<PAGE>

--------------------------------------------------------------------------------
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

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

For the quarterly period ended March 31, 2002

                                       OR

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

For the transition period from ___________ to ___________

Commission file number 000-22221

                         KONTRON MOBILE COMPUTING, INC.
             (Exact name of registrant as specified in its charter)

                Minnesota                                        41-1731723
(State or other jurisdiction of incorporation                 (I.R.S. Employer
             or organization)                                Identification No.)


                               7631 Anagram Drive
                          Eden Prairie, Minnesota 55344
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (952) 974-7000
              (Registrant's telephone number, including area code)


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes     [X]     No      [ ]


The number of shares of the registrant's Common Stock, $.001 par value,
outstanding as of May 6, 2002 was 14,952,926.

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


                                       1

<PAGE>

PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS

                         KONTRON MOBILE COMPUTING, INC.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                        March 31,
                                                                                          2002         December 30,
                                                                                       (Unaudited)         2001
                                                                                       -----------     ------------
                                            ASSETS
<S>                                                                                    <C>             <C>
Current Assets:
Cash and cash equivalents ..........................................................   $  1,751,234    $  2,073,970
Accounts receivable, net of allowance for doubtful accounts of $267,700 and $317,200      1,344,215       2,834,150
Accounts receivable, related parties ...............................................        113,249         118,472
Inventories ........................................................................      1,280,841       1,191,276
Prepaid expenses and other .........................................................        263,332         334,156
                                                                                       ------------    ------------
           Total current assets ....................................................      4,752,871       6,552,024
                                                                                       ------------    ------------
Property and Equipment:
   Computers and equipment .........................................................      1,142,624       1,114,125
   Furniture and fixtures ..........................................................        800,706         795,387
   Leasehold improvements ..........................................................        346,099         346,099
   Less: Accumulated depreciation and amortization .................................     (1,989,002)     (1,911,244)
                                                                                       ------------    ------------
       Property and equipment, net .................................................        300,427         344,367
Deposits and Other Assets, net .....................................................         25,526          19,764
                                                                                       ------------    ------------
Total Assets .......................................................................   $  5,078,824    $  6,916,155
                                                                                       ============    ============

                        LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
Accounts payable ...................................................................   $    486,016    $  1,118,581
Accounts payable, related parties ..................................................        137,075         210,054
Accrued warranty expenses ..........................................................        353,169         332,169
Accrued compensation and benefits ..................................................        110,772         257,398
Other accrued liabilities ..........................................................        213,721         771,502
Deferred revenue ...................................................................      1,280,668       1,306,563
Notes payable: Note to Kontron Embedded Computers AG for operating line ............      6,341,610       6,937,700
                                                                                       ------------    ------------
       Total current liabilities ...................................................      8,923,031      10,933,967
                                                                                       ------------    ------------
Total Liabilities ..................................................................      8,923,031      10,933,967
                                                                                       ------------    ------------
Shareholders' Equity (Deficit):
Series B Convertible Preferred Stock, $.001 par value, 4,250,000 shares authorized;
   4,250,000 issued and outstanding at March 31, 2002 ..............................          4,250           4,250
Series C Convertible Preferred Stock, $.001 par value, 500,000 shares authorized;
   500,000 issued and outstanding at March 31, 2002 ................................            500             500
Common stock, $.001 par value, 30,000,000 shares authorized;
   14,952,926 issued and outstanding for both periods ..............................         14,953          14,953
Additional paid-in capital .........................................................     32,551,972      32,551,972
Accumulated deficit ................................................................    (36,415,882)    (36,589,487)
                                                                                       ------------    ------------
           Total shareholders' equity (deficit) ....................................     (3,844,207)     (4,017,812)
                                                                                       ------------    ------------
Total Liabilities and Shareholders' Equity (Deficit) ...............................   $  5,078,824    $  6,916,155
                                                                                       ============    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       2

<PAGE>

                         KONTRON MOBILE COMPUTING, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                    For the Three Months Ended
                                                   ----------------------------
                                                     March 31,        April 1,
                                                       2002            2001
                                                   ------------    ------------
Net Sales ........................................ $  3,156,371    $  5,009,528
Cost of Sales ....................................    1,664,846       2,754,455
                                                   ------------    ------------
     Gross profit ................................    1,491,525       2,255,073
                                                   ------------    ------------
Operating Expenses:
     Sales and marketing .........................      582,622         851,505
     General and administrative ..................      305,034         504,715
     Research and development ....................      220,327         337,677
                                                   ------------    ------------
          Total operating expenses ...............    1,107,983       1,693,897
                                                   ------------    ------------
          Operating profit .......................      383,542         561,176
Gain (loss) on currency conversion ...............      (26,626)        325,735
Interest income (expense), net ...................     (183,311)       (334,335)
Other income (expense), net ......................           --           1,767
                                                   ------------    ------------
Net income applicable to common shareholders ..... $    173,605    $    554,343
                                                   ============    ============


Basic and Diluted Income Per Common Share:
Net income per common share ...................... $        .01    $        .04
                                                   ------------    ------------
Basic weighted average common shares outstanding..   14,952,926      14,934,536
                                                   ============    ============
Diluted weighted average common shares
   outstanding ...................................   15,020,941      15,036,209
                                                   ============    ============


   The accompanying notes are an integral part of these financial statements.


