##### 






UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549


Form 10-K

|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2002                                                     
|          
|or        
|          
|o          |  | 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)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 94-3209170                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

47200 Bayside Parkway


Fremont, CA 94538


(Address of principal executive offices,
including zip code)


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
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

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. þ

Indicate by check mark whether the registrant is
an accelerated filer (as defined in the Exchange Act
Rule 12b-2).     Yes þ          No o

The aggregate market value of the voting stock
held by non-affiliates of the registrant was approximately
$126,156,154 as of June 28, 2002, 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 47,949,775 shares of the
registrants Common Stock issued and outstanding as of
March 24, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference
from the definitive proxy statement to be filed in connection
with the registrants 2003 annual meeting of stockholders.



---






---



##### 



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 mobile resource management industry where there is no
established market for our products and services, our ability to
adapt to rapid technological change, our dependence on wireless
networks, network infrastructure and positioning systems owned
and controlled by others and general economic and political
conditions. Further information regarding these and other risks
is included in this Report and in our other filings with the
Securities and Exchange Commission (SEC).

Our primary Internet address is www.road.com. We
make our periodic SEC reports (Forms 10-Q and
Forms 10-K) and current reports (Forms 8-K) available
free of charge through our website as soon as reasonably
practicable after they are filed electronically with the SEC. We
may from time to time provide important disclosures to investors
by posting them in the investor relations section of our
website, as allowed by the SEC rules.

The @Road Solution

We integrate Global Positioning System
technology, wireless communications, transaction processing,
software applications and the Internet to enable companies to
efficiently manage their mobile workers with location-relevant
and time-sensitive information. Our services are designed to be
easy-to-use, cost-effective, Internet-based tools for mobile
resource management that provide location, reporting, dispatch,
messaging, and other management services. Our services allow
customers to use our website to manage the activities of their
employees, vehicles, and goods and services, and provide for
two-way communications between our customers and their mobile
workers. Our services also allow customers to conduct business
operations, such as event confirmation, signature verification,
forms processing, project management and timekeeping while their
workers are in the field. We believe our services provide
significant value to our customers by decreasing the costs and
increasing the efficiency of their operations.

Our services provide information to our customers
in one or more of the following ways. First, a customer can use
any Internet-connected computer to access our secure website,
www.road.com. Second, a customer can use a wireline or wireless
telephone to access our speech-to-text voice portal. The website
and voice portal are connected to our Wireless Applications
Processing Center, a network of secure servers, which receives,
processes and stores data as well as serves data to our
customers. Third, a customer can use our DirectData service,
which streams pre-processed data from our Wireless Applications
Processing Center directly to the customers legacy
software applications. A customer can then execute collaborative
processing, which is the combination of data provided by our
services and data provided by the customers legacy
software applications yielding an enhanced set of data. Fourth,
a customer can configure certain third-party software
applications, such as dispatching software, to access and obtain
requested data from our Wireless Applications Processing Center
using application programming interfaces.

The information technology infrastructure and
network application software used to provide our services reside
at our Wireless Applications Processing Center. Accordingly, our
customers do not need to make a substantial investment in
acquiring and supporting capital equipment, such as hardware,
software and data networking equipment, to use our services.

We provide data relating to a customers
mobile resources, each of which we call a subscriber to our
services, in a variety of formats, including activity reports,
maps and completed business forms. We provide these formats in a
standard configuration; however, customers can configure certain
elements and views themselves to satisfy their internal business
rules. We also provide a two-way text communications service.
Customers can access our website to send and receive text
messages. Customers can also use our voice

1



---



##### 



portal to speak messages that are translated into
text and then sent to recipients as well as have received text
messages converted to speech and provided orally. Workers in the
field can send and receive messages on several types of devices.
Messages are stored at our Wireless Applications Processing
Center for further analysis and audit.


We provide a service called MobileForms, which
enables mobile workers to use a ruggedized personal digital
assistant to conduct business transactions and to document
workflow in the field. Customers can define the fields of data
that the mobile worker will be prompted to input. Additionally,
mobile workers can capture item bar codes and signatures. We
also provide a service called ConnectBusiness, which enables
mobile workers to use a wireless application protocol-enabled
mobile telephone to capture timekeeping information, conduct
project management activities and document workflow in the field.

Our services provide both current and historical
information. Customer data is typically stored for fourteen
days, unless the customer purchases extended data storage
services from us. Customers can choose to have reports delivered
on a pre-scheduled basis, or they can submit queries to our
databases to create reports and views on demand. Customers can
also download reports to manipulate and store data as desired.

Our services are enabled by the deployment of a
platform to the customers mobile worker. Our services
operate with three independent platforms. First, a mobile worker
can use our proprietary hardware device embedded with software
and which integrates a Global Positioning System receiver with a
wireless modem. Second, a mobile worker can use our proprietary
hardware device embedded with software and an integrated Global
Positioning System receiver and which is tethered by cable to a
wireless telephone. Each of these proprietary hardware devices
is called an Internet Location Manager. The Internet Location
Manager is installed in a mobile workers vehicle.
Generally, the vehicle can be of any type. Installation
typically takes less than an hour, and is completed by our
subcontracted installation agents. Third, a mobile worker can
use a location- or wireless application protocol-enabled mobile
telephone embedded with our software application.

These platforms receive signals from Global
Positioning System satellites to determine location, velocity
and time. From time to time, the platform also collects other
information, such as operational diagnostics. These data are
transmitted to our Wireless Applications Processing Center using
wireless networks and the Internet. If a wireless connection is
not available, then the platform will store up to five days of
captured data and seek to transmit the data when a wireless
connection is available. To use services such as two-way
communications, MobileForms and ConnectBusiness, customers can
provide mobile workers a ruggedized personal digital assistant
or our Internet Data Terminal, which are connected to the
Internet Location Manager, or wireless application
protocol-enabled mobile telephone, as appropriate.

Customers can use our services to manage any
number or type of mobile resources, such as those in
telecommunications, construction, facilities/waste management,
field service, transportation (freight and passenger),
courier/delivery, distribution, security, cable/broadband or
utilities sectors. Since our services operate using our Wireless
Applications Processing Center, a customer can vary the services
and platforms it deploys within its organization, a region or
even a team.

We have entered into strategic relationships with
ALLTEL, AT&T Wireless, Cingular Wireless, Nextel
Communications, Nextel Partners, Southern LINC, TELUS Mobility
and Verizon Wireless to provide wireless data connectivity
between @Road-enabled mobile resources and the Internet using
these companies General Packet Radio Services
(GPRS) network, Integrated Digital Enhanced Network (iDEN)
or Cellular Digital Packet Data (CDPD) network. Our
services have also been tested with and operate on the Code
Division Multiple Access 1XRTT (CDMA 1X) network.

2



---



##### 



Customers who use our services find a variety of
compelling benefits. We believe that many of these benefits
result in operational efficiencies or competitive advantages for
our customers in their market segments. Benefits of using our
services include the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Improve the productivity of mobile
    resources.Using our services,
    customers can improve the productivity of mobile resources. For
    example, customers can use location, personalized mapping
    landmarks and path sequencing features to maximize the time
    spent completing work orders in the field. Customers can also
    monitor the progress of jobs in the field and re-allocate
    resources to better meet project deadlines. Customers can
    measure the improvements in their mobile workers
    productivity from using our services in many ways, including by
    an increase in the number of jobs a mobile worker can complete
    per day or by an increase in revenue earned by a mobile worker
    per day.                                                                                                                                                                                                                                                    
|
| |  | Decrease the costs of operations of mobile
    resources.Using our services,
    customers can reduce the cost of operating mobile resources. For
    example, customers can use our two-way communications services
    for low-cost transmission of completed business forms, signature
    capture verification and messaging. Customers can also use our
    services to automatically monitor and schedule maintenance
    activities for assets in the field. Customers can measure
    decreases in their costs from using our services in many ways,
    including by a decrease in the cost of having a mobile worker in
    the field or by a decrease in the cost of insuring mobile
    workers and assets.                                                                                                                                                                                                                                                                              
|
| |  | Improve the efficiency of a customers
    overall operations.Using our
    services, customers can improve the efficiency of their
    organizations operations. For example, customers can use
    our services to capture timekeeping, workflow and inventory use
    information in the field. These data can be delivered directly
    to our customers legacy software applications or
    downloaded from our website and imported into a payroll or
    customer invoicing system. These services can minimize the need
    for back-office data entry services, minimize data entry errors
    and accelerate invoicing processes. Customers can measure
    improvements in their efficiency from using our services in many
    ways, including by a decrease in costs of general and
    administrative expenses and by a reduction in days sales
    outstanding of accounts receivable.                                                                                              
|
| |  | Improve responsiveness to our customers
    customers.Using our services,
    customers can be more responsive to their customers. For
    example, location and workflow information can be used to update
    end-customers about pending work orders or deliveries. Customers
    can also use our location-on-demand feature to assign a pending
    work order to the closest or best-equipped mobile worker to
    provide the quickest response that meets the end-customers
    demands. Customers can enhance their customer relationship
    management operations by accessing stored information about
    end-customers, including workflow data records, audit trails of
    mobile worker messages, and audit trails of daily mobile worker
    activity. Customers can measure improvements in their
    responsiveness from using our services in many ways, including
    by a reduction in aged receivables and by an improvement in
    internal customer satisfaction indexes.

Strategy

Our objective is to be the leading provider of
mobile resource management services and solutions to businesses
and organizations with mobile workers. Key elements of our
strategy include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Establish @Road as the market leader in mobile
    resource management services.We
    believe our competitive advantages will establish us as the
    market leader in providing mobile resource 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
    mobile resource 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
    customers. We expect to continue to focus on customers of all
    sizes.

3



---



##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Increase the value of our service suite by
    adding new services and features.We
    will continue to add new features and functionality to our
    services and develop new services to enhance the value we
    provide to our customers. We expect to continue to release new
    features that synthesize the information currently retrieved by
    our existing services. We expect some of these features to be
    incorporated into our services as free upgrades, while others
    will be offered for additional fees. In addition, we are
    continuing to develop an open platform architecture, with
    application program interfaces, data streaming capabilities and
    enhanced website features to allow our customers and partners to
    integrate third-party applications with our services.
|
| |  | Take advantage of technological advances in
    hardware and networks.We intend to
    develop new services that take advantage of advances that are
    being made in the capabilities of wireless devices as well as
    improvements that are being made to wireless networks. For
    example, our services now operate on the General Packet Radio
    Services network and can use a location-enabled mobile telephone
    as a hardware platform in the field.                                                                                                                                                                                                                                                                                                                                                   
|
| |  | 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, two-way wireless
    communications and the Internet. To address expanding market
    opportunities, we have designed our services to be carrier-,
    connectivity- and hardware platform-independent. These features
    are designed to facilitate the rapid deployment of our services
    in additional geographic markets as coverage of wireless
    networks increases.                                                                                                              
|
| |  | Maintain technology leadership.We have developed and patented
    technology that integrates Global Positioning System technology,
    wireless communications, transaction processing, software
    applications 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 services integrate Global Positioning System
technology, wireless communications, transaction processing,
software applications and the Internet to provide location,
reporting, dispatch, messaging, and other management services to
our customers for managing their mobile resources. Our services
also enable customers to conduct business operations in the
field. We believe that our services provide significant value to
our customers by decreasing the costs and increasing the
efficiency of their operations. We have targeted our services to
businesses and organizations in the following vertical markets:

 Telecommunications

 Construction


 Facilities/waste management


 Field service


 Transportation (freight and passenger)


 Courier/delivery

 Distribution


 Security


 Cable/ Broadband


 Utilities


The following features and benefits of our
services provide a variety of competitive advantages over other
solutions:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Variety of deployment
    platforms.The data generated by use
    of our services may be provided in several standard formats to
    meet the various needs of our customers. Our services are
    accessible by customers in one or more of the following ways:
    (1) using an Internet-connected computer and accessing our
    secure website, www.road.com; (2) using a wireline or
    wireless telephone and accessing our speech-to-text voice
    portal; (3) implementing our DirectData service, which
    streams pre-processed customer data from our Wireless
    Applications Processing Center directly to the customers
    legacy software applications; or (4) configuring
    third-party software applications, such as

4



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | dispatching software, to access our Wireless
    Applications Processing Center using our application programming
    interfaces to obtain customer data.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Ease of implementation.The implementation of our services is
    designed to be quick and easy for our customers. When deploying
    our services using a location- or wireless application
    protocol-enabled mobile telephone as the hardware platform,
    customers install a software program on the telephone. Once
    launched, this software program communicates with our Wireless
    Applications Processing Center, and the customer deployment is
    complete. When deploying our services using an Internet Location
    Manager, the optional Internet Data Terminal or the ruggedized
    personal digital assistant as the hardware platform, we install
    this hardware in the customers vehicles. A vehicle
    installation typically takes less than an hour. As our customers
    grow, our services are scalable by either installing software on
    additional mobile telephones or installing our hardware platform
    in additional vehicles.                                                                                                                                                               
|
| |  | Ease of use.Our
    services are designed to be deployed as end-to-end solutions.
    That is, a customer does not incur incremental information
    technology costs associated with the deployment or use of our
    services. Our services are designed to be available over the
    Internet and by telephone twenty-four hours a day, seven days a
    week, with the exception of scheduled maintenance. Our user
    interfaces, including those used with the Internet, mobile
    telephones, Internet Data Terminals and our ruggedized personal
    digital assistant, are designed to be intuitive and easy to use,
    require minimal training and be modified by the customer to meet
    each customers particular requirements. Additionally, our
    DirectData service streams customer data directly to a
    customers legacy software applications, which enables a
    customer to maximize the value of its existing investments in
    information technology and productivity solutions and to combine
    business intelligence arising from use of our services with a
    customers existing operations models.
|
| |  | Ease of maintenance.We host and maintain all the services
    we provide. We also manage the wireless network and Internet
    connections between and among the platforms in the field, our
    Wireless Applications Processing Center and the Internet.
    Additionally, we implement service and software upgrades
    centrally at our Wireless Applications Processing Center and
    remotely to the platforms in the field over the same wireless
    connection used to transmit mobile resource information. For
    these reasons, customers avoid incurring information technology
    and infrastructure maintenance expenses and interrupting the
    daily operations of their mobile resources while benefiting from
    enhancements to our services.                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Cost-effective.Our
    services are 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 our services can be deployed on an existing
    location- or wireless application protocol-enabled mobile
    telephone, customer data and our software reside at our Wireless
    Applications Processing Center, and our services can be accessed
    by using the Internet or any wireline or wireless telephone.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Scalability.Our
    service delivery architecture is designed to serve a growing
    number of subscribers with increasing data transmission volumes
    without compromising performance, delivery times or the data
    accuracy of our services. Because key 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.
    With the addition of our services that run on a location- or
    wireless application protocol-enabled mobile telephone, a
    customer can easily expand the deployment of our services on
    existing or new handsets.                                                                                                                                                                                                                                                                                 
|
| |  | Wireless data connectivity.Our services interoperate with several
    wireless networks and are designed for use with a number of
    existing and future wireless networks. For example, our services
    operate on or have been tested with the General Packet Radio
    Services (GPRS) network, Code                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

5



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Division Multiple Access 1XRTT (CDMA 1X)
    network, Integrated Digital Enhanced Network (iDEN) and Cellular
    Digital Packet Data (CDPD) network offered by some of the
    largest wireless carriers in North America. With these wireless
    carrier partners, we deliver services in more than 200 of the
    top metropolitan statistical areas in the U.S. and Canada.
    Subject to a customers preferences, we typically configure
    our services with the most cost-effective and efficient wireless
    network available in the customers geographic area of
    operations. In some cases, a single customer with geographically
    disperse operations may receive services that seamlessly use
    more than one wireless network. Wireless network configuration
    typically occurs in the background and does not require
    significant time or effort of the customer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | Store-and-forward functionality.Our services are designed to address
    common geographic limitations and network difficulties
    associated with wireless networks. Where the platform deployed
    in the field travels outside a wireless networks coverage
    area, the Internet Location Manager or mobile telephone, as the
    case may be, continues to collect and stores up to five days of
    mobile resource information. These data are transmitted to our
    Wireless Applications Processing Center when the platform
    returns to the wireless coverage area. Our services are designed
    to be tolerant of wireless network difficulties and to have the
    ability to confirm receipt of data from the field and
    re-transmit data when errors are detected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Location by Global Positioning System.Our services use the Global
    Positioning System to determine the location of a mobile
    resource. This technology enables reliable, accurate and
    cost-effective location and monitoring of our customers
    mobile resources. 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 minimizes our costs of service delivery.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Return on investment.Our services are designed to result in
    a wide variety of cost savings and revenue enhancements to our
    customers that can give our customers a rapid return on their
    investments in our services. Our customers can use our services
    to determine the location of their mobile resources at
    particular times and to send the most appropriate resource to
    the next job. In addition, customers can increase their
    productivity by actively using reports, maps and messaging with
    their mobile resources. Effective managing, routing and
    dispatching of mobile resources can save our customers time and
    fuel, decrease our customers costs and increase their
    customers satisfaction. By estimating mileage data and
    providing maintenance scheduling services, we assist our
    customers in optimizing maintenance activities, timing their
    vehicle downtime cost-effectively and offering opportunities to
    purchase vehicle maintenance goods and services in bulk. 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 mobile telephone fees, which are often usage-based.
    Customers can also use our ruggedized personal digital assistant
    to conduct business operations in the field, allowing them to
    create a paperless trail of transactions and accelerate their
    billing and payroll processes.
|
| |  | Robust reporting and mapping capabilities.Our services offer customers
    comprehensive, detailed reporting of workforce activity, either
    individually or for all or a selected group of a customers
    mobile resources. Reports can be formatted by customers and
    downloaded for additional sorting and analysis. A
    customers preferences are stored at our Wireless
    Applications Processing Center and can be modified by the
    customer at any time to meet its changing needs. Reports can
    also be used to help our customers manage projects in the field,
    particularly construction projects, payroll data and the
    maintenance requirements of their vehicles. The current and past
    locations of each mobile resource enabled by our services can be
    displayed on a map, making monitoring simple. Map views can be
    personalized by customers to graphically display different
    information about their mobile resources, including locating
    positions on maps by address or customer-defined landmarks.
    Moreover, historical customer data is stored at our Wireless
    Applications Processing Center, allowing managers of mobile
    resources to analyze activities over time.                                                                                                                                                                                                                                                                                                                                 

