UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: November 30, 2008

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

For the transition period from ___________ to ___________

Commission file number: 000-32475

ASTRATA GROUP INCORPORATED

(Exact name of registrant as specified in its charter)

NEVADA			84-1408762
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

940 South Coast Dr., Suite 215, Costa Mesa, California			92626
(Address of principal executive offices)			(Zip Code)

Issuer’s telephone number, including area code: (714) 641-1512

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

Indicate by check mark whether the registrant is a large accelerated filer, and accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

State the number of shares outstanding of each of the issuer’s classes of common equity as of January 8, 2009: 31,113,819 shares of common stock.

TABLE OF CONTENTS

Page


Part I - Financial Information

Item 1 Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of November 30, 2008 and February 29, 2008	F-1

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended November 30, 2008 and 2007	F-2

Condensed Consolidated Statements of Cash Flows for the nine months ended November 30, 2008 and 2007	F-3

Notes to Condensed Consolidated Financial Statements	F-4

Item 2 Management’s Discussion and Analysis or Plan of Operation	1

Item 3 Quantitative and Qualitative Disclosures About Market Risk	12

Item 4 Controls and Procedures	13

Part II - Other Information

Item 1 Legal Proceedings	15

Item 1A Risk Factors	15

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3 Defaults Upon Senior Securities	15

Item 4 Submission of Matters to a Vote of Security Holders	15

Item 5 Other Information	16

Item 6 Exhibits	16

PART I – FINANCIAL INFORMATION

Item 1: Condensed Consolidated Financial Statements (Unaudited)

The following unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments considered necessary for a fair presentation, which (except where stated otherwise) consisted only of normal recurring adjustments, have been included. Operating results for the interim period ended November 30, 2008 are not necessarily indicative of the results anticipated for the entire fiscal year ending February 28, 2009. This report should be read in conjunction with the Company’s February 29, 2008 annual report on Form 10-KSB filed with the SEC on June 11, 2008.

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2008 AND FEBRUARY 29, 2008

	November 30,			February 29,
	2008			2008
ASSETS	(Unaudited)			(Audited)
Current assets:
Cash and cash equivalents		483,455		$	1,032,051
Trade receivables, net		893,419			1,047,990
Inventories		210,556			285,584
Cost in excess of billings and estimated earnings on uncompleted contract		6,874,460			3,289,258
Other assets		328,162			460,808
Total current assets		8,790,052			6,115,691
Property and equipment, net		594,046			617,727
Certificate of deposit - restricted		412,987			420,998
Goodwill		300,000			300,000
Notes receivable - unconsolidated affiliate		50,661			75,259
Other assets		283,216			-
Total assets	$	10,430,962		$	7,529,675

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	3,283,677		$	4,267,174
Salaries and benefits payable to officers and directors		6,868,301			5,586,795
Registration rights penalties		280,000			599,241
Interest payable		2,189,873			1,788,203
Line of credit		600,000			-
Deferred income		482,546			723,339
Income taxes and related penalties payable		35,799			517,592
Convertible notes payable to stockholder		1,884,000			1,884,000
Advances from stockholders		150,638			142,493
Current portion of long-term liabilities		234,764			191,161
Other current liabilities		218,184			393,479
Discontinued operations - current liabilities		-			8,011
Total current liabilities		16,227,782			16,101,488
Long-term liabilities		17,967			9,835
Total liabilities		16,245,749			16,111,323
Commitments and contingencies (Note 9)
Stockholders' deficit:
Preferred stock, Series A, A2, B and C convertible, $0.0001 par value, 75,000,000 and
10,000,000 shares authorized as of November 30, 2008 and February 29, 2008, respectively;
50,000 and 4,550,000 shares of Series A issued and outstanding with a liquidation preference
of $1.00 per share as of November 30, 2008 and February 29, 2008, respectively;
1,500,000 shares of Series A2 issued and outstanding with a liquidation preference
of $5.00 per share as of November 30, 2008;
2,142,857 shares of Series B issued and outstanding with a liquidation preference
of $1.40 per share as of February 29, 2008;
1,492,863 shares of Series C issued and outstanding with a liquidation preference
of $7.80 per share as of November 30, 2008;		304			670
Common stock, $0.0001 par value, 300,000,000 shares authorized,
31,113,819 and 28,480,910 shares issued and outstanding
as of November 30, 2008 and February 29, 2008, respectively		3,111			2,848
Additional paid-in capital		43,441,989			38,278,333
Accumulated deficit		(49,039,289	)		(46,471,478	)
Accumulated other comprehensive loss		(220,902	)		(392,021	)
Total stockholders' deficit		(5,814,787	)		(8,581,648	)
Total liabilities and stockholders' deficit	$	10,430,962		$	7,529,675

See accompanying notes to these condensed consolidated financial statements.

F-1

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
(UNAUDITED)

	THREE MONTHS						NINE MONTHS
	2008			2007			2008			2007

Net sales	$	2,857,397		$	4,718,503		$	8,602,701		$	10,350,895
Cost of goods sold		1,736,523			3,502,922			5,273,236			7,446,564
Gross profit		1,120,874			1,215,581			3,329,465			2,904,331
Selling, general and administrative expenses		1,376,930			1,529,072			5,278,139			7,776,890
Research and development		93,957			-			451,848			-
Operating loss		(350,013	)		(313,491	)		(2,400,522	)		(4,872,559	)
Other income (expense):
Interest expense		(203,685	)		(749,330	)		(558,919	)		(964,137	)
Other income		4,222			81,376			14,019			83,013
Total other income (expense)		(199,463	)		(667,954	)		(544,900	)		(881,124	)

Loss before tax (benefit)/provision and equity in net (loss) income of affiliate		(549,476	)		(981,445	)		(2,945,422	)		(5,753,683	)
Income tax (benefit)/provision		23,408			677			(455,490	)		500,677
Loss before equity in net (loss) income of affiliate		(572,884	)		(982,122	)		(2,489,932	)		(6,254,360	)
Equity in net (loss) income of affiliate		1,814			-			(77,878	)		-
Loss from continuing operations		(571,070	)		(982,122	)		(2,567,810	)		(6,254,360	)
Loss on discontinued operations, net of tax		-			(106,964	)		-			(288,284	)
Net loss	$	(571,070	)	$	(1,089,086	)	$	(2,567,810	)	$	(6,542,644	)

Net loss from continuing operations applicable
to common stockholders consists of the following:
Loss from continuing operations	$	(571,070	)	$	(982,122	)	$	(2,567,810	)	$	(6,254,360	)
Cumulative undeclared dividends on preferred stock (Note 8)		-			(56,000	)		(11,757,951	)		(168,000	)
Net loss applicable to common stockholders	$	(571,070	)	$	(1,038,122	)	$	(14,325,761	)	$	(6,422,360	)

Comprehensive loss and its components consist of the following:
Net loss	$	(571,070	)	$	(1,089,086	)	$	(2,567,810	)	$	(6,542,644	)
Foreign currency translation adjustment, net of tax		(315,652	)		(478,349	)		171,119			(978,376	)
Comprehensive loss	$	(886,722	)	$	(1,567,435	)	$	(2,396,691	)	$	(7,521,020	)

Basic and diluted (loss) per common share:
Continuing operations applicable to common stockholders	$	(0.02	)	$	(0.04	)	$	(0.48	)	$	(0.27	)
Discontinued operations		-			-			-			(0.01	)
	$	(0.02	)	$	(0.04	)	$	(0.48	)	$	(0.28	)

Weighted average common shares outstanding:
Basic and diluted		30,014,670			24,002,951			29,980,848			23,989,717

See accompanying notes to these condensed consolidated financial statements.

F-2

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 2008 AND 2007
(UNAUDITED)

	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,567,810	)	$	(6,542,644	)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization		252,652			289,145
Gain on disposal transactions relating to discontinued operations		-			(58,304	)
Stock-based compensation		609,427			2,350,009
Equity instruments issued for financing		-			66,000
Equity loss from affiliate		77,878			-
Realized foreign currency exchange gain		51,145			-
Changes in operating assets and liabilities:
Trade and other receivables		134,033			(349,302	)
Inventories		68,191			(166,790	)
Billings in excess of costs and estimated earnings on uncompleted contract		-			611,972
Costs in excess of billings and estimated earnings on uncompleted contract		(3,871,486	)		-
Other assets		(243,620	)		406,252
Accounts payable, accrued liabilities and other current liabilities		898,144			3,131,185
Income taxes and related penalties payable		(481,793	)		493,879
Net cash provided by (used in) operating activities		(5,073,239	)		231,402
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(228,971	)		(394,315	)
Investment in affiliates		-			11,741
Certificate of deposit-restricted		-			(412,987	)
Net cash used in investing activities		(228,971	)		(795,561	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term liabilities		(8,483	)		(5,225	)
Repayment on long-term debt		-			(600,000	)
Proceeds from long-term liabilities		16,518			-
Proceeds from line of credit		645,688			-
Proceeds from advances from stockholders		-			228,154
Proceeds from issuance of common stock		122,019			-
Proceeds from warrants exercised for common stock		-			2,750,000
Proceeds from warrants exercised for preferred stock		3,950,235			-
Net cash provided by financing activities		4,725,977			2,372,929
Effect of foreign currency exchange rate changes
on cash and cash equivalents		27,637			(826,260	)
Net increase (decrease) in cash and cash equivalents		(548,596	)		982,510
Cash and cash equivalents at beginning of period		1,032,051			179,371
Cash and cash equivalents at end of period	$	483,455		$	1,161,881
Cash paid during the period for:
Interest	$	-		$	-
Income taxes	$	-		$	-

See accompanying notes to these condensed consolidated financial statements.

F-3

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

1. ORGANIZATION, NATURE OF OPERATIONS, AND LIQUIDITY/GOING CONCERN CONSIDERATIONS

Organization and Nature of Operations

Astrata Group Incorporated (“Astrata,” or “Astrata Group”) and subsidiaries (sometimes hereafter collectively referred to as the “Company,” “we,” and “our”) currently operate exclusively in the Telematics sector of the Global Positioning System (“GPS”) industry. Telematics comprises the remote monitoring of assets in real-time (including tracking and tracing) whereby location, time and sensor status are communicated. Our products are deployed into diverse markets.

Our expertise is focused on advanced location-based IT products and services that combine positioning, wireless communications, and information technologies, which add measurable value to location–based information. We provide advanced positioning products, as well as monitoring and airtime services to commercial and governmental entities in a number of markets including homeland security, public safety, transportation, surveying, utility, construction, mining, and agriculture.

Telematics products often focus on people and assets in hostile and demanding environments such as monitoring the movement of hazardous materials for homeland security purposes. This business also addresses the market for fleet management, workforce management, remote asset management and tracking, and emergency services by providing hardware for GPS information and data collection, as well as the software needed to access and analyze the data through the Internet. We offer airtime to communicate data from the vehicle or field locations to the customer’s data center or provide access over the Internet to the data and application software. This allows critical real-time performance and monitoring data to be accessed and analyzed by supervisory, maintenance, or financial users and make real-time decisions for productivity improvement, cost reductions, safety improvement, or other critical decisions to be fed to the field.

Examples of our products and services include surveying instrumentation using GPS and other augmenting technologies, such as wireless communication and lasers; fleet management for specialized machines, such as guidance for earth-moving equipment; positioning and IT technology for remote asset management and associated Telematics products, field data collection equipment, and products and airtime communications services for high volume track and trace applications. Positioning technologies employed by us include GPS and inertial navigation systems. Communication techniques employed by us include GSM (“Global Systems for Mobile Telecommunications”), cellular and satellite communications.

Liquidity and Going Concern Considerations

For the nine months ended November 30, 2008, we had a net loss of approximately $2.6 million. We had negative cash flow from operating activities of approximately $5.1 million. In addition, we had a working capital deficit of approximately $7.4 million, an accumulated deficit of approximately $49 million and a stockholders’ deficit of approximately $5.8 million as of November 30, 2008.

Our February 29, 2008 audited consolidated financial statements included a report of our independent registered public accounting firm that contained a going concern paragraph. The going concern paragraph stated that there is substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern (based upon management’s plans discussed herein) which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. Accordingly, the condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result, should the Company be unable to continue as a going concern.

The Company’s capital requirements depend on numerous factors, including the Company’s ability to fill its current backlog, rate of market acceptance of the Company’s products and services, the Company’s ability to service its customers, the ability to maintain and expand our customer base, the level of resources required to expand the Company’s marketing and sales organization, research and development activities and other factors. Management presently believes execution of the Contract (see Note 2 and 4) combined with the Company’s debt and/or equity financing recently completed and proposals now under consideration, will be sufficient to meet the Company’s anticipated liquidity requirements through February 2009. In order for us to fund our operations and continue this growth plan, substantial additional funding will be required from external sources. Management currently intends to fund operations through a combination of borrowings, letters of credit, debt, and if necessary, equity-based transactions.

