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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

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

                                   FORM 10-K

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

   For the fiscal year ended December 31, 2000

                                      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: 000-31511

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

                                 AT ROAD, INC.
            (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                  Delaware                                       94-3209170
        (State or other jurisdiction                          (I.R.S. Employer
      of incorporation or organization)                     Identification No.)
</TABLE>

                             47200 Bayside Parkway
                               Fremont, CA 94538
         (Address, including zip code, of principal executive offices)

       Registrant's telephone number, including area code: 510-668-1638

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

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

                                     None

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

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

   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 than the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

   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. [X]

   The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $27,964,018 as of March 26, 2001, based upon
the closing sale price on the Nasdaq National Market reported for such date.
Shares of Common Stock held by each officer and director and by each person
who owns 5% or more of the outstanding Common Stock have been excluded in that
such persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.

   There were 46,160,773 shares of the registrant's Common Stock issued and
outstanding as of March 26, 2001.

                      DOCUMENTS INCORPORATED BY REFERENCE

   Part III incorporates information by reference from the definitive proxy
statement to be filed in connection with the registrant's 2001 annual meeting
of stockholders.

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                                     PART I

ITEM 1. BUSINESS.

   Except for the historical information contained in this Report, the matters
discussed in this Report are forward-looking statements involving risks and
uncertainties that could cause actual results to differ materially from those
in such forward-looking statements. Potential risks and uncertainties include,
but are not limited to, our historical and future losses, our limited operating
history, the infancy of the wireless data industry where there is no
established market for our products and services, our ability to adapt to rapid
technological change, our reliance on a limited number of customers and our
dependence on wireless networks, network infrastructure and positioning systems
owned and controlled by others. Further information regarding these and other
risks is included in this Report and in our other filings with the Securities
and Exchange Commission ("SEC").

The @Road Solution

   We integrate Global Positioning System technology, wireless communications
and the Internet to enable companies to efficiently manage their mobile
resources with location-relevant and time-sensitive information. Our service is
an easy-to-use, cost-effective, Internet-based service for vehicle management
that provides location, reporting, dispatch, messaging, and management
services. Our service allows customers to use our web site to track the
movement of their vehicles, employees, and goods and services, and provides for
two-way messaging between our customers and their mobile workers. We believe
our service provides significant value to our customers by reducing the costs
and increasing the efficiency of their operations.

   Our service includes a proprietary hardware device with embedded software
that integrates wireless Internet connectivity with a Global Positioning System
receiver. Our basic hardware product is called the Internet Location Manager.
Two-way text messaging is enabled with the addition of hardware called an
Internet Data Terminal. Customers can use our service with any number or type
of vehicles, including cars, rental cars, buses, school buses, vans, trucks,
trailers, limousines or heavy equipment, by installing our Internet Location
Manager in each vehicle. The Internet Location Manager receives signals
transmitted from Global Positioning System satellites to determine the
location, velocity and orientation of the vehicle in which it is installed.
These data are transmitted to the @Road Wireless Applications Processing
Center, our network of secure servers, using wireless networks and the
Internet. Our customers can then retrieve the information from our web site
using an Internet browser. Customers can purchase an additional messaging unit,
the Internet Data Terminal, that uses the Internet and wireless networks to
send and receive messages to and from a vehicle enabled with an Internet Data
Terminal. Because the customer data and solution software reside at our
Wireless Applications Processing Center, our customers do not need to make a
substantial investment in acquiring and supporting capital equipment, such as
proprietary hardware, software and data networking equipment, to use our
service.

   We have entered into strategic relationships with AT&T Wireless, Cingular
Wireless, Nextel Communications, Nextel Partners, TELUS Mobility and Verizon
Wireless to provide wireless data connectivity between @Road-enabled vehicles
and the Internet over these companies' Cellular Digital Packet Data networks
and Integrated Digital Enhanced Network. We have designed our service to be
easily adapted to other wireless protocols in order to allow us to offer our
services globally. We have also entered into a strategic relationship with
Hitachi Software Engineering to provide our service in Japan over additional
wireless networks.

   Customers who subscribe to our service find a variety of compelling
benefits. Many of these benefits translate into competitive advantages for our
customers. Benefits of our service include the following:

  . Productivity enhancement. Our service allows our customers to track,
    monitor, and manage their mobile resources more effectively and
    efficiently. Customers can achieve enhanced productivity from their fleet
    operations by closely monitoring all vehicles in their fleet, routing
    vehicles more efficiently, reducing vehicle downtime, and increasing the
    number of deliveries or trips per vehicle. In addition, these
    improvements to vehicle management can result in more efficient vehicle
    maintenance and reduced misuse of vehicles.

                                       2
<PAGE>

  . Differentiated service. Our customers can be more responsive to their
    customers by more effectively managing their mobile resources. Because
    our customers are able to track the location of each vehicle in their
    fleet, they are able to provide their customers with more detailed
    information on the location of products and services. At the same time,
    our customers can allocate their limited resources more efficiently to
    reduce wait times experienced by their customers. They can also provide
    better customer service because we provide our customers with records
    relating to the status and activity of their vehicles at relevant times
    as well as audit trails of messages between our customer and its
    vehicles.

  . Ease of implementation. The installation of our platform, the Internet
    Location Manager and the optional Internet Data Terminal, into a vehicle
    takes less than an hour. Once installed, our customers can manage all
    their vehicles through any Internet browser. Because we manage the
    software services and customer data at our Wireless Applications
    Processing Center, the customer does not incur any incremental
    information technology costs associated with the use of our services. As
    our customers grow, our services are scaleable by installing our platform
    in additional vehicles. Additionally, we implement software upgrades
    centrally on our server and remotely over a wireless connection to the
    vehicle. Customers benefit from these enhancements to our service without
    removing the vehicle from service.

 Strategy

   Our objective is to be the leading provider of location-relevant and time-
sensitive information services and solutions to businesses and organizations
managing vehicles and mobile resources. Our service enables us to deliver
information and services to vehicles or about vehicles, which take advantage of
the identity of the vehicles, the location and movement of the vehicles, and
the time when the vehicles are at particular locations. Key elements of our
strategy include:

  . Establish @Road as the market leader in vehicle management services. We
    believe our competitive advantages will establish us as the market leader
    in providing vehicle management services to businesses and organizations.
    Establishing this leadership position is a key element in successfully
    penetrating new markets, creating new sources of revenues and growing our
    overall business. We are one of the first companies to enter the vehicle
    management services market with a comprehensive turnkey solution at a low
    cost. We intend to aggressively grow our customer base and market
    additional services to our existing customer base. We expect to expand
    our existing distribution channels to continue to focus on small to mid-
    size fleets and grow our direct sales force to target customers with
    thousands of vehicles. Moreover, as wireless network coverage increases,
    and new wireless networks are deployed, we expect to increase our selling
    efforts into the worldwide market.

  . Increase the value of our solution by expanding the range of services we
    provide. We will add new features and functionality to our services to
    enhance their value. We expect to continue to offer services that
    synthesize the information currently retrieved by our service. For
    example, we have released a value-added service whereby customers can
    turn mileage data into a maintenance schedule for their vehicles. We
    expect to expand our use of Internet content to provide business- and
    consumer-oriented mobile commerce and additional content to our customers
    when we believe there is value for our customers and revenue
    opportunities for @Road. In addition, we are continuing to develop an
    open platform architecture, with application program interfaces and
    enhanced web site features to allow our partners to integrate their
    applications with our services.

  . Leverage partnerships to accelerate market acceptance. We believe that
    leveraging the market presence, brand recognition, and distribution
    resources of established vendors and wireless carriers will help us
    establish broad business and consumer awareness and acceptance of our
    services. We intend to continue to partner with vehicle and device
    manufacturers, providers of vehicle maintenance and support services,
    wireless telephone and personal digital assistant manufacturers, wireless
    carriers, suppliers of consumer services, Internet content and commerce
    providers, and other suppliers of goods and services. We believe that the
    successful design and implementation of our partnership strategy will
    facilitate the extension of our services to new markets such as the
    consumer vehicle and mobile device markets.

                                       3
<PAGE>

  . Penetrate new markets and applications. We intend to use our core
    competencies and relationships with key partners and customers to develop
    services for additional markets. We believe our technology is well suited
    to many applications that can leverage location-relevant, time-sensitive
    information and two-way messaging using wireless communications and the
    Internet. To address expanding market opportunities, we have designed our
    services to be carrier and connectivity-independent, which will allow us
    to rapidly deploy our services in additional geographic markets as
    coverage of digital wireless packet-based data networks increases. In
    addition, we intend to expand our services to include both commercial and
    consumer applications.

  . Maintain technology leadership. We have developed and patented technology
    that integrates Global Positioning System technology, wireless
    communications and the Internet. We also have substantial experience in
    the design and deployment of products and services incorporating these
    technologies. We believe that our existing intellectual property,
    technological experience and expected continued investment in research
    and development will provide us with significant competitive advantages,
    enabling us to maintain our technological leadership position.

 Services

   Our FleetASAP service integrates the Global Positioning System, wireless
communications and the Internet to provide location, reporting, dispatch,
messaging, and other management services to our customers for tracking and
managing their mobile resources. Our service also allows two-way messaging
between managers of vehicles and their drivers. We believe that our service
provides significant value to our customers by reducing the costs and
increasing the efficiency of their operations. We have initially targeted
companies with commercial vehicles.

   The following features and benefits of FleetASAP give it a competitive
advantage over existing solutions:

  . Cost-effective. The FleetASAP service is cost-effective for our customers
    because we pass on to them the efficiencies we gain by using the Internet
    and wireless networks developed by other companies and Global Positioning
    System technology developed by the U.S. government. Our customers are not
    required to make a substantial capital investment because the customer
    data and our software reside at our Wireless Applications Processing
    Center, and the service is accessible through the Internet.

  . Ease of implementation and use. The Internet Location Managers and
    Internet Data Terminals are shipped to the customer fully configured and
    ready to install, which typically takes an authorized technician less
    than one hour. Once these devices are installed, our customers can use
    our service by logging on to our web site. The user interface is
    intuitive to use, requires minimal training and can be personalized to
    meet the requirements of each of our customers. FleetASAP is designed to
    be available to our customers through the Internet 24 hours a day, seven
    days a week, with the exception of scheduled maintenance. Additionally,
    our platform software is designed to be updated wirelessly, minimizing
    vehicle downtime.

  . Robust reporting capabilities. FleetASAP reports offer our customers
    comprehensive, detailed reporting of vehicle activity, either
    individually or for all or a selected group of a customer's vehicles.
    Reports can be personalized by customers and downloaded for additional
    sorting and analysis. A customer's preferences are stored in our Wireless
    Applications Processing Center and can be altered at any time to meet
    their changing needs. The location of each vehicle in a customer's fleet
    can be displayed on a map, making vehicle location and tracking simple.
    Map views can be personalized by customers to graphically display
    different information about their vehicles, including locating points or
    vehicles on maps by address or customer-defined landmarks. Vehicle
    tracking information is stored at our Wireless Applications Processing
    Center, allowing vehicle managers to monitor their vehicles over an
    extended period of time. Reports can also be used to help our customers
    manage the maintenance requirements of their vehicles.

                                       4
<PAGE>

  . Return on investment. Our service results in a variety of cost savings to
    our customers. Our customers can use FleetASAP to determine the location
    of their vehicles at particular times and send the most appropriate
    vehicle to the next job. In addition, customers can increase their
    productivity by monitoring and managing the activities of their vehicles.
    Effective managing, routing and dispatching of vehicles saves fuel and
    time, decreases our customers' costs and increases their customers'
    satisfaction. By estimating mileage data and providing maintenance
    scheduling services, we assist our customers in optimizing maintenance
    activation, timing their vehicle downtime cost-effectively and offering
    opportunities to purchase vehicle maintenance goods and services in bulk,
    as appropriate. When we provide our customers with messaging capabilities
    using Internet Data Terminals, which bundles two-way communications for a
    flat rate, our customers can reduce their communications costs, including
    cellular telephone fees, which are often usage-based.

  . Scaleability. Our platform and software architecture are designed to
    serve a growing number of users with increasing data transmission volumes
    without compromising performance, delivery times or data accuracy of our
    services. Because the three technology components of our solution are
    designed to accommodate a practically unlimited number of users, as in
    the case of the Global Positioning System, or can be expanded to
    accommodate additional users, as in the case of wireless networks or the
    Internet, we believe that we can support a significantly expanding
    customer base.

  . Global Positioning System-determined location. FleetASAP uses the Global
    Positioning System to determine location, enabling reliable, accurate and
    cost-effective location and tracking of our customers' vehicles. We
    believe Global Positioning System technology is more reliable than other
    positioning technologies because of its proven accuracy, the large number
    of deployed satellites and its ability to determine location regardless
    of velocity and altitude. The Global Positioning System uses pre-existing
    infrastructure developed by the U.S. government, which reduces the cost
    of our service.

  . Wireless data connectivity. FleetASAP currently uses the Cellular Digital
    Packet Data or Integrated Digital Enhanced Network protocol to transmit
    data to and from customer vehicles. We have agreements with six major
    wireless carriers to provide Cellular Digital Packet Data and Integrated
    Digitial Enhanced Network service to our customers. Total wireless
    coverage includes more than 200 metropolitan areas in the U.S. and
    Canada. Our service is designed to be tolerant of network difficulties,
    with the ability to confirm receipt of data and retransmit data if errors
    are detected. Additionally, if a customer's vehicle is out of wireless
    coverage, the Internet Location Manager records up to two days of
    information, which is then transmitted to our Wireless Applications
    Processing Center when the vehicle returns to wireless coverage.

  . Messaging capabilities. Our customers may enhance our FleetASAP service
    by purchasing an optional two-way messaging unit, the Internet Data
    Terminal, that uses the Internet and wireless networks to enable our
    customers to communicate regularly with their vehicles. Our customers can
    pre-program each Internet Data Terminal with a specific set of reply
    messages that can be sent with the press of a button, minimizing driver
    distraction while on the road. An audit trail of messages, including the
    driver's acknowledgment that a message was received, is stored at our
    Wireless Applications Processing Center for fourteen days.

  . StatASAP. Our customers may enhance our FleetASAP service by purchasing
    connecting sensors and additional reporting functions. StatASAP allows
    the Internet Location Manager to report the status of an event on the
    vehicle. For example, a sensor attached to a school bus door reports to
    the Internet Location Manager whether the door was opened or closed.

  . Fleet Resources. Our Fleet Resources web page contains links to a number
    of value-added retail and informational sites that we believe serve
    additional needs of our customers. For example, our customers can link to
    purchase new tires, office supplies and several other goods, and obtain
    current information about traffic conditions and fuel prices.

  . Sturdy construction. The Internet Location Manager and the Internet Data
    Terminal are designed and tested to withstand the harsh environment of
    commercial vehicles, including off-road vehicles, for example with
    respect to vibration, shock and extreme temperatures.

                                       5
<PAGE>

 Customers

   We market and sell FleetASAP to a broad range of customers that vary in
size, geographic location and industry. The number of vehicles utilizing our
service has grown from 135 as of December 31, 1998 to approximately 35,000 as
of December 31, 2000. Our customers' fleets range from two vehicles to over
400. Currently we have customers in the following industries:

  . Trucking                            . Construction


  . Waste management                    . Delivery services


  . Vehicle repair                      . Courier services


  . Taxi cabs and limousines            . Public works


  . Commercial buses                    . Plumbing


  . Landscaping                         . Food and beverage distribution


  . Industrial machinery                . Furniture delivery


  . Equipment rental                    . School buses


 Research and Development

   We concentrate our research and development activities on services and
platform engineering. To enhance our existing services and to introduce new
services to our existing and potential customers, we focus on the following key
areas:

  . Services. We intend to continue to develop our service by offering new
    features while enhancing existing features. For example, we launched a
    service enabling customers to create vehicle maintenance scheduling
    reports in May 2000 and a service enabling customers to view geographic
    locations on maps by personalized landmarks in September 2000. We intend
    to dedicate substantial resources to continue our software development
    activities.

  . Platform. We intend to continue to develop and release platform upgrades
    to add new service features as well as to enhance existing features. For
    example, we introduced a ruggedized full-size keyboard for use with our
    Internet Data Terminal in June 2000 and released a version of our latest
    Internet Location Manager that utilizes the Integrated Digital Enhanced
    Network in December 2000. We also intend to continue to work with
    component suppliers, contract manufacturers and wireless network carriers
    to integrate our platform into other devices and develop our platform as
    a leading technology in the location-relevant information services
    market.