6



---



##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Workflow and project management features.Our customers may enhance their field
    operations by choosing from a variety of available workflow and
    project management services. For example, our customers can use
    our ConnectBusiness service to capture job costing and
    inspection status information in the field. Our customers can
    also use our MobileForms service to conduct business
    transactions while in the field, including completing and
    transmitting business process forms, signature verification and
    credit card confirmations.                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Communications capabilities.Our customers may enhance their field
    operations by using our two-way communications services. These
    services operate using either the mobile telephone platform or
    the Internet Location Manager with our optional Internet Data
    Terminal. These services enable our customers to communicate
    regularly and quickly with mobile workers. While the services
    permit free text messages, they also enable customers to
    pre-program a set of messages that can be transmitted with the
    push of a button to minimize distractions in the field. Messages
    are stored at our Wireless Applications Processing Center, and
    are accessible by our customers. Customers can use the message
    database for customer relationship management, proof of service,
    auditing and minimizing the occurrence of lost change orders,
    missed appointments or other communications.
|
| |  | Voice-enabled services.Our customers may enhance their field
    operations using our voice-based management service. Using
    speech-to-text and text-to-speech technologies integrated into
    our Wireless Applications Processing Center, managers can orally
    locate mobile workers and conduct two-way text messaging using
    any wireline or wireless telephone. This service can be useful
    to managers when they are not connected to the Internet, such as
    when managers are themselves in the field or responding to
    incidents outside of office hours.                                                                                                                                                                                                                                                                                                                                                           



| |          
| | ---------
| | Customers

We market and sell our services to a broad range
of North American customers that vary in size, geographic
location and industry. The number of mobile resources enabled
with our service has grown from 135 as of December 31, 1998
to approximately 90,000 as of December 31, 2002. We
categorize a customer in a small-, medium- or large-sized
customer group by reference to the total number of subscribers
to our services for that customer. Small-sized customers have
less than 30 subscribers, medium-sized customers have 31 to 750
subscribers and large-sized customers have more than 750
subscribers. Currently we have customers in the following
industries:

 Telecommunications

 Construction


 Facilities/waste
management


 Field
service


 Transportation
(freight and passenger)


 Courier/delivery


 Distribution


 Security


 Cable/
Broadband


 Utilities




| |                         
| | ------------------------
| | 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 services by offering new features
    while enhancing existing features. For example, in April 2002 we
    launched DirectData service, a store-and-forward transaction and
    message queuing service that is designed to continuously deliver
    customer data from our Wireless Applications Processing Center
    directly to a customers third party software applications.
    This service is designed to enable customers to collaboratively
    process data arising from a variety of sources to generate more
    meaningful business metrics and reports. In May 2002 we launched
    RoadFORCE service, which is a set of hosted services including
    activity reports relating to sales calls, travel time, expense
    reimbursement and location-on-demand. This service is designed
    to assist corporate mobile workforces and sales professionals
    managing business activity and sales performance. In June 2002
    we launched RoadREPORT service, which provides detailed

7



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | historical workforce data, such as activity and
    location, to our customers. This service is designed to provide
    the intelligence needed by companies seeking historical
    information on a cost-effective basis. In March 2003, we
    launched GeoManager, Pocket Edition service, which is designed
    to deliver our standard mobile resource management application
    using a location-enabled mobile telephone in lieu of an Internet
    Location Manager.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Platform.We intend
    to continue to develop and release platform upgrades to add new
    features as well as to enhance existing features. For example,
    in April 2002 we announced the availability of an Internet
    Location Manager with a Nextel Communications wireless modem
    embedded in the device. This expansion of our suite of platforms
    enables customers to use our services that operate with the
    Nextel Communications and Nextel Partners Integrated Digital
    Enhanced Network using one device with an integrated wireless
    modem or a device tethered to a mobile telephone. In September
    2002 we announced the availability of an Internet Location
    Manager that communicates with the Southern LINC Integrated
    Digital Enhanced Network. This expansion of our suite of
    platforms enables customers to use our services within Southern
    LINCs 127,000 square-mile wireless coverage area in
    southeastern U.S.

As of December 31, 2002, we had 59 employees
in research and development.



| |           
| | ----------
| | Technology

Our technology efforts focus on creating new
services and enhancing the reliability, availability and
features of our services while maintaining a scalable and cost
effective architecture. Our proprietary technologies are
designed to work with technologies from other companies,
including our partners, competitors, and other third parties.
Although our services utilize our patented Global Positioning
System chipset, our services have been designed to work with
other location technologies. Similarly, while we have integrated
wireless communications into our services in three ways,
including a wireless modem embedded in our Internet Location
Manager, an Internet Location Manager tethered to a Nextel
Communications cellular telephone and installation of our thin
client software application on a location-enabled mobile
telephone, our services are designed to operate with a variety
of wireless communications protocols and devices. We expect to
continue to develop additional proprietary technology where
feasible and to purchase or license technology where
cost-effective. Our technology efforts focus on the following
areas:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Wireless technology.Our services currently operate on the General Packet Radio
    Services (GPRS) network, Integrated Digital Enhanced
    Network (iDEN) and Cellular Digital Packet Data
    (CDPD) network. Additionally, our services have been tested
    with and operate on the Code Division Multiple Access 1XRTT
    (CDMA 1X) network. One of our objectives is to continue to
    maintain our technological independence from wireless protocols
    and platforms, enabling our customers to communicate with our
    Wireless Applications Processing Center in the way or ways which
    best suit their needs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Access and Internet technology.The delivery of our services is
    complex in part because it involves the continuous collection,
    storage and processing of data from tens of thousands of
    subscribers in the field as well as processing requests from
    thousands of users accessing our Wireless Applications
    Processing Center. To manage the throughput of customer
    information and to deliver our services to our customers, we use
    secure Internet connections between our Wireless Applications
    Processing Center and customers accessing our services as well
    as the wireless networks transmitting customer information. In
    addition to providing access to our services using any Internet
    connected computer, we provide access via any wireline or
    wireless telephone with our speech-to-text interface technology.
    We also facilitate the integration of customer data collected by
    our services with a customers legacy software applications
    through our DirectData streaming service and application
    programming interfaces. We plan to further enhance access to
    customer data and our services by further developing our access
    alternatives.
|
| |  | Information technology.We have an information technology
    organization dedicated to maintaining and enhancing our Wireless
    Applications Processing Center. By managing our services at our                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

8



---



##### 



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Wireless Applications Processing Center, we
    relieve our customers of the development and operations burden
    of managing services resulting from the integration of location
    technologies, wireless communications protocols, Internet and
    access technologies and software applications. Our Wireless
    Applications Processing Center is composed of servers located in
    Redwood City, California and Ashburn, Virginia. 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.
|
| |  | 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 positions. We have developed a patented Global
    Positioning System chipset and algorithm designed to be
    optimized for our services. As a result, our Internet Location
    Manager is designed to determine its location in less time than
    that which is required by other commercial receivers.                                                                                                                                                                                                          



| |                                    
| | -----------------------------------
| | 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 ALLTEL, AT&T Wireless, Cingular Wireless,
    Nextel Communications, Nextel Partners, Southern LINC, TELUS
    Mobility and Verizon Wireless to provide wireless connectivity
    between @Road-enabled mobile resources and the Internet. We
    contract directly with ALLTEL, AT&T Wireless and TELUS
    Mobility for the provision of wireless communications, which are
    bundled with our services. With Cingular Wireless, Nextel
    Communications, Nextel Partners and Southern LINC, our customers
    have separate contracts for wireless communications with their
    carrier. With Verizon Wireless, in some geographic areas we
    bundle our services with wireless communications and in others
    our customers have separate contracts for wireless
    communications with their carrier.
|
| |  | Manufacturers.Symbol Technologies manufactures the ruggedized personal digital
    assistant for use with our services. In addition, one of our
    investors, Orient Semiconductor Electronics, manufactures and
    tests our Internet Location Manager.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



| |                    
| | -------------------
| | 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, 2002, our sales and
marketing team consisted of 88 employees. We currently
market and sell our solution through a number of sales channels,
including the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Strategic sales force.We have a team of sales employees
    focused on marketing and selling our services to large-sized
    customers. This sales force is geographically dispersed
    throughout the U.S. near target sales prospects. Large-sized
    customers are defined as customers with greater than
    750 mobile resources. The sales process with large-sized
    customers often requires many months of activity, is competitive
    and typically requires a pilot test of our services.
|
| |  | Direct sales force.We have a team of sales employees
    focused on marketing and selling our services to small- and
    medium-sized customers. This sales force is geographically
    dispersed throughout North America in major General Packet Radio
    Services (GPRS), Integrated Digital Enhanced Network (iDEN) and
    Cellular Digital Packet Data (CDPD) markets. Additionally,
    our direct sales force works with our wireless carrier partners
    to increase our subscriber base.     
|
| |  | Inside sales force.We have a team of sales employees
    focused on marketing and selling our services to small-sized
    customers. This sales force is located at our headquarters in
    Fremont, CA. Additionally, our inside sales force works with our
    direct sales force to increase our subscriber base.                                                                                                                                                                                     

9



---



##### 





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Agent sales force.We have a team of employees who manage
    a network of independent sales agents focused on marketing and
    selling our services. These independent sales agents are
    geographically dispersed throughout North America. Participants
    in the agent sales program are compensated for the sale of our
    services and for the length of time during which a customer is
    under contract with us. Independent sales agents facilitate
    sales of our services through their own efforts and work with
    wireless carrier partners to increase our subscriber base.
|
| |  | Wireless carrier partners.Our wireless carrier partners are
    ALLTEL, AT&T Wireless, Cingular Wireless, Nextel
    Communications, Nextel Partners, Southern LINC, TELUS Mobility
    and Verizon Wireless. These partners market or facilitate sales
    of our services through their own sales channels and work with
    our direct sales force to increase our subscriber base.                                                                                                                                                                                                             

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 partners.



| |            
| | -----------
| | Competition

We compete with companies that provide mobile
resource management services to businesses and organizations
with field operations. We also compete with alternative means of
communication between mobile workers and their managers,
including mobile telephones, two-way radios and pagers. We
compete primarily on the basis of functionality, ease of use,
quality, price, service availability, geographic coverage of
services and corporate financial strength. As the demand by
businesses for mobile resource management services increases,
the quality, functionality and breadth of competitors
products and services typically improve and new competitors
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. We
do not know to what extent network infrastructure developers and
wireless network operators will seek to provide integrated
Global Positioning System, wireless communications, transaction
processing, software 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 or increase our sales cycles,
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 Openwave, Research in Motion and Aether
Systems; 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 (a subsidiary of Openwave).



| |                      
| | ---------------------
| | 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 seven patents, which cover our Global Positioning
System chipset technology and the method and structure for
distributing information over a network as well as applications
of this method. 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 have filed and intend to
continue to file patent applications in other countries where
there is a strategic technological or business justification. As
part of 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.

10



---



##### 





| |          
| | ---------
| | Employees

As of December 31, 2002, we had 292
employees, 267 of whom were located in the U.S. and 25 of whom
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.

|               |  |           |        |        |  |             |  |                                                                                                                                                                 |  |  |            | 
|-------------- |  | --------- | ------ | ------ |  | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---------- | 
|               |  |           |        | Square |  |             |  | Lease                                                                                                                                                          
|Location       |  | Ownership |        | Feet   |  | Primary Use |  | Expiration                                                                                                                                                     
|               |  |           |        |        |  |             |  |                                                                                                                                                                
|Fremont, CA    |  |           | Leased |        |  | 54,000      |  | Corporate headquarters, customer service,
    engineering                                                                                                       |  |  | 1/31/2005  | 
|Fremont, CA    |  |           | Leased |        |  | 30,000      |  | Engineering, research and development, data
    center (6,000 square feet was subleased to a third party
    under an agreement that expires on March 14, 2004) |  |  | 12/31/2005 | 
|Chennai, India |  |           | Leased |        |  | 4,100       |  | Research and development, customer service,
    office space                                                                                                    |  |  | 11/16/2005 | 

Item 3.     Legal
Proceedings

On February 28, 2003, a purported securities
class action lawsuit entitled Liu v. Credit Suisse First Boston
Corporation et al, including 166 other parties, Civil Action
Number 03-20459, was filed in the United States District
Court for the Southern District of Florida. The defendants
include Credit Suisse First Boston Corporation and related
entities and persons, certain companies that conducted an
initial public offering of securities underwritten by Credit
Suisse First Boston Corporation, us, our Chief Executive Officer
and our Chief Financial Officer. The lawsuit was filed by an
individual who purchased stock in Commerce One, Inc. and was
brought on behalf of all persons and entities who acquired stock
in the defendant companies after an initial public offering of
securities underwritten by Credit Suisse First Boston
Corporation. The complaint alleges that defendants violated
various federal securities laws and state laws by disseminating
fraudulent information regarding the expected financial
performance and revenue growth of the defendant companies with
the objective of inflating those companies stock prices.
The complaint seeks unspecified damages and rescission on behalf
of the purported class.

We believe we have meritorious defenses to these
claims and plan to defend the action vigorously; however,
litigation is inherently uncertain and we may not prevail in
this matter.

We are also a party to other legal proceedings in
the ordinary course of business. Based on evaluation of these
other matters, we believe that these matters will not have a
material effect on our results of operations or financial
position.

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

None.

11



---



##### 



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
period indicated.

|                                 |  |      |      |     |  |   |      | 
|-------------------------------- |  | ---- | ---- | --- |  | - | ---- | 
|                                 |  | High |      | Low
|                                 |  |      |      |    
|Quarter ended March 31, 2001     |  | $    | 7.25 |     |  | $ | 1.50 | 
|Quarter ended June 30, 2001      |  |      | 2.50 |     |  |   | 0.75 | 
|Quarter ended September 30, 2001 |  |      | 2.65 |     |  |   | 1.75 | 
|Quarter ended December 31, 2001  |  |      | 5.90 |     |  |   | 1.80 | 
|Quarter ended March 31, 2002     |  |      | 8.45 |     |  |   | 4.90 | 
|Quarter ended June 30, 2002      |  |      | 8.12 |     |  |   | 6.13 | 
|Quarter ended September 30, 2002 |  |      | 6.25 |     |  |   | 3.20 | 
|Quarter ended December 31, 2002  |  |      | 5.99 |     |  |   | 3.87 | 

At December 31, 2002, there were
approximately 147 holders of record of our common stock. This
does not include the number of persons whose stock is held 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 or services 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 years has experienced extreme price and
volume fluctuations that have particularly affected the market
prices of many high technology companies that have often been
unrelated or disproportionate to the operating performance of
those companies. These fluctuations, as well as general
political, 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.

12



---



##### 



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.

|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |     |       | 
|----------------------------------------------------------------------------- | ---------------------------- | ---------------------------------------- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | ---- | ------- | ------ | ------ | - | ------- | ----- | ------ | - | ------ | --- | ----- | 
|                                                                              |                              |                                         
|                                                                              |                              | Years Ended December 31,                
|                                                                              |                              |                                         
|                                                                              |                              | 2002                                     |         | 2001   |        | 2000 |         | 1999   |        | 1998
|                                                                              |                              |                                          |         |        |        |      |         |        |        |     
|                                                                              |                              |                                         
|                                                                              |                              | (In thousands, except per share amounts)
|Consolidated Statements of Operations
    Data:                               |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|Revenues:                                                                     |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|                                                                              | Services                     |                                          | $       | 33,678 |        |      | $       | 20,188 |        |      | $       | 7,919  |        |   | $       | 612   |        |   | $      | 4   |      
|                                                                              | Product                      |                                          |         | 10,742 |        |      |         | 7,262  |        |      |         | 2,704  |        |   |         | 294   |        |   |        | 64  |      
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|                                                                              |                              | Total revenues                           |         |        | 44,420 |      |         |        | 27,450 |      |         |        | 10,623 |   |         |       | 906    |   |        |     | 68    | 
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|Costs and expenses:                                                           |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|                                                                              | Cost of service revenue      |                                          |         | 13,544 |        |      |         | 12,690 |        |      |         | 6,414  |        |   |         | 681   |        |   |        | 27  |      
|                                                                              | Cost of product revenue      |                                          |         | 16,946 |        |      |         | 13,523 |        |      |         | 7,865  |        |   |         | 1,777 |        |   |        | 87  |      
|                                                                              | Sales and marketing          |                                          |         | 10,746 |        |      |         | 17,267 |        |      |         | 15,512 |        |   |         | 3,530 |        |   |        | 266 |      
|                                                                              | Research and development     |                                          |         | 5,878  |        |      |         | 7,608  |        |      |         | 8,893  |        |   |         | 2,109 |        |   |        | 731 |      
|                                                                              | General and administrative   |                                          |         | 8,616  |        |      |         | 12,733 |        |      |         | 10,887 |        |   |         | 2,129 |        |   |        | 457 |      
|                                                                              | Restructuring charges        |                                          |         |       |        |      |         | 218    |        |      |         |       |        |   |         |      |        |   |        |    |      
|                                                                              | Intangibles amortization     |                                          |         | 1,670  |        |      |         | 1,656  |        |      |         | 1,239  |        |   |         |      |        |   |        |    |      
|                                                                              | Stock compensation           |                                          |         | 1,065  |        |      |         | 3,041  |        |      |         | 11,664 |        |   |         | 4,973 |        |   |        |    |      
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|                                                                              |                              | Total costs and expenses                 |         |        | 58,465 |      |         |        | 68,736 |      |         |        | 62,474 |   |         |       | 15,199 |   |        |     | 1,568 | 
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|Loss from operations                                                          |                              |                                          | (14,045 | )      |        |      | (41,286 | )      |        |      | (51,851 | )      |        |   | (14,293 | )     |        |   | (1,500 | )  
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|Other income (expense), net:                                                  |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|                                                                              | Interest income              |                                          |         | 964    |        |      |         | 2,662  |        |      |         | 3,243  |        |   |         | 829   |        |   |        | 90  |      
|                                                                              | Interest expense             |                                          |         | (15    | )      |      |         | (9     | )      |      |         |       |        |   |         | (25   | )      |   |        |    |      
|                                                                              | Investment impairment charge |                                          |         | (1,035 | )      |      |         |       |        |      |         |       |        |   |         |      |        |   |        |    |      
|                                                                              | Other expense, net           |                                          |         | (106   | )      |      |         | (14    | )      |      |         | (215   | )      |   |         |      |        |   |        |    |      
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|                                                                              |                              | Total other income (expense), net        |         |        | (192   | )    |         |        | 2,639  |      |         |        | 3,028  |   |         |       | 804    |   |        |     | 90    | 
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|Net loss                                                                      |                              | $                                        | (14,237 | )      |        | $    | (38,647 | )      |        | $    | (48,823 | )      |        | $ | (13,489 | )     |        | $ | (1,410 | )  
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|Basic and diluted net loss per share                                          |                              | $                                        | (0.31   | )      |        | $    | (0.88   | )      |        | $    | (3.48   | )      |        | $ | (4.88   | )     |        | $ | (0.62  | )  
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    
|Shares used in calculating basic and diluted net
    loss per share           |                              |                                          | 46,134  |        |        |      | 43,892  |        |        |      | 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  |       |        |   |        |    
|                                                                              |                              |                                          |         |        |        |      |         |        |        |      |         |        |        |   |         |       |        |   |        |    

|                                  |       |                          |     |       |  |      |       |       |  |   |       |        |  |   |       |       |  |  |  |  | 
|--------------------------------- | ----- | ------------------------ | --- | ----- |  | ---- | ----- | ----- |  | - | ----- | ------ |  | - | ----- | ----- |  |  |  |  | 
|                                  |       |                          |     |      
|                                  |       | Years Ended December 31, |     |      
|                                  |       |                          |     |      
|                                  |       | 2002                     |     | 2001  |  | 2000 |       | 1999  |  |  
|                                  |       |                          |     |       |  |      |       |       |  |  
|                                  |       |                          |     |      
|                                  |       | (In thousands)           |     |      
|Detail of stock
    compensation: |       |                          |     |       |  |      |       |       |  |   |       |        |  |   |       |       |  |  |  | 
|Cost of service revenue           |       | $                        | 23  |       |  | $    | 82    |       |  | $ | 171   |        |  | $ | 17    |       |  |  |  | 
|Cost of product revenue           |       |                          | 96  |       |  |      | 194   |       |  |   | 479   |        |  |   | 52    |       |  |  |  | 
|Sales and marketing               |       |                          | 72  |       |  |      | (12   | )     |  |   | 1,691 |        |  |   | 445   |       |  |  |  | 
|Research and development          |       |                          | 322 |       |  |      | 214   |       |  |   | 2,686 |        |  |   | 501   |       |  |  |  | 
|General and administrative        |       |                          | 552 |       |  |      | 2,563 |       |  |   | 6,637 |        |  |   | 3,958 |       |  |  |  | 
|                                  |       |                          |     |       |  |      |       |       |  |   |       |        |  |   |       |       |  |  |  | 
|                                  | Total |                          | $   | 1,065 |  |      | $     | 3,041 |  |   | $     | 11,664 |  |   | $     | 4,973 |  |  |  |  | 
|                                  |       |                          |     |       |  |      |       |       |  |   |       |        |  |   |       |       |  |  |  | 

