Edgar Filing: CELLPOINT INC

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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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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 JUNE 30, 2001

/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________________ TO __________________

COMMISSION FILE NUMBER

CELLPOINT INC.

(Name of small business issuer in its charter)

NEVADA 52-2032380
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

3000 HILLSWOOD DRIVE,
HILLSWOOD BUSINESS PARK,
CHERTSEY, SURREY KT16 0RS, ENGLAND
(Address of principal executive offices) (Zip Code)

44-1932 895 310
(Issuer's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act: NONE.
Securities registered under Section 12(g) of the Exchange Act:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, $.001 par value NASDAQ National Market

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

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

State issuer's revenues for its most recent fiscal year: $4,111,804 for the
fiscal year ended June 30, 2001.

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days: $20,405,118 as of October 8, 2001. The
aggregate market value was based upon the closing price for the Common Stock,
par value $.001 per share, as quoted by the NASDAQ National Market for such
date.

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes / / No / /

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of October 12, 2001,
17,069,622 shares of Common Stock, par value $.001 per share.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). NONE.

Transitional Small Business Disclosure Format (check
one): Yes / / No /X/

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

CONTINUING OPERATIONS

LOCATION SERVICES (CELLPOINT)

We focus on the worldwide development, marketing, distribution, sales,
implementation and support of mobile location software technology and platforms
for digital cellular networks. Our positioning technology, location services
platform and the applications of the technology are collectively marketed under
the name the "CellPoint System" and CellPoint Mobile Location System ("MLS").
Our applications are marketed under the names "Resource Manager", "Finder!" and,
"iMate" in addition to a variety of partner applications.

The CellPoint System enables users to determine the position of a cellular
telephone or mobile device, such as a Personal Digital Assistant (PDA), for use
in a broad range of consumer and business applications. The primary location
service application areas today include resource management of mobile workforce
personnel, friend finding relative to one's own location, personal security
services, information and entertainment services. In the resource and fleet
management application, companies can view and track their mobile service
personnel over the Internet. Information and entertainment services include
location-sensitive traffic reports, weather, and concierge information services
such as the location of the nearest hotel, cinema, restaurant, bank machine or
repair shop. Emergency applications could include locating persons making
emergency calls, roadside assistance in the event of vehicle breakdown or
location of a disabled or impaired person who may be lost or missing. Friend-
finding allows users to maintain buddy lists and view the location of
pre-defined, consenting individuals relative to their own location, send
messages to these people or call them. Personal security services offer added
security to people in higher risk occupations such as night security guards,
chauffeurs, tax collectors, health care personnel, postal delivery persons and
couriers.

INDUSTRY OVERVIEW

We believe that location services will play a key role in the mobile
Internet and mobile commerce, and that the location component will be a
cornerstone in the majority of mobile Internet use. There has been an explosive
growth of wireless communications and the Internet, with mobile telephony being
the fastest growing technology of all time. Mobile Internet access will offer
corporate and mass-market utility in saving time and money. Merrill Lynch
(Wireless Internet, June 5, 2000) projects 1.5 billion people will have wireless
access to the Internet by 2005. Most experts agree that more people will access
the Internet from mobile devices than from fixed computers before 2005.
Location-based services are projected to be worth US$38 billion in consumer
spending in 2005 and location services are projected to represent 9% of all
mobile operator revenues in Western Europe in 2005 (Interactive Entertainment:
Delivering Revenues in the Broadband Era, Schema, July 2001).

Mobile operators are facing increased competition, lower revenues per user
through falling prices and churn among subscribers from one operator to another.
Voice services alone have become a commodity service. The key to unlocking
further value in the operators' investments in network infrastructure is through
offering unique value-added services to attract more customers and more airtime
use per customer, improve subscriber loyalty and reduce churn of subscribers.
Services such as voice mail, pre-paid subscriptions and short message service
(SMS) are value-added service offerings beyond voice that have become
commonplace. Location services can offer operators new value-added services to
unlock new revenue potential and differentiate operators from their competitors.

The industry for mobile location services is still very much in its infancy,
but new wireless services are an explosive growth area. It has taken longer than
we expected for this industry to "take off', but most experts agree that growth
is about to accelerate to massive proportions. We believe that

70% -- 80% of mobile phone users will employ location services by 2005, and that
the location component is key to using the Internet from mobile devices.
Location services for mobile users offer broad utility, and can be grouped into
four categories: management and tracking, information, entertainment and
security. While the industry is very new, we expect that commercial services
with a strong business case for management and service applications will be the
first to enter the market, but the mass-market services including information
and entertainment services will be much larger over time.

COMPANY HISTORY

Effective February 28, 1999, CellPoint acquired technology and intellectual
property rights from Novel Electronic Systems & Technologies ("Novel") for the
core GSM positioning technology originally developed in South Africa. We own the
original core positioning technology, and have the right to use it worldwide,
with the exception of sub-Saharan Africa for vehicle tracking applications which
are owned by Matrix Vehicle Tracking (Pty) Ltd., a corporation organized under
the laws of South Africa ("Matrix"). The GSM positioning technology was
originally commercialized by Wasp and Matrix, and has been in commercial use in
South Africa for more than four years. There are more than 28,000 commercial
users of the original technology in South Africa. We have entered into a
cooperation agreement with Matrix whereby Matrix has made available to us its
knowledge and know-how regarding GSM positioning applications, strategies and
service delivery.

CellPoint has subsequently developed Mobile Location System ("MLS"), a third
generation location platform that works with all GSM phones in all GSM, GPRS and
UMTS networks regardless of network infrastructure, and without overlays or
modifications to the network.

CORE BUSINESS

CellPoint's mission is to be the global leader in providing
location-enabling solutions toward GSM/ UMTS operators and service providers.

CellPoint's core business is to provide location system software, including
location platforms, selective location technology and selective location
applications. Core operations are Product Portfolio Management, Systems
Management, Product/Systems Development, Systems Verification, 2nd and 3rd line
support, marketing and direct touch/partner sales and sales support. Non-core
operations are supply and support of hardware (e.g. computer platforms), 1st
line support, volume sales, development of applications, and systems
integration.

CellPoint provides strong solutions in all layers--the positioning
technology, the middleware and the location applications--and provides open
interfaces for third party development through our Location Developers' Zone
("LDZ").

The clear requirement for third generation/UMTS terminals to operate in GSM
networks and the need for a combination of high-accuracy positioning methods
coupled to technologies offering high-position availability has lead CellPoint
systems to develop a location platform offering a powerful combination of
Assisted Global Positioning System ("A-GPS") and Cell-based positioning for
trusted clients at a very competitive price to the operator. The solutions offer
full support for inter-network roaming.

In order to support 3rd party applications as well as trusted applications,
CellPoint offers a middleware platform, Mobile Location Broker ("MLB") handling
anonymity, end-user privacy management and geo-server support with centralized
map rendering, routing, geo-coding and reverse geo-coding. This platform can be
placed in a separate security zone to the positioning platform, giving flexible
support for operator security requirements.

Progressive mobile operators are already launching location-based services,
opening up the market and motivating others to invest in a competitive
environment. Most are looking at location as a core

business and will require the type of carrier-grade, high-capacity and secure
systems which fall within CellPoint's product roadmap.

APPLICATIONS AND LOCATION TECHNOLOGY PLATFORM

Evolving GSM and UMTS standards will open up competition between providers
for system layers in location-based systems, creating a clear division between
location platforms and location applications.

NETWORK-BASED LOCATION PLATFORM. In September 2000, CellPoint announced a
new location platform, CellPoint Mobile Location System (MLS), capable of
locating any subscriber in a GSM network. MLS is a network-based solution that
works across multi-vendor GSM and UMTS infrastructures and does not require any
network upgrades or overlays. MLS is the central software node in a location
services system. It has open APIs and integrates location technologies with
applications, services, mapping, content terminals and browsers.

With CellPoint's MLS platform, mobile operators will be able to move
transparently from GSM to UMTS. MLS provides seamless migration from second
generation GSM networks to third generation ("3G") UMTS networks; this allows 3G
operators to offer location services in an effective manner during the build-up
phase of their networks, considerably enhancing the initial service offering for
3G operators.

CellPoint had already developed and deployed commercial location technology
using the Subscriber Identity Module (SIM) card on standard phones. MLS is the
latest CellPoint development and does not require a specially programmed SIM
card or WAP phone and is targeted at mass-market location services such as
friend finding and information services.

In March 2001, we announced our first installation of MLS with E-Plus, one
of the leading mobile operators in Germany. E-Plus demonstrated new location
services using MLS at the CeBIT technology exhibition in Germany in March 2001.

RESOURCE MANAGER. Our Resource Manager is a valuable tool for fleet and
personnel managers such as service and repair companies, sales organizations,
courier and shipping agencies, coach companies, taxi services, car rental
agencies, delivery firms, railroad companies, etc., that want to manage their
mobile resources and assets more effectively. The communication and positioning
system will help fleet owners to optimize routes and allocate resources.
Customers of these organizations can also benefit from increased information
being made available to them through the delivery of new location services, such
as when to expect a delivery, installation or service repair person. While we
believe that the potential cost savings for fleet owners and personnel managers
using the CellPoint System are significant, we have not had extensive experience
yet in the commercial use of these products.

Our first commercial agreement was signed in April 1999 with Tele2, a GSM
network operator in Sweden, for positioning services for GSM mobile phones. A
similar system was delivered to France Telecom Mobiles and announced on
July 13, 2000 where France Telecom Mobiles licensed CellPoint's location
platform and one location services application, Resource Manager.

On October 9, 2000, we announced a commercial agreement with EuroTel
Praha spol sro. of the Czech Republic for our MLS platform and applications.
EuroTel, using CellPoint's latest location-based service technology, is able to
offer its customers our Resource Manager service based on their current mobile
phones and SIM cards.

FINDER! Finder! is designed for and targeted to the mass consumer market.
It allows users to maintain buddy lists and view the location of pre-defined,
consenting individuals relative to their own location, send messages to these
people or call them. We believe Finder! offers both entertainment value as well
as practical value for consumer and business users.

IMATE. iMate addresses the broadest range of needs in mass-market mobile
use. iMate is both a full-featured information service for mobile users and a
powerful content collector and integrator. Information can be sourced from any
number of websites or databases. Internet content and geographical information
is delivered to users based on their location. Content delivered includes
weather and traffic reports to personal navigation, proximity services, and
concierge services. Information is structured in a navigable hierarchy to
optimize ease of use. Through the integrated use of mobile device positioning
and profiling, the user has a very powerful and user friendly tool to simplify
everyday life or to get more out of a visit to an unfamiliar area.

PERSONAL SECURITY. This service concept is based on mobile positioning
technology and allows personalized user profiles in case of emergency or threat.
In a distressed situation, the user may press predefined buttons on the mobile
phone. The phone sets up a voice call to an alarm center and sends positioning
information for the caller to the alarm center via CellPoint's location services
platform. The caller's position is shown to the operator on a digital map. Each
user makes an action plan when he or she subscribes to the service. The action
plan can contain medical information about blood type or allergies, contact
persons at work or home and other information such as hazardous cargo the person
may be transporting. With this information at hand, the emergency operator has
the caller's location and a much better chance to provide the distressed person
with the appropriate assistance.

STANDARDS

All GSM phones support the CellPoint MLS technology today. As GSM standards
open up for competition between system layers in location-based systems, a clear
division between location platforms and location applications will develop over
time. CellPoint provides systems in all layers--the positioning technology, the
middleware and the location applications--and provides open interfaces for third
party development. Operating entirely within GSM, Internet and WAP standards,
CellPoint's location technology and services platform require no network add on
or overlay and work in any GSM network regardless of infrastructure vendor or
vendors, allowing for worldwide roaming capabilities.

We contribute to the setting of standards through our membership and
participation in the WAP Forum (we also hold the Secretary position for Location
Services), ETSI (European Telecommunications Standards Institute, "ETSI") and
the Location Interoperability Forum ("LIF") where we chair the Mobile Location
Protocol/Application Programming Interface (MLP/API) definition group.

The United States Federal Communications Commission (the "FCC") adopted a
ruling in June 1996 (Docket No. 94-102) that mandates all cellular telephone
carriers to provide location information on all 911 calls by October 2001;
however no carriers were in compliance with the mandate as of October 1, 2001.
We believe that other countries may mandate similar requirements in the future.
Even without such additional regulations, we believe that many cellular carriers
are interested in providing new value-added services incorporating cellular
location such as the services available from CellPoint.

SYSTEM COMPONENTS

CellPoint is an end-to-end developer, supplier and enabler of mobile
location software technology and platforms. CellPoint provides systems in all
layers--the location technology, the middleware and the location applications.
CellPoint's location technologies utilize standard GSM functionality that is
already supported by all major GSM infrastructure suppliers today. The main
components of the technology are the CellPoint Mobile Location System and the
Mobile Location Broker. These third generation location platforms support our
location technology, provides open interfaces aligned with third generation
standards and is designed to support all or most location technologies expected
to reach commercial success in the future. It is through the platforms that all
operations and services run.

The Mobile Location System provides a generic location and messaging
platform that can be shared by several different applications, such as Finder!,
iMate or Resource Manager. In order to support third party applications as well
as trusted applications, CellPoint offers a middleware platform, Mobile Location
Broker, which handles anonymity, end-user privacy management and geo-server
support with centralized map rendering, routing, geo-coding and reverse
geo-coding. This platform can be placed in a separate security zone to the MLS
positioning platform, giving flexible support for operator security
requirements. The application servers utilize the Mobile Location System through
an Application Programmers Interface (APIs), which enables location of a mobile
terminal using a uniform protocol that is independent of the type of location
provider used. CellPoint also makes the API available to other application
developers who can then deliver their location-based services through
CellPoint's platform. There are a number of third party developers already doing
this, which will provide us with even more applications which the GSM operators
can offer their subscribers. A positioning server is attached to the Mobile
Location System, as are the map servers, dedicated terminal servers and other
databases.

The CellPoint System utilizes:

- A standard, unmodified GSM, GPRS or UMTS cellular network;

- Proprietary server system, the CellPoint Mobile Location System, (server
hardware and software) interacting with the GSM cellular network
operator's system, placed at the operator's site, at CellPoint's premises
or third party premises;

- A standard GSM cellular phone, WAP phone other GSM mobile device;

- Application software; and

- The Internet.

The server consists of a number of computers that manage the traffic between
the GSM network and the application software. It is designed to handle large
quantities of messages used in complex applications. The Mobile Location System
manages the communication processes, including routing of messages, calculation
of positions, database management and bi-directional message confirmation.
Remote billing features are also integrated. The CellPoint Mobile Location
System is a high-capacity platform that is fully scaleable and provides
carrier-grade availability.

Application software has been developed based on market and customer driven
principles. Normally these applications provide a graphical or text interface to
display positions on a computer terminal or mobile phone and can also present
information relative to another person's position. Tracking features are also
supported as well as remote updating of message text for defined users.
Information services relative to a user's location are also supported through
application software.

BUSINESS STRATEGY AND COMMERCIAL APPLICATIONS

Our business strategy is to provide mobile location software technology and
platforms enabling location service applications in target markets around the
world. We begin with installing the CellPoint location services platform with a
GSM cellular network operator. The network operator, or a third party, will then
market selected location services as value-added services offered to the
end-users of the cellular network. We can potentially earn revenues through
(i) sale of functionality licenses to network operators for our platforms with a
fixed price for the first capacity level and subsequent increases for additional
capacity, (ii) percentage or fixed price participation in the revenue streams
resulting from the new services offered by the network operator, (iii) usage
revenues from service providers, based on transaction volumes or time frames,
(iv) sale of the CellPoint System to strategic partners where partners are
licensed to operate the technology in a specified geographic area,
(v) maintenance and upgrade fees, (vi) consulting and professional services, and
(vii) programming interfaces.

We are currently running pilot projects and technology evaluations with
cellular network providers for mobile location services throughout Europe and
other parts of the world. We cannot assure our stockholders that any of these
pilot projects will result in the execution of definitive contracts for our
products and services. We cannot rely on the anticipated revenue from these
projects to meet our current growth and expense projections. There can be no
assurance that the CellPoint System will achieve a significant degree of market
share, and that such acceptance, if achieved, will be sustained for any
significant period or that life cycles of that technology will be sufficient (or
substitute products available) to permit us to recover start-up and other
associated costs.

We are also cooperating with numerous companies of all sizes in the areas of
marketing and sales, distribution, application development, standards setting,
systems integration and installation and support.

