SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended March 31, 1999

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                         Commission File Number O-24742

                            U.S. Wireless Corporation
               (Exact name of Company as specified in its charter)

Delaware                                13-3704059
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
Incorporation or organization)

            2303 Camino Ramon, Suite 200, San Ramon, California 94583
                      (Address of principal exe (Zip Code)

                                 (925) 327-6200
                (Company's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
          Title of each className of each exchange on which registered

                                      NONE

                 Securities        registered  pursuant to Section  12(g) of the
                                   Act:

                          Common Stock, $.01 par value
                                (Title of Class)

     Check whether the Issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such  shorter  period  that  Company  was  required  to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days. Yes [X] No [ ]

     Check if no  disclosure  of  delinquent  filers in  response to Item 405 of
Regulation S-B is contained in this form,  and no disclosure  will be contained,
to  the  best  of  Company's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB [X].

     The  Company  had,  on a  consolidated  basis,  $40,000  in  revenues  from
operations during the fiscal year ended March 31, 1999.

     The aggregate market value of the voting stock (consisting of Common Stock,
par  value  $.01  per  share)  held by  non-affiliates  on  June  17,  1999  was
approximately  $34,858,426,  based upon the average closing bid and asked prices
for such Common Stock on said date ($3.94),  as reported by a market  maker.  On
such date, there were 14,110,613 shares of Company's Common Stock outstanding.

<PAGE>
                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

GENERAL

     U.S. Wireless Corporation (the "Company"),  headquartered in San Ramon, CA,
was  organized  in the State of  Delaware in February  1993.  In July 1996,  the
Company  changed its name to its present name,  distributed to its  stockholders
its prior business  operations and began its current  business  operations.  See
"-The Company" and "-History"

THE COMPANY

     The Company has  developed a  network-based  location  systems  designed to
enable wireless carriers and others to provide their customers with valued-added
location-based   services  and  applications,   including   enhanced  911,  live
navigation assistance, enhanced 411, asset and vehicle tracking, ITS systems and
network management systems.

     The  RadioCamera(TM)  system,  is a  geographic  location  ("geo-location")
system that  pinpoints the locations of mobile  telephone  subscribers  within a
wireless network. Using location fingerprinting,  ("Location  Fingerprinting" or
"LF"),  proprietary  technology developed by the Company, the RadioCamera system
measures  the radio  frequency  pattern or the phase  (i.e.,  the timing and the
amplitude  path) of all the radio  frequency  signals  from a caller to a single
cell site. The Company  believes that this  technology  has distinct  advantages
over the competing technologies that use triangulation or the global positioning
system ("GPS").

CORPORATE STRATEGY

     The Company intends to establish a leadership  position within the industry
by leveraging  the  technical,  market  timing,  and economic  advantages of its
RadioCamera  technology.  The Company is developing a business plan and strategy
to establish an efficient means of deploying the RadioCamera system.  Presently,
the Company is evaluating the possibility of designing, building and operating a
nationwide  location  network,   through  which  it  will  develop  and  promote
location-based  applications.  This anticipated shared network would accommodate
all  standards  and provide an  efficient  and uniform  networking  platform for
delivering location information to multiple users.

     The Company is working to quickly build upon the  promising  results of its
field trials and complete the  development  and  refinement  of the  RadioCamera
systems that support all  cellular/PCS  protocols.  The Company  intends to work
with wireless carriers,  information content providers, and equipment vendors on
a nationwide and  international  basis.  In addition to the  FCC-mandated  E-911
service  that  requires  precise  location  information,  there  are  additional
applications  that could  provide  considerable  value in the private and public
sectors. See "-Wireless Location Based Services Overview -Value Added Services."
The Company will seek to establish its leadership  position by contracting  with
strong  well-known  suppliers and hiring an  experienced  operations  management
team. Presently, the Company is assessing and evaluating the timing and resource
requirements necessary to implement this plan.

LOCATION FINGERPRINTING TECHNOLOGY

     The RadioCamera system utilizes a network-based architecture to operate the
Company's Location Fingerprinting technology,  which uses pattern recognition as
its  fundamental  principle  to  determine  location.   The  RadioCamera  system
identifies and  "fingerprints" the RF (radio frequency) pattern (multipath phase
and  amplitude  characteristics)  of an  operating  cellular  telephone or other
wireless  device.  It then compares the RF pattern  fingerprint to a database of
previously  identified  RF  fingerprints  and  their  corresponding   geographic
locations  within the  calibrated  network.  By matching the  fingerprint of the
caller's signal with the database of known fingerprints, the caller's geographic
location is identified.



                                       1
<PAGE>
     Since the Location Fingerprinting RadioCamera technology keys to radio wave
fronts,  as  opposed  to the  modulated  content  of  the  radio  waves,  the LF
technology is compatible with all leading analog and digital wireless standards.
See "-Research and  Development  Activities."  The  RadioCamera  system uses the
existing cellular  infrastructure,  not requiring modifications to the antennae,
base station  equipment  or user  handsets.  The process is not  computationally
burdened,  and the  database  is  sufficiently  small to be  encompassed  on the
equivalent of a desktop PC running Windows NT.

Research and Development Activities

     The Company has recently developed  modifications to its RadioCamera system
for the CDMA and iDEN standards,  in addition to the AMPS and TDMA systems.  The
Company plans to design and develop a GSM version of the RadioCamera in the near
future.  Currently,  the Company is continuing the development and refinement of
the RadioCamera system for all the above standards.

     The Company has developed an Internet services platform,  including various
APIs  (application  programming  interfaces)  and web  service  components  that
interface with the location  "cache," enabling the Company and potentially other
service vendors to build applications  using the Company's location  information
database. The Company's customers would be able to visually monitor,  locate and
track a group of subscribers,  using accurate  high-detail maps and exact street
address information;  anticipated  applications include personal safety, vehicle
tracking  (stolen  vehicles or commercial  trucking),  traffic  information  and
"yellow pages" informational services.

Testing and Evaluation

     The  Company is  currently  conducting  field  trials  within  the  Western
Wireless network in Billings,  Montana; within the Bell Atlantic Mobile wireless
network in Baltimore,  Maryland;  and in Company-operated test sites in Oakland,
California.  In  addition,  the Company is  scheduling a field trial of the iDEN
RadioCamera, within the Nextel network, to begin later this year.

     In April 1999,  the Billings,  Montana trial extended to a State of Montana
sponsored "end to end" evaluation of the RadioCamera's  functionality,  from the
location  of the caller,  to the  delivery of the  location  information  at the
Public Safety Answering Points or "PSAPs" (regional emergency call centers). The
system  identifies a caller's  phone number,  location  coordinates  and nearest
street address.  The information is sent to the  appropriate  PSAP,  where it is
displayed on an electronic  map at an operator's  workstation.  The  RadioCamera
continuously updates the location information,  allowing the PSAP to monitor the
caller's  location  throughout  the call.  The trial does not monitor  emergency
calls due to liability issues, and instead uses a substitute number to establish
the efficiency and reliability of the system.

     The commencement of the system's operation capped a five-month  cooperative
development effort involving the State of Montana, the local Billings 911 center
and seven  telecommunications  organizations.  Participants  in the field  trial
include  U.S.  Wireless  Corporation,  US  WEST  Corporation,   XYPOINT,  Nortel
Networks,  Western Wireless, Corp., Williams Communications Solutions, LLC., and
Combix Corporation.

RECENT DEVELOPMENTS

Private Placement

     Between March 1999 and May 1999, the Company  completed a private placement
aggregating  $6,405,000.  See "Certain  Relationships and Related Transactions -
1999 Private Placement."



                                       2
<PAGE>
Field Operations and Customer Trials

     In April 1999,  the  Billings,  Montana  trial  expanded to an "end to end"
evaluation of the  RadioCamera  system,  complete  with a backhaul  network that
interconnects  the RadioCameras  distributed at base stations to central offices
by means of a web-like  network,  linked with the Billings,  Montana  PSAP.  See
"Location Fingerprinting Technology - Testing and Evaluation."

     In August 1998 and September 1998, the Company entered into agreements with
GTE Wireless and Nextel Communications,  Inc.,  respectively,  to commence joint
testing and evaluation of the RadioCamera  system.  The Company has developed an
iDEN interface for the  RadioCamera  system and is preparing to commence a trial
within the Nextel network later this year.

Joint Venture Agreements

Allen Telecom

     In March 1999, the Company and Allen  Telecom,  Inc.  ("Allen")  executed a
memorandum of understanding  to form a joint venture,  enabling the companies to
offer an integrated  line of  geolocation  equipment and solutions  based on the
Company's RadioCamera and Allen's Geometrix(TM) Wireless Location systems. Allen
is  a  supplier  of  wireless   equipment   to  the  global   telecommunications
infrastructure market.

Anam Instruments, Inc.

     In July  1998,  the  Company  formed  a  joint  venture  company,  Wireless
Technologies,  Inc. ("WTI") with Anam Instruments, Inc. ("Anam") to manufacture,
market and  distribute the  RadioCamera  system and  location-based  services in
Asia.  In June 1999,  the Company  formed a foreign  subsidiary,  U.S.  Wireless
International,  Inc., to undertake the Company's international  operations.  The
Company has transferred its ownership in WTI to this subsidiary.

     Since its  establishment  in the 3rd  quarter of 1998,  WTI has focused its
efforts on the joint development of a commercial RadioCamera, which could handle
the AMPS, CDMA and TDMA standards.  The CDMA version of this tri-mode commercial
prototype is on track to be available for field  testing  later this year,  with
AMPS and TDMA  standards to follow  within this year.  It is estimated  that the
tri-mode  commercial model of the RadioCamera will be commercially  available in
the first quarter of 2000.  WTI has also focused its efforts on the  development
of market opportunities in Asia.

     WTI has received a commitment for a $5,000,000  equity  investment from the
HanKang  Restructuring  Fund,  a Korean  government-sponsored  fund  managed  by
Scudder Kemper Investment,  which WTI plans on consummation  within the next few
weeks. The subscription  agreement  enables the fund to put the shares purchased
back to the two major  stockholders  of WTI,  which  are Anam and the  Company's
international subsidiary, in the event certain circumstances are met.

Qualcomm Licensing

     In May 1999,  the Company  extended  its license  agreement  with  Qualcomm
Incorporated to March 31, 2000. This agreement  enables the Company to develop a
Code Division Multiple Access version of the RadioCamera System. In addition the
agreement  provides for an  additional  extension of the license until March 31,
2001, if there are no other CDMA location systems deployed in the United States,
prior to March 31, 2000.

WIRELESS COMMUNICATIONS INDUSTRY OVERVIEW

     There are approximately 75 million people using wireless  telephones in the
United States today,  and that number is expected to grow by the year 2000 to an
estimated  90  million,  with some  estimates  reaching  120  million  (Cellular
Telecommunications  Industry  Association,  March 1999),  with an estimated  200
million  worldwide.  To accommodate  the increased  consumer demand for wireless
services,  the  industry  has  aggressively  continued  its  buildup of wireless
infrastructure,  and  has  implemented  more  efficient  standards  and  digital
technologies  such as  TDMA,  CDMA,  GSM and  iDEN.  The  introduction  of these
standards  into the  market  has  additionally  served  as a  selling  point for
manufacturers and service  providers in the already extremely  competitive arena
of telecommunications.

                                       3
<PAGE>
     In the  increasingly  competitive  marketplace  for wireless  customers and
service,  the  emerging  market  for  value-added  services  based  on  location
represents a considerable  opportunity for wireless  carriers to enhance current
and future revenue streams. The growth in the demand for wireless communications
services  during the past decade has resulted in decreased  pricing for wireless
service,  a  favorable  regulatory  environment,  increasing  competition  among
service providers and a greater availability of wireless  value-added  services.
In  addition,  many  developing  countries  are  installing  wireless  telephone
networks as an  alternative to  installing,  expanding or upgrading  traditional
wireline networks.

Wireless Location-Based Services Overview

E-911

     As the  demand  for  wireless  service  increases,  so will  the  need  for
location-based  safety services like wireless  E-911.  According to Yankee Group
(Boston),  more than one quarter of all new wireless  customers  purchase  their
phones for security reasons. In 1997, over 30 million cellular calls were placed
to 911 emergency call centers across the United States. Yet, unlike calls placed
from wire-line telephones, calls are not traceable when a caller uses a wireless
phone  to call  for  emergency  assistance  (the  emergency  operator  does  not
automatically  know the location of the  caller).  In response to this and other
safety concerns,  the U.S. Federal  Communications  Commission  issued a mandate
requiring  wireless  service  providers  to have the ability to locate  wireless
calls for emergency assistance within certain parameters and time schedules. See
"- Government Regulations."

Government Regulations

     As a result of these and other safety issues,  the wireless  industry,  the
PSAPs and  members of the E-911  community  and the FCC began  joint  efforts in
mid-1994 to solve the  technological  and policy  hurdles in providing  location
information  for wireless 911 calls.  In June 1996,  the FCC issued a Report and
Order in  Docket  94-102,  formalizing  certain  performance  requirements,  and
implementing a schedule for wireless service providers to establish  geolocation
capabilities.  In so doing,  the FCC ordered that the deployment and integration
of wireless E-911 features and functions be  accomplished  in two: (i) the first
phase  requires  wireless  service  providers to report the callback  number and
originating cell site and/or sector of a 911 call to PSAP operators. Pursuant to
the mandate,  commencing  in October  1997,  the service  provider must commence
providing such  information to qualified  requesting  PSAPs within six months of
the PSAP's  request.  Service  providers  have commenced the  implementation  of
products in order to meet this  requirement  and (ii) the second phase  requires
wireless  service  providers to pinpoint and report to the PSAPs the location of
all 911 callers  with an accuracy of 125 meters in 67% of all cases,  using root
mean square techniques.  The FCC has mandated  completion of Phase II by October
1, 2001. In December 1998, the FCC's Wireless Telecommunications Bureau released
a public  notice  outlining a filing  schedule  for  requests for waivers of the
Phase II E-911  requirements.  Various wireless carriers have submitted requests
for waivers, and various other parties have subsequently filed comments with the
FCC regarding the question of waivers. The issue of waivers and/or modifications
of the E-911 Phase II  requirements  is being  reviewed by the FCC in an ongoing
public forum. To date, the FCC has not granted any waivers of the Phase II E-911
conditions, nor has it made any modifications to the mandate.

