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

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

                                    FORM 10-K
 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(Mark One)

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

                   For the Fiscal Year ended December 31, 2001

                                       OR

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

            For the transition period from ___________ to ___________

                        Commission File Number 000-31561

                                  AvantGo, Inc.
             (Exact Name of Registrant as Specified in its Charter)

         Delaware                               94-3275789
(State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
 Incorporation or Organization)

                             25881 Industrial Blvd.
                            Hayward, California 94545
          (Address of Principal Executive Offices, including Zip Code)

                                 (510) 259-4000
              (Registrant's Telephone Number, Including Area Code)

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

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock,  par
value $0.0001.

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

Yes [X] No [_]

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  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

As of March 20, 2002, there were 35,501,609  shares of the  registrant's  Common
Stock,  $0.0001  par  value,  outstanding.  The  aggregate  market  value of the
registrant's  voting  stock  held by  nonaffiliates  as of  March  20,  2002 was
approximately $29.7 million.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  registrant's  definitive Proxy Statement for the Annual Meeting
of Stockholders to be held on May 13, 2002 are incorporated by reference in Part
III of this Form 10-K to the extent stated herein.

================================================================================


<PAGE>


                                  AVANTGO, INC.

                                    FORM 10-K

                                    CONTENTS

ITEM 1.    BUSINESS..........................................................  1

ITEM 2.    PROPERTIES........................................................  9

ITEM 3.    LEGAL PROCEEDINGS.................................................  9

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.............  9

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND
           RELATED STOCKHOLDER MATTERS.......................................  9

ITEM 6.    SELECTED FINANCIAL DATA........................................... 10

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
           CONDITION AND RESULTS OF OPERATIONS............................... 12

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES
           ABOUT MARKET RISK................................................. 30

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................... 30

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH
           ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE................ 30

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................ 30

ITEM 11.   EXECUTIVE COMPENSATION............................................ 31

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
           OWNERS AND MANAGEMENT............................................. 31

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 31

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
           AND REPORTS ON FORM 8-K........................................... 31


<PAGE>

     This Form 10-K  contains  certain  forward-looking  statements  within  the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of
the Securities Act of 1933. These  forward-looking  statements involve risks and
uncertainties, including, but not limited to, those identified in the section of
this Form 10-K entitled "Risk Factors," which may cause actual results to differ
materially from those discussed in such forward-looking statements. When used in
this  document,  the  words  "believes,"  "expects,"  "anticipates,"  "intends,"
"plans,"  "future,"  "may,"  "will,"  "should,"  "estimates,"   "potential,"  or
"continue" and similar  expressions,  are intended to identify  certain of these
forward-looking statements.  However, these words are not the exclusive means of
identifying  such  statements.   In  addition,  any  statements  that  refer  to
expectations,  projections  or  other  characterizations  of  future  events  or
circumstances are forward-looking  statements. The cautionary statements made in
this document should be read as being applicable to all related  forward-looking
statements  wherever they appear in this  document.  Factors that could cause or
contribute to such  differences  include those discussed  below. We undertake no
obligation   to  release   publicly   the  results  of  any  revision  to  these
forward-looking  statements that may be made to reflect events or  circumstances
occurring  subsequent to the filing of this Form 10-K with the SEC.  Readers are
urged to review and consider  carefully  the various  disclosures  made by us in
this report and in our other  reports  filed with the SEC that attempt to advise
interested parties of the risk factors that may affect our business.

     For a detailed  discussion of these risks and uncertainties,  see the "Risk
Factors"  section  of this Form  10-K.  We  undertake  no  obligation  to update
forward-looking  statements to reflect events or  circumstances  occurring after
the date of this Form 10-K.

     AvantGo,  AvantGo Enterprise,  AvantGo Mobile Engine, AvantGo Mobile Sales,
AvantGo Mobile Delivery,  Dynamic Mobility Model and the AvantGo logo are either
registered trademarks or trademarks of AvantGo in the United States and/or other
countries.

     As used in this report on Form 10-K, unless the context otherwise requires,
the terms "we," "us," "our" or "the  Company"  and  "AvantGo"  refer to AvantGo,
Inc., a Delaware  corporation,  and, unless the context otherwise requires,  its
wholly-owned subsidiaries.

                                     PART I

ITEM 1.  BUSINESS

Overview

     We were incorporated in June 1997 as a Delaware  corporation under the name
Bombardier Software, Inc. and changed our name to AvantGo, Inc. in January 1998.
In September  1998,  we launched our AvantGo  Enterprise  products  today called
AvantGo  M-Business  Server  products.  In May 1999, we  introduced  our AvantGo
Mobile  Internet  service.  In May 2000, we purchased  Globalware  Computing and
began integrating its software products and consulting  services into our mobile
offerings.  In October 2000, we completed our initial public  offering.  In July
2001,  September 2001 and March 2002,  respectively,  we launched AvantGo Mobile
Sales,  AvantGo Mobile  Delivery and AvantGo Mobile Pharma - which  interoperate
with our AvantGo M-Business Server products.

     We provide mobile enterprise  software and services that enable and enhance
the use of Internet-based content and corporate applications on handheld devices
and  Internet-enabled  phones. Our AvantGo M-Business Server products and mobile
business  applications are designed to automate  business  processes and improve
the exchange of information between companies and their employees and customers,
resulting  in  improved  business   efficiencies  and  more  effective  customer
interactions.  We license  our AvantGo  M-Business  Server  products  and mobile
business  applications  to help companies  provide their  employees,  customers,
suppliers and business affiliates with easy access to business  information.  We
host our  AvantGo  Mobile  Internet  service to enable our Media and  M-Business
customers  to  deliver  their  content  and  applications  to our over 5 million
registered  AvantGo Mobile Internet  service users.  Our AvantGo Mobile Internet
service also allows  consumers to access and interact  with over 2000 sources of
Internet-based  content and  corporate  applications  optimized  for delivery to
handheld devices and Internet-enabled phones.


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<PAGE>

     Our AvantGo  M-Business Server products,  our mobile business  applications
and our  AvantGo  Mobile  Internet  service  provide  several  key  benefits  to
enterprises and content providers, or e-businesses, including the ability to:

o    Deliver  sophisticated  applications.  Our software  incorporates  advanced
     configuration,  processing, storage and transmission technology designed to
     overcome  mobile  device  limitations  including  limited  memory  and slow
     processor performance,  as well as external limitations,  including limited
     network communications availability. Using our software, mobile devices can
     store and display complex,  table-formatted  content and graphics,  collect
     data using innovative methods such as bar-code scanners built directly into
     mobile devices and capture  hand-written  information,  including  customer
     signatures, using touch-sensitive displays.

o    Improve access to  information.  We designed our patented  software to keep
     information  up-to-date  and  readily  accessible,  even when a network  or
     wireless  connection is  unavailable.  Our software  allows users to easily
     update,  add and remove  applications and services.  Additionally,  systems
     administrators  can use our  software  to allow for the remote  delivery of
     business information to individuals within an enterprise or to the public.

o    Develop and deploy mobile applications using existing technology standards.
     We designed our software to enable mobile  devices to support  applications
     that rely on existing  Internet  technology  standards,  such as  hypertext
     mark-up language,  or HTML,  extensible  mark-up  language,  or XML, secure
     sockets layer, or SSL, and JavaScript. As a result, software developers can
     build and deploy  applications on mobile devices using the same development
     tools and  publishing  systems  that they use for ordinary Web browsers and
     personal computers.

     Our software and services also deliver  benefits that enable  businesses to
build and deepen  relationships with their workforces,  customers,  partners and
business affiliates.

Benefits to enterprises:

o    Increased productivity.  We designed our AvantGo M-Business Server products
     to automate  business  processes  and improve the  exchange of  information
     between companies and their employees and customers,  resulting in improved
     business  efficiencies  and  more  effective  customer  interactions.   Our
     software  streamlines  business  processes  such as  billing,  procurement,
     inventory  control  and  customer  relationship   management  by  replacing
     traditional  paper-based  processes  with those using mobile  devices.  For
     example,  by providing delivery personnel with handheld devices running our
     AvantGo  M-Business  Server software,  enterprises can keep tighter control
     over the  invoicing  process by enabling  drivers to  electronically  input
     delivery information such as customer signatures. In addition,  managers of
     manufacturing  companies can make faster and more informed  decisions  when
     provided  with  up-to-date  operations  data  accessible  at any time using
     personal digital assistants or Internet-enabled phones. Our software allows
     access to  information  on a mobile  device  in  situations  where  network
     connections or wireless signals are slow or unavailable.

o    Open  platform.  Our  software  runs  on  operating  systems  and  hardware
     platforms  that are  compatible  with HTML,  XML, SSL and  JavaScript.  Our
     software  integrates  efficiently with existing systems,  which enables our
     customers to quickly deploy a mobile  infrastructure using applications and
     other technology they already own.

o    Centralized  administration.  Our enterprise software enables businesses to
     centrally manage their mobile workforces using a Web browser.  For example,
     our software enables businesses to update  applications and distribute them
     from a single  location to dispersed  mobile  devices.  Our  software  also
     simplifies information management and maintenance by allowing organizations
     to create user accounts, define user groups and control access.

Benefits to media companies and other businesses:

o    Potential  for cost savings and faster time to market.  Instead of devoting
     significant resources to build a mobile network that may not operate over a
     variety of connectivity combinations,  Internet content providers and other
     businesses  can use our software  and  services to quickly  deploy a


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<PAGE>

     mobile infrastructure.  By using our products and services, we believe that
     our content and other  business  customers,  which we refer to as Media and
     M-Business customers,  can quickly meet the mobile computing needs of their
     customers while remaining focused on their core businesses.

o    Acquire  new  customers.  We have built a network  of over 2000  sources of
     content and applications,  and we currently have over 5 million  registered
     AvantGo Mobile Internet service users.  Our Media and M-Business  customers
     can leverage our large mobile Internet  registered user base to quickly and
     efficiently  grow their own mobile user base. In turn, a wider selection of
     our Media and M-Business  customers attract more users to our service. As a
     result,  existing  Media and M-Business  customers have the  opportunity to
     quickly  extend  their  brand  and  service  offerings  to a wide  consumer
     audience.

o    Create  new  customer  touch  points.  Using  our  services,  our Media and
     M-Business customers have the opportunity to develop personalized  customer
     interactions  through  mobile  advertising,  direct  marketing and customer
     relationship management opportunities.

Products and Services

     Our mobile  enterprise  software  and  services,  which are based on common
platform  technology,  provide the foundation for our AvantGo  M-Business Server
products  and  AvantGo  Mobile  Internet  service.  We also  offer  professional
services to help  customers  deploy and  maintain  our  software  and  services.
Revenues from our AvantGo M-Business Server products,  our professional services
and our AvantGo Mobile Internet service accounted for approximately 50%, 40% and
10% of our total  revenues for the year ended  December 31, 1999,  approximately
56%, 20% and 24% for the year ended  December 31, 2000, and  approximately  56%,
20% and 24% for the year ended December 31, 2001. McKesson Corporation accounted
for  approximately  25% of our total revenues during the year ended December 31,
1999,  approximately 26% for the year ended December 31, 2000, and approximately
20%  for  the  year  ended  December  31,  2001.  For   information   concerning
international sales, see Note 12 to our consolidated financial statements.

AvantGo M-Business Server Products

     Our  AvantGo  M-Business  Server  software,  which  our  customers  install
directly  within  their  corporate  networks,  enable  organizations  to  extend
interactive enterprise applications and data to mobile workers, through either a
wireless  connection  or through  desktop  synchronization.  AvantGo  M-Business
Server software allows enterprise customers to facilitate two-way  communication
on mobile  devices,  including  sales  force  automation,  document  publishing,
expense   management   applications,   field  service   maintenance,   inventory
management,  and  logistics.  Our  AvantGo  Mobile  Internet  service,  a hosted
solution,  allows  organizations  to run the same types of  applications  as our
AvantGo  M-Business  Server  software  without  operating  our software on their
network.  This service is well suited to enterprise  customers  that for timing,
technical or  cost-driven  reasons do not want to install,  operate and maintain
our AvantGo M-Business Server software on their network.

     Our AvantGo M-Business Server solution,  which we license to our enterprise
customers,  accounts for the majority of our enterprise  revenues.  We also make
our  AvantGo   M-Business   Server  solution   available  to  enterprises  on  a
subscription basis.

Mobile Business Applications

     Our AvantGo Mobile Sales  application is designed to enable  enterprises to
view and update critical sales  information from leading  customer  relationship
management  applications,  such as Onyx,  Oracle and Siebel  Systems  with their
handheld  devices  and   Internet-enabled   phones.  Our  AvantGo  Mobile  Sales
application  provides wireless and off-line access to critical sales information
from sales force automation systems and other corporate applications,  including
opportunities, contacts, service requests and inventory.

     Our AvantGo  Mobile  Delivery  application  is designed to enable  delivery
fleet  operators  to reduce  delivery  errors,  cut costs and provide  real-time
package  tracking   information  to  customers.   Our  AvantGo  Mobile  Delivery
application  accomplishes this by replacing  error-prone,  paper-based processes
with  an  automated   delivery  system  featuring  route  management,   manifest
reconciliation and electronic signature capture on the mobile device.


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<PAGE>

     We designed our AvantGo Mobile Pharma application to enable  pharmaceutical
companies  to  gain  market   share  by  improving   the  quality  of  physician
interactions and increasing the productivity of their sales representatives. Our
AvantGo  Mobile Pharma  application  provides sales  representatives  with rapid
access to the information most relevant to them,  including existing sales force
automation systems,  product and clinical data, prescription  distribution data,
corporate intranet and the Internet on mobile devices.

     Our  AvantGo  Pylon  Personal  Information   Management  (PIM)  Server  for
Microsoft Exchange and our AvantGo Pylon Personal  Information  Management (PIM)
Server for Lotus Notes products  enable much of the  functionality  of Microsoft
Exchange and Lotus Notes to be used on mobile devices.  Our Pylon PIM Server for
Microsoft Exchange and Pylon PIM Server for Lotus Notes products enable users of
handheld devices to synchronize data between a personal computer and a centrally
configured  server.  In September 2001, we entered into a license agreement with
Synchrologic,  Inc. that enables us to provide users of mobile  devices with the
ability to synchronize their mobile devices with Microsoft Exchange.

     Our AvantGo Pylon  Application  Server for Lotus Notes product enables much
of the  functionality  of Lotus Notes to be used on mobile  devices.  It enables
users of handheld devices to synchronize data between a personal  computer and a
centrally configured server to deliver custom Lotus Notes databases,  as well as
personal information management information to the device.

AvantGo Mobile Internet Service

     Our AvantGo Mobile  Internet  service allows Internet users with a handheld
device or  Internet-enabled  phone to access  Web-based  services and content in
real-time,  using a device with a wireless connection or through synchronization
with a desktop  computer.  Our AvantGo Mobile  Internet  service allows Internet
users to interact with Web-based applications and services and enter information
into  mobile  devices  for posting  onto the Web.  Through  our  AvantGo  Mobile
Internet service,  we generate  placement,  subscription,  advertising,  service
access  fee  and  professional   services  revenue,   and  have  revenue-sharing
arrangements  that  provide  the  opportunity  for  us to  earn  commissions  on
advertising, subscriptions and transactions.

     Companies  delivering  content and applications  through our AvantGo Mobile
Internet service pay an initial service fee and have the opportunity to increase
their  visibility  and  distribution  by  purchasing   AvantGo  Mobile  Internet
advertising  distribution products on our Web site and on our on-device service.
Additionally,  we receive a share of revenue  generated  by providers of content
and services on our AvantGo Mobile Internet  service.  These  agreements,  which
typically are  non-exclusive and have one-year  renewable terms,  stipulate that
the content provider may offer unlimited  content on our AvantGo Mobile Internet
service.  Currently over 2000 sources of content and  applications are optimized
for mobile  devices  and are  available  through  our  AvantGo  Mobile  Internet
service.  Our  AvantGo  Mobile  Internet  service  currently  has over 5 million
registered users.

AvantGo Professional Services

     We  employ a  professional  services  team  that  helps  our  customers  to
integrate  our software  into their  computer  networks and provides  consulting
services for our enterprise and AvantGo Mobile Internet  service  customers on a
fee-for-service   basis.   AvantGo   Professional   Services  offerings  include
implementation,  consulting,  training and  technical  support,  and within each
offering, our customers have the opportunity to choose the level of service that
best meets  their  needs.  Our  service  and  support  professionals  may assist
customers in every phase and stage of mobile solution  development and delivery,
including  design,  implementation  and deployment of mobile  architectures  and
applications.

Sales and Marketing

     Our marketing  organization  works with our hardware,  software and service
providers  to  develop  and  participate  in  marketing  activities,   including
seminars,  advertising,  public  relations and trade show events.  Our marketing
activities  are  strategically  focused  on  generating  campaigns  that  target
customers in both vertical markets,  including  pharmaceuticals,  healthcare and
government,  as  well  as  horizontal  markets,  such as  sales,  logistics  and
marketing.


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<PAGE>

Enterprise

     We sell software products,  mobile business  applications,  hosted services
and professional services to enterprise customers through our direct sales force
in North America and  third-party  resellers.  Our North  American  direct sales
organization   consists  of  field  sales   representatives,   technical   sales
consultants/engineers  and  transactional  sales  representatives.  Our European
sales and  marketing  personnel  are located in the United  Kingdom and Germany.
AvantGo  Europe,  Ltd., our U.K.  subsidiary,  focuses on marketing our products
throughout  Europe.  We do not plan to  significantly  expand our  international
operations  beyond  continuing  to increase our  enterprise  sales  efforts.  We
augment our sales efforts with customer service and ongoing  technical  support.
We also have a  business  development  function  that  pursues  and  establishes
distribution and marketing  relationships with enterprise  software vendors.  In
order to increase indirect distribution channels for our enterprise software, we
are also  expanding our  relationships  with  companies  that sell or bundle our
products for enterprise  use and that offer  additional  consulting  services to
these enterprises.

AvantGo Mobile Internet

     We have a team of professionals  that sells our mobile marketing  solutions
and AvantGo  Mobile  Internet  service  products on an ongoing  basis to branded
content and other  business  customers.  We sell mobile  advertising,  Media and
M-Business  products and professional  services to customers  through our direct
sales force in North America and in Europe. We have focused our recent marketing
efforts  on  targeting   businesses   that  want  to  create   direct   customer
relationships using mobile devices,  including pharmaceutical companies,  retail
outlets and automotive manufacturers.

Strategic Relationships

     We have entered into agreements with major hardware and software  producers
to bundle or  integrate  our  software  with their  mobile  devices and software
products.  We have also  entered  into joint  software  development  projects to
integrate our software and AvantGo Mobile Internet content and services with the
products of software and device vendors. We believe that these relationships are
integral to our success  because  they  expose our service  offerings  to a wide
array of users and tie our products into integral  elements of the mobile device
architecture.

     Microsoft  Corporation.  Our software is integrated into Microsoft's Pocket
Internet  Explorer  browser that ships on Windows Powered Pocket PC devices from
leading  manufacturers,   including  Hewlett-Packard  Company,  Compaq  Computer
Corporation,  Casio,  Inc.  and Symbol  Technologies,  Inc. Our software is also
available on other hardware platforms running the Microsoft Windows CE operating
system,  including  Handheld PCs, the Handheld PC Pro and the  Palm-sized PC. We
continue to explore  co-marketing  opportunities with Microsoft designed to more
broadly  distribute  our  software  to  original  equipment  manufacturers  that
pre-install  Microsoft's products, as well as to increase internal deployment of
our software  within  Microsoft's  product lines.  Our agreement with Microsoft,
which has a  two-year  renewable  term,  provides  Microsoft  with a license  to
incorporate our software with its Windows CE operating system on a non-exclusive
basis.

     Palm, Inc. Palm, Inc. is a provider of handheld computers.  Our software is
compatible with every handheld device that runs on the Palm operating  system or
Palm OS, and is bundled with most of the Palm, Inc. devices. Under our agreement
with Palm, Inc., Palm, Inc. bundles our software with its  Palm(TM)devices  on a
non-exclusive basis.

Technology

     Our technology builds upon open standards to deliver Internet-based content
and applications to handheld devices and  Internet-enabled  phones. The software
and  services  built  using  our  technology  take  into  account  the  specific
limitations  and  capabilities  of mobile  devices,  wireless  data networks and
Internet-based  applications.  Our software  products  allow mobile devices with
limited memory, low processing


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<PAGE>

power and  unreliable or limited  network  access to  effectively  interact with
systems and applications  designed to serve personal  computers with high-speed,
reliable Internet access.

Components of AvantGo Server

     We  designed  our  AvantGo  Server to allow our  customers  to use  AvantGo
software in their own  computing  environment.  We designed  our AvantGo  Server
technology to enable customers to add more systems and support as they add users
without  increasing  the risk of system  failure.  Our  architecture  allows our
AvantGo   Server  to  be  deployed  in   configurations   ranging   from  simple
single-server  configurations to large-scale  configurations  involving multiple
servers aligned in clusters.  Our AvantGo Server runs on Microsoft's  Windows NT
and Windows 2000, Sun Microsystems'  Solaris operating system, Linux and FreeBSD
and is designed to meet the reliability  and  performance  requirements of large
enterprises, as well as our AvantGo Mobile Internet service.

     Server Core. Our AvantGo Server core provides an expandable  framework that
performs many functions on behalf of mobile devices.  Because wireless  networks
have limited  capacity,  processing power and memory,  our technology shifts the
processing load from mobile devices to the server.  We designed our architecture
to make the most efficient use of slow,  expensive  wireless networks by relying
on servers to compress data before  transmitting  it to the mobile  device.  Our
AvantGo Server provides reliable and secure communications so that software that
resides on the mobile  device is not  encumbered  with the many  device-specific
communications  issues. Our AvantGo Server can integrate with existing directory
services,  such as Lightweight  Directory  Access Protocol and Windows NT Domain
Services for  identifying and  administering  information to users and groups of
users.

     Server-side  Web Module.  Our AvantGo  server-side  Web module  extends our
server core to provide  real-time  wireless  access to the Internet,  and allows
mobile devices without wireless  capabilities to synchronize with Internet based
applications and services.  By shifting the processing of information and secure
sockets layer from the mobile  device to a server,  our  server-side  Web module
allows  mobile  devices  to access  all  existing  Internet-based  applications,
content and services.  Depending upon the  capabilities of the mobile device and
on user preferences,  our server-side  Internet module can  simultaneously  send
large  quantities of information and data,  search the Internet in real-time and
compress data and files.

     Server-side  Administration Module.  Administrators can use the server-side
administration module to assign and deliver applications, content or services to
particular  users or groups of users,  as well as control user  preferences  and
settings.  Our  server-side   administration  module  enables  installation  and
upgrading  of  software  on mobile  devices in  addition  to  reporting  on user
activity. At the discretion of the server administrator,  our end users can also
self-administer   their   settings   and   preferences   with  the   server-side
administration  module. Both server  administrators and end users can access our
server-side administration module with any Web browser.

Components of AvantGo Client

     Client Core. Our AvantGo Client  software  allows the user to interact with
various  applications,  content and services on the mobile  device.  Our AvantGo
Client core  software  is not  required  to  interact  with our AvantGo  Server.
Devices such as Internet-enabled  phones can access some portions of our AvantGo
Server even though they lack our AvantGo Client software. As part of providing a
framework for client-side modules, our AvantGo Client core transforms directives
from our  AvantGo  Server  into the  appropriate  commands  recognizable  by the
specific device.