                                       3

<PAGE>

                         KONTRON MOBILE COMPUTING, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                    For the Three Months Ended
                                                                     March 31,       April 1,
                                                                       2002            2001
                                                                    -----------    -----------
<S>                                                                 <C>            <C>
Operating Activities:
Net income ......................................................   $   173,605    $   554,343
Adjustments to reconcile net income to net cash provided by (used
   for) operating activities--
     Depreciation and amortization ..............................        77,758        158,725
     Loss (gain) on currency conversion .........................        26,626       (325,735)
     Non-cash financing expense .................................            --        110,250
     Changes in operating items:
          Accounts receivable ...................................     1,495,158     (1,410,569)
          Inventories ...........................................       (89,565)      (340,028)
          Prepaid expenses and other ............................        65,062        (26,226)
          Accounts payable ......................................      (705,544)      (335,770)
          Accrued expenses ......................................      (683,407)    (1,188,916)
          Deferred revenue ......................................       (25,895)       (82,528)
                                                                    -----------    -----------
     Net cash provided by (used for) operating activities .......       333,798     (2,886,454)
                                                                    -----------    -----------
Investing Activities:
     Purchase of property and equipment .........................       (33,818)            --
                                                                    -----------    -----------
Financing Activities:
     Proceeds from (repayments of) notes to Kontron .............      (622,716)     2,860,373
     Proceeds from issuance of common stock .....................            --         21,000
     Payment of capitalized lease obligations ...................            --         (9,089)
                                                                    -----------    -----------
     Net cash provided by (used for) financing activities .......      (622,716)     2,872,284
                                                                    -----------    -----------
Change in Cash and Cash Equivalents .............................      (322,736)       (14,170)
Cash and Cash Equivalents, beginning of period ..................     2,073,970        552,887
                                                                    -----------    -----------
Cash and Cash Equivalents, end of period ........................   $ 1,751,234    $   538,717
                                                                    ===========    ===========
Supplemental Cash Flow Disclosure:
Cash paid for interest ..........................................   $   193,879    $   346,123
                                                                    ===========    ===========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       4

<PAGE>

                          Notes to Financial Statements
                                   (Unaudited)

1.   Basis of Presentation:

     The accompanying unaudited financial statements of Kontron Mobile
Computing, Inc. ("Kontron Mobile Computing" or "the Company") should be read in
conjunction with the financial statements and notes thereto filed with the
Securities and Exchange Commission in the Company's Annual Report on Form 10-K,
for the fiscal year ended December 30, 2001. In the opinion of management, the
accompanying financial statements reflect all adjustments (consisting only of
normal recurring adjustments) considered necessary to present fairly the
financial results for the interim periods presented. The results of operations
for the interim periods are not necessarily indicative of the results to be
expected for the entire fiscal year.

     Kontron Embedded Computers AG ("Kontron") has a controlling interest in the
Company. Kontron and its affiliates reported on Amendment No. 4 to Schedule 13D
filed with the Securities and Exchange Commission on January 5, 2001 beneficial
ownership of 13,163,242 shares which includes 7,694,492 shares of common stock
and 4,750,000 shares of Series B and C Preferred Convertible Stock convertible
into 5,468,750 shares of common stock.

2.   Inventories:

     Inventories are stated at the lower of cost or market value, as determined
by the first-in, first-out cost method.

     The components of inventories were:

                                               March 31,   December 30,
                                                 2002         2001
                                              ----------   ----------
     Raw materials ........................   $  636,332   $  556,823
     Work in process ......................      150,380      140,899
     Finished goods .......................      494,129      493,554
                                              ----------   ----------
          Total ...........................   $1,280,841   $1,191,276
                                              ==========   ==========

3.   Financing:

     On January 29, 2002, Kontron agreed to provide financial support to enable
the Company to meet its cash flow needs and obligations as and when they become
due through December 31, 2002. The Company has a line of credit agreement with
Kontron which allows for borrowings of up to 8.5 million Euros for operations
($7.4 million based on March 31, 2002 exchange rate.) Borrowings under this
agreement bear interest at 11% per annum (payable monthly), with no stated
maturity date. Outstanding borrowings under this line of credit were $6.3
million at March 31, 2002. In the first quarter of 2002, the Company repaid $1.0
million to Kontron, consisting of $620,000 in accrued interest and $388,000 in
principle.

     On June 29, 2000, the Company entered into a Purchase and Option Agreement
with FWRKS Acquisition Corp., a wholly owned subsidiary of Kontron. The
agreement was amended on August 16, 2000. Under the amended agreement, Kontron
acquired 6 million shares of common stock of the Company for a purchase price of
$5.4 million. In addition, the option Kontron previously granted to
Industrial-Works Holding Co., LLC (IWHC), a wholly owned subsidiary of Glenmount
International, was amended. As amended, IWHC was granted an option to acquire
62,000 bearer shares of Kontron in exchange for preferred shares of the Company
that were convertible into 3.4 million shares of the Company common stock. These
transactions closed in December 2000.

     In addition, the Company received $2.5 million from FWRKS Acquisition Corp.
on June 30, 2000 in the form of a subordinated note bearing interest at 11% per
annum with an original maturity date of September 2001. FWRKS Acquisition Corp.
received warrants to purchase 1.25 million shares of common stock of the Company
exercisable at $1.00 per share. The warrants were exercisable until November 15,
2000, and were recorded at their estimated fair


                                       5

<PAGE>

value of $437,500 at the date of issuance. These warrants were cancelled and the
subordinated notes were forgiven under the terms of the amended agreement
described above.

4.   Foreign Currency Transactions:

     The Company's credit agreements with Kontron allow for borrowings which are
payable in Euros.

     In the second quarter of 2001, the Company began utilizing foreign currency
forward contracts to protect against significant fluctuations in net income
(loss) caused by changes in Euro exchange rates. The Company's practice is to
enter into a forward contract at the beginning of each quarter and settle the
contract at the end of the quarter. The Company records gains and losses on
these derivative contracts (which are not designated as hedging instruments for
accounting purposes) in net income (loss) in accordance with the requirements of
Statement of Financial Accounting Standards (SFAS) No. 133, "Derivatives and
Hedging Activities," and also marks the related debt instrument to market under
SFAS No. 52, "Foreign Currency Translation." For the quarter ended March 31,
2002, the Company recorded a loss of $26,626. As of March 31, 2002, the
Company's forward contract arrangements allowed the Company to hedge up to 7.0
million Euros.

     The Company currently has no other balances or transactions conducted in a
foreign currency.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Cautionary Statement Regarding Forward Looking Statements

     This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. When used in
this Form 10-Q and in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases and in oral statements made
with the approval of an authorized executive officer, the words or phrases
"believes," "anticipates," "expects," "intends," "estimates," "should," "may" or
similar expressions are intended to identify such forward-looking statements,
but are not the exclusive means of identifying such statements. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, the following: risks associated with the development of
new products, market acceptance of new products and services, technological
obsolescence, dependence on third-party manufacturers and suppliers, risks
associated with the Company's dependence on proprietary technology and the long
customer sales cycle. The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only as of the date
made. The Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances after the date of such
statements. Readers are urged to carefully review and consider the various
disclosures made by the Company in this report and in the Company's other
reports filed with the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect the Company's
business. The Company's forward-looking statements are qualified in their
entirety by the cautions and risk factors set forth under the "Cautionary
Statement" filed as Exhibit 99.1 to its Form 10-K for the year ended December
30, 2001.


