UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549

                             FORM 10-K/A
                           AMENDMENT NO. 2
(Mark One)
 [  ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended ________________________________

                                  OR

[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934
 For the Transition period from _____________ to  ______________

       SPECIAL FINANCIAL REPORT FILED PURSUANT TO SECTION 15D-2
       OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

            THIS REPORT CONTAINS ONLY FINANCIAL STATEMENTS
             FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

         Commission file number         333-38567
                                --------------------------

                 World Wireless Communications, Inc.
        ------------------------------------------------------
        (Exact name of registrant as specified in its charter)

                 Nevada                          87-0549700
       --------------------------------     --------------------
      (State or other jurisdiction of         (I.R.S. Employer
       incorporation or organization)       Identification No.)

      2441 South 3850 West, West Valley City, Utah     84120
    ----------------------------------------------   ----------
      (Address of principal executive offices)       (Zip Code)

Registrant's telephone number, including area code   (801) 575-6600
                                                   ----------------
Securities registered under section 12(b) of the Act:

   Title of each class      Name of each exchange on which registered
------------------------    -----------------------------------------
         None

Securities registered under section 12(g) of the Act:

                               None
         ------------------------------------------------------
                          (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
 Yes (X)  No ( )

<PAGE>

     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. (
) Not applicable

     As of April 23, 1998, there were 11,072,186 shares of the
Issuer's common stock, par value $0.001, issued and outstanding. The
aggregate market value of the Issuer's voting stock held by
nonaffiliates of the Issuer was approximately $38,974,573, computed
at the closing quotation for the Issuer's common stock of $5.50 as
of April 23, 1998.


                 DOCUMENTS INCORPORATED BY REFERENCE

     List hereunder the following documents if incorporated by
reference and the part of the Form 10-K (e.g. Part I, Part II, etc.)
into which the document is incorporated: (1) any annual report to
security holders; (2) any proxy or information statement; and (3)
any prospectus filed pursuant to Rule 424(b) or (c) under the
Securities Act of 1933. The listed documents should be clearly
described for identification purposes. None.



                               PART II



ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Financial Statements are filed as part of this report on pages
     F-1 through F-19.

<PAGE>


                               PART IV


ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
           FORM 8-K

     (a)   Index to financial statements and Supplemental Schedules


       Title of Documents                                           Page No.

 Report of Independent Certified Public Accountants. . . . . . . . . . F-1

 Consolidated Balance Sheets - December 31, 1997 and 1996. . . . . . . F-2

 Consolidated Statements of Operations for the Years Ended
    December 31, 1997 and 1996, and for the Period from April
    10, 1995 (Date of Inception) through December 31, 1995 . . . . . . F-3

 Consolidated Statements of Comprehensive Loss for the
    Years Ended December 31, 1997 and 1996, and for the
    Period from April 10, 1995 (Date of Inception) through
    December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . F-3

 Consolidated Statements of Stockholders' Equity for the
    Period from April 10, 1995 (Date of Inception) through
    December 31, 1995, and for the Years Ended December 31,
    1996 and 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . F-4

 Consolidated Statements of Cash Flows for the Years
    Ended December 31, 1997 and 1996, and for the Period
    from April 10, 1995 (Date of Inception)  through December
    31, 1995F-5

 Notes to Consolidated Financial Statements. . . . . . . . . . . . . . F-6

<PAGE>

                         SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Company has caused
this report to be signed on its behalf by the undersigned, hereunto
duly authorized.


                                   WORLD WIRELESS COMMUNICATIONS,  INC.



Dated:  October 7, 1999      By:    /S/  David D. Singer
                                   --------------------------------------
                                   David D. Singer, President, Chairman of
                                   the Board
                                   (President and Chief Executive Officer)

     Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.



Dated:  October 7, 1999      By:    /S/   David D. Singer
                                   ------------------------------------
                                   David D. Singer, President,
                                   Chief Executive Officer Principal Financial
                                   Officer and Director

Dated:  October 7, 1999      By     /S/   Kevin Childress
                                   ------------------------------------
                                   Kevin Childress, Vice President - Finance
                                   and Principal Accounting Officer

Dated:  October 7, 1999      By    /S/   George Denney
                                   -----------------------------------
                                   George Denney, Director

<PAGE>


 HANSEN, BARNETT & MAXWELL
      A Professional Corporation
     CERTIFIED PUBLIC ACCOUNTANTS

                                                     (801) 532-2200
      Member of AICPA Division of Firms            Fax (801) 532-7944
               Member of SECPS                345 East Broadway, Suite 200
  Member of Summit International Associates  Salt Lake City, Utah 84111-2693


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

 To the Board of Directors and Stockholders
 World Wireless Communications, Inc.

 We have audited the accompanying consolidated balance sheets of World
 Wireless Communications, Inc. and subsidiaries as of December 31, 1997 and
 1996, and the related consolidated statements of operations, comprehensive
 loss,  stockholders' equity, and cash flows for the years ended December
 31, 1997 and 1996, and for the period from April 10, 1995 (date of
 inception) through December 31, 1995. These financial statements are the
 responsibility of the Company's management. Our responsibility is to
 express an opinion on these financial statements based on our audits.

 We conducted our audits in accordance with generally accepted auditing
 standards. Those standards require that we plan and perform the audits to
 obtain reasonable assurance about whether the financial statements are free
 of material misstatement. An audit includes examining, on a test basis,
 evidence supporting the amounts and disclosures in the financial
 statements.  An audit also includes assessing the accounting principles
 used and significant estimates made by management, as well as evaluating
 the overall financial statement presentation. We believe that our audits
 provide a reasonable basis for our opinion.

 In our opinion, the consolidated financial statements referred to above
 present fairly, in all material respects, the financial position of World
 Wireless Communications, Inc. and subsidiaries as of December 31, 1997 and
 1996, and the results of their operations and their cash flows for the
 years ended December 31, 1997 and 1996, and for the period from April 10,
 1995 (date of inception) through December 31, 1995, in conformity with
 generally accepted accounting principles.


                                     HANSEN, BARNETT & MAXWELL

 Salt Lake City, Utah
 February 27, 1998, except for Note 1- Restatement,
   as to which the date is May 10, 1999