Value-Added Applications

     To date,  there are limited  products and services  offered  which  provide
location  information.  These existing  systems are typically used for asset and
vehicle  location and require bulky and costly equipment to be installed in each
vehicle being located.  The architecture of the Company's  RadioCamera System is
designed  to  eliminate  the  need for  additional  equipment  purchases  by the
consumer,  enabling  all  wireless  phone users the  ability to access  location
information in networks where the RadioCamera System i operating.



                                       4
<PAGE>
     Anticipated value-added  applications include enhanced 411 (caller-location
based information services), asset tracking, vehicle location,  personal safety,
roadway  and  highway  management  ("ITS"),  data base  management  and  network
management.  Once deployed,  the Company  anticipates that value-added  services
facilitated  by  location-sensitive  applications  have the potential to further
expand the market for wireless  communications  by allowing service providers to
increase revenue-generating traffic on their networks.

Intellectual Property

     The  Company  believes  its  most  significant  asset  is its  intellectual
property.  The  Company  has filed 14 patent  applications  and has  received  a
"notice of  allowance"  from the Patent  and  trademark  office as to two of its
principal patents.

     The  Company  relies  on a  registered  common  law  trademark  for  use of
"RadioCamera".  There can be no assurance  that such  trademark,  as registered,
will adequately be protected against infringement. In the event the Company were
to become engaged in litigation, either as a result of a claimed infringement by
the Company or as a result of  infringement  by a third  party on the  Company's
technology  or  trademarks,  there can be no assurance  that the Company will be
able to fund such litigation or, if able to do so, that it will prevail.

Competition

     Companies  competing  for  market  share  in the  wireless  caller-location
industry  are  typically   divided  into  two  categories:   those  that  employ
handset-based  techniques,  and  those  that  employ  network-based  techniques.
Handset-based techniques rely on the integration of Global Positioning Satellite
("GPS") system receivers into the wireless handsets. Network-based techniques do
not rely on the addition of any dedicated equipment to the handset,  but operate
entirely from the wireless  network  infrastructure.  The Company's  RadioCamera
system falls into the category of network-based solutions.

     Competing  network-based  systems rely on triangulation  techniques such as
Angle of Arrival ("AOA") and Time Difference of Arrival ("TDOA").  The Company's
RadioCamera  system  architecture does not rely on  triangulation.  Both AOA and
TDOA systems require multiple base stations or points of reference from which to
triangulate,  and both systems are at a disadvantage in urban environments where
there are rarely  direct lines of sight  between a wireless  caller and multiple
base  stations.  Due to the  lack of line o  sight,  the  subscribers'  wireless
transmissions  bounce off of buildings  and other  obstacles,  reaching the base
station antennas via multiple paths.

     Companies  investigating the GPS handset-based  method propose  integrating
GPS receivers into wireless handsets.  By receiving  transmissions from multiple
orbiting  satellites,  GPS units also use triangulation  techniques to establish
location, and are also challenged in environments such as "urban canyons," where
line  of  sight  to  the  multiple  satellites  is  blocked.  Additionally,  GPS
-integrated  handsets are not currently  commercially  available.  Adding GPS to
handsets may create larger,  heavier, more expensive phones with shorter battery
life.  Additionally,  GPS will require  retrofitting  or replacing  the wireless
phones  currently  owned by over 75 million  wireless  subscribers  makes GPS an
unlikely near-term solution to the FCC's E-911 Mandate.

History

     Prior to July 1996, the Company was a holding company, owning a controlling
interest in a retailer of children's  toys and hobby items. In October 1996, the
Company filed an amendment to its certificate of incorporation changing its name
from American Toys, Inc. to U.S. Wireless Corporation. With its name change, its
trading  symbol was changed from "ATOY" to "USWC." In August  1996,  pursuant to
the  authorization  of the  Company's  Board of Directors and the consent of its
then  majority  stockholder,  the Compan  distributed  its  ownership of the toy
company to its stockholders,  thereby divesting itself entirely of its ownership
interest therein. In accordance with the change in operations of the Company, in
July 1996 the Company acquired a controlling interest in Labyrinth Communication
Technologies,  Inc.  ("Labyrinth")  and Mantra  Technologies,  Inc.  ("Mantra").
Labyrinth had originally been formed as the research and development arm for the
RadioCamera system.



                                       5
<PAGE>
Consolidation of Labyrinth Communication Technologies Group, Inc.

     In March 1998,  the Company  consummated  the merger of Labyrinth  with and
into the Company,  pursuant to its December 1997 stockholders  meeting, at which
time the  stockholders  approved a  proposal  to acquire  the  remaining  49% of
Labyrinth in exchange for an  aggregate  of  4,498,200  shares of the  Company's
Common Stock.  The issuance of the shares was, and still is subject to a vesting
schedule,  as follows: (i) 20% of the shares issued vest one year from issuance;
(ii) an additional 40% vest upon the successful  completion and operation of the
RadioCamera in its first major market; and (iii) the remaining 40% vest when the
Company reaches sales of $15,000,000. In addition to the above vesting schedule,
the former management of Labyrinth is subject to an additional vesting schedule,
in accordance with their employment  contracts and restricted share  agreements,
as amended,  whereby the shares  underlying  (i)-(iii) above vest at the rate of
1/3 each year. To date the (i) and (ii) milestones have been met and all members
of management have vested 2/3 of the shares attributed to those milestones.

Restructuring of Mantra Technologies, Inc.

     In  February   1999,  the  Company's   board  of  directors   approved  the
restructuring  of Mantra  Technologies,  Inc.  ("Mantra")  to enable it to raise
capital  for  operations,  to  provide  management  incentives  and gain its own
identity as a company.  As  described  in the below  business  description,  See
("Business of Mantra Technologies,  Inc."), the management of Mantra has created
an  innovative  technology  and business  model,  and has generated  sales.  The
restructuring  was  designed to  separate  Mantra from the Company to enable its
growth  and  to  facilitate  additional  investment.  In the  restructuring  the
management  team of Mantra  were  issued  33% of  Mantra's  outstanding  shares,
subject to a vesting  schedule,  whereby 1/3 were vested  upon  issuance  and an
additional 1/3 vesting upon each of Mantra reaching $1,000,000 and $3,000,000 in
revenues.

     In accordance with the  recapitalization of Mantra, Dr. Hilsenrath resigned
as president and David Huffman was elected  president of Mantra and appointed to
the board of directors, with Dr. Hilsenrath remaining Chairman of the Board. The
Company's and Dr. Hilsenrath's,  (as founder) ownership in Mantra decreased from
51%  and  39%,  respectively,  to  34%  and  26%,  respectively.   See  "Certain
Relationships   and   Related   Transactions   -  Mantra   Technologies,   Inc.,
Restructuring."

Employees

     As  of  June  1,  1999,  the  Company  employed  40  full-time   employees.
Approximately seventeen of these employees are involved in engineering,  ten are
lab technicians and field operations  personnel,  five in business  development,
two are  executive  officers  and six are in  support  functions.  To date,  the
Company believes it has been successful in attracting and retaining  skilled and
motivated individuals.  The Company's success will depend in large part upon its
ability to continue to attract and retain qualified  employees.  The Company has
never  experienced  a work  stoppage  and its  employees  are not  covered  by a
collective bargaining agreement. The Company believes that it has good relations
with its employees.

RISK FACTORS

     Development  Stage Company;  No Revenues from Operations.  The Company is a
development  stage company with no revenues from  operations.  Its activities to
date have consisted of its  formation,  obtaining  financing,  and the research,
development,   and   testing  of  the   Company's   RadioCamera   and   Location
Fingerprinting  technology.  The Company's  operations are subject to all of the
risks inherent in the  establishment  and development of a business  enterprise,
including the absence of a substantial  operating history. The likelihood of the
success of the Company must be considered  in light of the  problems,  expenses,
difficulties,  complications,  and delays  frequently  encountered in connection
with  a  developing  and  expanding  stage  business  and  the  competitive  and
unexplored environment in which the Company anticipates  operating.  The Company
has not deployed a fully  commercial  system to date. There can be no assurances
that any of the Company's product lines will be profitably  produced,  marketed,
and/or  operated,  or that the  Company  will be able to attract  and retain the
management and skilled  employees  needed.  Further,  there can be no assurances
that  the  Company's  management  will  be able to  successfully  implement  its
business plan.



                                       6
<PAGE>
     Emerging Market for Location  Technologies:  Market Uncertainty.  Presently
there is a limited market for  location-based  technologies  within the wireless
industry.  With the FCC mandate  requiring  geolocation of cellular  subscribers
dialing  911,  there is the  planned  emergence  of a market for  location-based
technologies  for  wireless  systems.  There can be no  assurances  that the FCC
mandate will not be revised or amended,  delaying or  eliminating  the necessity
for geolocation  information.  In addition, there can b no assurances that there
will develop additional applications and offerings of value-added services based
upon location-based information. Recently the FCC issued a notice for discussion
indicating  that it was  considering  granting  waivers to cellular  carriers in
order to allow time for technologies to be implemented. The Company is therefore
developing a product and  technology for which there is no clear market size and
no assurances  as to when and if one will develop.  The success of the Company's
produc lines,  if any,  shall be  contingent  on their  acceptance in the market
place.  Though the Company may be successful in  developing  its product  lines,
there can be no assurances that  competitors will not produce products which are
either  technically  superior,  price  cost-effective,  or that  which  make the
Company's  products  obsolete.  The lack of acceptance of the Company's  product
lines in the marketplace would have an adverse effect on its operations.

     Development of Business; Need for Additional Financing. The Company has not
generated any operating revenues to date and can not accurately predict when and
if  substantial  revenues will be generated,  therefore,  its cost of operations
shall  continue to be borne solely from its  financing  activities.  The Company
will require  additional  capital for  operations to implement its business plan
and corporate  strategy of deploying a nationwide  system.  The Company may also
seek  additional  funding  if  the  operating  timetable  for  the  development,
manufacturing,  marketing,  and  sales of its  products  are  unable to meet the
Company's  costs of  operations.  The  primary  expense  of the  Company  is the
salaries of its employees.  The Company's  limited  resources in addition to its
anticipated  continuation of its research,  development and testing  operations,
may cause significant strain on the Company's management,  technical, financial,
and other  resources.  To manage its  development,  the Company must continue to
improve and expand its existing resources and management information systems and
must attract,  train, and motivate qualified  technical,  management and general
personnel.   There  can  be  no  assurance,   however,  that  the  Company  will
successfully be able to achieve these goals.

     Rapid Technological  Change. The wireless  communications and informational
services industries are subject to rapid technological  change.  There can be no
assurances  that the  Company  will be able to keep pace with the  technological
developments  in the  telecommunication  industry or to  implement or change its
product lines to meet new demands within the industry.  Competitors with greater
resources  may develop  products  and/or  technologies  superior to or more cost
effective than those marketed by the Company.

Business of Mantra Technologies, Inc.

General

     Mantra  Technologies,  Inc. was founded by Dr.  Oliver  Hilsenrath  in July
1996, as an Internet services company dedicated to the improvement of the user's
Internet  browsing  experience.  Mantra now provides  advanced  functionality to
major web services in the areas of:

     Personalization  - helping web services  develop a one-to-one  relationship
with their customers.

     Automated  categorization  - helping  directories and content sites improve
quality, efficiency and timeliness.

     Advanced browsing - providing powerful  next-generation forms of navigation
on our customers' websites.

     User profiling for ad targeting, content targeting and community building.



                                       7
<PAGE>
     These services are enabled by a unique,  patented  technology that provides
industry-leading  precision  and  recall  in a  small  footprint,  low  resource
requirement package, with little or no training required.

Industry Overview

     Traditional navigation capabilities such as keyword search, manually edited
page layouts and editorial  webguides are increasingly  insufficient as the size
and  complexity  of the web  grows.  Mantra  is  well-positioned  with  powerful
technology and focus in outsourcing  innovative  navigation  services.We believe
this emerging niche will develop rapidly as three major trends continue to drive
demand for our services:

     The growth in the size of the  Internet  will drive the need for better web
navigation.  competition  for users among web  services  will drive the need for
differentiation.  the increasing  sophistication  of web services will drive the
propensity for outsourcing advanced service components such as Mantra's.

Context Synthesistm

     Mantra's  offerings  are based upon Context  Synthesistm,  a patented  text
analysis engine designed and developed by Mantra.  The engine is able to extract
areas of interest from one or more web pages, web sites or set of web sites, and
compare  these  to  extractions  from  other  sources  ranging  from  databases,
directories,  the Internet or enterprise  intranets.  Applications  can focus on
interactive or non-real time  applications  for end users or content  management
applications for major destination, search and directory sites.

     Context  Synthesistm is remarkable in the area of text analysis  because of
its very high  precision and recall,  extremely  small  footprint and ability to
perform with little or no pre-training on the body of source documents.