                                       6

<PAGE>

Operating Results

     The following table sets forth certain financial data expressed as a
percentage of net sales for the periods indicated:

                                             For the Three Months Ended
                                             --------------------------
                                                March 31,    April 1,
                                                  2002        2001
                                                  ----        ----
Net sales ....................................     100%        100%
Cost of sales ................................      53          55
                                                  ----        ----
     Gross profit ............................      47          45
Operating expenses:
     Sales and marketing .....................      18          17
     General and administrative ..............      10          10
     Research and development ................       7           7
                                                  ----        ----
          Total operating expenses ...........      35          34
                                                  ----        ----
Operating income .............................      12          11
Gain (loss) on currency conversion ...........      (1)          7
Interest income (expense), net ...............      (5)         (7)
Other income (expense), net ..................      --           *
                                                  ----        ----
Net income applicable to common shareholders..       6%         11%
                                                  ====        ====
     * Less than .5%

     Net Sales. The Company's net sales decreased $1.8 million, or 37%, to $3.2
million in the first quarter of 2002 from $5.0 million in the first quarter of
2001. The decrease was due to a large order from the United States Army for the
2000 Series Embedded Vehicle Server that partially shipped in the first quarter
of 2001 with no comparable large orders in 2002.

     The Company continues to target key vertical markets including government,
military, public services and utilities. No customers accounted for greater than
10% of net sales in the first quarter of 2002. In the first quarter of 2001, one
customer, the United States Army, accounted for greater than 10% of net sales,
representing $2.3 million of the Company's net sales.

     International sales remained constant at $0.5 million for the first
quarters in 2002 and 2001. As a percentage of net sales, international sales
were 15% for the first quarter of 2002 and 10% for the first quarter of 2001.
The majority of international sales, 78% and 82% of net sales for the first
quarter of 2002 and 2001, respectively, are in Europe. The Company believes that
international sales as a percentage of net sales for the year 2002 will be in
the mid-teen to 20% range with little impact on the Company's results of
operations and liquidity. The Company records all sales in U.S. Dollars.

     Gross Margin. Gross margin decreased to $1.5 million, or 47% of net sales,
for the first quarter of 2002 from $2.3 million, or 45% of net sales for the
first quarter of 2001. The decreased gross margin dollars are due to reduced
sales while the increased gross margin percent is due to increased sales of
higher margin products. The Company's gross margin will fluctuate as a result of
a number of factors, including mix of products sold, inventory obsolescence, the
proportion of international sales, large customer contracts (with the associated
volume discounts) and other manufacturing expenses.

     Sales and Marketing. Sales and marketing expenses include salaries,
incentive compensation, commissions, travel, trade shows, technical support and
professional services personnel and general advertising and promotion. These
expenses also include the labor and material costs related to maintaining the
Company's standard one-year warranty program. Sales and marketing expenses
decreased to $0.6 million for the first quarter of 2002 compared to $0.9 million
for the first quarter of 2001. As a percentage of net sales, sales and marketing
expenses increased to 18% for the first quarter of 2002 from 17% for the first
quarter of 2001. The dollar decrease in expenses is due to lower commission paid
on lower sales in 2002.

     General and Administrative. General and administrative expenses include the
Company's executive, finance, information services and human resources
departments. These expenses decreased to $0.3 million for the quarter ended
March 31, 2002, from $0.5 million for the quarter ended April 1, 2001. As a
percentage of net sales, general

                                       7

<PAGE>

and administrative expenses remained constant at 10% during the first quarters
of 2002 and 2001. The decrease in expenses is due to a small workforce reduction
in addition to monitoring of expenses.

     Research and Development. Research and development expenses are incurred in
the design, development and testing of new or enhanced products, services and
customized computing platforms. All research and development costs are expensed
as incurred. Research and development expenses decreased to $0.2 million in the
first quarter of 2002 from $0.3 million for the first quarter of 2001. As a
percentage of net sales, research and development costs remained constant at 7%
during the first quarters of 2002 and 2001. The decrease in expenses is due to
sharing research and development costs with Kontron and the synergy gained by
the combined efforts, in addition to a small workforce reduction.

     Gain (Loss) on Currency Conversion. The Company's credit agreements with
Kontron allow for borrowings which are payable in Euros.

     In the second quarter of 2001, the Company began utilizing foreign currency
forward contracts to protect against significant fluctuations in net income
(loss) caused by changes in Euro exchange rates. The Company's practice is to
enter into a forward contract at the beginning of each quarter and settle the
contract at the end of the quarter. The Company records gains and losses on
these derivative contracts (which are not designated as hedging instruments for
accounting purposes) in net income (loss) in accordance with the requirements of
Statement of Financial Accounting Standards (SFAS) No. 133, "Derivatives and
Hedging Activities," and also marks the related debt instrument to market under
SFAS No. 52, "Foreign Currency Translation." For the quarter ended March 31,
2002, the Company recorded a loss of $26,626. As of March 31, 2002, the
Company's forward contract arrangements allowed the Company to hedge up to 7.0
million Euros.

     The Company currently has no other balances or transactions conducted in a
foreign currency.

     Interest Income (Expense), Net. Net interest expense was approximately
$183,300 for the first quarter of 2002 compared to net interest expense of
$334,300 for the comparable period in 2001. The decrease in interest expense is
due to the repayment of the subordinated notes in third quarter 2001 and the
first quarter 2002 repayment to Kontron of $1.0 million, consisting of $620,000
in accrued interest and $388,000 in principle.

Liquidity and Capital Resources

     The relationship with Kontron has brought new resources, products, capital
and a global sales force. During 2001, the Company began integrating global
distribution channels, augmenting go-to-market strategies and reinventing
product development and positioning plans. The Company's 2001 focus was to
stabilize and reach profitability by reducing overhead and operating costs,
increasing the average selling price on products and reducing product direct
material costs.