   As of December 31, 2000, we had 85 employees and consultants in research and
development.

 Technology

   Our technology efforts focus on enhancing reliability, availability and
features in our service solution while maintaining scalability. Our proprietary
technologies are designed to work with technologies from other companies,
including our partners, competitors, and other third parties. Although our
current service utilizes our patented Global Positioning System chipset, our
service has been designed to work with other location technologies. Similarly,
although we offer an embedded wireless modem in our platform and a platform
tethered to a Nextel Plus series wireless telephone, our service is designed to
work with a wide range of wireless communications devices. Additionally, while
our service is currently based on delivering information through the Internet
from our Wireless Applications Processing Center, the service is designed to
provide any content available from the Internet. We expect to develop
additional proprietary technology where feasible and to purchase or license
technology where cost-effective. Our technology efforts focus on the following
areas:

  . Location Technology. The Global Positioning System is a worldwide radio-
    navigation system formed from a constellation of satellites and ground
    systems that are used as reference points to calculate

                                       6
<PAGE>

   positions. We have designed a patented Global Positioning System chipset
   and algorithm with four times the processing power of most other
   commercial Global Positioning System receivers. As a result, our platform
   determines its location in approximately half the time required by most
   other commercial receivers.

  . Wireless Technology. Our service currently operates over Cellular Digital
    Packet Data networks and the Integrated Digital Enhanced Network. We also
    have laboratory-tested different versions of our platform that are
    compatible with other wireless technologies and protocols. Our goal is to
    bring to market a platform that is independent of wireless connectivity
    protocols and hardware, allowing our customers to connect wirelessly to
    our Wireless Applications Processing Center using various protocols and
    wireless carriers, using our platform, the customer's existing wireless
    telephone, or other wireless devices.

  . Internet Technology. Although our service involves complex aggregation
    and processing of customer data, the customer can access all the
    functionality of our service through an Internet browser. Because our
    application, reporting and customer data software are independent of one
    another, each can be modified or upgraded without affecting the others.
    In order to expand the services we provide to our customers, we have
    developed an application programming interface that enables our customers
    to integrate our vehicle location information into their applications. We
    also expect to develop additional application programming interfaces that
    will enable our customers to integrate our service into their
    applications.

  . Information Technology. We have an information technology organization
    distinct from our research and development organization that is dedicated
    to building and maintaining our secure Wireless Applications Processing
    Center. By managing our service at our Wireless Applications Processing
    Center, we relieve our customers of the technology and operations burden
    of managing the integration of complex Global Positioning System,
    wireless data and Internet systems. Our Wireless Applications Processing
    Center is comprised of servers located in Sunnyvale and Fremont,
    California and Philadelphia, Pennsylvania. From our Wireless Applications
    Processing Center, we maintain variable-speed capacity connections to the
    Internet and dedicated connections to the wireless networks we use. In
    the event of a power failure, our systems would be powered by a backup
    power supply.

 Key Alliances and Relationships

   We will continue to establish relationships with a number of companies to
accelerate the adoption of our services. We believe that establishing strategic
relationships will facilitate our technological leadership and provide early
access to emerging technologies and new customers. Some of our existing
relationships include the following:

  . Wireless Carriers. We have established strategic relationships with AT&T
    Wireless, Cingular Wireless, Nextel Communications, Nextel Partners,
    TELUS Mobility and Verizon Wireless to provide wireless connectivity
    between @Road-enabled vehicles and the Internet. We contract directly
    with AT&T Wireless and Telus Mobility for the provision of wireless
    communications, which are bundled with our service. With Cingular
    Wireless, Nextel Communications and Nextel Partners, our customers have
    separate contracts for wireless communications with their carrier. With
    Verizon Wireless, we contract directly in some geographic areas and in
    others our customers have separate contracts for wireless communications.

  . Manufacturers. We have an agreement with Intel Corporation, which grants
    Intel a royalty-bearing license to our Global Positioning System chipset
    technology. As part of this agreement, Intel and @Road have agreed to
    cooperate on a variety of development activities. In addition, one of our
    investors, Orient Semiconductor Electronics, manufactures and tests our
    Internet Location Manager.

  . International Partner. We have established a strategic relationship with
    Hitachi Software Engineering to provide our FleetASAP service in Japan
    over wireless networks other than Cellular Digital Packet Data networks
    or the Integrated Digital Enhanced Network.

                                       7
<PAGE>

 Sales and Marketing

   Our sales and marketing objective is to achieve broad market penetration
through vertical marketing and targeted sales activities. As of December 31,
2000, our sales and marketing team consisted of 96 employees. We currently
market and sell our solution through a combination of direct sales, wireless
carrier partners and agents.

  . Direct sales force. We have deployed our direct sales force throughout
    the U.S. in major Cellular Digital Packet Data network and Integrated
    Digital Enhanced Network markets. In the fourth quarter of 2000, we
    created a strategic direct sales force to focus additional effort on
    large customer acquisitions. Our strategic direct sales force calls on
    potential customers with large fleets and works with our wireless carrier
    partners and independent sales agents to increase our customer base.

  . Wireless carrier partners. Our wireless carrier partners are AT&T
    Wireless, Cingular Wireless, Nextel Communications, Nextel Partners,
    TELUS Mobility and Verizon Wireless. These partners market and facilitate
    sales of our service through their own sales channels as part of their
    service offerings.

  . Agent sales program. Our agent sales program is designed to build a
    network of independent sales agents throughout the U.S. to sell our
    service. The program provides independent sales organizations fees for
    the sale, installation and ongoing support of our platform and service.

   Our marketing department is engaged in a wide variety of activities, such as
awareness and lead generation programs and product management. These activities
include public relations, seminars, direct mail, trade shows, and co-marketing
and co-branding with wireless carriers.

 Competition

   We compete with companies that offer the ability to obtain location-relevant
information about their mobile resources. We also compete with alternative
means of communication between vehicles and their managers, including wireless
telephones, two-way radios, and pagers. We compete primarily on the basis of
price, ease of use, functionality, quality and geographic coverage of our
services. As the demand by businesses and consumers for location-relevant
information increases, we anticipate that the quality, functionality and
breadth of our competitors' products and services will improve and that new
competitors will enter our market. In addition, the widespread adoption of
industry standards may make it easier for new market entrants or existing
competitors to improve existing services or offer some or all of the services
we offer or may offer in the future. It is unclear to what extent network
infrastructure developers and key network operators will seek to provide
integrated Global Positioning System, wireless data and Internet solutions,
including access devices developed internally or through captive suppliers.

   The market for our services is competitive and is expected to become even
more competitive in the future. If we are unable to compete successfully in
these areas, competitive pressures may harm our business, resulting in a loss
of market share and revenues. Our current and potential competitors include
other providers of vehicle-location services, such as Qualcomm, whose OmniTRACS
service uses satellite communication technology to manage fleets of trucks that
travel long distances; other wireless Internet companies, such as Aether
Systems, Openwave and Research in Motion; companies working on emergency-911
solutions, such as True Position; companies with solutions that integrate
location, wireless communications and call centers, such as General Motors; and
companies that provide wireless, location-relevant applications, such as
SignalSoft.

 Intellectual Property

   We rely on a combination of patent, trade secret, trademark and copyright
laws, and nondisclosure and other contractual restrictions to protect our
proprietary technology. We possess four patents, which cover our Global
Positioning System chipset technology and the method and structure for
distributing information over a network. We have filed numerous additional
patent applications to further protect and extend our technology leadership
position. Although we have applied for patent protection primarily in the U.S.,
we intend to file patent applications in other countries where there is a
strategic technological or business justification. As part of

                                       8
<PAGE>

our confidentiality procedures, we generally enter into nondisclosure
agreements with our employees, consultants, distributors and corporate partners
and limit access to and distribution of our software, documentation and other
proprietary information.

 Employees

   As of December 31, 2000, we had 315 employees, 290 of who were located in
the U.S. and 25 of who were located in Chennai, India. We believe relationships
with our employees are good.

ITEM 2. PROPERTIES.

   We have offices in Fremont, California and Chennai, India.

<TABLE>
<CAPTION>
                          Square                                                         Lease
   Location     Ownership  Feet                       Primary Use                      Expiration
   --------     --------- ------ ----------------------------------------------------- ----------
<S>             <C>       <C>    <C>                                                   <C>
Fremont, CA      Leased   54,000 Corporate headquarters, customer service, engineering  1/31/2005
Fremont, CA      Leased   30,000 Engineering, research and development, data center    12/31/2005
Chennai, India   Leased    4,100 Research and development, office space                11/18/2002
</TABLE>

ITEM 3. LEGAL PROCEEDINGS.

   We are not currently involved in any material legal proceedings.

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

   None.

                                       9
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Price Range of Common Stock

   Our common stock has been listed for quotation on the Nasdaq National Market
under the symbol "ARDI" since our initial public offering on September 28,
2000. The following table shows the high and low sales prices of our common
stock as reported by the Nasdaq National Market for the periods indicated.

<TABLE>
<CAPTION>
                                                                   High   Low
                                                                   ----- -----
   <S>                                                             <C>   <C>
   Quarter ended September 30, 2000 (from September 28, 2000)..... $9.13 $7.13
   Quarter ended December 31, 2000................................ $8.00 $1.19
</TABLE>

   At December 31, 2000, there were approximately 164 holders of record of the
common stock. This does not include the number of persons whose stock is in
nominee or "street name" accounts through brokers.

   The market price of our common stock has been and may continue to be subject
to wide fluctuations in response to a number of events and factors, such as
quarterly variations in our operating results, announcements of technological
innovations or new products by us or our competitors, changes in financial
estimates and recommendations by securities analysts, the operating and stock
performance of other companies that investors may deem comparable to us, and
news reports relating to trends in our markets. In addition, the stock market
in recent months has experienced extreme price and volume fluctuations that
have particularly affected the market prices of many high technology and
Internet-related companies that have often been unrelated or disproportionate
to the operating performance of these companies. These fluctuations, as well as
general economic and market conditions, may adversely affect the market price
for our common stock.

Dividend Policy

   We have never paid cash dividends on our common stock. We currently intend
to retain any future earnings to fund the development and growth of our
business. Therefore, we do not currently anticipate paying any cash dividends
in the foreseeable future.

Use of Proceeds

   On September 28, 2000, in connection with our initial public offering, a
Registration Statement on Form S-1 (No. 333-41372) was declared effective by
the Securities and Exchange Commission, pursuant to which 7.0 million shares of
our common stock were offered and sold for our account at a price of $9.00 per
share, generating aggregate gross proceeds of $63.0 million for the account of
the Company. The managing underwriters were Credit Suisse First Boston, Chase
H&Q and U.S. Bancorp Piper Jaffray. After deducting approximately $4.4 million
in underwriting discounts and $1.75 million in other related expenses, the net
proceeds of the offering were approximately $56.8 million. As of December 31,
2000, the net proceeds were invested in cash and cash equivalents and short-
term investments and a portion had been used, as planned, for working capital.
We intend to use such proceeds for capital expenditures and for general
corporate purposes, including working capital and to fund anticipated operating
losses.

                                       10
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

   The selected consolidated financial data set forth below should be read in
conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations, the consolidated financial statements, the related
notes and other information contained in this Report.

<TABLE>
<CAPTION>
                                                                Period from July
                                                                     1, 1996
                              Years Ended December 31,            (commencement
                          ------------------------------------  of operations) to
                            2000      1999     1998     1997    December 31, 1996
                          --------  --------  -------  -------  -----------------
                               (in thousands, except per share amounts)
<S>                       <C>       <C>       <C>      <C>      <C>
Consolidated Statements
 of Operations Data:
Revenues:
 Services...............  $  7,919  $    612  $     4  $   --        $  --
 Product................     2,704       294       64      --           --
                          --------  --------  -------  -------       ------
  Total revenues........    10,623       906       68      --           --
                          --------  --------  -------  -------       ------
Costs and expenses:
 Cost of service
  revenue...............     6,414       681       27      --           --
 Cost of product
  revenue...............     7,865     1,777       87      --           --
 Sales and marketing....    15,512     3,530      266      107          --
 Research and
  development...........     8,893     2,109      731      745          204
 General and
  administration........    10,887     2,129      457      250           95
 Intangibles
  amortization..........     1,239       --       --       --           --
 Stock compensation.....    11,664     4,973      --       --           --
                          --------  --------  -------  -------       ------
  Total costs and
   expenses.............    62,474    15,199    1,568    1,102          299
                          --------  --------  -------  -------       ------
Loss from operations....   (51,851)  (14,293)  (1,500)  (1,102)        (299)
Interest income, net....     3,243       804       90       98           25
Other expense, net......      (215)      --       --       --           --
                          --------  --------  -------  -------       ------
Net loss................  $(48,823) $(13,489) $(1,410) $(1,004)      $ (274)
                          ========  ========  =======  =======       ======
Basic and diluted net
 loss per share.........  $  (3.48) $  (4.88) $ (0.62) $ (0.45)      $(0.12)
                          ========  ========  =======  =======       ======
Shares used in
 calculating basic and
 diluted net loss per
 share..................    14,026     2,763    2,287    2,250        2,250
                          ========  ========  =======  =======       ======
Pro forma basic and
 diluted net loss per
 share..................  $  (1.41) $  (0.59)
                          ========  ========
Shares used in
 calculating pro forma
 basic and diluted net
 loss per share.........    34,582    22,882
                          ========  ========
<CAPTION>
                             Years Ended
                            December 31,
                          ------------------
                            2000      1999
                          --------  --------
                           (in thousands)
<S>                       <C>       <C>       <C>      <C>      <C>
Detail of stock
 compensation:
Cost of service
 revenue................  $    171  $     17
Cost of product
 revenue................       479        52
Sales and marketing.....     1,691       445
Research and
 development............     2,686       501
General and
 administrative.........     6,637     3,958
                          --------  --------
  Total.................  $ 11,664  $  4,973
                          ========  ========
</TABLE>

<TABLE>
<CAPTION>
                                                   As of December 31,
                                          -------------------------------------
                                            2000    1999    1998   1997   1996
                                          -------- ------- ------ ------ ------
                                                      (in thousands)
<S>                                       <C>      <C>     <C>    <C>    <C>
Consolidated Balance Sheet Data:
Cash and cash equivalent................. $ 69,280 $22,714 $5,356 $  590 $2,170
Working capital..........................   82,172  38,758  5,599  1,078  2,126
Total assets.............................  111,442  45,174  6,006  1,305  2,271
Total stockholders' equity...............   94,766  40,608  5,788  1,213  2,217
</TABLE>

                                       11
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

   The following discussion should be read in conjunction with the consolidated
financial statements and the related notes included in this Report. This Report
contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those in such forward-looking
statements as a result of many factors, including those discussed in "Risk
Factors," "Business" and elsewhere in this Report.

Overview

   We integrate Global Positioning System technology, wireless communications
and the Internet to enable companies to efficiently manage their mobile
resources with location-relevant and time-sensitive information. Our service is
an easy-to-use, cost-effective, Internet-based service for vehicle management
that provides location, reporting, dispatch, messaging, and management
services. Our service allows customers to use our web site to track the
movement of their vehicles, employees, and goods and services, and provides for
two-way messaging between our customers and their mobile workers. We believe
our service provides significant value to our customers by reducing the costs
and increasing the efficiency of their operations.

   From July 1996 through June 1998, our operations consisted primarily of
various start-up activities relating to our current business, including
development of Global Positioning System technologies, recruiting personnel and
raising capital. We did not recognize any revenues prior to June 1998, and our
expenses consisted of research and development, sales and marketing and general
and administrative expenses. In 1998, we expanded our strategy and redirected
our focus to provide location-relevant and time-sensitive information services
and solutions to companies managing mobile resources. In the second half of
1998, we introduced FleetASAP, a service that leverages existing
infrastructure, including the Global Positioning System, wireless networks and
the Internet, to enable companies to efficiently manage their mobile resources.
Our service includes a proprietary hardware and software platform that
integrates wireless Internet connectivity with a Global Positioning System
receiver. The platform is installed in each vehicle and receives signals
transmitted from Global Positioning System satellites to determine the location
and velocity of the vehicle. These data are transmitted over wireless networks
and the Internet to our Wireless Applications Processing Center. Our customers
can then retrieve the information from our web site using an Internet browser.
Because the customer data and solution software reside at our Wireless
Applications Processing Center, our customers do not need to make a substantial
investment in acquiring and supporting capital equipment, such as proprietary
hardware, software and data networking equipment, to use our service.

