SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                         
                                 FORM 10-KSB/A-1
                                          
                                   (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, 1997

                                       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)

            2694 Bishop Drive, Suite 213, San Ramon, California 94583
               (Address of principal executive offices) (Zip Code)

                                 (510) 830-8801
                (Company's telephone number, including area code)

                 Securities registered pursuant to Section 12(b)
                                   of the Act:
Title of each class                   Name 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)

                         Common Stock Purchase Warrants
                                (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 ^no  revenues  from  operations  during the fiscal year
ended March 31, 1997.
    

         The aggregate  market value of the voting stock  (consisting  of Common
Stock,  par value $.01 per  share)  held by  non-affiliates  on June 2, 1997 was
approximately  $10,756,969,  based upon the average closing bid and asked prices
for such Common Stock on said date ($4.53),  as reported by a market  maker.  On
such date, there were 7,325,245 shares of Company's Common Stock outstanding.



<PAGE>
                                     PART I

ITEM 1.           DESCRIPTION OF BUSINESS

General

     U.S.  Wireless  Corporation  ("the  Company")  is  a  Delaware  corporation
organized  in  February  1993.  In July 1996,  the Company  acquired  51% of the
outstanding  shares  of  common  stock  of each  of  Mantra  Technologies,  Inc.
("Mantra") and Labyrinth  Communication  Technologies Group, Inc. ("Labyrinth"),
both Delaware  corporations formed in July and June 1996,  respectively,  by Dr.
Oliver Hilsenrath.  Unless the context requires, all references to the "Company"
include Labyrinth and Mantra.

         Statements  contained in this report which are not historical facts may
be considered forward looking information with respect to plans, projections, or
future  performance  of the  Company as  defined  under the  Private  Securities
Litigation  Reform Act of 1995. These forward looking  statements are subject to
risks and  uncertainties  which could cause actual results to differ  materially
from those projected.

Reverse Stock Split

         The Company held a special meeting of its stockholders on May 31, 1996,
at which meeting the stockholders  approved a 1 for 4 reverse stock split of its
outstanding  shares of Common Stock,  reducing its issued and outstanding shares
of Common Stock from 3,575,980 shares to 893,995 shares. The record date for the
purpose of calculating  the reverse split was April 17, 1996.  Unless  otherwise
specified, all references herein to shares and per share information give effect
to the reverse stock split.

Name Change and Spin-off

         In June 1996, the Company's Board of Directors, pursuant to the consent
of  its  then  majority   stockholder,   authorized  the   distribution  to  its
shareholders ("the Spin-off Distribution") of the shares of common stock of Play
Co. Toys & Entertainment  Corp.  ("Playco.") owned by the Company.  In addition,
the Company, as majority stockholder of Playco, prior to but in contemplation of
the  Spin-off  Distribution,  authorized  the  conversion  of Playco's  Series D
Preferred  Stock owned by the Company into 1,157,028  shares of Playco's  common
stock.  This  conversion  was based on the average  closing bid price ($1.21) of
Playco's shares for the 90 day period from March 1, 1996 to May 31, 1996.

         In October 1996,  the Company filed an amendment to its  certificate of
incorporation  changing its name from American Toys,  Inc., to its present name.
Simultaneously,  its trading  symbol was changed from "ATOY" to "USWC." The name
change was effected due to the Company's change in direction.

Private Placements

         In July 1996, the Company consummated a private placement ("the Private
Placement") of its securities.  The Company offered 600,000 shares at a purchase
price of $2.50 per share for gross proceeds



<PAGE>
of  $1,500,000.  The  proceeds  of the  offering  were  used  for the  Company's
acquisitions of Labyrinth and Mantra.  Simultaneously,  Labyrinth  consummated a
private placement  offering of an aggregate of 79,000 shares at $12.00 per share
for gross proceeds of $948,000.

Business of Labyrinth Communication Technologies Group, Inc.

General

         In  July  1996,   the  Company   commenced   the   development   of  an
infrastructure  product,  the  RadioCamera,  for the cellular base station.  The
RadioCamera  is  designed to provide  value  added  services  and  features  for
cellular  networks.  The Company has a development plan according to which these
services and features  gradually  will be introduced  to the cellular  networks.
These  services and  features  include  caller  location  finding and  tracking,
autonomous network management, and caller location based improved trunking.

Industry Overview

   
         In June 1996, the Federal  Communications  Commission  adopted a report
and  order  establishing  certain  performance  goals and  timetables  requiring
wireless service providers to be able to identify each caller's phone number and
physical  location  for  the  purpose  of  providing  emergency  services.   See
"Government Regulations." This initiative, requiring service providers to obtain
location finding capabilities for 911 emergency services, has caused a number of
companies to dedicate  research  funding to solving the problem of  developing a
location technology. As the industry attempts to solve this problem,  management
believes  that the  industry ^ will  contemplate  additional  uses for  location
finding technology, as a means to increase revenues by offering additional value
added  services  to the  wireless  communications  industry.  The ^ Company  has
knowledge of a number of companies  competing to develop mobile location finding
technologies  ^  for  network-based   applications,   which  apply  mathematical
algorithms to RF signals.  In addition,  the Company is aware of other companies
which are seeking to build dedicated  networks using different  frequencies than
those  of the  current  cellular  standards  and in  the  alternative  satellite
tracking.  There can be no  assurances  that the  Company is  familiar  with all
companies developing  technology to provide location finding  capabilities,  nor
can it give  assurances  that new  entries in to the  marketplace  or  alternate
technologies will not be developed.
See "Competition."

         To the Company's  knowledge  the  following  are the current  different
method  formats  of  measurements  being  developed  which  use  existing  radio
frequency ("RF") signals to locate a caller, ^which include the following:
    

         Time difference of arrival ("TDOA") of RF signals, 1 Direction or angle
         of arrival  ("AOA")  of RF  signals,  1  Amplitude  or signal  strength
         measurements,  1  Polarization  of  signals,  and  1  Phase  of  signal
         measurements.





<PAGE>
         TDOA and AOA are the primary  techniques to triangulate the location of
the user,  being developed by several of the Company's  competition.  Since most
companies  use  triangulation  (the  use of RF  signals  from  two or more  base
stations) to determine  location,  it is important  that  multiple cell sites be
able to communicate with the user's handset.  For AOA systems, at least two cell
sites are  required.  For TDOA  systems,  three or more cell  sites are  usually
required for accurate location.

   
         A major problem in urban environments is multipath  signals.  Multipath
occurs when multiple RF signals  bounce off  buildings and other solid  objects,
resulting  in the receipt of several  different  signals at the cell site from a
single  caller.  As  there is  rarely a line of sight  from the user to the cell
site, in urban  environments,  reflected RF signals are beneficial in delivering
the call but can be detrimental to finding the user's location.  Therefore,  the
Company believes that, TDOA or AOA techniques typically experience  difficulties
in pinpointing  the location of the caller in urban  environments,  as there are
many conflicting angles and times for the RF signals received at the cell sites.

         Other  current  technical  solutions ^ the Company is familiar with can
locate the caller at the start of a call.  These  technologies  cannot track the
caller if the caller  moves from the original  position  after the time the call
was placed. These types of technical deficiencies do not provide the information
necessary  for  both  911  emergency   services  and  for  commercial   location
applications.  It is  important  for  any  location  technology  to be  able  to
continually track the user's location while a call is in progress.
    

Company Outlook

         The Company's RadioCamera is designed to solve the multipath problem in
offering  location  finding  services by taking various  measurements  of the RF
signals from any caller to a single cell site with a special focus on collecting
all multipath rays. The "fingerprint" collected in this fashion is then utilized
to reconstruct the location out of which the signals could have emerged in order
to locate the caller.

   
         The Company is currently  in the process of  completing  the  research,
development,  and  initial  testing  of the  RadioCamera  prototype.  Though the
Company does not  presently  have any  contracts  for the sale of  RadioCameras,
simultaneously  with its testing, it is marketing the RadioCamera and developing
distribution  alternatives with potential  strategic partners on how to commence
the rollout and operation of the  RadioCamera.  Notwithstanding  the  successful
completion of the testing of the  RadioCamera,  the rollout the RadioCamera will
be contingent on its ability to coordinate the implementation of the RadioCamera
with the service pro viders operations.  See "Marketing and  Distribution".  The
Company's  management  believes  that the  Company  will be able to rollout  the
RadioCamera  during fiscal 1998. To this end the Company is (i)  completing  the
design,  construction,  and testing of a second  prototype  of the  RadioCamera,
which prototype will be used as a platform for mass production of the commercial
units;  (ii)  preparing the  RadioCamera  for testing in active base station and
independent sites; (iii) engaging in marketing and developing  relationships and
strategic  alliances with companies in the wireless industry for the anticipated
rollout of the  RadioCamera  and the formation of an operating  company to offer
geolocation  services;   and  (iv)  developing  a  plan  for  manufacturing  the
RadioCamera in anticipation of its rollout.

     The Company currently believes that its has the funds necessary to continue
it operations for the
    




<PAGE>
   
next 24 months  enabling it to complete  its  testing and  commence  its initial
production.  The Company does not anticipate having revenues from operations for
approximately 12 months.
    

         Initially,  the RadioCamera is being developed for  incorporation  into
the cellular  systems  using the AMPS  standard,  which is the largest  cellular
market in the United States,  incorporating approximately 40 million subscribers
and approximately 30,000 base stations. In the near future, the Company plans to
modify the RadioCameras for use with PCS, GSM, CDMA, TDMA and other standards.

The RadioCamera

         The   RadioCamera  is  an  independent   system   designed  for  either
incorporation  into the  infrastructure  of a  cellular  base  station  or to be
operated on a stand alone basis. It is designed to perform two functions: (i) to
provide location finding  information from the measurement of a hybrid signature
based  on the RF  signals  from  all  cellular  callers  in a  geographic  area,
identifying the callers'  locations on a continuous  basis;  and (ii) to improve
trunking  efficiency in order to increase user capacity.  The  RadioCamera  will
provide trunking  efficiency by effectively  managing the allocation of channels
provided by the antennas to the sectors in which there is demand;  therefore, it
will  apportion  a  station's  capacity  where it is needed,  allowing  capacity
changes  as  demand  changes.  The  Company  believes  that such  efficiency  in
allocation  shall  enable  each  base  station  to  significantly  increase  its
capacity.

         The location finding technology  combines  algorithms  developed by the
Company operating on the collected rays, including all direct and reflected rays
from any  subscriber at any point in time, and matches such rays to an estimated
location of origination. This technology constantly determines the location of a
caller regardless of whether or not he makes a request for location.

         Management believes that the advantage of this technology over TDOA and
AOA  technologies  is  that  it  resolves  the  multipath  problem  of an  urban
environment.  Unlike TDOA or AOA  technologies,  the RadioCamera  technology can
generate a user's location from a single site in an urban  environment  since it
uses  multipath  signals  for its  location  detection  ability.  See  "Industry
Overview." The system also tracks the  geographical  performance of the wireless
base station and can detect whether the base station's coverage is as desired or
whether it has shifted  and is not  providing  coverage  to an expected  area of
coverage,  thus  providing  an  additional  benefit,  network  management,   and
substantially increasing and enhancing the network's operational efficiency.

Testing

         The  Company has  commenced  the  testing of the  RadioCamera  in three
different locations in Northern California.  The Company anticipates testing the
RadioCamera  in  operating  base  stations and on a stand alone basis within the
next few months.  This preliminary testing is designed to determine the accuracy
of the RadioCamera in several operating environments, to refine the software and
hardware of the  RadioCamera  in an  operating  environment,  and to monitor the
performance of the product.  The Company expects testing to continue through the
end of calendar 1997.




<PAGE>
Supply and Manufacturing

         The Company is presently reviewing  alternatives to address anticipated
product  demand.  The Company  believes that when the  technology  risk has been
eliminated, there will be a demand for the RadioCamera. Presently the Company is
performing the design and engineering of the  manufacturing  of the prototype of
the RadioCamera.  This will be the model for the first RadioCamera  manufactured
for  integration  and within the base stations of the  commercial  carrier.  The
Company  believes that these prototypes will be adjusted and modified during the
testing   process  to  conform  to  base  station   integration  and  production
requirements.  Simultaneously  during the testing period,  a manufacturing  plan
will be developed for the mass production of the RadioCamera.

         In April 1997,  the Company  submitted a proposal to the  government of
Germany  to  receive  a  subsidy  and  grant  for  the  purpose  of  building  a
manufacturing  plant in  Rostock,  Germany,  as part of a  redevelopment  effort
undertaken by the German authority. The Company estimates that the manufacturing
facility  will require a US $14 million  investment.  The proposal  includes the
receipt  of  grants  and a US $4.35  million  long-term  loan  from  the  German
government. The loan will be secured by the facility.

         There can be no assurance that an uninterrupted  and adequate supply of
the RadioCamera will be available initially to meet demand. The Company believes
that there are a sufficient  number of  suppliers,  vendors,  and  manufacturers
available to the Company at competitive prices and on competitive terms.

Marketing and Distribution

   
         The Company  plans to  distribute  the  RadioCamera  through  sales (i)
directly to service  providers;  (ii) to companies offering or planning to offer
geo-location services;  (iii) to OEM infrastructure  manufacturers;  and (iv) to
engineering firms developing and constructing base stations. Through its testing
process,   the  Company  is  developing  strategic  alliances  and  consummating
relationships  with various companies  referred to in items (i) - (iv) above. In
the  alternative  the Company may seek to operate  the  RadioCameras,  either as
installed in existing  cellular base stations or through the  development of its
own network.  The Company  believes  that by  eliminating  the  technology  risk
associated ^, through its testing  process,  there will develop a market for the
location finding  technology  produced by the RadioCamera,  though no assurances
can be given.

         In  addition  to  sales of the  RadioCamera,  the  Company  anticipates
entering  into  strategic  alliances  and/or joint  venture  agreements to offer
geo-location services to the wireless  communications  industry.  These services
will  include 911  emergency,  411  information,  wireless  network  management,
geographically sensitive billing, and in the future, advanced network management
and more advanced network applications. The Company can provide such services by
(i)  accessing  the  location  information  produced by the  RadioCameras;  (ii)
transporting  the  information  through  a  communications  system  to a hub for
coordination and integration of the information with other systems (i.e. mapping
system  and  informational   service  systems  like  411  and  911);  and  (iii)
transporting  and selling the information to (a) public safety  answering points
("PSAP") with respect to 911 emergency services, (b) service providers,
    




<PAGE>
   
(c) geo-location service companies,  and (d) end users. The additional functions
described  above would  require  joint  efforts  between the Company and current
providers  of such  services  or the  development  of each by the  Company.  The
Company is currently  undertaking the process of developing  relationships  with
the  cellular  service  providers  and  the  companies  which  provide  (i)  the
transportation  of information  (ii) mapping and  information  service and (iii)
access to the PSAP's.
    