     In 2001, the Company had a positive cash flow from operations of $622,641,
the first positive operating cash flow in the Company's history, compared to
negative cash flows from operations of $11,025,746 and $5,168,905 in fiscal
years 2000 and 1999, respectively. While the Company achieved profitability in
three of the four quarters in 2001, the Company realizes that continuous
management of sales, gross margin and cash is necessary to improve liquidity.
There can be no assurance that the Company will be successful in achieving these
measures and increasing its liquidity. Circumstances that are reasonably likely
to affect liquidity include changes in technology, dependence on key customers,
decrease in demand for the Company's products and reliance on Kontron for
financing and research and development support.

     The Company intends to fund its own cash needs in 2002 without assistance
from Kontron. To be successful, the Company will focus on increased sales and
profitability, in addition to improved working capital management. In the first
quarter of 2002, the Company repaid $1.0 million to Kontron, consisting of
$620,000 in accrued interest and $388,000 in principle. The Company has
finalized a $750,000 line of credit with an existing bank and if necessary,
intends to use this line of credit to fund potential cash requirements in excess
of its current cash flow projection.


                                       8

<PAGE>

     On January 29, 2002, Kontron agreed to provide financial support to enable
the Company to meet its cash flow needs and obligations as and when they become
due through December 31, 2002. The Company has a line of credit agreement with
Kontron which allows for borrowings of up to 8.5 million Euros for operations
($7.4 million based on March 31, 2002 exchange rate.) Borrowings under this
agreement bear interest at 11% per annum (payable monthly), with no stated
maturity date. Outstanding borrowings under this line of credit were $6.3
million at March 31, 2002. In the first quarter of 2002, the Company repaid $1.0
million to Kontron, consisting of $620,000 in accrued interest and $388,000 in
principle.

     On June 29, 2000, the Company entered into a Purchase and Option Agreement
with FWRKS Acquisition Corp., a wholly owned subsidiary of Kontron. The
agreement was amended on August 16, 2000. Under the amended agreement, Kontron
acquired 6 million shares of common stock of the Company for a purchase price of
$5.4 million. In addition, the option Kontron previously granted to
Industrial-Works Holding Co., LLC (IWHC), a wholly owned subsidiary of Glenmount
International, was amended. As amended, IWHC was granted an option to acquire
62,000 bearer shares of Kontron in exchange for preferred shares of the Company
that were convertible into 3.4 million shares of the Company common stock. These
transactions closed in December 2000.

     In addition, the Company received $2.5 million from FWRKS Acquisition Corp.
on June 30, 2000 in the form of a subordinated note bearing interest at 11% per
annum with an original maturity date of September 2001. FWRKS Acquisition Corp.
received warrants to purchase 1.25 million shares of common stock of the Company
exercisable at $1.00 per share. The warrants were exercisable until November 15,
2000, and were recorded at their estimated fair value of $437,500 at the date of
issuance. These warrants were cancelled and the subordinated notes were forgiven
under the terms of the amended agreement described above.

     Cash provided by operating activities was $333,798 for the first quarter of
2002, compared to $2.9 million used for operating activities in the comparable
period in 2001. The primary reasons for the improvement relate to timing of
receivable collections and changes in other working capital items. Inventory
stayed consistent at $1.3 million at March 31, 2002 compared to $1.2 million at
December 30, 2001. Accrued liabilities decreased to $0.2 million at March 31,
2002, from $0.8 million at December 30, 2001 due to the first quarter payment of
accrued interest to Kontron.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of March 31, 2002 the Company had $6.3 million outstanding on its line
of credit from Kontron. This loan bears interest at 11% per annum, payable
monthly. Both the principal amount borrowed under the line of credit and
interest payable thereunder are payable in Euros. See the earlier discussion
under "Foreign Currency Transactions" for a description of the foreign currency
forward contract in effect. All remaining transactions of the Company are
conducted and accounts are denominated in U.S. dollars. Based on its overall
foreign currency rate exposure at March 31, 2002, the Company does not believe
that a hypothetical 10% change in foreign currency rates would materially
adversely affect its financial position or results of operations.

     The Company has no derivative financial instruments or derivative commodity
instruments in its cash and cash equivalents. The Company had $1.8 million in
cash and cash equivalents at March 31, 2002. Based on analysis, shifts in money
market rates would have an immaterial impact on the Company.

PART II.  OTHER INFORMATION
---------------------------
ITEM 1.  LEGAL PROCEEDINGS

     The Company is involved in legal actions in the ordinary course of its
business. Although the Company cannot predict the outcome of any such legal
actions, management believes that there is no pending legal proceeding against
or involving the Company for which the outcome is likely to have a material
adverse effect upon the Company's financial position, results of operations or
cash flows.


                                       9

<PAGE>

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     See the discussion under "Liquidity and Capital Resources" above for a
description of securities sold by the Company within the past three years which
were not registered under the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     Not applicable.


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

     Not applicable.


ITEM 5.  OTHER INFORMATION

     None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         Exhibit 3.1    Second Amended and Restated Articles of
                        Incorporation of the Company (incorporated by
                        reference to Exhibit 3.2 to the Company's
                        Registration Statement filed on Form S-1, File No.
                        333-18335)

         Exhibit 3.2    Second Amended and Restated Bylaws of the Company
                        (incorporated by reference to Exhibit 3.4 to the
                        Company's Registration Statement filed on Form S-1,
                        File No. 333-18335)

         Exhibit 3.3    Articles of Merger amending the Company's
                        Articles of Incorporation effective June 4, 2001
                        (incorporated by reference to the exhibit 3.1 filed
                        with the Company's Report on Form 8-K filed June 4,
                        2001)

         Exhibit 10.1   2002 Compensation Plan for Thomas Sparrvik dated
                        November 12, 2001 (incorporated by reference to
                        Exhibit 10.24 to the Company's Report on 10-K for the
                        fiscal year ended December 30, 2001)

(b)      Reports on Form 8-K:

         None.


                                    SIGNATURE

         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.

KONTRON MOBILE COMPUTING, INC.