   Since 1998, we have derived substantially all of our revenues from the sale
of our service and the associated product hardware. Our service revenue is
comprised of monthly fees. Our customers can contract to receive our service
for terms of two or three years and can purchase enhanced features for
additional fees. As more customers use our service, the impact on our service
revenue is compounded. Our product revenue consists of sales of the Internet
Location Manager and the Internet Data Terminal. The selling prices of our
platforms are often below our costs, and we defer platform costs (not in excess
of related deferred product revenue); as a result, we expense a portion of the
platform costs at the time of shipment and the remaining deferred platform
costs are amortized ratably over the minimum service contract period.

   We recognize revenue when earned in accordance with applicable accounting
standards, including American Institute of Certified Public Accountants (AICPA)
Statement of Position No. 97-2, Software Revenue Recognition, as amended. Our
service is only available through use of our platform. Accordingly, service
revenue is recognized ratably over the minimum service contract period, which
commences upon the installation of the platform. In addition, we defer product
revenue from our platform at installation and recognize it ratably over the
minimum service contract period. Allowances for sales returns are recorded at
the time product revenue is recognized.

                                       12
<PAGE>

   To date, we have not sold our service outside the U.S. and Canada; however,
we intend to expand our service offerings to additional countries during the
year 2001. We do not expect that revenues from international sales will be
material in 2001.

   We will incur substantial stock compensation expense in current and future
periods, which represents non-cash charges incurred as a result of the issuance
of stock options to employees and consultants. The charge related to options
granted to employees is recorded based on the difference between the deemed
fair value of the common stock and the option exercise price of such options at
the date of grant, which is amortized over the option-vesting period. The
charge related to options granted to consultants is calculated at the end of
each reporting period based on the Black-Scholes model, which approximates fair
value, is amortized based on the term of the consulting agreement or service
period. The amount of the charge in each period can fluctuate depending on our
stock price and volatility. See "Stock Compensation Expense."

   Since inception, we have invested substantially in research and development,
marketing, the building of sales channels, and our overall infrastructure. We
anticipate that such investments will continue to grow in the near future. We
have incurred losses in each year since inception and expect to incur net
losses in the foreseeable future. As of December 31, 2000, we had an
accumulated deficit of $65.0 million. Our limited operating history makes it
difficult to forecast future operating results. Even if we were to achieve
profitability in any period, we may not sustain or increase profitability on a
quarterly or annual basis.

Results of Operations for the years ending December 31, 1998, 1999, and 2000

 Service Revenue

   Service revenue, which is comprised of monthly fees, increased to $7.9
million in 2000 from $612,000 and $4,000 in 1999 and 1998, respectively, as a
direct result of the growth in our installed base of subscribers. The increase
in subscriber base during 2000 and 1999 is attributed to the release of our
FleetASAP service. Initial product installation and services began at the end
of 1998. The number of vehicles using our services totaled approximately 135 at
December 31, 1998, approximately 7,000 at December 31, 1999 and grew to over
35,000 as of December 31, 2000.

 Product Revenue

   Product revenue increased to $2.7 million in 2000 from $294,000 and $64,000
in 1999 and 1998, respectively, and is consistent with the commercial release
of our services and the growth in our installed base of subscribers.

 Cost of Service Revenue

   Cost of service revenue consists of employees' salaries and expenses related
to the delivery and support of our services, costs and expenses associated with
connecting our services to wireless networks and the Internet, and depreciation
of our Wireless Applications Processing Center. Cost of service revenue
increased to $6.4 million in 2000 from $681,000 and $27,000 in 1999 and 1998,
respectively. The growth in costs of service revenue resulted from the
associated increase in service revenue and related service infrastructure and
personnel costs.

 Cost of Product Revenue

   Cost of product revenue consists of the cost of our platforms, including the
Internet Location Manager, Internet Data Terminal and related parts, as well as
costs associated with the final assembly, test, delivery, and installation of
our products. The selling prices of our platforms are often below cost; we
defer platform costs (not in excess of related deferred product revenue) and as
a result, we expense a portion of the platform costs at the time of shipment
and the remaining deferred product costs are amortized ratably over the minimum
service

                                       13
<PAGE>

contract period. We expect this practice will continue for the foreseeable
future as we continue to expand our installed base and as we view product
installation as enabling our core service business. We expect the impact of
this practice on future liquidity will be minimal as our service revenue stream
expands and is renewed. Cost of product revenue increased to $7.9 million in
2000 from $1.8 million and $87,000 in 1999 and 1998, respectively. The increase
in costs of product revenue was attributable primarily to the commercial
release of our services, the expansion of our services and the resulting
increase in the number of customers using our services.

 Sales and Marketing Expenses

   Sales and marketing expenses consist of employee salaries, sales
commissions, and marketing and promotional expenses. Sales and marketing
expenses increased to $15.5 million in 2000 from $3.5 million and $266,000 in
1999 and 1998, respectively. The increases reflect additional personnel,
expansion of sales channels and activities related to the development of market
awareness of our services in 2000 and 1999. Sales and marketing headcount grew
to 96 at December 31, 2000 from 39 and three at December 31, 1999 and 1998,
respectively. Related increases in salaries and other compensation, sales
commissions and marketing awareness campaigns comprised the majority of the
increase. We expect that sales and marketing expenses will continue to increase
as we hire additional personnel, expand our sales and marketing efforts and pay
sales commissions.

 Research and Development Expenses

   Research and development expenses consist of employee and consultant
compensation and expenses associated with software and hardware development.
Research and development expenses grew to $8.9 million in 2000 from $2.1
million and $731,000 in 1999 and 1998, respectively. Increased development
salaries, outside consultant expenses, and the creation of our development
subsidiary in Chennai, India account for the increases in 2000 and 1999.
Research and development headcount totaled 85 at December 31, 2000, 30 at
December 31, 1999 and five at December 31, 1998.

   In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, or SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This standard requires
companies to capitalize qualifying computer software costs that are incurred
during the application development stage and amortize them over the software's
estimated useful life. SOP 98-1 is effective for years beginning after December
15, 1998. We implemented this standard in 1999 and capitalized approximately
$869,000 and $242,000 of costs related to internally developed software systems
in 2000 and 1999.

 General and Administrative Expenses

   General and administrative expenses consist of employee salaries and related
expenses for executive, administrative, accounting, and professional fees,
recruiting and a provision for doubtful accounts. General and administrative
expenses increased to $10.9 million in 2000 from $2.1 million and $457,000 in
1999 and 1998, respectively. The increase was primarily due to higher employee
compensation associated with our growth in headcount, increases in our
provision for doubtful accounts, and costs of operating as a public company. We
expect that expenses will increase as we hire additional personnel and incur
related expenses in anticipation of the growth of the business and our
operation as a public company. General and administrative headcount totaled 57
at December 31, 2000, 15 at December 31, 1999 and four at December 31, 1998.

 Intangibles Amortization

   Intangibles amortization relates to the intangible assets purchased from
Differential Corrections, Inc. in April 2000, which are being amortized over an
estimated useful life of three years.

                                       14
<PAGE>

 Stock Compensation Expense

   Deferred stock compensation related to the granting of stock options to
employees and consultants was $8.1 million as of December 31, 2000. Stock
compensation expense increased to $11.7 million in 2000 from $5.0 million in
1999, and represents the amortization of deferred stock compensation over the
vesting periods of related options granted in 2000 and 1999.

 Interest Income, net

   Interest income is comprised primarily of interest earned on cash, cash
equivalents, and short-term investments. Net interest income increased to $3.2
million, $804,000 and $90,000 in 2000, 1999 and 1998 respectively, due to
investment in debt securities of the proceeds from our initial public offering
of common stock on September 28, 2000 and convertible preferred stock
financings completed in January and June 2000 and June and December 1999.

 Other Expense, net

   Other expense is comprised of amounts paid to underwriters for expenses not
associated with the initial public offering, offset in part by gains on
disposal of property and equipment.

 Income Taxes

   Since inception, we have incurred net losses for federal and state tax
purposes and except for only minimum state income and franchise taxes have not
recognized any tax provision or benefit.

 Net Loss

   Net loss increased to $48.8 million in 2000 from $13.5 million and $1.4
million in 1999 and 1998, respectively, as a result of developing our
technology, building our infrastructure and increasing installed customer base.
These increases were primarily due to growth in operating costs and expenses.

 Changing Prices

   We conduct operations primarily within the United States of America where
inflation during 2000, 1999 and 1998 has been low and has not materially
impacted our operating results. Foreign currency exchange losses resulting from
transactions with our wholly-owned subsidiary in India, which began business in
1999, were not material during 2000 and 1999 and were expensed as incurred.

                                       15
<PAGE>

Quarterly Results of Operations

   The following table sets forth our consolidated operating results for each
of the eight quarters ended December 31, 2000. This data has been derived from
unaudited consolidated financial statements that, in the opinion of our
management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such information when read in
conjunction with our annual audited consolidated financial statements and notes
thereto appearing elsewhere in this Report. These operating results are not
necessarily indicative of results of any future period.

<TABLE>
<CAPTION>
                                                               Quarters Ended
                         ---------------------------------------------------------------------------------------------
                         December 31, September 30, June 30,  March 31, December 31, September 30, June 30,  March 31,
                             2000         2000        2000      2000        1999         1999        1999      1999
                         ------------ ------------- --------  --------- ------------ ------------- --------  ---------
                                                               (in thousands)
<S>                      <C>          <C>           <C>       <C>       <C>          <C>           <C>       <C>
Consolidated Statements
of Operations Data:
Revenues:
 Services..............    $  3,042     $  2,353    $  1,587   $   937    $   425       $   145    $    35     $   7
 Product...............       1,169          698         584       253        158            80         32        24
                           --------     --------    --------   -------    -------       -------    -------     -----
  Total revenues.......       4,211        3,051       2,171     1,190        583           225         67        31
                           --------     --------    --------   -------    -------       -------    -------     -----
Cost and expenses:
 Cost of service
  revenue..............       2,527        1,758       1,490       639        457           154         61         9
 Cost of product
  revenue..............       2,598        1,885       2,109     1,273        942           613        192        30
 Sales and marketing...       4,226        4,435       4,107     2,744      1,797         1,133        424       176
 Research and
  development..........       2,262        2,466       2,554     1,611      1,043           572        291       203
 General and
  administrative.......       4,011        3,153       2,128     1,595        962           477        381       309
Intangibles
 amortization..........         414          414         411       --         --            --         --        --
Stock compensation.....       1,850        2,859       3,540     3,415      3,973           637        300        63
                           --------     --------    --------   -------    -------       -------    -------     -----
  Total costs and
   expenses............      17,888       16,970      16,339    11,277      9,174         3,586      1,649       790
                           --------     --------    --------   -------    -------       -------    -------     -----
Loss from operations...     (13,677)     (13,919)    (14,168)  (10,087)    (8,591)       (3,361)    (1,582)     (759)
Interest income, net...       1,403          666         553       621        321           351         76        56
Other expense, net.....        (215)         --          --        --         --            --         --        --
                           --------     --------    --------   -------    -------       -------    -------     -----
Net loss...............    $(12,489)    $(13,253)   $(13,615)  $(9,466)   $(8,270)      $(3,010)   $(1,506)    $(703)
                           ========     ========    ========   =======    =======       =======    =======     =====
</TABLE>

Liquidity and Capital Resources

   Since our inception, we have financed operations primarily through sales of
our stock, which totaled $141.4 million in aggregate net proceeds through
December 31, 2000. As of December 31, 2000, we had $69.3 million of cash and
cash equivalents and $7.3 million of short-term investments (including $2.1
million of restricted short-term investments), and working capital of $82.2
million. We currently have a $2.0 million revolving line of credit facility
against which there were no borrowings or letters of credit outstanding as of
December 31, 2000. The line, against which letters of credit may be issued, is
collateralized by a restricted certificate of deposit of $2.0 million and
expires in May 2001.

   Net cash used for operating activities was $39.4 million, $8.2 million and
$1.6 million for 2000, 1999 and 1998 respectively. Cash used for operating
activities was attributable primarily to net losses and increases in accounts
receivable, inventory, and deferred product costs, offset in part by
amortization of deferred stock compensation, increases in accounts payable,
accrued liabilities, and deferred revenues. As of December 31, 2000,
approximately $2.0 million of our accounts receivable were over 90 days old. We
believe we have adequately provided allowances as of December 31, 2000 for any
such amounts that may ultimately become uncollectible.

   We defer product costs at time of shipment and expense any amounts in excess
of the related product revenue at that time. We record accounts receivable from
our customers and defer related product

                                       16
<PAGE>

revenue upon installation. Both deferred product cost and revenue are
recognized ratably over the minimum service contract period. As a result of
deferred product costs being recorded at the time of shipment and deferred
product revenue being recorded at the time of installation, deferred product
costs will generally exceed deferred product revenue as we grow our business.
At December 31, 2000, total deferred product costs of $10.3 million exceeded
total deferred revenue by $3.2 million, and included $2.7 million related to
products shipped but not yet installed.

   Net cash used for investing activities for 2000 was $3.7 million, primarily
resulting from purchases of property and equipment of $7.5 million, purchases
of short-term investments of $6.5 million, cash paid for acquisitions of $3.4
million and increases in other assets of $1.7 million, offset by proceeds from
maturities of short-term investments of $15.3 million. Net cash used for
investing activities for 1999 was $17.7 million, primarily resulting from the
purchase of unrestricted and restricted short-term investments of $20.0
million, purchases of property and equipment of $1.6 million offset by proceeds
from maturities of short-term investments of $4.0 million. Net cash provided by
investing activities for 1998 was $399,000, primarily resulting from maturities
of short-term investments.

   Net cash provided by financing activities was $89.7 million, $43.3 million
and $6.0 million for 2000, 1999 and 1998, respectively. Cash provided by
financing activities in each period was attributable to proceeds from the
issuance of our stock.

   Our capital expenditures for 2000 were approximately $7.5 million, an
increase of $5.9 million over 1999, consistent with our anticipated growth in
operations, infrastructure and personnel. We had no material commitments for
capital expenditures, although we anticipate a substantial increase in capital
expenditures and lease commitments consistent with our anticipated growth in
operations, infrastructure and personnel. We also may establish additional
operations as we expand globally.

   We believe that our current cash, cash equivalents and short-term
investments will be sufficient to meet our anticipated cash needs for operating
expenses, working capital and capital expenditures for at least the next 12
months. If cash generated from operations is insufficient to satisfy our
liquidity requirements, we may seek to sell additional equity or debt
securities or to obtain a larger credit facility. If additional funds are
raised through the issuance of debt securities, holders of these securities
could have certain rights, preferences and privileges senior to holders of
common stock, and the terms of this debt could restrict our operations. The
sale of additional equity or convertible debt securities could result in
additional dilution to our existing stockholders, and we cannot be certain that
additional financing will be available in amounts or on terms acceptable to us,
if at all. If we are unable to obtain additional financing, we may be required
to reduce the scope of our operations, which could harm our business, financial
condition and operating results.

Impact of Recently Issued Accounting Standards

   Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, is effective for all fiscal
years beginning after June 15, 2000. SFAS No. 133, as amended, establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts and for hedging
activities. Under SFAS No. 133, certain contracts that were not formerly
considered derivatives may now meet the definition of a derivative. We have
adopted SFAS No. 133 effective January 1, 2001. We do not expect the adoption
of SFAS No. 133 to have a significant impact on our consolidated financial
position, results of operations or cash flows.

   In December 1999, the SEC released Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements. This bulletin summarizes certain
interpretations and practices followed by the Division of Corporation Finance
and the Office of the Chief Accountant of the SEC with respect to revenue
recognition in financial statements. Application of the accounting and
disclosures described in the bulletin was required by the fourth quarter of
2000. We have determined that adoption of this bulletin did not have a
significant impact on our consolidated financial position, results of
operations or cash flows.