     Client-side Web Module.  We provide a client-side Web module to display and
navigate  Web  content  including  text,   graphics  and  hypertext  links.  Our
client-side Web module also supports the execution of standard  JavaScript along
with code that is specific to the particular operating system or hardware device
to  provide  our users with an  interactive  experience  even if a device  lacks
real-time capabilities.  Additionally, HTML forms can be automatically organized
by our client-side Web module for later transmission from mobile devices.


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<PAGE>

Intellectual Property Rights

     We  regard  our  intellectual   property  protection  for  our  proprietary
technology,  products and  services as critical to our  success.  To protect our
proprietary  technology,  products and  services,  we rely on a  combination  of
patent, trademark, copyright and trade secret protection and confidentiality and
license  agreements  with our  employees,  customers,  business  affiliates  and
others.

     On January 22, 2002, the U.S.  Patent & Trademark  Office granted us Patent
number 6,341,316,  which covers the system,  method and computer program product
for synchronizing  content between a server and a client. The technology is core
to AvantGo technology's unique ability to support both the wireless and off-line
synchronization  of content  and  applications  to mobile  devices.  This patent
expires September 10, 2019.

     We have also  filed a number of  non-provisional  patent  applications  and
provisional patent applications in the United States, and one Patent Cooperative
Treaty   (International)   application,   directed   to   aspects  of  our  core
technologies.  We have received  registered  trademarks in the United States and
applied for trademarks internationally for several of our trademarks and service
marks, including the AvantGo circle logo and the name "AvantGo." We have applied
for and obtained  copyright  registration  in the United States for our software
products.

     We also license some of our intellectual property to others,  including our
AvantGo Client technology and various trademarks and copyrighted material. While
we attempt to ensure that the quality of our brand is  maintained,  others might
take actions that materially harm the value of either these  proprietary  rights
or our reputation.

     We  license  technology  from  others,   including  some  portions  of  our
compression-decompression  technology,  security and  encryption  technology and
personal  information  management  technology.   If  these  technologies  become
unavailable  to us, we would need to license  other  technology  and redesign or
redevelop portions of our system.

     We attempt to avoid infringing the proprietary  rights of others,  although
we have not done an exhaustive patent search.  Our competitors may claim that we
are infringing their intellectual  property and, if they are successful,  we may
be unable to obtain a license or similar agreement to use the technology we need
to conduct our business.

Employees

     As of  December  31,  2001,  we had 208  full-time  employees.  None of our
employees are subject to a collective  bargaining  agreement,  and we have never
experienced a work  stoppage.  We believe that our relations  with our employees
are good.

     The executive officers of the Company as of March 20, 2002 are as follows:

<TABLE>
<CAPTION>
Name                           Age       Position
----                           ---       ------
<S>                            <C>       <C>
Richard Owen................   36        Chief Executive Officer and Chairman of the Board of Directors
Felix Lin...................   38        Co-Founder and Vice Chairman of the Board of Directors
David B. Cooper, Jr.........   46        Chief Financial Officer
Michael Aufricht............   41        Chief Marketing Officer
Paul Kanneman...............   44        Vice President Client Services
David Moore.................   36        Chief Technology Officer
</TABLE>

     Richard  Owen has served as our chief  executive  officer and as one of our
directors since February 2000 and has been employed by us since January 2000. He
has been our Chairman of the Board since January 2001.  From  September  1998 to
December 1999,  Mr. Owen served as vice  president of Dell Online  Worldwide for
Dell Computer Corporation.  From July 1992 to September 1998, Mr. Owen served in
a variety of roles, including  international  business development,  director of
supply  chain  integration  and general  manager of Japan Home and Small  Office
Sales  at  Dell  Computer  Corporation.  From  1987 to  1990,  Mr.  Owen  was an
information  technology  consultant with KPMG Management  Consultants in


                                       7
<PAGE>

London,  England. Mr. Owen is also a director of FTD.com,  Inc. Mr. Owen holds a
Bachelors  Degree in  Mathematics  and Economics from  Nottingham  University in
England and a Master of Science in Management from the  Massachusetts  Institute
of Technology Sloan School of Management.

     Felix Lin. Mr. Lin is one of our co-founders and is a director. Mr. Lin has
been our vice chairman of the board since  February  2001. Mr. Lin served as our
chairman  of the board from  January  2000 to February  2001.  From July 1997 to
February 2000, Mr. Lin was our chief executive officer.  Mr. Lin has also served
as chairman of the board, president and chief executive officer, and as the sole
director of our  Globalware  subsidiary  since May 26,  2000.  Prior to founding
AvantGo,  from October  1994 to June 1997,  Mr. Lin was the director of Internet
strategy for Versant Object Technology,  a management  systems company.  Mr. Lin
served as  database  product  marketing  manager  at NeXT  Computer,  Inc.  from
February 1992 until October 1994. From October 1990 to January 1992, Mr. Lin was
product manager at Cadre Technology (now Sterling  Software).  From June 1988 to
June 1990, Mr. Lin was a principal  consultant and consulting manager for Oracle
Consulting  Group  at  Oracle  Corporation.  Mr.  Lin  holds  a B.S.  degree  in
Electrical  Engineering  and a Master of Science in  Computer  Science  from the
Massachusetts  Institute of  Technology,  and a Master of Science in  Management
from the Massachusetts Institute of Technology Sloan School of Management.

     David B. Cooper, Jr. has served as our chief financial officer since August
2000.  From August 1998 to May 2000,  Mr.  Cooper  served as vice  president and
chief financial  officer of Powerbar Inc. From October 1994 to January 1998, Mr.
Cooper served as executive vice president and chief financial  officer of Edison
Brothers  Stores,  Inc.,  an apparel and footwear  retail  company where he also
served on the board of directors.  From November 1993 to April 1994,  Mr. Cooper
served as executive  vice  president  and chief  financial  officer of Del Monte
Fresh Produce Company. From April 1986 to October 1993, Mr. Cooper served as the
treasurer and as vice president at Dole Food Company.  Mr. Cooper also served as
senior vice president of Castle & Cook Holmes, an affiliate of Dole Food Company
from January 1993 to October  1993,  and as director of finance and as treasurer
of Flexi-Van,  Inc., an affiliate of Dole Food Company from October 1984 through
October 1993.  From February 1982 to September 1984, Mr. Cooper was an assistant
manager at Chemical Bank. From 1978 to 1981, Mr. Cooper was a financial  analyst
at Continental Grain Company,  a diversified  agribusiness and commodities firm.
Mr. Cooper holds a B.A.  degree in Economics from Yale  University and an M.B.A.
degree from New York University.

     Michael Aufricht has served as chief marketing  officer since 2001.  Before
that, he was general  manager of AvantGo  Mobile  Internet  since March 2000 and
held the position of vice president of AvantGo.com for our company from December
1999 to March  2000.  From April 1992 to  November  1999,  Mr.  Aufricht  held a
variety of senior management  positions at The Walt Disney Company's Buena Vista
Home  Entertainment,  including  senior vice  president,  Retail  Services  from
October 1997 through  November  1999,  vice  president of retail  marketing from
September 1994 through September 1997, director of brand marketing from November
1993  through  August 1994 and  director of Canadian  marketing  from April 1992
through  October 1993.  From September  1988 to March 1992,  Mr.  Aufricht was a
manager at The  Alliance  Consulting  Group.  From July 1984 to July  1986,  Mr.
Aufricht was an associate brand manager at the Pepsi-Cola Company.  Mr. Aufricht
holds a B.S. from the University of California,  Berkeley and an M.B.A. from the
Harvard Graduate School of Business Administration

     Paul Kanneman has served as our vice president of worldwide client services
since August 2001.  From December 1999 to July 2001,  Mr.  Kanneman was Managing
Director,  Delivery for Lante Corporation.  From April 1998 to December 1999, he
served as President,  Micah Technology Services,  an I/T strategy consulting and
systems  integration  services  company he founded.  From November 1994 to March
1998, Mr. Kanneman served as senior vice president and chief information officer
for the Zales  Corporation,  a fine jewelry company.  From July 1993 to November
1994  he  was  with  Andersen  Consulting  as  an  Associate  Partner  in  their
Information and Technology Strategy practice.  From August 1985 until July 1993,
Mr.  Kanneman  worked  at the  management  consulting  firm of Booz,  Allen  and
Hamilton.  Prior to that,  he served from June 1978 to June 1985 in the U.S.Army
as an  Intelligence  Officer.  Mr.  Kanneman  holds a B.A.  degree in  Political
Science from The University of Toledo.


                                       8
<PAGE>

     David Moore has served as our chief technology  officer since October 2001,
and as vice president of product development since September 1997. From May 1996
to August 1997, Mr. Moore was an engineering manager at Netscape Communications.
From January  1990 to January  1995,  Mr. Moore was a software  engineer at NeXT
Software, Inc. From June 1986 to December 1989 Mr. Moore was a software engineer
at IBM  Corporation.  Mr. Moore holds a B.S. in Computer  Science from  Syracuse
University.

ITEM 2. PROPERTIES

     Our  principal  headquarters  are in  Hayward,  California,  where we lease
approximately  88,000  square  feet.  In  addition  to this  facility,  we lease
facilities in Chicago,  Illinois and London,  United Kingdom. In connection with
the  restructuring   program  adopted  and  implemented  in  2001,  under  which
restructuring  charges were taken related to excess space, we have initiated the
process of  sub-leasing  the  Chicago  facility  and 37,000  square  feet of the
Hayward  facility,  both of which are  unoccupied  at this time. We have not yet
secured subtenants for these facilities. We believe that existing facilities are
adequate for our needs through 2002.

ITEM 3. LEGAL PROCEEDINGS

     In October 2001, a purported  shareholder class action lawsuit was filed in
the United States  District Court for the Southern  District of New York against
us, certain of our officers and directors,  and the  underwriters of our initial
public offering. The suit is a class action filed on behalf of purchasers of our
common stock during the period from  September 27, 2000 to December 6, 2000. The
complaint  alleges that the underwriter  defendants  agreed to allocate stock in
our initial public  offering to certain  investors in exchange for excessive and
undisclosed  commissions  and agreements by those  investors to make  additional
purchases  of stock in the  aftermarket  at  pre-determined  prices.  Plaintiffs
allege  that the  prospectus  for our  initial  public  offering  was  false and
misleading in violation of the securities laws because it did not disclose these
arrangements. The complaint seeks unspecified damages on behalf of the purported
class. Over 300companies  involved in an initial public offering have been named
as defendants in nearly identical lawsuits filed by some of the same plaintiffs'
law firms. We believe we have meritorious defenses,  and we intend to defend the
action vigorously.

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

     None.

                                     PART II

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

     Our common  stock has been traded on the Nasdaq  National  Market under the
symbol  "AVGO"  since our initial  public  offering on September  27, 2000.  The
following  table sets forth the high and low closing sales prices as reported on
the Nasdaq  National  Market for each quarter  during which our common stock has
been traded on the Nasdaq National Market.

2000                                                High        Low
Third Quarter (commencing September 27, 2000)      $22.73      $20.00
Fourth Quarter                                      19.75        4.75

2001                                                High        Low
First Quarter                                      $10.00      $ 1.75
Second Quarter                                       3.60        1.10
Third Quarter                                        3.48        1.00
Fourth Quarter                                       1.95        0.90

     As of March 20, 2002 we had  approximately  405 stockholders of record.  We
have never paid  dividends on our capital stock.  We currently  intend to retain
any future  earnings for use in our business,  and  therefore do not  anticipate
paying any cash dividends in the foreseeable future.


                                       9
<PAGE>

     5(b) USE OF PROCEEDS FROM SALE OF REGISTERED SECURITIES

     On October  2, 2000,  we sold  6,325,000  shares of our common  stock in an
initial  public  offering  at  a  price  of  $12.00  per  share  pursuant  to  a
Registration  Statement  on Form  S-1  (Registration  No.  333-38888)  that  was
declared effective by the SEC on September 26, 2000. Credit Suisse First Boston,
Merrill,  Lynch & Co. and CIBC World Markets were the managing  underwriters  of
the offering.  The aggregate proceeds to us from the offering were approximately
$70,587,000 after deducting an aggregate of $5,313,000 in underwriting discounts
and  commissions to the  underwriters.  None of the proceeds of the offering was
paid by us, directly or indirectly, to any director, officer or general partners
of us or any of their  associates,  or to any persons owning ten percent or more
of our outstanding stock. In addition to underwriting discounts and commissions,
the expenses  incurred in connection with the offering were  approximately  $2.2
million,  including  $0.9  million of legal costs,  $0.6  million of  accounting
costs, $0.4 million,  including of printing costs and other costs  approximately
$0.3  million.  During the period from the  offering to December  31,  2000,  we
invested all of the proceeds in  commercial  paper,  government  securities  and
corporate debt  securities.  During 2001, we converted all of our investments to
cash and cash  equivalents.  These  funds  have  been the  principal  source  of
liquidity for us during 2001 and were used to fund operating  losses and capital
expenditures as described in the financial statements included with this report.

ITEM 6.  SELECTED FINANCIAL DATA

     The consolidated  statement of operations data for the years ended December
31,  2001,  2000,  1999 and 1998 and the period from June 30,  1997  (inception)
through December 31, 1997, and the related balance sheet data as of December 31,
1997,  1998 and 1999 are derived  from our  consolidated  financial  statements,
which  have been  audited by Ernst & Young LLP,  independent  auditors,  and are
contained  in Item 8 of Part II of this Form 10-K.  The  selected  statement  of
operations data for the period from June 30, 1997  (inception)  through December
31, 1997 and for the year ended  December 31, 1998 and the balance sheet data as
of  December  31,  1997,  1998 and  1999  are  derived  from  audited  financial
statements not included in Item 8 of Part II of this Form 10-K. We have prepared
this selected  information on the same basis as the audited financial statements
and  have  included  all  adjustments,   consisting  only  of  normal  recurring
adjustments,  that we consider  necessary for such presentation of the financial
condition  and operating  results for such date and periods.  When you read this
selected  financial  data, it is important that you read the AvantGo  historical
financial  statements  and related  notes  included in Item 8 of Part II of this
Form 10-K. Historical results are not necessarily indicative of future results.

     The information set forth below is not necessarily indicative of results of
future  operations  and  should  be  read  in  conjunction  with   "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
the consolidated  financial statements and notes to those statements included in
Items 7 and 8 of Part II of this Form 10-K.


                                       10
<PAGE>

                      SELECTED CONSOLIDATED FINANCIAL DATA

                      (in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                                     Period from
                                                                                                    June 30, 1997
                                                                                                    (inception) to
                                                                Year Ended December 31,              December 31,
                                                    ---------------------------------------------   --------------
                                                      2001        2000         1999        1998          1997
                                                      ----        ----         ----        ----          ----
<S>                                                 <C>         <C>          <C>         <C>           <C>
Consolidated Statement of Operations Data:
Revenues:
   License fees .................................   $ 13,548    $   9,087    $  1,443    $   189       $    --
   Services .....................................     10,456        7,231       1,446        198            --
                                                    --------    ---------    --------    -------       -------

      Total revenues ............................     24,004       16,318       2,889        387            --
Costs and expenses:
   Cost of license fees .........................        594          161          60         10            --
   Cost of services (1) .........................      5,137        4,103       1,466        239            --
   Product development (2) ......................     13,250       10,842       3,108      1,259           161
   Sales and marketing (3) ......................     29,362       30,682       4,630      1,292            61
   General and administrative (4) ...............      8,085        5,768         548        167            68
   Amortization of goodwill, other intangible
   assets and deferred stock compensation .......      9,201       16,582       2,605         71            --
   Purchased in-process research and
      development ...............................         --          600          --         --            --
   Write-off of core technology .................      1,981           --          --         --            --
   Restructuring and other impairment charges ...     15,065           --          --         --            --
                                                    --------    ---------    --------    -------       -------
         Total costs and expenses ...............     82,675       68,738      12,417      3,038           290
                                                    --------    ---------    --------    -------       -------
Loss from operations ............................    (58,671)     (52,420)     (9,528)    (2,651)         (290)
Interest income (expense), net ..................      2,496        2,582         313         48            (1)
                                                    --------    ---------    --------    -------       -------
Net loss ........................................   $(56,175)   $ (49,838)   $ (9,215)   $(2,603)      $  (291)
                                                    ========    =========    ========    =======       =======
Basic and diluted net loss per share ............   $  (1.71)   $   (4.13)   $  (2.11)   $ (0.95)      $ (0.20)
                                                    ========    =========    ========    =======       =======

Common  shares used to calculate  basic and
diluted net loss per common share ...............     32,892       12,077       4,377      2,735         1,464
                                                    ========    =========    ========    =======       =======
<CAPTION>

                                                                            December 31,
                                                    --------------------------------------------------------
                                                       2001         2000        1999       1998       1997
                                                       ----         ----        ----       ----       ----
<S>                                                 <C>         <C>          <C>         <C>        <C>
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments   $ 43,091    $  73,466    $  9,810    $ 2,124    $ 1,024
Working capital .................................     38,203       69,902       9,809      1,951        960
Total assets ....................................     57,479      104,308      12,499      2,434      1,136
Long-term obligations, net of current portion ...         --           --          41        116         --
Total stockholders' equity ......................     46,748       94,751      10,724      2,068      1,069
</TABLE>

----------

(1)  Excluding  $208,  $383,  $181,  and $9 in  amortization  of deferred  stock
     compensation for the years ended December 31, 2001, 2000, 1999 and 1998.

(2)  Excluding  $1,103,  $1,809,  $750 and $38 in amortization of deferred stock
     compensation for the years ended December 31, 2001, 2000, 1999 and 1998.

(3)  Excluding $1,725,  $3,290, $1,211 and $15 in amortization of deferred stock
     compensation for the years ended December 31, 2001, 2000, 1999 and 1998.


                                       11
<PAGE>

(4)  Excluding  $3,525,  $7,861,  $463 and $9 in  amortization of deferred stock
     compensation for the years ended December 31, 2001, 2000, 1999 and 1998.

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

     The following  commentary  should be read in conjunction with the financial
statements  and  related  notes  contained  elsewhere  in this  Form  10-K.  The
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  These statements relate to future events or our future financial
performance.  In many cases,  you can  identify  forward-looking  statements  by
terminology such as "may," "will," "should," "expects," "plans,"  "anticipates,"
"believes,"  "estimates,"  "predicts,"  "potential," "intend," or "continue," or
the negative of such terms and other  comparable  terminology.  These statements
are only  predictions.  Our  actual  results  may differ  materially  from those
anticipated  in these  forward-looking  statements  as a result of a variety  of
factors, including, but not limited to, those set forth under "Risk Factors" and
elsewhere in the Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our  discussion  and  analysis of our  financial  condition  and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  or  contingent  assets  and
liabilities.  On an on-going basis,  we evaluate our estimates,  including those
related to uncollectable accounts, intangible assets, and restructuring. We base
our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for  making  judgments  about  amounts  and  timing of  revenue  costs and
expenses,  the carrying  values of assets and the recorded amount of liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

     We believe  the  following  critical  accounting  policies  affect our more
significant  judgments and estimates used in the preparation of our consolidated
financial statements.

Revenue Recognition

     We generally license our enterprise software under  non-cancelable  license
agreements and provide services including training,  consulting and maintenance,
consisting of product support services and unspecified  product updates. We sell
placement service contracts which provide customers with priority  visibility on
our  website,  and also sell  advertising  on the device  delivered  through the
AvantGo Mobile Internet service, a service that is free to consumers.

     We recognize  license revenues when a non-cancelable  license agreement has
been signed,  the software product has been shipped,  there are no uncertainties
surrounding   product   acceptance,   the  fees  are   fixed  or   determinable,
collectibility is probable,  and  vendor-specific  objective  evidence exists to
allocate the total fee to elements of the arrangement using the residual method.
In instances  where no  vendor-specific  objective  evidence exists and the only
undelivered element is maintenance,  we recognize revenues ratably over the term
of the agreement.  Our agreements with our customers and resellers  generally do
not contain product return rights. We recognize revenues from maintenance, which
consist of fees for ongoing support and product  updates,  ratably over the term
of the contract, which is typically one year.

     For sales made  through  distributors,  resellers  and  original  equipment
manufacturers, we recognize revenue at the time these partners report to us that
they have sold the software to the end user and all revenue recognition criteria
have been met.

     Consulting  revenues  are  primarily  related  to  implementation  services
performed on a  time-and-materials  basis under separate  service  arrangements.
Training  revenues  are  generated  from  classes  offered  both  on-site and at
customer  locations.  We recognize revenues from  time-and-materials  consulting
engagements  and training  services as we perform the services.  Occasionally we
enter  into   short-term   fixed  price   consulting   contracts.   Under  these
arrangements,   we   recognize   revenues   as   work   progresses   using   the
percentage-of-completion  method,  which relies on  estimates of total  expected
contract  revenue and costs. We follow this method since  reasonably  dependable
estimates of the revenue and costs  applicable  to various  stages of a contract
can be made.  Recognized  revenues  are  subject to  revisions  as the  contract
progresses to completion. We make revisions in recognized revenues in the period
in which the facts that give rise to the revision become known.


                                       12
<PAGE>

     We recognize  revenues from placement  agreements  ratably over the service
period,  which in most  instances  is  between  three  months  and one year.  We
recognize advertising revenues based upon the lesser of the ratio of impressions
delivered over the total guaranteed  impressions or the straight-line basis over
the term of the advertising contract.

     We also earn revenues from advertising  barter  transactions.  We recognize
revenues and costs from  advertising  barter  transactions  during the period in
which the placement or advertising is delivered.  We record barter  transactions
at the fair value of the goods or services  provided or  received,  whichever is
more readily determinable in the circumstances.  In determining the value of the
services provided, we use historical pricing of comparable cash transactions.

Allowance for Doubtful Accounts

     We maintain allowances for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments.  If the financial
condition of our customers  were to  deteriorate,  resulting in an impairment of
their ability to make payments, additional allowances may be required.

Goodwill and Other Intangible Assets

     Goodwill and other intangible assets resulted from the Globalware Computing
acquisition  completed  in May 2000.  In  assessing  the  recoverability  of our
goodwill  and  other  intangible  assets  we  must  make  assumptions  regarding
estimated future cash flows and other factors to determine the fair value of the
assets.  During September 2001, we identified  indicators of possible impairment
of goodwill and other intangible assets. Such indicators included,  but were not
limited  to,  an  overall  decline  in  information   technology  spending,  and
anticipated increased pressure from competitors. Consequently, we have estimated
the value of goodwill and other  intangible  assets to zero and have written off
the balance in these accounts.

Restructuring

     We  have  recorded  restructuring  charges,  some of  which  are  based  on
estimates  regarding the sublease of excess space at several of our  facilities.
If  actual  market  conditions  are  less  favorable  than  those  projected  by
management, and we are unable to sublease the excess space as soon as estimated,
or for the estimated rate, then additional restructuring charges may be required
in the future.

OVERVIEW

     We generate our primary sources of revenues through our license  agreements
and our  services  agreements.  We  recognize  license  revenues for our AvantGo
M-Business Server products,  which are typically based on fixed-fee  agreements,
when we have executed an agreement with a customer, delivery and acceptance have
occurred,  the fee is fixed or  determinable,  and we deem the collection of the
related  receivable  to be probable.  Historically,  our services  revenues have
consisted  primarily of  consulting  revenues,  and  technical  support fees. We
recognize  revenues from consulting  services on a monthly basis as the services
are performed.  We recognize  technical  support fees ratably on a monthly basis
over the course of the support  period,  typically  twelve months.  Our services
revenues also include  amounts  derived from the operation of our AvantGo Mobile
Internet  service,  which  include  placement,   subscription,  and  advertising
revenues  and  revenue  sharing   arrangements.   We  recognize   placement  and
advertising  revenues  ratably  over the  period of time in which  placement  or
advertising is provided.