                                      F-1
 <PAGE>

              WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                                            December 31,
                                                      -----------------------
                                                          1997         1996
                                                      -----------  ----------
 Current Assets
  Cash and cash equivalents . . . . . . . . . . . . . $   218,234  $   37,278
  Investment in securities available for sale . . . .     188,354          -
  Trade receivables, net of allowance . . . . . . . .     345,433     131,392
  Other receivables . . . . . . . . . . . . . . . . .      49,208          -
  Inventory . . . . . . . . . . . . . . . . . . . . .     496,432     159,881
  Prepaid expenses. . . . . . . . . . . . . . . . . .     232,143          -
                                                      -----------  ----------
       Total Current Assets . . . . . . . . . . . . .   1,529,804     328,551
                                                      -----------  ----------
 Equipment. . . . . . . . . . . . . . . . . . . . . .   1,589,248     448,237
  Less accumulated depreciation . . . . . . . . . . .    (455,985)   (121,215)
                                                      -----------  ----------
       Net Equipment. . . . . . . . . . . . . . . . .   1,133,263     327,022
                                                      -----------  ----------
 Goodwill, net of accumulated amortization. . . . . .   6,934,803          -
                                                      -----------  ----------
 Other Assets, net of accumulated amortization. . . .     535,154       7,469
                                                      -----------  ----------
 Total Assets . . . . . . . . . . . . . . . . . . . . $10,133,024  $  663,042
                                                      ===========  ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                            December 31,
                                                      -----------------------
                                                          1997       1996
                                                      -----------  ----------
 Current Liabilities
  Trade accounts payable. . . . . . . . . . . . . . . $   524,093  $   61,997
  Accrued liabilities . . . . . . . . . . . . . . . .     466,183      55,788
  Notes payable - current portion . . . . . . . . . .     814,925      85,566
                                                      -----------  ----------
       Total Current Liabilities. . . . . . . . . . .   1,805,201     203,351
                                                      -----------  ----------
 Long-Term Liabilities
  Notes payable . . . . . . . . . . . . . . . . . . .      34,977      44,808
                                                      -----------  ----------
 Stockholders' Equity
  Preferred stock - $0.001 par value; 1,000,000
   shares authorized; no shares issued  . . . . . . .          -            -
  Common stock - $0.001 par value;
     50,000,000 shares authorized; 10,225,260
     shares in 1997 and 5,663,000 shares in 1996
     issued and outstanding . . . . . . . . . . . . .      10,225        5,663
  Additional paid-in capital. . . . . . . . . . . . .  20,915,068    3,916,613
  Unearned compensation . . . . . . . . . . . . . . .  (1,410,509)          -
  Shareholder receivable. . . . . . . . . . . . . . .     (18,409)          -
  Accumulated deficit . . . . . . . . . . . . . . . . (11,316,883)  (3,507,393)
  Accumulated other comprehensive income. . . . . . .     113,354           -
                                                      -----------  -----------
       Total Stockholders' Equity . . . . . . . . . .   8,292,846      414,883
                                                      -----------  -----------
 Total Liabilities and Stockholders' Equity . . . . . $10,133,024  $   663,042
                                                      ===========  ===========

   The accompanying notes are an integral part of these financial statements.

                                      F-2
 <PAGE>

              WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                              For the Period
                                                               April 10,1995
                                                                 (Date of
                                           For the Years        Inception)
                                         Ended December 31,       Through
                                       ------------------------ December 31,
                                          1997         1996         1995
                                       -----------  -----------  -----------
 Sales. . . . . . . . . . . . . . . . .$ 2,913,429  $   618,505  $   426,825

 Cost of Sales. . . . . . . . . . . . .  2,116,934      662,184      237,356
                                       -----------  -----------  -----------
 Gross Profit (Loss). . . . . . . . . .    796,495      (43,679)     189,469
                                       -----------  -----------  -----------
 Expenses
    Research and development  . . . . .  2,943,404       92,932           -
    General and administrative. . . . .  4,234,087    1,789,904      386,612
    Amortization of goodwill. . . . . .  1,384,715           -            -
    Interest .. . . . . . . . . . . . .     43,779    1,310,142       73,593
                                       -----------  -----------  -----------
       Total Expenses . . . . . . . . .  8,605,985    3,192,978      460,205
                                       -----------  -----------  -----------
 Net Loss . . . . . . . . . . . . . . .$(7,809,490) $(3,236,657) $  (270,736)
                                       ===========  ===========  ===========
 Basic and Diluted Loss Per
  Common Share. . . . . . . . . . . . .$     (0.85) $     (1.03) $     (0.26)
                                       ===========  ===========  ===========
 Weighted Average Number of Common
 Shares Used in Per Share Calculation.   9,217,158    3,141,613    1,049,679
                                       ===========  ===========  ===========

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

                                                              For the Period
                                                               April 10,1995
                                                                 (Date of
                                           For the Years        Inception)
                                         Ended December 31,       Through
                                       ------------------------ December 31,
                                          1997         1996         1995
                                       -----------  -----------  -----------
 Net Loss . . . . . . . . . . . . . . .$(7,809,490) $(3,236,657) $  (270,736)

 Other Comprehensive Income
  Unrealized gains on investment in
     securities available for sale. . .    113,354           -            -
                                       -----------  -----------  -----------
 Comprehensive Loss . . . . . . . . . .$(7,696,136) $(3,236,657) $  (270,736)
                                       ===========  ===========  ===========

  The accompanying notes are an integral part of these financial statements.

                                      F-3
 <PAGE>



              WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
(CAPTION>

                                   Common Stock         Additional                                Total
                                ---------------------    Paid-in    Accumulated    Equity    Stockholders'
                                  Shares      Amount     Capital      Deficit    Adjustments     Equity
                                -----------  --------  -----------  ------------  -----------  -----------
<S>                            <C>          <C>       <C>          <C>           <C>          <C>
 Balance - April 10, 1995
  (Date of Inception)                    -   $     -   $        -   $         -   $        -   $        -

 Shares issued for cash           1,189,394     1,189      394,811            -            -       396,000
 Shares issued for services         425,758       426      140,074            -            -       140,500
 Issuance for financing fees        116,988       117       38,489            -            -        38,606
 Redemption of shares              (600,000)     (600)    (268,400)           -            -      (269,000)
 Beneficial conversion feature
  of convertible debt                   -          -        69,974            -            -        69,974
 Net Loss                               -          -            -       (270,736)          -      (270,736)
                                -----------  --------  -----------  ------------  -----------  -----------
 Balance - December 31, 1995     1,132,140      1,132      374,948      (270,736)          -       105,344

 Beneficial conversion feature
  of convertible debt                   -          -       719,781            -            -       719,781
 Conversion of notes payable     3,092,860      3,093      811,907            -            -       815,000
 Shares issued for cash            900,000        900      776,797            -            -       777,697
 Shares issued for services        527,000        527      787,061            -            -       787,588
 Shares issued for interest due
  on convertible notes              11,000         11        4,939            -            -         4,950
 Compensation related to grant
  of stock options                      -          -       441,180            -            -       441,180
 Net loss                               -          -            -     (3,236,657)          -    (3,236,657)
                                ----------  ---------  -----------  ------------  -----------  -----------
 Balance - December 31, 1996     5,663,000      5,663    3,916,613    (3,507,393)          -       414,883

 Compensation related to grant
   of stock options                     -          -     2,373,849            -    (2,373,849)          -
 Shares and warrants issued
   for cash                      2,557,857      2,558    4,192,692            -            -     4,195,250

 Issuance upon exercise of
   options                          25,098         25       29,836            -       (18,409)      11,452
 Conversion of note payable          5,630          6        1,964            -            -         1,970
 Shares issued and 201,900
  stock options granted in
  acquisition of Digital Radio
  Communications Corporation     1,798,100      1,798    8,672,264            -            -     8,674,062
 Shares issued in acquisition
   of TWC                          101,200        101    1,048,331            -            -     1,048,432
 Shares issued in acquisition
   of XARC                          10,000         10      102,990            -            -       103,000
 Shares issued in settlement
   of lawsuit                       40,000         40      323,416            -            -       323,456
 Issuance for financing fees        24,375         24      253,113            -            -       253,137
 Amortization of unearned
   compensation                         -          -            -            -        963,340      963,340
 Unrealized gain on securities          -          -            -            -        113,354      113,354
 Net loss                               -          -            -    (7,809,490)           -    (7,809,490)
                                ----------  ---------  -----------  ------------  -----------  -----------

