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

                                    FORM 10-Q

      (Mark One)

      |X|   Quarterly report pursuant to Section 13 or 15(d) of the Securities
            Exchange Act of 1934

      For the quarterly period ended September 30, 2002 or

      |_|   Transition report pursuant to Section 13 or 15(d) of the Securities
            Exchange Act of 1934

      For the transition period from __________________ to _____________________

                        COMMISSION FILE NUMBER: 000-3156

                                  AVANTGO, INC.

             (Exact name of Registrant as specified in its charter)


           DELAWARE                                      94-3275789
(State or other jurisdiction of                        (I.R.S. Employer
 incorporation or organization)                       Identification No.)

                             25881 Industrial Blvd.
                                Hayward, CA 94545

                    (Address of principal executive offices)

                                 (510) 259-4000
              (Registrant's telephone number, including area code)

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

                                 Yes |X| No |_|

As of November 4, 2002 there were 35,714,155 shares of the Registrant's Common
Stock outstanding.

<PAGE>

                                  AVANTGO, INC.

                                    Form 10-Q

                                      INDEX

PART I.  FINANCIAL INFORMATION                                              PAGE
                                                                            ----

ITEM 1.   Condensed Consolidated Financial Statements (Unaudited)
          Condensed Consolidated Balance Sheets as of September 30, 2002
          and December 31, 2001                                                3
          Condensed Consolidated Statements of Operations for the three
          and nine months ended September 30, 2002 and September 30, 2001      4
          Condensed Consolidated Statements of Cash Flows for the nine
          months ended September 30, 2002 and September 30, 2001               5
          Notes to Condensed Consolidated Financial Statements                 6

ITEM 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                               11

ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk          27

ITEM 4.   Controls and Procedures                                             27

PART II.  OTHER INFORMATION

ITEM 1.   Legal Proceedings                                                   27

ITEM 6.   Exhibits and Reports on Form 8-K                                    28

          Signatures                                                          29


                                      -2-
<PAGE>

PART I.   FINANCIAL INFORMATION

ITEM 1.  Condensed Consolidated Financial Statements

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     September 30,  December 31,
                                                                                          2002          2001
                                                                                          ----          ----
<S>                                                                                     <C>          <C>
ASSETS
Current assets:
    Cash and cash equivalents .......................................................   $  32,249    $  43,091
    Accounts receivable, net of allowance of $967 in 2002 and $965 in 2001 ..........       2,696        3,236
    Prepaid expenses and other current assets .......................................       1,252          480
                                                                                        ---------    ---------
          Total current assets ......................................................      36,197       46,807
   Restricted investments ...........................................................       3,400        3,438
   Property and equipment, net ......................................................       4,822        6,890
   Other assets .....................................................................         139          344
                                                                                        ---------    ---------
          Total assets ..............................................................   $  44,558    $  57,479
                                                                                        =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable ................................................................   $     947    $   1,243
    Accrued liabilities .............................................................       3,453        3,855
    Accrued compensation and related benefits .......................................         917        1,693
    Deferred revenue ................................................................       4,412        1,813
                                                                                        ---------    ---------
          Total current liabilities .................................................       9,729        8,604
   Deferred revenue, net of current portion .........................................         232           --
   Accrued restructuring charges, net of current portion ............................       3,655        2,127
Commitments
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares  authorized; none issued and
         none outstanding at September 30, 2002 and December 31, 2001, respectively .                       --
Common stock, $0.0001 par value; 150,000,000 shares authorized; 35,700,093 and
      35,166,133 shares issued and outstanding at September 30, 2002 and December 31,
      2001, respectively ............................................................     166,165      168,603
    Notes receivable from stockholders ..............................................        (502)        (502)
    Deferred stock compensation .....................................................        (288)      (2,752)
    Revenue offset relating to warrant agreements ...................................        (211)        (592)
    Accumulated deficit .............................................................    (133,652)    (118,122)
    Accumulated other comprehensive income ..........................................        (570)         113
                                                                                        ---------    ---------
          Total stockholders' equity ................................................      30,942       46,748
                                                                                        ---------    ---------
          Total liabilities and stockholders' equity ................................   $  44,558    $  57,479
                                                                                        =========    =========
</TABLE>