F-4

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

1. ORGANIZATION, NATURE OF OPERATIONS, AND LIQUIDITY/GOING CONCERN CONSIDERATIONS (continued)

Liquidity and Going Concern Considerations (continued)

The Company entered into a fixed-price Contract with a Singapore entity on April 10, 2007 to design, develop and manufacture approximately $93.5 million of its Telematics products. The Company has completed the design phase and is currently working within the development phase where we have designed the functionality of the system to meet the customer needs and then developed the functionalities into a working environment. Upon completion of the development phase, all customer testing provisions will be completed and documented; thereby removing the only right of cancellation and we will move into the production phase in early 2009 for delivery over approximately fifteen months to the customer. With each shipment the customer will have forty-five days from receipt for normal processing of payment. From inception of the Contact, we have accomplished all requirements under the Contract with no liquidated damages incurred. We expect to progress through the production phase with minimal to no liquidated damages through the completion of this Contract.

The Company entered into a $4 million Warrant Exchange Agreement, a Warrant Amendment Agreement, and a Preferred Stock Exchange Agreement (collectively, the “Amended and Restated Rights Agreements”), dated as of May 29, 2008, between the Company and each of the holders of certain warrants, and holders of certain series of preferred shares issued by the Company (individually, a “Holder” and collectively, the “Holders”) relating to the Company’s Series A and Series B Preferred shares. The Amended and Restated Rights Agreements eliminate the anti-dilution and cashless exercise provisions of the Series A and Series B warrants (see Note 8).

During December 2008, Astrata entered into negotiations with an existing shareholder and officer to issue $1 million of convertible preferred stock at $0.25 per share in addition to a long-term loan of $2 million; for a total proposed financing of $3 million. These funds are intended to be used for working capital purposes, however there can be no assurance of the outcome of these events.

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim condensed consolidated financial statements reflect adjustments (consisting of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at November 30, 2008, the consolidated results of its operations and its consolidated cash flows for the three and nine month periods ended November 30, 2008 and 2007. Certain information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”), although the Company believes that the disclosures in the unaudited condensed consolidated financial statements are adequate to ensure the information presented is not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-KSB for the fiscal year ended February 29, 2008. The results of operations of interim periods are not necessarily indicative of future operating results. All intercompany amounts have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions made by management include the deferred tax asset valuation allowance, allowance for doubtful accounts receivable, realization of inventories, goodwill and long-lived assets, stock-based compensation, certain other equity transactions, income taxes and related penalties payable and revenue recognition under the percentage of completion method of accounting. Actual results could differ from these estimates.

F-5

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Risks and Uncertainties Related to International Operations

Since inception in August 2004, the Company’s revenue-producing activities have been conducted exclusively outside the United States of America. The Company’s customers, other end users of our products and services, and third-party manufacturers and other suppliers (collectively, “vendors”) engaged by the Company are located throughout the world. As a result, our operations are subject to foreign political and economic uncertainties which are beyond our control. The specific risks of operating in the international marketplace include abrupt changes in a foreign government’s policies/regulations, local or regional hostilities (such as war, terrorism and civil unrest) in foreign countries, and United States government policies restricting certain business transactions with a given foreign country.

Some of the Company’s sales and supplier contracts with its customers and vendors are subject to unilateral cancellation (regardless of whether such action is permitted by the terms of the agreement), and certain accounts receivable may suddenly become doubtful of collection. In addition, the lack of a well-developed legal system in some foreign countries may make it difficult to enforce all of the Company’s contractual rights.

Cash and Cash Equivalents

The Company considers all highly liquid short-term investments with original maturities of three months or less when purchased to be cash equivalents.

Other Concentrations

The financial instruments that potentially expose the Company to a concentration of credit risk principally consist of cash, cash equivalents and accounts receivable. The Company deposits its cash with high credit financial institutions, principally in the United States, Europe and Asia. Certain countries do not have any institutional depository insurance comparable to the United States, which insures bank balances up to $250,000 per bank. At November 30, 2008, the Company’s cash balances in U.S. bank accounts totaled approximately $2,000 which is less than the Federal Deposit Insurance Corporation limit of $250,000.

The certificate of deposit described below (approximately $413,000 at November 30, 2008) is with a Singapore bank. Because the funds deposited were in U.S. dollars, such account is not eligible for coverage under Singapore’s Deposit Insurance Act.

Trade Accounts Receivable

The Company records trade accounts receivable when its customers are invoiced for products delivered and/or services provided, or when contractual billing milestones have been reached. As explained under “Revenue Recognition”, the recording of certain accounts receivable does not necessarily result in immediate recognition of revenue.

The Company does not require collateral from its customers, but performs ongoing credit evaluations of its customers’ financial condition. Credit risk with respect to the accounts receivable is limited because of the large number of customers included in the Company’s customer base and the geographic dispersion of those customers.

Certificate of Deposit - Restricted

Under the terms of the Contract described in Note 4, the Company was required to provide a performance bond for the benefit of the customer. In lieu of such bond, a certificate of deposit was initiated. The certificate of deposit (the “CD”) in the amount of approximately $413,000 bears interest at 5.1% per annum and matures in December 2011. Under the terms of the Company’s arrangement with the bank that issued the CD, the funds will not be available for withdrawal until December 2011. Thus, the CD is a restricted account which has been reported as a non-current asset in the accompanying condensed consolidated balance sheets.

F-6

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Derivative Instruments and Hedging Activities

The Company records all derivative financial instruments in its condensed consolidated financial statements at estimated fair value, regardless of the purpose or intent of holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in the results of operations or in stockholders’ deficit as a component of accumulated other comprehensive loss, depending on whether the derivative instrument qualifies for hedge accounting as defined in Statement of Financial Accounting Standard (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities” and related interpretations. Changes in the estimated fair value of derivatives not qualifying for hedge accounting are included in the results of operations as they occur.

Fair Value of Other Financial Instruments

SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of the estimated fair value (if reasonably obtainable) of the Company’s financial instruments. The carrying amount of the Company’s trade accounts receivable, trade accounts payable, accrued expenses and credit facilities approximates their estimated fair value due to either the short-term maturities of those financial instruments and/or the fact that the credit facilities bear market interest rates.

In the opinion of management, the fair value of payables to related parties cannot be estimated without incurring excessive costs; for that reason, the Company has not provided such disclosure. Other information about related-party liabilities (such as the carrying amount, the interest rate, and the maturity date) is provided, where applicable, elsewhere in these notes to the condensed consolidated financial statements.

Translation of Foreign Currencies

The operations of our subsidiaries in international markets results in exposure to fluctuations in foreign currency exchange rates. The potential of volatile foreign currency exchange rate fluctuations in the future could have a significant effect on our financial position and results of operations.

The Company uses the U.S. dollar as its functional currency. We translate all assets and liabilities at period-end exchange rates and income and expenses accounts at average rates during the period. During the three and nine months ended November 30, 2008, we had transactions denominated in the Euro, the British Pound, the Singapore Dollar, the Malaysian Ringgit, and the Brunei Dollar. In accordance with SFAS No. 52, “Foreign Currency Translation” such adjustments are reported as a component of accumulated other comprehensive loss within stockholders’ deficit.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market, and consist of finished goods at November 30, 2008 and February 29, 2008. Market is determined by comparison with recent sales or estimated net realizable value. Net realizable value is based on management’s forecasts for sales of the Company’s products and services in the ensuing years and/or consideration and analysis of any change in the customer base, products mix, or other factors that may impact the estimated net realizable value. Should the demand for the Company’s products and/or services prove to be significantly less than anticipated, the ultimate realizable value of the Company’s inventories could be substantially less than the amount reflected in the accompanying condensed consolidated balance sheets.

Property and Equipment

Property and equipment are stated at cost, and are being depreciated using the straight-line method over the estimated useful lives of the assets, which generally range from three to seven years. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the remaining lease terms. Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments are capitalized. At the time of retirement, other disposition of property and equipment or termination of a lease, the cost and accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is reflected in results of operations.

F-7

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Other Assets

Included in other assets are prepaid expenses and deposits required in the normal course of operation and approximated $611,000 as of November 30, 2008. Each amount is recorded as current and noncurrent assets based on its estimated usage and/or related terms.

Goodwill and Other Intangible Assets

SFAS No. 142, “Goodwill and Other Intangible Assets”, addresses how intangible assets that are acquired individually or with a group of other assets should be accounted for upon their acquisition and after they have been initially recognized in the condensed consolidated financial statements. SFAS No. 142 requires that goodwill and identifiable intangible assets that have indefinite lives not be amortized but rather be tested at least annually for impairment, and intangible assets that have finite useful lives be amortized over their estimated useful lives. SFAS No. 142 provides specific guidance for testing goodwill and intangible assets that will not be amortized for impairment, and expands the disclosure requirements about intangible assets in the years subsequent to their acquisition.

Long-Lived Assets

SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such assets, and impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value.

As of November 30, 2008, management has determined that no impairment indicators exist and therefore, no adjustments have been made to the carrying values of long-lived assets held for sale or held and used. There can be no assurance, however, that market conditions will not change or demand for the Company’s services and products will continue which could result in impairment of long-lived assets in the future.

Registration Rights Penalties

In December 2006, the Financial Accounting Standards Board (the “FASB”) issued FASB Staff Position (“FSP”) EITF 00-19-2, Accounting for Registration Payment Arrangements (the “FSP”). Under this pronouncement, contingently payable registration payment arrangements are accounted for separately from and do not affect the classification of the underlying shares, warrants or other financial instruments subject to the registration payment provisions. A liability for a registration payment arrangement should be recognized when payment is probable and the amount is reasonably estimable (whether at inception or during the life of the arrangement) in accordance with SFAS No. 5, “Accounting for Contingencies”.

The FSP is effective for registration payment arrangements and the financial instruments subject to such arrangements that are entered into or modified after December 21, 2006. For registration payment arrangements and financial instruments subject to those arrangements that were entered into before December 22, 2006, companies are required to account for transitioning to the FSP through a cumulative-effect adjustment to the opening balance of accumulated deficit or retained earnings in fiscal years beginning after December 15, 2006. However, early adoption of this pronouncement for interim or annual periods for which financial statements or interim reports have not been issued is permitted. Accordingly, the Company adopted the FSP effective with the quarter ended November 30, 2006.

Registration rights penalties have been accounted for as described above in accordance with FSP EITF 00-19-2. When the potential registration rights penalties became probable, the Company accrued for the full potential contingent penalties creating the liability and recording the expense in the condensed consolidated statement of operations.

F-8

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Convertible Preferred Stock

If the conversion feature of cumulative preferred stock is beneficial (i.e., the market price of the Company’s common stock exceeds the per-share conversion price when the preferred stock is issued), management accounts for the beneficial conversion feature (“BCF”) based on SFAS No. 133 “Accounting for Derivative Instruments and Certain Hedging Activities” (as amended) and an analysis of the rights of the preferred stock owners. When management concludes that the economic risks and characteristics of the BCF are clearly and closely related to those of the “host contract “ (the preferred stock), the BCF (1) is not separated from the host contract or accounted for as a derivative financial instrument and (2) is measured using intrinsic value accounting. The Company has evaluated the conversion features and determined that the economic characteristics and risks are clearly and closely related to the host primarily because the host contract is a perpetual interest and there are no collateral requirements or creditor rights in the instruments. (see Note 8)

Revenue Recognition

General

Except as described in “Contract Accounting” below, the Company’s revenues are recorded in accordance with the SEC Staff Accounting Bulletin No. 104, “Revenue Recognition.” The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.

Contract Accounting

The Company is accounting for the Contract described in Note 4 under the percentage-of completion method under the AICPA Statement of Position (“SOP”) 81-1, “Accounting for Performance of Construction-Type and Certain Production –Type Contracts”. Under the percentage-of-completion method, revenues, expenses and profits are recognized as performance progresses on long-term contracts. Progress toward completion is measured using the cost-to-cost method. The Company uses the estimated cost of goods (“COGS”) for the project to determine the associated recognized revenues in the periods in which they are earned. This is calculated by taking the actual COGS against the total projected COGS to determine a percentage of completion; then applying the percentage against the Contract project total revenues to determine the revenues for the reporting period.

We follow the provisions of SOP 81-1, paragraph 78 when updating our Contract costs. We employ systematic and consistent procedures for periodically comparing actual and estimated costs. Our CTO and Project Manager, based in Singapore, monitor our project costs on a regular basis, and are apprised of progress regularly by the customer.

According to SOP 81-1, paragraph 82 states “adjustments to the original estimates of the total contract revenue, total contract cost, or extent of progress toward completion are often required as work progresses under the contract as experience is gained, even though the scope of the work required under the contract may not change”. The nature of accounting for contracts is such that refinements of the estimating process for changing conditions and new developments are continuous and characteristic to the process. We review our total projected Contract costs on a quarterly basis and make the appropriate revisions, as deemed necessary.

Should this quarterly update indicate a contract loss, a provision for the entire loss on the Contract will be made pursuant to SOP 81-1, paragraph 85.

Other Matters

Our Telematics equipment may be sold or provided as part of a monthly package which includes telecommunications, data warehousing and mapping. These revenues are recognized over the life of such contracts as revenues are earned.

Revenue from distributors and resellers is recognized upon delivery, assuming that all other criteria for revenue recognition have been met. Distributors and resellers do not have the right of return.

F-9

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Other Matters (continued)

Customer incentive bonuses and other consideration received or receivable directly from a vendor for which the Company acts as a reseller are accounted for as a reduction in the price of the vendor’s products or services. When such incentive is pursuant to a binding arrangement, the amount received or receivable is recorded as deferred income and recognized as income on a systematic basis over the life of the arrangement.

