6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

For the month of November 2010

Commission File Number: 001-13138

Pointer Telocation Ltd.

(Translation of registrant's name into English)

14 Hamelacha Street, Rosh Ha'ayin, Israel 48091

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F xForm 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes oNo x

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

Pointer Telocation Ltd.

On November 24, 2010, the Registrant announced its financial results for nine and three month period ending September 30, 2010 and issued its unaudited interim consolidated financial statements as of September 30, 2010 and for the nine and three months periods then ended. Attached hereto are the following exhibits:

Exhibit 99.1	Registrant's press release dated November 24, 2010
Exhibit 99.2	Registrant’s unaudited condensed interim consolidated financial statements as of September 30, 2010 and for the nine and three months periods then ended.
Exhibit 99.3	Management’s Discussion and Analysis of Financial Condition and   Results of Operations

This Form 6-K, including all exhibits hereto, is hereby incorporated by reference into all effective registration statements filed by us under the Securities Act of 1933.

Signatures

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

	POINTER TELOCATION LTD.
Date: November 24, 2010	By:	/s/ Yossi Ben Shalom
		Yossi Ben Shalom
		Chairman of the Board of Directors

EX-99.1

Exhibit 99.1

For Immediate Release

Pointer Telocation Reports Q3 2010 Financial Results

·   Record revenue: increased 10.5% year-over-year to $53.6M

·   $0.8 million in net income, up from $ 1.7 million net loss in the first nine months of 2009

Rosh HaAyin, Israel November 24th, 2010 Pointer Telocation Ltd. (Nasdaq CM: PNTR, TASE: PNTR) - a leading developer, manufacturer and operator of  Mobile Resource Management (MRM) and roadside assistance services for the automotive industry, announced today its financial results for the first nine months and third quarter of 2010, ended September 30, 2010.

Financial Highlights

Revenues: Pointer's revenues for the first nine months of 2010 increased 10.5% to $53.6 million, as compared to $48.5 million in the first nine months of 2009. In the third quarter of 2010, revenues increased 9.7% to $18.5 million as compared to $16.9 million for the comparable period in 2009.

International activities for the third quarter and first nine months of 2010 were 28% and 26% of total revenues compared to 21% and 23% in the comparable periods of 2009, respectively.

Revenues from products in the first nine months of 2010 increased 15.6% to $17.5 million, (32.6% of revenues), as compared to $15.1 million (31.2% of revenues) in the first nine months of 2009.

Pointer’s revenues from services in the first nine months of 2010 increased 8.3% to $36 million (67.4% of revenues), up from $33.4 million (68.8% of revenues), in the comparable period of 2009.

Gross Profit: In the first nine months of 2010, gross profit was $20.1 million, which is approximately the same level as in the first nine months of 2009. For the third quarter of 2010, gross profit decreased 3.6% to $6.8 million from $7 million in the third quarter of 2009. Gross profit decreased mainly as a result of price erosion in the  Israeli market.

Operating Income: Pointer reported an increase of 93.3% in operating income to $5.3 million for the first nine months of 2010 compared to $2.8 million for the same period in 2009.

It is important to note that in the second quarter of 2009, Pointer recorded a non-cash impairment of $3.0 million. Excluding this non-cash impairment, operating income in the first nine months of 2009, was $5.8 million.

For the third quarter of 2010 operating income was $1.7 million, compared to $2.5 million in the third quarter of 2009.

Net Income (loss):Pointer recorded net income attributable to Pointer’s shareholders for the first nine months of 2010 of $0.8 million or $0.15 diluted net earnings per share, compared to a net loss of $1.7 million or $0.38 diluted net loss per share in the same period of 2009.

For the third quarter of 2010 Pointer recorded net income of $0.4 million, or $0.09 per share, as compared to net income of $1.1 million or $0.23 per share for the third quarter of 2009.

Net income attributable to a non-controlling interest in affiliates in the first nine months of 2010 was $0.8 million compared to $2.4 million for the comparable period in 2009.

Net income attributable to a non-controlling interest in affiliatesin the third quarter of 2010 was $0.1 million, as compared to net income of $0.7 million in the third quarter of 2009.

Before the effect of the exclusion of earnings relating to non-controlling interests in accordance with SFAS 160, net income, in the third quarter and first nine months of 2010 was $0.5 million and $1.6 million, respectively, compared to $1.8 million and  $0.7 million for the same periods in 2009.

2

EBITDA: Pointer’s EBITDA for the third quarter and for the first nine months of 2010 decreased to $2.8 million and $8.6 million, respectively, as compared to $3.6 million and $9.3 million in the comparable periods in 2009.

Danny Stern, Pointer's Chief Executive Officer, commented on the results, "The results for the third quarter of 2010 reflect the continued positive trends that we are seeing in most of the markets we operate in and demonstrate solid revenue growth over last year. This has clearly been driven by our large customer base and the services we provide. We have also been very happy to see our overseas activities and revenues growing. We are continuing with our efforts to expand our customer base while improving our product mix. To that end, we have broadened our activities, including the leading of driver safety programs in both Israel and in Brazil. Additionally, Shagrir is expected to commence providing towing services to the Israeli police for vehicles that were involved in accidents or were stolen. Furthermore, beginning December 2010, Shagrir will begin providing installation services to one of the major car importers to Israel. CAR2GO continues to expand and now provides services to additional Israeli cities."

3

Conference Call Information:

Pointer Telocation's management will host today, Wednesday, November 24th, 2010 a conference call with the investment community to review and discuss the financial results, and will also be available to answer questions.

The conference call will commence at 10:30 AM EST, 5:30 PM Israel time.

To participate in the call, please dial in to one of the teleconferencing numbers below. Please begin placing your call at least 5 minutes before the time set for the commencement of the conference call.

From USA: 1-888-407-2553; From Israel: 03-918-0610

A replay will be available from November 25th, 2010 on the Company’s website: www.pointer.com .

Reconciliation between results on a GAAP and Non-GAAP basis.

Reconciliation between results on a GAAP and Non-GAAP basis is provided in a table immediately following the Condensed Interim Consolidated Statements of Cash Flows. Pointer uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income financial expenses, taxes, depreciation and amortization including in respect of our non-cash impairment charge related to the fair market value of the business with certain customers from our acquisition of Cellocator. The purpose of such adjustments is to give an indication of our performance exclusive of non-GAAP charges that are considered by management to be outside of our core operating results.

EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company’s business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. We believe that these non-GAAP measures help investors to understand our current and future operating cash flow and performance, especially as our three most recent acquisitions have resulted in amortization and non-cash items that have had a material impact on our GAAP profits. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures may differ mate rially from the non-GAAP financial measures used by other companies.

