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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

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

                  For the fiscal year ended December 31, 2005

                                       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-

                               MOTIENT CORPORATION
             (Exact name of registrant as specified in its charter)

                   Delaware                                  93-0976127
        (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                  Identification No.)

    300 Knightsbridge Parkway, Lincolnshire, IL                60069
     (Address of principal executive offices)                (Zip Code)

                                 (847) 478-4200
              (Registrant's telephone number, including area code)

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

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

                     Common Stock, par value $0.01 per share
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [X] Yes [_] No

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act. [_] Yes [X] No

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. [X] Yes [_] No

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

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large
accelerated filer [X] Accelerated filer [_] Non-accelerated filer [_]

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

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant, based upon the closing sale price of its
common stock on the last day of registrant's most recently completed second
fiscal quarter, June 30, 2005, as reported on The Nasdaq Stock Market, was
approximately $934,507,769 (affiliates being, for these purposes only,
directors, executive officers and holders of more than 5% of the Registrant's
Common Stock).

As of March 15, 2006, the Registrant had 63,182,849 outstanding shares of Common
Stock.

     Portions of the registrant's definitive Proxy Statement to be delivered to
stockholders in connection with its Annual Meeting of Stockholders are
incorporated by reference into Part III.


<PAGE>

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<S>                                                                                                        <C>
                                                                                                           Page
                                     PART I


Cautionary Note Regarding Forward-Looking Statements
Item 1.     Business .......................................................................................4
Item 1A.    Risk Factors ...................................................................................17
Item 1B.    Unresolved Staff Comments ......................................................................25
Item 2.     Properties .....................................................................................25
Item 3.     Legal Proceedings ..............................................................................26
Item 4.     Submission of Matters to a Vote of Security Holders ............................................28

                                     PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters ..........................28
Item 6.     Selected Financial Data ........................................................................32
Item 7.     Management's Discussion and Analysis of Financial Condition and
            Results of Operations ..........................................................................35
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk .....................................74
Item 8.     Financial Statements and Supplementary Data ....................................................74
Item 9.     Changes in and Disagreements with Accountants on Accounting and
            Financial Disclosure ...........................................................................75
Item 9A.    Controls and Procedures ........................................................................75
Item 9B.    Other Information ..............................................................................75

                                    PART III

Item 10.    Directors and Executive Officers of Motient ....................................................79
Item 11.    Executive Compensation .........................................................................79
Item 12.    Security Ownership of Certain Beneficial Owners and Management and .............................79
            Related Stockholder Matters ....................................................................79
Item 13.    Certain Relationships and Related Transactions .................................................79
Item 14.    Principal Accountant Fees and Services .........................................................79

                                     PART IV

Item 15.    Exhibits and Financial Statement Schedules .....................................................79

Financial Statements of Motient ............................................................................F-1

Financial Statements of MSV ................................................................................M-1
</TABLE>


                                     - 2 -
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              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS



This annual report on Form 10-K 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. All statements regarding
our expected financial position and operating results, our business strategy and
our financing plans are forward-looking statements. These statements can
sometimes be identified by our use of forward-looking words such as "may",
"will", "anticipate", "estimate", "expect", "project", or "intend". These
forward-looking statements reflect our plans, expectations and beliefs and
accordingly, are subject to certain risks and uncertainties. We cannot guarantee
that any of such forward-looking statements will be realized.

Statements regarding factors that may cause actual results to differ materially
from those contemplated by such forward-looking statements, or cautionary
statements, include, among others, those under the captions "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Overview and Introduction" and "Risk Factors", and elsewhere in this report,
including in conjunction with the forward-looking statements included in this
report. All of our subsequent written and oral forward-looking statements (or
statements that may be attributed to us) are expressly qualified in their
entirety by the cautionary statements referred to above and contained elsewhere
in this report. You should carefully review the risk factors described in our
other filings with the SEC from time to time, including our registration
statements and quarterly reports on Form 10-Q which will be filed in the future,
as well as our other reports and filings with the SEC.

Our forward-looking statements are based on information available to us today,
and we do not undertake any obligation to update these statements. Our actual
results may differ significantly from the results discussed.




                                     - 3 -
<PAGE>

                                     PART I
                                     ------


Item 1. Business.
-----------------

Overview

Our Business Segments

Motient owns, operates and develops two-way wireless communications businesses.
We are currently developing a satellite communications service via our majority
ownership of TerreStar Networks Inc., a development stage company in the process
of building its first satellite. TerreStar was formerly a subsidiary of another
satellite communications company, called Mobile Satellite Ventures LP, or MSV,
as it is commonly known. We own 49% of MSV, but do not have operating control of
its business. We also provide our customers with two-way wireless data
communication services via convenient and cost-effective access to wireless data
networks, such as the Sprint and Cingular networks, and our own DataTac network.

Our Satellite Communications Business - TerreStar Networks Inc.

In February 2002, MSV established TerreStar Networks Inc., as a wholly owned
subsidiary of MSV, to develop business opportunities related to the proposed
receipt of certain licenses to operate a satellite communications system in the
2 GHz band, also known as the "S-band". The Federal Communications Commission,
or FCC, increased TerreStar's allocation to its present 20 MHz of S-band
spectrum from its previous allocation of 8 MHz of such spectrum in the fourth
quarter of 2005.

On May 11, 2005, TerreStar was spun-off by MSV to its limited partners and, in
connection with that spin-off, Motient acquired ownership of approximately 49%
of the issued and outstanding shares of capital stock of TerreStar. On the same
day, Motient Ventures Holding Inc., or MVH, a wholly owned subsidiary of Motient
Corporation, purchased 8,190,008 shares of newly issued common stock of
TerreStar from TerreStar for $200 million pursuant to a Purchase Agreement by
and between MVH and TerreStar. The stock purchase increased Motient's ownership
to its current 61% of TerreStar's issued and outstanding common stock. Motient's
ownership is subject to the terms of a stockholder's agreement with the minority
stockholders of TerreStar.

We anticipate that TerreStar will allow us to provide Mobile Satellite Service,
or MSS, in the S-band in conjunction with ancillary terrestrial component, or
ATC, which would allow us to integrate satellite based two-way communications
services with land-based two-way communications services. The mobile devices
utilizing this service could be used for a myriad of communications
applications, including potentially voice, data and video services. ATC can
enhance satellite availability, efficiency and economic viability by
terrestrially reusing at least some of the frequencies that are allocated to the


                                     - 4 -
<PAGE>

satellite systems. Without ATC, it may be challenging for mobile satellite
systems to reliably serve densely populated areas, because the satellite's
signal may be blocked by high rise structures and may not penetrate into
buildings. As a result, the satellite spectrum may be underutilized or unused in
such areas. The use of ATC retransmission can reduce or eliminate this problem.

ATC could, for instance, eventually allow a user to utilize a mobile phone which
would communicate with a traditional land-based wireless network when in range
of that network, but communicate with a satellite when not in range of such a
land-based network. Ideally, ATC would allow for a user to have a communications
device that would provide ubiquitous service across the United States and
Canada. TerreStar's ability to effectively use ATC depends on its continued
ability to license certain intellectual property from MSV, including patents
covering ATC operations. TerreStar has a perpetual, royalty free license to such
technology pursuant to its agreement with MSV.

During 2002, TerreStar entered into a contract with Space Systems/Loral, Inc. to
purchase a satellite system, including certain ground infrastructure for use
with the 2 GHz band. At the end of 2005, TerreStar entered into a letter of
intent to execute, and in 2006, TerreStar executed, a contract with Hughes
Networks Systems, LLC. for additional ground-based components of the system. The
communications system being developed by TerreStar will ultimately include a
main satellite, a spare satellite, ground-switching infrastructure, launch costs
and insurance, among other things. The cost of the satellite system alone could
exceed $550 million. In order to finance future payments, TerreStar will be
required to obtain additional debt or equity financing, or may enter into
various joint ventures to share the cost of development. There can be no
assurance that such financing or joint venture opportunities will be available
to TerreStar or available on terms acceptable to TerreStar, and Motient is under
no obligation to provide such financing. The value of our investment in
TerreStar could be negatively impacted if TerreStar cannot meet any such funding
requirements.

Our website is www.motient.com, and TerreStar's website is www.terrestar.com.
This annual report on Form 10-K does not incorporate by reference any of the
information on these websites, and we provide these website addresses merely for
the information of the reader. Motient is headquartered in Lincolnshire, IL and
TerreStar is headquartered in Reston, VA.

Our Terrestrial Wireless Business - Motient Communications Inc.

We are a nationwide provider of two-way, wireless mobile data services and
wireless internet services. Owning and operating a wireless radio data network
that provides wireless mobile data service to customers across the United
States, we primarily generate revenue from the sale of airtime on our network
and from the sale of communications devices, which are manufactured by other
companies. Our customers use our network and our wireless applications for
wireless email messaging and wireless data communications services. This enables
businesses, mobile workers and consumers to wirelessly transfer electronic
information and messages and to wirelessly access corporate databases and the
Internet. Our network is designed to offer a broad array of wireless data
services, such as:

                                     - 5 -
<PAGE>

     o    two-way mobile Internet services, including our own eLink SM wireless
          email service and our BlackBerry (TM) by Motient wireless email
          service, each providing personal consumers and corporate customers
          with wireless access to a broad range of email and information
          services;

     o    wireless data systems used by companies involved in data transmission
          and processing, used to connect remote equipment, such as wireless
          point-of-sale terminals, with a central monitoring facility; and

     o    mobile data and mobile management systems used by transportation and
          other companies to wirelessly coordinate remote, mobile assets and
          personnel.

Our subscriber's wireless devices, which may be mobile or stationary, receive
and transmit wireless data messages to and from terrestrial base stations via
radio frequencies. Terrestrial messages are then routed to their destination via
data switches that Motient owns, which connect to the public data network.
Motient's network is a wireless packet-switched network based on technologies
developed prior to newer networks built around CDMA or GSM technologies, and,
unlike those networks, cannot accommodate wireless telephony.

In December 2004, we launched a new set of products and services designed to
provide these integrated wireless data solutions to our customers called
iMotient Solutions. iMotient allows Motient's customers to use multiple
networks, including our own DataTac network, plus the networks of Cingular
(GPRS) and Sprint (1XRTT), via a single connection to Motient's back-office
systems, providing a single alternative for application and software
development, device management and billing across these multiple networks. Once
connected to iMotient, customers receive our proprietary applications and
services that reduce airtime usage, improve performance and reduce costs.

As of December 31, 2005 and 2004, there were approximately 97,000 and 132,000
user devices registered and 53,000 and 77,000 user devices with active usage on
Motient's network, respectively. Of these devices, there were approximately
4,700 user devices registered and 4,400 user devices active on our iMotient
Solutions platform that are not using our DataTac network. Registered devices
represent devices that our customers and resellers have registered for use on
our network. These devices may be kept in inventory by our customers for future
use, in which case they are not generally revenue producing. We count a device
as active when it is removed from inventory by the customer and transmits data
traffic.

Mobile Satellite Ventures LP

MSV's Business

                                     - 6 -
<PAGE>

MSV is a provider of mobile satellite-based communications services. MSV
currently uses two satellites to provide service, which allow customers access
to satellite-based wireless data, voice, fax and dispatch radio services almost
anywhere in North and Central America and in various coastal waters.

MSV, together with Mobile Satellite Ventures (Canada) Inc., licensed by Industry
Canada, is licensed to operate in the L-Band spectrum which it has coordinated
for use. MSV currently has coordinated approximately 30 MHz of L-band spectrum
for use throughout the United States and Canada. The L-band spectrum is
positioned within the range of frequencies used by terrestrial wireless
providers in the United States and Canada. Like TerreStar, MSV is also
developing an ATC- based next-generation integrated wireless network. MSV is
headquartered in Reston, VA, with an office in Ottawa, ON, Canada.

MSV is structured as a limited partnership, of which Motient is one of the
limited partners. Motient holds a proportionate ownership interest in the
corporate general partner. Motient has certain rights to appoint directors to
the sole general partner of the limited partnership, but does not have any
direct or indirect operating control over MSV.

Until November 26, 2001, the entity that would become MSV was a majority owned
subsidiary of Motient. On that date, Motient sold the assets comprising its
satellite communications business as part of a transaction in which certain
other parties joined MSV, including TMI Communications and Company Limited
Partnership, a Canadian satellite services provider. In this transaction, TMI
also contributed its satellite communications business assets to MSV. At the
conclusion of this transaction and several minor secondary financings, Motient's
ownership interest in MSV was 29.5% (assuming conversion of all outstanding
convertible notes). In a subsequent financing on November 12, 2004, Motient
acquired additional interests in MSV in exchange for cash and the conversion and
cancellation of all outstanding notes issued to Motient by MSV (including all
accrued interest thereon), and as a result increased its ownership to 38.6%. In
February 2005, Motient acquired additional interests from several other MSV
equityholders, increasing its direct and indirect ownership to 49%. Motient
cannot increase its ownership of MSV any further without the consent of a
supermajority of the MSV equityholders.

To the extent that MSV will need future cash to support its operations, Motient
is under no contractual obligation to provide it, and the value of our
investment in MSV could be negatively impacted if MSV cannot meet any such
funding requirements.

Motient's Business Strategy

Motient's objective is to (i) via TerreStar (and indirectly through MSV), design
and develop a next-generation communications system involving a hybrid
satellite/terrestrial wireless network in North America, and (ii) via Motient
Communications, use its enterprise wireless data experience to continue to
penetrate the large markets for mobile data communications services and
solutions and wireless telemetry applications while keeping costs under control.
To meet these objectives, we intend to do the following:

                                     - 7 -
<PAGE>

TerreStar Networks and MSV

Design And Develop A Next-Generation Communications System - A Hybrid
Satellite/Terrestrial Wireless Network Over The United States and Canada.
TerreStar and MSV are each separately designing and developing next generation
hybrid wireless networks that will use powerful satellites working in unison
with patented ancillary terrestrial component (ATC) technology to deliver
seamless wireless services to end-users in the United States and Canada over
standard wireless devices. TerreStar holds a perpetual, royalty-free license to
utilize MSV's patent portfolio, including those patents related to ATC, pursuant
to an agreement with MSV. With the right to receive 20 MHz of S-band spectrum,
TerreStar will be able to deploy terrestrial two-way radio network technology in
thousands of locations across the United States and Canada, allowing subscribers
to integrate satellite-based communications services with more traditional
land-based wireless communications services. With access to approximately 30 MHz
of L-Band spectrum, MSV will be able to design and operate a similar system.
TerreStar is currently in the process of building its first satellite pursuant
to a construction contract with Space Systems/Loral, Inc. This satellite is
scheduled to be completed in November 2007, with commercial operations to
commence in 2008. MSV has entered into a contract with Boeing to build and
launch three satellites, beginning in 2009.

Work With MSV To Develop And Protect Intellectual Property And Patents
Underlying Its Communications System Capabilities. MSV has established a series
of wide-ranging patents, covering systems and methods for coordinating
space-based and terrestrial use of satellite frequencies for a
satellite/terrestrial hybrid network, and TerreStar has a perpetual,
royalty-free, license to this intellectual property, pursuant to its agreement
with MSV. MSV's intellectual property portfolio has been developed over 15 years
and includes over 100 filed patent applications representing over 4,000 claims
directed to the space segment, the terrestrial segment and the wireless
terminals of an ATC network. We believe this portfolio exceeds any other
potential ATC patent portfolio both in breadth and in depth.

Motient Communications

Focus Growth Efforts On iMotient Solutions Service Platform. As part of the
iMotient Solutions platform, we are a reseller of airtime on the Cingular and
Sprint wireless networks. These reseller agreements allow us to sell and promote
applications and solutions to enterprise accounts on networks with greater
capacity than our own, while still maintaining a direct relationship with the
customer, since "back office" functions like customer support, application
design and implementation and billing, among other support services, are handled
by Motient. This network-independent sales channel allows us to leverage our
reputation as a creative and agile provider of wireless services; without the
large fixed costs of a traditional wireless network.

Leverage Motient's Expertise In Selling And Provisioning Complete Wireless Data
Solutions For Business Customers. A key strategic asset of Motient is its
experienced sales, customer care and technical support team. This team is
qualified to sell complete wireless data solutions, rather than simply devices
and network airtime, that may include network services that utilize more than
Motient's terrestrial network offerings, such as customer support and business
services.

                                     - 8 -
<PAGE>

Take Advantage Of Motient's Professional Service And Back-Office Capabilities To
Potentially Generate New Revenue Opportunities. Motient has deployed
comprehensive and customized wireless data communications solutions for
businesses for over a decade. These wireless data communications solutions have
often required specialized billing, data switching requirements and inventory
and reporting requirements, among other customized back-office capabilities.
With our new iMotient Solutions platform, these professional services and
back-office capabilities can be customized to satisfy existing and new customers
on Motient's network or alternative networks. Motient believes that these
professional services and back-office capabilities can be positioned as network
or carrier agnostic and thus provide customers potentially expansive network
capabilities and service at the lowest cost.

Motient's Wireless Service Offerings

iMotient Solutions

Motient has reseller agreements with Sprint and Cingular that allow us to sell
and promote wireless data applications and solutions to customers using networks
that are more modern, and therefore have greater capacity, than our own DataTac
network, while still maintaining a direct relationship with the customer, since
"back office" functions like customer support, application design and
implementation and billing, among other things, are handled by Motient. The
iMotient Solutions set of products and services provide a one-source alternative
for software and application development, device management and billing across
multiple networks. Once connected to iMotient, customers receive our proprietary
applications and services that reduce airtime usage, improve performance and
reduce costs. iMotient customers may use our products in multiple applications,
including field service, transportation and telemetry applications.

Wireless Internet

Motient offers a variety of wireless email solutions for its DataTac network
(though not iMotient), including its own eLink wireless e-mail applications, as
well as Research In Motion's, or RIM's, BlackBerry(TM) wireless solution for use
on its own network. RIM has discontinued production of handheld units that are
compatible with our network. Accordingly, we do not anticipate significant
future sales of these wireless internet devices, applications and services. In
addition, we expect this revenue segment to decline in the future as customers
migrate to alternative networks that are compatible with newer and more
functional handheld devices, combining voice and data functionality.

Field Service Applications

In the field service market, customers use our wireless network, wireless
applications, professional support services and back-office capabilities to
enable their mobile field service technicians to stay connected. For these and
other field service customers, Motient also provides critical professional
support service and back-office functionality tailored to our customers'
respective communications requirements, such as specialized billing, data
switching, inventory tracking, customer support and reporting.

Transportation and Shipping

In the transportation and shipping market, customers take advantage of Motient's
network, data switching and routing capabilities and professional support
services and back-office capabilities to provide effective communications


                                     - 9 -
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solutions to transportation and shipping fleets and other similar mobile
customers. For these and other transportation and shipping customers, Motient
also provides critical professional support service and back-office functions
tailored to our customers' respective communications requirements, such as
specialized billing, data switching, inventory tracking, customer support and
reporting.

Telemetry

Telemetry involves the transmission of generally small amounts of data from a
remote device to a master collection or monitoring point. The data may be stored
in a mobile device and then transmitted when necessary or cost-effective.
Motient has signed agreements with a variety of resellers, device manufacturers
and software vendors in this market. We have also signed agreements with several
application service providers to develop and offer a variety of customer-driven
telemetry applications. Applications include HVAC system monitoring, wireless
point-of-sale systems, energy monitoring, vending and office machine automation
and security/alarm monitoring. We believe that our access to expansive wireless
networks and telemetry experience will allow us to provide cost-effective and
comprehensive solutions for these communication requirements.

Pricing of Services

Motient's customers are generally charged a monthly access fee or minimum usage
fee. Unless on a flat rate plan, users also pay for usage depending on the
number of kilobytes of data transmitted. Motient's pricing plans offer a wide
variety of volume packaging options, consistent with customer demand and market
conditions, from flat-rate plans to per message or per kilobyte plans. In
certain cases, primarily as it relates to strategic resellers, a percentage of
these subscriber units do not become revenue producing for up to several months
from initial registration on the network.

Motient's Customers

As of December 31, 2005, there were approximately 97,000 user devices registered
on Motient's networks, with 74,000 in a billable status and 53,000 with active
usage. Of these devices, there were approximately 4,700 user devices registered
and 4,400 user devices active on our iMotient Solutions platform that are not
using our DataTac network. Motient's customer base consists of large
corporations in the following market categories:

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                                                                  Percentage of
         Market Categories                                        Billable Units
         -----------------                                        --------------

Transportation and package delivery                                      51%
Telemetry and point of sale                                              23
Wireless internet or email                                               17
iMotient                                                                  7
Field service                                                             2
                                                                        ----
Total                                                                   100%
                                                                        ====


For the year ended December 31, 2005, one customer, SkyTel, accounted for
approximately 21% of Motient's service revenue, no other single customer
accounted for more than 10% of our service revenue. The loss of one or more of
these customers, or any event, occurrence or development which adversely affects
Motient's relationship with one or more of these customers, could harm Motient's
business. The contracts with these customers are generally multi-year contracts,
and the services provided pursuant to such contracts are generally customized
applications developed to work solely on Motient's network.

Strategic Alliances With Application, Integration And Distribution Partners

To penetrate new wireless data markets, which Motient believes have significant
growth potential, we have signed contracts for a variety of strategic alliances
with multiple partners in our various market segments. Motient intends to use
the marketing and distribution resources and large existing customer bases of
these partners to address significantly more potential customers than Motient
would be able to address on its own. Motient is continuing to seek additional
strategic distribution channels to help us move forward with our plan to more
fully penetrate our existing markets and access potential new markets on an
incremental basis. Motient has formed partnerships with Comstar Interactive,
Enfora, MultiTech Systems, Digi International and Webtech Wireless, among
others, for the sale of its services on its networks.

Direct Sales And Technical Force

Motient has a direct sales force that is experienced in selling its various
wireless services. Prior to making a buying decision, a majority of Motient's
potential customers exercise a due diligence process where competitive
alternatives are evaluated. Motient's employees often assist in developing
justification studies, application design support, hardware testing, planning
and training. Motient's internal sales force has been key to its ability to
convey customer feedback to its product management team, enabling Motient to
identify and develop new product and service features. Motient's internal sales
force is also supported by technical project managers that assist customers to
assess, design and implement their wireless data need and solutions.

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Motient's DataTac Network

Motient's two-way wireless radio data network provides a wide range of mobile
data services. Users access it through subscriber units that may be portable,
mobile or stationary devices. Subscriber units receive and transmit wireless
data messages to and from terrestrial radio transmitters/receivers, known as
base stations, which are located on various leased antenna sites across the
United States. Terrestrial messages are then routed to their destination via
leased communications circuits and data switches that Motient owns, which
connect to the public data network.

Motient's terrestrial network uses Motorola's patented single frequency reuse
technology. Single frequency reuse technology enables multiple base stations in
a given area to use the same frequency. As a result, a message sent by a
subscriber can be received by a number of base stations. This technology
contrasts with more commonly used multiple frequency reuse systems, which
provide for only one transmission path for a given message at a particular
frequency.

Equipment And Supplier Relationships

DataTac: Motient has contracts with a variety of vendors to supply devices
designed to meet the requirements of specific end-user applications on its
DataTac network. Although many of the components of its products are available
from a number of different suppliers, Motient relies on a relatively small
number of key suppliers for devices for its DataTac network. The devices used
with Motient's services generally are subject to various product certification
requirements and regulatory approvals before they are delivered for use by its
customers. There are currently four types of subscriber units available from
four different manufacturers that can operate on Motient's terrestrial network.
Examples of portable subscriber units include ruggedized laptop computers and
hand held point-of-sale terminals.

AT&T Corporation provides network telecommunications services and leased sites
which house regional switching equipment for Motient's DataTac network. Motient
also has a relationship with AT&T as Motient's vendor for switched inbound and
outbound public switched telephone network services, which connect Motient's
network to the public telecommunications network.

iMotient: Under our iMotient Solutions platform and our reseller agreements with
Cingular and Sprint, we have access to a variety of vendors to supply devices
designed to meet the requirements of specific end-user applications. These
vendors have certified devices for use on either or both of the Cingular or
Sprint networks, and we are able to use any certified device that supports GPRS
data on Cingular or 1XRTT on Sprint's network.

Competition

The wireless communications industry is highly competitive and is characterized
by constant technological innovation. Motient competes by providing access to
multiple networks, broad geographic coverage, demonstrated reliability and
experience in designing and implementing software and other wireless


                                     - 12 -
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applications for enterprise customers. These features distinguish Motient from
the competition. Motient's wireless solutions are used by businesses that need
critical customer and operational information in mobile and fixed environments.
Motient offers multiple business lines and competes with a variety of service
providers, from small startups to Fortune 500 companies. Motient's competitors
include service providers in several markets--dedicated mobile data, PCS and
cellular, narrowband PCS/enhanced paging and emerging technology platforms.
Motient's agreements with Sprint and Cingular are not exclusive and other
wireless service providers have similar agreements with these carriers.

TerreStar also competes in the highly competitive wireless communications
industry. TerreStar's distinguishing competitive features are its nationwide 20
MHz S-band frequency allocation and its license to MSV's ATC patent portfolio.

Employees

As of December 31, 2005 and March 1, 2006, Motient (including TerreStar) had 88
and 83 employees, respectively. None of Motient's employees are represented by a
labor union. Motient considers its relations with its employees to be good.

Regulation

Overview

Motient's wireless communications business is regulated to varying degrees at
the federal, state and local levels. Various legislative and regulatory
proposals under consideration from time to time by Congress and the FCC have in
the past materially affected and may in the future materially affect the
telecommunications industry in general, and Motient's wireless business in
particular. The following is a summary of significant laws, regulations and
policies affecting the operation of Motient's wireless business. In addition,
many aspects of regulation at the federal, state and local level currently are
subject to judicial review or are the subject of administrative or legislative
proposals to modify, repeal, or adopt new laws and administrative regulations
and policies. Neither the outcome of these proceedings nor their impact on
Motient's operations can be predicted at this time.

The ownership and operation of Motient's DataTac network is subject to the rules
and regulations of the FCC, which acts under authority established by the
Communications Act of 1934, as amended, and related federal laws. Among other
things, the FCC allocates portions of the radio frequency spectrum to certain
services and grants licenses to and regulates individual entities using that
spectrum. Motient operates pursuant to various licenses granted by the FCC.

Motient's FCC licenses are subject to restrictions in the Communications Act
that (i) some FCC licenses may not be held by a corporation of which more than
20% of its capital stock is directly owned of record or voted by non-U.S.
citizens or entities or their representatives and (ii) no such FCC license may
be held by a corporation controlled by another corporation, referred to as
indirect ownership, if more than 25% of the controlling corporation's capital
stock is owned of record or voted by non-U.S. citizens or entities or their
representatives, if the FCC finds that the public interest is served by the
refusal or revocation of such license. However, with the implementation of the


                                     - 13 -
<PAGE>

Basic Telecommunications Agreement, negotiated under the auspices of the World
Trade Organization and to which the United States is a party, the FCC will
presume that indirect ownership interests in our FCC licenses in excess of 25%
by non-U.S. citizens or entities will be permissible to the extent that the
ownership interests are from World Trade Organization-member countries. If the
25% foreign ownership limit is exceeded, the FCC could take a range of potential
actions that could harm Motient's business.

Regulation Of Our DataTac Network

The Federal Communications Commission licenses used in Motient's terrestrial
wireless business are renewable, site-based, 800 MHz licenses, granted for a
term of 10 years. Renewal is granted in the ordinary course for 800 MHz licenses
like those which Motient holds. As a commercial mobile radio service provider in
the 800 MHz terrestrial business, Motient is regulated as a common carrier.
Motient must therefore offer service at just and reasonable rates on a
first-come, first-served basis, without any unjust or unreasonable
discrimination, and Motient is subject to the FCC's complaint processes. The FCC
has decided not to apply or to withhold its right, at this time, to apply
numerous common carrier provisions of the Communications Act to commercial
mobile radio service providers. In particular, Motient is not subject to
traditional public utility rate-of-return regulation, and is not required to
file tariffs with the FCC.

In order to address certain concerns from wireless users in the public safety
community, such as fire and police departments, on July 8, 2004, the FCC
approved adoption of a reconfiguration plan for the 800 MHz spectrum band. Under
the plan, Nextel Communications Inc. will occupy spectrum in the 1.9 GHz band in
exchange for, among other things, (1) relocating and retuning public safety
licensees in the 800 MHz band, and (2) consolidating its own 800 MHz frequencies
in the upper portion of the 800 MHz band. On December 22, 2004, the FCC
clarified that Motient would generally be allowed, subject to certain
conditions, to move its 800 MHz frequencies to a portion of the upper-800 MHz
band. Motient will move some, but not all of its 800 MHz frequencies in this
manner. Motient cannot assure you that its operations will be not affected by
the adoption or implementation of this order or any subsequent addenda.

As a result of our ongoing network rationalization efforts, our 800 MHz FCC
licenses may be lost in markets to which we are discontinuing service. We
believe that the value of our FCC licenses in these smaller markets is very
small compared to the value of our FCC licenses in the top 40 MSAs. While we
believe that any such losses would not be material to our business, we can
provide no assurance that any such losses would not negatively impact our
business.

Regulation Of TerreStar & MSV

ATC

In February 2003, the FCC adopted an order governing ancillary terrestrial
component, or ATC, technology, giving mobile satellite operators broad authority
to use their assigned spectrum to operate an ATC network. This order was
applicable to both the L-band (MSV), and the S-band (TerreStar). The ATC Order
established a set of preconditions and technical limits for ATC operations, as
well as an application process for approval of specific ATC systems.


                                     - 14 -
<PAGE>

On November 8, 2004, the FCC issued an order granting MSV the first ATC license
ever granted by the FCC. The FCC also approved several of MSV's waiver requests,
allowing MSV to enhance its service coverage further, but it specifically
deferred its ruling on other MSV waiver requests at that time. On February 25,
2005, the FCC issued a revised set of rules for ATC. The decision clarified the
outstanding technical issues left open by the February 2003 and November 2004
decisions. In particular, these revised rules allow MSV to (i) increase
significantly reuse of its frequencies for ATC, resulting in enhanced ATC
capacity and coverage; and (ii) increase base station power, permitting MSV to
deploy base stations in a more cost-effective manner and to offer innovative
services. MSV has filed an application for approval from the FCC to modify its
ATC license to conform to the revised rules. In the interim, MSV can operate an
ATC network pursuant to the November 2004 decision.

The February 2003, November 2004 and February 2005 orders set forth various
limitations and conditions necessary to the use of ATC by MSV. There can be no
assurances that such conditions will be satisfied by MSV, or that such
limitations will not be unnecessarily burdensome. One of MSV's competitors has
asked the FCC to review the November 2004 and February 2005 decisions. We cannot
predict the outcome of this review.

In May 2005, MSV received FCC authorization to launch and operate a next
generation L-Band satellite. This authorization follows the April 2005 Industry
Canada authorization to MSV's Canadian affiliate for a next generation L-band
satellite. Use of the two authorizations together gives MSV the authority it
needs to replace its existing satellites and utilize the full complement of
spectrum available to it.

TerreStar has not applied for ATC authority, and there are several regulatory
conditions that must be satisfied prior to any grant of ATC authority by the FCC
to TerreStar. As a result, Motient can provide no assurances that ATC authority
will be granted if and when TerreStar applies for such authority.

TerreStar Licenses

TMI Communications, a shareholder of TerreStar, holds an approval issued by
Industry Canada for a 2 GHz space station authorization and related spectrum
licenses for the provision of Mobile Satellite Service, or MSS, in the 2 GHz
band in Canada, as well as an authorization from the FCC for the provision of
MSS in the 2 GHz band in the United States. These authorizations are subject to
various milestones relating to the construction, launch and operational date of
the system. TMI is contractually obligated to transfer the authorizations to an
entity designated by TerreStar that is eligible to hold the authorizations,
subject to obtaining the necessary regulatory approvals.

In December 2002, TMI and TerreStar jointly applied to the FCC for authority to
transfer TMI's U.S. MSS authorization to TerreStar. However, certain wireless
carriers urged the FCC to cancel TMI's MSS authorization and to dismiss the


                                     - 15 -
<PAGE>

application to transfer TMI's MSS authorization to TerreStar. In February 2003,
the FCC's International Bureau adopted an order canceling TMI's MSS
authorization due to an alleged failure to enter into a non-contingent satellite
construction contract before the specified first milestone date and dismissing
the application for TMI to transfer its MSS authorization to TerreStar.

In June 2004, upon review of the International Bureau's decision, the FCC agreed
to waive aspects of the first milestone requirement applicable to TMI's MSS
authorization and, therefore reinstated that authorization, along with the
application to transfer TMI's MSS authorization to TerreStar. The FCC also
modified the milestone schedule applicable to TMI's MSS authorization. TMI
recently certified to the FCC its compliance with the second and third
milestones under its MSS authorization. The FCC is currently reviewing that
certification for compliance with the requirements of TMI's MSS authorization.
The application to transfer TMI's MSS authorization to TerreStar is still
pending before the FCC and will need to be modified to reflect certain changes
in ownership of TerreStar and the eventual transfer of the Canadian MSS
authorization to TerreStar Canada. Furthermore, TMI's LOI will have to be
modified to reflect technical changes to the satellite and a change in the
orbital location specified in the Canadian MSS authorization. The remaining
milestones relate to satellite launch and operation, and are in November 2007
and 2008, respectively.

On July 26, 2005, Industry Canada modified TMI's S-band authorization to provide
for a 2 x 10 MHz reservation (20 MHz in total). Specifically, this reservation
consists of 7 MHz in each direction, with an additional 3 MHz in each direction
available on the condition that it does not constrain the entry of another MSS
operator into the Canadian market.

In December 2005, the FCC provided TMI a reservation of 2 x 10 MHz (20 MHz in
total) of spectrum within the 2 GHz MSS band. TMI does not yet have a specific
spectrum assignment within that band, because current FCC rules do not allow it
to request a specific assignment until such time as its satellite reaches its
intended orbit. TMI's current spectrum reservation from the FCC reflects the
December 2005 order dividing all of the then available S-band MSS spectrum
between the two 2 GHz MSS licensees, TMI and ICO Satellite Services. TMI and ICO
were the only remaining S-band authorization holders whose authorizations had
not been surrendered or cancelled by the FCC, and in the December 2005 order the
FCC rejected proposals to make recaptured 2GHz spectrum available to new MSS
applicants or to non-MSS services. Several parties have challenged the December
2005 ruling and the revocation of their S-band authorizations, and we cannot
predict the outcome of these challenges.

In September 2004, the FCC issued an order allowing PCS operation in the
1995-2000 MHz band, which may be adjacent to the 2 GHz frequencies ultimately
assigned to TMI. TerreStar has commented in the proceedings to establish service
rules for the 1995-2000 MHz band. There can be no assurance that the FCC will
not adopt service rules that will create interference to MSS operators in the 2
GHz band, including TerreStar.


                                     - 16 -
<PAGE>

The 2 GHz MSS band and certain adjacent bands are currently occupied by
broadcast auxiliary service licensees, cable television relay service licensees,
local television transmission service licensees, fixed service licensees, and
certain other licensees. Most if not all of those licensees, and especially
those in the broadcast auxiliary service, will need to relocate their operations
to a new band to accommodate 2 GHz MSS and other new entrants. As a 2 GHz MSS
entrant, TMI and/or TerreStar will have certain obligations to compensate those
incumbent licensees for their relocation costs and for the costs of providing
"comparable facilities" to them. However, the level to which TMI and/or
TerreStar will be required to participate in such reimbursement is uncertain due
to a variety of factors, and one such factor is that, pursuant to a separate FCC
order, Nextel Communications Inc. (Nextel) must relocate incumbent broadcast
auxiliary service licensees in the 1990-2025 MHz band by September 6, 2007. To
the extent that Nextel complies with its band clearing obligations, 2 GHz MSS
entrants commencing operations after Nextel has cleared the band would not have
to clear the band themselves, but could still have obligations to reimburse
Nextel for certain of its band clearing costs. Whether a 2 GHz MSS entrant will
be required to share in certain of Nextel's relocation costs will likely depend
upon whether that entrant commences operations prior to June 27, 2008. Even if
Nextel bears all costs of relocating incumbent licensees in the 1990-2025 MHz
band, TMI and/or TerreStar will still likely be responsible for relocating
certain incumbent licensees in the 2165-2200 MHz band, although it may have the
right to recoup certain costs from wireless entrants in the 2165-2180 MHz band.
We cannot predict what these band-clearing costs will be to TMI and/or
TerreStar, if any, but they could range from $0 to in excess of $100 million.

Item 1A. Risk Factors
---------------------

An investment in our common stock involves risks. Any of the following risks, as
well as other risks and uncertainties, could harm our business and financial
results and cause the value of our securities to decline, which in turn could
cause investors to lose all or part of their investment in us. The risks below
are not the only ones we face. Additional risks not currently known to us, or
that we currently deem immaterial also may impair our business.

We Have Undergone Significant Organizational Restructuring And We Face
Substantial Operational Challenges In Our Terrestrial Wireless Business.

We have been forced to take material actions to reduce operating costs in our
terrestrial wireless business. The elimination of certain sales and other
personnel may have a negative effect on our future revenues and growth prospects
and our ability to support new product initiatives and generate customer demand.
In addition, over the course of 2004 we removed unneeded capacity across the
network by deconstructing under-utilized and un-profitable base stations. In
2005, Motient reduced the size of its DataTac network to focus primarily on the
top 40 Metropolitan Statistical Areas (MSAs). Motient has been faced with the
loss of certain FCC licenses in those decommissioned areas. Motient anticipates
that if it is not able to sell, lease or otherwise monetize these frequencies
promptly, it may be forced to return the underlying licenses to the FCC. We have
discussed these changes to our network with many of our customers to assist them
in evaluating the potential impact, if any, to their respective communications
requirements. These reductions in network capacity and coverage may have a
negative effect on our future revenues and growth prospects.


                                     - 17 -
<PAGE>

We Are Not Cash Flow Positive, And We Will Need Additional Liquidity To Fund Our
Operations And Fully Fund All Of The Necessary TerreStar Capital Expenditures.

We do not generate sufficient cash from operations to cover our operating
expenses, and it is unclear when, or if, we will be able to do so. Even if we
begin to generate cash in excess of our operating expenses, we expect to require
additional funds to meet capital expenditures and other non-operating cash
expenses, including but not limited to capital expenditures required to complete
and launch TerreStar's satellite currently under construction. We currently
anticipate that the funding requirements of Motient (including TerreStar) for
the next 12 months should be met through a combination of various sources,
including:

     o    cash on hand,

     o    cash from a rights offering announced in December 2004, and,

     o    cash from the exercise of outstanding options and warrants.

There can be no assurance that the foregoing sources of liquidity will provide
sufficient funds in the amounts or at the time that funding is required.
TerreStar will seek to raise additional financing in 2006 to fund its operating
and capital expenditure requirements. If it is not successful in raising
additional financing, it may have to curtail or delay certain initiatives until
such financing is secured. There can be no assurance that we will be able to
provide this funding when necessary.

In addition, if our ability to realize such liquidity from any such source is
delayed or the proceeds from any such source are insufficient to meet our
expenditure requirements as they arise, we will seek additional equity or debt
financing, although such additional financing may not be available on reasonable
terms, if at all.

We Will Continue To Incur Significant Losses.

If we do not become profitable, we could have difficulty obtaining funds to
continue our operations. We have incurred net losses every year since we began
operations. These losses are due to the costs of developing and building our
network and the costs of developing, selling and providing products and
services. Although we have significantly reduced our losses, we will continue to
have losses in the future.

We May Not Be Able To Realize Value From Our Investment In TerreStar Or MSV Due
To Risks Associated With Their Next-Generation Business Plans.


                                     - 18 -
<PAGE>

The business plans of both TerreStar and MSV involve the development of a
next-generation network that combines satellite services with ancillary
terrestrial components, or ATC, which is novel and without established
precedent. Other than satellite radio providers, neither TerreStar, MSV nor any
other company has developed an integrated hybrid network combining satellite
services with ATC, and their success will depend on several factors, including:

the ultimate resolution of pending legal and regulatory proceedings with respect
to TerreStar's S-band and MSV's L-band license authorizations.

     o    TerreStar's and MSV's ability to effectively make use of spectrum;

     o    TerreStar's and MSV's ability to structure partnerships to fund its
          next generation system consistent with various regulations governing
          ownership and operation of satellite assets and regulations concerning
          the utilization of ATC;

     o    TerreStar's and MSV's ability to coordinate with other satellite
          system operators to optimize both its overall spectrum access and the
          utility of its spectrum for certain wireless protocols;

     o    whether the price paid for spectrum in prior transactions is
          indicative of the future value of TerreStar's and MSV's spectrum
          assets and TerreStar's and MSV's ability to effect transactions that
          realize the value of such spectrum assets;

     o    the supply of available wireless spectrum in the marketplace;

     o    TerreStar's and MSV's ability to develop and integrate the complex
          technologies associated with its next-generation system as well as
          appropriately and effectively manage interference;

     o    TerreStar's and MSV's ability to develop and deploy innovative network
          management techniques to permit mobile devices to seamlessly
          transition between satellite and terrestrial mode;

     o    the construction, delivery and launch of TerreStar's and MSV's
          next-generation satellites and the maintenance of MSV's existing
          geostationary satellites;

     o    TerreStar's and MSV's ability to obtain funding for the construction
          of the satellite component of its next-generation service on favorable
          terms;

     o    TerreStar's and MSV's dependence on one or more third party partners
          to construct the terrestrial base station component of its
          next-generation network, if it does not obtain other funding for this
          construction;

                                     - 19 -
<PAGE>

     o    market acceptance and level of demand for TerreStar's and MSV's
          next-generation network; and

     o    protection of MSV's proprietary information and intellectual property
          rights, and the protection of TerreStar's license to such information
          and rights.

If MSV or TerreStar is unable to implement its next-generation business
strategy, our investments in MSV and TerreStar could be materially and adversely
affected.

We May Not Be Able To Effectively Execute TerreStar's Business Plan.

As the majority shareholder of TerreStar, Motient will have the ability and
obligation to ensure that TerreStar can successfully execute its business plan.
We have not been a majority shareholder in a satellite communications company
since we sold MSV in November 2001. Accordingly, Motient has limited experience
in running a satellite communications business. In addition, TerreStar's
business plan (and the ultimate value of its assets) depends on the successful
deployment of an ancillary terrestrial component to its satellite network. If
Motient is unable to retain personnel with sufficient expertise in such matters,
Motient may be unable to execute the business plan of TerreStar. If Motient is
unable to execute TerreStar's business plan for this or any other reason, the
value of our investment in TerreStar will be negatively impacted.

Funding Requirements For TerreStar May Jeopardize Our Investment In, And Control
Over, TerreStar.

The implementation of TerreStar's business plan, including the construction and
launch of a satellite system and the necessary terrestrial components of an
ATC-based communications system, will require significant additional funding. If
Motient is unable or unwilling to provide such funding to TerreStar, then
TerreStar may be forced to seek funding from third parties that may dilute
Motient's equity investment in TerreStar. Such dilution, if sufficiently severe,
may limit Motient's control over TerreStar.

We Could Lose Market Share And Revenues As A Result Of Increasing Competition
From Companies In The Wireless Communications Industry That Have Greater
Resources, Name Recognition And Newer Technologies.

We face intense competition in all of our markets, which could result in
continuing losses of customers and lower revenues and could make it more
difficult for us to enter new markets. Our competitors include service providers
in several markets -- dedicated mobile data, personal communications service or
PCS, narrowband PCS/enhanced paging and emerging technology platforms. The
growth in wireless data opportunities has led traditional hardware manufacturers
and software developers to invest in technologies that will allow the migration
of core products and services to a mobile environment.

                                     - 20 -
<PAGE>

We Generate A Large Part Of Our Revenues And Cash Flows From A Small Number Of
Customers On Our DataTac Network, And The Loss Of One Or More Key Customers
Could Result In A Significant Reduction In Revenues And Cash Flows.

For the year ended December 31, 2005, one customer, SkyTel, accounted for
approximately 21% of Motient's service revenue, no other single customer
accounted for more than 10% of our service revenue. None of these significant
customers is obligated to purchase any minimum quantity of airtime, service or
hardware from us. There can be no assurance that the revenue generated from our
largest customers will continue in future periods. We may lose certain revenues
from major customers due to churn, migration to alternative technologies or the
impact of our recent network rationalization efforts. The loss of one or more of
our key customers, a material reduction in such customers' use of our network,
or any other event, occurrence or development which adversely affects our
relationship with one or more of these customers, could harm our business by
reducing revenue and reducing net cash flow from operations.

The Value Of Our Intangible Assets In Our Financial Statements Is Based On
Assumptions And Estimates, Which May Not Be Correct.

The valuation of our intangible assets is based on various assumptions and other
considerations, including the assumptions and estimates related to future
periods that we used to determined these values. Although we have attempted to
be as accurate as possible in making and applying the assumptions and estimates
used in the valuation of our intangible assets, including but not limited to
those outlined herein, we can provide no assurances that these assumptions and
estimates for future periods will ultimately be proven correct. Our actual
operating results for future periods may be materially different than our
assumptions and estimates for future periods, which may cause the actual value
of these assets to be materially different than our estimates. We will test
these assets in the future for impairment, which may result in the book value of
these assets to decrease.

We May Not Be Able To Develop, Acquire And Maintain Proprietary Information And
Intellectual Property Rights, Which Could Limit The Growth Of Our Business And
Reduce Our Market Share.

Our terrestrial and satellite wireless communications business depends on
technical knowledge, and we believe that our future success is based, in part,
on our ability to keep up with new technological developments and incorporate
them in our products and services. We own or have the right to use certain of
our work products, inventions, designs, software, systems and similar know-how.
While we have taken steps to diligently protect that information, there is no
assurance that the information will not be disclosed to others or that others
will not independently develop similar information, systems and know-how.
Protection of our information, systems and know-how may result in litigation,
the cost of which could be substantial. There is also no assurance that third
parties will not assert claims that our products or services infringe on their
proprietary rights.

                                     - 21 -
<PAGE>

We also rely on some technologies licensed from third parties, including but not
limited to the intellectual property related to ancillary terrestrial component
from MSV. We cannot be sure that these licenses will remain available on
commercially reasonable terms or at all. The loss of these technologies could
require us to obtain substitute technology of lower quality or performance
standards or at a greater cost, which could harm our business.

Government Regulation May Increase Our Cost Of Providing Services, Slow Our
Expansion Into New Markets, Subject Our Services To Additional Competitive
Pressures And Affect The Value Of Our Common Stock.

Motient's ownership and operation of wireless communication systems are subject
to significant regulation by the FCC under authority granted by the
Communications Act of 1934 and related federal laws. There is no assurance that
the rules and regulations of the FCC will continue to support our operations as
presently conducted, in the case of our DataTac network, or as we plan to
conduct such operations, in the case of TerreStar. Motient's 800 MHz licenses
are subject to renewal by the FCC, and we cannot guarantee that all such
licenses will be renewed and that the requisite frequencies will be coordinated.
Moreover, the recent changes to our wireless network, specifically the future
discontinuance of service to certain smaller markets, may result in the loss of
our FCC licenses in such markets. Current federal law requires prior FCC
approval of greater than 25% ownership of Motient by citizens or entities of
foreign countries, which could limit the value of our common stock.

We Do Not Expect To Pay Any Dividends On Our Common Stock For The Foreseeable
Future.