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


                                      -3-
<PAGE>

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

<TABLE>
<CAPTION>
                                                             Three Months Ended     Nine Months Ended
                                                                September 30,         September 30,
                                                                -------------         -------------
                                                              2002        2001       2002        2001
                                                              ----        ----       ----        ----
                                                                      (As Restated)           (As Restated)
<S>                                                         <C>         <C>         <C>         <C>
Revenues:
    License fees ........................................   $  2,448    $  2,837    $  8,199    $ 10,932
    Services ............................................      2,004       2,060       6,361       7,741
                                                            --------    --------    --------    --------
    Total revenues ......................................      4,452       4,897      14,560      18,673
Costs and expenses:
    Cost of license fees ................................         59         336         197         418
    Cost of services ....................................      1,040       1,208       3,327       4,171
    Product development .................................      1,640       3,130       6,061      10,853
    Sales and marketing .................................      3,847       6,929      14,141      23,741
    General and administrative ..........................      1,369       2,160       3,717       6,932
    Amortization of goodwill, other intangible assets
        and deferred stock compensation .................     (1,812)      1,249        (526)      8,163
    Write-off of core technology ........................         --       1,981          --       1,981
    Restructuring and other impairment charges ..........      4,128       9,761       4,450      12,602
                                                            --------    --------    --------    --------

    Total costs and expenses ............................     10,271      26,754      31,367      68,861
                                                            --------    --------    --------    --------

Loss from operations ....................................     (5,819)    (21,857)    (16,807)    (50,188)
    Interest and other income, net ......................        311         654       1,277       2,249
                                                            --------    --------    --------    --------

    Net loss ............................................   $ (5,508)   $(21,203)   $(15,530)   $(47,939)
                                                            ========    ========    ========    ========

    Basic and diluted net loss per share ................   $  (0.16)   $  (0.63)   $  (0.44)   $  (1.49)
                                                            ========    ========    ========    ========

    Basic and diluted common shares used to calculate
      basic and diluted net loss per share ..............     35,498      33,480      35,218      32,117
</TABLE>

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


                                      -4-
<PAGE>

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                  Nine Months Ended
                                                                                    September 30,
                                                                                  2002        2001
                                                                                  ----        ----
                                                                                          (As Restated)
<S>                                                                             <C>         <C>
OPERATING ACTIVITIES:

       Net loss .............................................................   $(15,530)   $(47,939)
       Adjustments to reconcile net loss to net cash used in operating
        activities:
         Restructuring and other impairment charges .........................      2,217      11,606
         Write-off of core technology .......................................         --       1,981
         Amortization of goodwill, other intangible assets and deferred stock
          compensation ......................................................       (527)      8,163
         Depreciation and amortization ......................................      2,078       2,165
         Amortization of revenue offset relating to warrant agreements ......        381         381
         Issuance of common stock in exchange for services ..................         87          --
         Changes in operating assets and liabilities:
           Accounts receivable ..............................................        540       1,477
           Prepaid expenses and other current assets ........................       (795)        434
           Accounts payable .................................................       (296)     (1,877)
           Accrued liabilities ..............................................       (352)        700
           Accrued compensation and related benefits ........................       (429)        222
           Accrued restructuring liability ..................................       (266)         --
           Deferred revenue .................................................      2,831       1,032
                                                                                --------    --------

             Net cash used in operating activities ..........................    (10,061)    (21,655)

INVESTING ACTIVITIES:

       Purchase of property and equipment ...................................       (344)     (2,344)
       Decrease in other assets .............................................        205         200
       Proceeds from restricted investments .................................         38          --
       Proceeds from investments ............................................         --      16,436
                                                                                --------    --------
             Net cash (used in) provided by investing activities ............       (101)     14,292

FINANCING ACTIVITIES:

       Repayment of obligations under bank line of credit agreement .........         --         (40)
       Proceeds from note repayment from shareholder ........................         --         204
       Proceeds from issuance of common stock, net of stock repurchase ......          3         166
                                                                                --------    --------

           Net cash provided by financing activities ........................          3         330
                                                                                --------    --------

  Effect of exchange rate changes on cash and cash equivalents ..............       (683)         42
                                                                                --------    --------

  Decrease in cash and cash equivalents .....................................    (10,842)     (6,991)
  Cash and cash equivalents at beginning of period ..........................     43,091      57,034
                                                                                --------    --------

  Cash and cash equivalents at end of period ................................   $ 32,249    $ 50,043
                                                                                ========    ========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

SUPPLEMENTAL DISCLOSURES:

       Cash paid during the period for interest .............................   $     --    $      5
                                                                                ========    ========
</TABLE>

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


                                      -5-
<PAGE>

     NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002
                                   (Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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 portals to mobile devices, including
personal digital assistants and Internet-enabled phones. The Company licenses
its AvantGo M-Business ServerTM products and AvantGo(R) 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 ServiceTM 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 accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
period ended September 30, 2002 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2002.

