10KSB/A 1 tlmx12310110kam.htm TELEMETRIX INC.--AMENDED 12/31/01 FORM 10-KSB Telemetrix Inc. Amended Form 10-KSB December 31, 2001

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

FORM 10-KSB/A

ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934

for the Fiscal Year Ended December 31, 2001
Commission file number 0-14724

TELEMETRIX INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware 59-345-3156
(Jurisdiction of incorporation) (I.R.S. Employer Identification Number)

Telemetrix Inc.

1225 Sage Street
Gering, Nebraska 69341
(308) 436-4090
(Address, including zip code, & telephone number, of Registrant's principal executive offices)

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

Title of each class Name of exchanges on which registered
Common Stock, par value $0.001 Not Applicable

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether Registrants (1) 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 Registrants were required to file such reports), and (2) were subject to such filing requirements for the past 90 days. Yes[X] No [ ]

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

The aggregate market value of Registrant’s common stock (“Shares”) held by non-affiliates as of December 31,2001 was approximately $ 4.4 million based on the December 31, 2001 closing price of $0.24 per Share.

There were 18,476,186 Shares outstanding on December 31, 2001.

TELEMETRIX INC.

(COMMISSION FILE NO. 0-14724)

ANNUAL REPORT ON SEC FORM 10-KSB/A FOR FISCAL YEAR ENDED DECEMBER 31, 2001

Part I ................................................................................... 1
Item 1. Business........................................................................ 1
Item 2. Financial Information........................................................... 13
Item 3. Properties...................................................................... 19
Item 4. Security Ownership of Certain Beneficial Owners and Management.................. 20
PART 2 ................................................................................... 21
Item 5. Directors and Executive Officers................................................ 21
Item 6. Executive Compensation.......................................................... 24
Item 7. Certain Relationships and Related Transactions.................................. 27
Item 8. Legal Proceedings............................................................... 27
Item 9. Market Price of and Dividends on the Registrant's Common Equity
and Related Stockholder Matters........................................... 27
Item 13. Financial Statements and Supplementary Data..................................... 30
Item 14. Changes in & Disagreements with Accountants on
Accounting & Financial Disclosure......................................... 30
Item 15. Financial Statements and Exhibits............................................ 30

Index to Consolidated Financial Statements................................................ 32

Signatures................................................................................ 31

NOTE CONCERNING FORWARD-LOOKING INFORMATION. This Report contains statements that anticipate the future and therefore are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Such “ forward-looking statements” include statements about the future of our industry, statements about our business plans and statements about our strategies; i.e., any statements other than statements of historical facts. Forward-looking words such as “may”, “will”, “expect”, “anticipate”, “believe”, “estimate”, and “continue” or similar words indicate such statements. Investors should read statements with these terms carefully because they:

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discuss the Company’s future expectations;

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contain projections of the Company’s future results of operations or of its financial condition; or

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contain other “forward-looking” information.

We believe that it is important to communicate such future expectations to our investors. However, the accuracy of our expectations and forward-looking statements could be affected by:

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our limited operating history and commercial experience;

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market acceptance of T3000;

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availability of additional capital;

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protection of our intellectual property rights;

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evolving technologies and markets;

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competitive developments;

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telecommunications regulatory environment; and

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our ability to manage growth.

These factors might cause actual results to differ materially from the forward-looking statements as well as materially and adversely affecting our business, operating results and financial condition.

In this Report, “Telemetrix” refers to Telemetrix Inc., a Delaware corporation (formerly Arnox Corporation; we use “Arnox” and “Telemetrix” for activities before and after, respectively, the Combination in which Arnox acquired TRG and WTC), “Telemetrix Solutions” collectively refers to Telemetrix Solutions Ltd. (formerly Telemetrix Resource Group Inc.) and Telemetrix Resource Group Ltd. (we use “TRG” and “Telemetrix Solutions” for activities before and after, respectively, the Combination), “Telemetrix Technologies” refers to Tracy Corporation II dba Western Total Communications, renamed Telemetrix Technologies Inc.; we use “WTC” and “Telemetrix Technologies” for activities before and after, respectively, the Combination), while the terms “Company” and “we” mean Telemetrix, Telemetrix Solutions and Telemetrix Technologies, collectively (see “Business--Corporate History”).

PART I

Item 1. Business

TELEMETRIX IS AN EARLY STAGE COMPANY WITH REVENUES LIMITED TO THOSE THAT ARE GENERATED THROUGH THE SALE OF MONTHLY PAGING SERVICE AND RENTAL OF TOWER SPACE ON OWNED TOWERS. TELEMETRIX HAS SIGNIFICANT ONGOING EXPENSES RELATED TO THE DEVELOPMENT OF THE FOLLOWING PRODUCTS AND SERVICES AND THE COMPANY HAS SUBSTANTIAL DEBT AS REFLECTED ON THE ACCOMPANYING FINANCIAL INFORMATION. TELEMETRIX TECHNOLOGIES HAS CUSTOMERS FOR THE PAGING SERVICES PROVIDED, BUT AT THIS TIME DOES NOT HAVE ANY CUSTOMERS FOR THE T3000 TELEMETRY DATA SYSTEM.

Telemetrix Inc. through its subsidiary, Telemetrix Technologies has developed and patented a universal solution for wireless telemetry. This system will be sold both to and through telecommunications companies and digital telecommunications carriers, which would be companies such as VoiceStream, and AT&T, as a complete end-to-end solution for telemetry data customers. The system will also be sold direct to end users through Telemetrix Technologies. Telemetry is the transmission of data that represents status information on a remote process, function or device. Telemetry enables businesses to monitor activity, detect situations requiring intervention and promptly respond to such situations. Examples of businesses currently using telemetry include electric utilities, alarm companies and vending machine operations and as the technology advances, the potential applications multiply. Telemetry has been significantly advanced by Telemetrix’ development of the T3000 e-Telemetry Data System ^TMthat collects and transfers telemetry data using the Short Message Service of digital communications systems worldwide and delivers that data to the user (customer) via the internet. The T3000 Wireless Telemetry System includes hardware(e.g., the CommCenter and Optical Reader), network monitoring services software, and other support services. Telemetrix provides each of the T3000 components.

Telemetrix owns and operates a wireless GSM Personal Communications System (PCS) telecommunications network and a paging network. The total coverage of the paging and PCS coverage areas encompass portions of western Nebraska, southeastern Wyoming and northeastern Colorado. Our operations consequently consist of operating the paging system and doing T3000 research & development, product design, manufacturing, development of telecommunications services and carrier support services.

Telemetrix Technologies

Telemetrix Technologies developed the T3000 e-Telemetry Data System^TM wireless telemetry hardware and software. The T3000 system can be used in an unlimited number of ways, i.e., automatic utility meter reading, home security, home health alarms, monitoring vending machines and numerous other specialty applications. During 2001, the Company began a total redesign of the Products hardware and firmware, and developed the New Modular Design T3100 Product. The model numbers of the functional Products has been changed to reflect the new Product design.

The Telemetrix Model T3101 CommCenter is a proprietary hardware and software communications gateway. The CommCenter hardware has the ability to function as a wireless local loop interface which will replace, bypass or supplement existing wireline telephone service equipment or provide primary or additional telephone service. Using this Telemetrix hardware and software, PCS operators in any size market can offer additional services and increase their revenue. The T3000 system and components have been developed and tested on the Telemetrix GSM PCS network.

The Telemetrix Model T3170 and T3171 (previously T3400 and T3500) Optical Meter Readers allow utility companies to retain legacy-metering equipment in their Automatic Meter Reading and telemetry systems. The Optical Meter Reader is simply attached to the outside of an existing electro-mechanical utility meter. This eliminates the need for an electric utility to replace existing meters which significantly lowers the installation cost of a telemetry system.

Telemetrix Technologies holds two PCS licenses and 34 paging and mobile telephone licenses serving 27 locations in the service area. The licensed PCS service areas encompass approximately 138,000 persons. We intend to expand these wireless services to include PCS Wireless Local Loop services (i.e ., local exchange services), wireless telemetry and mobile PCS. Our wireless network also serves as a showcase for new products and services, where potential carrier customers can watch the T3000 system and CommCenter in operation.

T3000 e-Telemetry Data System^TM

Telemetrix immediate objective is to get the T3000 e-Telemetry Data System ^TMhardware into production. We have beta-tested the T3000 in western Nebraska, and integrated the devices with the controlling software. While we had planned to begin commercial production of the First Generation T3000 Product line in 2001, it was determined from the beta-demonstrations that, while the technology worked and was confirmed, that the monolithic design of the First Generation product would not allow manufacturing cost improvements originally projected, and a total hardware and firmware product redesign was initiated. This delayed the anticipated commercial introduction of the T3000 Product by a year.

In 2002, it is planned that the T3000 e-Telemetry Data System^TM will be designed to operate using other wireless technologies including TDMA, which will expand the available coverage and increase the number of available markets in North America and around the world.

e-Telemetry Data System^TM and e-Telemetry Data^TM are Registered Trademarks of Telemetrix Inc.

SHORT MESSAGE SERVICE. The T3000 uses the Short Message Service capability of existing PCS networks: this wireless transmission technology eliminates any need for a wireline telephone connection, offers widespread coverage and permits easy mobility. SHORT MESSAGE SERVICE is available from licensed PCS operators; therefore, T3000 system users need not obtain Federal Communications C commission licenses. The Company’s technology patents prevent competitors from using the Company’s proprietary technology for collecting and transmitting telemetry data using the standard Short Message Service. The technology patents give the T3000 system a competitive advantage. Patents have a duration of 17 years from the date of issue; therefore the patents granted to Telemetrix will not expire until 2007.

The primary focus of the Company in 2001 was the commercial development and testing of the T3000 system. The Company completed manufacturing design of the T3000 hardware and substantially completed software redesign of operating components. Additional required PCS network infrastructure was installed. Several of the T3000 System components underwent independent testing and received approval.

The Company signed several testing and evaluation agreements during 2001. The agreements are for testing of our T3000 System under each company’s specific environment, prior to a complete commercial installation. Many other T&E agreements are being negotiated.