Business of Mantra

General

         Mantra  Technologies,  Inc.  was  founded  in July  1996 as a  software
development company dedicated to the enhancement of human computer  interaction.
In July 1996,  it began the  development  of a  self-driven  research tool ("the
Research  Tool")  designed  to access  various  databases  to locate and collect
information  based on a user  interest  profile.  The Research Tool engages in a
self-driven  daily  process of creating  and updating a user  interest  profile,
which  process is performed by analyzing the data on a user's  system.  The user
profile is submitted to an index server search engine which searches the various
databases the user requests,  and the  information  gathered by the tool is then
filtered for relevant  materials.  Finally,  the  relevant  information  and all
ancillary  documents are downloaded  into the system to be analyzed and filtered
for content, categorized and clustered into a useable format for the user.

         The first  version of this product is  currently  being  developed  and
tested for use as an Internet  research  tool. It studies the data stored on the
user's computer,  determines the user's current areas of interest,  and searches
for information  which may be of value to the user on any indexed database (LAN,
local drives,  Intranets,  Internet,  and paid  information  services  which are
supported by the user),  and retrieves and presents this information to the user
in a conveniently organized HTML document.

Industry Overview

         Information  retrieval is a rapidly growing industry.  With the rise of
the Internet and the personal  computer,  users are constantly  desiring greater
access to  information,  quicker and cheaper.  Technology,  though  continuously
improving,  has not been able to meet the increased  demands of users.  Speed of
transmissions,  limitations  of  communications  platforms,  and  differences in
programming have made research of these databases a tedious endeavor.

         The Internet  has become a new mass media  channel that exposes tens of
millions of people to existing public and private databases.  The technology the
Internet is based on, both at the networking layer and the information  indexing
techniques,  has forced the industry to redesign legacy  databases  and/or their
interfaces  to be compatible  with the new mass media  channel.  The  Internet's
information indexing and distribution  methodology has also become the model for
private local and wide area networks and Intranets.

         As   opposed   to   record   based   or   relational   databases,   the
Internet/Intranet indexing model was designed to accommodate a chaotic system of
resources. On the Internet, new resources are added daily




<PAGE>
and old ones are removed,  all without  notice and without a  supervising  body.
That means  indexing  such a system has to be done both randomly and with enough
flexibility to absorb inconsistencies,  false entries, and a variety of resource
types.

         The only type of attempt to index the  Internet  was made by  voluntary
and free service  providers who operated  complex systems of automated  programs
that roamed the Internet  and  collected  information.  This type of activity is
done today by hundreds of  non-profit  organizations  on the Internet or outside
it,  with the same  search-engine  model  emerging  as the  leading  standard in
indexing text-based  information.  This text-based  information  indexing is not
only on the Internet, it is used with Intranets and anywhere text information is
being  accumulated.  This indexing  technique for text-based  material  utilizes
extraction of the most  "important"  words out of each  text-based  resource and
then indexes that resource  according to the words extracted.  Thus,  retrieving
the  resource  demands that the system be queried with the same words it used to
index the resource. This method of organizing text material is very flexible but
also  introduces  an array of problems.  Searching  for a resource in a very big
database is complex, there being many subtleties to using search words or search
strings.

         Today,  a person needs to have some  proficiency in using these systems
when trying to find a resource,  and more often than not,  basic  proficiency is
not enough. Since the indexing systems are not linear, there can be many results
to a single  query,  sometimes up to hundreds of thousands of results  which the
query issuing person has to then filter based on his individual needs.

         Based on the need for the  accumulation of information and the need for
the ability to access it simply, a market for information  retrieval products is
emerging and continuously  developing.  Users basically are looking for products
to perform one or more of the following functions:

     1. To assist in the process of  retrieving  a resource  from a  query-based
database.

     2. To  submit a query  to  multiple  search-engines  for  local  or  public
databases.

     3. To automate  retrieval  of  specific  type of  information  the user has
designated.

     4. To improve the accuracy of the query results.

     5. To automatically filter out the less relevant results for a user query.

     6. To relieve the users'  need to acquire  proficiency  in resource  search
techniques.

The  available  products  that  target  this  market can be  divided  into three
categories:

     1. "Push Technology" - allows a person to state his field(s) of interest or
specific  items of interest,  and later  actively  sends the user updates  about
resources to use or directly sends the desired information to the user.

     2.  "Multiple  Search  Engine  Submission" - allows a user to form a fairly
simple  query,  submit this query to  multiple  search  engines,  and filter the
results.

     3. "Search  Engine  Enhancements"  - increase the indexing  accuracy of the
search  engine and  deliver  additional  services to narrow the search and yield
fewer, more accurate results per query.

<PAGE>
Company Outlook

         Until  now,  searching  for  information  on  databases  (such  as  the
Internet) required the computer user to proficiently articulate a search string,
submit it to a search  engine,  manually  filter the  results,  and thus  expend
extensive amounts of time during this process. Mantra has developed the Research
Tool, which is designed to eliminate the time inefficiency and extensive cost of
other researching techniques.

         Mantra has  produced the first  prototype  of its Research  Tool and is
engaging in testing  and market  research to  complete  the  development  of the
product and  formulate  a  direction  for its  implementation  in the  industry.
Mantra's goal is to integrate the Research Tool into a client's operating system
as a module which learns and adjusts to the user's habits, needs, and interests,
thereby becoming a personal assistant to the user. The concept is to provide the
user, whether he is an employee of a large corporation or an individual at home,
with the ability to have a search engine search the Internet or other  databases
for information  helpful and necessary to the person's daily operations,  all of
which is done in the background of the computer  system without the user waiting
for  results.   The  Research  Tool  is  to  be  a  learning  and  communicative
self-executing   program  which  will  give  the  user  greater  efficiency  and
flexibility in performing daily necessary functions.

         Mantra  anticipates that additional  versions of the initial  prototype
shall be developed based upon the testing process.  These versions shall include
a more robust set of features and will strive to be more closely integrated with
the user's system,  conceptually  residing between the application level and the
shell level.  Whereas now the only information source used is the Internet,  the
structure  of the  product  is such  that  it will  allow  simple  additions  of
information  modules  allowing  the  software  to  interact  with just about any
indexed  information  source. Its features will allow the product to be deployed
in a wide variety of working environments,  providing the most value in research
intensive environments.

         As part of the Company's  development  process, the Company studies the
possibilities  of  adding  standardized  tests,   handwriting   recognition  and
analysis,  and  behavioral  pattern  recognition to the resource pool for future
products.

The Product

         Mantra has produced the first  prototype of its "Research  Tool," which
is an innovative approach to information search and retrieval. The Research Tool
is a  self-learning  and adaptive  tool which  proactively  anticipates a user's
needs and  desires.  The tool is set up to develop an evolving  user  profile to
search and access  pertinent  information.  In  addition,  it has the  versatile
ability to be utilized by submitting an individual  document,  or a portion of a
document,  as the basis for the analysis  and search.  The user does not need to
come up with individual key words for the search. This system studies documents,
extracts the topics  discussed in them,  and  searches  the  Internet,  or other
available network resources,  for relevant content. Once the user has accessed a
document of interest,  the document can be submitted to the Research  Tool while
the user returns to other  duties.  When the research is finished,  the user can
access the relevant content found.





<PAGE>
         The  operational  process of the Research  Tool  performs the following
functions:  (i) it reviews and  analyzes the  documents in a user's  computer to
produce a user interest profile,  which is a part of the "MindStep"  technology;
(ii) this  profile is then  downloaded  into an index  server  search  engine to
search the database,  initially the Internet, to find relevant documents;  (iii)
once  matching  documents  and  materials  are found,  the  MindStep  technology
reengages  in  analyzing  the  gathered   information,   discarding   irrelevant
information  so as to compile  only  information  which is current  and  closely
associated  to the  user's  profile;  (iv) once this  process is  completed  and
relevant documents are found, a process called "Infodam" engages to download all
the relevant materials to the user's computer for viewing by the user.  MindStep
is the process of formulating a profile of a user's areas of interest from a set
of one or more documents  (initiating an adaptive search on any indexed database
of documents) and analyzing the results to determine  their relevance to the set
of areas of interest extracted from the original set of documents.  The relevant
documents  are then  categorized  according to topics  (areas of  interest)  and
presented to the user.

         The process of presenting  the  information  to the user is provided by
the Infodam  technology  which allows the  computer to download  onto the user's
hard drive the relevant information,  as a background function, so that when the
user goes to retrieve the relevant information it is a quick process.

         The  Research  Tool  may  also  commence  its  process  of  researching
databases by a user's pro-active  initiation of the process described above. The
direct  interaction  occurs when a user wants to research a specific topic. This
is done by delivering a document or set of documents  into a special  section of
the  Research  Tool,  whereby an  immediate  search is  requested.  The research
assistant  then sends the document  through the analysis and  retrieval  process
described above.

         The daily background analysis autonomously monitors the user's level of
interaction with the computer and waits for a period of inactivity which implies
the user is away  from the  computer.  It then  builds a  profile  of  documents
accessed,  modified,  and created within a  user-controlled  number of days. The
documents  contained in this profile should reflect the recent areas of interest
of the user. The documents may be e-mail messages, e-mail attachments, web pages
visited, documents created with any word processor,  presentations,  etc. All of
these documents are then fed into the MindStep engine,  which identifies  topics
discussed in this set of documents,  merges similar topics to form more accurate
topic  modules,  and initiates its research.  The result of this daily  activity
will be an HTML page on the  user's  desktop  which  will  contain  links to the
relevant documents that were found, categorized according to topics.

Marketing and Distribution

         The  Company is  currently  undergoing  studies to  determine  the most
appropriate vehicle for marketing the Mantra product.  Management  anticipates a
universal appeal of the product to include large and medium sized  corporations,
and   professional   groups  such  as  doctors  and  lawyers,   individuals  who
continuously  search databases for the most recent information on certain topics
and every day Internet  users.  Management  believes  that the best  approach to
marketing the product will fall under one of the two following categories:




<PAGE>
         1.       One approach is the mass commercialization,  distribution, and
                  marketing  of  the  product,   which  requires   intense  name
                  recognition and extensive distribution channels in putting the
                  product on retail shelves.  This approach is capital intensive
                  and  requires a bigger  investment  in  building  distribution
                  networks and service and support.

         2.       Another  approach is the marketing of the product  directly to
                  the  biggest  users and  creating  an impetus  for the product
                  through   licensing  the  software.   This  approach  includes
                  engaging in strategic  alliances with computer  manufacturers,
                  Internet  service  providers,   and  other  research  oriented
                  systems.  This method offers the most control regarding sales,
                  service, and support issues.


Competition

         The cellular  communications  and research and  informational  services
industries,  in  general,  are highly  competitive,  with a number of  companies
competing to provide value added services. Existing and developing companies are
providing  large budgets for research and  development in these areas.  Products
are  continuously  being  introduced in to the  marketplace  as newer and better
versions are being developed.

Labyrinth

         There are a number of companies offering value added wireless services.
Though the Company is  competing  with other smart  antenna  companies  offering
products  to increase  the base  stations'  efficiency,  the  Company's  primary
competitors  are firms  offering  or  seeking  to offer  network-based  location
finding services.  A network-based  solution accesses operating base stations in
order to locate  callers.  Currently,  the  Company  is  familiar  with  various
network-based  methods  relying  on  TDOA  and  AOA  techniques.  The  Company's
competitors  include  TruePosition,  a division of The Associated  Group,  Inc.;
Lockheed  Sanders,  a wholly-owned  subsidiary of Lockheed  Martin  Corporation;
E-Systems  Company;  KSI,  Inc.;  and  AccuCom  Wireless  Services.  The Company
believes that some of its competitors have greater marketing,  customer support,
financial, and other resources than those of the Company.

         Other  location   technologies   being  developed   include   dedicated
radiolocation  networks  which are built solely for location  finding and global
positioning  systems which are based on satellite tracking systems.  The Company
does not believe that dedicated  positioning  systems or global tracking systems
have the cost efficiencies  needed to replace the  network-based  systems as the
technology of choice.  Since this area of wireless  services is relatively  new,
sparked by the  requirement  of the FCC to provide 911  emergency  services with
location finding  capability,  most wireless and cellular  service  providers or
intended  providers are in the development and testing stages of their products,
as is the Company.

Mantra

         Though the  Company is  unaware of any  company or product  which is in
direct  competition with the Company's Research Tool, there can be no assurances
that there are not any products which have been




<PAGE>
developed  or which are in  development.  The  Company  is  familiar  with other
companies  and  products  which  perform some of the  functions  provided by the
Research Tool, including:  (i) Push Technology products, for which there are the
following  competitors:  Pointcast,  Inc., Marimba,  Inc., BackWeb Technologies,
AgentSoft Ltd., Intermind Corporation, Lanacom Inc., and Autonomy; (ii) Multiple
Search Engine Submission  products for which Symantec and WebCompass are the two
main competitors; and (iii) Search Engine Enhancement products for which ICE and
Live-Topics are the companies competitors.

         The Company shall compete with such other companies on the basis of the
quality and  efficiency of its products.  Although the Company is confident that
the  technology  behind its  products  is sound,  the Company  cannot  offer any
assurance  that one or more of its  competitors  will  not  develop  and  market
products  equal to or better  than those  marketed by the  Company;  nor can the
Company assure that other companies will not enter the marketplace or that other
companies will not produce and market products  technologically  superior to the
Company's.

Patents and Trademarks

         Members of the Company filed a patent  application  on January 8, 1997,
regarding the RadioCamera and the Company's location finding  technology,  which
application is currently pending.  Simultaneously  with the filing of the patent
application, the individuals assigned any and all rights, title, and interest to
the patent to Labyrinth.

         In June 1996,  employees of Mantra filed a provisional  patent with the
U.S.  Patent and Trademark  office with respect to the development of a personal
web map  system.  The filing of a  provisional  patent  requires  a full  patent
application within one year of the filing of the provisional patent in order for
the date of the patent,  if and when issued, to be the date of the filing of the
provisional  patent.  On March 28,  1997,  employees  of  Mantra  filed a patent
application,  including the technology  developed in the provisional  patent, as
further developed.  This patent is currently pending. The inventors subsequently
filed  assignments,  assigning  any and all rights,  title,  and interest to the
patent, to Mantra.