                                       17
<PAGE>

Risk Factors

   In addition to the other information contained in this Report, the following
factors should be considered in evaluating our business and prospects:

Due to our limited operating history it is difficult to predict future
operating results or our stock price.

   An evaluation of our business is difficult because we have a limited
operating history. We commenced operations in July 1996 and commercially
offered our first services in the second half of 1998. We may not continue to
grow or achieve profitability. We face a number of risks encountered by early-
stage companies in the Global Positioning System, wireless communications and
Internet information industries, including:

  . the uncertainty of market acceptance of our services;

  . our need to introduce reliable and robust products and services that meet
    the demanding needs of customers;

  . our need to expand our marketing, sales and support organizations, as
    well as our distribution channels;

  . our ability to anticipate and respond to market competition;

  . our need to manage expanding operations;

  . our dependence on wireless carriers;

  . limited coverage of wireless networks; and

  . migration to new networks, which could cause our products to be
    incompatible or out of date.

   Our business strategy may not be successful, and we may not successfully
address these risks.

We have historically incurred losses and these losses may increase in the
future.

   We have never been profitable. As of December 31, 2000, we had an
accumulated deficit of $65.0 million. In order to become profitable and sustain
profitability, we will need to generate significant revenues to offset our cost
of revenues, and sales and marketing, research and development and general and
administrative expenses. We may not achieve or sustain our revenue or profit
goals and our losses may grow in the future. In order to facilitate the sale of
our services, we often sell our hardware below cost. As a result, we have
experienced, and expect to continue to experience, negative gross margins on
the sale of our hardware. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview."

If we do not increase revenue from the sale of our services to new and existing
customers, our business may not be successful.

   Our success depends on our ability to increase revenue from the sale of our
services to new and existing customers and on market acceptance of our
services. We may not be able to achieve widespread adoption of our services. If
we are not able to expand our customer base and increase our revenue from new
and existing customers, our business will be seriously harmed.

Our success depends on our ability to maintain and expand our sales channels.

   In order to increase our market awareness, customer base and revenues, we
need to expand our direct and indirect sales operations. There is strong
competition for qualified sales personnel in our business, and we may not be
able to attract and retain sufficient new sales personnel to expand our
operations. New sales personnel will require training and will take time to
achieve full productivity. In addition, we believe that our success is
dependent on expansion of our indirect distribution channels, including our
relationships with wireless carriers

                                       18
<PAGE>

and independent sales agents. To date, we have relationships with a limited
number of these wireless carriers and independent sales agents. We may not be
able to establish relationships with additional distributors on a timely basis,
or at all, and our distributors may not devote adequate resources to promoting
and selling our services.

We have limited resources and may be unable to manage our anticipated growth in
operations.

   If we fail to develop and maintain our services as we experience rapid
growth, demand for our services and our revenues could decrease. Our
development and expansion has placed, and will continue to place, significant
strain on our managerial, operational, and financial resources. Due to the
limited deployment of our services, we are unable to assess our ability to grow
the business and manage a substantially larger number of customers and
additional services.

If we cannot deliver the features and functionality our customers demand, we
will be unable to retain or attract new customers.

   Our success depends upon our ability to determine the features and
functionality our customers demand and to design and implement services that
meet their needs in an efficient manner. We cannot assure you that we can
successfully determine customer requirements or that our future services will
adequately satisfy customer demands. To date, the design of our services has
been based on our internal efforts and feedback from a limited number of
existing and potential customers. In addition, we may experience difficulties
that could delay or prevent the successful development, introduction or
marketing of new services and service enhancements. If we cannot effectively
deploy, maintain and enhance our services, our expenses may increase, we may
not be able to recover our costs and our competitive position may be harmed.

We depend on wireless networks owned and controlled by others. If our customers
do not have continued access to sufficient capacity on reliable networks, we
may be unable to deliver services and our revenues could decrease.

   Our ability to grow and achieve profitability depends on the ability of
wireless carriers to provide sufficient network capacity, reliability and
security to our customers. Even where wireless carriers provide coverage to
entire metropolitan areas, there are occasional lapses in coverage, for example
due to tall buildings blocking the transmission of data to and from vehicles.
These effects could make our services less reliable and useful, and customer
satisfaction could suffer. Our financial condition could be seriously harmed if
our wireless carriers were to increase the prices of their services, or to
suffer operational or technical failures. If wireless carriers do not expand
coverage, we may be unable to offer our service to additional areas.

If one or more of the agreements we have with wireless carriers is terminated,
we may be unable to offer our services to our customers within the carrier's
coverage area.

   There are a limited number of wireless carriers offering services compatible
with our service. These wireless carriers have little overlap in their primary
service coverage areas. Our existing agreements with wireless carriers may be
terminated upon as little as fifteen-day written notice or immediately upon the
occurrence of certain conditions. If one or more of our wireless carriers
decides to terminate or not renew its contract with us, we may incur additional
costs relating to obtaining alternate coverage from another wireless carrier
outside of its primary coverage area, or we may be unable to replace the
coverage at all, causing a complete loss of service to our customers in that
coverage area.

We depend on a limited number of third parties to manufacture and supply
critical components for our services.

   If these parties do not perform their obligations, we may be unable to find
other suppliers or operate our business. A customer requires an Internet
Location Manager to use our service. To use our service with two-

                                       19
<PAGE>

way messaging, a customer requires an Internet Location Manager and an Internet
Data Terminal. The Internet Location Manager, which we install in a customer's
vehicle, determines the vehicle's location, velocity and orientation and
gathers other information about the vehicle. The Internet Data Terminal, when
installed in a customer's vehicle, adds the incremental ability to send and
receive messages to and from the vehicle. We cannot be sure that alternative
sources for key components used in the Internet Location Manager and the
Internet Data Terminal will be available when needed, or if available, that
these components will be available on commercially reasonable terms. We rely on
sole suppliers and manufacturers for a number of key components for these
products and do not have long-term agreements with any of these suppliers and
manufacturers. Our sole suppliers and manufacturers of key components include:

  . Taiwan Semiconductor Manufacturing Company, our sole manufacturer of
    Global Positioning System receiver chips;

  . Conexant Systems (formerly Philsar Electronics), our sole manufacturer of
    radio frequency chips;

  . Orient Semiconductor Electronics, our sole manufacturer of Internet
    Location Managers; and

  . Micronet, our sole supplier of Internet Data Terminals.

   If our agreements with these suppliers and manufacturers are terminated or
expire, or if we are unable to obtain sufficient quantities of these
components, our search for additional or alternate suppliers and manufacturers
could result in significant delays, added expense and our inability to maintain
or expand our customer base. Any of these events could require us to take
unforeseen actions or devote additional resources to provide our services and
could harm our ability to compete effectively.

We depend on recruiting and retaining qualified personnel and our inability to
do so would seriously harm our business.

   Because of the technical nature of our services and the market in which we
compete, our success depends on the continued services of our current executive
officers and our ability to attract and retain qualified personnel with Global
Positioning System, wireless communications and Internet software expertise.
Competition for qualified personnel in these industries is intense,
particularly in the San Francisco Bay Area. Competitors and others have in the
past, and may in the future, attempt to recruit our employees. In addition, new
employees generally require substantial training, which requires significant
resources and management attention. Even if we invest significant resources to
recruit, train and retain qualified personnel, we may not be successful in our
efforts.

We face competition from existing and potential competitors, which could reduce
our market share and revenues.

   The market for our services is competitive and is expected to become even
more competitive in the future. Our customers choose our services primarily on
the basis of the functionality, price, ease of use, quality and geographic
coverage of our services. If we are unable to compete successfully in these
areas, competitive pressures may harm our business, resulting in a loss of
market share and revenues. Our current and potential competitors include:

  . other providers of vehicle-location services, such as Qualcomm, whose
    OmniTRACS service uses satellite communication technology to manage
    fleets of trucks that travel long distances;

  . other wireless Internet companies, such as Aether Systems, Openwave and
    Research in Motion;

  . companies working on emergency-911 solutions, such as True Position;

  . companies with solutions that integrate location, wireless communications
    and call centers, such as General Motors; and

  . companies that provide wireless, location-relevant applications, such as
    SignalSoft.

                                       20
<PAGE>

   Many of our existing and potential competitors have substantially greater
financial, technical, marketing and distribution resources than we do.
Additionally, many of these companies have greater name recognition and more
established relationships with our target customers. Furthermore, these
competitors may be able to adopt more aggressive pricing policies and offer
customers more attractive terms than we can.

   Our services also compete with alternative means of communication between
vehicles and their managers, including wireless telephones, two-way radios and
pagers. In addition, we expect that new competitors will enter the market for
location-relevant wireless information as businesses and consumers increasingly
demand information when they are mobile. Furthermore, the widespread adoption
of industry standards may make it easier for new market entrants or existing
competitors to offer the services we offer or may offer in the future.

Our quarterly operating results are subject to fluctuations, and our stock
price may decline if we do not meet the expectations of investors and analysts.

   Our quarterly revenues and operating results are difficult to predict and
may fluctuate significantly from quarter to quarter due to a number of factors,
many of which are outside our control. These factors include, but are not
limited to:

  . delays in market acceptance or implementation by customers of our
    services;

  . changes in demand by our customers for existing and additional services;

  . changes in or cancellations of our agreements with wireless carriers;

  . introduction of new services by us or our competitors;

  . changes in our pricing policies or those of our competitors or suppliers;

  . changes in our mix of sources of revenues; and

  . changes in accounting standards, including standards relating to revenue
    recognition, business combinations and stock-based compensation.

   Our expense levels are based, in part, on our expectation of future
revenues. As a result, any shortfall in revenues relative to our expectations
could cause significant changes in our operating results from quarter to
quarter. We believe period-to-period comparisons of our revenue levels and
operating results are not meaningful. You should not rely on our quarterly
revenues and operating results to predict our future performance. In some
future quarter our operating results may be below the expectations of public
market analysts and investors and, as a result, the price of our common stock
may fall.

Our success and ability to compete depends upon our ability to secure and
protect patents, trademarks and other proprietary rights.

   Our success depends on our ability to protect our proprietary rights to the
technologies used to implement and operate our services in the U.S. and in
foreign countries. In the event that a third party breaches the confidentiality
provisions in our contracts or misappropriates or infringes on our intellectual
property or the intellectual property licensed to us by third parties, our
business would be seriously harmed. To protect our proprietary rights, we rely
on a combination of trade secrets, confidentiality and other contractual
provisions, and patent, copyright and trademark laws, which afford us only
limited protection. Third parties may independently discover or invent
competing technologies or reverse engineer our trade secrets, software or other
technology. Furthermore, laws in some foreign countries may not protect our
proprietary rights to the same extent as the laws of the U.S. Therefore, the
measures we take to protect our proprietary rights may not be adequate. See
"Business--Intellectual Property."

                                       21
<PAGE>

A disruption of our services due to accidental or intentional security breaches
may harm our reputation, may cause a loss of revenues and may increase our
expenses.

   Unauthorized access, computer viruses and other accidental or intentional
actions could disrupt our systems. We expect to incur significant costs to
protect against the threat of security breaches and to alleviate problems
caused by any breaches. Currently, the transmission of our customers'
proprietary information is not protected by encryption technology. If a third
party were to misappropriate our customers' proprietary information, we could
be subject to claims, litigation or other potential liabilities that could
seriously harm our revenues and result in the loss of customers.

System failures could reduce our sales, increase costs or result in liability
claims and seriously harm our business.

   Any disruption to our services, information systems or communications
networks or those of third parties could result in the inability of our
customers to receive our services for an indeterminate period of time. Our
services may not function properly if our systems fail, or if there is an
interruption in the supply of power, or if there is an earthquake, fire, flood
or other natural disaster, or an act of war. Any disruption to our services
could cause us to lose customers or revenue, or face litigation, customer
service or repair work that would involve substantial costs and distract
management from operating our business. We currently do not have fully
redundant systems for our services at an alternate site. Our operations depend
upon our ability to maintain and protect our computer systems in our principal
facilities in Fremont, California, which are on or near earthquake fault zones
and Philadelphia, Pennsylvania.

We depend on Global Positioning System technology owned and controlled by
others. If we do not have continued access to Global Positioning System
technology and satellites, we will be unable to deliver our services and our
revenues will decrease.

   Our services rely on signals from Global Positioning System satellites built
and maintained by the U.S. Department of Defense. Global Positioning System
satellites and their ground support systems are subject to electronic and
mechanical failures and sabotage. If one or more satellites malfunction, there
could be a substantial delay before they are repaired or replaced, if at all,
and our services may cease and customer satisfaction would suffer.

   In addition, the U.S. government could decide not to continue to operate and
maintain Global Positioning System satellites over a long period of time or to
charge for the use of the Global Positioning System. Furthermore, because of
ever-increasing commercial applications of the Global Positioning System, other
U.S. government agencies may become involved in the administration or the
regulation of the use of Global Positioning System signals in the future. If
factors such as the foregoing affect the Global Positioning System, for example
by affecting the availability and pricing of Global Positioning System
technology, our business will suffer.

Our Global Positioning System technology depends on the use of radio frequency
spectrum controlled by others.

   Global Positioning System technology is dependent on the use of radio
frequency spectrum. An international organization known as the International
Telecommunications Union controls the assignment of spectrum. If the
International Telecommunications Union reallocates radio frequency spectrum,
our services may become less useful or less reliable. This would, in turn, harm
our business. In addition, emissions from mobile satellites and other equipment
using other frequency bands may adversely affect the utility and reliability of
our services.

Defects or errors in our services could result in the cancellation or delays of
our services, which would damage our reputation and harm our financial
condition.

   We must develop our services quickly to keep pace with the rapidly changing
Global Positioning System, wireless communications and Internet markets.
Products and services that address these markets are likely to

                                       22
<PAGE>

contain undetected errors or defects, especially when first introduced or when
new versions are introduced. Our services may not be free from errors or
defects, which could result in the cancellation or disruption of our services
or dissatisfaction of customers. This would damage our reputation, and result
in lost revenues, diverted development resources, and increased service and
warranty costs.

The reporting of inaccurate location-relevant information could cause the loss
of customers and expose us to legal liability.

   The accurate reporting of location-relevant information is critical to our
customers' businesses. If we fail to accurately report location-relevant
information, we could lose customers, our reputation and ability to attract new
customers could be harmed, and we could be exposed to legal liability. We may
not have insurance adequate to cover losses we may incur as a result of these
inaccuracies.

Claims that we infringe third-party proprietary rights could result in
significant expenses or restrictions on our ability to provide our services.

   Third parties may claim that our current or future products or services
infringe their proprietary rights or assert other claims against us. As the
number of entrants into our market increases, the possibility of an
intellectual property or other claim against us grows. Any intellectual
property or other claim, with or without merit, would be time-consuming and
expensive to litigate or settle and could divert management attention from
focusing on our core business. As a result of such a dispute, we may have to
pay damages, incur substantial legal fees, develop costly non-infringing
technology, if possible, or enter into license agreements, which may not be
available on terms acceptable to us, if at all. This would increase our
expenses and could decrease the functionality of our service, which would make
our services less attractive to our current or potential customers. We have
agreed in some of our agreements and may agree in the future to indemnify other
parties for any expenses or liabilities resulting from claimed infringements of
the proprietary rights of third parties.

We may be subject to product liability claims that could result in significant
costs to us.

   We may be subject to claims for damages related to errors and malfunctions
of our hardware components or their installation. A product liability claim
could seriously harm our business because of the costs of defending against
this type of lawsuit, diversion of employees' time and attention, and potential
damage to our reputation. Some of our agreements with our customers contain
provisions designed to limit exposure to potential product liability claims.
Limitation of liability provisions contained in our agreements may not be
enforceable under the laws of some jurisdictions. As a result, we could be
required to pay substantial amounts of damages in settlement or upon the
determination of any of these types of claims.

We may establish alliances or acquire technologies or companies in the future,
which could result in the dilution of our stockholders and disruption of our
business.

   We are continually evaluating business alliances and external investments in
technologies related to our business. Acquisitions of companies, divisions of
companies, businesses or products and strategic alliances entail numerous
risks, any of which could materially harm our business in several ways,
including:

  . diversion of management's attention from our core business objective and
    other business concerns;

  . failure to integrate the acquired company into our pre-existing business;

  . potential loss of key employees from either our pre-existing business or
    the acquired business;

  . dilution of our existing stockholders as a result of issuing equity
    securities; and

  . assumption of liabilities of the acquired company.