Date:  May 13, 2002

                                        /s/ Thomas Sparrvik
                                        ----------------------------------------
                                        Thomas Sparrvik, Chief Executive Officer
                                        (as authorized officer)

                                       10
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{"company-data": {"conformed-name": "KONTRON MOBILE COMPUTING INC", "cik": "0000912643", "assigned-sic": "3571", "irs-number": "411731723", "state-of-incorporation": "MN", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "333-18335", "film-number": "02642685"}, "business-address": {"street1": "7631 ANAGRAM DRIVE", "city": "EDEN PRAIRIE", "state": "MN", "zip": "55344", "phone": "952.974.7000"}, "mail-address": {"street1": "7631 ANAGRAM DRIVE", "city": "EDEN PRAIRIE", "state": "MN", "zip": "55344"}, "former-company": {"former-conformed-name": "FIELDWORKS INC", "date-changed": "19960729"}}
--------------------------------------------------------------------------------
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

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

For the quarterly period ended March 31, 2002

                                       OR

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

For the transition period from ___________ to ___________

Commission file number 000-22221

                         KONTRON MOBILE COMPUTING, INC.
             (Exact name of registrant as specified in its charter)

                Minnesota                                        41-1731723
(State or other jurisdiction of incorporation                 (I.R.S. Employer
             or organization)                                Identification No.)

                               7631 Anagram Drive
                          Eden Prairie, Minnesota 55344
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (952) 974-7000
              (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes     [X]     No      [ ]

The number of shares of the registrant's Common Stock, $.001 par value,
outstanding as of May 6, 2002 was 14,952,926.

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

                                       1
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS

                         KONTRON MOBILE COMPUTING, INC.
                                 BALANCE SHEETS
March 31,
                                                                                          2002         December 30,
                                                                                       (Unaudited)         2001
                                                                                       -----------     ------------
                                            ASSETS
Current Assets:
Cash and cash equivalents ..........................................................   $  1,751,234    $  2,073,970
Accounts receivable, net of allowance for doubtful accounts of $267,700 and $317,200      1,344,215       2,834,150
Accounts receivable, related parties ...............................................        113,249         118,472
Inventories ........................................................................      1,280,841       1,191,276
Prepaid expenses and other .........................................................        263,332         334,156
                                                                                       ------------    ------------
           Total current assets ....................................................      4,752,871       6,552,024
                                                                                       ------------    ------------
Property and Equipment:
   Computers and equipment .........................................................      1,142,624       1,114,125
   Furniture and fixtures ..........................................................        800,706         795,387
   Leasehold improvements ..........................................................        346,099         346,099
   Less: Accumulated depreciation and amortization .................................     (1,989,002)     (1,911,244)
                                                                                       ------------    ------------
       Property and equipment, net .................................................        300,427         344,367
Deposits and Other Assets, net .....................................................         25,526          19,764
                                                                                       ------------    ------------
Total Assets .......................................................................   $  5,078,824    $  6,916,155
                                                                                       ============    ============

                        LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
Accounts payable ...................................................................   $    486,016    $  1,118,581
Accounts payable, related parties ..................................................        137,075         210,054
Accrued warranty expenses ..........................................................        353,169         332,169
Accrued compensation and benefits ..................................................        110,772         257,398
Other accrued liabilities ..........................................................        213,721         771,502
Deferred revenue ...................................................................      1,280,668       1,306,563
Notes payable: Note to Kontron Embedded Computers AG for operating line ............      6,341,610       6,937,700
                                                                                       ------------    ------------
       Total current liabilities ...................................................      8,923,031      10,933,967
                                                                                       ------------    ------------
Total Liabilities ..................................................................      8,923,031      10,933,967
                                                                                       ------------    ------------
Shareholders' Equity (Deficit):
Series B Convertible Preferred Stock, $.001 par value, 4,250,000 shares authorized;
   4,250,000 issued and outstanding at March 31, 2002 ..............................          4,250           4,250
Series C Convertible Preferred Stock, $.001 par value, 500,000 shares authorized;
   500,000 issued and outstanding at March 31, 2002 ................................            500             500
Common stock, $.001 par value, 30,000,000 shares authorized;
   14,952,926 issued and outstanding for both periods ..............................         14,953          14,953
Additional paid-in capital .........................................................     32,551,972      32,551,972
Accumulated deficit ................................................................    (36,415,882)    (36,589,487)
                                                                                       ------------    ------------
           Total shareholders' equity (deficit) ....................................     (3,844,207)     (4,017,812)
                                                                                       ------------    ------------
Total Liabilities and Shareholders' Equity (Deficit) ...............................   $  5,078,824    $  6,916,155
                                                                                       ============    ============
The accompanying notes are an integral part of these financial statements.

                                       2
KONTRON MOBILE COMPUTING, INC.
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                    For the Three Months Ended
                                                   ----------------------------
                                                     March 31,        April 1,
                                                       2002            2001
                                                   ------------    ------------
Net Sales ........................................ $  3,156,371    $  5,009,528
Cost of Sales ....................................    1,664,846       2,754,455
                                                   ------------    ------------
     Gross profit ................................    1,491,525       2,255,073
                                                   ------------    ------------
Operating Expenses:
     Sales and marketing .........................      582,622         851,505
     General and administrative ..................      305,034         504,715
     Research and development ....................      220,327         337,677
                                                   ------------    ------------
          Total operating expenses ...............    1,107,983       1,693,897
                                                   ------------    ------------
          Operating profit .......................      383,542         561,176
Gain (loss) on currency conversion ...............      (26,626)        325,735
Interest income (expense), net ...................     (183,311)       (334,335)
Other income (expense), net ......................           --           1,767
                                                   ------------    ------------
Net income applicable to common shareholders ..... $    173,605    $    554,343
                                                   ============    ============

Basic and Diluted Income Per Common Share:
Net income per common share ...................... $        .01    $        .04
                                                   ------------    ------------
Basic weighted average common shares outstanding..   14,952,926      14,934,536
                                                   ============    ============
Diluted weighted average common shares
   outstanding ...................................   15,020,941      15,036,209
                                                   ============    ============

   The accompanying notes are an integral part of these financial statements.