     The cost of license fees  consists  primarily  of  royalties  paid to other
software  vendors  whose  products  are  included  in  our  enterprise  software
products,  as well as costs incurred to manufacture,  package and distribute our
enterprise  software  products  and  related  documentation.  Cost  of  services
includes cost of professional  services,  customer service and support and costs
related to running our AvantGo Mobile  Internet  service.  Cost of  professional
services and  technical  support  consists  primarily of the cost of  personnel.
Costs  related to our AvantGo  Mobile  Internet  service  consist of the cost of
personnel, co-location facilities and bandwidth. Because the cost of services is
greater than cost of license  fees,  cost of revenues as a  percentage  of total
revenues may fluctuate based on the mix of products and services sold.


                                       13
<PAGE>

     We  classify  our  costs  and  expenses  into  three  general   operational
categories:   product  development,   sales  and  marketing,   and  general  and
administrative.  In addition,  our operating  expenses  include  amortization of
goodwill,   intangible  assets,  deferred  stock-based  compensation  and  other
acquisition-related  costs,  as well as a charge  for  in-process  research  and
development  which is  related to our  acquisition  of  Globalware  in May 2000.
Operating  expenses  also  include  charges  related  to the  write-off  of core
technology  related to our Globalware  acquisition and  restructuring  and other
impairment charges.

     We classify all charges to the product  development,  sales and  marketing,
and general and  administrative  categories based on the nature of the expenses.
Each of these three  categories  includes  commonly  recurring  expenses such as
salaries,  employee  benefits,  travel and  entertainment  costs,  and allocated
communication,  rent and depreciation  costs. We allocate these expenses to each
of the  functional  areas that derive a benefit  from such  expenses  based upon
their  respective  headcount.  The sales  and  marketing  category  of costs and
expenses  also  includes  sales  commissions  and  expenses  related  to  public
relations and advertising,  trade shows and marketing collateral materials.  The
general  and  administrative   category  of  operating  expenses  also  includes
administrative and professional services fees.

     In connection  with the granting of stock options to, and restricted  stock
purchases by, our employees,  we recorded deferred stock  compensation  totaling
approximately  $23.4 million as of December 31, 2001. This amount represents the
difference  between the  exercise  and the deemed fair value of our common stock
for financial  accounting purposes on the date these stock options were granted.
This  amount is included as a  component  of  stockholders'  equity and is being
amortized by charges to operations  over the vesting period of the options using
a declining  balance method.  The  amortization of the remaining  deferred stock
compensation will result in additional charges to operations through 2005.

     We have incurred significant losses and negative cash flows from operations
since our inception.  As of December 31, 2001, we had an accumulated  deficit of
$118.1 million. We had 208 full-time employees as of December 31, 2001.

RESULTS OF OPERATIONS

     The following  table sets forth certain  financial  data,  derived from our
audited  statements of  operations,  as a percentage  of total  revenues for the
periods indicated.
<TABLE>
<CAPTION>
                                                                              Year Ended
                                                                             December 31,
                                                                  ---------------------------------
                                                                   2001         2000          1999
                                                                   ----         ----          ----
<S>                                                               <C>           <C>           <C>
Revenues:
    License fees .........................................          56%           56%           50%
    Services .............................................          44            44            50
                                                                  ----          ----          ----
         Total revenues ..................................         100           100           100
Costs and expenses:
    Cost of license fees .................................           3             1             2
    Cost of services .....................................          21            25            51
    Product development ..................................          55            66           108
    Sales and marketing ..................................         122           188           160
    General and administrative ...........................          34            35            19
    Amortization of goodwill, other intangible assets, and
         deferred stock compensation ................               38           102            90
    Purchased in-process research and development ........          --             4            --
    Write-off of core technology .........................           8            --            --
    Restructuring and other impairment charges ...........          63            --            --
                                                                  ----          ----          ----
Total costs and expenses .................................         344           421           430
                                                                  ----          ----          ----
Loss from operations .....................................        (244)         (321)         (330)
Interest and other income, net ...........................          10            16            11
                                                                  ----          ----          ----
Net loss .................................................        (234)%        (305)%        (319)%
                                                                  ====          ====          ====
</TABLE>


                                       14
<PAGE>

Comparisons of the Year Ended December 31, 2001 and 2000

Revenues

     License  Fees.  License  fee  revenues  increased  approximately  49%  from
approximately $9.1 million for the year ended December 31, 2000 to approximately
$13.5 million for the year ended December 31, 2001.  This increase was primarily
attributable to sales force and product line  expansion.  The growth in revenues
reflected an  increased  volume of licenses  and  services  sold,  rather than a
substantive  increase in price. If current  economic  conditions do not improve,
revenues may not grow in 2002.

     Services.  Services revenues increased approximately 45% from approximately
$7.2 million for the year ended December 31, 2000 to approximately $10.5 million
for the year ended December 31, 2001.  This increase was primarily  attributable
to increased  consulting services performed in connection with increased license
fees, as well as increased  advertising revenues from the continued expansion of
our AvantGo Mobile Internet service organization.

     Deferred  revenues  reflected  on our  balance  sheet were $1.8  million at
December  31, 2001 as compared to $2.5  million at December 31, 2000 and will be
recognized as revenue as services are performed.

Costs and Expenses

     Cost of License Fees. Our cost of license fees increased approximately 269%
from   approximately   $161,000  for  the  year  ended   December  31,  2000  to
approximately  $594,000 for the year ended  December 31, 2001.  These  increases
were  primarily  attributable  to  royalty  expenses  incurred  as a  result  of
reselling  other  software  developers'  products in  conjunction  with ours. We
expect the cost of license  fees to  increase as we enter into  agreements  with
other software developers and incorporate their products into ours.

     Cost of Services.  Our cost of services  increased  approximately  25% from
approximately $4.1 million for the year ended December 31, 2000 to approximately
$5.1 million for the year ended  December 31, 2001.  This increase was primarily
due to increased expenditures resulting from the expansion of our AvantGo Mobile
Internet service and our consulting services organization. We expect these costs
to increase as we continue to build these service organizations.

     Product Development.  Product development expenses increased  approximately
22% from  approximately  $10.8  million for the year ended  December 31, 2000 to
approximately  $13.3 million for the year ended December 31, 2001. This increase
was primarily a result of increased hiring of engineers and product  development
personnel  throughout  2000 and  during  the first  quarter  of 2001.  We expect
product  development  expenses to decline in the near term due to lower  current
staffing levels, though they may increase in future periods.

     Sales and Marketing. Our sales and marketing expenses include those related
to compensation,  public  relations and  advertising,  trade shows and marketing
materials.   Sales  and  marketing  expenses  decreased  approximately  4%  from
approximately   $30.7   million  for  the  year  ended   December  31,  2000  to
approximately  $29.4 million for the year ended December 31, 2001. This decrease
was  primarily  a result  of  decreased  advertising  expenses  in line with our
efforts to reduce  costs and our  restructuring  programs.  We expect  sales and
marketing  expenses to decrease in 2002 from 2001 due to lower current  staffing
levels and decreased marketing spending.

     General and Administrative. Our general and administrative expenses consist
primarily  of  salaries,  recruiting  and related  costs for  general  corporate
functions including executive,  accounting and administrative  personnel,  lease
expenses,  facilities costs and other miscellaneous  general corporate expenses.
Our  general  and  administrative  expenses  increased  approximately  40%  from
approximately $5.8 million for the year ended December 31, 2000 to approximately
$8.1  million  for the year ended  December  31,  2001.  This  increase  was due
primarily  to  increased  personnel-related  expenses.  We  expect  general  and
administrative costs to decrease in 2002 from 2001 due to lower personnel costs.


                                       15
<PAGE>

     Purchased  in-process research and development.  In connection with our May
26, 2000  acquisition  of Globalware we have incurred an expense of $600,000 for
purchased in-process research and development consisting of technology developed
by Globalware. This is a non-recurring charge.

     Amortization  of goodwill,  other  intangible  assets,  and deferred  stock
compensation.  We have been  amortizing the amount of goodwill,  core technology
and acquired  workforce that we purchased in connection  with our acquisition of
Globalware.  These intangible assets totaled  approximately $15.9 million on the
acquisition  date.  Amortization  expense from the goodwill and other intangible
assets was $3.1 million for the year ended  December 31, 2000 and  approximately
$2.6 million during the year ended December 31, 2001. During 2001, we determined
that the  goodwill  and  intangible  assets were  impaired.  Goodwill  and other
intangible   assets  have  been  written  off  and  there  will  be  no  further
amortization  See  Note 10 of notes to the  Consolidated  Financial  Statements,
"Restructuring and Other Impairment Charges," for further information  regarding
these activities.

     We are also  amortizing the amount that equals the  difference  between the
exercise  price of stock options  granted to our employees and  consultants  and
what were  considered to be the deemed fair values of our common  stock,  in the
case of option  grants to  employees,  and on values based on the  Black-Scholes
formula for valuing  options,  in the case of grants to  non-employees,  in each
case on the date of the  grants  over  vesting  periods  using a graded  vesting
method.  We  recognized  approximately  $13.3  million of  related  compensation
expense during the year ended December 31, 2000 and  approximately  $6.6 million
during the year ended December 31, 2001.

     Write-off of core  technology.  During 2001,  due to an overall  decline in
information   technology  spending,  and  anticipated  increased  pressure  from
competitors,  we concluded  that the remaining  carrying value of our Globalware
core technology  would not be recoverable.  An impairment  assessment,  test and
measurement  resulted in the recording of a write-off of core technology of $2.0
million.  See  Note  10 of  notes  to  the  Consolidated  Financial  Statements,
"Restructuring and Other Impairment Charges," for further information  regarding
this activity.

     Restructuring and other impairment charges.

     In response to new challenges in the business  environment,  in April 2001,
management   approved  and  we  formally   adopted  and  began  to  implement  a
restructuring   program  in  an  effort  to  reduce  operating   expenses.   The
restructuring charges were $2.8 million,  which included $2.4 million related to
excess leased space at one of our Hayward  facilities,  the impairment of assets
of $22,000,  and $415,000 related to employee  termination costs associated with
the elimination of 56 positions, most of which occurred in the United States and
affected  employees  at all levels.  As of April 30,  2001,  all of the affected
employees  had  been  notified  and the  majority  of  these  terminations  were
completed.

     In July 2001,  management approved and we adopted and began to implement an
additional  restructuring program in an effort to reduce operating expenses that
resulted in aggregate  charges of $9.8 million.  These charges included $687,000
related to excess  leased  space at our  Chicago  facility,  which was closed in
July, and the impairment of assets of $108,000.  We also revised our estimate of
the  restructuring  charge  of one of our  Hayward  facilities  resulting  in an
additional restructuring charge of $406,000. Restructuring charges also included
$530,000 related to employee  termination  costs associated with the elimination
of 28  positions,  most of which  occurred  in the United  States  and  affected
employees at all levels. As of July 31, 2001, all of the affected  employees had
been notified and the majority of these terminations were completed. The revised
estimate of excess  payments on the  remaining  Hayward  facility  lease of $2.4
million  extends  through  September  2007.  The  estimate  of  payments  on the
remaining  Chicago  facility  costs of $508,000  extends  through  August  2005.
Restructuring and other impairment charges also included a write-off of goodwill
of $7.5 million and the write-off of acquired  workforce of $339,000,  discussed
further below.

     In November 2001, management approved and we adopted and began to implement
a further  restructuring  program in an effort to reduce operating expenses that
resulted in aggregate  charges of $2.5 million.  These charges included $557,000
related to excess  leased space at our San Mateo  facility,  which was closed in
December 2001. We also revised our estimates of the restructuring charges of our
Chicago  facility  and one of our Hayward  facilities  resulting  in  additional
charges of $147,000 and $1,098,000. Restructuring charges also included $808,000
related to employee  termination costs and accelerated  vesting on stock options
associated with the


                                       16
<PAGE>

elimination  of 58  positions,  most of which  occurred in the United States and
affected  employees at all levels.  As of December 31, 2001, all of the affected
employees had been notified and the majority of the terminations were completed.
The outstanding liability associated with the employee terminations was $325,000
as of  December  31,  2001.  The  revised  estimate  of excess  payments  on the
remaining Hayward facility lease of $3.3 million extends through September 2007.
The revised  estimate of payments on the  remaining  Chicago  facility  lease of
$574,000  extends  through August 2005. The remaining  payments on the San Mateo
facility lease of $243,000 extend through May 2002.

     In September 2001, we identified  indicators of possible  impairment of our
long-lived  assets,   consisting  of  goodwill,   acquired  workforce  and  core
technology  associated  with the  acquisition  of Globalware  in May 2000.  Such
indicators  included, but were not limited to, an overall decline in information
technology spending, and anticipated increased pressure from competitors.

     During  July  2001,  we  closed  our  Chicago  office,  which was where our
Globalware  employees  resided,  and  terminated the employees at that location.
Consequently,  the value of the  acquired  workforce of $339,000 was written off
and included in impairment charges.

     We  performed  asset  impairment  tests  for  the  other  identified  asset
categories, goodwill and core technology. The test for goodwill was performed by
comparing the expected  undiscounted cash flows for a five-year  period,  plus a
terminal value for future cash flows to the total  carrying  amount of goodwill.
Based on the result of this test, we determined  that the carrying amount of the
goodwill was impaired.

     We  determined  the fair value of the  goodwill to be zero.  Fair value was
determined  using the discounted cash flow method,  using a discount rate of 20%
and an estimated  residual value.  The discount rate was based upon our weighted
average  cost of capital and  comparable  to other  companies.  The  assumptions
supporting the discounted cash flow model reflect management's best estimates. A
write-down of goodwill totaling $7.5 million was recorded,  reflecting the write
off of the  entire  balance  of  goodwill,  and is  included  in the line  item,
"Restructuring and Other Impairment Charges".

     While  we  believe  that  our  business   realignment  will  assist  us  in
streamlining operations and reducing expenses, we cannot assure you that we will
achieve  these  anticipated  results.  We may in the future be  required to take
additional actions,  including further changes to the business  organization and
restructurings,  in order to realign the business with anticipated requirements.
If we are not  successful  in realigning  our business to increase  revenues and
decrease costs, we may never achieve profitability.

     Interest Income (Expense), Net. Net interest income decreased approximately
3% from  approximately  $2.6  million  for the year ended  December  31, 2000 to
approximately  $2.5 million for the year ended December 31, 2001.  This decrease
was primarily due to a decrease in our cash balances as a result of cash used to
fund our continuing operations.

Comparisons of the Year Ended December 31, 2000 and 1999

Revenues

     License  Fees.  License  fee  revenues  increased  approximately  530% from
approximately $1.4 million for the year ended December 31, 1999 to approximately
$9.1 million for the year ended  December 31, 2000.  This increase was primarily
due to continued expansion of our enterprise sales team.

     Services.  Services revenue increased approximately 400% from approximately
$1.4 million for the year ended December 31, 1999 to approximately  $7.2 million
for the year ended December 31, 2000.  This increase was primarily  attributable
to increased  consulting services performed in connection with increased license
fees, as well as the continued  expansion of our AvantGo Mobile Internet service
organization.

     Deferred  revenues  reflected  on our  balance  sheet were $2.5  million at
December  31, 2000 as  compared  to  $247,000  at December  31, 1999 and will be
recognized as revenue as services are performed.


                                       17
<PAGE>

Costs and Expenses

     Cost of License Fees. Our cost of license fees increased approximately 168%
from approximately $60,000 for the year ended December 31, 1999 to approximately
$161,000  for the year ended  December  31, 2000.  This  increase was  primarily
attributable to an increase in license fee revenue during the period.

     Cost of Services.  Our cost of services  increased  approximately 180% from
approximately $1.5 million for the year ended December 31, 1999 to approximately
$4.1 million for the year ended  December 31, 2000.  This increase was primarily
due to increased expenditures resulting from the expansion of our AvantGo Mobile
Internet service consulting services organization.

     Product Development.  Product development expenses increased  approximately
249% from  approximately  $3.1  million for the year ended  December 31, 1999 to
approximately  $10.8 million for the year ended December 31, 2000. This increase
was primarily a result of increased hiring of engineers and product  development
personnel.

     Sales and Marketing. Our sales and marketing expenses include those related
to compensation,  public  relations and  advertising,  trade shows and marketing
materials.  Sales  and  marketing  expenses  increased  approximately  563% from
approximately $4.6 million for the year ended December 31, 1999 to approximately
$30.7 million for the year ended December 31, 2000.  This increase was primarily
a result of increased personnel-related expenses.

     General and Administrative. Our general and administrative expenses consist
primarily  of  salaries,  recruiting  and related  costs for  general  corporate
functions including executive,  accounting and administrative  personnel,  lease
expenses,  facilities costs and other miscellaneous  general corporate expenses.
Our  general  and  administrative  expenses  increased  approximately  953% from
approximately  $548,000 for the year ended  December  31, 1999 to  approximately
$5.8  million  for the year ended  December  31,  2000.  This  increase  was due
primarily to increased personnel-related expenses.

     Purchased  in-process research and development.  In connection with our May
26, 2000  acquisition  of Globalware we have incurred an expense of $600,000 for
purchased in-process research and development consisting of technology developed
by Globalware. This is a non-recurring charge.

     Amortization  of goodwill,  other  intangible  assets,  and deferred  stock
compensation. Amortization expense from the goodwill and other intangible assets
was $3.1  million for the year ended  December  31, 2000.  No  amortization  was
recorded for goodwill and other intangible assets in 1999.

     We are also  amortizing the amount that equals the  difference  between the
fair value of stock options  granted to our employees and  consultants  and what
were considered to be the deemed fair values of our common stock, in the case of
option grants to employees, and on values based on the Black-Scholes formula for
valuing  options,  in the case of grants to  non-employees,  in each case on the
date of the grants over vesting  periods using a declining  balance  method.  We
recognized approximately $2.6 million of related compensation expense during the
year ended  December 31, 1999 and  approximately  $13.3 million  during the year
ended December 31, 2000.

     Interest Income (Expense), Net. Net interest income increased approximately
725%  from  approximately  $313,000  for the year  ended  December  31,  1999 to
approximately  $2.6 million for the year ended December 31, 2000.  This increase
was  primarily  due to  increased  cash  balances  as a  result  of our  private
placement  financing  completed  in March  and  April  2000 and  initial  public
offering in September 2000.


                                       18
<PAGE>

Liquidity and Capital Resources

The following table compares  restricted and unrestricted cash, cash equivalents
and marketable securities, and current ratio as well as sources and uses of cash
as of and for the years ended, December 31, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>
                                                                       2001             2000

<S>                                                                 <C>              <C>
Unrestricted cash, cash equivalents and marketable securities       $ 43,091         $  73,466
Restricted cash, cash equivalents and marketable securities         $  3,438         $   3,438
Total cash, cash equivalents, marketable securities and
   restricted investments                                           $ 46,529         $  76,904
     Percentage of total assets                                           81%               74%
Current ratio*                                                         11.29              6.89
Cash used in operating activities                                   $(28,766)        $ (27,534)
Cash provided by (used in) investing activities                     $ 14,386         $ (23,999)
Cash provided by financing activities                               $    340         $ 102,716
</TABLE>

*    Calculated excluding deferred revenue

     Our restricted  investments  are classified as  available-for-sale  but are
pledged as  collateral  against a letter of credit  (see Note 10 of notes to the
Consolidated Financial Statements).  Restricted investments are held in our name
by major financial institutions.

     On October 2, 2000,  we closed our initial  public  offering  of  6,325,000
shares of common stock,  which included  825,000  shares in connection  with the
exercise  of the  underwriters'  over-allotment  option,  at $12 per  share.  We
received net proceeds of  approximately  $68.3 million in cash,  after deducting
underwriter  discounts,  commissions and other offering  expenses.  Prior to our
initial  public  offering,  we  financed  our  operations  from  the sale of our
preferred and common stock.  As of December 31, 2001, we had  unrestricted  cash
and  cash   equivalents  of  approximately   $43.1  million,   a  decrease  from
approximately  $73.5  million  of  unrestricted  cash and cash  equivalents  and
short-term investments held as of December 31, 2000.

     Net cash used in operating  activities  in 2001 of $28.8  million  resulted
primarily from net losses of $56.2 million adjusted for non-cash items,  changes
in working capital and other items. Significant non-cash items in 2001 operating
activities included  restructuring charges of $13.2 million and depreciation and
amortization  and other  impairment  charges of $12.1 million.  Net cash used in
operating  activities in 2000 of $27.5 million resulted primarily from losses of
$49.8 million adjusted for non-cash items,  changes in working capital and other
items. Significant non-cash items included in 2000 operating activities included
depreciation and amortization and other acquisition costs of $16.6 million.

     Net cash provided by financing  activities totaled $340,000 during 2001 and
primarily  consisted of the proceeds of issuances of common stock in  connection
with stock options and the employee  stock  purchase plan and the repayment of a
note receivable from a stockholder. Net cash provided by financing activities in
2000 of $102.8  million  consisted  primarily  of the  proceeds of  issuances of
common stock issued in our initial  public  offering and  issuances of preferred
stock.

      Since our inception,  our investing activities have consisted primarily of
purchases  of fixed  assets,  principally  computer  hardware  and  software and
leasehold  improvements.  Capital  expenditures totaled $2.4 million in 2001, as
compared  with $8.1  million in 2000.  Cash was also used in fiscal year 2000 to
establish a security deposit  supporting a $3.4 million letter of credit related
to the lease of our offices in Hayward, California and Chicago, Illinois.

     The following summarizes our contractual  obligations at December 31, 2001,
and the effect such  obligations  are expected to have on our liquidity and cash
flows in future periods (in thousands):
                                                Less Than
                                      Total      1 Year     1-3 Years  4-5 Years
                                      -----      ------     ---------  ---------
Non-cancellable operating leases     $14,365     $3,022      $7,284     $4,059

     Included in the table above is the restructuring  liability of $4.1 million
associated with charges related to excess office space.

     We  currently  anticipate  that our  current  cash,  cash  equivalents  and
short-term investments will be sufficient to meet our anticipated cash needs for
working  capital and capital  expenditures  for at least the next twelve months.
Our  anticipated  cash needs must be considered in light of the risks,  expenses
and  difficulties  encountered  by companies  at an early stage of  development.
These and other  factors  could cause actual cash needs for working  capital and
capital expenditures to differ materially from those referred to above.


                                       19
<PAGE>

Recent Accounting Pronouncements

     In July 2001, the FASB issued Statements of Financial  Accounting Standards
No. 141,  Business  Combinations  (SFAS 141),  and No. 142,  Goodwill  and Other
Intangible  Assets  (SFAS 142).  SFAS 141  eliminates  the  pooling-of-interests
method of accounting for business  combinations  except for qualifying  business
combinations  that  were  initiated  prior to July 1,  2001.  SFAS  141  further
clarifies the criteria to recognize  intangible assets separately from goodwill.
The  requirements  of  SFAS  141 are  effective  for  any  business  combination
accounted  for by the  purchase  method that is  completed  after June 30, 2001.
Under SFAS 142,  goodwill and indefinite lived  intangible  assets are no longer
amortized but are reviewed annually (or more frequently if impairment indicators
arise) for impairment.  Separable  intangible assets that are not deemed to have
an indefinite  life will  continue to be amortized  over their useful lives (but
with no maximum  life).  The  amortization  provisions of Statement 142 apply to
goodwill and intangible  assets acquired after June 30, 2001. SFAS 142 will have
no affect on our financial statements in that all goodwill and intangible assets
have been written off due to impairment during 2001.