   Some or all of these problems may result from current or future alliances,
acquisitions or investments. Furthermore, we may not realize any value from
these alliances, acquisitions or investments.

                                       23
<PAGE>

We may need and may not be able to obtain additional capital, which could
prevent us from carrying out our business strategy.

   We anticipate that our available cash resources will be sufficient to fund
our operating needs for the next 12 months, including the expansion of sales
and marketing and research and development programs during that period.
Thereafter, we may require additional financing in an amount that we cannot
determine at this time. If our plans or assumptions change or are inaccurate,
we may be required to seek capital sooner than anticipated. We may need to
raise funds through public or private debt or equity financings. If we need to
raise additional funds, we may not be able to do so on commercially reasonable
terms, or at all, and may not be able to continue to fund our operations.

If our wireless carriers decide to abandon Cellular Digital Packet Data or
Integrated Digital Enhanced Network technologies or do not continue to expand
their Cellular Digital Packet Data or Integrated Digital Enhanced Network
systems, we may be unable to deliver our services and our sales could decrease.

   Our services function only on Cellular Digital Packet Data-enabled networks
or the Integrated Digital Enhanced Network. These protocols cover only portions
of the U.S. and Canada, are not widely used and may not gain market acceptance.
If wireless carriers decide to abandon these protocols in favor of other types
of wireless technology, we may not be able to provide our current services to
our customers. In addition, if wireless carriers do not expand their coverage
areas, we will be unable to meet the needs of customers who wish to use our
services outside the current coverage area.

Fluctuations in the value of foreign currencies could result in increased
product costs and operating expenses.

   We have suppliers and manufacturers that are located outside the U.S. Some
transactions relating to supply and development agreements may be conducted in
currencies other than the U.S. dollar, and fluctuations in the value of foreign
currencies relative to the U.S. dollar could cause us to incur currency
exchange costs. In addition, some of our transactions denominated in U.S.
dollars may be subject to currency exchange rate risk. We cannot predict the
effect of exchange rate fluctuations on our future operating results. Should
there be a sustained increase in average exchange rates for the local
currencies in these countries, our suppliers and manufacturers may request a
price increase at the end of the contract period.

Our business will be harmed if the demand for services based on wireless
communications does not grow.

   The markets for wireless data services and related products and services are
still emerging, and continued growth in demand for, and acceptance of, these
services remains uncertain. Current barriers to market acceptance of these
services include cost, reliability, functionality and ease of use. We cannot be
certain that these barriers will be overcome. Since the market for our services
is new and evolving, it is difficult to predict the size of this market or its
growth rate. Our financial performance will depend in large part upon the
continued demand for vehicle management services through wireless technologies.
We cannot assure you that a sufficient volume of customers will demand these or
other services based on these technologies. If the market for wireless on-line
vehicle management and other services grows more slowly than we currently
anticipate, our revenues may not grow.

If the use of the Internet by businesses does not continue to grow, our
business will be harmed.

   Our future success is dependent on continued growth in the use of the
Internet by businesses. The use and acceptance of the Internet by businesses
may not increase for a number of reasons, including the cost and availability
of Internet access and concerns about privacy, security and reliability.

                                       24
<PAGE>

   Capacity constraints caused by growth in the use of the Internet may impede
further development of the Internet to the extent that users experience delays,
transmission errors and other difficulties. If the necessary infrastructure,
products, services or facilities are not developed, or if the Internet does not
become a viable and widespread commercial medium, we may not be able to grow
our business.

Government regulations and standards may harm our business and could increase
our costs or reduce our opportunities to earn revenues.

   In addition to regulations applicable to businesses in general, we may also
be subject to direct regulation by governmental agencies, including the Federal
Communications Commission and Department of Defense. These regulations may
impose licensing requirements or safety standards, for example with respect to
human exposure to electromagnetic radiation and signal leakage. A number of
legislative and regulatory proposals under consideration by federal, state,
provincial, local and foreign governmental organizations may lead to laws or
regulations concerning various aspects of the Internet, wireless communications
and Global Positioning System technology, including on-line content, user
privacy, taxation, access charges and liability for third-party activities.
Additionally, it is uncertain how existing laws governing issues such as
taxation on the use of wireless networks, intellectual property, libel, user
privacy and property ownership, will be applied to our services. The adoption
of new laws or the application of existing laws may expose us to significant
liabilities and additional operational requirements, which could decrease the
demand for our services and increase our cost of doing business. Wireless
carriers who supply us with airtime are subject to regulation by the Federal
Communications Commission and regulations that affect them could also increase
our costs or limit the provision of our services.

Our platform contains encryption technology whose export is restricted by law,
which may slow our growth or result in significant costs.

   The U.S. government generally limits the export of encryption technology,
which our services incorporate. Foreign countries may impose similar regulatory
requirements. If any export approval that we receive is revoked or modified, if
our technology is unlawfully exported or if the U.S. government adopts new
legislation or regulations restricting export of our services and encryption
technology, we may not be able to distribute our services to potential
customers outside the U.S., which may seriously harm our business. We may need
to incur significant costs and divert resources to develop replacement
technologies or may need to adopt inferior substitute technologies to satisfy
these export restrictions. These replacement or substitute technologies may not
be the preferred security technologies of our customers, in which case, our
business may not grow. In addition, we may suffer similar consequences if the
laws of any other country limit the ability of third parties to sell encryption
technologies to us.

Our stock price is volatile, which may cause you to lose money and may result
in costly litigation that could divert our resources.

   Stock markets have recently experienced dramatic price and volume
fluctuations, particularly for shares of technology companies. These
fluctuations can be unrelated to the operating performance of these companies.
Broad market fluctuations may reduce the market price of our common stock and
cause you to lose some or all of your investment. These fluctuations may be
exaggerated if the trading volume of our common stock is low. In addition, due
to the technology-intensive and emerging nature of our business, the market
price of our common stock may rise and fall in response to:

  . announcements of technological or competitive developments;

  . acquisitions or strategic alliances by us or our competitors;

  . the gain or loss of a significant customer or order;

  . changes in estimates of our financial performance or changes in
    recommendations by securities analysts; and

  . security breaches.

                                       25
<PAGE>

   When the market price of a company's stock drops significantly, stockholders
often institute securities class action lawsuits against that company. A
lawsuit against us could cause us to incur substantial costs and could divert
the time and attention of our management and other resources from our business.

Our certificate of incorporation and bylaws and state law contain provisions
that could discourage a takeover.

   We have adopted a certificate of incorporation and bylaws, which in addition
to state law, may discourage, delay or prevent a merger or acquisition that a
stockholder may consider favorable. These provisions include the following:

  . establishing a classified board in which only a portion of the total
    board members will be elected at each annual meeting;

  . authorizing the board to issue preferred stock;

  . prohibiting cumulative voting in the election of directors;

  . limiting the persons who may call special meetings of stockholders;

  . prohibiting stockholder action by written consent; and

  . establishing advance notice requirements for nominations for election to
    the board of directors or for proposing matters that can be acted on by
    stockholders at stockholder meetings.

   We have adopted a certificate of incorporation that permits our board to
issue shares of preferred stock without stockholder approval, which means that
the board could issue shares with special voting rights or other provisions
that could deter a takeover. In addition to delaying or preventing an
acquisition, the issuance of a substantial number of preferred shares could
adversely affect the price of our common stock and dilute existing
stockholders.

A limited number of stockholders collectively continue to own a majority of our
common stock and may act, or prevent certain types of corporate actions, to the
detriment of other stockholders.

   Our directors, officers and greater than 5% stockholders own more than 70%
of our outstanding common shares. Accordingly, these stockholders may, if they
act together, exercise significant influence over all matters requiring
stockholder approval, including the election of a majority of the directors and
the determination of significant corporate actions. This concentration could
also have the effect of delaying or preventing a change in control that could
otherwise be beneficial to our stockholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Short-Term Investments

   At December 31, 2000, we held $7.3 million in short-term investments
(including short-term restricted investments of $2.1 million), consisting of
investment grade financial instruments with original maturities of three to
eighteen months. These available-for-sale securities are subject to interest
rate risk and will fall in value if market interest rates increase. If market
interest rates were to increase immediately and uniformly by 10% from levels at
December 31, 2000, the fair market value of the short-term investments would
decline by an immaterial amount. We generally expect to have the ability to
hold fixed income investments until maturity and therefore would not expect
operating results or cash flows to be affected to any significant degree by a
sudden change in market interest rates on short-term investments.

Foreign Currency Exchange

   We transact business primarily in U.S. dollars. We are subject, however, to
adverse movements in foreign currency exchange rates in those countries where
we conduct business. To date, the effect of fluctuations in

                                       26
<PAGE>

foreign currency exchange rates on expenses has not been material. Operating
expenses incurred by our subsidiary in India are denominated in Indian rupees.
This subsidiary was formed in November 1999 to perform research and development
activities. We hold fixed-price agreements denominated in U.S. dollars with key
foreign-based suppliers. Orient Semiconductor Electronics, in Taiwan,
manufactures the Internet Location Manager; Novatel, in Canada, provides the
modem for the Internet Location Manager; Taiwan Semiconductor Manufacturing
Company, in Taiwan, manufactures our Global Positioning System receiver chips;
Conexant Systems (formerly Philsar Electronics), in Canada, manufactures our
radio frequency chips; and Micronet, in Israel, supplies our Internet Data
Terminal. Should there be a sustained increase in average exchange rates for
the local currencies in the foregoing countries, our suppliers may request
increased pricing on any new agreements. If this were to occur for all of these
currencies and with each of these suppliers, a 10% increase in average exchange
rates could increase our product costs by approximately 8.3%.

   We do not use derivative financial instruments for speculative trading
purposes, nor do we currently hedge any foreign currency exposure to offset the
effects of changes in foreign exchange rates. Similarly, we do not use
financial instruments to hedge operating expenses of our India subsidiary.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

   See Part IV, Item 14 of this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

   Not applicable.

                                    PART III

   Certain information required by Part III is omitted from this Report because
we will file a definitive proxy statement within 120 days after the end of our
fiscal year pursuant to Regulation 14A (the "Proxy Statement") for our 2001
annual meeting of stockholders and the information included in the Proxy
Statement is incorporated herein by reference.

                                       27
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

   (a) The following documents are filed as part of this Report:

    1. Index to Consolidated Financial Statements

   The following Consolidated Financial Statements At Road, Inc. and it's
subsidiary are filed as part of this report on form 10-K:

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
   <S>                                                                    <C>
   Independent Auditor's Report..........................................  30
   Consolidated Balance Sheets--December 31, 2000 and 1999 ..............  31
   Consolidated Statements of Operations--Years ended December 31, 2000
    and 1999 ............................................................  32
   Consolidated Statements of Stockholder's Equity and Comprehensive
    loss--Years ended December 31, 2000, 1999 and 1998...................  33
   Consolidated Statements of Cash Flows--Years ended December 31, 2000,
    1999 and 1998........................................................  34
   Notes to Consolidated Financial Statements............................  35
</TABLE>

    2. Consolidated Financial Statement Schedule

   Schedule II--Valuation and Qualifying Accounts

   Schedules not listed above have been omitted because the matter or
conditions are not present or the information required to be set forth therein
is included in the Consolidated Financial Statements hereto.

    3. Exhibits

<TABLE>
     <C>    <S>
     3.4*   Amended and Restated Bylaws of the Registrant.

     3.5*   Amended and Restated Certificate of Incorporation of the
            Registrant.

     4.1*   Specimen Stock Certificate.

     10.1*+ CDPD Value Added Reseller Agreement between the Registrant and AT&T
            Wireless Data, Inc. dated September 30, 1997.

     10.2*+ Form of Wireless Network Services Agreement and Form of Purchase
            Agreement for Goods.

     10.3*+ Product License and Collaboration Agreement between the Registrant
            and Intel Corporation dated January 28, 2000.

     10.4*+ Product Purchase Agreement between the Registrant and Novatel
            Wireless Technologies, Inc. dated January 1, 2000.

     10.5*+ Product Purchase Agreement between the Registrant and Novatel
            Wireless Technologies, Inc. dated April 1, 2000.

     10.6*+ Design and Purchase Contract between the Registrant and Philsar
            Electronics, Inc. dated April 11, 1997.

     10.7*+ Joint Marketing Agreement between the Registrant and Cellco
            Partnership dated June 25, 1999 and Amendment No. 1 dated October
            12, 1999.
</TABLE>


                                       28
<PAGE>

<TABLE>
     <C>     <S>
     10.8*   Sublease Agreement between the Registrant and Sterling Software
             (Western), Inc. dated August 24, 1999.

     10.9*   Industrial Space Lease between Renco Equities IV as landlord and
             SEEQ Technology Inc. as tenant and First Addendum to Lease, each
             dated January 13, 1995, and First Amendment to Lease dated
             April 18, 1995.

     10.10*  Sublease Agreement between the Registrant and LSI Logic
             Corporation dated January 25, 2000 and Consent to Sublease between
             LSI Logic Corporation and Renco Equities IV dated February 8,
             2000.

     10.11*  Agreement between the Registrant and Elnet Technologies Ltd. dated
             November 16, 1999.

     10.12*  1996 Stock Option Plan.

     10.13*  2000 Stock Option Plan.

     10.14*  2000 Employee Stock Purchase Plan.

     10.15*  2000 Directors' Stock Option Plan.

     10.16*  Form of Indemnification Agreement.

     10.17*  Asset Purchase Agreement between the Registrant and Differential
             Corrections, Inc. dated March 8, 2000.

     10.18*  Asset Purchase Agreement between the Registrant and Hynet
             Technologies dated March 23, 2000.

     10.19*  Amended and Restated Rights Agreement between the Registrant and
             certain investors dated June 27, 2000.

     10.20*+ CDPD Data National Service Agreement between the Registrant and
             GTE Wireless Incorporated dated May 5, 2000.

     10.21*  Joint Marketing Agreement between the Registrant and GTE Wireless
             Service Corporation dated May 5, 2000.

     10.22*  Loan and Security Agreement between the Registrant and Silicon
             Valley Bank dated June 30, 1999, Loan Modification Agreement dated
             July 23, 1999, Loan Modification Agreement dated December 29, 1999
             and Loan Modification Agreement dated March 31, 2000.

     10.23*+ Strategic Agreement between the Registrant and Hitachi Software
             Engineering Co., Ltd. dated July 21, 2000.

     10.24*  Lease Agreement between the Registrant and ProLogis Limited
             Partnership-I dated August 3, 2000.

     10.25   First Amendment to Lease Agreement between the Registrant and
             ProLogis Limited Partnership-I dated March 8, 2001.

     10.26   Loan Modification Agreement between the Registrant and Silicon
             Valley Bank dated March 21, 2001.

     21.1*   List of Subsidiaries.

     23.1    Independent Auditors' Consent.

     24.1    Power of Attorney (see page 48).
</TABLE>

--------
 * Incorporated by reference to our registration statement on Form S-1 (File
   No. 333-41372) initially filed with the SEC on July 13, 2000.

 + Certain information in this Exhibit has been omitted and filed separately
   with the SEC. Confidential treatment has been granted with respect to the
   omitted portions.

   (b) The Company filed no reports on Form 8-K during the period from its
initial public offering through December 31, 2000.

                                       29
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of At Road, Inc.:

   We have audited the accompanying consolidated balance sheets of At Road,
Inc. and its subsidiary (the Company) as of December 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 2000. Our
audit also included the consolidated financial statement schedule listed in
Item 14.(a)2. These financial statements and the financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and the financial statement
schedule based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
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 financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

   In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of At Road, Inc. and its
subsidiary at December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000 in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.

/s/ DELOITTE & TOUCHE LLP

San Jose, California
February 14, 2001

                                       30
<PAGE>

                                 AT ROAD, INC.