      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 balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

      For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 2001.

      Certain reclassifications have been made to the financial statements for
the three months and nine months ended September 30, 2001 to conform to the
presentation of the financial statements for the three months and nine months
ended September 30, 2002.

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.

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 September 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 the Company's financial statements in that all goodwill and
intangible assets have been written off due to impairment during 2001. Had the
provisions of SFAS 142 been in effect during the three and nine months ended
September 30, 2001, the Company's


                                      -6-
<PAGE>

net loss and net loss per share would have been $21.2 million and $0.63 per
share, and $45.3 million and $1.41 per share, respectively.

      During August 2001, the Financial Accounting Standards Board also issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). SFAS 144 is effective
for fiscal years beginning after December 15, 2001 and supercedes Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment or
Disposal of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and
the accounting and reporting provisions of Accounting Principles Board Opinion
No. 30 relating to the disposal of a segment of business. The adoption of SFAS
144 did not have a material impact on the Company's consolidated financial
position, results of operations or cash flows.

NOTE 2. CONCENTRATION OF CREDIT RISK

      The following table sets forth the percentages of revenues from our major
customer for the three and nine months ended September 30, 2002 and 2001:

                                 Three Months Ended         Nine Months Ended
                                    September 30,             September 30,
                                2002            2001       2002            2001
                                ----            ----       ----            ----
     Customer A                 25%             23%        23%             19%

NOTE 3. NET LOSS PER SHARE

      Basic and diluted net loss per share information for all periods is
presented under the requirement of FASB Statement No. 128, "Earnings per Share"
("FASB 128"). Basic earnings per share has 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 earnings per share when our option to
repurchase these shares lapses.

      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 would be anti-dilutive.

      The calculation of basic and diluted net loss per share is as follows:

<TABLE>
<CAPTION>
                                                            Three Months Ended      Nine Months Ended
                                                               September 30,          September 30,
                                                               -------------          -------------
                                                             2002        2001        2002        2001
                                                             ----        ----        ----        ----
                                                             (in thousands, except per share amounts):
<S>                                                        <C>         <C>         <C>         <C>
Net loss ...............................................   $ (5,508)   $(21,203)   $(15,530)   $(47,939)
                                                           ========    ========    ========    ========
Weighted average shares of common stock outstanding ....     35,671      34,922      35,516      34,642
Less weighted average shares that may be repurchased ...       (173)     (1,442)       (298)     (2,525)
                                                           --------    --------    --------    --------
Weighted average shares of common stock outstanding used
in computing basic and diluted net loss per share ......     35,498      33,480      35,218      32,117
                                                           ========    ========    ========    ========
Basic and diluted net loss per share ...................   $  (0.16)   $  (0.63)   $  (0.44)   $  (1.49)
                                                           ========    ========    ========    ========
</TABLE>

NOTE 4. COMPREHENSIVE LOSS

      Statement of Financial Accounting Standard (SFAS) No. 130 "Reporting for
Comprehensive Income", established standards of reporting and display of
comprehensive income and its components of net income and "Other Comprehensive
Income". "Other Comprehensive Income" refers to revenues, expenses and gains and
losses that are not included in net income but rather are recorded directly in
stockholders' equity. The components of


                                      -7-
<PAGE>

comprehensive loss for the three and nine months ended September 30, 2002 and
2001 were as follows (in thousands):

<TABLE>
<CAPTION>
                                            Three Months ended      Nine Months ended
                                               September 30,          September 30,
                                               -------------          -------------
                                             2002        2001        2002        2001
                                           -------    --------    --------    --------
<S>                                        <C>        <C>         <C>         <C>
Net loss ...............................   $(5,508)   $(21,203)   $(15,530)   $(47,939)
Foreign currency translation adjustments      (156)       (152)       (683)         42
Unrealized gain on investment ..........        --          --          --           4
                                           -------    --------    --------    --------
Comprehensive loss .....................   $(5,664)   $(21,355)   $(16,213)   $(47,893)
                                           =======    ========    ========    ========
</TABLE>

NOTE 5. 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 19% and
15% of revenues were derived from outside North America in the three and nine
months ended September 30, 2002, respectively. Approximately 16% of revenues
were derived from outside North American in both the three and nine months ended
September 30, 2001. Less than 10% of net loss was derived from outside North
America in the three and nine months ended September 30, 2002 as well as the
three and nine months ended September 30, 2001. During the three and nine months
ended September 30, 2002 and 2001, no more than 10% of revenues were derived
from any specific country. At September 30, 2002 and 2001, less than 10% of the
Company's assets were located outside North America.