4

About Pointer Telocation:

Pointer Telocation is a leading provider of technology and services to the automotive and insurance industries, offering a set of services including Road Side Assistance, Stolen Vehicle Recovery and Fleet Management. Pointer has a growing client list with products installed in over 30countires. Cellocator, a Pointer Products Division, is a leading MRM (Mobile Resource Management) technology developer and manufacturer.

For more information: www.pointer.com

Forward Looking Statements

This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words “believe,” “expect,” "anticipate," “intend,” "seems," “plan,” "aim," “should” and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such for ward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss or gain of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.

Contact:

                                                       & #160;       

Zvi Fried, V.P. and Chief Financial Officer  Tel.; 972-3-572 3111   E-mail: zvif@pointer.com         Chen Livne, Gelbart-Kahana Investor Relations Tel: 972-3-607 4717, +972-54-302 2983 E-mail: chen@gk-biz.com

5

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	September 30,		December 31,
	2010		2009
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,687	$	3,209
Trade receivables		15,070		11,619
Other accounts receivable and prepaid expenses		3,644		3,033
Inventories		4,002		2,219
Total current assets		24,403		20,080
LONG-TERM ASSETS:
Long-term accounts receivable		1,109		673
Severance pay fund		7,027		6,070
Property and equipment, net		10,587		9,401
Deferred income taxes		-		507
Other intangible assets, net		7,074		9,022
Goodwill		52,496		51,220
Total long-term assets		78,293		76,893
Total assets	$	102,696	$	96,973

6

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	September 30,		December 31,
	2010		2009
	Unaudited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturities of long-term loans	$	11,418	$	9,146
Trade payables		11,114		8,639
Deferred revenues and customer advances		8,545		8,253
Other accounts payable and accrued expenses		6,769		6,248
Total current liabilities		37,846		32,286
LONG-TERM LIABILITIES:
Long-term loans from banks, shareholders and others		13,018		15,456
Other long-term liabilities		647		621
Accrued severance pay		7,925		7,131
		21,590		23,208
SHAREHOLDERS' EQUITY:
Pointer Telocation Ltd. shareholders' equity		35,694		33,809
Non-controlling interest		7,566		7,670
Total shareholders' equity		43,260		41,479
Total liabilities and shareholders' equity	$	102,696	$	96,973

7

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)

	Nine months ended September 30,					Three months ended September 30,				Year ended December 31,
	2010		2009			2010		2009		2009
	Unaudited
Revenues:
Products	$	17,464	$	15,101		$	6,423	$	5,395	$	20,038
Services		36,114		33,354			12,104		11,500		45,287
Total revenues		53,578		48,455			18,527		16,895		65,325
Cost of revenues:
Products		9,578		7,974			3,358		2,555		10,774
Services		23,125		19,190			8,166		7,086		26,645
Amortization of intangible assets		738		738			246		246		976
Total cost of revenues		33,441		27,902			11,770		9,887		38,395
Gross profit		20,137		20,553			6,757		7,008		26,930
Operating expenses:
Research and development, net		1,779		2,113			613		653		2,817
Selling and marketing		5,420		4,461			1,795		1,482		6,249
General and administrative		6,295		6,777			2,231		1,903		8,788
Amortization of intangible assets		1,319		1,489			430		442		1,942
Impairment of intangible assets		-		2,959			-		-		2,959
Total operating expenses		14,813		17,799			5,069		4,480		22,755
Operating income		5,324		2,754			1,688		2,528		4,175
Financial expenses, net		1,516		1,574			522		477		2,070
Other expenses, net		23		15			-		3		16
Income before taxes on income		3,785		1,165			1,166		2,048		2,089
Taxes on income		1,323		79			331		38		887
Income after Income taxes		2,462		1,086			835		2,010		1,202
Equity in losses of affiliate		836		382			295		191		677
Net income		1,626		704			540		1,819	$	525
Less: net income attributable to the noncontrolling interest		836		2,429			102		692		2,632
Net income (loss) attributable to Pointer's shareholders	$	790	$	(1,725	)	$	438	$	1,127	$	(2,107	)
Basic net earnings (loss) per share	$	0.17	$	(0.36	)	$	0.09	$	0.24	$	(0.44	)
Diluted net earnings (loss) per share	$	0.15	$	(0.38	)	$	0.09	$	0.23	$	(0.47	)

8

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Nine months ended September 30,						Three months ended September 30,						Year ended December 31,
	2010			2009			2010			2009			2009
	Unaudited
Cash flows from operating activities:
Net income	$	1,626		$	704		$	540		$	1,819		$	525
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation ,amortization and impairment		4,160			6,934			1,419			1,281			8,252
Accrued interest and exchange rate changes of convertible debenture and long-term loans		95			(113	)		34			16			(85	)
Accrued severance pay, net		(187	)		(415	)		(132	)		(160	)		(400	)
Gain from sale of property and equipment, net		(68	)		(205	)		(30	)		(67	)		(377	)
Equity in losses of affiliate		836			382			295			191			677
Amortization of deferred stock-based compensation		94			318			22			48			367
Decrease (increase) in trade receivables, net		(3,090	)		(568	)		(708	)		91			1,995
Decrease (increase) in other accounts receivable and prepaid expenses		(990	)		(384	)		322			(229	)		(308	)
Decrease (increase) in inventories		(2,107	)		156			(587	)		(150	)		128
Increase in long-term accounts receivable and deferred expenses		-			39			-			-			124
Write-off of inventories		1,241			-			334			-			773
Increase in deferred income taxes		(479	)		(226	)		(68	)		(63	)		(493	)
Increase (decrease) in trade payables		2,040			(339	)		1,190			347			(413	)
Increase (decrease) in other accounts payable and accrued expenses		374			1,072			(514	)		(820	)		461
Net cash provided by operating activities		3,545			7,355			2,117			2,304			11,226
Cash flows from investing activities:
Purchase of property and equipment		(2,931	)		(2,525	)		(993	)		(1,188	)		(3,442	)
Proceeds from sale of property and equipment		440			861			84			302			1,215
Investments in affiliate		(900	)		(300	)		(420	)		(100	)		(640	)
Acquisition of subsidiary (a)		-			(38	)		-			-			(38	)
Decrease in other account receivables		-			-			-			-			279
Net cash used in investing activities		(3,391	)		(2,002	)		(1,329	)		(986	)		(2,626	)
Cash flows from financing activities:
Receipt of long-term loans from banks		3,180			-			1,851			-			-
Repayment of long-term loans from banks		(4,202	)		(4,423	)		(919	)		(1,553	)		(6,027	)
Repayment of long-term loans from shareholders and others		(1,134	)		(23	)		(1,115	)		(8	)		(32	)
Receipt of long-term loans from shareholders and others		43			-			-			-			-
Proceeds from issuance of shares and exercise of warrants, net		57			-			-			-			-
Dividend paid to the noncontrolling interest		(1,170	)		(871	)		-			(285	)		(871	)
Short-term bank credit, net		1,257			414			(2,257	)		848			(983	)
Net cash used in financing activities		(1,969	)		(4,903	)		(2,440	)		(998	)		(7,913	)
Effect of exchange rate on cash and cash equivalents		293			(145	)		141			(135	)		(186	)
Increase (decrease) in cash and cash equivalents		(1,522	)		305			(1,511	)		185			501
Cash and cash equivalents at the beginning of the period		3,209			2,708			3,198			2,828			2,708
Cash and cash equivalents at the end of the period	$	1,687		$	3,013		$	1,687		$	3,013		$	3,209