Research and Development Costs

Research and development costs relating to GPS positioning hardware and software systems to be sold or otherwise marketed that are incurred before technological feasibility of the products has been established and after general release of the product to customers are expensed as incurred. Management believes that technological feasibility is not established until a beta version of the software product exists. Historically, costs incurred during the period from when a beta version is available until general release to the public have not been material. Accordingly, the Company has not capitalized any software development costs.

Stock-Based Compensation

Effective March 1, 2006, the Company adopted the provisions of SFAS No. 123-R, “Share-Based Payment” (“SFAS No. 123-R”). SFAS No. 123-R requires employee stock options and rights to purchase shares under stock participation plans to be accounted for under the fair value method and requires the use of an option pricing model for estimating fair value. Accordingly, share-based compensation is measured at the grant date, based on the fair value of the award.

Under the modified prospective method of adoption for SFAS No.123-R, the compensation cost recognized by the Company beginning March 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of March 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted or modified subsequent to February 28, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R.

Options granted by the Company generally expire five years from the grant date. Options granted to existing and newly hired employees generally vest over a three-year period from the date of grant. The effects of share-based compensation resulting from the initial adoption of SFAS No. 123-R to options granted under the Company’s equity incentive plan resulted in an expense of approximately $31,000 for the three months ended November 30, 2007 and $450,000 for the nine months ended November 30, 2007. During the three and nine months ended November 30, 2008 there was no effect of SFAS No. 123-R and no options were granted.

The following weighted average assumptions were used in estimating the fair value of certain share-based payment arrangements:

		Three and Nine Months Ended
		November 30, 2007
Annual dividends		Zero
Expected volatility		133%
Risk free interest rate		3.7%
Expected life		3.5 years

The expected volatility is based on the historical volatility. The expected life of options previously granted were based on the “simplified method” described in the SEC’s Staff Accounting Bulletin No. 107 due to changes in the vesting terms and the contractual life of current option grants compared to the Company’s historical grants. The historical forfeiture rate was then calculated as 6.5%. Management considers this to be a realistic average forfeiture rate excluding any one time events.

Options outstanding that are expected to vest are net of estimated future forfeitures in accordance with the provisions of SFAS No. 123-R, which are estimated when compensation costs are recognized. Additional information with respect to stock option activity is as follows:

F-10

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock-Based Compensation (continued)

			Outstanding Options
										Weighted
						Weighted				Average
	Shares					Average		Aggregate		Remaining
	Available for		Number of			Exercise		Intrinsic		Contractual
	Grant		Shares			Price		Value (a)		Term (in Years)
February 29, 2008		2,291,500		108,500		$	5.00	$	-
Grants		-		-			-		-
Exercises		-		-			-		-
Cancellations		4,875		(4,875	)		-		-
November 30, 2008		2,296,375		103,625		$	5.00	$	-	1.2

Options vested at:
February 29, 2008				108,500		$	5.00
November 30, 2008				103,625		$	5.00

(a)	These amounts represent the difference between the exercise price and $0.09, the closing market price of the Company’s common stock on November 30, 2008 as quoted on the Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “ATTG” for all in-the-money options outstanding.

Basic and Diluted Loss per Share

In accordance with SFAS No. 128, “Earnings per Share”, the Company calculates basic and diluted net loss per share using the weighted average number of common shares outstanding during the periods presented and adjusts the amount of net loss, used in this calculation, for preferred stock dividends during the period.

We incurred a net loss in each period presented, and as such, did not include the effect of potentially dilutive common stock equivalents in the diluted net loss per share calculation, as their effect would be anti-dilutive for all periods. Potentially dilutive common stock equivalents would include the common stock issuable upon the conversion of preferred stock, the exercise of warrants, stock options and convertible debt. As of November 30, 2008 and 2007, all potentially dilutive common stock equivalents amount to 66,674,882 and 39,078,585, respectively.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes”. SFAS No. 109 requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or income tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse.

F-11

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Uncertain Income Tax Positions

Effective March 1, 2007, the Company accounts for uncertain income tax positions in accordance with Financial Accounting Standards Board Interpretation (“FIN”) No. 48 (“FIN 48”). This pronouncement, which is an interpretation of SFAS No. 109, “Accounting for Income Taxes”, seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. FIN 48 clarifies when tax benefits should be recorded in financial statements, and indicates how any tax reserves should be classified in the balance sheet. In addition, FIN 48 requires expanded disclosure with respect to the uncertainty in income taxes (see Note 5).

Segment Reporting

The Company discloses information regarding segments in accordance with SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information”. SFAS No. 131 establishes standards for reporting of financial information about operating segments in annual financial statements, and requires reporting selected information about operating segments in interim financial reports (see Note 10).

Recently Issued Accounting Pronouncements

On December 4, 2007, the FASB, issued SFAS No. 141 (Revised 2007), “Business Combinations”. Statement 141R will significantly change the accounting for business combinations. Under Statement 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. Statement 141R will change the accounting treatment for certain specific items, as follows:

·	Acquisition costs will be generally expensed as incurred;

·	Non-controlling interests (formerly known as "minority interests" -- see Statement 160 discussion below) will be valued at fair value at the acquisition date;

·	Acquired contingent liabilities will be recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies;

·	In-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date;

·	Restructuring costs associated with a business combination will be generally expensed subsequent to the acquisition date; and

·	Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.

Statement 141R also includes a substantial number of new disclosure requirements. Statement 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Earlier adoption is prohibited. Accordingly, a calendar year-end company is required to record and disclose business combinations following existing GAAP until January 1, 2009. The Company does not believe the application of this standard will materially impact its consolidated financial statements.

SFAS No. 157, “Fair Value Measurements”, provides guidance for using fair value to measure assets and liabilities. The FASB believes the standard also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. Statement 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value but does not expand the use of fair value in any new circumstances. Currently, over 40 accounting standards within GAAP require (or permit) entities to measure assets and liabilities at fair value. Prior to Statement 157, the methods for measuring fair value were diverse and inconsistent, especially for items that are not actively traded. The standard clarifies that for items that are not actively traded, such as certain kinds of derivatives, fair value should reflect the price in a transaction with a market participant, including an adjustment for risk, not just the company’s mark-to-model value. Statement 157 also requires expanded disclosure of the effect on earnings for items measured using unobservable data.

F-12

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Issued Accounting Pronouncements (continued)

Under Statement 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. In this standard, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, Statement 157 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entity’s own data. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy.

The provisions of Statement 157 are effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for an interim period within that fiscal year. The Company adopted SFAS No. 157 as of March 1, 2008 which had no material impact its consolidated financial statements.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115” permits an entity to choose to measure many financial instruments and certain other items at fair value. This option is available to all entities, including not-for-profit organizations. Most of the provisions in Statement 159 are elective; however, the amendment to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. The FASB's stated objective in issuing this standard is as follows: "to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions."

The fair value option established by Statement 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings (or another performance indicator if the business entity does not report earnings) at each subsequent reporting date. A not-for-profit organization will report unrealized gains and losses in its statement of activities or similar statement. The fair value option: (a) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election date occurs); and (c) is applied only to entire instruments and not to portions of instruments.

Statement 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157, “Fair Value Measurements”. The Company adopted SFAS No. 159 as of March 1, 2008 which had no material impact its consolidated financial statements.

SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51” establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a non-controlling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. Statement 160 clarifies that changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the non-controlling equity investment on the deconsolidation date. Statement 160 also includes expanded disclosure requirements regarding the interests of the parent and its non-controlling interest. Statement 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Like Statement 141R discussed above, earlier adoption is prohibited. The Company does not believe the application of this standard will materially impact its consolidated financial statements.

F-13

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

2. CERTAIN SIGNIFICANT ACCOUNTING POLICIES (continued)

Recently Issued Accounting Pronouncements (continued)

SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an Amendment of FASB Statement 133” enhances required disclosures regarding derivatives and hedging activities, including enhanced disclosures regarding how: (a) an entity uses derivative instruments; (b) derivative instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”; and (c) derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. Specifically, Statement 161 requires:

·	Disclosure of the objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation;

·	Disclosure of the fair values of derivative instruments and their gains and losses in a tabular format;

·	Disclosure of information about credit-risk-related contingent features; and

·	Cross-reference from the derivative footnote to other footnotes in which derivative-related information is disclosed.

Statement 161 is effective for fiscal years and interim periods beginning after November 15, 2008. Early application is encouraged. The Company does not believe the application of this standard will materially impact its consolidated financial statements.

SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP in the United States (the GAAP hierarchy). Specifically, the sources of accounting principles that are generally accepted are categorized in descending order of authority as follows:

FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, and American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are not superseded by actions of the FASB;

b.	FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position;

c.	AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics); and

d.	Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry.

This Statement is effective November 15, 2008 and the Company intends to adhere to this statement.

SFAS No. 163, “Accounting for Guarantee Insurance Contracts” requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements.

Statement 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities. This Statement requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of this Statement. Except for those disclosures, earlier application is not permitted. The Company does not believe the application of this standard will impact its consolidated financial statements.

F-14

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

3. INVENTORY

Inventories consisted of the following:

	November 30, 2008
	Europe		Asia		Totals
Finished goods	$	17,418	$	193,138	$	210,556
	$	17,418	$	193,138	$	210,556

	February 29, 2008
	Europe		Asia		Totals
Finished goods	$	29,681	$	255,903	$	285,584
	$	29,681	$	255,903	$	285,584

4. CONTRACT IN PROGRESS

The Company’s Singapore subsidiary entered into the Contract with a Singapore entity on April 10, 2007 to design, develop and manufacture approximately $93.5 million of its Telematics products. Deliveries began in January 2008 and we anticipated beginning major shipments in the early part of 2009 over fifteen months. The Contract includes a provision for substantial liquidated damages for unexcused delays in product deliveries and/or failure to satisfy certain customer-specified acceptance criteria. In addition, in the event of non-performance by the Company that remains uncorrected after notice from the customer and the expiration of a contractual grace period, the customer has the right to cancel the Contract. The Company’s proprietary Telematics system is undergoing significant customization/modification in order to achieve the functionality required by the customer.

Under the terms of the Contract, the schedule of values is used to determine performance and testing criteria and includes the design, development and manufacturing phases. We are to receive payments that become payable upon the completion of each milestone as agreed upon in the Contract. The milestones include delivery of designs and plans, prototype units, harnesses and memory, main infrastructure components, PDA’s, testing procedures, prototype units and software. The Company has billed and collected, in full, the design phase representing $3.8 million. We have begun progress billings under the development phase representing approximately $1.7 million. The amounts due and payable are determined by delivery of milestones to the customer. The Company has completed the design phase and is currently working within the development phase where we have designed the functionality of the system to meet the customer needs and then developed the functionalities into a working environment. Upon completion of the development phase, all customer testing provisions will be completed and documented; thereby removing all rights of cancellation and we will move into the production phase for delivery over approximately fifteen months to the customer. With each shipment the customer will have forty-five days from receipt for normal processing of payment. From inception of the Contract, we have accomplished all requirements under the Contract with no liquidated damages incurred. We expect to progress to move through the production phase with minimal to no liquidated damages through the completion of this Contract.

As the Company is recognizing revenue under the percentage-of completion method under SOP 81-1, the amounts billed to the customer and received by the Company do not impact the revenues recognized.

The Company is accounting for the Contract described above under the percentage-of completion method under SOP 81-1, “Accounting for Performance of Construction-Type and Certain Production –Type Contracts”. Under the percentage-of-completion method, revenues, expenses and profits are recognized as performance progresses on long-term contracts. Progress towards completion is measured using the cost-to-cost method. The Company uses the estimated COGS for the project to determine the associated recognized revenues in the periods in which they are earned under the percentage-of-completion method of accounting. This is calculated by taking the actual COGS against the total projected COGS to determine a percentage of completion; then applying the percentage against the Contract project total revenues to determine the revenues for the reporting period.

F-15

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

4. CONTRACT IN PROGRESS (continued)

During the three and nine months ended November 30, 2008, the Company recognized approximately $1 million and $3.5 million, respectively in revenue on the Contract. During the three and nine months ended November 30, 2007, the Company recognized approximately $3.2 million and $6.2 million, respectively in revenue on the Contract.

As of November 30, 2008, the Company has unbilled revenues reflected in the condensed consolidated balance sheet of approximately $6.9 million towards costs and estimated earnings on the uncompleted Contract. The Company has recognized costs and estimated earnings on the uncompleted Contract to date of approximately $12.4 million; offset by actual billings to the customer of approximately $5.5 million.

5. INCOME TAXES

The Company adopted FIN 48 effective March 1, 2007. Management had determined that the failure to file certain information returns (for the period from inception to and including the year ended February 28, 2007) may result in the assessment of income tax penalties. As a result, management had accrued an estimate of such penalties at March 1, 2007 in the amount of $0.5 million.

As of November 30, 2008, the information returns discussed above have been prepared and filed with no income tax penalties. Accordingly, the Company has removed the estimated liability of approximately $0.5 million relating to potential income tax penalties.

All open tax years of the Company remain subject to examination by tax authorities and, as applicable, certain foreign tax authorities.