   
         There can be no assurance that patents will be issued pursuant to these
filings or that any particular  aspect of the Company's  technology  will not be
found to infringe on the  products or  technologies  of other  companies or that
other companies will not infringe on the patents or technologies of the Company.
Dr. Hilsenrath and all employees of the Company have agreed in writing to assign
any and all rights,  title and interest to patentable  products  produced by the
Company.  All employees prior to the commencing of their employment are required
to  execute  non  disclosure  and  confidentiality  agreements,   which  include
representations  that  all  technology  developed  during  the  course  of their
employment  is owned  solely  by the  Company  and that  they  agree to  execute
assignments for all patents filed
    

         The Company relies on common law  trademarks for use of  "RadioCamera,"
"MindStep,"  and "Infodam." The Company has filed intent to use  applications to
register these  trademarks in the United  States.  The Company has one year from
the filing date to file trademark  applications  showing use of the  trademarks.
There can be no assurance that such  trademarks  will be registered,  or that if
registered, they will adequately be protected against infringement.




<PAGE>
         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 of 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
fund same, that it will prevail.

Government Regulations

         The  wireless  communications  industry  is  regulated  by the  Federal
Communications  Commission  ("FCC").  The FCC  regulates and monitors the use of
radio waves which are  apportioned  to numerous uses for all  frequencies of the
spectrum,.  In September 1994, the FCC sought comment on a Notice of Rule making
(NPRM Docket  94-102)  which  proceeding  addressed  the issue of 911  emergency
services for advanced telecommunications technologies. On June 12, 1996, the FCC
adopted a Report & Order which establishes  performance goals and timetables for
the  identification of a wireless  caller's phone number and physical  location.
Under  phase I of the order,  wireless  carriers  must be able to  identify  the
telephone  numbers of their  subscribers  and locate  subscribers to the nearest
cell by April 1, 1998. Under phase II, wireless  carriers must be able to locate
a 911 caller within 125 meters, in 67% of all cases, by October 1, 2001.

         Additionally,  the  Company is  required to comply with a wide range of
other state and local rules and  regulations  applicable  to its  business.  The
ability to adapt the Company's product lines in order to comply with the current
and anticipated broad federal,  state, and local regulatory network is essential
and may be costly.  The  failure  to comply  with such  regulations  may have an
adverse effect on the Company's operations.

ITEM 2.           DESCRIPTION OF PROPERTY

         On July 31, 1996, the Company  entered a building lease agreement ("the
Lease") with Annabel Investment Company, a California partnership, for the lease
of executive office space at 2694 Bishop Drive, Suite 213, San Ramon, California
94583.  Pursuant  to the Lease,  the  Company  maintains  2,549  square  feet of
executive  office  space  at a total  cost of  $50,980  per  annum.  The  Lease,
effective  for a term of three (3)  years,  commencing  on August  23,  1996 and
continuing through August 23, 1999, was amended on November 11, 1996, to include
the rental of 2,667  additional  square feet of office space  (comprising  Suite
250) at a cost of $56,007 per annum.

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.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During the fourth  quarter of the fiscal year ended March 31, 1997,  no
matter was submitted to a vote of security holders,  through the solicitation of
proxies or otherwise.





<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 bid quotes as reported by a market  maker for the  Company's  Securities
during  the  period  from  January  1,  1995  through  June 2,  1997,  or  their
expiration. Bid quotations 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                       Warrants(1)                        Distribution Warrants(1)(2)
Calendar Period                      Low    High              Low      High             Low      High
---------------                      ---    ----              ---      ----             ---      ----

        1995

<C>                                  <C>    <C>                <C>     <C>                <C> <C>         <C>  <C>
01/01/95 - 03/31/95                  9      48                 7       26                 2 1/2           25 1/2
04/01/95 - 06/30/95                  2      16 21/32           1/8     7 1/2                        1/8            4
07/01/95 - 09/30/95                 12 1/4  12 1/4             3/4     3/4                1/4              1/4
10/01/95 - 12/31/95                 14      36                 1/8     1/2               1/8               1/4

        1996

01/01/96 - 03/31/96                  18      10                 1/8     1/2                       1/8              1/4
04/01/96 - 06/30/96                  10 1/2  14
07/01/96 - 09/30/96                  1 1/8   6 1/2
10/01/96 - 12/31/96                  3 1/8   4 1/4

        1997

01/01/97 - 03/31/97                  31/4   6 1/4
04/01/97 - 06/03/97                  23/4   4 13/16
-----------------------
</TABLE>

     (1) Unexercised  Distribution Warrants and Public Warrants expired on March
28, 1996.

     (2) The Warrants and  Distribution  Warrants began trading on June 14, 1994
upon the  separation  of the Units,  and ceased  trading on March 27,  1996 upon
their expiration.

     (3) The  Company's  Units only traded from March 28, 1994  through June 14,
1994.

         As of June 2, 1997,  there  were 44 holders of record of the  Company's
Common Stock,  although the Company  believes that there are  approximately  905
additional  beneficial  owners of shares of Common Stock held in street name. As
of June 2, 1997,  there were  7,325,245  shares of the  Company's  Common  Stock
outstanding.

         On July 31, 1996, the Company  consummated a private placement offering
of an  aggregate of 600,000  shares of its Common  Stock at a purchase  price of
$2.50 per share,  for which the Company  received  gross proceeds of $1,500,000.
The proceeds of the offering  were used to purchase the  securities of Labyrinth
and Mantra in accordance with the acquisition. See "Business." The purchasers in
the  offering  received  "piggy  back"  registration  rights.  At the same time,
Labyrinth  consummated  a private  placement  offering of an aggregate of 79,000
shares at $12.00 per share for gross proceeds of $948,000.




<PAGE>
ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

General

         The  Company was  originally  organized  in February  1993 as a holding
company to acquire a majority interest in Playco.  Historically,  through August
15, 1996,  the Company's  results of operations  and  financial  condition  have
related  primarily to those of Playco.  Effective  August 15, 1996,  the Company
spun-off its ownership of Playco Common Stock to the Company's  stockholders and
recorded a dividend for the net book value of the  spin-off.  With the July 1996
acquisitions  of 51% of Labyrinth and Mantra,  the Company  changed its business
focus.  As discussed in Item 1, Labyrinth is in the business of researching  and
developing cellular  infrastructure  products while Mantra is in the business of
developing  software  to  enhance  human  interaction  with  computers,  and  in
particular, of gathering and analyzing data from such sources as the Internet.

         Due to the Company's change in focus, the results of operations for the
year ended March 31, 1997, which primarily  reflect the activities of a research
and  development  company,  are  not  directly  comparable  to  the  results  of
operations  for the year ended  March 31,  1996,  which  reflect  the results of
operations from a retailer. Additionally, as operations for the year ended March
31, 1997 did include some results of operations  from Playco and the start-up of
operations  for  Labyrinth and Mantra,  the results of  operations  for the year
ended March 31, 1997 are not an indication of any future results of operations.

         Statements  contained in this report which are not historical facts may
be considered forward looking information with respect to plans, projections, or
future  performance  of the  Company as  defined  under the  Private  Securities
Litigation  Reform Act of 1995. These forward looking  statements are subject to
risks and  uncertainties  which could cause actual results to differ  materially
from those projected.

Results of Operations:

Year Ended March 31, 1997 as Compared to the Year Ended March 31, 1996

   
         Through  March 31, 1997 , the  Company^  recorded no revenues  from the
operations of Labyrinth  and Mantra.  ^ The Company  recorded  retail sales from
Playco of^  $21,230,853  ^ for the year ended March 31,  1996.  The  decrease in
sales is  reflective  of the August  1996  spin-off  of the  Company's  majority
ownership in ^Playco. ^

         Costs and expenses totaled $2,756,576 for the year ended March 31, 1997
as compared to total costs and expenses of $25,321,474  for the year ended March
31, 1996. As with sales, the overall decrease in costs and expenses is primarily
due to the ^  divestiture  of ^the  majority  ownership of Playco.  For the year
ended March 31, 1997, the Company ^and its current majority owned  subsidiaries,
Labyrinth and Mantra, had Operating Expenses which totaled $1,542,193.
    





<PAGE>
   
For the year ended March 31,  1997,  compensation  expense  associated  with the
issuance of 2,641,500  Common Stock  options to employees and 1,550,000 ^ common
stock options to consultants totaled $731,535.  In addition,  Labyrinth recorded
compensation  expense of $620,000  in  connection  with the  issuance of 151,000
shares of its common stock to its officers and key employees.
    

         The Company  recorded  $106,542 of  amortization  of the excess of cost
over basis of the net  assets  acquired,  $100,000  of which was  recorded  as a
result of the Labyrinth  acquisition  in July 1996, for the year ended March 31,
1997. Such amortization is included in operating expenses.

   
         For the year ended March 31, 1997,  the Company had interest  income of
$137,152 as compared to $18,417 for the year ended March 31, 1996.  The increase
in interest income is the result of (i) higher cash balances  resulting from the
Company's  and  Labyrinth's  July 1996 private  placement of 600,000  shares and
79,000 shares of Common Stock,  respectively,  which resulted in net proceeds of
$1,458,000  and  $948,000,  respectively,  and (ii) the  exercise  of  3,250,000
options to purchase  Common Stock between July and December 1996 which  resulted
in  additional  capital of $3,992,483  being  contributed  to the Company.  ^The
^Company had no interest  expense for the year ended March 31, 1997 ^compared to
$535,158  for the year ended March 31,  1996 ^. The  decrease is a result of the
spin-off of Playco which  incurred  interest on its  obligations  with a finance
company.
    

         During the year ended March 31, 1997, the Company changed its method of
accounting  for the  minority  stockholders'  interest  in Playco.  The  Company
changed from one method of accounting  which records the total amount of the net
proceeds received from Playco's equity  transactions as the minority interest to
a more  generally  accepted  method which  reflects  the minority  interest as a
percentage of the net assets of Playco.  The change in  accounting  for minority
interest is recorded as a cumulative effect of a change in accounting  principle
which had the effect of reducing  minority  interest by  $2,413,973,  increasing
additional  paid in capital by  $2,873,408,  and increasing the net loss for the
year ended March 31, 1997 by $459,435.

   
         During the year ended March 31, 1997, the Company recorded an aggregate
loss from discontinued  operations of $1,010,312.  Such amount represents losses
from the  operations of Playco prior to the spin-off date of August 15, 1996 and
is  comprised  of net sales of  $5,024,338,  costs and  expenses of  $6,170,999,
interest  expense of  $238,171  and a  reduction  of the loss from the  minority
interest in Playco's net losses of $374,520.
    

         As a  result  of  the  above,  the  Company  recorded  a  net  loss  of
$4,203,857,  or $0.56 per share, for the year ended March 31, 1997 compared to a
net loss of $2,876,733, or $4.02 per share, for the year ended March 31, 1996.

Research and Development - Future Operations

   
         During the year ended March 31, 1997, the Company incurred research and
development  expenses of  approximately  $410,000.  The Company expects that the
research and development stage of both Labyrinth's and Mantra's planned products
will  continue for  approximately  twelve  months  while  testing of the planned
products may require an additional six to
    




<PAGE>
   
twelve months. Thus, the Company does not expect Labyrinth or Mantra to earn any
significant  revenues from  operations  for at least eighteen  months.  As such,
management  estimates research and development  expenditures for the year ending
March 31, 1998 will approximate $610,000.  Research and development  activities,
as well as operating  and marketing  expenses,  are expected to be financed with
funds raised through  Labyrinth's private placement and Labyrinth's and Mantra's
sale^ of 51% of each of its outstanding common stock to the Company.
    

Liquidity and Capital Resources:

         As of March 31, 1997, the Company had working capital of $5,166,493 and
cash equivalents of $5,328,781. Such funds resulted primarily from the Company's
and  Labyrinth's  July 1996  private  placements  and the  exercise of 3,250,000
Common Stock options.

Trends Affecting Liquidity, Capital Resources, and Operations

         As discussed above, the nature of the Company's operations has changed.
While it once was a holding company for a retailer,  it is now a holding company
for research and  development  companies.  As such,  management is currently not
aware of any trends that may affect its  liquidity,  capital  resources,  and/or
operations.

         However, the Company's future operations could be adversely affected if
the Company's timetable for the developing,  marketing, and manufacturing of its
planned  products  exceeds  available  capital  resources.  The primary  initial
expenses associated with the commencement of Labyrinth's and Mantra's operations
are  expected  to  include  officer  and  key  employee  salaries.  Furthermore,
additional  financing may be required to complete product  development and begin
product  marketing.  Management  expects the limited  resources  of the Company,
Labyrinth,  and  Mantra,  as  well as the  required  continuation  of  research,
development,  and testing for approximately  twelve to eighteen months, to cause
significant strain on the Company's technical, financial, and other resources.

Inflation and Seasonality

         Inflation and seasonality are currently not expected to have a material
effect on the Company's liquidity, capital resources, or operating activities.




<PAGE>
New Accounting Pronouncement:

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement of Financial  Accounting Standards ("SFAS") No. 128 Earnings Per Share
("EPS"). SFAS No. 128 requires all companies to present "basic" EPS and, if they
have a complex capital structure, "diluted" EPS. Under SFAS No. 128, "basic" EPS
is computed by dividing income  (adjusted for any preferred stock  dividends) by
the weighted  average  number of common  shares  outstanding  during the period.
"Diluted" EPS is computed by dividing  income  (adjusted for any preferred stock
or convertible stock dividends and any potential income or loss from convertible
securities) by the weighted average number of common shares  outstanding  during
the period  plus the number of  additional  common  shares  that would have been
outstanding if any dilutive potential common stock had been issued. The issuance
of  antidilutive  potential  common  stock  should  not  be  considered  in  the
calculation.  In addition,  SFAS No. 128 requires certain additional disclosures
relating to EPS. SFAS No. 128 is effective for financial  statements  issued for
periods ending after December 15, 1997.  Thus, the Company  expects to adopt the
provisions of this statement in fiscal year 1998. Management does not expect the
adoption of this  pronouncement  to have a  significant  impact on the Company's
financial statements.

ITEM 7.           FINANCIAL STATEMENTS

         See attached financial statements.

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

         On August 15, 1996,  the Board of  Directors of the Company  authorized
the Company's Executive Officers to interview and engage a new auditing firm for
the Company.  This  resolution  was enacted in order for the Company to have its
auditors in closer proximity to its executive offices.  On October 24, 1996, the
Company  dismissed  Scarano  &  Lipton,  P.C.  as its  auditors.  The  change in
accountants  was not  due to any  discrepancies  or  disagreements  between  the
Company  and  Scarano  &  Lipton  on any  matter  of  accounting  principles  or
practices,  financial statement disclosure,  or auditing scope or procedure. The
former accountants'  reports on the Company's financial statements for the years
ended  March  31,  1995  and  1996  did not  contain  any  adverse  opinions  or
disclaimers of opinion;  nor were they qualified or modified as to  uncertainty,
audit scope, or accounting principles.