We have never paid cash dividends on our common stock and do not anticipated
that any cash dividends will be paid on the common stock for the foreseeable
future. The payment of any dividend by us will be at the discretion of our board
of directors and will depend on, among other things, our earnings, capital
requirements and financial condition. In addition, pursuant to the terms of the
Series A and Series B Preferred, no dividends may be declared or paid, and no
funds shall be set apart for payment, on shares of Motient common stock, unless
(i) written notice of such dividend is given to each holder of shares of Series
A and Series B Preferred not less than 15 days prior to the record date for such
dividend and (ii) a registration statement registering the resale of shares of
common stock issuable to the holders of the Series A and Series B Preferred has
been filed with the SEC and is effective on the date Motient declares such
dividend. Also, under Delaware law, a corporation cannot declare or pay
dividends on its capital stock unless it has an available surplus. Furthermore,
the terms of some of our financing arrangements directly limit our ability to
pay cash dividends on our common stock. The terms of any future indebtedness of
our subsidiaries also may generally restrict the ability of some of our
subsidiaries to distribute earnings or make other payments to us.

Future Sales Of Our Common Stock Could Adversely Affect Its Price And/Or Our
Ability To Raise Capital.

                                     - 22 -
<PAGE>

Sales of substantial amounts of common stock, or the perception that such sales
could occur, could adversely affect the prevailing market price of the common
stock and our ability to raise capital. We have announced a rights offering
pursuant to which we may sell up to 2.5 million shares of common stock at $8.57
per share to certain of the holders of our common stock as of December 17, 2004
who did not participate in our November 2004 sale of common stock.

We may issue additional common stock in future financing transactions or as
incentive compensation for our executives and other personnel, consultants and
advisors. Issuing any equity securities would be dilutive to the equity
interests represented by our then-outstanding shares of common stock. The market
price for our common stock could decrease as the market takes into account the
dilutive effect of any of these issuances. Finally, if Motient decides to file a
registration statement to raise additional capital (other than the rights
offering mentioned above), some of Motient's existing stockholders hold
piggyback registration rights that, if exercised, will require Motient to
include their shares in the registration statement. Any of these conditions
could adversely affect Motient's ability to raise needed capital.

We May Have To Take Actions Which Are Disruptive To Its Business To Avoid
Registration Under The Investment Company Act Of 1940.

We may have to take actions which are disruptive to its business if it is deemed
to be an investment company under the Investment Company Act of 1940. Our equity
investments, in particular its ownership interests in MSV, may constitute
investment securities under the Investment Company Act. A company may be deemed
to be an investment company if it owns investment securities with a value
exceeding 40% of its total assets excluding cash items and government
securities, subject to certain other exclusions. Investment companies are
required to register under and comply with the Investment Company Act unless an
exclusion or SEC safe harbor applies. If we were to be deemed an investment
company, it would become subject to the requirements of the Investment Company
Act. As a consequence, we would be prohibited from engaging in business as it
has in the past and might be subject to civil and criminal penalties for
noncompliance. In addition, certain of its contracts might be voidable, and a
court-appointed receiver could take control of we and liquidate its business.

The Consummation and Potential Impact of Our Announced Intent to Restructure Our
Ownership of MSV and TerreStar is Uncertain

On September 22, 2005, we announced that we had entered into a non-binding term
sheet to consolidate the ownership of MSV and TerreStar into Motient, to be
followed by a spin-off of TerreStar to Motient's shareholders. Later, on
February 2, 2006, we announced that we would likely need to modify the
contemplated transaction structure in order to accomplish the goals of the
previously announced transaction. Such modification would involve a direct or
indirect spin-off of its interests in MSV to Motient shareholders. Our primary
remaining asset would then be its controlling interest in TerreStar, although
Motient would expect to retain a minority of its current MSV interests (directly
or indirectly) to issue to the holders of our preferred stock upon its
conversion. We are actively investigating the specific transaction structures
available to it to accomplish these goals. We can provide no assurance that any
of these transactions will ultimately be completed on the terms described above,
if at all, since, among other things, significant documentation and/or


                                     - 23 -
<PAGE>

regulatory filings will need to be finalized by one or more parties, including
Motient. Moreover, we can provide no assurance that it can successfully
integrate TerreStar into Motient, or that such integration will not impact the
ability of TerreStar or Motient to successfully execute their respective
business plans. Finally, we can provide no assurance that such direct or
indirect spin-off of MSV will not impact the ability of MSV to successfully
execute its business plan.

Ongoing Litigation Could Negatively Impact Our Value and Our Ability to
Successfully Implement Our Business Plan

Certain stockholders affiliated with one of our directors, James D. Dondero,
have initiated multiple lawsuits against Motient. Collectively, these lawsuits
(i) seek damages related to the issuance of our Series A Preferred stock,
including rescission, and (ii) allege a variety of claims against certain
directors, officers and advisors of Motient, including unjust enrichment and
breaches of fiduciary duty. Although this second suit has been dismissed by the
Delaware court, Mr. Dondero may appeal such dismissal. If Mr. Dondero is
successful in his claims, these suits could materially negatively impact the
value of Motient, including but not limited to requiring Motient to rescind the
outstanding Series A Preferred Stock. Although we believe these suits to be
without merit, we can provide no assurances that we will ultimately prevail in
these matters.

Failure to Achieve and Maintain Effective Internal Control Over Financial
Reporting in Accordance With Rules of the Securities and Exchange Commission
Promulgated Under Section 404 of the Sarbanes-Oxley Act Could Harm our Business
and Operating Results and/or Result in a Loss of Investor Confidence in our
Financial Reports, Which Could in Turn Have a Material Adverse Effect on our
Business and Stock Price

In the course of our assessment of the effectiveness of our internal control
over financial reporting as of December 31, 2005, which assessment was conducted
over the course of 2005 and the first quarter of 2006 in connection with the
preparation of 2005 audited financial statements and this report, we identified
one material weaknesses in our internal control over financial reporting. This
material weaknesses in our internal control over financial reporting, as
described in Item 9A, Controls and Procedures, as well as any other weaknesses
or deficiencies that may exist or hereafter arise or be identified, could harm
our business and operating results, and could result in adverse publicity and a
loss in investor confidence in the accuracy and completeness of our financial
reports, which in turn could have a material adverse effect on our stock price,
and, if such weaknesses are not properly remediated, could adversely affect our
ability to report our financial results on a timely and accurate basis.

Although we believe that we have taken steps to remediate this material
weaknesses we cannot assure you that this remediation will be successful or that
additional deficiencies or weaknesses in our controls and procedures will not be
identified. In addition, we cannot assure you that our independent registered
public accounting firm will agree with our assessment that our material
weaknesses have been remediated.

                                     - 24 -
<PAGE>

Rights Offering

We have issued to each of its stockholders of record as of the close of business
on December 17, 2004, one right for each share of Motient common stock held.
Each right will entitle any holder that did not participate in the April, July
or November 2004 private placements of our common stock to purchase 0.103 shares
of its common stock at a price of $8.57 per share, with fractions rounded up to
the next whole share. A maximum of 2.5 million shares may be sold in the Rights
Offering, generating maximum aggregate proceeds of approximately $21.4 million.

The rights are not transferable and will expire if not exercised within the
exercise period. The rights will not be exercisable until the registration
statement covering the rights and the shares of underlying common stock is filed
with and declared effective by the SEC, and the exercise period will expire 30
days after the rights become exercisable. We have not filed a registration
statement relating to the rights offering.

The holders of the rights will not have over-subscription rights, and there will
be no backstop to purchase unsubscribed shares. Purchasers that purchased shares
in the November 12, 2004 private placement of its common stock, which include
all purchasers in its April and July 2004 private placements, have waived their
right to participate in the rights offering. We reserve the right to abandon
this rights offering at any time prior to the effectiveness of the registration
statement relating to the rights offering, and upon any such abandonment, any
and all of the rights previously issued will be cancelled, will no longer be
exercisable and will be of no further force or effect.

Item 1B. Unresolved Staff Comments.
-----------------------------------

None.

Item 2. Properties.
-------------------

Motient currently leases approximately 67,000 square feet for headquarters
office space and an operations center in Lincolnshire, IL, the lease for which
expires December 31, 2010. TerreStar leases approximately 3,500 square feet of
office space in Reston, VA. This lease expires July 31, 2006. Motient also
leases site space for over 700 base stations and antennae across the country for
the terrestrial network under one to five-year lease contracts with varied
renewal provisions.

Motient believes that its existing facilities are adequate to meet its needs for
the foreseeable future.

                                     - 25 -
<PAGE>

Item 3. Legal Proceedings.
--------------------------

On August 16, 2005, Highland Legacy Limited, a stockholder of Motient, filed
suit in the Court of Chancery of the State of Delaware in and for New Castle
County against: Motient; Steven Singer, Gerald Kittner, Barry Williamson,
Raymond Steele and Gerald Goldsmith, directors of Motient; Peter D. Aquino, a
former director of Motient; Christopher Downie, Chief Operating Officer of
Motient; Gary Singer; Tejas Inc.; Tejas Securities, Inc.; Communications
Technology Advisors LLC; Capital & Technology Advisors, Inc.; and Jared
Abbruzzese. Highland Legacy Limited is an affiliate of James Dondero, a former
director of Motient. The lawsuit alleged breaches of duties allegedly owed to
Motient by the defendants and sought recovery of fees from certain of these
parties relating to prior transactions with Motient. On March 17, 2006, the
Court of Chancery of the State of Delaware in and for New Castle County
dismissed the suit, finding that the plaintiff had failed to alleges facts
indicating that the defendant directors of Motient lacked independence or that
the challenged transactions were not a valid exercise of their business
judgment.

On August 16, 2005, Highland Equity Focus Fund, L.P., Highland Crusader Offshore
Partners, L.P., Highland Capital Management Services, Inc., and Highland Capital
Management, L.P., affiliates of James Dondero, a former director of Motient,
filed a lawsuit in Dallas County, Texas against Motient challenging the validity
of the Series A Preferred on the basis of the confusion regarding the voting
rights of the Series A Preferred and seeking rescission of their purchase of the
shares of Series A Preferred that they purchased from Motient in the private
placement in April 2005. These entities acquired 90,000 shares of Series A
Preferred for a purchase price of $90 million in that private placement. Motient
believes that this claim is without merit and intends to vigorously defend this
lawsuit.

On October 7, 2005, Highland Equity Focus Fund, L.P., Highland Crusader Offshore
Partners, L.P., Highland Capital Management Services, Inc., Highland Capital
Management, L.P., affiliates of James Dondero, a former director of Motient, on
behalf of themselves and all those similarly situated, filed a class action
lawsuit in the Court of Chancery of the State of Delaware against Motient and
each of its directors, other than Mr. Dondero, alleging that Motient has
provided inadequate information to the holders of Series A Preferred relating to
the Exchange Offer for the Series A Preferred, and that the Exchange Offer is
coercive. These parties have also requested that the court enjoin the Exchange
Offer. The Exchange Offer closed on October 26, 2005, mooting the claim.

On October 19, 2005, Motient Corporation filed two lawsuits against James D.
Dondero, one in the United States District Court for the Northern Division of
Texas and one in the District Court of Dallas County, Texas. The complaint filed
in state court alleges that Mr. Dondero has seriously and repeatedly breached
his fiduciary duties as a director of Motient in order to advance his own
personal interests. The complaint filed in Federal court alleges selective
disclosure of material inside information and other improper actions undertaken
by Mr. Dondero, the net result of which have been to drive down the price of
Motient's stock. It also alleges that Mr. Dondero has solicited, and is still
soliciting, the replacement of Motient's current board and management in
violation of federal law.

                                     - 26 -
<PAGE>

On February 14, 2006, entities controlled by James D. Dondero announced that
they would seek to replace Motient current board of directors with another slate
proposed by such entities. Also on February 14, 2006, Mr. Dondero resigned from
Motient's board of directors.

Issuance of Series A Preferred

Motient issued the Series A Preferred in a private placement on April 15, 2005.
As originally proposed, the Series A Preferred would have voted along with
Motient's common stock on all matters on an as-converted basis. During
negotiations with respect to the Series A Preferred, investors affiliated with
Jim Dondero, a director of Motient, requested that the voting rights of the
Series A Preferred be limited so that these investors would not be required to
file applications under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended ("HSR"). Motient agreed to limit the voting rights of the
Series A Preferred to the extent appropriate so that these investors would not
be required to file HSR applications. However, due to a mistake, the voting
rights were incorrectly stated in the Certificate of Designations for the Series
A Preferred as originally filed with the Secretary of State of Delaware. Upon
discovering this mistake, Motient promptly filed a Certificate of Corrections
with the Secretary of State of Delaware to correctly state the voting rights of
the Series A Preferred. Motient's Certificate of Incorporation contains a
provision that prohibits the issuance by Motient of "non-voting stock". As
described below, the investors affiliated with Jim Dondero who requested that
the voting rights of the Series A Preferred be limited have now filed lawsuits
against Motient claiming, among other things, that the Series A Preferred is
void because the limited voting rights set forth in the Certificate of
Incorporation make the Series A Preferred "non-voting stock" and that the
Certificate of Corrections is not effective to remedy this. Motient believes
that the Certificate of Corrections was effective to remedy any problems caused
by the mistake, and that the limited voting rights granted in the Certificate of
Designations were sufficient to make the Series A Preferred not be "non-voting
stock". Subsequent to our sale of Series A Preferred, entities affiliated with
Mr. Dondero filed an HSR application based on their purchases of Motient's
securities in February 2005, two months prior to our issuance of the Series A
Preferred.

Exchange Offer

On October 26, 2005, Motient completed an exchange offer in which it allowed
each Holder of Series A Preferred the opportunity to exchange their shares of
Series A Preferred and a release of any claims relating to the issuance of the
Series A Preferred for shares of Series B Preferred, which will have rights,
preferences and privileges substantially identical to the Series A Preferred,
except that upon (a) the accumulation of accrued and unpaid dividends on the
outstanding shares of Series B Preferred for two or more six month periods,
whether or not consecutive; (b) the failure of Motient to properly redeem the
Series B Preferred Stock, or (c) the failure of Motient to comply with any of
the other covenants or agreements set forth in the Certificate of Designations
for the Series B Preferred Stock, and the continuance of such failure for 30
consecutive days or more after receipt of notice of such failure from the
holders of at least 25% of the Series B Preferred then outstanding, then the
holders of at least a majority of the then-outstanding shares of Series B


                                     - 27 -
<PAGE>

Preferred, with the holders of shares of any parity securities upon which like
voting rights have been conferred and are exercisable, voting as a single class,
will be entitled to elect a majority of the members of Motient's Board of
Directors for successive one-year terms until such defect listed above has been
cured. All of the holders of the Series A Preferred except for those affiliated
with Highland Capital Management exchange their shares in this offer.
Accordingly, approximately $318.5 million in face amount of Series A Preferred
shares were exchanged for Series B Preferred shares of the same face amount, and
only $90 million in face amount of Series A Preferred shares remain outstanding.

Please also see our description of certain regulatory matters given above, which
involve certain legal matters.

From time to time, Motient is involved in legal proceedings in the ordinary
course of its business operations. Although there can be no assurance as to the
outcome or effect of any legal proceedings to which Motient is a party, Motient
does not believe, based on currently available information, that the ultimate
liabilities, if any, arising from any such legal proceedings not otherwise
disclosed would have a material adverse impact on its business, financial
condition, results of operations or cash flows.

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

No matters were submitted to a vote of our stockholders during the fourth
quarter of fiscal 2005.


                                     PART II

Item 5. Market for Registrant's Common Equity and Related StockholderMatters.
-----------------------------------------------------------------------------

Our common stock is not listed on any national securities exchange or on the
Nasdaq Stock Market. Our common stock has been quoted under the symbol "MNCP" on
the Pink Sheets since May 2, 2002.

The following tables set forth for the period indicated the high and low bid
prices for our common stock for the periods indicated for 2004, 2005 and 2006.

--------------------------------------------------------------------------------
                              2006                   High                 Low
--------------------------------------------------------------------------------
First Quarter (through March 15, 2006)             $   23.65            $ 20.04
--------------------------------------------------------------------------------
                              2005                   High                 Low
--------------------------------------------------------------------------------
First Quarter                                      $   31.45            $  21.25
Second Quarter                                     $   27.90            $  17.20
Third Quarter                                      $   26.15            $  20.25
Fourth Quarter                                     $   23.47            $  14.68
--------------------------------------------------------------------------------
                              2004                    High                 Low
--------------------------------------------------------------------------------
First Quarter                                      $    7.45            $   4.05
Second Quarter                                     $   14.01            $   6.15
Third Quarter                                      $   13.75            $   8.40
Fourth Quarter                                     $   23.95            $   8.80
--------------------------------------------------------------------------------

                                     - 28 -
<PAGE>

The high and low sales prices represent the intra-day prices on the Pink Sheets.
The quotations represent inter-dealer quotations, without retail markups,
markdowns or commissions, and may not necessarily represent actual transactions.

On March 15, 2006, the last reported bid price of our common stock was $21.82
per share on the Pink Sheets. As of March 15, 2006, there were approximately 117
record holders of our common stock.

Dividends

We have never declared or paid any cash dividends on our common stock and do not
plan to pay dividends on our common stock for the foreseeable future. The
payment of any dividend by us, other than dividends on our Series A and Series B
Preferred described below, will be at the discretion of our board of directors
and will depend on, among other things, our earnings, capital requirements and
financial condition. In addition, pursuant to the terms of the Series A and
Series B Preferred, no dividends may be declared or paid, and no funds shall be
set apart for payment, on shares of Motient common stock, unless (i) written
notice of such dividend is given to each holder of shares of Series A and Series
B Preferred not less than 15 days prior to the record date for such dividend and
(ii) a registration statement registering the resale of shares of common stock
issuable to the holders of the Series A and Series B Preferred has been filed
with the SEC and is effective on the date Motient declares such dividend.
Further, under Delaware law, a corporation cannot declare or pay dividends on
its capital stock unless it has an available surplus. Furthermore, the terms of
some of our financing arrangements directly limit our ability to pay cash
dividends on our common stock. The terms of any future indebtedness of our
subsidiaries also may generally restrict the ability of some of our subsidiaries
to distribute earnings or make other payments to us.

Motient is obligated to pay dividends, to the extent we are legally able to do
so, on the Series A and Series B Preferred as follows:

o        From April 15, 2005 to April 15, 2007, Motient is required to pay
         dividends in cash at a rate of 5.25% per annum (the "Cash Rate") on the
         shares of Series A and Series B Preferred. Motient was required to
         place the aggregate amount of these cash dividends, $42,892,500, in an
         escrow account. These cash dividends will be paid to the holders of
         Series A and Series B Preferred from this escrow account in four
         semi-annual payments, unless earlier paid pursuant to the terms
         described below. The first of these dividends was paid on October 15,
         2005.

o        From April 15, 2007 to April 15, 2010, Motient is required to pay
         dividends on each share of Series A and Series B Preferred either in
         cash at the Cash Rate or in shares of Motient common stock at a rate of
         6.25% per annum.

                                     - 29 -
<PAGE>

Recent Sales of Unregistered Securities

On February 9, 2005, Motient entered into a merger agreement with Telcom
Satellite Ventures Inc. and Telcom Satellite Ventures II Inc. and simultaneously
consummated the transactions contemplated thereby, pursuant to which Telcom
merged with and into MVH Holdings Inc., a direct and wholly-owned subsidiary of
Motient, in a tax free reorganization in which MVH is the surviving company. In
exchange for 2,296,835 MSV limited partnership units owned by the Telcom
entities, Motient issued to Telcom's stockholders 8,187,804 shares of its common
stock. As the purchasers were all accredited investors, and no general
solicitation occurred as part of the offering and sale of these securities,
Motient relied upon the exemption from registration afforded by Rule 506 under
the Securities Act and/or Section 4(2) of the Securities Act.

Concurrently with this merger, Motient (through MVH) also purchased 373.7 shares
of common stock of Spectrum Space Equity Investors IV, Inc. and two other
related entities, representing approximately 66.3% of the outstanding common
stock of each of such entities, and 221.2 shares of common stock of Columbia
Space Partners, Inc. and two other related entities, representing approximately
27.8% of the outstanding common stock of such entities. In total, Motient issued
to the Spectrum entities and Columbia entities a total of 4,516,978 shares of
Motient common stock in a private placement in exchange for indirect ownership
of 1,267,098 MSV units. As the purchasers were all accredited investors, and no
general solicitation has occurred as part of the offering and sale of these
securities, Motient relied upon the exemption from registration afforded by Rule
506 under the Securities Act and/or Section 4(2) of the Securities Act.

Telcom, Columbia and Spectrum also received warrants exercisable for an
aggregate of approximately 952,858 shares of Motient common stock. The warrants
have a term of five years and an exercise price equal to $22.50. As Motient has
filed a registration statement for the shares sold to these entities on February
14, 2005, 70% of the 952,858 warrants will never vest. The remainder vested in
August 2005.

On April 15, 2005, Motient sold 408,500 shares of Series A Cumulative
Convertible Preferred Stock, $0.01 par value, at a per share price of $1,000,
for total aggregate proceeds of approximately $391,000,000, net of $17,500,000
in combined commissions paid to Tejas Securities Group, Inc. and Deutsche Bank
Securities Inc. The approximately 40 purchasers included substantially all of
the purchasers from the November 2004 private placements, as well as multiple
new investors. Each share of preferred stock has a term of five years and is
convertible into 30 shares of common stock. Dividends may be paid in cash or
common stock at Motient's option. Dividends paid in cash bear interest at a rate
of 5.25% and dividends paid in common stock bear interest at a rate of 6.25%.
Motient was required to place into escrow a sufficient amount to pay 24 months
of cash dividends, and accordingly will pay dividends only in cash through April
15, 2007.

After 24 months, Motient can require holders of preferred stock to convert it
into common stock if the trading price of Motient common stock exceeds $43.33


                                     - 30 -
<PAGE>

for at least 15 trading days within a 20 consecutive trading day period, so long
as the common stock underlying the convertible preferred stock is then
registered. If Motient is acquired prior to maturity of the preferred stock, or
if Motient issues more than $250 million of senior or pari passu securities,
then Motient must offer to redeem the preferred stock at a price of $1,080 per
share, plus any interest then remaining in the escrow account. In addition,
Motient issued warrants to purchase 154,109 shares of common stock at a price of
$26.51 per share, which will vest between September 2005 and September 2006.

The sale of these shares was not registered under the Securities Act and the
shares may not be sold in the United States absent registration or an applicable
exemption from registration requirements. The shares were offered and sold
pursuant to the exemption from registration afforded by Rule 506 under the
Securities Act and/or Section 4(2) of the Securities Act.

On October 26, 2005, Motient completed an exchange offer whereby purchasers of
Series A Preferred could exchange their shares for Series B Preferred with
economic terms substantially identical to the Series A Preferred. Motient
accepted for exchange 318,500 shares of Series A Preferred Stock, representing
approximately 78% percent of the outstanding Series A Preferred Stock. With the
exception of 90,000 shares of Series A Preferred Stock held by funds affiliated
with Highland Capital Management (which remain outstanding), all Series A
Preferred Stockholders tendered their Series A Preferred Stock in the offer. The
Company issued an equal number of shares of Series B Preferred Stock to the
holders who elected to exchange their shares of Series A Preferred Stock in the
exchange offer. The exchange was made pursuant to an exemption from registration
afforded by Section 3(a)(9) of the Securities Act.

No underwriters were involved in any of the foregoing distributions of
securities.

Certain information concerning our equity compensation plans appearing under
"Equity Compensation Plan Information" is included in "Item 12. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters" below.

Issuer Purchases of Equity Securities

During the fiscal quarter ended December 31, 2005, we repurchased shares of our
common stock on the dates and in the amounts set forth in the table below:

<TABLE>
----------------------------------------------------------------------------------------------------------------------
Period                    (a) Total Number of    (b) Average Price       (c) Total Number of    (d) Maximum Number
                          Shares (or Units)      Paid per Share (or      Shares (or Units)      (or Approximate
                          Purchased              Unit)                   Purchased as Part of   Dollar Value) of
                                                                         publicly Announced     Shares (or Units)
                                                                         Plans or Programs      that May Yet Be
                                                                                                Purchased Under the
                                                                                                Plans or Programs
----------------------------------------------------------------------------------------------------------------------
<S>                       <C>                                            <C>                    <C>
October 1, 2005 -         0                      N/A                     0                      0
October 31, 2005
----------------------------------------------------------------------------------------------------------------------
November 1, 2005 -        565,000 (1)            $17.39                  565,000                $40,176,624
November 30, 2005
----------------------------------------------------------------------------------------------------------------------
December 1, 2005 -        15,213 (2)             $21.67                  0                      0
December 31, 2005
----------------------------------------------------------------------------------------------------------------------
Total                     580,213                $17.50                  565,000                $40,176,624
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                     - 31 -
<PAGE>

(1) Repurchased on the open market at market rates.

(2) Repurchased pursuant to the terms of a restricted stock grant at market
rates.

Item 6. Selected Financial Data.
--------------------------------

The following table summarizes our financial results as of and for the fiscal
year ended December 31, 2001, the four months ended April 30, 2002, the eight
months ended December 31, 2002 and the years ended December 31, 2003, 2004 and
2005. The consolidated balance sheet data and the other consolidated statement
of operations data are derived from the consolidated financial statements of
Motient, which were audited by Friedman LLP. Ehrenkrantz Sterling & Co. LLC,
independent public accounting firm and predecessors-in-interest to Friedman LLP,
audited the consolidated balance sheets for the year ended December 31, 2001,
the four months ended April 30, 2002, and the eight months ended December 31,
2002. All of the financial information for Motient up to and including April 30,
2002 is referred to as "Predecessor Company" results. The financial information
for Motient for the periods subsequent to April 30, 2002 are referred to as
"Successor Company" results.

You should read our selected financial data in conjunction with the information
contained in "Item 7 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and related notes thereto included elsewhere in this report. In reading the
following selected financial data, please note the following:

     o    Effective May 1, 2002, as a result of our emergence from bankruptcy,
          we adopted "fresh-start" accounting in accordance with American
          Institute of Certified Public Accountants Statement of Position 90-7,
          "Financial Reporting by Entities in Reorganization under the
          Bankruptcy Code". "Fresh-start" accounting has resulted in material
          changes to consolidated financial statements for periods beginning
          after May 1, 2002, to reflect adjustments required pursuant to SOP
          90-7 to record assets and liabilities at fair values in accordance
          with procedures specified by Statement of Financial Accounting
          Standards No. 141, "Business Combinations".

                                     - 32 -
<PAGE>

     o    Because the summary financial data below relates to periods prior to
          May 1, 2002, the effective date we emerged from bankruptcy, we refer
          to the summary financial data as that of the Predecessor Company. Due
          to the reorganization and implementation of SOP 90-7, consolidated
          financial statements issued for periods beginning after May 1, 2002
          will not be comparable to that of the Predecessor Company.

     o    In November 2002, we initiated a process to seek the concurrence of
          the staff of the SEC with respect to our conclusions of the
          appropriate accounting for the formation of and certain transactions
          with MSV in 2001. This process was completed in March 2003. The staff
          of the SEC did not object to certain aspects of our prior accounting
          with respect to the MSV transaction, but did object to other aspects
          of our prior accounting for these transactions. For a description of
          the material differences between our original accounting treatment
          with respect to the MSV transaction and the revised accounting
          treatment that we concluded is appropriate as a result of this
          process, please see our current report on Form 8-K dated March 14,
          2003.

     o    As a result of our re-audit of the year ended December 31, 2001
          performed by Ehrenkrantz Sterling & Co. LLC, certain additional
          financial statement adjustments were proposed and accepted by us.

                      Selected Consolidated Financial Data

                  (Amounts in thousands except per share data)
<TABLE>
<CAPTION>
                                                      Successor Company                      Predecessor Company(1)(2)(3)
                                   -----------------------------------------------------------------------------------------
                                                                             Eight Months     Four Months     (Restated)
                                    Year Ended    Year Ended    Year Ended       Ended           Ended        Year Ended
                                   December 31,  December 31,  December 31,   December 31,     April 30,      December 31,
                                       2005          2004          2003           2002           2002            2001
                                       ----          ----          ----           ----           ----            ----
<S>                                  <C>            <C>         <C>           <C>            <C>             <C>
Revenues                             $  13,824      $  36,880   $  54,485     $  36,617      $  22,373       $  90,265
Operating Loss                        (126,179)       (46,587)    (48,739)      (35,531)       (21,649)       (120,491)
Income (loss) before
reorganization items                  (139,281)       (72,329)    (62,122)      (58,786)       (24,138)       (267,000)
                                      --------        -------     -------       -------        -------        --------
Reorganization items                      --             --          --            (772)       256,116          (2,497)

Income tax provision                      --             --          --            --             --              --
                                      --------        -------     -------       -------        -------        --------
Net (loss) income                     (139,281)       (72,329)    (62,122)      (59,558)       231,978        (269,497)

Dividends on Series A Cumulative
Convertible Preferred Stock            (16,717)          --          --            --             --              --

Accretion of issuance costs
associated with Series A and
Series B Cumulative Convertible
Preferred Stock                         (2,409)          --          --            --             --              --
                                      --------        -------     -------       -------        -------        --------
Net (loss) available to Common
Stockholders                         $(158,407)     $ (72,329)  $ (62,122)    $ (59,558)     $ 231,978       $(269,497)
                                     =========      =========   =========     =========      =========       =========
Basic and diluted (loss) per
share of common stock                $   (2.55)     $   (2.21)  $   (2.47)    $   (2.37)     $    3.98       $   (5.27)
Weighted-average common shares
outstanding during the period -
basic and diluted                       62,141         32,771      25,145        25,097         58,251          51,136
Total assets                           967,191        248,080     157,028       202,221        257,401         240,465
Long term liabilities                $     343      $     675   $  33,189     $  33,913      $  29,785       $  30,652
</TABLE>

                                     - 33 -
<PAGE>

(1) Motient restated certain of its financial data reflected above to reflect
certain transactions with MSV in 2001.

(2) As of December 31, 2000, we had an equity interest of approximately 33.1%
(or 21.3% on a fully diluted basis) in XM Radio, a public company that launched
its satellite radio service at the end of 2001, and we controlled XM Radio
through our board of director membership and common stock voting rights. As a
result, all of XM Radio's results for the period from July 7, 1999 (the date we
acquired 100% voting interest of XM Radio) through December 31, 2000 have been
included in our consolidated financial statements. Prior to July 7, 1999, our
investment in XM Radio was accounted for pursuant to the equity method of
accounting. In January 2001, pursuant to FCC approval to cease to control XM
Radio, the number of directors that we appointed to XM Radio's board of
directors was reduced to less than 50% of XM Radio's directors, and we converted
a portion of our super-voting Class B common stock of XM Radio to Class A common
stock. As a result, we ceased to control XM Radio, and as of January 1, 2001, we
accounted for our investment in XM Radio pursuant to the equity method of
accounting. During 2001, we disposed of all of our remaining shares of XM Radio
and ceased to hold any interest in XM Radio as of November 19, 2001.

(3) In June 2000, we formed a joint venture subsidiary, MSV, in which we owned
80% of the membership interests. The remaining 20% interests in MSV were owned
by three investors unrelated to Motient; however, the minority investors had the
right to participate in certain MSV business decisions that were made in the
normal course of business; therefore, in accordance with EITF Issue No 96-16,
"Investor's Accounting for an Investee When the Investor Has a Majority of the
Voting Interest but the Minority Shareholder or Shareholders Have Certain
Approval or Veto Rights", our investment in MSV has been recorded for all
periods presented in the consolidated financial statements included in this
annual report pursuant to the equity method of accounting. On November 26, 2001,
Motient sold the assets comprising its satellite communications business to MSV.



                                     - 34 -
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations.
--------------

Overview And Introduction

The following Management's Discussion and Analysis is intended to help the
reader understand Motient Corporation. It is provided as a supplement to, and
should be read in conjunction with, our consolidated financial statements and
the accompanying notes.

Our Business Segments

Motient owns, operates and develops two-way wireless communications businesses.
In addition to our own two-way wireless data network (our DataTac network) which
we use to provide our customers with two-way wireless data communication
services, we have the capabilities to provide our customers with convenient
access to other wireless data networks, such as the Sprint and Cingular
networks. We also are in the process of developing a satellite communications
service via our majority ownership of TerreStar Networks Inc., a development
stage company in the process of building its first satellite. TerreStar was
formerly a subsidiary of another satellite communications company, Mobile
Satellite Ventures, LP, or MSV, as it is commonly known. We own 49% of MSV, but
do not have operating control of its business.

Structure of MSV and TerreStar Ownership

In February 2006, Motient announced that it would pursue transactions allowing
it to rationalize the ownership of MSV and TerreStar through the creation of two
distinct public entities, one whose primary asset is an equity interest in MSV
and one whose primary asset is shares of TerreStar common stock.

Previously, on September 22, 2005, Motient announced that it had entered into a
non-binding term sheet to consolidate the ownership of MSV and TerreStar into
Motient, to be followed by a spin-off of TerreStar to Motient's shareholders.
These transactions were intended to rationalize the ownership of MSV and
TerreStar by creating a single public entity in control of TerreStar, and a
single public entity in control of MSV. As discussions related to these
transactions have progressed, Motient has determined that, while the goals of
the previously announced transactions remain in the best interests of Motient's
shareholders, the structure previously announced for accomplishing these goals
will need to be modified.

Accordingly, Motient believes that the previously announced roll-up transaction
is unlikely to occur as contemplated or announced. Instead, Motient now intends,
either directly or indirectly, to spin-off its interests in MSV to Motient
shareholders. Motient's primary remaining asset would then be its controlling
interest in TerreStar, although Motient would expect to retain a minority of its
current MSV interests (directly or indirectly) to issue to the holders of
Motient's preferred stock upon its conversion. Motient is actively investigating
the specific transaction structures available to it to accomplish these goals.

                                     - 35 -
<PAGE>

Motient currently owns 61% of TerreStar and 49% of MSV. We cannot guarantee that
the public entities which we anticipate will own Motient's current TerreStar and
MSV interests will ultimately own those respective percentages of TerreStar or
MSV. Each entity could own more or less than those amounts, depending on the
final structure adopted. In addition, Motient can provide no assurance that any
of these transactions will ultimately be completed on the terms described above,
if at all, since, among other things, significant documentation and/or
regulatory filings will need to be finalized by one or more parties, including
Motient.

Our Terrestrial Wireless Business

We are a nationwide provider of two-way, wireless mobile data services and
mobile internet services. Owning and operating a wireless radio data network
that provides wireless mobile data service to customers across the United
States, we generate revenue primarily from the sale of airtime on our network
and from the sale of communications devices to our customers. Our customers use
our network and our wireless applications for wireless email messaging and
wireless data transmission, enabling businesses, mobile workers and consumers to
wirelessly transfer electronic information and messages and to access corporate
databases and the Internet.

In addition to selling wireless data services that use our own network, Motient
is also a reseller of airtime on the Cingular and Sprint wireless networks.
These arrangements allow Motient to provide integrated wireless data solutions
to its customers using a variety of networks. In December 2004, Motient launched
a new set of products and services designed to provide these integrated wireless
data solutions to its customers, called iMotient Solutions (TM). iMotient allows
Motient's customers to use these multiple networks via a single connection to
Motient's back-office systems, providing a single alternative for application
and software development, device management and billing across multiple
networks, including but not limited to GPRS, 1XRTT and our own DataTac network.
Once connected to iMotient, customers will receive proprietary applications and
services that reduce airtime usage, improve performance and reduce costs.
Motient anticipates that iMotient revenues will increase materially over the
course of 2006, but we cannot anticipate whether these revenues will increase
rapidly enough to offset anticipated revenue declines in other segments of its
business.

Our most significant ongoing cost reduction effort involves reducing the number
of base stations in our network in a coordinated effort to reduce network
operating costs. Over the course of 2004, Motient implemented and completed
certain initiatives to rationalize the size of its network, primarily to remove
unprofitable base stations and reduce unneeded capacity and coverage. During the
first quarter of 2005, Motient initiated a plan to refocus its DataTac network
primarily on the Top 40 Metropolitan Statistical Areas (MSAs). This plan
involved the decommissioning of DataTac network components and termination of
service in previously served MSAs above the Top 40. Given the similar coverage


                                     - 36 -
<PAGE>

profiles of the Cingular and Sprint networks, the significantly increased
bandwidth capabilities of these networks relative to the DataTac network and the
concentration of our revenues in the Top 40 MSAs, we determined that this plan
best allowed us to match our network infrastructure costs with our revenue base,
while continuing to meet the needs of as many of our customers as possible.

As a result of these network rationalization efforts, our 800 MHz FCC licenses
were lost in markets to which we discontinued service. We believe that the value
of our FCC licenses in these smaller markets is very small compared to the value
of our FCC licenses in the Top 40 MSAs, about 5% of the total value of our
licenses. Future changes in service may result in the loss of additional
licenses, which may be more valuable than the licenses we have already lost.

Our Satellite Communications Business

TerreStar Networks Inc.

On May 11, 2005, we acquired approximately an additional 13.4% ownership in
TerreStar Networks, Inc. for a total 61% ownership interest in, and operating
control over, TerreStar Networks Inc. Prior to that date, TerreStar was a
subsidiary of MSV established to, among other things, develop a satellite
communications system using frequencies in the 2 GHz band, that are part of what
is often known as the "S-band." We acquired our ownership interest in TerreStar
when, in conjunction with a spin-off of TerreStar to the owners of MSV, we
purchased an additional $200 million of newly issued TerreStar common stock. In
conjunction with this transaction, TerreStar also entered into an agreement with
MSV pursuant to which TerreStar has a perpetual, royalty-free license to utilize
MSV's patent portfolio, including those patents related to "ancillary
terrestrial component", or ATC, which we anticipate will allow us to deploy a
communications network that seamlessly integrates satellite and terrestrial
communications, giving a user ubiquitous wireless coverage in the U.S. and
Canada.

By offering Mobile Satellite Service, or MSS, in the S-band in conjunction with
ATC, TerreStar can effectively deploy a hybrid satellite and terrestrial
wireless communications network. This network could, for instance, eventually
allow a user to utilize a mobile device that would communicate with a
traditional land-based wireless network when in range of that network, but
communicate with a satellite when not in range of such a land-based network.
These mobile devices could be used for a myriad of communications applications,
including potentially voice, data and video services.

TerreStar is currently in the process of building its first satellite pursuant
to a construction contract with Space Systems/Loral, Inc. This satellite is
scheduled to be completed in November 2007, with commercial operations scheduled
to begin in 2008. Once launched, the satellite, with an antenna almost sixty
feet across, will be able to communicate with terrestrial base stations and
standard wireless devices. The construction, launch and operation of this
satellite will require significant additional capital, with satellite
construction costs alone expected to exceed $550 million, paid out over the next
several years.

                                     - 37 -
<PAGE>

Our business model used to prepare the valuation of TerreStar's assets relies on
revenues and cash flows generated by communications services provided by its
satellites as well as terrestrial infrastructure. Communications services are
assumed to be provided in three principal ways - (i) by utilizing only the
satellites, (ii) by utilizing only the terrestrial infrastructure, or (iii) by
utilizing a combination thereof via appropriate interfaces between the two
methods. The valuation model assumes that a substantial portion of TerreStar's
future revenues will be generated by the provision of services utilizing
terrestrial components only (approximately on average two-thirds of all revenues
over the projection period). We believe that a significant portion of the value
of TerreStar's spectrum and intellectual property assets lies in the amount of
revenue generated from these terrestrial components. If the amount of
terrestrial revenues generated by TerreStar's operating business in the future
is lower than anticipated, this could impair the value of TerreStar's assets.

The valuation model further assumes that these terrestrial revenues will be
generated in partnership with a terrestrial wireless service partner that either
(i) already has existing terrestrial infrastructure, or (ii) who would have the
interest and the capital to deploy such terrestrial infrastructure to provide
the scale and scope of communications services assumed in the Company's
valuation model. The Company believes that this partner could also potentially
provide a large existing subscriber base and/or brand recognition, to go along
with the terrestrial infrastructure. Since the model assumes that this partner
would provide substantial operating, marketing and capital expenditures in
support of these terrestrial services, the Company has assumed that TerreStar
would receive a low percentage of the revenue generated by the business (as
detailed below). The Company can provide no assurance that it will be successful
in entering into a partnership of this nature on the terms assumed in the
Company's valuation model, if at all. If it is not successful, it may be
required to raise significantly more capital to provide support services to
TerreStar and/or to deploy a terrestrial infrastructure on its own, which may be
dilutive to existing shareholders. In this case, the Company would retain all of
the revenues from the provision of terrestrial services. However, if raising the
capital necessary to reach the scale and scope assumed in the valuation model is
not possible, the value of TerreStar's assets would be impaired.

Our ability to offer these services depends on TerreStar's right to receive
certain regulatory authorizations allowing it to provide MSS in the S-band.
These authorizations are subject to various regulatory milestones relating to
the construction, launch and operational date of the satellite system required
to provide this service. In order to use ATC, TerreStar will need to apply for
authority with the FCC, which it has not yet done.

Given Motient's 61% interest in TerreStar as of May 11, 2005, we consolidated
the financial results of TerreStar from that point forward. Over the course of
2006, 2007 and 2008, we expect that TerreStar will continue to work on building,
testing and deploying its satellite communications system, which will require
large capital expenditures, as well as the incurrence of significant operating
expenses. During this period, we do not expect that TerreStar will generate any
revenues. Therefore, we anticipate that TerreStar will generate operating losses
during this period. We anticipate that TerreStar will not be in a position to
generate revenues from continuing business operations until 2008 at the
earliest.

                                     - 38 -
<PAGE>

Results of Operations
---------------------

Years Ended December 31, 2005 and 2004

In the year ended December 31, 2005, we experienced the loss of certain large
customer contracts, such as IBM, and a general erosion in our customer base,
primarily as a result of those customers' desire to utilize newer wireless
technologies, such as GPRS or CDMA, which we cannot support on our DataTac
network. A significant portion of this decline in revenue was due to a decline
in our wireless internet segment, which was driven generally by the
aforementioned desire to move to newer (voice-capable) technologies, as well as
the termination of the manufacture of RIM 857 devices by Research in Motion in
late 2003, which were the only RIM devices then produced for use on our network
and the most common wireless internet device used on our network. We are not
able to utilize any newer RIM devices on our network and we believe our wireless
internet revenues will continue to decline in the future as we have no product
to offer our customers and resellers in this market segment. As a result of this
revenue decline, we have been required to take numerous actions to reduce our
cost structure and change our operating strategy, including a reduction in our
DataTac network coverage. It is possible that these reductions in DataTac
network coverage have also caused some of this revenue deterioration and we
expect that our anticipated further requirements to reduce DataTac network
coverage in response to declining revenues may lead to a further deterioration
in related revenues. In addition to this general network reduction, we also
believe that several components of our cost structure are much larger than
required for our relative business size, and we believe that we can continue to
reduce our cost structure in our continued efforts to improve our profitability.
In an effort to counteract this revenue decline and market demand for newer
wireless technologies, we developed a new set of products and services in early
2005 which we branded iMotient Solutions. These products and services extend our
historical expertise of providing mobile data solutions to the advanced wireless
networks of Sprint and Cingular. We believe our iMotient Solutions suite of
products and services will be our primary source of new revenue for 2006 and
beyond, and we are focusing the majority of our development, sales and marketing
on this area.

Subscriber Statistics

<TABLE>
<CAPTION>
                                                  As of December 31,
                                     2005                                   2004                               % Change
                      Registered     Billable     Active     Registered     Billable      Active   Registered    Billable    Active
                      ----------     --------     ------     ----------     --------      ------   ----------    --------    ------
<S>                      <C>           <C>        <C>         <C>             <C>         <C>           <C>        <C>       <C>
Wireless Internet        19,864(1)     12,429     3,566       47,328(2)       35,366      20,126        (58)%      (65)%     (82)%
Field Services            1,703         1,701       109        7,437           7,360       4,896        (77)%      (77)%     (98)%
Transportation           46,380        37,829    38,706       46,721          41,013      40,621         (1)%       (8)%      (5)%
Telemetry                23,857        16,875     6,299       30,107          22,640      11,484        (21)%      (25)%     (45)%
iMotient                  4,728         4,733     4,424          ---             ---         ---         100%       100%      100%
All Other                   188            88        69          256             180         156        (27)%      (51)%     (56)%
                         ------        ------    ------      -------         -------      ------        ---        ---       ---
Total                    96,720        73,655    53,173      131,849         106,559      77,283        (27)%      (31)%     (31)%
                         ======        ======    ======      =======         =======      ======        ===        ===       ===

</TABLE>

                                     - 39 -
<PAGE>

1)   Reflects deregistration of units by RIM on December 31, 2005 of
     approximately 16,000 units.
2)   Reflects deregistration of units by SkyTel on December 31, 2004 of
     approximately 30,000 units.

Revenue

The table below sets forth, for the periods indicated, a year-over-year
comparison of the key components of our revenue:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                  ------------------------------------------------------
Summary of Revenue                  2005         2004           Change        % Change
------------------                  ----         ----           ------        --------
<S>                                 <C>          <C>         <C>               <C>
(in millions)
Wireless Internet                   $7.4         $18.3       $(10.9)           (60)%
Field Services                       1.2           5.6         (4.4)           (79)
Transportation                       1.9           3.3         (1.4)           (42)
Telemetry                            1.6           2.3         (0.7)           (29)
iMotient                             0.4            --          0.4             100
All Other                            0.4           2.9         (2.5)           (85)
                                   -----         -----       ------            ---
   Service Revenue                  12.9          32.4        (19.5)           (60)
   Equipment Revenue                 0.9           4.5         (3.6)           (79)
                                   -----         -----       ------            ---
        Total                      $13.8         $36.9       $(23.1)           (63)%
                                   =====         =====       ======            ===
</TABLE>

The decrease in service revenue in 2005 as compared to 2004 was primarily the
result of a material decrease in wireless internet revenue and the loss of
several large accounts, most notably IBM and Brinks in the field service
segment. We anticipate that our wireless internet revenue will continue to
decline in 2006 as a result of the continued decrease in our wireless internet
customer base. As we continue to reduce our DataTac network coverage, we expect
revenue in our other market segments that utilize this network will also decline
in 2006. We expect our iMotient Solutions revenue to increase in 2006 as we
focus our sales and development efforts on this market segment. By market
segment, we note:

     o    Wireless Internet: The revenue decline in the wireless internet sector
          during this period was driven almost exclusively by the migration of
          our wireless internet customers to newer technologies and newer
          wireless internet products (for example, RIM wireless email devices
          that incorporate a wireless telephone, which cannot be used on our
          network). Additionally, the termination of the manufacture of RIM 857
          devices by Research in Motion greatly hampered our ability as well as
          our larger resellers' ability to add new wireless internet customers
          to our network. We anticipate that our wireless internet revenue will
          continue to decline in 2006 for similar reasons. In addition, our
          recent and anticipated future changes to our DataTac network may have
          been or may be a proponent to this revenue decline over the last year
          or in the future, respectively.