9

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

		Nine months ended September 30,					Three months ended September 30,					Year ended December 31,
		2010		2009			2010		2009			2009
		Unaudited
(a)	Acquisition of subsidiary
	Fair value of assets acquired and liabilities assumed      at date of acquisition:
	Working capital		-		(40	)		-		(40	)	$	(112	)
	Property and equipment		-		60			-		60			60
	Customer list		-		24			-		24			24
	Goodwill		-		384			-		384			456
	Accrued severance pay, net		-		(12	)		-		(12	)		(12	)
	Shareholders loan		-		(122	)		-		(122	)		(122	)
	Minority interest		-		(256	)		-		(256	)		(256	)
			-	$	38			-	$	38		$	38

10

Reconciliation of GAAP net income to EBITDA

Reconciliation of GAAP to NON-GAAP Operating Results

To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income financial expenses, taxes, depreciation, amortization and impairment. EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP.  Reconciliation the GAAP to non-GAAP operating results:

CONDENSED EBITDA

US dollars in thousands

	Nine months ended September 30				Three months ended September 30				Year ended December 31
	2010		2009		2010		2009		2009
	Unaudited
Net income as reported:	$	1,626	$	704	$	540	$	1,819	$	525
Financial expenses, net		1,516		1,574		522		477		2,070
Tax on income		1,323		79		331		38		887
Depreciation, amortization and impairment		4,159		6,933		1,419		1,279		8,254
Non-GAAP EBITDA	$	8,624	$	9,290	$	2,812	$	3,613	$	11,736

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EX-99.2

Exhibit 99.2

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2010

IN U.S. DOLLARS

UNAUDITED

INDEX

	Page
Interim Consolidated Balance Sheets	F-2 - F-3
Interim Consolidated Statements of Operations	F-4
Interim Statements of Changes in Shareholders' Equity	F-5 - F-6
Interim Consolidated Statements of Cash Flows	F-7 - F-8
Notes to Interim Consolidated Financial Statements	F-9 - F-18

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

	September 30,		December 31,
	2010		2009
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,687	$	3,209
Trade receivables (net of allowance for doubtful accounts of $1,457 and $1,345 at September 30, 2010 and December 31, 2009, respectively)		15,070		11,619
Other accounts receivable and prepaid expenses		3,644		3,033
Inventories (Note 3)		4,002		2,219
Total current assets		24,403		20,080
LONG-TERM ASSETS:
Long-term accounts receivable		1,109		673
Severance pay fund		7,027		6,070
Property and equipment, net		10,587		9,401
Deferred income taxes		-		507
Other intangible assets, net		7,074		9,022
Goodwill		52,496		51,220
Total long-term assets		78,293		76,893
Total assets	$	102,696	$	96,973

The accompanying notes are an integral part of the interim consolidated financial statements.

F - 2

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

	September 30,			December 31,
	2010			2009
	Unaudited
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit and current maturities of long-term loans	$	11,418		$	9,146
Trade payables		11,114			8,639
Deferred revenues and customer advances		8,545			8,253
Other accounts payable and accrued expenses		6,769			6,248
Total current liabilities		37,846			32,286
LONG-TERM LIABILITIES:
Long-term loans from banks		12,063			14,493
Long-term loans from shareholders and others		955			963
Other long-term liabilities		647			621
Accrued severance pay		7,925			7,131
		21,590			23,208
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4)
SHAREHOLDERS' EQUITY:
Pointer Telocation Ltd. shareholders' equity:
Share capital -
Ordinary shares of NIS 3 par value -
Authorized: 8,000,000 shares at September 30, 2010 and December 31, 2009; Issued and outstanding: 4,771,181 and 4,752,931 shares at September 30, 2010 and December 31, 2009, respectively		3,280			3,266
Additional paid-in capital		118,486			118,348
Accumulated other comprehensive income		2,484			1,541
Accumulated deficit		(88,556	)		(89,346	)
Total Pointer Telocation Ltd. shareholders' equity		35,694			33,809
Non-controlling interest		7,566			7,670
Total equity		43,260			41,479
Total liabilities and equity	$	102,696		$	96,973

The accompanying notes are an integral part of the interim consolidated financial statements.

F - 3

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except per share data)

	Nine months ended September 30,					Three months ended September 30,				Year ended December 31,
	2010		2009			2010		2009		2009
	Unaudited
Revenues:
Products	$	17,464	$	15,101		$	6,423	$	5,395	$	20,038
Services		36,114		33,354			12,104		11,500		45,287
Total revenues		53,578		48,455			18,527		16,895		65,325
Cost of revenues:
Products		9,578		7,974			3,358		2,555		10,774
Services		23,125		19,190			8,166		7,086		26,645
Amortization of intangible assets		738		738			246		246		976
Total cost of revenues		33,441		27,902			11,770		9,887		38,395
Gross profit		20,137		20,553			6,757		7,008		26,930
Operating expenses:
Research and development		1,779		2,113			613		653		2,817
Selling and marketing		5,420		4,461			1,795		1,482		6,249
General and administrative		6,295		6,777			2,231		1,903		8,788
Amortization of intangible assets		1,319		1,489			430		442		1,942
Impairment of intangible asset		-		2,959			-		-		2,959
Total operating expenses		14,813		17,799			5,069		4,480		22,755
Operating income		5,324		2,754			1,688		2,528		4,175
Financial expenses, net		1,516		1,574			522		477		2,070
Other expenses, net		23		15			-		3		16
Income before taxes on income		3,785		1,165			1,166		2,048		2,089
Taxes on income (Note 6)		1,323		79			331		38		887
Income after taxes on income		2,462		1,086			835		2,010		1,202
Equity in losses of affiliate		836		382			295		191		677
Net income		1,626		704			540		1,819		525
Less - net income attributable to non-controlling interest		836		2,429			102		692		2,632
Net income (loss) attributable to Pointer Telocation Ltd. shareholders	$	790	$	(1,725	)	$	438	$	1,127	$	(2,107	)
Earnings per share attributable to Pointer Telocation Ltd's shareholders:
Basic net earnings (loss) per share (Note 5)	$	0.17	$	(0.36	)	$	0.09	$	0.24	$	(0.44	)
Diluted net earnings (loss) per share (Note 5)	$	0.15	$	(0.38	)	$	0.09	$	0.23	$	(0.47	)

The accompanying notes are an integral part of the interim consolidated financial statements.