COMPETITION

The wireless industry continues to undergo rapid change, and competition is
intense and is expected to increase. We are aware that other companies and
businesses market, promote and develop technologies and products that could be
competitive with or are functionally equivalent to those that we have. We expect
that companies or businesses that may have developed or are developing such
technologies and products, as well as other companies and businesses that have
the expertise which could encourage them to develop and market competitive
products and technologies, may attempt to develop technologies and products
directly competitive with ours. Many of these competitors have greater financial
and other resources than we have.

Although we believe that the CellPoint System is unique, there can be no
assurances that other companies will not introduce similar or more advanced
technologies. The location services market can be divided into three parts,
(i) the location technology, (ii) the location platform and (iii) the
applications. We are active in all three areas.

TECHNOLOGY. There are two different types of positioning technologies:
handset-based and network-based. Our technology was originally handset-based
positioning technology, but we have also developed MLS which is a unique
integrated network-based solution. Our positioning technologies are all
software-based with no need for hardware overlays or add-ons to an operator's
network.

Network-based solutions can be divided into overlay systems and integrated
solutions. Most competitors have pursued overlay systems. These systems are very
costly and time-consuming to implement, since they require hardware changes
and/or add-ons to the network. We are not aware of the implementation of a
commercial overlay system to date. Most companies in the industry pursued
network-based overlay system location technology solutions subsequent to a
mandate by the FCC in the United States in 1996. The FCC mandate required that
all mobile phones be positioned by October 2001, irrespective of the type or
vintage of phone. This led companies to pursue network-based overlay location
technologies. As of October 1, 2001, no US carriers were in compliance with the
FCC's mandate.

In September 2000, we announced a network-based solution to position any
cellular phone in a GSM network, regardless of age of the phone or network
infrastructure supplier. This new technology developed by us is called MLS and
is an integrated software-only solution for network-based positioning and now
extends our location service applications to all mobile GSM users.

Handset-based technologies can require new model phones, programmed SIM
cards or use of WAP phones to be positioned. Our positioning technology was
originally developed out of the need to track stolen cars. The concept was to
utilize information that was already in existence in a GSM network and have a
"smart terminal' that could gather sufficient information from the network and
allow a server system to calculate the location very quickly.

In November 1998, we announced the capability to position normal cellular
phones. The technology from the special terminals could now be utilized in
normal mobile phones with a standard SIM card containing a program developed by
CellPoint, which opened up a vast market for us for new location services.
Location services for normal mobile phones are the focus of our developments and
service offerings today.

We believe that the technology and applications offered by CellPoint have
distinct advantages over other systems currently being marketed by other
companies. For instance, another handset-based solution is built on Global
Positioning System (GPS), which uses satellites to determine an X,Y position.
GPS requires free line of sight to a minimum of three satellites. We view GPS
not as a competing technology but rather complementary to our offerings. GPS
provides excellent location coordinates, but our engineers' research has shown
that it is insufficient as a stand-alone solution for location services for
mobile phones.

A-GPS is a new technology is a relatively new system that improves the
functionality and performance of GPS by integrating the classic GPS information
with sophisticated geographic software and mobile/cellular network information.
We believe network operators will implement A-GPS solutions over time as the
technology becomes commercially available. A-GPS is a complementary positioning
technology to today's enhanced Cell-identification technology and our MLS
platform is designed to work with A-GPS when it is commercially available. In
August 2001, we announced a strategic partnership with SiRF Technology, Inc., a
leading developer of location technology based on GPS, to deliver a platform to
GSM operators that provides highly accurate location information to mobile users
in any environment.

Network-assisted GPS enhances GPS availability but it is widely accepted
that it will not be not sufficient for mass commercial location services because
users demand location functionality 100% of the time. GPS-equipped mobile phones
have started limited commercial availability in 2001, albeit as a very limited
percentage of the total mobile device market and more of a niche offering. We
support GPS and A-GPS today and we view A-GPS as an excellent complement to the
CellPoint System. We believe that a roadmap that involves CellPoint's enhanced
Cell-ID solution in the short-term, and then when A-GPS handsets are widely
available, a combination of enhanced Cell-ID/A-GPS will be the ideal solution
for mobile operators and end-users of location-based services.

LOCATION SERVICES PLATFORM. We view ourselves primarily as enablers of
location technology and services. Our location services platforms are the
"middleware" in the total solution. MLS and MLB are fully GSM-compliant, thus
work with all GSM networks, regardless of infrastructure supplier, and also work
in multi-vendor infrastructure environments. We believe that there will be
multiple positioning technologies available in the future and no single one will
be most suitable in all cases. Consequently, our Location Services Platform will
support all or most positioning technologies expected to reach commercial
success. Middleware vendors, such as SignalSoft and Ericsson have begun to
market location platform solutions. Many others are expected to come to market
in the future, but we believe that our ability to offer an end-to-end solution
to GSM operators will give us a significant time advantage in deploying our
platform. We also intend to cooperate with these companies to increase the
number of applications being offered to the operators.

APPLICATIONS. Today, we are focusing on mobile location software technology
and platforms. We have open APIs (Application Programmers Interface) available
to partners that are developing location-based applications through our Location
Developers' Zone. We expect that, in the next few years, hundreds of
applications will be delivered via our platform, with the majority being
developed by other companies using our APIs.

RESEARCH AND DEVELOPMENT

In Fiscal 2001, we spent approximately $5,000,000 on development activity,
of which approximately $790,000 has been capitalized. We spent approximately
$2,431,000 on research and development activities in Fiscal 2000, of which none
was capitalized. Our personnel have substantial experience in the areas of GSM
and UMTS architecture, SS7 signaling, positioning technologies, WAP, Mobile
Internet, Unix and Windows.

Development projects are carried out in-line with the time-to-market process
that span from pre-studies to first customer application and roll-out. The
process provides activity and documentation guidelines, management decision
points, configuration management, testing and release control. No product or
application development is finalized without a commitment from at least one
operator or customer.

EMPLOYEES

At September 30, 2001, we had 130 full-time employees and 30 consultants in
the location services area. Of the total 130 employees, 84, 25 and 21 were
employed in Sweden, England and South Africa, respectively. None of our
employees is represented by a labor union. We consider our relations with our
employees to be very good.

TRADEMARKS AND PATENTS

CellPoint is maintaining and building a patent portfolio within its defined
target markets in order to maximize competitiveness and to avoid infringements
on other parties' technical solutions. The existing portfolio consists of
approved location technology patents and a number of filed location technology,
middleware and application patents. Since 1997, the Company has applied for
several patents for the CellPoint System; most of which are currently pending;
three of which have been accepted. In addition, we have applied for more than 20
additional patents with respect to our technologies.

We believe that the complexity involved in developing these technologies
offers considerable protection against similar developments. Our technologies
have been under development for more than five years and are continually being
refined and improved.

DISCONTINUED OPERATIONS

UNWIRE AB AND TELEMATICS OPERATIONS IN CELLPOINT SOUTH AFRICA

On February 29, 2000, we acquired all of the capital stock of Unwire AB.
Unwire develops systems and equipment for GSM positioning and telematics. We
paid the purchase price by issuing to the stockholders of Unwire an aggregate of
1,075,000 shares of Common Stock with a market value of approximately
$72.2 million. In the fourth quarter of Fiscal 2001, our Board of Directors
determined that the investment required to operate the telematics business
segment did not fit in with the Company's longer-term strategic goals. We intend
to concentrate all of our efforts and resources in developing and promoting
location-based services. We have been unable to identify a purchaser for Unwire.

On October 9, 2001, the Company's subsidiary, Unwire, filed for bankruptcy
in Sweden. As a result of the filing the Company has effectively ceased all
funding of Unwire operations. The bankruptcy courts have appointed a Trustee to
oversee the disbursement of Unwire's assets and the Company has effectively lost
control of its management and decision making capabilities over Unwire
operations.

The Company anticipates that CellPoint Systems SA ("Systems SA"), its South
African subsidiary will also file for bankruptcy. Systems SA operated a research
and development facility for the Company. The telematics portion of Systems SA
has already been included in the discontinued operations. The location services
portion of Systems SA is not included in discontinued operations, and

those functions will continue to be performed by the Company's Swedish
subsidiary. Costs of closing this subsidiary, primarily the write-off of the net
receivable from Systems SA, have been accrued in the June 30, 2001 financial
statements.

The assets, liabilities and results of operations of Systems SA were
immaterial to the financial statements of the Company for all periods presented.

At September 30, 2001, there were 40 full-time employees in the business
area of telematics, of which 25 were employees of Unwire and 15 were employees
in CellPoint South Africa.

GENERAL INFORMATION

The Company was organized on February 28, 1997, as Technor
International, Inc. pursuant to the provisions of the Corporation Law of the
State of Nevada. The Company amended its charter to change its name to
CellPoint Inc. on October 4, 1999. The Company maintains its executive offices
at 3000 Hillswood Drive, Hillswood Business Park, Chertsey, Surrey, KT16 0RS,
England, telephone + 44 1932 895 310. The Company's principal business address
and telephone numbers in Sweden are Kronborgsgrand 7, 164 46 Kista, Sweden,
telephone +46 (0)8 633 27 00, facsimile +46 (0)8 35 87 90. The Company maintains
a website at www.cellpoint.com. Information contained on the Company's website
is not a part of this Annual Report.

ITEM 2. DESCRIPTION OF PROPERTY

CONTINUING OPERATIONS

We maintain our executive offices and headquarters for CellPoint Systems,
consisting of 2,500 square feet of rented furnished office space, at 3000
Hillswood Drive, Hillswood Business Park in Chertsey, KT16 0RS Surrey, England.
We pay the equivalent of $26,000 per month in rent for those facilities. We also
occupy completely furnished facilities consisting of 10,720 square feet of
leased office space located at Kronborgsgrand 7, 164 46 Kista, Sweden. We occupy
those facilities on a lease basis and pays the equivalent of $17,000 per month
in rent for those facilities. The facilities are leased until May 2003. The
leased property is covered by a comprehensive insurance policy covering
property, fire, theft, business interruption, general and liability, legal and
litigation. We believe that the premises will be adequate through the remainder
of the lease.

DISCONTINUED OPERATIONS

CellPoint South Africa occupies 8,000 square feet of leased office space
located at Ibhubezi House, Howick Close, Waterfall Park, Midrand, South Africa.
The rent expense is equivalent to $5,700 per month for those facilities.

Unwire AB in Sweden occupied 8,500 square feet of leased office space
located at Solna Torg 13, 171 45 Solna, Sweden. Unwire occupied such space on a
lease basis and paid the equivalent of $16,500 per month in rent for those
facilities.

ITEM 3. LEGAL PROCEEDINGS

In October 2000, two former stockholders of SGS Systems AB commenced an
action in Sweden against Unwire. The complaint seeks damages in the amount of
16,000,000 Swedish Kronor (approximately $1,500,000) on the basis of a purported
1997 agreement between such stockholders and Unwire. As of February 29, 2000,
Unwire became a wholly-owned subsidiary of the Company. Pursuant to the Stock
Purchase Agreement between the Company and the former stockholders of Unwire,
certain of the former stockholders of Unwire are obligated to indemnify the
Company in full with respect to this claim. The Company and Unwire believe that
the plaintiffs' claim is completely without merit and plan to defend against
this claim vigorously.

The Company received a claim by ArosMaizels AB for 5,700,000 Swedish Kronor
(approximately $550,000) for financial services rendered to the Company in
connection with the Unwire transaction and potential financings. This claim was
submitted for arbitration, as a result of which, the Company is required to pay
4,500,000 Swedish Kronor (approximately $425,000) plus interest at 8% from
May 3, 2001. The Company previously recorded a reserve for this claim.

The Company does not believe that these litigations (including defense
costs) will have a material effect on the Company's financial condition or
results of operations.

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

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock commenced trading on the NASDAQ Electronic
Bulletin Board on January 7, 1998. The Company began trading on the Nasdaq
National Market on July 12, 2000. The Company's fiscal year ends on June 30 of
each year. The Company believes that there are approximately 2,000 beneficial
owners of its Common Stock. Set forth below are the high and low closing prices
for the Company's Common Stock for each fiscal quarter during fiscal year 2001
and fiscal year 2000:

COMMON STOCK
PRICES ($)
-------------------
FISCAL QUARTER HIGH LOW
-------------- -------- --------

1st Qtr 00.......................................... 15.875 4.750
2nd Qtr 00.......................................... 49.750 13.750
3rd Qtr 00.......................................... 94.500 39.500
4th Qtr 00.......................................... 54.125 17.000
1st Qtr 01.......................................... 44.500 15.250
2nd Qtr 01.......................................... 21.625 5.250
3rd Qtr 01.......................................... 10.250 5.375
4th Qtr 01.......................................... 8.010 2.800
1st Qtr 02.......................................... 3.200 0.86

RECENT SALES OF UNREGISTERED SECURITIES

In August 1999, the Company completed a bridge financing of $2,000,000 of
12% promissory notes through Madison Securities, Inc. of Chicago, Illinois. In
connection with such bridge financing, the Company issued an aggregate of
180,000 common stock purchase warrants; 100,000 of which have an exercise price
of $7.49 per share and 80,000 of which have an exercise of $8.04 per share. On
October 29, 1999, the Company completed the first tranche of the Company's
private placement financing, in which it sold an aggregate of 393,750 shares of
Common Stock for gross proceeds of $3,500,000. In such offering, $1,200,000 of
bridge notes were exchanged for shares of the Company's Common Stock. The
Company used $841,557 of the gross proceeds to repay in full the balance of the
bridge notes plus interest accrued on all of the bridge notes. After paying
underwriting commissions, the Company received $1,108,443 in proceeds from the
first tranche of the offering. On November 12, 1999, the Company completed the
second and final tranche of the private placement, in which it sold an aggregate
of 731,250 shares of Common Stock for gross proceeds of $6,500,000. After paying
underwriting commissions, the Company received $5,850,000 in net proceeds from
the second tranche. The Company believes that these offerings were exempt from
registration under the Securities Act pursuant to Section 4(2) and Rule 506 of
Regulation D promulgated thereunder.

On February 29, 2000, the Company acquired all of the capital stock of
Unwire AB. The Company paid the purchase price by issuing to the stockholders of
Unwire an aggregate of 1,075,000 shares of Common Stock with a market value of
approximately $70,681,000. The Company registered 25% of the shares issued to
the former stockholders of Unwire in a registration statement filed with the SEC
on August 4, 2000. The Company registered the remaining shares in a registration
statement filed with the SEC on December 27, 2000.

On December 6, 2000, the Company and Castle Creek Technology Partners LLC
("Castle Creek") entered into a Securities Purchase Agreement (the "Securities
Purchase Agreement"), pursuant to which the Company sold to Castle Creek
$10,000,000 of 6% Convertible Notes (the "Notes") and warrants (the "Warrants")
to purchase 210,526 shares of the Company's Common Stock. The Notes were
originally due September 30, 2002, and could have been prepaid prior to such
date upon the satisfaction of certain conditions (including the issuance of
additional warrants). The Notes were convertible at the rate of $25.00 per share
on or before June 4, 2001; on or after June 5, 2001, the Notes were convertible
into shares of the Company' s Common Stock at a rate equal to the lesser of
(i) $25.00 per share, and (ii) 90% of the average of the five lowest volume
weighted average prices of the Company's Common Stock during the 20 consecutive
trading days ending on the trading day immediately prior to the conversion date.
The Warrants issued are exercisable at $11.40 per share. The conversion ratio of
the Notes and the exercise price of the Warrants are also subject to
anti-dilution adjustments. On December 29, 2000, the Company filed a
registration statement under the Securities Act of 1933, as amended, including
the shares into which the Notes may be converted and the shares underlying the
Warrants that were issued.

On July 25, 2001, the Company and Castle Creek entered into a Note Purchase,
Modification and Forebearance Agreement, pursuant to which the Company has
agreed to purchase the remaining $9.25 million principal amount in convertible
notes currently held by Castle Creek. The Company agreed to pay $3.0 million to
Castle Creek by September 24, 2001 and $4.955 million by October 23, 2001 (of
which $1.0 million was paid as a non-refundable deposit on July 25, 2001), plus
all accrued and unpaid interest from the original issuance date through
October 23, 2001 or, if earlier, the date of the purchase. As part of the
transaction, the Company issued to Castle Creek five-year warrants to purchase
500,000 shares of Common Stock, exercisable after one year, at an exercise price
of $3.14 per share (subject to specified anti-dilution adjustment). The shares
issuable upon exercise of such warrant are to be registered with the Securities
and Exchange Commission.