                                     - 40 -
<PAGE>

     o    Field Service: The decrease in field service revenue was primarily the
          result of the termination of several large customer contracts,
          including IBM, Brinks, Bannex, Pitney Bowes, Schindler, as well as the
          general reduction of units and/or rates across the remainder of our
          field service customer base. In addition, our recent and anticipated
          future changes to our DataTac network may have been or may be a
          proponent to this revenue decline over the last year or in the future,
          respectively. Motient believes however that customers in this market
          segment may potentially present new opportunities to generate new
          revenues with our iMotient Solutions(TM) products and services.

     o    Transportation: The decrease in revenue from the transportation sector
          was partially the result of UPS, beginning in July 2003, having
          removed a significant number of their units from our network. UPS
          represented $0.1 million and $0.5 million of revenue for the three and
          twelve months ended December 31, 2005, as compared to $0.2 million and
          $0.9 million of revenue for the three and twelve months ended December
          31, 2004. Other customers accounting for the decrease in revenues
          include Metra, $(0.4) million, Emery, $(0.3) million and Avis, $(0.1)
          million. In addition, our recent and anticipated future changes to our
          DataTac network may have been or may be a proponent to this revenue
          decline over the last year or in the future, respectively. Motient
          believes however that this market segment will potentially present new
          opportunities to generate new revenues with our iMotient Solutions(TM)
          products and services.

     o    Telemetry: We experienced revenue growth for 2005 in certain telemetry
          customer accounts, including CRN, Metersmart and Transaction Network
          Services Inc., of approximately $0.4 million. This revenue growth was
          more than offset by the loss of customers or decreased revenues of
          approximately $1 million in twelve other telemetry accounts. In
          addition, our recent and anticipated future changes to our DataTac
          network may have been or may be a proponent to this revenue decline
          over the last year or in the future, respectively. Motient believes
          however that this market segment will potentially present new
          opportunities to generate new revenues with our iMotient Solutions(TM)
          products and services.

     o    iMotient: We activated our first customer units and generated our
          initial revenue from the iMotient platform in February of 2005. As of
          December 31, 2005, we had 4,733 billable units utilizing our iMotient
          platform and generated $0.2 million and $0.4 million in revenues for
          the three and twelve months ended December 31, 2005. We expect
          iMotient revenues to increase over the course of 2006.

     o    Other Revenue: The decrease in other revenue for the twelve months
          ended December 31, 2005 as compared to the same period in 2004 was
          primarily due to the termination of our agreements with Verizon and
          T-Mobile, which allowed us to sell and promote wireless email and
          wireless internet applications on their networks. We no longer
          generate revenues in this product segment and do not expect to
          generate material revenues in the future.

                                     - 41 -
<PAGE>

     o    Equipment Revenue: Equipment revenues decreased as the result of the
          decline sales of devices attributable to our now-terminated agency and
          dealer agreements with Verizon and T-Mobile.

For the year ended December 31, 2005, one customer, SkyTel, accounted for
approximately 21% of Motient's service revenue, no other single customer
accounted for more than 10% of our service revenue. As of December 31, 2005, one
customer, Geologic Solutions, accounted for more than 20% of our net accounts
receivable. No other single customer accounted for more than 10% of our net
accounts receivable. The revenue attributable to such customers varies with the
level of network airtime usage consumed by such customers, and none of the
service contracts with such customers requires that the customers use any
specified quantity of network airtime, nor do such contracts specify any minimum
level of revenue. There can be no assurance that the revenue generated from
these customers will continue in future periods.

Expenses

The table below summarizes, for the periods indicated, a year-over-year
comparison of the key components of our operating expenses. Please note that
2005 includes expenses related to TerreStar, which were not consolidated in
2004.

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                     --------------------------------------------------
Summary of Expenses                   2005(1)       2004(2)        Change     % Change
-------------------                   -------       -------        ------     --------
<S>                                  <C>            <C>         <C>              <C>
(in millions)
Cost of Service and Operations       $ 20.5       $ 39.6      $(19.0)            (48)%
Cost of Equipment Sales                 0.9          4.3        (3.4)            (79)
Sales and Advertising                   1.0          1.9        (0.9)            (48)
Research & Development                  2.3          0.0         2.3             100
General and Administration             35.7         13.2        22.4             168
Operational Restructuring Costs         5.7          6.3        (0.6)            (10)
Depreciation and Amortization          16.0         15.6         0.4               3
Loss on Disposal of Assets             15.0          2.7        12.3             456
Loss on Impairment of Assets           42.9          0.8        42.1            5263
Gain on Debt and Capital Lease
   Retirement                           0.0         (0.8)        0.8            (100)
                                     ------       ------      ------            ----
         Total Operating             $140.0       $ 83.6      $ 56.4              67%
                                     ======       ======      ======            ====
</TABLE>

     (1)  Includes compensation expense of $0.8 million related to the market
          value of employee stock options and $11.7 million of stock
          compensation expense for directors and consultants.

     (2)  Includes compensation expense of $6.5 million related to the market
          value of employee stock options and $3.6 million of stock compensation
          expense for directors and consultants.


                                     - 42 -
<PAGE>

Cost Of Service And Operations: Our largest single cost center is the cost of
service and operations, which includes costs to support subscribers, such as
network telecommunications charges and site rent for network facilities, network
operations employee salary and related costs, network and hardware and software
maintenance charges, among other things. As a percentage of total revenues,
these costs totaled approximately 158% for 2005, as compared to 122% in 2004.
Our aggregate expenses in this area decreased $19.0 million, or $15.0 million,
excluding certain non-cash compensation charges. Given our ongoing
cost-reduction efforts, we expect these costs will continue to decrease in 2006.
The extent of the decrease will depend both upon our ability to successfully
manage our cost-reduction efforts as well as the necessity for these
expenditures in the future if our revenue continues to decline. The decrease in
2005 is primarily due to:


     o    lower employee salary and related costs of $1.1 million for the year
          ended December 31, 2005 as compared to the same periods in 2004 due to
          workforce reductions implemented in February 2004 and March 2005.

     o    the decrease in licensing fees paid primarily to RIM for licensing
          Blackberry as a result of the decline of wireless internet units and
          revenues, of approximately $2.6 million from 2004 to 2005.

     o    lower network maintenance costs of approximately $0.5 million from
          2004 to 2005 as a result of the continued removal of network switch
          hardware, older-generation base stations from the network and the
          removal of base stations under our network rationalization efforts
          initiated in the second quarters of 2004 and 2005. We currently
          perform our maintenance on our base stations by contracting directly
          with service shops in respective regions, which has materially lowered
          our costs.

     o    lower site lease costs of approximately $3.6 million from 2004 to
          2005, and lower telecommunications costs of approximately $5.8 million
          from 2004 to 2005, for base station locations as a result of the
          removal of base stations as part of our efforts to remove
          older-generation equipment from our network and the removal of base
          stations under our network rationalization efforts initiated in the
          second quarters of 2004 and 2005. As we continue to remove base
          stations from the network, we anticipate that these costs will
          continue to decrease.

     o    reductions in hardware and software maintenance costs of approximately
          $0.4 million from 2004 to 2005 as a result of the negotiation of lower
          rates on maintenance service contracts in 2004 and 2005 and the
          reduction of software licenses as a result of having fewer employees.

     o    lower compensation expenses associated with stock options issued to
          employees of $0.4 million for 2005, as compared to $4.4 million for
          2004. Excluding these compensation charges, cost of service and
          operations decreased $15.0 million, or 43% for 2005, as compared to
          2004.

                                     - 43 -
<PAGE>

Cost Of Equipment And Sales: The decrease in cost of equipment was the result of
the elimination of sales of devices attributable to agency and dealer agreements
with Verizon Wireless and T-Mobile USA. Our efforts to sell under our agent
relationships with T-Mobile USA and Verizon Wireless were reduced significantly
in the third and fourth quarter of 2004 and these contracts were terminated in
the fourth quarter of 2004 to accommodate our agreements with Sprint and
Cingular. We anticipate that these costs will be minor in the future given the
elimination of the T-Mobile USA and Verizon Wireless reseller agreements. Cost
of equipment sales as a percentage of total revenue totaled 7% for the year
ended December 31, 2005 as compared to 13% of total revenues for the year ended
December 31, 2004.

Sales And Advertising: The decrease in sales and advertising expenses for the
year ended December 31, 2005 was primarily attributable to lower employee salary
and related costs, of approximately $0.6 million from 2004 to 2005, including
lower sales commissions, lower travel and entertainment expense and lower
marketing expense, all due to lower sales volumes and the workforce reductions
implemented in February 2004 and March 2005. These decreases were also impacted
by compensation charges associated with stock options issued to employees of
$0.1 million for the year ended December 31, 2005, as compared to $0.4 million
for the year ended December 31, 2004. Excluding these compensation charges,
sales and advertising decreased $0.6 million, or 38% for the year ended December
31, 2005, as compared to the comparable period in 2004. We anticipate that these
costs will increase in the future in conjunction with our increasing efforts to
sell and promote our iMotient Solutions (TM) platform. Sales and advertising
expenses as a percentage of total revenue totaled approximately 8% for 2005,
compared to 6% for 2004.

General And Administrative: Excluding TerreStar, general and administrative
expenses for the core wireless business as a percentage of total revenue totaled
approximately 224% for 2005 as compared to 41% for 2004. Our aggregate expenses,
including TerreStar expense, in this area increased $22.4 million or 169%.
However, excluding certain compensation charges related to stock options and
restricted stock, general and administrative increased only $15.8 million, or
198% for 2005, as compared to 2004. The increase in general and administrative
expenses was primarily attributable to:

     o    TerreStar expenses of $6.6 million in 2005, as compared to $0.0 in
          2004 which include $1.0 million in salary and related costs, $2.9
          million for consulting, $2.3 million for legal and regulatory fees and
          $0.1 million for audit related fees.
     o    increases in legal and regulatory fees, of approximately $3.6 million
          from 2004 to 2005 as a result of our corporate finance and mergers and
          acquisitions activity, our litigation support requirements and our
          related reporting and security registration requirements.
     o    audit expenses increased $1.8 million for the year ended December 31,
          2005 as compared to the same period in 2004, mainly due to our
          requirements to comply with Sarbanes-Oxley guidelines for 2004 and our
          corporate finance activity in the first and second quarters of 2005.


                                     - 44 -
<PAGE>

     o    consulting and advisory fees increased $8.1 million for 2005 from $3.5
          million in 2004 to $11.6 million for 2005, due to certain corporate
          finance related fees discussed below, fees paid to consultants to
          support our regulatory efforts for Motient Communications and
          consulting support we utilized for our success-based site lease
          negotiation efforts. A consulting fee of $3.7 million, consisting of
          $0.9 million in cash and 95,000 shares of stock valued at $2.8
          million, was paid in the first quarter of 2005 for services rendered
          in conjunction with the acquisition of further MSV interests from
          Telcom Ventures, Columbia Capital and Spectrum Equity in February
          2005.
     o    higher bonus compensation expense of $0.6 million, and
     o    compensation of directors increased $1.8 million in 2005 from $0.9
          million for 2004 as compared to $2.7 million for 2005.

We anticipate certain general and administrative costs will decline in the
future in conjunction with our overall cost-cutting efforts. As we expand our
efforts on TerreStar, however, related general and administrative expenses are
anticipated to increase.

Research and Development: Research and development consists of approximately
$2.3 million of research and development costs from TerreStar for the period May
11, 2005 to December 31, 2005. We expect these costs from TerreStar to increase
in the future as development efforts on its satellite system accelerate.

Operational Restructuring Costs: The 2005 operational restructuring charges of
$5.7 million include $0.1 million in the first quarter of 2005 resulting from
the severance and related salary charges as a result of the reductions in force
in March 2005 and $5.6 million in the second quarter of 2005 resulting from
additional network rationalization initiatives in June 2005. Operational
restructuring charges of $6.3 million in 2004 consist of $1.2 million in the
first quarter of 2004 resulting from the severance and related salary charges as
a result of the reductions in force in February 2004, and $5.1 million in the
second quarter of 2004 related to certain network rationalization initiatives in
June 2004.

Depreciation And Amortization: Excluding TerreStar, depreciation and
amortization for the core wireless business was approximately 97% of total
revenue for 2005, as compared to 42% for 2004. Including TerreStar, depreciation
and amortization expense increased $0.4 million for 2005 as a result of the
amortization of our intangible assets of TerreStar and due to our June 2005
network rationalization for which we accelerated the depreciation of certain
base station equipment. Excluding these items, our depreciation and amortization
expense declined $4.8 million or 31% for 2005 as compared to 2004. Our
depreciation expense declined as a result of our decline in asset value related
to network reduction efforts in 2004 and 2005 and our write-down of related
assets and reduced amortization as a result of our additional impairment of our
customer contract intangibles in December 2004.

Loss On Disposal Of Assets: We recorded a loss on disposal of assets of $15.0
million for the year ended December 31, 2005. In the third and fourth quarters
of 2005, we determined that due to the material decline in our network traffic,
certain of our computer switching equipment was no longer operating at or near
capacity and that some of the units could be removed in order to reduce


                                     - 45 -
<PAGE>

costs. We recorded a loss on this equipment removal of $1.6 million. We also
removed certain direct customer connections and miscellaneous equipment related
to unused capacity and recorded a loss on network equipment of $1.1 million for
equipment that was removed from service. We disposed of certain base station
equipment that was the result of business casualties (hurricane Katrina) and
cost cutting activities in the amount of $1.5 million. We recorded a loss of
$0.1 million for leasehold improvements and office equipment as a result of a
fixed asset audit completed in the fourth quarter of 2005. In addition, as a
result of our rationalization efforts in 2004 and 2005, there were certain 800
MHz frequencies that were no longer being utilized. As part of our assessment of
the past and future utilization of these licenses and the applicable FCC rules
governing them, we determined to allow these licenses to expire in the fourth
quarter of 2005 and recorded a loss on their disposal of $10.7 million.

On December 9, 2003, Motient Communications entered into an asset purchase
agreement, under which Motient Communications will sell additional licenses to
Nextel for $2.75 million resulting in a $1.5 million loss which was recorded in
December 2003. In February 2004, we closed the sale of licenses covering
approximately $2.2 million of the purchase price, and we closed the sale of
approximately one-half of the remaining licenses in April 2004. We expect the
sale of the remaining licenses to close in 2006. None of these licenses are
necessary for our future network requirements. In 2004, we recorded a loss on
the sale of certain assets of $3.0 million, consisting of $1.5 million on the
sale of frequencies to Nextel (discussed above) and approximately $1.5 million
relating to the write-off of consulting costs and equipment purchased for our
project to convert our telecommunications circuits from an analog to a digital
base. This project was discontinued in favor of our TCPIP/Frame Relay conversion
project.

Loss On Impairment Of Assets: In December 2005, the Company revalued our 800 MHz
licenses as part of our review of our intangible assets. We determined that
these frequency assets were impaired for two reasons. The first reason related
to the FCC initiated 800 MHz frequency band reconfiguration effort commonly
known as the "consensus plan". While the FCC outlined its broad intentions for
this reconfiguration in 2004, the specifics of the plan were subject to
negotiation and administration by an appointed transition administrator. Motient
has been actively in negotiations with Nextel and the transition administrator
and reached a resolution with regard to the repositioning of our frequencies in
the fourth quarter of 2005. Second, we experienced a significantly greater
decline in our revenues and customer base in the second half of 2005 than
anticipated, which will cause us to reduce DataTac network coverage within the
top 40 MSAs in 2006. These changes impair the nationwide capacity of our
frequencies that was previously maintained, as well as the future revenue and
cash flows that either Motient or a third party could generate from the use of
these frequencies. As a result of this valuation, we have reduced the nationwide
value premium associated with these assets to zero from $18.4 million and
reduced the individual frequency value by $24.5 million. As our business
declines in the future or we reduce network coverage and service, it is possible
that these frequency values may be further impaired.

                                     - 46 -
<PAGE>

In December 2004, we performed an analysis on the impact of our revenue decline
on our customer contract intangibles. As a result, we determined that the value
of our customer contract intangibles was impaired and was reduced by $0.8
million.

Other Expenses & Income

<TABLE>
<CAPTION>
                                                            Year Ended               Year Ended
                                                           December 31,             December 31,
                                                               2005                     2004
                                                               ----                     ----
Other Income/Expense
--------------------
<S>                                                         <C>                      <C>
(in thousands)
Interest and other Income (Expense)                         $  7,582                 $ (3,763)
Write -off of deferred financing costs                            --                  (12,035)
Other Income from UPS                                          1,112                       --
Other Income from Aether                                          --                    1,953
Equity in Losses of Mobile Satellite Ventures                (25,059)                 (11,897)
Minority interests in losses of TerreStar                   $  3,263                 $     --
</TABLE>

Interest and Other Income (Expense): Interest expense is presented net of
interest income on our bank balances. Interest and other income increased for
2005, as compared to 2004, due to increased cash balances from the proceeds of
our financing transactions. For 2004, interest expense is presented net of the
interest accrued on our note receivable from MSV. As a result of the November
2004 investment transaction into MSV, the principal and interest outstanding
under our note receivable from MSV was converted into limited partnership units
in MSV.

We have no current plans to seek any additional debt financing, and we
accordingly anticipate that we will not have any material interest expense in
2006, other than what may be associated with our trade credit and our preferred
stock interest payments, which have been placed in escrow.

Write-Off Of Deferred Financing Fees: The April 2004 repayment of our term
credit facility and the subsequent termination on December 31, 2004, resulted in
the requirement to immediately expense $12.0 million in financing fees related
to the credit facility. The financing fees related to the credit facility
represent the unamortized portion of the value ascribed to warrants provided to
the term credit facility lenders on our closing of our credit facility in
January 2003 and the subsequent amendment in March 2004. We issued warrants to
these same lenders at closing of the subsequent amendment in March 2004 to
purchase, in the aggregate, 1,000,000 shares of our common stock. The exercise
price for these warrants is $4.88 per share. The warrants were valued at $6.7
million using a Black-Scholes pricing model, have been recorded as a debt
discount and were being amortized as additional interest expense over three
years, the term of the related debt. Upon closing of the amendment to the credit
agreement, we also paid closing and commitment fees to the lenders of $320,000,
which were also being amortized over three years.

Other Income from UPS: Other income from UPS of $1.1 million is related to the
September 2005 settlement of the UPS prepayment agreement. Motient made a
payment of $2.0 million to UPS, and in exchange, all but $0.6 million of the
outstanding prepayment of $3.7 million was terminated.

                                     - 47 -
<PAGE>

Other Income from Aether: We recorded other income from Aether in 2004 of $2.0
million related to their prepaid network airtime agreement entered into in
November 2000 when Motient sold its retail transportation business to Aether
Systems.

Equity in Losses of Mobile Satellite Ventures: Effective May 1, 2002, we were
required to reflect our equity share of the losses of MSV. We recorded equity in
losses of MSV of $25.1 million and $11.9 million for the years ended December
31, 2005 and 2004. The MSV losses for the year ended December 31, 2005 are
Motient's 38.60% and 48.84% share of MSV's losses for the period. The MSV losses
for the year ended December 31, 2004 are Motient's 46.50% and 38.60% share of
MSV's losses for the same period. We anticipate that our equity in losses of MSV
will continue to increase in 2006, as MSV's expenditures on its next generation
network will increase, coupled with a small expected decrease in the revenues
from its current customer base.

Minority Interest in TerreStar: For the year ended December 31, 2005, the
Company recorded approximately an $8.3 million net loss for TerreStar Networks.
The $3.3 million minority interest in TerreStar represents the approximately 39%
of TerreStar Networks that is not owned by the Company.

Additionally, we recorded other charges in 2005 and 2004 as a result of various
transactions. For additional information concerning these charges, please see
"-- Liquidity and Capital Resources."


Years Ended December 31, 2004 and 2003

In the year ended December 31, 2004, we experienced the loss of certain large
customer contracts, such as Schindler and Pitney Bowes, and a general erosion in
our customer base, primarily as a result of those customers' desire to utilize
newer wireless technologies, such as GPRS or CDMA, which we cannot support on
our wireless network. The majority of this decline in revenue was due to a
decline in our wireless internet segment, which was driven generally by the
aforementioned desire to move to newer technologies, as well as the termination
of the manufacture of RIM 857 devices by Research in Motion in late 2003, which
were the only RIM devices then produced for use on our network and the most
common wireless internet device used on our network. We are not able to utilize
any newer RIM devices on our network. As a result of this revenue decline, we
have been required to take numerous actions to reduce our cost structure and
change our operating strategy, which included reductions in the number of
employees and changes in senior management and a reduction in our DataTac
network coverage, among other things. We believe that several components of our
cost structure are much larger than required for our relative business size, and
we believe that we can continue to reduce our cost structure in our continued
efforts to improve our profitability. We are exploring alternatives ways to


                                     - 48 -
<PAGE>

provide comparable wireless internet services, using either our DataTac network
or our iMotient Solutions platform, however if we are unsuccessful in these
efforts, our wireless internet revenue base will continue to decline and we will
need to increase revenues from other sources. We believe our iMotient Solutions
suite of products and services will be our primary source of new revenue for
2005 and beyond, and we are focusing the majority of our development, sales and
marketing on this area.

Subscriber Statistics

<TABLE>
<CAPTION>
                                                 As of December 31,
                                  2004                                2003                                  % Change
                     Registered   Billable    Active    Registered    Billable    Active     Registered      Billable    Active
                     ----------   --------    ------    ----------    --------    ------     ----------      --------    ------
<S>                     <C>           <C>      <C>           <C>         <C>         <C>            <C>          <C>       <C>
Wireless Internet       47,328(1)     35,366   20,126        106,600     69,673      51,179         (56)%        (49)%     (61)%
Field Services           7,437         7,360    4,896         17,468     16,415       9,851         (57)%        (55)%     (50)%
Transportation          46,721        41,013   40,621         45,902     39,344      39,513            2%           4%        3%
Telemetry               30,107        22,640   11,484         32,420     23,947      13,444          (7)%         (5)%     (15)%
All Other                  256           180      156          1,305      1,043         584         (80)%        (83)%     (73)%
                       -------       -------   ------        -------    -------     -------         ---          ---       ---
Total                  131,849       106,559   77,283        203,695    150,422     114,571         (35)%        (29)%     (33)%
                       =======       =======   ======        =======    =======     =======         ===          ===       ===
</TABLE>

     (1) Reflects deregistration of units by SkyTel on December 31, 2004 of
     approximately 30,000 units.

Revenue

The table below sets forth, for the periods indicated, a year-over-year
comparison of the key components of our revenue:

<TABLE>
<CAPTION>
                                        Year Ended December 31,
                         ---------------------------------------------------
Summary of Revenue         2004        2003            Change     % Change
------------------         ----        ----            ------     --------
<S>                       <C>          <C>           <C>           <C>
(in millions)
Wireless Internet         $18.3        $27.8         $(9.5)        (34)%
Field Services              5.6          9.9          (4.3)        (43)
Transportation              3.3          7.9          (4.6)        (58)
Telemetry                   2.3          2.3           0.0           0
All Other                   2.9          1.4           1.5         107
                          -----        -----        ------         ---
Service Revenue            32.4         49.3         (16.9)        (34)%
Equipment Revenue           4.5          5.2          (0.7)        (13)
                          -----        -----        ------         ---
   Total                  $36.9        $54.5        $(17.6)        (32)%
                          =====        =====        ======         ===
</TABLE>

The decrease in service revenue in 2004 as compared to 2003 was primarily the
result of the loss of certain large accounts and a material decrease in wireless
internet revenue, with additional decreases in field services and transportation
revenues. UPS deactivated a significant number of units on our network during
the third and fourth quarters of 2003 and our revenue from UPS declined
significantly during this period, resulting in the majority of the decline in
transportation revenues. This revenue decline was marginally offset by our


                                     - 49 -
<PAGE>

ability to generate some commissions from the transition of our wireless
internet customers to newer technologies under our reseller agreements with
Verizon and T-Mobile (we terminated these agreements in the fourth quarter of
2004 in connection with entering into our agreements with Cingular and Sprint).
We anticipate that our wireless revenue will continue to decline in 2005 as a
result of the continued decrease in our wireless internet customer base. By
market segment, we note:

     o    Wireless Internet: The revenue decline in the wireless internet sector
          during this period was driven almost exclusively by the migration of
          our wireless internet customers to newer technologies and newer
          wireless internet products (for example, RIM wireless email devices
          that incorporate a wireless telephone, which cannot be used on our
          network). Additionally, the termination of the manufacture of 857
          devices by Research in Motion greatly hampered our ability as well as
          our larger resellers' ability to add new wireless internet customers
          to our network. We anticipate that our wireless internet revenue will
          continue to decline in 2005 for similar reasons.

     o    Field Service: The decrease in field service revenue is primarily the
          result of the termination of several customer contracts, including
          Schindler, Sears, Lanier, and Pitney Bowes, as well as the general
          reduction of units and rates across the remainder of our field service
          customer base. Schindler's revenue increased slightly due to a $0.25
          million contract termination fee that was billed and collected in
          third quarter of 2004. We believe that the technology requirements of
          this market segment are more compatible with our network than the
          wireless internet market segment, and we are making efforts to grow
          this segment.

     o    Transportation: The decrease in revenue from the transportation sector
          was primarily the result of UPS, beginning in July 2003, having
          removed a significant number of their units from our network. UPS
          represented $0.2 million and $0.9 million of revenue for the three and
          twelve months ended December 31, 2004, as compared to $0.3 million and
          $5.5 million of revenue for the three and twelve months ended December
          31, 2003. We did, however, also continue to experience growth during
          2004 in other transportation accounts, most notably Aether and
          Roadnet. We believe that the technology requirements of this market
          segment are more compatible with our network than the wireless
          internet market segment, and we are making efforts to grow this
          segment.

     o    Telemetry: While we experienced revenue growth in certain telemetry
          customer accounts, this revenue growth was equally offset by customer
          losses or negative rate changes in other telemetry accounts. We
          believe that the technology requirements of this market segment are
          more compatible with our network than the wireless internet market
          segment, and we are making efforts to grow this segment.

     o    Other Revenue: The increase in other revenue for the year ended
          December 31, 2004 was attributable to the settlement of a take-or-pay
          contract with Wireless Matrix resulting in the recognition of $1.6
          million of revenue and approximately $0.7 million of commissions


                                     - 50 -
<PAGE>

          earned via the agency and dealer agreements with Verizon Wireless and
          T-Mobile USA. Our efforts to sell and promote wireless email and
          wireless internet applications to enterprise accounts under our agent
          relationships with T-Mobile USA and Verizon Wireless were reduced
          significantly in the third and fourth quarter of 2004, which we
          anticipate will lead to a decline in these revenues in the future,
          unless we can improve our efforts in this area or refocus our efforts
          in this revenue segment to a different vendor/strategy. We terminated
          these agreements in order to enter into our resale agreements with
          Cingular and Sprint and launch our new iMotient Solutions (TM)
          platform.

     o    Equipment Revenue: The decrease in equipment revenues for the year
          ended December 31, 2004 was the result of the decline in sales of
          wireless internet devices as compared to the year ended December 31,
          2003 and the third and fourth quarter decline in the sale of devices
          attributable to agency and dealer agreements with Verizon Wireless and
          T-Mobile USA.

For the year ended December 31, 2004, one customer, SkyTel, accounted for
approximately 22% of the Company's service revenue. No other single customer
accounted for more than 10% of our service revenue. As of December 31, 2004, one
customer, RIM, accounted for more than 14% of our net accounts receivable. No
other single customer accounted for more than 10% of our net accounts
receivable. The revenue attributable to such customers varies with the level of
network airtime usage consumed by such customers, and none of the service
contracts with such customers requires that the customers use any specified
quantity of network airtime, nor do such contracts specify any minimum level of
revenue. There can be no assurance that the revenue generated from these
customers will continue in future periods.

Expenses

The table below summarizes, for the periods indicated, a year-over-year
comparison of the key components of our operating expenses.

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                     ---------------------------------------------------
Summary of Expenses                   2004(1)       2003(2)        Change     % Change
-------------------                   -------       -------        ------     --------
<S>                                  <C>            <C>       <C>               <C>
(in millions)
Cost of Service and Operations       $   39.6       $ 51.4    $   (11.8)        (23)%
Cost of Equipment Sales                   4.3          5.9         (1.6)        (27)
Sales and Advertising                     1.9          4.6         (2.7)        (59)
General and Administration               13.2         11.3          1.9          17
Operational Restructuring and
Impairment Costs                          6.3           --          6.3          --
Depreciation and Amortization            15.6         21.5         (5.9)        (27)
Loss on Disposal of Assets                2.7          3.0         (0.3)        (10)
Loss on Impairment of Asset               0.8          5.5         (4.7)        (85)
Gain on Debt and Capital
Lease Retirement                        (0.8)           --         (0.8)         --
                                     --------       ------    ---------        ----
         Total Operating             $   83.6       $103.2    $   (19.6)       (19)%
                                     ========       ======    =========        ====
</TABLE>


                                     - 51 -
<PAGE>

     (1) Includes compensation expense of $6.5 million related to the market
     value of employee stock options and $3.6 million of stock compensation
     expense for director and consultants.
     (2) Includes compensation expense of $0.6 million related to the market
     value of employee stock options.

     o    Cost Of Service And Operations: Our largest single cost center is the
          cost of service and operations, which includes costs to support
          subscribers, such as network telecommunications charges and site rent
          for network facilities, network operations employee salary and related
          costs, network and hardware and software maintenance charges, among
          other things. As a percentage of total revenues, these costs totaled
          approximately 107% for 2004, as compared to 94% in 2003. Our aggregate
          expenses in this area decreased $11.8 million, or $16.0 million,
          excluding certain non-cash compensation charges. Given our ongoing
          cost-reduction efforts described above, we expect these costs will
          continue to decrease. The extent of the decrease will depend both upon
          our ability to successfully manage our cost-reduction efforts as well
          as the necessity for these expenditures in the future if our revenue
          continues to decline. Additionally, any decreases would be offset by
          additional non-cash compensation expense related to currently
          outstanding employee stock options if the market price of our common
          stock continues to increase. (See "--2002 Stock Option Plan" below).
          The decrease in 2004 is primarily due to:

          o    lower employee salary and related costs due to the workforce
               reductions implemented in March of 2003 and February of 2004, of
               approximately $2.3 million from 2003 to 2004.

          o    the decrease in licensing fees paid primarily to RIM for
               licensing Blackberry as a result of the decline of wireless
               internet units and revenues, of approximately $0.8 million from
               2003 to 2004.

          o    lower network maintenance costs as a result of the termination of
               our national maintenance contract with Motorola at December 31,
               2003, of approximately $4.4 million from 2003 to 2004, as well as
               the continued removal of older-generation base stations from the
               network and the removal of base stations under our network
               rationalization efforts initiated in the second quarter of 2004.
               We currently perform our maintenance on our base stations by
               contracting directly with service shops in respective regions,
               which has materially lowered our cost relative to our prior
               national maintenance contract.

          o    lower site lease costs, of approximately $1.8 million from 2003
               to 2004, and telecommunications costs, of approximately $3.0
               million from 2003 to 2004, for base station locations as a result
               of the removal of base stations as part of our efforts to remove


                                     - 52 -
<PAGE>

               older-generation equipment from our network and the removal of
               base stations under our network rationalization efforts initiated
               in the second quarter of 2004. As we continue to remove base
               stations from the network, we anticipate that these costs will
               continue to decrease.

          o    reductions in hardware and software maintenance costs as a result
               of the negotiation of lower rates on maintenance service
               contracts in 2003 and 2004, the reduction of software licenses as
               a result of having fewer employees and a decrease in software
               development costs as a result of a change in capitalization
               policy, of approximately $1.1 million from 2003 to 2004.

         These decreases were partially offset by:

          o    higher compensation expenses associated with stock options issued
               to employees of $4.4 million for the year ended December 31,
               2004, as compared to $0.2 million for the year ended December 31,
               2003. Excluding these compensation charges, cost of service and
               operations decreased $16.0 million, or 31% for the year ended
               December 31, 2004, as compared to the comparable period in 2003.

     o    Cost Of Equipment And Sales: The decrease in cost of equipment for the
          year ended December 31, 2004 was the result of the decline in sales of
          wireless internet devices and a decline in the third and fourth
          quarter of the sale of devices attributable to agency and dealer
          agreements with Verizon Wireless and T-Mobile USA. Our efforts to sell
          under our agent relationships with T-Mobile USA and Verizon Wireless
          were reduced significantly in the third and fourth quarter of 2004 and
          these contracts were terminated in the fourth quarter of 2004 to
          accommodate our agreements with Sprint and Cingular. As our sales of
          these devices will decrease in the future, so will these costs.

     o    Sales And Advertising: Sales and advertising expenses as a percentage
          of total revenue totaled approximately 5% for 2004, compared to 8% for
          2003. The decrease in sales and advertising expenses for the year
          ended December 31, 2004 was primarily attributable to lower employee
          salary and related costs, of approximately $1.9 million from 2003 to
          2004, including sales commissions of approximately $0.5 million from
          2003 to 2004, due to lower sales volumes and the workforce reductions
          implemented in March 2003 and February 2004. These decreases were also
          impacted by compensation charges associated with stock options issued
          to employees of $0.4 million for the year ended December 31, 2004, as
          compared to $0.2 million for the year ended December 31, 2003.
          Excluding these compensation charges, sales and advertising decreased
          $3.0 million, or 67% for the year ended December 31, 2004, as compared
          to the comparable period in 2003. We anticipate that these costs will
          increase in the future in conjunction with our increasing efforts to
          sell and promote our iMotient Solutions (TM) platform. Additionally,
          we may experience additional non-cash compensation expense related to
          currently outstanding employee stock options if the market price of
          our common stock continues to increase. (See "--2002 Stock Option
          Plan" below).

                                     - 53 -
<PAGE>

     o    General And Administrative: General and administrative expenses for
          the core wireless business as a percentage of total revenue totaled
          approximately 36% for 2004 as compared to 21% for 2003. Our aggregate
          expenses in this area increased $1.9 million or 17%. However,
          excluding certain compensation charges related to stock options,
          general and administrative decreased $3.1 million, or 28% for the year
          ended December 31, 2004, as compared to 2003. The decrease in general
          and administrative expenses was primarily attributable to:

          o    lower employee salary and related costs due to the workforce
               reductions implemented in March 2003 and February 2004 of
               approximately $0.4 million from 2003 to 2004,
          o    lower rent expense as a result of the closure of our Reston
               facility in July 2003, of approximately $0.6 million from 2003 to
               2004,
          o    lower audit and tax fees, of approximately $0.2 million from 2003
               to 2004, and
          o    a reduction in bad debt reserves primarily due to lower accounts
               receivable balances as a result of improvements in our collection
               capabilities, of approximately $0.5 million from 2003 to 2004.

These decreases were offset by:

          o    increases in legal and regulatory fees, of approximately $0.1
               million from 2003 to 2004,
          o    higher consulting expenses as a result of the $1.8 million
               expensed in 2004 primarily related to CTA's monthly fees and
               certain stock options issued to CTA in December of 2004.
               Compensation expenses in 2003 was impacted by $0.9 million
               expensed for the Further Lane warrants in 2003,
          o    higher expenses related to Board compensation of $1.0 million,
               due primarily to the issuance of restricted stock to the Board in
               2004,
          o    higher bonus compensation expense due to the reversal of certain
               accrued bonuses in 2003 as a result of workforce reductions, and
          o    increases in compensation expenses associated with stock options
               issued to employees of $1.8 million and $3.6 million of stock
               compensation expense for directors and consultants for the year
               ended December 31, 2004, as compared to $0.2 million in 2003.
               We anticipate that these costs will continue to decline in the
               future in conjunction with our overall cost-cutting efforts.
               However, any decreases would be offset by additional non-cash
               compensation expense related to currently outstanding employee
               stock options if the market price of our common stock continues
               to increase. (See "--2002 Stock Option Plan" below).



                                     - 54 -
<PAGE>

     o    Restructuring And Impairment Charges: There were no restructuring
          costs in 2003. The operational restructuring and impairment charges in
          the first quarter of 2004 resulted from the severance and related
          salary charges as a result of the reduction in force in February 2004
          and certain costs as a result of base station deconstruction
          activities as part of our on-going network rationalization efforts. In
          the second quarter of 2004, we took an operational restructuring
          charge of $5.2 million related to these network rationalization
          efforts.

          In the second quarter of 2004, we finalized plans to implement certain
          network station rationalization initiatives. These initiatives involve
          the de-commissioning of base stations from our network. We had 1,549
          base stations in our network as of March 31, 2004, and as of December
          31, 2004, we have 1,239 base stations in our network. We took these
          actions in a coordinated effort to reduce network operating costs
          while also focusing on minimizing the potential impact to our
          customers' communications and coverage requirements. We were
          substantially complete with these network rationalization initiatives
          in December 2004. Additionally, during the first quarter of 2005,
          Motient initiated a plan to refocus its DataTac network primarily on
          the Top 40 Metropolitan Statistical Areas (MSAs). This plan involves
          the decommissioning of DataTac network components and termination of
          service in previously served MSAs above the Top 40. Given the similar
          coverage profiles of the Cingular and Sprint networks, the
          significantly increased capacity capabilities of these networks
          relative to DataTac and the concentration of our revenues in the Top
          40 MSAs, we determined that this plan best allowed us to match our
          network infrastructure costs with our revenue base, while continuing
          to meet the needs of as many of our customers as possible. We have
          notified our customers of this change in our network coverage and this
          decommissioning began on June 1, 2005. We are making every effort to
          provide any impacted customers with alternatives to migrate their
          services and applications either to our new iMotient Solutions
          platform, or to other networks using our agreements with RACO
          Wireless, Inc. and eAccess Solutions, Inc. We expect that the costs
          associated with this de-commissioning will be lower than in 2004. We
          anticipate that a major component of these costs will be the write-off
          of our de-commissioned base stations (anticipated to be approximately
          $1.2 million). However, any future programs of de-commissioning could
          result in increased expenditures in this area. No such additional
          programs are planned at this time.

     o    Depreciation And Amortization: Depreciation and amortization for the
          core wireless business was approximately 42% of total revenue for
          2004, as compared to 39% for 2003. The decrease in depreciation and
          amortization expense in 2004 was partially attributable to the
          impairment of the value of our customer contract intangibles as of
          September 2003, as well as the write-off of certain base station
          assets in June 2004 as a result of our network restructuring
          initiatives. As a result of our additional impairment of our customer
          contract intangibles in December 2004 as well as continued network
          restructuring initiatives planned in 2005, we expect depreciation and
          amortization to continue to decrease in 2005.

                                     - 55 -
<PAGE>

     o    Loss On Impairment Of Assets And Loss On Disposal Of Assets: In May
          2004, we engaged a financial advisory firm to prepare a valuation of
          customer contract intangibles as of September 2003. Due to the loss of
          UPS as a core customer in 2003 as well as the migration and customer
          churn occurring in our wireless internet base that is impacting the
          average life of a customer in this base, among other things, we
          determined an impairment of the value of these customer contracts was
          probable. As a result of this valuation, the value of customer
          contract intangibles was determined to be impaired as of September
          2003 and was reduced by $5.5 million. In addition, in December 2004,
          we performed an additional analysis on the impact of our revenue
          decline on our customer contract intangibles. As a result, we
          determined that the value of our customer contract intangibles was
          further impaired and was reduced by $0.8 million.

          On July 29, 2003, our wholly-owned subsidiary, Motient Communications,
          entered into an asset purchase agreement with Nextel, under which
          Motient Communications sold to Nextel certain of its SMR licenses
          issued by the FCC for $3.4 million. The closing of this transaction
          occurred on November 7, 2003. On December 9, 2003, Motient
          Communications entered into a second asset purchase agreement, under
          which Motient Communications will sell additional licenses to Nextel
          for $2.75 million resulting in a $1.5 million loss which was recorded
          in December 2003. In February 2004, we closed the sale of licenses
          covering approximately $2.2 million of the purchase price, and we
          closed the sale of approximately one-half of the remaining licenses in
          April 2004. The transfer of the other half of the remaining licenses
          has been challenged at the FCC by a third-party. While we believe,
          based on the advice of counsel, that the FCC will ultimately rule in
          our favor, we cannot assure you that we will prevail, and, in any
          event, the timing of any final resolution is uncertain. None of these
          licenses are necessary for our future network requirements. We
          recorded a loss on the sale of certain assets of $3.0 million,
          consisting of $1.5 million on the sale of frequencies to Nextel
          (discussed above) and approximately $1.5 million relating to the
          write-off of consulting costs and equipment purchased for our project
          to convert our telecommunications circuits from an analog to a digital
          base. This project was discontinued in favor of our TCPIP/Frame Relay
          conversion project.

          In June 2004, we negotiated settlements of our vendor financing and
          notes payable with Motorola and our capital lease with
          Hewlett-Packard. These settlements resulted in a gain on debt and
          capital lease retirements of $0.8 million.

Other Expenses & Income

<TABLE>
<CAPTION>
                                                                                 Year Ended
                                                           Year Ended             December
                                                          December 31,          December 31,
                                                              2004                  2003
                                                              ----                  ----
Other Income/Expense
--------------------
<S>                                                        <C>                   <C>
(in thousands)
Interest Expense, net                                      $ (3,763)             $ (5,703)
Write -off of deferred financing costs                      (12,035)                   --
Other Income from Aether                                      1,953                 2,203
Equity in Losses of Mobile Satellite Ventures              $(11,897)             $ (9,883)
</TABLE>

                                     - 56 -
<PAGE>

Interest Expense: Interest expense decreased for the year ended December 31,
2004, as compared to the year ended December 31, 2003, due primarily to the
April 2004 repayment of our term credit facility and the July 2004 repayments of
our notes payable to Motorola, Rare Medium and CSFB, and the termination of our
capital lease with Hewlett-Packard.

Write-Off Of Deferred Financing Fees: The April 2004 repayment of our term
credit facility and the subsequent termination on December 31, 2004, resulted in
the requirement to immediately expense $12.0 million in financing fees related
to the credit facility. The financing fees related to the credit facility
represent the unamortized portion of the value ascribed to warrants provided to
the term credit facility lenders on our closing of our credit facility in
January 2003 and the subsequent amendment in March 2004. We issued warrants to
these same lenders at closing of the subsequent amendment in March 2004 to
purchase, in the aggregate, 1,000,000 shares of our common stock. The exercise
price for these warrants is $4.88 per share. The warrants were valued at $6.7
million using a Black-Scholes pricing model, have been recorded as a debt
discount and were being amortized as additional interest expense over three
years, the term of the related debt. Upon closing of the amendment to the credit
agreement, we also paid closing and commitment fees to the lenders of $320,000,
which were also being amortized over three years.

Interest expense is presented net of interest income on our bank balances and
the interest accrued on our note receivable from MSV. As a result of November
2004 investment transaction into MSV, the principal and interest outstanding
under our note receivable from MSV was converted into limited partnership units
in MSV.

In July 2004, we repaid all amounts outstanding under our notes payable to Rare
Medium and CSFB.

Given our recent private placements of common stock and our repayment of our
outstanding debt, we expect interest expense to decline significantly in the
future. We have no current plans to seek any additional debt financing, and we
accordingly anticipate that we will not have any material interest expense in
2005, other than what may be associated with our trade credit.

Additionally, we recorded other charges in 2004 and 2003 as a result of various
transactions. For additional information concerning these charges, please see
"-- Liquidity and Capital Resources." We also recorded other income from Aether
in 2004 of $2.0 million, as compared to $2.2 million in 2003.

                                     - 57 -
<PAGE>

Effective May 1, 2002, we were required to reflect our equity share of the
losses of MSV. We recorded equity in losses of MSV of $11.9 million and $9.9
million for the years ended December 31, 2004 and 2003. The MSV losses for the
years ended December 31, 2004 and 2003 are Motient's 46.5% and 38.6% share of
MSV's losses for the same period reduced by the loans in priority. For the years
ended December 31, 2004 and 2003, MSV had revenues of $29.0 million and $27.1
million, operating expenses of $55.7 million and $44.1 million and a net loss of
$33.5 million and $28.0 million, respectively. Our calculations give effect to
the impairment of our investment in MSV in the fourth quarter of 2002 in the
amount of $15.4 million. We are unable to predict our equity share of MSV's gain
or losses in future periods, but we do not anticipate that MSV will be
profitable in the near future. For additional information, please see the MSV
financial statements starting on Page M-1.

2002 Stock Option Plan

Options to purchase 791,317 shares of our common stock were outstanding as of
December 31, 2005 under our 2002 stock option plan. Of these, 64,640 options are
accounted for in accordance with variable plan accounting, which requires that
the value of these options are measured at their intrinsic value and any change
in that value be charged to the income statement each quarter based on the
difference (if any) between the intrinsic value and the then-current market
value of the common stock. Therefore, for every $10 increase in our stock price,
we would incur $10 of non-cash expense for every variable option outstanding at
the end of the period.

The Company's 2002 Stock Option Plan was amended to increase the number of
shares of the Company's common stock authorized to be issued under the plan by
2,500,000 shares on June 15, 2005 at the Annual Meeting of Stockholders.

Material Off-Balance Sheet Transactions

As of December 31, 2005, 2004 and 2003, we did not have any material off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) under Regulation S-K.

Liquidity And Capital Resources

The Company's future financial performance will depend on the successful
implementation of its business plan. As of December 31, 2005, the Company had
$181 million of cash on hand, excluding restricted cash, of which approximately
$73 million was held at Motient Corporation and $108 million was held at
TerreStar. In 2006, Motient Corporation anticipates completing its previously
announced rights offering for proceeds of approximately $21.4 million.

TerreStar's business plan will require substantial funds to finance the
anticipated operating and capital expenditures of TerreStar. TerreStar currently
has contractual commitments in 2006 for its satellite system and part of its
planned ground segment totaling approximately $125 million, excluding
anticipated additional contractual cost if TerreStar elects the option for its
second satellite in 2006. These contractual commitments exclude TerreStar's


                                     - 58 -
<PAGE>

operating requirements for 2006. In the case of each of TerreStar's contractual
commitment, TerreStar has the ability to terminate its financial obligation with
30 days notice and its liability would be limited to monies expended to date of
termination. However, if the progress of the satellite system or ground segment
system is curtailed by this termination, it could materially impede TerreStar's
ability to complete its satellite and ATC network in a timely fashion and
thereby prevent TerreStar from timely generating revenues at the levels
anticipated.

TerreStar will likely face a cash deficit in 2006 under its current business
plan. If TerreStar is unable to secure financing from a third party source to
meet this cash deficit in 2006, then Motient may decide that it will support
TerreStar's funding obligations with cash on hand at Motient. However, Motient
is under no obligation to do so. The Company cannot guarantee that additional
financing sources will be available for TerreStar from third party sources, the
capital markets or the Company at any given time or available on favorable
terms. In addition, MSV has substantial funding requirements in the near and
long term future, and while the Company is not obligated to meet such funding
requirements, MSV's failure to meet such requirements could materially impair
the value of the Company's investment in MSV.

The cash requirements for TerreStar and MSV, along with the Company's possible
obligation to rescind $90 million of the Series A Preferred Stock, may place
significant pressures on the Company's liquidity position and the value of its
assets and/or investments. If future cash requirements exceed those currently
anticipated, the Company may require additional financing in amounts that will
be material in advance of the currently anticipated funding timeframes. The
type, timing and terms of financing that the Company obtains will be dependent
upon its cash needs, the availability of financing sources and the prevailing
conditions in the financial markets. The Company cannot guarantee that
additional financing sources will be available at any given time or available on
favorable terms.