 Balance - December 31, 1997    10,225,260  $  10,225  $20,915,068  $(11,316,883) $(1,315,564) $ 8,292,846
                               ===========  =========  ===========  ============  ===========  ===========
 <FN>
   The accompanying notes are an integral part of these financial statements.
 </FN>
 </TABLE>

                                     F-4
<PAGE>

             WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                              For the Period
                                                               April 10,1995
                                                                 (Date of
                                           For the Years        Inception)
                                         Ended December 31,       Through
                                       ------------------------ December 31,
                                          1997         1996         1995
                                       -----------  -----------  -----------
Cash Flows From Operating Activities
   Net loss. . . . . . . . . . . . . . $(7,809,490) $(3,236,657) $  (270,736)
   Adjustments to reconcile net loss
    to net cash used by operating
    activities:
      Amortization of goodwill . . . .   1,384,715           -            -
      Depreciation and amortization
       of other assets . . . . . . . .     361,607       83,094       38,853
      Purchased research and development 1,561,000           -            -
      Financing fees and amortization
       of debt discount. . . . . . . .     154,200    1,284,415       34,987
      Stock issued for services  . . .     111,370      787,588      179,106
      Compensation from stock options
       granted . . . . . . . . . . . .     963,340      441,180           -
      Changes in operating assets and
       liabilities, net of effects of
       businesses acquired:
         Accounts receivable, net of
          allowance for doubtful
          accounts . . . . . . . . . .       7,622     (100,688)     (30,621)
         Inventory . . . . . . . . . .     (41,105)     (99,225)     (14,799)
         Accounts payable. . . . . . .      41,546       30,741       31,256
         Accrued liabilities . . . . .     (86,981)      54,965          827
         Other assets. . . . . . . . .    (237,312)      (4,143)          -
                                       -----------  -----------  -----------
   Net Cash and Cash Equivalents Used
    By Operating Activities. . . . . .  (3,589,488)    (758,730)     (31,127)
                                       -----------  -----------  -----------
Cash Flows From Investing Activities
   Payments for the purchase of
    property and equipment . . . . . .    (663,707)     (90,544)     (49,691)
   Proceeds from sale of property
    and equipment. . . . . . . . . . .      10,754           -            -
   Cash paid for subsidiaries, net
    of cash received . . . . . . . . .    (248,736)          -      (340,000)
                                       -----------  -----------  -----------
   Net Cash and Cash Equivalents Used
    By Investing Activities. . . . . .    (901,689)     (90,544)    (389,691)
                                       -----------  -----------  -----------
Cash Flows From Financing Activities
   Payment to redeem common stock. . .          -            -       (19,000)
   Proceeds from issuance of
    common stock . . . . . . . . . . .   4,206,700      777,697      350,000
   Proceeds from borrowings, net
    of discount. . . . . . . . . . . .     775,000     (417,008)      77,847
   Proceeds from issuance of beneficial
    debt conversion feature. . . . . .          -       719,781       41,653
   Principal payments on notes payable    (309,567)    (223,600)          -
                                        ----------  -----------  -----------

   Net Cash and Cash Equivalents Provided
    By Financing Activities . . . . . .  4,672,133      856,870      450,500

Net Increase In Cash and Cash
   Equivalents  . . . . . . . . . . . .    180,956        7,596       29,682

Cash and Cash Equivalents -
  Beginning of Period . . . . . . . . .     37,278       29,682            -
                                        ----------  -----------  -----------

Cash and Cash Equivalents -
   End of Period. . . . . . . . . . . . $  218,234  $    37,278  $    29,682
                                        ==========  ===========  ===========

Supplemental cash flow information and noncash investing and financing
 activities - Note 7


 The accompanying notes are an integral part of these financial statements.

                                  F-5
 <PAGE>


              WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 NOTE 1--ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 ORGANIZATION - On April 10, 1995 a group of investors contributed $340,000
 in cash to form a joint venture (the Joint Venture). On the same day, the
 Joint Venture acquired substantially all of the assets and operations of
 Micro Security Systems, Inc. for $340,000 cash. The acquisition was
 accounted for by the purchase method of accounting. The purchase price was
 allocated to the assets acquired based upon their fair value: $45,857 to
 current assets and $294,143 to equipment and other long-term assets. The
 operations of the acquired business are included in the accompanying
 financial statements from the date of acquisition.

 Data Security Corporation (Data Security) was formed on November 15, 1995
 under the laws of the State of Nevada. The Joint Venture was reorganized
 into Data Security in November 1995 by Data Security issuing 787,140 shares
 of common stock and agreeing to pay $269,000 to one of the owners of the
 Joint Venture. The transfer of the net assets and operations to Data
 Security was a transfer  between enterprises under common control and has
 been accounted for at historical cost. The accompanying financial
 statements have been restated to reflect the common stock equivalents which
 would have been issued and redeemed from the dates of the original
 transactions with the owners of the Joint Venture based upon the shares
 exchanged in the transfer.

 By shareholder action on January 15, 1997, the Company's name was changed
 from Data Security Corporation to World Wireless Communications, Inc.

 PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
 the accounts of World Wireless Communications, Inc. and its wholly owned
 subsidiaries, ECA Electronic Contract Assembly, Inc. (ECA), TWC, Inc.
 (TWC), and Digital Radio Communications Corporation (Digital Radio) which
 has subsidiaries, from the dates of their acquisitions.  Intercompany
 accounts and transactions have been eliminated in consolidation. The
 consolidated entities are collectively referred to herein as the Company.
 On December 31, 1997, Digital Radio Communications Corporation and its
 subsidiaries, and ECA, effected a plan of liquidation into World Wireless
 Communications, Inc. and were dissolved.

 The preparation of financial statements in conformity with generally
 accepted accounting principles requires management to make estimates and
 assumptions that affect the reported amounts in these financial statements
 and accompanying notes. Actual results could differ from those estimates.

 RESTATEMENT - The Company corrected the amortization period for goodwill
 associated with the acquisition of Digital Radio from 15 to 5 years.  As a
 result of the change in the amortization period, the 1997 amortization of
 goodwill increased $279,263 which resulted in an increase in the 1997 net
 loss of $279,263, or $0.03 per share.

 NATURE OF BUSINESS - The Company and its subsidiaries design, develop and
 manufacture wired and wireless communications technology, systems and
 products, and provide contract manufacturing services to the electronics
 and wireless communications industry.

 Prior to the acquisition of Digital Radio and TWC, the primary operations
 of the Company were centered around the design and manufacture of computer
 security products, which constituted most of the Company's sales for 1996
 and 1995. Sales of these products were insignificant during 1997. As
 further described in Note 12, the computer security product line was sold
 to an employee/shareholder in January 1998.


            WORLD WIRELESS COMMUNICATIONS, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 BUSINESS CONDITION - Since the acquisition of Digital Radio in February
 1997, the Company no longer is considered in the development stage, having
 reached planned operations. However, it has not had sales sufficient to
 meet its operating expenses and to generate income. It has sustained
 operating losses for the years ended December 31, 1997 and 1996 and for the
 period from April 10, 1995 through December 31, 1995, and may require
 additional capital to continue operations. Although current liabilities
 exceed current assets at December 31, 1997, equity sales and debt issuances
 since December 31, 1997 have provided working capital necessary to meet
 obligations. Management also intends to obtain additional capital through
 issuance of common stock. Management anticipates sales from contracts
 currently in force will eventually generate profitable operations. However,
there is no assurance that profitable operations can be obtained or sustained.