13



---



##### 



|                                 |  |                          |        |      |  |      |        |      |  |      |         |  |  |   |        |  |  |   |       | 
|-------------------------------- |  | ------------------------ | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- |  |  | - | ------ |  |  | - | ----- | 
|                                 |  |                         
|                                 |  | Years Ended December 31,
|                                 |  |                         
|                                 |  | 2002                     |        | 2001 |  | 2000 |        | 1999 |  | 1998
|                                 |  |                          |        |      |  |      |        |      |  |     
|                                 |  |                         
|                                 |  | (In thousands)          
|Consolidated Balance Sheet Data: |  |                          |        |      |  |      |        |      |  |      |         |  |  |   |        |  |  |   |       | 
|Cash and cash equivalents        |  | $                        | 35,659 |      |  | $    | 40,164 |      |  | $    | 69,280  |  |  | $ | 22,714 |  |  | $ | 5,356 | 
|Working capital                  |  |                          | 45,771 |      |  |      | 51,300 |      |  |      | 82,172  |  |  |   | 38,758 |  |  |   | 5,599 | 
|Total assets                     |  |                          | 70,550 |      |  |      | 78,474 |      |  |      | 111,757 |  |  |   | 45,174 |  |  |   | 6,006 | 
|Total stockholders equity       |  |                          | 50,167 |      |  |      | 60,411 |      |  |      | 94,766  |  |  |   | 40,608 |  |  |   | 5,788 | 



|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|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 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, transaction processing,
software applications and the Internet to enable companies to
efficiently manage their mobile workers with location-relevant
and time-sensitive information. Our services are designed to be
easy-to-use, cost-effective, Internet-based tools for mobile
resource management that provide location, reporting, dispatch,
messaging, and other management services. Our services allow
customers to use our website to manage the activities of their
employees, vehicles, and goods and services, and provide for
two-way communications between our customers and their mobile
workers. Our services also allow customers to conduct business
operations, such as event confirmation, signature verification,
forms processing, project management and timekeeping while their
workers are in the field. We believe our services provide
significant value to our customers by decreasing 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, now
called GeoManager, a service that leverages existing
infrastructure, including the Global Positioning System,
wireless networks and the Internet along with integrated
transaction processing and software applications, to enable
companies to efficiently manage their mobile resources.
Subsequent to the introduction of FleetASAP, we have
introduced a number of additional services and features to our
services, including two-way communications, MobileForms,
ConnectBusiness and DirectData.

Our services provide information to our customers
in one or more of the following ways. First, a customer can use
any Internet-connected computer to access our secure website,
www.road.com. Second, a customer can use a wireline or wireless
telephone to access our speech-to-text voice portal. The website
and voice portal are connected to our Wireless Applications
Processing Center, a network of secure servers, which receives,
processes and stores data as well as serves data to our
customers. Third, a customer can use our DirectData service,
which streams pre-processed data from our Wireless Applications
Processing Center directly to the customers legacy
software applications. A customer can then execute collaborative
processing, which is the combination of data provided by our
services and data provided by the customers legacy
software applications yielding an enhanced set of data. Fourth,
a customer can configure certain third-party software
applications, such as dispatching software, to access

14



---



##### 



and obtain requested data from our Wireless
Applications Processing Center using application programming
interfaces.


The information technology infrastructure and
network application software used to provide our services reside
at our Wireless Applications Processing Center. Accordingly, our
customers do not need to make a substantial investment in
acquiring and supporting capital equipment, such as hardware,
software and data networking equipment, to use our services.

Our services are enabled by the deployment of a
platform to the customers mobile worker. Our services
operate with three independent platforms. First, a mobile worker
can use our proprietary hardware device embedded with software
and which integrates a Global Positioning System receiver with a
wireless modem. Second, a mobile worker can use our proprietary
hardware device embedded with software and an integrated Global
Positioning System receiver and which is tethered by cable to a
wireless telephone. Each of these proprietary hardware devices
is called an Internet Location Manager. The Internet Location
Manager is installed in a mobile workers vehicle.
Generally, the vehicle can be of any type. Installation
typically takes less than an hour, and is completed by our
subcontracted installation agents. Third, a mobile worker can
use a location or wireless application protocol-enabled mobile
telephone embedded with our software application.

These platforms receive signals from Global
Positioning System satellites to determine location, velocity
and time. From time to time, the platform also collects other
information, such as operational diagnostics. These data are
transmitted to our Wireless Applications Processing Center using
wireless networks and the Internet. If a wireless connection is
not available, then the platform will store up to five days of
captured data and seek to transmit the data when a wireless
connection is available. To use services such as two-way
communications, MobileForms and ConnectBusiness, customers can
provide mobile workers a ruggedized personal digital assistant
or our Internet Data Terminal, which are connected to the
Internet Location Manager, or, alternatively with some of our
services, a wireless application protocol-enabled mobile
telephone.

Since 1998, we have derived substantially all of
our revenues from the sale of our services and the associated
product hardware. Our service revenue is composed of monthly
fees. Our customers can contract to receive our services for
terms of one, two or three years and can purchase enhanced
service features for additional fees. As more customers use our
services, the impact on our service revenue is compounded. Our
product revenue consists of sales of the Internet Location
Manager, Internet Data Terminal and ruggedized personal digital
assistant.

We recognize revenue when earned in accordance
with applicable accounting standards including American
Institute of Certified Public Accountants (AICPA)
Statement of Position (SOP) No. 97-2,
Software Revenue Recognition, as amended. Through
December 31, 2002, our services have been available only by
using our platforms. Accordingly, service revenue is recognized
ratably over the minimum service contract period, which
commences upon the installation of the platform. We defer
product revenue from our platform at installation and recognize
it ratably over the minimum service contract period. Product
costs, not in excess of related product revenue, are deferred at
the time of shipment and amortized ratably over the minimum
service contract period. Where the selling prices of our
products are below our costs, we expense the difference at the
time of shipment of the related products. Allowances for sales
returns are recorded at the time product revenue is recognized.

To date, we have not sold our services outside
the U.S. and Canada; however, we intend to expand our service
offerings to additional countries in the future. We do not
expect that revenues from international sales will be material
in 2003.

We will incur 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

15



---



##### 



of each reporting period using the Black-Scholes
model, which approximates fair value and is amortized based on
the term of the consulting agreement or service period. The
amount of the charge for options granted to consultants in each
period can fluctuate depending on our stock price and
volatility. At December 31, 2002, deferred stock
compensation expense was $491,000, which will be amortized in
future periods.


Since inception, we have invested substantially
in research and development, marketing, the building of our
sales channels and our overall infrastructure. We anticipate
that such investments may increase in the future. We have
incurred losses in each quarter since inception and expect to
incur net losses in the future. At December 31, 2002, we
had an accumulated deficit of $117.9 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.

In the third quarter of 2002, AT&T Wireless
announced that it expects to cease operating its Cellular
Digital Packet Data network by June 30, 2004. We are
currently in discussions with AT&T Wireless and other
wireless carriers to minimize any disruption of the provision of
our services to subscribers. On or about the actual termination
date of AT&T Wireless Cellular Digital Packet Data
network and where possible, certain affected subscribers would
be transferred to alternate Cellular Digital Packet Data
networks without a change to the hardware platform then used by
those subscribers. However, we estimate that as of June 30,
2004 we will have 12,000 subscribers in their initial
contract periods that are then using AT&T Wireless
Cellular Digital Packet Data network and that would need to use
an alternate wireless protocol to continue to use our services.
To use an alternate wireless protocol, existing hardware
platforms would have to be replaced for these subscribers. We do
not expect to realize a loss on the sale of these replacement
hardware platforms. While there is no assurance, we do not
expect that the termination of AT&T Wireless Cellular
Digital Packet Data network will have a material adverse impact
on our financial results.

Critical Accounting Policies

Financial Reporting Release No. 60, which
was released by the SEC in January 2002, requires all companies
to include a discussion of critical accounting policies or
methods used in the preparation of financial statements.
Included in Note 1 of the Notes to the Consolidated Financial
Statements, included in this Report, is a summary of the
significant accounting policies and methods we use. The
following is a discussion of the more significant of these
policies and methods.



| |                    
| | -------------------
| | Revenue Recognition

In accordance with applicable accounting
standards, including SOP No. 97-2, Software Revenue
Recognition, as amended, we recognize revenue when earned.
Specifically, we recognize revenue when the price is fixed and
determinable, upon persuasive evidence of an agreement, when we
have fulfilled our obligations under any such agreement and upon
a determination that collection is probable.

Through December 31, 2002, our services have
been available only by using our platform. Accordingly, through
December 31, 2002, service revenue, which is composed of
monthly fees, was recognized ratably over the minimum service
contract period, which commenced upon the installation of the
platform in a mobile workers vehicle.

Our product revenue primarily consists of sales
of the Internet Location Manager, Internet Data Terminal and
ruggedized personal digital assistant. We defer product revenue
at installation and recognize it ratably over the minimum
service contract period, which is generally two or three years.
Renewal rates for our services are not considered priced at a
bargain in comparison to the initial sales price of an
associated product (as described in Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial
Statements). Changes to the pricing of our products and
services in the future could result in the recognition of
product revenue over periods that extend beyond the minimum
service contract period. Allowances for sales returns are
recorded at the time product revenue is recognized.

16



---



##### 



Historically, the selling prices of our products
have often been at or below our costs. Product costs not in
excess of related product revenue are deferred at the time of
shipment and amortized ratably over the minimum service contract
period. Where the selling prices of our products are below our
costs, we expense the difference at the time of shipment of the
related products.



| |                                     
| | ------------------------------------
| | Allowances for Doubtful
    Accounts

Historically, we have had a significant number of
small- to medium-sized companies utilizing our services. These
customers are involved in diverse businesses. Our payment
arrangements with customers generally provide 30-day payment
terms. At the time that customers contract with us for our
services, we assess their creditworthiness.

During economic downturns, certain of our
customers have had difficulty with their cash flows. The nature
of our relationship with customers is inherently long-term and
we have extended and may extend payment terms on an exception
basis. We regularly review our customers ability to
satisfy their payment obligations and provide an allowance for
doubtful accounts for all specific receivables that we believe
are not collectible. When these conditions arise, we suspend
recognition of revenue until collection becomes probable or cash
is collected. Beyond these specific customer accounts, we record
an allowance based on the size and age of all receivable
balances against which we have not established a specific
allowance. These allowances are based on our experience in
collecting such accounts.

Although we believe that we can make reliable
estimates for doubtful accounts, the size and diversity of our
customer base, as well as overall economic conditions, may
affect our ability to accurately estimate revenue and bad debt
expense. Actual results may differ from those estimates.

Results of Operations for the Years Ending
December 31, 2002, 2001, and 2000



| |                
| | ---------------
| | Service Revenue

Service revenue increased to $33.7 million
in 2002 from $20.2 million and $7.9 million in 2001
and 2000, respectively, as a direct result of the growth in our
installed base of subscribers to our services. Initial product
installation and service delivery began at the end of 1998. The
number of subscribers using our service totaled approximately
90,000, 66,000 and 35,000 at December 31, 2002, 2001 and
2000, respectively.



| |                
| | ---------------
| | Product Revenue

Product revenue increased to $10.7 million
in 2002 from $7.3 million and $2.7 million in 2001 and
2000, respectively, and is consistent with the growth in our
installed base of subscribers and the commercial release of our
services. As new subscribers are added to our installed base,
the amount of both deferred revenue and deferred costs
recognized ratably over the minimum service contract period
increases as well. Upon completion of the initial term of a
customers contract, recognition of both deferred product
revenue and product cost will be complete. Customers may then
renew their agreements for future services without the purchase
of new hardware and, therefore, we anticipate that product
revenue will grow more slowly than service revenue.



| |                        
| | -----------------------
| | Cost of Service Revenue

Cost of service revenue consists of expenses
related to the delivery and support of our services. Direct
expenses are composed of costs associated with connecting our
services to wireless networks and the Internet and royalty and
subscription fees paid to others. Support and other delivery
costs include such expenses as employee salaries and
depreciation of our Wireless Applications Processing Center.
Cost of service revenue increased to $13.5 million in 2002
from $12.7 million and $6.4 million in 2001 and 2000,
respectively. In 2002, the increase in cost of service revenue
resulted from direct service delivery expenses, offset by
reductions in service infrastructure and personnel costs. In
2001 and 2000, the increase resulted from the associated
increase in subscribers using our services and related
information technology

17



---



##### 



infrastructure and personnel costs. Direct
expenses generally increase at a rate proportional to the growth
in subscribers using our services. Personnel costs and
depreciation expense generally increase at a slower rate than
the growth rate of subscribers to our services. As a result, we
expect that the growth in service revenues will be greater than
the growth in cost of service revenue as we continue to add
subscribers.




| |                        
| | -----------------------
| | Cost of Product Revenue

Cost of product revenue consists of the cost of
the Internet Location Manager, Internet Data Terminal,
ruggedized personal digital assistant and related parts; costs
associated with the final assembly, test, provisioning, delivery
and installation of our products; and other costs such as
provisions for inventory and repair costs. Historically, the
selling prices of our products were often at or below our costs.
Product costs not in excess of related product revenue are
deferred at the time of shipment and amortized ratably over the
minimum service contract period. Where the selling prices of our
products are below our costs, we expense the difference at the
time of shipment of the related products. Generally, we expect
the selling prices of our products to be approximately equal to
or exceed the product costs in future periods. The impact of
selling products below our cost on future cash flow from
operations is expected to be minimal as our service revenue
stream expands and is renewed. As new subscribers are added to
our installed base, the amount of both deferred revenue and
deferred costs recognized ratably increases as well. Cost of
product revenue increased to $17.0 million in 2002 from
$13.5 million and $7.9 million in 2001 and 2000,
respectively. Increases in the cost of product revenue for each
of these years are primarily the result of associated increases
in product cost recognized from deferrals, consistent with the
growth in subscribers using our services. Upon completion of the
initial term of a customers contract, recognition of both
deferred product revenue and product cost will be complete.
Customers may then renew their agreements for future services
without the purchase of new hardware and, therefore, we
anticipate that product revenue and cost of product revenue will
grow more slowly than service revenue.



| |                             
| | ----------------------------
| | Sales and Marketing Expenses

Sales and marketing expenses consist of employee
salaries, sales commissions, and marketing and promotional
expenses. Sales and marketing expenses decreased to
$10.7 million in 2002 from $17.3 million in 2001. The
reduction in expenses is attributed to a lower average headcount
and the associated decline in compensation expense and
reductions in promotional expenses. Sales and marketing
headcount increased to 88 at December 31, 2002 from 85 at
December 31, 2001. Sales and marketing expenses increased
to $17.3 million in 2001 from $15.5 million in 2000.
The increase reflects personnel costs, expansion of sales
channels and activities related to the development of market
awareness of our services in 2001. In 2001, cost reductions
associated with the reduction in force were offset by increases
in average headcount levels. Sales and marketing headcount
decreased to 85 at December 31, 2001 from 96 at
December 31, 2000. We expect that sales and marketing
expenses will increase as we expand our sales and marketing
efforts, including, but not limited to, modest headcount growth
and promotional expenses related to new product and service
offerings.



| |                                      
| | -------------------------------------
| | Research and Development
    Expenses

Research and development expenses consist of
employee salaries and expenses related to development personnel
and consultants, as well as expenses associated with software
and hardware development. Research and development expenses
decreased to $5.9 million in 2002 from $7.6 million in
2001, primarily due to a decrease in headcount to 59 at
December 31, 2002 from 72 at December 31, 2001.
Due to a reduction in force undertaken in June 2001, research
and development expenses decreased to $7.6 million in 2001
from $8.9 million in 2000. The decrease in 2001 was
primarily attributable to a decrease in research and development
headcount to 72 at December 31, 2001 from 85 at
December 31, 2000. We expect that research and development
expenses will increase in future periods as we develop and
introduce new products and services.

In accordance with American Institute of
Certified Public Accountants Statement of Position 98-1, or
SOP 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use, we

18



---



##### 



capitalize qualifying computer software costs
that are incurred during the application development stage and
amortize them over the softwares estimated useful life. We
capitalized approximately $869,000 of costs related to
internally developed software systems in 2000. During 2002 and
2001, no research and development costs were capitalized in
accordance with SOP 98-1.




| |                                        
| | ---------------------------------------
| | General and Administrative
    Expenses

General and administrative expenses consist of
employee salaries and related expenses for executive and
administrative costs, accounting and professional fees,
recruiting costs and provisions for doubtful accounts. General
and administrative expenses decreased to $8.6 million in
2002 from $12.7 million in 2001. The decrease in 2002 is
the result of reductions in provision for doubtful accounts and
reductions in employee-related expenses attributed to lower
average headcount in 2002. Provisions for doubtful accounts
decreased to $461,000 in 2002 from $2.4 million in 2001,
due to improved collection activity and receivables management.
We expect that provisions for doubtful accounts may increase
because of the non-recurring nature of favorable adjustments
that occurred during 2002; however, we do not expect that these
provisions will return to the levels reported in 2001 and 2000.
The increase to $12.7 million in 2001 from
$10.9 million in 2000 was primarily due to increases in
compensation resulting from a higher average headcount during
2001, provision for doubtful accounts and insurance expenses.
General and administrative headcount totaled 47, 47 and
57 at December 31, 2002, 2001, and 2000, respectively.



| |                      
| | ---------------------
| | Restructuring Charges

During 2001 and in response to a general downturn
in the economy, we undertook a formal plan to lower our cost
structure. We completed a reorganization to more effectively
develop, market and sell mobile resource management products and
services. This effort resulted in the total number of employees
being reduced by approximately 11 percent. Restructuring
expenses, which consist of severance and related costs, were
$218,000 in 2001.



| |                         
| | ------------------------
| | Intangibles Amortization

Intangibles amortization relates to the
intangible assets purchased from Differential Corrections, Inc.
in April 2000 and ConnectBusiness.com, Inc. in September 2002.
The costs are being amortized over an estimated useful life of
three and two years, respectively.



| |                           
| | --------------------------
| | Stock Compensation Expense

Deferred stock compensation related to the
granting of stock options to employees and consultants was
approximately $491,000 at December 31, 2002 and
$2.3 million as of December 31, 2001. Stock
compensation expense decreased to $1.1 million in 2002 from
$3.0 million in 2001 and $11.7 million in 2000 and
primarily represents the amortization of deferred stock
compensation over the vesting periods of related options granted
in 2000 and 1999.



| |                             
| | ----------------------------
| | Investment Impairment Charge

At December 31, 2001, we held approximately
148,000 shares of preferred stock in Cellport Systems,
Inc., with a book value of $1,035,000 and which represented
approximately seven percent ownership in Cellport Systems, Inc.
We accounted for this investment using the cost method. During
2002, we determined that the investment had experienced a
decline in value that was other than temporary. Accordingly, we
expensed $1,035,000 in 2002.



| |                                   
| | ----------------------------------
| | Interest Income (Expense),
    Net

Net interest income (expense) is composed
primarily of interest earned on cash, cash equivalents and
short-term investments, partially offset by interest expense
related to the financing of directors and officers insurance
costs. Net interest income (expense) decreased to
approximately $949,000 in 2002 from

19



---



##### 



$2.6 million and $3.2 million in 2001
and 2000, respectively. The decreases resulted from lower
balances available for investment and lower interest rates.




| |                   
| | ------------------
| | Other Expense, Net

In 2002 and 2001 other expense consisted
primarily of immaterial net foreign currency exchange losses
related to our subsidiary in India. In 2001 and 2000, other
expense is composed 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 decreased to $14.2 million in 2002
from $38.6 million in 2001. This decrease was primarily
attributed to an increase in revenue while cost of revenue grew
more slowly and stock compensation, sales and marketing
expenses, research and development expenses and general and
administrative expenses all declined. Net loss decreased to
$38.6 million in 2001 from $48.8 million in 2000 as a
result of reduced stock compensation, offset in part by
increases in sales and marketing and general and administrative
costs associated with developing our technology, building our
infrastructure and increasing our installed base of subscribers.



| |                
| | ---------------
| | Changing Prices

We conduct operations primarily within the U.S.
where inflation during 2002, 2001 and 2000 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 2002, 2001 and 2000 and were expensed
as incurred.