Summary Of Cash Flows For The Years Ended December 31, (in thousands):

<TABLE>
                                                                        2005              2004
                                                                        ----              ----
<S>                                                               <C>                 <C>
Net cash Flows used in Operating Activities:                      $    (32,207)     $    (18,354)
Net cash Flows used in Investing Activities:                          (111,871)         (120,662)
Cash Flows from Financing Activities:
      Proceeds from the issuance of equity securities                    2,204           192,024
      Stock issuance costs and other charges                                (9)           (6,974)
      Principal payments under capital leases                              ---            (2,605)
      Principal payments under Vendor Financing                            ---            (2,645)
      Repayment under Term Credit Facility                                 ---            (6,899)
      Repayment of Notes Payable                                        (8,739)          (23,990)
      Proceeds from Term Credit Facility                                   ---             1,500
      Proceeds from issuance of employee stock options                   1,330             2,032
      Proceeds from issuance of Series A Cumulative
      Convertible Preferred Stock                                      408,500               ---
      Issuance cost associated with Series A Cumulative
      Convertible Preferred Stock                                      (17,570)              ---
      Dividends paid on Series A Cumulative Convertible
      Preferred Stock                                                  (10,723)              ---
      Debt issuance costs and other charges                                                 (100)
      Purchase of treasury stock                                       (67,086)               --
Net cash provided by financing activities                               307,907          152,343
Net increase in cash and cash equivalents                               163,829           13,327
Cash and Cash Equivalents, beginning of year                             16,945            3,618
Cash and Cash Equivalents, end of year                            $     180,774     $     16,945
</TABLE>

                                     - 59 -
<PAGE>

Operating Activities:

Net cash used in operating activities during the year ended December 31, 2005
was approximately $32.2 million as compared to $18.4 million for the year ended
December 31, 2004.

The $13.8 million increase in operating cash used in 2005 over 2004 is
attributed to a higher 2005 net loss of $67.0 million, higher depreciation and
amortization of $0.4 million, higher equity losses recorded for our investment
in MSV of $13.2 million, larger losses on asset disposals of $12.4 million,
which includes an increased loss of $0.8 million for 800 MHz frequencies that
were charged to restructuring as a part of our 2005 network rationalization, the
impairment of long-lived assets of $42.1 million, a 2004 gain on debt
extinguishment of $0.8 million, restructuring charges in 2004 of $0.8 million,
increase in the 401(k) match of $0.1 million and higher non-cash stock
compensation of $2.3 million.

The increase in cash used in operations was partially offset by losses from
TerreStar operations of $3.3 million and 2004 write-off of deferred financing
costs of $12 million and the 2004 non-cash amortization of deferred financing
fees of $2.5 million.

Changes in assets and liabilities during the year ended December 31, 2005
resulted in an increase to operating cash used of approximately $4.9 million as
compared to a change of $3.8 million in 2004. The $1.1 million 2005 increase
consists of a $0.2 million decrease in cash used for accounts payable and
accrued expenses as opposed to a $5.6 million increase in 2004. This decrease is
a result of lower expenses and reduced accruals. $4.9 million in deferred
revenue and other deferred items were amortized in 2005 as compared to $6.2
million in 2004 primarily due to small additions to deferred revenue as a result
lower equipment sales and registration fees as well as lower customer prepaid
balances. A $0.1 million decrease in cash used for inventory is a result of the
termination of our T-Mobile and Verizon contracts and the end-of-life decision
for RIM 857 devices. A $1.1 million decrease in cash received from accounts
receivable in 2005 as compared to a $1.9 million decline in 2004 is the result
of our decline in revenues. The $1.4 million increase in other current assets,
as compared to a decrease in 2004 of $4.5 million is primarily attributable to
an increase in our prepaid D&O insurance and an increase in interest receivable
as a result of our higher cash balances.

                                     - 60 -
<PAGE>

Investing Activities:

Net cash used in investing activities for the year ended December 31, 2005 was
$111.8 million as compared to $120.7 million used in investing activities for
the year ended December 31, 2004. The decrease in cash used in investing
activities of $8.8 million was attributable to increases in restricted cash
consisting of approximately $79 million related to the satellite construction
contract for TerreStar Networks and approximately $32 million related to future
interest payments on the Series A and Series B Cumulative Convertible Preferred
Stock. Cash used for additions to property, plant and equipment and capital
equipment purchases of approximately $8 million consist of approximately $7.8
million paid for the TerreStar satellite under construction and approximately
$0.2 million for various computer equipment for both Motient and TerreStar. This
$119 million increase in cash used in investing activities is offset by $6
million in restricted cash acquired in the TerreStar purchase. The restricted
cash was acquired as a part of the funds on deposit related to the TerreStar
satellite construction contract.

Financing Activities:

Net cash provided by financing activities was $307.9 million for the year ended
December 31, 2005 as compared to $152.3 million for the year ended December 31,
2004. The $155.6 million increase in cash provided by financing activities in
2005 over 2004 was the result of the proceeds from the issuance of Series A
Cumulative Convertible Preferred Stock of $408.5 million, proceeds from the
exercise of warrants of $2.2 million and proceeds from the exercise of employee
stock options of $1.3 million. These proceeds were partially offset by issuance
costs associated with the Series A Cumulative Convertible Preferred Stock of
$17.6 million, dividends paid on the Series A Cumulative Convertible Preferred
Stock of $10.7 million, the repayment of a TerreStar note payable to MSV of $8.7
million and the purchase of treasury stock in the amount of $67 million. In
2005, Motient repurchased 3,487,202 shares of it common stock at prices ranging
from $15.60 to $23.75 per share.

We believe that our funds available at December 31, 2005, together with our
planned rights offering and the proceeds from the exercise of warrants and
options, will be adequate to satisfy our current and planned operations for at
least the next 12 months. We have no definite plans with respect to the
acquisition of any additional debt or equity financing beyond the April 2005
private placement of our preferred stock. However, to the extent that we require
additional liquidity to fund our operations (including, but not limited to,
construction costs of TerreStar's communications network), we may undertake
additional debt or equity financings.

Debt And Capital Lease Obligations

As of December 31, 2005, Motient had no outstanding debt obligations other than
obligations with respect to the repayment of its Series A and B Preferred Stock.
If not converted or repaid, the entire amount of $408.5 million will be due on
April 15, 2010. The first two years' dividend payments for approximately $43
million have been placed in escrow. Future dividend payments will be due
bi-annually, payable in cash (at a 5.25% annual interest rate) or in common
stock (at a 6.25% annual interest rate).

                                     - 61 -
<PAGE>

United Parcel Service Prepayment: In December 2002, Motient entered into an
agreement with UPS pursuant to which UPS prepaid an aggregate of $5 million in
respect of network airtime service to be provided beginning January 1, 2004. In
April 2005, this agreement was amended, and then in September 2005, the
agreement was amended again. Motient made a payment of $2.0 million to UPS, and
in exchange, all but $0.6 million of the outstanding prepayment of $3.7 million
was terminated. The remaining $0.6 million prepayment must be used by UPS prior
to March 31, 2006. If not used, UPS will forfeit this prepayment, and it will
not be repaid.

Contractual Cash Obligations

As of December 31, 2005, we had no outstanding commitments to purchase
inventory. As of December 31, 2005, we had the following outstanding cash
contractual operating commitments:

<TABLE>
<CAPTION>
                                                                                                                     More than 5
                                                Total             <1 Year           1-3 Years        3-5 Years          Years
                                           ----------------    ---------------    --------------    -------------    -------------
(in thousands)
<S>                                        <C>                        <C>                <C>         <C>               <C>
TerreStar Satellite (1)                    $       166,000            125,000            41,000               --               --
Operating leases (2)                       $        11,926              3,975             5,126            2,825               --
                                           ----------------    ---------------    --------------    -------------    -------------
Total Contractual Cash Obligations         $       177,926            128,975            46,126            2,825               --
</TABLE>

(1)  These commitments include time payments related to the satellite
     construction contract with Space Systems/Loral, Inc. and the ground-based
     satellite beam access subsystem contract with Hughes Network Systems, LLC.
     This satellite is scheduled to be completed in November 2007.
(2)  These commitments generally contain provisions that provide for an
     acceleration of rent upon a default by us, except that certain long-term
     real estate leases, categorized as Operating Leases, may not contain such
     provisions.

On August 16, 2005, Highland Equity Focus Fund, L.P., Highland Crusader Offshore
Partners, L.P., Highland Capital Management Services, Inc., and Highland Capital
Management, L.P., affiliates of James Dondero, a former director of Motient,
filed a lawsuit in Dallas County, Texas against Motient challenging the validity
of the Series A Preferred on the basis of the confusion regarding the voting
rights of the Series A Preferred and seeking rescission of their purchase of the
shares of Series A Preferred that they purchased from Motient in the private
placement in April 2005. These entities acquired 90,000 shares of Series A
Preferred for a purchase price of $90 million in that private placement. Motient
believes that this claim is without merit and intends to vigorously defend this
lawsuit.


                                     - 62 -
<PAGE>

Restructuring Costs

In February 2004 and March 2005, the Company reduced its workforce by 54 and 11
employees, respectively. In accordance with SFAS No. 112, "Employers' Accounting
for Post-employment Benefits - an amendment of FASB statements No. 5 and 43",
the Company recorded a liability for the severance, employee benefits and
estimated payroll taxes of $1.1 million and $0.1 million, respectively related
to the reductions in workforce.

In June 2004, the Company recorded a restructuring charge of $5.1 million
related to certain network rationalization initiatives, consisting of base
station deconstruct costs of $0.5 million, the loss on the retirement of certain
base station equipment of $2.8 million and termination liabilities of $1.8
million for site leases no longer required for removed base stations. Of these
amounts, as of December 31, 2005, the Company had incurred base station
deconstruct costs of $0.5 million, the loss on the retirement of certain base
station equipment of $2.8 million and termination liabilities of $1.4 million
for site leases no longer required for removed base stations. The Company
recorded these charges in accordance with SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities".

In June 2005, the Company recorded a restructuring charge of $5.6 million
related to additional network rationalization initiatives for Motient
Communications, consisting of base station deconstruct costs of $0.1 million,
the loss on the cancellation of frequencies of $3.6 million and termination
liabilities of $1.9 million for site leases no longer required for removed base
stations. Of these amounts, as of December 31, 2005, the Company had incurred
base station deconstruct costs of than $0.1 million, the loss on the
cancellation of frequencies of $3.6 million and termination liabilities of $0.6
million for site leases no longer required for removed base stations. The
Company recorded these charges in accordance with SFAS No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities". In January 2005 the Company
identified the base station equipment associated with the 2005 rationalization
and adjusted their remaining useful lives for depreciation purposes, resulting
in approximately $1.8 million of accelerated depreciation expense. The Company
recorded these charges in accordance with SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets".

The following table displays the activity and balances of the restructuring
reserve account from January 1, 2005 to December 31, 2005:

<TABLE>
<CAPTION>
                                     Employee     FCC License     Base Station     FCC License     Site Lease
                                   Terminations    Disposals     Deconstruction   Terminations    Terminations     Total
                                   ------------    ---------     --------------   ------------    ------------     -----
<C>                                   <C>             <C>              <C>              <C>          <C>         <C>
Balance January 1, 2005               $(350)      $   ---            $ ---           $  5         $  (942)      $(1,287)
-----------------------------------------------------------------------------------------------------------------------------
Restructure Charge                      (85)          ---              ---            ---             ---           (85)
-----------------------------------------------------------------------------------------------------------------------------
Deductions - Cash                        39           ---              ---            ---             197           236
-----------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2005                 (396)          ---              ---              5            (745)       (1,136)
-----------------------------------------------------------------------------------------------------------------------------
Restructure Charge                      ---       (3,581)             (147)           ---          (1,852)       (5,580)
-----------------------------------------------------------------------------------------------------------------------------
Increase due to
reclassification of
site lease accrual                      ---           ---              ---            ---            (206)         (206)
-----------------------------------------------------------------------------------------------------------------------------
Deductions - Cash                       164                             24            ---             498           686
-----------------------------------------------------------------------------------------------------------------------------
Deductions - Non-Cash                   ---         3,581              ---            ---             ---         3,581
-----------------------------------------------------------------------------------------------------------------------------
Balance June 30, 2005                  (232)          ---             (123)             5          (2,305)       (2,655)
-----------------------------------------------------------------------------------------------------------------------------
Deductions - Cash                       232           ---              123            ---             620           975
-----------------------------------------------------------------------------------------------------------------------------
Deductions - Non-Cash                   ---           ---              ---             (5)             ---           (5)
-----------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2005              ---           ---              ---            ---          (1,685)       (1,685)

-----------------------------------------------------------------------------------------------------------------------------
Deductions - Cash                       ---           ---              ---            ---             493           493
-----------------------------------------------------------------------------------------------------------------------------
Balance December 31,
2005                                  $ ---       $   ---            $ ---           $---         $(1,192)      $(1,192)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                     - 63 -
<PAGE>

Other

On May 1, 2002, the effective date of our Plan of Reorganization, the financing
agreements that included restrictions on our ability to pay dividends were
terminated as part of the implementation of our Plan of Reorganization; however,
the terms of our Series A and B Preferred Stock restricts our ability to pay
dividends in certain circumstances. We have never paid dividends and do not
expect to do so in the near future, except for dividends required to be paid on
our Series A and Series B Preferred Stock. The cash required to make the first
two years of dividend payments on this preferred stock has been placed in
escrow.

Critical Accounting Policies And Significant Estimates

Below are our accounting policies that are both important to our financial
condition and operating results, and require management's most difficult,
subjective and complex judgments in determining the underlying estimates and
assumptions. The estimates and assumptions affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates as they require assumptions that are inherently uncertain.

TerreStar Asset Purchase

On May 11, 2005, TerreStar was spun-off by MSV to its limited partners and, in
connection with that spin-off, Motient acquired ownership of approximately 49%
of the issued and outstanding shares of capital stock of TerreStar. On the same
day, Motient Ventures Holding Inc., or MVH, a wholly owned subsidiary of Motient
Corporation, purchased 8,190,008 shares of newly issued common stock of
TerreStar from TerreStar for $200 million pursuant to a Purchase Agreement by
and between MVH and TerreStar. The stock purchase increased Motient's ownership
to its current 61% of TerreStar's issued and outstanding common stock. Motient's
ownership is subject to the terms of a stockholder's agreement with the minority
stockholders of TerreStar.

                                     - 64 -
<PAGE>

Assets acquired and liabilities assumed in the asset purchase were recorded on
the Company's Consolidated Balance Sheet as of the purchase date based upon
their fair values at such date. The results of operations of the net assets
acquired by the Company have been included in the Company's Statements of
Operations since its date of purchase. Approximately $78 million was allocated
to intangible assets that include the rights to receive licenses in the 2 GHz
band and other intangibles. These intangible assets are being amortized over an
average life of 15 years. Approximately $78 million represents the 39% minority
interest in TerreStar. There was no excess purchase price over the estimated
fair values of the underlying assets acquired and liabilities assumed. In
certain circumstances, the allocation of the purchase price is based upon
preliminary estimates and assumptions. Accordingly, the allocations are subject
to revision when the Company receives final information and other analyses.
Revisions to the fair values, which may be significant, will be recorded by the
Company as further adjustments to the purchase price allocations.

Deferred Taxes

We have generated significant net operating losses for tax purposes as of
December 31, 2005. We have had our ability to utilize these losses limited on
two occasions as a result of transactions that caused a change of control in
accordance with the Internal Revenue Service Code Section 382. Additionally,
since we have not yet generated taxable income, we believe that our ability to
use any remaining net operating losses has been greatly reduced; therefore, we
have provided a full valuation allowance for any benefit that would have been
available as a result of our net operating losses. See Note 2, "Significant
Accounting Policies - Deferred Taxes", of notes to the consolidated financial
statements for further details.

Revenue Recognition

The Company's revenues are recorded in accordance with the Securities and
Exchange Commission's (SEC) Staff Accounting Bulletin (SAB) No. 104, Revenue
Recognition and Emerging Issues Task Force (EITF) No. 00-21, Accounting For
Revenue Arrangements With Multiple Deliverables. The Company recognizes revenue
as follows:

Service Revenue: Revenues from the Company's wireless services are recognized
when the services are performed, evidence of an arrangement exists, the fee is
fixed and determinable and collectibility is probable. Service discounts and
incentives are recorded as a reduction of revenue when granted, or ratably over
a contract period. The Company defers any revenue and costs associated with
activation of a subscriber on the Company's network over an estimated customer
life of two years.

                                     - 65 -
<PAGE>

We package airtime usage on our terrestrial network that involves a wide variety
of volume packaging, for example, anything from a 35 kilobytes per month plan up
to unlimited kilobyte usage per month, with various gradations in between.
Discounts may be applied when comparing one customer to another, and such
service discounts are recorded as a reduction of revenue when granted. The
Company does not offer incentives generally as part of its service offerings,
however, if offered they would be recorded as a reduction of revenue ratably
over a contract period.

Service discounts and incentives are recorded as a reduction of revenue when
granted, or ratably over a contract period. The Company defers any revenue and
costs associated with activation of a subscriber on the Company's network over
an estimated customer life of two years.

To date, the majority of the Company's business has been transacted with
telecommunications, field services, professional service and transportation
companies located throughout the United States. The Company grants credit based
on an evaluation of the customer's financial condition, generally without
requiring collateral or deposits. The Company establishes a valuation allowance
for doubtful accounts receivable for bad debt and other credit adjustments.
Valuation allowances for revenue credits are established through a charge to
revenue, while valuation allowances for bad debts are established through a
charge to general and administrative expenses. The Company assesses the adequacy
of these reserves quarterly, evaluating factors such as the length of time
individual receivables are past due, historical collection experience, the
economic environment and changes in credit worthiness of the Company's
customers. If circumstances related to specific customers change or economic
conditions worsen such that the Company's past collection experience and
assessments of the economic environment are no longer relevant, the Company's
estimate of the recoverability of its trade receivables could be further
reduced.

Equipment And Service Sales: We sell equipment to resellers who market our
terrestrial product and airtime service to the public. We also sell our product
directly to end-users. Revenue from the sale of the equipment as well as the
cost of the equipment, are initially deferred and are recognized over a period
corresponding to our estimate of customer life of two years. Equipment costs are
deferred only to the extent of deferred revenue. As of December 31, 2005 and
2004, the Company had capitalized a total of $0.1 million and $1.0 million of
deferred equipment revenue, respectively, and had deferred equipment costs of
$0.1 million and $0.9 million, respectively.

Valuation of Long-Lived Assets

The Company evaluates whether long-lived assets, excluding goodwill, have been
impaired when circumstances indicate the carrying value of those assets may not
be recoverable. For such long-lived assets, an impairment exists when its
carrying value exceeds the sum of estimates of the undiscounted cash flows
expected to result from the use and eventual disposition of the asset. When


                                     - 66 -
<PAGE>

alternative courses of action to recover the carrying amount of a long-lived
asset are under consideration, a probability-weighted approach is used for
developing estimates of future undiscounted cash flows. If the carrying value of
the long-lived asset is not recoverable based on these estimated future
undiscounted cash flows, the impairment loss is measured as the excess of the
asset's carrying value over its fair value, such that the asset's carrying value
is adjusted to its estimated fair value.

Management assesses the fair value of long-lived assets using commonly accepted
techniques, and may use more than one source. Sources to determine fair value
include, but are not limited to, recent third party comparable sales, internally
developed discounted cash flow analysis and analysis from outside advisors.
Significant changes in market conditions resulting from events such as changes
in FCC license issuances or the condition of an asset, or a change in
management's intent to utilize the asset would generally require management to
re-assess the cash flows related to the long-lived assets.

The Company uses the criteria in SFAS No. 144 to determine when an asset is
classified as "held for sale." Upon classification as "held for sale," the
long-lived asset or asset group is measured at the lower of its carrying amount
or fair value less cost to sell, depreciation is ceased and the asset or asset
group is separately presented on the Consolidated Balance Sheets. When an asset
or asset group meets the SFAS No. 144 criteria for classification as held for
sale within the Consolidated Balance Sheets, the Company does not
retrospectively adjust prior period balance sheets to conform to current year
presentation.

The Company uses the criteria in SFAS No. 144 and EITF 03-13, "Applying the
Conditions in Paragraph 42 of FAS 144 in Determining Whether to Report
Discontinued Operations" (EITF 03-13), to determine whether components of the
Company that are being disposed of or are classified as held for sale are
required to be reported as discontinued operations in the Consolidated
Statements of Operations. To qualify as a discontinued operation under SFAS No.
144, the component being disposed of must have clearly distinguishable
operations and cash flows. Additionally, pursuant to EITF 03-13, the Company
must not have significant continuing involvement in the operations after the
disposal (i.e. the Company must not have the ability to influence the operating
or financial policies of the disposed component) and cash flows of the assets
sold must have been eliminated from the Company's ongoing operations (i.e. the
Company does not expect to generate significant direct cash flows from
activities involving the disposed component after the disposal transaction is
completed). Assuming both preceding conditions are met, the related results of
operations for the current and prior periods, including any related impairments,
would be reflected as (Loss) Income From Discontinued Operations, net of tax, in
the Consolidated Statements of Operations. If an asset held for sale does not
meet the requirements for discontinued operations classification, any
impairments and gains or losses on sales would be recorded in continuing
operations as Gains (Losses) on Sales of Other Assets, net, in the Consolidated
Statements of Operations. Impairments for all other long-lived assets, other
than goodwill, are recorded as Gain (Loss) on impairment of assets in the
Consolidated Statements of Operations.

                                     - 67 -
<PAGE>

FCC licenses and other intangible assets consist of the following:

                                                           December 31,
                                                       2005           2004
                                                          (in thousands)
                                                   ---------------------------
FCC 800 MHz licenses need $ signs                    $  7,323       $ 80,594
FCC 2 GHz licenses                                     66,786             --
Intellectual property                                  11,786             --
Customer contracts                                        349            349
                                                     --------       --------
                                                       86,244         80,943
Less accumulated amortization                          (5,176)       (13,294)
                                                     --------       --------
FCC licenses and other intangible assets, net        $ 81,068       $ 67,649
                                                     ========       ========

Amortization totaled $8,008, $5,616 and $7,696, for the years ended December 31,
2005, 2004 and 2003, respectively.

FCC Licenses

In December 2005, the Company revalued its 800 MHz licenses as part of its
review of its intangible assets. The Company determined that these frequency
assets were impaired for two reasons. The first reason related to the FCC
initiating 800 MHz frequency band reconfiguration effort commonly known as the
"consensus plan". While the FCC outlined its broad intentions for this
reconfiguration in 2004, the specifics of the plan were subject to negotiation
and administration by an appointed transition administrator. Motient has been
actively in negotiations with Nextel and the transition administrator and
reached a resolution with regard to the repositioning of its frequencies in the
fourth quarter of 2005. Second, the Company experienced a significantly greater
decline in its revenues and customer base in the fourth quarter of 2005 than
anticipated, which will cause us to reduce DataTac network coverage within the
top 40 MSAs in 2006. These changes impair the nationwide capacity of our
frequencies that was previously maintained, as well as the future revenue and
cash flows that either Motient or a third party could generate from the use of
these frequencies. As a result of this valuation, the Company has recorded an
$18.4 million impairment charge related to the nationwide value premium
associated with these assets bringing the balance to zero and a $24.5 million
impairment charge related to the individual frequency value. If the Company's
business should decline in the future or the Company reduces network coverage
and service, it is possible that these frequency assets may be further impaired.

The Company accounts for its frequencies as finite-lived intangibles and
amortizes them over a 15-year estimated life and amortizes customer contracts
over a three-year life.

The Company reevaluated the customer-related intangibles as of December 31, 2004
due primarily to the decline in revenue from the Company's wireless internet
customer segment. This valuation resulted in an impairment of the
customer-related intangibles of $0.8 million in the fourth quarter of 2004.

                                     - 68 -
<PAGE>

The table below outlines the Company's amortization requirements for the five
year period from December 31, 2005.

<TABLE>
<CAPTION>
                                                          December 31,
                                                          ------------
                                   2006          2007        2008         2009        2010      Thereafter
                                   ----          ----        ----         ----        ----      ----------
<S>                                  <C>           <C>         <C>         <C>          <C>       <C>
   800 MHz Licenses                  $499          $499        $499        $499         $499      $3,205
   2 GHz Licenses                   4,452         4,452       4,452       4,452        4,452      41,675
   Intellectual Property              786           786         786         786          786       7,353
   Customer Contracts                 150           ---         ---         ---          ---         ---
                                   ------        ------      ------      ------       ------     -------
   Total Amortization              $5,887        $5,737      $5,737      $5,737       $5,737     $52,233
</TABLE>

Other Intangible Assets

The Company has utilized numerous assumptions and estimates in applying its
valuation methodologies and in projecting future operating characteristics for
the TerreStar business enterprise. In general, the Company considered
population, market penetration, products and services offered, unit prices,
operating expenses, depreciation, taxes, capital expenditures and working
capital. The Company also considered competition, satellite and wireless
communications industry projections and trends, regulations and general economic
conditions. In the application of its valuation methodologies, the Company
applies certain royalty and discount rates that are based on analyses of public
company information, assessment of risk and other factors and estimates.

The Company's business model used to prepare the valuation of TerreStar's assets
relies on revenues and cash flows generated by communications services provided
by its satellites as well as terrestrial infrastructure. Communications services
are assumed to be provided in three principal ways - (i) by utilizing only the
satellites, (ii) by utilizing only the terrestrial infrastructure, or (iii) by
utilizing a combination thereof via appropriate interfaces between the two
methods. The valuation model assumes that a substantial portion of TerreStar's
future revenues will be generated by the provision of services utilizing
terrestrial components only (approximately on average two-thirds of all revenues
over the projection period). The Company believes that a significant portion of
the value of TerreStar's spectrum and intellectual property assets lies in the
amount of revenue generated from these terrestrial components. If the amount of
terrestrial revenues generated by TerreStar's operating business in the future
is lower than anticipated, this could materially decrease the value of TerreStar
and its assets.

The valuation model further assumes that these terrestrial revenues will be
generated in partnership with a terrestrial wireless service partner that either
(i) already has existing terrestrial infrastructure, or (ii) who would have the
interest and the capital to deploy such terrestrial infrastructure to provide
the scale and scope of communications services assumed in the Company's
valuation model. The Company believes that this partner could also potentially
provide a large existing subscriber base and/or brand recognition, to go along


                                     - 69 -
<PAGE>

with the terrestrial infrastructure. Since the model assumes that this partner
would provide substantial operating, marketing and capital expenditures in
support of these terrestrial services, the Company has assumed that TerreStar
would receive a low percentage of the revenue generated by the business (as
detailed below). The Company can provide no assurance that it will be successful
in entering into a partnership of this nature on the terms assumed in the
Company's valuation model, if at all. If it is not successful, it may be
required to raise significantly more capital to provide support services to
TerreStar and/or to deploy a terrestrial infrastructure on its own, which may be
dilutive to existing shareholders. In this case, the Company would retain all of
the revenues from the provision of terrestrial services. However, if raising the
capital necessary to reach the scale and scope assumed in the valuation model is
not possible, the value of TerreStar and its assets would be materially
decreased.

The Company's valuation of TerreStar's intellectual property rights was
determined utilizing a form of the income approach referred to as the relief
from royalty valuation method. The Company assumed a 10% to 12% royalty rate
applied to a projected revenue stream generated by a hypothetical licensee
utilizing such intellectual property rights. The projected revenue was based on
a business case for the operations and consisted of the following principal
assumptions and estimates:

-    A 20 year forecast period.
-    Specific cash outflows in the first four years of the forecast period to
     account for TerreStar's portion of satellite design, construction and
     launch expenditures.
-    Annual population growth of 1.6% based on U.S. Census Bureau estimates of
     the U.S. population in 2004.
-    Market penetration assumptions of zero to 7% to 12% over the forecast
     period, depending on the specific market and when the market is launched.
-    Average monthly revenue per customer of $40.00 when services are launched,
     increasing to $44.50 over the forecast period. This increase equates to a
     compound annual growth rate of 0.6%. A substantial portion of this revenue
     is generated by the terrestrial component (rather than the satellite
     component) of the ATC network.
-    Tax rate of 40% after the consumption of net operating losses generated in
     the early years of the forecast period.
-    A 25% discount rate based on a weighted average cost of capital (WACC)
     determined by analyzing and weighting the cost of capital for a peer group
     of publicly traded satellite service providers, wireless communications
     companies and telecommunications companies in general.

The Company's valuation of its spectrum assets is based on a form of the income
approach known as the "Build-Out Method". The method applies a discounted cash
flow framework to the Company's "build-out" business case. This build-out
approach is intended to incorporate all of historical and future development
costs, as well as projected revenues, operating expenses and cash flows
generated from the build-out of a hybrid satellite and terrestrial
communications systems utilizing the Company's frequency assets. This "build-out
method" business case and the applied discounted cash flow valuation consisted
of the following principal assumptions and estimates:

                                     - 70 -
<PAGE>

-    A 20-year forecast period, comprised of a high growth period for the first
     10 years and a declining growth period beginning in year 11, and a terminal
     period to perpetuity.
-    Development cash outflows and capital expenditures related to the design
     and construction of two satellites in the first 3 years of the forecast
     period and the launch of one of these satellites in the fourth year of the
     forecast period. Replacement costs for the construction and launch of one
     satellite are included in the declining growth period.
-    Satellite only revenues based on market size data for traditional satellite
     segments (maritime, fleet management, public safety, telematics and
     aeronautical) compiled generally by third party research groups and
     penetration estimates of 10% to 40% of our potential customer base,
     depending on the specific market segment addressed over the 20 year
     forecast period.
-    Terrestrial revenues calculated as eleven percent of the total revenues
     generated by a joint or strategic partner with whom TerreStar would intend
     to deploy a terrestrial infrastructure and launch terrestrial services.
     Total partnership revenues are based on (i) market penetration assumptions
     of zero to 7 to 12% over the forecast period depending on the specific city
     and when the city is launched, (ii) average monthly revenue per customer of
     $40.00 when services are launched, increasing to $44.50 over the forecast
     period. This increase equates to a compound annual growth rate of 0.6%.
-    Operating expenses covering the operation of satellite facilities. These
     include a network operations center, tracking, telemetry and command
     systems, interconnect costs, in-orbit insurance, technical staff, and
     general and administrative personnel Under the projected expense structure,
     EBITDA margins grow to 60% early in the forecast period and expand to 70%
     later in the forecast period.
-    All capital expenditures required to design and construct two satellites
     and launch one satellite during the first four years of the forecast
     period. Additional capital expenditures for constructing ground station
     segments and investing in handset development.
-    Tax rate of 40% after the consumption of net operating losses generated in
     the early years of the forecast period.
-    A 19 to 21% discount rate based on a weighted average cost of capital
     (WACC) determined by analyzing and weighting the cost of capital for a peer
     group of publicly traded satellite service providers, wireless
     communications companies and telecommunications companies in general, with
     more weight given to traditional satellite service providers. A terminal
     value calculated using a WACC of 12% and a perpetuity growth rate of 2.5%.

The Company will test for impairment of its intangible assets by reviewing all
of the assumptions and estimates utilized relative to the valuation
methodologies discussed above. To the extent that it determines these
assumptions and estimates are no longer accurate, either because actual results
have materially differed from the assumptions and estimates, or because changing
circumstances have caused the Company to reevaluate these assumptions and
estimates for future periods, the Company will revalue these intangible assets
based on revised assumptions and estimates.

                                     - 71 -
<PAGE>

Recent Accounting Pronouncements

SFAS No. 123 (Revised 2004) ("SFAS No. 123R"), "Share-Based Payment," issued in
December 2004, is a revision of FASB Statement 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and its related implementation guidance. The Statement focuses
primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS No. 123R requires a public
entity to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award
(with limited exceptions). That cost will be recognized over the period during
which an employee is required to provide service in exchange for the award. On
March 29, 2005, the SEC issued Staff Accounting Bulletin No. 107 ("SAB No.
107"), which provides the Staff's views regarding interactions between SFAS No.
123R and certain SEC rules and regulations and provides interpretations of the
valuation of share-based payments for public companies.

SFAS No. 123(R) permits public companies to adopt its requirements using one of
two methods:

(1) A "modified prospective" method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No.
123(R) for all share-based payments granted after the effective date and (b)
based on the requirements of SFAS No. 123 for all awards granted to employees
prior to the effective date of SFAS No. 123(R) that remain unvested on the
effective date.

(2) A "modified retrospective" method which includes the requirements of the
modified prospective method described above, but also permits entities to
restate based on the amounts previously recognized under SFAS No. 123 for
purposes of pro forma disclosures either (a) all prior periods presented or (b)
prior interim periods of the year of adoption.

This statement is effective for the beginning of the first annual reporting
period that begins after June 15, 2005, therefore, we will adopt the standard in
the first quarter of fiscal 2006 using the modified prospective method. As
permitted by SFAS No. 123, we currently account for share-based payments to
employees using the intrinsic value method prescribed in APB Opinion 25 and, as
such, generally recognize no compensation cost for employee stock options.
Although we have not completed our assessment, we believe the impact on our
consolidated financial position or results or operations will not be material
given the current number of outstanding stock options. The effect on our results
of operations of expensing stock options using the Black-Scholes method is
presented in the disclosure of pro forma net income and earnings per share in
Note 2. SFAS No. 123(R) also requires the benefits of tax deductions in excess
of recognized compensation cost to be reported as a financing cash flow, rather
than as an operating cash flow as required under current literature. This
requirement will reduce net operating cash flows and increase net financing cash
flows in periods after adoption.

In December 2004, the FASB issued SFAS No. 153, Exchanges Of Nonmonetary Assets
-- An Amendment Of APB Opinion No. 29, Accounting For Nonmonetary Transactions


                                     - 72 -
<PAGE>

(SFAS 153). SFAS 153 eliminates the exception from fair value measurement for
nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB
Opinion No. 29, Accounting For Nonmonetary Transactions, and replaces it with an
exception for exchanges that do not have commercial substance. SFAS 153
specifies that a nonmonetary exchange has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. SFAS 153 is effective for the fiscal periods beginning after June 15,
2005 and was required to be adopted by the Company in the third quarter of 2005.
The adoption of SFAS No. 153 did not have an impact on our consolidated
financial position or consolidated results of operations.

In March 2005, the FASB issued FIN No. 47, "Accounting for Conditional Asset
Retirement Obligations - an interpretation of FASB Statement No. 143 "Accounting
for Asset Retirement Obligations ("SFAS No. 143")" ("FIN 47"). FIN 47 clarifies
that the term conditional asset retirement obligation as used in SFAS No. 143,
refers to a legal obligation to perform an asset retirement activity in which
the timing and (or) method of settlement are conditional on a future event that
may or may not be within the control of the entity. Accordingly, an entity is
required to recognize a liability for the fair value of a conditional asset
retirement obligation if the fair value of the liability can be reasonably
estimated. The liability for the conditional asset retirement obligation should
be recognized when incurred. This Interpretation also clarifies when an entity
would have sufficient information to reasonably estimate the fair value of an
asset retirement obligation. FIN 47 is effective for fiscal periods beginning
after December 15, 2005, and we will adopt this provision, as applicable, during
fiscal year 2006.

In November 2005, the FASB issued Staff Position Nos. FAS 115-1 and 124-1, "The
Meaning of Other Than Temporary Impairment and its Application to Certain
Investments" ("the FSP"). The FSP provides accounting guidance for determining
and measuring other-than-temporary impairments of debt and equity securities,
and confirms the disclosure for investments in unrealized loss positions as
outlined in EITF 03-01, "The Meaning of Other-Than-Temporary Impairments ands
its Application tom Certain Investments". The accounting requirements are
effective for us on January 1, 2006 and will not have a material impact on our
consolidated financial position or consolidated cash flows.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs: an amendment
of ARB No. 43, Chapter 4," to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling costs and wasted material. SFAS No. 151
is effective for inventory costs incurred during fiscal years beginning after
June 15, 2005. We do not believe the provisions of SFAS No. 151, when applied,
will have an impact on our consolidated financial position or consolidated
results of operations.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections - A Replacement of APB Opinion No. 20 and FASB Statement No. 3"
("SFAS No. 154"). SFAS No. 154 requires the retrospective application to prior
periods' financial statements of changes in accounting principle, unless it is
impractible to determine either the period-specific effects or cumulative effect
of the accounting change. SFAS No. 154 also requires that a change in


                                     - 73 -
<PAGE>

depreciation, amortization, or depletion method for long-lived non-financial
assets be accounted for as a change in accounting estimate affected by a change
in accounting principle. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005 and
we will adopt this provision, as applicable, during fiscal year 2006.


Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
--------------------------------------------------------------------

As of December 31, 2005 and March 1, 2006, we are not exposed to the impact of
interest rate changes. We do not use derivative financial instruments to manage
our interest rate risk. We invest our cash in short-term commercial paper,
investment-grade corporate and government obligations and money market funds.

As of December 31, 2005 and March 1, 2006, we have no debt obligations, other
than our Series A and Series B Cumulative Convertible Preferred Stock.

Item 8. Financial Statements and Supplementary Data.
----------------------------------------------------

The financial statements and supplementary data required by this item are
included in Part IV, Item 15 of this Form 10-K and are presented beginning on
page F-1 with respect to Motient and beginning on page M-1 with respect to MSV.



                                     - 74 -
<PAGE>

Item 9. Changes in and Disagreements with Accountants on Accounting and
-----------------------------------------------------------------------
Financial Disclosure.
---------------------

None

Item 9A. Controls and Procedures.
---------------------------------

Disclosure Controls and Procedures

We have performed an evaluation under the supervision and with the participation
of our management, including our principal executive officer and principal
financial officer, of the effectiveness of our disclosure controls and
procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act"). As of the end of the period covered by this report
(December 31, 2005), our disclosure controls and procedures were not effective
because of the material weaknesses in internal control over financial reporting
described below.

Management's Report on Internal Control over Financial Reporting

Pursuant to Item 308(a) of Regulation S-K , management is required to issue a
report on its internal control over financial reporting. In order to issue our
report, management documented both the design of our internal controls and the
testing processes that support management's evaluation and conclusion. Our
management has completed the necessary processes and procedures for issuing its
report on internal controls based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO").

Our management is responsible for establishing and maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. The Company's
internal control over financial reporting is a process designed under the
supervision of the Company's principal executive officer and principal financial
officer, and effected by the Company's board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles in the
United States of America. Our internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with U.S. generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.

Internal control over financial reporting includes the controls themselves,
monitoring and internal auditing practices and actions taken to correct
deficiencies as identified.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

As of December 31, 2005, management, with the participation of our principal
executive officer and principal financial officer, assessed the effectiveness of
our internal control over financial reporting based on the framework established
by COSO. Management's assessment included an evaluation of the design of our
internal control over financial reporting and testing of the operational
effectiveness of our internal control over financial reporting. Management
reviewed the results of its assessment with the Audit Committee of our Board of
Directors, and based on this assessment, management has determined that as of
December 31, 2005, there was one material weakness in our internal control over
financial reporting. In light of this material weakness, management has
concluded that, as of December 31, 2005, Motient Corporation and Subsidiaries
did not maintain effective internal control over financial reporting. As defined
by the Public Company Accounting Oversight Board ("PCAOB") Auditing Standard No.

                                     - 75 -
<PAGE>

2, a material weakness is a significant control deficiency or a combination of
significant control deficiencies, that results in there being more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. Friedman LLP, our independent
registered public accounting firm, which audited our consolidated financial
statements included in our Annual Report on Form 10-K, has issued its
attestation report on our management's assessment of our internal control over
financial reporting, which appears below.

This conclusion does not adversely affect the information contained in the
financial statements included in this Annual Report. Our auditors expressed an
unqualified opinion on our financial statements as of December 31, 2005.

Material Weakness

The following material weakness has been identified and included in management's
assessment:

Management has identified a lack of sufficient oversight and review involved in
the quarterly and year - end financial reporting process. In addition,
management identified a lack of resources to ensure complete application of
generally accepted accounting principles as it relates to non routine
transactions. Specifically in 2005, we consummated two merger and acquisition
transactions related to two separate entities that we have a material investment
in (MSV) or acquired a controlling interest in (TerreStar). This deficiency in
the design and implementation of the Company's internal control over financial
reporting resulted in a misstatement to the financial statements for the
quarterly reporting periods in 2005. The annual statements provided herein
reflect the adjustments for these restatements. No additional restatements
related to this deficiency were required.

Actions Taken to Correct Material Weakness

We have taken the following actions to remediate the above identified material
weakness:

We have enhanced our corporate accounting function by creating and filling the
new positions of Assistant Controller in the second quarter and Internal Audit
Manager in the fourth quarter of 2005. We have also increased the engagement of
the consulting services of an independent public accounting firm. We have
subscribed to a GAAP and SEC compliance information service and are increasing
the participation of financial management personnel in continuing education
courses. Given our resulting material weakness despite adding these additional
resources in 2005, we intend to evaluate the need for additional resources to
support our evaluation of complex transactions as discussed above for 2006 and
beyond. We will also dedicate additional substantial review at the point of each
complex transaction to review all appropriate accounting requirements. We intend
to either hire more internal resources or engage additional third party
accounting resources to support these efforts. We believe that the control
deficiency involving lack of sufficient oversight and review of the processes
involved in the financial reporting process as it relates to complex, unique and
sophisticated transactions will be remedied with the addition of these
additional resources. We have discussed our corrective actions and future plans
with our Audit Committee, which has approved them, and with our independent
registered public accounting firm.

The Company believes that the corrective action described above will remediate
the internal control deficiency identified in this report, but the Company and
the Audit Committee will continue to monitor the effectiveness of these actions
and will make any other changes or take such other actions as management
determines to be appropriate.

Changes in Internal Control Over Financial Reporting

                                     - 76 -
<PAGE>


There has been no change in our internal control over financial reporting that
occurred during our last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Motient Corporation


We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, that Motient
Corporation did not maintain effective internal control over financial reporting
as of December 31, 2005 based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission ("COSO Control Criteria"). Motient Corporation's management
is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by,
or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of managements and directors
of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of un-authorized acquisition, use, or disposition of the

                                     - 77 -
<PAGE>

company's assets that could have a material effect on the financial statements.

Because of inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. The following material weakness has been identified and included in
management's assessment.

 1.  Management has identified a lack of sufficient oversight and review
     involved in the quarterly and year - end financial reporting process. In
     addition, management identified a lack of resources to ensure complete
     application of generally accepted accounting principles as it relates to
     non routine transactions. Specifically in 2005, we consummated two merger
     and acquisition transactions related to two separate entities that we have
     a material investment in (MSV) or acquired a controlling interest in
     (TerreStar). This deficiency in the design and implementation of the
     Company's internal control over financial reporting resulted in a
     misstatement to the financial statements for the quarterly reporting
     periods in 2005. The annual statements provided herein reflect the
     adjustments for these restatements. No additional restatements related to
     this deficiency were required.

This material weakness was considered in determining the nature, timing and
extent of audit tests applied in our audit of the 2005 financial statements, and
this report does not affect our report dated March 30, 2006 on those financial
statements.

In our opinion, management's assessment that Motient Corporation did not
maintain effective internal control over financial reporting as of December 31,
2005, is fairly stated, in all material respects, based on the COSO Control
Criteria. Also, in our opinion, because of the effect of the material weakness
described above on the achievement of the objectives of the control criteria,
Motient Corporation did not maintain effective internal control over financial
reporting as of December 31, 2005, based on the COSO Control Criteria.

We do not express an opinion or any other form of assurance on management's
statements relating to new controls being implemented and tested.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements of Motient Corporation as of December 31, 2005 and 2004 and the
related consolidated statements of operations, change in stockholders' equity
and cash flows for each of the years in the three-year period ended December 31,
2005 and the financial statement and schedule listed in the index at Item 15(2)
and our report dated March 30, 2006 expressed an unqualified opinion thereon.

/s/Friedman LLP
---------------


Item 9B. Other Information
--------------------------

None.


                                     - 78 -
<PAGE>


                                    PART III

Items 10 through 14 will be included in Motient's Proxy Statement for its 2006
Annual Meeting of the Stockholders, and are incorporated herein by reference.

Item 10. Directors and Executive Officers of Motient.
-----------------------------------------------------

The information required by this Item will be included under the section
captioned "Election of Directors (Proposal 1)" in our Proxy Statement for the
2006 Annual Meeting of Shareholders, which information is incorporated into this
Annual Report by reference.

Item 11. Executive Compensation.
--------------------------------

The information required by this Item will be included under the sections
captioned "Executive Compensation" and "Certain Relationships and Related
Transactions" in our Proxy Statement for the 2006 Annual Meeting of
Shareholders, which information is incorporated into this Annual Report by
reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
---------------------------------------------------------------------------
Related Stockholder Matters.
----------------------------

The information required by this Item will be included under the section
captioned "Security Ownership of Certain Beneficial Owners and Management" in
our Proxy Statement for the 2006 Annual Meeting of Shareholders, which
information is incorporated into this Annual Report by reference.


Item 13. Certain Relationships and Related Transactions.
--------------------------------------------------------

The information required by this Item will be included under the section
captioned "Certain Relationships and Related Transactions" in our Proxy
Statement for the 2006 Annual Meeting of Shareholders, which information is
incorporated into this Annual Report by reference.

Item 14. Principal Accountant Fees and Services.
------------------------------------------------

Information required by this Item will be included under the section captioned
"Ratification of the Appointment of the Independent Auditors (Proposal 2)" in
our Proxy Statement for the 2006 Annual Meeting of Shareholders, which
information is incorporated into this Annual Report by reference.


                                     PART IV

Item 15. Exhibits and Financial Statement Schedules
---------------------------------------------------

(1)(a) The following documents are filed as part of this Form 10-K:

      1) The following consolidated financial statements of Motient Corporation
are included as follows:

                                     - 79 -
<PAGE>

<TABLE>
                                                                                                               Page
                                                                                                               ----

<S>                                                                                                             <C>
Report of Independent Registered Public Accounting Firm.........................................................F-1

Consolidated Statements of Operations...........................................................................F-2

Consolidated Balance Sheets.....................................................................................F-3

Consolidated Statements of Changes in Stockholders' Equity......................................................F-4

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

Notes to Consolidated Financial Statements......................................................................F-6

Quarterly Financial Data........................................................................................F-43


          2) The following consolidated financial statements of Mobile Satellite
Ventures LP are included as follows:


                                      Page

Report of Independent Auditors..................................................................................M-1

Consolidated Balance Sheets.....................................................................................M-2

Consolidated Statements of Operations...........................................................................M-3

Consolidated Statements of Partners' Equity (Deficit)...........................................................M-4

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

Notes to Consolidated Financial Statements......................................................................M-6
</TABLE>






                                     - 80 -
<PAGE>

         (2)  Financial Statement Schedules

Financial Statement Schedules not included below have been omitted because they
are not required or not applicable, or because the required information is shown
in the financial statements or notes thereto.

              Schedule II - Valuation and Qualifying Accounts

         (3)  Exhibits

         3.1    -   Restated Certificate of Incorporation of the Company (as
                    restated effective May 1, 2002) (incorporated by reference
                    to Exhibit 3.1 of the Company's Amendment No. 2 to
                    Registration Statement on Form 8-A, filed May 1, 2002).

         3.2    -   Amended and Restated Bylaws of the Company (as amended and
                    restated effective May 1, 2002) (incorporated by reference
                    to Exhibit 3.1 of the Company's Amendment No. 2 to
                    Registration Statement on Form 8-A, filed May 1, 2002).

         3.3    -   Certificate of Correction filed to correct a certain error
                    in the Certificate of Designations of the Series A
                    Cumulative Convertible Preferred Stock of Motient
                    Corporation (incorporated by reference to Exhibit 3.2 to
                    Registrant's Current Report on Form 8-K/A filed on August
                    3, 2005).