RISK FACTORS

The  slowdown  in the  adoption  of the mobile  device  and  mobile  application
marketplace could harm our revenues.

     The emergence of markets for our software is critically  dependent upon the
rapid  expansion of the market for mobile  devices  including  personal  digital
assistants,  handheld computers,  smart phones, pagers and other mobile devices.
This market has suffered recent setbacks due to the decline in general  economic
conditions.  Moreover, the economic slowdown has caused prospective customers to
reduce  their  budgets  for  information  technology  projects,  such as  mobile
application  deployments.  This economic slowdown has reduced the rate of growth
in the  adoption  of mobile  devices,  and  associated  products  and  services.
Sustained economic slowdown could reduce demand for our software and services.

We may be unable to fund our future  operating  and  capital  requirements  and,
therefore, may be unable to execute on our business strategy.

     Since our inception, we have never been profitable.  From inception through
December 31, 2001, we had an accumulated  deficit of $118.1 million.  Because we
are not currently generating  sufficient cash to fund our operations,  we may be
forced to rely on  external  financing  to meet  future  operating  and  capital
requirements. Any projections of future cash needs and cash flows are subject to
substantial  uncertainty.  Our  operating and capital  requirements  depend upon
several  factors,  including  the rate of market  acceptance of our products and
services,  our ability to expand our customer  base and increase  revenues,  our
level of  expenditures  for product  development,  marketing and sales,  general
administration and purchases of equipment,  and other factors.  If our operating
and capital  requirements vary materially from those currently  planned,  we may
require  additional  financing  sooner than  anticipated.  We cannot assure that
financing will be available in amounts or on terms  acceptable to us, if at all.
Further, if we issue equity securities,  stockholders may experience  additional
dilution,  or  the  new  equity  securities  may  have  rights,  preferences  or
privileges  senior to those of  existing  holders  of  our  common  stock.  Debt
financing, if available,  may involve restrictive covenants which could restrict
our operations or finances.  If we cannot raise funds, if needed,  on acceptable
terms,  we may not be able to continue our operations,  grow market share,  take
advantage  of future  opportunities  or  respond  to  competitive  pressures  or
unanticipated requirements.  This in turn, could materially and adversely impact
our business, operating results and financial condition.

A significant  portion of our  enterprise  revenues comes from a small number of
customers,  and any  decrease in revenues  from these  customers  could harm our
operating results.

     We  currently  derive a  significant  portion  of our  enterprise  software
revenues  from  a  small  number  of  major  customers.  For  example,  McKesson
Corporation,  our largest  customer,  represented  20% of our total


                                       20
<PAGE>

revenues in 2001. We expect that McKesson Corporation will continue to represent
a significant  portion of our revenues  through March of 2003. Any disruption or
termination of our commercial relationships with McKesson Corporation would harm
our revenues and results of operations.

We were named in a securities  class action lawsuit that could  materially  harm
our business and financial condition and result in a decline in our stock price.

     AvantGo, certain of our officers and directors, and the underwriters of our
initial  public  offering  are  parties  to a class  action  lawsuit  alleging a
violation of securities  laws. See "Item III. Legal  Proceedings."  This pending
litigation,  and any  subsequent  litigation  against  us or our  affiliates  or
employees,  regardless  of the  outcome,  may  result in  substantial  costs and
expenses  and  significant  diversion  of  management,  which  could  materially
adversely affect our business.

     Due to inherent  uncertainties in litigation,  we cannot predict accurately
the ultimate outcome of the litigation.  An adverse judgment in a large monetary
amount  could have a material  adverse  impact on our  financial  position,  and
consequently our business and results of operations.  Such an event is likely to
cause our stock price to decline substantially.

We  depend  on our  M-Business  software  products  as a  primary  source of our
revenues,  and we do not know if businesses  will adopt our enterprise  products
and related services or continue to make investments in technology products such
as ours.

     Our enterprise  software,  which consists of our AvantGo M-Business Server,
AvantGo Mobile Sales,  AvantGo Mobile Delivery and AvantGo Pylon  products,  has
accounted  for 56% of our revenues in 2001,  56% of our revenues in 2000 and 50%
of our revenues in 1999.  We expect that a  significant  portion of our revenues
will depend upon the continued and growing  market  acceptance of our enterprise
software  products.  The lifecycle of our products is particularly  difficult to
estimate  because of  growing  competition  and the  changing  marketplace.  Our
enterprise  software  may not  achieve  acceptance  among  businesses  and other
organizations.  A decline  in the  demand  for our  enterprise  software  or our
failure to successfully develop, introduce or market new or enhanced products in
a timely  manner  would  have a  negative  impact  on  sales  of our  enterprise
products,  jeopardizing our most important  source of revenues.  The sales cycle
for our products is lengthy.  Due to the recent economic  downturn,  our current
and  prospective  customers  may  elect  to  delay or  postpone  investments  in
technology such as ours, which would harm our enterprise sales efforts and cause
our business to suffer.

Increasing  competition  could harm our ability to maintain or increase sales of
our products or reduce the prices we can charge for our products.

     We face growing competition, and we expect this competition to intensify in
the future. Our competitors  include both start-up companies  designing software
and services similar to ours and established  companies seeking to capitalize on
the mobile  market.  Competition  in our  industry is  primarily on the basis of
product  functionality,  compatibility  with other  hardware and  software,  and
price.

     Our enterprise  software and services compete primarily with offerings from
the following types of companies:

     o    server  synchronization  software  providers,  including  Palm,  Inc.,
          PUMATECH, Inc., Extended Systems and Oracle Corporation;

     o    handheld  application  development  environment  providers,  including
          PUMATECH, Inc., IBM Corporation and Microsoft Corporation;

     o    application service providers, including Aether Systems, Inc.;

     o    mobile  personal   information   management   application   providers,
          including Synchrologic and Extended Systems;

     o    mobile sales force automation application providers,  including Siebel
          Systems;

     o    mobile pharmaceutical application providers, including Dendrite; and


                                       21
<PAGE>

     o    mobile delivery application providers, including Aether Systems, Inc.

     Our AvantGo Mobile  Internet  service  competes with the service  offerings
from the following types of companies:

     o    value-added wireless service providers,  such as Palm, Inc.'s Palm.Net
          and GoAmerica, Inc.; and

     o    wireless  Internet  portals,  such  as  InfoSpace,   Inc.  and  Oracle
          Corporation's Portal to Go.

     As the mobile device and wireless markets mature, we expect  competition to
intensify. This competition presents us with several risks. Many of our existing
and potential  competitors  have  substantially  greater  financial,  technical,
marketing and  distribution  resources than we do. Several of these  competitors
have greater name recognition and more established relationships with our target
customers.  Our  competitors  may be able to use these  advantages to adopt more
aggressive  pricing  policies  and products  that  compete  with our  enterprise
software and offer more attractive terms to customers.  As a result, we may lose
customers or may be required to limit the amount we can charge customers for our
products.   In  addition,   current  and  potential  competitors  may  establish
cooperative relationships among themselves or with third parties to compete more
effectively  with us.  Further,  existing and potential  competitors may develop
enhancements  to or future  generations of  competitive  products that will have
better  performance  features than our products.  Any of these factors,  if they
occur, would likely cause our sales and revenues to fall.  Finally,  competition
in the mobile Internet  sector could harm our ability to generate  revenues from
our AvantGo  Mobile  Internet  service,  undermining  our  potential  for future
growth.

We do not maintain  redundant  facilities for our servers,  and system  failures
resulting  from  earthquakes,  power outages or other  causes,  or accidental or
intentional  security  breaches could disrupt our operations,  cause us to incur
significant expenses, expose us to liability and harm our reputation.

     Our operations depend upon our ability to maintain and protect our computer
systems,  which  are  located  at our  offices  in  Hayward,  California  and at
facilities  owned  by  Level 3  Communications  in  Sunnyvale,  California,  and
operated  by Yipes  Communications,  Inc.  We  currently  do not have  redundant
facilities for our servers.  Our systems therefore are vulnerable to damage from
vendor shutdowns,  break-ins,  unauthorized  access,  vandalism,  fire,  floods,
earthquakes,  power loss,  telecommunications  failures,  terrorist acts such as
that  occurring on September 11, 2001 in New York and similar  events.

     On March 22,  2002,  Yipes  Communications  filed a voluntary  petition for
reorganization   under  Chapter  11  in  the  U.S.   Bankruptcy   Court.   Yipes
Communications  has  indicated  that it will  continue its  business  operations
uninterrupted during the reorganization. Yipes Communications has stated that it
has  made  arrangements  for   debtor-in-possession   financing  and  that  this
additional  financing will allow it to continue offering its existing  customers
24x7 service and support and otherwise conduct business as normal. AvantGo is in
the process of contracting  with multiple  bandwidth  providers to eliminate any
risk  associated  with  financial  difficulties  that Yipes  Communications  has
encountered.  In the mean time, if these  financial  difficulties  result in the
interruption  or  discontinuation  of bandwidth  services,  this whould  disrupt
operation  of AvantGo  Mobile  Internet  service and the  operations  of certain
customers. Many other bandwidth providers are in financial difficulty and we may
not be able to find a reliable,  stable bandwidth service provider, and the next
provider may encounter similar financial problems.

     The potential impact on us and our general  infrastructure of being located
near  major  earthquake  faults  is  unknown,  but  operating  results  could be
materially  adversely affected in the event of a major earthquake.  In addition,
California recently  experienced power shortages,  which resulted in brief power
outages, or "blackouts", in parts of the state. Any such blackouts in the future
could  cause  disruptions  to our  operations,  especially  our  AvantGo  Mobile
Internet  service,  which is  housed  at  Level 3  Communications  and  during a
blackout could become inaccessible to our users.  Additionally,  these blackouts
could disrupt the  operations of our  distributors,  resellers,  and  customers.
Although we maintain insurance against break-in, unauthorized access, vandalism,
fires,  floods,  earthquakes and general business  interruptions,  the amount of
coverage  may not be  adequate  in any  particular  case,  and will  not  likely
compensate us for all the damages caused by these or similar events.

     We  may  be  unable  to  prevent  computer   programmers  or  hackers  from
penetrating  our network  security  from time to time.  A breach of our security
could  seriously  damage  our  reputation,  which  would harm our  business.  In
addition,   because  a  hacker  who  penetrates   our  network   security  could
misappropriate  proprietary  information or cause interruptions in our services,
we might be required to expend significant  resources to protect against,  or to
alleviate,  problems caused by hackers.  We might also face liability to persons
harmed by misappropriation of secure information if it is determined that we did
not exercise sufficient care to protect our systems.

Our future  success will depend on our ability to anticipate  and keep pace with
technological  change, and if we experience delays in developing and introducing
software  compatible  with new products  and  technologies,  our  business  will
suffer.

     The market for mobile Internet software is becoming highly  competitive and
is characterized by evolving industry standards,  rapid technological change and
frequent product  introductions.  To remain  competitive,  we must  continuously
develop new  products  and  services  and adapt our  software to function on new
devices and  operating  systems  designed and marketed by other  companies.  The
development of software and services like ours can be difficult,  time-consuming
and  costly,  and we could  lose  market  share if we  encounter  delays  in the
development and introduction of our future software products.  Additionally, our
business could be seriously harmed if:

     o    competitors  develop  new  technologies  and  products  which  provide
          comparable  functionality  at  reduced  prices  to our  customers  and
          potential customers;

     o    we  fail to  anticipate  technological  trends  or  evolving  industry
          standards  or to adapt our  software  and services to these new trends
          and standards;

     o    other companies  develop products that render our software obsolete or
          less desirable to consumers; or

     o    technical,  legal,  financial  or  other  obstacles  prevent  us  from
          improving  our  software  and  services  to adapt to  changing  market
          conditions.

If we fail to meet  the  continued  listing  requirements  of the  Nasdaq  Stock
Market, our stock could be delisted.

     Our stock is currently  listed on the Nasdaq  National  Market.  The Nasdaq
Stock Market's  Marketplace Rules impose certain minimum financial  requirements
on us for the continued  listing of our stock. One such requirement is a minimum
bid price on our stock of $1.00 per share.  Our stock  price  has,  from time to
time,  fallen below the  minimums  set forth by those rules.  If we remain below
minimum levels for an extended period, the Nasdaq National Market may delist our
stock.  If we are delisted and cannot obtain  listing on another major market or
exchange,  our stock's  liquidity would suffer,  and we would likely  experience
reduced  analyst  coverage and investor  interest.  Such factors may result in a
decrease in our  stock's  trading  price.  Delisting  also may  restrict us from
issuing additional securities or securing additional financing.


                                       22
<PAGE>

Because our quarterly  operating  results are volatile and difficult to predict,
period-to-period  comparisons  of our  operating  results  are  not  necessarily
meaningful,   and  you  should  not  rely  on  them  as  indications  of  future
performance.

     Because our licensing,  professional  services and AvantGo Mobile  Internet
service revenues can vary substantially from month to month and are difficult to
predict,  and we  expect  to  continue  to rely on these  revenues,  our  future
quarterly  revenues and  operating  results may  fluctuate  substantially.  As a
result of these factors,  we believe that  quarter-to-quarter  or other periodic
comparisons of our revenue and operating results are not necessarily meaningful,
and that these comparisons may not be accurate indicators of future performance.
Our  prospects  must  be  considered  in  light  of  the  risks,   expenses  and
difficulties  encountered  by  companies  at  an  early  stage  of  development,
particularly  companies in new and rapidly  evolving  markets,  such as Internet
software. Examples of the factors that could cause our quarterly results to vary
include:

     o    failure to close key enterprise agreements as contemplated;

     o    termination  of important  contracts,  including  those with  McKesson
          Corporation; and

     o    long sales cycles for our products.

     Because  our  staffing  and  operating  expenses  are based on  anticipated
revenue  levels and  because a high  percentage  of our costs are  fixed,  small
variations  in the timing of the  recognition  of specific  revenue  could cause
significant  variations in operating results from quarter to quarter.  If we are
unable to adjust  spending in a timely manner to compensate  for any  unexpected
revenue  shortfall,  any  significant  revenue  shortfall  would  likely have an
immediate  negative  effect on our  business.  It is likely  that in some future
quarter or quarters our operating results will be below public expectations.  If
this occurs, we would expect to experience an immediate and significant  decline
in the market price of our common stock.

The  emergence  of a dominant  platform  for  mobile  devices  could  reduce our
customer base and revenues.

     The marketplace for mobile devices is currently  characterized  by a number
of competing  operating  systems and standards for handheld devices and cellular
telephones. Currently, our customers and potential customers often use a variety
of  mobile  devices  with  multiple  connectivity  options.  One of the  primary
benefits of our  products is their  ability to operate  across a wide variety of
platforms.  If a dominant  platform for mobile devices  emerges,  the demand for
interoperable software may decline and the need for our software may diminish.

We depend  on our  ability  to  market  successfully  the  functionality  of our
software.

     Even if the market for mobile devices continues to expand, our success will
depend,  among other  things,  on whether  businesses  and  consumers  adopt our
products and services for obtaining  Web-based  information and  applications on
the Internet and intranets. We have expended considerable resources on sales and
marketing of our products and  services.  During 2001,  our sales and  marketing
expenses were approximately $29.4 million. As revenues increase,  we expect that
these expenses will continue to increase. If our sales and marketing efforts are
inadequate  and we are  unable  to build our  visibility  and  brand  name,  our
enterprise  revenues will fall and consumer use of our AvantGo  Mobile  Internet
service will fail to develop,  jeopardizing our ability to generate revenue from
the sale of advertising and distribution products.

If we adopt additional  economic  incentives to retain our current  employees or
attract new employees, stockholder equity could be diluted.

     The purchase price of many outstanding  stock options held by our employees
is above the  current  fair  market  value of our common  stock.  To  adequately
motivate and retain our employees,  and to attract new employees, we may need to
provide additional economic incentives.  For example, our board of directors may
seek to increase the stock pool in our  existing  2000 Stock  Incentive  Plan or
adopt a new equity incentive plan, such as the new 2001 Stock Incentive Plan, to
reincentivize  current  employees  and  attract  new  employees.   If  we  issue
additional stock options or additional stock grants to current or new employees,
our existing stockholders will suffer dilution.


                                       23
<PAGE>

If we fail to either maintain our existing  relationships  or enter into new key
relationships  with  leading  hardware  and  software  manufacturers,  our brand
awareness and the use of our products and services will suffer.

     The success of our product and service offerings depends, in large part, on
our ability to develop and  maintain  relationships  with  leading  hardware and
software manufacturers,  such as Palm, Inc., Microsoft Corporation, and Research
in Motion Ltd., that bundle or offer our software with their product  offerings.
We depend on these relationships to:

     o    distribute our products to purchasers of mobile devices;

     o    increase usage of our AvantGo Mobile Internet service;

     o    build brand awareness through product marketing; and

     o    cooperatively market our products and services.

     All of our agreements with these companies are non-exclusive and have broad
rights of  termination.  In  addition,  these  agreements  do not require  these
companies to bundle our software  with all of their product  offerings.  Some of
these  manufacturers have services that compete with our AvantGo Mobile Internet
service.  Any of these  manufacturers may choose either to promote its competing
service or promote the services of one or more of our other  competitors,  which
could limit the growth of our AvantGo  Mobile  Internet  service.  If we fail to
maintain  these  relationships  or fail to enter into  relationships  with other
leading hardware or software manufacturers,  the distribution of our software to
consumers and our AvantGo Mobile Internet service will suffer.

Our  success  depends  on strong  performance  by  equipment  manufacturers  and
software companies with whom we have key relationships.

     Because we depend on equipment  manufacturers  like Palm, Inc. and Research
in Motion Ltd.,  and  software  companies  like  Microsoft  Corporation  to help
distribute our software and promote our AvantGo  Mobile  Internet  service,  the
sales  growth of our  products  and  services  is  dependent  in part upon their
success.  If the products that these  companies  sell, or the operating  systems
upon which these products are based, were to lose popularity, or if any of these
equipment  manufacturers or software  companies cease to distribute our software
in significant  volumes,  or if they change operating systems to which we cannot
adapt, our business would suffer.

Acquisitions  we consummate in the future may disrupt our business and cause our
existing stockholders to suffer dilution.

     As  part of our  business  strategy,  we may  acquire  or  make  additional
investments in businesses,  products and  technologies  that complement ours. We
may  experience  difficulties  integrating  the operations of companies we might
acquire,  into ours.  As a result,  we may divert  management  attention  to the
integration that would otherwise be available for the ongoing development of our
core business. Acquisitions have inherent risks, including:

     o    risks related to the strategic utility of technology acquired;

     o    difficulties   assimilating   acquired  operations,   technologies  or
          products;

     o    unanticipated costs; and

     o    adverse  effects  on  relationships  with  customers,   suppliers  and
          employees.

     If we fail to successfully integrate any businesses, products, technologies
or personnel that we acquire,  that would harm our business. We cannot guarantee
that  we will  not  need  to  write  off  any of our  investments  or  that  our
investments  will  yield a  significant  return,  if any.  We may  issue  equity
securities to finance acquisitions, which would dilute our current stockholders'
investment,  or we may incur  significant  indebtedness,  which  could  harm our
business.


                                       24
<PAGE>

If we fail to manage future expansion effectively,  we may be unable to meet our
customers' needs or to attract new customers.

     We expect to continue to expand  certain  areas of our  operations  for the
foreseeable  future. For example,  we expect to hire additional new employees to
support our sales organization. Because of the technical nature of our products,
we anticipate  that it will take several months to train new personnel.  Failure
to accomplish this objective  would impede our ability to deliver  products in a
timely fashion, fulfill existing customer commitments and attract and retain new
customers, which would harm our business.

The use of our AvantGo Mobile  Internet  service may be reduced if we are unable
to maintain and expand our agreements with content providers and e-businesses.

     Existing  users of our content  providers  and  e-businesses  that  deliver
content to our website  account for a significant  portion of the traffic to our
AvantGo Mobile Internet service.  To expand our AvantGo Mobile Internet service,
we  must  maintain  quality  relationships  with  these  content  providers  and
e-businesses.  If we fail to continue to provide  valuable content and services,
Internet  users may be less likely to actively  use our service and to engage in
commercial  transactions  using our  service,  which,  in turn,  would  harm our
business.

     All of our agreements with content providers and e-businesses survive for a
short period of time and are  non-exclusive.  These  companies may choose not to
renew their agreements with us or may terminate their agreements at any time. If
any of these agreements terminate, we will experience a decline in the number of
websites  that are optimized for use with mobile  devices,  and our  competitive
position  could  suffer.   Further,   while  we  intend  to  pursue   additional
relationships  with content  providers and  e-businesses,  we may not experience
sustained increases in user traffic from these affiliations.

Our future results could be harmed by risks  associated  with our expansion into
Europe and other international markets.

     We sell our  products  in the  United  States  and  abroad.  We manage  our
European sales and marketing  operations  through our U.K.  subsidiary,  AvantGo
Europe,  Ltd. Revenues from international  sales represented 16% of our revenues
in 2001,  and we  anticipate  that revenue from  international  operations  will
represent  an  increasing  portion  of our total  revenues.  Our  business  will
therefore be  increasingly  subject to the risks  associated with doing business
internationally.  We expect that the costs of developing  overseas revenues will
exceed those  revenues.  Accordingly,  our future  results  could be harmed by a
variety of factors, including:

     o    changes in foreign currency exchange rates;

     o    inflation;

     o    the adoption of incompatible platforms or standards;

     o    trade protection measures and import or export licensing requirements;

     o    potentially negative consequences from changes in tax laws; and

     o    weak economic conditions in foreign markets.

Our success depends on retaining key personnel.

     Our  future  success  depends  to a  significant  extent  on the  continued
services  of our  senior  management  and other key  personnel.  The loss of the
services of our management team or other key employees may harm our business. We
have  no  employment  agreements  that  prevent  any of our key  personnel  from
terminating  their  employment  at any time.  We do not maintain key person life
insurance on any of our officers.


                                       25
<PAGE>

Competition  for  personnel  could  harm our  ability  to  develop or market new
products or provide professional services necessary to sustain our growth.

     During 2001, we implemented a restructuring plan and reduced our workforce.
Despite this reduction in workforce,  we will continue to recruit key personnel.
We may be unable to retain our key employees or to attract, assimilate or retain
other highly qualified  employees in the future. The mobile computer industry is
a complex  industry  that  requires  a unique  knowledge  base,  and the loss of
technical  knowledge  and industry  expertise  among our key  personnel,  or our
failure to obtain  necessary  additional  expertise,  could  result in delays in
software  development,  loss of sales and a diversion  of  management  resources
which could harm our business.

Our  software may contain  defects or errors which would delay  shipments of our
products, harm our reputation and increase our costs.

     Our  software  is  complex  as it must  operate  across a broad  variety of
operating  systems,  devices and  connectivity  options  and meet the  stringent
requirements of our customers. We must develop our products and services quickly
to keep pace with the rapidly changing software and telecommunications  markets.
Despite  testing by our customers and us,  software as complex as ours is likely
to contain  undetected  errors or defects,  especially when first  introduced or
when new  versions  are  released.  Our  software may not be free from errors or
defects  after  delivery  to  customers  has begun,  which  could  result in the
rejection of our software or services, damage to our reputation,  lost revenues,
diverted  development  resources and increased service and support costs, any of
which could harm our business.