                                       3
KONTRON MOBILE COMPUTING, INC.
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)
For the Three Months Ended
                                                                     March 31,       April 1,
                                                                       2002            2001
                                                                    -----------    -----------
Operating Activities:
Net income ......................................................   $   173,605    $   554,343
Adjustments to reconcile net income to net cash provided by (used
   for) operating activities--
     Depreciation and amortization ..............................        77,758        158,725
     Loss (gain) on currency conversion .........................        26,626       (325,735)
     Non-cash financing expense .................................            --        110,250
     Changes in operating items:
          Accounts receivable ...................................     1,495,158     (1,410,569)
          Inventories ...........................................       (89,565)      (340,028)
          Prepaid expenses and other ............................        65,062        (26,226)
          Accounts payable ......................................      (705,544)      (335,770)
          Accrued expenses ......................................      (683,407)    (1,188,916)
          Deferred revenue ......................................       (25,895)       (82,528)
                                                                    -----------    -----------
     Net cash provided by (used for) operating activities .......       333,798     (2,886,454)
                                                                    -----------    -----------
Investing Activities:
     Purchase of property and equipment .........................       (33,818)            --
                                                                    -----------    -----------
Financing Activities:
     Proceeds from (repayments of) notes to Kontron .............      (622,716)     2,860,373
     Proceeds from issuance of common stock .....................            --         21,000
     Payment of capitalized lease obligations ...................            --         (9,089)
                                                                    -----------    -----------
     Net cash provided by (used for) financing activities .......      (622,716)     2,872,284
                                                                    -----------    -----------
Change in Cash and Cash Equivalents .............................      (322,736)       (14,170)
Cash and Cash Equivalents, beginning of period ..................     2,073,970        552,887
                                                                    -----------    -----------
Cash and Cash Equivalents, end of period ........................   $ 1,751,234    $   538,717
                                                                    ===========    ===========
Supplemental Cash Flow Disclosure:
Cash paid for interest ..........................................   $   193,879    $   346,123
                                                                    ===========    ===========
The accompanying notes are an integral part of these financial statements.

                                       4
Notes to Financial Statements
                                   (Unaudited)

1.   Basis of Presentation:

     The accompanying unaudited financial statements of Kontron Mobile
Computing, Inc. ("Kontron Mobile Computing" or "the Company") should be read in
conjunction with the financial statements and notes thereto filed with the
Securities and Exchange Commission in the Company's Annual Report on Form 10-K,
for the fiscal year ended December 30, 2001. In the opinion of management, the
accompanying financial statements reflect all adjustments (consisting only of
normal recurring adjustments) considered necessary to present fairly the
financial results for the interim periods presented. The results of operations
for the interim periods are not necessarily indicative of the results to be
expected for the entire fiscal year.

     Kontron Embedded Computers AG ("Kontron") has a controlling interest in the
Company. Kontron and its affiliates reported on Amendment No. 4 to Schedule 13D
filed with the Securities and Exchange Commission on January 5, 2001 beneficial
ownership of 13,163,242 shares which includes 7,694,492 shares of common stock
and 4,750,000 shares of Series B and C Preferred Convertible Stock convertible
into 5,468,750 shares of common stock.

2.   Inventories:

     Inventories are stated at the lower of cost or market value, as determined
by the first-in, first-out cost method.

     The components of inventories were:

                                               March 31,   December 30,
                                                 2002         2001
                                              ----------   ----------
     Raw materials ........................   $  636,332   $  556,823
     Work in process ......................      150,380      140,899
     Finished goods .......................      494,129      493,554
                                              ----------   ----------
          Total ...........................   $1,280,841   $1,191,276
                                              ==========   ==========

3.   Financing:

     On January 29, 2002, Kontron agreed to provide financial support to enable
the Company to meet its cash flow needs and obligations as and when they become
due through December 31, 2002. The Company has a line of credit agreement with
Kontron which allows for borrowings of up to 8.5 million Euros for operations
($7.4 million based on March 31, 2002 exchange rate.) Borrowings under this
agreement bear interest at 11% per annum (payable monthly), with no stated
maturity date. Outstanding borrowings under this line of credit were $6.3
million at March 31, 2002. In the first quarter of 2002, the Company repaid $1.0
million to Kontron, consisting of $620,000 in accrued interest and $388,000 in
principle.

     On June 29, 2000, the Company entered into a Purchase and Option Agreement
with FWRKS Acquisition Corp., a wholly owned subsidiary of Kontron. The
agreement was amended on August 16, 2000. Under the amended agreement, Kontron
acquired 6 million shares of common stock of the Company for a purchase price of
$5.4 million. In addition, the option Kontron previously granted to
Industrial-Works Holding Co., LLC (IWHC), a wholly owned subsidiary of Glenmount
International, was amended. As amended, IWHC was granted an option to acquire
62,000 bearer shares of Kontron in exchange for preferred shares of the Company
that were convertible into 3.4 million shares of the Company common stock. These
transactions closed in December 2000.

     In addition, the Company received $2.5 million from FWRKS Acquisition Corp.
on June 30, 2000 in the form of a subordinated note bearing interest at 11% per
annum with an original maturity date of September 2001. FWRKS Acquisition Corp.
received warrants to purchase 1.25 million shares of common stock of the Company
exercisable at $1.00 per share. The warrants were exercisable until November 15,
2000, and were recorded at their estimated fair

                                       5
value of $437,500 at the date of issuance. These warrants were cancelled and the
subordinated notes were forgiven under the terms of the amended agreement
described above.

4.   Foreign Currency Transactions:

     The Company's credit agreements with Kontron allow for borrowings which are
payable in Euros.

     In the second quarter of 2001, the Company began utilizing foreign currency
forward contracts to protect against significant fluctuations in net income
(loss) caused by changes in Euro exchange rates. The Company's practice is to
enter into a forward contract at the beginning of each quarter and settle the
contract at the end of the quarter. The Company records gains and losses on
these derivative contracts (which are not designated as hedging instruments for
accounting purposes) in net income (loss) in accordance with the requirements of
Statement of Financial Accounting Standards (SFAS) No. 133, "Derivatives and
Hedging Activities," and also marks the related debt instrument to market under
SFAS No. 52, "Foreign Currency Translation." For the quarter ended March 31,
2002, the Company recorded a loss of $26,626. As of March 31, 2002, the
Company's forward contract arrangements allowed the Company to hedge up to 7.0
million Euros.