                          CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and par value amounts)

<TABLE>
<CAPTION>
                                                               December 31,
                                                             -----------------
                                                               2000     1999
                                                             --------  -------
<S>                                                          <C>       <C>
                           ASSETS
Current assets:
  Cash and cash equivalents................................. $ 69,280  $22,714
  Short-term investments....................................    5,198   13,939
  Restricted short-term investments.........................    2,135    2,000
  Accounts receivable (net of allowances of $2,247 and
   $153)....................................................    4,252      807
  Inventories...............................................    6,976    1,880
  Deferred product costs....................................    6,598    1,282
  Prepaid expenses and other................................      812      204
                                                             --------  -------
    Total current assets....................................   95,251   42,826

Property and equipment, net.................................    7,108    1,566
Deferred product costs......................................    3,706      594
Intangible assets, net......................................    3,727      --
Other assets................................................    1,650      188
                                                             --------  -------

    Total assets............................................ $111,442  $45,174
                                                             ========  =======
            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.......................................... $  3,610  $ 2,020
  Accrued liabilities.......................................    5,557    1,345
  Deferred revenue..........................................    3,912      703
                                                             --------  -------
    Total current liabilities...............................   13,079    4,068
Deferred revenue............................................    3,217      464
Other long-term liabilities.................................      380       34
                                                             --------  -------
    Total liabilities.......................................   16,676    4,566

Commitments (Note 10)
Stockholders' equity:
  Preferred stock, $0.0001 par value, 10,000,000 authorized,
   shares issued and outstanding: none in 2000 and
   25,430,177 shares of convertible preferred stock in 1999
   .........................................................      --    51,606
  Common stock, $0.0001 par value, 250,000,000 shares
   authorized, shares issued and outstanding: 46,071,979 in
   2000 and 7,550,001 in 1999 ..............................  171,208   18,590
Deferred stock compensation.................................   (8,123) (11,632)
Notes receivable from stockholders..........................   (3,309)  (1,758)
Accumulated other comprehensive loss........................      (10)     (21)
Accumulated deficit.........................................  (65,000) (16,177)
                                                             --------  -------
    Total stockholders' equity..............................   94,766   40,608
                                                             --------  -------
    Total liabilities and stockholders' equity.............. $111,442  $45,174
                                                             ========  =======
</TABLE>

                See notes to consolidated financial statements.

                                       31
<PAGE>

                                 AT ROAD, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                                  ---------------------------
                                                    2000      1999     1998
                                                  --------  --------  -------
<S>                                               <C>       <C>       <C>
Revenues:
  Service........................................ $  7,919  $    612  $     4
  Product........................................    2,704       294       64
                                                  --------  --------  -------
    Total revenues...............................   10,623       906       68
                                                  --------  --------  -------
Costs and expenses:
  Cost of service revenue........................    6,414       681       27
  Cost of product revenue........................    7,865     1,777       87
  Sales and marketing............................   15,512     3,530      266
  Research and development.......................    8,893     2,109      731
  General and administrative.....................   10,887     2,129      457
  Intangibles amortization.......................    1,239       --       --
  Stock compensation (*).........................   11,664     4,973      --
                                                  --------  --------  -------
    Total costs and expenses.....................   62,474    15,199    1,568
                                                  --------  --------  -------
Loss from operations.............................  (51,851)  (14,293)  (1,500)
Interest income, net.............................    3,243       804       90
Other expense, net...............................     (215)      --       --
                                                  --------  --------  -------
Net loss......................................... $(48,823) $(13,489) $(1,410)
                                                  ========  ========  =======
Basic and diluted net loss per share............. $  (3.48) $  (4.88) $ (0.62)
                                                  ========  ========  =======
Shares used in calculating basic and diluted net
 loss per share..................................   14,026     2,763    2,287
                                                  ========  ========  =======
Pro forma basic and diluted net loss per share... $  (1.41) $  (0.59)
                                                  ========  ========
Shares used in calculating pro forma basic and
 diluted net loss per share......................   34,582    22,882
                                                  ========  ========
(*)Stock compensation:
  Cost of service revenue........................ $    171  $     17  $   --
  Cost of product revenue........................      479        52      --
  Sales and marketing............................    1,691       445      --
  Research and development.......................    2,686       501      --
  General and administrative.....................    6,637     3,958      --
                                                  --------  --------  -------
    Total........................................ $ 11,664  $  4,973  $   --
                                                  ========  ========  =======
</TABLE>


                See notes to consolidated financial statements.

                                       32
<PAGE>

                                 AT ROAD, INC.

    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE LOSS

                 YEARS ENDED DECEMBER 31, 1998, 1999 and 2000
              (In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                                                                              Notes      Accumulated
                    Preferred Stock         Common Stock        Deferred    Receivable      Other
                  ---------------------  -------------------     Stock         from     Comprehensive Accumulated Stockholders'
                    Shares      Amount     Shares    Amount   Compensation Stockholders     Loss        Deficit      Equity
                  -----------  --------  ---------- --------  ------------ ------------ ------------- ----------- -------------
<S>               <C>          <C>       <C>        <C>       <C>          <C>          <C>           <C>         <C>
BALANCES,
January 1,
1998............    3,750,000  $  2,489   2,250,000 $      3    $    --      $   --         $--        $ (1,278)    $  1,214
Net loss........                                                                                         (1,410)      (1,410)
Issuance of
Series B
convertible
preferred stock
at $0.48 per
share, net of
issuance costs
of $20..........   12,413,789     5,980                                                                                5,980
Exercise of
stock options...                             61,125        4                                                               4
                  -----------  --------  ---------- --------    --------     -------        ----       --------     --------
BALANCES
December 31,
1998............   16,163,789     8,469   2,311,125        7         --          --          --          (2,688)       5,788
Net loss........                                                                                        (13,489)     (13,489)
Change in net
unrealized loss
from short term
investments.....                                                                             (21)                        (21)
Comprehensive
loss............
Issuance of
Series C
convertible
preferred stock
at $3.33 per
share, net of
issuance costs
of $21..........    6,956,400    23,167                                                                               23,167
Issuance of
Series D
convertible
preferred stock
at $8.67 per
share, net of
issuance costs
of $50..........    2,309,988    19,970                                                                               19,970
Common stock
issued for
consulting
services........                             50,689       43                                                              43
Exercise of
stock options
and stock
purchase
rights..........                          5,188,187    1,935                  (1,758)                                    177
Deferred stock
compensation....                                      16,605     (16,605)
Amortization of
deferred stock
compensation....                                                   4,973                                               4,973
                  -----------  --------  ---------- --------    --------     -------        ----       --------     --------
BALANCES,
December 31,
1999............   25,430,177    51,606   7,550,001   18,590     (11,632)     (1,758)        (21)       (16,177)      40,608
Net loss........                                                                                        (48,823)     (48,823)
Change in net
unrealized
income (loss)
from short term
investments.....                                                                              11                          11
Comprehensive
loss............
Issuance of
Series D
convertible
preferred stock
at $8.67 per
share net of
issuance cost of
$35.............    1,280,768    11,069                                                                               11,069
Issuance of
Series D
convertible
preferred stock
at $10.80 per
share in
connection with
the purchase of
Differential
Corrections,
Inc. assets.....       78,923       852                                                                                  852
Issuance of
Series E
convertible
preferred stock
at $10.00 per
share net of
issuance costs
of $20..........    2,100,000    20,980                                                                               20,980
Issuance of
common stock in
connection with
the purchase of
Hynet
Technologies
assets..........                             50,000      740                                                             740
Conversion of
convertible
preferred stock
into common
stock...........  (28,889,868)  (84,507) 28,889,868   84,507                                                             --
Common stock
issued through
initial public
offering, net of
issuance costs..                          7,000,000   56,841                                                          56,841
Exercise of
stock options
and stock
purchase
rights..........                          2,575,860    2,324                  (1,471)                                    853
Common stock
issued for
consulting
services........                              6,250       51                                                              51
Issuance of note
receivable
related to
previously
issued common
stock...........                                                                 (80)                                    (80)
Deferred stock
compensation....                                      10,026     (10,026)                                                --
Reversal of
deferred stock
compensation due
to employee
terminations....                                      (1,871)      1,871                                                 --
Amortization of
deferred stock
compensation....                                                  11,664                                              11,664
                  -----------  --------  ---------- --------    --------     -------        ----       --------     --------
BALANCES,
December 31,
2000............          --        --   46,071,979 $171,208    $ (8,123)    $(3,309)       $(10)      $(65,000)    $ 94,766
                  ===========  ========  ========== ========    ========     =======        ====       ========     ========
<CAPTION>
                      Total
                  Comprehensive
                      Loss
                  -------------
<S>               <C>
BALANCES,
January 1,
1998............
Net loss........    $ (1,410)
                  =============
Issuance of
Series B
convertible
preferred stock
at $0.48 per
share, net of
issuance costs
of $20..........
Exercise of
stock options...
BALANCES
December 31,
1998............
Net loss........    $(13,489)
Change in net
unrealized loss
from short term
investments.....         (21)
                  -------------
Comprehensive
loss............    $(13,510)
                  =============
Issuance of
Series C
convertible
preferred stock
at $3.33 per
share, net of
issuance costs
of $21..........
Issuance of
Series D
convertible
preferred stock
at $8.67 per
share, net of
issuance costs
of $50..........
Common stock
issued for
consulting
services........
Exercise of
stock options
and stock
purchase
rights..........
Deferred stock
compensation....
Amortization of
deferred stock
compensation....
BALANCES,
December 31,
1999............
Net loss........    $(48,823)
Change in net
unrealized
income (loss)
from short term
investments.....          11
                  -------------
Comprehensive
loss............    $(48,812)
                  =============
Issuance of
Series D
convertible
preferred stock
at $8.67 per
share net of
issuance cost of
$35.............
Issuance of
Series D
convertible
preferred stock
at $10.80 per
share in
connection with
the purchase of
Differential
Corrections,
Inc. assets.....
Issuance of
Series E
convertible
preferred stock
at $10.00 per
share net of
issuance costs
of $20..........
Issuance of
common stock in
connection with
the purchase of
Hynet
Technologies
assets..........
Conversion of
convertible
preferred stock
into common
stock...........
Common stock
issued through
initial public
offering, net of
issuance costs..
Exercise of
stock options
and stock
purchase
rights..........
Common stock
issued for
consulting
services........
Issuance of note
receivable
related to
previously
issued common
stock...........
Deferred stock
compensation....
Reversal of
deferred stock
compensation due
to employee
terminations....
Amortization of
deferred stock
compensation....
BALANCES,
December 31,
2000............
</TABLE>
                See notes to consolidated financial statements.

                                       33
<PAGE>

                                 AT ROAD, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                    Years Ended December 31,
                                                    ---------------------------
                                                      2000      1999     1998
                                                    --------  --------  -------
<S>                                                 <C>       <C>       <C>
Cash flows from operating activities:
 Net loss.........................................  $(48,823) $(13,489) $(1,410)
 Adjustments to reconcile net loss to net cash
  used in operating activities
  Depreciation and amortization...................     3,385       188       47
  (Gain) loss on sale of property and equipment...      (161)        6
  Amortization of deferred stock compensation.....    11,664     4,973      --
  Provision for inventory reserves................       768       154      --
  Provision for bad debts and sales returns.......     2,094       153      --
  Common stock issued for consulting services.....        51        43      --
  Change in assets and liabilities:
  Accounts receivable.............................    (5,539)     (898)     (62)
  Inventories.....................................    (5,864)   (1,796)    (166)
  Deferred product costs..........................    (8,428)   (1,809)     (67)
  Prepaid expenses and other......................      (608)     (110)     (84)
  Accounts payable................................     1,590     1,969       25
  Accrued and other liabilities...................     4,558     1,279       33
  Deferred revenue................................     5,962     1,100       67
                                                    --------  --------  -------
   Net cash used in operating activities..........   (39,351)   (8,237)  (1,617)
                                                    --------  --------  -------
Cash flows from investing activities:
 Purchase of property and equipment...............    (7,550)   (1,621)    (101)
 Proceeds from sale of property and equipment.....       283        35      --
 Purchases of short-term investments..............    (6,531)  (17,971)
 Proceeds from maturities of short-term
  investments.....................................    15,283     4,011      500
 Purchase of restricted short-term investments....      (135)   (2,000)     --
 Cash paid in purchase of Differential
  Corrections, Inc. and Hynet Technologies assets,
  net of cash acquired............................    (3,363)      --       --
 Other assets.....................................    (1,733)     (173)     --
                                                    --------  --------  -------
   Net cash provided by (used in) investing
    activities....................................    (3,746)  (17,719)     399
                                                    --------  --------  -------
Cash flows from financing activities:
 Proceeds from sale preferred stock...............    32,049    43,137    5,980
 Proceeds from sale of common stock...............    57,694       177        4
 Issuance of note receivable related to previous
  issuance of common stock........................       (80)      --       --
                                                    --------  --------  -------
   Net cash provided by financing activities......    89,663    43,314    5,984
                                                    --------  --------  -------
Net increase in cash and cash equivalents.........    46,566    17,358    4,766
Cash and cash equivalents:
  Beginning of year...............................    22,714     5,356      590
                                                    --------  --------  -------
  End of year.....................................  $ 69,280  $ 22,714  $ 5,356
                                                    ========  ========  =======
Supplemental disclosure of cash flow information:
 Cash paid for interest:..........................  $    --   $     25  $   --
                                                    ========  ========  =======
Non-cash investing and financing activities
 Issuance of common stock for notes receivable....  $  1,471  $  1,758  $   --
                                                    ========  ========  =======
Purchase of Differential Corrections, Inc. and
 Hynet Technologies assets:
 Value of stock issued............................     1,592
 Cash paid........................................     4,014
 Liabilities assumed..............................       215
                                                    --------
 Assets acquired (including intangibles of
  $4,969).........................................  $  5,821
                                                    ========
</TABLE>

                See notes to consolidated financial statements.

                                       34
<PAGE>

                                 AT ROAD, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

Note 1. Summary of Significant Accounting Policies

 Organization

   At Road, Inc. (the Company), was incorporated in July 1994 in California and
commenced operations on July 1, 1996. During 1998, the Company completed the
development of its service delivery platform and began substantial sales and
marketing efforts. The Company is a leading provider of Internet-based
productivity enhancement services for companies with mobile workforces through
the use of the proprietary global positioning system (GPS) and wireless
technologies. In September 2000, the Company reincorporated in the State of
Delaware and changed its name from @Road, Inc. to At Road, Inc.

 Principles of Consolidation

   The consolidated financial statements include the Company and its wholly
owned subsidiary. Intercompany accounts and transactions are eliminated in
consolidation.

 Estimates

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses during the reporting period.
Actual results could differ from those estimates.

 Cash Equivalents

   The Company considers all highly liquid debt instruments purchased with an
original maturity of 90 days or less to be cash equivalents.

 Short-Term Investments

   Short-term investments represent highly liquid debt instruments purchased
with a maturity date at purchase of greater than 90 days and are stated at fair
value. The differences between amortized cost (cost adjusted for amortization
of premiums and accretion of discounts, which are recognized as adjustments to
interest income) and fair value, representing unrealized holding gains or
losses, are recorded as accumulated other comprehensive loss within
stockholders' equity. While the Company's intent is to hold debt securities to
maturity, they are classified as available-for-sale because the sale of such
securities may be required prior to maturity. Any gains and losses on the sale
of debt securities are determined on a specific identification basis.

   Restricted short-term investments consist of a certificate of deposit with
an original maturity of greater than 90 days, which is held as collateral under
the Company's line of credit agreement (see Note 7). The certificate of deposit
is classified as an available-for-sale as the sale of such security may be
required prior to maturity. At December 31, 2000 and 1999, the fair value of
the restricted short-term investments approximated cost.

 Concentration of Credit Risk

   Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash equivalents, short-
term investments and accounts receivable. The Company's cash equivalents and
short-term investments consist of checking and savings accounts, money market
accounts and highly liquid

                                       35
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

debt instruments with three financial institutions. The Company sells its
products primarily to companies in the United States. The Company does not
require collateral or other security to support accounts receivable. To reduce
credit risk, management performs ongoing evaluations of its customers'
financial condition.

 Inventories

   Inventories consist of raw materials, work in process and finished goods,
and are stated at the lower of cost (average cost) or market.

 Property and Equipment

   Property and equipment are stated at cost and depreciated using the
straight-line method over estimated useful lives of approximately three to five
years. Leasehold improvements are amortized over the shorter of the lease term
or their useful lives.

 Intangible Assets

   Intangible assets, which represent purchased technology, are stated at cost
and are amortized using the straight-line method over an estimated useful life
of three years.