         3.3    -   Certificate of Designations of the Series B Cumulative
                    Convertible Preferred Stock (incorporated by reference to
                    Exhibit 31 to Registrants Current Report on Form 8-K filed
                    on October 31, 2005).

         4.1    -   Specimen of Common Stock Certificate (incorporated by
                    reference to Exhibit 4.1 of the Company's Amendment No. 2
                    to Registration Statement on Form 8-A, filed May 1, 2002).

         10.1*  -   Form of Change of Control Agreement for Officers of the
                    Company (incorporated by reference to Exhibit 10.2 to the
                    Company's Quarterly Report on Form 10-Q for the quarter
                    ended March 31, 2002 (File No. 0-23044)).

         10.2*  -   Motient Corporation 2002 Stock Option Plan (incorporated
                    by reference to Exhibit 99.1 to the Company's registration
                    statement on Form S-8 (File No. 333-92326)).

         10.3*  -   Form of Stock Option Agreement (incorporated by reference
                    to Exhibit 99.2 to the Company's registration statement on
                    Form S-8 (File No. 333-92326)).

                                     - 81 -
<PAGE>

         10.4   -   Form of Warrant to purchase up to 500,000 shares of the
                    Company's common stock at an exercise price of $3.00 per
                    share issued to certain affiliates of Communication
                    Technology Advisors LLC (incorporated by reference to
                    Exhibit 10.22 to the Company's Quarterly Report on Form
                    10-Q for the quarter ended June 30, 2002).

         10.5   -   Form of Warrant to purchase shares of common stock of
                    Motient Corporation issued to lenders under the Amended
                    and Restated Term Credit Agreement dated as of January 27,
                    2003 (incorporated by reference to Exhibit 10.29 to the
                    Company's Annual Report on Form 10-K for the year ended
                    December 31, 2002).

         10.6*  -   Letter amendment to Executive Retention Agreement, dated
                    as of February 10, 2004, by and between Walter V. Purnell,
                    Jr. and the Company (incorporated by reference to Exhibit
                    10.30 to the Company's Annual Report on Form 10-K for the
                    year ended December 31, 2002).

         10.7   -   Warrant to purchase shares of common stock of Motient
                    Corporation, issued to lenders under Amendment No. 1 to
                    Amended and Restated Term Credit Agreement, dated March
                    16, 2004 (incorporated by reference to Exhibit 10.34 to
                    the Company's Annual Report on Form 10-K for the year
                    ended December 31, 2002).

         10.8   -   Common Stock Purchase Agreement, dated as of April 7,
                    2004, by and among Motient Corporation and the Raptor
                    Global Portfolio, Ltd., et al (incorporated by reference
                    to Exhibit 10.38 to the Company's Quarterly Report on Form
                    10-Q for the quarter ended March 31, 2003).

         10.9   -   Registration Rights Agreement, dated as of April 7, 2004,
                    by and among Motient Corporation and the Raptor Global
                    Portfolio, Ltd., et al (incorporated by reference to
                    Exhibit 10.39 to the Company's Quarterly Report on Form
                    10-Q for the quarter ended March 31, 2003).

         10.10  -   Form of Common Stock Purchase Warrant, dated as of April
                    7, 2004 (incorporated by reference to Exhibit 10.40 to the
                    Company's Quarterly Report on Form 10-Q for the quarter
                    ended March 31, 2003).

         10.11  -   Form of Common Stock Purchase Warrant, dated as of April
                    7, 2004 (incorporated by reference to Exhibit 10.41 to the
                    Company's Quarterly Report on Form 10-Q for the quarter
                    ended March 31, 2004).

         10.12  -   Securities Purchase Agreement, dated as of June 30, 2004,
                    by and among Motient Corporation and the Raptor Global
                    Portfolio, Ltd., et al (incorporated by reference to
                    Exhibit 10.42 to the Company's Registration Statement on
                    Form S-1 filed on July 6, 2004)

         10.13  -   Registration Rights Agreement, dated as of June 30, 2004,
                    by and among Motient Corporation and the Raptor Global
                    Portfolio, Ltd., et al (incorporated by reference to
                    Exhibit 10.42 to the Company's Registration Statement on
                    Form S-1 filed on July 6, 2004)

                                     - 82 -
<PAGE>

         10.14  -   Form of Common Stock Purchase Warrant, dated as of June
                    30, 2004 (incorporated by reference to Exhibit 10.42 to
                    the Company's Registration Statement on Form S-1 filed on
                    July 6, 2004)

         10.15  -   Form of Common Stock Purchase Warrant, dated as of June
                    30, 2004 (incorporated by reference to Exhibit 10.42 to
                    the Company's Registration Statement on Form S-1 filed on
                    July 6, 2004)

         10.16  -   Warrant Issued to Motorola, Inc. (incorporated by
                    reference to Exhibit 10.42 to the Company's Quarterly
                    Report on Form 10-Q for the quarter ended June 30, 2004)

         10.17  -   Common Stock Purchase Agreement, dated as of November 12,
                    2004, by and among Motient Corporation and the investors
                    listed therein (incorporated by reference to Exhibit 10.43
                    to the Company's Quarterly Report on Form 10-Q for the
                    quarter ended September 30, 2004)

         10.18  -   Registration Rights Agreement, dated as of November 12,
                    2004, by and among Motient Corporation and the investors
                    listed therein (incorporated by reference to Exhibit 10.44
                    to the Company's Quarterly Report on Form 10-Q for the
                    quarter ended September 30, 2004)

         10.19  -   Form of Common Stock Purchase Warrant, dated as of
                    November 12, 2004 (incorporated by reference to Exhibit
                    10.45 to the Company's Quarterly Report on Form 10-Q for
                    the quarter ended September 30, 2004)

         10.20  -   Purchase Agreement, dated as of November 12, 2004, by and
                    among Motient Ventures Holding Inc., Mobile Satellite
                    Ventures LP, et al (incorporated by reference to Exhibit
                    10.46 to the Company's Quarterly Report on Form 10-Q for
                    the quarter ended September 30, 2004)

         10.21  -   Note Exchange Agreement, dated as of November 12, 2004, by
                    and among Motient Ventures Holding Inc., Mobile Satellite
                    Ventures LP, et al (incorporated by reference to Exhibit
                    10.47 to the Company's Quarterly Report on Form 10-Q for
                    the quarter ended September 30, 2004)

         10.22  -   Amended and Restated Limited Partnership Agreement, dated
                    as of November 12, 2004, by and among Motient Ventures
                    Holding Inc., Mobile Satellite Ventures LP, et al
                    (incorporated by reference to Exhibit 10.48 to the
                    Company's Quarterly Report on Form 10-Q for the quarter
                    ended September 30, 2004)

         10.23  -   Amended and Restated Stockholders Agreement, dated as of
                    November 12, 2004, by and among Motient Ventures Holding
                    Inc., Mobile Satellite Ventures GP Inc., et. al.
                    (incorporated by reference to Exhibit 10.49 to the
                    Company's Quarterly Report on Form 10-Q for the quarter
                    ended September 30, 2004)

                                     - 83 -
<PAGE>

         10.24  -   Second Amended and Restated Parent Transfer/Drag Along
                    Agreement, dated as of November 12, 2004, by and among
                    Motient Corporation, et. al. (incorporated by reference to
                    Exhibit 10.50 to the Company's Quarterly Report on Form
                    10-Q for the quarter ended September 30, 2004)

         10.25  -   Voting Agreement, dated as of November 12, 2004, by and
                    among Columbia Space (QP), Inc., et al (incorporated by
                    reference to Exhibit 10.55 to the Company's Registration
                    Statement on Form S-1/A filed on February 14, 2005)

         10.26  -   Consent Agreement, dated January 27, 2005, by and among
                    Columbia Space (QP), Inc., et al(incorporated by reference
                    to Exhibit 10.56 to the Company's Registration Statement
                    on Form S-1/A filed on February 14, 2005)

         10.27  -   Merger Agreement, dated as of February 9, 2005, by and
                    among Motient Corporation, Telcom Satellite Ventures Inc.,
                    et al(incorporated by reference to Exhibit 10.57 to the
                    Company's Registration Statement on Form S-1/A filed on
                    February 14, 2005)

         10.28  -   Form of Stock Purchase Agreement, dated February 9, 2005
                    (incorporated by reference to Exhibit 10.58 to the
                    Company's Registration Statement on Form S-1/A filed on
                    February 14, 2005)

         10.29  -   Registration Rights Agreement, dated February 9, 2005 by
                    and among Motient Corporation, Telcom Satellite Ventures
                    Inc., et al (incorporated by reference to Exhibit 10.59 to
                    the Company's Registration Statement on Form S-1/A filed
                    on February 14, 2005)

         10.30  -   Form of Warrant to purchase Motient common stock, dated
                    February 9, 2005 (incorporated by reference to Exhibit
                    10.60 to the Company's Registration Statement on Form
                    S-1/A filed on February 14, 2005)

         10.31  -   Form of Stockholder's Agreement, dated February 9, 2005
                    (incorporated by reference to Exhibit 10.61 to the
                    Company's Registration Statement on Form S-1/A filed on
                    February 14, 2005)

         10.32  -   Securities Purchase Agreement dated April 15, 2005 by and
                    among the Registrant and the Purchasers listed on Schedule
                    1 thereto (incorporated by reference to Exhibit 10.1 to
                    the Registrant's Current Report on Form 8-K dated April
                    15, 2005)

                                     - 84 -
<PAGE>

         10.33  -   Amended and Restated Registration Rights Agreement dated
                    October 26, 2005 by and among the Registrant and the
                    Purchasers listed on Schedule 1 thereto (incorporated by
                    reference to Exhibit 10.1 to the Registrant's Current
                    Report on Form 8-K dated October 31, 2005)

         10.34  -   Form of Common Stock Purchase Warrant (incorporated by
                    reference to Exhibit 10.3 to the Registrant's Current
                    Report on Form 8-K dated April 15, 2005)

         10.35  -   Purchase Agreement dated May 11, 2005 by and between
                    Motient Ventures Holding Inc. and TerreStar Networks Inc.
                    (incorporated by reference to Exhibit 10.1 to the
                    Registrant's Current Report on Form 8-K dated May 11,
                    2005)

         10.36  -   Conditional Waiver and Consent Agreement dated May 11,
                    2005 by and among the Registrant and each other party
                    listed on the signature page thereto (incorporated by
                    reference to Exhibit 10.2 to the Registrant's Current
                    Report on Form 8-K dated May 11, 2005)

         10.37  -   Stockholders Agreement dated May 11, 2005 by and among
                    Motient Ventures Holding Inc. and the other parties
                    thereto (incorporated by reference to Exhibit 10.3 to the
                    Registrant's Current Report on Form 8-K dated May 11,
                    2005)

         10.38  -   Purchase Agreement dated May 13, 2005 by and between
                    Motient Corporation and George Haywood (incorporated by
                    reference to Exhibit 10.1 to the Registrant's Current
                    Report on Form 8-K dated May 19, 2005)

         10.39  -   Form of Purchase Agreement dated May 17, 2005 by and
                    between Motient Corporation and Columbia Capital Investors
                    III, LLC, et al (incorporated by reference to Exhibit 10.2
                    to the Registrant's Current Report on Form 8-K dated May
                    19, 2005

         10.40* -   Amendment to Motient Corporation 2002 Stock Option Plan
                    (incorporated by reference to Motient's Registration
                    Statement on Form S-1 filed June 24, 2005)

         10.41  -   Amended and Restated Registration Escrow Agreement dated
                    October 26, 2005 by and among the Registrant and
                    Computershare (incorporated by reference to Exhibit 10.2
                    to the Registrant's Current Report on Form 8-K dated
                    October 31, 2005)

         10.42* -   Employment Agreement, dated November 21, 2005, by and
                    between Motient Corporation and Christopher Downie (filed
                    herewith)

                                     - 85 -
<PAGE>

         10.43* -   Amended and Restated Employment Agreement, dated March 9,
                    2006, by and between Motient Corporation and Christopher
                    Downie (filed herewith)

         10.44* -   Employment Agreement, dated November 21, 2005, by and
                    between Motient Corporation and Myrna Newman (filed
                    herewith)

         10.45* -   Amended and Restated Employment Agreement, dated March 9,
                    2006, by and between Motient Corporation and Myrna Newman
                    (filed herewith)

         10.46* -   Employment Agreement, dated November 21, 2005, by and
                    between Motient Corporation and Robert Macklin (filed
                    herewith)

         10.47* -   Amended and Restated Employment Agreement, dated March 9,
                    2006, by and between Motient Corporation and Robert
                    Macklin (filed herewith)

         21.1   -   Subsidiaries of the Company (filed herewith).

         23.1   -   Consent of Friedman LLP , Independent Registered Public
                    Accounting Firm (filed herewith)

         23.2   -   Consent of Ernst & Young LLP, Independent Auditors (filed
                    herewith)

         31.1   -   Certification Pursuant to Rule 13a-14(a)/15d-14(a), of the
                    Executive Vice President, Chief Operating Officer and
                    Treasurer (principal executive officer).

         31.2   -   Certification Pursuant to Rule 13a-14(a)/15d-14(a), of the
                    Controller and Chief Accounting Officer (principal
                    financial officer)

         32     -   Certification Pursuant to 18 U.S.C. Section 1350, as
                    Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
                    of 2002, of Executive Vice President, Chief Operating
                    Officer and Treasurer (principal executive officer) and
                    Controller and Chief Accounting Officer (principal
                    financial officer)

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

         *        Management contract or compensatory plan or arrangement
                  required to be filed as an exhibit to this report pursuant to
                  Item 14(c) of this report.



                                     - 86 -
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                    MOTIENT CORPORATION


                                    By  /s/ Christopher W. Downie
                                        -------------------------
                                        Christopher W. Downie
                                        Executive Vice President
                                        Chief Operating Officer and Treasurer

                                    Date:  March 30, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<S>                                     <C>                                               <C>
/s/ Christopher W. Downie               Executive Vice President, Chief Operating         March 30, 2006
------------------------------------    Officer and Treasurer (principal executive
Christopher W. Downie                   officer)


/s/ Myrna J. Newman                     Controller and Chief Accounting Officer           March 30, 2006
------------------------------------    (principal financial officer)
Myrna J. Newman

/s/ Steven G. Singer                    Chairman of the Board                             March 30, 2006
------------------------------------
Steven G. Singer

/s/ Jonelle St. John                    Director                                          March 30, 2006
------------------------------------
Jonelle St. John

/s/ Gerald S. Kittner                   Director                                          March 30, 2006
------------------------------------
Gerald S. Kittner

/s/ David Grain                         Director                                          March 30, 2006
------------------------------------
David Grain

/s/ Raymond L. Steele                   Director                                          March 30, 2006
------------------------------------
Raymond L. Steele

/s/ Gerald Goldsmith                    Director                                          March 30, 2006
------------------------------------
C. Gerald Goldsmith

/s/ Barry A. Williamson                 Director                                          March 30, 2006
------------------------------------
Barry A. Williamson

/s/ David Meltzer                       Director                                          March 30, 2006
------------------------------------
David Meltzer
</TABLE>



                                     - 87 -
<PAGE>

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



                          INDEX TO FINANCIAL STATEMENTS

                      MOTIENT CORPORATION AND SUBSIDIARIES


Report of Independent Registered Public Accounting Firm....................F-1

Consolidated Statements of Operations......................................F-2

Consolidated Balance Sheets................................................F-3

Consolidated Statements of Changes in Stockholders' Equity.................F-4

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

Notes to Consolidated Financial Statements.................................F-6

Quarterly Financial Data...................................................F-43


<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders of
Motient Corporation:

We have audited the accompanying consolidated balance sheets of Motient
Corporation and subsidiaries, as of December 31, 2005 and 2004 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 2005.
Our audits also included the financial statements and schedule listed in the
index at Item 15 (2). These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Motient
Corporation and subsidiaries as of December 31, 2005 and 2004, and the results
of its consolidated operations and cash flows for each of the years in the
three-year period ended December 31, 2005, in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole present fairly
in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Motient
Corporation and subsidiaries' internal control over financial reporting as of
December 31, 2005, based on criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway commission (COSO), and our report dated March 30, 2006 expressed an
unqualified opinion on management's assessment of internal control over
financial reporting and an adverse opinion on the effectiveness of internal
control over financial reporting.

/s/Friedman LLP
---------------

East Hanover, New Jersey
March 30, 2006.






                                     F-1
<PAGE>

                      Motient Corporation and Subsidiaries
                      Consolidated Statements of Operations
              For the Years Ended December 31, 2005, 2004 and 2003
                      (in thousands, except per share data)


<TABLE>
<CAPTION>
                                                                                              2005          2004           2003
                                                                                              ----          ----           ----
<S>                                                                                       <C>             <C>             <C>
REVENUES
   Services and related revenues                                                          $  12,876       $  32,378       $  49,275
   Sales of equipment                                                                           948           4,502           5,210
                                                                                          ---------       ---------       ---------
       Total revenues                                                                        13,824          36,880          54,485
                                                                                          ---------       ---------       ---------

COSTS AND EXPENSES
  Cost of services and operations (including stock-based compensation
  of $437, $4,401 and $211 for the years ended December 31, 2005,
  2004 and 2003; exclusive of depreciation and amortization below)                           20,549          39,586          51,393
  Cost of equipment sold (exclusive of
  depreciation and amortization)                                                                884           4,329           5,942
  Sales and advertising (including stock-based
  compensation of $72,  $372 and $151 for the
  years ended December 31, 2005, 2004 and 2003)                                               1,007           1,879           4,552
  General and administrative (including
  stock-based compensation of  $11,937, $5,370
  and $241 for the years ended December 31, 2005,
  2004 and 2003 and including expense to MSV, a
  related party, of $1,309, $0 and $0 for the
  years ended December 31, 2005, 2004 and 2003,
  respectively)                                                                              35,714          13,223          11,299
  Research and development (including expense to
  MSV, a related party, of $2,312, $0 and $0
  for the years ended December 31, 2005, 2004 and
  2003, respectively)                                                                         2,312              --              --
  Restructuring charges                                                                       5,665           6,264              --
  Depreciation and amortization                                                              15,973          15,564          21,466
  Loss on disposal of assets                                                                 15,032           2,669           3,037
  Loss on impairment of assets                                                               42,867             755           5,535
  Gain on debt and capital lease retirement                                                      --            (802)             --
                                                                                          ---------       ---------       ---------
  Total Costs and Expenses                                                                  140,003          83,467         103,224
                                                                                          =========       =========       =========

       Operating loss                                                                      (126,179)        (46,587)        (48,739)

  Interest and other income (expense)                                                         7,582          (3,763)         (5,703)
  Write-off of deferred financing costs                                                          --         (12,035)             --
  Other income from Aether                                                                       --           1,953           2,203
  Other income from UPS                                                                       1,112              --              --
  Equity in losses of MSV                                                                   (25,059)        (11,897)         (9,883)
  Minority interests in net losses of TerreStar                                               3,263              --              --
                                                                                          ---------       ---------       ---------

  Net loss                                                                                 (139,281)        (72,329)        (62,122)
                                                                                          ---------       ---------       ---------

  Less:

  Dividends on Series A and Series B Cumulative
  Convertible Preferred Stock                                                               (16,717)             --              --
  Accretion of issuance costs associated with
  Series A and Series B Cumulative Convertible
  Preferred Stock                                                                            (2,409)             --              --

  Net loss available to Common Stockholders                                               $(158,407)      $ (72,329)      $ (62,122)
                                                                                          =========       =========       =========

  Basic and Diluted Loss Per Share of Common Stock                                        $   (2.55)      $   (2.21)      $   (2.47)



  Weighted-Average Common Shares Outstanding -                                               62,072          32,771         25,145
  basic and diluted                                                                       =========       =========       =========

</TABLE>

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

                                     F-2
<PAGE>

                      Motient Corporation and Subsidiaries
                           Consolidated Balance Sheets
                        as of December 31, 2005 and 2004
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                                                      2005                   2004
                                                                                                      ----                   ----
<S>                                                                                                <C>                    <C>
        ASSETS
        CURRENT ASSETS:
           Cash and cash equivalents                                                               $ 180,774              $  16,945
           Restricted cash for Loral satellite construction contract                                  77,946                     --
           Restricted cash for Series A and Series B Cumulative Convertible Preferred
           Stock                                                                                      24,905                     --
           Accounts receivable-trade, net of allowance for doubtful accounts of $55
           and $256 at December 31, 2005 and 2004                                                        857                  1,917
           Inventory                                                                                       2                     75
           Due from MSV, net                                                                              --                      5
           Deferred issuance costs associated with Series A and Series B Cumulative
           Convertible Preferred Stock                                                                 4,029                     --
           Assets held for sale                                                                          261                    261
           Deferred equipment costs                                                                       93                    874
           Other current assets                                                                        2,736                  1,348
                                                                                                   ---------              ---------
              Total current assets                                                                   291,603                 21,425

        RESTRICTED INVESTMENTS                                                                            76                     76
        PROPERTY AND EQUIPMENT, net                                                                   75,989                 17,261
        INTANGIBLE ASSETS, net                                                                        81,068                 67,649
        INVESTMENT IN MSV                                                                            496,208                141,635
        RESTRICTED CASH FOR SERIES A AND SERIES B CUMULATIVE CONVERTIBLE PREFERRED
        STOCK                                                                                          7,264                     --
        DEFERRED ISSUANCE COSTS ASSOCIATED WITH SERIES A AND SERIES B CUMULATIVE CONVERTIBLE
        PREFERRED STOCK                                                                               14,947                     --
        DEFERRED CHARGES AND OTHER ASSETS                                                                 36                     34
                                                                                                   ---------              ---------
              Total assets                                                                         $ 967,191              $ 248,080
                                                                                                   =========              =========
        LIABILITIES AND STOCKHOLDERS' EQUITY
        CURRENT LIABILITIES:
           Accounts payable and accrued expenses (including amounts due to MSV, a
           related party, of $699 and $0 at December 31, 2005 and 2004)                            $   8,154              $   6,327
           Accounts payable to Loral for satellite construction contract                              59,771                     --
           Deferred equipment revenue                                                                    120                    933
           Deferred revenue and other current liabilities                                                928                  5,414
           Series A and Series B Cumulative Convertible Preferred Stock Dividends                      5,994                     --
                                                                                                   ---------              ---------
              Total current liabilities                                                               74,967                 12,674
        LONG-TERM LIABILITIES:
           Other long-term liabilities                                                                   343                    675
                                                                                                         ---                    ---
              Total long-term liabilities                                                                343                    675
                                                                                                         ---                    ---
              Total liabilities                                                                       75,310                 13,349
                                                                                                   ---------              ---------
        COMMITMENTS AND CONTINGENCIES                                                                     --                     --
        MINORITY INTEREST                                                                             74,840                     --
        SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK ($0.01 par value, 450,000
        shares authorized at December 31, 2005 and December 31, 2004, 90,000 and 0
        shares issued and outstanding at December 31, 2005 and December 31, 2004
        respectively)                                                                                 90,000                     --

        SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK ($0.01 par value, 500,000
        shares authorized at December 31, 2005 and December 31, 2004, 318,500 and 0
        shares issued and outstanding at December 31, 2005 and December 31, 2004,
        respectively)                                                                                318,500                     --

        STOCKHOLDERS' EQUITY:
        Common Stock; voting, par value $0.01; 200,000,000 and 100,000,000
        shares authorized and 66,606,504 and 51,544,596 shares issued and
        outstanding at December 31, 2005 and 2004, respectively                                          666                    516
        Additional paid-in capital                                                                   752,777                399,635
        Common stock purchase warrants                                                                74,600                 28,589
        Less: 3,487,202 common shares held in treasury stock                                         (67,086)                    --
        Accumulated deficit                                                                         (352,416)              (194,009)
                                                                                                   ---------              ---------
        STOCKHOLDERS' EQUITY                                                                         408,541                234,731
                                                                                                   ---------              ---------
        Total liabilities, and stockholders' equity                                                $ 967,191              $ 248,080
                                                                                                   =========              =========
</TABLE>

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


                                      F-3
<PAGE>

                      Motient Corporation and Subsidiaries
           Consolidated Statements of Changes In Stockholders' Equity
              For the Years Ended December 31, 2005, 2004 and 2003
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                            Common
                                                               Additional   Stock
                                                                Paid-In    Purchase                           Accumulated
                                             Common Stock       Capital    Warrants   Treasury Stock           Deficit     Total
                                             ------------       -------    --------   --------------           -------     -----
                                                        Par
                                            Shares     Value                             Shares      Amount
                                            ------     -----                             ------      ------
<S>                                       <C>         <C>    <C>         <C>        <C>          <C>        <C>         <C>
                                         ------------------------------------------------------------------------------------------
BALANCE, December 31, 2002                25,097,256  $ 251  $ 197,814   $   4,541          --   $      --  $ (59,558)  $ 143,048
  Common Stock issued under the
  401(k) Savings & Stock Purchase Plan        84,172      1        280          --          --          --         --         281
  Common Stock issued for exercise of
  stock options                               15,412     --         46          --          --          --         --          46
  Issuance of Common Stock Warrants               --     --         --      10,951          --          --         --      10,951
  Compensatory stock options
  issued to employees and consultants             --     --        603          --          --          --         --         603
  Net loss                                        --     --         --          --          --          --    (62,122)    (62,122)
                                         -----------------------------------------------------------------------------------------
BALANCE, December 31, 2003                25,196,840  $ 252  $ 198,743   $  15,492          --   $      --  $(121,680)  $  92,807

  Common Stock issued under the 401(k)
  Savings and Stock Purchase Plan             38,276      2        192          --          --          --         --         194
  Sales of Common Stock, Net of
  expenses                                23,084,640    231    159,730      17,829          --          --         --     177,790
  Common Stock issued for exercise
  of stock options                           630,685      6      2,032          --          --          --         --       2,038
  Issuance of Common Stock Warrants               --     --         --       8,844          --          --         --       8,844
  Common Stock issued for exercise/
  expiration of common stock
  purchase warrants                        2,594,155     25     20,802     (13,576)         --          --         --       7,251
  Compensatory stock options issued
  to employees and consultants                    --     --     10,143          --          --          --         --      10,143
  Capital gain in connection with sale
  of stock by MSV                                 --     --      7,993          --          --          --         --       7,993
  Net loss                                        --     --         --          --          --          --    (72,329)    (72,329)
                                         -----------------------------------------------------------------------------------------
BALANCE, December 31, 2004                51,544,596  $ 516  $ 399,635   $  28,589          --          --  $(194,009)  $ 234,731
  Common Stock issued under the 401(k)
  Savings & Stock Purchase Plan               14,127     --        254          --          --          --         --         254
  Sales of Common Stock, Net of Expenses  12,704,782    127    370,853          --          --          --         --     370,980
  Common Stock issued for exercise of
  stock options                              447,535      4      1,339          --          --          --         --       1,343
  Issuance of Common Stock Warrants               --     --    (48,908)     61,071          --          --         --      12,163
  Common Stock issued for exercise/
  expiration of common stock
  purchase warrants                        1,717,678     17     17,160     (15,060)         --          --         --       2,117
  Compensatory stock options issued
  to employees and consultants                    --     --      7,754          --          --          --         --       7,754
  Restricted Stock                           177,786      2      4,690          --          --          --         --       4,692
  Treasury Stock                                  --     --         --          --  (3,487,202)    (67,086)        --     (67,086)
  Net loss available to Common
  Stockholders                                    --     --         --          --          --          --   (158,407)   (158,407)
                                          -----------------------------------------------------------------------------------------
BALANCE, December 31, 2005                66,606,504  $ 666  $ 752,777   $  74,600  (3,487,202)  $ (67,086) $(352,416)  $ 408,541
                                          ==========  =====  =========   =========  ==========   =========  =========   =========
</TABLE>

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


                                      F-4
<PAGE>

                      Motient Corporation and Subsidiaries
                      Consolidated Statements of Cash Flows
              For the Years Ended December 31, 2005, 2004 and 2003
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                      2005             2004             2003
                                                                                      ----             ----             ----
<S>                                                                                <C>              <C>              <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                         $(139,281)       $ (72,329)       $ (62,122)
  Adjustments to reconcile net loss income to net cash (used in)
  operating activities:
       Depreciation and amortization                                                  15,973           15,564           21,466
       Equity in losses of MSV                                                        25,059           11,897            9,883
       Minority interest in losses of TerreStar                                       (3,263)              --               --
       Restructuring charges, fixed asset and intangible
       disposals                                                                       3,581            2,801               --
       Loss on disposal of assets                                                     15,032            2,669            8,572
       Gain on extinguishment of debt                                                     --             (802)              --
       Gain on debt restructuring                                                         --               --             (573)
       Impairment of assets                                                           42,867              755               --
       Write off of deferred financing costs                                              --           12,035               --
       Issuance of warrants                                                               --               --              927
       Non cash amortization of deferred financing costs                                  --            2,485            3,292
       Non cash 401(k) match                                                             254              192               --
       Non-cash stock based compensation expense                                      12,446           10,143              603
       Changes in assets and liabilities, net of acquisitions and
       dispositions:
       Accounts receivable - trade                                                     1,060            1,887            5,535
       Inventory                                                                          73              165              837
       Other current assets                                                           (1,383)           4,506              (80)
       Accounts payable and accrued expenses (including in
       payments to MSV, a related party, of $3,948, $0 and
       $0 at December 31, 2005, 2004 and 2003)                                           225           (5,610)            (255)
       Accrued interest                                                                   --            1,523            2,510
       Deferred revenue and other current liabilities                                 (4,850)          (6,235)           2,285
                                                                                   ---------        ---------        ---------
       Net cash (used in) operating activities                                       (32,207)         (18,354)          (7,120)
                                                                                   ---------        ---------        ---------
  CASH FLOWS FROM INVESTING ACTIVITIES:
       Proceeds from sale of property & equipment                                         29               60               --
       Proceeds from sale of FCC licenses                                                 --            2,045            6,116
       Proceeds (purchase) of restricted investments                                (110,116)           1,519             (991)
       Cash acquired in TerreStar asset purchase                                       6,165
       Investment in MSV                                                                  --         (125,000)              --
       Proceeds from MSV note                                                             --            2,071               --
       Additions to property and equipment                                            (7,949)          (1,357)            (232)
                                                                                   ---------        ---------        ---------
       Net cash (used in) provided by investing activities                          (111,871)        (120,662)           4,893
                                                                                   ---------        ---------        ---------
  CASH FLOWS FROM FINANCING ACTIVITIES:
       Proceeds from issuance of equity securities                                     2,204          192,024               --
       Stock issuance costs and other charges                                             (9)          (6,974)              --
       Principal payments under capital leases                                            --           (2,605)          (2,986)
       Principal payments under vendor financing                                          --           (2,645)          (1,020)
       Repayment of Term Credit Facility                                                  --           (6,899)              --
       Repayments of notes payable                                                    (8,739)         (23,990)              --
       Proceeds from Term Credit Facility                                                 --            1,500            4,500
       Proceeds from issuance of employee stock options                                1,330            2,032               47
       Proceeds from issuance of Series A Cumulative
       Convertible Preferred Stock                                                   408,500               --               --
       Issuance costs associated with Series A Cumulative
       Convertible Preferred Stock                                                   (17,570)              --               --
       Dividends paid on Series A Cumulative Convertible
       Preferred Stock                                                               (10,723)              --               --
       Debt issuance costs and other charges                                              --             (100)            (536)
       Purchase of treasury stock                                                    (67,086)              --               --
                                                                                   ---------         ---------       ---------
       Net cash provided by financing activities                                     307,907          152,343                5
                                                                                   ---------        ---------        ---------
       Net increase (decrease) in cash and cash equivalents                          163,829           13,327           (2,222)
                                                                                   ---------        ---------        ---------
  CASH AND CASH EQUIVALENTS, beginning of year                                        16,945            3,618            5,840
  CASH AND CASH EQUIVALENTS, end of year                                           $ 180,774        $  16,945        $   3,618
                                                                                   =========        =========        =========
</TABLE>

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

                                      F-5
<PAGE>

                   Notes to Consolidated Financial Statements


1. Organization and Description of Business

Motient Corporation (with its subsidiaries, "Motient" or the "Company") provides
two-way, wireless mobile data services and wireless internet services. Motient
allows its customers access to multiple communications networks for a variety of
wireless data communications services, including email messaging and other
services that enable businesses, mobile workers and machines to transfer
electronic information and messages and access corporate databases and the
internet.

In addition to selling wireless services that use its own terrestrial DataTac
network, it is also a reseller of airtime for data communications services on
the Cingular and Sprint wireless networks. These arrangements allow Motient to
provide integrated seamless solutions to its customers using a variety of
networks. In December 2004, Motient launched a new set of products and services
designed to provide these seamless solutions to our customers called iMotient
Solutions (TM). iMotient allows Motient's customers to use these multiple
networks via a single connection to Motient's back-office systems, providing a
one-source alternative for development, device management and billing across
multiple networks, including but not limited to GPRS, 1XRTT, and DataTac. The
Company considers the two-way mobile communications service described in this
paragraph to be its core wireless business.

Motient presently has six wholly-owned subsidiaries, a 61% interest in TerreStar
Networks Inc., and a 49% interest in Mobile Satellite Ventures LP (MSV). Motient
Communications Inc., a wholly owned subsidiary, owns the assets comprising
Motient's core wireless business, except for Motient's Federal Communications
Commission, or FCC, licenses, which are held in a separate subsidiary, Motient
License Inc. Motient's other four subsidiaries hold no material operating assets
other than the stock of other subsidiaries and Motient's interests in MSV.

TerreStar Networks Inc.

On May 11, 2005, Motient Ventures Holding Inc. ("MVH"), a wholly owned
subsidiary of Motient Corporation ("Motient"), purchased 8,190,008 shares of
newly issued common stock of TerreStar Networks Inc. ("TerreStar") from
TerreStar for $200 million pursuant to a Purchase Agreement by and between MVH
and TerreStar. As a result of this purchase and as of May 11, 2005, Motient's
ownership increased from approximately 49% to approximately 61% of the issued
and outstanding common stock of TerreStar. The funds used to purchase the shares
of TerreStar common stock represent a portion of the proceeds Motient raised
from the private placement of its Series A Cumulative Convertible Preferred
Stock on April 15, 2005.

TerreStar was a subsidiary of MSV established to, among other things, develop
business opportunities in the 2 GHz band. On May 11, 2005, TerreStar was
spun-off by MSV to its limited partners and, in connection with that spin-off,
Motient acquired ownership of approximately 49% of the issued and outstanding
shares of capital stock of TerreStar and the subsequent stock purchase increased
Motient's ownership to its current 61% level.

                                      F-6
<PAGE>

Mobile Satellite Ventures LP

On June 29, 2000, the Company formed a joint venture subsidiary, MSV, with
certain other parties, in which it owned 80% of the membership interests.
Through November 2001, MSV used the Company's satellite network to conduct
research and development activities. Three investors unrelated to Motient owned
the remaining 20% interests in MSV. The minority investors had certain
participating rights which provided for their participation in certain major
business decisions that were made in the normal course of business; therefore,
in accordance with EITF No 96-16, "Investor's Accounting for an Investee When
the Investor Has a Majority of the Voting Interest but the Minority Shareholder
or Shareholders Have Certain Approval or Veto Rights", the Company's investment
in MSV has been recorded for all periods presented in the consolidated financial
statements pursuant to the equity method of accounting.

On November 12, 2004, Motient acquired approximately 5.4 million MSV limited
partnership units, and a corresponding number of shares in MSV's general
partner, Mobile Satellite Ventures GP Inc. ("MSV GP"). These units consist of
4.2 million units purchased for $125 million in cash and 1.2 million units
received in exchange for the cancellation of our $15 million principal note (and
all accrued interest thereon) issued by MSV and the conversion of $3.5 million
of convertible notes issued by MSV (including the cancellation of the accrued
interest on such convertible notes). In connection with our investment, the
other limited partners of MSV exchanged their outstanding notes (but not
generally the accrued interest thereon), and one limited partner contributed an
additional $20 million of cash, for limited partnership units and a
corresponding number of MSV GP shares.

As a result of MSV's capital transactions in 2004, Motient recorded a change of
interest loss of $3.1 million directly to shareholder's equity in accordance
with Staff Accounting Bulletin ("SAB") No. 51 "Accounting for Sales of Stock of
a Subsidiary" as our ownership interest decreased from 48% to 30%, prior to our
additional $125 million investment, in MSV.

On February 9, 2005, Motient entered into a merger agreement with Telcom
Satellite Ventures Inc. and Telcom Satellite Ventures II Inc. and simultaneously
consummated the transactions contemplated thereby, pursuant to which Telcom
merged with and into MVH Holdings Inc., a direct and wholly-owned subsidiary of
Motient, in a tax-free reorganization in which MVH is the surviving company. In
exchange for 2,296,835 MSV limited partnership units, Motient issued to Telcom's
stockholders 8,187,804 shares of its common stock owned by the Telcom entities.

Concurrently with this merger, Motient (through MVH) also purchased 373.7 shares
of common stock of Spectrum Space Equity Investors IV, Inc. and two other
related entities, representing approximately 66.3% of the outstanding common
stock of each of such entities, and 221.2 shares of common stock of Columbia
Space Partners, Inc. and two other related entities, representing approximately
27.8% of the outstanding common stock of such entities. In total, Motient issued
to the Spectrum entities and Columbia entities 4,516,978 shares of Motient
common stock in a private placement in exchange for indirect ownership of
1,267,098 MSV units.

                                      F-7
<PAGE>

Telcom, Columbia and Spectrum also received warrants exercisable for an
aggregate of approximately 952,858 shares of Motient common stock. The warrants
have a term of five years and an exercise price equal to $22.50. As Motient has
filed a registration statement for the shares sold to these entities on February
14, 2005, 70% of the warrants to purchase 952,858 common shares will never vest.
The remainder vested in August 2005. The fair value of the remaining warrants
was estimated at $8.3 million using a Black-Scholes model.

In connection with the acquisition of the additional interest in MSV, the
Company allocated $100 million and $270 million of the excess of the purchase
price to the proportionate underlying equity of MSV to identifiable intangibles
and goodwill, respectively. The identifiable intangibles (spectrum rights and
intellectual property) are being amortized over fifteen years.

As of December 31, 2004 and 2005, Motient held a 38.6% and 48.84% interest,
respectively, in MSV. For additional information regarding MSV, please see the
financial statements of MSV beginning on page M-1.

Liquidity And Capital Resources

The Company's future financial performance will depend on the successful
implementation of its business plan. As of December 31, 2005, the Company had
$181 million of cash on hand, excluding restricted cash, of which approximately
$73 million was held at Motient Corporation and $108 million was held at
TerreStar. In 2006, Motient Corporation anticipates completing its previously
announced rights offering for proceeds of approximately $21.4 million.

TerreStar's business plan will require substantial funds to finance the
anticipated operating and capital expenditures of TerreStar. TerreStar currently
has contractual commitments in 2006 for its satellite system and part of its
planned ground segment totaling approximately $125 million, excluding
anticipated additional contractual cost if TerreStar elects the option for its
second satellite in 2006. These contractual commitments exclude TerreStar's
operating requirements for 2006. In the case of each of TerreStar's contractual
commitment, TerreStar has the ability to terminate its financial obligation with
30 days notice and its liability would be limited to monies expended to date of
termination. However, if the progress of the satellite system or ground segment
system is curtailed by this termination, it could materially impede TerreStar's
ability to complete its satellite and ATC network in a timely fashion and
thereby prevent TerreStar from timely generating revenues at the levels
anticipated.

TerreStar will likely face a cash deficit in 2006 under its current business
plan. If TerreStar is unable to secure financing from a third party source to
meet this cash deficit in 2006, then Motient may determine that it will support
TerreStar's funding obligations with cash on hand at Motient. However, Motient
is under no obligation to do so. The Company cannot guarantee that additional
financing sources will be available for TerreStar from third party sources, the
capital markets or the Company at any given time or available on favorable
terms. In addition, MSV has substantial funding requirements in the near and
long term future, and while the Company is not obligated to meet such funding
requirements, MSV's failure to meet such requirements could materially impair
the value of the Company's investment in MSV.

The cash requirements for TerreStar and MSV, along with the possible obligation
to rescind $90 million of the Series A Preferred Stock, may place significant
pressures on the Company's liquidity position and the value of its assets and/or
investments. If future cash requirements exceed those currently anticipated, the
Company may require additional financing in amounts that will be material in
advance of the currently anticipated funding timeframes. The type, timing and

                                      F-8
<PAGE>

terms of financing that the Company obtains will be dependent upon its cash
needs, the availability of financing sources and the prevailing conditions in
the financial markets. The Company cannot guarantee that additional financing
sources will be available at any given time or available on favorable terms.


2. Significant Accounting Policies

Basis of Presentation

These consolidated financial statements include the results of Motient and its
subsidiaries. Inter-company accounts and transactions have been eliminated. The
results of MSV have been accounted for pursuant to the equity method of
accounting. The results of TerreStar have been consolidated with Motient since
its acquisition on May 11, 2005. . Certain amounts from prior years have been
reclassified to conform to the current year presentation.

Use of Accounting Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The Company's most significant estimates
relate to the valuation on its investment in MSV, the allowance for doubtful
accounts receivable, the valuation of deferred tax assets and the ability to
realize long-lived assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers highly liquid investments with original or remaining
maturities at the time of purchase of three months or less to be cash
equivalents. The carrying amount of cash and cash equivalents approximates fair
value because of the short maturity of those instruments.

Restricted Cash and Investments

The Company had $110 million of restricted cash at December 31, 2005 held in
money market escrow accounts. At December 31, 2005 and 2004, the Company had
$0.1 million of restricted investments. The restricted investments included
securities that were classified as held-to-maturity under the provision of SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity Securities". The
Company classified restricted investment amounts that would mature within one
year as current assets in the accompanying consolidated balance sheet. The
Company accounted for these investments at their amortized cost.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on historical
trends, customer knowledge, any known disputes, and the aging of accounts
receivable balance combined with management's estimate of future potential
recoverability, based on our knowledge of customer's financial condition.

                                      F-9
<PAGE>

Property and Equipment

Property and equipment are recorded at cost and adjusted for impairment and are
depreciated over the shorter of their estimated useful lives or the term of the
lease using the straight-line method. Assets recorded as capital leases are
amortized over the shorter of their estimated useful lives or the term of the
lease. The estimated useful lives of office furniture and equipment vary from
two to ten years, and the network equipment is depreciated over seven years. The
Company has also capitalized certain costs to develop and implement its
computerized billing system. These costs are included in property and equipment
and are depreciated over three years. Repairs and maintenance that do not
significantly increase the utility or useful life of an asset and are expensed
as incurred, while expenditures for refurbishments and improvements that
significantly add to the productive capacity or extend the useful life of an
asset are capitalized. Depreciation expense was $8.0 million, $9.9 million and
$13.8 million for the years ended December 31, 2005, 2004 and 2003,
respectively.

Satellite Under Construction

Additions to satellite under construction are stated at cost. These costs
consist primarily of the cost of satellite construction and will include the
costs of the launch, including premiums for launch insurance and insurance
during the period of in-orbit testing, the net present value of performance
incentives expected to be payable to the satellite manufacturers, costs directly
associated with the monitoring and support of satellite construction and
interest costs incurred during the period of satellite construction. Satellite
construction and launch services have generally been procured under long-term
contracts that provide for payments by us over the contract periods.


Software Development Costs

The Company capitalized certain costs valued in connection with developing or
obtaining internal use software in accordance with American Institute of
Certified Public Accountants Statement of Position 98-1. "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use". As of
December 31, 2005 and 2004, net capitalized internal use software costs were
$0.1 million and $0.3 million, respectively, are included in property and
equipment in the accompanying consolidated balance sheets and are amortized on a
straight-line basis over three years.

Valuation of Long-Lived Assets

The Company evaluates whether long-lived assets, excluding goodwill, have been
impaired when circumstances indicate the carrying value of those assets may not
be recoverable. For such long-lived assets, an impairment exists when its
carrying value exceeds the sum of estimates of the undiscounted cash flows

                                      F-10
<PAGE>

expected to result from the use and eventual disposition of the asset. When
alternative courses of action to recover the carrying amount of a long-lived
asset are under consideration, a probability-weighted approach is used for
developing estimates of future undiscounted cash flows. If the carrying value of
the long-lived asset is not recoverable based on these estimated future
undiscounted cash flows, the impairment loss is measured as the excess of the
asset's carrying value over its fair value, such that the asset's carrying value
is adjusted to its estimated fair value.

Management assesses the fair value of long-lived assets using commonly accepted
techniques, and may use more than one source. Sources to determine fair value
include, but are not limited to, recent third party comparable sales, internally
developed discounted cash flow analysis and analysis from outside advisors.
Significant changes in market conditions resulting from events such as changes
in FCC license issuances or the condition of an asset, or a change in
management's intent to utilize the asset would generally require management to
re-assess the cash flows related to the long-lived assets.

The Company uses the criteria in SFAS No. 144 to determine when an asset is
classified as "held for sale." Upon classification as "held for sale," the
long-lived asset or asset group is measured at the lower of its carrying amount
or fair value less cost to sell, depreciation is ceased and the asset or asset
group is separately presented on the Consolidated Balance Sheets. When an asset
or asset group meets the SFAS No. 144 criteria for classification as held for
sale within the Consolidated Balance Sheets, the Company does not
retrospectively adjust prior period balance sheets to conform to current year
presentation.

The Company uses the criteria in SFAS No. 144 and EITF 03-13, "Applying the
Conditions in Paragraph 42 of FAS 144 in Determining Whether to Report
Discontinued Operations" (EITF 03-13), to determine whether components of the
Company that are being disposed of or are classified as held for sale are
required to be reported as discontinued operations in the Consolidated
Statements of Operations. To qualify as a discontinued operation under SFAS No.
144, the component being disposed of must have clearly distinguishable
operations and cash flows. Additionally, pursuant to EITF 03-13, the Company
must not have significant continuing involvement in the operations after the
disposal (i.e. the Company must not have the ability to influence the operating
or financial policies of the disposed component) and cash flows of the assets
sold must have been eliminated from the Company's ongoing operations (i.e. the
Company does not expect to generate significant direct cash flows from
activities involving the disposed component after the disposal transaction is
completed). Assuming both preceding conditions are met, the related results of
operations for the current and prior periods, including any related impairments,
are reflected as (Loss) Income From Discontinued Operations, net of tax, in the
Consolidated Statements of Operations. If an asset held for sale does not meet
the requirements for discontinued operations classification, any impairments and
gains or losses on sales are recorded in continuing operations as Gains (Losses)
on Sales of Other Assets, net, in the Consolidated Statements of Operations.
Impairments for all other long-lived assets, other than goodwill, are recorded
as Impairment and Other Charges in the Consolidated Statements of Operations.


                                      F-11
<PAGE>

Investment in MSV

The Company uses the equity method of accounting for its investment in MSV. The
company considers whether the fair value of its investment has declined below
its carrying value whenever adverse events or circumstances indicate that the
recorded value may not be recoverable. If the Company considers such decline to
be other than temporary, a write down would be recorded to estimate fair value.

Impairment

The Company reviews and accounts for asset impairment under SFAS No. 144
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144
requires that one accounting model be used for long-lived assets to be disposed
of by sale, whether previously held and used or newly acquired, and by broadens
the presentation of discontinued operations to include more disposal
transactions. The Company reviews its assets for impairment, at a minimum on an
annual basis and immediately recognizes an impairment in interim periods.