The Telemetrix T3000 e-Telemetry Data System^TM will support services to telemetry users and carriers, including telemetry network management, billing support, system design, consulting and service bureau capabilities.

The T3000 system:

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Acquires data from remote devices.

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Controls, polls and activates remote devices.

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Manages the entire wireless telemetry data system.

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Offers real-time access to telemetry data.

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Provides Wireless Local Loop type telephony services.

Depending on operating funds, the company plans to move to the full marketing and commercialization phase of the redesigned T3100 Product in the second quarter of 2002. Numerous meetings are set, field trials are scheduled and convention exhibits are booked.

The Company, in 2001, continued discussions with a second international company to market our products in Mexico, Central and South America. It also determined that the Company would test and commercialize it’s Products and System in the United States market, before venturing into foreign markets.

PCS Signaling Standards. PCS systems generally use one of three digital signal transmission technologies: GSM, CDMA and TDMA. Each of these signaling standards, which are incompatible with each other, has been adopted by at least two different PCS carriers in major U.S. markets. Each standard has distinct advantages and disadvantages. TDMA resembles the signaling standard used by many cellular carriers. CDMA should require fewer cell sites and offer greater capacity, call quality and hand-off advantages. However, GSM is the leading digital wireless technology worldwide, with systems in over 170 countries serving over 600 million subscribers. Further, major carriers like AT&T, Cingular and TelCel Mexico have recently announced plans to change over from TDMA to GSM technology. GSM uses an open system architecture that allows carriers to purchase network equipment from a wider variety of vendors and provides significant flexibility for the carrier in vendor cost leveraging and provisioning of features, products and services. The T3000 e-Telemetry Data System^TM is currently available for use on GSM networks.

The following chart summarizes the different markets that can be served by the T3000 e-Telemetry Data System ^TM. There is a strong market for the delivery and use of telemetry data in a number of different industries. The Targeted Telemetry Market Segments chart shows some of the different industries and businesses that either currently use telemetry data which will benefit from the availability of wireless telemetry data or currently do not have access to wireless telemetry data from any source and will benefit from this availability. The chart shows the major industries that will benefit or be major users of wireless telemetry data, the uses that will be made of the data, the benefit that will be realize by that industry as a result of the availability of reasonable access to a universal telemetry data service and finally, the chart has an example of the application and the use of wireless telemetry data in serving that application or business segment.

Targeted Telemetry Market Segments

   Segmentation                      Telemetry Application          Benefits             Example
________________________________________________________________________________________________________________
   ALARM and SECURITY           o  Commercial /           o  Alarm and status      o  A burglar breaks
                                   Residential Security      messages sent to         into a house and cuts
                                   Alarms                    alarm monitoring         the phone and power
                                o  Smoke Detectors           center                   wires
                                o  Fire Alarms            o  Security against      o  Alarm company is
                                                             compromise of            still notified of the
                                                             wireline connections     break in and
                                                                                      dispatches for police
________________________________________________________________________________________________________________
 Agricultural Irrigation, and   o  Pipeline Corrosion     o  Monitor               o  A city registers
    Environmental                  Systems                   environmental            unusually high air
                                o  Water Pump Failures,      condition                pollutions readings
                                   Levels And             o  Alarm systems for     o  A public service
                                   Contamination Air         hazardous                announcement is sent
                                   Quality Systems           environmental            out warning those
                                                             conditions               with medical
                                                                                      conditions to stays
                                                                                      in doors
________________________________________________________________________________________________________________
Asset Management, and           o  Office Equipment       o  Monitor meter         o  A delivery truck
       Tracking                 o  Industrial                Information              follows a specific
                                   Machinery and          o  Service diagnosis        route to fill Coke
                                   Manufacturing             and maintenance          vending machine
                                   Processes                 Inventory management  o  Truck can be
                                o  Vending Machines       o  Fleet / route            re-routed if the
                                                             management               vending machine is
                                                                                      still full from last
                                                                                      delivery
________________________________________________________________________________________________________________
   ATMOSPHERE                   o  Heating,               o  Air quality           o  A commercial
    CONTROLS                       Ventilation, and Air      standards                refrigerator door in
                                   Conditioning           o  Temperature              a restaurant is left
                                o  Refrigeration,            controls for food and    open after a food
                                   Temperature and           other perishable items   delivery
                                   Humidity Controls      o  Climate control       o  An alarm is triggered,
                                                             for greenhouses and      alerting people to
                                                             agricultural products    close the door to save
                                                                                      the food from spoiling
________________________________________________________________________________________________________________
        HEALTHCARE              o  Health Status          o  Patient health        o  A patient takes a
                                   Monitoring Devices        status alarms            blood test everyday
                                                          o  Mobile patient        o  Test data is sent
                                                             monitoring               to hospital where
                                                          o  Centralized              doctor can monitor
                                                             storage of patient       patient daily
                                                             information
________________________________________________________________________________________________________________
Public and Municipal            o  Parking Meters         o  Parking meter         o  A city is losing
      Services                  o  Highway Tolls             servicing                money everyday
                                o  Streetlights           o  Service route            because parking
                                o  Railroad Crossing         management               meters are full or
                                   Switches               o  Preventive               robbed
                                                             security for          o  Meter attendants
                                                             hazardous public         are rerouted to full
                                                             situations               meters, and police
                                                                                      are dispatched to
                                                                                      tampered meters
________________________________________________________________________________________________________________
 Transportation Systems and     o  Vehicle Location       o  Inventory             o  A truck is making
         Facilities             o  Vehicle Engine            management               an urgent delivery
                                   Computers              o  Emergency                but there is a major
                                o  Container asset           communications           accident that will
                                   tracking               o  Remote                   delay the arrival
                                                                                   o  Information can
                                                                                      be sent to driver to
                                                                                      take an alternative
                                                                                      route to deliver
                                                                                      shipment on time
________________________________________________________________________________________________________________
         Utilities              o  Utility Meter          o  Reduced cost of       o  A Customer is
                                   Reading                   servicing meters         moving out of town
                                o  Oil and Gas Pipeline   o  Customer account      o  Utility company
                                   Facilities                management               can provide
                                                          o  Remote meter             up-to-the-minute
                                                             control                  billing to settle the
                                                                                      account
________________________________________________________________________________________________________________

Intellectual Property Rights

On January 11, 2000, United States Patent #6,014,089 was issued to Telemetrix. The patent covers claims for an apparatus and method for transmitting data to and from a data collection device using the short message service functionality of the control channel of a personal communications system. This system and method is entirely within the standards (specifications) of operation of any PCS network, which means that the overall operation and functionality of the network is not affected by this use and data transmission, and that modification to the network are not required.

On November 29, 2000, United States Patent #6,150,955 was issued to Telemetrix. The patent covers claims which relate to the use of the Telemetrix T3000 e-Telemetry Data SystemTM for monitoring certain digital packets associated with a digital communications system control channel, identifying of certain packets and replacing of certain non-information bearing packets with packets that contain useful data and information. Advantageously, this system and method does not impact the capacity of the digital communications network.

Patents have duration of 17 years from the date of issue; therefore the patents granted to Telemetrix will not expire until 2017.

Our Optical Meter Reader is being enhanced and applications have been made for patents on the enhancements to the reader. We have filed additional patent applications and amendments.

Patents are “intellectual property” conferred by federal legislation and authorized by the U.S. Constitution. Utility patents are available for new, useful and non-obvious processes, methods, machines, manufactured articles, compositions of matter or improvements of these items. U.S. patents are awarded on a first-to-invent basis, rather than a first-to-file basis. The first and original inventor must file patent applications no later than one year after any commercial exploitation of the invention. Patent application processing usually requires a minimum of 18 months from the filing date to issuance or abandonment, although some applications remain pending for more than a decade. Patent applications are usually kept strictly secret until the patent is allowed to issue. Patents allow the holders to exclude others from making, using, or selling the patented invention in the United States; the duration of utility patents is 17 years. The protection provided by a patent is determined by the scope of the invention identified in the claims. Patent holders may file suit in the federal district courts to enforce patents; as a defense to an infringement action, a purported infringer may attack the patent’s validity. Infringement of a valid patent can result in injunctive relief, a monetary award for up to three times the amount of damages, together with interest and costs, and in exceptional cases, attorney fees.

MARKETING & SALES

Telemetrix will use wireless operators with wireless knowledge, that have established relationships in their service market and coverage area, to capitalize on market presence, wireless brand awareness, data aggregation by the T3101 CommCenter units which will reduce the cost per telemetry origination point. Telemetrix e-Telemetry Data System will make the PCS operator (a) the most competitively priced telemetry data service in their operating region, (b) provide a completed and installed infrastructure which does not have to be maintained by the telemetry data users, and (c) provide financial incentives for the PCS operator to generate additional revenues through the use of SM telemetry data on their networks, generating enhanced revenues for operators through the use of SM capability that is currently not financially productive. The wireless operators are seen as the leaders in communication technology, therefore, their reputation, stature and standing will generate credibility for the delivery of new wireless telemetry data technology, which can be delivered by any other entity in a market, at a competitive price.

Telemetrix will also go to market through a direct sales effort utilizing the roaming capability of the PCS network located in Gering, Nebraska. Through the use of this network, as outlined in the following diagram, Telemetrix has the ability to use any other PCS network to deliver and receive telemetry data information from locations throughout the United States and have that data returned to the Telemetrix network in Nebraska. That data is then posted to a secure Internet site for access by the data customer. This Managed Services concept permits Telemetrix to work with existing PCS operators until they reach the level of business necessary to support a Telemetrix software installation in their own network. This also allows Telemetrix to work directly with Value Added Resellers to utilize their sales contacts to generate business on the Telemetrix network, with access to the data and control through an Internet connection to the Telemetrix network and Short Message Service Center.

Telemetrix Inc. is positioned to quickly gain nationwide capability and to become a nationwide telemetry data service provider.

Industry And Technology Overview

Wireless Telemetry. Telemetry involves the use of remote devices for data collection and analysis, and encompasses the following activities:

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installing a measurement device at a remote location;

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controlling the device from a central station;

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obtaining data with the device;

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transmitting the data to the central station;

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collecting and analyzing the data; and

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responding to the results of the analysis.