NOTE 6. AMORTIZATION OF DEFERRED STOCK-BASED COMPENSATION

      During the quarter ended September 30, 2002, and in connection with a
reduction in force, the Company recorded an adjustment to reverse compensation
expense for the cancellation of stock option awards that had not yet been
earned. This resulted in a net $1.8 million and $526,000 credit included in
amortization of goodwill, other intangible assets, and deferred stock-based
compensation for the three and nine month periods ended September 30, 2002,
respectively. As of September 30, 2002, all of the affected employees had been
notified and the majority of these terminations were completed.

NOTE 7. RESTRUCTURING AND OTHER IMPAIRMENT CHARGES

      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 Company incurred a charge of approximately $2.8 million in the
second quarter of 2001 relating to the restructuring. During the third quarter
of 2001, the Company reported additional charges of approximately $9.8 million,
which included approximately $406,000 related to adjustments to facility exit
costs as a result of a rapidly deteriorating real estate market. In the fourth
quarter of 2001, management approved and the Company implemented a further
restructuring program that resulted in aggregate charges of $2.5 million, which
included approximately $1.2 million related to adjustments to facility exit
costs as a result of continuing deterioration in the real estate market. In the
second quarter of 2002, the Company recorded adjustments to the estimates of
facility exit costs resulting in a charge to restructuring expense of $322,000.

      In July 2002, management approved and the Company formally adopted and
began to implement another restructuring program in an effort to reduce
operating expenses that resulted in aggregate charges of $4.1 million. These
charges included $1.2 million related to revised estimates on the excess space
at the Hayward facility, and $207,000 related to revised estimates on the excess
space at the Chicago facility as a result of continuing deterioration in the
real estate market. The Company also recorded a charge of $479,000 related to
excess equipment and software, and other charges related to the reduction in
force. Restructuring charges also included $2.2 million related to employee
termination costs associated with the elimination of 78 positions, most of which


                                      -8-
<PAGE>

occurred in the United States and affected employees at all levels of the
Company. As of September 30, 2002, all of the affected employees had been
notified and the majority of these terminations were completed.

     The following table sets forth the restructuring activity during the three
months ended September 30, 2002 (in thousands):

<TABLE>
<CAPTION>
                                Balance at      Restructuring and other       Cash         Non-cash          Balance at
                               June 30, 2002     impairment charges       Expenditures    Expenditures   September 30, 2002
                               -------------     ------------------       ------------    ------------   ------------------
<S>                                <C>                 <C>                   <C>             <C>                <C>
Facility lease costs               $3,651              $1,430                $  (275)        $  --              $4,806
Employee termination costs            308               2,219                 (1,336)         (116)              1,075
Excess equipment and other             --                 479                    (76)         (348)                 55
                                   ------              ------                -------         -----              ------
Total                              $3,959              $4,128                $(1,687)        $(464)             $5,936
</TABLE>

      The following table sets forth the restructuring activity during the nine
months ended September 30, 2002 (in thousands):

<TABLE>
<CAPTION>
                                 Balance at        Restructuring
                                December 31,     and other impairment         Cash                Non-cash            Balance at
                                    2001               charges             Expenditures         Expenditures      September 30, 2002
                                    ----               -------             ------------         ------------      ------------------
<S>                                <C>                  <C>                  <C>                    <C>                  <C>
Facility lease costs               $4,133               $1,752               $(1,079)               $  --                $4,806
Employee termination costs            325                2,219                (1,353)                (116)                1,075
Excess equipment and other             --                  479                   (76)                (348)                   55
                                   ------               ------               -------                -----                ------
Total                              $4,458               $4,450               $(2,508)               $(464)               $5,936
</TABLE>

      The following table sets forth the restructuring activity during the three
months ended September 30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                          Total
                                                      Restructuring
                                   Balance at           and other
                                    June 30,            Impairment              Cash              Non-cash           Balance at
                                      2001               Charges             Expenditures       Expenditures      September 30, 2001
                                      ----               -------             ------------       ------------      ------------------
<S>                                  <C>                  <C>                  <C>                 <C>                 <C>
Facility lease costs                 $2,203               $1,093               $  (224)            $(152)              $2,920
Employee termination costs               15                  530                  (163)               --                  382
Excess equipment and other               --                  108                    --              (108)                  --
Goodwill                                 --                7,691                    --            (7,691)                  --
Acquired workforce                       --                  339                    --              (339)                  --
                                     ------               ------               -------           -------               ------
Total                                $2,218               $9,761               $  (387)          $(8,290)              $3,302
</TABLE>