Current Activity

     Mantra has  agreements  with two major web services for  deployment  of its
technology.  Mantra  is  providing  an  automated  categorization  platform  for
LookSmart,  a  leading  web  directory  which  provides  its  directory  to MSN,
AltaVista,  @Home and over 200 ISP's worldwide.  Mantra is also deploying an end
user  web  monitoring  for  Portivity,   a  supplier  of  customer  relationship
management services.

ITEM 2.           DESCRIPTION OF PROPERTY

     The Company  entered in to a building  lease  agreement  ("the Lease") with
Annabel Investment Company, a California partnership, for the lease of executive
office  space at 2303 Camino  Ramon,  Suite 200,  San Ramon,  California  94583,
commencing December 1997. The Company maintains approximately 12,000 square feet
of executive office space at a total cost of  approximately  $250,000 per annum.
The Lease,  effective for a term of five (5) years,  continues  through  January
2002. The Company also leases six rooftop testing facilities,  three in Oakland,
California, and three in Baltimore, Maryland, for each of which it pays $500 per
month.  All six leases are  terminable  by either party at any time upon notice.
The  Company  also leases  approximately  1,120  square feet of office  space in
Jessup,  Maryland at a total cost of approximately  $14,000 per annum. The lease
commenced in September 1998 and is effective for a term of one year. The Company
believes  these  existing  facilities are adequate to meet its current needs and
that suitable  additional or alternative space will be available on commercially
reasonable terms as needed.

ITEM 3.           LEGAL PROCEEDINGS

     The Company is not a party to any material  litigation  and is not aware of
any  threatened  litigation  that would have a  material  adverse  effect on its
business.



                                       8
<PAGE>
ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     January 22, 1999 Annual Meeting

     On  January  22,  1999,   the  Company  held  an  annual   meeting  of  its
stockholders,  during which the stockholders  elected four (4) persons nominated
by the Board of Directors to serve as Directors until the next annual meeting of
stockholders and until their  respective  successors shall have been elected and
shall have qualified. The voting tabulations regarding the election of Directors
were as follows:

<TABLE>
<CAPTION>
                                                     Votes Cast            Withhold
                  Nominees                              For           Authority to Vote

<S>                                                  <C>                        <C>
                  Dr. Oliver Hilsenrath              8,778,631                  1,550
                  David Tamir                        8,778,631                  1,550
                  Barry West                         8,778,631                  1,550
                  Dennis Francis                     8,778,631                  1,550
</TABLE>

April 5, 1999 Special Meeting

     On April 5, 1999, the Company held a special  meeting of its  stockholders,
during which the stockholders  approved the proposal  authorizing the Company to
issue up to an aggregate of 10 million  shares of the  Company's  Common  Stock,
through either the sale of shares of Common Stock or shares of Preferred  Stock,
which shares are convertible  into shares of Common Stock at a fixed price.  See
Item 5. Market for Common Equity and Related  Stockholder Matters - 1999 Private
Placement." The voting tabulations regarding the proposal were as follows:
<TABLE>
<CAPTION>

                               Votes Cast                Votes Cast
                                  For                     Against                    Abstain
<S>                             <C>                       <C>                         <C>
                                7,223,371                 3,315,005                   8,200


</TABLE>

<PAGE>
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  Common Stock is quoted on the SmallCap  Market of the Nasdaq
Stock Market. The following table sets forth representative high and low closing
prices for the Common Stock as reported by the market  makers for the  Company's
Securities  during the period from April 1, 1997 through June 15, 1999.  Closing
prices  reflect  prices  between  dealers,   do  not  include  resale  mark-ups,
mark-downs,  or other  fees or  commissions,  and do not  necessarily  represent
actual transactions. <TABLE> <CAPTION>


                                  Common Stock

Calendar Period                             Low                           High

        1997
<S>                                         <C>                           <C>
03/31/97-  06/30/97                         3 1/2                         4 3/4
07/01/97 - 09/30/97                         3 9/16                        4 1/8
10/01/97 - 12/31/97                         2 3/4                         4 13/32

        1998
        ----
01/01/98 - 03/31/98                         2 1/2                         3 7/8
04/01/98 - 06/30/98                         2 11/32                       3 5/8
07/01/97 - 09/30/97                         1 1/2                         2 31/32
10/01/97 - 12/31/97                         31/32                         1 7/16

        1999
        ----
01/01/99 - 03/31/99                         1 1/16                        2 1/16
04/01/99 - 06/1/99                          1 9/16                        4 27/32
</TABLE>


     As of June 15,  1999,  there  were 82  holders  of record of the  Company's
Common Stock,  although the Company believes that there are approximately  1,500
additional  beneficial  owners of shares of Common Stock held in street name. As
of June 15, 1999,  there were  14,110,613  shares of the Company's  Common Stock
outstanding.

1999 Private Placement

     In March 1999, the Company  commenced an  undertaking  to raise  additional
capital in a private  placement  offering of its securities.  In April 1999, the
Company received stockholders approval for the offering (See "Item 4. Submission
of Matters to a Vote of Security Holders") and completed the private offering of
its securities, in which the Company raised gross proceeds of $6,000,000 through
the sale of 60,000  shares of the  Company's  newly  created  Series B Preferred
Stock. In addition,  the Company  offered its officers,  directors and employees
the right to purchase an  aggregate  of 405,000  shares of Common Stock at $1.00
per share.  All shares were  subscribed.  Employees had the right to pay for the
shares through a two month salary deduction.

     Holders of the  Series B  Preferred  Stock  have the right to convert  each
share into 100 shares of the Company's Common Stock, at any time,  commencing 90
days from  issuance.  However,  if  conversion  is  elected  within 12 months of
issuance,  each share of Series B Preferred  Stock is  convertible  into only 67
shares of Common Stock. Additionally, there is a mandatory conversion provision,
commencing  12 months from  issuance if the closing  price for a share of Common
Stock has been $5.00 or more for 30  consecutive  trading  days.  Holders of the
Series B Preferred  Stock have the right,  as a separate  voting group, to elect
one member to the  Company's  Board of  Directors  until such time as one of the
following events occurs:  (i) when 50% of the shares of Series B Preferred Stock
have  been  voluntarily  converted  into  Common  Stock  or (ii) if a  mandatory
conversion of the shares of Series B Preferred Stock occurs, an aggregate of 50%
of the total number of shares of Common Stock  issued upon  conversion,  whether
voluntary  or  mandatory,  have been  resold.  The holders of Series B Preferred
Stock  also have the right to vote on (i) the  issuance  of any stock that ranks
senior to or on parity with the Series B Preferred  Stock and (ii) any change in
terms of the  Series B  Preferred  Stock.  The  Series B  Preferred  Stock has a
liquidation preference of $100 per share.

                                       9
<PAGE>
     The Company agreed to file a registration  statement to register the shares
of Common Stock  underlying  the Series B Preferred  Stock within 90 days of the
Company's  April 5, 1999 special  meeting of  stockholders.  The proceeds of the
offering will be used for general working capital.

ITEM 6.           PLAN OF OPERATION

Capital Resources

     As of March 31, 1999,  the Company had working  capital of  $7,779,210  and
cash and cash equivalents of $5,788,288.  Such amounts  resulted  primarily from
sales of the  Company's  securities in its 1998 private  placement  offering and
$2,700,000 from its 1999 private placement.  In its 1999 private placement,  the
Company raised an aggregate of $6,405,000. During the year ended March 31, 1999,
the  Company  earned  revenues  of $40,000  in  connection  with the  license of
software by its subsidiary Mantra Technologies, Inc.

     During the year ended March 31, 1999, the Company raised approximately $7.8
million of cash in private placements of equity and debt securities. The Company
made  investments  of $400,000 in a joint  venture  and  $242,000 in  equipment.
Although the Company  incurred a net loss of $7.2 million  during the year ended
March 31, 1999,  such amount includes  non-cash  charges of  approximately  $2.2
million  related  to  the  Labyrinth  consolidation,  $565,000  of  stock  based
compensation,  $341,000 of equity losses related to a joint venture and $260,000
of depreciation  expense.  As result of the above, the Company experienced a net
increase in cash of  approximately  $3.5 million during the year ended March 31,
1999.

     Based on  management's  estimates,  the  Company's  capital  resources  are
expected  to meet cash  requirements  through  at least  March 31,  2000 for the
continuation of the Company's research,  development and field trial operations.
The Company will require  additional  capital in order to implement its business
strategy of rolling out a  nationwide  network of the  RadioCamera  system.  The
Company  is  assessing  and  evaluating  the timing  and  resource  requirements
necessary  to  implement  this  plan.  Additionally,  the Compan  continues  the
development  of an  internet  services  platform  that will  interface  with the
nationwide location "caches" enabling the Company and other vendors to build and
offer applications based on location sensitive applications.

     The Company is presently  engaged in the testing of its AMPS, TDMA CDMA and
iDEN  RadioCamera  systems.  Further,  the Company is conducting field trials in
several major cities for its RadioCamera  System and the Company is scheduled to
build  additional  field trial  operations  during the balance of this year.  In
addition,  the Company is  developing an internet  services  platform that would
allow  potential  customers  to  visually  monitor,  locate and track a group of
subscribers.

     Notwithstanding  the Company's  strategy of building a nationwide  network,
which will require  financing,  management does not expect that the Company will
be required to purchase  significant  equipment or expect significant changes in
the number of Company  employees during the next twelve months. In the event the
Company  undertakes  the deployment of a nationwide  network,  it will require a
significant  number of new employees as well as consulting,  manufacturing,  and
other services.

     If the Company's timetable for developing, marketing, and manufacturing the
RadioCamera  exceeds  current  estimates,  the Company  may  require  additional
capital resources.  The primary continuing  expenses associated with the testing
and development of the RadioCamera are expected to include officer, key employee
and consultant salaries.



                                       10
<PAGE>
Recently Issued Accounting Standards

     In June 1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income." This statement  establishes  standards for the reporting
and display of  comprehensive  income and its  components  (revenues,  expenses,
gains and losses) in an entity's financial  statements.  This statement requires
and entity to classify items of other comprehensive  income by their nature in a
financial  statement and display the accumulated  balance of other comprehensive
income separately from retained earnings and additional  paid-in-capital  in the
equity section of a statement of financial position. This statement is effective
for fiscal years  beginning  after  December 15, 1997.  In  accordance  with the
provisions of this  statement,  the Company did not adopt SFAS No. 130 in fiscal
year 1999, as the Company has no items of other comprehensive income. Management
does not expect this statement to significantly  impact the Company's  financial
statements


     statement  requires public  enterprises to report financial and descriptive
information about its reportable  operating  segments and establishes  standards
for related disclosures about product and services,  geographic areas, and major
customers. This statement is effective for fiscal years beginning after December
15, 1997. At the present time,  the Company's two operating  segments,  wireless
location-based services and software and internet development, are not monitored
separately for internal financial reporting purposes. Management does not expect
this statement to significantly impact the Company's financial statements.

Year 2000

     The  Company  does not  believe  that the impact of the year 2000  computer
issue will have a significant  impact on its  operations or financial  position.
Furthermore,  the  Company  does  not  believe  that  it  will  be  required  to
significantly  modify its internal computer systems or products  currently under
development.  However,  if  internal  systems do not  correctly  recognize  date
information  when the year changes to 2000,  there could be an adverse impact on
the Company's  operations.  Furthermore,  there can be no assurance that another
entity's failure to ensure year 2000 capability would not have an adverse effect
on the Company.

ITEM 7.

         See attached financial statements.


ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                  ON ACCOUNTING AND FINANCIAL DISCLOSURE

         Not Applicable.




<PAGE>
                                    PART III

ITEM 9.           DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND
                  CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
                  OF THE EXCHANGE ACT


Executive Officers and Directors

     The Executive Officers and Directors of the Company are as follows:

<TABLE>
<CAPTION>
         NAME                               AGE               POSITION

<S>                                         <C>               <C>
         Dr. Oliver Hilsenrath (1) (2)      42                President, Chief Executive
                                                              Officer and Director

         David Klarman                      34                Vice President, General
                                                              Counsel, Secretary, and Treasurer

         Dennis Francis (2)                 48                Director

         David Tamir(1)                     55                Director

         Barry West(2)                      54                Director

         Irwin Gross (1) (3)                55                Director
</TABLE>

     (1) Member of Audit Committee

     (2) Member of Compensation Committee.

     (3) On April 6, 1999,  the  holders  of the  Company's  Series B  Preferred
Stock,  elected,  via unanimous written consent,  Irwin Gross to be the Series B
Preferred  Stock  elected  director.  See "Item 5. Market for Common  Equity and
Related Stockholder Matters - 1999 Private Placement."

     Dr. Oliver Hilsenrath has served as President,  Chief Executive Officer and
Director of the Company since July 31, 1996. Since its inception, Dr. Hilsenrath
was a co-founder  and served from 1992 through 1996 as Senior Vice  President of
Technology of Geotek  Communications,  Inc. Prior to that, Dr. Hilsenrath served
as Chief Engineer of the secure communications  division of RAFAEL,  Israel. Dr.
Hilsenrath   received  his  Ph.D.   in   information   theory  from  Technion  -
Polytechnical  Institute of Israel and has worked in the wireless communications
industry for 20 years.

     David S. Klarman has served as General Counsel and Secretary of the Company
since  September  1996.  He was elected  Vice  President  in December  1997.  In
September 1996, Mr. Klarman formed Klarman & Associates, a law firm specializing
in corporate and securities  law. From July 1994 to August 1996, Mr. Klarman was
an associate with Lampert & Lampert,  a law firm  specializing  in corporate and
securities  law in New York,  New York.  From  February  1991 to July 1994,  Mr.
Klarman  was  an  associate  with  Goldstein,  Axelro  &  DiGioia,  a  law  firm
specializing  in corporate and securities law in New York, New York. Mr. Klarman
holds a Juris Doctorate from Yeshiva  University,  Benjamin N. Cardozo School of
Law and a B.S. in Finance from the University of Maryland.