Telemetry requires measurement and transceiver devices, transmission services, central control devices and management software. Since it offers widespread coverage and permits mobility, wireless telecommunications can provide the transmission component for telemetry.

Potential Customers and Markets

Telemetrix Technologies currently has approximately 1,400 paging customers located in Western Nebraska and Eastern Wyoming. Telemetrix does not have any contracted customers for the e-Telemetry Data system, hardware or software. Currently, there isn’t any single customer that represents over 10% of the business of the Company.

The Wireless Services Market. The wireless communications market, which includes cellular telephone service, PCS, Specialized Mobile Radio (“SMR”), paging, and other applications, has grown dramatically in recent years. U.S. wireless telephone service revenues grew from $5.7 billion in 1991 to $50.2 billion in 1999, and the number of subscribers increased from $7.6 million in 1991 to $86 million in 1999. The growth in wireless communications results from lower prices for consumer equipment, more comprehensive service coverage, lower rates and technological advances that have improved transmission quality and reliability.

Wireless Telemetry. Developments in computing, Internet and wireless technologies have created an opportunity for a new business, wireless telemetry. The need for accurate and timely data is rapidly increasing, especially with the advent of techniques such as “just-in-time” inventory management. As measurement and transceiving devices become smaller and more robust, companies will install telemetry devices into more products. Just as the use of microprocessors expanded well beyond computing applications, telemetry devices could become ubiquitous. Telemetry creates demand for measurement and transceiver devices, transmission services, control devices and management software. The Yankee Group forecasts revenue for wireless telemetry devices to grow from $1.2 billion in 1999 to $5 billion in 2004, while revenue for wireless telemetry airtime will grow to $1.7 billion.

Wireless telemetry and the e-Telemetry Data system must achieve hardware deployment in the field in order to be successful. The hardware developed by Telemetrix must be relatively inexpensive, easy to install and maintain. The coverage areas of digital PCS providers continues to expand however the relatively limited coverage area could be problematic in meeting the telemetry data needs of some potential customers. The seriousness of this problem will decrease over time as the existing networks expand in the United States. Outside the United States coverage is better and network interoperability is not a serious issue.

Telecommunications providers are beginning to reduce their capital outlays to compensate for the higher level of spending that have taken place over recent years, and to give the networks time to develop revenues. This does not have a significant effect on the e-Telemetry Data system because the system operates on digital communication system and network that is currently deployed. The effect of the reduction in spending by network operators will have some effect on slowing the overall growth of coverage in the United States.

                     Wireless Telemetry Revenue Forecast (a)

                               2002           2003              2004
                          ___________________________________________
Wireless Service Revenues       921          1,278             1,688
Transceiver Unit Revenues     3,099          3,996             4,918
(a) $ in Millions

Telemetry is the science and technology devoted to measuring values and variables (such as pressure, temperature, humidity, blood flow, radiation levels, or sound levels), transmitting the results of the measurements to a distant station, and interpreting, indicating, displaying, recording or using the information that is obtained. The wireless telemetry market is relatively undefined and is now emerging.

Statement of the current status of the Market of Telemetrix Inc.

Of the targeted markets for Telemetrix T3000 systems, one of the largest and most active at this time is that of Automatic Meter Reading (AMR) for the Utility Industry. Industry newsletters and resources report that at the end of 2001, over 31.2 million utility meters (water, gas and electric) had been equipped with AMR systems which range from radio-frequency (RF) walk-by or drive-by readers to 902-928 MHz remote reader solutions built into the meter to Power Line Carrier (PLC) readers that passively read meters over the electric power line. It is estimated that the market opportunity for the USA exceeds 440 million commercial and industrial utility meters. Sub-metering applications and load-shedding applications double or triple this potential.

Therefore, only 7% of the utility meter market potential has been installed with AMR solutions. And if the extended applications are considered, the penetration of the utility meter market is less than 5%. Further, those utilities that installed non-real time, passive or manual interface (which is about 41% of the above 31.2 million installed AMR solutions) will be potential for upgrade or replacement with T3000 system type system solutions so they can realize such interactive AMR features as: Time-of use Pricing; Outage Monitoring; Load Control; Load-Shedding; Customer Energy Management; and Internet Access to Usage Data.

Competition

Competitors are extremely diverse. There is no single company that dominates the wireless telemetry market or that dominates any individual segment of the telemetry market. Each competitor has created a niche for their business and seems to stay within that niche. There is no competitor that can offer the universal capabilities of the T3000 System end-to-end solution, from ease of installation and use to the complete “turn-key” telemetry data implementation solution. All of the known competitors are shown in the following table and are categorized by wireless data transmission standard or technique. The precise market share of each competitor cannot be shown because the telemetry data market is spread over a number of applications. Some of the competitors are particularly strong in utility telemetry data solutions, others serve other and more diverse niche’ markets. The Telemetrix e-Telemetry Data System is designed to effectively compete in almost all markets with the competitors and technologies listed herein.

In general terms, there are a limited number of ways to gather telemetry data in actual operation. There are only two general categories i.e., wireline (telephone connection) and wireless. The wireline applications are rapidly being replaced with wireless applications because wireless applications are (a) less expensive and (b) easier to install and maintain. The wireless methods of delivering telemetry data are divided into three general categories; (a) proprietary networks, (b) existing commercial networks and (c) satellite.

Proprietary networks are those wireless installations that are built and owned by a single company and that are used for specific applications or uses. In the following chart, those networks are shown as (a) Proprietary Wireless Networks and (b) Dedicated Packet Data Networks. In certain applications and under specific circumstances (high concentration of data points that require a high level of monitoring) those networks can be advantageous. The cost of using these networks is scalable, and the more use that is made of the network, the lower the cost per transaction.

Existing commercial networks are those wireless applications that operate over the existing commercial wireless networks. In the following chart, those networks are shown as (a) Cellular Digital Packet Data, (b) Cellular Control Channel Technologies, (c) Narrowband PCS. The usefulness of these technologies depends on the cost of using the network and the availability of equipment to be placed on the network. The size of the data packets that are transmitted over these networks is relatively small, and there is some difficulty in moving data through the networks in certain circumstances. These systems rely on the analog wireless telephone systems, which are becoming obsolete and are being replaced with digital wireless systems.

Satellite service requires the use of a low earth orbiting satellite network to receive the telemetry data and retransmit that data to another location for transport to the customer. The coverage is very good, the equipment is expensive and the data costs per packet are expensive.

Many of the Company’s competitors have multiple divisions and do not break out the telemetry data and equipment sales individually on their publicly available financial statements. However, information on various companies with much of their revenues derived from telemetry data and equipment sales are listed below.

The following chart contains industry specific terms and is provided for the use of those readers that have knowledge specific to the industry. It is anticipated that this information will be valuable to that reader.

Telemetry Technology Landscape

Service Technologies         Description                     Advantages                       Weaknesses
__________________________________________________________________________________________________________________
DIGITAL CELLULAR/PCS     Currently SHORT MESSAGE       IP Capable, Cost of network      Small but growing
(GSM, TDMA, CDMA)        SERVICE technology; packet    is shared,  Migrateable GSM/    footprint/Service
(TELEMETRIX              data technology will be       TDMA transceiver technology     still in deployment/
TECHNOLOGIES)            overlaid on digital cellular/                                 Focus on wireless voice
                         PCS networks in long term
__________________________________________________________________________________________________________________
PROPRIETARY WIRELESS     Networks originally built     Understanding of telemetry      Proprietary networks
NETWORKS (CELLNET,       for utility meter reading     Business, AMR expertise         and systems, Limited
ITRON)                                                 Partnerships with major         coverage, Limited
                                                       utilities companies,            message size
                                                       Alliances with system
                                                       integrators
__________________________________________________________________________________________________________________
Dedicated packet Data    Digital Packet data radio     Coverage, Good in-building      Strong urban, weak rural
Networks (DPD)           Services designed for mobile  Penetration, Alliances with     coverage, Limited
(ARDIS, BSWD)            data and interactive paging   System Integrators, Low         deployment of
                         functions                     Latency                         technologies by service
                                                                                       providers
__________________________________________________________________________________________________________________
Cellular Digital Packet  Digital packet technology     Well-suited for short burst     Coverage dependent on
Data (CDPD) (AT&T        is an overlay on analog       transmissions, IP capable       cellular carriers
Wireless, GTE Wireless,  cellular technology                                           agreements, Strong
Bell Atlantic Mobile,                                                                  urban weak rural coverage
Ameritech)
__________________________________________________________________________________________________________________
Mobile Satellite         Services using Ku band and    Excellent coverage              Poor in-building
Services (MSS)           low earth orbit satellite                                     penetration, Expensive,
(QUALCOMM, Orbcomm and   systems to provide wide                                       Low data rate, Limited
other LEO Systems)       area blanket coverage                                         message size, Networks
                                                                                       still in deployment
__________________________________________________________________________________________________________________
Cellular Control Channel Uses overhead control         Low Latency, Low cost, IP       Coverage dependent on
Technologies (CCT)       channels of analog            Capable, Cost of network is     cellular carriers
(Cellemetry, Aeris       cellular network, and the     shared                          agreements, Limited
Microburst)              SS7 network via IS-41                                         message size
__________________________________________________________________________________________________________________
Narrowband PCS           Two-way messaging networks    Medium message size,            Networks still in
(NPCS) (Skytel,          based on ReFLEX technology    Spectral efficient Low cost,    deployment, High
Pagenet, Pagemart)                                     Excellent in-building           comparative latency
                                                       penetration, Coverage           (low data rate)
__________________________________________________________________________________________________________________

REGULATION

Wireless telecommunications services are subject to significant regulation and we could become subject to additional regulatory requirements as our services grow. Pursuant to the Communications Act of 1934, as amended (the “Communications Act”) including amendments by the Telecommunications Act of 1996, the Federal Communications Commission regulates the facilities and services we use to provide, originate, or terminate interstate or international communications. Provision of PCS and other wireless services requires radio frequency licenses from the Federal Communications Commission or a contractual arrangement with a licensee. Telemetrix has a PCS license, which was obtained in the C Block License Auctions. Telemetrix also has numerous paging facility licenses, which are used in the operation of the existing paging system. Telemetrix maintains FCC licenses on all of the communication facilities. The PCS licenses were issued on a 10-year basis with an expectation of renewal at the end of that term. The paging licenses are granted on a 10-year basis also with a reasonable expectation of renewal.