         Effective as of November 20, 1996, the Company engaged Haskell & White,
Certified Public  Accountants as its certifying  auditors to audit the Company's
financial  statements  for the year ended March 31, 1997. In December  1996, the
Company engaged Haskell & White, to reaudit the Company's  financial  statements
for the year ended March 31, 1996.




<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>                                                  
         Dr. Oliver Hilsenrath                                40                President, Chief Executive Officer,
                                                                                Director

         Dr. Mati Wax                                         50                Chief Technology Officer

         David Klarman                                        32                General Counsel and
                                                                                Secretary

         David Tamir                                          53                Director

         Regina Gindin                                        45                Director

</TABLE>

     Dr. Oliver  Hilsenrath has been the President and Chief  Executive  Officer
and a Director of the Company since July 31, 1996. Since their  inceptions,  Dr.
Hilsenrath has been the Chief Executive  Officer,  President,  and a Director of
both  Labyrinth  and  Mantra.  From  1992  through  1996,  he was a Senior  Vice
President,  General Manager, and co-founder of Geotek  Communications,  Inc., an
international  wireless  carrier  with  networks  in the United  States,  United
Kingdom,  and Germany.  Dr. Hilsenrath  received his Ph.D. in information theory
from  Technion-Polytechnical  Institute of Israel. He has worked in the wireless
communications industry for twenty years.

     Dr.  Mati Wax has been the Chief  Technology  Officer  of the  Company  and
Labyrinth  since  August  1996.  From 1985 to 1996 he was the head of the Signal
Processing Center at RAFAEL.  From 1984 through 1985 he was a visiting scientist
for IBM  Research  Laboratories.  Dr.  Wax  received  his  Ph.D.  in  electrical
engineering  from Stanford  University in 1985. While at Stanford he founded the
smart antenna group, and received the fellow of IEEE.

     David  Klarman has been General  Counsel and Secretary of the Company since
September 1, 1996. In August 1996, Mr.  Klarman  formed Klarman & Associates,  a
law firm  specializing in corporate and securities law with offices in New York,
New York and San Ramon,  California.  From July 1994 to August 1996, Mr. Klarman
was an associate  with Lampert & Lampert,  a New York law firm  specializing  in
corporate and securities law. Prior thereto, from February 1991 to July 1994, he
was an associate with




<PAGE>
     Goldstein,  Axelrod &  DiGioia,  also a New York law firm  specializing  in
corporate and  securities  law. Mr. Klarman was elected a member of the Board of
Directors  of The  Appletree  Companies,  Inc. in August 1996 and served as such
until April 1997.  Mr. Klarman  received a Juris  Doctorate in 1990 from Yeshiva
University,  Benjamin N.  Cardozo  School of Law and a B.S. in Finance  from the
University of Maryland in 1986.

         David Tamir has been a Director of the Company since August 1996. Since
September 1995, Mr. Tamir has been the General Manager of GeoNet Israel Limited,
a subsidiary of Geotek  Communications,  Inc. From July 1992 to September  1995,
Mr. Tamir was the President of Powerspectrum Technology Limited, a subsidiary of
Geotek  Communications,  Inc., a cellular-wireless  communications  corporation.
Prior thereto,  from 1990 to 1992, Mr. Tamir was a representative of RAFAEL, the
defense branch of the Israeli  government.  Mr. Tamir received BS and MS degrees
in Electrical  Engineering from Technion,  the Israel Institute of Technology in
Haifa, and an MBA degree from Hebrew University.

   
     Regina Gindin has been a Director of the Company  since August 1996.  Since
August 1994, Ms. Gindin has been an independent consultant for RBG Associates, a
consulting  firm which  provides  management  consulting  services for strategic
business  planning.  From 1993 to August  1994,  Ms.  Gindin was the Senior Vice
President  of  Strategic  Management  and  Corporate  Communications  for Conner
Peripherals, Inc. ("Conner"),  computer peripheral manufacturer.  Prior thereto,
from 1992 to 1993,  Ms.  Gindin was the acting Chief  Financial  Officer of such
corporation  and prior to that, from 1988 to 1992, she was the Vice President of
Strategic Planning and Corporate Communications.  Ms. Gindin received her MBA in
Business  Administration  from the  Wharton  School of  Finance,  University  of
Pennsylvania. She is a Director of The American Jewish World Service. Ms. Gindin
is also an advisor to the marketing department of the Wharton School of Finance.
See "--Employment and Consulting Agreements."
    

         The Directors of the Company are elected  annually by the  shareholders
and hold office  until the next annual  meeting of  shareholders  or until their
successors  are  elected  and  qualified.  The  Executive  Officers  are elected
annually  by the Board of  Directors,  serve at the  discretion  of the Board of
Directors and hold office until their successors are duly elected and qualified.
Vacancies on the Board of Directors may be filled by the remaining 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  shareholders  for damages for 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 shareholder litigation.

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




<PAGE>
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  shareholders,  during fiscal 1997, the Company has
been  informed  that all  Officers,  Directors,  or  greater  than  ten  percent
shareholders  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.

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, 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                                                                               Options/          Other Annual
Position                                     Year(1)           Salary($)        Bonus($)          SARS             Compensation

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

David Klarman                                1997              70,000           -                 150,000(5)      --
General Counsel and Secretary

Dr. Mati Wax                                 1997              66,667           -                 100,000(6)      --
    
Chief Technology Officer
-----------------------------
</TABLE>

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

     (2)  Reflects the portion of the year worked based on salaries of $160,000,
$120,000,   and  $100,000  for  Dr.  Hilsenrath,   Mr.  Klarman,  and  Dr.  Wax,
respectively.

     (3) Pursuant to his employment agreement,  Dr. Hilsenrath receive an option
to purchase 1,500,000 shares of Common Stock at $2.00 per share.

     (4)  Includes (i) the payment of $509 per month for  automobile  allowance,
and (ii) the payment of approximately  $1,500 per annum for a life insurance and
disability  policy  for  the  benefit  of Dr.  Hilsenrath's  beneficiaries.  See
"Employment and Consulting Agreements."

     (5) In August 1996, the Company  granted Mr. Klarman the option to purchase
150,000  shares of the Company's  Common Stock at an exercise price of $2.00 per
share subject to a vesting schedule. See "Employment and Consulting Agreements."

     (6) In July 1996,  the  Company  granted  Dr.  Wax the  option to  purchase
100,000  shares of the Company's  Common Stock at an exercise price of $2.00 per
share pursuant to a vesting schedule. See "Employment and Consulting Agreement."
The Company also issued Dr. Wax 50,000 restricted  shares of Labyrinth's  Common
Stock.



<PAGE>
<TABLE>
<CAPTION>
                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)


                                            Individual Grants


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

                                                          % of Total
                                 # of Securities          Options/SAR's
                                  underlying              Granted                     Exercise or
                                 Options/SAR's            Employees in                Base
Name                             Granted (1)              Fiscal Year                 Price ($/SH)             Expiration Date
----                             ------------             ------------                -------------            ---------------


<S>                              <C>                                 <C>              <C>                       <C>   
Dr. Oliver Hilsenrath            1,500,000                           56.8             $2.00                     06/30/01

   
David  Klarman                     150,000                            5.7             $2.00                     08/30/01
    

Dr. Mati Wax                       100,000                            3.8             $2.00                     07/06/01

</TABLE>

     The following table contains  information  with respect to employees of the
Corporation concerning options held as of March 31, 1997.
<TABLE>
<CAPTION>


               AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES



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


                                                                                                           Value of
                                                                                 Number of                  Unexercised
                                                                                 Unexercised               In-The-Money
                                                                                 Options/SAR's             Options/SAR's
                                 Shares                                          at FY-End (#)             at FY-End ($)
                                 Acquired on            Value                    Exercisable/               Exercisable/
Name                             Exercise (#)           Realized ($)             Unexercisable             Unexercisable (1)
----                             ------------           ------------             -------------             -----------------
<S>                                    <C>                      <C>              <C>                       <C>
Dr. Oliver Hilsenrath                  -                        -                1,500,000/0               3,000,000/0

David Klarman                          -                        -                0/150,000                 0/300,000

Dr. Mati Wax                           -                        -                0/100,000                 0/200,000

</TABLE>

     (1) Based upon the  closing  price for the Common  Stock on March 31,  1997
($4.00), as reported by a market maker.

<PAGE>
Employment and Consulting Agreements

         In April 1997, the Company amended the five year  employment  agreement
it entered with Dr. Hilsenrath in July 1996. As amended,  Dr. Hilsenrath remains
the Chief  Executive  Officer and President of the Company and the President and
sole Director of both Labyrinth and Mantra. The agreement, as amended,  provides
for an annual salary of $160,000 and increases of 15% per annum for each year of
its 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 policy of life  insurance on the life of Dr.  Hilsenrath in
the face amount of $1,000,000 payable to his designee. This policy shall include
provisions  for the payment of up to 18 months  salary to Dr.  Hilsenrath in the
event that Dr.  Hilsenrath is disabled.  Upon the conclusion of this  agreement,
all right,  title,  and  interest  in the  policy  shall be  transferred  to Dr.
Hilsenrath,  and Dr.  Hilsenrath 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
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,  Dr.  Hilsenrath  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 is to receive a salary
of $120,000 per annum and the option to purchase 150,000 shares of the Company's
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 to 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.

         In July  1996,  Dr.  Mati  Wax  entered  into a three  year  employment
agreement with the Company whereby as Chief Technology  Officer of same, Dr. Wax
is to receive a salary of $100,000  per annum,  the option to  purchase  100,000
shares of the  Company's  Common Stock at an exercise  price of $2.00 per share,
subject to a three  year  vesting  schedule,  and  50,000  restricted  shares of
Labyrinth's common stock, subject to a three year vesting schedule.

         In June 1996, the Company entered into a five year employment agreement
with Ilan Arbel pursuant to which Mr. Arbel was to be Vice President of Business
Development,  a non-executive officer position,  upon the Company's consummation
of the acquisitions of Labyrinth and Mantra.  Mr. Arbel's sole  compensation was
the grant of options to purchase  1,000,000  shares of Common Stock at $1.00 per
share  for a period  of five  years and  2,250,000  shares  at $1.33 per  share,
exercisable  until  December 31, 1996.  In July 1996 Mr.  Arbel,  exercised  his
option to purchase  1,000,000  shares at $1.00 in full. Mr. Arbel  exercised the
remaining options in August and December 1996. Pursuant to an S-8 registration




<PAGE>
statement, 1,000,000 shares were transferred. The S-8 registration statement has
been amended to deregister the sale of the remaining  shares,  all of which were
issued with restrictive legends.

   
         ^In July 1996 the Company  entered  into 3 year  consulting  agreements
with Ryburn Limited and Crossgar Limited,  to render services in introducing the
Company  to  potential  customers  and  facilitating   relationships  with  such
companies in the United States and Middle East,  initiating  strategic alliances
and joint ventures,  as well as providing investment and business consulting and
advisory  services to the  Corporation,  inclusive of the location,  evaluation,
structuring and financing of business activities.  The only compensation for the
services  rendered by the  consultants  are the five year options granted by the
Company to purchase  1,000,000  and 200,000  shares of Common Stock at $2.00 per
share, to each of Ryburn Limited and Crossgar Limited, respectively.

         In  December  1996,  the  Company  entered  into  a 3  year  consulting
agreement with Dennis Francis,  Vice-president  of Vanguard  Cellular  Financial
Corp.,  to provide  technical  assistance  in the  development  of the Company's
products.  Mr. Francis  received a five year option to purchase 50,000 shares of
Common Stock at $4.00 per share.

         In January 1997, the Company entered into a 2 year consulting agreement
with Young Associates Limited, with Lord David Young as its principal, to render
services  introducing  the  Corporation  to owners of Beta  sites,  facilitating
relationships with potential customers and initiating strategic  alliances.  The
only compensation for the services  rendered by Young Associates  Limited is the
of a five year option to purchase  100,000  shares of Common  Stock at $2.00 per
share,  vesting at the rate of 1/4 (25,000 shares) per the expiration of every 6
month period  commencing July 1, 1997, until fully vested.  In addition,  in the
event that the Company enters into a transaction with a company introduced to it
by  Young  Associates  Limited,  it is due a  finders  fee  subject  to a Lehman
formula.

         In January 1997, the Company entered into a 3 year consulting agreement
with  Spencer   Corporation,   to  render   services  in  Europe  to  facilitate
relationships with potential customers and initiating strategic alliances and to
provide  investment  and  business  consulting  and  advisory  services  to  the
Corporation, inclusive of the location, evaluation, structuring and financing of
business  activities.  The only  compensation  for the services  rendered by the
consultant  is a five year option to purchase  100,000  share of Common Stock at
$2.50 per share.

         In June 1997, the Company entered into a two year consulting  agreement
with Gerard Klauer Mattison & Co., Inc. ("GKM"), an investment banking firm, for
services in facilitating  relationships  with potential  customers and strategic
partners and for initiating,  evaluating,  recommending and providing  strategic
analysis  with  respect  to  financing  alternatives.  As  compensation  for the
services,  the Company granted to GKM options to purchase  100,000 shares of the
Company's Common Stock at $4.25 per share,  subject to a vesting schedule of 1/2
of the shares  underlying the option vesting upon issuance and 1/2 of the shares
vesting six months from  issuance.  The option shall be for a term of five years
commencing on the date of issuance.  In addition,  in the event that the Company
enters into a transaction  with a company  introduced to it by GKM, GKM is due a
finders fee subject to a Lehman formula.
    





<PAGE>
   
         On August  12,  1997,  the  Company  entered  into a 2 year  consulting
agreement  with  DAEHO  Merchandising  Inc.,  Seoul,  Korea,  whereby  DAEHO was
retained to perform consulting  services  including (i) introducing,  initiating
and  engaging  in the  process  of  facilitating  relationships  with  potential
customers  and  strategic  partners  and  (ii)  initiating  and  coordinating  a
manufacturing  effort  for the  RadioCamera  in Asia.  As  compensation  for the
services  rendered DAEHO would receive a commission,  in cash or kind,  based on
any  consummated  transactions  as referred to in (i) above and 3% of the actual
price paid by the Company for the manufacture of each  RadioCamera  purchased by
the Company in accordance with (ii) above.