                                      F-6
 <PAGE>

 SEGMENT INFORMATION AND CONCENTRATION OF RISK -The Company operates solely
 in the electronics industry and, prior to 1997, its sales were primarily to
 customers in the western United States. Accordingly, segment information
 relating to operations in different industries or geographic areas is not
 presented in these financial statements. Beginning in 1997, the Company
 expanded its operations to include significant sales nationally and
 internationally. Export sales during the year ended December 31, 1997 were
 $1,661,752 of which 97% or $1,607,706 were to customers in Japan. The
 concentration of business in one industry subjects the Company to a
 concentration of credit risk relating to trade accounts receivable. The
 Company generally does not require collateral from its customers with
 respect to trade receivables.

 FINANCIAL INSTRUMENTS - The Company considers all highly-liquid debt
 instruments purchased with a maturity of three months or less to be cash
 equivalents. Cash and cash equivalents in excess of insured limits was
 approximately $81,953 at December 31, 1997. The amounts reported as cash
 and cash equivalents, accounts receivable, other receivables, accounts
 payable and notes payable are considered to be reasonable approximations of
 their fair values. The fair value estimates presented herein were based on
 market information available to management at the time of the preparation
 of the financial statements.

 TRADE ACCOUNTS RECEIVABLE AND MAJOR CUSTOMERS - Sales to major customers
 during the years ended December 31, 1997 and 1996 were as follows: Customer
 "A" - $1,596,000 and $0, Customer "B" - $413,512 and $0, and Customer "C" -
 $77,667 and $102,578, respectively. Sales to major customers subject the
 Company to the risk  that the Company may not be able to continue the
 current level of sales if there were a loss of a major customer. At
 December 31, 1997 and 1996, an allowance for doubtful accounts of $30,000
 and $0, respectively, was provided.

 INVENTORY - Inventory is stated at the lower of cost or market. Cost is
 determined using the first-in, first-out method.

 RESEARCH AND DEVELOPMENT EXPENSE - Current operations are charged with all
 research, engineering and product development expenses.

 GOODWILL AND LONG-LIVED ASSETS -Goodwill and other long-lived assets are
 evaluated periodically for impairment when indicators of impairment are
 present and undiscounted cash flows estimated to be generated by those
 assets are less than their carrying amounts.  Goodwill is included along
 with other assets acquired as a group when evaluating their recoverability.
  Impairment losses are recognized to the extent estimated discounted net
 future cash flows expected to be generated from those assets are less than
 their carrying amounts.  Goodwill is further evaluated separately and
 impairment losses are recognized for the excess of the carrying amount of
 goodwill over management's estimation of the value and future benefits
 expected to be realized from the goodwill.  In both of these analyses,
 significant management judgement is required to evaluate the capacity of
 the assets or the acquired business to perform within projections.

 The original amortization periods for goodwill and other intangible assets
 are evaluated periodically to determine whether later events and
 circumstances warrant revised estimates of their useful lives.  If
 estimated useful lives are changed, the unamortized cost is allocated to
 the remaining periods in the revised useful lives.  The Company determines
 the useful life of goodwill based upon an analysis of all relevant factors.

                                      F-7
 <PAGE>

 Goodwill arose from the acquisitions of Digital Radio and TWC Ltd. and is
 being amortized over a 5-year period on a straight-line basis. The
 amortization expense for 1997 was $1,384,715.

 EQUIPMENT - Equipment is stated at cost. Depreciation, including
 amortization of leased assets, is computed using the straight-line method
 over the estimated useful lives of the equipment, which are three to seven
 years. Leased equipment is amortized over the shorter of the useful life of
 the equipment or the term of the lease. Depreciation expense was $338,043,
 $82,362 and $38,853 for the years ended December 31, 1997 and 1996 and for
 the period from April 10, 1995 through December 31, 1995, respectively.
 Maintenance and repairs of equipment are charged to operations and major
 improvements are capitalized. Upon retirement, sale, or other disposition
 of equipment, the cost and accumulated depreciation are eliminated from the
 accounts and gain or loss is included in operations.

 INVESTMENTS -At December 31, 1997, investment in marketable securities
 consisted of common stock of customers classified as available for sale and
 are stated at quoted fair market value of $188,354. The cost of the
 marketable securities was $75,000. The unrealized gain as of  December 31,
 1997 was $113,354 which was also the change in net unrealized gains on
 marketable securities included as a separate component of stockholders'
 equity in the accompanying balance sheet.

 SALES RECOGNITION - Sales are recognized upon delivery of products or
 services and acceptance by the customer. As a result of design and
 technology contracts, the Company has a right to receive royalties which
 will be recognized upon the related sales by customers.

 STOCK-BASED COMPENSATION - Stock-based compensation to employees is
 measured by the intrinsic value method. This method recognizes compensation
 expense related to stock options granted to employees based on the
 difference between the fair value of the underlying common stock and the
 exercise price of the stock option on the date granted.

 LOSS PER SHARE - In the fourth quarter of 1997, the Company adopted
 Statement of Financial Accounting Standards (SFAS) No. 128,"Earnings Per
 Share." Under SFAS 128, basic loss per common share is computed by dividing
 net loss available to common stockholders by the weighted-average number of
 common shares outstanding during the period. Diluted loss per share
 reflects the potential dilution which could occur if all potentially
 issuable common shares from options or convertible notes payable  resulted
 in the issuance of common stock. In the Company's present position, diluted
 loss per share is the same as basic loss per share because potentially
 issuable common shares would decrease the loss per share and have been
 excluded from the calculation. Prior periods have been restated, where
 appropriate, to conform to the requirements of SFAS 128.

 NEW ACCOUNTING STANDARDS -The Company adopted SFAS No. 128, "Earnings per
 Share," and SFAS No. 129, "Disclosures of Information About Capital
 Structure," in 1997. In accordance with SFAS Nos. 128 and 129, both basic
 net loss per share and diluted net loss per share as well as rights and
 liquidation preferences of equity securities have been presented in the
 accompanying consolidated financial statements.

 In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of
 Computer Software Developed or Obtained for Internal Use." The Company is
 currently analyzing the impact of this statement, which is required to be
 adopted in 1999, and does not expect this statement to have a material
 impact on the Company's financial position, results of operations or cash
 flows.

                                      F-8
 <PAGE>

 In June 1997, SFAS No. 130, "Reporting Comprehensive Income" was issued.
 The Company adopted this standard during the fourth quarter of 1997 which
 requires the display of comprehensive income and its components in the
 financial statements. In the Company's case, comprehensive income includes
 net loss and unrealized gains on investment in securities available for sale.

 The Financial Standards Board issued SFAS No. 131, "Disclosures About
 Segments of an Enterprise and Related Information" and SFAS No. 132,
 "Employers' Disclosures About Pensions and Other Postretirement Benefits,
 an Amendment of FASB Statements No. 87, 88, and 106 during 1997 and 1998.
 These statements, which are effective for fiscal years beginning after
 December 15, 1997, expand or modify disclosures and will have no impact on
 the Company's consolidated financial position, results of operations, or
 cash flows.