EMPLOYEES

The Company had 12 full-time and contracted employees on December 31, 2001. No Company employees are members of labor unions. The Company also utilizes independent contractors and consultants.

CORPORATE HISTORY

Telemetrix was formed through a corporate combination (“Combination”) between Arnox Corporation, Telemetrix Resource Group Inc. (“TRG--US”) and Tracy Corporation II d/b/a Western Total Communications (“WTC”). Arnox was originally formed in 1983 to develop, manufacture, market and license fire retardant products and technology, and Arnox’s stock was listed for trading on the NASDAQ system. However, a 1989 bankruptcy left Arnox as an inactive shell without material assets, liabilities or operations. WTC was formed in 1982 as a paging company operating in western Nebraska. TRG--US was formed in 1998 after its founders acquired the rights to an initial version of the TRACCS Software; TRG--US’s principal activity was licensing the TRACCS Software to Telemetrix Resource Group Ltd.(“TRG--Canada”), which offered some Customer Care Services in Canada; TRG--US then acquired TRG--Canada in early 1999. In a “reverse takeover” during the second and third quarters of 1999, the stockholders of WTC and TRG--US (“Principal Stockholders”) acquired 11,500,000 Shares (approximately 90%) from Arnox in exchange for all WTC and TRG--US stock; as a result, the Principal Stockholders acquired control of Arnox. After the Combination, the companies changed their names to reflect their complementary businesses:

—

Arnox became Telemetrix Inc. (“Telemetrix”);

—

TRG-US became Telemetrix Solutions Ltd. (“Telemetrix Solutions”; for the collective activities of both TRG-US and TRG—Canada, we use “TRG” and “Telemetrix Solutions” for activities before and after, respectively, the Combination);

—

WTC became Telemetrix Technologies Inc. (“Telemetrix Technologies”; we use “WTC” and “Telemetrix Technologies” for activities before and after, respectively, the Combination).

Item 2. Financial Information

Summary Financial Data


                                        1997            1998           1999           2000           2001
                                        -----------------------------------------------------------------
Income Statement Data:
Pager service revenues ..........       N/A               --             --          218,000        175,000
Rental income ...................       N/A               --             --           29,000         25,000
Consulting Income ...............                      409,000        867,000
Service income ..................                       18,000        601,000        383,000           --
Other ...........................                         --          107,000         28,000         18,000
                                    -----------    -----------    -----------    -----------    -----------
     Total revenue ..............                      427,000      1,575,000        658,000        218,000
                                    -----------    -----------    -----------    -----------    -----------

Cost of service income ..........                        2,000        415,000        415,000           --
Cost of consulting income .......                      838,000      1,540,000           --             --
Cost of pager service ...........        --               --             --           44,000         38,000
Other costs of sales ............        --               --             --           16,000         14,000

     Total costs of sales........                      840,000      1,955,000        475,000         52,000
                                    -----------    -----------    -----------    -----------    -----------

Research & development ..........                     --        5,462,000      3,696,000         79,000
Selling, General and
   administrative expense .......                      856,000     14,594,000      4,731,000      4,204,000
Impairment of Software ..........                         --       13,194,000           --             --
                                    -----------    -----------    -----------    -----------    -----------
     Total Operating expenses ...                    1,696,000     35,205,000      8,902,000      4,335,000
                                    ===========    ===========    ===========    ===========    ===========
Interest expense (income) .......                      145,000        537,000        973,000      3,888,000
Other expense (income) ..........                      (80,000)      (152,000)       506,000       (604,000)
                                    -----------    -----------    -----------    -----------    -----------
     Total Other expenses .......                       65,000        385,000      1,479,000      3,284,000
                                    ===========    ===========    ===========    ===========    ===========
          Net income (loss) .....                   (1,269,000)   (33,630,000)    (9,723,000)    (7,401,000)
                                    ===========    ===========    ===========    ===========    ===========
          Loss per share ........                        (0.22)         (3.95)   $     (0.67)   $     (0.43)

Balance Sheet Data:
Current assets ..................        N/A            N/A           680,000        409,000        265,000
Property, plant and equipment ...                                   2,317,000        230,000        458,000
Construction in progress ........                                        --        1,437,000      1,117,000
Debt issuance costs .............                                        --        1,067,000           --
Goodwill & other intangibles ....                                   8,545,000      6,778,000      5,014,000
                                    -----------    -----------    -----------    -----------    -----------
    Total assets ................                                  11,542,000      9,921,000      6,854,000
                                    ===========    ===========    ===========    ===========    ===========
Current liabilities .............                                   2,176,000      4,214,000      5,479,000
Due to related parties ..........                                   7,099,000      1,790,000      3,192,000
Long term liabilities
   (excluding related party debt)                                     966,000        841,000        829,000
Shareholders Equity .............                                  37,078,000     45,085,000     47,019,000
Retained earnings (deficit) .....                                 (35,777,000)   (42,009,000)   (49,665,000)
                                    -----------    -----------    -----------    -----------    -----------
   Total Liabilities and Equity..                                  11,542,000      9,921,000      6,854,000
                                    ===========    ===========    ===========    ===========    ===========

Management’s Discussion & Analysis of Financial Condition or Plan of Operation

Telemetrix offers wireless e-Telemetry Data ^TM Solutions for businesses and telecommunications carriers, particularly wireless Personal Communications Services (“PCS”). The Company’s T3000 wireless telemetry system uses a patented method for automatically collecting and transmitting telemetry data over the Short Message Service control channel of digital communications networks (PCS systems). Telemetrix was granted patents covering this proprietary technology in January and November 2000.

The Company has experienced substantial change over the past two reporting years. During April 1999, the Company was formed through a corporate combination between Arnox Corporation and Telemetrix Resource Group, Inc. Arnox was an inactive corporate shell prior to the combination. In September 1999, Tracy Corporation II d/b/a/ Western Total Communication was acquired for stock. Telemetrix Resource Group, Inc. was comprised of Telemetrix Resource Group, LTD, a Canadian corporation, which was later renamed Telemetrix Solutions. Telemetrix Solutions offered billing services and consulting to telephony companies. Western Total Communications, later renamed Telemetrix Technologies, was formed in 1982 to provide wide area paging in western Nebraska, eastern Wyoming and northeastern Colorado. It acquired two PCS licenses (30 MHZ and 10MHZ) for Business Trading Area 411, as defined by the Federal Communications Commission, and has constructed the 30 MHZ licensed network. It is also certified as a competitive local exchange carrier (“CLEC”) in the State of Nebraska. Telemetrix Technologies developed the T3000 wireless telemetry system.

In addition to the corporate formation during 1999, the Company focused on the research and development of the T3000 system. The Company developed its own proprietary GSM module for use in the T3000 system as well as a Subscriber Line Interface Card module. Three major investors provided the funding for the operations in 2001.

The T3000 e-Telemetry Data System^TM will be available for commercial distribution in the second quarter of 2002. The software development required for the T3000 will be completed in the first quarter of 2002. During 2002, we will increase our marketing efforts to create the demand for our systems. Telemetrix Inc. expects regular sales to meet historical and future projections.

The next evolution of the T3000 system will be the enhancement with European GSM and TDMA licensed frequencies. This will allow for a broader geographical distribution of our system. These enhancements should be operational by year-end 2003.

Currently, the Company is seeking additional financing. In December 2001, the Company signed an agreement with investment banker Berthel Fisher and Company Financial Services Inc., Cedar Rapids, Iowa to work on a best-efforts basis to raise equity or debt capital as needed at terms favorable to Telemetrix. It is estimated that no more than an additional $6 million will be required for manufacturing inventory, working capital and to re-pay current liabilities. The Company has immediate need for short and long term financing.

Telemetrix Inc. expects to continue as a going concern. The strategic plan is to partially exit the design phase of the business after trial and testing of products. Production will then commence from contracts generated and develop an income stream from operations. Previous to and including this reporting period, minimal revenue has been derived from operations and most of the funding has been through financing activities. In late 2002, cash flow from operations is expected to materialize.

DESCRIPTION OF FINANCIAL COMPONENTS

The following summarizes the components of revenue and the associated cost of sales (excluding depreciation) from our proposed operations:

Activity                       Revenue Source           Costs of Sales (excluding depreciation)
--------                       --------------           ---------------------------------------

Wireless telecommunications    PCS Services             Billing; Customer Care; Network Operation and
                                                        Maintenance; Carrier settlements

Wireless Telemetry             Licensing T3000          Customer Care and Support; Development costs;
                                                        licensing fees
                               T3000 equipment sales    Manufacturing costs; Customer Care and Support,
                                                        licensing fees
                               T3000 software sales     Customer Care and Support; License fees
                               Data transmission        Carrier settlements; roaming fees

Wireless Services

Our wireless communications services currently consist of paging operations in Nebraska, Wyoming and Colorado over the WTC Network. These operations (paging services plus equipment sales, rentals and repairs) now generate approximately $18,000 in monthly revenue. We will not expand the paging operations but instead will integrate them into the PCS operations. We acquired the PCS licenses in 1996, began network deployment in late 1997 and finished network deployment in April 1999. The network has primarily been used for the research and development of the T3000. We will commence commercial PCS operations late 2002 for short message services to support the T3000 technology development.

Operating Expenses

As we develop our products and services and ready them for market, the operating expenses principally consist of research & development, pre-production, license and general & administrative costs. When we launch products and services, sales & marketing expenses substantially increase, while research & development, pre-production and license costs decrease. After sales of products and services reach “regular” levels, the principal operating expenses will be research & development, sales & marketing, manufacturing, general & administrative. Since we are still in the initial stages of our business plan, we believe that operating expenses, particularly for wireless telemetry and wireless telecommunications, will continue to increase during the next year as we continue development and commercialization, pre-production and manufacturing and expand our operations.