     The Company currently has no other balances or transactions conducted in a
foreign currency.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Cautionary Statement Regarding Forward Looking Statements

     This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. When used in
this Form 10-Q and in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases and in oral statements made
with the approval of an authorized executive officer, the words or phrases
"believes," "anticipates," "expects," "intends," "estimates," "should," "may" or
similar expressions are intended to identify such forward-looking statements,
but are not the exclusive means of identifying such statements. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, the following: risks associated with the development of
new products, market acceptance of new products and services, technological
obsolescence, dependence on third-party manufacturers and suppliers, risks
associated with the Company's dependence on proprietary technology and the long
customer sales cycle. The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only as of the date
made. The Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances after the date of such
statements. Readers are urged to carefully review and consider the various
disclosures made by the Company in this report and in the Company's other
reports filed with the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect the Company's
business. The Company's forward-looking statements are qualified in their
entirety by the cautions and risk factors set forth under the "Cautionary
Statement" filed as Exhibit 99.1 to its Form 10-K for the year ended December
30, 2001.

                                       6
Operating Results

     The following table sets forth certain financial data expressed as a
percentage of net sales for the periods indicated:

                                             For the Three Months Ended
                                             --------------------------
                                                March 31,    April 1,
                                                  2002        2001
                                                  ----        ----
Net sales ....................................     100%        100%
Cost of sales ................................      53          55
                                                  ----        ----
     Gross profit ............................      47          45
Operating expenses:
     Sales and marketing .....................      18          17
     General and administrative ..............      10          10
     Research and development ................       7           7
                                                  ----        ----
          Total operating expenses ...........      35          34
                                                  ----        ----
Operating income .............................      12          11
Gain (loss) on currency conversion ...........      (1)          7
Interest income (expense), net ...............      (5)         (7)
Other income (expense), net ..................      --           *
                                                  ----        ----
Net income applicable to common shareholders..       6%         11%
                                                  ====        ====
     * Less than .5%

     Net Sales. The Company's net sales decreased $1.8 million, or 37%, to $3.2
million in the first quarter of 2002 from $5.0 million in the first quarter of
2001. The decrease was due to a large order from the United States Army for the
2000 Series Embedded Vehicle Server that partially shipped in the first quarter
of 2001 with no comparable large orders in 2002.

     The Company continues to target key vertical markets including government,
military, public services and utilities. No customers accounted for greater than
10% of net sales in the first quarter of 2002. In the first quarter of 2001, one
customer, the United States Army, accounted for greater than 10% of net sales,
representing $2.3 million of the Company's net sales.

     International sales remained constant at $0.5 million for the first
quarters in 2002 and 2001. As a percentage of net sales, international sales
were 15% for the first quarter of 2002 and 10% for the first quarter of 2001.
The majority of international sales, 78% and 82% of net sales for the first
quarter of 2002 and 2001, respectively, are in Europe. The Company believes that
international sales as a percentage of net sales for the year 2002 will be in
the mid-teen to 20% range with little impact on the Company's results of
operations and liquidity. The Company records all sales in U.S. Dollars.

     Gross Margin. Gross margin decreased to $1.5 million, or 47% of net sales,
for the first quarter of 2002 from $2.3 million, or 45% of net sales for the
first quarter of 2001. The decreased gross margin dollars are due to reduced
sales while the increased gross margin percent is due to increased sales of
higher margin products. The Company's gross margin will fluctuate as a result of
a number of factors, including mix of products sold, inventory obsolescence, the
proportion of international sales, large customer contracts (with the associated
volume discounts) and other manufacturing expenses.

     Sales and Marketing. Sales and marketing expenses include salaries,
incentive compensation, commissions, travel, trade shows, technical support and
professional services personnel and general advertising and promotion. These
expenses also include the labor and material costs related to maintaining the
Company's standard one-year warranty program. Sales and marketing expenses
decreased to $0.6 million for the first quarter of 2002 compared to $0.9 million
for the first quarter of 2001. As a percentage of net sales, sales and marketing
expenses increased to 18% for the first quarter of 2002 from 17% for the first
quarter of 2001. The dollar decrease in expenses is due to lower commission paid
on lower sales in 2002.

     General and Administrative. General and administrative expenses include the
Company's executive, finance, information services and human resources
departments. These expenses decreased to $0.3 million for the quarter ended
March 31, 2002, from $0.5 million for the quarter ended April 1, 2001. As a
percentage of net sales, general

                                       7
and administrative expenses remained constant at 10% during the first quarters
of 2002 and 2001. The decrease in expenses is due to a small workforce reduction
in addition to monitoring of expenses.

     Research and Development. Research and development expenses are incurred in
the design, development and testing of new or enhanced products, services and
customized computing platforms. All research and development costs are expensed
as incurred. Research and development expenses decreased to $0.2 million in the
first quarter of 2002 from $0.3 million for the first quarter of 2001. As a
percentage of net sales, research and development costs remained constant at 7%
during the first quarters of 2002 and 2001. The decrease in expenses is due to
sharing research and development costs with Kontron and the synergy gained by
the combined efforts, in addition to a small workforce reduction.

     Gain (Loss) on Currency Conversion. The Company's credit agreements with
Kontron allow for borrowings which are payable in Euros.

     In the second quarter of 2001, the Company began utilizing foreign currency
forward contracts to protect against significant fluctuations in net income
(loss) caused by changes in Euro exchange rates. The Company's practice is to
enter into a forward contract at the beginning of each quarter and settle the
contract at the end of the quarter. The Company records gains and losses on
these derivative contracts (which are not designated as hedging instruments for
accounting purposes) in net income (loss) in accordance with the requirements of
Statement of Financial Accounting Standards (SFAS) No. 133, "Derivatives and
Hedging Activities," and also marks the related debt instrument to market under
SFAS No. 52, "Foreign Currency Translation." For the quarter ended March 31,
2002, the Company recorded a loss of $26,626. As of March 31, 2002, the
Company's forward contract arrangements allowed the Company to hedge up to 7.0
million Euros.

     The Company currently has no other balances or transactions conducted in a
foreign currency.

     Interest Income (Expense), Net. Net interest expense was approximately
$183,300 for the first quarter of 2002 compared to net interest expense of
$334,300 for the comparable period in 2001. The decrease in interest expense is
due to the repayment of the subordinated notes in third quarter 2001 and the
first quarter 2002 repayment to Kontron of $1.0 million, consisting of $620,000
in accrued interest and $388,000 in principle.

Liquidity and Capital Resources

     The relationship with Kontron has brought new resources, products, capital
and a global sales force. During 2001, the Company began integrating global
distribution channels, augmenting go-to-market strategies and reinventing
product development and positioning plans. The Company's 2001 focus was to
stabilize and reach profitability by reducing overhead and operating costs,
increasing the average selling price on products and reducing product direct
material costs.