     Barry West has served as a Director  of the Company  since May 1998.  Since
March 1996, Mr. West has served as Vice President and Chief  Technology  Officer
of Nextel Communications,  Inc. Prior to that, Mr. West served in various senior
positions with British Telecom for more than thirty-five years, most recently as
Director of Value-Added  Services and Corporate Marketing at Cellnet, a cellular
communications subsidiary of British Telecom.

                                       11
<PAGE>
     Dennis  Francis  was  elected  to the  Company's  Board in  December  1997.
Previously,  from  December  1996,  he served as a  consultant  to the  Company,
providing technical support services. Mr. Francis has served for over five years
as Executive Vice President and Chief  Technology  Officer of Vanguard  Cellular
Systems,  Inc., a cellular  communications  service provider. Mr. Francis is the
current chairman of the Nortel Technology Officers Council and has served on the
Chief Technology  Officers Council of the Cellular  Telecommunications  Industry
Association for four years.  Mr. Francis  graduated from the University of Texas
at Arlington, Texas with a B.S. in Industrial Engineering.

     David  Tamir has served as a Director  of the Company  since  August  1996.
Since April 1996,  Mr. Tamir has been the  President and CEO of  Nanomotion,  an
Israeli-based company that has developed piezo ceramic, ultra-sonic motors. From
July 1992 to January  1996,  Mr.  Tamir was  General  Manager of Power  Spectrum
Technologies Limited, a subsidiary of Geotek  Communications,  Inc. From 1990 to
1992,  Mr.  Tamir  was a  representative  of RAFAEL  (the  Israeli  Ministry  of
Defense),  in  Washington  D. C. Mr. Tamir holds BS and MS degrees in Electrical
Engineering from Technion - Polytechnical  Institute of Israel and an MBA degree
from The Hebrew University, in Jerusalem.

     Irwin Gross was elected on April 6, 1999 by  unanimous  written  consent of
the  stockholders of the Company's  Series B Preferred Stock to be the Company's
Series B  Preferred  Stock  elected  Director.  Mr.  Gross  has  served as Chief
Executive  Officer and Chairman of the Board of Directors of Interactive  Flight
Technologies,  Inc.  since  September  1998.  He was the  founder and had been a
director of ICC  Technologies,  Inc, which designs  innovative  climate  control
systems,  from May 1984 until July 1998.  In 1998 ICC  Technologies  merged with
Rare Medium Inc.,  an internet  services  company.  Mr.  Gross is currently  the
Chairman  of the Board of The  Network  Connection  and a member of the Board of
Orbit R/F. In addition,  Mr. Gross had served as the Chief Executive  Officer of
an ICC from February 1994 to February  1998.  Mr. Gross also serves on the board
of directors of several  charitable  organizations.  Mr. Gross has a Bachelor of
Science degree in Accounting  from Temple  University and a Juris Doctorate from
Villanova University.

     All Directors,  with the exception of the Series B Preferred  Stock elected
director,  hold office until the next annual  meeting of  stockholders  or until
their  successors  are duly  elected and  qualified.  Vacancies  on the Board of
Directors  may be  filled  by the  remaining  Directors.  Officers  are  elected
annually by, and serve at the discretion of, the Board of Directors.

     As permitted under Delaware  Corporation Law, the Company's  certificate of
incorporation  eliminates the personal liability of the Directors to the Company
or any of  its  stockholders  for  damages  resulting  from  breaches  of  their
fiduciary  duty as Directors.  As a result of the  inclusion of such  provision,
stockholders  may be unable to recover  damages  against  Directors  for actions
taken by them,  which  constitute  negligence or gross negligence or that are in
violation of their  fiduciary  duties.  The  inclusion of this  provision in the
Company's  certificate of incorporation  may reduce the likelihood of derivative
litigation  against  Directors  and other types of  stockholder  litigation.  In
addition, the Company has executed indemnification  agreements with all officers
and directors providing indemnification to the fullest extent of the law.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's  Officers,  Directors,  and persons who beneficially own more than
ten percent of a registered  class of the  Company's  equity  securities to file
reports  of  securities  ownership  and  changes  in  such  ownership  with  the
Securities and Exchange Commission  ("SEC").  Officers,  Directors,  and greater
than ten percent beneficial owners also are required by rules promulgated by the
SEC to furnish  the Company  with  copies of all Section  16(a) forms they file.
Based solely upon requests for information of the Company's Officers, Directors,
and greater than ten percent  stockholders,  during fiscal 1999, the Company has
been  informed  that all  Officers,  Directors,  or  greater  than  ten  percent
stockholders  have filed such reports as are required pursuant to Section 16(a).
The  Company  has no basis to  believe  that any  required  filing by any of the
above-indicated  individuals  has not  been  made.  <PAGE>  ITEM  10.  EXECUTIVE
COMPENSATION

Summary of Cash and Certain Other Compensation

     The following provides certain information concerning all Plan and Non-Plan
(as  defined in Item 402 (a)(ii) of  Regulation  S-B)  compensation  awarded to,
earned by, or paid by the Company  during the year ended March 31,  1999,  1998,
and 1997 to each of the named Executive Officers of the Company.
<TABLE>
<CAPTION>

                           Summary Compensation Table

                               Annual Compensation

                  (a)                        (b)                (c)                 (d)               (e)                (f)
          Name and Principal              Year (1)          Salary ($)           Bonus ($)       Options/ SARS      Other Annual
               Position                                                                                             Compensation

<S>                                         <C>               <C>                    <C>            <C>               <C>
Dr. Oliver Hilsenrath                       1999              160,000                -                 -              $1,620(5)
President and                               1998              160,000                -                 -              $1,620(5)
Chief Executive Officer                     1997              106,667(2)             -              1,500,000(3)      $5,572(4)

David Klarman                               1999              120,000                -                 -                  -
Vice President,                             1998              120,000                -                100,000             -
General Counsel and Secretary               1997               70,000(2)             -                150,000 (6)         -

Dr. Mati Wax                                1999              100,000                -                 -              20,000(8)
Former Chief Technology Officer(7)          1998              100,000                -                 -              20,000(8)
                                            1997               66,667(2)             -                100,000 (6)         -

Abraham Bar                                 1999              110,000                -                 -                  -
Vice President                              1998              102,500                -                 -                  -
of Hardware                                 1997              60,000(2)              -                100,000(6)          -

Ravi Rajapakse                              1999              110,000                -                 -                  -
Vice President                              1998              100,000                -                 -                  -
of Software Design                          1997               30,000 (2)            -                100,000(6)          -
</TABLE>

     (1) No  compensation  was paid to any officer of the Company  prior to July
31, 1996. Reflects the portion of the year worked.

     (2) Pursuant to his employment agreement, Dr. Hilsenrath received an option
to purchase  1,500,000  shares of Common Stock.  See  "Employment and Consulting
Agreements." Includes (i) the payment of $509 per month for automobile allowance
and (ii) the payment of approximately $1,500 for a life insurance and disability
policy for the benefit of Dr.  Hilsenrath's  beneficiaries.  See "Employment and
Consulting  Agreements."Represents  the  payment  of $1,620 per annum for a life
insurance   and   disability   policy  for  the  benefit  of  Dr.   Hilsenrath's
beneficiaries.  See  "Employment and Consulting  Agreements."  Pursuant to their
employment agreements, Dr. Wax, Mr. Klarman, Mr. Bar, and Mr. Rajapakse received
options to purchase 100,000, 150,000, 100,000 and 100,000, respectively,  shares
of Common Stock,  vesting over the term of their initial employment  agreements,
1/3 each year. See "Employment and Consulting Agreements." In June 1999, Dr. Wax
relinquished  his  position  as the  Company's  Chief  Technology  Officer.  See
"Employment and Consulting  Agreements."  Dr. Wax received a travel allowance of
approximately $20,000 per annum.

<PAGE>
               AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>



(a)                             (b)                  (c)                    (d)                      (e)

                                                                                                         Value of
                                                                            Number of                    Unexercised
                                                                            Unexercised Options/SARs     In-The-Money)Options/SARs
                                                                            Exercisable/                 at FY-End ($)
                                Shares Acquired on                          Unexercisable                Exercisable/
                                Exercise (#)         Value Realized ($)                                  Unexercisable (1)
Name
<S>                                   <C>                    <C>            <C>                                   <C>
Dr. Oliver Hilsenrath                 -                      -              1,500,000/0                           0/0

David Klarman                         -                      -              200,000/50,000                        0/0

Dr. Mati Wax                          -                      -              66,666/33,334(2)                      0/0

Abraham Bar                           -                      -              66,666/33,334                         0/0

Ravi Rajapakse                        -                      -              66,666/33,334                         0/0
==============================  ==================== ====================== =======================  =============================
</TABLE>

     Based  upon the  closing  price  for the  Common  Stock on March  31,  1999
($1.68), as reported by a market maker. Option ceased vesting in June 1999.

Employment and Consulting Agreements

Employment Agreements

     In April 1997, the Company  amended the five-year  employment  agreement it
entered into  originally  with Dr.  Hilsenrath in July 1996. The  agreement,  as
amended,  provides  for an annual  salary of $160,000  and  increases of 15% per
annum for each year remaining in the original  five-year  term.  Upon execution,
the Company  granted Dr.  Hilsenrath an option to purchase  1,500,000  shares of
Common Stock at an exercise price of $2.00 per share.  The Company  provides Dr.
Hilsenrath with an automobile allowance. In addition, the Company shall maintain
during the full term hereof and at its sole cost and expense,  a life  insurance
policy  on Dr.  Hilsenrath  in the face  amount  of  $1,000,000  payable  to his
designee.  This  policy  also  includes  provisions  for the payment of up to 18
months of salary to Dr.  Hilsenrath  in the event that he is disabled.  Upon the
conclusion of this agreement,  all right, title and interest in the policy shall
be transferred to Dr.  Hilsenrath,  and he shall be responsible for any premiums
due after such transfer.  The agreement  restricts Dr. Hilsenrath from competing
with  the  Company  for a period  of two  years  after  the  termination  of his
employment.  The agreement provides for severance compensation to be paid to Dr.
Hilsenrath  if his  employment  with the Company is  terminated or if there is a
decrease in his  responsibilities or duties following a change in control of the
Company. The severance  compensation shall be made in one payment equal to three
times the  aggregate  annual  compensation  paid to Dr.  Hilsenrath  during  the
preceding  calendar year. In the event the Company wishes to obtain Key Man life
insurance on the life of Dr. Hilsenrath, he agrees to cooperate with the Company
in  completing  any  applications  necessary  to obtain  such  insurance  and in
promptly   submitting  to  such  physical   examinations   and  furnishing  such
information as any proposed insurance carrier may request.

     In August 1996, the Company entered into a three year employment  agreement
with Mr.  Klarman,  pursuant to which Mr. Klarman  receives a salary of $120,000
per annum and was granted an option to purchase  150,000  shares of Common Stock
at an  exercise  price of $2.00  per  share,  subject  to a three  year  vesting
schedule.  The  employment  agreement  provides that Mr. Klarman will be General
Counsel and Secretary of the Company.  The agreement also  acknowledges that Mr.
Klarman  shall have the right to represent  non-competing  companies  during the
term of the agreement.



                                       12
<PAGE>
     In January  1997,  Ravi  Rajapaske  entered  into a  three-year  employment
agreement  with  Labyrinth.  The  agreement  was  amended  in January  1998,  in
accordance  with the merger of Labyrinth with and into the Company,  pursuant to
which the  agreement was assigned to the Company and Mr.  Rajapakse  became Vice
President of Software Design.  Mr.  Rajapakse  receives a salary of $130,000 per
annum,  and was granted an option to purchase  100,000 shares of Common Stock at
an  exercise  price of $2.15 per  share,  as  adjusted,  subject to a three year
vesting schedule.  The amended employment agreement provides for the exchange of
his 20,000 restricted  shares of Labyrinth's  common stock for 183,600 shares of
the Company's Common Stock,  subject to a vesting  schedule.  Additionally,  the
amended agreement  provides for the extension of the agreement on a yearly basis
until the shares  have  vested.  See  "Business  -  Consolidation  of  Labyrinth
Communication Technologies Group, Inc."

     In October 1996, Abraham Bar entered into a three-year employment agreement
with  Labyrinth.  The agreement was amended in January 1998, in accordance  with
the  merger  of  Labyrinth  with and into the  Company,  pursuant  to which  the
agreement  was  assigned to the Company  and Mr. Bar became  Vice  President  of
Hardware  Design.  Mr. Bar  receives  a salary of  $110,000  per annum,  and was
granted an option to  purchase  100,000  shares of Common  Stock at an  exercise
price of $2.50 per share, subject to a three year vesting schedule.  The amended
employment  agreement  provides for the exchange his 25,000 restricted shares of
Labyrinth's  common  stock for 229,500  shares of the  Company's  Common  Stock,
subject to a vesting schedule.  Additionally, the amended agreement provides for
the  extension of the  agreement on a yearly basis until the shares have vested.
See "Business - Consolidation  of Labyrinth  Communication  Technologies  Group,
Inc."

Consulting Agreements

     The  Company  has  engaged  various  consultants  to provide  expertise  in
specific areas of services required by the Company.  Presently,  the Company has
engaged   consultants  to  provide  services  and  expertise  in  various  areas
including,  investor  relations,  public relations,  business  development,  and
marketing.  Compensation  for these services  include  retainer fees,  with some
consultants  receiving  stock  options,  which vest according to time and/or the
attainment of certain goals.