Quarterly Results of Operations

The following table sets forth our consolidated
operating results for each of the eight quarters ended
December 31, 2002. These data have 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. The operating results are
not necessarily indicative of results of any future period.

|                                                |                          |                |   |               |        |          |   |           |        |              |   |               |        |          |   |           |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |       |       | 
|----------------------------------------------- | ------------------------ | -------------- | - | ------------- | ------ | -------- | - | --------- | ------ | ------------ | - | ------------- | ------ | -------- | - | --------- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                                |                          |               
|                                                |                          | Quarters Ended
|                                                |                          |               
|                                                |                          | December 31,   |   | September 30, |        | June 30, |   | March 31, |        | December 31, |   | September 30, |        | June 30, |   | March 31,
|                                                |                          | 2002           |   | 2002          |        | 2002     |   | 2002      |        | 2001         |   | 2001          |        | 2001     |   | 2001     
|                                                |                          |                |   |               |        |          |   |           |        |              |   |               |        |          |   |          
|                                                |                          |               
|                                                |                          | (In thousands)
|Consolidated Statements of Operations
    Data: |                          |                |   |               |        |          |   |           |        |              |   |               |        |          |   |           |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |      
|Revenues:                                       |                          |                |   |               |        |          |   |           |        |              |   |               |        |          |   |           |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |      
|                                                | Services                 |                | $ | 9,813         |        |          | $ | 8,657     |        |              | $ | 7,957         |        |          | $ | 7,251     |       |  | $ | 6,371 |       |  | $ | 5,550 |       |  | $ | 4,544 |       |  | $ | 3,723 |      
|                                                | Product                  |                |   | 3,133         |        |          |   | 2,659     |        |              |   | 2,501         |        |          |   | 2,449     |       |  |   | 2,242 |       |  |   | 1,980 |       |  |   | 1,649 |       |  |   | 1,391 |      
|                                                |                          |                |   |               |        |          |   |           |        |              |   |               |        |          |   |           |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |      
|                                                |                          | Total revenues |   |               | 12,946 |          |   |           | 11,316 |              |   |               | 10,458 |          |   |           | 9,700 |  |   |       | 8,613 |  |   |       | 7,530 |  |   |       | 6,193 |  |   |       | 5,114 | 
|                                                |                          |                |   |               |        |          |   |           |        |              |   |               |        |          |   |           |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |      
|Costs and expenses:                             |                          |                |   |               |        |          |   |           |        |              |   |               |        |          |   |           |       |  |   |       |       |  |   |       |       |  |   |       |       |  |   |      
|                                                | Cost of service revenue  |                |   | 3,570         |        |          |   | 3,440     |        |              |   | 3,325         |        |          |   | 3,209     |       |  |   | 3,187 |       |  |   | 3,375 |       |  |   | 3,285 |       |  |   | 2,843 |      
|                                                | Cost of product revenue  |                |   | 4,932         |        |          |   | 4,264     |        |              |   | 3,796         |        |          |   | 3,954     |       |  |   | 4,062 |       |  |   | 3,933 |       |  |   | 2,882 |       |  |   | 2,646 |      
|                                                | Sales and marketing      |                |   | 2,711         |        |          |   | 2,433     |        |              |   | 2,604         |        |          |   | 2,998     |       |  |   | 3,166 |       |  |   | 4,201 |       |  |   | 4,835 |       |  |   | 5,065 |      
|                                                | Research and development |                |   | 1,340         |        |          |   | 1,476     |        |              |   | 1,476         |        |          |   | 1,586     |       |  |   | 1,592 |       |  |   | 1,575 |       |  |   | 2,204 |       |  |   | 2,237 |      

20



---



##### 



|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |       |        | 
|---------------------------- | ---------------------------- | --------------------------------- | ------ | ------------- | ------ | -------- | ------ | --------- | ------ | ------------ | ------ | ------------- | ------ | -------- | ------ | --------- | ------ | - | ------ | ----- | ------ | - | ------ | ----- | ------ | - | ------- | ----- | ------ | - | ------- | ----- | ------ | 
|                             |                              |                                  
|                             |                              | Quarters Ended                   
|                             |                              |                                  
|                             |                              | December 31,                      |        | September 30, |        | June 30, |        | March 31, |        | December 31, |        | September 30, |        | June 30, |        | March 31,
|                             |                              | 2002                              |        | 2002          |        | 2002     |        | 2002      |        | 2001         |        | 2001          |        | 2001     |        | 2001     
|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |          
|                             |                              |                                  
|                             |                              | (In thousands)                   
|                             | General and administrative   |                                   |        | 2,026         |        |          |        | 1,875     |        |              |        | 1,879         |        |          |        | 2,836     |        |   |        | 3,034 |        |   |        | 2,692 |        |   |         | 3,177 |        |   |         | 3,830 |       
|                             | Restructuring charges        |                                   |        |              |        |          |        |          |        |              |        |              |        |          |        |          |        |   |        |      |        |   |        | (30   | )      |   |         | 248   |        |   |         |      |       
|                             | Intangibles amortization     |                                   |        | 424           |        |          |        | 418       |        |              |        | 414           |        |          |        | 414       |        |   |        | 414   |        |   |        | 414   |        |   |         | 414   |        |   |         | 414   |       
|                             | Stock compensation           |                                   |        | 248           |        |          |        | 380       |        |              |        | 376           |        |          |        | 61        |        |   |        | 578   |        |   |        | 880   |        |   |         | 288   |        |   |         | 1,295 |       
|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |      
|                             |                              | Total costs and expenses          |        |               | 15,251 |          |        |           | 14,286 |              |        |               | 13,870 |          |        |           | 15,058 |   |        |       | 16,033 |   |        |       | 17,040 |   |         |       | 17,333 |   |         |       | 18,330 | 
|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |      
|Loss from operations         |                              |                                   | (2,305 | )             |        |          | (2,970 | )         |        |              | (3,412 | )             |        |          | (5,358 | )         |        |   | (7,420 | )     |        |   | (9,510 | )     |        |   | (11,140 | )     |        |   | (13,216 | )    
|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |      
|Other income (expense), net: |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |      
|                             | Interest income              |                                   |        | 296           |        |          |        | 204       |        |              |        | 219           |        |          |        | 245       |        |   |        | 307   |        |   |        | 504   |        |   |         | 776   |        |   |         | 1,075 |       
|                             | Interest expense             |                                   |        | (3            | )      |          |        | (2        | )      |              |        | (4            | )      |          |        | (6        | )      |   |        | (7    | )      |   |        | (1    | )      |   |         | (1    | )      |   |         |      |       
|                             | Investment impairment charge |                                   |        |               |        |          |        |           |        |              |        | (1,035        | )      |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |       |       
|                             | Other income (expense), net  |                                   |        | (6            | )      |          |        | 6         |        |              |        | (15           | )      |          |        | (91       | )      |   |        | (24   | )      |   |        | 14    |        |   |         | 14    |        |   |         | (18   | )     
|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |      
|                             |                              | Total other income (expense), net |        |               | 287    |          |        |           | 208    |              |        |               | (835   | )        |        |           | 148    |   |        |       | 276    |   |        |       | 517    |   |         |       | 789    |   |         |       | 1,057  | 
|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |      
|Net loss                     |                              | $                                 | (2,018 | )             |        | $        | (2,762 | )         |        | $            | (4,247 | )             |        | $        | (5,210 | )         |        | $ | (7,144 | )     |        | $ | (8,993 | )     |        | $ | (10,351 | )     |        | $ | (12,159 | )    
|                             |                              |                                   |        |               |        |          |        |           |        |              |        |               |        |          |        |           |        |   |        |       |        |   |        |       |        |   |         |       |        |   |         |      

Liquidity and Capital Resources

Since our inception, we have financed operations
primarily through sales of our stock, which totaled
$144.9 million in aggregate net proceeds through
December 31, 2002. As of December 31, 2002, we had
$35.7 million of cash and cash equivalents,
$2.2 million of restricted short-term investments and
working capital of $45.8 million. We currently have a
$2.0 million revolving line of credit facility against
which there were no borrowings as of December 31, 2002. The
line, against which letters of credit have been issued, is
collateralized by a restricted certificate of deposit of
$2.0 million. There are two letters of credit outstanding
under this revolving line of credit at December 31, 2002
totaling $733,735 and expiring October 29, 2003 and
December 31, 2003. This credit facility expires in November
2003.

Net cash used for operating activities was
$6.6 million, $34.6 million and $39.4 million in
2002, 2001 and 2000, respectively. In 2002, cash used for
operating activities was attributable primarily to net losses,
an increase in accounts receivable and deferred product costs,
offset by depreciation and amortization and amortization of
deferred stock compensation. In 2001 and 2000, 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 depreciation and amortization
and amortization of deferred stock compensation and increases in
deferred revenues. As of December 31, 2002, approximately
$1.9 million of our accounts receivable were over
90 days old. We believe we have adequately provided
allowances as of December 31, 2002 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 revenue upon installation. Both deferred
product costs and revenue are recognized ratably over the
minimum service contract period. Deferred product costs are
recorded at the time of shipment and deferred product revenue is
recorded at the time of installation. As a result, deferred
product costs will generally exceed deferred product revenue as
we grow our business. At December 31, 2002, total deferred
product costs of $14.9 million exceeded total deferred
product revenue by approximately $2.4 million and included
$1.3 million related to products shipped but not yet
installed.

Net cash used in investing activities was
$881,000 in 2002 and resulted from purchases of $755,000 of
property and equipment offset by reductions in other assets of
$101,000. Net cash provided by investing activities in 2001 was
$4.2 million, primarily resulting from maturities of
short-term investments of $5.2 million and offset in part
by purchases of approximately $763,000 of property and
equipment. In 2000, net cash used in investing activities of
$3.7 million resulted from purchases of $7.5 million of

21



---



##### 



property and equipment, 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 provided by financing activities was
$2.9 million, $1.3 million and $89.7 million in
2002, 2001 and 2000, respectively. Cash provided by financing
activities in each period was attributable to proceeds from the
issuance of our stock.

Our capital expenditures in 2002 were
approximately $755,000, a decrease of $8,000 from 2001 and
consistent with our anticipated needs in operations,
infrastructure and personnel. We have no material commitments
for capital expenditures, although we anticipate increases in
capital expenditures and lease commitments with our expected
growth in operations and infrastructure. We also may establish
additional operations as we expand globally.

We believe that our current cash and cash
equivalents will be sufficient to meet our anticipated cash
needs for operating expenses, working capital and capital
expenditures at least through March 2004. 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 our 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

In October 2001, the Financial Accounting
Standards Board (FASB) issued Statement of
Accounting Standards (SFAS) No. 144,
Accounting for Impairment of Long-Lived Assets. SFAS
No. 144 supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, and addresses financial accounting and
reporting for the impairment or disposal of long-lived assets.
This statement is effective for fiscal years beginning after
December 15, 2001. We have adopted SFAS No. 144 as of
January 1, 2002. During the quarter ended June 30,
2002, we recorded an impairment charge of $1,035,000,
representing our entire investment in Cellport Systems, Inc.
preferred stock.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities, which addresses accounting for restructuring and
similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally Emerging Issues Task Force
(EITF) Issue No. 94-3. We expect to adopt the
provisions of SFAS No. 146 for restructuring activities
initiated after December 31, 2002. SFAS No. 146
requires that the liability for costs associated with an exit or
disposal activity be recognized when the liability is incurred.
Under EITF Issue 94-3, a liability for an exit cost was
recognized at the date of our commitment to an exit plan. SFAS
No. 146 also establishes that the liability should
initially be measured and recorded at fair value. Accordingly,
SFAS No. 146 may affect the timing of recognizing future
restructuring costs as well as the amounts recognized.

In November 2002, the FASB issued FASB
Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires that upon issuance of a
guarantee, the guarantor must recognize a liability for the fair
value of the obligation it assumes under that guarantee. The
initial recognition and measurement provisions of FIN 45
apply on a prospective basis to guarantees issued or modified
after December 31, 2002. We adopted the disclosure
requirements of FIN 45 effective December 31, 2002. As
we did not have any material guarantees outstanding, the
issuance of FIN 45 did not have an effect on our financial
statements.

22



---



##### 



In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which
amends FASB Statement No. 123, Accounting for
Stock-Based Compensation. SFAS No. 148 provides
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require
prominent disclosure about the effects on reported net income of
an entitys accounting policy decision with respect to
stock-based employee compensation, and requires disclosure about
those effects in both annual and interim financial statements.
SFAS No. 148 is effective for fiscal years ending after
December 15, 2002. We do not expect to change to using the
fair value based method of accounting for stock-based employee
compensation; therefore, adoption of SFAS No. 148 is not
expected to have an impact on our financial position, results of
our operations or our cash flows.

Risk Factors

In addition to the other information contained in
this Report, the following factors should be carefully
considered in evaluating our business and prospects. The risks
and uncertainties described below are intended to be ones that
are specific to us or our industry and that we deem material,
but they are not the only ones that we face.

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 achieve
profitability or continue to grow. We face a number of risks
encountered by companies in the Global Positioning System,
wireless communications, transaction processing, software
applications and Internet information industries, including:



| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | 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 and technological change;                                       
|
| |  | the uncertainty of market acceptance of our
    services;                                                                       
|
| |  | our need to manage expanding operations;                                                                                        
|
| |  | our dependence on wireless carriers;                                                                                            
|
| |  | limited coverage of wireless networks; and                                                                                      
|
| |  | any need to migrate to new networks, which could
    cause our products to be incompatible with new networks or out
    of date.

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

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.
Furthermore, changes such as increases in our pricing for
products and services or the pricing of competing products and
services may harm our ability to increase sales of our products
and services to new and existing customers. 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.

23



---



##### 



If, pursuant to its announcement, AT&T
Wireless ceases to operate its Cellular Digital Packet Data
network in 2004, or our other wireless carriers decide to
abandon Cellular Digital Packet Data, Integrated Digital
Enhanced Network, General Packet Radio Services or Code Division
Multiple Access 1XRTT technologies or do not continue to expand
their Cellular Digital Packet Data, Integrated Digital Enhanced
Network, General Packet Radio Services or Code Division Multiple
Access 1XRTT systems, we may be unable to deliver our services
and our revenues would decrease.

Our services function only on Cellular Digital
Packet Data, General Packet Radio Services or Code Division
Multiple Access 1XRTT networks or Integrated Digital Enhanced
Networks. These protocols cover only portions of the U.S. and
Canada, and may not gain widespread market acceptance. If
wireless carriers abandon these protocols in favor of other
types of wireless technology, we may not be able to provide
services to our customers. AT&T Wireless has announced that
it expects to discontinue new sales of Cellular Digital Packet
Data service on March 31, 2003, and that it expects to
cease operating its Cellular Digital Packet Data network by
June 30, 2004. If the termination of
AT&T Wireless Cellular Digital Packet Data
network disrupts our ability to deliver our services to certain
of our customers, our revenues would decrease and our
customers satisfaction would suffer. 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.

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.

Wireless carriers offering services compatible
with our services have little overlap in their service coverage
areas. Our existing agreements with wireless carriers may be
terminated upon as little as fifteen-days written notice or
immediately upon the occurrence of certain conditions. In
connection with ceasing operation of its Cellular Digital Packet
Data network, AT&T Wireless may seek to terminate or not to
renew its contract for Cellular Digital Packet Data service with
us. If one or more of our wireless carriers decides to terminate
or not to 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 products
and services.

If these parties do not perform their
obligations, or if they cease to manufacture and supply
components critical for our products and services, we may be
unable to find other suppliers or operate our business. A
subscriber requires our Internet Location Manager or a location-
or wireless application protocol-enabled mobile telephone to use
our services. To use our services with two-way communications, a
subscriber requires an Internet Location Manager and either an
Internet Data Terminal or a ruggedized personal digital
assistant. The Internet Location Manager, which we install in
each subscribers vehicle, determines the workers
location, velocity and orientation, and gathers other
information about the subscribers activities. The Internet
Data Terminal, when installed in a subscribers vehicle,
adds the incremental ability to send and receive messages to and
from the worker. 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
or manufacturers. Our sole suppliers and manufacturers of key
components include:



| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | Taiwan Semiconductor Manufacturing Company, our
    sole manufacturer of Global Positioning System digital receiver
    chips;
|
| |  | Valence Semiconductor, our sole supplier of radio
    frequency chips;                                                        
|
| |  | Orient Semiconductor Electronics, our sole
    manufacturer of Internet Location Managers;                                    

24



---



##### 





| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | Micronet, our sole supplier of Internet Data
    Terminals;                                                      
|
| |  | Symbol Technologies, our sole supplier of
    ruggedized personal digital assistants;                            
|
| |  | Motorola, our sole supplier of wireless modems
    operable on Integrated Digital Enhanced Networks; and         
|
| |  | Voxeo, our sole supplier of voice-based access
    services for use with our speech-to-text voice portal service.

If our agreements with these or other suppliers
and manufacturers are terminated or expire, if we are unable to
obtain sufficient quantities of components critical for our
products and services, if the quality of these components is
inadequate, or if the terms for supply of these components
become commercially unreasonable, our search for additional or
alternate suppliers and manufacturers could result in
significant delays, added expense and our inability to maintain
or expand our subscriber base. Any of these events could require
us to take unforeseen actions or devote additional resources to
provide our products and services and could harm our ability to
compete effectively.

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 objectives 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.