6. NOTES PAYABLE

In April 2007, the Company received an unsecured note payable which was due on August 4, 2008 and carries an annual interest rate of 16.5%. During August 2008, the maturity date was extended to December 4, 2008. The balance of the note is approximately $64,000 at November 30, 2008 and is included in current portion of long-term liabilities in the accompanying condensed consolidated balance sheet. As of December 31, 2008, this note was purchased by an officer and shareholder of the Company which included extending the due date to January 16, 2009.

In August 2007, the Company received an unsecured non-interest bearing note payable which was due on August 11, 2008. The amount of the imputed interest is insignificant. This note payable replaced approximately $130,000 of accrued expenses. During August 2008, the maturity date was extended to December 11, 2008. The balance of the note payable is approximately $164,000 at November 30, 2008 and is included in current portion of long- term liabilities in the accompanying condensed consolidated balance sheet. As of December 31, 2008, this note was purchased by an officer and shareholder of the Company which included extending the due date to January 16, 2009.

During the fiscal year ended February 28, 2007, certain stockholders advanced funds to the Company for working capital purposes at an annual interest rate of 15% payable upon demand with a remaining balance of approximately $81,000 as of November 30, 2008. During the fiscal year ended February 29, 2008, certain stockholders advanced additional funds to the Company in the amount of approximately $70,000 for working capital purposes at an annual interest rate of 15% payable upon demand. The aggregate balance of stockholders advances is approximately $151,000 at November 30, 2008 and is included in advances from stockholders in the accompanying condensed consolidated balance sheet.

In September 2008, the Company received a $1.2 million line of credit which carries an annual interest rate based on the Prime Rate plus 3% (7% as of November 30, 2008). Principal and interest is due within six months and upon payment in full the $1.2 million line of credit will be re-established with the same terms. The balance of the line of credit is $600,000 at November 30, 2008.

F-16

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

7. OTHER MATTERS RELATING TO CERTAIN DEBT AND EQUITY INSTRUMENTS

In previous years, the Company entered into certain convertible debt financings. A $1.5 million convertible note payable to a stockholder issued in September 2004 (as amended in November 2004) and a $384,000 convertible note payable issued to the same stockholder in December 2004 are outstanding at November 30, 2008 and are included in the convertible notes payable to stockholders on the accompanying condensed consolidated balance sheet.

8. EQUITY TRANSACTIONS

Issuances of Preferred Stock

May 29, 2008 Series C Preferred Stock Transaction

Background

Following approval of its Board of Directors and a majority of its Shareholders, the Company entered into a Warrant Exchange Agreement, a Warrant Amendment Agreement, and a Preferred Stock Exchange Agreement (collectively, the “Amended and Restated Rights Agreements”), dated as of May 29, 2008, between Company and each of the holders of certain warrants, and holders of certain series of Preferred shares issued by the Company (individually, a “Holder” and collectively, the “Holders”) relating to the Company’s Series A and Series B Preferred shares and related warrants. The Company accepted an exchange of warrants with modified terms for cash and Series C Preferred stock; and the exchange of Series A and Series B Preferred stock for Series A-2 Preferred stock sequentially with all transactions closing concurrently on the same day. The Company offered the same terms to all participants of Series A and Series B Preferred stock and related warrant holders for a limited 20 day period of exchange. The specific changes contained in the Amended and Restated Rights Agreements are as follows:

Decrease the exercise price of 5,963,571 Series A Preferred stock warrants, 805,260 Series B Preferred stock warrants, 4,384,027 Series C Preferred stock warrants, 3,657,142 Series J Preferred stock warrants and 1,200,000 Other Preferred stock warrants from exercise prices ranging between $1.00 through $1.50 per share to $0.25 per share. The warrant terms were also modified to eliminate the anti-dilution and cashless exercise provisions of each of the warrant series and so that the holders of the warrants received 800,000 shares of Series C Preferred stock upon exercise of the warrants instead of shares of the Company’s common stock. These warrants were then exercised for cash proceeds of $4,000,000.

Simultaneously, modify 314,286 Series A Preferred stock warrants, 5,462,597 Series B Preferred stock warrants, 1,883,830 Series C Preferred stock warrants, 6,267,857 Series D Preferred stock warrants and 628,572 Series J Preferred stock warrants so that the holders exchanged such warrants for 1,285,238 shares of Series C Preferred stock.

·	Simultaneously, modify 4,500,000 shares of Series A Preferred stock and 2,142,857 shares of Series B Preferred stock so that the holders exchanged such shares for 1,500,000 shares of Series A-2 Preferred stock.

The Certificates of Designation for the Series A-2 Preferred shares and the Series C Preferred shares contain the same terms except that the Series A-2 Preferred shares maintain privileges from the Series A Preferred stock in the event of certain transactions; and the Series C Preferred shares do not have these privileges.

Overall Consideration

The substance of this transactions is to convert the Series A and Series B Preferred stock and related warrants exercisable for shares into Series A-2 and Series C Preferred stock. Based on an assessment of the overall effect of the components of the transaction, there is an increase of 11,861,904 potential shares to be issued between the number of shares to be issued upon conversion of the Series A-2 and Series C Preferred Stock versus the number of shares that would have been issued upon the conversion of the Series A and Series B Preferred stock and the exercise of the Series A, B, C, D, J and Other warrants. This is accomplished through the reduction of the conversion and exercise prices from between $0.50 to $1.75 to $0.25 and $0.39.

F-17

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

8. EQUITY TRANSACTIONS (continued)

Issuances of Preferred Stock (continued)

Accounting for Transactions

Change in Exercise Price

The change in the exercise prices of the Series A, B, C, J and other warrants as well as the change such that the warrants are exercisable in exchange for Series C Preferred Stock instead of common stock is considered to be a modification and must be accounted for in accordance with paragraph 51 of SFAS No. 123(R), “Share-Based Payment,” (“SFAS 123(R)”) as follows:

“A modification of the terms or conditions of an equity award shall be treated as an exchange of the original award for a new award. In substance, the entity repurchases the original instrument by issuing a new instrument of equal or greater value, incurring additional compensation cost for any incremental value. The effects of a modification shall be measured as follows:

Incremental compensation cost shall be measured as the excess, if any, of the fair value of the modified award determined in accordance with the provisions of this Statement over the fair value of the original award immediately before its terms are modified, measured based on the share price and other pertinent factors at that date.”

The warrants were exercisable into 16,000,000 shares of common stock. The fair value of the warrants on the transaction date before the modifications was determined to be $4,110,225 using the Black-Scholes option pricing model in accordance with SFAS 123(R). The fair value of the warrants on the transaction date after the modifications was determined to be $5,696,144 using the Black-Scholes option pricing model in accordance with SFAS 123(R). In addition, the warrants were originally issued as part of an equity transaction and the fair value of those warrants was recorded as paid-in capital; therefore, a modification resulting in a change in the fair value of those warrants would also be recorded as paid-in capital rather than as a compensation charge. As a result, the difference in the fair value of the warrants before and after the modification of $1,585,919 was be recorded as a deemed dividend – since these warrant holders are also holders of the Company’s Series A and Series B Preferred stock and are the beneficiaries of the increase in incremental value – and was be recognized over the period until the Series C Preferred Stock becomes convertible, which was upon issuance since the Series C Preferred stock are convertible upon issuance. However, since the Company did not have retained earnings on the transaction date, the deemed dividend was accounted for by reducing additional paid-in capital. The accounting for these dividends also requires that they be credited to additional paid-in capital; as a result, there was no net effect of the transaction on the Company’s stockholders’ deficit on the transaction date.

The reporting of the basic and diluted loss per common share was accounted for in accordance with paragraphs 8 and 9 of SFAS No. 128, “Earnings per Share.” Paragraph 8 states “the objective of basic earnings per share (“EPS”) is to measure the performance of an entity over the reporting period. Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares reacquired during the period shall be weighted for the portion of the period that they were outstanding.” Paragraph 9 states “income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. If there is a loss from continuing operations or a net loss, the amount of the loss shall be increased by those preferred dividends.” Therefore, the deemed dividend to Preferred stockholders was added to the net loss in determining the net loss available to common shareholders in the condensed consolidated statement of operations.

Exchange of Warrants for shares of Series C Preferred Stock

Based on the facts of the transaction, this is considered to be a non-monetary exchange and was accounted for at fair value in accordance with APB No. 29, “Accounting for Non-Monetary Transactions” (as amended by SFAS 153). The transaction does not qualify for the exception for transactions that lack “commercial substance’ since the future cash flows of the Company are expected to change significantly as a result of the transaction (the Company would have received cash proceeds from the exercise of the warrants but will receive no cash proceeds upon the conversion of the Series C Preferred stock).

F-18

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

8. EQUITY TRANSACTIONS (continued)

Issuances of Preferred Stock (continued)

The warrants were exercisable into 14,557,142 shares of common stock. The fair value of the warrants on the transaction date was determined to be $4,331,396 using the Black-Scholes option pricing model in accordance with SFAS 123(R). The Series C Preferred stock has a liquidation preference of $7.80 per share with a 20:1 conversion to the Company’s common shares issuable upon conversion; therefore, the liquidation preference on a per-share of common stock basis of $0.39 (fair value) is equal to the closing price of the Company’s common stock on May 29, 2008, which was determined to be $3,784,856. The difference in fair value between the warrants and the Preferred stock exchanged of $546,540 is considered to be a deemed dividend to the Preferred stockholders, with the entire amount charged to equity on the transaction date. However, since the Company did not have retained earnings on the transaction date, the deemed dividend was accounted for by reducing additional paid-in capital. The accounting for these dividends also requires that they be credited to additional paid-in capital; as a result, there was no net effect of the transaction on the Company’s stockholders’ deficit on the transaction date.

The Company reported the basic and diluted loss per common share pursuant to paragraphs 8 and 9 of SFAS No. 128, “Earnings per Share.” As a result, the deemed dividend to Preferred stockholders was added to the net loss in determining the net loss available to common shareholders in the condensed consolidated statement of operations.

Accounting for Series C Preferred Stock

SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” (“SFAS 150”) requires an issuer to classify the following instruments as liabilities (or assets in some circumstances): a financial instrument issued in the form of shares that is mandatorily redeemable—that embodies an unconditional obligation requiring the issuer to redeem it by transferring its assets at a specified or determinable date (or dates) or upon an event that is certain to occur. However, SFAS 150 provisions do not apply if redemption is required to occur only upon the liquidation or termination of the reporting entity. The Series C Preferred Stock contains no unconditional obligation requiring redemption. SFAS 150 also requires unconditional obligations in the form of shares that the issuer must or may settle by issuing a variable number of shares to be classified as a liability. The Series C Preferred Stock contains no unconditional obligations that may be settled in a variable number of shares. The Series C Preferred Stock contains redemption features if a Major Transaction or Triggering Event were to occur, that may be settled in cash or shares, at the Company’s option or solely within the Company’s control. These transactions are not certain to occur and are not unconditional. Accordingly, the Series C Preferred Stock is considered not to be within the scope of SFAS 150.

The conversion feature in the Series C Preferred Stock was also evaluated as a potential embedded derivative in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” (“SFAS 133”) SFAS 133 provides guidance on derivative instruments and contracts that do not in their entirety meet the definition of a derivative instrument but may contain “embedded” derivative instruments. SFAS 133 requires that an embedded derivative instrument be separated from the host contract and accounted for as a derivative instrument if specified criteria are met. It also indicates the necessary criteria for bifurcation including (i) that the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, as well as (ii) that a separate instrument with the same terms as the embedded derivative instrument would be a derivative instrument subject to the requirements of the Statement.

SFAS 133 paragraph 61 (l) provides guidance on evaluating convertible Preferred stock and requires that the terms of the Preferred stock (other than the conversion option) be analyzed to determine whether the economic characteristics and risks are more akin to a debt or an equity instrument. Based on an evaluation of the conversion features, the economic characteristics and risks are considered to be more akin to equity since they are clearly and closely related to the host primarily because the host contract is a perpetual interest and there are no collateral requirements or creditor rights in the instruments. Therefore, the conversion feature does not need to be bifurcated from the host instrument.

F-19

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

8. EQUITY TRANSACTIONS (continued)

Issuances of Preferred Stock (continued)

The Series C Preferred Stock was also analyzed in comparison to the requirements of EITF Abstracts, Topic D-98, “Classification and Measurement of Redeemable Securities” (“Topic D-98”) and the SEC’s Regulation S-X, Article 5-02.28 (“Reg S-X”). Reg S-X requires securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable upon the occurrence of an event that is not solely within the control of the issuer. Topic D-98 excludes cash redemption upon final liquidation as an event requiring classification outside of permanent equity. In addition, Topic D-98 states that if a company issues preferred shares that are conditionally redeemable, for example, at the holder's option or upon the occurrence of an uncertain event not solely within the company's control, the shares are not within the scope of SFAS 150 because there is no unconditional obligation to redeem the shares by transferring assets at a specified or determinable date or upon an event certain to occur. If the uncertain event occurs, the condition is resolved, or the event becomes certain to occur, then the shares become mandatorily redeemable under SFAS 150 and would require reclassification to a liability. Certain events require cash redemption of the Series C Preferred Stock; however, the Company is either in sole control of these events or upon the occurrence of an uncertain event not solely within the Company’s control. Upon any required conversion the Company has the ability to deliver unregistered common shares. However, the shares become redeemable in the event that the Company does not timely file all reports required by Section 13(a) of 15(d) of the Exchange Act of ’34. Based on the terms of the agreement, the Company has the ability (at its option) to settle this via the delivery of unregistered common shares. Accordingly, this is deemed to be within the control of the Company. Therefore, the Series C Preferred Stock is considered to be permanent equity in accordance with Topic D-98 and Reg S-X.