Senior Management Incentive Plan

     In  December  1997,  the Board of  Directors  and the  stockholders  of the
Company adopted the Senior  Management  Incentive Plan (the "Management  Plan").
The  Management  Plan provides for the issuance of up to an aggregate of 500,000
shares of Common  Stock  upon  exercise  of stock  options  and other  rights to
Executive Officers, key employees, and consultants to the Company.

     The adoption of the  Management  Plan was prompted by the desire to provide
the  Board  with  sufficient   flexibility  regarding  the  forms  of  incentive
compensation which the Company will have at its disposal in rewarding  Executive
Officers, key employees,  and consultants who render significant services to the
Company.  Pursuant to the  Management  Plan,  the Board of Directors  intends to
offer equity ownership in the Company to such persons through the grant of stock
options and other rights,  to enable the Company to attract and retain qualified
personnel  without  unnecessarily  depleting the Company's  cash  reserves.  The
Management  Plan is  designed  to augment the  Company's  existing  compensation
programs  and is intended to enable the Company to offer a personal  interest in
the Company's growth and success through awards of either shares of Common Stock
or rights to acquire shares of Common Stock.

     The  Management  Plan is  intended  to attract  and  retain  key  executive
management  personnel whose performance is expected to have a substantial impact
on the  Company's  long-term  profit and growth  potential  by  encouraging  and
assisting  those  persons to acquire  equity in the Company.  A total of 500,000
shares of Common Stock will be reserved for issuance under the Management  Plan.
It is anticipated  that awards made under the Management Plan will be subject to
three-year  vesting  periods,  although  the vesting  periods are subject to the
discretion of the Administrator.



                                       13
<PAGE>
     Unless  otherwise  indicated,  the Management  Plan is  administered by the
compensation  committee of the Board of Directors.  (The Board or such committee
shall be referred to in the following description as the  "Administrator.").  In
accordance therewith, all issuance under the Management Plan will be approved by
such committee.  Subject to the specific  provisions of the Management Plan, the
Administrator  will have the  discretion  to  determine  the  recipients  of the
awards,  the nature of the awards to be  granted,  the dates such awards will be
granted,  the  terms and  conditions  of awards  and the  interpretation  of the
Management  Plan,  except that any award  granted to any employee of the Company
who is also a Director  of the Company  shall also be subject,  in the event the
persons  serving as members of the  Administrator  of the Management Plan at the
time such  award is  proposed  to be  granted do not  satisfy  the  requirements
regarding the participation of  "disinterested  persons" set forth in Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange  Act"), to the approval of an auxiliary  committee  consisting of
not less than two  individuals  who are  considered  "disinterested  persons" as
defined  under  Rule  16b-3.  As of the date  hereof,  the  Company  has not yet
determined who will serve on such auxiliary committee,  if one is required.  The
Management Plan generally  provides that,  unless the  Administrator  determines
otherwise, each option or right granted under a plan shall become exercisable in
full upon certain  "change of control"  events as  described  in the  Management
Plan,  or  subject  to any right or option  granted  under the  Management  Plan
(through  merger,   consolidation,   reorganization,   recapitalization,   stock
dividend,  dividend  in  property  other than  cash,  stock  split,  liquidating
dividend,  combination  of  shares,  exchange  of  shares,  change in  corporate
structure, or otherwise), the Administrator will make appropriate adjustments to
such  plans  and the  classes,  number  of  shares  and price per share of stock
subject to outstanding rights or options.  The Management Plan may be amended by
action of the Board of Directors, except that any amendment which would increase
the total  number of shares  subject to such plan,  extend the  duration of such
plan, materially increase the benefits accruing to participants under such plan,
or would  change the  category of persons who can be eligible  for awards  under
such  plan,  must  be  approved  by  the  affirmative  vote  of  a  majority  of
stockholders  entitled to vote.  The  Management  Plan permits awards to be made
thereunder until November 2004.

     Directors  who  are not  otherwise  employed  by the  Company  will  not be
eligible for  participation in the Management Plan. The Management Plan provides
for  four  types  of  awards:  stock  options,  incentive  stock  rights,  stock
appreciation rights (including limited stock appreciation rights) and restricted
stock purchase agreements.



                                       14
<PAGE>
ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                  AND MANAGEMENT

     The following table sets forth information as of June 17, 1999 with respect
to the  beneficial  ownership  of  shares  of  Common  Stock by (i) each  person
(including  any  "group"  as  that  term  is used  in  Section  13(d)(3)  of the
Securities  Exchange Act of 1934, as amended) known by the Corporation to be the
owner of more  than 5% of the  outstanding  shares of  Common  Stock;  (ii) each
Director;  and  (iii) all  Officers  and  Directors  as a group.  At that  date,
14,110,613 shares of Common Stock were outstanding.

<TABLE>
<CAPTION>
Name and  Address                              Amount and Nature of                  % of outstanding
Of Beneficial Owner                            Beneficial Ownership (1)              shares owned (2)(3)
Dr. Oliver Hilsenrath (4)
<S>                                                    <C>                                        <C>
c/o U.S. Wireless Corporation                          5,752,880                                  36.9%
2303 Camino Ramon, Suite 200
San Ramon, CA 94583

David Tamir (5)
c/o U.S. Wireless Corporation                              86,667                                    *
2303 Camino Ramon, Suite 200
San Ramon, CA 94583

Barry West (6)
c/o U.S. Wireless Corporation                              53,333                                    *
2303 Camino Ramon, Suite 200
San Ramon, CA 94583

Irwin Gross(7)
c/o U.S. Wireless Corporation                             136,333                                    *
2303 Camino Ramon, Suite 200
San Ramon, CA 94583

Dennis Francis (5)
c/o U.S. Wireless Corporation                              86,667                                    *
2303 Camino Ramon, Suite 200
San Ramon, CA 94583

Janvrin Holdings Limited(8)
Jardine House                                             918,000                                  6.5%
1 Wesley Street
St. Helier, Jersey JE4 8UD

Officers and Directors as a group
(6 persons) (3)-(9)                                     7,007,980                                 44.3%

--------------------------------------------   ------------------------------------  ---------------------------------
</TABLE>
Less then 1%.

     (1) Unless otherwise noted, all of the shares shown are held by individuals
or entities  possessing  sole voting and  investment  power with respect to such
shares.  Shares not outstanding but deemed  beneficially  owned by virtue of the
right of a person to acquire  them  within 60 days,  whether by the  exercise of
options or warrants,  are deemed outstanding in determining the number of shares
beneficially owned by such person or group.

     (2) The  "Percentage  Beneficially  Owned" is  calculated  by dividing  the
"Number of Shares  Beneficially  Owned" by the sum of (i) the total  outstanding
shares of Common Stock of the  Company,  and (ii) the number of shares of Common
Stock  that such  person  has the right to  acquire  within 60 days,  whether by
exercise of options or warrants.  The "Percentage  Beneficially  Owned" does not
reflect shares  beneficially  owned by virtue of the right of any person,  other
than the person named and  affiliates  of the person,  to acquire them within 60
days, whether by exercise of options or warrants.

                                       15
<PAGE>
(footnotes continued from previous page)

     (3) Does not  include  (i) the  shares of Common  Stock  issuable  upon the
conversion of the shares of the 70,000 shares of Series A Preferred stock or the
shares of Series A Preferred  Stock issuable in accordance  with the dividend on
said shares or the shares of Common Stock into which those  dividend  shares may
be convertible,  (ii) the shares of Common Stock issuable upon conversion of the
60,000 shares of the Series B Preferred Stock, (iii) additional shares of Common
Stock or shares of preferred stock which shares are  convertible  into shares of
Common Stock to be issued in the 1999 private  offering in  accordance  with the
stockholders  meeting  held on April 5,  1999,  or (iv) of any  shares of Common
Stock or preferred stock issuable underlying any outstanding warrants or options
issued by the Company.

     (4) All  shares are held in the name of the  Hilsenrath  Family  trust,  of
which  Dr.   Hilsenrath   is  the  trustee  and  his  family   members  are  the
beneficiaries.

     (5) Includes  1,500,000 shares of Common Stock,  issuable upon the exercise
of a vested option granted pursuant to Dr. Hilsenrath's employment agreement and
1,982,880  shares  issued in  connection  with the  Labyrinth  merger,  of which
793,152 are not vested and subject to a vesting schedule. See "Certain Relations
and Related Transactions - Merger of Labyrinth." Includes 66,667 shares issuable
upon the exercise of the portion of an option  currently vested and exercisable,
equal to 2/3 of the shares  underlying the option  granted.  The options vest at
1/3 intervals per year.

     (6) Includes  33,333 shares issuable upon the exercise of the portion of an
options currently vested and exercisable,  equal to 1/3 of the shares underlying
the option granted. The options vest at 1/3 intervals per year.

     (7)  Includes  (i) 33,333  shares  issuable  upon the  exercise  of options
currently  vested and  exercisable,  equal to 1/3 of the shares  underlying  the
option  granted,  which options vest at 1/3 intervals per year. Does not include
(i) 3,000,000  shares  issuable upon the conversion of 30,000 shares of Series B
Preferred Stock purchased by Interactive Flight Technologies, Inc., a company of
which Mr. Gross is the Chief  Executive  Officer and Chairman of the Board,  and
which Mr. Gross  disclaims  beneficial  ownership and (ii) 32,000 shares held in
trust  for the  benefit  of Mr.  Gross'  children,  which  Mr.  Gross  disclaims
beneficial ownership. See "Certain Relationships and Related Transactions."

     (8) Includes 550,800 shares which have vested and 367,200 shares subject to
a vesting  schedule  in  connection  with the  Labyrinth  merger.  See  "Certain
Relations and Related  Transactions  - Merger of  Labyrinth."  Includes  348,857
shares  which have vested and 523,243  shares  subject to a vesting  schedule in
connection  with the  Labyrinth  merger.  See  "Certain  Relations  and  Related
Transactions - Merger of Labyrinth."



ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

1999 Private Placement

     In April 1999, the Company  commenced a private  placement  offering of its
securities,  in which it sold 60,000 shares of the Company's  Series B Preferred
Stock,  of which 30,000  shares were sold to  Interactive  Flight  Technologies,
Inc.,  a company  in which  Irwin  Gross,  is the Chief  Executive  Officer  and
Chairman  of the  Board.  The  holders  of the  60,000  shares  of the  Series B
Preferred  Stock  have the right to elect one member to the  Company's  board of
director.  The Series B  Preferred  Stockholders  elected  Irwin  Gross as their
appointee. See "Item 5. Market for Common Equity and Related Stockholder Matters
- 1999 Private Placement."

                                       16
<PAGE>
     In addition,  the Company  sold an  aggregate  of 405,000  shares of Common
Stock at $1.00 per share to its  officers,  directors  and  employees,  which is
equal to the conversion price of the shares of Series B Preferred Stock.

Mantra Technologies, Inc. Restructuring

     In February  1999, the board of the Company  approved the  recapitalization
and  restructuring  of Mantra  Technologies,  Inc.  including the issuance of an
aggregate of 33% of the outstanding shares of Mantra to its management team.

Merger of Labyrinth

     In March  1998,  the  Corporation  consummated  the merger of its 51% owned
subsidiary, Labyrinth Communication Technologies Group, Inc. ("Labyrinth"), into
the Corporation.  In December 1997, the stockholders of the Corporation approved
a proposal  to  acquire  the  remaining  49% of  Labyrinth  in  exchange  for an
aggregate of 4,498,200 shares of the  Corporation's  Common Stock,  subject to a
vesting schedule,  as follows:  (i) 20% of the shares issued shall vest one year
from issuance;  (ii) an additional 40% shall vest upon the successful completion
and  operation  of the  RadioCamera  in its first  major  market;  and (iii) the
remaining 40% shall vest when the Corporation  reaches sales of $15,000,000.  In
addition to the above vesting  schedule,  the management of Labyrinth is subject
to  an  additional  vesting  schedule,   in  accordance  with  their  employment
contracts, whereby the shares underlying (i)-(iii) above vest at the rate of 1/3
each year. As of the date hereof the first two milestones have been met.

     See "Executive  Compensation-Employment  and Consulting  Agreements"  for a
discussion of the  compensation  arrangements the Company has with its Executive
Officers and consultants.

<PAGE>
                                     PART IV

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K.

     All exhibits to this Form 10-KSB,  except those designated with an asterisk
(*) which are filed herewith, have previously been filed with the Commission, as
referenced,  and  pursuant  to 17 C.F.R.  Section  230.411 are  incorporated  by
reference herein.