         On  August  12,  1997  the  Company  entered  into a 2 year  consulting
agreement  with Regina  Gindin,  a member of the  Company's  board of directors,
pursuant  to which Ms.  Gindin  was  retained  to  perform  consulting  services
including  (i)  introducing  and  facilitating   relationships   with  potential
customers  and strategic  partners and (ii)  providing  investment  and business
consulting  and  advisory  services  related  to  corporate  finance  and  other
financial  services matters.  The Company agreed to pay 2% of the gross proceeds
of any financing of $10,000,0000 and $20,000,000 , which fees are payable over a
12 month period from the transaction  date (s).  Additionally,  Ms. Gindin shall
receive three year options to purchase an aggregate of 150,000  shares of Common
Stock,  exerciseable  subject to a vesting schedule,  at the market price on the
date(s) of consummation of said  offering(s),  of each of the  consummation of a
$10,000,000  and  $20,000,000   capital   funding.   Upon  the  consummation  of
transactions between Mantra and a strategic partner,  facilitated by Ms. Gindin,
of up to four strategic partner, she shall receive 2.5 shares of Mantra for each
strategic partnership.
    

Stock Option Plan

         During 1993,  the Company  adopted the Company's 1993 Stock Option Plan
("the  Plan").  The Board  believes  that the Plan is  desirable  to attract and
retain  executives  and other key employees of  outstanding  ability.  Under the
Plan,  options to purchase an aggregate of not more than 37,500 shares of Common
Stock may be granted from time to time to key  employees,  Officers,  Directors,
advisors, and independent consultants to the Company and its subsidiaries.

         The Board of Directors is charged with the  administration  of the Plan
and  is  generally  empowered  to  interpret  the  Plan,   prescribe  rules  and
regulations  relating  thereto,  determine  the terms of the option  agreements,
amend same with the consent of the Optionee(s),  determine the employees to whom
options are to be granted,  and determine  the number of shares  subject to each
option  and the  exercise  price  thereof.  The per  share  exercise  price  for
incentive stock options  ("ISO's") will not be less than 100% of the fair market
value of a share of the Common Stock on the date the option is granted  (110% of
fair market value on the date of grant of an ISO if the optionee  owns more than
10% of the Common Stock of the Company).

         Options will be  exercisable  for a term  determined by the Board which
will not be less than one year. Options may be exercised only while the original
grantee has a relationship with the Company or with a subsidiary of the Company,
which latter  relationship  confers eligibility to be granted options, or at the
sole  discretion of the Board,  within ninety days after the original  grantee's
termination.  In the event of termination due to retirement,  the Optionee, with
the consent of the Board, shall have the right to exercise




<PAGE>
his  option at any time  during  the  thirty-six  month  period  following  such
retirement.  Options may be exercised up to thirty-six months after the death or
total and  permanent  disability  of an Optionee.  In the event of certain basic
changes in the Company,  including a change in control of the Company as defined
in the Plan, in the  discretion  of the Board,  each option may become fully and
immediately exercisable. ISO's are not transferable other than by will or by the
laws of descent and  distribution.  Options may be exercised during the holder's
lifetime only by the holder or his guardian or legal representative.

         Options  granted  pursuant to the Plan may be  designated as ISO's with
the attendant tax benefits  provided  therefor pursuant to Sections 421 and 422A
of the Internal  Revenue Code of 1986.  Accordingly,  the Plan provides that the
aggregate  fair market value  (determined  at the time an ISO is granted) of the
Common  Stock  subject to ISO's  exercisable  for the first time by an  employee
during any calendar  year (under all plans of the Company and its  subsidiaries)
may not exceed $100,000.  The Board may modify,  suspend, or terminate the Plan,
provided,  however, that certain material modifications  affecting the Plan must
be approved by the  shareholders,  and any change in the Plan that may adversely
affect an Optionee's  rights under an option  previously  granted under the Plan
requires the consent of the Optionee.




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

         The following table sets forth certain  information as of June 10, 1997
with  respect to the  beneficial  ownership  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 Company to be the
owner  of 5% or more of the  outstanding  shares  of  Common  Stock;  (ii)  each
Director;  and (iii) all Officers and Directors as a group.  Except as otherwise
indicated  below,  each named  beneficial owner set forth herein has sole voting
power with respect to the shares of Common Stock listed opposite his name.
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------

Name and  Address                                Amount and                  % of outstanding]
of Beneficial Owner                              Nature of                   shares owned
                                                 Beneficial
                                                 Ownership
-------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                                    <C>  
Dr. Oliver Hilsenrath
c/o U.S. Wireless Corp.                                  3,750,000(1)                           42.2%
2694 Bishop Drive, Suite 213
San Ramon, CA 94583
-------------------------------------------------------------------------------------------------------------
United Textiles & Toys
Corporation                                                 378,758                              5.1%
448 West 16th Street
New York, New York 10011

-------------------------------------------------------------------------------------------------------------
David Tamir (2)
c/o U.S. Wireless Corp.                                         --                       --
2694 Bishop Drive, Suite 213
San Ramon, CA 94583
-------------------------------------------------------------------------------------------------------------
Regina Gindin (2)
c/o U.S. Wireless Corp.
2694 Bishop Drive, Suite 213                                    --                       --
San Ramon, CA 94583
-------------------------------------------------------------------------------------------------------------
Galit Capital Limited (3)
Tortola, British Virgin Islands                         1,071,880                               14.5%
-------------------------------------------------------------------------------------------------------------
Amir Overseas Capital Limited(3)
Tortola, British Virgin Islands                            750,000                              10.1%
-------------------------------------------------------------------------------------------------------------
ZOE Arbel Trust (3)
Tortola, British Virgin Islands                            500,000                                6.8%

-------------------------------------------------------------------------------------------------------------
Officers and Directors as a group
(4 persons) (1) - (2)                                   3,750,000                               42.2%
-------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
         Footnotes from previous page

         *Less than 1%.

     (1) Includes 1,500,000 shares of Common Stock issuable upon the exercise of
an option granted pursuant to Dr. Hilsenrath's employment agreement.
 
     (2) Does not include  stock  options to purchase  an  aggregate  of 100,000
shares of Common  Stock  which vest 1/3 each year from  grant,  non of which are
presently vested or exercisable.

     (3) Mr.  Arbel,  a former  Officer and Director of the  Company,  exercised
options granted pursuant to an employment  agreement and thereafter  transferred
said shares to the referenced  companies.  Mr. Arbel denies beneficial ownership
of these shares.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         In June 1996, the Company's Board of Directors, pursuant to the consent
of the then majority  stockholder  of the Company,  distributed  ("the  Spin-off
Distribution")  the shares of common stock of Playco  owned by the  Company.  In
addition,  the  Company,  as majority  stockholder  of Playco,  prior to, but in
contemplation  of  the  Spin-off  Distribution,  authorized  the  conversion  of
Playco's Series D Preferred Stock owned by the Company into 1,157,028  shares of
Playco's  common stock.  This  conversion  was based on the average  closing bid
price ($1.21) of Playco's shares for the ninety day period from March 1, 1996 to
May 31, 1996.

         In June 1996, European Ventures Corp. ("EVC"), a British Virgin Islands
corporation of which Moses Mika at the time was the sole Officer,  Director, and
stockholder,  acquired 3,106,005 shares of the Company's Common Stock, par value
$.01,  in exchange  for 400,000  shares of common stock of  Multimedia  Concepts
International, Inc. ("Media"), a Delaware Corporation. The Company had the right
either to pay $1,800,000  for the shares or to transfer  400,000 shares of Media
to the Company.  Mr. Mika is the father of Mr. Arbel,  the former  President and
Chief Executive Officer of the Company. The shares of Common Stock issued to EVC
were not eligible for the Spin-off Distribution of the Playco shares referred to
herein.  In April 1997, the Company and EVC entered into an agreement to rescind
the  transaction,  and EVC returned  2,706,006 shares to the Company in exchange
for the 400,000 shares of Media. This transaction was consummated in May 1997.

         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 amended Form 10-KSB,  except those designated with
an asterisk (**) which are filed  herewith,  previously have been filed with the
Commission in connection with (i) the Company's  Registration  Statement on Form
SB-2, dated March 28, 1994, under file No. 33-68306-NY;  or (ii) Form 8-K, dated
July 11, 1996,  pursuant to 17 C.F.R.  Section 230.411,  and are incorporated by
reference  herein.  The  exhibits  designated  with an (*) were  filed  with the
initial filing of this Form 10-KSB for the year ended March 31, 1997.
    
<TABLE>
<CAPTION>

<S>                        <C>                                                                                            
2.1               -        Stock Purchase Agreement Among the Company, Labyrinth Communications
                           Technologies Group, Inc., and the stockholders of Labyrinth Communications
                           Technologies Group, Inc., dated July 10, 1996 (incorporated by reference to the
                           indicated exhibit in the Company's Form 8-K dated July 11, 1996).
2.2               -        Stock Purchase Agreement Among the Company, Mantra Technologies, Inc., and
                           the  stockholders of Mantra Technologies, Inc., dated July 10, 1996 (incorporated
                           by reference to the indicated exhibit in the Company's Form 8-K dated July 11,
                           1996).
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)
3.4               -        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)
3.5               -        Specimen Common Stock Certificate.
4.7               -        Form of Option from Stockholders of Mantra Technologies, Inc., dated July 10, 1996
                           (incorporated by reference to the indicated exhibit in the Company's Form 8-K dated July 11,
                           1996).
10.41             -        The 1993 Stock Option Plan  (incorporated by reference to the indicated exhibit in the
                           Company's SB-2 Registration Statement File No. 33-68306-NY)
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).
10.75             -        Form of Stockholders Agreement for Labyrinth (incorporated by reference to the
                           indicated exhibit in the Company's Form 8-K dated July 11, 1996).
10.76*            -        S & S Engineering agreement.
10.77*            -        Amended Employment Agreement with Dr. Oliver Hilsenrath.
10.78*            -        Employment Agreement with David Klarman
10.79*            -        Employment Agreement with Dr. Mati Wax.
10.80*            -        Consulting Agreement with Young Associates.
10.81*            -        Consulting Agreement with Dennis Frances.
10.82*            -        Consulting Agreement with Spencer Corporation.
10.83*            -        Consulting Agreement with Ryburn Limited.
10.84*            -        Consulting Agreement with Crossgar Limited.
10.85*            -        Consulting Agreement with Pelican Investments Limited.

<PAGE>
   
10.86**           -        Consulting Agreement with DAEHO Merchandising, Inc.
10.87**           -        Consulting Agreement with Regina Gindin.
21.01             -        List of all Company Subsidiaries.
    
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 22nd day of August, 1997.
    


                                                       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                         August 22, 1997
Dr. Oliver Hilsenrath                                        President and Director                          Dated

\s\ David Tamir                                              Director                                        August 22, 1997
    
David Tamir                                                                                                  Dated

   
\s\ Regina Gindin                                            Director                                        August 22, 1997
    
Regina Gindin                                                                                                Dated
</TABLE>




<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES


                                    CONTENTS



<TABLE>
<CAPTION>
                                                                                                              Page


<S>                                                                                                               <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                                            F - 2

CONSOLIDATED BALANCE SHEET                                                                                    F - 3

CONSOLIDATED STATEMENTS OF OPERATIONS                                                                         F - 5

STATEMENTS OF STOCKHOLDERS' EQUITY                                                                            F - 7

CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                         F - 9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                                   F - 13
</TABLE>





<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS







To the Board of Directors and Stockholders

U.S. Wireless Corporation and Subsidiaries



We have audited the  accompanying  consolidated  balance sheet of U.S.  Wireless
Corporation,  formerly  known as American  Toys,  Inc.,  and  Subsidiaries  (the
"Company")  as of March 31,  1997 and the  related  consolidated  statements  of
operations, stockholders' equity and cash flows for each of the two years in the
period ended March 31, 1997. 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 audit 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 consolidated  financial  statements present fairly, in all
material  respects,  the financial position of the Company as of March 31, 1997,
and the results of its  operations  and its cash flows for each of the two years
in the period  ended March 31,  1997,  in  conformity  with  generally  accepted
accounting principles.


                                                                 HASKELL & WHITE

                                                    Certified Public Accountants

   
Newport Beach, CA
    

     May 30, 1997, except for the last sentence of Note 6.a) which is as of June
16, 1997



                                      F - 2



<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 1997
<TABLE>
<CAPTION>





                                     ASSETS

Current assets

<S>                                                                   <C>       
     Cash and cash equivalents ..................................     $5,328,781

     Other current assets .......................................          3,500

         Total current assets ...................................      5,332,281

Equipment, improvements and fixtures, net .......................        281,211

Excess of costs over basis of net assets acquired, net of

     accumulated amortization of $100,000 .......................      2,150,000

Other assets ....................................................          4,667

         Total assets ...........................................     $7,768,159
</TABLE>
                                                                      ==========
          See accompanying notes to consolidated financial statements.


                                                     F - 3



<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 1997

<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

<S>                                                                <C>         
     Accounts payable and accrued expenses .....................   $    140,550

     Obligations under capital leases, current .................         25,238

         Total current liabilities .............................        165,788

Obligations under capital leases, noncurrent ...................         45,427

         Total liabilities .....................................        211,215

Minority interest in subsidiaries ..............................      1,529,534

Commitments (Notes 8 and 9)

Stockholders' equity

     Common Stock, $.01 par value, 40,000,000 shares authorized,
         10,031,250 shares issued and outstanding ..............        100,312

     Additional paid-in capital ................................     20,493,262

     Unearned compensation .....................................     (1,277,918)

     Stock subscription receivable .............................     (1,569,483)

     Accumulated deficit .......................................    (11,718,763)

         Total stockholders' equity ............................      6,027,410

         Total liabilities and stockholders' equity ............   $  7,768,159
                                                                   ============
</TABLE>

          See accompanying notes to consolidated financial statements.