F - 4

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

U.S. dollars in thousands (except share data)

			Pointer Telocation Ltd. shareholders
	Number of		Share		Additional paid-in		Receipts on account		Accumulated other comprehensive			Accumulated			Non-controlling			Comprehensive			Total
	shares		capital		capital		of shares		income (loss)			deficit			interest			income			equity
Balance as of January 1, 2009		4,752,931	$	3,266	$	118,015	$	-	$	1,773		$	(87,239	)	$	5,372					$	41,187
Stock-based compensation expenses		-		-		333		-		-			-			32						365
Dividend paid to the non-controlling interest		-		-		-		-		-			-			(871	)					(871	)
Non-controlling interest recorded as a result of business combination		-		-		-		-		-			-			256						256
Comprehensive income:
Foreign currency translation adjustments		-		-		-		-		(167	)		-			249		$	82			82
Realized losses on derivativesdesignated as cash flow hedges		-		-		-		-		(78	)		-			-			(78	)		(78	)
Unrealized gains on derivativesdesignated as cash flow hedges		-		-		-		-		13			-			-			13			13
Net income		-		-		-		-		-			(2,107	)		2,632			525			525
Total comprehensive income																		$	542
Balance as of December 31, 2009		4,752,931		3,266		118,348		-		1,541			(89,346	)		7,670						41,479
Stock-based compensation expenses		-		-		94		-		-			-			-						94
Issuance of share capital to employees resulting from exercise of options		18,250		14		44		-		-			-			-						58
Dividend paid to the non-controlling interest		-		-		-		-		-			-			(1,170	)					(1,170	)
Comprehensive income:													-
Foreign currency translation adjustments		-		-		-		-		838			-			230		$	1,068			1,068
Realized losses on derivativesdesignated as cash flow hedges		-		-		-		-		(12	)		-			-			(12	)		(12	)
Unrealized gains on derivativesdesignated as cash flow hedges		-		-		-		-		117			-			-			117			117
Net income		-		-		-		-		-			790			836			1,626			1,626
Total comprehensive income																		$	2,799
Balance as of September 30, 2010 (unaudited)		4,771,181	$	3,280	$	118,486	$	-	$	2,484		$	(88,556	)	$	7,566					$	43,260
Accumulated other comprehensive income for nine month that ended on September 30, 2010:
Accumulated gain on derivative instruments	$	118
Accumulated foreign currency translation differences, net		2,366
Accumulated other comprehensive income	$	2,484

The accompanying notes are an integral part of the interim consolidated financial statements.

F - 5

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

U.S. dollars in thousands (except share data)

			Pointer Telocation Ltd. shareholders
	Number of		Share		Additional paid-in		Receipts on account		Accumulated other comprehensive			Accumulated			Non-controlling			Comprehensive			Total
	shares		capital		capital		of shares		income (loss)			deficit			interest			income			equity
Balance as of January 1, 2009		4,752,931	$	3,266	$	118,015	$	-	$	1,773		$	(87,239	)	$	5,372					$	41,187
Stock-based compensation expenses		-		-		284		-		-			-			34						318
Dividend paid to the non-controlling interest		-		-		-		-		-			-			(871	)					(871	)
Non-controlling interest recorded as a result of business combination (see Note 1b)		-		-		-		-		-			-			256						256
Comprehensive income:
Foreign currency translation adjustments		-		-		-		-		13			-			201		$	210			214
Realized losses on derivativesdesignated as cash flow hedges		-		-		-		-		(61	)		-			-			(61	)		(61	)
Unrealized gains on derivativesdesignated as cash flow hedges		-		-		-		-		41			-			-			41			41
Net income		-		-		-		-		-			(1,725	)		2,429			704			704
Total comprehensive income																		$	894
Balance as of September 30, 2009 (unaudited)		4,752,931	$	3,266	$	118,299	$	-	$	1,766		$	(88,964	)	$	7,421					$	41,788
Accumulated other comprehensive income for nine month that ended on September 30, 2009:
Accumulated gain (losses) on derivative instruments	$	56
Accumulated foreign currency translation differences, net		1,710
Accumulated other comprehensive income	$	1,766

The accompanying notes are an integral part of the interim consolidated financial statements.