                                      -9-
<PAGE>

The following table sets forth the restructuring activity during the nine months
ended September 30, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                           Total
                                                       Restructuring
                                     Balance at          And Other
                                    December 31,         Impairment            Cash               Non-cash           Balance at
                                        2000              Charges           Expenditures        Expenditures     September 30, 2001
                                        ----              -------           ------------        ------------     ------------------
<S>                                    <C>                <C>                  <C>                 <C>                 <C>
Facility lease costs                   $  --              $ 3,497              $(425)              $  (152)            $2,920
Employee termination costs                --                  945               (563)                   --                382
Excess equipment and other                --                  130                 --                  (130)                --
Goodwill                                  --                7,691                 --                (7,691)                --
Acquired workforce                        --                  339                 --                  (339)                --
                                       -----              -------              -----               -------             ------
Total                                  $  --              $12,602              $(988)              $(8,312)            $3,302
</TABLE>

At September 30, 2002, the current portion of the restructuring liability of
$2,281,000 is included in accrued liabilities; the non-current portion of
$3,655,000 is included in accrued restructuring charges.

NOTE 8. 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 the Company's officers and directors (the "Individual
Defendants"), and the underwriters of the Company's initial public offering. The
suit is 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. A consolidated amended complaint has
been filed. A motion to dismiss addressing issues common to the companies and
individuals who have been sued in these actions was filed on July 15, 2002. The
Court has not yet ruled on this motion. On October 9, 2002, the Court dismissed
the Individual Defendants from the case without prejudice based upon
Stipulations of Dismissal filed by the plaintiffs and the Individual Defendants.
The Company believes it has meritorious defenses, and it intends to defend the
action vigorously; however, due to inherent uncertainties in litigation,
management cannot predict accurately the ultimate outcome of the litigation. An
adverse judgment in a large monetary amount could have a material adverse impact
on the financial position, and consequently the business and results of
operations.

NOTE 9. RELATED PARTY

On July 8, 2002, the Company entered into a consulting agreement with one of its
directors. The director provided consulting services to the Company with respect
to the development of the Company's business plan and restructuring activities.
The consulting engagement was completed and the Company incurred related
expenses in the amount of approximately $50,000 during the three months ended
September 30, 2002.


                                      -10-
<PAGE>

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

FORWARD-LOOKING STATEMENTS

      This document 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-Q 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, as well as those
contained in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission for year ended December 31, 2001. 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-Q 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.

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

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 Pylon software products and consulting services into our
mobile offerings. In October 2000, we completed our initial public offering. In
July 2001, September 2001, March 2002 and April 2002, respectively, we launched
AvantGo Mobile Sales(TM), AvantGo Mobile Delivery(TM)., AvantGo Mobile
Pharma(TM) and AvantGo Mobile Inspection(TM) - mobile business applications that
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. We designed our AvantGo M-Business Server products
and mobile business applications 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 7.0 million
registered AvantGo Mobile Internet Service users. Our AvantGo Mobile Internet
Service also allows consumers to access and interact with over 2,000 sources of
Internet-based content and corporate applications optimized for delivery to
handheld devices and Internet-enabled phones. In July 2002, we announced that we
will heighten our focus on applications and solutions targeted to field force
professionals.

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 uncollectible accounts and restructuring. We base our estimates on
historical experience and on various other


                                      -11-
<PAGE>

assumptions that we believe 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.
Maintenance consists 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,
collectability 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 agreement, 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. We
generate training revenues 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. When reasonably
dependable estimates of the revenue and costs are not available, we use the
completed contract method of revenue recognition. 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 to us.

      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 agreement.

      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.

Restructuring

      We have recorded restructuring charges, some of which are based on
estimates regarding the sublease of


                                      -12-
<PAGE>

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.

OUR BUSINESS

      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, generated through 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, hardware, co-location facilities and Internet connectivity charges.
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.

      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, and deferred stock-based compensation. For the
three and nine months ended September 30, 2002 only amortization of deferred
stock-based compensation was recorded, as all goodwill and intangible assets
were written off in 2001.

      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 $22.9 million as of September 30, 2002. 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 graded method. The amortization of the remaining deferred stock compensation
will result in additional charges to operations through 2004. During the quarter
ended September 30, 2002, and in connection with our reduction in force, we
recorded an adjustment to reverse compensation expense for the cancellation of
stock option awards that had not yet been earned. This resulted in a net $1.8
million and a $526,000 credit included in amortization of goodwill, other
intangible assets, and deferred stock-based compensation for the three and nine
months ended September 30, 2002, respectively. As of September 30, 2002, all of
the affected employees had been notified, and the majority of these terminations
were completed.