Development and Commercialization

Our development and commercialization activities will principally focus on completing T3000 for release in June 2002. We expect development and commercialization will always constitute a significant operating expense because we must continually develop, enhance and upgrade our products and services. For example, we must extend T3000 to integrate other wireless technologies such as TDMA, CDMA, and ReFLEX.

Capital Expenditures

The most significant capital expenditure will be deploying and equipping the T3000 Network Operation Center (“T-NOC”). The T-NOC is the central repository of telemetry information and acts as the gateway between the PCS service providers and the Telemetry Users of T3000 (e.g., utilities and alarm companies).

Licensing

Some of our products and services utilize intellectual property of other parties, which generally requires us to pay license fees. Such license fees can take the form of initial payments, continuing royalties or both types of payments. We also must reserve funds to pay licenses on “essential patents” on the GSM radio and protocols, which is a standard practice in the industry.

Pre-Production

Pre-production costs include certification by the Underwriters Laboratory and ANSI to prove that our T3000 device complies with electronic emissions, safety and system interoperability standards. Pre-production costs will end when the system is commercially available, in June 2002.

Sales & Marketing

Sales & Marketing expenses include salaries and commissions for sales staff, trade show expenses, consulting fees and advertising. Since our Company’s, products and services are innovative and relatively unknown, we must conduct considerable market development programs to create awareness of our products and services.

Manufacturing

The largest manufacturing expense will be costs associated with component purchase guarantees to manufacturers and holding inventory on the T3000 units. Since T3000 includes some customized components and custom circuit boards, we must commit to large volume purchases to ensure timely delivery and to lower costs. Large production runs avoid multiple set-up charges and therefore are more economical, especially since third parties will manufacture the T3000 units for us. We anticipate building a minimal inventory to satisfy Test and Evaluation orders. Commercial production will be against firm orders from customers.

General & Administrative

General & administrative expenses primarily consist of salaries and related expenses of management, support personnel, occupancy fees, professional fees, general corporate and administrative expenses. As the size and scope of our business grow, we may expand our corporate and administrative staff, especially accounting and contract management.

RESULTS OF OPERATIONS
Year ended December 31, 2001, compared to year ended December 31, 2000

The following discussion contains only minimal comparisons between the year ended December 31, 2001 (“Recent Period” and the year ended December 31, 2000 (“Prior Period”).

During the Recent period, our prime focus was manufacturing design, testing and pre-production manufacturing of the T3000 technology. We have made significant progress in marketing the T3000 to the marketplace and are poised to begin commercial manufacturing and delivery of the system.

Additionally, we had been working to close Telemetrix Solutions, which was closed in September 2001. All significant inter-company transactions and balances have been eliminated.

Revenue totaled $218,000 during the Recent Period, compared to $658,000 during the Prior Period. During the Recent Period, we received $218,000 from equipment sales and rentals. The $440,000 decrease in revenues is due to the close of Telemetrix Solutions in September 2001. We expect revenue to increase substantially over the next 12 to 18 months as we launch the T3000 system.

Operating expenses were $4.3 million during the Recent Period. These expenses are primarily due to design and pre-manufacturing costs for the T3000 technology, amortization of goodwill resulting from the acquisition of WTC, and the operations of the Service Bureau.

Costs of Revenuewas approximately $52,000 for the Recent Period. These expenses primarily consist of the costs of the equipment sold and salaries and wages of employees related to the sales as well as agent fees and repair parts. The $423,000 decrease in the cost of revenue can be attributed to the closing of the Canadian operations (Telemetrix Solutions).

Research & Development expenses were approximately $79,000 for the Recent Period. Research and Development expenses will continue consistent with the Commercialization and Development Plan. The $3,617,000 decrease in research and development is due to the majority of the development of the T-3000 was incurred in fiscal year 2000.

Manufacturing expenses were not incurred during the Recent Period. We will incur manufacturing expenses for the T3000 in the second quarter of 2002.

Selling, General & Administrative expenses were $4.2 million for the Recent Period. The primary component of the SG&A expense is depreciation and amortization; $1.8 million for the Recent Period. Amortization includes the amortization of goodwill from the acquisition of WTC and amortization of patents and FCC licenses. SG&A expenses also include marketing costs for the T3000 and salaries and administrative costs of Telemetrix Solutions and Technologies. The $527,000 decrease in selling, and general and administrative expenses can be attributed to the shut down of the Canadian operations. The Company also had $345,000 more in legal fees in the prior fiscal year.

Interest expenses were $3.9 million for the Recent Period. This expense represents primarily the interest charges on related party loans during 2001 and debt issuance costs. Debt issuance costs were expensed in the Recent Period because all notes are current liabilities. Interest expense for the Prior Period was $973,000, also interest on loans from related parties and the costs of conversion of debt to equity. The $2.9 million increase in interest expense is due to the payoff of the related party debt in the current fiscal year.

Other income consisted of two items. Approximately $320,000 of the income is related to a write-off of faulty software. The software received by the Company was not fit or useful for the purposes intended. The Company contacted the vendor but no action or communication has taken place. The Company has taken this balance out of accounts payable and recognized the amount as other income. The second portion of the other income balance is made up of approximately $200,000 of accounts payable that are carried by Telemetrix Inc. representing debt of TRG Ltd. Creditors who represent these payables have not contracted Telemetrix for over two years and in substantially all of the cases, TRG disputed the amount of the alleged debt. Because of inaction of these creditors Telemetrix has recognized these balances. Loss of disposition of assets did not occur during the current fiscal year. The balance in the prior fiscal year relates to a receivable the client had on their books for 1,000,000 shares of common stock in Superwire.com in the exchange of the assets and liabilities sold from its Canadian subsidiary. The investment had been permanently impaired and recognized as a loss.

Net loss. We reported a net loss of $7.4 million for the Recent Period. The principal components of this net loss were amortization and depreciation expenses, interest expenses, and SG&A expenses, as well as operating costs. We did not reflect any benefit for income taxes due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns.

LIQUIDITY AND CAPITAL RESOURCES . Telemetrix has been financed through various means. During 2001, the principal stockholders have financed the Company’s activities through loans and equity contributions. In the Recent Period, Telemetrix used $1.1million in cash for operations. During the Recent Period the Company generated cash flow from financing activities of $1.2 million mostly through additional financing obtained from related parties. The Company must obtain additional financing in order to fund operations and would require even more financing if the Company fails to operate within the planned operational budget or fail to obtain revenue from operations. In December 2001, the Company signed an agreement with investment banker Berthel Fisher and Company Financial Services Inc., Cedar Rapids, Iowa to work on a best-efforts basis to raise equity or debt capital as needed at terms favorable to Telemetrix. No assurance can be given that additional financing will be available or that such funds would be available on acceptable terms or in the amounts or time periods we require.

Income from operations contributes to cash flow starting late in 2002. See the table below for planned operational budget for fiscal year 2002.

                                                     2002 Totals

Sources Of Cash
    Total Sources                                   $5,088,434.95

Uses of Cash
  Total Cost of Goods Sold                          $2,183,031.11

  Operating Costs                                   $          --

  General & Administrative                            $485,687.00

  NOC & Customer Support                              $345,550.00

  Development                                         $359,596.00

  Marketing & Sales                                   $280,300.00

  Operating Expenses                                  $159,000.00

  Other Expenses                                      $107,244.00

  Equipment LOC Payoff                                $170,700.00
                                                     ------------
Total Uses                                          $4,091,108.11

Net Cash Impact

Beginning Cash                                        $237,000.00

Ending Cash                                         $1,234,326.85

FUNDING REQUIREMENTS. In order to pay operating expenses and achieve self-sustaining operations, we expect to require substantial funding during the next year. We will need funds for:

Development and Commercialization

Development and commercialization prior to commercial distribution will require approximately $1,000,000. This includes documentation for training, customer user and installation manuals, licensing fees, compliance testing (i.e., ANSI and UL), software interface development, and completion of commercial design. $750,000 will be required to upgrade the Network Operations Center’s software and hardware.

Working Capital

Debt and equity financing will be required for working capital to fund the operations until the Company reaches positive cash flows. Working capital will be used for salaries and wages for employees, for marketing expense including advertising and trade shows, and other operating expenses such as rent, office supplies, postage and professional fees. Working capital of $2,000,000 also includes a reserve for unanticipated expenses.

Manufacturing Expense

The anticipated demand for the T3000 will require the manufacturing of product for inventory prior to sale. We estimate that an initial 3,000 units will be required at a cost of approximately $1,000,000.

Repay Current Liabilities

During our start up phase, we incurred several lines of credit and slightly above normal levels of accounts payable. The $1,000,000 will be used to partially pay down our lines of credit and to bring the accounts payable to a normal level. See tabular discussion below of all funding requirements for the next 2 years.

________________________________________________________________________________
    Contractual
    Obligations                          Payments Due by Period
________________________________________________________________________________
                                  Less than 1                           After 5
                        Total         Year      1-2 Years   3-5 Years    Years
________________________________________________________________________________
Long Term Debt-      2,966,000    2,966,000
Related Parties
________________________________________________________________________________
Capital lease
obligations
________________________________________________________________________________
Operating leases
________________________________________________________________________________
Unconditional
Purchase Obligations
________________________________________________________________________________
Other Long-Term      2,029,000    1,200,000      57,000     598,000      174,000
Obligations
________________________________________________________________________________
Total Conditional    4,995,000    4,166,000      57,000     598,000      174,000
Cash Obligations
________________________________________________________________________________

Item 3. Properties

Telemetrix Technologies leases 5,168 square feet of office space in Gering, Nebraska from Mr. Tracy (our CEO, President, Treasurer and Director), pursuant to a lease expiring in October 2002. See “Certain Relationships and Affiliated Transactions”.

Telemetrix Technologies holds various Federal Communications Commission radio frequency licenses: two PCS licenses for Scottsbluff, Nebraska, and 34 paging and mobile telephone licenses serving 27 locations in western Nebraska, eastern Wyoming and northeastern Colorado.