     In 2001, the Company had a positive cash flow from operations of $622,641,
the first positive operating cash flow in the Company's history, compared to
negative cash flows from operations of $11,025,746 and $5,168,905 in fiscal
years 2000 and 1999, respectively. While the Company achieved profitability in
three of the four quarters in 2001, the Company realizes that continuous
management of sales, gross margin and cash is necessary to improve liquidity.
There can be no assurance that the Company will be successful in achieving these
measures and increasing its liquidity. Circumstances that are reasonably likely
to affect liquidity include changes in technology, dependence on key customers,
decrease in demand for the Company's products and reliance on Kontron for
financing and research and development support.

     The Company intends to fund its own cash needs in 2002 without assistance
from Kontron. To be successful, the Company will focus on increased sales and
profitability, in addition to improved working capital management. In the first
quarter of 2002, the Company repaid $1.0 million to Kontron, consisting of
$620,000 in accrued interest and $388,000 in principle. The Company has
finalized a $750,000 line of credit with an existing bank and if necessary,
intends to use this line of credit to fund potential cash requirements in excess
of its current cash flow projection.

                                       8
On January 29, 2002, Kontron agreed to provide financial support to enable
the Company to meet its cash flow needs and obligations as and when they become
due through December 31, 2002. The Company has a line of credit agreement with
Kontron which allows for borrowings of up to 8.5 million Euros for operations
($7.4 million based on March 31, 2002 exchange rate.) Borrowings under this
agreement bear interest at 11% per annum (payable monthly), with no stated
maturity date. Outstanding borrowings under this line of credit were $6.3
million at March 31, 2002. In the first quarter of 2002, the Company repaid $1.0
million to Kontron, consisting of $620,000 in accrued interest and $388,000 in
principle.

     On June 29, 2000, the Company entered into a Purchase and Option Agreement
with FWRKS Acquisition Corp., a wholly owned subsidiary of Kontron. The
agreement was amended on August 16, 2000. Under the amended agreement, Kontron
acquired 6 million shares of common stock of the Company for a purchase price of
$5.4 million. In addition, the option Kontron previously granted to
Industrial-Works Holding Co., LLC (IWHC), a wholly owned subsidiary of Glenmount
International, was amended. As amended, IWHC was granted an option to acquire
62,000 bearer shares of Kontron in exchange for preferred shares of the Company
that were convertible into 3.4 million shares of the Company common stock. These
transactions closed in December 2000.

     In addition, the Company received $2.5 million from FWRKS Acquisition Corp.
on June 30, 2000 in the form of a subordinated note bearing interest at 11% per
annum with an original maturity date of September 2001. FWRKS Acquisition Corp.
received warrants to purchase 1.25 million shares of common stock of the Company
exercisable at $1.00 per share. The warrants were exercisable until November 15,
2000, and were recorded at their estimated fair value of $437,500 at the date of
issuance. These warrants were cancelled and the subordinated notes were forgiven
under the terms of the amended agreement described above.

     Cash provided by operating activities was $333,798 for the first quarter of
2002, compared to $2.9 million used for operating activities in the comparable
period in 2001. The primary reasons for the improvement relate to timing of
receivable collections and changes in other working capital items. Inventory
stayed consistent at $1.3 million at March 31, 2002 compared to $1.2 million at
December 30, 2001. Accrued liabilities decreased to $0.2 million at March 31,
2002, from $0.8 million at December 30, 2001 due to the first quarter payment of
accrued interest to Kontron.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of March 31, 2002 the Company had $6.3 million outstanding on its line
of credit from Kontron. This loan bears interest at 11% per annum, payable
monthly. Both the principal amount borrowed under the line of credit and
interest payable thereunder are payable in Euros. See the earlier discussion
under "Foreign Currency Transactions" for a description of the foreign currency
forward contract in effect. All remaining transactions of the Company are
conducted and accounts are denominated in U.S. dollars. Based on its overall
foreign currency rate exposure at March 31, 2002, the Company does not believe
that a hypothetical 10% change in foreign currency rates would materially
adversely affect its financial position or results of operations.

     The Company has no derivative financial instruments or derivative commodity
instruments in its cash and cash equivalents. The Company had $1.8 million in
cash and cash equivalents at March 31, 2002. Based on analysis, shifts in money
market rates would have an immaterial impact on the Company.

PART II.  OTHER INFORMATION
---------------------------
ITEM 1.  LEGAL PROCEEDINGS

     The Company is involved in legal actions in the ordinary course of its
business. Although the Company cannot predict the outcome of any such legal
actions, management believes that there is no pending legal proceeding against
or involving the Company for which the outcome is likely to have a material
adverse effect upon the Company's financial position, results of operations or
cash flows.

                                       9
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     See the discussion under "Liquidity and Capital Resources" above for a
description of securities sold by the Company within the past three years which
were not registered under the Securities Act.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

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

     Not applicable.

ITEM 5.  OTHER INFORMATION

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         Exhibit 3.1    Second Amended and Restated Articles of
                        Incorporation of the Company (incorporated by
                        reference to Exhibit 3.2 to the Company's
                        Registration Statement filed on Form S-1, File No.
                        333-18335)

         Exhibit 3.2    Second Amended and Restated Bylaws of the Company
                        (incorporated by reference to Exhibit 3.4 to the
                        Company's Registration Statement filed on Form S-1,
                        File No. 333-18335)

         Exhibit 3.3    Articles of Merger amending the Company's
                        Articles of Incorporation effective June 4, 2001
                        (incorporated by reference to the exhibit 3.1 filed
                        with the Company's Report on Form 8-K filed June 4,
                        2001)

         Exhibit 10.1   2002 Compensation Plan for Thomas Sparrvik dated
                        November 12, 2001 (incorporated by reference to
                        Exhibit 10.24 to the Company's Report on 10-K for the
                        fiscal year ended December 30, 2001)

(b)      Reports on Form 8-K:

         None.

                                    SIGNATURE

         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.

KONTRON MOBILE COMPUTING, INC.

Date:  May 13, 2002

                                        /s/ Thomas Sparrvik
                                        ----------------------------------------
                                        Thomas Sparrvik, Chief Executive Officer
                                        (as authorized officer)

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