Income Taxes

Income taxes are accounted for under the liability method whereby deferred tax
asset and liability account balances are calculated at the balance sheet date
using current tax laws and rates for the year in which the differences are
expected to affect taxable income A valuation allowance is recorded to reduce
the carrying amounts of deferred tax assets if it is more likely than not that
such assets will not be realized.

Fair Value of Financial Instruments

The fair value of certain of the Company's financial instruments, including cash
and cash equivalents, and other accrued liabilities approximate cost because of
their short maturities. The fair value of investments is determined using quoted
market prices for those securities or similar financial instruments.

Revenue Recognition

The Company's revenues are recorded in accordance with the Securities and
Exchange Commission's (SEC) Staff Accounting Bulletin (SAB) No. 104, Revenue
Recognition and Emerging Issues Task Force (EITF) No. 00-21, Accounting For
Revenue Arrangements With Multiple Deliverables. The Company recognizes revenue
as follows:

Service Revenue: Revenues from the Company's wireless services are recognized
when the services are performed, evidence of an arrangement exists, the fee is
fixed and determinable and collectability is probable. Service discounts and
incentives are recorded as a reduction of revenue when granted, or ratably over
a contract period. The Company defers and amortizes any revenue and costs
associated with activation of a subscriber on the Company's network over an
estimated customer life of two years.

The Company packages airtime usage on its network that involves a wide variety
of volume packaging, anything from a 35 kilobytes per month plan up to unlimited

                                      F-12
<PAGE>

kilobyte usage per month, with various gradations in between. Discounts may be
applied when comparing one customer to another, and such service discounts are
recorded as a reduction of revenue when granted.

Service discounts and incentives are recorded as a reduction of revenue when
granted, or ratably over a contract period. The Company does not offer
incentives generally as part of its service offerings, however, if offered they
would be recorded as a reduction of revenue ratably over a contract period.

To date, the majority of the Company's business has been transacted with
telecommunications, field services, professional service and transportation
companies located throughout the United States. The Company grants credit based
on an evaluation of the customer's financial condition, generally without
requiring collateral or deposits. The Company establishes a valuation allowance
for doubtful accounts receivable for bad debt and other credit adjustments.
Valuation allowances for revenue credits are established through a charge to
revenue, while valuation allowances for bad debts are established through a
charge to general and administrative expenses. The Company assesses the adequacy
of these reserves quarterly, evaluating factors such as the length of time
individual receivables are past due, historical collection experience, the
economic environment and changes in credit worthiness of the Company's
customers. If circumstances related to specific customers change or economic
conditions worsen such that the Company's past collection experience and
assessments of the economic environment are no longer relevant, the Company's
estimate of the recoverability of its trade receivables could be further
reduced.

Equipment And Service Sales: The Company sells equipment to resellers who market
its terrestrial product and airtime service to the public. The Company also
sells its product directly to end-users. Revenue from the sale of the equipment,
as well as the cost of the equipment, are initially deferred and are recognized
over a period corresponding to the Company's estimate of customer life of two
years. Equipment costs are deferred only to the extent of deferred revenue.

As of December 31, 2005 and 2004, the Company had capitalized a total of $0.1
million and $1.0 million of deferred equipment revenue, respectively, and had
deferred equipment costs of $0.1 million and $0.9 million, respectively.

Research and Development Costs

Research and development costs are expensed as incurred. Such costs include
development efforts on the TerreStar satellite system and expenses associated
with external development agreements. We expect these costs associated with the
TerreStar development agreements to increase in the future as development
efforts on its satellite system accelerate.

Advertising Costs

Advertising costs (inclusive of airtime commissions) are charged to operations
as incurred and totaled $1.5 million in 2005, $4.0 million in 2004, and $6.6
million in 2003.

                                      F-13
<PAGE>

Stock-Based Compensation

In accordance with the provisions of Statement of Financial Accounting Standards
No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation" and "Statement
of Financial Accounting Standards No. 148" ("SFAS 148"), "Accounting for
Stock-Based Compensation - Transition and Disclosure," the Company applies
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25") and related interpretations in accounting for its
stock-based compensation. Accordingly, the Company recognizes compensation cost
for stock options granted at their intrinsic value on the date of the grant.
Note 12 "Employee Stock Benefit Plans" of the consolidated financial statements
describe the plans operated by the Company.


For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period, and the estimated fair
value of purchases under the employee stock purchase plan is expensed in the
year of purchase as well as the stock-based employee compensation cost, net of
related tax effects, that would have been included in the determination of net
income if the fair value based method had been applied to all awards.

Pro forma information regarding net income and earnings per share is required by
SFAS 123 and has been determined as if Motient had accounted for its employee
stock options and purchases under the employee stock purchase plan using the
fair value method of SFAS 123.

The following table illustrates the pro forma effect on net loss available to
common stockholders and earnings loss per share if the Company had applied the
fair value recognition provisions of SFAS 123 and SFAS 148 to stock-based
employee compensation.

<TABLE>
<CAPTION>
                                            Year Ended       Year Ended        YearEnded
                                           December 31,     December 31,      December 31,
                                               2005             2004              2003
                                               ----             ----              ----
<S>                                         <C>              <C>              <C>
Net loss, available to common
stockholders                                 $(158,407)       $ (72,329)       $ (62,122)
Add: Stock-based employee
compensation expense included in net
income, net of related tax effects              12,446           10,143              603
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of tax related
effects                                        (17,996)          (6,726)          (2,488)
                                               -------           ------           ------
Pro forma net loss                           $(163,957)        $(68,912)        $(64,007)

Weighted average common shares
outstanding                                     62,072           32,771           25,145
Earnings per share:
  Basic and diluted---as reported               $(2.55)          $(2.21)          $(2.47)
  Basic and diluted---pro-forma                 $(2.64)          $(2.10)          $(2.55)
</TABLE>

                                      F-14
<PAGE>

Under SFAS No. 123 the fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions:

                                 Year Ended        Year Ended      Year Ended
                                December 31,      December 31,     December 31,
                                    2005              2004            2003
                                    ----              ----            ----

Expected life (in years)                 10                10                10
Risk-free interest rate         2.28%-3.44%       0.92%-2.18%       0.88%-0.93%
Volatility                        456%-840%         162%-375%         148%-162%
Dividend yield                         0.0%              0.0%              0.0%

SFAS 123 requires the use of option pricing models that were not developed for
use in valuing employee stock options. The Black-Scholes option pricing model
were developed for use in estimating the fair value of short-lived
exchange-traded options that have no vesting restrictions and are fully
transferable. In addition, the models require the input of highly subjective
assumptions. Because the Company's stock-based compensation has characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
the opinion of management, the existing models do not necessarily provide a
reliable single measure of the fair value of employee stock-based compensation.

Segment Reporting

The Company has reviewed its business operations and determined that it is not
organized by multiple operating segments for the purpose of making operating
decisions or assessing performance. Accordingly, the Company operates as one
operating segment, the core wireless business, and report applicable
enterprise-wide disclosures. Revenues and costs are reviewed monthly by
management on an individual contract basis as a single business segment.


TerreStar does not currently generate any revenues and we do not anticipate that
it will do so until 2008. Additional financial information concerning the
Company's reportable segments is shown in the following table (in thousands):

                                       Year Ended December 31, 2005

                              Motient        TerreStar            Total
                              -------        ---------            -----
Operating (loss)            $(113,904)        $(12,275)       $(126,179)
Depreciation expense            7,965              ---            7,965
Amortization expense            4,655            3,353            8,008
Identifiable assets           635,141          332,050          967,191
Capital expenditures              165            7,784            7,949

                                      F-15
<PAGE>

Loss Per Share

Basic loss per share is determined by dividing net loss available to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted net loss per share reflects the potential increase in
weighted average number of common shares used in the basic loss per share
calculation, plus the number of common shares that would be issued assuming
conversion of all potentially dilutive securities outstanding under the treasury
stock method.

Options and warrants to purchase shares of common stock were not included in the
computation of loss per share as the effect would be antidilutive for the years
ended December 31, 2005 and December 31, 2004. As a result, the basic and
diluted earnings per share amounts for all periods presented are the same. As of
December 31, 2005, there were warrants to acquire approximately 5,878,601 shares
of common stock, 408,500 shares of Series A and Series B Cumulative Convertible
Preferred Stock entitled to be converted into a total of 12,255,000 shares of
common stock and 791,317 options outstanding that were not included in this
calculation because of their antidilutive effect. As of December 31, 2004, there
were warrants to acquire 4,594,327 shares of common stock and options
outstanding for 605,727 shares that were not included in this calculation
because of their anti-dilutive effect. As of December 31, 2003, there were
warrants to acquire approximately 5,664,962 shares of common stock and 1,757,513
options outstanding that were not included in this calculation because of their
antidilutive effect. Additionally, there were options to purchase 4,318,113 and
0 shares of TerreStar common stock at December 31, 2005 and December 31, 2004.

Reclassification

We have reclassified some prior period amounts to conform to our current year
presentation.

Concentrations Of Credit Risk And Major Customers

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash, short term investments, and accounts
receivable. The Company periodically invests its cash balances in temporary or
overnight investments. The Company's short term investments included debt
securities such as commercial paper, time deposits, certificates of deposit,
banker acceptances, and marketable direct obligations of the United States
Treasury with high credit quality financial institutions. At December 31, 2005,
the Company had approximately $181 million of cash deposits, excluding
restricted cash, in excess of amounts insured by the Federal Deposit Insurance
Corporation. To date, the company has not experienced any losses on cash
deposits.

To date, the majority of the Company's business has been transacted with
telecommunications, field services, professional service and transportation
companies located throughout the United States. The Company grants credit based
on an evaluation of the customer's financial condition, generally without
requiring collateral or deposits. Exposure to losses on trade accounts
receivable, for both service and for equipment sales, is principally dependent
on each customer's financial condition.

For the year ended December 31, 2005, one customer, SkyTel, accounted for
approximately 21% of Motient's service revenue, no other single customer

                                      F-16
<PAGE>

accounted for more than 10% of our service revenue. As of December 31, 2005, one
customer, Geologic Solutions, accounted for more than 20% of our net accounts
receivable. No other single customer accounted for more than 10% of our net
accounts receivable.

For the year ended December 31, 2004, one customer, SkyTel, accounted for
approximately 22% of the Company's service revenue. No other single customer
accounted for more than 10% of our service revenue. As of December 31, 2004, one
customer, RIM, accounted for more than 14% of our net accounts receivable. No
other single customer accounted for more than 10% of our net accounts
receivable.

For the year ended December 31, 2003, two customers accounted for approximately
31% of the Company's service revenue, with SkyTel accounting for approximately
20% and UPS accounting for approximately 11% of the Company's service revenue.
No other single customer accounted for more than 10% of the Company's service
revenue. As of December 31, 2003, no single customer accounted for more than 6%
of the Company's net accounts receivable.

The revenue attributable to such customers varies with the level of network
airtime usage consumed by such customers, and none of the service contracts with
such customers requires that the customers use any specified quantity of network
airtime, nor do such contracts specify any minimum level of revenue. There can
be no assurance that the revenue generated from these customers will continue in
future periods.

Recent Accounting Pronouncements

SFAS No. 123 (Revised 2004) ("SFAS No. 123R"), "Share-Based Payment," issued in
December 2004, is a revision of FASB Statement 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and its related implementation guidance. The Statement focuses
primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS No. 123R requires a public
entity to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award
(with limited exceptions). That cost will be recognized over the period during
which an employee is required to provide service in exchange for the award. On
March 29, 2005, the SEC issued Staff Accounting Bulletin No. 107 ("SAB No.
107"), which provides the Staff's views regarding interactions between SFAS No.
123R and certain SEC rules and regulations and provides interpretations of the
valuation of share-based payments for public companies.

SFAS No. 123(R) permits public companies to adopt its requirements using one of
two methods:

(1) A "modified prospective" method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No.
123(R) for all share-based payments granted after the effective date and (b)
based on the requirements of SFAS No. 123 for all awards granted to employees
prior to the effective date of SFAS No. 123(R) that remain unvested on the
effective date.

                                      F-17
<PAGE>

(2) A "modified retrospective" method which includes the requirements of the
modified prospective method described above, but also permits entities to
restate based on the amounts previously recognized under SFAS No. 123 for
purposes of pro forma disclosures either (a) all prior periods presented or (b)
prior interim periods of the year of adoption.

This statement is effective for the beginning of the first annual reporting
period that begins after June 15, 2005, therefore, we will adopt the standard in
the first quarter of fiscal 2006 using the modified prospective method. As
permitted by SFAS No. 123, we currently account for share-based payments to
employees using the intrinsic value method prescribed in APB Opinion 25 and, as
such, generally recognize no compensation cost for employee stock options.
Although we have not completed our assessment, we believe the impact on our
consolidated financial position or results or operations will not be material
given the current number of outstanding stock options. The effect on our results
of operations of expensing stock options using the Black-Scholes method is
presented in the disclosure of pro forma net income and earnings per share in
Note 2. SFAS No. 123(R) also requires the benefits of tax deductions in excess
of recognized compensation cost to be reported as a financing cash flow, rather
than as an operating cash flow as required under current literature. This
requirement will reduce net operating cash flows and increase net financing cash
flows in periods after adoption.

In December 2004, the FASB issued SFAS No. 153, Exchanges Of Nonmonetary Assets
-- An Amendment Of APB Opinion No. 29, Accounting For Nonmonetary Transactions
(SFAS 153). SFAS 153 eliminates the exception from fair value measurement for
nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB
Opinion No. 29, Accounting For Nonmonetary Transactions, and replaces it with an
exception for exchanges that do not have commercial substance. SFAS 153
specifies that a nonmonetary exchange has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. SFAS 153 is effective for the fiscal periods beginning after June 15,
2005 and was required to be adopted by the Company in the third quarter of 2005.
The adoption of SFAS No. 153 did not have an impact on our consolidated
financial position or consolidated results of operations.

In March 2005, the FASB issued FIN No. 47, "Accounting for Conditional Asset
Retirement Obligations - an interpretation of FASB Statement No. 143 "Accounting
for Asset Retirement Obligations ("SFAS No. 143")" ("FIN 47"). FIN 47 clarifies
that the term conditional asset retirement obligation as used in SFAS No. 143,
refers to a legal obligation to perform an asset retirement activity in which
the timing and (or) method of settlement are conditional on a future event that
may or may not be within the control of the entity. Accordingly, an entity is
required to recognize a liability for the fair value of a conditional asset
retirement obligation if the fair value of the liability can be reasonably
estimated. The liability for the conditional asset retirement obligation should
be recognized when incurred. This Interpretation also clarifies when an entity
would have sufficient information to reasonably estimate the fair value of an
asset retirement obligation. FIN 47 is effective for fiscal periods beginning
after December 15, 2005, and we will adopt this provision, as applicable, during
fiscal year 2006.

In November 2005, the FASB issued Staff Position Nos. FAS 115-1 and FAS 124-1,
"The Meaning of Other Than Temporary Impairment and its Application to Certain
Investments" ("the FSP"). The FSP provides accounting guidance for determining
and

                                      F-18
<PAGE>

measuring other-than-temporary impairments of debt and equity securities, and
confirms the disclosure for investments in unrealized loss positions as outlined
in EITF 03-01, "The Meaning of Other-Than-Temporary Impairments ands its
Application tom Certain Investments". The accounting requirements are effective
for us on January 1, 2006 and will not have a material impact on our
consolidated financial position or consolidated cash flows.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs: an amendment
of ARB No. 43, Chapter 4," ("SFAS No. 151") to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling costs and wasted
material. SFAS No. 151 is effective for inventory costs incurred during fiscal
years beginning after June 15, 2005. The adoption of SFAS No. 151, did not have
an impact on our consolidated financial position or consolidated results of
operations.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections - A Replacement of APB Opinion No. 20 and FASB Statement No. 3"
("SFAS No. 154"). SFAS No. 154 requires the retrospective application to prior
periods' financial statements of changes in accounting principle, unless it is
impractible to determine either the period-specific effects or cumulative effect
of the accounting change. SFAS No. 154 also requires that a change in
depreciation, amortization, or depletion method for long-lived non-financial
assets be accounted for as a change in accounting estimate affected by a change
in accounting principle. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005 and
we will adopt this provision, as applicable, during fiscal year 2006.


3. Assets Held for Sale

On July 29, 2003, Motient Communications, entered into an asset purchase
agreement with Nextel, under which Motient Communications sold to Nextel certain
of its SMR licenses issued by the FCC for $3.4 million. The closing of this
transaction occurred on November 7, 2003. On December 9, 2003, Motient
Communications entered into a second asset purchase agreement, under which
Motient Communications sold additional licenses to Nextel for $2.75 million
resulting in a $1.5 million loss which was recorded in December 2003.

In February 2004, the Company closed the sale of licenses covering approximately
$2.2 million of the purchase price, and in April 2004, the Company closed the
sale of approximately one-half of the remaining licenses. The transfer of the
remaining licenses has been challenged at the FCC by a third-party. While the
Company believes, based on the advice of counsel, that the FCC will ultimately
rule in its favor, the Company cannot be assured that it will prevail, and in
any event, the timing of any final resolution is uncertain. None of these
licenses are necessary for Motient's future network requirements. The net
realizable value of these frequencies at December 31, 2005 and 2004 were
approximately $0.26 million and $0.26 million respectively.

4. Property And Equipment

                                      F-19
<PAGE>

Property and equipment consists of the following:

                                                        December 31,
                                                        ------------
                                                   2005            2004
                                                   ----            ----
                                                      (in thousands)
Network equipment                                $11,308         $30,598
Office equipment                                   2,561           2,838
Satellite Construction in Progress                70,883             ---
                                                  ------          ------
                                                  84,752          33,436

Less accumulated depreciation                     (8,763)        (16,175)
                                                 -------         -------
Property and equipment, net                      $75,989         $17,261
                                                 =======         =======

Depreciation expense totaled $7,965, $9,948 and $13,770 for the years ended
December 31, 2005, 2004 and 2003, respectively.


5. FCC Licenses and Other Intangible Assets

FCC licenses and other intangible assets consist of the following:

                                                           December 31,
                                                           ------------
                                                       2005           2004
                                                       ----           ----
                                                          (in thousands)
FCC 800 MHz licenses                                 $7,323        $80,594
FCC 2 GHz licenses                                   66,786             --
Intellectual property                                11,786             --
Customer contracts                                      349            349
                                                        ---            ---
                                                     86,244         80,943
Less accumulated amortization                        (5,176)       (13,294)
                                                     ------        -------
FCC licenses and other intangible assets, net       $81,068        $67,649
                                                    =======        =======

Amortization expense totaled $8,008, $5,616 and $7,696, for the years ended
December 31, 2005, 2004 and 2003, respectively.

Assets acquired in the May 11, 2005 asset purchase of TerreStar were recorded on
the Company's Consolidated Balance Sheet as of the date of the purchase based
upon their fair values at such date. Approximately $78 million was allocated to
intangible assets that include the rights to receive licenses in the 2 GHz band
and other intangibles. These intangible assets are being amortized over an
average life of 15 years.

In December 2005, the Company revalued our 800 MHz licenses as part of our
review of our intangible assets. The Company determined that these frequency
assets were impaired for two reasons. The first reason related to the FCC
initiating 800 MHz frequency band reconfiguration effort commonly known as the
"consensus plan". While the FCC outlined its broad intentions for this

                                      F-20
<PAGE>

reconfiguration in 2004, the specifics of the plan were subject to negotiation
and administration by an appointed transition administrator. Motient has been
actively in negotiations with Nextel and the transition administrator and
reached a resolution with regard to the repositioning of our frequencies in the
fourth quarter of 2005. Second, the Company experienced a significantly greater
decline in our revenues and customer base in the fourth quarter of 2005 than
anticipated, which will cause us to reduce DataTac network coverage within the
top 40 MSAs in 2006. These changes impair the nationwide capacity of our
frequencies that was previously maintained, as well as the future revenue and
cash flows that either Motient or a third party could generate from the use of
these frequencies. As a result of this valuation, the Company has recorded an
$18.4 million impairment charge related to the nationwide value premium
associated with these assets bringing the balance to zero and a $24.5 million
impairment charge related to the individual frequency value. If the Company's
business should decline in the future or the Company reduces network coverage
and service, it is possible that these frequency assets may be further impaired.

The Company accounts for its frequencies as finite-lived intangibles and
amortizes them over a 15-year estimated life and amortizes customer contracts
over a three-year life.

The Company reevaluated the customer-related intangibles as of December 31, 2004
due primarily to the decline in revenue from the Company's wireless internet
customer segment. This valuation resulted in an impairment of the
customer-related intangibles of $0.8 million in the fourth quarter of 2004.

The table below outlines the Company's amortization requirements for the five
year period from December 31, 2005.

<TABLE>
<CAPTION>
                                                         December 31,
                                                         ------------
                                     2006          2007          2008           2009           2010       Thereafter
                                     ----          ----          ----           ----           ----       ----------
<S>                                 <C>            <C>          <C>            <C>            <C>            <C>
   800 MHz Licenses                 $   499        $   499      $   499        $   499        $   499        $ 3,205
   2 GHz Licenses                     4,452          4,452        4,452          4,452          4,452         41,675
   Intellectual Property                786            786          786            786            786          7,353
   Customer contracts               $   150        $   ---      $   ---        $   ---        $   ---        $   ---
                                    -------        -------      -------        -------        -------        -------
   Total Amortization               $ 5,887        $ 5,737      $ 5,737        $ 5,737        $ 5,737        $52,233
                                    -------        -------      -------        -------        -------        -------
</TABLE>

Other Intangible Assets

The Company has utilized numerous assumptions and estimates in applying its
valuation methodologies and in projecting future operating characteristics for
the TerreStar business enterprise. In general, the Company considered
population, market penetration, products and services offered, unit prices,
operating expenses, depreciation, taxes, capital expenditures and working
capital. The Company also considered competition, satellite and wireless
communications industry projections and trends, regulations and general economic
conditions. In the application of its valuation methodologies, the Company
applies certain royalty and discount rates that are based on analyses of public
company information, assessment of risk and other factors and estimates.

                                      F-21
<PAGE>

The Company's valuation of TerreStar's intellectual property rights was
determined utilizing a form of the income approach referred to as the relief
from royalty valuation method. The Company assumed a 10% to 12% royalty rate
applied to a projected revenue stream generated by a hypothetical licensee
utilizing such intellectual property rights.

The Company's valuation of its spectrum assets is based on a form of the income
approach known as the "Build-Out Method". The method applies a discounted cash
flow framework to the Company's "build-out" business case.

The Company will test for impairment of its intangible assets by reviewing all
of the assumptions and estimates utilized relative to the valuation
methodologies.

6. Loss on Disposal of Assets

The Company recorded a loss on disposal of assets of $15.0 million for the year
ended December 31, 2005. In the third and fourth quarters of 2005, we determined
that due to the material decline in our network traffic, certain of our network
switching equipment was no longer operating at or near capacity and that some of
the units could be removed in order to reduce costs. We recorded a loss on this
equipment removal of $1.6 million. The Company also removed certain direct
customer connections and miscellaneous equipment related to unused capacity and
recorded a loss on network equipment of $1.1 million for equipment that was
removed from service. The Company disposed of certain base station equipment
that was the result of business casualties (hurricane Katrina) and cost cutting
activities in the amount of $1.5 million. The Company recorded a loss of $0.1
million for leasehold improvements and office equipment as a result of a fixed
asset audit completed in the fourth quarter of 2005. In addition, as a result of
our rationalization efforts in 2004 and 2005, there were certain 800 MHz
frequencies that were no longer being utilized. As part of our assessment of the
past and future utilization of these licenses and the applicable FCC rules
governing them, the Company determined to allow these licenses to expire in the
fourth quarter of 2005 and recorded a loss on their disposal of $10.7 million.

7. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

                                                         December 31,
                                                         ------------
                                                     2005            2004
                                                     ----            ----
                                                        (in thousands)
Accounts Payable Trade                             $1,758         $ 1,900
Accrued Site Rent                                     701           1,512
Accrued Restructuring (1)                           1,192           1,287
Accrued Operating and Other                         4,503           1,628
                                                    -----           -----
                                                   $8,154          $6,327
                                                   ======          ======

(1) See Note 9 "Restructuring Costs" for additional details

 8.   Deferred Revenue and Other Current Liabilities

                                      F-22
<PAGE>

Deferred revenue and other current liabilities consist of the following:

                                                         December 31,
                                                         ------------
                                                     2005            2004
                                                     ----            ----
                                                        (in thousands)
Deferred Revenue - UPS                               $413          $4,025
Deferred Revenue - Aether                             303             472
Deferred Revenue - RIM                                ---             755
Deferred Registration fees                            120             153
Deposits - other                                       72              --
Deferred Revenue - other                               20               9
                                                       --               -
                                                     $928          $5,414
                                                     ====          ======

See Note 15 "Commitments and Contingencies" for disclosure regarding deferred
revenue - UPS.

9. Restructuring Costs

In February 2004 and March 2005, the Company reduced its workforce by 54 and 11
employees, respectively. In accordance with SFAS No. 112, "Employers' Accounting
for Post-employment Benefits - an amendment of FASB statements No. 5 and 43",
the Company recorded a liability for the severance, employee benefits and
estimated payroll taxes of $1.1 million and $0.1 million, respectively related
to the reductions in workforce.

In June 2005, the Company recorded a restructuring charge of $5.6 million
related to additional network rationalization initiatives consisting of base
station deconstruct costs of $0.1 million, the loss on the cancellation of
frequencies of $3.6 million and termination liabilities of $1.9 million for site
leases no longer required for removed base stations. Of these amounts, as of
December 31, 2005, the Company had incurred base station deconstruct costs of
than $0.1 million, the loss on the cancellation of frequencies of $3.6 million
and termination liabilities of $0.6 million for site leases no longer required
for removed base stations. The Company recorded these charges in accordance with
SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities". In January 2005 the Company identified the base station equipment
associated with the 2005 rationalization and adjusted their remaining useful
lives for depreciation purposes, resulting in approximately $1.8 million of
accelerated depreciation expense. The Company recorded these charges in
accordance with SFAS No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets".

In June 2004, the Company recorded a restructuring charge of $5.1 million
related to certain network rationalization initiatives, consisting of base
station deconstruct costs of $0.5 million, the loss on the retirement of certain
base station equipment of $2.8 million and termination liabilities of $1.8
million for site leases no longer required for removed base stations. Of these
amounts, as of December 31, 2005, the Company had incurred base station
deconstruct costs of $0.5 million, the loss on the retirement of certain base
station equipment of $2.8 million and termination liabilities of $1.4 million
for site leases no longer required for removed base stations. The Company
recorded these charges in accordance with SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities".


                                      F-23
<PAGE>

The following table displays the activity and balances of the restructuring
reserve account from January 1, 2005 to December 31, 2005:

<TABLE>
<CAPTION>
                        Employee     FCC License     Base Station     FCC License     Site Lease
                      Terminations    Disposals     Deconstruction   Terminations    Terminations     Total
                      ------------   ------------   --------------   ------------    ------------     -----
<S>                      <C>             <C>              <C>              <C>          <C>         <C>
Balance January 1,
2005                      $(350)          $---             $---             $5           $(942)      $(1,287)
----------------------------------------------------------------------------------------------------------------
Restructure Charge          (85)           ---              ---            ---             ---           (85)
----------------------------------------------------------------------------------------------------------------
Deductions - Cash            39            ---              ---            ---             197           236
----------------------------------------------------------------------------------------------------------------
Balance March 31,
2005                       (396)           ---              ---              5            (745)       (1,136)
----------------------------------------------------------------------------------------------------------------
Restructure Charge          ---         (3,581)            (147)           ---          (1,852)       (5,580)
----------------------------------------------------------------------------------------------------------------
Increase due to
reclassification of
site lease accrual          ---            ---              ---            ---            (206)         (206)
----------------------------------------------------------------------------------------------------------------
Deductions - Cash           164                              24            ---             498           686
----------------------------------------------------------------------------------------------------------------
Deductions - Non-
Cash                        ---          3,581              ---            ---             ---         3,581
----------------------------------------------------------------------------------------------------------------
Balance June 30,
2005                       (232)           ---             (123)             5          (2,305)       (2,655)
----------------------------------------------------------------------------------------------------------------
Deductions - Cash           232            ---              123            ---             620           975
----------------------------------------------------------------------------------------------------------------
Deductions - Non-
Cash                        ---            ---              ---             (5)            ---            (5)
----------------------------------------------------------------------------------------------------------------
Balance September
30, 2005                    ---            ---              ---            ---          (1,685)       (1,685)
----------------------------------------------------------------------------------------------------------------
Deductions - Cash           ---            ---              ---            ---             493           493
---------------------------------------------------------------------------------------------------------------
Balance December
31, 2005                   $---           $---             $---           $---         $(1,192)      $(1,192)
----------------------------------------------------------------------------------------------------------------
</TABLE>

10. Stockholders' Equity

As of December 31, 2005, the Company has authorized 5,000,000 shares of
preferred stock and 200,000,000 shares of common stock. As of December 31, 2004,
the Company has authorized 5,000,000 shares of preferred stock and 100,000,000
shares of common stock. For each share of common stock held, common stockholders
are entitled to one vote on matters submitted to the stockholders.

The Preferred Stock may be issued in one or more series at the discretion of the
Board of Directors (the "Board"), without stockholder approval. The Board is
authorized to determine the number of shares in each series and all
designations, rights, preferences and limitations on the shares in each series,
including, but not limited to, determining whether dividends will be cumulative
or non-cumulative.


                                      F-24
<PAGE>

Common Stock

On April 7, 2004, Motient sold 4,215,910 shares of its common stock at a per
share price of $5.50 for an aggregate purchase price of $23.2 million to several
different investors in a private placement. In connection with this sale,
Motient signed a registration rights agreement with the holders of these shares.
Motient also issued warrants to purchase an aggregate of 1,053,978 shares of its
common stock to the investors listed above, at an exercise price of $5.50 per
share. Because Motient met certain deadlines related to the registration of the
shares, the warrants will never vest.

In connection with this sale, Motient issued to Tejas Securities Group, Inc.,
its placement agent for the private placement, and certain CTA affiliates,
warrants to purchase 600,000 and 400,000 shares, respectively, of its common
stock. The exercise price of these warrants is $5.50 per share. The warrants are
immediately exercisable upon issuance and have a term of five years. Motient
also paid Tejas Securities Group, Inc. a placement fee of $350,000 at closing.
The fair value of the warrants was estimated at $6.2 million using a
Black-Scholes model with volatility of 160%, risk free rate of 0.92% and a
current stock price on the date of the grant of $6.30. The shares were offered
and sold pursuant to the exemption from registration afforded by Rule 506 under
the Securities Act and/or Section 4(2) of the Securities Act.

On July 1, 2004, Motient sold 3,500,000 shares of its common stock at a per
share price of $8.57 for an aggregate purchase price of $30.0 million to
multiple investors. The sale of these shares was not registered under the
Securities Act and the shares may not be sold in the United States absent
registration or an applicable exemption from registration requirements. The
shares were offered and sold pursuant to the exemption from registration
afforded by Rule 506 under the Securities Act and/or Section 4(2) of the
Securities Act. Motient also issued warrants to purchase an aggregate of 525,000
shares of its common stock to the investors listed above, at an exercise price
of $8.57 per share. Because Motient met certain deadlines related to the
registration of the shares, the warrants will never vest.

In connection with this sale, Motient issued to certain affiliates of CTA and
Tejas Securities Group, Inc., its placement agent for the private placement,
warrants to purchase 340,000 and 510,000 shares, respectively, of its common
stock. The exercise price of these warrants is $8.57 per share. The warrants are
immediately exercisable upon issuance and have a term of five years. Motient
also paid Tejas Securities Group, Inc. a placement fee of $850,000 at closing.
The fair value of the warrants was estimated at $11.6 million using a
Black-Scholes model with volatility of 229%, risk free rate of 1.20% and a
current stock price on the date of the grant of $13.75.

On November 12, 2004, Motient sold 15,353,609 shares of its common stock at a
per share price of $8.57. Motient received aggregate proceeds of $126,397,809,
net of $5,182,620 in commissions paid to its placement agent, Tejas Securities
Group, Inc. The approximately 60 purchasers included substantially all of the
purchasers from the April and July 2004 private placements, as well multiple new
investors. In connection with this sale, Motient signed a registration rights
agreement with the holders of these shares. Among other things, this
registration rights agreement required us to file and cause to make effective a
registration statement permitting the resale of the shares by the holders
thereof. Motient also issued warrants to purchase an aggregate of approximately
3,838,401 shares of its common stock to the investors listed above, at an
exercise price of $8.57 per share. 75% of these warrants have vested, and the

                                      F-25
<PAGE>

other 25% will never vest. The fair value of the warrants was estimated at $65.2
million using a Black-Scholes model with volatility of 296%, risk free rate of
2.04% and a current stock price on the date of the grant of $17.00.

Share Repurchases

On May 13, 2005, Motient, entered into an agreement to repurchase 500,000 shares
of Motient Corporation common stock, from George Haywood, at a price of $19.90
per share. The repurchase was completed on May 18, 2005. Mr. Haywood owned
approximately 9% of Motient's outstanding common stock prior to the repurchase.
The shares repurchased will be held for general corporate purposes.

On May 17, 2005, Motient repurchased an aggregate of 2.4 million shares of its
common stock from several different entities (the "Sellers"), at a price of
$19.50 per share. The Sellers (Columbia Capital Equity Partners III (QP), L.P.,
Columbia Capital Equity Partners III (Cayman), L.P., Columbia Capital Equity
Partners III (AI), L.P., Columbia Capital Investors III, LLC, Columbia Capital
Employee Investors III, LLC, Spectrum Equity Investors Parallel IV, L.P.,
Spectrum IV Investment Managers' Fund, L.P. and Spectrum Equity Investors IV,
L.P.), had previously purchased the common stock in connection with Motient's
February 9, 2005, acquisition of the Seller's indirect interests in Mobile
Satellite Ventures, LP. The shares repurchased will be held for general
corporate purposes.

On November 4, 2005, the Executive Committee of the Board of Directors
authorized the Company to repurchase up to $50 million of its outstanding common
shares. From time to time throughout the month of November, the Company
purchased a total of 565,000 common shares in the open market. The average
purchase price per common share was $17.39.

In the second half of 2005, Motient repurchased shares of common stock from
several directors, Messrs. Kittner, Singer and Steele, and Ms. St. John, which
were surrendered to Motient pursuant to the terms of their respective restricted
stock grants. Motient paid a total of $496,000 for an aggregate of 22,202 common
shares. The common shares repurchased will be held for general corporate
purposes.

As of December 31, 2005, the Company had reserved common stock for future
issuance as detailed below.

Shares issuable upon exercise of warrants                   5,878,601
2002 Stock Option Plan                                      3,793,665
Defined Contribution Plan                                      55,057
2004 Restricted Stock Plan                                    806,814
Shares issuable upon conversion of preferred stock         12,255,000
                                                           ----------
           Total                                           22,789,137
                                                           ==========

Rights Offering

                                      F-26
<PAGE>

Motient has issued to each of its stockholders of record as of the close of
business on December 17, 2004, one right for each share of Motient common stock
held. Each right will entitle any holder that did not participate in the April,
July or November 2004 private placements of our common stock to purchase 0.103
shares of its common stock at a price of $8.57 per share, with fractions rounded
up to the next whole share. A maximum of 2.5 million shares may be sold in the
Rights Offering, generating maximum aggregate proceeds of approximately $21.4
million.

The rights are not transferable and will expire if not exercised within the
exercise period. The rights will not be exercisable until the registration
statement covering the rights and the shares of underlying common stock is filed
with and declared effective by the SEC, and the exercise period will expire 30
days after the rights become exercisable. Motient has not filed a registration
statement relating to the rights offering.

The holders of the rights will not have over-subscription rights, and there will
be no backstop to purchase unsubscribed shares. Motient reserves the right to
abandon this rights offering at any time prior to the effectiveness of the
registration statement relating to the rights offering, and upon any such
abandonment, any and all of the rights previously issued will be cancelled, will
no longer be exercisable and will be of no further force or effect.

11. Redeemable Convertible Preferred Stock

The Company accounts for Series A Cumulative Redeemable Convertible Preferred
Stock under Accounting Series Release 268. "Redeemable Preferred Stocks". As of
December 31, 2005, Motient had 5,000,000 authorized shares of preferred stock,
consisting of 450,000 Series A shares, 500,000 Series B shares and 4,050,000
undesignated. On April 15, 2005, Motient sold 408,500 shares of non-voting
Series A Cumulative Convertible Preferred Stock ("Series A Preferred"), $0.01
par value in a private placement exempt from the registration requirements of
the Securities Act of 1933. Motient received cash proceeds, net of $17.6 million
in placement agent commissions of which approximately $11.5 million was paid to
paid to Tejas Securities Group, Inc., a related party (see Note 14 "Related
Party Transactions") and Deutsche Bank Securities Inc. (before escrowing a
portion of the proceeds as required under the terms of the preferred stock,
described below) of approximately $391 million. The purchasers under the
Securities Purchase Agreement included most of the purchasers from Motient's
November 2004 private placement, as well as several new investors.

In connection with the sale of the Series A Preferred stock, Motient granted
warrants exercisable for an aggregate of 154,109 shares of Motient common stock
to the purchasers. The warrants have a term of five years and an exercise price
equal to $26.51 per share. Since Motient was unable to meet certain registration
deadlines with respect to the shares of preferred stock, each warrant will vest
as to 1/365th of the shares of common stock underlying the warrant for each day
after September 7, 2005. The fair value of the warrants was estimated at $3.9
million using a Black-Scholes model with volatility of 757%, risk free rate of
2.72% and a current stock price on the date of issue of $25.00 and recorded as
additional deferred issuance costs.

The rights, preferences and privileges of the Series A Preferred are contained
in Certificates of Designations of the Series A Cumulative Convertible Preferred
Stock. The following is a summary of these rights, preferences and privileges:

                                      F-27
<PAGE>

      o  The Series A Preferred Stock has voting rights limited to those listed
         below, or except as required by applicable law. Upon (a) the
         accumulation of accrued and unpaid dividends on the outstanding shares
         of Series A Preferred for two or more six month periods, whether or not
         consecutive; (b) the failure of the Corporation to properly redeem the
         Series A Preferred Stock, or (c) the failure of the Corporation to
         comply with any of the other covenants or agreements set forth in the
         Certificate of Designations for the Series A Preferred Stock, and the
         continuance of such failure for 30 consecutive days or more after
         receipt of notice of such failure from the holders of at least 25% of
         the Series A Preferred then outstanding then the holders of at least a
         majority of the then-outstanding shares of Series A Preferred, with the
         holders of shares of any parity securities issued after April 15, 2005
         upon which like voting rights have been conferred and are exercisable,
         voting as a single class, will be entitled to elect two directors to
         Motient's Board of Directors for successive one-year terms until such
         defect listed above has been cured. In addition, Motient must obtain
         the approval of the holders of a majority of the then outstanding
         shares of Series A Preferred to modify the rights, preferences or
         privileges of the Series A Preferred in a manner adverse to the holders
         of Series A Preferred.

      o  From April 15, 2005 to April 15, 2007, Motient is required to pay
         dividends in cash at a rate of 5.25% per annum (the "Cash Rate") on the
         shares of Series A Preferred. Motient was required to place the
         aggregate amount of these cash dividends, $42,892,500, in an escrow
         account. These cash dividends will be paid to the holders of Series A
         Preferred from this escrow account in four semi-annual payments, unless
         earlier paid pursuant to the terms described below. The first of these
         dividends was paid on October 15, 2005.

      o  From April 15, 2007 to April 15, 2010, Motient is required to pay
         dividends on each share of Series A Preferred either in cash at the
         Cash Rate or in shares of Motient common stock at a rate of 6.25% per
         annum.

      o  If any shares of Series A Preferred remain outstanding on April 15,
         2010, Motient is required to redeem such shares for an amount equal to
         the purchase price paid per share plus any accrued but unpaid dividends
         on such shares.

      o  Each holder of shares of Series A Preferred shall be entitled to
         convert their shares into shares of Motient common stock at any time.
         Each share of Series A Preferred will initially be convertible into 30
         shares of Motient common stock. Upon conversion, any accrued but unpaid
         dividends on such shares will also be issued as shares of common stock,
         in a number of shares determined by dividing the aggregate value of
         such dividend by $33.33. In addition, if the conversion takes place
         prior to April 15, 2007 (or if any amounts remain in the escrow account
         on such date), the converting holder will be entitled to the portion of
         the escrow account per share of Series A Preferred Stock equal to
         $105.00 minus all dividends that have been paid on such share from the
         escrow account (such amount, the "Escrow Portion"). Upon conversion,
         all amounts paid to holders of Series A Preferred will be paid in
         shares of Motient common stock.

                                      F-28
<PAGE>

      o  Upon a change in control of Motient, each holder of Series A Preferred
         shall be entitled to require Motient to redeem such holder's shares of
         Series A Preferred for an amount in cash equal to $1,080 per share plus
         all accrued and unpaid dividends on such shares. In addition, if the
         change in control takes place prior to April 15, 2007 (or if any
         amounts remain in the escrow account on such date), the holder electing
         to have such shares redeemed will be entitled to the Escrow Portion
         remaining as to such share.

      o  No dividends may be declared or paid, and no funds shall be set apart
         for payment, on shares of Motient common stock, unless (i) written
         notice of such dividend is given to each holder of shares of Series A
         Preferred not less than 15 days prior to the record date for such
         dividend and (ii) a registration statement registering the resale of
         the Conversion Shares has been filed with the SEC and is effective on
         the date Motient declares such dividend.

Upon the liquidation, dissolution or winding up of Motient, the holders of
Series A Preferred are entitled to receive, prior and in preference to any
distributions to holders shares of Motient common stock, an amount equal to
$1,000 per share plus all accrued and unpaid dividends on such shares. In
addition, if the liquidation, dissolution or winding up takes place prior to
April 15, 2007 (or if any amounts remain in the escrow account on such date),
the holder of each share of Series A Preferred will be entitled the Escrow
Portion remaining as to such share.

Exchange Offer

On October 26, 2005, Motient completed an exchange offer in which it allowed
each Holder of Series A Preferred the opportunity to exchange their shares of
Series A Preferred and a release of any claims relating to the issuance of the
Series A Preferred for shares of Series B Preferred, which will have rights,
preferences and privileges substantially identical to the Series A Preferred,
except that upon (a) the accumulation of accrued and unpaid dividends on the
outstanding shares of Series B Preferred for two or more six month periods,
whether or not consecutive; (b) the failure of Motient to properly redeem the
Series B Preferred Stock, or (c) the failure of Motient to comply with any of
the other covenants or agreements set forth in the Certificate of Designations
for the Series B Preferred Stock, and the continuance of such failure for 30
consecutive days or more after receipt of notice of such failure from the
holders of at least 25% of the Series B Preferred then outstanding, then the
holders of at least a majority of the then-outstanding shares of Series B
Preferred, with the holders of shares of any parity securities upon which like
voting rights have been conferred and are exercisable, voting as a single class,
will be entitled to elect a majority of the members of Motient's Board of
Directors for successive one-year terms until such defect listed above has been
cured. All of the holders of the Series A Preferred except for those affiliated
with Highland Capital Management exchange their shares in this offer.
Accordingly, approximately $318.5 million in face amount of Series A Preferred
shares were exchanged for Series B Preferred shares of the same face amount, and
only $90 million in face amount of Series A Preferred shares remain outstanding.

12. Employee Stock Benefit Plans

In May 2002, the Company's Board approved the 2002 Stock Option Plan with

                                      F-29
<PAGE>

2,993,024 authorized shares of common stock, of which options to purchase
791,317 shares of the Company's common stock were outstanding at December 31,
2005. The Company's stockholders approved the plan on July 11, 2002. The options
granted initially in 2002 are subject to vesting in two parts - 50% of the
shares vest in three equal parts on the first, second and third anniversary of
the date of grant, and the other 50% vest in three equal parts, or are
rescinded, based on a comparison of the Company's performance in 2002, 2003 and
2004 to certain objectives established by the compensation and stock option
committee of the Board following the availability of the annual results. In May
2004, the compensation committee of the Company's Board made a determination to
vest a portion of the 2003 performance options. The 2002 and 2004 performance
objectives were met in ordinary course, and those options were vested. The
performance based options are accounted for in accordance with variable plan
accounting, which requires that the value of these options are measured at their
intrinsic value and any change in that value be charged to the income statement
upon the determination that the fulfillment of the performance criteria is
probable. The other options were previously accounted for as a fixed plan and in
accordance with intrinsic value accounting, which require that the excess of the
market price of stock over the exercise price of the options, if any, at the
time that both the exercise price and the number of options are known, be
recorded as deferred compensation and amortized over the option vesting period.

In March 2003, the Company's board of directors approved the reduction in the
exercise price of all of the outstanding stock options from $5.00 per share to
$3.00 per share. The re-pricing requires that all options be accounted for in
accordance with variable plan accounting, which requires that the value of these
options are measured at their intrinsic value and any change in that value be
charged to the income statement each quarter based on the difference (if any)
between the intrinsic value and the then-current market value of the common
stock. In 2005, the Company recorded a mark-to-market adjustment of $(0.1)
million and $0.8 million respectively relating to these re-priced options.
Options to purchase 791,317 shares, 605,727 shares and 1,757,513 shares of the
Company's common stock were outstanding at December 31, 2005, 2004 and 2003,
respectively, under the Company's 2002 Stock Option Plan.

In July and September 2003, the compensation and stock option committee of the
Company's Board, acting pursuant to the Company's 2002 stock option plan,
granted 26 employees and officers options to purchase an aggregate of 470,000
shares of the Company's common stock at a price of $5.15 per share and 25,000
shares of the Company's common stock at a price of $5.65 per share. One-half of
each option grant vests with the passage of time and the continued employment of
the recipient, in three equal increments, on the first, second and third
anniversary of the date of grant. The other half of each grant vested based on
the performance of the Company in 2004. In August 2004, one employee received a
grant for 100,000 shares of the Company's common stock at a price of $5.15 per
share. These options were immediately exercisable. If vested and not exercised,
the options will expire on the 10th anniversary of the date of grant. In
December 2004, the directors, one employee and one consultant received options
to purchase an aggregate of 205,000 shares of the Company's common stock at a
price of $8.57 per share. These options were immediately exercisable upon
issuance, but later amended to vest on February 28, 2005 and expire on March 1,
2005. In addition, on February 28, 2005, the board granted an aggregate of
205,000 options with a strike price of $28.70 per share to the same persons.
This strike price was set at the closing price of the Company's common stock on
February 28, 2005.

                                      F-30
<PAGE>

On June 23, 2005, pursuant to stockholder approval given at Motient's June 15,
2005 annual meeting, Motient amended its 2002 Stock Option Plan to increase the
number of shares authorized for issuance thereunder by 2.5 million.

On August 5, 2005, the compensation and stock option committee of the Company's
Board, acting pursuant to the Company's 2002 stock option plan, granted 78
employees and officers options to purchase an aggregate of 425,000 shares of the
Company's common stock at a price of $23.15 per share equal to the strike price
on such date. One-third of each option grant vests with the passage of time and
the continued employment of the recipient, in three equal increments, on
December 31, 2005, December 31, 2006 and December 31, 2007.