In addition, the Company granted to Castle Creek a security interest in its
assets (including the assets of its subsidiaries), including its intellectual
property. Castle Creek agreed not to trade in the Company's stock effective
July 25, 2001 until the note repurchase is completed. The fixed conversion price
of the Notes was changed to $4.00 with no floating conversion price if the Notes
are purchased on a timely basis and the Company complies with all its other
obligations to Castle Creek in all material respects. The Company also agreed to
certain limitations on the terms of future debt and equity financings, which
limitations would not apply to a financing that provided the proceeds for the
final purchase of the Notes. The Company granted Castle Creek a full release of
all claims and has agreed not to disparage Castle Creek; Castle Creek has agreed
not to disparage the Company.

On September 26, 2001, CellPoint and Castle Creek entered into an amendment
of the July 25, 2001 agreement (the "July Agreement") to repurchase the Notes
currently held by Castle Creek and related maters. Pursuant to the amendment,
CellPoint paid $2.25 million to Castle Creek on September 26, 2001 for principal
and accrued interest. The remaining outstanding Notes will be subject to a fixed
conversion price of $4.00, and are scheduled to be repurchased on October 1,
2002 for approximately $6.1 million plus accrued interest. The outstanding Notes
are prepayable in part or in whole at any time. Castle Creek's agreement not to
trade in the Company's securities was eliminated. However, if the Company is in
non-compliance of the above mentioned limitations on the terms of future debt
and equity financing, they will be charged a $2,000,000 penalty and the notes
will become

convertible at the lower of 1) the average closing price during the ten day
period beginning five days prior to the date of the non-compliance event or
(2) the lowest price of common stock or common stock equivalents sold from
September 25, 2001 to the non-compliance event. The July Agreement, except as
modified by the amendment of September 26, 2001, remains in effect.

On September 25, 2001, the Company closed a private placement for
$3.25 million, pursuant to which it will issue 3,250,000 shares of Common Stock
plus 1,625,000 warrants to purchase shares of Common Stock at an exercise price
of $2.25 per share, exercisable for two years. The units were sold to accredited
investors pursuant to Regulation 506 under the Securities Act of 1933, as
amended (the "Securities Act"). The proceeds from the sale of these units were
used to repurchase a portion of the convertible notes held by Castle Creek.

On September 25, 2001, the Company also completed an offering pursuant to
Regulation S under the Securities Act, in which non-U.S. Persons (as such term
is defined in Regulation S), purchased 1,568,144 shares of Common Stock and
784,071 warrants to purchase shares of Common Stock, exercisable at $2.36 per
share for two years. The proceeds from the Regulation S offering aggregated
$2,071,130, and will be used for working capital.

On October 5, 2001, the Company completed a private placement of shares of
Common Stock and warrants to purchase Common Stock for $1,300,000. Such offering
was made to accredited investors pursuant to Regulation 506 under the Securities
Act. In connection with such offering, the Company will issue 1,238,096 shares
of Common Stock, and 619,048 warrants to purchase shares of Common Stock, half
of which are exercisable at $3.50 per share for twelve months and the other half
of which are exercisable at $5.00 per share for twenty-four months.

The Company has agreed to file with the Securities and Exchange Commission
prior to October 31, 2001 a registration statement covering all shares of Common
Stock issued and issuable upon exercise of the warrants described above.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

GENERAL

Except for historical information, the material contained in this
Management's Discussion and Analysis or Plan of Operation is forward-looking.
This discussion includes, in addition to historical information, forward-looking
statements, which involve risks and uncertainties. The Company's actual results
could differ materially from the results discussed in the forward-looking
statements. Factors that could cause or contribute to such differences are
discussed below. These risks and uncertainties include the rate of market
development and acceptance of location services technology, the unpredictability
of the Company's sales cycle, the limited revenues and significant operating
losses generated to date, and the possibility of significant ongoing capital
requirements. For the purposes of the safe harbor protection for forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995,
readers are urged to review the list of certain important factors set forth in
"Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995".

For purposes of the discussion contained herein, unless otherwise stated,
all information is reported on a consolidated basis for CellPoint and its
wholly-owned subsidiaries.

BUSINESS STRATEGY

CONTINUING OPERATIONS

We, and our subsidiaries, promote, market, develop, offer, sell, support and
distribute digital cellular or GSM (Global System for Mobile Communications,
"GSM") technologies and platforms for mobile phone location services. We are
primarily an enabler of location technology and services for mobile phones and
other mobile devices. Location services for mobile phones are made possible by
combining location technology, a location services platform (similar to an
operating system) and applications to deliver various location services.

CellPoint Systems is an end-to-end provider of location services. Our
location technology enables users to determine the position of a cellular
telephone or object in unmodified GSM cellular networks. The primary location
service applications include resource management of mobile workforce assets,
friend-finding relative to one's own location, personal security services and
fleet management and vehicle tracking for security, including positioning and
tracking for recovery in the event of theft. In the resource and fleet
management application, companies can view and track their mobile service
personnel over the Internet. Information services can include location-sensitive
traffic reports, weather, and concierge information services such as the
location of the nearest hotel, restaurant or repair shop. Emergency applications
could include locating persons making emergency calls, roadside assistance in
the event of vehicle breakdown or location of a disabled or impaired person who
may be lost or missing.

DISCONTINUED OPERATIONS

Unwire AB and the telematics operations in CellPoint South Africa constitute
the telematics operations in the CellPoint group, focusing on the worldwide
marketing, support, development, distribution and sales of our technologies and
products for telematics. The Company's Board of Directors has determined that
the investments required to operate Unwire does not fit in with the Company's
longer-term strategic goals. We intend to concentrate all of our effects and
resources in developing location technology and platforms and promoting location
based services. On July 25, 2001, CellPoint announced plans to sell the Unwire
subsidiary. We have been unable to identify a purchaser for Unwire. On
October 9, 2001, Unwire filed for bankruptcy protection under the laws of
Sweden.

The decision made in the fourth quarter of Fiscal 2001 to focus on the
location services business and put Unwire up for sale, and the subsequent filing
by Unwire for bankruptcy protection on October 8, 2001, requires that the
Company disclose the results of the telematics operations as "discontinued
operations" according to U.S. Generally Accepted Accounting Principles (US GAAP)
requirements. Accordingly, the results of the telematics business area have been
segregated from the results of the Company's ongoing business of location
services. The historical financial statements have also been restated to conform
to this required presentation. Unwire remains a wholly-owned subsidiary of
CellPoint Inc. at June 30, 2001. However, Unwire's financial results are
reported under Discontinued Operations in the Consolidated Statements of
Operations and its financial position is presented in the Consolidated Balance
Sheets under Assets/Liabilities of Discontinued Operations.

RESULTS OF CONTINUING OPERATIONS

The results of continuing operations are reported herein for the Company's
location services business. The Company's telematics division is reported as
"discontinued operations".

REVENUES. For the year ended June 30, 2001 ("Fiscal 2001"), the Company's
gross revenues from continuing operations increased five-fold to $4,111,804, as
compared to revenues from continuing operations of $839,003 for the fiscal year
ended June 30, 2000 ("Fiscal 2000"). Virtually all of the Company's revenues
came from the European market.

COST OF REVENUES. Costs incurred by the Company in producing revenues are
mainly the costs of supplying hardware in conjunction with the sale of the
previous generation of software platforms. Costs incurred by the Company in
producing revenues were relatively flat in Fiscal 2001 and Fiscal 2000, $587,281
in Fiscal 2001 as compared to $506,254 in Fiscal 2000. The Company does expect
the Company's role in supplying hardware in relation to its sale of software and
applications to decrease, and accordingly, the costs of producing revenue as a
percentage of revenue are expected to decrease. Research and development
expenses are recorded separately.

GROSS PROFIT. For Fiscal 2001, the Company recorded a gross profit of
$3,524,523 as compared to $332,749 gross profit in Fiscal 2000. This increase in
gross profit is attributable to the significant increase in revenues in Fiscal
2001, while the costs of producing such revenues remained relatively flat.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The Company's selling,
general and administrative expenses increased by $6,376,609, from $1,889,124 in
Fiscal 2000 to $8,265,733 in Fiscal 2001. The increase in selling, general and
administrative expenses in the Company's continuing operations was substantial
as the Company continued to build its infrastructure at both the corporate and
operational levels. The primary components of increased expenses in Fiscal 2001
were an increase in personnel costs due to an increase in the number of
employees, an increase in marketing expenses and establishment and maintenance
of operations and offices in the United Kingdom. Management expects selling,
general and administrative expenses to decrease in the near future as the
Company is implementing cost-saving measures and structural changes.

RESEARCH AND DEVELOPMENT EXPENSES. The Company's research and development
expenses increased by $1,780,436 from $2,431,275 in Fiscal 2000 to $4,211,711 in
Fiscal 2001. The increase in research and development expenses in the Company's
continuing operations was substantial and was due to the development of the new
generation of software platforms for location-based services.

PROFESSIONAL FEES. Professional fees decreased minimally from $1,526,806 in
Fiscal 2000 to $1,374,892 in Fiscal 2001. Professional fees in Fiscal 2001
primarily related to costs incurred in connection with regulatory compliance.
Management expects to continue to incur significant professional fees while in
its expansion phase.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased from $2,612,230 in Fiscal 2000 to $3,931,215 in Fiscal 2001.
Depreciation and amortization is primarily related to purchased technology. The
expense increased in Fiscal 2001 since Fiscal 2001 contained a full year of
amortization pertaining to the positioning technology acquired in connection
with the Unwire acquisition. In the first quarter of fiscal 2002, the Company
intends to early adopt SFAS No. 142 and is currently assessing the impact the
adoption will have on its financial position and results of operations. The
Company expects that the majority of its intangibles will meet the criteria
required under SFAS No. 142 to allow cessation of amortization.

FINANCIAL ITEMS. Financial items resulted in an expense of $1,900,052 in
Fiscal 2001 compared to a net expense of $37,931 in Fiscal 2000. Interest
expense was $1,563,541 in Fiscal 2001, compared to

$183,739 in Fiscal 2000. The increase in interest expense was attributable to
the $10,000,000 of convertible notes issued in December 2000 and the
amortization of the debt discount recorded in relation to those notes. In Fiscal
2001, the Company had realized and unrealized exchange gains aggregating
$177,529 whereas in Fiscal 2000, the Company had net realized exchange gains of
$2,016. These items result primarily from exchange rate fluctuations in the
currencies of the United States, Sweden and South Africa.

LOSS FROM CONTINUING OPERATIONS. Loss from continuing operations for Fiscal
2001 was ($16,501,365) versus ($8,164,617) in Fiscal 2000. The loss from
continuing operations was larger in Fiscal 2001 because the Company greatly
expanded its infrastructure, increased the number of its full-time employees and
increased its marketing and selling expenses as the Company sought to
commercialize its products and obtain contracts for the sale of its services and
products. The Company believes that as a result of the economic downturn in the
second half of last year, generally, and in the telecom sector, anticipated
orders from network operators may have been delayed.

LOSS FROM DISCONTINUED OPERATIONS. On July 25, 2001, the Company announced
its intention to sell its telematics division. On October 9, 2001, the Unwire
filed for bankruptcy protection under the laws of Sweden. Under United States
generally accepted accounting principles, the results of operations for the
telematics division, are presented under "Loss from Discontinued Operations" for
both Fiscal 2001 and Fiscal 2000. A write off of intangible assets within Unwire
resulted in a loss of $52,258,545 attributed to the disposal of "discontinued
operations". The intangible assets were valued initially based on the Company's
stock price when Unwire was acquired in February 2000 for 1,075,000 shares and
no cash. The majority of the loss on disposal of the "discontinued operations"
results from a write-down of these intangibles to their expected net realizable
value. The loss from "discontinued operations" of $10,876,197 represents the
operating losses of the telematics division for the fiscal year through the date
of the Board approval for the sale of Unwire. This amount includes depreciation
and amortization of $8,067,016.

NET LOSS AND LOSS PER SHARE. Net loss was ($79,636,107) for Fiscal 2001, a
majority of which was attributable to the loss on disposal of and loss from
discontinued operations of ($52,258,545) and ($10,876,197), respectively. Loss
per share from continuing operations was ($1.57), loss per share from
discontinued operations was ($5.99) and net loss per share was ($7.56), based on
weighted average shares outstanding of 10,532,913, while the Fiscal 2000 loss
per share from continuing operations was ($0.93), loss per share from
discontinued operations was ($0.42) and the net loss per share was ($1.35)based
upon a weighted average of 8,743,630 shares outstanding. The net loss for Fiscal
2000 was ($11,831,260) including the loss from discontinued operations of
($3,666,643).

LIQUIDITY AND CAPITAL RESOURCES

WORKING CAPITAL. At June 30, 2001, the Company had $4,993,093 in current
assets. Cash and cash equivalents amounted to $687,151. Current liabilities were
$7,401,872 at June 30, 2001. At June 30, 2000, the Company had $7,781,060 in
current assets, of which $6,624,392 consisted of cash and cash equivalents.
Working capital at the end of Fiscal 2001 was ($2,408,779), as compared to
$5,304,840 at the end of Fiscal 2000. The decrease in working capital is
attributable to the Company's expenses in connection with the implementation of
its contracts, the development of the new generation of software platforms for
location-based services and marketing to obtain new commercial contracts.

CASH FLOW FROM OPERATIONS. For Fiscal 2001, the Company used net cash in
operating activities from continuing operations of $11,246,240, as compared to
$4,557,303 for Fiscal 2000. Net cash used in operating activities from
discontinued operations as $3,044,374 in Fiscal 2001, as compared to $1,703,016
in Fiscal 2000. The significant increase in Fiscal 2001 was largely attributable
to the Company's net loss ($79,636,107) for Fiscal 2001 compared to
($11,831,260) for Fiscal 2000).

On July 25, 2001, CellPoint announced the planned sale of Unwire. CellPoint
will streamline the Company's focus and significantly reduce costs by selling
Unwire which is a recognized innovator in the field of wireless
machine-to-machine (M2M) communication. Selling Unwire will also lower the
Company's burn-rate significantly and get it to cash flow positive most quickly.
We were unable to identify a purchaser for Unwire. On October 9, 2001, Unwire
filed for bankruptcy protection under the laws of Sweden.

CASH FLOW FROM INVESTING ACTIVITIES. For Fiscal 2001, the Company had a net
cash outflow from investing activities from continuing operations of $1,626,495
versus a net cash outflow of $595,160 in Fiscal 2000. In Fiscal 2001, the
Company purchased fixed assets of $1,784,274. The Company does not currently
have any commitments for capital expenditures during the next fiscal year, but
the Company may make such expenditures if an opportunity consistent with the
Company's business strategy presents itself.

CASH FLOW FROM FINANCING ACTIVITIES. For Fiscal 2001, the Company had a net
cash inflow from financing activities from continuing operations of $10,150,323
versus a net cash inflow from continuing operations of $12,850,000 in Fiscal
2000. The Company received $10,000,000 from a private placement of its
convertible notes in December 2000. The Company received net proceeds of
$9,000,000 from a private placement of shares and warrants and $4,000,000 from a
bank loan in Fiscal 2000.

The Company may require additional capital during its fiscal year ending
June 30, 2002 to implement its business strategies, including cash for
(i) payment of increased operating expenses such as salaries for additional
employees; and (ii) further implementation of those business strategies. Such
additional capital may be raised through additional public or private financing,
as well as borrowings and other resources. To the extent that additional capital
is raised through the sale of equity or equity-related securities, the issuance
of such securities could result in dilution to the Company's stockholders. No
assurance can be given, however, that the Company will have access to the
capital markets in the future, or that financing will be available on acceptable
terms to satisfy the Company's cash requirements to implement its business
strategies. If the Company is unable to access the capital markets or obtain
acceptable financing, its future results of operations and financial conditions
could be materially and adversely affected. The Company may be required to raise
substantial additional funds through other means. If adequate funds are not
available to the Company, it may be required to curtail operations significantly
or to obtain funds through entering into arrangements with collaborative
partners or others that may require us to relinquish rights to certain of its
technologies or product candidates that the Company would not otherwise
relinquish. While the Company has begun to receive commercial revenues, there
can be no assurances that its existing commercial agreements will provide
adequate cash to sustain its operations. If the Company decides to expand its
business faster, or to geographic areas outside of Europe during the next twelve
months, it may need to raise further capital.