Exchange of Series A and Series B Preferred Stock for Series A-2 Preferred Stock

Based on the facts of the transaction, this is considered to be a non-monetary exchange and was accounted at fair value for in accordance with APB 29, “Accounting for Non-Monetary Transactions (as amended by SFAS 153).” The transaction did not qualify for the exception for transactions that lack “commercial substance.’ Although the future cash flows of the Company are not expected to change significantly as a result of the transaction (the Company will not receive proceeds from the conversion of either the Series A, the Series B or the Series A-2 Preferred stock), using the number of shares to be issued upon conversion of the Series A and Series B Preferred stock compared to the number to be issued upon the conversion of the Series A-2 as a measure of entity-specific value as discussed in paragraph 21.b of SFAS 153 shows that there would be an effect on the Company (13,285,714 total shares versus 30,000,000 shares). Because the transaction has entity specific value, it therefore has commercial substance and therefore must be measured at fair value.

The Series A and Series B Preferred stock were convertible into 9,000,000 and 4,285,714 shares of Company common stock, respectively. The fair value of the Series A and Series B Preferred stock was based on the closing price of the Company’s common stock on the transaction date and the number of common shares issuable upon conversion and was determined to be $5,181,428. The Series A-2 Preferred stock is convertible into 30,000,000 shares of common stock. The Series A-2 Preferred stock has a liquidation preference of $7.80 per share with a 20:1 conversion to the Company’s common shares issuable upon conversion; therefore, the liquidation preference on a per-share of common stock basis of $0.39 (fair value) was equal to the closing price of the Company’s common stock on May 29, 2008, which was determined to be $11,700,000. The difference in fair value of the Preferred stock exchanged, $6,518,572, was considered to be a deemed dividend to the Preferred stockholders, with the entire amount charged to equity on the transaction date. However, since the Company did not have retained earnings on the transaction date, the deemed dividend was accounted for by reducing additional paid-in capital. The accounting for these dividends also requires that they be credited to additional paid-in capital; as a result, there was no net effect of the transaction on the Company’s stockholders’ deficit on the transaction date.

F-20

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

8. EQUITY TRANSACTIONS (continued)

Issuances of Preferred Stock (continued)

Accounting for Series A-2 Preferred Stock

SFAS 150 requires an issuer to classify the following instruments as liabilities (or assets in some circumstances): a financial instrument issued in the form of shares that is mandatorily redeemable—that embodies an unconditional obligation requiring the issuer to redeem it by transferring its assets at a specified or determinable date (or dates) or upon an event that is certain to occur. However, SFAS 150 provisions do not apply if redemption is required to occur only upon the liquidation or termination of the reporting entity. The Series A-2 Preferred Stock contains no unconditional obligation requiring redemption. SFAS 150 also requires unconditional obligations in the form of shares that the issuer must or may settle by issuing a variable number of shares to be classified as a liability. The Series A-2 Preferred Stock contains no unconditional obligations that may be settled in a variable number of shares. The Series A-2 Preferred Stock contains redemption features if a Major Transaction or Triggering Event were to occur, that may be settled in cash or shares, at the Company’s option or solely within the Company’s control. These transactions are not certain to occur and are not unconditional. Accordingly, the Series A-2 Preferred Stock was considered to not be within the scope of SFAS 150.

The conversion features in the Series A-2 Preferred Stock were evaluated as a potential embedded derivative in accordance with SFAS No. 133. SFAS 133 provides guidance on derivative instruments and contracts that do not in their entirety meet the definition of a derivative instrument but may contain “embedded” derivative instruments. SFAS 133 requires that an embedded derivative instrument be separated from the host contract and accounted for as a derivative instrument if specified criteria are met. It also indicates the necessary criteria for bifurcation including (i) that the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, as well as (ii) that a separate instrument with the same terms as the embedded derivative instrument would be a derivative instrument subject to the requirements of the Statement.

SFAS 133 paragraph 61 (l) provides guidance on evaluating the convertible Preferred stock and requires that the terms of the Preferred stock (other than the conversion option) be analyzed to determine whether the economic characteristics and risks are more akin to a debt or an equity instrument. Based on an evaluation of the conversion features, the economic characteristics and risks are considered to be more akin to equity since they are clearly and closely related to the host primarily because the host contract is a perpetual interest and there are no collateral requirements or creditor rights in the instruments. Therefore, the conversion feature does not need to be bifurcated from the host instrument.

The Series A-2 Preferred Stock was also analyzed in comparison to the requirements of EITF Abstracts, Topic D-98 and the SEC’s Reg S-X. Reg S-X requires securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable upon the occurrence of an event that is not solely within the control of the issuer. Topic D-98 excludes cash redemption upon final liquidation as an event requiring classification outside of permanent equity. In addition, Topic D-98 states that if a company issues Preferred shares that are conditionally redeemable, for example, at the holder's option or upon the occurrence of an uncertain event not solely within the company's control, the shares are not within the scope of SFAS 150 because there is no unconditional obligation to redeem the shares by transferring assets at a specified or determinable date or upon an event certain to occur. If the uncertain event occurs, the condition is resolved, or the event becomes certain to occur, then the shares become mandatorily redeemable under SFAS 150 and would require reclassification to a liability. Certain events require cash redemption of the Series A-2 Preferred Stock; however, the Company is either in sole control of these events or upon the occurrence of an uncertain event not solely within the Company’s control. Upon any required conversion the Company has the ability to deliver unregistered common shares. However, the shares become redeemable in the event that the Company does not timely file all reports required by Section 13(a) of 15(d) of the Exchange Act of ’34. Based on the terms of the agreement, the Company has the ability (at its option) to settle this via the delivery of unregistered common shares. Accordingly, this is deemed to be within the control of the Company. Therefore, the Series A-2 Preferred Stock is considered to be permanent equity in accordance with Topic D-98 and Reg S-X.

F-21

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

8. EQUITY TRANSACTIONS (continued)

Issuances of Preferred Stock (continued)

Finally, the existence of a BCF must be determined in accordance with EITF 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios,” and EITF 00-27, “Application of Issue No. 98-5 to Certain Convertible Instruments,” and the amount of the BCF calculated in accordance with these accounting standards, if any, must be recorded. The Series A-2 Preferred Stock conversion price of $0.25 per share was in-the-money when issued, since the Company’s closing stock price on May 29, 2008 was $0.39, and therefore a BCF existed at the time of issuance of the Series A-2 Preferred Stock. The BCF, $6,518,572, is considered to be a deemed dividend to the preferred stockholders, with the entire amount charged to equity on the transaction date. However, since the Company did not have retained earnings on the transaction date, the deemed dividend was accounted for by reducing additional paid-in capital. The accounting for these dividends also requires that they be credited to additional paid-in capital; as a result, there was no net effect of the transaction on the Company’s stockholders’ deficit on the transaction date.

Accounting Treatment of the Company’s Derivatives

Paragraph 10 of EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock,” requires that contracts be reassessed at each balance sheet date or as result of transactions during a period. One of the criteria to be satisfied so that a potential derivative can be accounted for as equity is that the Company have sufficient authorized and unissued shares available to settle a contract after all other commitments that may require the issuance of stock.

As part of the transactions discussed above, on May 27, 2008 the Company’s Board approved modification of the Astrata Articles of Incorporation to increase authorized Preferred stock to 75,000,000 shares; also authorizing Common Stock to 300,000,000 shares. On May 28, 2008, the Company received 52% of the common stockholder’s approval for the modification of the Astrata Articles of Incorporation.

As a result of the approval discussed above, the number of authorized and unissued shares of the Company is sufficient to settle all the current potential common stock commitments that may require the issuance of common stock, which as of May 29, 2008 was 101,102,341 shares of common stock fully diluted. Therefore, no further assessment is required.

As of June 18, 2008, holders of approximately 8.2 million warrants, with a twenty (20) day offer elected to participate in the exchange and exercised approximately 2.1 million warrants for approximately 2.1 million shares of Common stock with cash and non-cash proceeds of approximately $37,000 and $482,000, respectively . Then the participants forfeited approximately 2.1 million in warrants and exchanged approximately 4.2 million warrants for approximately 208,000 shares of Series C Preferred stock. The remaining approximately 3.5 million Preferred stock warrant holders which did not elect to participate in the exchange will continue to hold their original warrants with terms modified eliminating the anti-dilution and cashless exercise provision. In addition, in accordance with the anti-dilution terms of the warrant agreement, the exercise price of these approximately 3.5 million warrants was reduced to $0.61.

Issuance of Common Stock and Other Equity Instruments

During the quarter ended May 31, 2008, the Company issued approximately 43,000 shares of its restricted common stock in exchange for services provided by consultants. Such shares were valued at approximately $22,000 (estimated to be the closing value based on the trading price on the issuance date). This transaction constituted an exempt offering under Section 4(2) of the Securities Act.

The June 18, 2008 Series C Preferred stock transaction reflected above included the exchange of approximately 1.9 million warrants for approximately 1.9 million shares of common stock for approximately $482,000 of debt. This transaction constituted an exempt offering under Section 4(2) of the Securities Act.

F-22

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

8. EQUITY TRANSACTIONS (continued)

Issuance of Common Stock and Other Equity Instruments (continued)

The June 18, 2008 Series C Preferred stock transaction reflected above included the exchange of approximately .2 million warrants for approximately .2 million shares of common stock for cash proceeds of approximately $37,000. This transaction constituted an exempt offering under Section 4(2) of the Securities Act.

During the quarter ended August 31, 2008, the Company issued approximately 174,000 shares of its restricted common stock in exchange for services provided by employees and consultants. Such shares were valued at approximately $76,000 (estimated to be the closing value based on the trading price on the issuance date). This transaction constituted an exempt offering under Section 4(2) of the Securities Act.

During the quarter ended August 31, 2008, the Company issued approximately 239,000 shares of its restricted common stock in exchange for cash of approximately $60,000 (estimated to be the closing value based on the trading price on the issuance date). This transaction constituted an exempt offering under Section 4(2) of the Securities Act.

During the quarter ended November 30, 2008, the Company issued approximately 100,000 shares of its restricted common stock in exchange for services provided by employees. Such shares were valued at approximately $25,000 (estimated to be the closing value based on the trading price on the issuance date). This transaction constituted an exempt offering under Section 4(2) of the Securities Act.

Common shares issued which vest over a three-year period from the date of grant, are amortized over the vesting period resulting in an expense of approximately $184,000 for the three months ended November 30, 2008 and $511,000 for the nine months ended November 30, 2008.

9. COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company may be involved in various claims, lawsuits and disputes with third parties, actions involving allegations of discrimination or breach of contract incidental to the ordinary operations of the business. The Company is not currently involved in any litigation which management believes could have a material adverse effect on the Company's financial position or results of operations.

Registration Rights Penalties

The Company is contractually liable for certain penalties because its registration statement relating to the preferred stock and the April/May 2005 sale of equity units was not filed (or expected to be declared effective by the SEC) by the deadline dates. During June 2008, the Company issued restricted common stock in settlement of approximately $0.3 million registration rights penalties which is included in the issuance of approximately 2.1 million shares of common stock issued June 18, 2008 as reflected above. Based on the current estimate of the filing and effective dates of such registration statement and the contractual deadlines, as of November 30, 2008, the Company has accrued estimated penalties and related interest of approximately $0.3 million.

Accrued Interest Expense

A number of directors, officers, employees and consultants have deferred salaries, fees and/or expenses for significant periods of time to support the Company. These loans accrue 1% per month simple interest on balances that remained outstanding for over six months. During the three and nine months ended November 30, 2008, we accrued interest payable and expensed approximately $69,000 and $179,000 respectively. During the three and nine months ended November 30, 2007, we accrued interest payable and expensed approximately $278,000. Accrued interest is included within interest expense in the accompanying condensed consolidated statement of operations.

F-23

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

10. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

Revenues (from continuing operations) reported in the accompanying condensed consolidated statements of operations relate exclusively to the Company’s Telematics operations. Thus, management has not reported the segment information otherwise required by SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information.”

Telematic products, accessories and services related to the business of remote monitoring of assets (including track-and-trace) whereby position, attributes, status and communication are involved.