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

We have never been profitable. At
December 31, 2002, we had an accumulated deficit of
$117.9 million. In order to become profitable and sustain
profitability, we will need to generate significant revenues to
offset our cost of revenues, 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 increase in the future. In order to facilitate the sale of
our services, we have sold and may sell our hardware below our
costs. As a result, we have experienced, and may continue to
experience, negative gross margins on the sale of our hardware.

25



---



##### 



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 length of sales cycles of or 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;                                                                                                       
|
| |  | changes in the productivity of our distribution
    channels;                                                                                    
|
| |  | changes in accounting standards, including
    standards relating to revenue recognition, business combinations
    and stock-based compensation;
|
| |  | wireless data and Internet market conditions; and                                                                                                
|
| |  | general economic and political conditions.                                                                                                       

Our expense levels are based, in part, on our
expectation of future revenues. Additionally, a substantial
portion of our expenses is relatively fixed. 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 stock price is volatile, which may cause
you to lose money and 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 and the
mobile resource management sector, 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;
|
| |  | security breaches; and                                                                                     
|
| |  | disposition of shares of our common stock held by
    large investors.                                     

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.

26



---



##### 



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 could
decrease, which would result in a decrease in our revenues. Our
development and expansion have 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.

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 evaluate our services primarily on the basis of the
functionality, ease of use, quality, price, geographic coverage
of services and corporate financial strength and those of our
competitors. 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
    Openwave, Research in Motion and Aether Systems;                                                                                                   
|
| |  | companies with solutions that integrate location,
    wireless communications and call centers, such as General
    Motors; and                                                                   
|
| |  | companies that provide wireless,
    location-relevant applications, or that are working on
    emergency-911 solutions, such as SignalSoft (a subsidiary of
    Openwave).                       

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 mobile workers 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 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 or other obligations in one or more of our agreements
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 agreements,
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.

27



---



##### 



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

Unauthorized access, computer viruses and other
accidental or intentional actions could disrupt our information
systems or communications networks. 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 or network 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 or terrorism. 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 uninterrupted services at
an alternate site. Our operations depend upon our ability to
maintain and protect our computer systems in our principal
facilities in Redwood City, California, which are on or near
earthquake fault zones, and Ashburn, Virginia.

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
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 and international political unrest, U.S.
government agencies may become increasingly 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, quality, accuracy or 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.

28



---



##### 



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 wireless modems used with our
services. These effects could make our services less reliable
and less 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 their coverage, we may be unable to offer our
service to additional areas.

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, transaction processing, software and Internet
markets. Products and services that address these markets are
likely to 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. Any
of these results would increase our expenses and could decrease
the functionality of our services, 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.

From time to time we are or may be subject to
litigation that could result in significant costs to
us.

From time to time, we are or may be subject to
litigation in the ordinary course of business relating to any
number or type of claims, including claims for damages related
to errors and malfunctions of our services or hardware platform
or their deployment. In addition, we currently are and may in
the future be, subject to litigation alleging violations of
various federal and state securities laws. A securities, product
liability or other claim could seriously harm our business
because of the costs of defending the lawsuit, diversion of
employees time and attention, and potential damage to our
reputation. Some of our

29



---



##### 



agreements with our customers, suppliers and
other third parties contain provisions designed to limit
exposure to potential 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. Although we carry
general liability and directors and officers insurance, our
insurance may not cover potential claims or may not be adequate
to cover all costs incurred in defense of potential claims or to
indemnify us for all liability that may be imposed.


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.

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 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 require training and
it takes time for them to achieve full productivity, if at all.
In addition, we believe that our success is dependent on
expansion of our indirect distribution channels, including our
relationships with wireless carriers, independent sales agents
and distribution partners. To date, we have relationships with a
limited number of these wireless carriers, independent sales
agents and distribution partners. These sales channel partners
require training in selling our products and services and it
will take time for these partners to achieve productivity, if at
all. We may not be able to establish relationships with
additional distributors on a timely basis, or at all. Our
distributors, many of which are not engaged with us on an
exclusive basis, may not devote adequate resources to promoting
and selling our services.

30



---



##### 



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, transaction
processing, software and Internet expertise. Competitors and
others have in the past, and may attempt in the future, 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 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 until March 2004,
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.

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 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 service
infrastructure incorporates. 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.

31



---



##### 



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 our 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 shares of
preferred stock 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 stock and may act, or prevent
certain types of corporate actions, to the detriment of other
stockholders.

Our directors, officers and greater than
5 percent stockholders own a majority of our outstanding
common stock. 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

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 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, with interests in Canada, provides the modem
for some versions of the Internet Location Manager; Taiwan
Semiconductor Manufacturing Company, in Taiwan, manufactures our
Global Positioning System digital receiver chips; and Micronet,
in Israel, supplies our Internet Data Terminal. Should there be
a sustained increase in average exchange rates for the local
currency in any of 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 percent increase in average exchange rates
could increase our product costs by approximately 8 percent.

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 subsidiary in
India.

32



---



##### 





|        |                                                
|------- | -----------------------------------------------
|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 2003 annual meeting of stockholders and
the information included in the Proxy Statement is incorporated
herein by reference.



|         |                        
|-------- | -----------------------
|Item 14. | Controls and Procedures

Within 90 days prior to the date of this
Report, we carried out an evaluation, under the supervision and
with the participation of our management, including our
principal executive officer and principal financial officer, of
the effectiveness of our disclosure controls and procedures as
defined in Rules 13a-14(c) and 15d-14(c) of the Securities
Exchange Act of 1934 (the Exchange Act). Based upon
that evaluation, our principal executive officer and principal
financial officer have concluded that our disclosure controls
and procedures are effective to ensure that information required
to be disclosed by us in reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms. It
should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of
future events, and the design of our disclosure controls and
procedures may not achieve our stated goals under all potential
future conditions, regardless of how remote.

There were no significant changes in our internal
controls or in other factors that could significantly affect
these internal controls subsequent to the date of their
evaluation.

PART IV



|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 15. | 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
    of At Road, Inc. and its subsidiary are filed as part of
    this Report on Form 10-K:

|                                                                                                                               |  |      |    | 
|------------------------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|                                                                                                                               |  | Page
|                                                                                                                               |  |     
|Independent Auditors Report                                                                                                   |  |      | 36 | 
|Consolidated Balance Sheets 
    December 31, 2002 and 2001.                                                                  |  |      | 37 | 
|Consolidated Statements of Operations 
    Years ended December 31, 2002, 2001 and 2000                                       |  |      | 38 | 
|Consolidated Statements of Stockholders
    Equity and Comprehensive Loss  Years ended
    December 31, 2002, 2001 and 2000. |  |      | 39 | 
|Consolidated Statement of Cash Flows 
    Years ended December 31, 2002, 2001 and 2000.                                       |  |      | 40 | 
|Notes to the Consolidated Financial Statements                                                                                 |  |      | 41 | 



| |                                                      
| | -----------------------------------------------------
| | 2.     Consolidated
    Financial Statement Schedules

33



---



##### 





| |                                                    
| | ---------------------------------------------------
| | 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
    (numbered in accordance with Item 601 of
    Regulation S-K)

(b) Reports on Form 8-K

None

(c) Exhibits

| |         |  |  |                                                                                                                                                                                                                      
| | ------- |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.4     |  |  | Amended and Restated Bylaws of the Registrant, as
    amended.                                                                                                                                                       
| | 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.                                                                      
| | 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,
    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.                                                                                                     

34



---



##### 



| |           |  |  |                                                                                                                                                                                                                                                                           
| | --------- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                      
| | 10.27*** |  |  | Cellular Digital Packet Data Reseller Agreement
    between the Registrant and TELUS Mobility dated January 19,
    2001.                                                                                                                                                 
| | 10.28*** |  |  | Co-Marketing Agreement between the Registrant and
    Nextel Partners Operating Corp. dated March 14, 2001.                                                                                                                                                               
| | 10.29*** |  |  | Co-Marketing Agreement between the Registrant and
    Nextel Financing Company dated December 15, 2000.                                                                                                                                                                   
| | 10.30*** |  |  | Cellular Digital Packet Data Reseller Agreement
    between the Registrant and Ameritech Mobile Communications LLC
    dated January 10, 2002.                                                                                                                            
| | 10.31*** |  |  | Service Agreement between the Registrant and
    ALLTEL Communications Inc. dated May 17, 2001.                                                                                                                                                                           
| | 10.32*** |  |  | Integrator Agreement between the Registrant and
    Symbol Technologies, Inc. dated July 31, 2001, as amended
    by Amendment to Agreement with Integrator between the Registrant
    and Symbol Technologies, Inc. dated December 28, 2001.                             
| | 10.33***  |  |  | Loan Modification Agreements between the
    Registrant and Silicon Valley Bank dated July 31, 2001,
    September 30, 2001 and November 5, 2001.                                                                                                                         
| | 10.34***  |  |  | Co-Marketing Agreement between the Registrant and
    Southern Communications Services, Inc. dated March 4, 2002.                                                                                                                                                         
| | 10.35     |  |  | Agreement between the Registrant and Elnet
    Technologies Ltd. dated November 17, 2002.                                                                                                                                                                                 
| | 10.36     |  |  | Loan Modification Agreement between the
    Registrant and Silicon Valley Bank dated December 24, 2002.                                                                                                                                                                   
| | 10.37    |  |  | Reseller Agreement between the Registrant and
    AT&T Wireless dated February 24, 2003.                                                                                                                                                                                  
| | 21.1*     |  |  | List of Subsidiaries.                                                                                                                                                                                                                                                     
| | 23.1      |  |  | Independent Auditors Consent.                                                                                                                                                                                                                                            
| | 24.1      |  |  | Power of Attorney (see page 57).                                                                                                                                                                                                                                          
| | 99.1      |  |  | Statement pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                             
| | 99.2      |  |  | Statement pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                             



---



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



|   |                                                                                               
|-- | ----------------------------------------------------------------------------------------------
|** | Incorporated by reference to our Report on
    Form 10-K filed with the SEC on March 30, 2001.



|    |                                                                                               
|--- | ----------------------------------------------------------------------------------------------
|*** | Incorporated by reference to our Report on
    Form 10-K filed with the SEC on March 28, 2002.



| |   |                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Certain information in this Exhibit has been
    omitted and filed separately with the SEC. Confidential
    treatment has been requested or granted with respect to the
    omitted portions.

35



---



##### 



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, 2002 and 2001 and
the related consolidated statements of operations,
stockholders equity and comprehensive loss and cash flows
for each of the three years in the period ended
December 31, 2002. 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, 2002 and 2001 and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2002 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 5, 2003


36



---



##### 



AT ROAD, INC.



CONSOLIDATED BALANCE SHEETS


(In thousands, except share and par value
amounts)


|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |        |         | 
|---------------------------------------- | ---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | -------- | ------ | ------- |  | -------- | ------ | ------- | 
|                                         |                                                                  |                                                                                                                                                 
|                                         |                                                                  | December 31,                                                                                                                                    
|                                         |                                                                  |                                                                                                                                                 
|                                         |                                                                  | 2002                                                                                                                                             |          | 2001  
|                                         |                                                                  |                                                                                                                                                  |          |       
|ASSETS                                  
|Current assets:                          |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         | Cash and cash equivalents                                        |                                                                                                                                                  | $        | 35,659 |         |  | $        | 40,164 |        
|                                         | Restricted short-term investments                                |                                                                                                                                                  |          | 2,241  |         |  |          | 2,216  |        
|                                         | Accounts receivable (net of allowances of $1,900
    and $3,633) |                                                                                                                                                  |          | 7,407  |         |  |          | 4,781  |        
|                                         | Inventories                                                      |                                                                                                                                                  |          | 5,399  |         |  |          | 8,396  |        
|                                         | Deferred product costs                                           |                                                                                                                                                  |          | 8,694  |         |  |          | 8,599  |        
|                                         | Prepaid expenses and other                                       |                                                                                                                                                  |          | 1,243  |         |  |          | 482    |        
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         |                                                                  | Total current assets                                                                                                                             |          |        | 60,643  |  |          |        | 64,638  | 
|Property and equipment, net              |                                                                  |                                                                                                                                                  | 2,500    |        |         |  | 4,900    |       
|Deferred product costs                   |                                                                  |                                                                                                                                                  | 6,166    |        |         |  | 5,091    |       
|Intangible assets, net                   |                                                                  |                                                                                                                                                  | 483      |        |         |  | 2,071    |       
|Other assets                             |                                                                  |                                                                                                                                                  | 758      |        |         |  | 1,774    |       
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         |                                                                  | Total assets                                                                                                                                     |          | $      | 70,550  |  |          | $      | 78,474  | 
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|LIABILITIES AND STOCKHOLDERS
    EQUITY
|Current liabilities:                     |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         | Accounts payable                                                 |                                                                                                                                                  | $        | 3,408  |         |  | $        | 2,377  |        
|                                         | Accrued liabilities                                              |                                                                                                                                                  |          | 4,309  |         |  |          | 4,837  |        
|                                         | Deferred revenue                                                 |                                                                                                                                                  |          | 7,155  |         |  |          | 6,124  |        
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         |                                                                  | Total current liabilities                                                                                                                        |          |        | 14,872  |  |          |        | 13,338  | 
|Deferred revenue                         |                                                                  |                                                                                                                                                  | 5,321    |        |         |  | 4,426    |       
|Other long-term liabilities              |                                                                  |                                                                                                                                                  | 190      |        |         |  | 299      |       
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         |                                                                  | Total liabilities                                                                                                                                |          |        | 20,383  |  |          |        | 18,063  | 
|                                        
|Commitments and contingencies (Note 10)  |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|Stockholders equity:                    |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         |                                                                  | Preferred stock, $0.0001 par value, 10,000,000
    shares authorized, shares issued and outstanding: none in 2002
    and 2001                   |          |        |        |  |          |        |        | 
|                                         |                                                                  | Common stock, $0.0001 par value, 250,000,000
    shares authorized, shares issued and outstanding: 47,747,156 in
    2002 and 46,499,451 in 2001 |          |        | 170,610 |  |          |        | 169,148 | 
|Deferred stock compensation              |                                                                  |                                                                                                                                                  | (491     | )      |         |  | (2,342   | )     
|Notes receivable from stockholders       |                                                                  |                                                                                                                                                  | (2,068   | )      |         |  | (2,748   | )     
|Accumulated deficit                      |                                                                  |                                                                                                                                                  | (117,884 | )      |         |  | (103,647 | )     
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         |                                                                  | Total stockholders equity                                                                                                                       |          |        | 50,167  |  |          |        | 60,411  | 
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       
|                                         |                                                                  | Total liabilities and stockholders equity                                                                                                       |          | $      | 70,550  |  |          | $      | 78,474  | 
|                                         |                                                                  |                                                                                                                                                  |          |        |         |  |          |       

See notes to consolidated financial statements.

37



---



##### 



AT ROAD, INC.



CONSOLIDATED STATEMENTS OF
OPERATIONS


(In thousands, except per share
amounts)


|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |        |        |        | 
|----------------------------------------------------------------------------- | ---------------------------- | --------------------------------- | ------- | ------ | ------ | ----- | ------- | ------ | ------ | ----- | ------- | ------ | ------ | ------ | 
|                                                                              |                              |                                  
|                                                                              |                              | Years Ended December 31,         
|                                                                              |                              |                                  
|                                                                              |                              | 2002                              |         | 2001   |        | 2000 
|                                                                              |                              |                                   |         |        |        |      
|Revenues:                                                                     |                              |                                   |         |        |        |       |         |        |        |       |         |       
|                                                                              | Service                      |                                   | $       | 33,678 |        |       | $       | 20,188 |        |       | $       | 7,919  |       
|                                                                              | Product                      |                                   |         | 10,742 |        |       |         | 7,262  |        |       |         | 2,704  |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|                                                                              |                              | Total revenues                    |         |        | 44,420 |       |         |        | 27,450 |       |         |        | 10,623 |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Costs and expenses:                                                           |                              |                                   |         |        |        |       |         |        |        |       |         |       
|                                                                              | Cost of service revenue      |                                   |         | 13,544 |        |       |         | 12,690 |        |       |         | 6,414  |       
|                                                                              | Cost of product revenue      |                                   |         | 16,946 |        |       |         | 13,523 |        |       |         | 7,865  |       
|                                                                              | Sales and marketing          |                                   |         | 10,746 |        |       |         | 17,267 |        |       |         | 15,512 |       
|                                                                              | Research and development     |                                   |         | 5,878  |        |       |         | 7,608  |        |       |         | 8,893  |       
|                                                                              | General and administrative   |                                   |         | 8,616  |        |       |         | 12,733 |        |       |         | 10,887 |       
|                                                                              | Restructuring charges        |                                   |         |       |        |       |         | 218    |        |       |         |       |       
|                                                                              | Intangibles amortization     |                                   |         | 1,670  |        |       |         | 1,656  |        |       |         | 1,239  |       
|                                                                              | Stock compensation(*)        |                                   |         | 1,065  |        |       |         | 3,041  |        |       |         | 11,664 |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|                                                                              |                              | Total costs and expenses          |         |        | 58,465 |       |         |        | 68,736 |       |         |        | 62,474 |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Loss from operations                                                          |                              |                                   | (14,045 | )      |        |       | (41,286 | )      |        |       | (51,851 | )     
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Other income (expense), net:                                                  |                              |                                   |         |        |        |       |         |        |        |       |         |       
|                                                                              | Interest income              |                                   |         | 964    |        |       |         | 2,662  |        |       |         | 3,243  |       
|                                                                              | Interest expense             |                                   |         | (15    | )      |       |         | (9     | )      |       |         |       |       
|                                                                              | Investment impairment charge |                                   |         | (1,035 | )      |       |         |       |        |       |         |       |       
|                                                                              | Other income (expense), net  |                                   |         | (106   | )      |       |         | (14    | )      |       |         | (215   | )     
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|                                                                              |                              | Total other income (expense), net |         |        | (192   | )     |         |        | 2,639  |       |         |        | 3,028  |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Net loss                                                                      |                              | $                                 | (14,237 | )      |        | $     | (38,647 | )      |        | $     | (48,823 | )     
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Basic and diluted net loss per share                                          |                              | $                                 | (0.31   | )      |        | $     | (0.88   | )      |        | $     | (3.48   | )     
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Shares used in calculating basic and diluted net
    loss per share           |                              |                                   | 46,134  |        |        |       | 43,892  |        |        |       | 14,026  |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Pro forma basic and diluted net loss per share                                |                              |                                   |         |        |        |       |         |        |        | $     | (1.41   | )     
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Shares used in calculating pro forma basic and
    diluted net loss per share |                              |                                   |         |        |        |       |         |        |        |       | 34,582  |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|(*) Stock compensation:                                                       |                              |                                   |         |        |        |       |         |        |        |       |         |       
|Cost of service revenue                                                       |                              | $                                 | 23      |        |        | $     | 82      |        |        | $     | 171     |       
|Cost of product revenue                                                       |                              |                                   | 96      |        |        |       | 194     |        |        |       | 479     |       
|Sales and marketing                                                           |                              |                                   | 72      |        |        |       | (12     | )      |        |       | 1,691   |       
|Research and development                                                      |                              |                                   | 322     |        |        |       | 214     |        |        |       | 2,686   |       
|General and administrative                                                    |                              |                                   | 552     |        |        |       | 2,563   |        |        |       | 6,637   |       
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       
|                                                                              |                              |                                   | Total   |        | $      | 1,065 |         |        | $      | 3,041 |         |        | $      | 11,664 | 
|                                                                              |                              |                                   |         |        |        |       |         |        |        |       |         |       

See notes to consolidated financial statements.