SUMMARY OF DEVELOPMENTS SUBSEQUENT TO JUNE 30, 2001

FRAME AGREEMENT WITH KPN MOBILE N.V. On July 3, 2001, CellPoint announced
the frame agreement for a group license of CellPoint's Mobile Location System
(MLS) for operators within the KPN-Group. The contract covers the German
operator E-Plus Mobilfunk GmbH & Co. KG and has an option for all operators in
the KPN Mobile N.V. group.

CASTLE CREEK NOTES RESTRUCTURING. On July 25, 2001, the Company and Castle
Creek entered into a Note Purchase, Modification and Forebearance Agreement,
pursuant to which the Company has agreed to purchase the remaining
$9.25 million principal amount in convertible notes currently held by Castle
Creek. The Company is obligated to pay $3.0 million to Castle Creek by
September 24, 2001 and $4.955 million by October 23, 2001 (of which
$1.0 million was paid as a non-refundable deposit on July 25, 2001), plus all
accrued and unpaid interest from the original issuance date through October 23,

2001 or, if earlier, the date of the purchase. As part of the transaction, the
Company has issued to Castle Creek five-year warrants to purchase 500,000 shares
of Common Stock, exercisable after one year, at an exercise price of $3.14 per
share (subject to specified anti-dilution adjustment). The shares issuable upon
exercise of such warrant are to be registered with the Securities and Exchange
Commission.

In addition, the Company granted to Castle Creek a security interest in its
assets (including the assets of its subsidiaries), including its intellectual
property. Castle Creek agreed not to trade in the Company's stock effective
July 25, 2001 until the note repurchase is completed. The fixed conversion price
of the Notes was changed to $4.00 with no floating conversion price if the notes
are purchased on a timely basis and the Company complies with all its other
obligations to Castle Creek in all material respects. The Company also agreed to
certain limitations on the terms of future debt and equity financings, which
limitations would not apply to a financing that provided the proceeds for the
final purchase of the Notes. The Company granted Castle Creek a full release of
all claims and agreed not to disparage Castle Creek; Castle Creek has agreed not
to disparage the Company.

On September 26, 2001, CellPoint and Castle Creek entered into an amendment
of the July Agreement to repurchase the convertible notes currently held by
Castle Creek and related maters. Pursuant to the amendment, CellPoint paid
$2.25 million to Castle Creek on September 26, 2001 for principal and accrued
interest. The remaining outstanding convertible notes will be subject to a fixed
conversion price of $4.00, and are scheduled to be repurchased on October 1,
2002 for approximately $6.1 million plus accrued interest (and, in the amount of
a material breach by the Company, such prices will be then subject to specified
adjustments by a reset of the fixed conversion price and by the payment of an
additional repurchase amount). The outstanding notes are prepayable in part or
in whole at any time. The July Agreement, except as modified by the amendment,
remains in effect.

ADDITIONAL FINANCINGS. On September 25, 2001, the Company closed a private
placement for $3.25 million, pursuant to which it issued 3,250,000 shares of
Common Stock plus 1,625,000 warrants to purchase shares of Common Stock at an
exercise price of $2.25 per share, exercisable for two years. The units were
sold to accredited investors pursuant to Regulation 506 under the Securities Act
of 1933, as amended (the "Securities Act"). The proceeds from the sale of these
units were used to repurchase a portion of the convertible notes held by Castle
Creek.

On October 5, 2001, the Company completed a private placement of shares of
Common Stock and warrants to purchase Common Stock for $1,300,000. Such offering
was made to accredited investors pursuant to Regulation 506 under the Securities
Act. In connection with such offering, the Company issued 1,238,096 shares of
Common Stock, and 619,048 warrants to purchase shares of Common Stock, half of
which are exercisable at $3.50 per share for twelve months and the other half of
which are exercisable at $5.00 per share for twenty-four months.

STOCKHOLDERS' EQUITY. Total stockholders' equity at June 30, 2001 was
$4,026,846 including an accumulated deficit of ($95,273,710). The accumulated
deficit for Fiscal 2001 includes ($63,134,742) attributable to a loss from
discontinued operations, recorded in accordance with United States generally

accepted accounting principles, associated with the Company's announced
intention to sell Unwire. The Company's stockholders' equity was $80,100,076 at
June 30, 2000, including an accumulated deficit of ($15,637,603).

Subsequent to the end of Fiscal 2001, the Company completed $6.62 million in
private placements, pursuant to which will issue 6,056,240 shares of Common
Stock and 3,028,119 warrants to purchase Common Stock. The Company used
$3.25 million to repurchase a portion of the Castle Creek Notes. In addition,
the Company was able to extend the maturity of $4,000,000 in existing
indebtedness from February 2002 until October 2002. The PRO FORMA effect on
stockholders' equity of the foregoing financing activities as if they had
occurred as of June 30, 2001 is as follows:

STOCKHOLDERS' EQUITY AT JUNE 30, 2001 (UNAUDITED)
-------------------------------------------------

As reported................................................. $ 4,026,846
Additional financing........................................ 6,621,130
-----------
Pro-forma Stockholders' equity at June 30, 2001............. $10,647,976
===========

(R) EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, as amended by SFAS No. 137 "Accounting for Derivative Instruments and
Hedging Activities," which requires the Company to value derivative financial
instruments, including those used for hedging foreign currency exposures, at
current market value with the impact of any change in market value being charged
against earnings in each period. FASB Statement No. 137, "Accounting for
Derivative Instruments and Hedging Activities Deferral of the Effective Date of
FASB Statement No. 133, an amendment of FASB No. 133" defers implementation of
SFAS No. 133 until fiscal years beginning after June 15, 2000. In addition, FASB
statement No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities", was issued in June 2000, and amended the accounting and
reporting standards of certain derivative and hedging activities. The Company
does not engage in transactions involving derivative instruments, and therefore
the initial adoption of this pronouncement did not have any effect on the
financial statements.

In December 1999, the Securities Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition", which became effective in the
fourth quarter of fiscal 2001. The adoption of SAB No. 101 did not have a
material impact on the financial position or results of operations.

In March 2000, the FASB issued Financial Interpretation No. 44, "Accounting
for Certain Transactions involving Stock Compensation an interpretation of APB
Opinion 25". Interpretation No. 44 was effective July 1, 2000. Interpretation
No. 44 clarifies the application of APB Opinion 25 for various matters,
specifically: the criteria for determining whether a plan qualifies as a
non-compensatory plan; the accounting consequence of various modifications to
the terms of a previously fixed stock option or award; and the accounting for an
exchange of stock compensation awards in a business combination. The adoption of
Interpretation No. 44 did not have a material impact on the Company's financial
position or results of operations.

In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, BUSINESS COMBINATIONS (SFAS No. 141), and No. 142, GOODWILL
AND OTHER INTANGIBLE ASSETS (SFAS No. 142). SFAS No. 141 requires the use of the
purchase method of accounting and prohibits the use of the pooling-of-interests
method of accounting for business combinations initiated after June 30, 2001.
SFAS No. 141 also requires that the Company recognize acquired intangible assets
apart from goodwill if the acquired intangible assets meet certain criteria.
SFAS No. 141 applies to all business combinations initiated after June 30, 2001
and for purchase business combinations completed on or

after July 1, 2001. It also requires, upon adoption of SFAS No. 142 that the
Company reclassify the carrying amounts of intangible assets and goodwill based
on the criteria in SFAS No. 141.

SFAS No. 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually. In
addition, SFAS No. 142 requires that the Company identify reporting units for
the purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life. An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS No. 142. SFAS No. 142 is required to be
applied in fiscal years beginning after December 15, 2001 to all goodwill and
other intangible assets recognized at that date, regardless of when those assets
were initially recognized. Early adoption is permitted in the first quarter of
fiscal years beginning after December 15, 2000. SFAS No. 142 requires the
Company to complete a transitional goodwill impairment test six months from the
date of adoption. The Company is also required to reassess the useful lives of
other intangible assets within the first interim quarter after adoption of SFAS
No. 142.

In the first quarter of fiscal 2002, the Company intends to early adopt SFAS
No. 142 and is currently assessing the impact the adoption will have on its
financial position and results of operations. The Company expects that the
majority of its intangibles will meet the criteria required under SFAS No. 142
to allow cessation of amortization.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

Certain statement contained in this Report contain "forward looking
statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. These are statements that do not relate
strictly to historical or current facts. Although the Company believes that its
plans, intentions and expectations reflected in such forward looking statements
are reasonable, it can give no assurance that such plans, intentions or
expectations will be achieved. Such forward-looking statements involve known and
unknown risks and uncertainties. The Company's actual actions or results may
differ materially from those discussed in the forward-looking statements. These
risk factors are set forth below. All forward looking statements attributable to
the Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements set forth below:

- Our limited operating history makes evaluation of our business and
prospects difficult;

- Our business and prospects must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered by
companies in their early stages of development, particularly companies in
new and rapidly evolving markets, such as the market for location
services;

- Our sales cycles are long and our revenue is unpredictable;

- Our ability to secure additional financing on acceptable terms, as and
when necessary;

- Our ability improve our technology to keep up with customer demand for new
services;

- The development cycle for new products may be significantly longer than
expected, resulting in higher than anticipated development costs;

- The ability of our systems and operations to connect and manage a
substantially larger number of customers while maintaining adequate
performance, which could place a strain on managerial and operational
resources;

- Our ability to expand customer service, billing and other related support
systems;

- Our ability to retain the services of our key management and to attract
new members of our management team;

- Our ability to effect and retain appropriate patent, copyright and
trademark protection of our products;

- Despite the implementation of security measures, our computer networks and
web sites may be vulnerable to unauthorized access, computer viruses and
other disruptive problems, and any such occurrence could result in the
expenditure of additional resources necessary to protect our assets;

- Increased competition in the field of location services;

- Our ability to sell our telematics division on acceptable terms;

- Our ability to retire the outstanding convertible notes held by Castle
Creek Technology Partners, LLC, pursuant to the terms of the Note
Purchase, Modification and Forebearance Agreement, dated as of July 25,
2001, as amended as of September 26, 2001.

- Our ability to continue to meet the listing requirements of the Nasdaq
National Market.

ITEM 7. FINANCIAL STATEMENTS

The financial statements for the Company's fiscal year ended June 30, 2001
are attached to this Annual Report commencing at page F-1.

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

None.

PART III

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

The following table sets forth the directors and executive officers of the
Company:

Stephen Childs....................... Director

Lynn Duplessis....................... Director, Executive Vice President
and Secretary

Peter Henricsson..................... Director, President, Chief Executive
Officer and Chairman of the Board

Mats Jonnerhag....................... Director

Bengt Nordstrom...................... Director

Lars Persson......................... Director; President of CellPoint
Europe Ltd.

Lars Wadell.......................... Chief Financial Officer

STEPHEN CHILDS, 53, has been a director of the Company since May 2000. He
has more than 15 years international experience in the telecom industry and has
held senior management positions with Orange from 1997-2000 as Group
Director--New Business Ventures; Deutsche Telecom from 1995-1996 as Vice
President, International Business Development; US West International from
1993-1995, Assistant Vice President; Pakcom from 1990-1993 as CEO and McCaw
Cellular from 1986-1988 in the United States as General Manager. He has over
20 years of proven success in general management, sales and marketing and an
extensive network in the telecoms industry.

LYNN DUPLESSIS, 41, has been Executive Vice President and Secretary, and
director of the Company since its formation. She has 20 years of experience in
the technology field. Ms. Duplessis has been employed by Minerva Technology Inc,
Vancouver, British Columbia, (1996), director of industry solutions with The
Capstan Group, Vancouver, British Columbia, (1992-1993), and was employed in
marketing, management and systems engineering by IBM Canada Ltd., Vancouver,
British Columbia and Toronto, Ontario, Canada (1981-1992). Ms. Duplessis is
married to Peter Henricsson, a director and the President of the Company.

PETER HENRICSSON, 49, has been Chairman and President, Chief Executive
Officer, and director of the Company since its formation. He has over 20 years
of experience in executive management, international marketing, venture capital,
consulting and financing, with both multinational corporations and emerging
companies. Mr. Henricsson has been President of Iform Sverige AB of Sweden,
(1996-1997), owner of HIM Inc. (Henricsson International Marketing), Vancouver,
British Columbia, (1991-1996), senior vice president with Allied Environmental,
Vancouver, British Columbia, (1986-1991), and manager at Atlas Copco MCT AB,
Stockholm, Sweden, Hong Kong and Indonesia (1980-1986). Mr. Henricsson is
married to Lynn Duplessis, a director and Secretary and Treasurer of the
Company.

MATS JONNERHAG, 47, has been a director of the Company since 1998.
Mr. Jonnerhag is the founder and majority owner of Borsinsikt AB. He founded
Borsinsikt in 1982 and has more than 20 years of experience with the Swedish
stock market. Borsinsikt publishes a weekly stock market newsletter. Subsidiary
operations include Borsinsikt Broker, which is a brokerage company, and
Borsinsikt BorsData AB, which markets analysis software developed in-house and
other research products.

BENGT NORDSTROM, 44, has been a director of the Company since 1998. He was
the Chief Technology Officer and Executive Director of SmarTone
Telecommunications Ltd., a cellular network operator in Hong Kong, until
January 1999. He is now the President and Senior Partner of Northstream AB of

Sweden, a GSM consulting company specializing in data over GSM. Mr. Nordstrom
has been a member of the Executive Committee of the GSM MoU association which
represents the interests of more than 400 GSM and satellite network operators
around the world. He was with SmarTone from 1993 to 1998, and was previously
with Comviq GSM AB from 1989 to 1993 and with Ericsson Telecom AB from 1983 to
1989.

LARS PERSSON, 44, has been a director of the Company since June 2000 and
President of CellPoint Europe, Ltd. since July 2000. He was President of Telia
Mobile International and Executive Vice President of Telia, a leading mobile
operator in the Nordic countries, from 1997-2000. He was the Managing Director
for France Telecom in the Nordic countries from 1992-1997. From 1986-1992, he
was the Managing Director of GPI Sweden, a wholly-owned subsidiary of the
Norwegian public company GPI A/S. Prior to that he held other senior management
positions in telecommunications and technology companies dating back to 1980.

LARS WADELL, 42, has been the Chief Financial Officer of the Company since
October, 2000. Prior to that, he was Vice President, International Business
Management of Telia Mobile International, a leading mobile operator in the
Nordic countries. From 1997 until 2000, he was Finance Manager at Merkantildata
Kommunikation (previously Upnet), a subsidiary of Merkatildata ASA. From 1993
through 1997, Mr. Wadell was Division Controller at WMI Sellbergs, a subsidiary
of Waste Management, Inc. Prior to that, he held financial management positions
in Reuters Nordic Countries and Atlas Copco.

Each of the Company's directors was elected by the stockholders at the
stockholders meeting, held in December 2000. Each director shall serve until the
next annual meeting of the stockholders at which time he or his successor shall
be elected and duly qualified.

COMMITTEES AND MEETINGS

The Board of Directors has a standing Audit Committee. The Audit Committee
reviews the proposed scope of audit and non-audit services and the fees proposed
to be charged for such services, reviews the reports and receives comments and
recommendations from the Company's internal audit function and the Company's
independent auditors following completion of the annual audit, and reviews with
such auditors and management the Company's accounting policies and the adequacy
of the Company's internal accounting controls. The Audit Committee also deals
with special matters relating to the Company's accounting practices and
financial statements brought to its attention by the Company's internal
auditors, management or the Company's independent auditors. The Audit Committee
is comprised of Messrs. Jonnerhag and Childs and Ms. Duplessis.

The Board of Directors held five meetings during the Company's fiscal year
ended June 30, 2001. Otherwise, the Board of Directors acted by unanimous
written consent.

COMPENSATION OF DIRECTORS

The directors of the Company do not receive salaries for being directors but
do have options in the Company. Messrs. Henricsson and Persson and
Ms. Duplessis are compensated for their services to the Company or its
subsidiaries in their capacities as respective officers of the Company or its
subsidiaries, and not as directors of the Company.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own beneficially more than ten
percent of the Company's outstanding Common Stock to file with the SEC initial
reports of beneficial ownership and reports of changes in beneficial ownership
of Common Stock and other securities of the Company on Forms 3, 4 and 5, and to
furnish the Company with copies of all such forms they file. One of the
Company's directors and officers

(Mr. Jonnerhag) inadvertently filed his Statement of Changes of Beneficial
Ownership of Securities on Form 4 more than ten days after the required filing
date pursuant to the reporting requirements of the Securities Exchange Act of
1934. One stockholder beneficially owning more than ten percent of the Company's
Common Stock (Novel Electronics Systems and Technologies Ltd.) inadvertently
filed its Statement of Changes of Beneficial Ownership of Securities on Form 4
more than ten days after the required filing date pursuant to the reporting
requirements of the Securities Exchange Act of 1934.