Certain condensed geographic information is presented below including property and equipment, revenues:

	Property and		Property and
	Equipment, net		Equipment, net
	November 30, 2008		February 29, 2008
Asia	$	562,225	$	528,740
United States		11,593		-
Western Europe		20,228		88,987
Total	$	594,046	$	617,727


	Three Months Ended				Nine Months Ended
	November 30, 2008		November 30, 2007		November 30, 2008		November 30, 2007
	Revenue		Revenue		Revenue		Revenue
Asia	$	2,625,797	$	4,552,639	$	7,828,835	$	9,897,819
United States		-		-		-		-
Western Europe		231,600		165,864		773,866		453,076
Total	$	2,857,397	$	4,718,503	$	8,602,701	$	10,350,895

F-24

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

11. LOSS PER COMMON SHARE

The following is a reconciliation of the numerators and denominators of the basic and diluted loss per common share from continuing operations computations for the three and nine months ended November 30, 2008 and 2007:

	Three Months			Three Months			Nine Months			Nine Months
	November 30,			November 30,			November 30,			November 30,
	2008			2007			2008			2007
Numerator for basic and diluted loss per common share:
Net loss from continuing operations	$	(571,070	)	$	(982,122	)	$	(2,567,810	)	$	(6,254,360	)
Cumulative undeclared dividends on preferred stock		-			(56,000	)		(11,757,951	)		(168,000	)
Net loss from continuing operations applicable
to common shareholders	$	(571,070	)	$	(1,038,122	)	$	(14,325,761	)	$	(6,422,360	)

Loss from continuing operations	$	(571,070	)	$	(982,122	)	$	(2,567,810	)	$	(6,254,360	)
Loss from discontinued operations, net of tax		-			(106,964	)		-			(288,284	)
Net loss	$	(571,070	)	$	(1,089,086	)	$	(2,567,810	)	$	(6,542,644	)

Denominator for basic and diluted loss per common share:
Weighted average number of common share outstanding		30,014,670			24,002,951			29,980,848			23,989,717

Basic and diluted (loss) per common share:
Continuing operations applicable to common stockholders	$	(0.02	)	$	(0.04	)	$	(0.48	)	$	(0.27	)
Discontinued operations		-			-			-			(0.01	)
	$	(0.02	)	$	(0.04	)	$	(0.48	)	$	(0.28	)

12. DISCONTINUED OPERATIONS

In the opinion of management, the Company’s future opportunities in the GPS industry are principally in the Telematics sector in the Southeast Asia, Western Europe, and United States markets, with particular emphasis on the homeland security business. In combination with certain operational issues in South Africa, the desire to outsource manufacturing activities, and the intent to restructure/relocate the research and development function, management reached a decision in the first quarter of fiscal 2007 to sell the Company’s Geomatics operations. The Company consummated certain disposal transactions in the second quarter of fiscal 2007. In addition, management placed Astrata Systems (a wholly-owned) subsidiary in South Africa) in liquidation during fiscal 2007.

Management believes that the Company has not incurred any material contingent liabilities in connection with the transactions and events described in the preceding paragraph. The Company did not recognize any losses for write-downs (to fair value, less cost to sell) of any assets related to discontinued operations during the three and nine months ended November 30, 2008. Operations reported as discontinued in the accompanying condensed consolidated statements of operations are not generating any significant cash flows. Management has concluded that the Company does not have any active continuing involvement with the components that have been classified as discontinued operations in the accompanying condensed consolidated financial statements.

The loss from discontinued operations (net of tax) reported by the Company for the three and nine months ended November 30, 2007 was approximately $107,000 and $288,000 respectively.

F-25

ASTRATA GROUP INCORPORATED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

13. SUBSEQUENT EVENTS

Entry into a Material Definitive Agreement

The new company will be 51% owned by Astrata and known as PassTime Telematics Inc., an Astrata Group Company (“PTT”). The purpose of PTT is to facilitate and optimize Astrata’s entry into the North American telematics market. PTT will distribute a combination of Astrata’s and PassTime’s technology through PassTime’s well established distribution network and offer substantially competitive solutions to North American customers. The initial target markets for PTT are the quickly expanding U.S. vehicle fleet and asset tracking industry and homeland security.

Appointment of Principal Officers

On December 3, 2008, Astrata announced the following organizational changes which management deemed necessary to appropriately manage Astrata’s newly announced entry into the North American markets and to maintain its growing customer base abroad: Executive Chairman, Anthony Harrison will assume the role of Chairman and Chief Executive Officer. Martin Euler will assume the position of President and Chief Operating Officer. Henry Negron is appointed Chief Technology Officer.

F-26

Item 2: Management’s Discussion and Analysis or Plan of Operation

Overview

Astrata Group Incorporated is a U.S. publicly-held company, headquartered in Costa Mesa, California. Astrata is focused on advanced location-based IT services and solutions (Telematics) that combine the GPS positioning, wireless communications (satellite or terrestrial) and geographical information technology, which together enable businesses and institutions to monitor, trace, or control the movement and status of machinery, vehicles, personnel or other assets. The Company's intelligent vehicle tracking system currently in use enables the customer to track vehicles carrying hazardous materials and to halt them in case they veer off course. Astrata has designed, developed, manufactured and currently supports eight generations of Telematics systems with units deployed worldwide. Astrata has offices throughout the world including the United States, Europe and Asia.

Nature of Operations

Our expertise is focused on advanced location-based IT products and services that combine positioning, wireless communications, and information technologies. We provide advanced positioning products, as well as monitoring and airtime services to commercial and governmental entities in a number of markets including homeland security, public safety, transportation, surveying, utility, construction, mining, and agriculture.

Positioning technologies employed by us include GPS, laser, optical and inertial navigation systems. Communication techniques employed by us include GSM cellular and satellite communications.

Our Product

Telematics comprises the remote monitoring of assets in real-time (including tracking and tracing) whereby location, time and sensor status are communicated. These products are deployed into diverse markets including homeland security, public safety, transportation services and construction.

Telematics products often focus on people and assets in hostile and demanding environments such as monitoring the movement of hazardous materials for homeland security purposes. We also address the market for fleet management, workforce management, remote asset management and tracking, and emergency services by providing hardware for GPS information and data collection, as well as the software needed to access and analyze the data through the Internet. Our products combine positioning, wireless, and information technology and add measurable value to location-based information. We offer airtime to communicate data from the vehicle or field location to the customer’s data center or provide access over the Internet to the data and application software. This allows critical real-time performance and monitoring data to be accessed and analyzed by supervisory, maintenance, or financial users and make real-time decisions for productivity improvement, cost reductions, safety improvement, or other critical decisions to be fed to the field.

Recent Trends

Our business strategy is to focus on the homeland security, hazardous materials, civil defense and business-to-business markets by providing our customers with comprehensive solutions to meet their needs. Frequently this involves additional integration such as sensors ranging from Radio Frequency Identification to biometrics, remote displays or augmenting technologies to allow tracking in tunnels. Our business strategy anticipates we will be doing business internationally which carries risks which the Company must consider in conducting business with each international customer.

Our anticipated sales cycle in our target markets is subject to long cycles which include potential buyers requiring an evaluation process. As a result, we may be required to subsidize our operations during the period of obtaining sales contracts and the subsequent payment of invoices. Since our technology is new, prospective customers may require a longer evaluation process prior to purchasing or making a decision to include our product in their vehicles or containers. Some prospective customers may require a test installation of a customized system before making a purchase decision, which could be costly and time consuming for us. Each industry that we serve may have entirely different requirements, which can diminish our ability to fine tune a marketing approach.

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The Company entered into a fixed-price Contract with a Singapore entity on April 10, 2007 to design, develop and manufacture approximately $93.5 million of its Telematics products. The Company has completed the design phase and is currently working within the development phase where we have designed the functionality of the system to meet the customer needs and then developed the functionalities into a working environment. Upon completion of the development phase, all customer testing provisions will be completed and documented; thereby removing all rights of cancellation and we will move into the production phase for delivery over approximately fifteen months to the customer. With each shipment the customer will have forty-five days from receipt for normal processing of payment. From inception of the Contact, we have accomplished all requirements under the Contract with no liquidated damages incurred. We expect to progress to move through the production phase with minimal to no liquidated damages through the completion of this Contract. We anticipate entering into the manufacturing phase in early 2009, at which time we anticipate an increase in our revenues and gross margins.

In May 2008, Geneva-based Cotecna Group SA, one of the world’s leading trade inspection, security and certification companies, has awarded Astrata a contract to produce a transit monitoring system for the government of Senegal’s customs operations. The contract, the first for Astrata in the West African country, is to provide RDU’s and fixed tracking units as part of Cotecna’s Transit Monitoring & Traceability solution, which is designed to remotely monitor the movement of vehicles transporting goods.

On December 3, 2008, Astrata entered into a joint venture agreement with PassTime™, a Colorado based company that provides code-based, wireless and GSM technologies used in high technology payment solutions for the finance industry (specifically with automotive sales and leasing) throughout North America. PassTime has over 400,000 telematics devices installed in the United States. These products range from basic ignition control systems for sub-prime auto payment assurance to advanced personal vehicle management units. PassTime is deeply involved with all of the value chain partners that are integral to the deployment of wireless telematics systems including the sales channels, network operators and financing companies. The new company will be 51% owned by Astrata and known as PassTime Telematics Inc., an Astrata Group Company (“PTT”). The purpose of PTT is to facilitate and optimize Astrata’s entry into the North American telematics market. PTT will distribute a combination of Astrata’s and PassTime’s technology through PassTime’s well established distribution network and offer substantially competitive solutions to North American customers. The initial target markets for PTT are the quickly expanding U.S. vehicle fleet and asset tracking industry and homeland security.

Management is projecting growth in Telematics sales during fiscal 2009 and 2010, and has announced sales orders in this sector valued at a total of approximately $99 million (which includes the Contract) for the next two years. Other sales contracts are under negotiation, but at this time there can be no assurance regarding the ultimate success of these negotiations.

Results of Operations for the Three Months Ended November 30, 2008 Compared to November 30, 2007

Revenues

Net sales from continuing operations were approximately $2.9 million for the three months ended November 30, 2008; a decrease of approximately $1.8 million compared to the three months ended November 30, 2007 of approximately $4.7 million. This decrease is directly attributable to our long sales cycle in orders to provide customer specific requirements and the reduced recognition on the fixed-price Contract with a Singapore entity. During the three months ended November 30, 2008, we continued with the development phase of our Contract which covers a larger period of time for completion; recognizing approximately $1 million in revenue. During the three months ended November 30, 2007, we recognized approximately $2.3 million in revenue on the Contract. We are currently in the later stage of the development phase, completing recent customer change orders and recognize revenue using the percentage of completion method of accounting. The design and development phase is where we have designed the functionality of the system to meet the customer’s needs and then developed the functionalities into a working environment for testing and acceptance to move into production. Throughout the last nineteen months, we have accomplished all requirements under the Contract with no liquidation damages incurred. Upon completion of the development phase, we will move into the production phase which includes the units for delivery over approximately fifteen months to the customer. We expect to progress through the production phase with minimal to no liquidation damages through the completion of this Contract.

Our business strategy is to focus on the homeland security, hazardous materials, civil defense and business-to-business markets by providing our customers with comprehensive solutions to their needs. Frequently this involves additional integration such as sensors ranging from Radio Frequency Identification to biometrics, remote displays or augmenting technologies to allow tracking in tunnels. Management is projecting growth in Telematics sales during fiscal 2009 and 2010. Other sales contracts are under negotiation, but at this time there can be no assurance regarding the ultimate success of these negotiations. Based on our current estimates, we project recording revenue under the Contract of approximately $4.5 million and $62.6 million in fiscal 2009 and 2010, respectively.

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Margins

Gross profit from continuing operations was approximately $1.1 million for the three months ended November 30, 2008 and approximately $1.2 million for the three months ended November 30, 2007. Total gross profit as a percentage of revenue increased to 39% for the three months ended November 30, 2008 compared to approximately 26% for the three months ended November 30, 2007. This is attributable to an increase in orders with higher margins in addition to our fixed-price Contract.

Operating Expenses

Selling general and administrative expenses from continuing operations for the three months ended November 30, 2008 were approximately $1.4 million, a decrease of approximately $0.1 million compared to the three months ended November 30, 2007 of approximately $1.5 million. For the three months ended November 30, 2008, we experienced approximately $0.3 million increase related to Europe; and approximately $0.1 million related to the United States; offset by a decrease of approximately $0.5 million in our South East Asia operations. The majority of the administrative expenses primarily include marketing, salaries, facilities and travel expenses. Corporate overhead of approximately $0.9 million includes public company expenses of approximately $0.3 million, investor relations and investment banker service expenses of approximately $0.1 million and administrative expenses of approximately $0.5 million. Public company expenses include audit expenses, legal fees, and director’s fees. We expect our expenses to remain consistent or decrease as we progress through the manufacturing phase on the Contract. A non-cash expense was recorded for stock based compensation amounting to approximately $0.2 million for the three month period ending November 30, 2008.

Research and Development

Research and development expenses not directly related to the Contract were approximately $0.1 million for the three months ended November 30, 2008. During the prior year period, our research and development team devoted the majority of their time on the Contract in which their costs became direct charges to cost of goods sold during the development phase. We expect to incur approximately $0.7 million during fiscal 2009 for the addition of enhanced features to become available with our current products.

Operating Loss

Our operating loss for the three months ended November 30, 2008 and 2007 was approximately $0.4 million. This primarily reflects expenses incurred related to supporting current orders in process during the three months ended November 30, 2008 for future shipments.

Certain Non-Operating Items

Interest expense decreased by approximately $0.5 million to $0.2 million for three months ended November 30, 2008 compared to approximately $0.7 million for three months ended November 30, 2007. This was directly related to interest on the loans provided by officers and shareholders for working capital.