Between May 11, 2005 through the end of 2005, TerreStar granted options to
purchase 62,077 shares of TerreStar common stock at a price of $0.70 and 651,516
shares of TerreStar common stock at a price of $24.42 to directors, consultants
and employees.

2004 Restricted Stock Plan

In August 2004, the Company adopted a restricted stock plan, and subsequently
registered the shares to be issued under such plan on a registration statement
on Form S-8. Pursuant to this plan, the Company may issue up to 1,000,000 shares
of restricted common stock to employees or directors. In September 2004, the
Company issued an aggregate of 15,400 shares of restricted stock to its
directors as partial compensation for their service on the board of directors.
The Company amortized the compensation expense over a period of 6 months for a
total of $54,000. Such shares vested in February 2005. In February 2005, the
Company issued an aggregate of 95,286 shares of restricted stock to certain
consultants and advisors, which vested on February 18, 2005. The Company
recorded consulting expense associated with the restricted stock of $2.8
million.

Also, in August 2005, the Company issued an aggregate 82,500 shares of
restricted stock to its directors as partial compensation for their service on
the board of directors. Such shares vested in August 2005. The Company recorded
compensation expense associated with the restricted stock of $1.9 million.

In November 2005, the Company granted an aggregate of 155,000 shares of
restricted stock to three officers, which will vest upon the completion of
strategic events involving a change of control which had not occurred as of
December 31, 2005. At December 31, 2005 the Company did not record any
compensation charge associated with the grants, as they were assigned a zero
probability of vesting.

As stated in Note 2 of the Notes to the Consolidated Financial Statements, the
Company has elected to follow APB 25 and related interpretations in accounting
for its employee stock options and stock purchase plans. The alternative fair
value accounting provided for under SFAS 123 requires use of option pricing
models that were not developed for use in valuing employee stock options. Under
APB 25, because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on date of grant, no
compensation expense is recognized.

                                      F-31
<PAGE>

Exercise prices for options outstanding as of December 31, 2005, ranged from
$3.00 to $28.70. The weighted average remaining contractual life of those
options is 8.8 years. In view of the wide range of exercise prices, the Company
considers it appropriate to provide the following additional information with
respect to options outstanding at December 31, 2005:

<TABLE>
<CAPTION>
                                                       Restricted
                                                        Stock and                             Weighted
                                                         Options        Options Granted       Average
                                                        Available             and           Option Price
                                                        For Grant         Outstanding        Per Share
                                                        ---------         -----------        ---------
<S>                                                     <C>                 <C>                  <C>
Balance, December 31, 2002                              1,361,999           1,631,025

    Options granted                                      (495,000)            495,000            $5.18
    Exercised                                              15,412             (15,412)           $3.00
    Forfeited                                             353,100            (353,100)           $3.02
                                                        ---------           ---------
Balance, December 31, 2003                              1,235,511           1,757,513

    Options granted                                      (340,432)            340,432            $6.99
    Exercised                                             630,685            (630,685)           $3.23
    Forfeited                                             861,533            (861,533)           $3.66
                                                        ---------           ---------
Balance, December 31, 2004                              2,387,297             605,727

    Options granted                                      (933,257)            933,257           $19.42
    Exercised                                             447,535            (447,535)          $12.19
    Forfeited                                             300,132            (300,132)          $ 8.74
                                                        ---------           ---------
Balance, December 31, 2005                              2,201,707             791,317
</TABLE>


(1) In March 2003, our board of directors approved the reduction in the exercise
price of all of the outstanding stock options from $5.00 per share to $3.00 per
share.

Options exercisable at December 31:

                                             Average
                           Options        Exercise Price
                           -------        --------------
         2005              469,684           $20.71
         2004              343,140           $ 7.08
         2003              437,266           $ 3.00

Exercise prices for options outstanding as of December 31, 2005, were as
follows:

                                      F-32
<PAGE>
<TABLE>
<CAPTION>
                               Options Outstanding                     Options Exercisable
                               -------------------                     -------------------

                            Number           Weighted                          Number
                         Outstanding          Average         Weighted       Exercisable     Weighted
                            as of           Contractual       Average           as of         Average
Range of                   December            Life           Exercise        December       Exercise
Exercise Prices            31, 2005          Remaining         Price          31, 2005         Price
---------------            --------          ---------         -----          --------         -----
<S>                          <C>              <C>              <C>              <C>            <C>
     $5.00(1)                69,322           8 years           $3.00           66,823          $3.00
     $5.15                   73,663           9 years           $5.15           42,004          $5.15
     $5.65                    8,332           9 years           $5.65            4,166          $5.65
     $20.50                  20,000          10 years          $20.50           20,000         $20.50
     $23.15                 425,000          10 years          $23.15          141,691         $23.15
     $28.70                 195,000          10 years          $28.70          195,000         $28.70
</TABLE>

(1) In March 2003, our board of directors approved the reduction in the exercise
price of all of the outstanding stock options from $5.00 per share to $3.00 per
share.

13. Income Taxes

The following is a summary of the Company's deferred taxes:

<TABLE>
<CAPTION>
                                                                            December 31,
                                                                       2005             2004
                                                                       ----             ----
                                                                           (in thousands)
<S>                                                                 <C>              <C>
Net Operating Loss Carryforwards                                    $ 200,239        $ 188,107
Deferred Taxes Related to Temporary Differences:
Tangible asset bases, lives and depreciation methods                   (4,518)         (11,067)
Other                                                                  28,767           (2,967)
TerreStar Acquisition Intangible                                      (30,238)              --
                                                                    ---------        ---------
                  Total deferred tax asset, net                       194,250          174,073
Less valuation allowance                                             (194,250)        (174,073)
                                                                    ---------        ---------
Net deferred tax asset                                              $      --        $      --
                                                                    =========        =========
</TABLE>

The ultimate realization of deferred tax assets is dependant upon the generation
of future taxable income during the periods in which those temporary differences
become deducible. No benefit for federal income taxes has been recorded for the
periods ended December 31, 2005 and 2004, as the net deferred tax asset
generated, primarily from temporary differences related to the net operating
loss, was offset by a full valuation allowance because it is not considered more
likely than not that these benefits will be realized due to the Company's losses
since inception. The change in the valuation allowance for 2005 is based on the
tax effect of the availability and utilization of the Company's NOL's.

As of December 31, 2005 and 2004, the Company had estimated net operating loss
carryforwards ("NOLs") of $498 million and $468 million, respectively. In April
2002, due to the debt restructuring and reorganization, the Company has
triggered a change of control, which has limited the availability and
utilization of the NOLs. The Company's NOL's expire between 2006 and 2025.

The provisions for income taxes for the periods below differs from the amount
computed by applying the federal statutory rate due to the following:

                                      F-33
<PAGE>
<TABLE>
<CAPTION>
                                                                Year Ended December 31
                                                          2005        2004            2003
                                                          ----        ----            ----
<S>                                                       <C>          <C>            <C>
Statutory Federal income tax rate                         34.0%        34.0%          34.0%
State and local taxes, net of Federal tax benefit         6.20%        5.89%          6.14%
Permanent Differences                                    (3.04)%      (1.66)%        (0.32)%
Valuation Allowance                                     (37.16)%     (38.23)%       (39.82)%
Effective income tax rate                                   --           --             --
</TABLE>

14. Related Party Transactions

The Company incurred expenses of $13,051,000 to related parties for
service-related obligations for the year ended December 31, 2005, of that
amount, $3,621,000 was incurred to MSV for consulting services related to
TerreStar Networks, Inc. Also in 2005, $1,773,000 in cash and $7,657,000 in
stock compensation incurred to CTA, a consulting and private advisory firm
specializing in the technology and telecommunications sectors. At December 31,
2005, the Company had accrued $699,000 related to the services provided by MSV.
Also at December 31, 2005, there was a $70,000 payment-in-transit to MSV for
services included in the above amount. For the year ended December 31, 2004, the
Company made cash payments of $1,136,000 to related parties, of that amount,
Motient paid Communications Technology Advisors LLC $1,111,000 and $25,000 to
Gerald Stevens-Kittner, Esq. for consulting services.

CTA has been engaged to act as consultants to Motient. As consideration for this
work, Motient has agreed to pay to CTA a monthly fee of $100,000, which
increased from $60,000 per month in November 2005. This engagement extends to
November 30, 2006.

In the second half of 2005, by a vote of a majority of the directors, Motient
repurchased shares of common stock from several directors, Messrs. Kittner,
Singer and Steele, and Ms. St. John, which were surrendered to Motient pursuant
to the terms of their respective restricted stock grants. Motient paid a total
of $496,000 for an aggregate of 22,202 shares. In May 2005, Motient repurchased
500,000 shares of common stock from George Haywood, a holder of more than 5% of
Motient's common stock for $9,950,000.

Mr. Kittner has been designated by Motient as one of its representatives on the
board of directors of MSV, and has received stock options from such entities
commensurate with options granted to the other directors of MSV.

In February 2005, the board approved a success-based consulting fee of
$3,709,796, payable 60% to CTA and certain of its affiliates, and 40% to The
Singer Children's Management Trust, a trust established for the benefit of the
children of Gary Singer, a former lender under the 2003 Term Credit Agreement
and the brother of Steven Singer, Motient's chairman of the board. The fee was
paid in cash and stock, and was related to the closing of Motient's acquisition
of certain interests in MSV in February 2005. Such fee is equal to 1% of the
aggregate consideration paid by Motient for such MSV interests.

Certain of our directors and holders of more than 5% of our common stock
participated in our April 15, 2005 private placement of Series A Cumulative

                                      F-34
<PAGE>

Convertible Preferred Stock and the subsequent exchange offer for Series B
Preferred Stock. James D. Dondero, a director and beneficial owner of more than
5% of our common stock, purchased 90,000 shares of Series A preferred stock. In
addition, he also received warrants to purchase 33,951 shares of our common
stock at a price of $26.51 per share. The fair value of the warrants was
estimated at $849 thousand using a Black-Scholes model with volatility of 757%,
risk free rate of 2.72% and a current stock price on the date of issue of
$25.00. Various entities affiliated with James G. Dinan, a beneficial owner of
more then 5% of our common stock, purchased 10,000 shares of Series A preferred
stock and subsequently exchanged them for 10,000 shares of our Series B
preferred stock. In addition they received warrants to purchase 3,739 shares of
common stock at a price of $26.51 per share. The fair value of the warrants was
estimated at $93 thousand using a Black-Scholes model with volatility of 757%,
risk free rate of 2.72% and a current stock price on the date of issue of
$25.00.

During March 2005, Barry Williamson was appointed to Motient's Board of
Directors. Mr. Williamson was director of Tejas Securities Group, Inc. until
February 2006. He recused himself from voting on matters concerning Tejas or CTA
that came before Motient's Board of Directors. (See Note 10 "Stockholders
Equity" and Note 11 "Redeemable Preferred Stock" for a description of certain
transactions with Tejas Securities Group, Inc.).

15. Commitments And Contingencies

TerreStar Contracts

In May 2005, MSV and TerreStar entered into a management services agreement
whereby MSV agreed to provide certain services, including technical and program
management efforts associated with ATC network development, as well as
administrative support required to accomplish these tasks. This agreement may be
terminated on 60 days' notice by TerreStar. TerreStar's payment obligations
under this contract are a monthly service fee of $168,000 plus effectively
hourly fees for work performed, plus expenses. Also in May 2005, TerreStar in
connection with its perpetual, royalty-free license to utilize MSV's patent
portfolio, agreed to fund the one-half of the operating expenses of MSV's
intellectual property holding company. Such funding obligations are limited to
$1 million per year, absent TerreStar's consent.

During 2002 and in connection with its contractual obligations to TMI, TerreStar
entered into a contract to purchase a satellite system, including certain ground
infrastructure for use with the 2 GHz band. Following the reinstatement of the
TMI license in July 2004, the contract was amended resulting in a reduced
milestone payment plan. Payments of $67.5 million have been capitalized as
satellite under construction in property and equipment in the accompanying
balance sheets. The satellite manufacturer may also be entitled to certain
incentive payments based upon the performance of the satellite once in
operation. If TerreStar terminates the contract, the manufacturer shall be
entitled to payment of a termination liability as prescribed in the contract.
The termination liability is equal to amounts that would have otherwise been due
on milestones scheduled within 30 days following notice of termination by
TerreStar. The satellite represents one component of a communications system
that will include ground-switching infrastructure, launch costs, and insurance.

                                      F-35
<PAGE>

TerreStar Satellite

As of December 31, 2005, we had the following outstanding cash contractual
commitments related to the satellite construction contract with Space
Systems/Loral and the ground-based satellite beam access subsystem contract with
Hughes Network Systems, LLC. This satellite is scheduled to be completed in
November 2007.
<TABLE>
<CAPTION>

                                                                                                                     More than 5
                                                Total             <1 Year           1-3 Years        3-5 Years          Years
                                           ----------------    ---------------    --------------    -------------    -------------
<S>                                        <C>                        <C>                <C>                 <C>              <C>
(in thousands)
TerreStar Satellite                        $       166,000            125,000            41,000               --               --
</TABLE>


For further information on TerreStar commitments and contingencies, see Note 20,
"Subsequent Events".

CTA

In November 2005, Motient entered into a consulting agreement with CTA. Motient
is obligated to pay $100,000 per month until November 2006, unless the contract
is earlier terminated by Motient in connection with a change of control of
Motient.

UPS Prepayment Agreement

In December 2002, Motient entered into an agreement with UPS pursuant to which
UPS prepaid an aggregate of $5 million in respect of network airtime service to
be provided beginning January 1, 2004. In April 2005, this agreement was
amended, and then in September 2005, the agreement was amended again. Motient
made a payment of $2.0 million to UPS, and in exchange, all but $0.6 million of
the outstanding prepayment of $3.7 million was terminated. The remaining $0.6
million prepayment must be used by UPS prior to March 31, 2006. If not used, UPS
will forfeit this prepayment, and it will not be repaid. The prepayment balance
was $0.4 million on December 31, 2005.

Operating Leases

The Company leases substantially all of its base station sites through operating
leases. The majority of these leases provide for renewal options for various
periods at their fair rental value at the time of renewal. In the normal course
of business, the operating leases are generally renewed or replaced by other
leases. Additionally, the Company leases certain facilities and equipment under
arrangements accounted for as operating leases. Certain of these arrangements
have renewal terms. Total rent expense, under all operating leases, approximated
$11 million for the year ended December 31, 2005, $13.9 million for the year
ended December 31, 2004, $15.2 million for the year ended December 31, 2003.

                                      F-36
<PAGE>

At December 31, 2005, minimum future lease payments under noncancelable
operating leases are as follows:

                                                          Operating
                                                          ---------
                                                      (in thousands)
                    2006                                    $3,975
                    2007                                     3,175
                    2008                                     1,951
                    2009                                     1,506
                    2010                                     1,319
                    2011 and thereafter                        ---
                                                           -------
                    Total                                  $11,926
                                                           =======

Change of Control Agreements

Pursuant to the Plan of Reorganization, Motient entered into a change of control
agreement, effective May 1, 2002, with each of Ms. Peterson, Mr. Crawford and
eight other vice presidents of Motient. Under the agreements, each officer is
eligible to receive one year of their annual base salary (excluding cash bonus)
in the event that both (x) a "change in control" or an anticipated "change in
control," as defined in the change of control agreement, has occurred and (y)
the employee is terminated or his or her compensation or responsibilities are
reduced. The events constituting a "change of control" generally involve the
acquisition of greater than 50% of the voting securities of Motient, as well as
certain other transactions or events with a similar effect.

On November 21, 2005, Motient entered into employment agreements with each of
Mr. Downie, Ms. Newman and Mr. Macklin. The agreements provide for annual
salaries of $240,000, $150,000 and $175,000, annual cash bonuses of up to 50%,
35% and 35%, and grants of 125,000, 15,000, and 15,000 shares of restricted
common stock, respectively. The restricted stock grant and 176,664 unvested
stock options will vest upon the consummation of a change of control. Ms.
Newman's and Mr. Macklin's employment agreements provide for a severance payment
of up to two year's salary, bonus and benefits value upon termination by the
company without cause, or upon termination by the employee for good reason. The
severance amount payable to either Ms. Newman or Mr. Macklin decreases by one
month's pay for each month such employee is employed after November 2005, to a
minimum severance payment of one year's salary. Mr. Downie's severance payment
is equivalent to eighteen months' of his salary, bonus and benefit value. The
agreements were subsequently amended. See Note 20, "Subsequent Events."

16. Fair Value of Financial Instruments

The carrying amount for cash and cash equivalents, short-term investments,
accounts receivable, non-trade receivables included in other assets, accounts
payable and accrued expenses, and deferred revenues approximates their fair
values. For debt issues that are not quoted on an exchange, interest rates

                                      F-37
<PAGE>

currently available to the Company for issuance of debt with similar terms and
remaining maturities are used to estimate fair value. The fair value of the
Company's equity investment in MSV was determined by an independent third-party
valuation performed as part of Company's preparation of its December 31, 2003
financial statements. The fair value of the notes receivable from MSV
approximated its carrying value as of December 31, 2003. These notes receivable
were exchanged into equity of MSV as part of the Company's investment in MSV in
November 2004. Given the investment transaction by Motient into MSV in November
2004, the fair value of the Company's equity investment in MSV was determined by
the carrying amount of the Company's investment in MSV and adjusted for the
Company's change in ownership interest upon the conversion of the notes.

<TABLE>
<CAPTION>
                              As of December 31, 2005         As of December 31, 2004
                              -----------------------         -----------------------
                              Carrying                        Carrying
                               Amount        Fair Value        Amount      Fair Value
                               ------        ----------        ------      ----------
<S>                        <C>            <C>                   <C>          <C>
(in thousands)
Assets:
Restricted investments     $  110,191     $   110,191         $    76       $    76
Investment in MSV             496,208         496,208         141,635       141,635
</TABLE>

17. Employee Benefits

Defined Contribution Plan

The Company sponsored a 401(k) defined contribution plan ("401(k) Savings Plan")
in which all employees of Motient could participate. The 401(k) Savings Plan
provided for (i) a Company match of employee contributions, in the form of
common stock, at a rate of $1 for every $1 of an employee's contribution not to
exceed 4% of an employee's eligible compensation, (ii) a discretionary annual
employer non-elective contribution, (iii) the option to have plan benefits
distributed in the form of installment payments and (iv) the reallocation of
forfeitures, if any, to active participants. The Company's matching expense was
$0.3 million for 2005, $0.2 million for 2004 and $0.4 million for 2003. During
2002, the Company authorized 200,000 shares for the 401(K) Savings Plan.

18. Legal Matters

On August 16, 2005, Highland Legacy Limited, a stockholder of Motient and
affiliate of former director James Dondero,, filed suit in the Court of Chancery
of the State of Delaware in and for New Castle County against: Motient; Steven
Singer, Gerald Kittner, Barry Williamson, Raymond Steele and Gerald Goldsmith,
directors of Motient; Peter D. Aquino, a former director of Motient; Christopher
Downie, Chief Operating Officer of Motient; Gary Singer; Tejas Inc.; Tejas
Securities, Inc.; Communications Technology Advisors LLC; Capital & Technology
Advisors, Inc.; and Jared Abbruzzese. Highland Legacy Limited is an affiliate of
James Dondero, a former director of Motient. The lawsuit alleges breaches of
duties allegedly owed to Motient by the defendants and seeks the recovery of
fees from certain of these parties relating to prior transactions with Motient.
Most of these fees were approved by Mr. Dondero in his capacity as a director of
Motient. The defendants in this lawsuit filed a motion to dismiss these claims

                                      F-38
<PAGE>

on October 14, 2005. Motient's independent audit committee, along with
independent special counsel, has conducted an investigation of Mr. Dondero's
allegations and has found no basis to his allegations.

On August 16, 2005, Highland Equity Focus Fund, L.P., Highland Crusader Offshore
Partners, L.P., Highland Capital Management Services, Inc., and Highland Capital
Management, L.P., affiliates of James Dondero, a former director of Motient,
filed a lawsuit in Dallas County, Texas against Motient challenging the validity
of the Series A Preferred on the basis of the confusion regarding the voting
rights of the Series A Preferred and seeking rescission of their purchase of the
shares of Series A Preferred that they purchased from Motient in the private
placement in April 2005. These entities acquired 90,000 shares of Series A
Preferred for a purchase price of $90 million in that private placement. Motient
issued the Series A Preferred in a private placement on April 15, 2005. As
originally proposed, the Series A Preferred would have voted along with
Motient's common stock on all matters on an as-converted basis. During
negotiations with respect to the Series A Preferred, certain investors included
among the plaintiffs requested that the voting rights of the Series A Preferred
be limited so that these investors would not be required to file applications
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
("HSR"). Motient agreed to limit the voting rights of the Series A Preferred to
the extent appropriate so that these investors would not be required to file HSR
applications. However, due to a mistake, the voting rights were incorrectly
stated in the Certificate of Designations for the Series A Preferred as
originally filed with the Secretary of State of Delaware. Upon discovering this
mistake, Motient promptly filed a Certificate of Corrections with the Secretary
of State of Delaware to correctly state the voting rights of the Series A
Preferred. Motient's Certificate of Incorporation contains a provision that
prohibits the issuance by Motient of "non-voting stock". Motient believes that
this claim is without merit and intends to vigorously defend this lawsuit.

On October 7, 2005, Highland Equity Focus Fund, L.P., Highland Crusader Offshore
Partners, L.P., Highland Capital Management Services, Inc., Highland Capital
Management, L.P., affiliates of James Dondero, a former director of Motient, on
behalf of themselves and all those similarly situated, filed a class action
lawsuit in the Court of Chancery of the State of Delaware against Motient and
each of its directors, other than Mr. Dondero, alleging that Motient has
provided inadequate information to the holders of Series A Preferred relating to
the Exchange Offer for the Series A Preferred, and that the Exchange Offer is
coercive. These parties have also requested that the court enjoin the Exchange
Offer. The Exchange Offer closed on October 26, 2005, mooting the claim.

On October 19, 2005, Motient Corporation filed two lawsuits against James D.
Dondero, one in the United States District Court for the Northern Division of
Texas, and one in the District Court of Dallas County, Texas. The complaint
filed in state court alleges that Mr. Dondero has seriously and repeatedly
breached his fiduciary duties as a director of Motient in order to advance his
own personal interests. The complaint filed in Federal court alleges selective
disclosure of material inside information and other improper actions undertaken
by Mr. Dondero, the net result of which have been to drive down the price of
Motient's stock. It also alleges that Mr. Dondero has solicited, and is still
soliciting, the replacement of Motient's current board and management in
violation of federal law.

                                      F-39
<PAGE>

From time to time, Motient is involved in legal proceedings in the ordinary
course of its business operations. Although, there can be no assurance as to the
outcome or effect of any legal proceedings to which Motient is a party, Motient
does not believe, based on currently available information, that the ultimate
liabilities, if any arising from any such legal proceedings not otherwise
disclosed would have a material adverse impact on its business, financial
condition, results of operations or cash flows.


                                      F-40
<PAGE>


19. Supplemental Cash Flow Information

Supplemental cash flows information for the three years ended December 31 is
presented in the following table (in thousands):

<TABLE>
<CAPTION>
                                                        2005                2004             2003
                                                        ----                ----             ----
<S>                                                  <C>                <C>              <C>
Cash payments for interest                           $      --          $   3,144         $    572
Cash payment for income taxes                               --                 --               --

Non-cash investing and financing activities:

Accrued Satellite under construction                    59,771                 --               --
Issuance and re-pricing of common stock
purchase warrants                                       61,070             26,672           10,024
Financing fees added to term credit facility                --                320               --
Amortization of deferred financing fees
related to Series A Cumulative Convertible
Preferred Stock                                          2,409                 --               --
Dividends payable on Series A and Series B
Cumulative Convertible Preferred Stock                  16,717                 --               --
Issuance of common stock                               370,980                 --               --
Exercise and Expiration of common stock
warrants                                               (10,060)           (13,575)              --

Step up of TerreStar intangible assets                  78,377                 --               --
Issuance of Common Stock under the Defined
Contribution Plan                                           --                 --              280
SAB 51 pick-up                                       $      --          $   7,993         $     --
</TABLE>


                                      F-41
<PAGE>

20. Subsequent Events

On January 30, 2006 $59,045,600 was released from the Restricted Cash for Loral
Satellite account which represented all invoiced amounts due and payable to
Loral through January 25, 2006.

In January 2006, TerreStar entered into a contract with Hughes Networks Systems
to build a ground component of its integrated communications system. The
contract calls for payments over time of up to approximately $38 million,
excluding any optional services or components TerreStar elects to purchase.

In the first quarter of 2006, TerreStar granted options to purchase 450,000
shares at a price of $24.42 per share to newly hired employees.

On February 14, 2006, James D. Dondero resigned from Motient's board of
directors. On the same day, certain entities which he controlled that are
Motient shareholders announced their intent to solicit the replacement of
Motient's board.

On February 27, 2006, Motient named two new directors to its board, David
Meltzer and David Grain.

On March 9, 2006 the Company amended its November 21, 2005 employment agreements
with Mr. Downie, Ms. Newman and Mr. Macklin. The amendments were made to clarify
certain provisions relating to events triggered by a change of control.

On March 17, 2006, the Court of Chancery of the State of Delaware in and for New
Castle County dismissed the suit filed by Highland Legacy Limited on August 16,
2005, a stockholder of Motient and affiliate of former director James Dondero.
The court found that the plaintiff had failed to alleges facts indicating that
the defendant directors of Motient lacked independence or that the challenged
transactions were not a valid exercise of their business judgment.

In March 2006, the TerreStar Board of Directors authorized a $5 million capital
contribution to its wholly-owned subsidiary TerreStar Networks Bermuda Ltd.
(TerreStar Bermuda), and TerreStar Bermuda was subsequently spun-off by
TerreStar on a pro-rata basis to its shareholders, including Motient. TerreStar
Bermuda has no material assets or liabilities other than the cash capital
contribution.

                                      F-42
<PAGE>

21. Quarterly and Other Financial Data (unaudited)

                            QUARTERLY FINANCIAL DATA
                (dollars in thousands, except for per share data)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                       2004-Quarters
                                                                       -------------
                                                         3/31/04    6/30/04     9/30/04    12/31/04
                                                         -------    -------     -------    --------

<S>                                                      <C>        <C>          <C>         <C>
Revenues                                                 $ 11,500   $ 11,439    $  8,353     $  5,588
Operating expenses (1)                                     21,674     23,471      14,583       23,739
                                                          -------    -------      ------      -------
Loss from operations                                      (10,174)   (12,032)     (6,230)     (18,151)

Net loss                                                 $(13,517)  $(23,112)   $ (9,849)    $(25,851)
Basic and Diluted Loss Per Share of common stock (2)     $  (0.54)  $  (0.79)   $  (0.29)    $  (0.62)
Weighted-average common shares outstanding during the
period                                                     25,232     29,338      33,418       41,944
Market price per share (3)
   High                                                  $   7.45   $  14.01    $  13.75     $  23.95
   Low                                                   $   4.05   $   6.15    $   8.40     $   8.95
</TABLE>

<TABLE>
<CAPTION>

                                                                       2005-Quarters
                                                                       -------------
                                                            3/31/05       6/30/05        9/30/05      12/31/05
                                                         (as restated) (as restated)  (as restated)
                                                         ------------- -------------  ------------- -------------

<S>                                                        <C>           <C>            <C>           <C>
Revenues                                                   $  5,013      $  3,545       $  3,163      $  2,103
Operating expenses (1)                                       26,465        21,399         17,863        74,276
                                                            -------      --------        -------       -------
Loss from operations (2)                                    (21,452)      (17,854)      (14,700)      (72,173)

Net loss                                                    (31,139)      (20,289)      (13,439)      (74,414)
Net loss available to Common Stockholders                   (31,139)      (25,778)      (20,118)      (81,372)
Basic and Diluted Loss Per Share of common stock           $  (0.52)     $  (0.40)     $  (0.32)     $  (1.30)
Weighted-average common shares outstanding during
the period                                                   59,580        63,762         62,464        62,445
Market price per share (3)
   High                                                    $  33.40      $  28.50       $  26.25      $  23.60
   Low                                                     $  20.50      $  16.45       $  19.65      $  13.75
</TABLE>

(1) In 2004, $1.1million and $5.2 million in restructuring expenses were charged
    to costs and expenses in the first and second quarters, respectively. Of the
    $6.3 million restructuring expense in 2004, $5.0 million was paid in 2004
    and $1.0 million was paid in 2005. In 2005, $0.1 and $5.6 million in
    restructuring expenses were charged to costs and expenses in the first and
    second quarters, respectively. Of the $5.7 million restructuring expense in
    2005, $4.8 million was paid in 2005.
(2) Loss per share calculations for each of the quarters are based on the
    weighted average number of shares outstanding for each of the periods, and
    the sum of the quarters is not equal to the full year loss per share amount
    due to rounding.
(3) The Company's common stock is currently traded under the symbol MNCP on the
    Pink Sheets. The quarterly high and low sales price represents the high and
    low bid prices in the Nasdaq Stock Market for the Company's
    pre-reorganization common stock for the periods indicated for 2002 and the
    high and low bid prices for Motient pre- and post-reorganization common
    stock for the periods indicated. The quotations represent inter-dealer
    quotations, without retail markups, markdowns or commissions, and may not
    necessarily represent actual transactions. As of December 31, 2005, there
    were approximately 17 stockholders of record of the Company's common stock.

                                      F-43
<PAGE>

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 2003, 2004 and 2005
<TABLE>
<CAPTION>

                                                              Charged
                                                Balance at    to Costs
                                                 Beginning      and                        Balance at End of
Description                                      of Period    Expenses       Deductions         Period
-----------                                      ---------    --------       ----------         ------
<S>                                               <C>         <C>           <C>               <C>
Year Ended December 31, 2003
       Allowance for doubtful accounts            $1,003      $  194         $ (438)           $  759
Year Ended December 31, 2004
       Allowance for doubtful accounts            $  759      $ (269)        $ (234)           $  256
Year Ended December 31, 2005
       Allowance for doubtful accounts            $  256      $ (140)        $  (61)           $   55
</TABLE>


<TABLE>
<CAPTION>
                                                              Charged
                                                 Balance at   to Costs
                                                 Beginning      and                         Balance at End of
Description                                      of Period    Expenses       Deductions         Period
-----------                                      ---------    --------       ----------         ------
<S>                                               <C>         <C>           <C>                <C>
Year Ended December 31, 2003
       Allowance for Obsolescence                 $ 9,551     $   199       $(2,000)           $ 7,750
Year Ended December 31, 2004
       Allowance for Obsolescence                 $ 7,750     $  (132)      $(7,618)           $    --
Year Ended December 31, 2005
       Allowance for Obsolescence                 $    --     $    --       $    --            $    --
</TABLE>

                                      F-44

<PAGE>


                         Report of Independent Auditors

General Partner and Unit Holders
Mobile Satellite Ventures LP

         We have audited the accompanying consolidated balance sheets of Mobile
Satellite Ventures LP (a Delaware limited partnership) (the Company) as of
December 31, 2004 and 2005, and the related consolidated statements of
operations, partners' equity (deficit), and cash flows for each of the three
years in the period ended December 31, 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. We were not engaged to perform an audit of
the Company's internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the Company's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Mobile
Satellite Ventures LP at December 31, 2004 and 2005, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2005, in conformity with accounting principles
generally accepted in the United States.

         As discussed in Note 2 to the consolidated financial statements, in
2005 the Company adopted Financial Accounting Standards Board Interpretation No.
46, Consolidation of Variable Interest Entities.

                                                           /s/ Ernst & Young LLP

McLean, Virginia
February 22, 2006

                                      M-1

<PAGE>

                          Mobile Satellite Ventures LP
                           Consolidated Balance Sheets
                                 (In Thousands)
<TABLE>
<CAPTION>

                                                                                                             December 31
                                                                                                             -----------
                                                                                                          2004         2005
                                                                                                          ----         ----
<S>                                                                                                     <C>           <C>
Assets
Current assets:
  Cash and cash equivalents.......................................................................      $129,124      $59,925
  Investments.....................................................................................            --       52,278
  Restricted cash.................................................................................            75        1,664
  Accounts receivable, net of allowance of $70 and $103...........................................         3,344        3,370
  Management fee due from TerreStar...............................................................            --          769
  Inventory.......................................................................................           698          710
  Prepaid expenses and other current assets.......................................................           782        1,090
  TerreStar assets, discontinued..................................................................         5,955           --
Total current assets..............................................................................       139,978      119,806
Restricted cash, long-term........................................................................            --        4,600
Property and equipment, net.......................................................................        14,054       10,600
Intangible assets, net............................................................................        71,506       61,958
Goodwill..........................................................................................        16,495       16,936
Other assets......................................................................................            85        2,884
TerreStar assets, discontinued....................................................................         4,105           --
Total assets......................................................................................      $246,223     $216,784
Liabilities and partners' equity
Current liabilities:
  Accounts payable and accrued expenses...........................................................        $6,171       $6,974
  Vendor note payable, current portion............................................................           206          225
  Deferred revenue, current portion...............................................................         4,882        4,538
  Other current liabilities.......................................................................            65           74
  TerreStar liabilities, discontinued.............................................................           549           --
Total current liabilities.........................................................................        11,873       11,811
Deferred revenue, net of current portion..........................................................        20,690       23,243
Vendor note payable, net of current portion.......................................................           696          470
Total liabilities.................................................................................        33,259       35,524
Commitments and contingencies
Partners' equity:
  MSV general partner.............................................................................            --           --
  MSV limited partners............................................................................       217,643      186,803
  Deferred compensation...........................................................................        (4,185)      (4,420)
  Accumulated other comprehensive loss............................................................          (494)      (1,123)
Total partners' equity............................................................................       212,964      181,260
Total liabilities and partners' equity............................................................      $246,223     $216,784
</TABLE>
                             See accompanying notes.



                                      M-2
<PAGE>

                          Mobile Satellite Ventures LP
                      Consolidated Statements of Operations
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                                 Year ended December 31
                                                                                                 ----------------------
                                                                                             2003          2004          2005
                                                                                             ----          ----          ----
<S>                                                                                       <C>           <C>           <C>
Revenues:
  Services and related revenues..................................................         $25,536       $26,664       $27,200
  Equipment sales and other revenues.............................................           1,588         2,343         2,181
Total revenues...................................................................          27,124        29,007        29,381
Operating expenses:
  Satellite operations and cost of services (exclusive of depreciation and
    amortization shown separately below).........................................          15,640        16,618        14,264
  Next generation expenditures (exclusive of depreciation and amortization shown
    separately below)............................................................           4,268         8,593        18,516
  Sales and marketing............................................................           1,973         4,762         4,093
  General and administrative.....................................................           4,319         7,350        15,552
  Depreciation and amortization..................................................          17,928        18,439        16,109
Total operating expenses.........................................................          44,128        55,762        68,534
Loss from continuing operations before other income (expense)....................         (17,004)      (26,755)      (39,153)
Other income (expense):
  Rights and services fee from MSV Canada........................................           3,200         3,568            --
  Equity in losses of MSV Canada.................................................          (1,030)         (275)           --
  Interest income................................................................              41           442         3,490
  Interest expense...............................................................          (9,616)       (8,551)         (145)
  Management fee from TerreStar..................................................              --            --         3,621
  Other income, net..............................................................             737            55            61
  Loss from continuing operations before cumulative effect of change in accounting
    principle....................................................................         (23,672)      (31,516)      (32,126)
  Loss from TerreStar discontinued operations....................................          (4,328)       (1,939)       (9,553)
  Loss before cumulative effect of change in accounting principle................         (28,000)      (33,455)      (41,679)
  Cumulative effect of change in accounting principle............................              --            --           724
Net loss.........................................................................        $(28,000)     $(33,455)     $(40,955)
</TABLE>
                             See accompanying notes.


                                      M-3
<PAGE>

                          Mobile Satellite Ventures LP
              Consolidated Statements of Partners' Equity (Deficit)
                     (In Thousands, except number of units)

<TABLE>
<CAPTION>
                            General Partner      Limited Partners
                            ---------------      ----------------
                                                                                        Accumulated      Total
                                                                                              Other  Partners'
                           Number of            Number of                  Deferred   Comprehensive  Equity      Comprehensive
                               Units   Amount       Units     Amount   Compensation   Income (Loss)  (Deficit)            Loss
                               -----   ------       -----     ------   ------------   -------------  ---------            ----

<S>                              <C>    <C>    <C>         <C>                <C>               <C>    <C>           <C>
Balance, December 31, 2002        --     $ --  16,642,732  $  23,259       $     --         $     7  $  23,266
  Issuance of MSV Class A
    Preferred Units.....          --       --     573,951      3,700             --              --      3,700
  Net loss..............          --       --          --    (28,000)            --              --    (28,000)      $ (28,000)
  Change in market value
    of derivative
    instruments.........          --       --          --         --             --              82         82              82
  Foreign currency
    translation adjustment        --       --          --         --             --             (32)       (32)            (32)
Balance, December 31, 2003        --       --  17,216,683     (1,041)            --              57       (984)
Total, year ended
  December 31, 2003.....                                                                                             $ (27,950)
  Issuance of MSV Class A
    Preferred Units.....          --       --   2,735,317     17,633             --              --     17,633
  Conversion of Notes...          --       --   9,911,234     84,922             --              --     84,922
  Issuance of MSV Common
    Units...............          --       --   4,923,599    145,000             --              --    145,000
  Issuance of stock
    options.............          --       --          --      4,680         (4,680)             --         --
  Amortization of
    deferred compensation         --       --          --         --            495              --        495
  Distribution of warrant
    in subsidiary.......          --       --          --        (96)            --              --        (96)
  Net loss..............          --       --          --    (33,455)            --              --    (33,455)      $ (33,455)
  Change in market value
    of derivative
    instruments.........          --       --          --         --             --             (45)       (45)            (45)
  Foreign currency
    translation adjustment        --       --          --         --             --            (506)      (506)           (506)
Balance, year ended
  December 31, 2004.....          --       --  34,786,833    217,643         (4,185)           (494)    212,964
Total, year ended
  December 31, 2004.....                                                                                             $ (34,006)
  Issuance of stock
    options.............          --       --          --      8,717         (8,717)             --         --
  Amortization of
    deferred compensation         --       --          --         --          8,369              --      8,369
  Distribution to unit
    holders for TerreStar         --       --          --        869            113              --        982
  Exercise of employee
    options.............          --       --      86,852        529             --                        529
  Net loss..............          --       --          --    (40,955)            --              --    (40,955)      $ (40,955)
  Change in market value
    of derivative
    instruments.........          --       --          --         --             --             (37)       (37)            (37)
  Foreign currency
    translation adjustment        --       --          --         --             --            (592)      (592)           (592)
Balance, December 31, 2005        --     $ --  34,873,685  $ 186,803       $ (4,420)        $(1,123) $ 181,260
Total, year ended
  December 31, 2005.....                                                                                             $ (41,584)
</TABLE>
                             See accompanying notes.

                                      M-4
<PAGE>

                          Mobile Satellite Ventures LP
                      Consolidated Statements of Cash Flows
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                                    Year ended December 31
                                                                                                    ----------------------
                                                                                                 2003        2004        2005
                                                                                                 ----        ----        ----
<S>                                                                                         <C>         <C>         <C>
Operating activities
Net loss..............................................................................       $(28,000)   $(33,455)   $(40,955)
Loss from TerreStar discontinued operations...........................................          4,328       1,939       9,553
Loss from continuing operations.......................................................        (23,672)    (31,516)    (31,402)
Adjustments to reconcile net loss to net cash provided by (used in) operating
  activities:
  TerreStar discontinued operations...................................................         (1,755)     (7,236)        113
  Cumulative effect of change in accounting principle.................................             --          --        (724)
  Depreciation and amortization.......................................................         17,928      18,439      16,109
  Equity in losses of MSV Canada......................................................          1,030         275          --
  Amortization of deferred compensation...............................................             --         495       8,369
  Changes in operating assets and liabilities:
    Accounts receivable...............................................................         (1,062)        917          53
    Management fee due from TerreStar.................................................             --          --        (769)
    Inventory.........................................................................            712         708         (12)
    Prepaid expenses and other assets.................................................           (938)        333      (3,478)
    Accounts payable and accrued expenses.............................................            307       2,765         672
    Other current liabilities.........................................................           (752)       (120)          9
    Accrued interest..................................................................          7,385     (12,589)         --
    Deferred revenue..................................................................          1,274      (2,677)       (988)
Net cash provided by (used in) operating activities...................................            457     (30,206)    (12,048)
Investing activities
Purchase of Motient Satellite business, net of cash acquired..........................         (2,200)         --          --
Purchase of property and equipment....................................................           (967)       (344)       (294)
Purchase of intangible assets and other assets........................................             --        (500)         --
Restricted cash.......................................................................            579          (1)     (6,134)
Purchase of investments...............................................................             --          --     (52,278)
Investing activities of TerreStar discontinued operations.............................         (1,944)     (3,791)         --
Net cash used in investing activities.................................................         (4,532)     (4,636)    (58,706)
Financing activities
Proceeds from issuance of Class A Preferred Units.....................................          3,700      17,633          --
Proceeds from issuance of Common Units................................................             --     145,000         529
Principal payment on notes payable to investors.......................................         (1,575)     (2,370)         --
Principal payment on vendor note payable..............................................             --          --       (206)
Financing activities of TerreStar discontinued operations.............................             --           4          --
Net cash provided by financing activities.............................................          2,125     160,267         323
Effect of exchange rates on cash and cash equivalents.................................            134         (66)      1,232
Net (decrease) increase in cash and cash equivalents..................................         (1,816)    125,359     (69,199)
Cash and cash equivalents, beginning of period........................................          5,581       3,765     129,124
Cash and cash equivalents, end of period..............................................       $  3,765    $129,124    $ 59,925
Supplemental information
Cash paid for interest................................................................       $  2,125    $ 21,395    $    102
Distribution of TerreStar.............................................................       $     --    $     --    $    869
Non-cash financing information
Equipment obtained through issuance of vendor note....................................         $1,029    $     --    $     --
Conversion of Notes...................................................................       $     --    $  84,922   $     --
</TABLE>
                             See accompanying notes.

                                      M-5
<PAGE>

                          Mobile Satellite Ventures LP
                   Notes to Consolidated Financial Statements
                                December 31, 2005

1.  Organization and Business

         Mobile Satellite Venture LP's predecessor company, Motient Satellite
Ventures LLC, was organized as a limited liability company pursuant to the
Delaware Limited Liability Company Act on June 16, 2000, by Motient Corporation
(Motient). On December 19, 2000, Motient Satellite Ventures LLC changed its name
to Mobile Satellite Ventures LLC (MSV LLC). On November 26, 2001, MSV LLC was
converted into a limited partnership, Mobile Satellite Ventures LP (MSV or the
Company), subject to the laws of the state of Delaware. Concurrent with such
conversion, the Company acquired certain assets and liabilities of the Motient
and TMI Communications LP (TMI) satellite businesses. In connection with its
purchase of TMI's satellite business, the Company acquired a 20% equity interest
in Mobile Satellite Ventures (Canada) Inc. (MSV Canada) and a 33 (1)/3% equity
interest in Mobile Satellite Ventures Holdings (Canada) Inc. (MSV Canada
Holdings). In February 2002, the Company established TerreStar Networks Inc.
(TerreStar), a wholly owned subsidiary, to develop business opportunities
related to the planned receipt of certain licenses in the S-band radio frequency
band (see Note 10). On May 11, 2005, holders of the Company's Limited
Partnership units exercised previously distributed rights to acquire all of the
shares of TerreStar owned by the Company. As a result of this transaction,
TerreStar is no longer a subsidiary of the Company. The assets and liabilities
and operating performance of the TerreStar business are classified as TerreStar
discontinued operations in the accompanying consolidated financial statements
(see Note 10).

         The Company provides mobile satellite and communications services to
individual and corporate customers in the United States and Canada via its own
satellite and leased satellite capacity. The Company's operations are subject to
significant risks and uncertainties including technological, competitive,
financial, operational, and regulatory risks associated with the wireless
communications business. Uncertainties also exist regarding the Company's
ability to raise additional debt and equity financing and the ultimate
profitability of the Company's proposed next generation integrated network. The
Company will require substantial additional capital resources to construct its
next generation integrated network.

         The Company's current operating assumptions and projections, which
reflect management's best estimate of future revenue, capital commitments, and
operating expenses, indicate that anticipated operating expenditures through
2006 can be met by cash flows from operations and available working capital;
however, the Company's ability to meet its projections is subject to
uncertainties, and there can be no assurance that the Company's current
projections will be accurate. If the Company's cash requirements are more than
projected, the Company may require additional financing.

         The type, timing, and terms of financing, if required, selected by the
Company will be dependent upon the Company's cash needs, the availability of
financing sources, and the prevailing conditions in the financial markets. There
can be no assurance that such financing will be available to the Company at any
given time or available on favorable terms.

                                      M-6
<PAGE>

                          Mobile Satellite Ventures LP
                   Notes to Consolidated Financial Statements

2.  Significant Accounting Policies

Basis of Presentation

         The consolidated financial statements as of December 31, 2004 and 2005,
and for the years ended December 31, 2003 and 2004, include the accounts of the
Company and its majority owned subsidiaries prepared in accordance with
accounting principles generally accepted in the United States (GAAP). The
consolidated financial statements as of December 31, 2005 include the accounts
of the Company and its majority-owned subsidiaries and all variable interest
entities for which the Company is the primary beneficiary, in accordance with
GAAP. All intercompany accounts are eliminated upon consolidation.

Use of Estimates

         The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Significant estimates
affecting the consolidated financial statements include management's judgments
regarding the allowance for doubtful accounts, reserves for inventory, future
cash flows expected from long-lived assets, accrued expenses, and the fair value
of the Company's partnership units for purposes of accounting for options.
Actual results could differ from those estimates.

Cash and Cash Equivalents

         Cash and cash equivalents include investments such as money market
accounts with an original maturity of three months or less.

Investments

         The Company's investments are all either United States Treasury
securities or obligations of United States government agencies, with original
maturities of not more than 12 months. All of the Company's investments are
considered held-to-maturity and are reported at amortized cost. The following is
a summary of our held-to-maturity securities (in thousands):

<TABLE>
                                                                December 31
                                                                       2005
                                                                       ----
<S>                                                                 <C>
Amortized cost and net carrying amount..........................    $52,278
Gross unrealized loss...........................................        (57)
Estimated fair value............................................    $52,221
</TABLE>

Restricted Cash

         In connection with the purchase of the satellite business in 2001, the
Company retained a portion of the purchase price, which was restricted to pay
Motient's rent obligation to the Company for the lease of office space in the
Company's headquarters and to ensure the provision of certain services to the
Company by Motient under a transition services agreement. During the year ended
December 31, 2003, approximately $531,000 was used to satisfy Motient's
obligations under its sublease with the Company, and approximately $51,000 was
remitted to Motient for services provided to MSV. As of December 31, 2004, the
restricted cash balance for this purpose was $74,000. During March, 2005, all
obligations under this transition services agreement were satisfied and all
remaining funds were released to Motient and MSV.

         On January 10, 2005, and on May 23, 2005, the Federal Communication
Commission's (FCC) International Bureau authorized MSV to launch and operate new
L-Band mobile satellite services (MSS) systems that will occupy orbital
locations that are in addition to the Company's existing orbital slots, and
satellites. The International Bureau requires all grants for new systems to be
supported by a performance bond. In accordance with this requirement, the
Company secured a five-year, $3.0 million bond for each satellite system. The
bonds are fully collateralized by a $3.0 million letter of credit for each bond,
secured by $6.0 million cash on deposit, which is reflected as restricted cash
in the accompanying consolidated balance sheet as of December 31, 2005.