     Computer  viruses have been reported to impact  handheld  device  operating
systems. Viruses and publicity about them may adversely impact our product sales
and  usage  of  our  AvantGo  Mobile  Internet  service.   In  particular,   the
unavailability  of anti-virus  protection  that our users deem to be adequate to
combat these viruses could have a material adverse effect on both our enterprise
license business as well as our AvantGo Mobile Internet service.


                                       26
<PAGE>

We incorporate  software licensed from third parties into our products,  and our
loss of these licenses could disrupt our sales.

     We currently  license software from a variety of third parties.  If we were
found to be in breach of any of our license  agreements,  or, in any event, upon
termination  of such  agreements,  we would have to  discontinue  the use of the
licensed software,  cease the use and sale of products containing this software,
and incur expenses to develop or obtain licenses to other technology.  We may be
unable to  develop  alternative  technologies  or to obtain a license to use the
software formerly licensed to us on commercially reasonable terms.

     Although  we are  generally  indemnified  against  claims  that  technology
licensed  to us  infringes  the  intellectual  property  rights of others,  such
indemnification is not always available for all types of intellectual  property,
and in some  cases  the scope of such  indemnification  is  limited.  Even if we
receive  broad  indemnification,  third  party  indemnitors  may  not  have  the
financial  resources  to  fully  indemnify  us in  the  event  of  infringement,
resulting in substantial  exposure to us. We cannot be assured that infringement
claims arising from the incorporation of this technology will not be asserted or
prosecuted  against us. These claims,  even if not meritorious,  could result in
the expenditure of significant financial and managerial resources in addition to
potential  redevelopment  costs  and  delays,  all  of  which  could  materially
adversely affect our business, operating results and financial condition.

Increasing  government  regulation  could  cause  demand  for our  products  and
services to grow more slowly or to decline.

     We are subject not only to government  regulations applicable to businesses
generally, but also to laws and regulations directly applicable to the Internet.
Demand for our  software  in  certain  countries,  and our  ability to meet this
demand, is subject to export controls on hardware and on the encryption software
incorporated  into  our  products.  In  addition,  state,  federal  and  foreign
governments  may  adopt  laws and  regulations  governing  any of the  following
issues:

     o    user privacy;

     o    taxation of electronic commerce;

     o    the online distribution of specific material or content; and

     o    the characteristics and quality of online products and services.

     One or more states or the federal  government could enact regulations aimed
at companies like us, which provide software that facilitates e-commerce and the
distribution  of content over the Internet.  The  likelihood of the enactment of
regulations in these areas will increase as the Internet  becomes more pervasive
and  extends to more  people's  daily  lives.  Any  legislation,  regulation  or
taxation of, or concerning,  electronic  commerce could dampen the growth of the
Internet and decrease its acceptance as a communications  and commercial medium.
If a  reduction  in growth  occurs as a result of these  events,  demand for our
client software and AvantGo Mobile Internet service could decline significantly.

We may be subject to liability for transmitting  information,  and our insurance
coverage may be inadequate to fully cover us against this liability.

     We could be exposed to liability  with respect to  third-party  information
that our users access with our  software.  Even if these claims do not result in
liability to us, they would likely divert  management's  attention and resources
and we could incur  significant  costs in  investigating  and defending  against
these claims.  Although we carry general liability insurance,  our insurance may
not cover potential  claims of this type or may be inadequate to cover all costs
incurred in defense of potential  claims or to  indemnify  us for all  liability
that may be imposed.

We rely on intellectual property rights, and we may not be able to obtain patent
or other protection for our technology, products or services.

     We rely on a combination of patent,  copyright,  trademark and trade secret
laws,  confidentiality  procedures  and  contractual  provisions  to protect our
proprietary technology, products and services. We


                                       27
<PAGE>

also believe that factors such as the  technological  and creative skills of our
personnel,  new product  developments,  frequent  product  enhancements and name
recognition  are  essential  to   establishing   and  maintaining  a  technology
leadership position.

     We seek to protect our  proprietary  software and written  materials  under
trade secret,  patent and copyright laws, which afford only limited  protection.
We do not know if these or other applications will ever be issued or, if issued,
whether  they will contain  claims with the scope that we seek,  or whether they
will survive legal  challenges that may be brought.  Any such legal  challenges,
whether or not successful, may be expensive to defend.  Furthermore,  others may
develop  technologies  that are similar or superior to our  technology or design
around any patents which may issue.

     Despite our efforts to protect our proprietary rights, unauthorized parties
may attempt to copy  aspects of our  software  or to obtain and use  information
that we regard as proprietary.  In addition,  the laws of some foreign countries
do not ensure that our means of protecting our proprietary  rights in the United
States or abroad  will be  adequate.  We have  entered  into  source code escrow
agreements  with a  limited  number of our  customers  and  business  affiliates
requiring  release of our source code in certain  limited  circumstances.  These
agreements  generally  provide  that  each  party to the  agreement  will have a
limited,  non-exclusive  right to use our code should one of these circumstances
occur,  such as if we cease to do business or if we fail to meet our contractual
obligations.  This may  increase the  likelihood  of  misappropriation  by third
parties.  If we are unable to adequately protect our intellectual  property,  it
could  materially  affect our  financial  performance.  In  addition,  potential
competitors  may be able to  develop  non-infringing  technologies  or  services
similar to ours.

We may be sued by third parties for  infringement of their  proprietary  rights,
and litigation or threatened  litigation  could require us to incur  significant
litigation  or  licensing  expenses,  prevent us from  selling  our  software or
require  us  to  make   expensive   modifications   to  our  software  to  avoid
infringement.

     The wireless communications, handheld computers and software industries are
characterized  by the  existence  of a large  number  of  patents  and  frequent
litigation  based on allegations of patent  infringement or other  violations of
intellectual  property  rights.  As the  number of  participants  in our  market
increases,  the  likelihood of an  intellectual  property claim against us could
increase.  We expect that we may increasingly be subject to infringement  claims
as the number of products and competitors in our industry  segment grows and the
functionality of products in different  industry  segments  overlaps.  Any claim
made against us, regardless of merit, could be time-consuming to defend,  result
in costly  litigation,  divert  management's  attention  and  resources or cause
product release delays.  In addition,  this kind of claim, if successful,  could
require us to discontinue the use of infringing  software code or processes,  to
cease the use and sale of infringing products,  to incur significant  litigation
costs  and  expenses  and to  develop  non-infringing  technology  or to  obtain
licenses to the alleged  infringing  technology under which we might be required
to pay expensive royalties. We may be unable to develop alternative technologies
or to obtain a license to use software formerly used by us or, if a license were
obtainable,  the terms might not be commercially  acceptable to us. In the event
of a  successful  claim of product  infringement  against us and our  failure or
inability to obtain a license or develop or acquire  non-infringing  technology,
our business would suffer.

Our stock price may continue to be volatile and an active trading market for our
common stock may never develop or be sustained.

     The stock markets,  particularly  the Nasdaq  National  Market on which our
common  stock  is  listed,   have  experienced   significant  price  and  volume
fluctuations,  and the market  prices of  companies  focused on the Internet and
wireless  communications  have been  highly  volatile.  The market  price of our
common  stock is likely  to be highly  volatile  and  could be  subject  to wide
fluctuations in response to factors including:

     o    actual or anticipated variations in our quarterly operating results;

     o    announcements  of  new  product  or  service  offerings  by us or  our
          competitors;

     o    changes in the handheld and wireless device industries;


                                       28
<PAGE>

     o    technological innovations;

     o    competitive developments;

     o    departure of key personnel;

     o    securities class action litigation, or other civil litigation, brought
          against us by third parties, regardless of outcome;

     o    changes in financial estimates by securities analysts; and

     o    changes in interest rates and other general economic conditions.

Future sales of our common stock may cause our stock price to decline.

     Sales of  significant  amounts of our common stock in the public  market or
the  perception  that sales of  significant  amounts of common  stock will occur
could  adversely  affect  the  market  price of our  common  stock or our future
ability to raise  capital  through an offering of our equity  securities.  As of
December  31, 2001 we had  approximately  35.2  million  shares of common  stock
outstanding,  of which 34.7 million were freely tradable,  except for any shares
purchased by our  "affiliates"  as defined in Rule 144 of the  Securities Act of
1933. Sales of a large number of restricted  shares,  or sales of shares held by
affiliates,  could  have an adverse  effect on the  market  price for our common
stock.

Provisions  in our charter  documents  and Delaware law could prevent or delay a
change in control, which could reduce the market price of our common stock.

     Provisions of our certificate of incorporation and bylaws,  and of Delaware
law, could limit the price that investors  might be willing to pay in the future
for shares of our common stock and may have the effect of delaying or preventing
a change of control or changes in our management. These provisions:

     o    allow the board of directors to issue preferred stock without any vote
          or further action by the stockholders;

     o    eliminate the right of  stockholders to act by written consent without
          a meeting;

     o    eliminate cumulative voting in the election of directors; and

     o    divide  our board of  directors  into three  classes,  with each class
          serving a staggered three-year term.

     Provisions of Delaware law may  discourage,  delay or prevent  someone from
acquiring or merging with us. These provisions  prevent us from engaging,  under
limited circumstances,  in a merger or sale of more than 10% of our assets, with
a stockholder who owns 15% or more of our  outstanding  voting stock, as well as
affiliates and associates of the stockholder, for three years following the date
that the stockholder  became an owner of 15% or more of our  outstanding  voting
stock unless:

     o    the transaction is approved by the board of directors  before the date
          the interested stockholder attained that status;

     o    upon the closing of the  transaction  that resulted in the stockholder
          becoming an interested  stockholder,  the interested stockholder owned
          at least 85% of the voting stock of the corporation outstanding at the
          time the transaction commenced; or

     o    on or after such date,  the  business  combination  is approved by the
          board and authorized at an annual or special  meeting of  stockholders
          by at least  two-thirds  of the  outstanding  voting stock that is not
          owned by the interested stockholder.

You  should not  unduly  rely on  forward-looking  statements  because  they are
inherently uncertain.

     You should not rely on  forward-looking  statements in this document.  This
document   contains   forward-looking   statements   that   involve   risks  and
uncertainties.  We use  words  such  as  "believes,"  "expects,"  "anticipates,"
"intends," "plans," "future," "may," "will," "should," "estimates," "potential,"
or "continue" and similar  expressions to identify  forward-looking  statements.
You should not place undue reliance on


                                       29
<PAGE>

these  forward-looking  statements,  which  apply  only  as of the  date of this
document. The forward-looking  statements contained in this document are subject
to the  provisions of Section 27A of the  Securities Act of 1933 and Section 21E
of the  Securities  Exchange  Act of  1934.  Our  actual  results  could  differ
materially from those anticipated in these  forward-looking  statements for many
reasons, including the risks described above and elsewhere in this document.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are  exposed to the impact of  interest  rate  changes and change in the
market values of our investments.

     Interest Rate Risk.  We are exposed to the impact of short-term  changes in
interest rates. Our exposure primarily relates to our investment  portfolio.  We
invest our excess cash in high quality corporate and municipal debt instruments.
Investments  in both fixed rate and floating rate interest  earning  instruments
carries a degree of interest  rate risk.  Fixed rate  securities  may have their
fair market value adversely impacted by a rise in interest rates, while floating
rate securities may produce less income than expected if interest rates fall. As
a result,  changes in interest  rates may cause us to suffer losses in principal
if forced to sell securities that have declined in market value or may cause our
future investment income to fall short of expectations. Our investment portfolio
is designated as available-for-sale,  and accordingly is presented at fair value
in the consolidated balance sheet.

     We protect and  preserve our invested  funds with  investment  policies and
procedures  that  limit  default,  market  and  reinvestment  risk.  We have not
utilized derivative financial instruments in our investment portfolio.

     As of December 31, 2001, we had  unrestricted  cash and cash equivalents of
$43.1  million.  Cash and cash  equivalents  consist of cash and  highly  liquid
short-term  investments with original  maturities of three months or less at the
date of  purchase.  Our  interest  income is sensitive to changes in the general
level of U.S. interest rates, particularly since the majority of our investments
are  in  short-term  instruments.  Due to  the  nature  of  our  cash  and  cash
equivalents,  we have concluded that there is no material  market risk exposure.
At December  31,  2001,  our cash and cash  equivalents  consisted  primarily of
demand deposits, money market funds, U.S. government obligations,  and corporate
debt securities held by three major financial institutions in the United States.
We had no short-term investments at December 31, 2001.

     Foreign  Currency  Exchange Risk. We develop  products in the United States
for sale in North America and Europe.  As a result,  our financial results could
be affected by factors  such as changes in foreign  currency  exchange  rates or
weak  economic  conditions  in foreign  markets.  Since our sales are  currently
priced in U.S. dollars and translated to local currency amounts, a strengthening
of the dollar could make our products less  competitive in foreign  markets.  We
have one foreign  subsidiary  whose expenses are incurred in its local currency.
As  exchange  rates  vary,  its  expenses,   when  translated,   may  vary  from
expectations and adversely impact overall expected profitability.  Our operating
results were not significantly affected by exchange rate fluctuations in 2001.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Our consolidated  financial statements included in this report beginning at
page F-1 are incorporated herein by reference.

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

     Not Applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information  required  by  Item  10  of  Form  10-K  with  respect  to
identification  of directors is  incorporated  by reference from the information
contained  in  the  section  captioned  "Election  of  Directors"  in  AvantGo's
definitive proxy statement for the Annual Meeting of Stockholders to be held May
13,  2002,  a


                                       30
<PAGE>

copy of which  will be filed with the SEC before the date 120 days after the end
of 2001. For information with respect to the executive officers of AvantGo,  see
"Employees" at the end of Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

     The  information  required  by  Item 11 of Form  10-K  is  incorporated  by
reference from the  information  contained in the section  captioned  "Executive
Compensation" in the proxy statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information  required  by  Item 12 of Form  10-K  is  incorporated  by
reference  from the  information  contained in the section  captioned  "Security
Ownership of Certain Beneficial Owners and Management" in the proxy statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  information  required  by  Item 13 of Form  10-K  is  incorporated  by
reference  from the  information  contained  in the section  captioned  "Certain
Relationships and Related Transactions" in the proxy statement.

                                     PART IV

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

(a)(1) Financial Statements

     (1)  Report of Ernst & Young LLP, Independent  Auditors,  dated January 16,
          2002 (See page F-2 hereof).

     (2)  Consolidated  Balance  Sheets as of December  31, 2001 and 2000.  (See
          page F-3 hereof).

     (3)  Consolidated Statements of Operations for the years ended December 31,
          2001, 2000 and 1999 (See page F-4 hereof).

     (4)  Consolidated  Statements of  Stockholder's  Equity for the years ended
          December 31, 2001, 2000 and 1999 (See pages F-5 and F-6 hereof).

     (5)  Consolidated Statements of Cash Flows for the years ended December 31,
          2001, 2000 and 1999 (See page F-7 hereof).

     (6)  Notes to  Consolidated  Financial  Statements.  (See pages F-8 through
          F-23 hereof).

(a)(2) Financial Statement Schedules

                 Schedule No.                   Description
                 ----------                     ----------
                 Schedule II            Valuation and Qualifying Accounts

     Other schedules are not provided because of the absence of conditions under
which they are  required or because  the  required  information  is given in the
financial statements or notes thereto.

(a)(3)  Exhibits.  The following is a complete list of Exhibits filed as part of
this Form 10-K.

Exhibit No  Description
----------  ----------
2.1*        Agreement  and  Plan  of  Merger  by and  among  AvantGo,  Inc.,  GC
            Acquisition,  Inc., Globalware Computing,  Inc. and the stockholders
            of Globalware Computing, Inc. dated as of May 26, 2000. Reference is
            made to Exhibit 2.1 of the  registrant's  Registration  Statement on
            Form S-1 (No.  333-38888) filed with the Commission on June 8, 2000,
            as amended (the "Form S-1").

2.2*        Escrow and Indemnity  Agreement by and among  AvantGo,  Inc.,  Chase
            Manhattan  Bank and Trust  Company,  N.A.,  as escrow  agent and the
            stockholders of Globalware Computing,  Inc. (See Exhibit 2.2 to Form
            S-1)

3.1*        Seventh  Amended and Restated  Certificate  of  Incorporation.  (See
            Exhibit 3.2 to Form S-1)

3.2*        Amended and Restated Bylaws. (See Exhibit 3.4 to Form S-1).


                                       31
<PAGE>

Exhibit No   Description
----------   ----------
4.1*        Form of common stock certificate. (See Exhibit 4.1 to Form S-1)

4.2*        Fourth Amended and Restated  Investors'  Rights  Agreement dated May
            19, 2000. (See Exhibit 4.2 to Form S-1)

10.1*       Form of Indemnification Agreement (See Exhibit 10.1 to Form S-1).

10.2*       1998  Globalware  Computing,  Inc.  stock option plan.  (See Exhibit
            10.56 to Form S-1).

10.3*       1997 Stock Option Plan, as amended. (See Exhibit 10.3 to Form S-1)

10.4*       Form of Notice of Option  Grant  and Stock  Option  Agreement.  (See
            Exhibit 10.4 to Form S-1)

10.5*       Form of 2000 Employee Stock Purchase Plan. (See Exhibit 10.5 to Form
            S-1)

10.6*       Form of 2000 Stock Incentive Plan. (See Exhibit 10.6 to Form S-1)

10.7*       Stock Option Grant Program for Non-employee Directors.  (See Exhibit
            10.7 to Form S-1)

10.8*       401(k)  Standardized  Profit Sharing Plan Adoption  Agreement by and
            between AvantGo, Inc. and Paychex Retirement Services, dated January
            1, 1998. (See Exhibit 10.8 to Form S-1)

10.9*       Founders Stock Purchase  Agreement by and between AvantGo,  Inc. and
            Felix Lin, dated August 11, 1997. (See Exhibit 10.16 to Form S-1).

10.10*      Founders Stock Purchase  Agreement by and between AvantGo,  Inc. and
            Linus Upson, dated August 11, 1997. (See Exhibit 10.17 to Form S-1).

10.11*      Employment  Offer Letter  between  AvantGo,  Inc. and Richard  Owen,
            dated December 4, 1999. (See Exhibit 10.34 to Form S-1).

10.12*      Pledge  Agreement  between AvantGo,  Inc. and David B. Cooper,  Jr.,
            dated August 30, 2000. (See Exhibit 10.58 to Form S-1).

10.13*      Full Recourse  Promissory  Note executed by David B. Cooper,  Jr. in
            favor of AvantGo,  Inc. dated August 30, 2000. (See Exhibit 10.59 to
            Form S-1).

10.14*      Change of Control Agreement by and between David B. Cooper,  Jr. and
            AvantGo,  Inc.  dated  August 30, 2000.  (See Exhibit  10.60 to Form
            S-1).

10.15*      Amended  and  Restated  Change of Control  Agreement  by and between
            AvantGo,  Inc. and Felix Lin,  dated October 13, 1997.  (See Exhibit
            10.22 to Form S-1).

10.16*      Change of Control Agreement by and between AvantGo, Inc. and Richard
            Owen, dated January 24, 2000. (See Exhibit 10.23 to Form S-1).

10.17*      Amended  and  Restated  Change of Control  Agreement  by and between
            AvantGo,  Inc. and Linus Upson, dated October 13, 1997. (See Exhibit
            10.24 to Form S-1).

10.18*+     Master Agreement by and between  AvantGo,  Inc. and American Express
            Travel-Related Services Company, Inc., dated February 16, 2000. (See
            Exhibit 10.30 to Form S-1).

10.19*      Warrant  to  purchase  Series D  preferred  stock  issued to Imagine
            Health, Inc., dated March 8, 2000. (See Exhibit 10.33 to Form S-1).

10.20*      Consulting  Agreement  between  AvantGo,  Inc.  and R.B.  Webber and
            Company, dated April 16, 1998. (See Exhibit 10.35 to Form S-1).

10.21*      Consulting  Agreement  between  AvantGo,  Inc. and RB Webber,  dated
            December 11, 1998. (See Exhibit 10.36 to Form S-1).

10.22*      QuickStart  Loan and Security  Agreement with Silicon Valley Bank in
            the amount of $300,000,  dated January 28, 1998.  (See Exhibit 10.37
            to Form S-1).

10.23*      Irrevocable Standby Letter of Credit No. SVB001S with Silicon Valley
            Bank in the amount of $3,250,000,  dated June 2, 2000.  (See Exhibit
            10.38 to Form S-1).

10.24*+     License  Agreement  by  and  between  AvantGo,   Inc.  and  McKesson
            Corporation,  dated October 1, 1998, as amended  August 31, 1999 and
            March 7, 2000. (See Exhibits 10.39, 10.40 and 10.41 to Form S-1).


                                       32
<PAGE>

Exhibit No  Description
----------  -----------
10.25*+     Agreement for  Implementation of Licensor Software  Materials by and
            between  AvantGo,  Inc. and Palm Computing Inc., dated June 1, 1999.
            (See Exhibit 10.43 to Form S-1).

10.26*+     Marketing and Distribution  Agreement by and between  AvantGo,  Inc.
            and Microsoft  Corporation,  dated June 2, 1999, as amended  January
            25, 2000. (See Exhibits 10.44 and 10.45 to Form S-1).

10.27*+     Enterprise  License Agreement by and between AvantGo,  Inc. and Ford
            Motor Company,  dated December 9, 1999, as amended  January 31, 2000
            and March 7,  2000.  (See  Exhibits  10.46,  10.47 and 10.48 to Form
            S-1).

10.28*      Bayshore Corporate Center Office Lease by and between AvantGo,  Inc.
            and  Cornerstone  Properties I, LLC, dated June 23, 1997, as amended
            January,  30, 1998; April 27, 1998;  November 16, 1998, and April 2,
            1999. (See Exhibits  10.49,  10.50,  10.51,  10.52 and 10.53 to Form
            S-1).

10.29*      Bayshore Corporate Center Office Lease by and between AvantGo,  Inc.
            and  Cornerstone  Properties  I, LLC,  dated  August 5,  1999.  (See
            Exhibit 10.54 to Form S-1).

10.30*      Net  Lease  by and  between  AvantGo,  Inc.  and The  Multi-Employer
            Property  Trust,  dated March 31, 2000.  (See Exhibit  10.55 to Form
            S-1).

10.31**     Promissory  Note executed by Mike Aufricht and AvantGo,  Inc.  dated
            April 20, 2000.

10.32**+    Amendments  to License  Agreement by and between  AvantGo,  Inc. and
            McKesson Corporation dated October 1, 1998 (as amended through March
            7, 2000)  December 30, 2000 and undated  amendments  to Exhibit B to
            License Agreement.

10.33       Form of 2001 Stock Incentive Plan

10.34       Form of 2001 Stock Option Agreement

10.35       Amended  and  Restated  Change of Control  Agreement  by and between
            AvantGo, Inc. and David Moore, dated October 13, 1997.

10.36       Amended  and  Restated  Change of Control  Agreement  by and between
            AvantGo, Inc. and Michael Aufricht, dated December 6, 1999.

10.37       Change of Control  Agreement by and between  AvantGo,  Inc. and Paul
            Kanneman, dated July 12, 2001.

10.38       Offer  Letter  and Change of Control  Agreement  Supplement,  by and
            between AvantGo, Inc. and Paul Kanneman, dated August 1, 2001.

10.39++     Amendment  to License  Agreement  by and between  AvantGo,  Inc. and
            McKesson Corporation dated August 17, 2001.

10.40++     Amendment  Number 2 to Marketing and  Distribution  Agreement by and
            between AvantGo,  Inc. and Microsoft  Corporation,  dated August 31,
            2001.