ITEM 10. EXECUTIVE COMPENSATION

The following table shows compensation for services rendered to the Company
during the fiscal years ended June 30, 2001, 2000 and 1999, respectively, by the
Chief Executive Officer. the Executive Vice President and the Chief Financial
Officer of the Company, and of the President of CellPoint Europe, Ltd., a
principal subsidiary of the Company. Each executive officer serves under the
authority of the Board of Directors. Directors who are also employees of the
Company receive no extra compensation for their service on the Board of
Directors of the Company.

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------- ------------------------------------
AWARDS PAYOUTS
----------------------- --------
SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
----------------------- -------- -------- -------- ------------- ---------- ---------- -------- ------------

Peter Henricsson,...... 2001 $200,000 -- $20,000(1) -- -- -- --
President & CEO 2000 $140,000 -- $ 6,500(1) -- -- -- --
1999 $ 71,000 -- -- -- -- -- --

Lynn Duplessis,........ 2001 $168,000 -- $20,000(2)
Executive Vice 2000 $125,000 -- $ 6,500(2) -- -- -- --
President
and Secretary 1999 $ 60,000 -- -- -- -- -- --

Lars Persson........... 2001 $294,000 -- $98,000(3) -- -- -- --
President, CellPoint 2000 -- -- -- -- 90,000/0 -- --
Europe Ltd.

Lars Wadell............ 2001 $140,000 -- -- -- 40,000/0 -- --
Chief Financial Officer

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

(1) Represents housing allowance paid on behalf of Mr. Henricsson.
Mr. Henricsson and Ms. Duplessis are husband and wife.

(2) Represents housing allowance paid on behalf of Ms. Duplessis.
Mr. Henricsson and Ms. Duplessis are husband and wife.

(3) Represents housing allowance of $50,000, car allowance of $18,000, and
tuition reimbursement of $31,000.

The Company has employment agreements with its executive officers: Peter
Henricsson, Lynn Duplessis, Lars Persson and Lars Wadell.

The Company has an agreement with Mr. Henricsson pursuant to which
Mr. Henricsson now receives a base salary of 132,000 Pounds Sterling per year.
Such employment agreement is for a term of two years, subject to automatic
renewals and certain rights of termination as specified therein. Mr. Henricsson
is entitled to one year's severance if his employment is terminated in certain
circumstances. In addition, if Mr. Henricsson's employment is terminated within
12 months following a

"change of control", Mr. Henricsson shall be entitled to receive his base salary
for one year following such termination, and all then non-exercisable options
shall become vested.

The Company has an agreement with Ms. Duplessis pursuant to which
Ms. Duplessis receives a base salary of 120,000 Pounds Sterling per year. Such
employment agreement is for a term of three years, subject to automatic renewals
and certain rights of termination as specified therein. Ms. Duplessis is
entitled to one year's severance if her employment is terminated in certain
circumstances. In addition, if Ms. Duplessis' employment is terminated within
12 months following a "change of control", Ms. Duplessis shall be entitled to
receive her base salary for one year following such termination, and all then
non-exercisable options shall become vested.

The Company has an agreement with Mr. Persson pursuant to which Mr. Persson
receives a base salary of 150,000 Pounds Sterling per year. Such agreement shall
continue until the agreement is terminated as specified therein. Mr. Persson is
entitled to one year's severance if his employment is terminated in certain
circumstances.

The Company has an employment agreement with Lars Wadell, the Company's
Chief Financial Officer, pursuant to which Mr. Wadell receives a base salary of
96,000 Pounds Sterling per year.

The Company has no set bonus policy. Bonuses may be awarded by the
independent directors of the Company. There is no bonus plan currently under
discussion or in place with the Company. The Board has established a salary
review committee consisting of two independent directors and the Chairman of the
board, plus an alternate director where the Chairman's compensation is
concerned. This salary review committee will review salaries for all staff. The
directors of the company do not receive salaries for being directors but do have
options in the Company.

OPTION GRANTS IN LAST FISCAL YEAR

The Company granted the following options to executive officers during
Fiscal 2001:

INDIVIDUAL GRANTS
------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE
NAME GRANTED(#)(1)(2) FISCAL YEAR ($/SH) EXPIRATION DATE
------------------------ ---------------- ------------ -------- ---------------

Lars Wadell............. 40,000/0 16.3% $14.625 November 2010

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

(1) The Company did not grant any SARs during Fiscal 2001.

(2) The options granted vest in installments over eighteen to twenty-eight
months. The options fully vest in the event of a change in control of the
Company.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES

The following table sets forth as to each person named in the Summary
Compensation Table the specified information with respect to option exercises
during Fiscal 2001 and the status of their options at the end of Fiscal 2001.

VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY(4)
NUMBER OF OPTIONS/SARS AT FISCAL OPTIONS/SARS AT
SHARES VALUE YEAR-END FISCAL YEAR-END ($)(5)
ACQUIRED REALIZED ---------------------------- ----------------------------
NAME ON EXERCISE ($)(1) EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
---- ----------- --------- ----------- -------------- ----------- --------------

Peter Henricsson........... -- -- 75,000(2) -- $3,750 --
Lynn Duplessis............. -- -- 75,000(3) -- $3,750 --
Lars Persson............... -- -- 30,000 60,000 -- --
Lars Wadell................ -- -- -- 40,000 -- --

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

(1) The "value realized" represents the difference between the exercise price of
the option shares and the market price of the option shares on the date the
option was exercised. The value realized was determined without considering
any taxes which may become payable in respect of the sale of any such
shares.

(2) Excludes options to acquire 75,000 shares owned by Lynn Duplessis, Mr.
Henricsson's wife.

(3) Excludes options to acquire 75,000 shares owned by Peter Henricsson, Ms.
Duplessis' husband.

(4) "In-the-money" options are options whose exercise price was less than the
market price of Common Stock at June 30, 2001.

(5) Based on a stock price of $2.80 per share, which was the closing price of a
share of Common Stock reported on the Nasdaq National Market on June 29,
2001.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company's capital structure consists of 22,000,000 authorized shares of
Common Stock, of which 17,069,622 shares were issued and outstanding as of
October 12, 2001 (after giving effect to the issuance of shares pursuant to
private placements in the first quarter of fiscal 2002), and 3,000,000 shares of
Preferred Stock, none of which is outstanding. Each share of Common Stock is
entitled to one vote.

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of October 12, 2001, by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock; (ii) each of the Company's officers and
directors; and (iii) all officers and directors as a group. Unless otherwise
noted below, each such person had sole voting and investment power over such
shares.

SHARES OF COMMON PERCENT OF COMMON
NAME AND ADDRESS OF BENEFICIAL STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNERS AND DIRECTORS AND OFFICERS OWNED OWNED
------------------------------------------------------------ ------------------ ------------------

5% BENEFICIAL OWNERS
Novel Electronics Systems & Technologies.................... 2,315,400 13.6%
5 Duke of Edinburgh Ave
Port Louis, Mauritius
DIRECTORS AND EXECUTIVE OFFICERS:
Stephen Childs.............................................. 19,500(a) *
4800 Abbey Road
Placerville, California 95667
United States
Lynn Duplessis.............................................. 2,150,000(b) 12.5%
Peter Henricsson
3000 Hillswood Drive
Hillswood Business Park
Chertsey, Surrey KT16 0RS
England
Mats Jonnerhag.............................................. 26,023(c) *
Borsinsikt AB
Box 6044
S-192 06 Sollentuna
Sweden
Bengt Nordstrom............................................. 35,000(d) *
Northstream AB
Sjoangsvagen 7
S-19172 Sollentuna
Sweden
Lars Persson................................................ 30,000(e) *
126 A Old Working Road
Pyrford
Surrey GU 22 8PB
England
Lars Wadell................................................. 14,000(f) *
Artillergatan 50
5 Tr, SE-114 54 Stockholm
Sweden
Officers and Directors as a Group 2,274,523 13.1%
(7 persons).................................................

--------------------------
* Less than 1%

(a) Mr. Childs holds options to acquire 40,000 shares, of which 19,500 are
currently exercisable.

(b) Lynn Duplessis and Peter Henricsson are husband and wife, and each of them
is a director and an executive officer of the Company. Includes (1) 500,000
shares owned by Lynn Duplessis, (2) 1,500,000 shares owned by Peter
Henricsson, (3) options to acquire 75,000 shares issued to Ms. Duplessis,
and (4) options to acquire 75,000 shares issued to Mr. Henricsson.

(c) Includes (1) 1,550 shares held by Borsinsikt AB, of which Mr. Jonnerhag is a
66% stockholder (owning 1,023 shares), and (2) options to acquire 25,000
shares, all of which are exercisable.

(d) Mr. Nordstrom holds options to acquire 35,000 shares, all of which are
currently exercisable.

(e) Mr. Persson holds options to acquire 90,000 shares, of which 30,000 are
currently exercisable.

(f) Mr. Wadell holds options to acquire 40,000 shares, of which 14,000 are
currently exercisable.

For the purpose of the foregoing table, each of the directors and executive
officers is deemed to be the beneficial owner of shares that may be acquired by
him or her within 60 days through the exercise of options, if any, and such
shares are deemed to be outstanding for the purpose of computing the percentage
of the Company's Common Stock beneficially owned by him or her and by the
directors and executive officers as a group. Such shares, however, are not
deemed to be outstanding for the purpose of computing the percentage of the
Company's Common Stock beneficially owned by any other person.

The foregoing table does not include shares issuable upon conversion of
notes and exercise of warrants currently held by Castle Creek. On July 25, 2001,
the Company and Castle Creek entered into a Note Purchase, Modification and
Forebearance Agreement, pursuant to which the Company has agreed to purchase the
remaining $9.25 million principal amount in convertible notes currently held by
Castle Creek. The Company is obligated to pay $3.0 million to Castle Creek by
September 24, 2001 and $4.955 million by October 23, 2001 (of which
$1.0 million was paid as a non-refundable deposit on July 25, 2001), plus all
accrued and unpaid interest from the original issuance date through October 23,
2001 or, if earlier, the date of the purchase. As part of the transaction, the
Company has issued to Castle Creek five-year warrants to purchase 500,000 shares
of Common Stock, exercisable after one year, at an exercise price of $3.14 per
share (subject to specified anti-dilution adjustment). The shares issuable upon
exercise of such warrant are to be registered with the Securities and Exchange
Commission. In addition, the Company has granted to Castle Creek a security
interest in its assets (including the assets of its subsidiaries), including its
intellectual property. Castle Creek has agreed not to trade in the Company's
stock effective July 25, 2001 until the note repurchase is completed. The fixed
conversion price of the notes was changed to $4.00 with no floating conversion
price if the notes are purchased on a timely basis and the Company complies with
all its other obligations to Castle Creek in all material respects. The Company
also agreed to certain limitations on the terms of future debt and equity
financings, which limitations would not apply to a financing that provided the
proceeds for the final purchase of the notes. The Company has granted Castle
Creek a full release of all claims and has agreed not to disparage Castle Creek;
Castle Creek has agreed not to disparage the Company. In addition, Castle Creek
holds warrants to purchase 210,526 shares of Common Stock, which are currently
exercisable at an exercise price of $11.40 per share (subject to antidilution
adjustments).

On September 26, 2001, CellPoint and Castle Creek entered into an amendment
of the July Agreement to repurchase the convertible notes currently held by
Castle Creek and related maters. Pursuant to the amendment, CellPoint paid
$2.25 million to Castle Creek on September 26, 2001 for principal and accrued
interest. The remaining outstanding convertible notes will be subject to a fixed
conversion price of $4.00, and are scheduled to be repurchased on October 1,
2002 for approximately $6.1 million plus accrued interest (subject to specified
adjustments upon a material breach by CellPoint). The outstanding notes are
prepayable in part or in whole at any time. The July Agreement, except as
modified by the amendment, remains in effect.

STOCK INCENTIVE PLAN

The Board of Directors of the Company has adopted a stock incentive plan
(the "Plan"). Pursuant to the provisions of the Plan, 2,000,000 shares of the
Company's Common Stock are reserved for issuance upon exercise of options. The
Plan is designed to retain qualified and competent officers, employees, and
directors of the Company.

The Company's Board of Directors, or a committee thereof, shall administer
the Plan and is authorized, in its sole and absolute discretion, to grant
options thereunder to all eligible employees of the Company, including officers
and directors (whether or not employees) of the Company. Options will be granted
pursuant to the provisions of the Plan on such terms and at such prices as
determined by the Company's Board of Directors. The exercise price will not be
lower than the closing price on the date the options are issued, or if such
prices are not available, at the fair market value as determined by the Board of
Directors. Options granted under the Plan will be exercisable after the period
specified in the option agreement. Options granted under the Plan will not be
exercisable after the expiration of ten years from the date of grant. The Plan
will also authorize the Company to make loans to optionees to enable them to
exercise their options. During Fiscal 2001, 192,600 options were exercised,
250,300 were cancelled and 244,900 options were granted. There were 928,000
options outstanding as of June 30, 2001. To date, the Company has not issued any
SAR's.

STOCK WARRANT PLAN

The Company has adopted a stock warrant plan (the "Warrant Plan"). Pursuant
to the provisions of the Warrant Plan, eligible employees, consultants and
affiliates will be given the opportunity to purchase warrants, which warrants
can be exercised, upon vesting, to purchase shares of the Company's Common
Stock. An aggregate of 1,000,000 shares of the Company's Common Stock have been
reserved for issuance pursuant to the Warrant Plan. The Plan is designed
primarily to retain qualified and competent officers, employees, and directors.

The Board of Directors of the Company, or a committee thereof, shall
administer the Plan and is authorized, in its sole and absolute discretion, to
grant options thereunder to all eligible employees, consultants and affiliates
including the Company's officers and directors (whether or not employees).
Warrants will be sold to eligible persons at prices determined by independent
appraisers to be fair market prices at the time of such sale. Each warrant will
have an exercise price equal to no less than 125% or 150% of the closing price
of the Company's Common Stock on the date immediately preceding the date of
sale. Each warrant sold pursuant to the Warrant Plan will be subject to a
vesting period as determined by the Board of Directors, and will expire no later
than five years from the date of issuance. To date, warrants with respect to an
aggregate of 385,300 warrants have been sold.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since the formation of the Company, Peter Henricsson and Lynn Duplessis, the
Company's founders and directors and executive officers, have periodically made
loans to fund the Company's cash needs. Mr. Henricsson and Ms. Duplessis loaned
the Company an aggregate of $300,000 in June and July 1999. Interest of 5% was
charged on the outstanding balance of this loan, which was repaid in full in
December 1999.

The Company is currently offering for sale to "non-U.S. Persons" pursuant to
Regulation S under the Securities Act of 1933, as amended, an initial maximum of
80 units, plus if the offering is oversubscribed, an additional 60 units. Each
unit in the Regulation S Offering consists of shares of the Company's Common
Stock and warrants to purchase Common Stock. The shares of Common Stock and the
shares issuable upon exercise of the warrants may, at the request of the holder
thereof, be exchanged for Swedish Depositary Receipts ("SDRs") after those
shares have been registered with the Securities and Exchange Commission ("SEC")
in the United States. As of September 25, 2001, the Company has sold an
aggregate of 95 units, consisting of 1,568,144 shares and 784,071 warrants, for
aggregate gross proceeds of $2,071,130. The placement agent for the
Regulation S offering is Borsinsikt AB. Mats Jonnerhag, a director of the
Company, is a 66% stockholder of Borsinsikt AB. The placement agent will receive
a commission equal to 6% of the proceeds from the Regulation S offering plus
warrants equal to 6% of the number of shares issued. The disinterested members
of the Board of Directors of the Company have approved the terms of this
transaction as being fair to the Company.