 Long-Lived Assets

   The Company evaluates long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. An impairment loss would be recognized when the sum of the
undiscounted future net cash flows expected to result from the use of the asset
and its eventual disposition is less than its carrying amount.

 Income Taxes

   The Company accounts for income taxes under an asset and liability approach.
Deferred income taxes reflect the impact of temporary differences between
assets and liabilities recognized for financial reporting purposes and such
amounts recognized for income tax reporting purposes, net operating loss carry
forwards and other tax credits measured by applying currently enacted tax laws.
Valuation allowances are provided when necessary to reduce deferred tax assets
to an amount that is more likely than not to be realized.

 Revenue Recognition

   Revenue is recognized when earned in accordance with applicable accounting
standards, including American Institute of Certified Public Accountants (AICPA)
Statement of Position No. 97-2, Software Revenue Recognition, as amended. The
Company earns revenues under service contracts, which generally provide service
over periods from two to three years, and from related products sold to
customers (for which title passes on shipment). The Company's service is only
available through use of the Company's product; such product has no alternative
use. Accordingly, service revenue is recognized ratably over the minimum
service contract period, which commences upon product installation. In
addition, the Company defers product revenue at installation and recognizes it
ratably over the minimum service contract period. Product costs (not in excess
of the related deferred product revenues) are also deferred and amortized over
such period. Allowances for sales returns are recorded at the time product
revenue is recognized. Deferred revenue also includes customer payments
received prior to installation.

                                       36
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Advertising Costs

   All advertising costs are expensed as incurred. Advertising costs, which are
included in sales and marketing expenses, were $1,392,000, $179,000 and $3,000
for 2000, 1999 and 1998, respectively.

 Research and Development Expenses

   Research and development expenses are charged to operations as incurred.
Such expenses include product development costs and costs related to the
Company's internally developed software systems, which have not met the
capitalization criteria of Statement of Position 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use (SOP 98-1). During
2000 and 1999, the Company capitalized approximately $869,000 and $242,000,
respectively, of costs related to internally developed software systems in
accordance with SOP 98-1.

 Foreign Currency Transactions

   The functional currency of the Company's foreign subsidiary is the U.S.
dollar. Accordingly, all monetary assets and liabilities are translated at the
current exchange rate at the end of the year, non-monetary assets and
liabilities are translated at historical rates and revenues and expenses are
translated at average exchange rates in effect during the period. Transaction
gains and losses have not been significant to date.

 Stock-Based Awards

   The Company accounts for stock-based awards to employees using the intrinsic
value method in accordance with Accounting Principles Board Opinion (APB) No.
25, Accounting for Stock Issued to Employees.

   The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation, and Emerging Issues
Task Force (EITF) Issue No. 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services, which requires that the fair value of such instruments be
recognized as an expense over the period in which the related services are
received.

 Net Loss per Common Share

   Basic net loss per common share excludes dilution and is computed by
dividing net loss by the weighted average number of common shares outstanding
for the period (excluding shares subject to repurchase). Diluted net loss per
common share was the same as basic net loss per common share for all years
presented since the effect of any potentially dilutive securities is excluded,
as they are anti-dilutive because of the Company's net losses.

 Pro Forma Net Loss per Common Share

   Pro forma basic and diluted net loss per common share is computed by
dividing net loss by the weighted average number of common shares outstanding
for the period (excluding shares subject to repurchase) plus the weighted
average number of common shares resulting from the assumed conversion of
outstanding shares of convertible preferred stock.

                                       37
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Certain Significant Risks and Uncertainties

   The Company participates in a dynamic high-technology industry and believes
that changes in any of the following areas could have a material adverse effect
on the Company's future financial position, results of operations or cash
flows: advances and trends in new technologies and industry standards;
competitive pressures in the form of new products and services or price
reductions on current products and services; changes in the overall demand for
products and services offered by the Company; market acceptance of the
Company's products and services; development of sales channels; changes in
third-party manufacturers; changes in key suppliers; changes in certain
strategic relationships or customer relationships; litigation or claims against
the Company based on intellectual property, patent, product, regulatory or
other factors; risks associated with necessary components and the Company's
ability to attract and retain employees necessary to support its growth.

 Comprehensive Loss

   Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income, requires that an enterprise report, by major components
and as a single total, the change in its net assets during the period from non-
owner sources. At December 31, 2000, accumulated other comprehensive loss is
comprised of net unrealized losses on short-term investments of $10,000. At
December 31, 1999, accumulated other comprehensive loss is comprised of
unrealized losses on short-term investments of $21,000. For 1998, comprehensive
loss was equal to net loss.

 Segment Reporting

   Effective January 1, 1999, the Company adopted SFAS No. 131, Disclosures
About Segments of an Enterprise and Related Information. In 2000 and 1999, the
Company operated in a single reportable segment. The Company had no significant
revenues from customers outside of the United States in 2000 and 1999, and had
no significant long-lived assets deployed outside the United States at December
31, 2000 and 1999.

 Recently Issued Accounting Standards

   Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, is effective for all years
beginning after June 15, 2000. SFAS No. 133, as amended, establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities.
Under SFAS No. 133, certain contracts that were not formerly considered
derivatives may now meet the definition of a derivative. The Company has
adopted SFAS No. 133 effective January 1, 2001. The adoption of SFAS No. 133
did not have a significant impact on the consolidated financial position,
results of operations or cash flows of the Company.

   In December 1999, the Securities and Exchange Commission (SEC) released
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial
Statements. This bulletin summarizes certain interpretations and practices
followed by the Division of Corporation Finance and the Office of the Chief
Accountant of the SEC with respect to revenue recognition in financial
statements. Application of the accounting and disclosures described in the
bulletin was required by the fourth quarter of 2000. Management has determined
that adoption of this bulletin did not have a significant impact on the
Company's consolidated financial position, results of operations or cash flows.

                                       38
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Reclassifications

   Certain reclassifications have been made to the 1999 and 1998 consolidated
financial statement presentation to conform to the 2000 presentation. These
reclassifications had no effect on net loss or stockholders' equity.

Note 2. Acquisitions

   In April 2000, the Company purchased substantially all assets and certain
related liabilities of Differential Corrections, Inc. (Differential) for cash
of $4,014,000 and 78,923 shares of the Company's Series D convertible preferred
stock with an estimated fair value of $852,000. The acquisition was accounted
for as a purchase and, accordingly, the results of operations of Differential
since the date of acquisition have been included in the Company's consolidated
financial statements. The total consideration exceeded the fair value of the
net tangible assets (liabilities) acquired by approximately $4,969,000, which
has been recorded as purchased technology and is being amortized on a straight-
line basis over an estimated useful life of three years.

   The following pro forma information shows the results of operations for 2000
and 1999 as if the Differential purchase had occurred at the beginning of the
year. The results are not necessarily indicative of what would have occurred
had the acquisition actually been made at the beginning of the respective years
presented or of future operations of the combined companies (in thousands,
except per share information).

<TABLE>
<CAPTION>
                                                                Year ended
                                                               December 31,
                                                             ------------------
                                                               2000      1999
                                                             --------  --------
                                                                (unaudited)
   <S>                                                       <C>       <C>
   Net revenues............................................. $ 10,743  $  1,306
   Net loss.................................................  (48,940)  (15,828)
   Net loss per share, basic and diluted....................    (3.49)    (5.73)
</TABLE>

   In May 2000, the Company purchased certain assets and related liabilities of
Hynet Technologies for 50,000 shares of the Company's common stock. The net
assets purchased had an estimated fair value of $740,000 (including $651,000 of
cash and $100,000 of assets held for sale). The Company recorded the value of
the common stock issued at $740,000 based on the monetary assets acquired
(including the estimated proceeds from the assets held for sale) net of
liabilities assumed.

Note 3. Short-Term Investments

   Short-term investments include the following available-for-sale securities
at December 31, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                          Unrealized Unrealized
                                         Amortized Market  Holding    Holding
                                           Costs   Value    Gains      Losses
                                         --------- ------ ---------- ----------
   <S>                                   <C>       <C>    <C>        <C>
   Commercial paper.....................  $2,332   $2,332   $ --       $ --
   Corporate debt securities............   1,855    1,845     --         (10)
   U.S. Government debt securities......   1,021    1,021     --         --
                                          ------   ------   -----      -----
   Total................................  $5,208   $5,198   $ --       $ (10)
                                          ======   ======   =====      =====
</TABLE>

                                       39
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Short-term investments include the following available-for-sale securities
at December 31, 1999 (in thousands):

<TABLE>
<CAPTION>
                                                          Unrealized Unrealized
                                        Amortized Market   Holding    Holding
                                          Costs    Value    Gains      Losses
                                        --------- ------- ---------- ----------
   <S>                                  <C>       <C>     <C>        <C>
   Commercial paper....................  $10,214  $10,215    $  1      $ --
   Corporate debt securities...........    2,746    2,731     --         (15)
   U.S. Government debt securities.....    1,000      993     --          (7)
                                         -------  -------    ----      -----
   Total...............................  $13,960  $13,939    $  1      $ (22)
                                         =======  =======    ====      =====
</TABLE>

Note 4. Inventories

   Inventories consist of (in thousands):

<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   -------------
                                                                    2000   1999
                                                                   ------ ------
   <S>                                                             <C>    <C>
   Raw materials.................................................  $4,681 $1,095
   Work in progress..............................................     774    338
   Finished goods................................................   1,521    447
                                                                   ------ ------
                                                                   $6,976 $1,880
                                                                   ====== ======
</TABLE>

Note 5. Property and Equipment

   Property and equipment consist of (in thousands):

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                ---------------
                                                                 2000     1999
                                                                -------  ------
   <S>                                                          <C>      <C>
   Computers and software...................................... $ 8,514  $1,603
   Manufacturing and office equipment..........................     248     131
   Furniture and fixtures......................................     334      67
   Leasehold improvements......................................     153      19
                                                                -------  ------
     Total.....................................................   9,249   1,820
   Accumulated depreciation and amortization...................  (2,141)   (254)
                                                                -------  ------
   Property and equipment, net................................. $ 7,108  $1,566
                                                                =======  ======
</TABLE>

Note 6. Accrued Liabilities

   Accrued liabilities consist of (in thousands):

<TABLE>
<CAPTION>
                                                                  December 31,
                                                                  -------------
                                                                   2000   1999
                                                                  ------ ------
   <S>                                                            <C>    <C>
   Accrued compensation and related benefits..................... $2,329 $  924
   Other.........................................................  3,228    421
                                                                  ------ ------
   Total......................................................... $5,557 $1,345
                                                                  ====== ======
</TABLE>

                                       40
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 7. Line of Credit

   During 1999, the Company entered into a $2,000,000 revolving line of credit
agreement that expires in May 2001. The line of credit provides for issuance of
letters of credit of up to $2,000,000. Borrowings bear interest at the
restricted certificate of deposit rate plus 2% (6.4% at December 31, 2000) and
are collateralized by a restricted certificate of deposit (see Note 1). There
were no borrowings or letters of credit outstanding under this revolving line
of credit at December 31, 2000 and 1999.

Note 8. Stockholders' Equity

 Initial Public Offering of Stock

   On September 28, 2000, the Company completed the sale of 7,000,000 shares of
common stock in an underwritten initial public offering at a price of $9.00 per
share. Offering proceeds to the Company, net of the underwriting discount and
aggregate expenses of approximately $6,159,000, were approximately $56,841,000.
Simultaneously with the closing of the initial public offering, all outstanding
shares of the Company's convertible preferred stock were converted into shares
of common stock at a conversion ratio of 1-to-1.

   In connection with the initial public offering, the Company authorized an
undesignated class of preferred stock for 10,000,000 shares. The preferred
stock may be issued from time to time in one or more series. The board of
directors is authorized to determine or alter the rights, preferences,
privileges and restrictions of such preferred stock. No shares were outstanding
at December 31, 2000.

 Employee Stock Purchase Plan

   In 2000, the Company adopted the 2000 Employee Stock Purchase Plan (the
ESPP). A total of 450,000 shares of common stock are reserved for issuance
under the ESPP. The number of shares reserved for issuance under the ESPP will
automatically increase on the first day of each year beginning in 2001 and
ending 2010 by an amount equal to the lesser of 900,000 shares or two percent
of the total shares outstanding on the last day of the preceding year. Under
the ESPP, shares of common stock will be sold to employees at a price not less
than 85% of the lower of fair market value at the beginning of the two-year
offering period or the end of the six month purchase periods. At December 31,
2000, no shares have been issued under this plan.

 Stock Option Plans

   In 2000, the Company adopted the 2000 Stock Option Plan (the 2000 Option
Plan). A total of up to 2,000,000 shares are be reserved for issuance under the
2000 Plan. In addition, up to 9,825,000 shares, if available for grant under
the 1996 Stock Option Plan will be granted under the 2000 Option Plan. The
number of shares reserved under the 2000 Option Plan will automatically be
increased on the first day of each of the fiscal years beginning 2001 and
ending 2010 in an amount equal to the lesser of 2,500,000 shares or four
percent of the shares outstanding on the last day of the preceding year. These
options generally expire ten years from date of grant and generally vest in
installments over a four-year period.

   In 2000, the Company adopted the 2000 Directors' Stock Option Plan (the
Directors' Plan). A total of up to 1,200,000 shares of common stock are
reserved for issuance under the Directors' Plan at the fair market value at the
grant date. Under the Directors' Plan, each individual who first becomes a non-
employee director after the effective date of the Directors' Plan will receive
an automatic initial grant of an option to purchase 40,000 shares of common
stock upon appointment or election to the board of directors. These automatic
grants to purchase 40,000 shares generally vest in installments over a four-
year period. The Directors' Plan also provides for automatic annual grants of
options to purchase 10,000 shares of common stock on the date of each annual
meeting of our stockholders to each non-employee director who has served on the
board for at least six months prior to the meeting. The automatic grants to
purchase 10,000 shares generally vest in installments over a one-year period.
Options granted under the 2000 Directors' Plan have a term of 10 years from the
date of grant.

                                       41
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Under the Company's 1996 Stock Option Plan, the Board of Directors is
authorized to grant to employees, officers, directors and consultants up to
11,326,125 shares of common stock. These options generally expire ten years
from the date of grant and generally vest in installments over a four-year
period.

 Stock Purchase Rights

   In 1999, the Company granted to employees purchase rights for 525,000 shares
of common stock at $1.33 per share. Of the shares issuable under the purchase
rights, 150,000 of the shares are subject to repurchase by the Company at the
original issuance price; the repurchase right lapses over a twenty-one month
period.

   A summary of option and stock purchase right activity is as follows:

<TABLE>
<CAPTION>
                                                                     Weighted
                                                      Number of      Average
                                                        Shares    Exercise Price
                                                      ----------  --------------
   <S>                                                <C>         <C>
   Outstanding, January 1, 1998.....................   1,755,000      $0.07
   Granted (weighted average fair value of $0.01 per
    share)..........................................     627,000       0.07
   Exercised........................................     (61,125)      0.07
   Canceled.........................................    (189,375)      0.07
                                                      ----------
   Outstanding, December 31, 1998 (1,062,483
    exercisable at a weighted average exercise price
    of $0.07).......................................   2,131,500       0.07
   Granted (weighted average fair value of $2.34 per
    share)..........................................   7,572,575       0.55
   Exercised........................................  (5,188,187)      0.37
   Canceled.........................................    (459,000)      0.09
                                                      ----------
   Outstanding, December 31, 1999 (833,872
    exercisable at a weighted average exercise price
    of $0.69).......................................   4,056,888       0.57
   Granted (weighted average fair value of $6.98 per
    share)..........................................   4,598,450       5.79
   Exercised........................................  (2,575,860)      0.90
   Canceled.........................................    (741,093)      5.30
                                                      ----------
   Outstanding, December 31, 2000...................   5,338,385      $4.25
                                                      ==========
</TABLE>

   At December 31, 2000, 1,887,565 shares were available for future grant under
the option plans.