21.1        Subsidiaries of the Registrant.

23.1        Consent of Ernst & Young LLP, Independent Auditors.

24.1        Power of Attorney (see signature page).

----------
     (*)  Incorporated by reference to the registrant's  Registration  Statement
          on Form S-1 (No. 333-38888) filed with the Commission on June 8, 2000,
          as amended.

     (**) Incorporated  by reference to the  registrant's  Annual Report on Form
          10-K (No.  000-31561)  filed with the  Commission on April 2, 2001, as
          amended.

      +   Confidential treatment granted on portions of this exhibit.

      ++  Confidential treatment requested on portions of this exhibit.

         (6) Reports on Form 8-K

         None.


                                       33
<PAGE>

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 29th day of
March, 2002.

                                             AVANTGO, INC.
                                      --------------------------
                                             (REGISTRANT)


                                        By: /s/ Richard Owen
                                            --------------------------
                                            Richard Owen
                                            Chief Executive Officer and
                                            Chairman of the Board of Directors


                                POWER OF ATTORNEY

     Know all  persons  by these  presents,  that each  person  whose  signature
appears below  constitutes  and appoints  Richard Owen as his  attorney-in-fact,
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  said
attorney-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, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
           Name                                    Title                          Date
           ----                                    -----                          ----
<S>                                <C>                                        <C>
Principal Executive Officers:

/s/ Richard Owen
-------------------------
Richard Owen                       Chief Executive Officer and Chairman
                                      of the Board of Directors               March 29, 2002


/s/ Felix Lin                      Vice Chairman of the Board of Directors    March 29, 2002
-------------------------
Felix Lin

Principal Financial and Principal
   Accounting Officer:


/s/ David B. Cooper, Jr.           Chief Financial Officer                    March 29, 2002
-------------------------
David B. Cooper, Jr.


Additional Directors:

/s/ Christopher B. Hollenbeck      Director                                   March 29, 2002
-------------------------
Christopher B. Hollenbeck


                                       34
<PAGE>

/s/ Robert J. Lesko                Director                                   March 29, 2002
-------------------------
Robert J. Lesko


/s/ William J. Miller              Director                                   March 29, 2002
-------------------------
William J. Miller


/s/ James Richardson               Director                                   March 29, 2002
-------------------------
James Richardson


/s/ Linus Upson                    Director                                   March 29, 2002
-------------------------
Linus Upson


/s/ Jeffrey T. Webber              Director                                   March 29, 2002
-------------------------
Jeffrey T. Webber


/s/ Peter H. Ziebelman             Director                                   March 29, 2002
-------------------------
Peter H. Ziebelman
</TABLE>


                                       35
<PAGE>

                                  AVANTGO, INC.

                          INDEX TO FINANCIAL STATEMENTS


                                                                            Page
                                                                            ----

Report of Ernst & Young LLP, Independent Auditors.....................      F-2

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

Consolidated Statements of Operations.................................      F-4

Consolidated Statements of Stockholders' Equity.......................      F-5

Consolidated Statements of Cash Flows.................................      F-7

Notes to Consolidated Financial Statements............................      F-8


                                      F-1
<PAGE>

                Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders
AvantGo, Inc.

We have audited the accompanying consolidated balance sheets of AvantGo, Inc. as
of  December  31,  2001 and 2000,  and the related  consolidated  statements  of
operations,  stockholders' equity, and cash flows for each of the three years in
the period  ended  December  31, 2001.  Our audits also  included the  financial
statement  schedule  listed in Item  14(a) of this  Annual  Report on Form 10-K.
These financial statements and schedule are the responsibility of the management
of AvantGo,  Inc. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. 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,  the consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
AvantGo, Inc. at December 31, 2001 and 2000, and the consolidated results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2001, in conformity with accounting  principles  generally accepted
in the United  States.  Also in our opinion,  the financial  statement  schedule
referred  to above,  when  considered  in  relation  to the  basic  consolidated
financial  statements  taken  as a  whole,  presents  fairly,  in  all  material
respects, the information set forth therein.

                                                           /s/ ERNST & YOUNG LLP

Walnut Creek, California
January 16, 2002


                                      F-2
<PAGE>

                                  AVANTGO, INC.

                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                                  ------------------------
                                                                                    2001            2000
                                                                                  ---------      ---------
<S>                                                                               <C>            <C>
                                        ASSETS
Current Assets:
          Cash and cash equivalents ..........................................    $  43,091      $  57,034
          Short-term investments .............................................           --         16,432
          Accounts receivable, net of allowance for doubtful accounts of
              $965 in 2001 and $240 in 2000, respectively ....................        3,236          4,724
          Prepaid expenses and other current assets ..........................          480          1,186
                                                                                  ---------      ---------
              Total current assets ...........................................       46,807         79,376
Restricted investments .......................................................        3,438          3,438
Property and equipment, net ..................................................        6,890          7,998
Goodwill and other intangibles ...............................................           --         12,803
Other assets .................................................................          344            693
                                                                                  ---------      ---------
              Total assets ...................................................    $  57,479      $ 104,308
                                                                                  =========      =========
                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
          Accounts payable ...................................................    $   1,243      $   3,227
          Accrued liabilities ................................................        3,855          1,527
          Accrued compensation and related benefits ..........................        1,693          2,238
          Current portion of borrowings under bank line of credit agreement ..           --             40
          Deferred revenue ...................................................        1,813          2,442
                                                                                  ---------      ---------
              Total current liabilities ......................................        8,604          9,474
Deferred revenue, net of current portion .....................................           --             83
Accrued restructuring charges, net of current portion ........................        2,127             --
Commitments
Stockholders' Equity:
          Convertible preferred stock, $0.0001 par value, issuable in Series:
              10,000,000 shares  authorized  at December 31, 2001; none and
              none issued and outstanding at December 31, 2001, and 2000,
              respectively ...................................................           --             --
          Common stock, $0.0001 par value; 150,000,000 shares authorized;
              35,166,133 and 34,473,663 shares issued and outstanding
              at December 31, 2001 and 2000, respectively ....................      168,603        170,841
          Notes receivable from stockholders .................................         (502)          (706)
          Deferred stock compensation ........................................       (2,752)       (12,350)
          Revenue offset relating to warrant agreements ......................         (592)        (1,099)
          Accumulated deficit ................................................     (118,122)       (61,947)
          Accumulated other comprehensive income .............................          113             12
                                                                                  ---------      ---------
              Total stockholders' equity .....................................       46,748         94,751
                                                                                  ---------      ---------
              Total liabilities and stockholders' equity .....................    $  57,479      $ 104,308
                                                                                  =========      =========
</TABLE>

                             See accompanying notes.


                                      F-3
<PAGE>

                                  AVANTGO, INC.

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

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                                ------------------------------------
                                                                  2001          2000          1999
                                                                --------      --------      --------
<S>                                                             <C>           <C>           <C>
Revenues:
          License fees ....................................     $ 13,548      $  9,087      $  1,443
          Services ........................................       10,456         7,231         1,446
                                                                --------      --------      --------
                    Total revenues ........................       24,004        16,318         2,889
Costs and expenses:
          Cost of license fees ............................          594           161            60
          Cost of services (1) ............................        5,137         4,103         1,466
          Product development (2) .........................       13,250        10,842         3,108
          Sales and marketing (3) .........................       29,362        30,682         4,630
          General and administrative (4) ..................        8,085         5,768           548
          Amortization of goodwill, other intangible
            assets, and deferred stock compensation .......        9,201        16,582         2,605
          Purchased in-process research and development ...           --           600            --
          Write-off of core technology ....................        1,981            --            --
          Restructuring and other impairment charges ......       15,065            --            --
                                                                --------      --------      --------
                    Total costs and expenses ..............       82,675        68,738        12,417
                                                                --------      --------      --------
Loss from operations ......................................      (58,671)      (52,420)       (9,528)
Other income (expense):
          Interest income (expense), net ..................        2,496         2,582           313
                                                                --------      --------      --------
                    Net loss ..............................     $(56,175)     $(49,838)     $ (9,215)
                                                                ========      ========      ========
          Basic and diluted net loss per share ............     $  (1.71)     $  (4.13)     $  (2.11)
                                                                ========      ========      ========
          Common shares used to calculate basic and diluted
              net loss per common share ...................       32,892        12,077         4,377
                                                                ========      ========      ========
</TABLE>

----------

(1)  Excluding  $208,  $383,  $181  and $9 in  amortization  of  deferred  stock
     compensation  for the year ended  December 31, 2001,  2000,  1999 and 1998,
     respectively.

(2)  Excluding  $1,103,  $1,809,  $750 and $38 in amortization of deferred stock
     compensation  for the year ended  December 31, 2001,  2000,  1999 and 1998,
     respectively.

(3)  Excluding $1,725,  $3,290, $1,211 and $15 in amortization of deferred stock
     compensation  for the year ended  December 31, 2001,  2000,  1999 and 1998,
     respectively.

(4)  Excluding  $3,525,  $7,861,  $463 and $9 in  amortization of deferred stock
     compensation  for the year ended  December 31, 2001,  2000,  1999 and 1998,
     respectively.

                             See accompanying notes.


                                      F-4
<PAGE>

                                  AVANTGO, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                              Convertible                                        Notes
                                                            Preferred Stock             Common Stock          Receivable
                                        Comprehensive    ---------------------     -----------------------       from
                                         Income (Loss)     Shares      Amount        Shares        Amount    Stockholders
                                        --------------   ----------    -------     ----------      -------   ------------
<S>                                         <C>           <C>           <C>         <C>             <C>         <C>
BALANCES AT DECEMBER 31, 1998 .........                   7,736,042      4,807      7,864,120          540        --
  Issuance of Series C preferred
    stock, net of issuance costs ......                   3,659,898     14,373             --           --        --
  Issuance of Series C preferred
    stock in exchange for
    cancellation of notes payable .....                      76,142        300             --           --        --
  Exercise of stock options ...........                          --         --      1,805,942          694      (100)
  Repurchase of common stock ..........                          --         --        (40,000)          (1)       --
  Deferred stock compensation .........                          --         --             --        9,695        --
  Amortization of deferred stock
    compensation ......................                          --         --             --           --        --
  Net loss and comprehensive loss .....      (9,215)             --         --             --           --        --
                                            =======      ----------     ------     ----------      -------      ----
BALANCES AT DECEMBER 31, 1999 .........                  11,472,082     19,480      9,630,062       10,928      (100)
  Issuance of common stock in
    exchange for services .............                          --         --         12,500          187        --
  Issuance of Series D preferred
    stock in connection with license ..                       4,785         40             --           --        --
  Issuance of Series D preferred
    stock, net of issuance costs ......                   3,726,094     31,042             --           --        --
  Exercise of stock options ...........                          --         --      1,794,445        4,157      (606)
  Repurchase of common stock ..........                          --         --       (496,167)        (141)       --
  Deferred stock compensation .........                          --         --             --       18,218        --
  Amortization of deferred stock
    compensation ......................                          --         --             --           --        --
  Issuances of Series D warrant .......                      71,562        159             --           --        --
  Issuance of Series E  preferred
    stock in connection with
    acquisition .......................                   1,933,300     15,466             --           --        --
  Issuance of common stock options
    in connection with acquisition ....                          --         --             --        1,444        --
    Issuance of common stock in
       connection with initial public
       offering, net of issuance costs
       of $7,560 ......................                                             6,325,000       68,340
  Deferred revenue relating to warrants                          --      1,521             --           --        --


<CAPTION>
                                             Deferred       Revenue                    Accumulated
                                               Stock        Offset                        Other          Total
                                              Compen-     Relating to    Accumulated   Comprehensive  Stockholders'
                                              sation        Warrants       Deficit     Income (Loss)     Equity
                                             --------     -----------    -----------   -------------  -------------
<S>                                           <C>                <C>       <C>             <C>           <C>
BALANCES AT DECEMBER 31, 1998 .........          (385)           --         (2,894)           --          2,068
  Issuance of Series C preferred
    stock, net of issuance costs ......            --            --             --            --         14,373
  Issuance of Series C preferred
    stock in exchange for
    cancellation of notes payable .....            --            --             --            --            300
  Exercise of stock options ...........            --            --             --            --            594
  Repurchase of common stock ..........            --            --             --            --             (1)
  Deferred stock compensation .........        (9,695)           --             --            --             --
  Amortization of deferred stock
    compensation ......................         2,605            --             --            --          2,605
  Net loss and comprehensive loss .....            --            --         (9,215)           --         (9,215)
                                              -------        ------        -------        ------        -------
BALANCES AT DECEMBER 31, 1999 .........        (7,475)            0        (12,109)           --         10,724
  Issuance of common stock in
    exchange for services .............            --            --             --            --            187
  Issuance of Series D preferred
    stock in connection with license ..            --            --             --            --             40
  Issuance of Series D preferred
    stock, net of issuance costs ......            --            --             --            --         31,042
  Exercise of stock options ...........            --            --             --            --          3,551
  Repurchase of common stock ..........            --            --             --            --           (141)
  Deferred stock compensation .........       (18,218)           --             --            --             --
  Amortization of deferred stock
    compensation ......................        13,343            --             --            --         13,343
  Issuances of Series D warrant .......            --            --             --            --            159
  Issuance of Series E  preferred
    stock in connection with
    acquisition .......................            --            --             --            --         15,466
  Issuance of common stock options
    in connection with acquisition ....            --            --             --            --          1,444
    Issuance of common stock in
       connection with initial public
       offering, net of issuance costs
       of $7,560 ......................                                                                  68,340
  Deferred revenue relating to warrants            --        (1,521)            --            --             --
</TABLE>

                             See accompanying notes.


                                      F-5
<PAGE>

                                  AVANTGO, INC.

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY--(Continued)
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                              Convertible                                           Notes
                                                            Preferred Stock                Common Stock          Receivable
                                        Comprehensive  ------------------------     -------------------------       from
                                        Income (Loss)     Shares        Amount        Shares         Amount     Stockholders
                                        -------------  -----------     --------     -----------     ---------   ------------
<S>                                       <C>          <C>              <C>          <C>             <C>           <C>
  Amortization of warrant ............                          --           --              --            --        --
  Conversion of preferred stock into
     common stock upon initial public
     offering ........................                 (17,207,823)     (67,708)     17,207,823        67,708
  Net loss ...........................     (49,838)             --           --              --            --        --
  Foreign currency translation
     adjustment ......................          16              --           --              --            --        --
  Unrealized loss on investment, net .          (4)             --           --              --            --        --
  Comprehensive loss .................     (49,826)             --           --              --            --        --
                                          ========     -----------     --------     -----------     ---------     -----
BALANCES AT December 31, 2000 ........                           0            0      34,473,663       170,841      (706)
  Exercise of stock options ..........                          --           --         387,826           301        --
  Issuance of common stock under
    the Employee Stock Purchase
 Plan ................................                          --           --         331,995           310        --
  Repurchase of common stock .........                          --           --         (87,351)         (155)       --
  Reversal of stock based compensation
    upon termination of employees ....                          --           --              --        (2,587)       --
  Accelerated vesting of options for
    terminated employees .............                          --           --              --           280        --
Issuance of restricted stock .........                          --           --          60,000            63        --
  Revaluation of common stock options
    issued to consultants ............                          --           --              --          (450)       --
  Amortization of deferred stock
    compensation .....................                          --           --              --            --        --
  Repayment of note receivable by
    stockholder ......................                          --           --              --            --       204
  Amortization of warrant ............                          --           --              --            --        --
  Net loss ...........................     (56,175)             --           --              --            --        --
  Foreign currency translation
    adjustment .......................          97              --           --              --            --        --
  Unrealized gain on investment, net .           4              --           --              --            --        --
                                          --------
  Comprehensive loss .................    $(56,074)             --           --
                                          --------     -----------     --------     -----------     ---------     -----
BALANCES AT December 31, 2001 ........                           0     $      0      35,166,133     $ 168,603     $(502)
                                                       ===========     ========     ===========     =========     =====


<CAPTION>
                                             Deferred       Reevenue                      Accumulated
                                               Stock         Offset                          Other          Total
                                              Compen-      Relating to     Accumulated   Comprehensive   Stockholders'
                                              sation        Warrants         Deficit     Income (Loss)     Equity
                                             --------      -----------     -----------   -------------   -------------
<S>                                          <C>             <C>            <C>              <C>           <C>
  Amortization of warrant ............             --            422               --           --             422
  Conversion of preferred stock into
     common stock upon initial public
     offering ........................
  Net loss ...........................             --             --          (49,838)          --         (49,838)
  Foreign currency translation
     adjustment ......................             --             --               --           16              16
  Unrealized loss on investment, net .             --             --               --           (4)             (4)
  Comprehensive loss .................             --             --               --           --              --
                                             --------        -------        ---------        -----        --------
BALANCES AT December 31, 2000 ........        (12,350)        (1,099)         (61,947)          12          94,751
  Exercise of stock options ..........             --             --               --           --             301
  Issuance of common stock under
    the Employee Stock Purchase
 Plan ................................             --             --               --           --             310
  Repurchase of common stock .........             --             --               --           --            (155)
  Reversal of stock based compensation
    upon termination of employees ....          2,587             --               --           --              --
  Accelerated vesting of options for
    terminated employees .............             --             --               --           --             280
Issuance of restricted stock .........             --             --               --           --              63
  Revaluation of common stock options
    issued to consultants ............            450             --               --           --              --
  Amortization of deferred stock
    compensation .....................          6,561             --               --           --           6,561
  Repayment of note receivable by
    stockholder ......................             --             --               --           --             204
  Amortization of warrant ............             --            507               --           --             507
  Net loss ...........................             --             --          (56,175)          --         (56,175)
  Foreign currency translation
    adjustment .......................             --             --               --           97              97
  Unrealized gain on investment, net .             --             --               --            4               4
  Comprehensive loss .................             --             --               --           --              --
                                             --------        -------        ---------        -----        --------
BALANCES AT December 31, 2001 ........       $ (2,752)       $  (592)       $(118,122)       $ 113        $ 46,748
                                             ========        =======        =========        =====        ========
</TABLE>

                             See accompanying notes.


                                      F-6
<PAGE>

                                  AVANTGO, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                      Year Ended
                                                                                     December 31,
                                                                         -----------------------------------
                                                                           2001          2000         1999
                                                                         --------     ---------     --------
<S>                                                                      <C>          <C>           <C>
OPERATING ACTIVITIES:
    Net loss ........................................................    $(56,175)    $ (49,838)    $ (9,215)
    Adjustments to reconcile net loss to net cash used in operating
    activities:
        Purchased in-process research and development ...............          --           600           --
        Write-off of core technology ................................       1,981            --           --
        Restructuring and other impairment charges ..................      13,156            --           --
        Amortization of goodwill, other intangible assets, and
            deferred stock compensation .............................       9,201        16,582        2,605
        Depreciation and amortization ...............................       2,892         1,013          163
        Amortization of revenue offset relating to warrant
            agreements ..............................................         507           422           --
        Issuance of common stock in exchange for services ...........          63           187           --
        Changes in operating assets and liabilities, net of business
        acquisition:
            Accounts receivable .....................................       1,606        (3,174)      (1,426)
            Prepaid expenses and other current assets ...............         706          (929)        (230)
            Accounts payable ........................................      (1,984)        2,326          764
            Accrued liabilities .....................................         144         1,000          295
            Accrued compensation and related benefits ...............        (264)        1,999          200
            Deferred revenue ........................................        (599)        2,278          231
                                                                         --------     ---------     --------
                Net cash used in operating activities ...............     (28,766)      (27,534)      (6,613)
INVESTING ACTIVITIES:
    Purchase of property and equipment ..............................      (2,385)       (8,051)        (871)
    Business acquisition, net of cash acquired ......................          --           456           --
    Restricted investments ..........................................          --        (3,438)          --
    Other assets ....................................................         335          (613)         (15)
    Cash paid for investments .......................................          --       (20,781)     (10,000)
    Proceeds from investments .......................................      16,436         8,428        6,025
                                                                         --------     ---------     --------
                Net cash provided by (used in) investing activities .      14,386       (23,999)      (4,861)
FINANCING ACTIVITIES:
    Repayment of obligations under bank line of credit agreement ....         (40)          (72)         (71)
    Principal payments on capital lease obligations .................          --            (4)         (10)
    Proceeds from issuance of convertible preferred stock, net ......          --        31,042       14,373
    Proceeds from note repayment by shareholder .....................         204            --           --
    Proceeds from issuance of convertible notes payable .............          --            --          300
    Proceeds from issuance of common stock, net .....................         176        71,750          593
                                                                         --------     ---------     --------
                Net cash provided by financing activities ...........         340       102,716       15,185
                                                                         --------     ---------     --------
Effect of foreign exchange rate changes on cash and cash equivalents           97            16           --
                                                                         --------     ---------     --------
Increase in cash and cash equivalents ...............................     (13,943)       51,199        3,711
Cash and cash equivalents at beginning of period ....................      57,034         5,835        2,124
                                                                         --------     ---------     --------
Cash and cash equivalents at end of period ..........................    $ 43,091     $  57,034     $  5,835
                                                                         ========     =========     ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES:
    Issuance of preferred stock in exchange for convertible notes
      payable .......................................................    $     --     $      --     $    300
                                                                         ========     =========     ========
    Issuance of preferred stock in exchange for license .............    $     --     $      40     $     --
                                                                         ========     =========     ========
    Issuance of preferred stock in connection with acquisition ......    $     --     $  15,466     $     --
                                                                         ========     =========     ========
    Issuance of common stock for notes receivable from stockholder ..    $     --     $     606     $    100
                                                                         ========     =========     ========
    Warrant issued in connection with a content service agreement ...    $     --     $     159     $     --
                                                                         ========     =========     ========
SUPPLEMENTAL DISCLOSURES:
    Cash paid during the period for interest ........................    $      5     $       9     $     18
                                                                         ========     =========     ========
</TABLE>

                             See accompanying notes.


                                      F-7
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

1.   THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

     AvantGo,  Inc.  (the  "Company")  was  incorporated  on  June  30,  1997 in
Delaware. The Company provides software and services that enable and enhance the
use of  Internet-based  content  and  corporate  intranets  to  mobile  devices,
including personal digital assistants and  Internet-enabled  phones. The Company
licenses its AvantGo M-Business Server products and AvantGo mobile  applications
products to help its customers provide their employees, customers, suppliers and
business affiliates with easy access to business information. The AvantGo Mobile
Internet  service  allows  individuals  to  access  Internet-based  content  and
applications  and gives content  providers and other businesses a new medium for
reaching and interacting with new and existing  customers,  increasing  customer
acquisition and retention.

Basis of Presentation

     The consolidated  financial  statements include the accounts of the Company
and its wholly-owned  subsidiaries.  All significant  intercompany  accounts and
transactions have been eliminated.

     The functional  currency of the Company's  foreign  subsidiary is the local
currency.  The Company  translates all assets and liabilities to U.S. dollars at
the current exchange rates as of the applicable  balance sheet date. Revenue and
expenses are  translated  at the average  exchange  rate  prevailing  during the
period.  The gains and losses  resulting from the changes in exchange rates from
year to year have been reported in other comprehensive  income. Gains and losses
resulting from the translation for the foreign subsidiary's financial statements
have not been  material to date.  Net gains and losses  resulting  from  foreign
exchange transactions were not significant during any of the periods presented.

     Certain  prior  period  amounts  have been  reclassified  to conform to the
current period presentation.

Use of Estimates

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities  and  disclosure  of  contingent  liabilities  at  the  date  of the
financial statements and the reported results of operations during the reporting
period. Actual results could differ from those estimates.