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

(a) EXHIBITS

The following exhibits are filed as part of this Annual Report on
Form 10-KSB:

Exhibit 3.1 Articles of Incorporation (incorporated by reference to the
Company's filing on Form 10-SB, filed on December 23, 1998)

Exhibit 3.2 Amended and Restated By-Laws (incorporated by reference to
the Company's Registration Statement on Form SB-2, filed on
June 8, 2000)

Exhibit 3.3 Certificate of Amendment to the Articles of Incorporation of
the Company, filed with the Secretary of State of Nevada on
October 4, 1999 (incorporated by reference to the Company's
Current Report on Form 8-K, filed on October 5, 1999)

Exhibit 4.1 Registration Rights Agreement, dated as of December 6, 2000,
by and among CellPoint Inc. and Castle Creek Technology
Partners LLC (incorporated by reference to the Company's
Current Report on Form 8-K, filed on December 12, 2000)

Exhibit 4.2 Convertible Note of CellPoint Inc., dated December 6, 2000,
payable to the order of Castle Creek Technology Partners
LLC, in the aggregate principal amount of $10,000,000
(incorporated by reference to the Company's Current Report
on Form 8-K, filed on December 12, 2000)

Exhibit 4.3 Stock Purchase Warrant of CellPoint Inc., dated December 6,
2000, issued to Castle Creek Technology Partners LLC
(incorporated by reference to the Company's Current Report
on Form 8-K, filed on December 12, 2000).

Exhibit 4.4 Stock Purchase Warrant, dated July 25, 2001, issued to
Castle Creek Technology Partners LLC (incorporated by
reference to the Company's Current Report on Form 8-K, filed
July 31, 2001)

Exhibit 10.1 Amended and Restated Stock Incentive Plan*

Exhibit 10.2 Agreement between Matrix Vehicle Tracking (Pty) Ltd. and
Technor International Inc., dated May 11, 1999

Exhibit 10.3 Amended and Restated Option Agreement, dated May 13, 1999*

Exhibit 10.4 Sale of Technology Agreement between Novel Electronic
Systems & Technologies and Technor International Inc., dated
May 13, 1999*

Exhibit 10.5 Share Sale Agreement, dated May 13, 1999, between Gerrit van
Urk, Albert van Urk, Guy Redford and Technor International,
Inc.*

Exhibit 10.6 Limited Sale of Business, dated as of March 1, 1999, between
Wasp International (Pty) Limited and Wasp S.A. (Pty)
Limited*

Exhibit 10.7 Project Agreement, dated April 23, 1999, between Tele2 and
CellPoint Systems AB*

Exhibit 10.8 Agreement, dated as of June 30, 2000, by and between France
Telecom Mobiles and CellPoint Systems AB (incorporated by
reference to the Company's Annual Report on Form 10-KSB,
filed on September 29, 2000; omits portions based upon a
request for confidential treatment pursuant to Rule 24b-2
under the Securities Exchange Act of 1934)

Exhibit 10.9 Employment Agreement, dated as of April 1, 2000, between
CellPoint Inc. and Peter Henricsson (incorporated by
reference to the Company's Annual Report on Form 10-KSB,
filed on September 29, 2000)

Exhibit 10.10 Employment Agreement, dated as of June 1, 1999, between
CellPoint Inc. and Lynn Duplessis (incorporated by reference
to the Company's Annual Report on Form 10-KSB, filed on
September 29, 2000)

Exhibit 10.11 Employment Agreement, dated as of July 9, 2000, by and
between CellPoint Inc. and Lars Persson (incorporated by
reference to the Company's Annual Report on Form 10-KSB,
filed on September 29, 2000)

Exhibit 10.12 Employment Agreement, dated as of October 16, 2000, by and
between CellPoint Inc. and Lars Wadell (filed herewith)

Exhibit 10.13 Loan Agreement, dated June 7, 2000, by and between M&S Trust
Company Limited and CellPoint Inc. (incorporated by
reference to the Company's Annual Report on Form 10-KSB,
filed on September 29, 2000)

Exhibit 10.14 Securities Purchase Agreement, dated as of December 6, 2000,
by and among CellPoint Inc. and the Purchaser set forth on
the execution page thereof (incorporated by reference to the
Company's Current Report on Form 8-K, filed on December 12,
2000)

Exhibit 10.15 Note Purchase, Modification and Forebearance Agreement,
dated as of July 25, 2001, by and between CellPoint Inc. and
Castle Creek Technology Partners LLC (incorporated by
reference to the Company's Current Report on Form 8-K, filed
on July 31, 2001)

Exhibit 10.16 Amendment, dated September 26, 2001, to Note Purchase,
Modification and Forbearance Agreement, dated as of
July 25, 2001, by and between CellPoint Inc. and Castle
Creek Technology Partners LLC (incorporated by reference to
the Company's Current Report on Form 8-K, filed on
October 5, 2001)

Exhibit 21.1 Subsidiaries of Registrant (filed herewith)

Exhibit 23.1 Consent of BDO Seidman, LLP (filed herewith)

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

* Incorporated by reference from the Company's Registration Statement on
Form 10-SB/A-2, filed on January 18, 2000.

(b) REPORTS ON FORM 8-K

None

CELLPOINT INC. AND SUBSIDIARIES
Consolidated Financial Statements
Years Ended
June 30, 2001 and 2000

CELLPOINT INC. AND SUBSIDIARIES

CONTENTS

PAGE:
--------

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

Consolidated balance sheets as of June 30, 2001 and 2000.... F-2

Consolidated statements of operations for the years ended
June 30, 2001 and 2000.................................... F-3

Consolidated statements of stockholders' equity and
comprehensive income/(loss) for the years ended June 30,
2001 and 2000............................................. F-4

Consolidated statements of cash flows for the years ended
June 30, 2001 and 2000.................................... F-5

Notes to consolidated financial statements.................. F-6

INDEPENDENT AUDITORS REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
CELLPOINT INC. AND SUBSIDIARIES
CHERTSEY, ENGLAND

We have audited the accompanying consolidated balance sheets of
CellPoint Inc. and Subsidiaries (the Company) as of June 30, 2001 and 2000 and
the related consolidated statements of operations, stockholders' equity and
comprehensive income (loss) and cash flows for each of the years ended June 30,
2001 and 2000. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
CellPoint Inc. and Subsidiaries as of June 30, 2001 and 2000, and the results of
their operations and their cash flows for each of the years ended June 30, 2001
and 2000 in conformity with accounting principles generally accepted in the
United States of America.

/S/BDO SEIDMAN, LLP
New York, New York
USA

August 21, 2001, except for note 9(b) as to which the date is September 26, 2001
and note 17 as to
which the date is October 9, 2001.

F-1

CELLPOINT INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN USD)

JUNE 30, JUNE 30,
NOTE 2001 2000
-------- ----------- -----------

ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 687,151 $ 6,624,392
Accounts receivable, net of allowance for doubtful
accounts of $Nil and $36,732, respectively.............. 1,366,641 204,923
Unbilled receivables...................................... 792,443 --
Prepaid expenses and other current assets................. 4 383,578 492,932
Other receivables......................................... 402,132 196,241
Current assets of discontinued operations................. 1,361,148 262,572
----------- -----------
TOTAL CURRENT ASSETS........................................ 4,993,093 7,781,060
----------- -----------
LONG-TERM ASSETS
Restricted cash........................................... $ 184,216 $ --
Acquired technology net................................... 5 15,571,001 18,536,899
Investment in affiliated company.......................... -- 500,000
Other intangible assets, net.............................. 6 1,107,201 705,214
Property and equipment, net............................... 7 885,780 580,458
Non-current assets of discontinued operations............. 10 521,401 58,602,679
----------- -----------
TOTAL LONG-TERM ASSETS...................................... 18,269,599 78,925,250
----------- -----------
TOTAL ASSETS................................................ $23,262,692 $86,706,310
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses and other current liabilities............ 8 $ 2,337,066 $ 1,377,726
Accounts payable.......................................... 2,082,257 711,457
Due to affiliate.......................................... -- 55,517
Current liabilities of discontinued operations............ 2,982,549 331,520
----------- -----------
TOTAL CURRENT LIABILITIES................................... 7,401,872 2,476,220
LONG-TERM DEBT.............................................. 9 11,785,510 4,000,000
NON-CURRENT LIABILITIES OF DISCONTINUED OPERATIONS.......... 10 -- 130,014
----------- -----------
TOTAL LIABILITIES........................................... 19,187,382 6,606,234
----------- -----------
MINORITY INTEREST........................................... 48,464 --
COMMITMENTS AND CONTINGENCIES 15
STOCKHOLDERS' EQUITY
Preferred shares ($0.001 par value; authorized 3,000,000
shares, nil issued and outstanding)..................... -- --
Common shares ($0.001 par value; authorized 22,000,000
shares, 10,824,503 shares and 10,465,000 shares issued
and outstanding, respectively).......................... 10,824 10,465
Additional paid in capital................................ 98,692,254 95,434,348
Cumulative foreign currency translation adjustment........ 597,478 292,866
Accumulated deficit....................................... (95,273,710) (15,637,603)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY.................................. 4,026,846 80,100,076
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $23,262,692 $86,706,310
=========== ===========

See accompanying summary of accounting policies and notes to the financial
statements

F-2

CELLPOINT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(AMOUNTS IN USD)

YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30,
NOTE 2001 2000
-------- ------------- -------------

Revenues.................................................. $ 4,111,804 $ 839,003
Cost of revenues.......................................... (587,281) (506,254)
------------- -------------
Gross profit.............................................. 3,524,523 332,749

Selling, general and administrative expenses.............. (8,265,733) (1,889,124)
Research and development expenses......................... 2 (4,211,711) (2,431,275)
Professional fees......................................... (1,374,892) (1,526,806)
Depreciation and amortization............................. (3,931,215) (2,612,230)
------------- -------------
TOTAL OPERATING EXPENSES.............................. (17,783,551) (8,459,435)
------------- -------------
LOSS FROM OPERATIONS...................................... (14,259,028) (8,126,686)
Investment expenses:
Loss on sale of investment................................ (342,285) --
Financial items, net...................................... 11 (1,900,052) (37,931)
------------- -------------
LOSS FROM CONTINUING OPERATIONS........................... (16,501,365) (8,164,617)

DISCONTINUED OPERATIONS
Loss from discontinued operations......................... 10 (10,876,197) (3,666,643)
Loss on disposal of discontinued operations............... 10 (52,258,545) --
------------- -------------
LOSS FROM DISCONTINUED OPERATIONS......................... (63,134,742) (3,666,643)
------------- -------------
LOSS BEFORE INCOME TAX.................................... (79,636,107) (11,831,260)
Income tax................................................ 13 -- --
------------- -------------
NET LOSS.................................................. $ (79,636,107) $ (11,831,260)
------------- -------------
Weighted average number of shares
outstanding, basic and diluted............................ 10,532,913 8,743,630
------------- -------------
Net loss per common share basic and diluted:
Continuing operations................................... $ (1.57) $ (0.93)
Discontinued operations................................. $ (5.99) $ (0.42)
Net loss per share...................................... $ (7.56) $ (1.35)

See accompanying summary of accounting policies and notes to the financial
statements

F-3

CELLPOINT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

(AMOUNTS IN USD)

COMMON SHARES COMMON SHARES TO
ISSUED BE ISSUED
--------------------- --------------------- ADDITIONAL ACCUMULATED
NUMBER NUMBER OF PAID-IN DEFICIT COMPREHENSIVE
OF SHARES AMOUNT SHARES AMOUNT CAPITAL ACCUMULATED INCOME/(LOSS)
---------- -------- ---------- -------- ----------- ------------ -------------

Balance, June 30, 1999......... 7,440,000 $ 7,440 750,000 $750 $14,961,373 $(3,806,343) $ (2,318)
November 1999 private placement
including exchange of
$1,200,000 of debt (net of
issuance costs).............. 1,125,000 1,125 -- -- 8,998,875 --
Shares issued.................. 750,000 750 (750,000) (750) -- -- --
Shares issued in connection
with the acquisition of
Unwire AB (note 3)........... 1,075,000 1,075 -- -- 70,680,175 -- --
Original issue debt discount... -- -- -- -- 660,000 -- --
Shares issued in connection
with purchased technology.... 75,000 75 -- -- (75) -- --
Sale of warrants to employees
(note 14).................... -- -- -- -- 134,000 -- --
Comprehensive loss
Net loss..................... -- -- -- -- -- (11,831,260) --
Other comprehensive income:
Currency translation....... -- -- -- -- -- -- 295,184
Comprehensive loss for fiscal
year.......................
---------- ------- -------- ---- ----------- ------------ --------
Balance, June 30, 2000......... 10,465,000 $10,465 -- $ -- $95,434,348 $(15,637,603) $292,866
========== ======= ======== ==== =========== ============ ========
Shares issued.................. 268,030 268 -- -- 150,055 -- --
Shares issued for the
conversion of debt
(note 9(b)).................. 91,473 91 -- -- 299,909 -- --

Original issue debt discount
(note 9(b)).................. -- -- -- -- 2,807,942 -- --

Comprehensive loss
Net loss..................... -- -- -- -- -- (79,636,107) --
Other comprehensive income:
Currency translation....... -- -- -- -- -- -- 304,612
Comprehensive loss for fiscal
year.......................
---------- ------- -------- ---- ----------- ------------ --------
Balance, June 30, 2001......... 10,824,503 $10,824 -- $ -- $98,692,254 $(95,273,710) $597,478
========== ======= ======== ==== =========== ============ ========

TOTAL
-----------

Balance, June 30, 1999......... $11,160,902
November 1999 private placement
including exchange of
$1,200,000 of debt (net of
issuance costs).............. 9,000,000
Shares issued.................. --
Shares issued in connection
with the acquisition of
Unwire AB (note 3)........... 70,681,250
Original issue debt discount... 660,000
Shares issued in connection
with purchased technology.... --
Sale of warrants to employees
(note 14).................... 134,000
Comprehensive loss
Net loss..................... (11,831,260)
Other comprehensive income:
Currency translation....... 295,184
-----------
Comprehensive loss for fiscal
year....................... (11,536,076)
-----------
Balance, June 30, 2000......... $80,100,076
===========
Shares issued.................. 150,323
Shares issued for the
conversion of debt
(note 9(b)).................. 300,000
Original issue debt discount
(note 9(b)).................. 2,807,942
Comprehensive loss
Net loss..................... (79,636,107)
Other comprehensive income:
Currency translation....... 304,612
-----------
Comprehensive loss for fiscal
year....................... (79,331,495)
-----------
-----------
Balance, June 30, 2001......... $ 4,026,846
===========

See accompanying summary of accounting policies and notes to the financial
statements

F-4

CELLPOINT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN USD)

NOTE 12

YEAR ENDED YEAR ENDED
JUNE 30, 2001 JUNE 30, 2000
-------------- --------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $(79,636,107) $(11,831,260)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Loss from discontinued operations......................... 10,876,197 3,666,643
Loss from disposal of discontinued operations............. 52,258,545 --
Depreciation and amortization............................. 3,931,215 2,612,230
Provision for allowance on accounts receivables........... -- 36,732
Non-cash financing costs.................................. 893,452 660,000
Loss on disposal of investment in affiliated company...... 342,285 --
Minority interest in net income of subsidiary............. 48,464 --
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Increase in restricted cash............................... (184,216) --
Increase in accounts receivable........................... (1,161,718) (241,655)
Increase in unbilled receivables.......................... (792,443) --
Decrease/(increase) in prepaid expenses................... 109,354 (457,345)
Increase in other receivables............................. (205,891) (41,708)
Increase in accrued expenses and other current
liabilities............................................. 959,340 435,403
Increase in accounts payable.............................. 1,370,800 671,939
Decrease in due to affiliate.............................. (55,517) (68,282)
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES FROM CONTINUING
OPERATIONS:............................................... (11,246,240) (4,557,303)
NET CASH USED IN OPERATING ACTIVITIES FROM DISCONTINUED
OPERATIONS:............................................... (3,044,374) (1,703,016)
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES:...................... (14,290,614) (6,260,319)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure....................................... (1,784,274) (595,160)
Proceeds from disposal of investments in affiliated
companies............................................... 157,715 --
Other..................................................... 64 --
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES FROM CONTINUED
OPERATIONS:............................................... (1,626,495) (595,160)
NET CASH USED IN INVESTING ACTIVITIES FROM DISCONTINUED
OPERATIONS:............................................... (597,146) (86,074)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES:...................... (2,223,641) (681,234)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of stockholders' loans.......................... -- (150,000)
Proceeds from bridge loan................................. -- 2,000,000
Repayment of bridge loan.................................. -- (800,000)
Proceeds from notes payable............................... 10,000,000 --
Proceeds from issuance of shares.......................... 150,323 7,800,000
Advances of bank loans.................................... -- 4,000,000
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES FROM CONTINUING
OPERATIONS:............................................... 10,150,323 12,850,000
NET CASH PROVIDED BY FINANCING ACTIVITIES FROM DISCONTINUED
OPERATIONS:............................................... 51,849 197,257
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES:.................. 10,202,172 13,047,257
------------ ------------
Effects of exchange rate changes on cash.................... 416,196 308,497
Effects of exchange rate changes on cash from discontinued
operations................................................ (41,354) 30,118
------------ ------------
(Decrease)/increase in cash and cash equivalents............ (5,937,241) 6,444,319
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 6,624,392 180,073
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 687,151 $ 6,624,392
============ ============

See accompanying summary of accounting policies and notes to the financial
statements

F-5

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS IN USD)

1 THE BUSINESS

CellPoint Inc. and Subsidiaries ("the Company" or "CellPoint"), was
incorporated in the state of Nevada on February 28, 1997. Through June 30, 2001,
the Company operated in two reportable business segments.