<TABLE>
<CAPTION>
<S>                        <C>
3.1               -        Certificate of Incorporation of the Company filed February 12, 1993. (Incorporated by reference to the
                           indicated exhibit in the Company's SB-2 Registration Statement File No. 33-68306-NY)
3.2               -        Amended and Restated Certificate of Incorporation of the Company filed on August 25, 1993. (Incorporated
                           by reference to the indicated exhibit in the Company's SB-2 Registration Statement File No. 33-68306-NY)
3.2.1*            -        Amended and Restated Certificate of Incorporation of the Company filed on March 5, 1999.
3.2.2*            -        Certificate of Amendment of the Certificate of Incorporation of the Company filed on March 29, 1999.
3.2.3*            -        Certificate of Amendment of the Certificate of Incorporation of the Company filed on May 14, 1999.
3.4               -        By-Laws of the Company. (Incorporated by reference to the indicated exhibit in the Company's SB-2
                           Registration Statement File No. 33-68306-NY)
3.4.1*            -        Amendment to the By-laws dated November 25, 1997.
3.5               -        Specimen Common Stock Certificate.
3.6               -        Form of Series A Preferred Stock.
3.6.1*            -        Form of Series B Preferred Stock.
10.74             -        Form of Employment Agreement with Dr. Oliver Hilsenrath (incorporated by reference to the indicated
                           exhibit in the Company's Form 8-K dated July 11, 1996).
10.77             -        Amended Employment Agreement with Dr. Oliver Hilsenrath. (Incorporated by reference to the indicated
                           exhibit in the Company's Form 10-KSB filed for the year ended March 31, 1997).
10.78             -        Employment Agreement with David Klarman (incorporated by reference to the indicated exhibit in the
                           Company's Form 10-KSB filed for the year ended March 31, 1997).
10.79             -        Employment Agreement with Dr. Mati Wax. (Incorporated by reference to the indicated exhibit in the
                           Company's Form 10-KSB filed for the year ended March 31, 1997).
10.79.1           -        Amended Employment Agreement with Dr. Mati Wax.
10.87             -        Amended Employment Agreement with Ravi Rajapakse
10.88             -        Amended Employment Agreement with Abraham Bar
27.01*            -        Financial Data Schedule.
</TABLE>

<PAGE>
                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Company has
duly caused this report to be signed on its behalf by the undersigned; thereunto
duly authorized this 25th day of June 1999.


U.S. WIRELESS CORPORATION




By: \s\ Dr. Oliver Hilsenrath
Dr. Oliver Hilsenrath
Chief Executive Officer



     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the Company,  in the  capacities  and on the
dates indicated.


<TABLE>
<CAPTION>
<S>                                 <C>                                         <C>
\s\  Dr. Oliver Hilsenrath          Chief Executive Officer                     June 25, 1999
Dr. Oliver Hilsenrath               President and Director                      Dated

\s\  David Tamir                    Director                                    June 25, 1999
David Tamir                                                                     Dated

\s\  Dennis Francis                 Director                                    June 25, 1999
Dennis Francis                                                                  Dated

\s\  Barry West                     Director                                    June 25, 1999
Barry West                                                                      Dated

\s\  Irwin Gross                    Director                                    June 25, 1999
Irwin Gross                                                                     Dated

</TABLE>
<PAGE>
                            U.S. WIRELESS CORPORATION


                                Table of Contents

<TABLE>
<CAPTION>




                                                                                                          Page

<S>                                                                                                       <C>
Report of Independent Certified Public Accountants                                                        F - 2

Consolidated Financial Statements

Consolidated Balance Sheets                                                                               F - 3

Consolidated Statements of Operations                                                                     F - 5

Consolidated Statements of Stockholders' Equity                                                           F - 6

Consolidated Statements of Cash Flows                                                                     F - 8

Notes to Consolidated Financial Statements                                                                F - 11


</TABLE>


                                       F-1


<PAGE>
                              Haskell & White LLP
                          CERTIFIED PUBLIC ACCOUNTANTS
                                4901 Birch Street
                         Newport Beach, California 92660
                            Telephone (949) 833-8312
                               Fax (949) 833-9421



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders

U.S. Wireless Corporation

     We have  audited  the  accompanying  consolidated  balance  sheets  of U.S.
Wireless  Corporation  (the  "Company")  as of March 31, 1999 and 1998,  and the
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for each of the years  then  ended.  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,  such financial  statements present fairly, in all material
respects,  the  consolidated  financial  position of the Company as of March 31,
1999 and 1998, and the consolidated results of its operations and its cash flows
for  each of the  years  then  ended,  in  conformity  with  generally  accepted
accounting principles.

                                                             HASKELL & WHITE LLP



                            Newport Beach, California

                                                                    May 13, 1999



                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                     ASSETS

                                    March 31,
                                    1999 1998
                                                     -------------   -----------

Current assets

<S>                                                      <C>          <C>
     Cash and cash equivalents .......................   $5,788,288   $2,285,750

     Stock subscription (Note 7) .....................    2,300,000         --

     Investment in joint venture (Note 4) ............       58,630         --

     Other current assets ............................        2,323         --
                                                         ----------   ----------
         Total current assets ........................    8,149,241    2,285,750

Equipment, improvements and fixtures, net (Note 5) ...      381,617      399,896

Other assets .........................................       25,035       25,035
                                                         ----------   ----------


         Total assets ................................   $8,555,893   $2,710,681
                                                         ==========   ==========
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                           Consolidated Balance Sheets


                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                           March 31,
                                                                       1999            1998
                                                                 -------------------------------
Current liabilities

<S>                                                               <C>             <C>
     Accounts payable and accrued expenses ....................   $    335,543    $    252,708

     Obligations under capital leases, current (Note 9) .......         34,486          15,192
                                                                  ------------    ------------

         Total current liabilities ............................        370,029         267,900

Obligations under capital leases, noncurrent (Note 9) .........          4,632          39,118
                                                                  ------------    ------------

         Total liabilities ....................................        374,661         307,018
                                                                  ------------    ------------

Minority interest in subsidiary ...............................         76,434         195,305
                                                                  ------------    ------------
Commitments and contingencies (Notes 8, 9, and 10)

Stockholders' equity (Notes 3, 4, 7, 8, and 10)

     Series A  preferred  stock,  convertible,  6%  cumulative,  $.01 par value,
         100,000  shares  authorized,   70,000  shares  issued  and  outstanding
         (liquidation preference
         of $1,400,000) .......................................            700            --

     Series B  preferred  stock,  convertible,  $.01 par  value,  50,000  shares
         authorized, 50,000 shares issued
         and outstanding (liquidation preference of $5,000,000)            500            --

     Common stock, $.01 par value, 40,000,000 shares authorized,  13,556,188 and
         11,823,444 shares issued and outstanding,  respectively;  1,973,699 and
         3,715,421 of which are subject to vesting,
         respectively (Note 3) ................................        135,563         118,234

     Additional paid-in capital ...............................     32,504,598      19,912,890

     Unearned compensation ....................................       (244,958)       (761,438)

     Accumulated deficit ......................................    (24,291,605)    (17,061,328)
                                                                  ------------    ------------

         Total stockholders' equity ...........................      8,104,798       2,208,358
                                                                  ------------    ------------

         Total liabilities and stockholders' equity ...........   $  8,555,893    $  2,710,681
                                                                  ============    ============
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       F -

<PAGE>
                            U.S. WIRELESS CORPORATION
                      Consolidated Statements of Operations

                   For the Years Ended March 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                1999          1998
                                                            ------------    ------------

<S>                                                         <C>             <C>
Net revenues ............................................   $     40,000    $       --
                                                            ------------    ------------

Cost and expenses

     Research and development, including write-off of
         excess of cost over net assets acquired (Note 3)      4,866,292       2,220,767

     Operating expenses .................................      1,922,779       1,372,315

     Stock based compensation (Note 8) ..................        568,781         642,797

     Equity in loss of joint venture (Note 4) ...........        341,370            --

     Interest income ....................................       (310,074)       (199,222)
                                                            ------------    ------------

         Total costs and expenses .......................      7,389,148       4,036,657
                                                            ------------    ------------
Loss before minority interest and income tax
     (expense) benefit ..................................     (7,349,148)     (4,036,657)

Minority interest in net losses .........................        118,871         844,092
                                                            ------------    ------------

Loss before income tax (expense) benefit ................     (7,230,277)     (3,192,565)

Income tax (expense) benefit ............................           --              --
                                                            ------------    ------------

Net loss ................................................   $ (7,230,277)   $ (3,192,565)
                                                            ============    ============

Basic and diluted loss per common equivalent share

     Net loss per common equivalent share ...............   $      (0.56)   $      (0.37)
                                                            ============    ============

     Weighted average number of common shares outstanding     12,924,639       8,580,354
                                                            ============    ============

</TABLE>

          See accompanying notes to consolidated financial statements.



                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                Consolidated Statements of Stockholders' Equity

                   For the Years Ended March 31, 1999 and 1998

<TABLE>
<CAPTION>


                                        Series A                           Series B
                                       Preferred                          Preferred                                   Additional
                                         Stock                              Stock              Common Stock             Paid-in
                               Shares            Amount           Shares      Amount      Shares          Amount        Capital
                            -------------    -------------     ---------     -------   -------------   ------------    -----------
<S>                               <C>        <C>                <C>           <C>       <C>           <C>             <C>
Balances, April 1, 1997 ......    --         $   --             --            $--       10,031,250    $    100,312    $ 20,493,262

Reacquisition of common stock
upon return of investment ...     --             --             --             --       (2,706,006)        (27,060)     (1,542,423)

Amortization of unearned
compensation ................     --             --             --             --             --              --              --

Issuance of common stock
options for compensation.....     --             --             --             --             --              --           126,316

Acquisition of minority
interest (Note 3) ...........     --             --             --             --        4,498,200          44,982         835,735

Net loss for the year ended
March 31, 1998 ..............     --             --             --             --             --              --              --
                             ------------   ------------   ------------   ------------   ------------    ------------    -----------

Balances, March 31, 1998 ....     --             --       11,823,444        118,234     19,912,890

Conversion of debentures to
common stock ................     --             --             --             --          961,538           9,615       2,490,385

Amortization of unearned
compensation ................     --             --             --             --             --              --              --

Issuance of common stock
options for compensation ....     --             --             --             --             --              --           703,859

Issuance of stock in connection
with private placements, net of
offering costs of $801,558 ....  70,000            700         50,000            500        668,206           6,684       7,013,842

Exercise of common stock options  --             --             --             --          103,000           1,030         206,470

Acquisition of minority interest
(Note 3) ....................     --             --             --             --             --              --         2,177,152

Net loss for the year ended
March 31, 1999 ..............     --             --             --             --             --              --              --
                             ------------   ------------   ------------   ------------   ------------    ------------    -----------

Balances, March 31, 1999 .....  70,000   $        700         50,000   $        500     13,556,188    $    135,563     $ 32,504,598
                             ============   ============   ============   ============   ============    ============    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       F -

<PAGE>
                            U.S. WIRELESS CORPORATION
          Consolidated Statements of Stockholders' Equity (continued)

                   For the Years Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>



                                                                      Stock                             Total
                                                      Unearned     Subscription      Accumulated    Stockholders'
                                                    Compensation    Receivable         Deficit         Equity

<S>             <C>                                 <C>             <C>             <C>             <C>
Balances, April 1, 1997 .........................   $ (1,277,918)   $ (1,569,483)   $(13,868,763)   $  3,877,410

Reacquisition of common stock
upon return of investment .......................           --         1,569,483            --              --

Amortization of unearned compensation ...........        516,480            --              --           516,480

Issuance of common stock options for compensation           --              --              --           126,316

Acquisition of minority interest (Note 3) .......           --              --              --           880,717

Net loss for the year ended March 31, 1998 ......           --              --        (3,192,565)     (3,192,565)
                                                    ------------    ------------    ------------    ------------

Balances, March 31, 1998 ........................       (761,438)           --       (17,061,328)      2,208,358

Conversion of debentures to common stock ........           --              --              --         2,500,000

Amortization of unearned compensation ...........        516,480            --              --           516,480

Issuance of common stock options for compensation           --              --              --           703,859

Issuance of stock in connection with private
   placements, net of offering costs of $801,558            --              --              --         7,021,726

Exercise of common stock options ................           --              --              --           207,500

Acquisition of minority interest (Note 3) .......           --              --              --         2,177,152

Net loss for the year ended March 31, 1999 ......           --              --        (7,230,277)     (7,230,277)
                                                    ------------    ------------    ------------    ------------

Balances, March 31, 1999 ........................   $   (244,958)   $       --      $(24,291,605)   $  8,104,798
                                                    ============    ============    ============    ============

</TABLE>

          See accompanying notes to consolidated financial statements.



                                       F -

<PAGE>
                            U.S. WIRELESS CORPORATION
                      Consolidated Statements of Cash Flows

                   For the Years Ended March 31, 1999 and 1998

                Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>


                                                                        1999             1998
                                                                    -------------   ----------------
Cash flows from operating activities

<S>                                                                   <C>            <C>
     Net loss .....................................................   $(7,230,277)   $(3,192,565)

     Adjustments  to  reconcile   net  loss  to  net  cash  used  for  operating
       activities:

         Equity in loss of joint venture ..........................       341,370           --

         Write-off of excess of cost over net assets acquired .....     2,177,152        476,552

         Minority interest in net losses ..........................      (118,871)      (844,092)

         Amortization of unearned compensation ....................       516,480        516,480

         Depreciation expense .....................................       260,000        231,150

         Issuance of common stock options for compensation

           and services ...........................................        48,234        126,316

         Increase (decrease) from change in assets and liabilities:

           Other current assets ...................................        (2,323)         3,500

           Deposits and other assets ..............................          --          (20,368)

           Accounts payable and accrued expenses ..................        82,835        112,158

           Other ..................................................          --          (85,972)
                                                                      -----------    -----------
                  Net cash used for operating activities ..........    (3,925,400)    (2,676,841)
                                                                      -----------    -----------
Cash flows from investing activities

     Equipment, improvements and fixtures acquired ................      (241,721)      (339,465)

     Investment in joint venture ..................................      (400,000)          --

                  Net cash used for investing activities ..........      (641,721)      (339,465)
                                                                      -----------    -----------
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                      Consolidated Statements of Cash Flows

                   For the Years Ended March 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                        1999                1998
                                                                  ---------------    ----------------

Cash flows from financing activities

<S>                                                                    <C>             <C>
     Proceeds from issuance of debentures ........................     2,500,000           --

     Proceeds from issuance of Series A preferred stock ..........     1,400,000           --

     Proceeds from issuance of Series B preferred stock ..........     2,700,000           --

     Proceeds from issuance of common stock ......................     1,634,851           --

     Payment of stock offering costs .............................      (150,000)          --

     Principal repayments on obligations under capital leases ....       (15,192)       (26,725)
                                                                     -----------    -----------

                  Net cash provided (used) by financing activities     8,069,659        (26,725)
                                                                     -----------    -----------

Net increase (decrease) in cash ..................................     3,502,538     (3,043,031)

Cash and cash equivalents at beginning of year ...................     2,285,750      5,328,781
                                                                     -----------    -----------

Cash and cash equivalents at end of year .........................   $ 5,788,288    $ 2,285,750
                                                                     ===========    ===========

Supplemental disclosure of cash flow information:

     Interest paid ...............................................   $      --      $      --

     Income taxes paid ...........................................   $      --      $      --
</TABLE>
Schedule of non-cash investing and financing activities:

     In July 1998,  $2,500,000 of  convertible  debentures  were  converted into
961,538 shares of the Company's common stock.