F - 6

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Nine months ended September 30,						Three months ended September 30,						Year ended December 31,
	2010			2009			2010			2009			2009
	Unaudited
Cash flows from operating activities:
Consolidated net income	$	1,626		$	704		$	540		$	1,819		$	525
Adjustments required to reconcile consolidated net income to net cash provided by operating activities:
Depreciation, amortization and impairment		4,160			6,934			1,419			1,281			8,252
Accrued interest and exchange rate changes of debenture and long-term loans		95			(113	)		34			16			(85	)
Accrued severance pay, net		(187	)		(415	)		(132	)		(160	)		(400	)
Gain from sale of property and equipment, net		(68	)		(205	)		(30	)		(67	)		(377	)
Equity in losses of affiliate		836			382			295			191			677
Stock-based compensation expenses		94			318			22			48			367
Decrease (increase) in trade receivables, net		(3,090	)		(568	)		(708	)		91			1,995
Decrease (increase) in other accounts receivable and prepaid expenses		(990	)		(384	)		322			(229	)		(308	)
Decrease (increase) in inventories		(2,107	)		156			(587	)		(150	)		128
Write-off of inventories		-			39			-			-			124
Deferred income taxes		1,241			-			334			-			773
Increase in long-term accounts receivable		(479	)		(226	)		(68	)		(63	)		(493	)
Increase (decrease) in trade payables		2,040			(339	)		1,190			347			(413	)
Increase (decrease) in other accounts payable and accrued expenses		374			1,072			(514	)		(820	)		461
Net cash provided by operating activities		3,545			7,355			2,117			2,304			11,226
Cash flows from investing activities:
Decrease in other accounts receivable		-			-			-			-			279
Purchase of property and equipment		(2,931	)		(2,525	)		(993	)		(1,188	)		(3,442	)
Proceeds from sale of property and equipment		440			861			84			302			1,215
Investments in affiliate		(900	)		(300	)		(420	)		(100	)		(640	)
Acquisition of subsidiary (a)		-			(38	)		-			-			(38	)
Net cash used in investing activities		(3,391	)		(2,002	)		(1,329	)		(986	)		(2,626	)
Cash flows from financing activities:
Receipt of long-term loans from banks		3,180			-			1,851			-			-
Repayment of long-term loans from banks		(4,202	)		(4,423	)		(919	)		(1,553	)		(6,027	)
Repayment of long-term loans from shareholders and others		(1,134	)		(23	)		(1,115	)		(8	)		(32	)
Receipt of long-term loans from shareholders and others		43			-			-			-			-
Proceeds from issuance of shares and exercise of warrants, net		57			-			-			-			-
Dividend paid to the non-controlling interest		(1,170	)		(871	)		-			(285	)		(871	)
Short-term bank credit, net		1,257			414			(2,257	)		848			(983	)
Net cash used in financing activities		(1,969	)		(4,903	)		(2,440	)		(998	)		(7,913	)
Effect of exchange rate changes on cash and cash equivalents		293			(145	)		141			(135	)		(186	)
Increase (decrease) in cash and cash equivalents		(1,522	)		305			(1,511	)		185			501
Cash and cash equivalents at the beginning of the period		3,209			2,708			3,198			2,828			2,708
Cash and cash equivalents at the end of the period	$	1,687		$	3,013		$	1,687		$	3,013		$	3,209

The accompanying notes are an integral part of the interim consolidated financial statements.

F - 7

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

		Nine months ended September 30,					Three months ended September 30,				Year ended December 31,
		2010		2009			2010		2009		2009
		Unaudited
(a)	Acquisition of subsidiary:
	Fair value of assets acquired and liabilities assumed at date of acquisition:
	Working capital	$	-	$	(40	)	$	-	$	-	$	(112	)
	Property and equipment		-		60			-		-		60
	Customer list		-		24			-		-		24
	Goodwill		-		384			-		-		456
	Accrued severance pay, net		-		(12	)		-		-		(12	)
	Non-controlling shareholders loan		-		(122	)		-		-		(122	)
	Non-controlling interest		-		(256	)		-		-		(256	)
		$	-	$	38		$	-	$	-	$	38
(b)	Non-cash investing activity:
	Purchase of property and equipment	$	219	$	-		$	219	$	-	$	221
(c)	Supplemental disclosure of cash flow activity:
	Cash paid during the period for:
	Interest	$	925	$	1,544		$	289	$	517	$	1,958
	Income taxes	$	99	$	17		$	81	$	7	$	87

The accompanying notes are an integral part of the interim consolidated financial statements.

F - 8

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 1:- GENERAL

On June 28, 2010, the Company subsidiary Shagrir Systems Ltd ("Shagrir"), together with an Israel resident entered into an agreement for the establishment of an Israeli company named "Rider" for the providing of outsourcing services to insurance companies and others. The Company will hold 67% of the issued share capital of Rider, and the minority shareholder will hold 33% and serve as Rider's CEO. In the framework of the agreement for the establishment of that company, Rider will grant a loan to the minority shareholder in an amount of up to NIS 5,000, pursuant to the compliance with terms provided in the agreement. The loan will bear interest at the rate of 3% and will be linked to the Israeli CPI.

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

a. Unaudited interim financial information:   The accompanying consolidated balance sheet as of September 30, 2010, consolidated statements of operations for the three and nine months ended September 30, 2009 and 2010 and consolidated statements of cash flows for the three and nine months ended September 30, 2009 and 2010 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair presentation of the Company's consolidated financial position as of September 30, 2010, the Company's consolidated results of operations for the three and nine months ended September 30, 2009 and 2010 and the Compan y's consolidated cash flows for the three and nine months ended September 30, 2009 and 2010.

The balance sheet at December 31, 2009 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2009 included in the Company's Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission ("SEC") on March 25, 2010.

Results for the three and nine months ended September 30, 2010 are not necessarily indicative of results that may be expected for the year ending December 31, 2010.

F - 9

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

b. Use of estimates:

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The company's management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

c. Principles of consolidation:

Our consolidated financial statements include the accounts of the company and it’s wholly and majority owned subsidiaries, referred to herein as the group.

Intercompany transactions and balances including profits from intercompany sales not yet realized outside the Company, have been eliminated upon consolidation.

d. Impact of recently issued accounting standards still not effective for the Company:

In July 2010, the FASB issued ASU 2010-20 "Disclosures About the Credit Quality of Financing Receivables and the Allowance for Credit Losses". ASC 310, "Receivables".

F - 10

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The ASU requires extensive new disclosures in the financial about financing receivables, Including credit risk exposures and the allowance for credit losses.

The disclosures required under the ASU as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010. Disclosures related to activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. The Company is currently evaluating the impact of ASU 2010-20 on the consolidated financial statements.

NOTE 3:- INVENTORIES

	September 30,		December 31,
	2010		2009
	Unaudited
Raw materials	$	2,214	$	985
Work in process		108		106
Finished goods		1,680		1,128
	$	4,002	$	2,219

NOTE 4:- COMMITMENTS AND CONTINGENT LIABILITIES

a. Charges:

As collateral for its liabilities, the Company has recorded floating charges on all of its assets, including the intellectual property and equipment, in favor of banks.

b. Collateral:

1. To secure Shagrir's obligations for providing services to several of its customers, Shagrir provided such customers with a bank guarantee in the amount of about $ 2,502, in effect until January 2014.

2. The Company obtained bank guarantees in the amount of $ 92 in favor of its lessor and customs.

3. As of September 30, 2010, the use of $ 89 has been restricted following B.C.R.A. (Central Bank of Argentina) regulations.

F - 11

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 4:- COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

c. Royalties:

The Company has undertaken to pay royalties to the BIRD Foundation ("BIRD"), at the rate of 5% on sales proceeds of products developed with the participation of BIRD up to the amount received, linked to the U.S. dollar. The contingent obligation as of September 30, 2010 is $ 2,319. No royalties were accrued or paid during 2010 and 2009.

d. Litigation:

As of September 30, 2010, several claims were filed against Shagrir, mainly by customers. The claims are in an amount aggregating to approximately $ 220. The substance of the claims is the malfunction of Shagrir's products, which occurred during the ordinary course of business. Shagrir's management, based on the opinion of its legal counsel, is of the opinion that no material costs will arise to Shagrir in respect to these claims.

e. Commitments:

1. The Company and DBSI Investment Ltd. ("DBSI"), an equity owner in the Company (see Note 7), have entered into a management services agreement pursuant to which DBSI shall provide management services in consideration of annual management fees of $ 180 for a period of three years commencing on April 6, 2003.