 NOTE 2--BUSINESS COMBINATION AND ACQUISITIONS

 ECA Electronic Contract Assembly, Inc. (ECA) was incorporated on October
 24, 1996 under the laws of the State of Nevada. ECA had no operations or
 assets and had made efforts toward the development of business relating to
 the assembly of printed circuit boards and wire/cable harnesses. Effective
 October 28, 1996, the Company acquired all of ECA's outstanding common
 stock and employed two ECA officers by issuing 500,000 shares of common
 stock. The business combination was accounted for using the purchase method
 of accounting. The purchase price, based upon the fair value of the common
 shares issued, was $752,565, or $1.51 per share. The entire purchase price
 is considered to be a sign up bonus and was allocated to compensation
 expense. ECA's operations have been included in the accompanying financial
 statements from the date of acquisition.

 On February 12, 1997, a majority of the shareholders of Digital Radio
 Communications Corporation, a Utah Corporation, accepted an offer from the
 Company to merge Digital Radio into a newly-formed subsidiary of the
 Company. The Digital Radio shareholders agreed to exchange each of their
 common shares for 0.5577349 common shares of World Wireless, which resulted
 in the Company issuing 1,798,100 shares of common stock. In addition,
 holders of Digital Radio stock options exchanged each of their options for
 0.5577349 stock options, which resulted in the Company issuing options to
 purchase 201,900 shares of common stock exercisable at a weighted-average
 price of $1.90 per share.

 The merger has been accounted for using the purchase method of accounting.
 The purchase price, based upon the fair value of the common shares and
 stock options issued, was $8,674,062. The fair value of the common shares
 and stock options issued was based upon the average market price of the
 Company's common stock at the time of the acquisition, discounted for
 restrictions on resale and for trading volume. The excess of the purchase
 price over the estimated fair value of the identifiable acquired assets
 less liabilities assumed was $7,885,075, which was recognized as goodwill.
 The fair value of purchased research and development amounted to $1,258,000
 and was recognized as an expense at the date of the merger. The
 accompanying consolidated financial statements include the accounts and
 operations of Digital Radio from February 12, 1997. The following pro forma
 information presents the results of operations as if the Digital Radio
 acquisition had occurred at the beginning of 1996. The write-off of
 purchased research and development was a nonrecurring charge which resulted
 directly from the transaction and therefore has been excluded from the
 following pro forma information. The pro forma results have been prepared
 for comparative purposes only and do not purport to be indicative of what
 would have occurred had the acquisition been made at the beginning of 1996
 as described above or of the results which may occur in the future.

                                      F-9
 <PAGE>                                                    December 31,
                                                  ----------------------------
                                                          1997            1996
                                                  ------------     -----------
            Sales . . . . . . . . . . . . . .     $  3,048,014     $ 2,004,983
            Net Loss. . . . . . . . . . . . .       (7,107,213)     (5,999,903)
            Net Loss per Common Share . . . . . . $      (0.77)    $     (1.17)

 On October 31, 1997, the Company acquired all of the outstanding common
 stock of TWC, Ltd, (TWC), a Delaware corporation engaged in the design and
 manufacture of antennas for sale to radio and electronics manufacturers,
 and acquired substantially all of the assets of Austin Antenna, Ltd.
 (Austin Antenna), a New Hampshire corporation. The Company paid $146,000 in
 cash by advancing $106,000 and by paying $40,000 in acquisition costs, and
 issued 100,000 shares of restricted common stock valued at $1,036,000 or
 $10.36 per share. The Company also issued 1,200 shares of stock to the
 owners of TWC for services valued at $12,431.The acquisition was accounted
 for using the purchase method of accounting. The net assets acquired were
 recorded at their fair value, with $400,000 allocated to patents and
 $200,000 allocated to research and development which was charged against
 operations. The patents are being amortized over 6.5 years, their estimated
 remaining useful life. The excess of the purchase price over the estimated
 fair value of the net assets acquired was $434,443 which was allocated to
 goodwill and is being amortized over 5 years on a straight-line basis. The
 results of operations of TWC are included in the consolidated financial
 statements from the date of acquisition. The net assets and operations of
 TWC are not significant to the net assets and operations of the Company;
 therefore,  pro forma financial information is not presented.

 On November 11, 1997 the Company acquired all of the issued and outstanding
 stock of XARC Corporation, a Kansas corporation primarily engaged in
 development and sales of wireless technology, by issuing 10,000 shares of
 restricted common stock valued at $103,000. XARC had no assets or
 liabilities prior to the acquisition. The acquisition was accounted for
 under the purchase method of accounting with the purchase price allocated
 to purchased research and development and charged against operations at the
 acquisition date. Results of operations for XARC are included in the
 consolidated financial statements from the date of acquisition.

 NOTE 3--INVENTORY

 Inventory consisted of the following:
                                                     December 31,
                                            ----------------------------
                                                     1997           1996
                                            -------------    -----------
            Materials . . . . . . . . . . . $     378,238    $    20,935
            Work in process   . . . . . . .       118,194        138,946
                                            -------------    -----------
 NOTE 4--EQUIPMENT

 Equipment consisted of the following:
                                                     December 31,
                                            ----------------------------
                                                     1997           1996
                                            -------------    -----------
            Computer equipment  . . . . .  $     246,117    $    68,440
            Manufacturing equipment . . .       1,059,91        308,458
            Office furniture. . . . . . .        164,566         71,339
            Software  . . . . . . . . . .        118,649              -
                                           -------------    -----------
            Total . . . . . . . . . . . .  $  1,589,248     $   448,237
                                           ============     ===========

                                      F-10
 <PAGE>

 NOTE 5--NOTES PAYABLE

                                                     December 31,
                                               -------------------------
                                                  1997           1996
                                               ----------     ----------
 10% Notes payable; paid in 1997. . . . . . .  $       -      $   3,404

 Payable due to shareholder; converted to
  common stock in January 1997. . . . . . .            -          1,970

 Capital lease obligations for equipment
  (Note 12) . . . . . . . . . . . . . . . .        40,576            -

 15% Note payable to a shareholder; payable
  $7,798 monthly through September 1998;
  secured by equipment and personally
  guaranteed by two stockholders. . . . . .        44,808       125,000

 12% Note payable to a shareholder; guaranteed
  by an officer and secured by an officer's
  common stock; paid in 1998 . . . . . . . .      200,000            -

 12% Note payable to shareholder; due
  December 31, 1997; unsecured . . . . . . .      125,000            -

 10% Note payable to an unrelated party;
  due September 30, 1998; unsecured. . . . .      400,000            -

 12% Note payable to an employee; payable
  $1,408 monthly through December 31, 1998;
  unsecured. . . . . . . . . . . . . . . . .       39,518            -
                                               ----------     ---------
 Total Notes Payable . . . . . . . . . . . .      849,902       130,374

 Less:  Current Portion. . . . . . . . . . .     (814,925)      (85,566)
                                               ----------     ---------

 Long-Term Notes Payable . . . . . . . . . .   $   34,977     $  44,808
                                               ==========     =========

 From November 1995 through February 1996, the Company issued convertible
 notes payable totaling $275,000. The notes bore interest at 6% in addition
 to the amortization of the discount (see Note 8) resulting in an effective
 interest rate of 463%. The notes were converted into 1,892,860 shares of
 common stock in March 1996.