Item 4. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the number of Shares beneficially owned on December 31, 2001, by (i) each person beneficially owning more than five percent (5%) of Telemetrix outstanding Shares; (ii) each executive officer and director; and (iii) executive officers and directors as a group.

Name and Address of Beneficial Owner                                                    Shares             Percent(2)
------------------------------------                                                    ------             -------

Hartford Holdings Ltd. ("HHL").....................................................     4,012,004(2)          21.7%
       Box 143, Cayman Islands, British West Indies

Vintage Investments Ltd (The Marguerite Laura Becker Trust)(4) ....................     1,725,000              9.3%
       c/o The Harbour Trust Co. Ltd. One Capital Place, PO Box 1787,
       Cayman Islands, BWI

William W. Becker (Chairman of the Board of Directors).............................       137,500(3)             *
       Box 143, Cayman Islands, British West Indies

Larry Becker (over 5% beneficial ownership)........................................       946,833              5.1%
       7102 La Vista Place, Suite 100, Longmont, CO  80503

Michael J. Tracy (Chief Executive Officer, Treasurer & Director)...................     4,885,504             26.4%
       1225 Sage, Gering, Nebraska 69341

Michael L. Glaser (Secretary & Director)...........................................     1,432,554              7.8%
       633 17th Street, Suite 2700, Denver, Colorado 80202

Joe Schon (Chief Operating Officer)................................................        19,000                 *
       1225 Sage, Gering Nebraska 69341

James Doyle (Chief Financial Officer)..............................................         3,000                 *
       1225 Sage, Gering, Nebraska 69341

Executive Officers and Directors as a Group (5 persons)............................    10,489,562             56.8%

___________________

* Less than one percent of outstanding Shares.

¹ Based on 18,476,186 issued and outstanding Shares on December 31, 2001. Beneficial ownership is calculated according to the SEC’s rules.

² William W. Becker is empowered to exercise sole voting and investment control over shares held by HHL. Mr. Becker controls both The Becker Group and HHL.

³ Includes all Shares held personally and by HHL.

⁴ Marquerite Laura Becker is the ex. Wife to William Becker.

There currently are no arrangements that could result in a change in control of the Company.

Part 2

Item 5. Directors and Executive Officers

Telemetrix shareholders elect the Board of Directors at each annual general meeting. Directors hold office until their successors have been elected and qualified or until their death, resignation or removal. The incumbent Directors fill vacancies occurring between annual general meetings of the shareholders. Telemetrix Officers are appointed by, and serve at the pleasure of, the Board. No Director or Executive Officer was selected pursuant to any arrangement or understanding between that person and any other person. Telemetrix current directors and executive officers are listed below.

      Name                      Appointed     Age   Positions
      ----                      ---------     ---   ---------
 William W. Becker............ April  1999    72    Chairman of the Board of Directors
 Michael Tracy................ April  1999    56    President, Director and Chief Executive
                                                    Officer of Telemetrix
 Michael L. Glaser............ April  1999    62    Secretary & Director
 James Doyle.................. March  2000    46    Chief Financial Officer
 Joe Schon.................... May    2000    59    Chief Operating Officer

The Directors were established on the date of acquisition of the corporation and the term of the directors is continues until resignation by the director or replacement of the director by the board.

William W. Becker, Chairman of the Board. Mr. Becker is a principal of Hartford Holdings Ltd. (“HHL”), our largest shareholder. He also serves a Chairman of The Becker Group of Companies and Transdigital Communications Corporation, and served as the Chairman of TeleHub Communications Corporation (“TeleHub”) from March 1996 through June 1999 and then from September 1999 to the present. He also serves on the Board of Directors for nCUBE Corporation, AirCell Communications, Inc., Transdigital Communications Corporation, Earth Satellite Telecommunications Advanced Research, Inc. (“e*star”) and TeleHub Communications Corporation (“TeleHub”). Prior to joining us, Mr. Becker founded a number of companies in telecommunications, cable TV, oil and gas, real estate development, and other industries. From 1993 to 1995, Mr. Becker was a principal of WWB Oil & Gas Ltd. (now Cigar Oil & Gas Ltd.). Mr. Becker was a significant investor of IntelCom Group, Inc. (now, ICG Communications, Inc.), a CLEC, for which he served as chairman and CEO from 1987 to June 1995. Mr. Becker devotes time to Telemetrix on a part time and as needed basis.

Michael J. Tracy serves as Director, Chief Executive Officer and President - Telemetrix Inc. Technologies since April 1999, Telemetrix Inc. since January 2000. For the 4 years prior to serving as CEO and President of Telemetrix, Inc. Tracy was President of Telemetrix Technologies. He participated in the development of the technology and patenting of the T3000 e-Telemetry Data System. In 1982, Mr. Tracy formed WTC (now called Telemetrix Technologies), which provides paging, PCS and mobile telephone services. He has over 20 years of broadcasting and communications experience and is President of Tracy Broadcasting Corporation, which he founded in 1976. Mr. Tracy has a Bachelor of Arts degree from The Hiram Scott College, has held various elected civic and local positions including city council and president of the chamber of commerce. He is a member of several professional, industry and representative boards. Mr. Tracy devotes full time to his duties in management with Telemetrix Inc.

Michael L. Glaser has been Secretary and Director of Telemetrix Inc. since April 1999 and has 36 years legal and regulatory experience in the telecommunications industry. Currently he is a shareholder of Lottner Rubin Fishman Brown & Saul, P.C., Company’s legal counsel, which he joined in January 1996. Mr. Glaser was a director and shareholder of the law firm Hopper and Kanouff, P.C. from July 1992 to January 1996, and a partner at the law firm Holme Roberts & Owen, Denver, Colorado from July 1990 through June 1992. From 1966 to 1983, Mr. Glaser practiced law emphasizing Telecommunications in Washington D.C. Mr. Glaser is co-Chairman of the Telecommunications Law Forum of the Colorado Bar Association, and is licensed to practice in Colorado, Maryland and the District of Columbia. He received both his undergraduate degree and law degree (with honors) from the George Washington University, Washington, D.C. Mr. Glaser devotes time to Telemetrix on a part time and as needed basis.

James Doyle has served as Chief Financial Officer of Telemetrix Inc. since March 2000 and has extensive experience in corporate fiscal management. For three years prior to joining Telemetrix, he served as Vice President and CFO of the Regional West Medical Center in Scottsbluff, Nebraska. Prior to Joining Regional West, Mr. Doyle served as Controller for Provenant Health Partners and Hospital Controller for National Medical Enterprises, both in Denver, Colorado. He has also held executive positions with Rocky Mountain Health Care Corporation/Blue Cross and Blue Shield, serving as Director, Corporate Planning; Supervisor, Corporate Budget and Financial Planning and Senior Financial Analyst. Mr. Doyle received his Bachelor’s degree from the University of Northern Colorado in 1977 and his MBA from the University of Nebraska-Lincoln in 1983. He was licensed as a Certified Public Accountant in 1987. NOTE: Jay Doyle tendered resignation in September 2001 and it was accepted by the Board of Directors upon the condition that he stay until a suitable replacement was named. Mr. Doyle was present all during this report represents.

Joe Schon has served as our Chief Operating Officer of Telemetrix Inc. since May 2000. For 8 years prior to joining Telemetrix, Mr. Schon served as President of Agromac Corporation, a manufacturing company specializing in the design and manufacture of agricultural equipment.. Mr. Schon has held management positions with the world's major companies. He served as Vice President of the Alcoa Separations Technology Division of Alcoa, Inc.; Business Development Director for FMC; Director of Marketing-Corporate Technology for Allied-Signal, Inc., and also served as General Manager of the company’s AQUATECH Systems Division; Marketing and Market Development Manager for Boise Cascade Corp’s Composite Can Division and as Allied Chemical Corp.’s Asia Pacific Sales Manager and Western Hemisphere Sales Manager. Mr. Schon holds a B. S. Degree in mathematics and physics with a minor in chemistry from Fort Hays State University in Kansas and an MBA Degree from Pepperdine University in Los Angeles.

Board Committees

The Board currently does not have any committees but intends to form an Audit Committee and a Compensation Committee. The proposed Audit Committee will review the services provided by the Company’s independent accountants, consult with the independent accountants on audits and proposed audits of the Company and review certain filings with the SEC and the need for internal auditing procedures and the adequacy of internal controls. The Compensation Committee will determine executive compensation and review transactions between the Company and its affiliates, including any associates of affiliates.

Litigation Involving Officers & Directors

Mr. William Becker served as the Chairman of TeleHub Communications Corporation (“TeleHub”) from March 1996 through June 1999 and then from September 1999 to the present. On October 27, 1999, a TeleHub subsidiary petitioned for reorganization under the U.S. Bankruptcy Code. At that time, that subsidiary owed the Company approximately $606,000 for billing and consulting services. Given the status of this bankruptcy case, the Company has reserved for the entire amount owed and we do not expect to receive any payment.

Compliance With Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires our directors, executive officers and significant shareholders (“Reporting Persons”) to report their Share ownership and transactions in Shares. The following table lists the Reporting Persons and the number of late reports filed by each Reporting Person during 1999-2001:

   Reporting Person                                                           Late Reports

   Hartford Holdings Ltd. (10% Shareholder)..................................   None

   Vintage Investments Ltd. (10% Shareholder)................................   None

   William W. Becker (Chairman)..............................................   None

   Michael J. Tracy (Chief Executive Officer & Director).....................   None

   Michael L. Glaser (Secretary & Director)..................................   None

   James M. Doyle (Chief Financial Officer)..................................1 (Form 3)*

   Joe Schon (Chief Operating Officer).......................................   None

*The late filings of the Form 3 resulted from inadvertence. Except as set forth above, we believe that our Reporting Persons complied with all Section 16(a) filing requirements. NOTE: Jay Doyle tendered resignation in September 2001 and it was accepted by the Board of Directors upon the condition that he stay until a suitable replacement was named. Mr. Doyle was present all during the period this report represents.