This agreement is automatically renewed for additional periods of twelve months each, unless either party gives the other party a notice of termination three months prior to the beginning of a renewal term.

2. During 1998, the Company entered into an agreement with Shagrir, for the supply of the services and equipment required to set up reception bases to be positioned throughout Israel. An addendum to the agreement was entered into in 2004 (the "First Addendum"). The agreement was for a period of 10 years with an option to extend it by an additional 10 years. During 2008, the Company and Shagrir entered into a second addendum to the agreement that extended the agreement by a period of 5 years, until 2013.

3. Shagrir entered into a management services agreement with its shareholders, pursuant to which the shareholders will grant management services to the Shagrir, in consideration of NIS 1,000 thousand per year. This amount is split between the Company (NIS 120 thousand) and the other shareholders of Shagrir.

F - 12

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 4:- COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

f. Covenants:   In respect of the bank loans provided to the Company for the purpose of funding the 2007 Acquisition Transaction, pursuant to which the Company acquired Cellocator, the Company is required to meet certain financial covenants as follows:

1. The ratio of the shareholders equity to the total consolidated assets will not be less than 20% and the shareholders equity will not be less than $ 20,000, starting December 31, 2007.

2. The ratio of the Company and its subsidiaries' debt (debt to banks, convertible debenture and loans from others that are not subordinated to the bank less cash) to the annual EBITDA will not exceed 5 in 2008, 4.5 in 2009 and 4 in 2010 and thereafter.

3. The ratio of Pointer Telocation Ltd.'s debt (debt to banks, convertible debenture and loans from others was not subordinated to the bank less cash) to the annual EBITDA will not exceed 4 in 2008, 3.5 in 2009 and 2.5 in 2010 and thereafter.

As of September 30, 2010, the Company is in compliance and expect to remain in compliance with the financial covenants in 2010.

Under the credit facility (in respect of the loans denominated in NIS) from the bank, Shagrir is required to meet financial covenants.

The financial covenants are:

1. The ratio of the debt to the bank to the annual EBITDA will not exceed 5.5.

2. The ratio of the annual EBITDA to the current maturities (the loan principal plus interest) of long-term loans from the bank will not be less than 1, at any time.

3. The shareholders' equity, including loans from shareholders, will not be less than NIS 50 million, at any time

4. Shagrir will not decide on any distribution of dividends in Shagrir without prior written consent from the bank. Shagrir received such consent from the bank prior to its dividend distribution in May and September 2009.

As of September 30, 2010, Shagrir is in compliance and expect to remain in compliance with the financial covenants of its credit facility in 2010.

F - 13

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 5:- NET EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net earnings (loss) per share:

	Nine months ended September 30,						Three months ended September 30,						Year ended December 31,
	2010			2009			2010			2009			2009
	Unaudited
Numerator:
Numerator for basic net earnings per share - Net income (loss)	$	790		$	(1,725	)	$	438		$	1,127		$	(2,107	)
Effect of diluting securities		(56	)		(86	)		(15	)		(28	)		(106	)
Numerator for diluted net earnings per share - Net income (loss)	$	734		$	(1,811	)	$	423		$	1,099		$	(2,213	)
Denominator:
Denominator for basic net earnings per share - weighted-average number of shares outstanding (in thousands)		4,766			4,753			4,771			4,753			4,753
Denominator for diluted net earnings per share - adjusted weighted average shares and assumed exercises (in thousands)		4,830			4,756			4,850			4,763			4,753
Basic net earnings (loss) per share	$	0.17		$	(0.36	)	$	0.09		$	0.24		$	(0.44	)
Diluted net earnings (loss) per share	$	0.15		$	(0.38	)	$	0.09		$	0.23		$	(0.47	)

F - 14

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 6:- INCOME TAXES

The effective tax rate for the nine-months ended September 30, 2010 was 44.9% as compared to 6.8% for the nine months ended September 30, 2009. The effective tax rate for the nine months ended September 30, 2010 was impacted mainly due to a valuation allowance against deferred tax assets. The effective tax rate for the nine months ended September 30, 2009 was impacted due to tax revenue from the decrease in the future tax rate in Israel, which was partially offset by establishing valuation allowances against net deferred tax assets

NOTE 7:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES

a. Balances with related parties:

	September 30,		December 31,
	2010		2009
	Unaudited
Other accounts payable and accrued expenses:
DBSI (see Note 4e(1))	$	52	$	52
	$	52	$	52

b. Transactions with related parties:

	Nine months ended September 30,				Three months ended September 30,				Year ended December 31,
	2010		2009		2010		2009		2009
	Unaudited
Management fees to DBSI (see Note 4e(1))	$	135	$	135	$	45	$	45	$	180
Interest on loans from shareholders (*)	$	155	$	-	$	155	$	-	$	-

(*) As of September 30, 2010, the debenture balance was $ 1,000. The debenture bears an annual interest of 4.4%, to be paid on March 2011 and September 2011. The debenture shall mature in September 2011.

F - 15

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 8:- SEGMENT INFORMATION

a. The following segment identification is identical to the segment that use in the latest annual consolidated financial report.

b. The following presents segment results of operations for the year ended December 31, 2009:

	Cellocator segment			Pointer segment		Total
Segments revenues	$	15,380		$	54,187	$	69,567
Intersegments revenues		(4,242	)		-		(4,242	)
Revenues from external customers	$	11,138		$	54,187	$	65,325
Segments operating profit (loss)	$	(3,144	)	$	7,043	$	3,899
Segments assets	$	24,799		$	73,922	$	98,721

The Pointer segment revenues include revenue from services in the amount of $ 45,118.

The following presents segment results of operations for the nine months ended September 30, 2009 (unaudited):

	Cellocator segment			Pointer segment		Total
Segments revenues	$	11,203		$	40,012	$	51,215
Intersegments revenues		(2,760	)		-		(2,760	)
Revenues from external customers	$	8,443		$	40,012	$	48,455
Segments operating profit (loss)	$	(3,066	)	$	5,823	$	2,757
Segments assets	$	27,744		$	73,268	$	101,012

The Pointer segment revenues include revenue from services in the amount of $ 33,213.