 From June through December 1996, the Company issued convertible notes
 payable totaling $540,000 in connection with a unit offering of common
 stock. The notes bore interest at 6% in addition to the amortization of the
 discount which amounted to $1,154,094 (see Note 8). The discount was fully
 amortized during the period from the dates the notes were issued through
 December 31, 1996. The notes payable were converted into 1,200,000 shares
 of common stock from October through December 1996.

                                      F-11
 <PAGE>

 The annual maturities of notes payable as of December 31, 1997 were as
 follows:

            Years Ending December 31:
                    1998. . . . . . . . . . . . $ 810,386
                    1999. . . . . . . . . . . .    30,103
                    2000. . . . . . . . . . . .     8,866
                    2001. . . . . . . . . . . .       547
                                                ---------
                   Total. . . . . . . . . . . . $ 849,902
                                                =========
 NOTE 6--INCOME TAXES

 The net loss for all periods presented resulted entirely from operations
 within the United States. There was no provision for or benefit from income
 tax for any period. The components of the net deferred tax asset are shown
 below:
                                           For the Years Ended December 31,
                                         -----------------------------------
                                            1997         1996        1995
                                         -----------  -----------  ---------
    Operating loss carryforwards . . . . $ 3,684,004  $   864,937  $  95,813
    Accrued liabilities and other. . . .     271,694      168,979      5,169
                                         ------------  -----------  --------
    Total Deferred Tax Assets. . . . . .   3,955,698    1,033,916    100,982

    Valuation Allowance. . . . . . . . .  (3,955,698)  (1,033,916)  (100,982)
                                         -----------   -----------  --------
    Net Deferred Tax Asset . . . . . . . $        -   $        -   $      -
                                         ===========  ===========  =========

 For tax reporting purposes, the Company has net operating loss
 carryforwards in the amount of $9,443,887 which will expire beginning in
 the year 2011. Of this amount, $1,246,871 was from Digital Radio prior to
 its acquisition, and the availability of this amount to offset future
 taxable income is limited.

 The following is a reconciliation of the amount of tax (benefit) that would
 result from applying the federal statutory rate to pretax loss with the
 provision for income taxes.

                                           For the Years Ended December 31,
                                         -----------------------------------
                                            1997         1996        1995
                                         -----------  -----------  ---------
    Tax at statutory rate (34%). . . . . $(2,655,227) $(1,100,463) $ (92,050)
    Non-deductible expenses. . . . . . .     740,830      283,633         -
    Change in valuation allowance. . . .   2,301,134      932,934    100,982
    State tax benefit, net of federal
     tax effect. . . . . . . . . . . . .    (248,497)    (106,811)    (8,932)
    Research and development credit. . .    (138,240)      (9,293)        -
                                         -----------  -----------  ---------
    Net Income Tax Expense . . . . . . . $        -   $        -   $      -
                                         ===========  ===========  =========

 In connection with the Digital Radio acquisition, $1,258,000 of research
 and development was written-off before tax. This amount comprises most of
 the non-deductible expenses in 1997. The results of the acquisition were an
 increase to total deferred tax assets of $620,647 and a corresponding
 increase in the valuation allowance.

                                      F-12
 <PAGE>

 NOTE 7--SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH
                 INVESTING AND FINANCING ACTIVITIES

 Supplemental Cash Flow Information -
                                           For the Years Ended December 31,
                                         -----------------------------------
                                            1997         1996        1995
                                         -----------  -----------  ---------

        Interest Paid . . . . . . . . .  $    34,426  $    30,677  $      -

 Noncash Investing and Financing Activities -

 During the period from April 10, 1995 through December 31, 1995 the Company
 redeemed 600,000 shares of common stock as follows:

        Common stock redeemed . . . . . . . . . . . . . . . . . $ 269,000
        Payments made by others in exchange for the following:
           139,394 shares of common stock . . . . . . . . . . .    46,000
           Notes payable, net of discount . . . . . . . . . . .    16,679
           Beneficial debt conversion feature . . . . . . . . .    28,321
        Issuance of note payable to former shareholder. . . . .   159,000
                                                                ---------
                                                                  250,000
                                                                ---------
        Cash Paid to Redeem Common Stock. . . . . . . . . . . . $  19,000
                                                                =========

 During the period ended December 31, 1995, the Company issued 542,746
 shares of common stock valued at $179,106 for services and financing fees.

 During the year ended December 31, 1996, $138,000 of debt was issued to
 acquire equipment, of which $120,000 was payable to a stockholder. Notes
 payable in the amount of $815,000 were converted to common stock. Common
 stock valued at $787,588 was issued for services.

 During the year ended December 31, 1997, $1,970 in long-term debt was
 converted into 5,630 shares of common stock at $0.35 per share. The Company
 purchased equipment totaling $54,887 by issuing a note payable in the same
 amount. Equipment was sold at no gain or loss in exchange for assumption by
 the purchaser of a $54,320 note payable. The Company issued 1,798,100
 shares of common stock and 201,900 stock options in exchange for all of the
 issued and outstanding common stock of Digital Radio. In January and
 February 1997, which was prior to the effective date of the merger, the
 Company advanced $118,764 to Digital Radio. In conjunction with the merger,
 liabilities were assumed as follows:

             Fair value of assets acquired . . . . . . . . .  . $ 1,112,399
             Purchased research and development . . . . . . . .   1,258,000
             Goodwill . . . . . . . . . . . . . . . . . . . . .   7,885,075
             Common stock issued and stock options granted. . .  (8,674,062)
                                                                -----------
             Liabilities Assumed. . . . . . . . . . . . . . . . $ 1,581,412
                                                                ===========
                                      F-13
 <PAGE>

 NOTE 8--STOCKHOLDERS' EQUITY

 The Company began business on April 10, 1995 as a joint venture. The
 accompanying financial statements have been restated to present the capital
 transactions of the Joint Venture at their common stock equivalents, based
 on 787,140 common shares issued upon the reorganization of the Joint
 Venture into Data Security Corporation in November 1995. Capital
 transactions of the Joint Venture were as follows:  Owners of the Joint
 Venture invested cash in the amount of $340,000 and $10,000 in April and
 June 1995, respectively, and paid another $46,000 on behalf of the Company
 during this time. In addition, owners contributed management services
 valued at $34,900 and were paid financing fees of $30,356. These capital
 transactions, totaling $461,256, have been presented as being equivalent to
 the issuance of 1,387,140 shares of common stock which were valued at $0.33
 per share, based upon the price shares were issued to owners in exchange
 for cash. The Company redeemed one of the owner's interest in the Joint
 Venture for $269,000 by paying the owner $19,000, by other owners of the
 Joint Venture paying the owner $46,000 (as described above), by a
 third-party lender paying the owner $45,000 and by the Company entering
 into an agreement to pay the owner $159,000 plus interest thereon at 10% by
 March 1996. The redemption of the ownership interest has been presented in
 the accompanying financial statements as being equivalent to the redemption
 of 600,000 shares of common stock at $0.45 per share. The payments to the
 owner were not in exchange for any additional stated or unstated rights or
 privileges.

 On November 15, 1995, the Company issued 25,000 shares of common stock as
 fees for raising financing for the Company.  The shares issued were valued
 at $8,250 or $0.33 per share, based upon the price common stock had been
 issued for cash. In December 1995, an additional 320,000 shares of common
 stock were issued to a director of the Company in payment for management
 services.  The services and the shares issued were also valued at $0.33 per
 share and totaled $105,600.