                                      F - 5



<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                      1997           1996
                                                                      -------------  ----------

<S>                                                                   <C>            <C>       
Net sales ........................................................    $^             21,230,853

Cost and expenses
   
     Cost of sales ...............................................     ^ --           15,132,895

     Operating expenses ..........................................     ^1,542,193      9,518,238
    
     Stock and stock options issued as compensation ..............     1,351,535        153,600
   
     Interest (income) expense and financing fees, net of interest
         income of $18,417 in 1996 ...............................       137,152        516,741

         Total costs and expenses ................................     2,756,576     25,321,474
    
Loss before minority interest in net losses of subsidiaries,

   
      income tax (expense) benefit ^, discontinued operations ....           ^              ^
    
   
^ and cumulative effect of a change in accounting principle ......    (2,756,576)    (4,090,621)

Minority interest in net losses of subsidiaries ..................        22,466      1,213,888

Loss before income tax (expense) benefit,
     discontinued operations and cumulative
     effect of a change in accounting principle ..................    (2,734,110)    (2,876,733)
    

Income tax (expense) benefit .....................................          --             --
   
Loss before ^discontinued operations and ^
cumulative effect of a change in
     accounting principle ........................................    (2,734,110)    (2,876,733)

Discontinued operations (Note 2)

     Loss from operations of Playco prior to spin-off ............      (625,269)          --

     Loss on disposal of Playco ..................................      (385,043)          --

         Total discontinued operations ...........................    (1,010,312)          --

Loss before cumulative effect of a change in accounting
     principle ...................................................    (3,744,422)    (2,876,733)
    
Cumulative effect of a change in accounting principle ............      (459,435)          --

Net loss                                                           $    (4,203,857)   $(2,876,733)


</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F - 7
<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                                   1997                1996
                                                                                ---------------    ----------
Loss per common equivalent share
   
     Loss before ^discontinued operations and cumulative effect
    
   
<S>                                                                                <C>              <C>    
     ^ of a change in accounting principle .....................................   $(0.37)          $(3.47)

     Discontinued operations ...................................................    (0.13)         --

     Cumulative effect of a change in accounting principle .....................    (0.06)         --
                                                                                -------------    -------------
    
     Net loss per common equivalent share ......................................   $(0.56)          $(3.47)
                                                                                  =============    =============

Weighted average number of common shares outstanding ...........................       7,443,419          828,891
                                                                                   =============    =============
Pro forma amounts assuming the new minority
     interest accounting method is applied retroactively

     Net loss .................................................................. $    (3,744,422)$     (3,336,168)
                                                                               =============    =============
     Net loss per common equivalent share ......................................   $  (0.50)$          (4.02)
                                                                                   =============    =============
</TABLE>
          See accompanying notes to consolidated financial statements.



                                                     F - 10



<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>


                                                        Additional                    Stock                            Total
                                 Common Stock           Paid-in        Unearned       Subscription   Accumulated       Stockholders'
                              Shares        Amount      Capital        Compensation   Receivable     Deficit           Equity

<S>                           <C>           <C>         <C>            <C>            <C>            <C>                 <C>        
Balances at April 1, 1995     753,995       $ 7,540     $ 5,774,590    $ -            $ -            $ (3,874,126)       $ 1,908,004

Sale of common shares         56,250         562            273,938      -              -                -                   274,500

Issuance of shares as
consideration for services
provided to the Company       15,000         150            153,450      -              -                -                   153,600

Issuance of shares in
connection with exercise
of special warrant            68,750         688            549,312      -              -                -                   550,000

Net loss for the year ended
March 31, 1996                -              -              -            -              -                (2,876,733)     (2,876,733)

Balances at March 31, 1996    893,995        8,940          6,751,290    -              -                (6,750,859)          9,371

Spin-off of Playco as
dividend                      -              -              -            -              -                (731,964)         (731,964)

Cancellation of stock
subscription receivable
and accrued interest          (68,750)       (688)          (549,312)    -              -                (32,083)          (582,083)
</TABLE>

          See accompanying notes to consolidated financial statements.



                                     F - 11



<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

                                   (Continued)

<TABLE>
<CAPTION>


                                                        Additional                    Stock                            Total
                                 Common Stock           Paid-in        Unearned       Subscription   Accumulated       Stockholders'
                              Shares        Amount      Capital        Compensation   Receivable     Deficit           Equity

<S>                           <C>           <C>         <C>            <C>            <C>            <C>                 <C>        

Issuance  of Common Stock
options for compensation      -              -          2,009,453      (1,277,918)    -              -                   731,535

Exercise of common
stock options                 3,250,000      32,500     3,959,983      -              -              -                   3,992,483

Private placement of
Common Stock, net of
offering costs of             $42,000        600,000    6,000          1,452,000      -              -                   1,458,000

Common Stock issued for
acquisition                   2,250,000      22,500    2,227,500       -              -              -                   2,250,000

Stock subscription receivable 3,106,005      31,060    1,768,940       -              (1,569,483)    -                   230,517

Cumulative effect of a
change in accounting principle -             -         2,873,408       -              -              -                   2,873,408

Net loss for the year ended
March 31, 1997                -              -         -               -              -              (4,203,857)         (4,203,857)

Balances at March 31, 1997    10,031,250     $100,312  $20,493,262     $(1,277,918)   $(1,569,483)   $(11,718,763)       $6,027,410

</TABLE>


          See accompanying notes to consolidated financial statements.

                                     F - 13

<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>



                Increase (Decrease) in Cash and Cash Equivalents

                                                                      1997           1996
Cash flows from operating activities

<S>                                                                   <C>            <C>         
     Net loss .....................................................   $(4,203,857)   $(2,876,733)

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

         Cumulative effect of a change in accounting principle ....       459,435           --

         Depreciation and amortization ............................       242,382        487,594

         Amortization of excess of cost over net assets acquired ..       106,542         78,508

         Minority interest in net losses of subsidiaries ..........      (396,986)    (1,213,888)

         Issuance of Common Stock for
           compensation and services ..............................       620,000        153,600

         Issuance of Common Stock options for compensation
           and services ...........................................       731,535           --

         Write-down of stock subscription receivable ..............       230,517           --

         Increase (decrease) from change in assets and liabilities,
           net of the effects of spin-off of subsidiary:

           Accounts receivable ....................................      (165,207)       586,824

           Merchandise inventories ................................    (1,743,239)     1,673,284

           Other current assets ...................................       174,810         73,738

           Deposits and other assets ..............................        (4,667)        33,387

           Accounts payable and accrued expenses ..................     1,632,146       (402,693)

           Deferred rent liability ................................       (20,823)        57,717
                                                                      -----------    -----------

                  Net cash used for operating activities ..........    (2,337,412)    (1,348,662)
                                                                      -----------    -----------
Cash flows from investing activities

     Equipment, improvements and fixtures acquired ................      (388,220)      (340,311)
                                                                      -----------    -----------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     F - 14

<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

<TABLE>
<CAPTION>

                                                                                          1997        1996
                                                                                          ----------  ---------
Cash flows from financing activities

<S>                                                                                       <C>         <C>     
     Payments on capital lease obligation ......................................          --          (42,045)

     Borrowings under bank lines of credit .....................................          --        1,092,361

     Repayments under bank lines of credit .....................................          --       (3,466,852)

     Borrowings under financing agreement ......................................     1,465,859      5,637,392

     Repayments under financing agreement ......................................          --       (2,234,367)

     Payment of financing fees .................................................          --         (199,455)

     Repayment to stockholders .................................................      (381,430)      (217,723)

     Proceeds from affiliates ..................................................          --          701,472

     Payment of accrued dividends on subsidiary's
       redeemable preferred stock ..............................................          --          (18,982)

     Redemption of subsidiary's Series B redeemable preferred
       stock from Common Stock .................................................          --         (163,157)

     Proceeds from issuance of Common Stock ....................................     6,398,483        274,500

     Proceeds from issuance of preferred stock (Playco) ........................       584,000           --

     Redemption of Series B redeemable preferred stock (Playco) ................       (87,680)          --
                                                                                 -----------    -----------
                  Net cash provided by financing activities ....................     7,979,232      1,363,144
                                                                                   -----------    -----------
Net increase (decrease) in cash ................................................     5,253,600       (325,829)

Cash and cash equivalents at beginning of year .................................        75,181        401,010
                                                                                   -----------    -----------
Cash and cash equivalents at end of year .......................................   $ 5,328,781    $    75,181
                                                                                   ===========    ===========
</TABLE>
          See accompanying notes to consolidated financial statements.

                                     F - 16

<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>

                                                                                   1997           1996
                                                                             
Supplemental disclosure of cash flow information:

<S>                                                                                <C>            <C>        
     Interest paid .............................................................   $   166,453    $   464,832

     Income taxes paid .........................................................   $      --      $    15,821

Schedule of non-cash financing activities:

As  discussed  in Note 1, the  Company  spun-off  its shares of Playco in August
1996. This non-cash event had the following  effects on the Company's  financial
statements:

     Decrease in accounts receivable ...........................................   $   286,793

     Decrease in merchandise inventories .......................................     8,002,320

     Decrease in other current assets ..........................................       152,801

     Decrease in equipment, improvements and fixtures, net .....................     1,793,833

     Decrease in deferred financing costs ......................................       393,699

     Decrease in deposits and other assets .....................................        57,285

     Decrease in accounts payable and accrued expenses .........................    (4,683,291)

     Decrease in notes payable .................................................    (4,868,884)

     Decrease in deferred rent liability .......................................      (177,112)

     Decrease in minority interest .............................................       358,520

     Decrease in preferred stock ...............................................      (584,000)

     Net equity of Playco ......................................................      (731,964)

     As discussed in Note 1, in connection  with the Company's  acquisition of a
51% interest in Labyrinth  Communications  Technologies Group, Inc., the Company
issued 2,250,000 shares of Common Stock

     As  discussed  in Note 9, the  Company  exchanged  3,106,005  shares of its
Common Stock for 400,000  shares of Multimedia  Concepts  International,  Inc.'s
Common Stock. Subsequent to March 31, 1997, 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 Multimedia  Concepts  International,  Inc. Common Stock. In connection
these transactions,  the Company recorded a stock subscription receivable in the
amount of $1,569,483 and a current year expense of $230,517

     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 issuances,  the Company recorded  compensation  expense of
$271,535 and unearned compensation of $1,277,918
</TABLE>

          See accompanying notes to consolidated financial statements.



                                     F - 18



<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

Schedule of non-cash financing activities (continued):

During the year ended March 31, 1997, the Company issued  1,550,000 Common Stock
options to consultants. In connection with these issuances, the Company recorded
compensation expense of $460,000.

During the year ended  March 31,  1997,  the Company  canceled a $550,000  stock
subscription receivable and $32,083 of related accrued interest.

During the year ended March 31, 1997,  the Company  entered into capital  leases
for office equipment that totaled $70,665.

During the year ended March 31, 1996,  the Company  issued  15,000 shares of its
Common Stock as  consideration  for services and recorded  related  compensation
expense of $153,600.

During the year ended March 31, 1996,  the Company  issued  68,750 shares of its
Common Stock as a result of the exercise of a special warrant.

           See accompanying notes to consolidated financial statements.



                                     F - 20



<PAGE>
                   U.S. WIRELESS CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED MARCH 31, 1997 AND 1996

1.       ORGANIZATION

         U.S.  Wireless  Corporation,  (the  "Company") was  incorporated in the
         State of Delaware on February 12, 1993.  On July 31, 1996,  the Company
         consummated  a  stock  purchase  agreement  and  acquired  51%  of  the
         outstanding   shares  of  common  stock  of  Labyrinth   Communications
         Technologies  Group, Inc.  "Labyrinth",  whereby 20% of the shares were
         acquired  for  $2,000,000  from  Labyrinth  and an  additional  31% was
         acquired  from the  principle  stockholder  of Labyrinth  for 2,250,000
         shares  of the  Company's  Common  Stock.  Upon  consummation  of  this
         acquisition,   the  founding  shareholder  of  Labyrinth,   Dr.  Oliver
         Hilsenrath,  was appointed the Company's  President and Chief Executive
         Officer.  Labyrinth  is a  development  stage  company  engaged  in the
         research  and  development  of  wireless  communications  hardware  and
         software technology.

         On July 31,  1996,  the  Company  also  consummated  an  agreement  and
         acquired 51% of the  outstanding  common stock of Mantra  Technologies,
         Inc.  ("Mantra")  and an option to  acquire  the  remaining  49% of the
         outstanding  shares of common stock for an aggregate  purchase price of
         $500,000.  Pursuant to the terms of the agreement,  the Company has the
         right  to  acquire  the  remaining  49% of the  outstanding  shares  of
         Mantra's common stock in exchange for an aggregate  1,000,000 shares of
         the Company's  Common  Stock.  In order for the Company to exercise its
         options,  the closing  bid price of its Common  Stock must have been at
         least  $5.00 for the 30  trading  days  prior to the date of  exercise.
         Mantra  is  a  development  stage  company  which  is  engaged  in  the
         development  of an advanced  user  interface for the Internet and other
         databases.

         Prior to the acquisitions of Labyrinth and Mantra,  the Company,  which
         was formerly known as American Toys, Inc., was the majority stockholder
         of Play Co. Toys & Entertainment Corp.  ("Playco"),  a California-based
         toy retailer.  On June 1, 1996,  the then majority  stockholder  of the
         Company,  United Textiles & Toys Corporation,  formerly known as Mister
         Jay  Fashions   International  Inc.  ("Mister  Jay"),  a  publicly-held
         Delaware  Corporation,  authorized and consented to the spin-off of the
         shares  of  common  stock  of  Playco  owned  by  the  Company  to  the
         stockholders  of the Company as of the record date of August 15,  1996.
         Additionally,   the  Company,   as  majority   stockholder  of  Playco,
         authorized  the  conversion of its 1 share of Series D preferred  stock
         owned into  1,157,028  shares of Playco's  common  stock,  based on the
         average  closing bid price  ($1.21) of  Playco's  shares for the period
         from March 1, 1996 to May 31, 1996.

         Pursuant to a special meeting of the  shareholders on May 31, 1996, the
         Company  effected,  as of April 17, 1996, a one-for-four  reverse stock
         split. The consolidated  financial  statements give retroactive  effect
         for this one-for-four reverse stock split.

   
                                     F - 21
    

<PAGE>
2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         a)       Consolidated financial statements
   
                  The consolidated financial statements for the year ended March
                  31,  1997,  include the  accounts of the  Company,  Labyrinth,
                  Mantra,  and Playco  through the  spin-off  date of August 15,
                  1996. The consolidated financial statements for the year ended
                  March 31, 1996 include the accounts of the Company and Playco.
                  All significant  intercompany  balances and transactions  have
                  been eliminated in consolidation.

                  For the year ended March 31, 1997, the Company recorded a loss
                  from  operations  of Playco prior to spin-off as  discontinued
                  operations in the amount of $1,010,312.  Such amount  resulted
                  from revenues of $5,024,338, costs and expenses of $6,170,999,
                  interest expense of $238,171 and minority  interest in the net
                  ^ losses of Playco of  $374,520  through  the August 15,  1996
                  spin-off  date.  The Company has recorded no revenues from the
                  operations of Labyrinth and Mantra through March 31, 1997.
    