F - 16

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 8:- SEGMENT INFORMATION (Cont.)

The following presents segment results of operations for the nine months ended September 30, 2010 (unaudited):

	Cellocator segment			Pointer segment		Total
Segments revenues	$	16,236		$	43,428	$	59,664
Intersegments revenues		(6,086	)		-		(6,086	)
Revenues from external customers	$	10,150		$	43,428	$	53,578
Segments operating profit	$	1,623		$	3,701	$	5,324
Segments assets	$	25,655		$	77,041	$	102,696

The Pointer segment revenues include revenue from services in the amount of $ 36,066.

The following presents segment results of operations for the three months ended September 30, 2009 (unaudited):

	Cellocator segment			Pointer segment		Total
Segments revenues	$	3,496		$	14,209	$	17,705
Intersegments revenues		(810	)		-		(810	)
Revenues from external customers	$	2,686		$	14,209	$	16,895
Segments operating profit	$	529		$	1,999	$	2,528
Segments assets	$	27,744		$	73,268	$	101,012

The Pointer segment revenues include revenue from services in the amount of $ 11,954.

F - 17

POINTER TELOCATION LTD. AND ITS SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands (except share and per share data)

NOTE 8:- SEGMENT INFORMATION (Cont.)

The following presents segment results of operations for the three months ended September 30, 2010 (unaudited):

	Cellocator segment			Pointer segment		Total
Segments revenues	$	6,172		$	14,680	$	20,852
Intersegments revenues		(2,325	)		-		(2,325	)
Revenues from external customers	$	3,847		$	14,680	$	18,527
Segments operating profit	$	1,094		$	594	$	1,688
Segments assets	$	25,655		$	77,041	$	102,696

The Pointer segment revenues include revenue from services in the amount of $ 12,119.

F - 18

EX-99.3

Exhibit 99.3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

 CONDITION AND RESULTS OF OPERATIONS

The information contained in this section should be read in conjunction with (1) our unaudited condensed interim consolidated financial statements as of September 30, 2010 and for the nine months then ended and related notes included in this report and (2) our consolidated financial statements and related notes included in our Annual Report on Form 20-F for the year ended December 31, 2009 and the other information contained in such Annual Report, particularly the information in Item 5 - “Operating and Financial Review and Prospects”. Our financial statements have been prepared in accordance with generally accepted accounting principles in United States (“US GAAP”).

Results of Operations

The following table sets forth certain statement of operations data as a percentage of total revenues for the periods indicated.

Nine months Ended September 30,

(in thousands of U.S. Dollars – except weighted average number of ordinary shares,

and basic and diluted income (loss) per ordinary share)

	2010		2009
Statement of Income Data:
Revenues:
Products		17,464		15,101
Services		36,114		33,354
Total Revenues		53,578		48,455
Cost of revenues:
Products		9,578		7,974
Services		23,125		19,190
Amortization of intangible assets		738		738
Total Cost of Revenues		33,441		27,902
Gross profit		20,137		20,553
Operating Expenses:
Research and development, net		1,779		2,113
Selling, general and administrative expenses		5,420		4,461
General and administrative		6,295		6,777
Amortization of intangible assets		1,319		1,489
Impairment of intangible asset		-		2,959
Other income, net		14,813		17,799
Total operating income		5,324		2,754
Financial expenses, net		1,516		1,574
Other income (expenses)		23		15
Income (loss) before tax on income		3,785		1,165
Taxes on income		1,323		79
Income (loss) after taxes on income		2,462		1,086
Equity in losses of affiliate		836		382
Net income		1,626		704
Net income attributable to non-controlling interest		836		2,429
Net income (loss) attributable to Pointer Telocation Ltd. Shareholders		790		(1,725	)
Basic net earning (loss) per share attributable to Pointer Telocation Ltd. shareholders		0.17		(0.36	)
Diluted net earnings (loss) per share attributable to Pointer Telocation Ltd. shareholders		0.15		(0.38	)
Basic weighted average number of shares outstanding (in thousands)		4,766		4,753
Diluted weighted average number of shares outstanding (in thousands)		4,830		4,756

Nine Months Ended September 30, 2010 Compared with Nine Months Ended September 30, 2009

Revenues.  Revenues increased by $5.1 million or 10.5%, from $48.4 million in the nine months ending September 30 2009 to $53.6 million in the nine months ending September 30, 2010.

The revenues from the sale of our products increased by $2.4 million, or 15.6%, from $15.1 million in the nine months ending September 30, 2009 to $17.5 million in the nine months ending September 30, 2010. This increase is primarily attributable to an increase in the sales of our operations conducted through the Cellocator segment of our business.

The revenues from our services increased by $2.8 million, or 8.3%, from $33.3 million in the nine months ending September 30, 2009 to $36.1 million in the nine months ending September 30, 2010. Approximately $1.5 million is attributable to the NIS revaluation against the U.S dollar by 6% during the period.

Revenues from our services in the nine months ending September 30, 2010 accounted for 67% of our total revenues as compared with 69% in the nine months ending September 30, 2009. This change is primarily attributable to price erosion in our operations in Israel, which affected a reduction in revenues from sales in our Israeli activities.

2

Our international revenues in the nine months ending September 30, 2010 accounted for 26% of total revenues compared to 23% in the nine months ending September 30, 2009. The increase in international sales is primarily attributable to an increase in the sales of the Cellocator segment in the nine months ending September 30, 2010.  Sales to Latin America increased from $0.3 million in the nine months ending September 30, 2009 to $1 million in the nine months ending September 30, 2010. Sales to Europe decreased from $5.4 million in the nine months ending September 30, 2009 to $4.3 million in the nine months ending September 30, 2010.

Cost of Revenues. Our cost of revenues increased by $5.5 million to $33.4 million for the nine months ending September 30, 2010 as compared to $27.9 million for the same period in 2009. This increase of $5.5 million is associated with an increase of $1.6 million in the cost of products due to increased sales of our Cellocator segment, and an increase of $3.9 million attributable to increased cost of services.

Gross Profit. Our gross profit was $20.1 million in the nine months ending September 30, 2010, which is approximately the same as in the nine months ending September 30, 2009. As a percentage of total revenues gross profit accounted for 37% in the nine months ending September 30, 2010 compared to 42% in the nine months ending September 30, 2009. Our gross margin on products sales in the nine months ending September 30, 2010 was 45% compared to 47% in the nine months ending September 30, 2009 due to a reduction in the prices of products in the Cellocator segment in the nine month ended September 30, 2010. Gross margins in services were approximately 36% in the nine months ending September 30, 2010 as compared to 42% in the nine months ending September 30, 2009. Gross margins decreased mainly as a result of the price erosion in the Israeli market.