 In November 1995 through February 1996, the Company issued convertible
 notes payable in the amount of $275,000, of which notes for $120,000 were
 issued in 1995. The debt was converted into 1,892,860 shares of common
 stock in March 1996 at $0.15 per share. The market value of the restricted
 common shares at the dates the debt was issued exceeded the rate the debt
 was converted by an average of $0.23 per share. This difference was a
 beneficial conversion feature of the convertible debt and has been
 accounted for as a discount on the debt in the amount of $69,974 in 1995
 and $90,384 in 1996. The beneficial conversion feature was credited to
 additional paid-in capital on the dates the convertible notes payable were
 issued.

 The Company issued 300,000 shares of common stock at $0.70 per share during
 April and May 1996 for $210,000 in cash and incurred costs in connection
 with the offering of $12,000. The Company issued 7,000 shares of common
 stock in March 1996 in connection with the termination of the employment of
 an employee. The shares issued were valued based upon the $0.70 cash price
 for common stock.

 Common stock and convertible debt were issued as a unit in an offering from
 June through December 1996. The offering resulted in the issuance of
 600,000 shares of common stock and $540,000 of notes payable which were
 convertible into common stock at $0.45 per share. The gross proceeds from
 the offering before $5,000 offering costs were $600,000 and were allocated
 on the dates received to (a) the common stock based upon its fair value,
 (b) to the beneficial conversion feature of the notes payable based upon
 the excess of the fair value of the common stock over the conversion price,
 and (c) the remaining amount was allocated to the notes payable, net of a
 $1,154,094 discount.  The excess of the market value of the common stock
 over the conversion price at the dates the notes payable were issued ranged
 from $0.25 to $0.73 per share and was a beneficial conversion feature of
 the convertible debt. The portion of the proceeds from the unit offering
 allocated to the beneficial conversion feature was $629,397, which amount
 was accounted for as additional paid-in capital on the dates the
 convertible notes payable were issued. The notes payable were converted
 into 1,200,000 shares of common stock from October through December 1996.

 The Company issued 20,000 shares of common stock in November 1996 in
 settlement of an employment agreement. The services were valued at $30,123,
 or $1.51 per share.

 The Company issued 2,557,857 shares of common stock from January 1997
 through August 1997 in private placement offerings for $4,195,250 cash.

                                      F-14
 <PAGE>

 The Company issued 25,098 shares of common stock upon the exercise of stock
 options. Proceeds from the issuance were $11,452 of cash and a promissory
 note from a shareholder of $18,409.

 On November 11, 1997, the Company fulfilled an obligation totaling $323,456
 under a settlement reached with an otherwise unrelated joint venture
 partner. The obligation was settled by the Company issuing 40,000 shares of
 restricted common stock valued at $8.09 per share based upon fair value of
 the common stock on the date issued. Under the settlement agreement, the
 shareholder has an option to require the Company to redeem the stock at
 $4.00 per share through February 28, 1998, but the option was not exercised
 by that date and expired.

 During November and December 1997, the Company issued 24,375 shares of
 common stock for financing fees in the amount of $253,137.

 NOTE 9--EQUITY ADJUSTMENTS

 Equity adjustments include unearned compensation from stock options granted
 in 1997 which vest through 1999, a receivable from a shareholder which
 arose from the shareholder exercising an option in exchange for a
 promissory note, and accumulated other comprehensive income relating to
 unrealized gain on investment in securities available for sale. Changes in
 equity adjustments for the year ended December 31, 1997 were as follows:

 <TABLE>
 <CAPTION>
                                                               Accumulated
                                                                   Other       Total
                                          Unearned  Shareholder Comprehensive  Equity
                                        Compensation Receivable   Income    Adjustments
                                          ----------  ---------  ---------  -----------
<S>                                      <C>         <C>        <C>        <C>
 Balance - December 31, 1996. . . . . . . $       -   $      -   $      -   $        -
 Compensation related to grant
  of stock options. . . . . . . . . . . . (2,373,849)        -          -    (2,373,849)
 Amortization of unearned compensation. .    963,340         -          -       963,340
 Options exercised for note receivable
  from shareholder. . . . . . . . . . . .         -     (18,409)        -       (18,409)
 Unrealized gain on investment
  in securities available
  for sale. . . . . . . . . . . . . . . .         -          -     113,354      113,354
                                         -----------  ---------  ---------  -----------
 Balance - December 31, 1997. . . . . . .$(1,410,509) $ (18,409) $ 113,354  $(1,315,564)
                                         ===========  =========  =========  ===========
 </TABLE>

 NOTE 10--STOCK OPTIONS

 In December 1996, the Company granted options to two members of management
 of the Company to purchase a total of 258,000 shares of restricted common
 stock at $0.33 per share for services to the Company. In January 1997, one
 of the members was granted an additional option to purchase 150,000 shares
 at $0.35 per share. The options may be exercised from the date granted
 through June 30, 1998. The Company recorded compensation expense of
 $441,180 ($1.71 per share) during 1996 and $265,500 ($1.77 per share)
 during 1997 for  the difference between the exercise price and the fair
 value of the common stock on the dates granted.

 In connection with the acquisition of Digital Radio, the Company assumed
 Digital Radio's stock option plans and granted options to the former
 shareholders and employees of Digital Radio to purchase 201,900 shares of
 common stock at a weighted-average price of $1.90 per share through
 December 20, 2001.

                                      F-15
 <PAGE>

 The Board of Directors approved a stock option plan in September 1997 which
 authorized options to purchase 1,500,000 shares of common stock. Options to
 purchase 937,044 common shares were granted under the Plan on December 18,
 1997,with a weighted-average exercise price of $6.50 per share. The Plan
 was approved and the options were granted subject to shareholders'
 approval, which was obtained on December 18, 1997. The options become
 exercisable from the date granted through November 10, 1999. The
 unexercised options expire on December 17, 2002. Compensation relating to
 the options of $2,108,349, or $2.25 per share, is being recognized over the
 period the options vest of which $697,840 was recognized during the fourth
 quarter of 1997.

 A summary of the status of the Company's stock options as of December 31,
 1997 and 1996, and changes during the years then ended are presented below:

<TABLE>
<CAPTION>
                                                          December 31,
                                            ------------------------------------------
                                                      1997                1996
                                            ---------------------  -------------------
                                                   Weighted-Average     Weighted-Average
                                                        Exercise             Exercise
                                              Shares      Price     Shares     Price
                                            ----------  ---------  --------  ---------
<S>                                        <C>         <C>        <C>       <C>
    Outstanding at beginning of year. . . .    258,000  $    0.33        -   $      -
    Granted . . . . . . . . . . . . . . . .  1,288,944       5.06   258,000       0.33
    Exercised . . . . . . . . . . . . . . .    (25,098)      1.19        -          -
                                            ----------             --------
    Outstanding at end of year  . . . . . .  1,521,846       4.33   258,000       0.33
                                            ==========             ========
    Options exercisable at year-end . . . .    792,610       2.32   258,000       0.33
                                            ==========             ========
    Weighted-average fair value of
     options granted during the year. . . . $     3.43             $   1.76
                                            ==========             ========
</TABLE>