     As of March 31,  1999,  the Company had  $2,300,000  in stock  subscription
receivables  related  to the sale of  23,000  shares of its  Series B  Preferred
Stock. Such receivables were collected in full in April 1999.

     As discussed in Note 3, the Company  acquired the 49% minority  interest in
Labyrinth   Communications   Technology  Group,  Inc.  during  fiscal  1998.  In
connection with the acquisition, the Company issued 1,741,722 and 782,779 vested
shares of common stock in fiscal 1999 and 1998, respectively.

     See accompanying notes to consolidated financial statements.



                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                      Consolidated Statements of Cash Flows

                   For the Years Ended March 31, 1999 and 1998


Schedule of non-cash investing and financing activities (continued):

     During the years ended March 31, 1999 and 1998,  the Company issued 379,500
and 594,000  stock options to employees and 103,000 and 200,000 stock options to
consultants,  respectively.  In connection  with these  issuance's,  the Company
recorded compensation expense of $4,067 and $10,572 to employees and $48,234 and
$115,744,  to consultants,  respectively.  In fiscal year 1999, the Company also
issued  common  stock  options and  warrants to purchase  370,000  shares of the
Company's common stock in connection with private placements (Note 7).

     During the year ended March 31,  1998,  the Company  entered  into  capital
leases for equipment that totaled $10,370.

     During  the year  ended  March 31,  1997,  the  Company  issued  options to
purchase an  aggregate  of 2,641,500  shares of common  stock to  employees.  In
connection with these  issuance's,  the Company  amortized  $516,480 of unearned
compensation during each of fiscal 1999 and 1998.

     During  fiscal year 1998,  the Company  negotiated  the return of 2,706,006
shares of its common stock in exchange  for the return of the 400,000  shares of
common stock of another entity.

     See accompanying notes to consolidated financial statements.



                                       F -

<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

1.       Organization and Business

     U.S.  Wireless  Corporation  (the  "Company"),  headquartered in San Ramon,
California,  was incorporated in the State of Delaware in February 1993. In July
1996,  the  Company  changed its name to its present  name,  distributed  to its
stockholders  its prior  business  operations,  and began its  current  business
operations  by acquiring  51% of each of Labyrinth  Communications  Technologies
Group, Inc. ("Labyrinth") and Mantra Technologies,  Inc. ("Mantra").  In January
1998, the Company acquired the 49% minorit interest in Labyrinth (Note 3).

     The  Company  develops  high-performance,  network-based  location  systems
designed to enable wireless  carriers and others to provide their customers with
value-added,  location-based services and applications,  including enhanced 911,
live-navigation  assistance,  enhanced  411,  asset and  vehicle  tracking,  and
network-management systems.

     In  February   1999,  the  Company's   board  of  directors   approved  the
recapitalization  of Mantra,  which provided for the issuance of 33% of Mantra's
outstanding  common stock to its  management.  Such shares vest  one-third  upon
issuance,  and additional  vesting is dependent upon the  achievement of defined
revenue targets.  This  recapitalization  has reduced the Company's ownership of
Mantra to 44%,  at March 31,  1999 and future  reductions  will occur if vesting
targets are achieved.

2.       Summary of Accounting Policies

         a)       Principles of consolidation

     The  consolidated  financial  statements  for the year ended March 31, 1999
include the  accounts of the Company  and  Mantra.  The  consolidated  financial
statements  for the year  ended  March 31,  1998  include  the  accounts  of the
Company,  Labyrinth,  and Mantra.  All  significant  intercompany  balances  and
transactions have been eliminated in consolidation.

         b)       Cash and cash equivalents

     The  Company  considers  all highly  liquid  investments  purchased  with a
maturity  of  three  months  or  less  on the  date  of  acquisition  to be cash
equivalents.

                                       F -


<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

2.       Summary of Accounting Policies (continued)

         c)       Equipment, improvements, and fixtures

     Equipment, improvements, and fixtures are recorded at cost. Depreciation is
provided using the  straight-line  method over the estimated useful lives of the
related assets, which is two to five years.  Maintenance and repairs are charged
to operations as incurred.

         d)       Income taxes

     The Company uses the  "liability  method" of  accounting  for income taxes.
Accordingly,  deferred tax  liabilities  and assets are determined  based on the
difference  between  the  financial  statement  and  tax  bases  of  assets  and
liabilities,  using  enacted  tax  rates in  effect  for the  year in which  the
differences  are  expected to  reverse.  Current  income  taxes are based on the
year's income taxable for federal and state income tax reporting purposes.

         e)       Accounting for employee stock options

     In October 1995, the Financial  Accounting  Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock-Based  Compensation."  In conformity  with the provisions of SFAS No. 123,
the  Company  has  determined  that it will not change to the fair value  method
presented by SFAS No. 123 and will continue to follow Accounting Principle Board
Opinion  No.  25  for  measurement  and  recognition  of  employee   stock-based
transactions.  Pro forma disclosures, as required by SFAS No. 123, are presented
in Note 8.

                                       F -


<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998


2.       Summary of Accounting Policies (continued)

         f)       Software development costs

     Costs incurred in the research and development of new software products are
expensed,  as incurred,  until  technological  feasibility has been established.
After  technological  feasibility  is  established,  any  additional  costs  are
capitalized in accordance with SFAS No. 86, "Accounting for the Cost of Computer
Software  to Be Sold,  Leased  or  Otherwise  Marketed."  The  establishment  of
technological  feasibility  and the  ongoing  assessment  of  recoverability  of
capitalized  software   development  costs  require  considerable   judgment  by
management with respect to certain external factors such as,  anticipated future
revenues,  estimated  economic  life,  and  changes  in  software  and  hardware
technologies.  No software development costs have been capitalized during either
of the years ended March 31, 1999 and 1998.

         g)       Net loss per share

     Basic  earnings  (loss) per share is computed by dividing net income (loss)
by the weighted average number of common shares  outstanding during each period.
Diluted  earning (loss) per share is similar to basic earnings (loss) per share,
except  that the  weighted  average  number  of  common  shares  outstanding  is
increased to reflect the dilutive  effect of potential  common  shares,  such as
those  issuable  upon the exercise of stock or warrants,  and the  conversion of
preferred stock, as if they had been issued.

     For both of the years ended March 31, 1999 and 1998, there is no difference
between basic and diluted loss per common share,  as the effects of the exercise
of common stock options,  the conversion of preferred stock, and the issuance of
any  contingent  shares related to the  acquisition of the minority  interest of
Labyrinth  (Note 3) are  anti-dilutive,  given  the net loss  recorded  for both
years.

         h)       Use of estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect the reported amounts of assets and liabilities, revenues
and expenses, and disclosure of contingent assets and liabilities at the date of
the financial statements. Actual amounts could differ from those estimates.


                                      F -


<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998


2.       Summary of Accounting Policies (continued)

         i)       Concentration of credit risk

     As of March 31, 1999 and 1998,  the  Company  had  amounts on deposit  that
exceeded federally insured limits by $5,114,463 and $1,519,478, respectively.

         j)       Recent accounting standards

     In June  1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
Income."  This  statement  establishes  standards  for  reporting and display of
comprehensive income, and its components (revenues, expenses, gains and losses),
in an  entity's  financial  statements.  This  statement  requires  an entity to
classify items of other  comprehensive  income,  by their nature, in a financial
statement  and display the  accumulated  balance of other  comprehensive  income
separately from retained  earnings and additional  paid-in capital in the equity
section of a statement of financial position.  In accordance with the provisions
of this statement, the Company did not adopt SFAS No. 130, as it had no items of
other comprehensive income during fiscal 1999 and 1998.

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures about Segments of
an  Enterprise  and  Related   Information."   This  statement  requires  public
enterprises to report financial and descriptive information about its reportable
operating  segments and  establishes  standards  for related  disclosures  about
products and services,  geographic  areas, and major  customers.  At the present
time,  the Company's two  operating  segments,  which are described in Note 1 as
wireless communications and internet applications,  are not monitored separately
for internal financial reporting purposes.

         Reclassifications

     The 1998  consolidated  financial  statements  have  been  reclassified  to
conform to the 1999 presentation.

                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

3.       Acquisition of Minority Interest

     In January 1998,  the Company  submitted  Exchange  Offer  Agreements  (the
"Exchange Offer") to the stockholders  representing the 49% minority interest in
Labyrinth.  Pursuant to the terms of the Exchange Offer,  the Company  exchanged
4,498,200  shares of its  common  stock for  490,000  shares of common  stock of
Labyrinth.  The Exchange Offer provides that the shares of the Company's  common
stock are subject to the following vesting schedule:

          (i) 20% of shares vest one year from issuance.

          (ii) 40% of shares shall vest upon successful completion and operation
     of Labyrinth's primary product in a major market.

          (iii)  40%  of  the  shares  shall  vest  when  the  Company  achieves
     cumulative sales of $15 million.

     In accordance  with the provisions of Accounting  Principles  Board ("APB")
Opinion  No. 16, and  interpretations  thereof,  this  acquisition  of  minority
interest has been accounted for using the purchase  method of accounting.  As of
March 31, 1999, an aggregate of 2,524,517  shares of the Company's  common stock
have  vested,  as defined by the  Exchange  Offer,  and have been  issued to the
former Labyrinth  stockholders.  The remaining 1,973,683 shares of the Company's
common  stock  provided  for in the  Exchang  Offer  have not yet vested and are
currently held in escrow until vested. Shares of the Company's common stock that
do not vest  shall be  cancelled  and  returned  to the  Company's  treasury  as
unissued common stock.

     In  connection  with the  acquisition  of the minority  interest  described
above, the Company expensed $2,177,152 and $476,552 during the years ended March
31, 1999 and 1998, respectively,  as the cost over basis of net assets acquired.
Such amounts have been characterized as purchase research and development costs,
given the ongoing research and development activities of Labyrinth.

     When and if event (iii),  detailed in the vesting  schedule above,  occurs,
and additional shares of the Company's common stock become vested and are issued
to the former Labyrinth stockholders, the Company will record additional noncash
charges to earnings,  which may have the effect of significantly  increasing the
Company's net loss, or reducing or eliminating earnings, if any, at such time.


                                       F -

<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

 3.      Acquisition of Minority Interest (continued)

     In June 1999,  the  holder of 50,000  shares of common  stock of  Labyrinth
relinquished his position with the Company.  Accordingly,  the vesting of shares
issued in  connection  with the  Exchange  Offer has ceased with respect to this
stockholder.

4.       Investment in Joint Venture

     The  Company  and Anam  Instruments,  Inc.  ("Anam")  entered  into a Joint
Venture  Agreement  (the  "Agreement")  dated July 31,  1998,  whereby  Wireless
Technology,  Inc.  ("WTI") was formed to develop and manufacture a Code Division
Multiple Access interface ("CDMA") for the RadioCamera. WTI will also market and
distribute  the  RadioCamera in Korea and other Asian  countries.  In connection
with the  formation of WTI, the Company sold 20,000 shares of Series A Preferred
Stock  to Anam  for  $400,000.  The cash  proceeds  from  this  sale  were  then
contributed  by the  Company to WTI while  Anam  contributed  cash of  $800,000.
Accordingly, the Company has a 33% ownership interest in WTI, and Anam has a 67%
ownership interest as of March 31, 1999. During the period from inception,  July
31, 1998,  through March 31, 1999,  WTI incurred a net loss of  $1,024,211.  The
Company's equity in net losses of WTI aggregated  $341,370 during the year ended
March 31, 1999.

     The Company also has a Joint Development  Agreement with Anam;  whereby WTI
shall  reimburse the Company up to $650,000 for  expenditures  made prior to the
formation of the joint  venture,  subject to defined  financing and  performance
objectives with the CDMA project. As of March 31, 1999, the Company has received
related reimbursements  aggregating approximately $482,000, and such amounts are
included as reductions of research and development  expenses in the accompanying
statement of operations for th year ended March 31, 1999.

5.       Equipment, Improvements and Fixtures

         Equipment,  improvements,  and fixtures,  net comprise the following at
March 31:

         Equipment, improvements, and fixtures

         Less accumulated depreciation and amortization


                                       F -


<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

5.       Equipment, Improvements and Fixtures (continued)

     Equipment,  improvements,  and fixtures  include  equipment  under  capital
leases of $81,035  and  $81,035,  and  accumulated  amortization  of $51,431 and
$24,419, as of March 31, 1999 and 1998, respectively.