Cash and Cash Equivalents

     Cash and cash  equivalents  consist of cash and highly  liquid  investments
with insignificant interest rate risk and original maturities of three months or
less at the date of  purchase  and are stated at cost,  which  approximate  fair
value. Cash equivalents  consist  principally of investments in short-term money
market instruments.

Restricted Investments

     At December 31, 2001, the Company's  restricted  investments are classified
as  available-for-sale  but are pledged as collateral against a letter of credit
(see Note 10).  Restricted  investments  are held in the Company's name by major
financial institutions.

Short-Term Investments

     Short-term   investments   consist  principally  of  commercial  paper  and
corporate notes with original  maturities greater than 90 days and are stated at
amounts  that  approximate  fair  market  value.  The Company  accounts  for its
short-term  investments  in accordance  with  Statement of Financial  Accounting
Standards  No.  115,  "Accounting  for  Certain  Investments  in Debt and Equity
Securities."  Management  determines  the  appropriate  classification  of  debt
securities at the time of purchase and reevaluates  such  designation as of each
balance  sheet date.  The  Company  classifies  its  short-term  investments  as
available-for-sale.


                                      F-8
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

Available-for-sale  investments are recorded at fair value with unrealized gains
and losses  reported in accumulated  other  comprehensive  income  (loss).  Fair
values of investments are based on quoted market prices, where available.

Other income and expense includes  realized gains and losses and declines in the
value of short-term  investments  determined to be other than  temporary,  which
have been immaterial to date. These valuation  adjustments are derived using the
specific  identification  method for determining  the cost of investments  sold.
Dividend and interest income is recognized when earned.

Fair Value of Financial Instruments

     The carrying value of the Company's  financial  instruments,  which include
cash and cash equivalents,  short-term investments, accounts receivable, current
liabilities,  and notes  receivable from  stockholders,  approximate  their fair
value.

Property and Equipment

     Property and equipment are stated at cost less accumulated depreciation and
amortization.  Depreciation is computed using the straight-line  method over the
estimated  useful  lives of three  years.  Equipment  under  capital  leases  is
amortized  over the  shorter  of the  estimated  useful  life or the life of the
lease.  Leasehold improvements are amortized over the lease life of seven years.
Useful  lives  are  evaluated  regularly  by  management  in order to  determine
recoverability in light of current technological conditions.

Goodwill and Other Intangible Assets

     Goodwill and other intangible assets resulted from the Globalware Computing
acquisition  accounted for under the purchase method (see Note 2).  Amortization
of  goodwill  and  other  intangible   assets  has  been  provided  for  on  the
straight-line  basis over the respective  estimated  useful lives of the assets.
During September 2001,  management  identified indicators of possible impairment
of goodwill and other intangible assets. Such indicators included,  but were not
limited  to,  an  overall  decline  in  information   technology  spending,  and
anticipated increased pressure from competitors.  See Note 9 for a discussion of
the  write-down  of goodwill and other  intangible  assets during the year ended
December 31, 2001.

Software Development Costs

     The Company  accounts for software  development  costs in  accordance  with
Financial  Accounting Standards Board ("FASB") Statement No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise  Marketed" ("FASB
86"), under which certain software  development costs incurred subsequent to the
establishment  of  technological  feasibility are capitalized and amortized over
the  estimated  lives of the  related  products.  Technological  feasibility  is
established upon completion of a working model. Through December 31, 2001, costs
incurred  subsequent to the establishment of technological  feasibility have not
been significant and all software development costs have been charged to product
development expense in the accompanying consolidated statements of operations.

Concentration of Credit Risk

     Financial   instruments   that   potentially   subject  the  Company  to  a
concentration  of credit risk consist of cash and cash  equivalents,  short-term
investments and accounts  receivable.  Cash and cash  equivalents and short-term
investments are deposited with four high-credit quality financial  institutions.
Accounts receivable consists of balances due from a limited number of customers.
The Company markets,  sells and grants credit to its customers without requiring
collateral  or  third-party  guarantees.  The Company  monitors its exposure for
credit losses and maintains appropriate allowances. To date, the Company has not
experienced any material losses with respect to its accounts receivable. For the
year  ended  December  31,  1999  two  customers  accounted  for  25%  and  15%,
respectively,  of total  revenues.  For the year ended  December 31, 2000 one of
these customers accounted for 26% of total revenues. For the year ended December
31, 2001 the same customer accounted for 20% of total revenues


                                      F-9
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

Revenue Recognition

     The Company licenses software under  non-cancelable  license agreements and
provides services including training, consulting and maintenance,  consisting of
product support  services and  unspecified  product  updates.  The Company sells
placement service contracts which provide customers with priority  visibility on
the  Company's  web-site,  and also sells  advertising  on the device  delivered
through AvantGo Mobile Internet, a service that is free to consumers.

     License revenues are recognized when a non-cancelable license agreement has
been signed,  the software product has been shipped,  there are no uncertainties
surrounding   product   acceptance,   the  fees  are   fixed  or   determinable,
collectibility is probable,  and  vendor-specific  objective  evidence exists to
allocate the total fee to elements of the arrangement using the residual method.
In instances  where no  vendor-specific  objective  evidence exists and the only
undelivered element is maintenance,  revenue is recognized ratably over the term
of the  agreement.  The  Company's  agreements  with its customers and resellers
generally do not contain product return rights. Revenues from maintenance, which
consist of fees for ongoing support and product updates,  are recognized ratably
over the term of the  contract,  typically  one year.  Consulting  revenues  are
primarily related to implementation  services performed on a  time-and-materials
basis under separate service arrangements.  Occasionally the Company enters into
short-term  fixed price  consulting  contracts.  Under these  arrangements,  the
Company recognizes revenue as work progresses using the percentage-of-completion
method. Training revenues are generated from classes offered both on-site and at
customer   locations.   Revenues  from  consulting  and  training  services  are
recognized as the services are performed.

     For sales made  through  distributors,  resellers  and  original  equipment
manufacturers,  the Company recognizes revenue at the time these partners report
that they have sold the  software  to the end user and all  revenue  recognition
criteria have been met.

     Revenues from placement  agreements are recognized ratably over the service
period,  which  in  most  instances  is  between  three  months  and  one  year.
Advertising  revenues  are  recognized  based  upon the  lesser  of the ratio of
impressions delivered over the total guaranteed impressions or the straight line
basis over the term of the advertising contract.

     The Company  also earns  revenues  from  advertising  barter  transactions.
Revenues and costs from advertising  barter  transactions are recognized  during
the  period  in  which  the  placement  or  advertising  is  delivered.   Barter
transactions are recorded at the fair value of the goods or services provided or
received,  whichever  is more  readily  determinable  in the  circumstances.  In
determining  the value of the services  provided,  the Company  uses  historical
pricing  of  comparable   cash   transactions.   Revenues   earned  from  barter
transactions  were  $258,000,  $407,000 and $92,000 for the years ended December
31, 2001, 2000 and 1999.

Stock-Based Compensation

     The Company  accounts for employee stock options using the intrinsic  value
method  in  accordance  with  Accounting   Principles   Board  Opinion  No.  25,
"Accounting  for Stock  Issued to  Employees"  ("APB  25"),  and has adopted the
disclosure-only   alternative  of  FASB  Statement  No.  123,   "Accounting  for
Stock-Based Compensation" ("FASB 123").

     All stock option  awards to  non-employees  are accounted for at their fair
value, as calculated using the Black-Scholes  model, in accordance with FASB 123
and Emerging  Issues Task Force  Consensus  No.  96-18,  "Accounting  for Equity
Instruments  That Are  Issued  to Other  Than  Employees  for  Acquiring,  or in
Conjunction  with  Selling,  Goods  or  Services"  ("EITF  96-18").  The  option
arrangements are subject to periodic re-valuation over their vesting terms.

Advertising Expense

     The cost of advertising is expensed as incurred.  Advertising  costs, which
are included in sales and  marketing  expense,  were  approximately  $1,101,000,
$8,772,000,  and $91,000, for the years ended December 31, 2001, 2000, and 1999,
respectively,  including  $250,000,  $407,000 and $83,000  resulting from barter
transactions for the years ended December 31, 2001, 2000 and 1999, respectively.

Net Loss Per Share

     Basic net loss per share information for all periods is presented under the
requirement of FASB Statement No. 128,  "Earnings per Share" ("FASB 128"). Basic
net loss per share has


                                      F-10
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

been  computed  using the  weighted-average  number  of  shares of common  stock
outstanding during the period, less shares that may be repurchased, and excludes
any dilutive effects of options,  warrants, and convertible  securities.  Shares
subject to repurchase  will be included in the computation of net loss per share
when the Company's commitment to repurchase these shares lapses.

     Diluted net loss per share has been  computed as  described  above and also
gives  effect,  under  Securities  and  Exchange  Commission  guidance,  to  the
conversion of preferred shares not included above that  automatically  converted
to common shares  immediately  prior to the completion of the Company's  initial
public  offering,  using  the  if-converted  method  from the  original  date of
issuance.

     Diluted net loss per share reflects the potential dilution of securities by
adding other common stock equivalents,  including stock options,  shares subject
to repurchase, warrants and convertible preferred stock, to the weighted average
number of common shares  outstanding for a period, if dilutive.  All potentially
dilutive securities have been excluded from the computation,  as their effect is
anti-dilutive.

     The following  table presents the calculation of basic and diluted net loss
per share (in thousands, except share and per share amounts):

<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                               --------------------------------------------
                                                                   2001            2000             1999
                                                               ------------    ------------     -----------
<S>                                                            <C>              <C>              <C>
   Net loss ...............................................    $    (56,175)    $    (49,838)    $    (9,215)
                                                               ============     ============     ===========
   Weighted average shares of common stock outstanding ....      34,778,212       16,366,727       8,924,914
   Less weighted average shares that may be repurchased ...      (1,886,049)      (4,289,389)     (4,548,317)
                                                               ------------     ------------     -----------

   Weighted average shares of common stock outstanding used
     in computing basic and diluted net loss per share ....      32,892,163       12,077,338       4,376,597
                                                               ============     ============     ===========
   Basic and diluted net loss per share ...................    $      (1.71)    $      (4.13)    $     (2.11)
                                                               ============     ============     ===========
</TABLE>

     If the Company had reported net income, the calculation of diluted loss per
share would have included  approximately an additional 1,215,271,  9,866,258 and
5,226,544  common  equivalent  shares related to the outstanding  stock options,
shares subject to repurchase and warrants not included above  (determined  using
the treasury  stock  method) for the years ended  December 31, 2001,  2000,  and
1999, respectively.

Income Taxes

     The Company accounts for income taxes in accordance with FASB Statement No.
109,  "Accounting for Income Taxes" ("FASB 109"),  which requires the use of the
liability  method in accounting for income taxes.  Under FASB 109,  deferred tax
assets and liabilities  are measured based on differences  between the financial
reporting  and tax bases of assets and  liabilities  using enacted tax rates and
laws that are  expected to be in effect  when the  differences  are  expected to
reverse.

Recent Accounting Pronouncements

     In July 2001, the FASB issued Statements of Financial  Accounting Standards
No. 141,  Business  Combinations  (SFAS 141),  and No. 142,  Goodwill  and Other
Intangible  Assets  (SFAS 142).  SFAS 141  eliminates  the  pooling-of-interests
method of accounting for business  combinations  except for qualifying  business
combinations  that  were  initiated  prior to July 1,  2001.  SFAS  141  further
clarifies the criteria to recognize  intangible assets separately from goodwill.
The  requirements  of  SFAS  141 are  effective  for  any  business  combination
accounted  for by the  purchase  method that is  completed  after June 30, 2001.
Under


                                      F-11
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

SFAS  142,  goodwill  and  indefinite  lived  intangible  assets  are no  longer
amortized but are reviewed annually (or more frequently if impairment indicators
arise) for impairment.  Separable  intangible assets that are not deemed to have
an indefinite  life will  continue to be amortized  over their useful lives (but
with no maximum  life).  The  amortization  provisions of Statement 142 apply to
goodwill and intangible  assets acquired after June 30, 2001. SFAS 142 will have
no  affect  on the  Company's  financial  statements  in that all  goodwill  and
intangible assets have been written off due to impairment during 2001.

2.   BUSINESS ACQUISITION

     Effective May 26, 2000, the Company  acquired  Globalware  Computing,  Inc.
("Globalware"), a company which develops and sells software designed to increase
connectivity  between business and personal databases using handheld devices, in
a transaction  accounted  for as a purchase.  The  operations of Globalware  are
included  in  the  consolidated   statement  of  operations  from  the  date  of
acquisition.   The  purchase   consideration  was  approximately  $17.1  million
consisting  of  1,933,300  shares  of  preferred  stock  with  a fair  value  of
$15,500,000, stock options to acquire 180,438 shares of common stock with a fair
value of $1,400,000, and approximately $200,000 of acquisition costs.

     The  fair  values  of  equity  securities  issued  by  the  Company  in the
acquisition were determined as follows: common stock--$8.00 per share based on a
discount  from recent per share prices of  preferred  stock sales to reflect the
superior  rights of the preferred  stock;  and common stock  options--$8.00  per
share based on a fair value  computation  as of the  acquisition  date using the
Black-Scholes valuation mode.

     The purchase consideration was allocated to the acquired assets and assumed
liabilities based on deemed fair values as follows (in thousands):

  Net tangible assets.............................................. $   666
  Intangible assets:
       Purchased technology........................................   3,100
       Assembled workforce.........................................     530
       Goodwill....................................................  12,214
                                                                    -------
            Total intangible assets................................  15,844
  Purchased in-process research and development charged to
       operations for the year ended December 31, 2000.............     600
                                                                    -------
            Total purchase consideration........................... $17,110
                                                                    =======

     Goodwill,  purchased  technology and assembled  workforce  arising from the
acquisition were being amortized on a straight-line basis over three years prior
to the identification of impairment.  See Note 9 for a further discussion of the
impairment  of  goodwill  and  other  intangible  assets.  Purchased  in-process
research and  development  consists of a single project to develop  connectivity
software  that enables end users to conduct  wireless and modem  synchronization
from Palm  devices to the Lotus  Notes  server.  This tool has been added to the
Company's suite of products.  The Company's management is primarily  responsible
for  estimating  the  fair  value  of  the  purchased  in-process  research  and
development.  The Company  estimated the revenues,  costs and resulting net cash
flows  from the  project,  and  discounted  the net cash flows back to their net
present  value.  These  estimates were based on several  assumptions,  including
those  summarized  below.  The resultant value was then adjusted to reflect only
the value creation  effort of Globalware  prior to the  acquisition  and further
reduction  by the  estimated  value of core  technology,  which was  included in
capitalized purchased technology.


                                      F-12
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

     Revenues and operating profit  attributable to the in-process  research and
development were estimated over a three-year  projection  period.  The resulting
projected net cash flows were discounted to their present value using a discount
rate of 23%, which was calculated based on the weighted-average cost of capital,
adjusted  for the  technology  risk  associated  with the  purchased  in-process
research and  development.  The technology risk was considered to be significant
due to the rapid pace of technological change in the software industry.

     The  following   unaudited  pro  forma  adjusted  summary   represents  the
consolidated results of operations for the year ended December 31, 2000 and 1999
as if the acquisition of Globalware had been  consummated on January 1, 1999 and
is not intended to be indicative  of future  results (in  thousands,  except per
share amounts) (unaudited).

                                                                 Year ended
                                                                December 31,
                                                           ---------------------
                                                             2000        1999
                                                           --------    --------
Pro forma adjusted total revenues ......................   $ 17,281    $  4,324
Pro forma adjusted net loss ............................    (51,359)    (14,190)
Pro forma adjusted net loss per share--basic and diluted   $  (3.80)   $  (2.25)

     The pro forma results of operations  include  historical  operations of the
Company  and  Globalware  adjusted  to reflect  certain  pro forma  adjustments,
including  amortization of goodwill and other intangible assets arising from the
acquisition and do not include the charge for purchased  in-process research and
development of $600,000 since it is a nonrecurring  charge. These results do not
purport to be indicative of what would have  occurred had the  acquisition  been
made as of those  dates or the results of  operations  which may occur in future
periods.

3.   SHORT-TERM INVESTMENTS

     The following is a summary of fair value of available  for sale  securities
at December 31, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                          Gross         Gross
                                           Amortized    Unrealized    Unrealized      Fair
                                              Cost        Gains         Losses        Value
                                           ---------    ----------    ----------     --------
<S>                                         <C>           <C>          <C>           <C>
Money market mutual funds...............    $ 41,152      $  --        $   --        $ 41,152
                                           ---------    ---------     ----------     --------
                                            $ 41,152      $__--        $ (_--_)      $ 41,152
                                           =========    =========     ==========     ========
</TABLE>

     The following is a summary of fair value of available  for sale  securities
at December 31, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                          Gross         Gross
                                           Amortized    Unrealized    Unrealized      Fair
                                              Cost        Gains         Losses        Value
                                            --------    ----------    ----------     --------
<S>                                         <C>           <C>         <C>            <C>
Money market mutual funds...............    $ 23,051      $    --      $   --        $ 23,051
Auction rate preferred stock............       9,785           --          --           9,785
Corporate bonds and commercial paper....      38,540            6          (10)        38,536
                                            --------       -------     ---------     --------
                                            $ 71,376      $ ____6      $ (__10)      $ 71,372
                                           =========    =========      =========     ========
</TABLE>


                                      F-13
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

                                                            December 31,
                                                      -----------------------
                                                       2001            2000
                                                      -------         -------
     Included in cash and cash equivalents            $41,152         $54,940
     Included in short-term investments                    --          16,432
                                                      -------         -------
                                                      $41,152         $71,372
                                                      =======         =======

4.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following (in thousands):

                                                              December 31,
                                                         -------------------
                                                           2001        2000
                                                         -------     -------
     Computers and equipment...........................  $ 6,120     $ 5,275
     Furniture, fixtures and improvements..............    4,468       3,954
                                                         -------     -------
                                                          10,588       9,229
     Less accumulated depreciation and amortization....   (3,698)     (1,231)
                                                         -------     -------
                                                         $ 6,890     $ 7,998
                                                         =======     =======

5.   GOODWILL AND OTHER INTANGIBLE ASSETS

     All goodwill and other intangible assets were written off in 2001. See Note
9 for a discussion of the impairment and write-down of these assets.

     Goodwill and other intangible assets consisted of the following at December
31, 2000 (in thousands):

                                                                Life (years)
                                                                ------------
Purchased technology.........................       $  3,100         3
Assembled workforce..........................            530         3
Prepaid technology royalties.................             40         3
Goodwill.....................................         12,214         3
                                                    --------
Goodwill and other intangible assets.........         15,884
Accumulation amortization....................         (3,081)
                                                    --------
Goodwill and other intangible assets, net....       $ 12,803
                                                    ========

     Amortization   of  goodwill  and  other   intangible   assets  amounted  to
approximately  $2,640,000  and  $3,081,000 for the years ended December 31, 2001
and 2000,  respectively.  The Company did not have goodwill or other  intangible
assets at December 31, 1999.

6.   INCOME TAXES

     There has been no provision for U.S. federal, state or foreign income taxes
for any period as the Company has incurred  operating  losses in all periods and
for all jurisdictions.

     Deferred income taxes reflect the net tax effects of temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets are as follows (in thousands):

                                                              December 31,
                                                         --------------------
                                                           2001         2000
                                                         -------      -------
      Deferred tax assets:
          Net operating loss carryforwards.............  $28,314      $13,985
          Deferred revenue.............................      725          976
          Capitalized research and development costs...    1,107          543
          Research credit carryforwards................    1,467          740
          Other........................................    2,446          944
                                                         -------      -------
      Total deferred tax assets........................   34,059       17,188
      Valuation allowance..............................  (34,059)     (17,188)
                                                         -------      -------
      Net deferred tax assets..........................  $    --      $    --
                                                         =======      =======


                                      F-14
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

     Realization  of deferred tax assets is dependent upon future  earnings,  if
any, the timing and amount of which are uncertain. Accordingly, the net deferred
tax assets  have been  fully  offset by a  valuation  allowance.  The  valuation
allowance  increased  by  $16,871,000,  and  $13,286,000  during the years ended
December 31, 2001 and 2000, respectively.

     As of December 31, 2001, the Company had net operating  loss  carryforwards
for federal income tax purposes of  approximately  $68 million,  which expire in
fiscal years 2012 through 2021 and federal  research and development tax credits
of approximately $900,000 which expire in the years 2012 through 2021.

     Utilization  of the  Company's  net  operating  loss  carryforwards  may be
subject  to  a  substantial  annual  limitation  due  to  the  ownership  change
limitations  provided by the Internal Revenue Code and similar state provisions.
Such an annual  limitation  could result in the  expiration of the net operating
loss carryforwards before utilization.

7.   BANK LINE OF CREDIT AGREEMENT

     In January 1998, the Company entered into a line of credit agreement with a
bank which provided for borrowings of up to $300,000. Borrowings of $40,000 were
outstanding under the line of credit at December 31, 2000.  Borrowings under the
line of credit bear interest at the bank's prime plus 0.5% (9.5% at December 31,
2000).  The line of credit matured in July 2001,  and borrowings  were repaid in
full.   Outstanding  borrowings  under  the  agreement  were  collateralized  by
substantially all the Company's assets.

8.   STOCKHOLDERS' EQUITY

Common Stock

     In October 2000, the Company sold  6,325,000  shares of common stock in its
initial public offering,  including the underwriters  over-allotment  of 825,000
shares, with proceeds, net of commissions, to the Company of approximately $68.3
million.  In  conjunction  with the  initial  public  offering,  all of the then
outstanding  shares of Series A, B, C, D and E of the Company's  preferred stock
converted into shares of common stock on a one-to-one basis.

Preferred Stock

     Effective  September  2000,  the  stockholders  of the Company  approved an
amendment to the Company's certificate of incorporation  authorizing  10,000,000
shares of preferred stock. The Board of Directors has the authority to issue the
preferred  stock  in one or  more  series  and to fix its  rights,  preferences,
privileges,  and  restrictions,   including  dividend  rights,  dividend  rates,
conversion  rights,  voting  rights,  terms of  redemption,  redemption  prices,
liquidation  preferences,  and the number of shares  constituting  any series or
designation of the series.

Warrants

     On February  1, 2000,  the  Company  issued a warrant to  purchase  117,558
shares of series D preferred stock at an exercise price of $8.36 per share.  The
warrant was issued in connection with a Content and Service  agreement  pursuant
to which the Company and Yahoo!  have agreed to co-brand  their content and make
it available to users of their services.  The service component of the agreement
provides that the Company  agrees to make the AvantGo Mobile  Internet  service,
including  but not limited to Yahoo!'s  content,  available to Yahoo!  users.  A
total of 58,779 shares vested at the closing of the Company's Series D Preferred
Stock financing in March 2000. The remaining shares vested on the effective date
of the


                                      F-15
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

Company's initial public offering.  The warrant was exercised in October 2000 in
a net issuance for a total of 71,562 shares of common  stock.  The fair value of
$437,000  was  estimated  using  the  Black-Scholes  valuation  model  with  the
following  assumptions:  risk-free  interest  rate of 6.50%,  expected life of 3
years,  expected  dividend yield of 0%, and volatility of 70%. The fair value of
this  warrant  is being  charged  to  operations  over the term of the  business
arrangement.

     The company issued a second warrant on February 1, 2000 to purchase 117,558
shares of common stock at the average fair value of the  company's  common stock
over the most recent twenty  business days before the vesting date.  The warrant
expired  when the Company  agreed to purchase  $1,000,000  of  advertising  from
Yahoo, in accordance with terms of the warrant.