Net Results of Operations

We reported a net loss of approximately $0.6 million or $0.02 per common share for the three months ended November 30, 2008 compared to a net loss of approximately $1.1 million or $0.04 per common share for the three months ended November 30, 2007. Our discontinued operations had no effect on net results from operations for the three months ended November 30, 2008 and 2007.

Results of Operations for the Nine Months Ended November 30, 2008 Compared to November 30, 2007

Revenues

Net sales from continuing operations were approximately $8.6 million for the nine months ended November 30, 2008; a decrease of approximately $1.8 million compared to the nine months ended November 30, 2007 of approximately $10.4 million. This was attributable to decreased related revenues on the fixed-price Contract with a Singapore entity. During the nine months ended November 30, 2008, we recognized approximately $5.1 million related to Telematics capabilities and approximately $3.5 million related to the development phase of the fixed-price Contract. During the nine months ended November 30, 2007 we recognized approximately $3.7 million related to Telematics capabilities and approximately $6.7 million related to the fixed-price Contract. We are currently in the later stage of the development phase on the Contract, completing customer change orders and recognize revenue using the percentage of completion method of accounting. The design and development phase is where we have designed the functionality of the system to meet the customer’s needs and then developed the functionalities into a working environment for testing and acceptance to move into production. Throughout the last nineteen months, we have accomplished all requirements under the Contract with no liquidation damages incurred. Upon completion of the development phase, we will move into the production phase which includes the units for delivery over approximately fifteen months to the customer. We expect to progress through the production phase with minimal to no liquidation damages through the completion of this Contract.

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Our business strategy is to focus on the homeland security, hazardous materials, civil defense and business-to-business markets by providing our customers with comprehensive solutions to their needs. Frequently this involves additional integration such as sensors ranging from Radio Frequency Identification to biometrics, remote displays or augmenting technologies to allow tracking in tunnels. Management is projecting growth in Telematics sales during fiscal 2009 and 2010. Other sales contracts are under negotiation, but at this time there can be no assurance regarding the ultimate success of these negotiations. Based on our current estimates, we project recording revenue under the Contract of approximately $4.5 million and $62.6 million in fiscal 2009 and 2010, respectively.

Margins

Gross profit from continuing operations increased approximately $0.4 million to approximately $3.3 million for the nine months ended November 30, 2008 compared to the nine months ended November 30, 2007 of approximately $2.9 million. Total gross profit as a percentage of revenue increased to 39% for the nine months ended November 30, 2008 compared to approximately 28% for the nine months ended November 30, 2007. This is attributable to an increase in orders with higher margins in addition to our fixed-price Contract.

Operating Expenses

Selling general and administrative expenses from continuing operations for the nine months ended November 30, 2008 were approximately $5.3 million, a decrease of approximately $2.5 million compared to the nine months ended November 30, 2007 of approximately $7.8 million. The $2.5 million decrease was primarily due to compensation awards that related to obtaining the Contract that was issued during April 2007. For the nine months ended November 30, 2008, we experienced a decrease of approximately $3.1 million related to our South East Asia operations offset by an increase of approximately $0.5 million relating to the United States and approximately $0.1 million relating to Europe. The majority of these expenses are specifically related to staffing, facilities and travel. Administrative expenses primarily include marketing, salaries, facilities and travel expenses. Corporate overhead of approximately $2.9 million includes public company expenses of approximately $0.5 million, investor relations and investment banker service expenses of approximately $0.3 million and administrative expenses of approximately $2.1 million. Public company expenses include audit expenses, legal fees, and director’s fees. We expect our expenses to remain consistent or decrease as we progress through the manufacturing phase on the Contract. A non-cash expense was recorded for stock based compensation amounting to approximately $0.6 million for the nine month periods ended November 30, 2008.

Research and Development

Research and development expenses not directly related to the Contract were approximately $0.5 million for the nine months ended November 30, 2008. During the prior year period, our research and development team devoted the majority of their time on the Contract in which their costs became direct charges to cost of goods sold during the design and development phase. We expect to incur approximately $0.7 million during fiscal 2009 for the addition of enhanced features to become available with our current products.

Operating Loss

Our operating loss for the nine months ended November 30, 2008 was approximately $2.4 million, a decrease of approximately $2.5 million from approximately $4.9 million for the nine months ended November 30, 2007. This primarily reflects a decrease in expenses incurred related to the award of the Contract during the nine months ended November 30, 2007.

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Certain Non-Operating Items

Interest expense decreased by approximately $0.4 million to $0.6 million for nine months ended November 30, 2008 compared to approximately $1 million for nine months ended November 30, 2007. This was directly related to interest on the loans provided by officers and shareholders for working capital.

Net Results of Operations

We reported a net loss of approximately $2.6 million (and a net loss applicable to common stockholders of approximately $14.3 million) or $0.48 per common share for the nine months ended November 30, 2008 compared to a net loss of approximately $6.5 million or $0.28 per common share for the nine months ended November 30, 2007. The fiscal 2008 amount includes an undeclared non-cash dividend on preferred stock of approximately $11.8 million related to the fair value of the exchange of warrants for Series C Preferred Stock during the nine months ended November 30, 2008. Our discontinued operations had no effect on net results from operations for the nine months ended November 30, 2008. Our discontinued operations resulted in a loss of approximately $0.3 million or $0.01 per common share for the nine months ended November 30, 2007.

Liquidity and Capital Resources

Total assets increased by approximately $2.9 million from approximately $7.5 million as of February 29, 2008 to approximately $10.4 million as of November 30, 2008. The increase is primarily due to the increase of approximately $3.6 million in costs in excess of billings and estimated earnings related to the Contract offset by a decrease in cash of approximately $0.5 million and a decrease in accounts receivable of approximately $0.2 million.

Total liabilities increased by approximately $0.1 million from approximately $16.1 million as of February 29, 2008 to approximately $16.2 million as of November 30, 2008. The increase is primarily due to a net increase in salaries and benefits payable to officers and directors of approximately $1.3 million, an increase in accrued interest of approximately $0.4 million and an increase in credit line of approximately $0.6 million; offset by a decrease in accounts payable and accrued liabilities of approximately $1 million, a decrease in registration rights penalties of approximately $0.3 million, a decrease in income tax and related penalties payable of approximately $0.5 million and a decrease in deferred income of approximately $0.3 million.

At November 30, 2008, the Company had negative working capital of approximately $7.4 million and negative working capital of approximately $10 million at February 29, 2008; a decrease of approximately $2.6 million. The primary reason for the decrease in the working capital deficit is an increase in the cost in excess of billings and estimated earnings on uncompleted contract of approximately $3.6 million, a net decrease in accounts payable and accrued liability and salaries of approximately $1 million; a decrease in registration rights penalties of approximately $0.3 million, a decrease in income tax and related penalties payable of approximately $0.5 million; offset by an increase in salaries and benefits payable to officers and directors of approximately $1.3 million, an increase in accrued interest of approximately $0.4 million, a increase in line of credit of approximately $0.6 million and a decrease in cash of approximately $0.5 million.

Our operating activities used approximately $5.1 million in cash for the nine months ended November 30, 2008. Our net loss of approximately $2.6 million, an increase in cost in excess of billings and estimated earnings on uncompleted contract of approximately $3.9 million and decrease in income tax and related penalties payable of approximately $0.5 million; offset by stock-based compensation of approximately $0.6 million, depreciation and amortization of approximately $0.3 million and a decrease in accounts payable and accrued liabilities of approximately $1 million was the primary components of the net cash used in operating activities.

Our operating activities provided approximately $0.2 million in cash for the nine months ended November 30, 2007. Our net loss of approximately $6.5 million and an increase in accounts receivable and inventories of approximately $0.5 million; was offset by certain non-cash expenses such as stock-based compensation and depreciation and amortization in the total amount of approximately $2.6 million. Increases in accounts payables, accrued liabilities, other assets, income taxes and penalties payable of approximately $4 million and an increase in billings in excess of costs and estimated earnings on uncompleted contract of approximately $0.6 million was the primary components of the net cash used in operating activities.

Under the terms of the Contract, the Company was required to provide a performance bond for the benefit of the customer. In lieu of such bond, a certificate of deposit was initiated to guarantee this bond. The CD in the amount of $413,000 bears interest at 5.1% per annum and matures in December 2011. Under the terms of the Company’s arrangement with the bank that issued the CD, the funds will not be available for withdrawal until December 2011. Thus, the CD is a restricted account which has been reported as a non-current asset in the Company’s condensed consolidated balance sheets.

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On December 19, 2007, Astrata Group Incorporated entered into a Series B Convertible Preferred Stock Purchase Agreement with Investors. Under the terms of the Stock Purchase Agreement, the Investors purchased an aggregate of (i) $3,000,000 of Series B Convertible Preferred Stock and (ii) warrants to purchase a total of approximately 8.6 million shares of our common stock and warrants to purchase a total of approximately 2.1 million shares of our preferred stock. The Company used the proceeds for working capital and general corporate purposes.

Following approval of the Board of Directors and a majority of its shareholders, the Company entered into a $4 million Warrant Exchange Agreement, a Warrant Amendment Agreement, and a Preferred Stock Exchange Agreement (collectively, the “Amended and Restated Rights Agreements”), dated as of May 29, 2008, between Company and each of the holders of certain warrants, and holders of certain series of preferred shares issued by the Company (individually, a “Holder” and collectively, the “Holders”) relating to the Company’s Series A and Series B Preferred shares. The Amended and Restated Rights Agreements eliminated the anti-dilution and cashless exercise provisions of the Series A and Series B warrants. The Company received net cash proceeds of approximately $4 million which it has used the proceeds for working capital purposes. For additional information on this transaction, see Note 8 in the accompanying footnotes to these condensed consolidated financial statements.

Liquidity and Going Concern Considerations

The accompanying consolidated financial statements have been prepared assuming we will continue in our present form, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. For the nine months ended November 30, 2008, we had a net loss of approximately $2.6 million and negative cash flows from operating activities of approximately $5.1 million. In addition, we had a working capital deficit of approximately $7.4 million and an accumulated deficit of approximately $49 million and stockholders’ deficit of approximately $5.8 million as of November 30, 2008.

Because of the matters discussed in the immediately preceding paragraph, the Company’s independent registered public accounting firm added a going concern paragraph to their audit report on our February 29, 2008 consolidated financial statements. The going concern paragraph states that there is substantial doubt about the Company’s ability to continue as a going concern. Such consolidated financial statements have been prepared assuming that the Company will continue as a going concern (based upon management’s plans discussed in our February 29, 2008 consolidated financial statements) which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. Accordingly, the aforementioned consolidated financial statements do not include any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result, should the Company be unable to continue as a going concern.

The Company’s capital requirements depend on numerous factors, including the rate of market acceptance of the Company’s products and services, the Company’s ability to service its customers, the ability to maintain and expand our customer base, the level of resources required to expand the Company’s marketing and sales organization, research and development activities and other factors. Management presently believes execution of the Contract combined with the Company’s debt and/or equity financing recently completed and proposals now under consideration, will be sufficient to meet the Company’s anticipated liquidity requirements through February 2010. In order for us to fund our operations and continue this growth plan, substantial additional funding will be required from external sources. Management currently intends to fund operations through a combination of borrowings, letters of credit, debt, and if necessary, equity-based transactions. Management is in discussion with lending facilities and certain investors, who have expressed an interest in providing the Company with such investments. These discussions are ongoing; however, there can be no assurance of the outcome of these negotiations.

Astrata’s Telematics operations were strengthened during fiscal 2007 by our increased presence in South East Asia based primarily on the successful execution of the fixed-price Contract. Deliveries began in January 2008 and we anticipated beginning major shipments in the early part of 2009 over fifteen months. The Contract includes a provision for substantial liquidated damages for unexcused delays in product deliveries and/or failure to satisfy certain customer-specified criteria. The Company’s proprietary Telematics system is undergoing significant customization/modification in order to achieve the functionality required by the customer. The design and development phase is where we have designed the functionality of the system to meet the customer’s needs and then developed the functionalities into a working environment for testing and acceptance to move into production. Throughout the last nineteen months, we have accomplished all requirements with no liquidation damages incurred. Upon completion of the development phase, we will move into the production phase which includes the units for delivery over approximately fifteen months to the customer. We expect to progress through the production phase with minimal to no liquidation damages through the completion of this Contract. Funding for the manufacturing phase is covered by the customer providing a letter of credit for each shipment. Profits from these shipments will partially fund our operations and begin to result in a strengthening of our balance sheet, cash flow and equity position; however, there can be no assurance of the outcome of these events.

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Off Balance Sheet Arrangements

As of November 30, 2008, there were no off balance sheet arrangements. Please refer to the Commitment and Contingencies footnote (Note 9 to our condensed consolidated financial statements included elsewhere herein) for additional information.

Inflation

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to offset fully such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition, and results of operations.

Foreign Currency Exchange Rate Risk

The operation of our subsidiaries in international markets results in exposure to fluctuations in foreign currency exchange rates. The potential of volatile foreign currency exchange rate fluctuations in the future could have a significant effect on our results of operations.

The Company uses the U.S. dollar as its functional currency. We translate all assets and liabilities at period-end exchange rates and income and expenses accounts at average rates during the period. In fiscal 2008, we had transactions denominated in the Euro, the British Pound, the Singapore Dollar, the Malaysian Ringgit, and the Brunei Dollar. In accordance with SFAS No. 52, “Foreign Currency Translation” such adjustments are reported as a component of accumulated other comprehensive loss within stockholders’ deficit.