         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.

         c)       Equipment, improvements and fixtures

                  Equipment,  improvements  and  fixtures  are recorded at cost.
                  Depreciation   and   amortization   are  provided   using  the
                  straight-line  method over the estimated  useful lives (3 - 15
                  years)  of the  related  assets.  Leasehold  improvements  are
                  amortized  over the lesser of the  related  lease terms or the
                  estimated  useful lives of the  improvements.  Maintenance and
                  repairs are charged to operations as incurred.

         d)       Excess of costs over basis of net assets acquired

                  Excess of costs  over basis of net  assets  acquired  is being
                  amortized  on the  straight-line  method  over a period  of 15
                  years. The Company assesses whether there has been a permanent
                  impairment  in the value of intangible  assets by  considering
                  factors such as estimated  future revenues and product demand,
                  related competition and other economic factors. Management has
                  determined that no impairment  adjustments have been necessary
                  to date.
   
                                     F - 23
    
<PAGE>
2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         e)       Income taxes

                  The  Company  accounts  for income  taxes in  accordance  with
                  Statement  of   Financial   Accounting   Standards   No.  109,
                  "Accounting  for Income  Taxes," which requires the use of 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.

   
         f)       Accounting for employee stock options
    

                         In October  1995,  the Financial  Accounting  Standards
                    Board 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.  The Company has adopted the "disclosure only"
                    requirements of SFAS No. 123 in fiscal year 1997.
   
         g)       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 the year ended
                  March 31, 1997.

                                     F - 25
    

<PAGE>
2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         h)       Net loss per share

                  Net loss per share is based upon the weighted  average  number
                  of  outstanding  common shares  during the year.  Common Stock
                  equivalents have been excluded from the computation  since the
                  results would be anti-dilutive.

         i)       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.

         j)       Concentration of credit risk

                  As of March 31,  1997,  the Company had cash on deposit with a
                  financial  institution  that  exceeded the  federally  insured
                  limit by $3,047,096.

         k)       Reclassifications

                  Certain  amounts as of and for the year ended  March 31,  1996
                  have  been   reclassified  for  presentation   purposes.   The
                  reclassifications  have no effect on the  Company's  financial
                  position or results of operations as previously reported.

         l)       New Accounting Pronouncement

                  In February 1997,  the Financial  Accounting  Standards  Board
                  issued SFAS No. 128, Earnings Per Share ("EPS").  SFAS No. 128
                  requires  all  companies  to present  "basic" EPS and, if they
                  have a complex  capital  structure,  "diluted" EPS. Under SFAS
                  No. 128,  "basic" EPS is computed by dividing income (adjusted
                  for any preferred  stock  dividends)  by the weighted  average
                  number  of  common  shares   outstanding  during  the  period.
                  "Diluted" EPS is computed by dividing income (adjusted for any
                  preferred  stock  or  convertible   stock  dividends  and  any
                  potential income or loss from  convertible  securities) by the
                  weighted  average number of common shares  outstanding  during
                  the period plus the number of  additional  common  shares that
                  would have been  outstanding if any dilutive  potential Common
                  Stock had been issued. The issuance of anti-dilutive potential
                  Common Stock should not be considered in the  calculation.  In
                  addition, SFAS No. 128 requires certain additional disclosures
                  relating  to EPS.  SFAS No.  128 is  effective  for  financial
                  statements  issued for periods ending after December 15, 1997.
                  Thus,  the  Company  expects to adopt the  provisions  of this
                  statement in fiscal year 1998.  Management does not expect the
                  adoption of this  pronouncement to have significant  impact on
                  the Company's financial statements.

                                     F - 26

<PAGE>
3.       CHANGE IN ACCOUNTING PRINCIPLE

         During the first  quarter of the  Company's  fiscal  year,  the Company
         changed its method of accounting for the minority shareholders interest
         in Playco.  The Company  changed  from one method of  accounting  which
         records the total amount of the net  proceeds  received  from  Playco's
         equity  transactions  as the  minority  interest  to a  more  generally
         accepted method which reflects the minority interest as a percentage of
         the net  assets of  Playco.  The  change  in  accounting  for  minority
         interest is recorded as a cumulative  effect of a change in  accounting
         principle,  which  had the  effect of  reducing  minority  interest  by
         $2,413,973,  increasing  additional  paid-in-capital  by $2,873,408 and
         increasing  the net loss for the year ended March 31, 1997 by $459,435.
         The consolidated financial statements have not been restated to reflect
         this  accounting  change;  however,  pro forma  information,  as if the
         change were made retroactively,  is shown on the consolidated statement
         of operations.

4.       EQUIPMENT, IMPROVEMENTS AND FIXTURES, NET

         Equipment,  improvements and fixtures,  net, at March 31, 1997 and 1996
         consisted of the following:
<TABLE>
<CAPTION>

                                               1997         1996
 
<S>                                        <C>          <C>       
Furniture, fixtures and equipment ......   $   299,692    $ 2,918,621

Leasehold improvements .................          --          542,785

Computerized inventory management system          --          484,074

Signs ..................................          --          265,959

Vehicles ...............................          --          104,912

                                               299,692      4,316,351

Less accumulated depreciation
and amortization .......................       (18,481)    (2,457,813)
                                           $   281,211    $ 1,858,538
</TABLE>

   
         Equipment,  improvements and fixtures  include  equipment under capital
         leases of $70,665 and no accumulated amortization as of March 31, 1997.
    
          See accompanying notes to consolidated financial statements.

                                     F - 27
<PAGE>
 5.      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>

                                                1997       1996
                                              ------     ------
<S>                                              <C>        <C>    
Federal statutory income tax (benefit) rate      (34.0)%    (34.0)%

Increases (decreases) resulting from:

     Non-deductible expenses ..............        6.7        2.0

     Net change in valuation allowance ....       27.3       32.0
                                              ------     ------

Effective income tax benefit rate .........   -%         - %
</TABLE>

         The income tax effects of  significant  items  comprising the Company's
         net deferred income tax assets and liabilities as of March 31, 1997 and
         1996 are as follows:
<TABLE>
<CAPTION>

                                                1997           1996

<S>                                             <C>            <C>         
Inventories .................................   $      --      $   (57,883)

AMT tax credits .............................          --          (23,260)

Accrued expenses ............................          --          (17,816)

Valuation allowance .........................          --           98,959

Current portion of deferred tax liabilities .   $      --      $      --
                                                ===========    ===========

Depreciation and amortization ...............   $    15,639    $   246,185

Net operating loss carryforwards ............    (1,192,326)    (1,958,123)

Deferred rent liability .....................          --          (79,447)

Unearned compensation .......................      (542,479)          --

Valuation allowance .........................     1,719,166      1,791,385
                                                -----------    -----------

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

         At March 31, 1996, a significant portion of the deferred tax assets and
         deferred tax liabilities  resulted from Playco.  At March 31, 1997, the
         deferred tax assets and liabilities result from the Company,  Labyrinth
         and  Mantra.  The  Company  has  federal  and state NOLs  approximating
         $3,387,784 and $659,492,  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.

   
         At March  31,  1997  and  1996,  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.
    

                                     F - 28
<PAGE>
6.       STOCKHOLDERS' EQUITY

        a)       Sale of shares

                  On June 16,  1995,  pursuant to an amendment to Form S-8 filed
                  with the Securities and Exchange  Commission (the "SEC"),  the
                  Company  terminated  its original  option to purchase  150,000
                  shares of Common Stock at $4.25.  Such amendment  included the
                  registration of 150,000 and 75,000 new options,  respectively,
                  to the Company's  former President and to a former Director at
                  an exercise price of $1.00 per share. Such shares were granted
                  on June 2, 1995.  During  June  1995,  all such  options  were
                  exercised and the Company received $225,000 as payment for the
                  56,250  post-split  common  shares.  On the  grant  date,  the
                  average market value of the Company's shares was approximately
                  $1.22  per  share.  Accordingly,   the  Company  has  recorded
                  compensation expense in the amount of $49,500 which represents
                  the excess of the fair market value over the exercise price of
                  such options on the grant date.

                  On August 11, 1995, the Company filed Amendment #2 to Form S-8
                  clarifying  the date of grant with  respect to the new 225,000
                  options registered in Amendment No. 1 to Form S-8.

                  On  August  24,  1995,  pursuant  to a Form  S-8  Registration
                  Statement  filed with the SEC, the Company  registered  30,000
                  post-split  common shares  underlying  options to issue Common
                  Stock of the Company.  In  connection  therewith,  the Company
                  issued  15,000  shares of Common Stock to two  consultants  as
                  consideration  for  services.  On the grant date,  the average
                  market value of the Company's shares was  approximately  $2.56
                  per  share.  Accordingly,   the  Company  recorded  consulting
                  expense in the amount of  $153,600  ($2.56 x 60,000  pre-split
                  common  shares)  since such  consulting  contracts  expired on
                  November 8, 1995.

                  During  July 1996,  the  Company  commenced  and  completed  a
                  private placement of its Common Stock,  whereby it offered and
                  sold 600,000  shares of its Common Stock.  The gross  proceeds
                  received  from  the  sale  were  $1,500,000.   Simultaneously,
                  Labyrinth  consummated a private placement of its Common Stock
                  whereby it sold 79,000 shares for aggregate  gross proceeds of
                  $948,000.

                                     F - 29

<PAGE>
6.       STOCKHOLDERS' EQUITY (continued)

         a)       Sale of shares (continued)

                  In July 1996,  pursuant to a Form S-8  Registration  Statement
                  filed with the SEC, the Company registered 3,250,000 shares of
                  Common Stock underlying options held by the
                  Company's former President. All shares except 1,000,000 have a
                  restrictive  legend.  The 3,250,000  options were exercised by
                  the former  President  between July 1996 and December 1996 for
                  an aggregate  of  $3,992,483.  On June 16,  1997,  the Company
                  filed an amendment to the S-8 registration  deregistering  the
                  resale of the remaining 2,250,000 shares.

         b)       Cancellation of stock subscription receivable

                  On October 27, 1995,  Mister Jay exercised its right  pursuant
                  to the  terms  of a  special  warrant  and  purchased  275,000
                  pre-split common shares at $2.00 per share and issued a twelve
                  month  promissory note for $550,000 bearing interest at 8% per
                  annum.  The note,  accrued  interest  totaling $32,083 and the
                  related  shares  of  Common  Stock  were  canceled  by  mutual
                  agreement in July 1996.

7.       STOCK OPTIONS

         During the year ended March 31, 1997,  the Company  issued Common Stock
         options to its employees and to various consultants performing services
         for the Company.  Options  granted to employees  vest over three years,
         expire  five  years  from the date of grant  and have  exercise  prices
         ranging from $2 to $5 per share.  Substantially  all options granted to
         consultants vest immediately,  expire five years from the date of grant
         and have exercise prices ranging from $2 to $4 per share. The number of
         options issued and outstanding at March 31, 1997 are as follows:

<TABLE>
<CAPTION>
<S>                                         <C>
Options outstanding, beginning of period         --

Granted ................................    7,441,500

Canceled ...............................         --

Exercised ..............................   (3,250,000)

Options outstanding, end of period .....    4,191,500

Options exercisable, end of period .....    1,550,000
</TABLE>

                                     F - 31

<PAGE>
         7.       STOCK OPTIONS (continued)

         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 fiscal 1997, $1,549,453 of unearned compensation
         was  recorded,  of which  $271,535 was amortized to expense as of March
         31, 1997.

         Compensation   expense   associated   with  stock  options   issued  to
         consultants  is  measured  based on the  estimated  value  of  services
         received by the Company.  During fiscal 1997,  $460,000 of compensation
         expense was recorded in connection with these stock options.

         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  $751,226  in related  compensation
         expenses.  The pro forma net loss under the  provisions of SFAS No. 123
         is $(4,955,083) and the pro forma net loss per common  equivalent share
         is $(0.67).


8.       COMMITMENTS

         a)       Operating lease

                  The Company leases office facilities in San Ramon,  California
                  under a  non-cancelable  operating  lease.  The lease requires
                  minimum monthly payments of $8,916 and expires in August 1999.
                  At March 31, 1997, aggregate future minimum lease payments due
                  under this lease are as follows:

                         Year ending
                         March 31,

                         1998           $106,987

                         1999           44,578
                                        --------



 Total minimum lease payments           $151,565
                                        ========

                  Rent expense  related to the operating  lease  discussed above
                  was $75,173 for the year ended March 31, 1997.

                                     F - 33

<PAGE>
8.       COMMITMENTS (continued)

         b)       Capital leases

                  The Company leases various equipment under two  non-cancelable
                  capital  leases.  Minimum monthly rental payments are $512 and
                  $2,011,  respectively,  and the leases expire in January 2000.
                  Principal   payments   pursuant  to  these  lease   agreements
                  aggregate  $70,665,  of which  $25,238  is due during the year
                  ended March 31,  1998.  At March 31,  1997,  aggregate  future
                  minimum lease payments due under these leases are as follows:


Year ending
March 31,

1998                                    $30,283

1999                                    30,283

2000                                    25,235

                                        85,801

Less amounts representing interest      (15,136)

                                        $ 70,665

9.       RELATED PARTY TRANSACTIONS

         a)       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, 1997.
                  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 both Labyrinth and Mantra.

                                     F - 35



<PAGE>
         9.       RELATED PARTY TRANSACTIONS (continued)

         a)       Employment agreements (continued)

                  The Company also has three-year employment agreements with its
                  Chief Technology  Officer and General Counsel that provide for
                  annual  salaries of $100,000 and  $120,000,  respectively.  In
                  addition,  an aggregate of 250,000  options to purchase shares
                  of the  Company's  Common Stock at $2.00 per share were issued
                  in connection with these agreements.  The options vest equally
                  over a three-year  period and have  five-year  lives.  No such
                  options were vested or exercised as of March 31, 1997.

                    On June 1, 1996, the Company's former President entered into
               a five-year  employment  agreement.  Pursuant  to the  employment
               agreement,  the former  President  shall not receive any monetary
               compensation  during the term.  As  consideration,  the Company's
               former President was granted stock options to purchase  1,000,000
               shares  of Common  Stock at $1.00  per  share for five  years and
               2,250,000  shares of Common Stock at $1.33 per share  exercisable
               until  December  31,  1996.  As  discussed  in Note 6.a) all such
               options were exercised during fiscal year 1997.


         b)       Investment in Multimedia Concepts International, Inc.