Research and Development Costs. Research and development expenses decreased by $0.3 million from $2.1 million in the nine months ending September 30, 2010 to $1.8 million in the nine months ending September 30, 2009.

Selling and Marketing Expenses. Selling and marketing costs increased by $1 million to $5.4 million in the nine months ending September 30, 2010 from $4.4 million in the nine months ending September 30, 2009. The increase is due to the increase in sales and marketing efforts in Israel and as well as the costs associated with our expansion into new territories.

General and Administrative Expenses. General and administrative expenses decreased by $0.5 million to $6.3 million in the nine months ending September 30, 2010 from $6.8 million in the nine months ending September 30, 2009. The decrease resulted mainly due to salary cost reduction and a decrease in bad-debt expenses.

3

Amortization of intangible assets and Impairment of long lived assets. Amortization of intangible assets and impairment of long lived assets decreased by $3.1 million from $5.2 million in the nine months ending September 30, 2009 to $2 million in the nine months ending September 30, 2010. The amortization of intangible assets includes amortization of intangible assets related to our acquisitions. The amount of $5.2 million in amortization in the nine months ending September 30, 2009 includes a one-time impairment of $3 million in connection with the decrease in activity of former Cellocator customers that necessitated impairing intangible assets.

Operating Profit. As a result of the foregoing, we recorded in the nine months ending September 30, 2010 a $5.3 million operating profit, compared to an operating profit of $2.7 million in the nine months ending September 30, 2009. The increase is attributable to the impairment in the amount of $3 million of intangible assets related to the acquisition of Cellocator in 2007.

Financial Expenses (Net). Financial expenses decreased from $1.6 million in the nine months ending September 30, 2009 to $1.5 million in the nine months ending September 30, 2010.

Taxes on income.  Taxes on income were $1.3 million in the nine months ending September 30, 2010, as compared with no tax expenses in the nine months ending September 30, 2009. The effective tax rate for the nine-months ended September 30, 2010 was 44.9% as compared to 6.8% for the nine months ended September 30, 2009. The effective tax rate for the nine months ended September 30, 2010 was impacted mainly due to a valuation allowance against deferred tax assets. The effective tax rate for the nine months ended September 30, 2009 was impacted due to tax revenue from the decrease in the future tax rate in Israel, which was partially offset by establishing valuation allowances against net deferred tax assets.

Equity in losses of our Brazilian affiliate. In the nine months ending September 30, 2010, we recorded equity in losses of the Brazilian affiliate, Pointer do Brazil S.A., in the amount of $0.8 million compared to $0.4 million in the nine months ending September 30, 2009. The increase is due to our increased investment in the Brazilian market.

Net Income. We recorded net income of $1.6 million in the nine months ending September 30, 2010 and $0.7 million in the nine months ending September 30, 2009.

Net Income attributable to non-controlling interests.  We recorded net income attributable to non-controlling interests in the amount of $0.8 million in the nine months ending September 30, 2010, compared to $2.4 million the nine months ending September 30, 2009.

Net Income (Loss) attributable to Pointer shareholders. In the nine months ending September 30, 2010, we recorded a net income of $0.8 million, compared to a net loss of $1.7 million in the nine months ending September 30, 2009.

4

Impact of Exchange Rate Fluctuations on Results of Operations, Liabilities and Assets

Our results of operations, liabilities and assets were mainly impacted by the fluctuations of exchange rates between the U.S. dollar and the New Israeli Shekel (“NIS”), and to a lesser extent between the U.S. dollar and the Argentine Peso, the Mexican Peso, the Euro and the Brazilian Real.

During the nine months ended September 30, 2010, the exchange rate of the U.S. Dollar in relation to the NIS decreased by 2.9% and the Israeli Consumer Price Index (“CPI”) increased by 1.9% (during the nine months ended September 30, 2009 there was a decrease of 1.2% in the exchange rate of the U.S. Dollar in relation to the NIS and an increase of 3.4% in the CPI).

We believe that the rate of inflation in Israel did not have a material effect on our business to date. However, our U.S. Dollar costs will increase if inflation in Israel exceeds the revaluation of the NIS against the U.S. Dollar.

Regarding our operations in Argentina and the fact that most of PLA's revenues are not denominated in U.S. Dollars, we believe that inflation in Argentina and fluctuations in the exchange rate between the U.S. Dollar and Argentinean Peso may have a significant effect on the business and overall profitability of PLA and as a consequence, on the results of our operations. From January 1, 2010 to September 30, 2010, the value of the Argentinean Peso increased by approximately 4% against the U.S. dollar. From January 1, 2010 until November 24, 2010 the U.S. Dollar – Argentinean Peso exchange rate fluctuated between 3.72 and 3.99 Pesos to the Dollar.

The fluctuations of the Mexican Peso are not material to our business.

We are engaged from time to time in hedging expenses relating to foreign currency exchange rate and other transactions intended to manage the risks relating to foreign currency exchange rate or interest rate fluctuations. In the nine months ended September 30, 2009 and the nine months ended September 30, 2010 we entered into a foreign currency hedging transaction to manage risk related to salary expenses. We may in the future undertake, such transactions if management determines that such is necessary to offset such risks.

5

B. LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2010, we had a negative working capital of $13.4 million, our current assets to current liabilities ratio was 0.64 and we had cash and cash equivalents of $1.7 million and an unused credit facility of $2.6 million. We believe that we have access to sufficient capital to meet the Company's requirements for at least the next twelve months.

Our credit facilities and loans contain a number of restrictive covenants that limit the operating and financial flexibility of Pointer and Shagrir.  As of September 30, 2010 we are with compliance with the financial covenants of our credit facilities.

In the nine months ended September 30, 2010, net cash provided by our continuing operating activities amounted to $3.5 million as compared to net cash provided from continuing operating activities of $7.4 million in the nine months ended September 30, 2009. The decrease was primarily attributable to an increase in trade receivables and inventories which was offset by a decrease in trade payables.

In the nine months ended September 30, 2010, net cash used in our continuing investing activities was $3.4 million as compared to $2 million in the nine months ended September 30, 2009. The increase was primarily attributable to our investment in an affiliate and an increase in purchases of property and equipment.

In the nine months ended September 30, 2010, net cash used in financing activities was $2 million as compared to $4.9 million in the nine months ended September 30, 2009. The decrease was primarily attributable to repayment of a long-term loan from shareholders offset by receipt of long-term loans from banks.

6