   Additional information regarding options and stock purchase rights
outstanding as of December 31, 2000 is as follows:

<TABLE>
<CAPTION>
                                 Outstanding
                                  Weighted      Outstanding              Vested
                                   Average       Weighted               Weighted
                                  Remaining       Average               Average
     Exercise        Number      Contractual     Exercise     Number    Exercise
       Price       Outstanding   Life (Years)      Price      Vested     Price
     --------      -----------   -----------    -----------   -------   --------
   <S>             <C>           <C>            <C>           <C>       <C>
       $0.07          639,755       7.62          $ 0.07      270,907    $ 0.07
       0.67           661,580       8.63            0.67      124,101      0.67
       1.33           914,062       9.00            1.33      159,751      1.33
       1.63           860,125       9.97            1.63        2,000      1.63
       4.00           285,500       9.16            4.00            0      4.00
       8.00            25,000       9.21            8.00            0      8.00
       9.00         1,278,613       9.42            9.00       18,234      9.00
       10.00          673,750       9.62           10.00        2,000     10.00
                    ---------                                 -------
   $0.07--$10.00    5,338,385       9.14          $ 4.25      576,993    $ 0.87
                    =========                                 =======
</TABLE>

                                       42
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Stock Compensation

   In 2000 and 1999, the Company issued options and purchase rights to
employees having a fair value greater than the related exercise price. These
options and purchase rights totaled 1,264,875 and 7,045,125 shares of common
stock at a weighted average exercise price of $2.28 and $0.59, respectively.
The weighted average fair value of the common stock at the time the options
were issued was $9.27 and $2.95 per share in 2000 and 1999, respectively.
Accordingly, the Company recorded approximately $8,830,000 and $15,842,000 as
the value of such options in 2000 and 1999, respectively. Stock compensation of
$10,491,000 and $4,436,000 was amortized to expense in 2000 and 1999,
respectively. At December 31, 2000 and 1999, the Company had $8,101,000 and
$11,406,000 in deferred compensation related to employee options, respectively.

   In 2000 and 1999, the Company issued non-statutory common stock options to
consultants to purchase 204,250 and 147,200 shares of common stock, of which
options to purchase 170,000 and 144,200 shares of common stock were outstanding
at December 31, 2000 and 1999, respectively. Accordingly, the Company recorded
$1,196,000 and $763,000 as the fair value of such options at December 31, 2000
and 1999, respectively. Stock compensation of $1,173,000 and $537,000 was
recognized as a result of issuing these options in 2000 and 1999, respectively.
The fair value of the unvested portion of these options is being amortized over
the vesting period. The fair value attributable to the unvested portion of
these options is subject to adjustment based upon the future value of the
Company's common stock. The fair values of these options were determined at the
date of vesting using the methods specified by SFAS 123 with the following
weighted average during 2000 and 1999: expected life, ten years; risk free
interest rate, 6%; volatility, 95%; and no dividends during the expected term.
Forfeitures are recognized as they occur.

 Additional Stock Plan Information

   As discussed in Note 1, the Company accounts for its stock-based awards
using the intrinsic value method in accordance with APB No. 25, Accounting for
Stock Issued to Employees, and its related interpretations. Accordingly, no
compensation expense has been recognized in the consolidated financial
statements for employee stock arrangements granted at fair market value.

   SFAS No. 123, Accounting for Stock-Based Compensation, requires the
disclosure of pro forma net income or loss had the Company adopted the fair
value method. Under SFAS 123, the fair value of stock-based awards to employees
is calculated through the use of option pricing models, even though such models
were developed to estimate the fair value of freely tradable, fully
transferable options without vesting restrictions, which significantly differ
from the Company's stock option awards. These models also require subjective
assumptions, including expected time to exercise, which greatly affect the
calculated values. The Company's calculations were made using the minimum value
method with the following weighted average assumptions: expected life, five
years in 2000, 1999 and 1998; risk-free interest rate, 6% in 2000 and 1999 and
5% in 1998 and no dividends during the expected term. The Company's calculation
includes volatility of 95% in the period following the public offering and no
dividends during the expected terms. The Company's calculations are based on a
single option valuation approach, and forfeitures are recognized as they occur.

                                       43
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   If the computed minimum values of the Company's stock-based awards to
employees had been amortized to expense over the vesting period of the awards
as specified under SFAS No. 123, loss attributable to common stockholders and
basic and diluted loss per share on a pro forma basis (as compared to such
items as reported) would have been (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                                   Years Ended December 31,
                                                   ---------------------------
                                                     2000      1999     1998
                                                   --------  --------  -------
   <S>                                             <C>       <C>       <C>
   Net loss:
     As reported.................................. $(48,823) $(13,489) $(1,410)
     Pro forma.................................... $(51,786) $(13,746) $(1,417)

   Basic and diluted net loss per share:
     As reported.................................. $  (3.48) $  (4.88) $ (0.62)
     Pro forma.................................... $  (3.69) $  (4.98) $ (0.62)
</TABLE>

 Common Stock

   At December 31, 2000, the Company has reserved shares of common stock for
issuance as follows:

<TABLE>
     <S>                                                               <C>
     Issuance under stock option plans................................ 7,225,950
     Issuance under ESPP..............................................   450,000
</TABLE>

 Receivables from Sales of Stock

   At December 31, 2000, notes receivable from stockholders representing notes
receivable from certain officers and other employees of the Company, were
comprised of (dollars in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                 Stock Purchased
                                               -------------------
   Issue Date                           Amount  Number   Per Share Interest Rate
   ----------                           ------ --------- --------- -------------
   <S>                                  <C>    <C>       <C>       <C>
   December 1999....................... $  814   610,500   $1.33       6.11%
   December 1999.......................    905 1,357,500    0.67       6.11%
   December 1999.......................     39   577,500    0.07       6.11%
   January 2000........................    344   258,000    1.33       6.12%
   January 2000........................     28    42,000    0.67       6.12%
   February 2000.......................    250   187,500    1.33       6.12%
   February 2000.......................    500   375,000    1.33       6.46%
   March 2000..........................    180    45,000    4.00       6.46%
   April 2000..........................     80       --      N/A       6.60%
   September 2000......................    169    18,750    9.00       6.13%
                                        ------ ---------   -----       ----
                                        $3,309
                                        ======
</TABLE>

   These full recourse notes are secured by common stock and generally are due
five years from the issue dates. The April 2000 loan represents a cash loan
secured by the shares of stock previously purchased by an officer. The stock
sold in connection with certain of these notes and other stock sales for cash
are subject to repurchase by the Company at the original issuance price; this
right generally lapses over a four-year period subject to continued employment.
At December 31, 2000, 3,215,471 shares of common stock were subject to this
repurchase right.

                                       44
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Note 9. Net Loss per Share

   The following is a reconciliation of the numerators and denominators used in
computing basic and diluted net loss per share (in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                                  Years Ended December 31,
                                                  ---------------------------
                                                    2000      1999     1998
                                                  --------  --------  -------
<S>                                               <C>       <C>       <C>
Net loss (numerator), basic and diluted.......... $(48,823) $(13,489) $(1,410)
                                                  ========  ========  =======
Shares (denominator):
  Weighted average common shares outstanding.....   18,071     3,974    2,287
  Weighted average common shares outstanding
   subject to repurchase.........................   (4,045)   (1,211)     --
                                                  --------  --------  -------
  Shares used in computation, basic and diluted..   14,026     2,763    2,287
                                                  ========  ========  =======
Net loss per share, basic and diluted............ $  (3.48) $  (4.88) $ (0.62)
                                                  ========  ========  =======
Shares used in computation, basic and diluted....   14,026     2,763
Weighted average convertible preferred stock
 outstanding.....................................   20,556    20,119
                                                  --------  --------
Shares used in computing pro forma per share
 amounts on a converted basis....................   34,582    22,882
                                                  ========  ========
Pro forma net loss per share on a converted
 basis, basic and diluted........................ $  (1.41) $  (0.59)
                                                  ========  ========
</TABLE>

   For the above-mentioned periods, the Company had securities outstanding,
which could potentially dilute basic earnings per share in the future, but were
excluded from the computation of diluted net loss per share in the periods
presented, as their effect would have been antidilutive. Such outstanding
securities consist of the following:

<TABLE>
<CAPTION>
                                                   Years Ended December 31,
                                                -------------------------------
                                                  2000       1999       1998
                                                --------- ---------- ----------
<S>                                             <C>       <C>        <C>
Convertible preferred stock...................        --  25,430,177 16,163,789
Shares of common stock subject to repurchase..  3,215,471  4,046,000        --
Outstanding options and stock purchase
 rights.......................................  5,338,385  4,056,888  2,131,500
Weighted average exercise price of options and
 stock purchase rights........................  $    4.25 $     0.57 $     0.07
                                                ========= ========== ==========
</TABLE>

Note 10. Commitments

 Lease Commitments

   The Company leases its principal facilities under noncancelable operating
leases expiring in December 2005. Future minimum rental payments under
operating leases, net of sublease income, are as follows (in thousands):

<TABLE>
<CAPTION>
         Year
         Ending
         December
         31,
         --------
         <S>        <C>
            2001    $1,154
            2002     1,213
            2003     1,212
            2004     1,254
            2005       541
                    ------
                    $5,374
                    ======
</TABLE>

                                       45
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Rent expense was approximately $984,000, $225,000 and $51,000 (net of
sublease income of $203,000, $50,000 and $0) for 2000, 1999 and 1998,
respectively.

 Purchase Commitments

   At December 31, 2000, the Company has noncancelable purchase commitments
totaling approximately $9,715,000.

Note 11. Income Taxes

   Only minimum state income and franchise taxes were provided for any years
presented due to the Company's net losses.

   The Company's effective tax rate differs from the expected benefit at the
federal statutory tax rate for the years ended December 31 as follows:

<TABLE>
<CAPTION>
                              2000    1999    1998
                              -----   -----   -----
   <S>                        <C>     <C>     <C>
   Federal statutory rate.... (35.0)% (35.0)% (35.0)%
   State taxes, net of
    federal benefit..........  (2.6)   (3.9)   (8.1)
   Non-deductible stock
    compensation charges.....   8.4    11.5     --
   Research and development
    credits..................  (1.0)   (0.7)   (3.7)
   Other.....................   1.2    (1.7)   (4.2)
   Valuation allowance.......  29.0    29.8    51.0
                              -----   -----   =====
     Effective tax rate......   -- %    -- %    -- %
                              =====   =====   =====
</TABLE>

   Net deferred tax assets at December 31 consist of (in thousands):

<TABLE>
<CAPTION>
                                                              2000     1999
                                                            --------  -------
   <S>                                                      <C>       <C>
   Deferred tax assets:
     Net operating loss carryforwards...................... $ 15,787  $ 4,419
     Credit carryforwards..................................    1,108      292
     Accruals and reserves recognized in different
      periods..............................................    2,593      614
                                                            --------  -------
       Total gross deferred tax assets before valuation
        allowance..........................................   19,488    5,325
   Valuation reserve.......................................  (19,488)  (5,325)
                                                            --------  -------
   Net deferred tax asset.................................. $    --   $   --
                                                            ========  =======
</TABLE>

   At December 31, 2000, the Company has federal and state net operating loss
carryforwards of approximately $41,872,000 and $21,758,000, respectively,
expiring through 2020 and 2004, respectively.

   At December 31, 2000, the Company also has research and development and
manufacturing investment credits of approximately $680,000 and $428,000
available to offset future federal and state income taxes, respectively. The
federal tax credit carryforward expires through 2020. The state tax credit
carryforward has no expiration.

   Current federal and California tax law includes provisions limiting the
annual use of net operating loss and credit carryforwards in the event of
certain defined changes in stock ownership. The Company's capitalization
described herein may have resulted in such a change. Accordingly, the annual
use of the Company's net operating loss and credit carryforwards would be
limited according to these provisions. Management has not

                                       46
<PAGE>

                                 AT ROAD, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

yet determined the extent of such limitation. Such limitation may result in the
loss of carryforward benefits due to their expiration.

Note 12. Related Party Transactions

   The Company purchased approximately $2,779,000, $512,000 and $12,000, of
inventory from a stockholder in 2000, 1999 and 1998, respectively. At December
31, 2000 and 1999, approximately $196,000 and $256,000, respectively, were owed
to the stockholder and included in accounts payable.

Note 13. Employee Benefit Plan

   The Company sponsors a 401(k) Saving and Retirement Plan (the Plan) for all
employees who meet certain eligibility requirements. Participants may
contribute, on a pre-tax basis, between 1% and 15% of their annual
compensation, but not to exceed a maximum contribution amount pursuant to
Section 401(k) of the Internal Revenue Code. The Company is not required to
contribute, nor has it contributed, to the Plan for any of the years presented.

Note 14. Quarterly Financial Data (unaudited)

<TABLE>
<CAPTION>
                                                                                                     June
                         December 31, September 30, June 30,  March 31,  December 31, September 30,   30,    March 31,
                             2000         2000        2000      2000         1999         1999       1999      1999
                         ------------ ------------- --------  ---------  ------------ ------------- -------  ---------
                                                  (in thousands, except per share amounts)
<S>                      <C>          <C>           <C>       <C>        <C>          <C>           <C>      <C>
Consolidated Statements
of Operations Data:
Total revenues..........   $  4,211     $  3,051    $  2,171  $  1,190     $   583       $   225    $    67   $   31
Loss from operations....    (13,677)     (13,919)    (14,168)  (10,087)     (8,591)       (3,361)    (1,582)    (759)
Net loss................   $(12,489)    $(13,253)   $(13,615) $ (9,466)    $(8,270)      $(3,010)   $(1,506)  $ (703)
                           ========     ========    ========  ========     =======       =======    =======   ======
Basic and diluted net
 loss per share.........   $  (0.29)    $  (2.13)   $  (3.68) $  (2.64)    $ (2.54)      $ (0.96)   $ (0.64)  $(0.30)
                           ========     ========    ========  ========     =======       =======    =======   ======
Shares used in
 calculating basic and
 diluted net loss per
 share..................     42,598        6,221       3,696     3,590       3,250         3,121      2,370    2,311
                           ========     ========    ========  ========     =======       =======    =======   ======
</TABLE>

                                       47
<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.

                                          AT ROAD, INC.

                                                 By: /s/ Krish Panu
                                          _____________________________________
                                                       Krish Panu
                                              President and Chief Executive
                                                         Officer

Date: March 30, 2001

                               POWER OF ATTORNEY

   KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Krish Panu and Thomas C. Hoster, jointly and
severally, his attorneys-in-fact, each with the power of substitution, for him
in any and all capacities, to sign any amendments to this Report on Form 10-K,
and to file the same, with exhibits thereto and other documents in connection
therewith with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes may do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
             Signature                           Title                    Date
             ---------                           -----                    ----

<S>                                  <C>                           <C>
           /s/ Krish Panu            Chairman of the Board of        March 30, 2001
____________________________________  Directors, President and
             Krish Panu               Chief Executive Officer

        /s/ Thomas C. Hoster         Vice President, Finance and     March 30, 2001
____________________________________  Administration and Chief
          Thomas C. Hoster            Financial Officer

         /s/ Rodric C. Fan           Director and Chief              March 30, 2001
____________________________________  Technology Officer
           Rodric C. Fan

                                     Director
____________________________________
            Kris Chellam

        /s/ Stuart Phillips          Director                        March 30, 2001
____________________________________
          Stuart Phillips

         /s/ Andrew Sheehan          Director                        March 30, 2001
____________________________________
           Andrew Sheehan

        /s/ T. Peter Thomas          Director                        March 30, 2001
____________________________________
          T. Peter Thomas
</TABLE>

                                       48
<PAGE>

                                                                     Schedule II

                                 AT ROAD, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
              For the Years Ended December 31, 2000, 1999 and 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                               Additions
                                    Balance at    and     Write-off  Balance at
                                    Beginning  Charges to    and       End of
Description                          of Year    Expenses  Deductions    Year
-----------                         ---------- ---------- ---------- ----------
<S>                                 <C>        <C>        <C>        <C>
Year Ended December 31, 2000
Accounts receivable allowance......    $153      $2,368      $274      $2,247
                                       ====      ======      ====      ======
Inventory reserve..................    $199      $  768      $ --      $  967
                                       ====      ======      ====      ======
Year Ended December 31, 1999
Accounts receivable allowance......    $ --      $  153      $ --      $  153
                                       ====      ======      ====      ======
Inventory reserve..................    $ --      $  199      $ --      $  199
                                       ====      ======      ====      ======
Year Ended December 31, 1998
Accounts receivable allowance......    $ --      $  --       $ --      $  --
                                       ====      ======      ====      ======
Inventory reserve..................    $ --      $  --       $ --      $  --
                                       ====      ======      ====      ======
</TABLE>