      We have incurred significant losses and negative cash flows from
operations since our inception. As of September 30, 2002, we had an accumulated
deficit of $133.7 million. We had 118 full-time employees as of September 30,
2002.


                                      -13-
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND
2001

      The following table sets forth certain financial data, derived from our
unaudited statements of operations, as a percentage of total revenues for the
periods indicated. The operating results for the three and nine months ended
September 30, 2002 and 2001 are not necessarily indicative of the results that
may be expected for any future period.

<TABLE>
<CAPTION>
                                                     Three Months Ended    Nine Months Ended
                                                        September 30,        September 30,
                                                        -------------        -------------
                                                        2002     2001        2002    2001
                                                        ----     ----        ----    ----
<S>                                                    <C>      <C>         <C>      <C>
 Revenues:
   License fees ....................................     55%      58%         56%      59%
   Services ........................................     45%      42%         44%      41%
                                                       ----     ----        ----     ----
   Total revenues ..................................    100%     100%        100%     100%
Costs and expenses:
   Cost of license fees ............................      1%       7%          1%       2%
   Cost of services ................................     23%      25%         23%      22%
   Product development .............................     37%      64%         42%      58%
   Sales and marketing .............................     87%     141%         96%     127%
   General and administrative ......................     31%      44%         26%      37%
   Amortization of goodwill, other intangible assets
       and deferred stock compensation .............    (41%)     26%         (4%)     44%
   Write-off of core technology ....................     --%      40%         --%      11%
   Restructuring and other impairment charges ......     93%     199%         31%      68%
                                                       ----     ----        ----     ----
   Total costs and expenses ........................    231%     546%        215%     369%
                                                       ----     ----        ----     ----
Loss from operations ...............................   (131%)   (446%)      (115%)   (269%)
   Interest and other income, net ..................      7%      13%          8%      12%
                                                       ----     ----        ----     ----
   Net loss ........................................   (124%)   (433%)      (107%)   (257%)
                                                       ====     ====        ====     ====
</TABLE>

Comparisons of Three and Nine Months Ended September 30, 2002 and 2001

Revenues

      Total revenues were approximately $4.5 million and $4.9 million for the
three months ended September 30, 2002 and 2001, representing a decrease in the
third quarter of 2002 of approximately $400,000, or 8%, from the comparable
quarter of the prior year. Total revenues were approximately $14.6 million and
$18.7 million for the nine months ended September 30, 2002 and 2001,
representing a decrease of approximately $4.1 million, or 22% from the
comparable period of the prior year. The decline in revenues period over period
was primarily attributable to an overall downturn in the economy, one of the
results of which has been reduced capital spending on technology, including
mobile enterprise software and professional services, as well as longer sales
cycles. Consequently, sales of licenses and associated services, and sales of
advertising have been negatively impacted. The decline in revenues reflects a
decreased volume of licenses and services sold, rather than a decrease in
prices.

      License Fees. License fee revenues decreased approximately $400,000, or
14%, from approximately $2.8 million for the three months ended September 30,
2001 to approximately $2.4 million for the three months ended September 30,
2002. License fee revenues decreased approximately $2.7 million, or 25%, from
approximately $10.9 million for the nine months ended September 30, 2001 to
approximately $8.2 million for the nine months ended September 30, 2002. The
decline in license fee revenues was primarily attributable to the circumstances
described in the immediately preceding paragraph.

      Services. Services revenue decreased approximately $56,000, or 3%, from
approximately $2.1 million for the three months ended September 30, 2001 to
approximately $2.0 million for the three months ended September 30,


                                      -14-
<PAGE>

2002. Services revenue decreased approximately $1.3 million, or 18%, from $7.7
million for the nine months ended September 30, 2001 to approximately $6.4
million for the nine months ended September 30, 2002. The decline in services
revenue was due to decreased consulting services performed, as a result of fewer
license sales to new customers.

      We also earn revenues from advertising barter transactions. We recognize
revenues and costs from advertising barter transactions during the period in
which we deliver the advertising or distribution product. 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 goods or services provided, we use historical pricing of comparable
cash transactions. Revenues earned from barter transactions were $0 and $45,000
for the three months ended September 30, 2002 and 2001. Revenues earned from
barter transactions were $0 and $173,000 for the nine months ended September 30,
2002 and 2001, respectively. We do not expect barter revenue to be a significant
portion of revenue in the future.