 The following table summarizes information about stock options outstanding
 at December 31, 1997:

                          Options Outstanding           Options Exercisable
                   ----------------------------------  ---------------------
                               Weighted-
                    Number      Average     Weighted-   Number    Weighted-
      Range of   Outstanding   Remaining    Average   Exercisable  Average
      Exercise        At      Contractual   Exercise      At       Exercise
       Prices      12/31/97       Life        Price    12/31/97     Price
   --------------  ---------  ------------  ---------  ---------  ----------
        $0.18           224      2.0 years    $0.18         224      $0.18
    $0.33 - $0.35   408,000      0.6          $0.34     408,000      $0.34
        $2.00       176,578      2.1          $2.00     176,578      $2.00
        $6.50       937,044      2.0          $6.50     207,808      $6.50

 The Company measures compensation under stock-based options and plans using
 the intrinsic value method prescribed in Accounting Principles Board
 Opinion 25, Accounting for Stock Issued to Employees, and related
 interpretations. Stock-based compensation charged to operations was
 $963,340 and $441,180 for the years ended December 31, 1997 and 1996. Had
 compensation cost for the Company's options been determined based on the
 fair value at the grant dates consistent with the alternative method set
 forth under Statement of Financial Accounting Standards No. 123, Accounting
 for Stock-Based Compensation, net loss and loss per share would have
 increased to the pro forma amounts indicated below:

                                     For the Years  Ended December 31,
                                  ----------------------------------------
                                      1997           1996          1995
                                  ------------   ------------   ----------
     Net loss:
        As reported . . . . . . . $ (7,809,490)  $ (3,236,657)  $ (270,736)
        Pro forma . . . . . . . .   (8,339,767)    (3,249,557)    (270,736)

     Basic and diluted loss per share:
         As reported. . . . . . . $      (0.85)  $      (1.03)  $    (0.26)
         Pro forma. . . . . . . .        (0.90)         (1.03)       (0.26)

                                      F-16
 <PAGE>

 The fair value of each option granted was estimated on the date of grant
 using the Black-Scholes option-pricing model with the following
 weighted-average assumptions used for grants in 1997 and 1996,
 respectively: dividend yield of 0.0% for both periods; expected volatility
 of 79.2% and 99.6%; risk-free interest rate of 5.3% and 5.0% and expected
 life of the options of 2.0 years and 1.5 years.

 Subsequent to December 31, 1997, option holders exercised options to
 purchase 336,926 shares of common stock at exercise prices from $0.33 to
 $2.00 per share.

 NOTE 11-RELATED PARTY TRANSACTIONS

 During 1997, an officer and shareholder loaned $125,000 to the Company. The
 loan carries a 12% interest rate and was due on December 31, 1997. The
 Company issued 9,375 shares of common stock valued at $98,938 as a fee
 relating to the loan. A loan to the Company of $400,000 was guaranteed and
 secured by the common stock held by an officer. Through the acquisition of
 Digital Radio, the Company assumed and subsequently paid a note payable and
 accrued wages totaling $128,057 to two officers and shareholders.

 During 1995, the principal shareholders and managers of the Company
 contributed cash, paid expenses for the benefit of the Company and
 contributed services to the Company all valued at $461,256, for which they
 received 1,387,140 shares of common stock, valued at $0.33 per share.
 Subsequently, one of the shareholders interests were redeemed through the
 payment of $46,000, payment by a third party lender of $45,000, and the
 issuance of a promissory note bearing interest at 10% in the amount of
 $159,000 to the shareholder. The note was paid by March 1996.

 NOTE 12--COMMITMENTS AND CONTINGENCIES

 LEASE COMMITMENTS - The Company leases office and production facilities
 under agreements accounted for as operating leases. Lease expense for the
 years ended December 31, 1997 and 1996 and for the period ended December
 31, 1995  was $367,301, $123,779 and $17,820, respectively. The facilities
 lease terms end in May and June 1998. The Company also assumed lease
 commitments in the merger with Digital Radio for three vehicles under
 operating lease agreements. The following is a schedule by years of the
 future minimum lease payments required under operating and capital leases
 together with the present value of net minimum lease payments as of
 December 31,1997:


                                                Capital     Operating
        Years Ending December 31:                Leases       Leases
                                               ----------   ----------
             1998 . . . . . . . . . . . . . .  $   21,448   $  118,860
             1999 . . . . . . . . . . . . . .      18,081        4,981
             2000 . . . . . . . . . . . . . .      11,246           -
             2001 . . . . . . . . . . . . . .         695           -
        Total Minimum Lease Payments. . . . .      51,470   $  123,481
                                                            ==========
        Less amount representing interest . .     (10,894)
                                               ----------
        Present Value of Net Minimum
         Lease Payments . . . . . . . . . . .      40,576
        Less Current Portion. . . . . . . . .     (21,448)
                                               ----------
        Capital Lease - Long-Term . . . . . .  $   19,128
                                               ==========

 COMMITMENT TO ACQUIRE TECHNOLOGY- The Company has entered into an agreement
 to acquire certain technology from Asyst, Inc., an otherwise unrelated
 company. Under the agreement the Company will issue approximately $300,000
 in common stock (not less than 30,000 shares), and will advance $65,000 in
 cash, in exchange primarily for Asyst's spectrum technology. Appropriate
 accounting treatment of this transaction, should it occur, has not been
 determined.

                                      F-17
 <PAGE>

 UNASSERTED CLAIM - Although action has not been initiated, a former officer
 of the Company has threatened litigation against the Company following his
 resignation as an officer and as a director in October 1997. The
 resignation was the result of a dispute over compensation involving, among
 other things, a claim by the former officer and director that the Company
 had agreed to grant him options to purchase 275,000 shares of the Company's
 common stock at a price of $2.00 per share in connection with his
 employment, and had later disaffirmed such obligation. Because of the
 number of shares involved in this unasserted claim, and the difference
 between the current market price for the Company's common stock and the
 exercise price of the options claimed, the expense to the Company for
 financial reporting purposes would be material if the former officer should
 initiate and prevail in litigation over these claims. The Company intends
 to vigorously defend any such action.

 401K PROFIT SHARING PLAN -The Company sponsors a  401K profit sharing plan
 but has no commitment to match employee's contributions to the plan, nor
 has the Company made any contributions to the plan to date.

 NOTE 13--SUBSEQUENT EVENTS

 In January 1998, the Company sold its SecuriKey business and related
 products to a shareholder/employee for $372,499. The sale resulted in a
 gain of approximately $300,000. The results from operations of the
 SecuriKey business were not significant during the year ended December 31,
 1997.

 In January 1998, the Company entered into agreements to lease equipment and
 software with future minimum lease payments totaling $1,093,165. The lease
 agreements are for periods ranging from two to three years.

 On January 8, 1998, the Company issued an unsecured note payable to an
 unrelated party in the amount of $400,000. Interest accrues at 10.0% and
 the note and related accrued interest are due September 30, 1998.

 Between March 17, 1998 and March 30, 1998, the Company issued 500,000
 shares of common stock at $2.00 per share in a private placement offering.
 (Unaudited).

 Subsequent to December 31, 1997, option holders exercised options to
 purchase 333,926 shares of common stock at exercise prices from $0.33 to
 $2.00 per share. (Unaudited).

                                      F-18
 <PAGE>