Item 6. Executive Compensation

Executive Compensation. The following table provides certain summary information concerning compensation paid or accrued by the Company and its subsidiaries to Michael J. Tracy, the Company’s CEO, and the three most highly compensated executive officers of the Company (the “Named Officers”) for the fiscal years ended December 31, 1999, 2000 & 2001. The Company has not granted options, warrants, stock appreciation rights or other long-term compensation.

Summary Compensation Table

                                                Annual Compensation
                                 Fiscal  ------------------------------    Long-Term        All Other
Name & Principal Position         Year   Salary     Bonus       Other     Compensation    Compensation
-------------------------         ----   ------     -----       -----     ------------    ------------

Michael J. Tracy                 2001    $131,692(4)   None    $593,000(3)    None             None
   Chief Executive Officer       2000     $12,000      None       $0          None             None
                                 1999      $9,700      None      None         None             None

James (Jay) Doyle                2001     $90,000      None      None         None             None
   Chief Financial Officer       2000(1)  $75,000      --        --           --               --
                                 1999       --         --        --           --               --

Joe Schon                        2001     $72,000      None      None         None             None
   Chief Operating Officer       2000(2)  $40,000      --        --           --               --
                                 1999       --         --        --           --               --

__________

¹Mr. Doyle’s salary reflects a partial year of employment at an annual salary of $90,000 NOTE: Jay Doyle tendered resignation in September 2001 and it was accepted by the Board of Directors upon the condition that he stay until a suitable replacement was named. Mr. Doyle was present all during the period this report represents.
² Mr. Schon’s salary reflects a partial year of employment at an annual salary of $72,000.
³During 2001, the Board approved the grant of $665,000 as compensation in restricted stock for past services of which $593,000 was issued in restricted shares in 2001.
⁴ Includes $71,692 payable in stock.

Stock Option Plans. The Board adopted an incentive stock option plan to award stock options for officers, directors, employees and consultants; the Board reserved 1.4 million Shares for issuance under the Plan. The Plan permits both Incentive Stock Options and Non-statutory Stock Options (as described in the Internal Revenue Code). Either the Board or a Board Committee will select option recipients and will set the terms, such as exercise price, the number of shares purchasable and vesting, for any options; the terms of an option will be specified in a specific option certificates. There were no stock options issued during the year ended December 31, 2001.

Summary of Executive Options Table

                     Number of Shares     % of Total Options   Exercise
                     Underlying Options   Vested  During       Price        Expiration
Name                 Granted              2000                 ($/Share)    Date
---------            -----------------    ------------------   ---------    ---------

James Doyle (1)           50,000                0               10.00        6/08/2003

Joe Schon (2)            100,000                0                4.69        9/12/2003

(1)	Mr. Doyle’s options are vested in equal annual amounts over five years starting on March 8, 2001. The fourth and fifth incremental vesting is contingent upon the Company’s renewal of his employment contract.

(2)

Mr. Schon’s options are vested over a five year period on June 12 of that year, based on the following schedule:

2001          15,000 shares
2002          15,000 shares
2003          20,000 shares
2004          25,000 shares
2005          25,000 shares
The fourth and fifth incremental vesting is contingent upon the Company’s renewal of his employment contract.

Executive Employment Contracts . The Company employs Mr. Doyle, as Chief Financial Officer pursuant to an employment contract. This employment contract has an initial three-year term and two one-year renewal terms unless either party notifies the other of the non-renewal at least 60 days before the renewal term. The agreement provides for a $90,000 annual base salary. If the Company terminates the employment agreement without cause then Mr. Doyle shall receive a termination fee equal to ¹/ ₃of his annual salary plus benefits plus a specified bonus. Payments shall only be made after Mr. Doyle executes a standard release waiving all claims against the Company. Mr. Doyle is subject to a confidentiality covenant. NOTE : Jay Doyle tendered resignation in September 2001 and it was accepted by the Board of Directors upon the condition that he stay until a suitable replacement was named. Mr. Doyle was present all during the period this report represents.

Michael Tracy is contracted for employment as Chief Executive Officer. The duration of the contract is four years with 2001, marking the completion of the 2^nd year of the contract. Contracted compensation is $300,000 per year plus benefits. A bonus provision also allows the Board of Directors to award up to 50% of the base salary based upon Executive accomplishment of Company objectives. If employment is terminated without cause, the Company shall pay the Executive a termination fee equal to the current year salary plus benefits and the bonus as specified above upon a prorated basis of the previous year bonus. Mr. Tracy has covenanted not to compete and is subject to non-disclosure and confidentiality covenants.

The Company employs Mr. Schon, as Chief Operating Officer pursuant to an employment contract. This employment contract has an initial three-year term and two one-year renewal terms unless either party notifies the other of the non-renewal at least 60 days before the renewal term. The agreement provides for a $72,000 annual base salary. If the Company terminates the employment agreement without cause then Mr. Schon shall receive a termination fee equal to ¹/₃ of his annual salary plus benefits plus a specified bonus. Payments shall only be made after Mr. Schon executes a standard release waiving all claims against the Company. Mr. Schon is subject to a confidentiality covenant.

Director Compensation. We currently do not provide cash compensation to Directors who are not also employees for attendance at Board or committee meetings, but reimburse expenses related to such attendance (e.g., airfare or telephone charges). The Company does provide options for common stock as consideration for the Directors, which a summary follows:

Summary of Director Options Table

                     Number of Shares     % of Total Options   Exercise
                     Underlying Options   Vested  During       Price        Expiration
Name                 Granted              2001                 ($/Share)    Date
---------            -----------------    ------------------   ---------    ---------
William Becker            50,000                100%            $4.75       4/30/2010
                         100,000                100%            $0.68       4/30/2011
Michael J. Tracy          50,000                100%            $4.75       4/30/2010
                         100,000                100%            $0.68       4/30/2011
Michael Glaser            50,000                100%            $4.75       4/30/2010
                         100,000                100%            $0.68       4/30/2011

After we formulate and begin implementing the business plans, the Board’s Compensation Committee will address director compensation.

Compensation Committee Interlocks and Insider Participation in Compensation Decisions. Since the Board does not have a Compensation Committee, the Board has responsibility for all Executive Officer compensation issues. The Board will establish a Compensation Committee to adopt executive compensation policies.

Item 7. Certain Relationships and Related Transactions

On June 30, 2000, the Becker Group of Companies converted notes payable totaling $1.03 million (just including principal) into 510,778 shares of common stock. The remaining $369,000 due to Becker Group of Companies represents accrued interest from the $1.03 that was not converted into stock. On September 30, 2000, Hartford Holdings converted notes payable totaling $6.47 million (including principal and accrued interest) into 1,177,240 shares of common stock. The Becker Group of Companies is owned by HHL, our largest shareholder. William Becker, Chairman of the Board, maintains control of both The Becker Group and HHL.

The Company also borrowed $2,597,000 from two principal shareholders, Mr. Tracy (President, Treasurer and Director) and Mr. Glaser (Secretary and Director) at interest rates ranging from 9% to 11%. Funds were borrowed as needed throughout the year and notes created on specific loan dates. All notes are demand notes and listed as short term liabilities. All funds were used for the continuation of the development of the T3000 technology and for working capital. All funds were used for operating expenses incurred in the continuation of the development of the T-3000 technology.

Mr. Tracy (President, Treasurer and Director) owns the building in Gering, Nebraska, where Telemetrix Technologies conducts its operations. Telemetrix Technologies pays rent of $2,500 per month, which is the current market rate.

The Company also has some due from/due to balances on their balance sheet. The balances are all related party transactions. The amounts titled Tracy Broadcasting Company and Michael Tracy relate to the amounts due from Michael J. Tracy (Chief Executive Officer, Treasurer & Director). The remaining parties (Mondetta Telecommunications Inc., Web CCB Systems Inc., Software Factory Inc., and Becker Group of Companies) are related entities of William Becker (Chairman).

We believe that each of these transactions were on terms no less favorable than we could have obtained in transactions with unrelated third parties.

Item 8. Legal Proceedings

The Company is party to various negotiations and legal proceedings regarding claims on contracts in the normal course of its business. Management believes that the outcome of such negotiations and legal proceedings, as well as commitments, will not have a material adverse effect on the Company’s consolidated and combined financial statements.

PART 3

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.

The Shares are quoted on the NASD’s Over-The-Counter Bulletin Board (“OTC-BB”), but there currently is a very limited market for the resale of the Shares, which have lightly traded since 1999. Although we intend to apply for a NASDAQ listing in the future, Telemetrix currently does not qualify for listing. Since listing depends on our future financial condition, there is no assurance that we will ever qualify. Without a NASDAQ listing, trading in the Shares probably will remain light and the Shares will be illiquid.

The following table lists the range of high and low closing prices in U.S. dollars on NASDAQ electronic bulletin board for the years ended December 31, 2000 and 2001. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

                                               High              Low
                                           ------------      -----------
                                           2000    2001      2000   2001
                                           ----    ----      ----   ----
    Quarter Ended
    -------------
    First Quarter .......................   6.88   2.44       6.13  0.66
    Second Quarter ......................   4.75   1.02       4.50  0.65
    Third Quarter .......................   3.63   0.90       3.13  0.39
    Fourth Quarter ......................   2.63   0.60       2.44  0.16

The last reported trade of the Shares on December 31, 2001, was executed at a price of $0.24. On December 31, 2001, there were 18,476,186 Shares outstanding (3,030,848 held by non-affiliates) held by 257 record shareholders.

We have not paid dividends on the Shares and the Board intends to continue a policy of retaining earnings to finance its growth and for general corporate purposes. Future loan agreements also could limit our ability to pay cash dividends. We therefore do not anticipate paying any dividends in the foreseeable future.