     In March 2000, the company  entered into a software  license  agreement and
three year Channel Management Agreement  (Agreements).  In connection with these
Agreements,  the Company issued a warrant to purchase 358,851 shares of Series D
preferred  stock at an exercise price of $8.36 per share,  which  converted to a
warrant for common stock upon the  completion  of the Company's  initial  public
offering. The warrant is immediately exercisable and non-forfeitable and expires
three years from the issue date. The fair value of the warrant of $1,521,000 was
calculated   using  the   Black-Scholes   valuation  model  with  the  following
assumptions: risk-free interest rate of 6.5%; expected life of 3 years; expected
dividend yield of 0%; and  volatility  rate of 70%. The estimated fair value was
originally  recorded in equity and is being  amortized as a reduction to revenue
over the three-year term of the Agreements.

Employee Stock Purchase Plan

     The Board of Directors  adopted the 2000 Employee  Stock Purchase Plan (the
"ESPP") in May 2000 that was  effective  upon the  completion  of the  Company's
initial  public  offering of its common stock.  At December 31, 2001, a total of
694,737  shares of common stock have been reserved for issuance  under the ESPP,
of which 362,742 are  available  for issuance as of December 31, 2001.  The Plan
provides  for an  automatic  increase in the Plan pool each  January 1. The Plan
consists of four six-month  purchase  periods in each two-year  offering period.
Shares may be  purchased  under the Plan at 85% of the lesser of the fair market
value of the common stock on the first day of the applicable  offering period or
the fair  market  value of the  common  stock on the last day of the  applicable
purchase  period.  As of December 31, 2001, a total of 331,995  shares have been
issued under the ESPP.

Stock Option Plans

     The Company reserved 13,213,600 shares of common stock under the 1997 Stock
Option  Plan (the "1997  Plan").  The 1997 Plan  provides  for  incentive  stock
options, as defined by the Internal Revenue Code, to be granted to employees, at
an  exercise  price not less than  100% of the fair  value at the grant  date as
determined by the Board of Directors,  unless the optionee is a 10% shareholder,
in which  case the option  price will not be less than 110% of such fair  market
value. The 1997 Plan also provides for  nonqualified  stock options to be issued
to employees and  consultants  at an exercise  price of not less than 85% of the
fair value at the grant date.  Options granted  generally have a maximum term of
10 years from grant date, are immediately  exercisable and generally vest over a
four-year  period.  The plan provides that shares issued under the plan prior to
vesting are subject to repurchase by the Company upon  termination of employment
at the original price paid for the shares.  The  repurchase  rights lapse at the
rate of 25%  after one year and  ratably  on a  monthly  basis  for three  years
thereafter.  As of December 31, 2001, 498,252 shares were subject to repurchase.
A total of  1,143,448  shares were not issued under the 1997 Plan and were added
to the options  available for issuance under the 2000 Stock  Incentive Plan (the
"2000 Plan").

     In May 2000, the Board of Directors  adopted the 2000 Stock Incentive Plan.
There are 4,367,131  shares of common stock  authorized  for issuance  under the
plan which  includes  1,143,448  shares  reserved but not granted under the 1997
Plan and returned to the 2000 Plan upon cancellation of the unexercised options.
The terms of the 2000 Plan are  substantially  similar to the 1997 Plan,  except
that options cannot be exercised  prior to vesting,  and there are no repurchase
rights.

     On May 26, 2000, the Company  acquired  Globalware  Computing by merger and
assumed all stock options outstanding under the Globalware Computing, Inc. Stock
Option Plan (the "Globalware Plan").


                                      F-16
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

There are 180,438 shares of common stock authorized for issuance under the plan.
The assumed options are  exercisable  for shares of the Company's  common stock.
The terms of the Globalware Plan are substantially  similar to the 2000 Plan. No
additional options will be issued under the Globalware stock option plan.

     The Company has  reserved  1,700,000  shares of common stock under the 2001
Stock Option Plan (the "2001  Plan").  The 2001 Plan  provides for  nonqualified
stock  options,  as  defined  by the  Internal  Revenue  Code,  to be granted to
employees and  consultants,  at an exercise  price not less than 85% of the fair
value at the grant date as determined by the Board of Directors. Options granted
generally  have a maximum term of 10 years from grant date,  cannot be exercised
prior to vesting, and generally vest over a four-year period.

     A summary of the Company's  stock option activity under the Company's stock
option plans follows:

                                                                    Weighted-
                                                Number of            Average
                                                 Shares          Exercise Price
                                               ----------        --------------
Outstanding at December 31, 1998 ........         541,200             0.12
     Granted ............................       3,891,000             1.09
     Exercised ..........................      (1,805,942)            0.38
     Canceled ...........................         (30,000)            0.13
                                               ----------
Outstanding at December 31, 1999 ........       2,596,258             1.40
     Granted ............................       6,552,520             5.83
     Exercised ..........................      (1,794,445)            2.37
     Canceled ...........................        (234,587)            4.45
                                               ----------
Outstanding at December 31, 2000 ........       7,119,746             5.12
     Granted ............................       4,530,050             2.64
     Exercised ..........................        (387,826)            0.61
     Restricted stock grant .............         (60,000)            1.05
     Canceled ...........................      (3,291,997)            5.12
                                               ----------
Outstanding at December 31, 2001 ........       7,909,973           $ 3.95
                                               ==========

     The following table summarizes  information about stock options outstanding
and exercisable at December 31, 2001:

<TABLE>
<CAPTION>
                                       Options Outstanding                    Options Exercisable
                                       -------------------                    -------------------
                                             Weighted
                                              Average
                                            Remaining        Weighted-                     Weighted-
                                           Contractual        Average                       Average
       Range of            Number of           Life          Exercise      Number of        Exercise
   Exercise Prices          Shares          (in Years)         Price        Shares           Price
   ---------------         ---------       -----------       ---------     ---------       ---------
<S>                        <C>                 <C>             <C>         <C>               <C>
      $0.03--0.90            131,646           7.44            $ 0.29         94,892         $ 0.11
       1.07--1.98          2,051,670           9.10              1.24        350,720           1.50
       2.00--2.90          2,051,641           8.28              2.31      1,736,641           2.31
       3.03--3.75          1,518,061           9.17              3.49        136,019           3.39
       4.50--5.78            150,650           8.75              5.13         78,848           5.03
       6.00--7.50            165,275           8.91              6.62         53,525           6.02
       8.00--9.94          1,677,030           8.64              8.81      1,634,811           8.78
      10.00--12.00           155,000           8.75             11.93        150,875          11.98
         16.13                 9,000           8.80             16.13          2,625          16.13
                           ---------                                        --------
         Total             7,909,973           8.27              3.95      4,230,957           5.17
</TABLE>


                                      F-17
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

Shares Reserved for Future Issuance

As of December 31, 2001,  shares of common  stock  reserved for future  issuance
were as follows:

Stock options available for grant                         2,601,151
Stock options outstanding                                 7,909,973
Shares reserved under ESPP                                  362,742
Warrants outstanding                                        358,851
                                                         ----------
Total shares reserved for future issuance                11,232,717
                                                         ==========

Pro Forma Disclosure of the Effect of Stock-Based Compensation

     Pro forma  information  regarding  results of  operations  and net loss per
share is required  by FASB 123,  which also  requires  that the  information  be
determined as if the Company had accounted for its employee  stock options under
the fair  value  method  of FASB 123.  The fair  value  for  these  options  was
estimated at the date of grant using a  Black-Scholes  option pricing model with
the following weighted average  assumptions:  a risk-free interest rate of 6.0%,
no dividend yield, a weighted  average  expected life of the option of 4.5 years
and volatility  factors of 0, 0.7 and 1.5 for the years ended December 31, 1999,
2000 and 2001 respectively.

     The option  valuation  models are developed for use in estimating  the fair
value  of  traded  options  that  have no  vesting  restrictions  and are  fully
transferable.  In addition,  option valuation models require the input of highly
subjective assumptions,  including the expected life of the options. Because the
Company's employee stock options have  characteristics  significantly  different
from  those of traded  options  and  because  changes  in the  subjective  input
assumptions  can  materially  affect the fair value  estimate,  in  management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

     Had compensation cost for the Company's stock-based compensation plans been
determined  using the fair value at the grant dates for awards under those plans
calculated  using the minimum  value method of FASB 123, the  Company's net loss
and pro forma basic and diluted net loss per share would have been  increased to
the pro forma amounts indicated below (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                               Year Ended
                                                              December 31,
                                                 -----------------------------------
                                                    2001         2000         1999
                                                 ---------    ---------    --------
<S>                                              <C>          <C>          <C>
Pro forma net loss                               $ (58,466)   $ (51,096)   $ (6,411)
Pro forma basic and diluted net loss per share   $   (1.78)   $   (4.23)   $  (1.46)
</TABLE>

     The  weighted  average  fair value of options  granted,  which is the value
assigned to the options under FASB 123, was $1.63,  $4.35,and  $3.18 for options
granted during the years ended December 31, 2001, 2000, and 1999, respectively.

     The pro  forma  impact  of  options  on the net  loss for the  years  ended
December 31,  2001,  2000 and 1999 is not  representative  of the effects on net
income  (loss) for future  years,  as future  years will  include the effects of
additional years of stock option grants.

Deferred Stock Compensation

     The Company recorded deferred stock  compensation of $0,  $17,636,000,  and
$8,186,000   during  the  years  ended  December  31,  2001,   2000,  and  1999,
respectively,  representing  the  difference  between the exercise price and the
deemed fair value for  financial  accounting  purposes of the  Company's  common
stock on the date the  stock  options  were  granted.  The  Company  recorded  a
reduction  in  deferred  stock  compensation  of  $2,888,000  in the year  ended
December 31, 2001 due to  cancellations of stock options


                                      F-18
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

upon the termination of employees related to our restructurings (see Note 9). In
the absence of a public market for the Company's  common stock,  the deemed fair
value was based on the price  per share of recent  preferred  stock  financings.
These  amounts are being  amortized  by charges to  operations  over the vesting
periods of the  individual  stock options using a graded  vesting  method.  Such
amortization amounted to approximately $6,504,000,  $11,998,000,  and $2,432,000
for the years  ended  December  31,  2001,  2000,  and 1999,  respectively.  The
expected annual  amortization  for stock options  granted  through  December 31,
2001, (assuming no cancellations) for the next three years will be as follows:

              2002...........................       $2,075,000
              2003...........................          649,000
              2004...........................           28,000

     The Company also recorded deferred stock  compensation of approximately $0,
$582,000 and $1,509,000 during the years ended December 31, 2001, 2000 and 1999,
respectively,  relating to the issuance of 0, 174,000 and 266,000 of  consultant
options for administrative and sales and marketing services.  These amounts were
computed using the Black-Scholes option valuation model. Unvested shares will be
remeasured  at each  measurement  date,  as they are  variable  awards,  and the
related  amortization  will be charged to operations  over the remaining term of
the related consulting  agreements.  Such amortization amounted to approximately
$57,000, $1,345,000 and $173,000 for the years ended December 31, 2001, 2000 and
1999, respectively.  The assumptions used to compute the value of the options at
the grant date under  Black-Scholes are as follows:  expected  volatility,  0.7;
expected life, 5 years;  expected  dividend  yield,  0%; and risk-free  interest
rate, 6.0%.

Notes Receivable From Stockholders

     During 2001,  2000 and 1999, the Company issued $0,  $948,000 and $100,000,
respectively,  of full recourse notes  receivable from  stockholders  which bear
interest at rates ranging from 6.5% to 8.5% per annum in  consideration  for the
exercise of stock options and the purchase of Series D Preferred  Stock.  During
2000, a note  receivable  of $342,000 was repaid in full plus  interest.  During
2001, a note receivable of $204,000 was repaid in full plus interest.  The notes
are collateralized by assets and mature on various dates through fiscal 2005.

9.   RESTRUCTURING AND OTHER IMPAIRMENT CHARGES

Restructuring Charges

     In response to new challenges in the business  environment,  in April 2001,
management  approved and the Company  formally  adopted and began to implement a
restructuring   program  in  an  effort  to  reduce  operating   expenses.   The
restructuring charges were $2.8 million,  which included $2.4 million related to
excess leased space at one of the Company's Hayward  facilities,  the impairment
of assets of  $22,000,  and  $415,000  related  to  employee  termination  costs
associated with the  elimination of 56 positions,  most of which occurred in the
United States, and affected employees at all levels of the Company.  As of April
30, 2001,  all of the affected  employees  had been notified and the majority of
these terminations were completed.

     In July 2001,  management  approved  and the  Company  adopted and began to
implement an additional  restructuring  program in an effort to reduce operating
expenses  that  resulted in aggregate  charges of $9.8  million.  These  charges
included  $687,000  related  to excess  leased  space at the  Company's  Chicago
facility,  which was closed in July,  and the  impairment of assets of $108,000.
The Company also revised its estimate of the restructuring  charge of one of its
Hayward facilities resulting in an additional  restructuring charge of $406,000.
Restructuring  charges also included  $530,000  related to employee  termination
costs associated with the elimination of 28 positions, most of which occurred in
the United States,  and affected  employees at all levels of the Company.  As of
July 31, 2001, all of the affected  employees had been notified and the majority
of these terminations were completed. The revised estimate of excess payments on
the  remaining  Hayward  facility  lease costs of $2.4 million  extends  through
September 2007. The estimate of payments on the remaining Chicago facility costs


                                      F-19
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

of $508,000  extends  through August 2005.  Restructuring  and other  impairment
charges also  included a write-off of goodwill of $7.5 million and the write-off
of acquired workforce of $339,000, discussed further below.

     In  November  2001,  the Company  adopted and began to  implement a further
restructuring program in an effort to reduce operating expenses that resulted in
aggregate  charges of $2.5 million.  These charges included  $557,000 related to
excess space at the Company's San Mateo  facility,  which was closed in December
2001. The Company also revised its estimates of the restructuring charges of its
Chicago  facility  and one of its Hayward  facilities  resulting  in  additional
charges of $147,000 and  $1,098,000,  respectively.  Restructuring  charges also
included $808,000 related to employee  termination costs and accelerated vesting
on stock options associated with the elimination of 58 positions,  most of which
occurred in the U.S. and affected employees at all levels of the Company.  As of
December  31,  2001,  all of the affected  employees  had been  notified and the
majority  of  the  terminations  were  completed.   The  outstanding   liability
associated with the employee  terminations was $325,000 as of December 31, 2001.
The revised estimate of excess lease payments on the remaining  Hayward facility
costs of $3.3 million  extends through  September 2007. The revised  estimate of
payments on the  remaining  Chicago  facility  lease  costs of $574,000  extends
through  August 2005.  The remaining  payments on the San Mateo  facility  lease
costs of $243,000 extend through May 2002.


     The following table sets forth the  restructuring  activity during the year
ended December 31, 2001 (in thousands):

<TABLE>
<CAPTION>
                                     Total
                                 Restructuring     Cash        Non-cash       Balance at
                                    Charges    Expenditures  Expenditures  December 31, 2001
                                    -------      -------       -------     -----------------
<S>                                 <C>          <C>           <C>              <C>
Facility lease costs ..........     $ 5,299      $  (761)      $  (405)         $4,133
Employee termination costs ....       1,753       (1,148)         (280)            325
Excess equipment ..............         130           --          (130)             --
Goodwill ......................       7,544           --        (7,544)             --
Acquired workforce ............         339           --          (339)             --
                                    -------      -------       -------          ------
Total .........................     $15,065      $(1,909)      $(8,698)         $4,458
</TABLE>

     At December 31, 2001, the current portion of the restructuring liability of
$2,241,000  is  included  in accrued  liabilities;  the  non-current  portion of
$2,217,000 is included in accrued restructuring charges.

Impairment Write-down of Goodwill, Acquired Workforce, and Core Technology

     In September 2001,  management identified indicators of possible impairment
of its long-lived  assets,  consisting of goodwill,  acquired workforce and core
technology  associated with the acquisition of Globalware Computing in May 2000.
Such indicators included an overall decline in information  technology spending,
and anticipated increased pressure from competitors.

     During July 2001,  the Company closed its Chicago office and terminated the
employees at that location. Consequently, the value of the acquired workforce of
$339,000 was written off and included in restructuring charges.

     The Company performed asset impairment tests for the other identified asset
categories, goodwill and core technology. The test for goodwill was performed by
comparing the expected  undiscounted cash flows for a five-year  period,  plus a
terminal value for future cash flows to the total  carrying  amount of goodwill.
The assumptions  supporting the estimated cash flows, and an estimated  terminal
value, reflect management's


                                      F-20
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

best  estimates.  Based on the result of this test, the Company  determined that
the carrying amount of the goodwill was impaired.

     The Company  determined  the fair value of the  goodwill  to be zero.  Fair
value was  determined  using the discounted  cash flow method,  using a discount
rate of 20% and an estimated  residual  value.  The discount rate was based upon
the weighted  average cost of capital for the Company and comparable  companies.
The assumptions  supporting the discounted cash flow model reflect  management's
best  estimates.  A write-down  of goodwill  totaling $7.5 million was recorded,
reflecting the write off of the entire  balance of goodwill,  and is included in
the line item, "Restructuring and other impairment charges".

     The test for core  technology  was  performed  by comparing  the  estimated
future gross  revenues from the product  reduced by the estimated  future direct
costs,  including  the costs of  performing  maintenance  and  customer  support
required to satisfy the Company's responsibility. The assumptions supporting the
estimated  future  gross  revenues and direct costs  reflect  management's  best
estimates.  Based on the result of this test,  the Company  determined  that the
carrying  amount of the core  technology was impaired and should be written down
to zero.

10.  COMMITMENTS

Leases

     The Company leases its  facilities  under various  noncancelable  operating
leases that expire at various dates through 2007.  Rent expense under  operating
lease  arrangements  amounted to  $3,004,052,  $1,537,000,  and $374,000 for the
years ended December 31, 2001,  2000, and 1999  respectively.  The capital lease
obligations are paid in full. Future minimum payments under operating leases (of
which  $4,123,180  has been  accrued for in  connection  with our  restructuring
plans) are as follows (in thousands):

Year ending December 31,
            2002........................................       $ 3,022
            2003........................................         2,390
            2004........................................         2,484
            2005........................................         2,410
            2006........................................         2,290
            Thereafter..................................         1,769
                                                               -------
                                                               $14,365
                                                               =======

     The Company  maintains two letters of credit  totaling  $3,438,000  held as
collateral for the operating leases for two of the Company's facilities.

11.  LEGAL PROCEEDINGS

     In October 2001, a purported  shareholder class action lawsuit was filed in
the United States  District Court for the Southern  District of New York against
the Company,  certain of its officers and directors, and the underwriters of its
initial public offering.  The suit purports to be a class action filed on behalf
of purchasers of the Company's common stock during the period from September 27,
2000 to December 6, 2000. The complaint alleges that the underwriter  defendants
agreed to allocate  stock in the Company's  initial  public  offering to certain
investors in exchange for excessive and  undisclosed  commissions and agreements
by those investors to make  additional  purchases of stock in the aftermarket at
pre-determined  prices.  Plaintiffs allege that the prospectus for the Company's
initial public  offering was false and misleading in violation of the securities
laws  because  it did not  disclose  these  arrangements.  The  complaint  seeks
unspecified  damages  on  behalf  of the  purported  class.  Over 300  companies
involved in an initial  public  offering have been named as defendants in nearly
identical  lawsuits filed by some of the same  plaintiffs' law firms. We believe
we have  meritorious  defenses,  and we intend to defend the action


                                      F-21
<PAGE>

                                  AVANTGO, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001

vigorously;  however,  due to inherent  uncertainties  in litigation,  we cannot
predict  accurately the ultimate outcome of the litigation.  An adverse judgment
in a large monetary amount could have a material adverse impact on our financial
position, and consequently our business and results of operations.

12.  BUSINESS SEGMENT INFORMATION

     The Company operates in a single operating segment,  providing software and
services that enable and enhance the use of Internet-based content and corporate
applications  to mobile  devices,  including  personal  digital  assistants  and
Internet-enabled phones.

Geographic Information

     The Company  operates in North  America  and Europe.  Approximately  16% of
revenues were derived from outside North America  during 2001.  Less than 10% of
revenues  were derived from outside  North America in 2000 and 1999. At December
31,  2001,  2000 and 1999,  less than 10% of the  Company's  assets were located
outside North America.

13.  EMPLOYEE BENEFIT PLAN

     The Company has a 401(k) plan that allows eligible  employees to contribute
up to 15% of their pretax salary, subject to annual limits. Contributions by the
Company  are at the  discretion  of the  Board of  Directors.  No  discretionary
contributions have been made by the Company to date.

14.  RELATED PARTY TRANSACTION

     The Company has entered into two consulting  agreements  with R.B. Webber &
Company,  Inc., which is related to one of the Company's directors.  Pursuant to
these consulting agreements, R.B. Webber & Company, Inc. has provided consulting
services  to the  Company  with  respect  to the  development  of the  Company's
business  plan and the  performance  of a market  study.  The Company  paid R.B.
Webber & Company, Inc. $36,787,  $392,000, and $115,000 for such services during
the years ended December 31, 2001, 2000, and 1999 respectively.

15.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following table contains, for the period presented,  selected data from
our  consolidated  Statements of Operations.  The data has been derived from our
unaudited  consolidated  financial  statements,  and,  in  the  opinion  of  our
management,  include  all  adjustments,  consisting  only  of  normal  recurring
adjustments  that  are  necessary  for a fair  presentation  of the  results  of
operations for these periods.

<TABLE>
<CAPTION>
                                                       [In thousands, except per share data]

                                                                Three Months Ended
                                                March 31        June 30     September 30    December 31
<S>                                            <C>            <C>            <C>            <C>
2001
Total revenues                                 $  7,307       $  6,469       $  4,897       $  5,331
Total costs and expenses                         20,889         21,218         26,754         13,814
Net loss                                        (12,808)       (13,928)       (21,203)        (8,236)
Basic and diluted net loss per share              (0.41)         (0.43)         (0.63)         (0.24)
2000
Total revenues                                 $  1,661       $  3,456       $  4,636       $  6,565
Total costs and expenses                          9,309         14,952         21,324         23,153
Net loss                                         (7,431)       (11,001)       (16,231)       (15,175)
Basic and diluted net loss per share              (1.30)         (1.69)         (2.67)         (0.50)
1999
Total revenues                                 $    228       $    561       $  1,052       $  1,048
Total costs and expenses                          1,343          2,132          3,591          5,351
Net loss                                         (1,108)        (1,565)        (2,369)        (4,173)
Basic and diluted net loss per share              (0.31)         (0.38)         (0.51)         (0.82)
</TABLE>


                                      F-22
<PAGE>

                                  AVANTGO, INC.

Schedule II: Valuation and Qualifying Accounts (in thousands)

<TABLE>
<CAPTION>
                                                  Balance at       Additions       Balance at
                                                  Beginning         Charged          End of
                                                  of Period        to Expense        Period
                                                  ----------       ----------      ----------
<S>                                                  <C>             <C>              <C>
Year ended December 31, 2001:
      Allowance for doubtful accounts                $240            $725             $965
                                                  ----------------------------------------
                                                     $240            $725             $965
                                                  ========================================
Year ended December 31, 2000:
      Allowance for doubtful accounts                $ 50            $190             $240
                                                  ----------------------------------------
                                                     $ 50            $190             $240
                                                  ========================================
Year ended December 31, 1999:
      Allowance for doubtful accounts                $ --            $ 50             $ 50
                                                  ----------------------------------------
                                                     $ --            $ 50             $ 50
                                                  ========================================
</TABLE>


                                      F-23