      We have seen a rapid and increasingly severe downturn in the United States
economy that has continued through the first three quarters of 2002. Although we
expect this economic downturn to continue into the fourth quarter of 2002, we
cannot be certain as to the severity or duration of this downturn. We have also
seen a downturn in our European business in 2002. If the economic conditions in
the United States and Europe fail to improve or if wider or global economic
slowdowns occur, the demand for our products and services may be reduced. In
addition to reducing our customers' and prospective customers' budgets for our
products and services, these economic slowdowns may also adversely affect our
customers' ability to pay for our products and services. Accordingly, these
economic slowdowns may have a material adverse impact on our business, operating
results and financial condition.

      Costs and Expenses

      Cost of License Fees. Our cost of license fees decreased approximately
$277,000, or 82%, from approximately $336,000 for the three months ended
September 30, 2001 to approximately $59,000 for the three months ended September
30, 2002. Cost of license fees decreased approximately $221,000, or 53%, from
approximately $418,000 for the nine months ended September 30, 2001 to
approximately $197,000 for the nine months ended September 30, 2002. These
decreases were primarily attributable to decreased royalty expenses incurred as
a result of a decline in reselling other software developers' products in
conjunction with ours during the three and nine months ended September 30, 2002.
We expect the cost of license fees to vary according to the sales mix of our
products and those of other software developers' products.

      Cost of Services. Our cost of services decreased approximately $200,000,
or 14%, from approximately $1.2 million for the three months ended September 30,
2001 to approximately $1.0 million for the three months ended September 30,
2002. Cost of services decreased approximately $900,000, or 20%, from
approximately $4.2 million for the nine months ended September 30, 2001 to
approximately $3.3 million for the nine months ended September 30, 2002. These
decreases were primarily attributable to a reduction in headcount as a result of
the restructuring program that we implemented during 2002.

      Product Development. Product development expenses decreased approximately
$1.5 million, or 48%, from approximately $3.1 million for the three months ended
September 30, 2001 to approximately $1.6 million for the three months ended
September 30, 2002. Product development expenses decreased approximately $4.8
million, or 44%, from approximately $10.9 million for the nine months ended
September 30, 2001 to approximately $6.1 million for the nine months ended
September 30, 2002. These decreases were primarily attributable to a reduction
in headcount as a result of the restructuring program that we implemented during
2002. To date, all software and development costs have been expensed in the
period incurred.

      Sales and Marketing. Our sales and marketing expenses include those
related to compensation, public relations, advertising, trade shows and
marketing materials. Sales and marketing expenses decreased approximately $3.1
million, or 44%, from approximately $6.9 million for the three months ended
September 30, 2001 to approximately $3.8 million for the three months ended
September 30, 2002. Sales and marketing expenses decreased approximately $9.6
million, or 40%, from approximately $23.7 million for the nine months ended
September 30, 2001 to approximately $14.1 million for the nine months ended
September 30, 2002. These decreases were primarily attributable to a reduction
in headcount as a result of the restructuring program that we implemented


                                      -15-
<PAGE>

during 2002, as well as a reduction in the level of advertising expenditures
relating to our AvantGo Mobile Internet service.

      General and Administrative. General and administrative expenses consist
primarily of salaries, recruiting and related costs for general corporate
functions including executive, accounting and administrative personnel, and
other miscellaneous general corporate expenses. Our general and administrative
expenses decreased approximately $800,000, or 37%, from approximately $2.2
million for the three months ended September 30, 2001 to approximately $1.4
million for the three months ended September 30, 2002. General and
administrative expenses decreased approximately $3.2 million, or 46%, from
approximately $6.9 million for the nine months ended September 30, 2001 to
approximately $3.7 million for the nine months ended September 30, 2002. This
decrease was due primarily to a decrease in the number of executive, finance and
administrative employees as a result of the restructuring program that we
implemented during 2002.

      Amortization of goodwill, other intangible assets and deferred stock
compensation. Until we determined that goodwill and other intangible assets were
impaired and were written off in September 2001, we had been amortizing the
amount of goodwill and acquired workforce that we purchased in connection with
our acquisition of Globalware, using the straight-line method. We are also
amortizing the amount that equals the difference between the exercise price of
stock options granted to our employees and consultants and 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 $0 of amortization of goodwill and other intangible assets
during the three months ended September 30, 2002 and 2001. We recognized $0 for
the nine months ended September 30, 2002 and approximately $2.6 million during
the nine months ended September 30, 2001. We recognized approximately $406,000
and $1.2 million of amortization of deferred stock compensation during the three
months ended September 30, 2002 and 2001. We recognized approximately $1.7
million of deferred stock compensation for the nine months ended September 30,
2002 and approximately $5.5 million of deferred stock compensation for the nine
months ended September 30, 2001. During the three months ended September 30,
2002, and in connection with our reduction in force, we recorded an adjustment
to reverse compensation expense for the cancellation of stock option awards that
had not yet been earned in the amount of $2.2 million. This resulted in a net
$1.8 million and $526,000 credit included in amortization of goodwill, other
intangible assets, and deferred stock-based compensation for the three and nine
month periods ended September 30, 2002, respectively.