                  On June 28, 1996, European Venture Corp. ("EVC"), an affiliate
                  of the Company's former  President,  entered into an option to
                  acquire  3,106,005  shares of the  Company's  Common Stock for
                  $1,800,000  or for an exchange  for  400,000  shares of Common
                  Stock of Multimedia  Concepts  International,  Inc.  ("MCII"),
                  which shares shall not be subject to the distribution.  During
                  July 1996,  EVC  exercised  its option and acquired  3,106,005
                  shares in exchange for 400,000 shares of Common Stock of MCII.

                  Subsequent  to  year-end,   EVC  returned   2,706,006  of  the
                  Company's  shares  and the  Company  returned  all of the MCII
                  shares  due to a decline in the value of the MCII  shares.  At
                  March 31, 1997, the Company has recorded a stock  subscription
                  receivable in the amount of $1,569,483 in connection  with the
                  return of 2,706,006 shares of its Common Stock.  Additionally,
                  the  Company  has  expensed  $230,517  in fiscal  1997 for the
                  shares of Common Stock that were not returned.

   
 .
    
                                     F - 37

<PAGE>
                                  Exhibit 10.86



               Consulting Agreement with DAEHO Merchandising, Inc.

<PAGE>
                                                                 August 12, 1997



Mr. S.C. Chon

DAEHO Merchandising Inc.

Rm 1004 Keo Yang Bldg. 51-8

Susong Dong, Chongro-Ku Seoul

   
Dear Mr. Chon:
    

Dear Mr. Chon:

                  This  letter  agreement  confirms  the  understanding  by  the
parties  hereto,   U.S.   Wireless   Corporation,   (the  "Company")  and  DAEHO
Merchandising, Inc. ("DAEHO") pursuant to which the Company retains DAEHO to act
as a consultant to the Company under the terms and conditions set forth below.

     1. In connection with the engagement hereunder,  the Company hereby retains
DAEHO to perform consulting  services including (i) introducing,  initiating and
engaging in the process of facilitating  relationships with potential  customers
and strategic  partners and (ii)  initiating and  coordinating  a  manufacturing
effort  for  the  RadioCamera  in  Asia,  by  coordinating   (a)  the  component
manufacturing (b) assembly and (c) testing,  wherby, the Company would receive a
final product.

     2. As compensation for the services  described in paragraph 1(i) above, the
Company shall provide the following:

                  a. In the event that the Company  consummates a transaction as
described in subparagraph 1 (i) above,  initiated and facilitated by DAEHO,  the
Company  shall  pay  to  DAEHO  a fee  equal  4% of  the  amount  of  the  total
consideration  paid in  such  transaction  up to  $1,000,000,  3% of the  second
$1,000,000, 2% of the third $1,000,000, 1% of any consideration over $4,000,000.
Such fee shall be paid in cash or kind as may be negotiated between the parties,
subject to the closing of the transaction to which it relates, and shall only be
payable to such portion,  if less than whole, of the transaction  which has been
completed. In the event that the transaction relates to the sale of RadioCameras
or  the  operation  of a  joint  venture  company  which  provides  geo-location
services, the fee shall be based on the net profit of the sales for the first 12
month period of the transaction.

                  b. In the event that the Company  consummates a transaction as
described in subparagraph 1(ii) above, initiated, facilitated and coordinated by
DAEHO, the Company shall pay to DAEHO a fee equal to 3% of the actual price paid
by the Company for the manufacture of each RadioCamera purchased by the Company.

     3. Pursuant to the terms of a non-disclosure and confidentiality  agreement
to be executed  and  delivered in tandem to this  agreement,  DAEHO will hold in
confidence any  confidential  information  which the Company  provides to DAEHO.
DAEHO shall be an  independent  contractor  and not an employee of the  Company.
This Agreement  shall not be construed to create between the Company and DAEHO a
relationship of principal, employer and employee, joint ventures, co-partners or
any other  similar  relationship,  the  existence  of which is hereby  expressly
denied by the Company and DAEHO.  DAEHO is not an agent for the Company,  except
as described herein and the Company is not an agent

<PAGE>
for  DAEHO  for any  purpose  whatsoever;  and each  such  party has no right or
authority to assume or create any obligations,  express or implied, on behalf or
in the name of the other party.

     4. DAEHO shall not during the term of this  agreement  enter into or engage
in any business which is a direct competitor of the Company, unless:

                  a. Prior to DAEHO  consulting with or becoming  engaged by any
direct or  indirect  competitor  of the  Company,  she gives the Company 10 days
prior written notice of such pending  engagement and upon request of the Company
returns any and all materials supplied by the Company to DAEHO together with any
copies prepared by DAEHO or distributed by DAEHO,  except as may be specifically
exempted in writing by the Company; and

                  b. Without  prejudice to its obligations  under  sub-paragraph
(a)  above,  if DAEHO at any time has an  interest  in, or  conflict  of duty in
relation to, any transaction or matter which is the subject of services provided
to the  Company,  DAEHO agrees to notify the Company  prior to such  interest or
conflict arising.

     5. This  Agreement may not be  transferred,  assigned or delegated by DAEHO
without the prior written consent of the Company.

     6. This  Agreement  is for a term of  twenty-four  (24)  months  and may be
terminated by either party upon notice to the other party. In the event that the
Company  consummates a transaction as described in subparagraphs  1(i) and (ii),
within 12 months immediately  following the termination of this Agreement,  with
any party or entity introduced by DAEHO to the Company, the Company shall pay to
DAEHO  the  compensation  with  respect  to  such  transaction,   calculated  in
accordance with such paragraph.

     7. Any notices hereunder shall be sent to the Company and to DAEHO at their
respective  addresses  set forth  above.  Any notice shall be given by certified
mail,  return receipt  requested,  postage prepaid,  and shall be deemed to have
been given when deposited in the United States mail.  Either party may designate
any other address to which notice shall be given,  by giving  written  notice to
the other of such change of address in the manner herein provided.

     8. This  Agreement  has been made in the State of  California  and shall be
construed  and governed in  accordance  with the laws of the state of California
without giving effect to principles governing conflicts of law.

     9. This Agreement  contains the entire agreement  between the parties,  may
not be altered  or  modified,  except in  writing  and signed by the party to be
charged DAEHO thereby,  and supersedes any and all previous  agreements  between
the parties relating to the subject matter hereof.

     10. This  Agreement  shall be binding  upon the parties  hereto,  and their
respective  heirs,  legal   representatives,   administrators,   successors  and
permitted assigns.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals the day and year first above written,

                                                               Very truly yours,



                                                       U.S. Wireless Corporation





                                               By: _____________________________
                                                           Dr. Oliver Hilsenrath
                                                         Chief Executive Officer





ACCEPTED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN







Mr. S.C. Chon, DAEHO Merchandising, Inc.

<PAGE>

                                  Exhibit 10.87



                     Consulting Agreement with Regina Gindin

<PAGE>

                                                                 August 12, 1997



Ms. Regina Gindin
2000 Broadway
Suite 401
San Francisco, CA 94115

Dear Ms. Gindin:


     This letter  agreement  confirms the  understanding  by the parties hereto,
U.S.  Wireless   Corporation,   (the  "Company"),   Mantra  Technologies,   Inc.
("Mantra"),  and Ms.  Regina  Gindin  pursuant to which the Company  retains Ms.
Regina  Gindin  to act as a  consultant  to the  Company  under  the  terms  and
conditions set forth below.

     2. In connection with the engagement hereunder,  the Company hereby retains
Ms.  Regina Gindin to perform  consulting  services  including (i)  introducing,
initiating  and  engaging  in the  process of  facilitating  relationships  with
potential   customers  and  strategic  partners  (ii)  initiating,   evaluating,
recommending  and  providing  strategic  analysis  with respect to financing and
(iii) providing investment and business consulting and advisory services related
to corporate  finance and other financial  services  matters.  In furtherance of
items  (i) - (iii)  above,  Ms.  Regina  Gindin  shall  assist  the  Company  in
negotiating, advising and evaluating financing alternatives, with respect to the
timing, structure and pricing of any transaction. In addition, Ms. Regina Gindin
shall negotiate,  advise and follow through  consummation and implementation the
facilitation of relationships with strategic partners.

     2. As  compensation  for the services  described in paragraph 1 above,  the
Company shall provide the following:

     a.  Upon the  consummation  of the  raising  of  capital  for the  Company,
introduced  and  facilitated  by Ms. Regina Gindin shall receive  $200,000 if at
least  $10,000,000 and $400,000 if at least  $20,000,000 is raised. In the event
that a  financing  or an  acquisition  transaction  is  consummated  by  Mantra,
introduced  and  facilitated  by Ms. Regina  Gindin,  Ms. Regina Gindin shall be
entitle to receive 2% of the value of the transaction, in cash or kind depending
on the  transaction.  For  example,  if the  Company  engages in an  acquisition
whereby there is an exchange of shares,  of which Mantra  receives shares valued
at  $5,000,000,  Ms.  Gindin  would be  entitled  to  receive  shares  valued at
$100,000.  These fees shall be paid pursuant to an ongoing  consulting  services
agreement  to be  performed  and paid over a 12 month period from the date(s) of
consummation of the financing(s). In the event that any financing is consummated
in segments over a period of time, the consulting  arrangement  shall be amended
to adjust  accordingly  to the time  period  of the  funding.  The  compensation
provided  herein may have to be adjusted,  solely with respect to payment terms,
so as to not violate or cause the compensation being received by any underwriter
or  placement  agent,  to be in excess of the  compensation  limitations  of the
National Association of Securities Dealers, Inc.'s rules and regulations.

     b. In addition to the  compensation  stated in (a) above,  in the event the
Company consummates an equity financing transactions,  facilitated by Ms. Regina
Gindin,  the Company  shall grant to Ms.  Regina  Gindin  options to purchase an
aggregate of 300,000 shares of the Company's  Common Stock,  exerciseable at the
market price on the date(s) of consummation of said  offering(s),  whereby,  Ms.
Regina  Gindin  shall have the right to receive  an option to  purchase  150,000
shares on the  consummation of each of (i) an offering(s) in which the aggregate
gross proceeds is $10,000,000  and (ii) upon the  consummation of an offering(s)
in which the aggregate  proceeds  provides an additional  $10,000,000 in capital
funding.  The options shall vest and become  exerciseable over a 12 month period
commencing with


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the  consummation of the offering(s) and shall remain  exerciseable for a period
of three years from the date of grant.

     c. With respect to the  consummation  of  transactions  in accordance  with
subparagraph 1(i) above, for each strategic alliance consummated,  with up to an
aggregate of 4 non-affiliated companies, between Mantra and a strategic partner,
Ms. Regina Gindin shall receive the following:

     (i) 1 share of  Common  Stock of Mantra  which  shall be issued on the date
that a  strategic  partnership  agreement,  or similar  agreement,  is  executed
between Mantra and the strategic partner; and

     (ii) 1.5 shares of Common  Stock of Mantra,  upon receipt by the Company of
revenues from the strategic partnership of $5,000,000.

     5. Pursuant to the terms of a non-disclosure and confidentiality  agreement
to be executed and delivered in tandem to this agreement, Ms. Regina Gindin will
hold in confidence any  confidential  information  which the Company provides to
Ms. Regina Gindin. Ms. Regina Gindin shall be an independent  contractor and not
an employee of the  Company.  This  Agreement  shall not be  construed to create
between the Company and Ms. Regina Gindin a relationship of principal,  employer
and employee, joint ventures, co-partners or any other similar relationship, the
existence  of which is hereby  expressly  denied by the Company  and Ms.  Regina
Gindin.  Ms. Regina Gindin is not an agent for the Company,  except as described
herein and the  Company is not an agent for Ms.  Regina  Gindin for any  purpose
whatsoever;  and each such party has no right or  authority  to assume or create
any  obligations,  express  or  implied,  on  behalf or in the name of the other
party.

     6. Ms. Regina Gindin shall not during the term of this agreement enter into
or engage in any business which is a direct competitor of the Company, unless:

     a. Prior to Ms. Regina Gindin  consulting  with or becoming  engaged by any
direct or  indirect  competitor  of the  Company,  she gives the Company 10 days
prior written notice of such pending  engagement and upon request of the Company
returns  any and all  materials  supplied by the  Company to Ms.  Regina  Gindin
together with any copies  prepared by Ms. Regina  Gindin or  distributed  by Ms.
Regina Gindin, except as may be specifically exempted in writing by the Company;
and

     b. Without prejudice to its obligations  under  sub-paragraph (a) above, if
Ms.  Regina  Gindin  at any time has an  interest  in,  or  conflict  of duty in
relation to, any transaction or matter which is the subject of services provided
to the Company,  Ms.  Regina  Gindin  agrees to notify the Company prior to such
interest or conflict arising.

     7. This  Agreement  may not be  transferred,  assigned or  delegated by Ms.
Regina Gindin without the prior written consent of the Company.

     8. This  Agreement  is for a term of  twenty-four  (24)  months  and may be
terminated by either party upon notice to the other party. In the event that the
Company  consummates  a  transaction  as described in  subparagraph  1 for which
compensation is due as described in subparagraphs 2(b) and (c), within 12 months
immediately  following  the  termination  of this  Agreement,  with any party or
entity introduced by Ms. Regina Gindin to the Company,  the Company shall pay to
Ms. Regina Gindin the compensation with respect to such transaction,  calculated
in accordance with such paragraph.

     9. Any notices  hereunder  shall be sent to the  Company and to Ms.  Regina
Gindin at their

<PAGE>
respective  addresses  set forth  above.  Any notice shall be given by certified
mail,  return receipt  requested,  postage prepaid,  and shall be deemed to have
been given when deposited in the United States mail.  Either party may designate
any other address to which notice shall be given,  by giving  written  notice to
the other of such change of address in the manner herein provided.

     10. This  Agreement has been made in the State of  California  and shall be
construed  and governed in  accordance  with the laws of the state of California
without giving effect to principles governing conflicts of law.

     11. This Agreement  contains the entire agreement between the parties,  may
not be altered  or  modified,  except in  writing  and signed by the party to be
charged  Ms.  Regina  Gindin  thereby,  and  supersedes  any  and  all  previous
agreements between the parties relating to the subject matter hereof.

     12. This  Agreement  shall be binding  upon the parties  hereto,  and their
respective  heirs,  legal   representatives,   administrators,   successors  and
permitted assigns.

     IN WITNESS  WHEREOF,  the parties  hereto have executed this  Agreement and
affixed their hands and seals the day and year first above written,



                                                               Very truly yours,



                                                       U.S. Wireless Corporation



                                               By: _____________________________
                                                           Dr. Oliver Hilsenrath
                                                         Chief Executive Officer



ACCEPTED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN



--------------------------
Regina Gindin, an individual

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