38



---



##### 



AT ROAD, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY AND COMPREHENSIVE LOSS


YEARS ENDED DECEMBER 31, 2002, 2001 AND
2000


(In thousands, except share and per share
amounts)


|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- | ----------- | ------------ |  | -------- | ------- | ---------- |  | ------------- | ---------- | ------------ |  | ------------- | ------- | ------------- |  | ------ | ------- | ---- |  | - | ------ | - |  | - | --- | - |  | - | -------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                                                      |  |                 |             |              |  |          |         | Notes      |  | Accumulated   |            |              |  |               |         |              
|                                                                                                                                                      |  | Preferred Stock |             | Common Stock |  | Deferred |         | Receivable |  | Other         |            |              |  |               |         | Total        
|                                                                                                                                                      |  |                 |             |              |  | Stock    |         | from       |  | Comprehensive |            | Accumulated  |  | Stockholders |         | Comprehensive
|                                                                                                                                                      |  | Shares          |             | Amount       |  | Shares   |         | Amount     |  | Compensation  |            | Stockholders |  | Loss          |         | Deficit       |  | Equity |         | Loss
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |     
|BALANCES, January 1, 2000                                                                                                                             |  |                 | 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 | ) |  | $ | (48,823 | )
|Change in net unrealized income (loss) from
    short-term investments                                                                                |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   | 11  |   |  |   |          |   |  |   | 11      |   |  |   | 11      |  
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Comprehensive loss                                                                                                                                    |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  | $ | (48,812 | )
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Issuance of Series D convertible preferred
    stock at $8.67 per share, net of issuance costs 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  |   |  |   |         |  
|Net Loss                                                                                                                                              |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   | (38,647  | ) |  |   | (38,647 | ) |  | $ | (38,647 | )
|Change in net unrealized income (loss) from
    short-term investments                                                                                |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   | 10  |   |  |   |          |   |  |   | 10      |   |  |   | 10      |  
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Comprehensive loss                                                                                                                                    |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  | $ | (38,637 | )
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Shares issued under employee stock purchase plan                                                                                                      |  |                 |             |              |  |          |         |            |  |               | 367,579    |              |  |               | 672     |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   | 672     |   |  |   |         |  
|Exercise of stock options                                                                                                                             |  |                 |             |              |  |          |         |            |  |               | 387,226    |              |  |               | 282     |               |  |        |         |      |  |   | (35    | ) |  |   |     |   |  |   |          |   |  |   | 247     |   |  |   |         |  
|Common stock issued for consulting services                                                                                                           |  |                 |             |              |  |          |         |            |  |               | 2,250      |              |  |               | 4       |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   | 4       |   |  |   |         |  
|Collection of notes receivable from stockholders                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   | 318    |   |  |   |     |   |  |   |          |   |  |   | 318     |   |  |   |         |  
|Repurchase of common stock through cancellation
    of notes receivable                                                                               |  |                 |             |              |  |          |         |            |  |               | (329,583   | )            |  |               | (278    | )             |  |        |         |      |  |   | 278    |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Deferred stock compensation                                                                                                                           |  |                 |             |              |  |          |         |            |  |               |            |              |  |               | 85      |               |  |        | (85     | )    |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Reversal of deferred stock compensation due to
    employee terminations                                                                              |  |                 |             |              |  |          |         |            |  |               |            |              |  |               | (2,825  | )             |  |        | 2,825   |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Amortization of deferred stock compensation                                                                                                           |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        | 3,041   |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   | 3,041   |   |  |   |         |  
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|BALANCES, December 31, 2001                                                                                                                           |  |                 |            |              |  | $        |        |            |  |               | 46,499,451 |              |  | $             | 169,148 |               |  | $      | (2,342  | )    |  | $ | (2,748 | ) |  | $ |    |   |  | $ | (103,647 | ) |  | $ | 60,411  |   |  |   |         |  
|Net Loss                                                                                                                                              |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   | (14,237  | ) |  |   | (14,237 | ) |  | $ | (14,237 | )
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Shares issued under employee stock purchase plan                                                                                                      |  |                 |             |              |  |          |         |            |  |               | 553,401    |              |  |               | 1,098   |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   | 1,098   |   |  |   |         |  
|Exercise of stock options                                                                                                                             |  |                 |             |              |  |          |         |            |  |               | 788,054    |              |  |               | 1,276   |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   | 1,276   |   |  |   |         |  
|Collection of notes receivable from stockholders                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   | 554    |   |  |   |     |   |  |   |          |   |  |   | 554     |   |  |   |         |  
|Repurchase of common stock through cancellation
    of notes receivable                                                                               |  |                 |             |              |  |          |         |            |  |               | (93,750    | )            |  |               | (126    | )             |  |        |         |      |  |   | 126    |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Deferred stock compensation                                                                                                                           |  |                 |             |              |  |          |         |            |  |               |            |              |  |               | 15      |               |  |        | (15     | )    |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Reversal of deferred stock compensation due to
    employee terminations                                                                              |  |                 |             |              |  |          |         |            |  |               |            |              |  |               | (801    | )             |  |        | 801     |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|Amortization of deferred stock compensation                                                                                                           |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        | 1,065   |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   | 1,065   |   |  |   |         |  
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  
|BALANCES, December 31, 2002                                                                                                                           |  |                 |            |              |  | $        |        |            |  |               | 47,747,156 |              |  | $             | 170,610 |               |  | $      | (491    | )    |  | $ | (2,068 | ) |  | $ |    |   |  | $ | (117,884 | ) |  | $ | 50,167  |   |  |   |         |  
|                                                                                                                                                      |  |                 |             |              |  |          |         |            |  |               |            |              |  |               |         |               |  |        |         |      |  |   |        |   |  |   |     |   |  |   |          |   |  |   |         |   |  |   |         |  

See notes to consolidated financial statements.

39



---



##### 



AT ROAD, INC.



CONSOLIDATED STATEMENT OF CASH FLOWS


(In thousands)


|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |         |        |        |         |  
|----------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------------- | ------------------------------------------------------- | ----- | ------ | ------- | ------- | ----- | ------ | ------- | ------- | ------ | ------ | ------- | -
|                                                                              |                                                                                                                     |                                                  
|                                                                              |                                                                                                                     | Years Ended December 31,                         
|                                                                              |                                                                                                                     |                                                  
|                                                                              |                                                                                                                     | 2002                                              |                               | 2001                                                    |       | 2000  
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |       
|Cash flows from operating activities:                                         |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Net loss                                                                                                            |                                                   | $                             | (14,237                                                 | )     |        | $       | (38,647 | )     |        | $       | (48,823 | )     
|                                                                              | Adjustments to reconcile net loss to net cash
    used in operating activities:                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |         |       
|                                                                              |                                                                                                                     | Depreciation and amortization                     |                               |                                                         | 4,710 |        |         |         | 4,625 |        |         |         | 3,385  |       
|                                                                              |                                                                                                                     | (Gain) loss on disposal of property and equipment |                               |                                                         | 115   |        |         |         | 2     |        |         |         | (161   | )     
|                                                                              |                                                                                                                     | Investment impairment charge                      |                               |                                                         | 1,035 |        |         |         |      |        |         |         |       |       
|                                                                              |                                                                                                                     | Amortization of deferred stock compensation       |                               |                                                         | 1,065 |        |         |         | 3,041 |        |         |         | 11,664 |       
|                                                                              |                                                                                                                     | Provision for inventory valuation                 |                               |                                                         | 1,063 |        |         |         | 735   |        |         |         | 768    |       
|                                                                              |                                                                                                                     | Provision for bad debts and sales returns         |                               |                                                         | 461   |        |         |         | 2,442 |        |         |         | 2,386  |       
|                                                                              |                                                                                                                     | Common stock issued for consulting services       |                               |                                                         |      |        |         |         | 4     |        |         |         | 51     |       
|                                                                              |                                                                                                                     | Change in assets and liabilities:                 |                               |                                                         |       |        |         |         |       |        |         |         |        |       
|                                                                              |                                                                                                                     |                                                   | Accounts receivable           |                                                         |       | (3,087 | )       |         |       | (2,656 | )       |         |        | (6,128 | )      
|                                                                              |                                                                                                                     |                                                   | Inventories                   |                                                         |       | 1,934  |         |         |       | (2,155 | )       |         |        | (5,864 | )      
|                                                                              |                                                                                                                     |                                                   | Deferred product costs        |                                                         |       | (1,170 | )       |         |       | (3,386 | )       |         |        | (8,428 | )      
|                                                                              |                                                                                                                     |                                                   | Prepaid expenses and other    |                                                         |       | (761   | )       |         |       | 330    |         |         |        | (608   | )      
|                                                                              |                                                                                                                     |                                                   | Accounts payable              |                                                         |       | 1,031  |         |         |       | (1,233 | )       |         |        | 1,590  |        
|                                                                              |                                                                                                                     |                                                   | Accrued and other liabilities |                                                         |       | (637   | )       |         |       | (1,116 | )       |         |        | 4,855  |        
|                                                                              |                                                                                                                     |                                                   | Deferred revenue              |                                                         |       | 1,926  |         |         |       | 3,421  |         |         |        | 5,962  |        
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              |                                                                                                                     |                                                   |                               | Net cash used in operating activities                   |       |        | (6,552  | )       |       |        | (34,593 | )       |        |        | (39,351 | )
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|Cash flows from investing activities:                                         |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Purchase of property and equipment                                                                                  |                                                   |                               | (755                                                    | )     |        |         | (763    | )     |        |         | (7,550  | )     
|                                                                              | Proceeds from sale of property and equipment                                                                        |                                                   |                               |                                                        |       |        |         |        |       |        |         | 283     |       
|                                                                              | Purchases of short-term investments                                                                                 |                                                   |                               |                                                        |       |        |         |        |       |        |         | (6,531  | )     
|                                                                              | Proceeds from maturities of short-term investments                                                                  |                                                   |                               |                                                        |       |        |         | 5,208   |       |        |         | 15,283  |       
|                                                                              | Purchase of restricted short-term investments                                                                       |                                                   |                               | (25                                                     | )     |        |         | (81     | )     |        |         | (135    | )     
|                                                                              | Cash paid in purchase of Differential
    Corrections, Inc. and Hynet Technologies assets, net of cash
    acquired |                                                   |                               |                                                        |       |        |         |        |       |        |         | (3,363  | )     
|                                                                              | Other assets                                                                                                        |                                                   |                               | (101                                                    | )     |        |         | (124    | )     |        |         | (1,733  | )     
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              |                                                                                                                     |                                                   |                               | Net cash provided by (used in) investing
    activities |       |        | (881    | )       |       |        | 4,240   |         |        |        | (3,746  | )
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|Cash flows from financing activities:                                         |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Proceeds from sale preferred stock                                                                                  |                                                   |                               |                                                        |       |        |         |        |       |        |         | 32,049  |       
|                                                                              | Proceeds from sale of common stock                                                                                  |                                                   |                               | 2,374                                                   |       |        |         | 919     |       |        |         | 57,694  |       
|                                                                              | Proceeds from payments on note receivable issued
    to stockholders                                                |                                                   |                               | 554                                                     |       |        |         | 318     |       |        |         |        |       
|                                                                              | Issuance of notes receivable related to previous
    issuance of common stock                                       |                                                   |                               |                                                        |       |        |         |        |       |        |         | (80     | )     
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|Net cash provided by financing activities                                     |                                                                                                                     |                                                   | 2,928                         |                                                         |       |        | 1,237   |         |       |        | 89,663  |        
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|Net increase (decrease) in cash and cash
    equivalents                      |                                                                                                                     |                                                   | (4,505                        | )                                                       |       |        | (29,116 | )       |       |        | 46,566  |        
|Cash and cash equivalents:                                                    |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Beginning of year                                                                                                   |                                                   |                               | 40,164                                                  |       |        |         | 69,280  |       |        |         | 22,714  |       
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | End of year                                                                                                         |                                                   | $                             | 35,659                                                  |       |        | $       | 40,164  |       |        | $       | 69,280  |       
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|Supplemental disclosure of cash flow information:                             |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|Non-cash investing and financing activities:                                  |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Issuance of common stock for notes receivable                                                                       |                                                   | $                             |                                                        |       |        | $       | 35      |       |        | $       | 1,471   |       
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Deferred stock compensation                                                                                         |                                                   | $                             | 15                                                      |       |        | $       | 85      |       |        | $       | 10,026  |       
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Reversal of deferred stock compensation                                                                             |                                                   | $                             | 801                                                     |       |        | $       | 2,825   |       |        | $       | 1,871   |       
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|                                                                              | Repurchase of common stock through cancellation
    of notes receivable                                             |                                                   | $                             | 126                                                     |       |        | $       | 278     |       |        | $       |        |       
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        
|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   |       
|                                                                              |                                                                                                                     |                                                   |                               |                                                         |       |        |         |         |       |        |         |        

See notes to consolidated financial statements.

40



---



##### 



AT ROAD, INC.



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


YEARS ENDED DECEMBER 31, 2002, 2001 AND
2000


Note
1.     Organization and 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 upon consolidation.



| |          
| | ---------
| | Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States 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 a remaining maturity at purchase of
90 days or less to be cash equivalents.



| |                       
| | ----------------------
| | Short-Term Investments

Short-term investments represent highly liquid
debt instruments purchased with a remaining 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
separately 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. There were no short-term investments at December 31,
2002 and 2001.

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 available-for-sale as
the sale of such security may be required prior to maturity. At
December 31, 2002 and 2001, the fair value of the
restricted short-term investment 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 debt instruments with three
financial institutions. The Company sells products primarily

41



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 estimated useful lives.



| |                            
| | ---------------------------
| | Intangible and Other Assets

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

At December 31, 2002, the Company held
approximately 148,000 shares of preferred stock in Cellport
Systems, Inc., with a book value of $1,035,000 and which
represented approximately seven percent ownership in Cellport
Systems, Inc. The Company accounts for this investment using the
cost method. During the quarter ended June 30, 2002, it was
determined that the investment had experienced a decline in
value that was other than temporary. Accordingly, $1,035,000 was
expensed in 2002 (see Note 5).



| |                  
| | -----------------
| | 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 delivery). Through December 31, 2002, the
Companys service has been available only through use of
its 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
revenue) are also deferred and amortized over such period.
Allowances for sales returns are recorded at the time

42



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

product revenue is recognized. Customer payments
received prior to installation are recorded as customer deposits.



| |                  
| | -----------------
| | Advertising Costs

All advertising costs are expensed as incurred.
Advertising costs, which are included in sales and marketing
expenses, were approximately $252,000, $1,345,000 and $1,392,000
in 2002, 2001 and 2000, respectively. Advertising costs consist
primarily of ad campaigns, catalog brochures, direct mailings
and trade show expenses.



| |                                      
| | -------------------------------------
| | 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
(SOP 98-1), Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. During 2002
and 2001 no research and development costs were capitalized in
accordance with SOP 98-1. During 2000 the Company
capitalized approximately $869,000 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, and its related
interpretations. Accordingly, no compensation expense has been
recognized in the financial statements for employee stock
arrangements granted at fair market value.

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.

SFAS No. 123 requires the disclosure of pro
forma net income or loss had the Company adopted the fair value
method. Under SFAS No. 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 are

43



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

based on a single option valuation approach, and
forfeitures are recognized as they occur. The Company used the
following weighted average assumptions:

|                              |                         |                          |   |       |   |      |   |       |   |  |   |      |  
|----------------------------- | ----------------------- | ------------------------ | - | ----- | - | ---- | - | ----- | - |  | - | ---- | -
|                              |                         |                         
|                              |                         | Years Ended December 31,
|                              |                         |                         
|                              |                         | 2002                     |   | 2001  |   | 2000
|                              |                         |                          |   |       |   |     
|Stock Option Plans:           |                         |                          |   |       |   |      |   |       |   |  |   |     
|                              | Risk free interest rate |                          |   | 3.6   | % |      |   | 4.5   | % |  |   | 6.0  | %
|                              | Expected volatility     |                          |   | 124.0 | % |      |   | 143.0 | % |  |   | 95.0 | %
|                              | Expect life (in years)  |                          |   | 5     |   |      |   | 5     |   |  |   | 5    |  
|                              | Expected dividend       |                          | $ | 0.00  |   |      | $ | 0.00  |   |  | $ | 0.00 |  
|                             
|Employee Stock Purchase Plan: |                         |                          |   |       |   |      |   |       |   |  |   |     
|                              | Risk free interest rate |                          |   | 1.61  | % |      |   | 2.83  | % |  |   | 3.74 | %
|                              | Expected volatility     |                          |   | 124.0 | % |      |   | 143.0 | % |  |   | 95.0 | %
|                              | Expect life (in years)  |                          |   | .5    |   |      |   | .5    |   |  |   | .5   |  
|                              | Expected dividend       |                          | $ | 0.00  |   |      | $ | 0.00  |   |  | $ | 0.00 |  

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):

|                                                                                            |             |                          |         |       |   |      |         |       |   |   |         |       |  
|------------------------------------------------------------------------------------------- | ----------- | ------------------------ | ------- | ----- | - | ---- | ------- | ----- | - | - | ------- | ----- | -
|                                                                                            |             |                         
|                                                                                            |             | Years Ended December 31,
|                                                                                            |             |                         
|                                                                                            |             | 2002                     |         | 2001  |   | 2000
|                                                                                            |             |                          |         |       |   |     
|Net loss as reported                                                                        |             | $                        | (14,237 | )     |   | $    | (38,647 | )     |   | $ | (48,823 | )    
|Less; stock-based employee compensation expense
    included in reported net loss           |             |                          | 1,025   |       |   |      | 2,957   |       |   |   | 10,491  |      
|Add; stock-based employee compensation expense
    determined under fair value based method |             |                          | (8,705  | )     |   |      | (7,364  | )     |   |   | (6,639  | )    
|                                                                                            |             |                          |         |       |   |      |         |       |   |   |         |      
|Pro forma net loss                                                                          |             | $                        | (21,917 | )     |   | $    | (43,054 | )     |   | $ | (44,971 | )    
|                                                                                            |             |                          |         |       |   |      |         |       |   |   |         |      
|Basic and diluted net loss per share:                                                       |             |                          |         |       |   |      |         |       |   |   |         |      
|                                                                                            | As reported |                          | $       | (0.31 | ) |      | $       | (0.88 | ) |   | $       | (3.48 | )
|                                                                                            |             |                          |         |       |   |      |         |       |   |   |         |      
|                                                                                            | Pro forma   |                          | $       | (0.48 | ) |      | $       | (0.98 | ) |   | $       | (3.21 | )
|                                                                                            |             |                          |         |       |   |      |         |       |   |   |         |      

During the preparation of the Companys 2002
consolidated financial statements, management determined that
the pro forma net loss and pro forma net loss per share for
fiscal 2001 and 2000 had been improperly calculated.
Accordingly, such pro forma amounts presented above have been
revised. These changes did not impact the Companys
consolidated balance sheet, consolidated statement of
operations, net loss or net loss per share for any of the
periods presented.



| |                          
| | -------------------------
| | 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 periods
presented since the effect of any potentially dilutive
securities is excluded, as they are anti-dilutive due to the
Companys net losses.