                                      M-7
<PAGE>

Inventory

         Inventories consist of finished goods that are communication devices
and are stated at the lower of cost or market, average cost method. The Company
periodically assesses the market value of its inventory, based on sales trends
and forecasts and technological changes, and records a charge to current-period
income when such factors indicate that a reduction in net realizable value has
occurred.

Property and Equipment

         Property and equipment acquired in business combinations are recorded
at their estimated fair value on the date of acquisition. Purchases of property
and equipment are recorded at cost. Depreciation is computed using the
straight-line method over estimated useful lives, ranging from three to ten
years. The Company capitalized $1.8 million related to a ground station to which
it does not yet hold legal title. Title will pass to the Company upon completion
of all payments for that equipment under the related vendor note payable (see
Note 5). As of December 31, 2005 the cost, net of accumulated depreciation
related to this equipment, was $1.4 million. During the year ended December 31,
2004, MSV initiated inclined orbit of the MSAT-2 satellite, effectively
extending its fuel life. In March 2005, the Company completed a formal
evaluation of the impact of this action and concluded that the satellite's
useful life had been extended by approximately five years to December 2010. The
depreciable life of this satellite was extended by five years on a prospective
basis. This change in estimate decreased the net loss for the year ended
December 31, 2005, by approximately $4.1 million.

         Leasehold improvements are amortized over the shorter of the estimated
useful life of the asset or the remaining lease term.

Long-Lived Assets

         In accordance with Statement of Financial Accounting Standards (SFAS)
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the
Company reviews its long-lived assets, including property and equipment and
intangible assets other than goodwill, whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. To determine the recoverability of its long-lived assets, the
Company evaluates the probability that future estimated undiscounted net cash
flows will be less than the carrying amount of the assets. If such estimated
cash flows are less than the carrying amount of the long-lived assets, then such
assets are written down to their fair value. No impairment charges were recorded
related to the continuing operations of the Company in the years ended December
31, 2003, 2004, or 2005. The Company's estimates of anticipated cash flows and
the remaining estimated useful lives of long-lived assets could be reduced
significantly in the future. As a result, the carrying amount of long-lived
assets may be reduced in the future.

Goodwill

         SFAS No. 142, Goodwill and Other Intangible Assets, requires the use of
a non-amortization approach to account for purchased goodwill. Under a
non-amortization approach, goodwill is not amortized into results of operations,
but instead is reviewed for impairment and written down and charged to results
of operations only in the periods in which the recorded value of goodwill is
determined to be more than its estimated fair value. The Company performs its
annual impairment test on December 31 or when certain triggering events occur.
No impairment charges were recorded in the years ended December 31, 2003, 2004,
or 2005.

Concentrations of Credit Risk

         Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents,
investments, and accounts receivable. The Company maintained cash balances at
financial institutions that exceeded federally insured limits as of December 31,
2004 and 2005. The Company maintains its cash and cash equivalents at
high-credit-quality institutions, and as a result, management believes that
credit risk related to its cash is not significant.

                                      M-8
<PAGE>

         The Company generally grants credit to customers on an unsecured basis.
The Company performs ongoing evaluations of probability of collection of amounts
owed to the Company. The Company records an allowance for doubtful accounts
equal to the amount estimated to be potentially uncollectible.

         The Company's significant customers, as measured by percentage of total
revenues, were as follows:

<TABLE>
                                                                          Year ended December 31
                                                                          ----------------------
                                                                     2003           2004         2005
                                                                     ----           ----         ----
<S>                                                                   <C>            <C>          <C>
Customer A....................................................        12%              *            *
Customer B....................................................        11%              *            *
Customer C....................................................        13%            14%          12%

<CAPTION>
         The Company's significant customers, as measured by percentage of total
accounts receivable, were as follows:
                                                                                       December 31
                                                                                       -----------
                                                                                    2004         2005
                                                                                    ----         ----
<S>                                                                                  <C>           <C>
Customer B.....................................................................      12%            *
Customer C.....................................................................      12%            *
Customer D.....................................................................      11%            *
</TABLE>
_________________________
*    Customer did not represent more than 10% for the period presented.

                                      M-9
<PAGE>

                          Mobile Satellite Ventures LP
                   Notes to Consolidated Financial Statements

2.  Significant Accounting Policies

Fair Value of Financial Instruments

         SFAS No. 107, Disclosure about Fair Value of Financial Instruments,
requires disclosures regarding the fair value of certain financial instruments.
The carrying amount of the Company's cash and cash equivalents, investments,
restricted cash, accounts receivable, accounts payable, and accrued expenses
approximates their fair value because of the short-term maturity of these
instruments. The fair value of the vendor note payable approximates fair value
as of December 31, 2005.

Stock-Based Compensation

         SFAS No. 123, Accounting for Stock-Based Compensation, encourages, but
does not require, companies to record compensation cost for stock-based employee
compensation plans using the fair value method. The Company accounts for
employee stock-based compensation using the intrinsic value method as prescribed
in Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and its related interpretations. The Company recognizes
compensation expense on a straight-line basis over the vesting period. The
Company accounts for stock-based compensation awarded to non-employees as
prescribed in SFAS No. 123.

         The following illustrates the effect on net loss if the Company had
applied the fair value method of SFAS No. 123 (in thousands):

<TABLE>
                                                                                                Year ended December 31
                                                                                                ----------------------
                                                                                       2003             2004             2005
                                                                                       ----             ----             ----
<S>                                                                               <C>              <C>              <C>
Net loss, as reported...................................................           $(28,000)        $(33,455)        $(40,955)
Add stock-based compensation included in reported net loss..............                 --              495            8,482
Stock-based compensation expense determined under fair value method.....             (1,080)          (1,952)         (10,709)
Pro forma net loss......................................................           $(29,080)        $(34,912)        $(43,182)
</TABLE>
         The weighted-average fair value of unit options granted during the
years ended December 31, 2003, 2004, and 2005 was $0.91, $4.61, and $11.11,
respectively. The fair value of the options granted was estimated at the grant
date using the Black-Scholes option-pricing model with the following
weighted-average assumptions:

<TABLE>
                                                                                                     Year ended December 31
                                                                                                     ----------------------
                                                                                                   2003       2004       2005
                                                                                                   ----       ----       ----
<S>                                                                                                   <C>        <C>        <C>
Expected life..............................................................................           5          5          5
Risk-free rate.............................................................................       3.16%      3.31%      2.91%
Volatility.................................................................................          0%         0%         0%
Dividend yield.............................................................................          0%         0%         0%
</TABLE>

Revenue Recognition

         The Company generates revenue primarily through the sale of wireless
airtime service and equipment. The Company recognizes revenue when the services
are performed or delivery has occurred, evidence of an arrangement exists, the
fee is fixed and determinable, and collectibility is probable. The Company
receives activation fees related to initial registration for retail customers.
Revenue from activation fees is deferred and recognized ratably over the
customer's contractual service period, generally one year. The Company records
equipment sales upon transfer of title and accordingly recognizes revenue upon
shipment to the customer.

Next Generation Expenditures

         The Company classifies costs it incurs related to the financing,
development and deployment of its next generation integrated network as next
generation expenditures in the accompanying consolidated statements of
operations in order to distinguish these costs from the costs related to its
existing satellite-only MSS. Next generation expenditures include costs
associated with the Company's next generation integrated network as follows (in
thousands):

                                      M-10
<PAGE>

<TABLE>
                                                                                                   Year ended December 31
                                                                                                   ----------------------
                                                                                               2003        2004          2005
                                                                                               ----        ----          ----
<S>                                                                                          <C>         <C>           <C>
Employee-related costs..............................................................         $2,270      $3,425        $6,918
Research and development expenses...................................................             --         769         5,010
Professional and consulting expenses................................................            833       2,663         3,941
Legal and regulatory fees...........................................................            944       1,053         1,413
Patent costs and fees...............................................................            221         683         1,234
Total next generation expenditures..................................................         $4,268      $8,593       $18,516
</TABLE>

Income Taxes

         As a limited partnership, the Company is not subject to income tax
directly. Rather, each unit holder is subject to income taxation based on the
unit holder's portion of the Company's income or loss as defined in the limited
partnership agreement. The Company's Canadian subsidiary and MSV Canada are
taxed as corporations in Canada, and as such, are subject to entity-level tax
(see Note 11).

Foreign Currency and International Operations

         The functional currency of the Company's Canadian subsidiary and MSV
Canada is the Canadian dollar. The financial statements of these companies are
translated to United States dollars using period-end rates for assets and
liabilities, and period-average rates for revenues and expenses. The impact of
translation is included as a component of accumulated other comprehensive income
in the accompanying consolidated balance sheets. In addition, the Company
realized foreign exchange transaction gains, which are a component of other
income in the accompanying consolidated statements of operations. For the years
ended December 31, 2003, 2004, and 2005, foreign exchange transaction gains were
approximately $445,000, $41,000, and $23,000, respectively.

Derivatives

         The Company accounts for derivatives in accordance with SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended, which
requires the recognition of all derivatives as either assets or liabilities
measured at fair value with changes in fair value of derivatives reflected as
current-period income (loss) unless the derivatives qualify as hedges of future
cash flows. For derivatives qualifying as hedges of future cash flows, the
effective portion of changes in fair value is recorded temporarily in equity and
subsequently recognized in earnings along with the related effects of the hedged
items. Any ineffective portion of hedges is reported in earnings as it occurs.

         In the normal course of business, the Company is exposed to the impact
of fluctuations in the exchange rate of the Canadian dollar. The Company limits
this risk by following an established foreign currency financial management
policy. This policy provides for the use of forward and option contracts, which
limit the effects of exchange rate fluctuations of the Canadian dollar on
financial results. The Company does not use derivatives for trading or
speculative purposes. As of December 31, 2003, 2004, and 2005, the Company
hedged portions of its forecasted expenses and equipment purchases, payable in
Canadian dollars or Euros, totaling approximately $2.8 million, $923,000, and
$1.2 million, respectively, by entering into forward contracts and option
contracts. In general, these contracts have varying maturities up to, but not
exceeding, one year with cash settlements made at maturity based upon rates
agreed to at contract inception. All derivatives held by the Company satisfy the
hedge criteria of SFAS No. 133. The Company's unrealized gains on these
contracts were $81,000, $36,000, and $0 as of December 31, 2003, 2004, and 2005,
respectively, which are reflected as a component of accumulated other
comprehensive income and an asset within prepaid expenses and other current
assets in the accompanying consolidated balance sheets.

Comprehensive Income

         Comprehensive income is the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
non-owner sources. Other comprehensive income refers to revenue, expenses, gains
and losses that under GAAP are included in comprehensive income, but excluded
from net income. For the period presented, the elements within other
comprehensive income, net of tax, consisted of foreign currency translation
adjustments and the changes in the market value and expiration of the Company's
derivative instruments.

         The components of accumulated other comprehensive income was as follows
(in thousands):


                                      M-11
<PAGE>

<TABLE>
                                                                                           December 31
                                                                                           -----------
                                                                                       2004            2005
                                                                                       ----            ----
<S>                                                                                     <C>              <C>
Unrealized gain in market value of derivative instruments.......................        $37             $--
Foreign currency translation adjustment.........................................       (531)         (1,123)
Accumulated other comprehensive loss............................................      $(494)        $(1,123)
</TABLE>

Investments in MSV Canada and MSV Canada Holdings

         For the years ended December 31, 2003 and 2004, the Company accounted
for its equity investments in MSV Canada and MSV Canada Holdings pursuant to the
equity method of accounting. The carrying value of these investments was $0 at
each balance sheet date. Because the Company is obligated to provide working
capital financial support to MSV Canada, and rights and services to MSV Canada,
the Company recorded losses related to such funding as equity in losses of MSV
Canada in the accompanying consolidated statements of operations.

         In January 2003, the FASB issued Financial Interpretation No. 46 (FIN
46), Consolidation of Variable Interest Entities--an Interpretation of
Accounting Research Bulletin No. 51. FIN 46 provides a new framework for
identifying variable interest entities (VIEs) and determining when a company
should include the assets, liabilities, noncontrolling interests, and results of
activities of a VIE in its consolidated financial statements.

         In general, a VIE is a corporation, partnership, limited-liability
corporation, trust, or any other legal structure used to conduct activities or
hold assets that either (1) has an insufficient amount of equity to carry out
its principal activities without additional subordinated financial support, (2)
has a group of equity owners that is unable to make significant decisions about
its activities, or (3) has a group of equity owners that does not have the
obligation to absorb losses or the right to receive returns generated by its
operations.

         FIN 46 requires a VIE to be consolidated if a party with an ownership,
contractual or other financial interest in the VIE (a variable interest holder)
is obligated to absorb a majority of the risk of loss from the VIE's activities,
is entitled to receive a majority of the VIE's residual returns (if no party
absorbs a majority of the VIE's losses), or both. A variable interest holder
that consolidates the VIE is called the primary beneficiary. Upon consolidation,
the primary beneficiary generally must initially record all of the VIE's assets,
liabilities, and noncontrolling interests at fair value and subsequently account
for the VIE as if it were consolidated based on majority voting interest. FIN 46
also requires disclosures about VIEs that the variable interest holder is not
required to consolidate but in which it has a significant variable interest.

         FIN 46 was effective immediately for VIEs created after January 31,
2003, and was effective January 1, 2005, for VIEs created before February 1,
2003. The provisions of FIN 46, as revised, were adopted as of January 1, 2005,
for the Company's interest in MSV Canada, which was created prior to February 1,
2003.

         The Company determined that it is the primary beneficiary of MSV Canada
as a result of its direct and indirect ownership interests in MSV Canada, its
obligation to fund MSV Canada, and the rights and services and capacity
agreements between the Company and MSV Canada. The Company is obligated, by
contract, to fund MSV Canada. This obligation continues indefinitely, but may
terminate upon written agreement between the Company and MSV Canada, or upon one
party becoming the beneficial owner of all of the shares of MSV Canada.

         In accordance with the transition provisions of FIN 46, the assets,
liabilities, and noncontrolling interests of newly consolidated VIEs such as MSV
Canada were initially recorded at the amounts at which they would have been
carried in the consolidated financial statements if FIN 46 had been effective
when the Company first met the conditions to be the primary beneficiary of the
VIE. The assets, as consolidated by MSV, of MSV Canada consist primarily of its
satellite, which has a carrying value of approximately $1.3 million at December
31, 2005 and is included in property, plant, and equipment in the Company's
consolidated balance sheet. The consolidated liabilities of MSV Canada consist
primarily of its deferred revenue, which has a carrying value of approximately
$1.4 million at December 31, 2005 and is included in deferred revenue in the
Company's consolidated balance sheet.


                                      M-12
<PAGE>


                          Mobile Satellite Ventures LP
                   Notes to Consolidated Financial Statements

2.  Significant Accounting Policies

         The difference between the net amount added to the Company's
consolidated balance sheet related to MSV Canada and the Company's previously
recognized interest in MSV Canada represented a gain of approximately $724,000
and was recognized as a cumulative effect of change in accounting principle
during the year ended December 31, 2005. The adoption of FIN 46 on January 1,
2005 also increased total assets by approximately $3.3 million and total
liabilities by approximately $2.6 million. Prior periods were not restated. Had
FIN 46 been applied retroactively, the impact on prior periods would not have
been material. Neither the assets nor liabilities of MSV Canada have been
reported in any of the Company's financial statements prior to January 1, 2005.

Recent Pronouncements

         In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment,
which is a revision of SFAS No. 123, supersedes APB Opinion No. 25, and amends
SFAS No. 95, Statement of Cash Flows. SFAS No. 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the financial statements based on their fair values. The Company
will be required to adopt SFAS No. 123(R) using the prospective method, as the
Company used the minimum-value method for disclosure purposes. The new standard
will be effective for the Company for the year beginning January 1, 2006. As the
Company currently accounts for share-based payments using the intrinsic value
method as allowed by APB Opinion No. 25, the adoption of the fair value method
under SFAS No. 123(R) will have an impact on the Company's results of
operations. However, the extent of impact of the adoption of SFAS No. 123(R)
cannot be predicted at this time because it will depend on levels of share-based
payments granted in the future.

Reclassifications

         Certain prior-year amounts have been reclassified to conform to the
current-year presentation.

3.  Intangible Assets and Goodwill

         The Company's intangible assets and goodwill arose primarily as a
result of the Company's 2001 acquisitions of the Motient and TMI satellite
businesses. These transactions were accounted for using the purchase method of
accounting. At the time of the acquisition, the Company allocated the purchase
price to the assets acquired and liabilities assumed based on their respective
estimated fair values. In addition, under the terms of the purchase agreement,
during 2003, the Company paid $2.2 million in contingent consideration to
Motient for the provision of services to a customer under a contract assumed by
the Company. This payment was accounted for as contingent consideration and was
included in the determination of the purchase price when paid to Motient.

         The Company's identifiable intangible assets consist of the following
(in thousands):

<TABLE>
                                                                                                        December 31
                                                                                                        -----------
                                                                                                         2004            2005
                                                                                                         ----            ----
<S>                                                                                                   <C>             <C>
Customer contracts..........................................................................          $18,178         $18,219
Next generation intellectual property.......................................................           82,600          82,600
                                                                                                      100,778         100,819
Accumulated amortization....................................................................          (29,272)        (38,861)
Intangible assets, net......................................................................          $71,506         $61,958
</TABLE>

         Customer contracts are amortized over a period ranging from 4.5 to 5
years. Next generation intellectual property is amortized over periods ranging
from 4.5 to 15 years. During the years ended December 31, 2003, 2004, and 2005,
the Company recorded approximately $9.4 million, $9.5 million, and $9.5 million,
respectively, of amortization expense related to these intangible assets. The
Company's next generation intellectual property consists of a combination of
licenses and contractual rights to various authorizations, various applications,
certain technology, and certain other rights. The changes in the recorded
balance of goodwill and customer contracts are primarily the result of the
fluctuation of the exchange rate between the United States dollar and Canadian
dollar.

         Future amortization of intangible assets is as follows as of December
31, 2005 (in thousands):

<TABLE>
<S>                                                                                                                    <C>
2006.........................................................................................................          $7,512
2007.........................................................................................................           5,585
2008.........................................................................................................           5,585
2009.........................................................................................................           5,474
2010.........................................................................................................           5,474
Thereafter...................................................................................................          32,328
                                                                                                                      $61,958
</TABLE>

                                      M-13
<PAGE>

4.  Balance Sheet Details

         Property and equipment consisted of the following (in thousands):

<TABLE>
                                                                                                            December 31
                                                                                                             -----------
                                                                                                        2004             2005
                                                                                                        ----             ----
<S>                                                                                                  <C>              <C>
Space and ground segments................................................................            $40,578          $48,510
Office equipment and furniture...........................................................                927              958
Leasehold improvements...................................................................                435              493
                                                                                                      41,940           49,961
Accumulated depreciation.................................................................            (27,886)         (39,361)
Property and equipment, net..............................................................            $14,054          $10,600
</TABLE>

         Accounts payable and accrued expenses consisted of the following (in
thousands):

<TABLE>
                                                                                                               December 31
                                                                                                               -----------
                                                                                                             2004        2005
                                                                                                             ----        ----
<S>                                                                                                        <C>         <C>
Accounts payable..................................................................................         $2,448      $2,342
Accrued expenses..................................................................................          1,369       1,738
Accrued compensation and benefits.................................................................          2,012       2,502
Accrued interest..................................................................................            342         392
Total accounts payable and accrued expenses.......................................................         $6,171      $6,974
</TABLE>

5.  Long-Term Debt

Notes Payable

         In November 2001, the Company issued $55.0 million of Convertible Notes
and $26.5 million of Non-Convertible Notes (collectively, the Notes) to finance
the acquisitions of the Motient and TMI satellite businesses. In August 2002,
the Company issued an additional $3.0 million of Convertible Notes. The Notes
were scheduled to mature on November 26, 2006, and bore interest at 10% per
annum, compounded semiannually and payable at maturity. In August 2003, the
Company repaid approximately $1.6 million of the principal, and all of the
accrued interest of approximately $2.1 million, on one of the Non-Convertible
Notes.

         In April 2004, the Company made payments totaling approximately $2.4
million for principal and $2.6 million for accrued interest, on the
Non-Convertible Notes. In November 2004, $25.9 million of Non-Convertible Notes
and accrued interest were exchanged for 878,115 Common Units of MSV. The
principal balance of $22.6 million and accrued interest of $3.3 million were
exchanged for 765,843 and 112,272 Common Units, respectively, and approximately
$56,000 of accrued interest was paid in cash.

         At the same time, $58.0 million of Convertible Notes were converted
into 8,997,074 Class A Preferred Units at a rate of $6.45 per unit. At the date
of the transaction, accrued interest on the Convertible Notes was approximately
$19.2 million, of which $18.2 million was paid in cash and $1.0 million was
exchanged for 36,045 Common Units (see Note 6). At the completion of this
transaction, all outstanding principal and interest obligations on the Notes
were extinguished.

Vendor Note Payable

         In February 2003, the Company entered into an agreement with a
satellite communications provider that is a related party (the Vendor) for the
construction and procurement of a ground station. The Vendor provided financing
for this project totaling approximately $1.0 million at an interest rate of
9.5%. Future payments on the Vendor note payable as of December 31, 2005, are as
follows (in thousands):

<TABLE>
<S>                                                                                                                      <C>
2006............................................................................................................         $279
2007............................................................................................................          279
2008............................................................................................................          233
Total future payments...........................................................................................          791
Less: interest..................................................................................................         (96)
Principal portion...............................................................................................          695
Less: current portion...........................................................................................         (225)
Long-term portion of vendor note payable........................................................................         $470
</TABLE>

                                      M-14
<PAGE>

6.  Partners' Equity

         Pursuant to the Limited Partnership Agreement of the Company, the
partners' interests in the Company consisted of MSV Common Units and MSV Class A
Preferred Units. The Company's general partner, Mobile Satellite Ventures GP
Inc., a Delaware corporation, has no economic interest in the Company and is
owned by the Company's limited partners in proportion to their fully diluted
interests in the Company.

         Profits and losses are allocated to the partners in proportion to their
economic interests. Losses allocated to any partner for any fiscal year will not
exceed the maximum amount of losses that may be allocated to such partner
without causing such partner to have an adjusted capital account deficit at the
end of such fiscal year. Any losses in excess of this limitation shall be
specially allocated solely to the other partners. Thereafter, subsequent profits
shall be allocated to reverse any such losses specially allocated pursuant to
the preceding sentence. Except for certain capital proceeds and upon
liquidation, the Company shall make distributions as determined by the Board of
Directors to the partners in proportion to their respective percentage
interests. Upon dissolution of the Company, a liquidating trustee shall be
appointed by the Board, or under certain circumstances, the required investor
majority, as defined, who shall immediately commence to wind up the Company's
affairs. The proceeds of liquidation shall be distributed in the following
order:

      o First, to creditors of the Company, including partners, in the order
        provided by law

      o Thereafter, to the partners in the same order as other distributions

         The Class A Preferred Units and Common Units had many of the same
rights and privileges, except the Class A Preferred Units had preference over
the Common Units in receiving proceeds resulting from a distribution of assets
in certain circumstances.

                          Mobile Satellite Ventures LP
                   Notes to Consolidated Financial Statements

6.  Partners' Equity

         In August 2003, the Company received $3.7 million in exchange for the
issuance of 573,951 Class A Preferred Units at $6.45 per unit. In March 2004,
the Company received $17.6 million in exchange for the issuance in April 2004 of
2,735,317 Class A Preferred Units. In November 2004, the Company's limited
partnership agreement was amended to eliminate the distinction between Class A
Preferred and Common Units; all Class A Preferred Units were converted to Common
Units. Also in November 2004, the Company received $145.0 million in proceeds
from its existing investors in exchange for the issuance of 4,923,599 Common
Units. Concurrently, $25.9 million of Non-Convertible Notes and accrued interest
was exchanged for 878,115 Common Units. The principal balance of $22.6 million
and accrued interest of $3.3 million were exchanged for 765,843 and 112,272
Common Units, respectively, and approximately $56,000 of accrued interest were
paid in cash. Additionally, $58.0 million of Convertible Notes were converted
into 8,997,074 Common Units in accordance with their terms. At the date of the
transaction, accrued interest on the Convertible Notes was approximately $19.2
million, of which $18.2 million was paid in cash and $1.0 million was exchanged
for 36,045 Common Units.

7.  Unit and Stock Option Plan

         In December 2001, the Company adopted a unit option incentive plan
(Unit Option Incentive Plan), which allows for the granting of options and other
unit based awards to employees and directors upon approval by the Board of
Directors. Options to acquire units generally vest over a three-year period and
have a 10-year life. As of February 2006, the total options or other unit based
awards available for grant were 6.5 million.

         Beginning in July 2004, the Company granted options with exercise
prices at less than the estimated fair market value of the related units on the
option's grant date, for which the intrinsic value is recorded as deferred
compensation. The deferred compensation is amortized over the options' vesting
period.

         Determining the fair value of units underlying employee options
(Limited Investor Units) requires complex and subjective judgments. We utilized
the market approach to estimate the fair value of Limited Investor Units at each
date on which options were granted. The market approach uses an analysis of the
observable market price of equity instruments for companies with similar assets
and businesses. We estimated the value of a Limited Investor Unit based on the
values implied for partnership units (Common Units) held by limited partners,
which hold significant interests in the Company, and whose equity securities are

                                      M-15
<PAGE>

publicly traded. In order to derive the amount of the publicly traded security's
value attributable to the Common Units, we used the market approach to estimate
the value of other equity investments and assets owned by the respective limited
partner, and therefore included in the public equity value of those securities.
We made adjustments to account for the differences in volatility and liquidity
between the publicly traded reference securities and a private Common Unit. We
determined the estimated value of a Limited Investor Unit by making further
adjustments to account for differences in rights attributable to a Common Unit
as compared to those of a Limited Investor Unit. There is inherent uncertainty
in making these estimates.

         During 2005, the Company's Compensation Committee of the Board of
Directors determined that a "Change of Control" of the Company, as defined in
the Unit Option Incentive Plan, occurred. This interpretation was related to
Motient's acquisition, in February 2005, of MSV interests previously held by
other MSV limited partners. This Change of Control in turn triggered the
acceleration of vesting of all of the Company's then outstanding options that
were subject to accelerated vesting, and recognition as additional compensation
expense of approximately $3.8 million of previously deferred compensation
expense associated with these options in the year ended December 31, 2005.

<TABLE>
<CAPTION>
                                                                                                                    Weighted-
                                                                                               Options to             Average
                                                                                            Acquire Units      Exercise Price
                                                                                            -------------      --------------
<S>                                                                                             <C>                     <C>
Options outstanding at December 31, 2002...........................................             1,388,500               $6.45
  Granted..........................................................................             1,621,500                6.45
  Canceled.........................................................................              (115,833)               6.45
Options outstanding at December 31, 2003...........................................             2,894,167                6.45
  Granted..........................................................................             1,497,750                6.81
  Canceled.........................................................................               (78,334)               6.45
Options outstanding at December 31, 2004...........................................             4,313,583                6.58
  Granted..........................................................................               866,000               22.43
  Canceled.........................................................................              (110,333)               8.95
  Exercised........................................................................               (82,045)               6.45
Options outstanding at December 31, 2005...........................................             4,987,205                9.49
</TABLE>

         At December 31, 2004 and 2005, 1,807,167 and 3,596,896 options,
respectively, were exercisable. The following table summarizes the
weighted-average option information as of December 31, 2005:

<TABLE>
<CAPTION>

                                                  Number         Weighted-Average          Weighted-Average            Number
Range of Exercise Prices                     Outstanding           Remaining Life            Exercise Price       Exercisable
-------------------------                    -----------           --------------            --------------       -----------
<S>                                            <C>                           <C>                      <C>           <C>
$6.45...............................           4,363,705                     7.30                     $6.45         3,542,396
$29.45..............................             592,500                     9.43                    $29.45            54,500
$56.33..............................              31,000                     9.92                    $56.33                --
$6.45-$56.33........................           4,987,205                     7.12                     $9.49         3,596,896
</TABLE>

8.  Related Party Transactions

         During the years ended December 31, 2003, 2004, and 2005, the Company
incurred approximately $151,000, $1,000, and $0 of administrative expenses
related primarily to services provided by Motient. In addition, the Company
provided facilities-related services to Motient of approximately $134,000 during
the year ended December 31, 2003.

         The Company has a rights and services agreement with MSV Canada, under
which the Company provides various technical support and other services to MSV
Canada, such as allowing access to its intellectual property; providing voice-
and data-switching capabilities; providing backup, restoral, and emergency
spectrum and satellite capacity; and providing accounting, customer service, and
billing services. The Company also leases satellite capacity from MSV Canada
pursuant to a lease agreement. The term of the lease extends for 25 years and
may be terminated by the Company with one year's notice or by either party in
certain circumstances. The amount of the lease payments is determined by the
parties periodically based upon the amount of capacity usage by the Company and
market rates. Prior to consolidating MSV Canada in 2005 (see Note 2), the
capacity fee was included in the satellite operations cost in the accompanying
consolidated income statement. During the years ended December 31, 2003, 2004,
and 2005, the capacity fee paid by the Company to MSV Canada was approximately
$4.9 million, $5.8 million and $6.3 million, respectively. The rights and
services fee received by the Company from MSV Canada during the years ended
December 31, 2003, 2004 and 2005 was $3.2 million, $3.6 million and $4.5
million, respectively.

                                      M-16
<PAGE>

         During the years ended December 31, 2003, 2004, and 2005, the Company
incurred approximately $36,000, $193,000, and $159,000 respectively, of
consulting expenses for services provided by a company controlled by a former
limited partner and former member of the Company's general partner's board of
directors. Certain of the Company's intellectual property was acquired by
assignment from entities controlled by this former limited partner of the
Company and former member of the Company's general partner's board of directors.
In certain circumstances where the Company generates royalties from licensing
its ancillary terrestrial component (ATC) intellectual property to third
parties, the Company may be required to share a portion of such royalty payments
with such person and/or related entities.

         During the years ended December 31, 2003, 2004 and 2005, the Company
incurred approximately $--, $2.5 million and $1.3 million, respectively, of
expenses for services provided by Hughes Network Systems LLC. During the years
ended December 31, 2003, 2004, and 2005, the Company purchased certain services
from Electronic System Products, Inc. of approximately $--, $210,000, and
$11,000, respectively. Hughes Network Systems LLC and Electronic System
Products, Inc., were controlled by SkyTerra Communications, Inc., which
indirectly holds limited partnership units in the Company. SkyTerra
Communications, Inc., is controlled by Apollo Advisors L.P., an investment
company for which two of the directors of the Company's general partner are
partners.

         The Company leases office space from Telesat, an affiliate of TMI (see
Note 9). Under its lease agreement, the Company paid approximately $361,000,
$429,000, and $507,000, during the years ended December 31, 2003, 2004, and
2005, respectively. The Company has entered into an operational services
agreement with Telesat to provide regular maintenance and tracking of space
debris of the MSAT-1 satellite. The Company paid approximately $2.3 million,
$2.4 million, and $1.9 million, respectively, in the years ended December 31,
2003, 2004, and 2005. The Company has entered into an agreement with Telesat to
obtain telemetry, tracking, and control services for its MSAT-2 satellite. The
agreement ends April 30, 2006, with automatic extension for three successive
additional renewal periods of one year each. The agreement may be terminated at
any time, provided that the Company makes a payment equal to the lesser of 12
months of service or the remaining service fee. For the years ended December 31,
2003, 2004, and 2005 the Company paid approximately $704,000, $1.1 million, and
$1.1 million respectively. During the years ended December 31, 2003, 2004, and
2005 the company paid Telesat approximately $66,000, $74,000, and $143,000
respectively for consulting services and $135,000, $130,000, and $135,000,
respectively, for administrative support services.

         The Company has entered into an agreement whereby it has agreed to
provide Infosat Communications Inc., (Infosat) a subsidiary of Telesat and an
affiliate of TMI, with satellite services in Canada, a portion of which have
been prepaid. As of December 31, 2004 and 2005, the balance of this prepayment
was approximately $21.0 million and $21.4 million, respectively. In the years
ended December 31, 2003, 2004 and 2005, the Company provided approximately $1.7
million, $2.5 million and $2.3 million, respectively, of services to Infosat
pursuant to this agreement, of which $1.4 million, $2.1 million and $2.0 million
was paid in cash, respectively, and $0.3 million, $0.4 million and $0.3 million,
respectively was applied against the prepayment.

         The Company's vendor note payable is held by a related party (see Note
5).

         The Company's transactions with TerreStar are related party
transactions (see Note 10).

9.  Commitments and Contingencies

Leases

         As of December 31, 2005, the Company has non-cancelable operating
leases, expiring through August 2008. Rental expense, net of sublease income,
for the years ended December 31, 2003, 2004, and 2005, was approximately $1.1
million, $1.2 million, and $1.3 million, respectively.

         Future minimum lease payments under noncancelable operating leases with
initial terms of one year or more are as follows for the years ended December 31
(in thousands):

<TABLE>
<S>                                                                                                                    <C>
2006...........................................................................................................        $1,303
2007...........................................................................................................         1,303
2008...........................................................................................................           958
                                                                                                                       $3,564
</TABLE>
         Office facility leases may provide for periodic escalations of rent,
rent abatements during specified periods of the lease, and payment of pro rata
portions of building operating expenses, as defined. The Company records rent
expense for operating leases using the straight-line method over the term of the
lease agreement.

                                      M-17
<PAGE>

L-Band Space-Based Network Contract

         The Company has entered into a firm-fixed price contract with Boeing
Satellite Systems Inc. (Boeing) to construct a space-based network that consists
of a space segment and ground segment. Boeing is responsible for the
comprehensive design, development, construction, manufacturing, testing, and
installation of a space-based network, providing satellite launch support and
other services related to mission operations and system training.

         Under the terms of the contract, MSV will purchase up to three
satellites with options for two additional satellites that must be exercised no
later than October 2008. Each satellite is contracted to have a mission life of
15 years with a portion of the contract value payable if certain performance
incentives are met, paid over the intended 15-year operating life. Under the
Company's contract with Boeing, Boeing has a first lien on each satellite and
related work until title and risk of loss transfers to the Company upon launch
(assuming the Company is then current in its payments under the contract).
Should the Company become subject to a bankruptcy proceeding before Boeing's
lien is released, any interest the Company has in the satellites would secure
the Company's obligations to Boeing on a first priority basis.

                          Mobile Satellite Ventures LP
                   Notes to Consolidated Financial Statements

9.  Commitments and Contingencies

         Future maximum contractual payments under this contract, including all
potential performance incentives and related interest payments on the
incentives, not including options, are as follows for the years ended December
31, including the performance incentives payable (in thousands):

<TABLE>
<S>                                                                                                                   <C>
2006.....................................................................................................             $59,058
2007 through 2009........................................................................................             572,425
2010 through 2011........................................................................................             179,417
Thereafter...............................................................................................             271,858
                                                                                                                   $1,082,758
</TABLE>
         If the Company elects to terminate the contract in whole or in part,
the Company will be subject to termination liability charges that are in excess
of contractual payments made prior to the termination date. The additional
termination charges vary based upon the portion of the program being terminated
and the state of completion of the terminated portion. In-part termination
charges are spread over the remaining satellite payment milestones, while a full
program termination charge is due upon termination. Generally, these charges
range from $3 million to $200 million, declining after 2007. The Company also
has an option to defer certain contractual payments after full construction
commences with any deferrals to be repaid in full prior to satellite shipment.

Executive Employment Agreements

         Certain executives have employment agreements that provide for
severance and other benefits, as well as acceleration of option vesting in
certain circumstances following a Change of Control. The agreement for one
executive entitles that executive to a severance payment equal to 1.5 times the
executive's prior-year salary and bonus as well as acceleration of vesting for
options currently held by the executive, should the executive terminate
employment within the period defined in the agreement (originally six months
following a change of control). Based on the February 2005 change in control
(see Note 7), this executive could terminate employment and trigger the
severance and vesting portions of the executive agreement. The executive has not
elected to terminate employment, and accordingly, no amounts have been accrued
or expensed in the accompanying consolidated financial statements for this
contingency as of December 31, 2005 other than the compensation expense for the
intrinsic value of the options that vested during the year ended December 31,
2005.

         On February 9, 2006 the Compensation Committee of the Board of
Directors approved a modification to the agreement to extend the executive's
ability to exercise this change in control provision to February 9, 2007. Under
SFAS No.123(R), this modification triggers the recognition of expense of
approximately $4.4 million during the quarter ended March 31, 2006.

Other Agreements

         In September 2005, the Company entered into an agreement with a
third-party that will provide the Company with rights to the use of certain
intangible assets in future periods. The Company has prepaid approximately $3.0
million related to this agreement, $2.8 million of which is included in other
assets, and $150,000 included in prepaid expenses and other current assets as of
December 31, 2005, in the accompanying consolidated balance sheet. The Company

                                      M-18
<PAGE>

has also agreed to provide additional annual payments of approximately $158,000
for the remainder of the contract. The Company is amortizing the costs of the
contract ratably over the 20-year term of the agreement.

Litigation and Claims

         The Company is periodically a party to lawsuits and claims in the
normal course of business. While the outcome of the lawsuits and claims against
the Company cannot be predicted with certainty, management believes that the
ultimate resolution of the matters will not have a material adverse effect on
the financial position or results of operations of the Company.

Contingencies

         From time to time, the Company may have certain contingent liabilities
that arise in the ordinary course of its business activities. The Company
recognizes a liability for these contingencies when it is probable that future
expenditures will be made and such expenditures can be reasonably estimated.

Regulatory Matters

         During 2001, Motient applied to the Federal Communications Commission
(FCC) to transfer licenses and authorizations related to its L-Band MSS system
to MSV. This transfer was approved in November 2001. In connection with this
application, Motient sought FCC authority to launch and operate a next
generation integrated network that will include the deployment of satellites and
terrestrial base stations operating in the same frequencies. In February 2003,
the FCC adopted general rules based on the Company's proposal to develop a next
generation integrated network, subject to the requirement that the Company file
an additional application for a specific terrestrial component consistent with
the broader guidelines issued in the February 2003 order. These broad guidelines
govern issues such as aggregate system interference to other MSS operators, the
level of integration between satellite and terrestrial service offerings, and
specific requirements of the satellite component that the Company currently
meets by virtue of its existing satellite system. While the Company's current
satellite assets satisfy these requirements, the Company has signed a contract
to construct and deploy more powerful satellites and has relevant regulatory
authorizations for these satellites.

         The Company believes that the ruling allows for significant commercial
opportunity related to the Company's next generation integrated network. Both
proponents and opponents of ATC, including the Company, asked the FCC to
reconsider the rules adopted in the February 2003 order. Opponents of the ruling
advocated changes that could adversely impact the Company's business plans. The
Company also sought certain corrections and relaxations of technical standards
that would further enhance the commercial viability of the next generation
integrated network. The FCC issued an order on reconsideration of the February
2003 order in February 2005. The FCC granted some of the corrections and
relaxations of technical standards the Company has advocated and has rejected
the requests for changes advocated by opponents of the FCC's February 2003
order. Only Inmarsat Ventures Ltd. has filed a petition for reconsideration of
the February 2005 order, which is currently pending. One terrestrial wireless
carrier filed an appeal of the FCC's February 2003 order with the United States
Court of Appeals. This appeal has been withdrawn.

         In November 2003, the Company applied for authority to operate ATC in
conjunction with the current and next generation satellites of MSV and MSV
Canada. The FCC's International Bureau granted this authorization, in part, in
November 2004 and deferred certain issues to the FCC's rule-making proceeding,
which was resolved in February 2005. One opponent of the Company's application
has asked the FCC to review the Company's ATC authorization. This challenge is
pending. The Company has also filed an application to modify its ATC
authorization. Only one party has filed comments in opposition to this
application. This application is pending. The Company has also received
authorization to construct, launch, and operate two satellites from the FCC. MSV
Canada has also received authorization from Industry Canada to construct,
launch, and operate a satellite. MSV and MSV Canada must meet certain milestone
dates for each of these satellites. In January 2006, MSV entered into a contract
with Boeing to construct these three satellites as required by the first FCC and
Industry Canada milestone requirement for these satellite authorizations.

         There can be no assurance that, following the conclusion of the
rule-making and the other legal challenges, the Company will have authority to
operate a commercially viable next generation integrated network.

10.  TerreStar Discontinued Operations

         In February 2002, the Company established TerreStar, then a wholly
owned subsidiary, to develop business opportunities related to the proposed
receipt of certain licenses in the S-band. TMI holds the approval issued by
Industry Canada for an S-Band space station authorization and related spectrum
licenses for the provision of MSS in the S-band as well as an authorization from

                                      M-19
<PAGE>

the FCC for the provision of MSS in the S-band. These authorizations are subject
to FCC and Industry Canada milestones relating to construction, launch, and
operational date of the system. TMI plans to transfer the Canadian authorization
to an entity that is eligible to hold the Canadian authorization and in which
TerreStar and/or TMI will have an interest, subject to obtaining the necessary
Canadian regulatory approvals.

         The operating losses and cash used by TerreStar related to its
activities to acquire rights to assets associated with its proposed receipt of
the S-band license. In addition, TerreStar incurred costs related to its
contract to construct a satellite system.

Distribution of TerreStar Stock

         On December 20, 2004, the Company issued rights (the Rights) to receive
all of the 23,265,428 shares of TerreStar Common Stock, which were owned by the
Company, to the limited partners of the Company, pro rata in accordance with
each limited partner's percentage ownership in the Company. In addition, in
connection with this transaction, TerreStar issued warrants to purchase an
aggregate of 666,972 shares of TerreStar Common Stock to one of the Company's
limited partners, which had an exercise price of $0.21491 per share, which were
valued using the Black-Scholes pricing model.

         On May 11, 2005, the limited partners of MSV exercised the Rights to
acquire shares of Common Stock of TerreStar. As a result of this transaction,
MSV divested its ownership interest in TerreStar, thereby affecting a spin-off,
which was recorded as a distribution to the limited partners at book value in
the accompanying consolidated statement of partners' equity (deficit) in the
year ended December 31, 2005. Immediately following the spin-off, Motient
Ventures Holdings, Inc., a subsidiary of Motient, invested $200 million in
TerreStar and thereby gained a majority interest in TerreStar. In May 2005, MSV
and TerreStar entered into a management services agreement whereby MSV agreed to
provide certain services, to include technical and program management efforts
associated with ATC network development as well as administrative support
required to accomplish these tasks. TerreStar continues to be a related party,
as Motient has a significant ownership interest in both the Company and
TerreStar.

         Subsequent to the spin-off, as MSV no longer has an ownership interest
in TerreStar and is not the primary economic beneficiary of TerreStar, the
accompanying consolidated financial statements do not include the assets or
liabilities of TerreStar, which were approximately $9.7 million and $10.4
million, respectively, on May 11, 2005. The assets of TerreStar consisted
primarily of intangible assets related to its S-band spectrum and satellite
construction in progress. The liabilities of TerreStar consisted primarily of
its obligations under the satellite construction contract and amounts payable to
the Company. The accompanying consolidated financial statements include the
results of TerreStar since its inception through May 11, 2005, which are
presented as discontinued operations in the accompanying consolidated statements
of operations and as TerreStar assets and liabilities, discontinued, in the
accompanying December 31, 2004 consolidated balance sheet.

11.  Income Taxes

         The Company's Canadian subsidiaries pay a Canadian provincial capital
tax that is included in general and administrative expenses in the accompanying
consolidated statements of operations. The components of net loss by country are
as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                              Year ended December 31
                                                                                              ----------------------
                                                                                    2003               2004              2005
                                                                                    ----               ----              ----
<S>                                                                            <C>                <C>               <C>
United States.......................................................            $(23,760)          $(30,228)         $(37,795)
Canadian............................................................              (4,240)            (3,227)           (3,160)
Total net loss......................................................            $(28,000)          $(33,455)         $(40,955)
</TABLE>

         Deferred income tax balances related to the Canadian entities result
principally from temporary differences in the recognition of certain revenue and
expense items for financial and tax reporting purposes, as well as net operating
loss (NOL) carry forwards from operations as follows (in thousands):

<TABLE>
                                                                                                            December 31
                                                                                                            -----------
                                                                                                       2004              2005
                                                                                                       ----              ----
<S>                                                                                                  <C>               <C>
Net operating losses...................................................................              $6,968            $5,721
Net differences in the treatment of book and tax differences...........................                 283             1,717
Valuation allowance....................................................................              (7,251)           (7,438)
Deferred tax assets, net...............................................................                 $--               $--
</TABLE>

                                      M-20
<PAGE>

         The Company's Canadian subsidiaries are taxed as corporations in
Canada. As of December 31, 2005, the Company had approximately $15.8 million of
losses available to be applied against future taxable income. These losses will
begin to expire in 2008.

         In assessing the realizability of future income tax assets, management
considers whether it is more likely than not that some or the entire future
income tax asset will be realized. The ultimate realization of the future income
tax asset is dependent on the generation of future taxable income during the
periods in which the NOL carry forwards are available. Management considers
projected future taxable income, the scheduled reversal of future income tax
liabilities, and available tax planning strategies that can be implemented by
the Company in making this assessment. Based on the level of historical taxable
income and projections for future taxable income over the period in which the
NOL carry forwards are available to reduce income taxes payable, management has
established a full valuation allowance against the Company's deferred tax
assets.

12.  Retirement Plan

         The Company has a tax-deferred savings plan (the Plan) that qualifies
under Section 401(k) of the Internal Revenue Code (IRC). United States employees
are eligible to participate in the Plan upon employment and attainment of age
21. Such employees may contribute a percentage of their income, subject to
limitation of the IRC. The Plan contains provisions that allow the Company to
make discretionary contributions and matching contributions. The Company made
contributions of approximately $101,000, $171,000, and $235,000 in the years
ended December 31, 2003, 2004, and 2005 respectively. Employees vest immediately
in the Company's contributions.

13.  Subsequent Events

Leases

         In February 2006, the Company entered into an amended and restated
operating lease agreement that provided for, among other things, an extension of
term and expansion of its premises in Reston, Virginia. As a result of this
amendment, the Company's lease obligations as disclosed in Note 9 have increased
by the following amounts (in thousands):

<TABLE>
<S>                                                                                                                      <C>
2006...........................................................................................................          $602
2007...........................................................................................................           743
2008...........................................................................................................         1,067
2009...........................................................................................................         1,703
2010...........................................................................................................         1,751
Thereafter.....................................................................................................           298
                                                                                                                       $6,164
</TABLE>

Grant of Restricted Units

         On February 9, 2006, the Compensation Committee of the Board of
Directors approved the issuance of 50,000 Restricted Units (the Award) to an
executive. The Award will vest over five years; 20,000 units will vest after the
second anniversary of the grant date and 10,000 units will vest annually
thereafter, subject to certain acceleration provisions. As the Award vests, the
Company is obligated to issue to the executive units (or successor equity) or
pay in cash an amount equal to the fair value of the related MSV units or stock,
depending on the occurrence of certain events in the future. The Company intends
to account for the Award under the provisions of SFAS No. 123(R), which will
require the recognition of a liability and expense based on the fair value of
the vested Award, each reporting period.

                                      M-21