(A) LOCATION SERVICES

CellPoint owns a GSM (Global System for mobile communications) positioning
system technology (the "Technology") which can be used for a variety of
positioning applications including positioning standard mobile phones for
resource management, information, safety and security.

CellPoint is marketing and further developing the positioning applications
of the CellPoint System. The CellPoint System consists of three main parts:
mobile phone or terminal, the positioning server and the positioning programs.
The GSM network facilitates the communication between the mobile phone or
terminal and the CellPoint server system. The positioning server system enables
the use of the Internet or fixed lines as information carriers.

The Company operates its positioning business primarily through a wholly
owned subsidiary in Sweden, CellPoint Systems AB. This is CellPoint's commercial
arm focusing primarily on, but not limited to, Europe.

(B) TELEMATICS

Effective February 29, 2000 CellPoint acquired 100% of Unwire AB, a Swedish
Company ("Unwire") (see note 3). Unwire focuses on the worldwide marketing
development and sales of products for telematics.

Telematics involves wireless remote management and control of machines and
equipment. The field of applications spans all industries and includes, for
example, logistics, alarm management, elevator systems, vending machines,
container management, meter reading, fleet management, vehicle monitoring and
remote control, quality control, cash and ATM terminals, gate and door
management, security, supervision and service information. Unwire's hardware
terminals are GSM telematics terminals that are installed in various industrial
equipment, vehicles or machinery with associated application software to manage
the operation of the terminals.

On May 19, 2001 the Company approved the sale of Telematics and committed to
a plan to dispose of the business segment. Accordingly, Telematics has been
presented as a discontinued operation for the year ended June 30, 2001, and the
balance sheets as of June 30, 2001 and 2000 and the related statements of
operations and cash flows for the years then ended have been restated to conform
with this presentation. (See notes 10 and 17(b)).

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

The accompanying consolidated financial statements include the financial
statements of CellPoint and all its subsidiaries and have been prepared in
accordance with accounting principles generally accepted in the United States
and are presented in US dollars. All material inter-Company transactions and
balances have been eliminated.

F-6

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(B) CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments with
original maturities of three months or less.

Cash is restricted in accordance with a bank performance guarantee whereby
in the event the Company does not fulfil a certain contract, the cash will be
disbursed to the related customer. The bank performance guarantee expires on
December 31, 2004 and the guaranteed amount will automatically be reduced by
approximately $138,000 on January 1, 2003.

(D) REVENUE RECOGNITION

Revenues from sales of hardware, software, licenses and support services are
recognized when the products are delivered or the services are rendered. For
products and services for which customer acceptance is required, revenue is
recorded upon receipt of such acceptance.

(E) ACQUIRED TECHNOLOGY

Acquired technology arising on an acquisition of a subsidiary undertaking is
an allocation of the difference between the value of the consideration paid and
the value of the assets and liabilities acquired. It is amortised through the
statement of operations over a period of seven years, which is management's best
estimate of its useful economic life.

(F) INVESTMENT IN AFFILIATE

The investment in an affiliate at June 30, 2000 was recorded at the lower of
cost or estimated net realizable value, as no significant influence was
exercised over the financial and operating decisions of that affiliate. The
investment was sold during the year ended June 30, 2001.

(G) SOFTWARE DEVELOPMENT COSTS

Patent costs represent the expense of preparing and filing applications to
patent the Company's proprietary technologies. Such costs are amortized over the
shorter of the life of the technology or the life of the patent, beginning on
the date the patents or rights are issued. Amortization expense for fiscal 2001
and 2000 was $91,060 and $Nil, respectively.

Software development costs for products and certain product enhancements are
capitalized subsequent to the establishment of their technological feasibility
(as defined in Statement of Financial Accounting Standards ("SFAS") No. 86)
based upon the existence of working models of the products which are ready for
initial customer testing. Costs incurred prior to such technological feasibility
or subsequent to a product's general release to customers are expensed as
incurred. During fiscal 2001 and 2000, the Company capitalized costs of $789,574
and $Nil, respectively attributable to the continuing operations. Capitalized
software development costs are amortized on a product-by-product basis. The
annual amortization is the greater of the amount computed using (a) the ratio
that current gross revenues for a product bear to the total of current and
anticipated future gross revenues for that

F-7

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
product or (b) the straight-line method over the remaining estimated economic
life. Amortization starts when the product is available for general release to
customers. No amortization expense has been recorded relative to continuing
operations through June 30, 2001.

(H) OTHER INTANGIBLE ASSETS

Other intangible assets are amortized on a straight-line basis over their
estimated lives based on the underlying agreements, as follows:

Acquired franchising concept................................ --3 years
Acquired employment contracts............................... --2 years

(I) PROPERTY AND EQUIPMENT

Furniture and equipment are recorded at acquisition cost less accumulated
depreciation. Depreciation is calculated using a straight-line method over the
estimated useful lives of the related assets, as follows:

Furniture and equipment..................................... --5 years
Motor vehicles.............................................. --3 years
Computer equipment.......................................... --3 years

Assets acquired during the year are depreciated from the date the assets are
put to service. Expenditures for normal maintenance and repairs are charged to
income. Significant improvements are capitalized.

(J) IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically evaluates potential impairment of long-lived assets
based upon cash flows. A loss relating to an impairment of assets occurs when
the aggregate of the estimated undiscounted future cash inflows to be generated
by the Company's asset groups (including any salvage values) are less than the
related assets' carrying value. Impairment is measured based on the difference
between the fair value of the assets and the assets' carrying value. No
impairment has been recorded through June 30, 2001 relative to continuing
operations.

(K) INCOME TAXES

The Company utilizes the asset and liability method to account for income
taxes whereby deferred tax assets and liabilities are recognized to reflect the
future tax consequences attributable to temporary differences between the
financial reporting basis of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted tax rates expected to be recovered and settled. The effect of a change
in tax rates on deferred tax assets and liabilities is recognized in the period
in which the change is enacted.

(L) EARNINGS PER SHARE

The Company calculated its earnings per share pursuant to SFAS No. 128,
"Earnings per Share", which requires the presentation of both basic and diluted
earnings per share (EPS). The following

F-8

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
approximate number of potentially dilutive securities are not included in the
diluted earnings per share calculation since they are anti-dilutive:

JUNE 30, JUNE 30,
2001 2000
---------- ----------

Stock options........................................ 903,000 1,126,000
Warrants............................................. 690,285 614,500
Convertible notes.................................... 3,400,000 -

(M) FOREIGN CURRENCY TRANSLATION

The financial position and results of operations of the Company's foreign
subsidiaries are determined using local currency as the functional currency.
Assets and liabilities of foreign units are translated to USD at the exchange
rate in effect at each year-end. Income statements are translated at the average
exchange rate for the period. Translation differences that arise from the use of
differing exchange rates from period to period are recorded directly as a
component of stockholders' equity.

Receivables and liabilities denominated in foreign currencies are translated
at balance sheet date rates. Exchange gains and losses on translation are
reported as financial items in the statement of operations.

(N) 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 and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.

(O) RESEARCH AND DEVELOPMENT COSTS

Research and development costs are charged to expense as incurred.

(P) STOCK COMPENSATION

The Company accounts for stock options granted to employees under the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"), as permitted by SFAS No. 123 "Accounting for
Stock-Based Compensation". APB 25 provides for compensation cost to be
recognized over the vesting period of the options based on the difference, if
any, between the fair market value of the Company's stock and the option price
on the grant date. SFAS No. 123 requires the Company to provide pro forma
disclosures of net income and earnings per share as if the optional fair value
method had been applied to determine compensation costs for the Company's stock
option plans.

(Q) RECLASSIFICATIONS

Certain amounts relating to the fiscal year ended June 30, 2000 have been
reclassified to conform to the current year presentation.

F-9

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(R) EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

F-10

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
adoption is permitted in the first quarter of fiscal years beginning after
December 15, 2000. SFAS No. 142 requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first interim quarter after adoption of SFAS No. 142.

3 ACQUISITION

On February 29, 2000, the Company acquired all of the outstanding shares of
Unwire for 1,075,000 shares of the Company's common stock, having a fair market
value of approximately $70,681,000. The Company accounted for this acquisition
as a purchase. The excess cost, including acquisition costs incurred, over fair
market value of the net tangible liabilities acquired was $72,217,372 and was
allocated to acquired technology, which is being amortized over seven years.

The purchase price of $71,341,250 was allocated to assets acquired and
liabilities assessed based on the fair market value of the date of acquisition
as follows:

Current assets.............................................. $ 564,372
Acquired technology......................................... 72,217,372
Current liabilities......................................... (1,440,494)
-----------
$71,341,250
===========

On May 19, 2001 the Company approved the sale of Telematics and committed to
a plan to dispose of the business segment (Note 10). Telematics represents
primarily the operations of Unwire. Approximately $10,832,605 of the $72,217,372
acquired technology is related to positioning, with the remainder attributable
to Telematics.

4 PREPAID EXPENSES

JUNE 30, JUNE 30,
2001 2000
--------- ---------

Rent.................................................... 236,237 79,782
Other................................................... 147,341 413,150
-------- --------
$383,578 $492,932
======== ========

F-11

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

5 ACQUIRED TECHNOLOGY

Acquired technology at June 30, 2001 and 2000 consisted of the following:

JUNE 30, JUNE 30,
2001 2000
----------- -----------

Positioning technology arising on the acquisition
of Unwire (See note 3)........................... $10,832,605 $10,832,605
Amortization....................................... (2,028,283) (512,368)
----------- -----------
Net book value..................................... 8,804,322 10,320,237
----------- -----------
Purchased core positioning technology.............. 10,150,000 10,150,000
Amortization....................................... (3,383,321) (1,933,338)
----------- -----------
Net book value..................................... 6,766,679 8,216,662
----------- -----------
Acquired technology, net........................... $15,571,001 $18,536,899
=========== ===========

6 OTHER INTANGIBLE ASSETS

JUNE 30, JUNE 30,
2001 2000
----------- -----------

Acquired franchising concept, net of amortization
of $777,780 and $444,445, respectively........... $ 222,220 $ 555,555
Acquired employment contracts, net of amortization
of $442,990 and $273,331, respectively........... -- 149,659
Patents, net of amortization of $91,060 and $Nil,
respectively..................................... 95,407 --
Capitalization of software, net of amortization of
$Nil and $Nil, respectively...................... 789,574 --
----------- -----------
$ 1,107,201 $ 705,214
=========== ===========

7 PROPERTY AND EQUIPMENT

Property and equipment at June 30, 2001 and 2000 consisted of the following:

JUNE 30, JUNE 30,
2001 2000
----------- -----------

Furniture and equipment............................ $ 161,416 $ 546,294
Motor vehicles..................................... 35,801 18,538
Computer equipment................................. 1,168,908 127,155
----------- -----------
1,366,125 691,987
Accumulated depreciation........................... (480,345) (111,529)
----------- -----------
$ 885,780 $ 580,458
=========== ===========

F-12

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

8 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

JUNE 30, JUNE 30,
2001 2000
----------- ----------

Professional fees................................... $ 474,601 $ 660,000
Vacation pay........................................ 283,501 264,899
Payroll taxes and social security costs............. 226,407 139,352
Interest............................................ 390,000 --
Temporary employees................................. 134,840 131,310
Other............................................... 827,717 182,165
----------- ----------
$ 2,337,066 $1,377,726
=========== ==========

9 LONG-TERM DEBT

JUNE 30, JUNE 30,
2001 2000
----------- ----------

Bank loans(a)....................................... $ 4,000,000 $4,000,000
Castle Creek(b)..................................... 7,785,510 --
----------- ----------
$11,785,510 $4,000,000
=========== ==========

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

(A) BANK LOANS

Interest on the bank loan is payable quarterly in arrears and is charged at
9% per annum. Security for the loan is given by items of corporate
governance as may reasonably be required by the tenders attorneys. The loan
is required to be repaid in total no later than October 1, 2002. An addendum
has been added to the loan that will allow the loan to be converted to
shares of the Company at a fixed rate of $1.60 per share in the event that
there is a change in control of the Company.

(B) CASTLE CREEK

On December 6, 2000, the Company entered into an agreement whereby it issued
to Castle Creek Technology Partners LLC ("Castle Creek") convertible notes
in the aggregate principal amount of $10,000,000, which were originally due
and payable on September 30, 2002. Interest on the debt is 6% per annum,
compounded semi-annually and payable semi-annually on each June 30 and
December 31. Prior to June 5, 2001, the notes were convertible, in whole or
in part, at a fixed conversion price of $25 per share at the option of the
holder of the debt and could be converted in exchange for all or part of the
outstanding debt plus the accrued interest at the conversion date.
Subsequent to June 5, 2001, the notes were convertible at the lower of $25
or 90% of the average of the five lowest volume weighted average prices
during the period of twenty consecutive trading days ending on the trading
day immediately prior to the date of determination. The conversion of the
notes contained certain limitations as set forth in the agreement. The
Company has reserved 2,000,000 shares for the purpose of possible future
conversions.

In connection with the convertible notes, the Company issued warrants
exercisable immediately and expiring on December 5, 2005. The warrants grant
Castle Creek the right to purchase 210,526 shares of the Company's common
stock at an exercise price per share of $11.40.

F-13

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

9 LONG-TERM DEBT (CONTINUED)
Due to the beneficial conversion feature, the Company has applied Emerging
Issues Task Force ("EITF") 00-27: Application of EITF No. 98-5 "Accounting
for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios", to certain convertible
instruments. In accordance with EITF 00-27 the Company evaluated the value
of the beneficial conversion feature and recorded this amount as a reduction
to the carrying amount of the convertible debt and an addition to
paid-in-capital. Additionally, the fair value of the warrants was calculated
and recorded as a further reduction to the carrying amount and an addition
to paid-in-capital. The Company therefore recorded a total debt discount of
approximately $2,808,000 and is amortizing the discount over the term of the
debt. Amortization for the year ended June 30, 2001 was approximately
$893,000 and this amortization is recorded as interest expense.

As of June 30, 2001, Castle Creek had converted $300,000 of the note into
91,473 shares.

On July 25, 2001, subsequent to year-end, the Company entered into a note
purchase, modification and forebearance agreement with Castle Creek
concerning the above mentioned notes. Under the agreement, the outstanding
notes are to be repurchased by the Company. The Company agreed to buy back
the outstanding principal of the notes over 90 days for 86% of the remaining
principal, plus accrued interest, and issue 500,000 warrants with an
exercise price of $3.14 per share and exercisable after one year for a
period of four years. In addition, the Company granted to Castle Creek a
security interest in its assets (including the assets of its subsidiaries),
including its intellectual property. Castle Creek agreed not to trade in the
Company's stock effective July 25, 2001 until the note repurchase is
completed, in consideration for which Castle Creek was paid $1,000,000 as a
non-refundable deposit against the final note purchase payment. The fixed
conversion price of the Notes was changed to $4.00 with no floating
conversion price if the notes are purchased on a timely basis and the
Company complies with all its other obligations to Castle Creek in all
material respects. The Company also agreed to certain limitations on the
terms of future debt and equity financings, which limitations would not
apply to a financing that provided the proceeds for the final purchase of
the Notes.