44



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                        
| | ---------------------------------------
| | 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.



| |                                                
| | -----------------------------------------------
| | 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 its
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 availability
of wireless data networks; 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, 2002 and 2001,
accumulated other comprehensive loss was zero. At
December 31, 2000, accumulated other comprehensive loss was
composed of unrealized losses on short-term investments of
$10,000.



| |                  
| | -----------------
| | Segment Reporting

In 2002, 2001 and 2000, the Company operated in a
single reportable segment and will evaluate additional segment
disclosure requirements as it expands its operations. The
Company had no significant revenues from customers outside of
the United States in 2002, 2001 and 2000, and had no significant
long-lived assets deployed outside the United States at
December 31, 2002 and 2001.



| |                                                  
| | -------------------------------------------------
| | Derivative Instruments and Hedging
    Activities

In June 1998, the FASB issued SFAS
No. 133, Accounting for Derivative Instruments and
Hedging Activities. This statement requires companies to
record derivatives on the balance sheet as assets or
liabilities, measured at fair value. Gains or losses resulting
from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether
it qualifies for hedge accounting. SFAS No. 133 became
effective for the Company on January 1, 2001. The adoption
of this statement did not have a significant impact on the
Companys consolidated financial position, results of
operations or cash flows.



| |                                         
| | ----------------------------------------
| | Recently Issued Accounting
    Standards

In October 2001, the FASB issued SFAS
No. 144, Accounting for Impairment of Long-Lived
Assets. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, and addresses financial
accounting and reporting for the impairment or disposal of
long-lived assets. This statement is effective for fiscal years
beginning after December 15, 2001. The Company adopted SFAS
No. 144 on January 1, 2002. The adoption of this
statement did not

45



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

have a significant impact on the Companys
consolidated financial position, results of operations or cash
flows.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities, which addresses accounting for restructuring and
similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally EITF Issue No. 94-3. The Company is
required to adopt the provisions of SFAS No. 146 for
restructuring activities initiated after December 31, 2002.
SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when
the liability is incurred. Under EITF Issue 94-3, a
liability for an exit cost was recognized at the date of the
Companys commitment to an exit plan. SFAS No. 146
also establishes that the liability should initially be measured
and recorded at fair value. Accordingly, SFAS No. 146 may
affect the timing of recognizing future restructuring costs as
well as the amounts recognized.

In November 2002, the FASB issued FASB
Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 requires that upon issuance of a
guarantee, the guarantor must recognize a liability for the fair
value of the obligation it assumes under that guarantee. The
initial recognition and measurement provisions of FIN 45
apply on a prospective basis to guarantees issued or modified
after December 31, 2002. The Company adopted the disclosure
requirements of FIN 45 effective December 31, 2002. As
the Company did not have any material guarantees outstanding,
the issuance of FIN 45 did not have an effect on the
Companys financial statements.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which
amends FASB Statement No. 123, Accounting for
Stock-Based Compensation. SFAS No. 148 provides
alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require
prominent disclosure about the effects on reported net income of
an entitys accounting policy decision with respect to
stock-based employee compensation, and requires disclosure about
those effects in both annual and interim financial statements.
SFAS No. 148 is effective for fiscal years ending after
December 15, 2002. The Company does not expect to change to
using the fair value based method of accounting for stock-based
employee compensation; therefore, adoption of SFAS No. 148
is not expected to have an impact on the financial position,
results of operations or cash flows of the Company.



|        |             
|------- | ------------
|Note 2. | Acquisitions

In April 2000, the Company purchased
substantially all assets and certain related liabilities of
Differential Connections, 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 unaudited pro forma information
shows the results of operations for 2000 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).

46



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                      |  |              |         |  
|------------------------------------- |  | ------------ | ------- | -
|                                      |  | Year Ended  
|                                      |  | December 31,
|                                      |  | 2000        
|                                      |  |             
|Net revenues                          |  | $            | 10,743  |  
|Net loss                              |  |              | (48,940 | )
|Net loss per share, basic and diluted |  | $            | (3.49   | )

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 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. | Inventories

Inventories consist of (in thousands):

|                |  |              |       |      |  |   |       | 
|--------------- |  | ------------ | ----- | ---- |  | - | ----- | 
|                |  |             
|                |  | December 31,
|                |  |             
|                |  | 2002         |       | 2001
|                |  |              |       |     
|Raw materials   |  | $            | 3,183 |      |  | $ | 5,086 | 
|Work in process |  |              | 389   |      |  |   | 1,022 | 
|Finished goods  |  |              | 1,827 |      |  |   | 2,288 | 
|                |  |              |       |      |  |   |       | 
|                |  | $            | 5,399 |      |  | $ | 8,396 | 
|                |  |              |       |      |  |   |       | 



|         |                       
|-------- | ----------------------
|Note  4. | Property and Equipment

Property and equipment consist of (in thousands):

|                                          |       |              |        |        |  |   |        |       | 
|----------------------------------------- | ----- | ------------ | ------ | ------ |  | - | ------ | ----- | 
|                                          |       |             
|                                          |       | December 31,
|                                          |       |             
|                                          |       | 2002         |        | 2001  
|                                          |       |              |        |       
|Computers and software                    |       | $            | 9,662  |        |  | $ | 9,153  |      
|Manufacturing and office equipment        |       |              | 289    |        |  |   | 318    |      
|Furniture and fixtures                    |       |              | 419    |        |  |   | 392    |      
|Leasehold improvements                    |       |              | 105    |        |  |   | 106    |      
|                                          |       |              |        |        |  |   |        |      
|                                          | Total |              |        | 10,475 |  |   |        | 9,969 | 
|Accumulated depreciation and amortization |       |              | (7,975 | )      |  |   | (5,069 | )    
|                                          |       |              |        |        |  |   |        |      
|Property and equipment, net               |       | $            | 2,500  |        |  | $ | 4,900  |      
|                                          |       |              |        |        |  |   |        |      



|        |                  
|------- | -----------------
|Note 5. | Intangible Assets

On January 1, 2002, the Company adopted SFAS
No. 142, Goodwill and Other Intangible Assets. As
the Company does not have any goodwill, only intangible assets
are assessed.

During 2002, the Company acquired an additional
$83,000 of purchase technology. This intangible asset will be
amortized on a straight-line basis over an estimated useful life
of two years.

47



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In connection with adopting SFAS No. 142, we
reassessed the useful lives and classification of our
identifiable intangible assets and determined that they
continued to be appropriate. Information regarding the
Companys intangible assets having a finite life is as
follows (in thousands):

|                     |  |                         |       |                         |  |         |        |          |  |              |     |         |  |   |       |  |  |   |        |   |  |   |       | 
|-------------------- |  | ----------------------- | ----- | ----------------------- |  | ------- | ------ | -------- |  | ------------ | --- | ------- |  | - | ----- |  |  | - | ------ | - |  | - | ----- | 
|                     |  |                         |       |                        
|                     |  | As of December 31, 2002 |       | As of December 31, 2001
|                     |  |                         |       |                        
|                     |  | Carrying                |       | Accumulated             |  | Net     |        | Carrying |  | Accumulated  |     | Net    
|                     |  | Amount                  |       | Amortization            |  | Balance |        | Amount   |  | Amortization |     | Balance
|                     |  |                         |       |                         |  |         |        |          |  |              |     |        
|Purchased technology |  | $                       | 5,052 |                         |  | $       | (4,569 | )        |  | $            | 483 |         |  | $ | 4,969 |  |  | $ | (2,898 | ) |  | $ | 2,071 | 

Amortization expense for intangible assets was
$1,670,000, $1,656,000 and $1,656,000 for 2002, 2001 and 2000,
respectively. The estimated amortization for fiscal years
subsequent to December 31, 2002 is as follows:

|                        |       |              |     |     | 
|----------------------- | ----- | ------------ | --- | --- | 
|                        |       | Amortization
|Year Ended December 31, |       | Expense     
|                        |       |             
|2003                    |       | $            | 456 |    
|2004                    |       |              | 27  |    
|                        |       |              |     |    
|                        | Total |              | $   | 483 | 
|                        |       |              |     |    



|        |                    
|------- | -------------------
|Note 6. | Accrued Liabilities

Accrued liabilities consist of (in thousands):

|                                          |       |              |       |       |  |   |       |       | 
|----------------------------------------- | ----- | ------------ | ----- | ----- |  | - | ----- | ----- | 
|                                          |       |             
|                                          |       | December 31,
|                                          |       |             
|                                          |       | 2002         |       | 2001 
|                                          |       |              |       |      
|Accrued compensation and related benefits |       | $            | 1,655 |       |  | $ | 2,042 |      
|Customer deposits                         |       |              | 439   |       |  |   | 711   |      
|Accrued installation charges              |       |              | 530   |       |  |   | 557   |      
|Other accrued expenses                    |       |              | 1,685 |       |  |   | 1,527 |      
|                                          |       |              |       |       |  |   |       |      
|                                          | Total |              | $     | 4,309 |  |   | $     | 4,837 | 
|                                          |       |              |       |       |  |   |       |      



|        |               
|------- | --------------
|Note 7. | Line of Credit

The Company has a $2,000,000 revolving line of
credit agreement that expires on November 30, 2003. 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 percent
(2.8 percent at December 31, 2002) and are
collateralized by a restricted certificate of deposit (see
Note 1). There are two letters of credit outstanding under
this revolving line of credit at December 31, 2002 totaling
$733,735. The two letters of credit expire on December 31,
2003. There were no borrowings against the line of credit at
December 31, 2002.



|        |                     
|------- | --------------------
|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 of the Companys
outstanding convertible preferred stock were converted into
shares of common stock at a conversion ratio of 1-to-1.

48



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In connection with the initial public offering,
the Company authorized an undesignated class of preferred stock
of 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, 2002 or 2001.



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

In 2000, the Company adopted the 2000 Employee
Stock Purchased Plan (the ESPP) under which a total of 450,000
shares of common stock were reserved for issuance. 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 percent 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. In 2002, 553,401 shares were issued
at a weighted average price of $1.983 per share under this plan.
In 2001, 367,579 shares were issued at a weighted average price
of $1.8275 per share under this plan. At December 31, 2002,
429,020 shares of common stock were reserved for issuance under
the plan.



| |                   
| | ------------------
| | Stock Option Plans

In 2000, the Company adopted the 2000 Stock
Option Plan (the 2000 Option Plan). A total of up to 5,703,478
shares are reserved for issuance under the 2000 Option Plan at
December 31, 2002. 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.
These initial grants 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 the
Companys 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 Directors Plan have a term of
10 years from the date of grant.

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 in 10 years
from the date of the 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. None of these shares are subject to repurchase by the
Company.

49



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                                                                                                        |  |           |            |                |  |   |      | 
|------------------------------------------------------------------------------------------------------- |  | --------- | ---------- | -------------- |  | - | ---- | 
|                                                                                                        |  |           |            | Weighted      
|                                                                                                        |  | Number of |            | Average       
|                                                                                                        |  | Shares    |            | Exercise Price
|                                                                                                        |  |           |            |               
|Outstanding, January 1, 2000 (833,872
    exercisable at a weighted average exercise price of $0.69)    |  |           | 4,056,888  |                |  | $ | 0.57 | 
|Granted (weighted average fair value of $3.67 per
    share)                                            |  |           | 4,598,450  |                |  |   | 5.79 | 
|Exercised                                                                                               |  |           | (2,575,860 | )              |  |   | 0.90 | 
|Canceled                                                                                                |  |           | (741,093   | )              |  |   | 5.30 | 
|                                                                                                        |  |           |            |                |  |   |      | 
|Outstanding, December 31, 2000 (576,993
    exercisable at a weighted average exercise price of $0.87)  |  |           | 5,338,385  |                |  |   | 4.25 | 
|Granted (weighted average fair value of $2.29 per
    share)                                            |  |           | 3,678,605  |                |  |   | 2.53 | 
|Exercised                                                                                               |  |           | (387,226   | )              |  |   | 0.73 | 
|Canceled                                                                                                |  |           | (1,765,643 | )              |  |   | 5.36 | 
|                                                                                                        |  |           |            |                |  |   |      | 
|Outstanding, December 31, 2001(1,562,775
    exercisable at a weighted average exercise price of $3.41) |  |           | 6,864,121  |                |  |   | 3.24 | 
|Granted (weighted average fair value of $4.59 per
    share)                                            |  |           | 2,542,250  |                |  |   | 5.41 | 
|Exercised                                                                                               |  |           | (788,054   | )              |  |   | 1.64 | 
|Canceled                                                                                                |  |           | (749,404   | )              |  |   | 3.94 | 
|                                                                                                        |  |           |            |                |  |   |      | 
|Outstanding, December 31, 2002.                                                                         |  |           | 7,868,913  |                |  | $ | 4.04 | 
|                                                                                                        |  |           |            |                |  |   |      | 

During the preparation of the Companys 2002
consolidated financial statements, management determined that
the weighted average fair value per share for options granted in
fiscal 2001 and 2000 had been improperly calculated.
Accordingly, such weighted average values presented above have
been revised.

At December 31, 2002, an aggregate of
2,307,567 shares were available for future grant under the 2000
Option Plan and the Directors Plan.

Additional information regarding options and
stock purchase rights outstanding as of December 31, 2002
is as follows:

|              |              |                     |           |                     |  |          |      |             |  |          |      |      |  |  |           |         |  |   |      |      | 
|------------- | ------------ | ------------------- | --------- | ------------------- |  | -------- | ---- | ----------- |  | -------- | ---- | ---- |  |  | --------- | ------- |  | - | ---- | ---- | 
|              |              |                     |           |                    
|              |              | Options Outstanding |           | Options Exercisable
|              |              |                     |           |                    
|              |              |                     |           | Weighted            |  |          |      |            
|              |              |                     |           | Average             |  | Weighted |      |             |  | Weighted
|              |              |                     |           | Remaining           |  | Average  |      |             |  | Average 
|Exercise      |              |                     |           | Contractual         |  | Exercise |      | Number      |  | Exercise
|Price         |              | Number              |           | Life (Years)        |  | Price    |      | Exercisable |  | Price   
|              |              |                     |           |                     |  |          |      |             |  |         
|$0.07 - 0.67  |              |                     | 621,255   |                     |  |          | 6.43 |             |  | $        | 0.47 |      |  |  | 501,165   |         |  | $ | 0.43 |     
|              | 1.33 - 1.97  |                     |           | 1,512,868           |  |          |      | 7.83        |  |          |      | 1.54 |  |  |           | 992,596 |  |   |      | 1.52 | 
|              | 2.00 - 2.13  |                     |           | 1,471,958           |  |          |      | 8.60        |  |          |      | 2.01 |  |  |           | 419,035 |  |   |      | 2.01 | 
|              | 3.20 - 3.85  |                     |           | 560,000             |  |          |      | 8.68        |  |          |      | 3.63 |  |  |           | 167,708 |  |   |      | 3.69 | 
|              | 4.00 - 4.75  |                     |           | 862,732             |  |          |      | 9.08        |  |          |      | 4.46 |  |  |           | 192,942 |  |   |      | 4.17 | 
|              | 5.04 - 5.69  |                     |           | 1,158,950           |  |          |      | 9.50        |  |          |      | 5.10 |  |  |           | 55,038  |  |   |      | 5.41 | 
|              | 6.05 - 7.80  |                     |           | 466,750             |  |          |      | 9.42        |  |          |      | 6.65 |  |  |           | 23,000  |  |   |      | 7.07 | 
|              | 8.00 - 10.00 |                     |           | 1,214,400           |  |          |      | 7.73        |  |          |      | 9.30 |  |  |           | 654,991 |  |   |      | 9.41 | 
|              |              |                     |           |                     |  |          |      |             |  |          |      |      |  |  |           |         |  |   |      |     
|$0.07 - 10.00 |              |                     | 7,868,913 |                     |  |          | 8.39 |             |  | $        | 4.04 |      |  |  | 3,006,475 |         |  | $ | 3.53 |     
|              |              |                     |           |                     |  |          |      |             |  |          |      |      |  |  |           |         |  |   |      |     

50



---



##### 



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 $1,025,000, $2,957,000 and $10,491,000 was
amortized to expense in 2002, 2001 and 2000, respectively. At
December 31, 2002 and 2001, the Company had $491,000, and
$2,318,000 in deferred compensation related to employee options,
respectively.

In 2002, 2001, 2000 and 1999, the Company issued
non-statutory common stock options to consultants to purchase
2,750, 12,500, 204,550 and 147,200 shares of common stock, of
which options to purchase 80,125, 149,250 and 170,000 shares of
common stock were outstanding at December 31, 2002, 2001
and 2000, respectively. Accordingly, the Company recorded
$15,000, $85,000, and $1,196,000 as the fair value of such
options at December 31, 2002, 2001 and 2000, respectively.
Stock compensation expense of $40,000, $84,000 and $1,173,000
was recognized as a result of issuing these options in 2002,
2001 and 2000, respectively. The fair value attributed 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 assumptions: expected life, ten years
in 2002, 2001 and 2000; risk-free interest rate,
3.6 percent in 2002, 4.5 percent in 2001 and
6 percent in 2000; volatility of 124 percent in 2002,
143 percent in 2001 and 95 percent in 2000; and no
dividends during the expected term. Forfeitures are recognized
as they occur.



| |             
| | ------------
| | Common Stock

At December 31, 2002, the Company has
reserved shares of common stock for issuance as follows:

|                                  |  |  |            | 
|--------------------------------- |  |  | ---------- | 
|Issuance under stock option plans |  |  | 10,176,480 | 
|Issuance under ESPP               |  |  | 429,020    | 
|                                  |  |  |            | 
|                                  |  |  | 10,605,500 | 
|                                  |  |  |            | 

51



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                   
| | ----------------------------------
| | Receivable from Sales of
    Stock

At December 31, 2002, notes receivable from
stockholders representing notes receivable from certain officers
and other employees of the Company were composed of (dollars in
thousands, except per share amounts):

|              |  |                 |       |        |  |           |           |               |  |   |      |  |  |  |      |  
|------------- |  | --------------- | ----- | ------ |  | --------- | --------- | ------------- |  | - | ---- |  |  |  | ---- | -
|              |  |                
|              |  | Stock Purchased
|              |  |                
|Issue Date    |  | Amount          |       | Number |  | Per Share |           | Interest Rate
|              |  |                 |       |        |  |           |           |              
|December 1999 |  | $               | 570   |        |  |           | 427,500   |               |  | $ | 1.33 |  |  |  | 6.11 | %
|December 1999 |  |                 | 598   |        |  |           | 897,500   |               |  |   | 0.67 |  |  |  | 6.11 | %
|December 1999 |  |                 | 15    |        |  |           | 230,000   |               |  |   | 0.07 |  |  |  | 6.11 | %
|January 2000  |  |                 | 100   |        |  |           | 75,000    |               |  |   | 1.33 |  |  |  | 6.12 | %
|March 2000    |  |                 | 500   |        |  |           | 375,000   |               |  |   | 1.33 |  |  |  | 6.46 | %
|March 2000    |  |                 | 170   |        |  |           | 42,500    |               |  |   | 4.00 |  |  |  | 6.46 | %
|April 2000    |  |                 | 80    |        |  |           | N/A       |               |  |   | N/A  |  |  |  | 6.60 | %
|January 2001  |  |                 | 35    |        |  |           | 52,250    |               |  |   | 0.67 |  |  |  | 5.53 | %
|              |  |                 |       |        |  |           |           |               |  |   |      |  |  |  |      |  
|              |  | $               | 2,068 |        |  |           | 2,099,750 |               |  |   |      |  |  |  |      |  
|              |  |                 |       |        |  |           |           |               |  |   |      |  |  |  |      |  

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,
2002, 384,540 shares of common stock were subject to this
repurchase right.