Interest Rate Risk

Since many of our credit facilities are directly based on various prime rates of interest, we are exposed to interest rate risk.

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Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting policies” in the Management Discussion and Analysis or Plan of Operations. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of our financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition as they relate to our consolidated financial statements.

Stock-based compensation

Under the modified prospective method of adoption for SFAS No.123-R, the compensation cost recognized by the Company beginning March 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of March 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to February 28, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R. For additional information see Note 2 in the Company’s condensed consolidated financial statements included elsewhere herein.

Registration Rights Penalties

In December 2006, the Financial Accounting Standards Board (the “FASB”) issued FASB Staff Position (“FSP”) EITF 00-19-2, “Accounting for Registration Payment Arrangements” (the “FSP”). Under this pronouncement, contingently payable registration payment arrangements are accounted for separately from and do not affect the classification of the underlying shares, warrants or other financial instruments subject to the registration payment provisions. A liability for a registration payment arrangement should be recognized when payment is probable and the amount is reasonably estimable (whether at inception or during the life of the arrangement) in accordance with SFAS No. 5, “Accounting for Contingencies”.

Revenue Recognition

General

The Company’s revenues are recorded in accordance with the SEC’s Staff Accounting Bulletin No. 104, “Revenue Recognition.” The Company recognizes revenue when persuasive evidence of an arrangement exits, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.

Contract Accounting

The Company is accounting for the Contract under the percentage-of completion method under the AICPA Statement of Position (“SOP”) 81-1, “Accounting for Performance of Construction-Type and Certain Production –Type Contracts”. Under the percentage-of-completion method, revenues, expenses and profits are recognized as performance progresses on long-term contracts. Progress toward completion is measured using the cost-to-cost method. The Company uses the estimated cost of goods (“COGS”) for the project to determine the associated recognized revenues in the periods in which they are earned. This is calculated by taking the actual COGS against the total projected COGS to determine a percentage of completion; then applying the percentage against the Contract project total revenues to determine the revenues for the reporting period.

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Should this quarterly update indicate a contract loss, a provision for the entire loss on the Contract will be made pursuant to SOP 81-1, paragraph 85.

Other Matters

Recently Issued Accounting Pronouncements

·	Acquisition costs will be generally expensed as incurred;

·	Non-controlling interests (formerly known as "minority interests" -- see Statement 160 discussion below) will be valued at fair value at the acquisition date;

·	Acquired contingent liabilities will be recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies;

·	In-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date;

·	Restructuring costs associated with a business combination will be generally expensed subsequent to the acquisition date; and

·	Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.

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·	Disclosure of the objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation;

·	Disclosure of the fair values of derivative instruments and their gains and losses in a tabular format;

·	Disclosure of information about credit-risk-related contingent features; and

·	Cross-reference from the derivative footnote to other footnotes in which derivative-related information is disclosed.

f.	FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position;

g.	AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics); and

h.	Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry.

This Statement is effective November 15, 2008 and the Company intends to adhere to this statement.

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Item 3: Quantitative and Qualitative Disclosures About Market Risk.

Market Information

Our common stock has been quoted on the OTC Bulletin Board since December 2004, and is currently quoted under the symbol “ATTG”. The following table sets forth the high and low bid prices for our common stock for the periods indicated, as reported by Yahoo!® Finance. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions.

	High		Low
For the nine months ended November 30, 2008:
First Quarter	$	0.60	$	0.35
Second Quarter		0.49		0.21
Third Quarter		0.37		0.09

For the fiscal year ended February 29, 2008:
First Quarter	$	1.52	$	0.93
Second Quarter		1.23		0.50
Third Quarter		0.99		0.54
Fourth Quarter		0.80		0.40

On January 8, 2009 the last sales price of our common stock was $0.14.

Penny Stock Rules

The Securities and Exchange Commission (the “SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or traded on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction (by a person other than an established customer or an “accredited investor”) in a penny stock, among certain other restrictions, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation. In addition, the penny stock rules require a uniform two day waiting period following delivery of the standardized risk disclosure document and receipt of a signed and dated acknowledgement of receipt of such disclosure document before the penny stock transaction may be completed.

The broker-dealer also must provide, prior to effecting any transaction (by a person other than an established customer or an “accredited investor”) in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Holders of Our Common Stock

As of January 8, 2009, there were approximately 533 holders of record of our common stock.

Dividends

We have never declared or paid any cash dividends on our common stock. We cannot declare dividends payable to common shareholders unless all outstanding dividends for preferred shareholders are paid at the time of declaration. We anticipate that any earnings will be retained for development and expansion of our business and do not anticipate paying any cash dividends in the near future. Our Board of Directors has sole discretion to pay cash dividends based on our financial condition, results of operations, capital requirements, contractual obligations, and other relevant factors.

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Item 4: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of November 30, 2008, Company management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that as of November 30, 2008, the Company's disclosure controls and procedures are not effective for the purposes of recording, processing, summarizing and timely reporting of material information relating to the Company and required to be included in its periodic reports.

For the reasons discussed in “Management’s Report on Internal Control over Financial Reporting” below, Company management, including the Chief Executive Officer and Chief Financial Officer concluded that, as of November 30, 2008, the Company’s internal control over financial reporting was not effective due to material weaknesses in internal control over financial reporting. Notwithstanding the identified control deficiencies, management has concluded that the condensed consolidated financial statements included in this quarterly report present fairly, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Management’s Report on Internal Control over Financial Reporting

Management used its knowledge and understanding of the Company’s organization, operations, and processes to determine, in its judgment, the sources and potential likelihood of misstatements in financial reporting. Management also considered in its assessment the Company’s size and complexity.

Specifically, Company management identified certain matters involving internal control and the Company’s operations that it considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board (“PCAOB”). These material weaknesses involved:

·	Ineffective controls over the period-end closing and financial reporting processes. This is caused by the weakness of controls over the closing protocols for the Company and its subsidiaries as well as the consolidation of all subsidiaries.

·	Lack of uniform internal controls and procedures designed to formalize documentation of its accounting and operational policies and procedures.

·	Inadequate financial reporting systems without standardization of the processes for the Company and its subsidiaries. This is caused by the lack of formal policies and procedures to address financial functions and disciplines.

·	Ineffective controls to provide the necessary documentation and procedures to assure that employee information, benefits and policies are accurate and timely administered.

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Company management is taking steps to remediate these weaknesses in the Company’s internal control environment, including:

·	Establishing effective controls over the period-end closing and financial reporting processes. This will require enhancement of closing protocols for both the Company and its subsidiaries, as well as, the consolidation of all subsidiaries.

·	Establishing formal policies and procedures to address all material financial functions and disciplines. Management’s implementation of these policies and procedures will include appropriate staff enhancement and training to ensure financial reporting competencies are strengthened.

·	Implementing a new accounting software package to standardize the financial reporting process for the Company and its subsidiaries as well as automating the consolidation of all subsidiaries.

·	Enhancing Human Resource functions to provide the necessary documentation and procedures to assure that employee information, benefits and policies are accurate and timely administered.

·	Retaining the services of a third-party consulting firm to assist Company management with on-going compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (SOX).

Developing and implementing a formal, top-down, risk-based approach to the evaluation of the Company’s internal control over financial reporting, in accordance with recent interpretative guidance from the SEC. Management is further utilizing a risk-based approach to remediate the control weaknesses identified as part of its assessment of the Company’s internal control environment.

Management has evaluated the impact of these gaps on the Company’s internal control over financial reporting, and is now utilizing its risk-based approach to designing controls to remediate these gaps as part of its implementation of the Company’s SOX Compliance Plan.

Company management will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional improvements, as necessary and as funds allow.

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PART II – OTHER INFORMATION

Item 1: Legal Proceedings

From time to time, the Company may be involved in various claims, lawsuits, disputes with third parties, actions involving allegations of discrimination or breach of contract incidental to the ordinary operations of the business. The Company is not currently involved in any litigation which management believes could have a material adverse effect on the Company’s financial position or results of operations.

Item 1A: Risk Factors

There were no material changes from the risk factors disclosed in the Company’s February 29, 2008 Form 10-KSB filed with the SEC on June 11, 2008.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Common Stock

Item 3: Defaults Upon Senior Securities.

None.

Item 4: Submission of Matters to a Vote of Security Holders.

Notification to Stockholders

An Information Statement has been furnished to the holders of shares of the common stock of Astrata Group Incorporated, a Nevada corporation. The purpose of this Information Statement was to notify the Company’s stockholders of actions already approved by written consent of a majority of the voting stockholders and directors. Pursuant to Rule 14c-2 of the Securities Exchange Act of 1934, the following actions were effective twenty (20) days after the date the Information Statement was mailed to the stockholders:

1. To authorize the Company's Board of Directors to amend our Articles of Incorporation to increase the maximum number of shares of stock that the Company shall be authorized to have outstanding at any time to Three Hundred Million (300,000,000) shares of common stock at par value of $0.0001 with no preemptive rights and Seventy Five Million (75,000,000) shares of preferred stock at par value of $0.0001 with no preemptive rights. These additional shares will have the same rights, privileges, preferences and restrictions as the Company’s shares of common stock and preferred stock respectively, which are currently authorized.

2. To authorize the Company’s Board of Directors to amend our Articles of Incorporation to create out of the shares of the Company’s preferred stock, par value $0.0001 per share, of the Company authorized in Article IV of the Articles of Incorporation, two series of Preferred Stock of the Company, to be named “Series C Convertible Preferred Stock” and “Series A-2 Convertible Preferred Stock,” consisting of One Million Six Hundred Ninety Six Thousand One Hundred Thirty One (1,696,131) shares and One Million Five Hundred Thousand (1,500,000) shares, respectively.

3. To advise that at a meeting of the Company’s Board of Directors on May 27, 2008 the appointment of John Clough to a vacancy on the Board was unanimously approved.

The Information Statement was mailed on or about June 16, 2008 to stockholders of record as of the close of business on May 28, 2008.

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General Information

An Information Statement was filed with the Securities and Exchange Commission and was furnished, pursuant to Section 14C of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the holders (the "Stockholders") of the common stock, par value $.0001 per share (the "Common Stock"), of Astrata Group Incorporated, a Nevada Corporation, to notify such Stockholders of the following:

1. On or about May 28, 2008 the Company received written consents in lieu of a meeting of Stockholders from holders of 14,140,023 shares representing approximately 51.67% of the 27,367,327 vested shares of the total issued and outstanding shares of voting stock of the Company approving an amendment to the Articles of Incorporation of the Company, to increase the maximum number of shares of stock that the Company shall be authorized to have outstanding at any time to three hundred million (300,000,000) shares of common stock at par value of $0.0001 with no preemptive rights and seventy-five million (75,000,000) shares of preferred stock at par value of $0.0001 with no preemptive rights. These additional shares will have the same privileges, preferences and restrictions as the Company’s shares of common stock and preferred stock respectively, which are currently authorized.

2. On or about May 28, 2008 the Company received written consents in lieu of a meeting of Stockholders from holders of 14,140,023 shares representing approximately 51.67% of the 27,367,327 vested shares of the total issued and outstanding shares of voting stock of the Company (the “Majority Stockholders”) approving an amendment to the Articles of Incorporation of the Company (the “Amendment”), to create out of the shares of the Company’s preferred stock, par value $0.0001 per share, of the Company authorized in Article IV of the Articles of Incorporation, two series of Preferred Stock of the Company, to be named “Series C Convertible Preferred Stock” and “Series A-2 Convertible Preferred Stock,” consisting of One Million Six Hundred Ninety Six Thousand One Hundred Thirty One (1,696,131) shares and One Million Five Hundred Thousand (1,500,000) shares, respectively. Both Series of Preferred Stock shall have the powers, preferences and relative rights as designated in the Series C and Series A-2 Certificates of Designation, as filed with the SEC on May 30, 2008.

3. On or about May 28, 2008, the Company received written consents in lieu of a meeting of Stockholders from holders of 14,140,023 shares representing approximately 51.67% of the 27,367,327 shares of the total issued and outstanding shares of voting stock of the Company authorizing the appointment of John Clough as a member of the Company’s Board of Directors.

On May 28, 2008, pursuant to Nevada Revised Statutes (“NRS”) 78.315, the Board of Directors of the Company approved the above-mentioned actions, subject to Stockholder approval. According to NRS 78.390, a majority of the outstanding shares of voting capital stock entitled to vote on the matter is required in order to amend the Company’s Articles of Incorporation. The Majority Stockholders approved the action by written consent in lieu of a meeting on May 28, 2008, in accordance with the NRS.

Item 5: Other Information.

None

Item 6: Exhibits

b) Exhibits:

Exhibit 31.1

Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2

Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1

Certificate of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2

Certificate of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ASTRATA GROUP INCORPORATED


Dated: January 14, 2009	By:	/s/MARTIN G. EULER Martin G. Euler Chief Executive Officer and Chief Operations Officer


Dated: January 14, 2009	By:	/s/THOMAS A. WAGNER Thomas A. Wagner Chief Financial Officer

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Filing Compare · ASTRATA GROUP INC