Item 10. Recent Sales of Unregistered Securities

Issuance of Unregistered Securities. The following tables summarize all securities that the Company issued or sold during the fiscal year ended December 31, 2001, that were not sold in registered offerings:

                                                                    Deemed Per
 Date    Title           Amount    Purchaser            Exemption   Share Price  Consideration
 ----    -----           ------    ---------            ---------   -----------  -------------

4/4/01   Common Stock  (20,000)   Weisman/Balk         Sec. 4(2)    $0.73       Returned shares
6/30/01  Common Stock  279,455    Becker Cap Mgmt      Sec. 4(2)     0.90       Convertible debt
7/1/01   Common Stock  327,913    Michael Glaser IRA   Sec. 4(2)     0.90       Convertible debt
7/2/01   Common Stock   27,778    Becker Capital Mgmt  Sec. 4(2)     0.90       Convertible debt
7/20/01  Common Stock  723,004(1) Michael J. Tracy     Sec. 4(2)     0.85       Compensation
7/31/01  Common Stock   88,889    Capital Mgmt         Sec. 4(2)     0.72       Convertible debt
8/1/01   Common Stock   69,375    Michael Glaser       Sec. 4(2)     0.72       Convertible debt
8/21/01  Common Stock   45,000    Berthel Fisher       Sec. 4(2)     0.70       Consulting services
8/21/01  Common Stock  105,000    Baxter Capital Adv.  Sec. 4(2)     0.70       Consulting services
9/12/01  Common Stock  375,000    Scott Parliament     Sec. 4(2)     0.65       Consulting services
10/30/01 Common Stock   35,714    Becker Capital Mgmt  Sec. 4(2)     0.27       Convertible debt
10/30/01 Common Stock   52,910    Becker Capital Mgmt. Sec. 4(2)     0.27       Convertible debt

¹The Company issued Michael Tracy 723,004 shares of Company common stock in lieu of cash payments of outstanding amounts of salary due from the time period of April 9, 1999 through the date of issue.

Item 11. Description of Registrant's Securities to be Registered.

Capital Stock. The Company is authorized to issue a total of thirty million (30,000,000) shares of capital stock which shall be subdivided into classes of common and preferred. Twenty-five million (25,000,000) shares of the Company’s capital stock is denominated as Common Stock, having a par value of $0.001 per share. The holders of common stock share ratably, with all other classes of common equity, in any dividends that may, from time to time, be declared by the Board of Directors. No dividends may be paid with respect to Company’s Common Stock, however, until dividend distributions to the holders of Preferred Stock, if any, have been paid in accordance with the certificate or certificates of designation relating to such Preferred Stock. The holders of Common Stock shall share ratably, with all other classes of common equity, in any assets of the Company that are available for distribution too the holders of common equity securities of the Company upon dissolution or liquidation of the Corporation. The holders of Common Stock shall be entitled to cast one vote per share on all matters that are submitted for a vote of the stockholders. During 2001, there was not a shareholder meeting and shareholders did not vote upon any matters.

Five million (5,000,000) shares of the Company’s authorized capital stock shall be denominated as Preferred Stock, par value of $0.001 per share. Shares of Preferred Stock may be issued from time to time in one or more series as the Board of Directors, by resolution or resolutions, may from time to time determine, each of said series to be distinctively designated. The voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, if any, of each such series of Preferred Stock may differ from those of any and all other series of Preferred Stock at any time outstanding, and the Board of Directors is expressly granted authority to fix or alter, by resolution or resolutions, the designation, number, voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions thereof, of each such series of Preferred stock.

Debt Securities. The Company issued a $1.2 million debt security on September 8, 2000 that matured December 31, 2001. Interest accrued at 6.25% per annum. The principal and interest have not been paid to the date of this filing.

Warrants and rights. In March of 2000, a private placement of 1,311,250 shares of stock carried with them warrants for 664,376 shares. To date, no warrants have been exercised. The warrants expire December 31, 2003.

PART 4

Item 12. Indemnification of Directors and Officers.

In addition to any rights of indemnification that may be granted to directors and officers under the general corporation law of the State of Delaware, as amended, Company’s Bylaws (#147 & #148) grant Company broad powers to indemnify directors and officers against liabilities that they may incur in such capacities.

Section 5.1 of Company’s Bylaws require the indemnification of an officer or director made or threatened to be made a party to a proceeding because such person is or was an officer or director of Company against certain liabilities and expenses if: (a) the officer or director acted in good faith; (ii) the officer or director reasonably believed the actions were in or not opposed to Company’s best interest; and (iii) in the case of a criminal proceeding, the officer or director had no reasonable cause to believe that the conduct was unlawful. In the case of any proceeding by or in the right of Company, an officer or director is entitled to indemnification to the fullest extent permitted by law if the officer or director acted in good faith and in a manner the officer or director reasonably believed was in or not opposed to Company’s best interest.

An officer or director is not entitled to indemnification if the officer or director has been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the Company, unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which an action or suit was brought against the officer or director determines upon application that, despite the adjudication of liability, the officer or director is fairly and reasonably entitled to indemnification for expenses in view of all the circumstances.

Item 13. Financial Statements and Supplementary Data

See audited financials below.

Item 14. Changes in & Disagreements with Accountants on Accounting & Financial Disclosure

None

Item 15. Financial Statements and Exhibits

15(a)(1) List of Exhibits

(1)

Underwriting Agreement. No Exhibit Required.

(2)

Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession. No Exhibit Required.

(3)

Corporate Organization. No Exhibit Required.

(4)

Instruments defining the rights of security holders. No Exhibit Required.

(5)

Letter regarding Legality. No Exhibit Required.

(6)

No Exhibit Required.

(7)

No Exhibit Required.

(8)

Opinion regarding Tax Matters. No Exhibit Required.

(9)

Voting Trust Agreement. None.

(10)

Material Contracts.

(10.1)

Software OEM Agreement with Ericsson Messaging Systems Inc. +

(10.2)

Resellers Agreement with Ericsson Messaging Systems Inc. +

(10.3)

TRACCS Software Purchase Agreement ++

(10.4)

Employment Agreement for James Doyle ++

(10.5)

Employment Agreement for Michael Tracy ++

(10.6)

Employment Agreement for Joseph Schon ++

(11)

Statement regarding Computation of Per Share Earnings.None.

(12)

No Exhibit Required.

(13)

Annual Report to Security Holders. None.

(14)

No Exhibit Required.

(15)

Letter regarding Unaudited Interim Financial Information. Not Applicable.

(16)

Letter regarding Change in Certifying Accountant. No Exhibit Required.

(17)

Letter regarding Director Resignation. None.

(18)

Letter regarding Change in Accounting Principles. None.

(19)

Report furnished to Security Holders. No Exhibit Required.

(20)

Other Documents or Statements to Security Holders. No Exhibit Required.

(21)

No Exhibit Required.

(22)

Published Report regarding Matters Submitted to Vote of Security Holders. None.

(23)

Consents. No Exhibit Required.

(24)

Power of Attorney.

(24.1)

Power of Attorney for Officers and Directors of Company (Signature Page) +++

(25)

Statement of Eligibility of Trustee. No Exhibit Required.

(26)

Invitation for Competitive Bids. No Exhibit Required.

(27)

Financial Data Schedule. No Exhibit Required.

(28)

Information from Reports Furnished to State Insurance Regulatory Authorities. None.

(99)

Other Exhibits. None.

_________________________

+ Previously filed and incorporated by reference to Company’s Current Report on SEC Form 10-Q as filed August 14, 2000.

++ Previously filed and incorporated by reference to Company’s Current Report on SEC Form 10-Q as filed November 14, 2000.

+++ Filed with Annual Report on SEC Form 10-K for the year ended December 31, 1999.

++++ Filed with this Annual Report on SEC Form 10-K for the year ended December 31, 2001.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                      Page
                                                                           ----

Independent Auditors' Report.............................................. F - 1

Consolidated Financial Statements

     Consolidated Balance Sheet........................................... F - 2

     Consolidated Statements of Operations and Comprehensive Loss......... F - 3

     Consolidated Statement of Stockholders' Equity (Deficit)............. F - 4

     Consolidated Statements of Cash Flows................................ F - 5

Notes to Consolidated Financial Statements................................ F - 7

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders
Telemetrix, Inc. and Subsidiaries
Denver, Colorado

We have audited the accompanying consolidated balance sheet of Telemetrix, Inc. (the Company) as of December 31, 2001, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the years ended December 31, 2001 and 2000. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Telemetrix, Inc. as of December 31, 2001 and 2000, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Ehrhardt Keefe Steiner & Hottman PC

April 5, 2002
Denver, Colorado

F-1

TELEMETRIX, INC.
Consolidated Balance Sheet
December 31, 2001


                                     Assets
Current assets
   Cash .......................................................    $     13,000
   Accounts receivable ........................................          26,000
   Note receivable - related party, net
    of allowance for doubtful
    accounts $175,000 (2001) ..................................         188,000
   Due from related parties, net of
    allowance for doubtful accounts
    $221,000 (2001) ...........................................          38,000
                                                                   ------------
       Total current assets ...................................         265,000

Construction in progress ......................................       1,117,000
Property and equipment, net ...................................         458,000
Intangibles, net ..............................................       5,014,000
                                                                   ------------

Total assets ..................................................    $  6,854,000
                                                                   ============

                      Liabilities and Stockholders' Deficit
Current liabilities
   Accounts payable ...........................................    $  1,952,000
   Accrued expenses ...........................................       2,327,000
   Due to related companies ...................................         226,000
   Current portion - long-term debt
    - related parties .........................................       2,966,000
   Current portion - long-term debt ...........................       1,200,000
                                                                   ------------
       Total current liabilities ..............................       8,671,000

   Long term debt .............................................         829,000
                                                                   ------------
       Total liabilities ......................................       9,500,000
                                                                   ------------

Commitments and contingencies

Stockholders' deficit
   Preferred stock $.001 par value, 5,000,000
     shares authorized, none issued
     or outstanding ...........................................            --
   Common stock, $.001 par value, 25,000,000
     shares authorized, 18,476,186
     issued and outstanding ...................................          19,000
   Additional paid in capital .................................      46,808,000
   Accumulated foreign currency
     translation adjustment ...................................         192,000
   Accumulated deficit ........................................     (49,494,000)
   Prepaid consulting services ................................        (171,000)
                                                                   ------------
       Total stockholders' deficit ............................      (2,646,000)
                                                                   ------------

Total liabilities and stockholders' deficit ...................    $  6,854,000
                                                                   ============