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):

|                                                                              |                                                                      |                          |         |        |   |      |         |        |   |   |         |        |  
|----------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------ | ------- | ------ | - | ---- | ------- | ------ | - | - | ------- | ------ | -
|                                                                              |                                                                      |                         
|                                                                              |                                                                      | Years Ended December 31,
|                                                                              |                                                                      |                         
|                                                                              |                                                                      | 2002                     |         | 2001   |   | 2000
|                                                                              |                                                                      |                          |         |        |   |     
|Net loss (numerator), basic and diluted                                       |                                                                      | $                        | (14,237 | )      |   | $    | (38,647 | )      |   | $ | (48,823 | )     
|Shares (denominator):                                                         |                                                                      |                          |         |        |   |      |         |        |   |   |         |       
|                                                                              | Weighted average common shares outstanding                           |                          |         | 47,047 |   |      |         | 46,219 |   |   |         | 18,071 |  
|                                                                              | Weighted average common shares outstanding
    subject to repurchase |                          |         | (913   | ) |      |         | (2,327 | ) |   |         | (4,045 | )
|                                                                              |                                                                      |                          |         |        |   |      |         |        |   |   |         |       
|                                                                              | Shares used in computation, basic and diluted                        |                          |         | 46,134 |   |      |         | 43,892 |   |   |         | 14,026 |  
|                                                                              |                                                                      |                          |         |        |   |      |         |        |   |   |         |       
|Net loss per share, basic and diluted                                         |                                                                      | $                        | (0.31   | )      |   | $    | (0.88   | )      |   | $ | (3.48   | )     
|                                                                              |                                                                      |                          |         |        |   |      |         |        |   |   |         |       
|Shares used in computation, basic and diluted                                 |                                                                      |                          |         |        |   |      |         |        |   |   | 14,026  |       
|Weighted average convertible preferred stock
    outstanding                  |                                                                      |                          |         |        |   |      |         |        |   |   | 20,556  |       
|                                                                              |                                                                      |                          |         |        |   |      |         |        |   |   |         |       
|Shares used in computing pro forma per share
    amounts on a converted basis |                                                                      |                          |         |        |   |      |         |        |   |   | 34,582  |       
|                                                                              |                                                                      |                          |         |        |   |      |         |        |   |   |         |       
|Pro forma net loss per share on a converted
    basis, basic and diluted      |                                                                      |                          |         |        |   |      |         |        |   | $ | (1.41   | )     
|                                                                              |                                                                      |                          |         |        |   |      |         |        |   |   |         |       

52



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

For the above-mentioned periods, the Company had
securities outstanding which could potentially dilute basic
earnings per share in the future, but which 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:

|                                                                         |  |                          |           |      |  |      |           |  |  |   |           | 
|------------------------------------------------------------------------ |  | ------------------------ | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                                         |  |                         
|                                                                         |  | Years Ended December 31,
|                                                                         |  |                         
|                                                                         |  | 2002                     |           | 2001 |  | 2000
|                                                                         |  |                          |           |      |  |     
|Shares of common stock subject to repurchase                             |  |                          | 384,540   |      |  |      | 1,562,891 |  |  |   | 3,215,471 | 
|Outstanding options and stock purchase rights                            |  |                          | 7,868,913 |      |  |      | 6,864,121 |  |  |   | 5,338,385 | 
|Weighted average exercise price of options and
    stock purchase rights |  | $                        | 4.04      |      |  | $    | 3.24      |  |  | $ | 4.25      | 
|                                                                         |  |                          |           |      |  |      |           |  |  |   |           | 

Note 10.     Commitments
and Contingencies



| |                  
| | -----------------
| | Lease Commitments

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

|                             |  |           |       | 
|---------------------------- |  | --------- | ----- | 
|                             |  | Operating
|                             |  | Leases   
|                             |  |          
|Year Ending December 31,     |  |           |       | 
|2003                         |  | $         | 1,444 | 
|2004                         |  |           | 1,489 | 
|2005                         |  |           | 773   | 
|                             |  |           |       | 
|Total minimum lease payments |  | $         | 3,706 | 
|                             |  |           |       | 

Rent expense was approximately $1,312,000,
$1,563,000 and $984,000 (net of sublease income of approximately
$72,000, $79,000 and $203,000) for 2002, 2001 and 2000,
respectively. The lease provides for escalating rental payments
over the lease period. Rent expense is recognized on a
straight-line basis over the term of the lease. Deferred rent
represents the difference between rental payments and rent
expense recognized. Current deferred revenue is included in
accrued liabilities, with the long-term portion being included
in other long-term liabilities.



| |                     
| | --------------------
| | Purchase Commitments

At December 31, 2002, the Company had
noncancelable inventory purchase commitments totaling
approximately $1,945,000.



| |              
| | -------------
| | Contingencies

In the third quarter of 2002, AT&T Wireless
announced that it expects to cease operating its Cellular
Digital Packet Data network by June 30, 2004. The Company
is currently in discussions with AT&T Wireless and other
wireless carriers to minimize any disruption of the provision of
its services to subscribers. On or about the actual termination
date of AT&T Wireless Cellular Digital Packet Data
network and where possible, certain affected subscribers would
be transferred to alternate Cellular Digital Packet Data
networks without a change to the hardware platform then used by
those subscribers. However, the Company estimates that as of
June 30, 2004 the Company will have 12,000 subscribers
in their initial contract periods that are then using AT&T
Wireless Cellular Digital Packet Data network and that
would need to use an alternate wireless protocol to continue to
use its services. To use an alternate wireless protocol,
existing hardware platforms would have to be replaced for these
subscribers. The

53



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Company does not expect to realize a loss on the
sale of these replacement hardware platforms. While there is no
assurance, the Company does not expect that the termination of
AT&T Wireless Cellular Digital Packet Data network
will have a material adverse impact on its financial results.

Note 11.     Restructuring
of Operations

During 2001, the Company adopted a formal plan to
reduce operating costs in response to a general downturn in the
economy. In connection with these actions, a pre-tax
restructuring charge of approximately $218,000 (net of reversals
in 2001 of $30,000) was recorded in 2001. The principal actions
of the plan involved reducing the number of employees by
approximately 11 percent. All areas of the Company were
affected by the reduction of 29 employees. The restructuring
expense was composed of severance and related costs. The total
restructuring expense paid in 2001 was $218,000.

Note 12.     Income
Taxes

Only minimum state income and franchise taxes
were provided for any of the 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:

|                                          |  |      |        |      |  |      |        |    |  |  |        |   
|----------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | -- |  |  | ------ | --
|                                          |  | 2002 |        | 2001 |  | 2000
|                                          |  |      |        |      |  |     
|Federal statutory rate                    |  |      | (35.00 | )%   |  |      | (35.00 | )% |  |  | (35.00 | )%
|State taxes, net of federal benefit       |  |      | (6.14  | )    |  |      | (4.84  | )  |  |  | (2.60  | ) 
|Non-deductible stock compensation charges |  |      | 2.61   |      |  |      | 2.78   |    |  |  | 8.40   |   
|Research and development credits          |  |      | (2.72  | )    |  |      | (0.56  | )  |  |  | (1.00  | ) 
|Other                                     |  |      | (1.04  | )    |  |      | (2.22  | )  |  |  | (1.20  | ) 
|Valuation allowance                       |  |      | 42.29  |      |  |      | 39.84  |    |  |  | 29.00  |   
|                                          |  |      |        |      |  |      |        |    |  |  |        |   
|Effective tax rate                        |  |      |       | %    |  |      |       | %  |  |  |       | % 

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

|                                                               |  |      |         |      |  |   |         |  
|-------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                                               |  | 2002 |         | 2001
|                                                               |  |      |         |     
|Net operating loss carry forwards                              |  | $    | 34,815  |      |  | $ | 28,791  |  
|Credit carry forwards                                          |  |      | 3,016   |      |  |   | 2,567   |  
|Accruals and reserves recognized in different
    periods      |  |      | 4,115   |      |  |   | 3,381   |  
|                                                               |  |      |         |      |  |   |         |  
|Total gross deferred tax assets before valuation
    allowance |  |      | 41,946  |      |  |   | 34,739  |  
|Valuation reserve                                              |  |      | (41,946 | )    |  |   | (34,739 | )
|                                                               |  |      |         |      |  |   |         |  
|Net deferred tax asset                                         |  | $    |        |      |  | $ |        |  
|                                                               |  |      |         |      |  |   |         |  

At December 31, 2002, the Company had
federal and state net operating loss (NOL) carry forwards
of approximately $91,408,000 and $36,423,000, respectively. The
federal NOL carry forwards expire through 2022, while the state
NOL carry forwards expire through 2012.

At December 31, 2002, the Company also has
federal and state research credits of approximately $1,723,000
and $1,293,000, respectively. The federal tax credit carry
forward expires through 2022. The state tax credit carry forward
has no expiration.

Current federal and California tax law includes
provisions limiting the annual use of net operating loss and
credit carry forwards in the event of certain defined changes in
stock ownership. The Companys

54



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

capitalization described herein may have resulted
in such a change. Accordingly, the annual use of the
Companys net operating loss and credit carry forwards
would be limited according to these provisions. Management has
not yet determined the extent of such limitation. Such
limitation may result in the loss of carry forward benefits due
to their expiration.

Note 13.     Related
Party Transactions

The Company purchased approximately $1,892,000 in
2002, $3,007,000 in 2001 and $2,779,000 in 2000, of inventory
from a stockholder. At December 31, 2002, 2001 and 2000,
approximately $198,000, $40,000 and $196,000, respectively, owed
to the stockholder was included in accounts payable.

Note 14.     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 percent and 15 percent 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
15.     Quarterly Financial Data
(unaudited) (in thousands except per share amounts)

|                                                                    |  |              |        |               |  |          |        |           |  |              |        |               |  |          |        |           |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|------------------------------------------------------------------- |  | ------------ | ------ | ------------- |  | -------- | ------ | --------- |  | ------------ | ------ | ------------- |  | -------- | ------ | --------- |  | - | ------ | - |  | - | ------ | - |  | - | ------- | - |  | - | ------- | -
|                                                                    |  | December 31, |        | September 30, |  | June 30, |        | March 31, |  | December 31, |        | September 30, |  | June 30, |        | March 31,
|                                                                    |  | 2002         |        | 2002          |  | 2002     |        | 2002      |  | 2001         |        | 2001          |  | 2001     |        | 2001     
|                                                                    |  |              |        |               |  |          |        |           |  |              |        |               |  |          |        |          
|Consolidated Statements of
    Operations Data:                     |  |              |        |               |  |          |        |           |  |              |        |               |  |          |        |           |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Total revenues                                                      |  | $            | 12,946 |               |  | $        | 11,316 |           |  | $            | 10,458 |               |  | $        | 9,700  |           |  | $ | 8,613  |   |  | $ | 7,530  |   |  | $ | 6,193   |   |  | $ | 5,114   |  
|Loss from operations                                                |  |              | (2,305 | )             |  |          | (2,970 | )         |  |              | (3,412 | )             |  |          | (5,358 | )         |  |   | (7,420 | ) |  |   | (9,510 | ) |  |   | (11,140 | ) |  |   | (13,216 | )
|Net loss                                                            |  | $            | (2,018 | )             |  | $        | (2,762 | )         |  | $            | (4,247 | )             |  | $        | (5,210 | )         |  | $ | (7,144 | ) |  | $ | (8,993 | ) |  | $ | (10,351 | ) |  | $ | (12,159 | )
|                                                                    |  |              |        |               |  |          |        |           |  |              |        |               |  |          |        |           |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Basic and diluted net loss per share                                |  | $            | (0.04  | )             |  | $        | (0.06  | )         |  | $            | (0.09  | )             |  | $        | (0.12  | )         |  | $ | (0.16  | ) |  | $ | (0.20  | ) |  | $ | (0.24   | ) |  | $ | (0.28   | )
|                                                                    |  |              |        |               |  |          |        |           |  |              |        |               |  |          |        |           |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  
|Shares used in calculating basic and diluted net
    loss per share |  |              | 46,990 |               |  |          | 46,355 |           |  |              | 45,904 |               |  |          | 45,287 |           |  |   | 44,668 |   |  |   | 44,213 |   |  |   | 43,798  |   |  |   | 42,890  |  
|                                                                    |  |              |        |               |  |          |        |           |  |              |        |               |  |          |        |           |  |   |        |   |  |   |        |   |  |   |         |   |  |   |         |  

55



---



##### 



AT ROAD, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

SCHEDULE II

AT ROAD, INC.



VALUATION AND QUALIFYING ACCOUNTS


FOR THE YEARS ENDED DECEMBER 31, 2002, 2001
AND 2000


(In thousands)


|                              |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|----------------------------- |  | ---------- | ----- | ---------- |  | ---------- | ----- | ---------- |  | - | ----- |  |  | - | ----- | 
|                              |  |            |       | Additions  |  |            |       |           
|                              |  | Balance at |       | and        |  | Write-off  |       | Balance at
|                              |  | Beginning  |       | Charges to |  | and        |       | End of    
|                              |  | of Year    |       | Expenses   |  | Deductions |       | Year      
|                              |  |            |       |            |  |            |       |           
|Year Ended December 31, 2002  |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|Accounts receivable allowance |  | $          | 3,633 |            |  | $          | 461   |            |  | $ | 2,194 |  |  | $ | 1,900 | 
|                              |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|Year Ended December 31, 2001  |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|Accounts receivable allowance |  | $          | 2,247 |            |  | $          | 2,442 |            |  | $ | 1,056 |  |  | $ | 3,633 | 
|                              |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|Year Ended December 31, 2000  |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|Accounts receivable allowance |  | $          | 153   |            |  | $          | 2,368 |            |  | $ | 274   |  |  | $ | 2,247 | 
|                              |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 

56



---



##### 



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 31, 2003

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.

|                                       |  |                                                                                       |  |               
|-------------------------------------- |  | ------------------------------------------------------------------------------------- |  | --------------
|Signature                              |  | Title                                                                                 |  | Date          
|                                       |  |                                                                                       |  |               
|/s/ KRISH PANUKrish Panu               |  | Chairman of the Board of Directors,
    President and Chief Executive Officer         |  | March 31, 2003
|                                      
|/s/ THOMAS C. HOSTERThomas C. Hoster   |  | Senior Vice President,
    Finance and Administration and
    Chief Financial Officer |  | March 31, 2003
|                                      
|/s/ KRIS CHELLAMKris Chellam           |  | Director                                                                              |  | March 31, 2003
|                                      
|/s/ CHARLES E. LEVINECharles E. Levine |  | Director                                                                              |  | March 31, 2003
|                                      
|/s/ STUART PHILLIPSStuart Phillips     |  | Director                                                                              |  | March 31, 2003
|                                      
|/s/ ANDREW T. SHEEHANAndrew T. Sheehan |  | Director                                                                              |  | March 31, 2003
|                                      
|/s/ T. PETER THOMAST. Peter Thomas     |  | Director                                                                              |  | March 31, 2003

57



---



##### 



CERTIFICATIONS

I, Krish Panu, certify that:



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this annual report on Form 10-K of At Road, Inc.;                                                                                                                                                                                                                                                                           
|
| | 2.     Based on my
    knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this annual
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this annual report;                       
|
| | 4.     The
    registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the registrants
    auditors and the audit committee of registrants board of
    directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officer and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |                        
| | -----------------------
| | /s/KRISH PANU          
| |                        
| | Krish Panu             
| | Chief Executive Officer

Date: March 31, 2003

58



---



##### 



CERTIFICATIONS

I, Thomas C. Hoster, certify that:



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this annual report on Form 10-K of At Road, Inc.;                                                                                                                                                                                                                                                                           
|
| | 2.     Based on my
    knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this annual
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this annual report;                       
|
| | 4.     The
    registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the registrants
    auditors and the audit committee of registrants board of
    directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officer and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |                        
| | -----------------------
| | /s/THOMAS C. HOSTER    
| |                        
| | Thomas C. Hoster       
| | Chief Financial Officer

Date: March 31, 2003

59



---



##### 



EXHIBIT INDEX

| |       |    |  |                                                                                                                                                                                                                                                                           
| | ----- | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.4   |    |  | Amended and Restated Bylaws of the Registrant, as
    amended.                                                                                                                                                                                                            
| | 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.                                                                                                                           
| | 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, 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.                                                                                                                                         
| | 10.27 | *** |  | Cellular Digital Packet Data Reseller Agreement
    between the Registrant and TELUS Mobility dated January 19,
    2001.                                                                                                                    
| | 10.28 | *** |  | Co-Marketing Agreement between the Registrant and
    Nextel Partners Operating Corp. dated March 14, 2001.                                                                                                                                  
| | 10.29 | *** |  | Co-Marketing Agreement between the Registrant and
    Nextel Financing Company dated December 15, 2000.                                                                                                                                      
| | 10.30 | *** |  | Cellular Digital Packet Data Reseller Agreement
    between the Registrant and Ameritech Mobile Communications LLC
    dated January 10, 2002.                                                                                               
| | 10.31 | *** |  | Service Agreement between the Registrant and
    ALLTEL Communications Inc. dated May 17, 2001.                                                                                                                                              
| | 10.32 | *** |  | Integrator Agreement between the Registrant and
    Symbol Technologies, Inc. dated July 31, 2001, as amended
    by Amendment to Agreement with Integrator between the Registrant
    and Symbol Technologies, Inc. dated December 28, 2001.
| | 10.33 | ***  |  | Loan Modification Agreements between the
    Registrant and Silicon Valley Bank dated July 31, 2001,
    September 30, 2001 and November 5, 2001.                                                                                            
| | 10.34 | ***  |  | Co-Marketing Agreement between the Registrant and
    Southern Communications Services, Inc. dated March 4, 2002.                                                                                                                            
| | 10.35 |      |  | Agreement between the Registrant and Elnet
    Technologies Ltd. dated November 17, 2002.                                                                                                                                                    
| | 10.36 |      |  | Loan Modification Agreement between the
    Registrant and Silicon Valley Bank dated December 24, 2002.                                                                                                                                      
| | 10.37 |     |  | Reseller Agreement between the Registrant and
    AT&T Wireless dated February 24, 2003.                                                                                                                                                     
| | 21.1* |      |  | List of Subsidiaries.                                                                                                                                                                                                                        
| | 23.1  |      |  | Independent Auditors Consent.                                                                                                                                                                                                               
| | 24.1  |      |  | Power of Attorney (see page 57).                                                                                                                                                                                                             
| | 99.1  |      |  | Statement pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                
| | 99.2  |      |  | Statement pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                



---



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



|   |                                                                                               
|-- | ----------------------------------------------------------------------------------------------
|** | Incorporated by reference to our Report on
    Form 10-K filed with the SEC on March 30, 2001.



|    |                                                                                               
|--- | ----------------------------------------------------------------------------------------------
|*** | Incorporated by reference to our Report on
    Form 10-K filed with the SEC on March 28, 2002.



| |   |                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Certain information in this Exhibit has been
    omitted and filed separately with the SEC. Confidential
    treatment has been requested or granted with respect to the
    omitted portions.