6.       Income Taxes

     The  reconciliation  of income taxes computed at the federal  statutory tax
rate to income tax expense at the effective income tax rate is as follows:
<TABLE>
<CAPTION>

                                                                                     1999                1998
                                                                                ---------------    ----------------

<S>                                                                                  <C>                  <C>
         Federal statutory income tax (benefit) rate                                 (34.0)%              (34.0)%
         Increases (decreases) resulting from:

              Non-deductible expenses                                                    8.9                  5.4
              Net change in valuation allowance                                         25.1                 28.6
                                                                                ------------       --------------

         Effective income tax benefit rate                                                -%                   -%

     The income tax effects of  significant  items  comprising the Company's net
deferred  income tax assets and liabilities as of March 31, 1999 and 1998 are as
follows:

                                                                                     1999                1998
                                                                                ---------------    ----------------

         Depreciation and amortization                                          $        52,900    $       (12,990)
         Net operating loss carryforwards                                             3,046,685           1,475,163
         Unearned compensation                                                          466,756             343,344
         Valuation allowance                                                         (3,566,341)        (1,805,517)
                                                                                ----------------   ---------------

         Long-term portion of deferred tax assets (liabilities)                 $             -    $              -
                                                                                ===============    ================
</TABLE>

     At March 31, 1999 and 1998, the deferred tax assets and liabilities  result
from the Company,  Labyrinth and Mantra.  The Company has federal and state NOLs
at March 31, 1999  approximating  $8,303,000 and $3,836,000,  respectively.  The
federal NOL carryforwards  expire between the years 2009 and 2012. The state NOL
carryforwards expire in the year 2002.  Utilization of a portion of the NOLs may
be limited on Section 382 of the Internal Revenue Code due to ownership changes.


                                       F -


<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

6.       Income Taxes (continued)

     At March 31, 1999 and 1998, a 100% valuation allowance has been provided to
reduce  the  Company's  net  deferred  tax  assets  for the  amount by which the
deferred tax asset  related to NOLs  exceeded  the net  deferred  tax  liability
resulting  from all other  temporary  differences.  The Company has provided the
allowance  since  management  could not determine  that it was "more likely than
not" that the benefits of the deferred tax assets would be realized.

7.       Stockholders' Equity

     a) Series A Preferred Stock and Common Stock Private Placement

     On June 24, 1998, the Company's  stockholders  approved an amendment to the
Company's articles of incorporation,  authorizing  1,000,000 shares of Preferred
Stock,  subject to the rights and preferences  being determined by the Company's
board of  directors.  The board of  directors  authorized  the issuance of up to
300,000 shares of the Series A Preferred Stock.

     On  June  25,  1998,  the  Company  completed  a  private  offering  of its
securities, in which the Company raised gross proceeds of $5,134,849 through the
sale of 668,206 shares of common stock and 50,000 shares of the Company's Series
A Preferred  Stock.  Included  in the private  offering  was the  conversion  by
debenture  holders of the  Company  of  $2,500,000  principal  amount of secured
debentures in exchange for 961,538 shares of common stock.  The debentures  were
originally issued in May 1998.

     The shares of Series A Preferred  Stock carry a cumulative  dividend at the
rate of 6% per annum,  payable in cash or shares of Series A Preferred Stock, at
the Company's option (dividends in arrears aggregated  approximately  $56,000 at
March 31,  1999).  Holders of the Series A stock have the right to convert  each
share into shares of common stock at a conversion  price of $2.95 per share,  at
any time,  commencing  90 days from  issuance.  The shares of Series A Preferred
Stock have no voting  rights and carry a  liquidation  preference  of $20.00 per
share.  The Company may redeem the Series A Preferred  Stock upon the earlier of
three years from  issuance,  or when the closing price for the Company's  common
stock has been at least $8.00, for any consecutive 30-day period.

                                       F -


<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998


Stockholders' Equity (continued)

     a) Series A Preferred Stock and Common Stock Private Placement (continued)

     In connection with the offering,  the Company paid $150,000 as a commission
on the net proceeds of the offering and warrants to purchase  110,000  shares of
common stock at $4.00 per share, and 110,000 shares of common stock at $5.00 per
share,  exercisable for three and five years,  respectively.  Additionally,  the
Company issued options to purchase  150,000 shares of the Company's common stock
at  $2.00  per  share,  exercisable  for five  years  commencing  one year  from
issuance.  The estimated fai value of these  warrants and options was determined
in accordance with SFAS No. 123, and aggregated  $651,558.  Total offering costs
of $801,558  have been netted  against  gross  proceeds  received in the private
placement.

     In addition,  the Company sold 20,000 shares of Series A Preferred Stock to
Anam, as described in Note 4.

Series B Preferred Stock Private Placement

     In March 1999, the Company entered into subscription  agreements with three
private  investors to sell an  aggregate of 50,000  shares of Series B Preferred
Stock at $100 per  share.  As of March 31,  1999,  27,000 of the Series B shares
were  issued,  and the  Company  received  gross  proceeds  of  $2,700,000.  The
remaining  23,000 shares of Series B Preferred Stock were in escrow at March 31,
1999.  In April 1999,  the Company's  stockholders  approved the issuance of the
Series B shares,  and the share  were  issued  upon  receipt  by the  Company of
$2,300,000.

     Each share of Series B Preferred  Stock is  convertible  into 100 shares of
the Company's  common stock,  commencing  90 days after the  offering's  closing
date,  provided,  however,  that if  conversion  is elected  within 12 months of
issuance,  each share of Series B Preferred Stock is convertible  into 67 shares
of the Company's common stock.  Further, the Series B shares shall automatically
convert  into shares of common  stock when the  closing  price for the shares of
common  stock has been at least $5.00 for 30  consecutive  days.  Holders of the
Series B Preferred Stock shall vote as a separate voting group, and are entitled
to elect one member to the Company's  Board of  Directors,  until the earlier of
such  time as:  (i) 50% of the  shares  of Series B  Preferred  Stock  have been
voluntarily  converted  into common stock,  and (ii) in the event of a mandatory
conversion of



                                       F -

<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

7        Stockholders' Equity (continued)

     b) Series B Preferred Stock Private Placement (continued)

     the Series B Preferred  Stock,  an aggregate of 50% of the total numbers of
shares of common stock issued upon conversion have been resold. Series B holders
shall also vote on the  issuance  of stock  that  ranks  senior to, or on parity
with, the Series B Preferred Stock, and on any change in the terms of the Series
B Preferred Stock. The Series B Preferred Stock has a liquidation  preference of
$100 per share.

8.       Stock Options

     The Company  issues  common stock  options to its  employees and to various
consultants  performing  services for the Company.  Options granted to employees
generally  vest over three  years,  expire five years from the date of grant and
have  exercise  prices  ranging  from $2 to $4 per  share.  Options  granted  to
consultants   generally   vest   immediately,   or  over  three  years,   expire
three-to-five  years from the date of grant,  and have exercise  prices  ranging
from $2 to $5 per share.  The number of options issue and  outstanding  at March
31, 1999 are as follows:

         Options outstanding, beginning of period                4,754,000
         Granted                                                   852,500
         Canceled                                                 (553,000)
         Exercised                                                (103,000)
                                                                  --------

         Options outstanding, end of period                      4,950,500

         Options exercisable, end of period                      3,758,317


     The difference  between the exercise price and the fair market value of the
options  issued to employees on the dates of grant is accounted  for as unearned
compensation  and amortized to expense over the related vesting  period.  During
each of the years  ended  March  31,  1999 and 1998,  amortization  of  unearned
compensation amounted to $516,480.



                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

8.       Stock Options (continued)

     Compensation expense associated with stock options issued to consultants is
measured based on the estimated fair value of services  received by the Company,
or the fair value of the stock option  issued by the Company,  whichever is more
reliably  measurable.  During fiscal years 1999 and 1998,  $48,234 and $115,744,
respectively,  of  compensation  expense were recorded in connection  with these
stock  options.  In addition,  common stock  purchase  warrants and options were
issued in connection with a private placement (Note 7).

     As discussed in Note 2.f), the Company follows  Accounting  Principle Board
Opinion  No.  25  for  measurement  and  recognition  of  employee   stock-based
transactions.  Had the Company  elected to adopt the measurement and recognition
provisions  of SFAS No. 123,  the  Company  would have  incurred  an  additional
$2,286,891  and  $1,945,114 in related  compensation  expenses  during the years
ended  March 31, 1999 and 1998,  respectively.  The pro forma net loss under the
provisions of SFAS No. 123 is $(9,517,168) and  $(5,137,679),  and the pro forma
basic and diluted net loss per common  share is $(0.74) and $(0.67) for the year
ended March 31, 1999 and 1998, respectively.

     The  pro-forma  information  provided  above was  estimated  at the date of
grant, using the Black-Scholes option-pricing model, with the following weighted
average assumptions: <TABLE> <CAPTION>

                                                                                     1999                1998
                                                                                ---------------    ----------------

<S>                                                                                    <C>                 <C>
                Expected life (in years)                                               5.00                5.00
                Risk free interest rate                                                6.50%               6.50%
                Volatility                                                           120.00%              99.00%
                Dividend yield                                                         0.00%               0.00%

</TABLE>
     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully transferable.  Because the Company's options have  characteristics
significantly different from those of trading options,  management believes that
the existing pricing models do not necessarily provide a reliable single measure
of the fair value of its options.

                                       F -



<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

8.       Stock Options (continued)

     In December 1997, the Company adopted the Senior Management  Incentive Plan
(the  "Plan").  The Plan  provides  for the  issuance of up to an  aggregate  of
500,000 shares of the Company's  common stock upon exercise of stock options and
other rights to officers, key employees,  and consultants.  Awards made pursuant
to the Plan will generally vest over three-year  periods.  As of March 31, 1999,
no stock options, or other rights, have been issued under the Plan.

9.       Commitments and Contingencies

     a) Operating leases

     The Company leases office  facilities in San Ramon,  California and Jessup,
Maryland under  non-cancelable  operating leases.  The California lease requires
minimum  monthly  payments of $21,585 and expires in January 2003.  The Maryland
lease requires minimum monthly payments of $1,167 and expires in September 1999.
At March 31, 1999,  aggregate  future minimum lease payments due under operating
leases are as follows:

Year ending
March 31,

2000                         $ 266,018
2001                           259,016
2002                           259,016
2003                           202,312


Total minimum lease payments $ 986,362
                             =========

     The  Company  also  leases  six  rooftop-testing   facilities  in  Oakland,
California and Baltimore,  Maryland under month-to-month leases. Minimum monthly
payments under these month-to-month leases are $500.

     Rent expense was $273,964 and $153,393,  respectively,  for the years ended
March 31, 1999 and 1998.

                                       F -


<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                  For the Years Ended March 31, 1999 and 1998

9.       Commitments and Contingencies (continued)

     b) Capital leases

     The Company leases various equipment under  non-cancelable  capital leases.
Minimum monthly rental payments on capital leases range from $88 to $2,011,  and
the related  leases expire at various  dates  through  August 2001. At March 31,
1999,  aggregate  future  minimum lease payments due under capital leases are as
follows:

                                         Year ending
                                          March 31,

                                                 2000   $ 38,624
                                                 2001      5,188
                                                         --------
                                                          43,812

Less amounts representing interest                        (4,694)

Total future minimum lease payments, net                  39,118

Less current portion due within one year                 (34,486)
                                                       ----------

Noncurrent portion of obligation under capital leases    $ 4,632
                                                       ==========

         c)       Year 2000

     The  Company  does not  believe  that the impact of the year 2000  computer
issue will have a significant  impact on its  operations or financial  position.
Furthermore,  the  Company  does  not  believe  that  it  will  be  required  to
significantly  modify its internal computer systems or products  currently under
development.  However,  if  internal  systems do not  correctly  recognize  date
information  when the year changes to 2000, there could be adverse impact on the
Company's  operations.  Furthermore,  there  can be no  assurance  that  another
equity's failure to ensure year 2000 capability would not have an adverse effect
on the Company.




                                       F -

<PAGE>
                            U.S. WIRELESS CORPORATION
                   Notes to Consolidated Financial Statements

                   For the Years Ended March 31, 1999 and 1998

9.       Commitments and Contingencies (continued)

     d) Employment agreements

     The Company has a five-year  employment  agreement  with its president that
provides for an annual salary of $160,000 and annual increases of 15% per annum.
Upon  execution  of this  agreement,  the  president  was  granted  an option to
purchase  1,500,000 shares of the Company's common stock for $2.00 per share. No
such options were exercised as of March 31, 1999.  The agreement  provides for a
two-year, non-compete period upon termination of the president's employment, and
provides for severance  compensation  in the amount of three times the aggregate
annual  compensation  paid to the president during the preceding  calendar year.
The Company's president is also the President and sole director of Mantra.

     The Company  also has  three-year  employment  agreements  with its general
counsel, Vice President of Hardware Engineering,  and Vice President of Software
Development. Such agreements provide for individual minimum annual salaries that
range  between  $100,000  and  $120,000  and provide for an aggregate of 350,000
options to purchase  shares of the Company's  common stock at $2.00 to $2.50 per
share. The options vest over three-year  periods and have five-year lives. As of
March 31, 1999, no options have been exercised.

Subsequent Events

     In May 1999,  the  Company  sold an  additional  10,000  shares of Series B
Preferred  Stock to private  investors at $100 per share. In connection with the
sales of Series B Preferred  Stock (Note 7), the Company issued an option to the
placement  agent to purchase  150,000  shares of the  Company's  common stock at
$2.50 per share  commencing one year from issuance.  The option expires on April
30, 2004.  The Company also sold 405,000 shares of its common stock to officers,
directors, and employees at $1 per share.


                                       F -