On September 26, 2001, the Company and Castle Creek entered into an
amendment of the July 25, 2001 agreement. The outstanding convertible notes
will be repurchased at 100% of the remaining principal and subject to a
fixed conversion price of $4.00. Pursuant to the amendment, the Company paid
approximately $2,250,000 to Castle Creek on September 26, 2001 for principal
and accrued interest and is scheduled to make a second payment on
October 1, 2002 for approximately $6,100,000 plus accrued interest (subject
to specified adjustments upon a material breach by the Company). The
outstanding notes are prepayable in part or in whole at any time without
penalty. However, if the Company is in non-compliance of the above mentioned
limitations on the terms of future debt and equity financing, they will be
charged a $2,000,000 penalty and the notes will become convertible at the
lower of 1) the average closing price during the ten day period beginning
five days prior to the date of the non-compliance event or (2) the lowest
price of common stock or common stock equivalents sold from September 25,
2001 to the non-compliance event. The July Agreement, except as modified by
the amendment, remains in effect.

F-14

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

10 DISCONTINUED OPERATIONS

On May 19, 2001, the Company approved the disposal of the telematics
business segment of the Company and committed to a plan to dispose of the
business. Accordingly, the telematics business segment has been presented as a
discontinued operation for the year ended June 30, 2001, and the balance sheets
as of June 30, 2001 and 2000 and the related statements of operations and cash
flows for the years then ended have been restated to conform with this
presentation. At May 19, 2001, the Company accrued a loss on disposal of
approximately $52,259,000. The loss on disposal of telematics includes
provisions for write-downs of net assets of $50,745,000 and estimated losses of
approximately $1,514,000. The provision for estimated losses is based on
management's estimate of future income and expenses relating to the remaining
telematics business and amortization of acquired technology related to
telematics until the expected date of disposition. Net sales for Telematics were
approximately $956,000 and $76,000 for the years ended June 30, 2001 and 2000,
respectively.

The components of net assets (liabilities) of discontinued operations
included in the Company's Consolidated Balance Sheets at June 30, 2001 and 2000
are as follows:

2001 2000
----------- -----------

Current assets:
Accounts receivable.............................. $ 262,504 $ 7,025
Other receivables................................ 482,423 45,957
Inventory........................................ 429,432 159,628
Other current assets............................. 186,789 49,962
Non-current assets:
Acquired technology.............................. -- 58,481,348
Other long-term assets........................... 521,401 121,331
Current liabilities:
Accrued expenses and other current liabilities... (1,952,808) (245,715)
Accounts payable................................. (1,029,741) (85,805)
Non-current liabilities:
Long-term debt................................... -- (130,014)
----------- -----------
$(1,100,000) $58,403,717
=========== ===========

11 FINANCIAL ITEMS, NET

JUNE 30, JUNE 30,
2001 2000
----------- ---------

Interest income...................................... $ 169,972 $ 143,792
Other financial income............................... 9,851
Interest expense..................................... (1,563,541) (183,739)
Other financial expense.............................. (693,863)
Foreign currency exchange gains...................... 177,529 2,016
----------- ---------
$(1,900,052) $ (37,931)
=========== =========

F-15

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

12 SUPPLEMENTAL CASH FLOW INFORMATION

JUNE 30, JUNE 30,
2001 2000
---------- -----------

Cash paid during the year for:
Interest related to continuing operations........... $ 279,864 $ 10,353
Interest related to discontinued operations......... 16,332 11,123

Non-cash transactions relating to investing and
financing activities:
Discount on debt issued............................. 2,807,942 660,000
Conversion of convertible debt to common stock...... 300,000 --
Accounts receivable from the sale of warrants to
employees......................................... -- 134,000
Common stock issued in connection with purchased
technology........................................ -- 75
Debt repaid through issuance of shares.............. -- 1,200,000
Business acquisition:
Net liabilities assumed........................... -- (1,440,494)
Common stock issued............................... -- 70,681,250

13 INCOME TAXES

The Company and its eligible subsidiaries file a consolidated Federal income
tax return. Other subsidiaries file separate income tax returns in their
respective countries. The Company's U.S. and wholly owned foreign subsidiaries
had net operating losses for the years ended June 30, 2001 and 2000 and were not
subject to income tax.

Actual income tax benefit differs from the amount computed by applying the
U.S. Federal corporate income tax rate of 34% to pre-tax losses, primarily as a
result of foreign tax reporting subsidiaries and valuation allowances netted
against potential deferred tax assets.

The significant components of the Company's deferred income tax assets are
as follows:

JUNE 30, JUNE 30,
2001 2000
DEFERRED INCOME TAX ASSETS: ------------ -----------

Net operating Losses--US subsidiaries........... $ 3,864,727 $ 2,042,005
Net operating Losses--Foreign subsidiaries...... 19,787,830 3,586,106
Valuation Allowance............................. (23,652,557) (5,628,112)
------------ -----------
NET DEFERRED INCOME TAX ASSET..................... $ -- $ --
============ ===========

At June 30, 2001, the Company provided a 100% valuation allowance for the
deferred tax asset because the ultimate realization of this asset is uncertain.

At June 30, 2001, the Company's U.S. net operating losses carried forward
amounted to approximately $11,000,000 which are available to offset future
federal taxable income through 2021. Foreign net operating losses carried
forward totalled approximately $84,000,000 at June 30, 2001. Such losses can be
utilized against future foreign income, with no expiration date.

F-16

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

14 STOCK OPTIONS AND WARRANTS

(A) STOCK INCENTIVE PLAN

In 1998, the Company adopted a Stock Incentive Plan ("the Stock Incentive
Plan") for its employees, officers and directors (whether or not employees). The
Stock Incentive Plan provides for the grant of non-qualified stock options. The
Stock Incentive Plan provides that for each option granted under the Stock
Incentive Plan, the exercise price shall not be less than 100% of the fair
market value of the common share on the date before the option is granted. The
Stock Incentive Plan provides that options granted vest in one, two or three
installments: the first being six to twelve months, the second being one year to
two years, and the third being eighteen months to twenty-eight months after the
anniversary of the date of grant, and expire no later than 10 years subsequent
to the grant date.

The number of shares authorized for grants under the Share Option Plan is
2,000,000 and the number of options granted at June 30, 2001 was 1,120,600. As
of June 30, 2001, 192,600 options had been exercised.

The following table summarizes information about stock options outstanding
at June 30, 2001.

OPTIONS EXERCISABLE
WEIGHTED --------------------------------
OUTSTANDING AVERAGE WEIGHTED WEIGHTED
RANGE OF AS OF REMAINING AVERAGE EXERCISABLE AS AVERAGE
EXERCISE JUNE 30, CONTRACTUAL EXERCISE OF JUNE 30, EXERCISABLE
PRICES 2001 YEARS PRICES 2001 PRICE PER SHARE
--------------- ----------- ----------- -------- -------------- ---------------

$2.50 - $2.75 230,000 6.8 $ 2.69 230,000 $2.69
$3.25 - $3.88 35,000 7.5 3.43 35,000 3.43
$4.00 - $4.63 152,500 7.5 4.31 152,500 4.31
$5.02 - $5.37 34,500 9.7 5.32 -- --
$6.09 - $6.38 47,750 9.6 6.19 7,500 6.09
$7.00 90,000 8.1 7.00 60,000 7.00
$8.06 - $8.88 38,000 9.6 8.17 -- --
$9.00 - $9.13 15,000 9.5 9.04 -- --
$13.63 - $14.75 160,250 8.9 14.48 33,000 14.17
$17.00 - $23.88 125,000 8.9 19.81 42,000 19.78
------- ------- -------
928,000 $ 8.35 560,000
------- ======= =======

F-17

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

14 STOCK OPTIONS AND WARRANTS (CONTINUED)
Information concerning the Stock Incentive Plan is summarized as follows:

WEIGHTED
YEAR ENDED OPTION AVERAGE
OPTION PRICE PER PRICE PER
SHARES SHARE SHARE
---------- ------------- ---------

Outstanding at June 30, 1999............... 840,000 1.00 - 4.63 2.94
Granted.................................... 661,000 7.00 - 74.00 18.97
Exercised.................................. -- -- --
Cancelled/expired.......................... (375,000) 3.38 - 74.00 26.15
--------- ------------- ------
Outstanding at June 30, 2000............... 1,126,000 1.00 - 64.00 7.02
Granted.................................... 244,900 5.02 - 14.63 9.95
Exercised.................................. (192,600) 1.00 - 4.38 1.85
Cancelled/expired.......................... (250,300) 2.75 - 64.00 10.60
--------- ------------- ------
Outstanding at June 30, 2001............... 928,000 $2.50 - 23.88 $ 8.35
--------- ------------- ------

The weighted average fair value of options granted during the year was $7.29
and $5.67 for June 30, 2001 and 2000, respectively.

The Company has used the Black Scholes pricing model to determine fair value
of each option with pricing assumption, as follows:

OPTIONS
---------------------
2001 2000
--------- ---------

Risk free interest rate................................ 5.28% 6.10%
Expected option life................................... 7-8 years 7-8 years
Volatility............................................. 61.0% 45.8%
Dividends expected..................................... -- --

SFAS 123 requires the Company to provide pro forma disclosures of net loss
and net loss per share as if the fair value method had been used to determine
compensation costs. The following represents the Company's net loss and net loss
per share under the fair value method of accounting for stock compensation.

JUNE 30, JUNE 30,
2001 2000
----------- -----------

Net loss As reported $79,636,107 $11,831,260
Compensation--options 891,358 459,869
----------- -----------
Pro forma $80,527,465 $12,291,129
=========== ===========

Loss per share As reported $ (7.56) (1.35)
Compensation--options (0.08) (0.05)
----------- -----------
Pro forma $ (7.64) $ (1.40)
=========== ===========

F-18

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

14 STOCK OPTIONS AND WARRANTS (CONTINUED)

(B) WARRANTS

In May 2000, the Company instituted a warrant plan whereby warrants may be
granted to employees, officers and directors. The warrant plan provides that
each warrant will have an exercise price equal to no less than 125% or 150% of
the closing price of the Company's Common Stock on the date immediately
preceding the date of sale. Such warrants are purchased by the employee, officer
or director at a price equal to the fair market value of the warrant on the date
of the grant. The fair market value is determined using the Black Scholes
valuation method. The plan provides for the warrants to vest two or three years
after the date of grant, and have a life of six months from the vesting date.

The following table summarizes information about the warrant plan at
June 30, 2001:

WEIGHTED
OUTSTANDING AVERAGE WEIGHTED
AS OF REMAINING AVERAGE EXERCISABLE AS
JUNE 30, CONTRACTUAL EXERCISE OF JUNE 30,
RANGE OF EXERCISE PRICES 2001 YEARS PRICES 2001
------------------------ ----------- ----------- -------- --------------

$5.57 - 25.50................... 385,300 2.27 $17.43 --
------- ----- ------ ---------

WEIGHTED
AVERAGE
YEAR ENDED WARRANT EXERCISE
WARRANT PRICE PER PRICE PER
SHARES SHARE SHARE
---------- ------------ ---------

Outstanding at June 30, 1999............... -- -- --
Granted.................................... 322,000 $ 0.40 $25.50
-------- ------------ ------
Outstanding at June 30, 2000............... 322,000 $ 0.40 $25.50

Granted.................................... 238,300 $0.09 - 0.37 $12.46
Cancelled.................................. (175,000) $ 0.40 $25.50
-------- ------------ ------
Outstanding at June 30, 2001............... 385,300 $0.09 - 0.40 $17.43
======== ============ ======

15 COMMITMENTS AND CONTINGENCIES

(A) CURRENCY EXPOSURE

A significant portion of the Company's continuing business is conducted in
currencies other than the US dollar (the currency in which its financial
statements are stated), primarily the Swedish krona. The Company incurs a
significant portion of its expenses in Swedish krona. As a result, the value of
the Swedish krona relative to the other currencies in which the Company
generates revenues, particularly the US dollar, could adversely affect operating
results. As the Company's customers are mostly found in Europe the invoicing is
predominately made in Euro. The Company does not currently undertake hedging
transactions to cover its currency.

F-19

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

15 COMMITMENTS AND CONTINGENCIES (CONTINUED)
(B) OPERATING LEASES

The Company rents offices under noncancelable operating leases expiring
through April 30, 2003. Rental expense amounted to $915,362 and $185,477 for
fiscal year 2001 and 2000, respectively.

Future minimum annual rental payments under the noncancelable leases at
June 30, 2001 are as follows:

2001-2002................................................... $532,944
2002-2003................................................... $202,330

The Company is obligated under four employment agreements with certain
officers, which provide for base annual compensation aggregating approximately
$700,000.

(D) LITIGATION

The Company is subject to claims and lawsuits that arose in the ordinary
course of business. On the basis of information presently available, it is the
opinion of management that the disposition or ultimate determination of such
claims and lawsuits will not have a material adverse effect on the financial
position or operations of the Company.

16 MAJOR CUSTOMERS AND GEOGRAPHICAL CONCENTRATION

The Company's two largest customers relative to continuing operations
accounted for 65% and 90% of the Company's sales for the fiscal years ended
June 30, 2001 and 2000, respectively. Accounts receivable from these two
customers represented 86% and 84% of accounts receivables at June 30, 2001 and
2000, respectively.

For the years ended June 30, 2001 and 2000, the Company's business was
primarily conducted in Sweden with customers in Europe.

17 SUBSEQUENT EVENTS

(A) FINANCING

On September 25, 2001, the Company closed a private placement pursuant to
which it will issue 3.25 million shares of Common Stock for proceeds of
$3,250,000. In addition, the Company will issue warrants to purchase 1,625,000
shares of Common Stock, exercisable at $2.25 per share for two years. The
Company used the proceeds from this offering to make the required payment to
Castle Creek for the repurchase of a portion of the convertible notes held by
Castle Creek.

On September 25, 2001, the Company closed a placement under Regulation S for
an aggregate of $2,071,130, pursuant to which the Company will issue an
aggregate of 1,568,144 shares and 784,071 warrants to purchase shares of the
Company's Common Stock, exercisable at $2.36 per share for two years.

F-20

CELLPOINT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS IN USD)

17 SUBSEQUENT EVENTS (CONTINUED)
On October 5, 2001, the Company closed additional private placements
pursuant to which it will issue an aggregate of 1,238,096 shares of Common Stock
for proceeds of $1,300,000. In addition, the Company will issue warrants to
purchase 619,048 shares of Common Stock, half of which are exercisable at $3.50
per share for twelve months following the closing, and the other half of which
are exercisable at $5.00 per share for twenty-four months following the closing.

(B) UNWIRE

The Company anticipates that CellPoint Systems SA ("Systems SA"), its South
African subsidiary will also file for bankruptcy. Systems S.A. operated a
research and development facility for the Company. The telematics portion of
Systems SA has already been included in the discontinued operations. The
location services portion of Systems SA is not included in discontinued
operations, and those functions will continue to be performed by the Company's
Swedish subsidiary. Costs of closing this subsidiary, primarily the write-off of
the net receivable from Systems SA, have been accrued in the June 30, 2001
financial statements.

The assets, liabilities and results of operations of Systems SA were
immaterial to the financial statements of the Company for all periods presented.

18 UNAUDITED PRO-FORMA INFORMATION

The PRO FORMA effect on stockholders' equity of financing activity referred
to in note 17(a) as if they had occurred as of June 30, 2001:

Stockholders' equity at June 30, 2001 as reported........... $ 4,026,846
Additional financing........................................ 6,621,130
-----------
Pro-forma Stockholders' equity at June 30, 2001............. $10,647,976
===========

F-21

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

CELLPOINT INC.

By: /s/ PETER HENRICSSON
-----------------------------------------
Peter Henricsson
PRESIDENT, CHIEF EXECUTIVE OFFICER
October 17, 2001 (PRINCIPAL EXCUTIVE OFFICER)

By: /s/ LARS WADELL
-----------------------------------------
Lars Wadell
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)

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

SIGNATURE TITLE DATE
--------- ----- ----

/s/ PETER HENRICSSON
------------------------------------------- Director October 17, 2001
Peter Henricsson

------------------------------------------- Director
Stephen Childs

/s/ LYNN DUPLESSIS
------------------------------------------- Director October 17, 2001
Lynn Duplessis

/s/ MATS JONNERHAG
------------------------------------------- Director October 17, 2001
Mats Jonnerhag

------------------------------------------- Director
Bengt Nordstrom

/s/ LARS PERSSON
------------------------------------------- Director October 17, 2001
Lars Persson