      We anticipate that the amortization of the remaining deferred stock
compensation will result in additional charges through 2004.

      Because goodwill and other intangible assets were determined to be
impaired and were written off in September 2001, there will be no further
amortization of goodwill or intangible assets.

      Write-off of core technology. During the third quarter of 2001, due to an
overall decline in information technology spending, and anticipated increased
pressure from competitors, we concluded that 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 related to the
acquisition of Globalware in May 2000.

      Restructuring and other impairment charges. During the third quarter of
2002, management approved and we formally adopted and began to implement another
restructuring program in an effort to reduce operating expenses that resulted in
aggregate charges of $4.1 million. These charges included $1.2 million related
to revised estimates on the excess space at the Hayward facility, and $207,000
related to revised estimates on the excess space at the Chicago facility, due to
the continuing deterioration in the real estate market, and $479,000 related to
excess equipment and software, and other charges related to the reduction in
force. Restructuring charges also included $2.2 million related to employee
termination costs associated with the elimination of 78 positions, most of which
occurred in the United States and affected employees at all levels. See Note 7
to the Condensed Consolidated Financial Statements, "Restructuring and Other
Impairment Charges," for further information regarding these activities.

      Interest and Other Income, Net. Net interest and other income decreased
approximately $343,000, or 52%, from approximately $654,000 for the three months
ended September 30, 2001 to approximately $311,000 for the three


                                      -16-
<PAGE>

months ended September 30, 2002. Net interest and other income decreased
approximately $1.0 million, or 43%, from approximately $2.2 million for the nine
months ended September 30, 2001 to approximately $1.2 million for the nine
months ended September 30, 2002. This decrease was primarily due to a decrease
in net interest earned as a result of decreased cash balances and lower interest
rates.

Liquidity and Capital Resources

      Since inception, we have funded our operations primarily through the sale
of equity securities, through which we have raised net proceeds of $124.5
million through September 30, 2002. As of September 30, 2002, we had $32.2
million of cash and cash equivalents, a decrease from $43.1 million of cash and
cash equivalents held as of December 31, 2001. As of September 30, 2002, our
working capital was approximately $26.5 million compared to approximately $38.2
million on December 31, 2001.

      Net cash used in operating activities totaled $10.1 million for the nine
months ended September 30, 2002, as compared with $21.7 million for the
comparable period in 2001. During the nine months ended September 30, 2002, we
received a payment of $6 million from our largest customer, McKesson
Corporation. This was the final scheduled payment on a three-year contract which
will expire in March 2003. During the comparable period in 2001, we received a
scheduled payment of $5 million from McKesson Corporation. The principal use of
cash was to fund our losses from operations. Net cash provided by financing
activities totaled $3,000 during the nine months ended September 30, 2002, as
compared with $330,000 for the comparable period in 2001.

      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 $344,000 in the nine months
ended September 30, 2002, as compared with $2.3 million for the comparable
period in 2001. The decrease was primarily due to the reduction of expenditures
related to leasehold improvements for our Hayward office and the reduction of
expenditures for computer hardware. During the nine months ended September 30,
2001, we converted all of our investments to cash and cash equivalents, which
provided $16.4 million of net cash from investing activities.

      We have restructured our business to more closely align expenses with
near-term revenue. In conjunction with this restructuring, we reduced our
workforce by approximately 40% during the third quarter of 2002.

      We believe that our current cash and cash equivalents will be sufficient
to meet our anticipated cash needs for working capital and capital expenditures
for at least the next 12 months. However, we may need to raise additional funds
in order to support more rapid expansion, develop new or enhanced services and
products, respond to competitive pressures, acquire complementary businesses or
technologies or take advantage of unanticipated opportunities. Our future
liquidity and capital requirements will depend upon numerous factors, including
costs and timing of expansion of research and development efforts and the
success of such efforts, the success of our existing and new service offerings
and competing technological and market developments. The factors described
earlier in this paragraph will impact our future capital requirements and the
adequacy of our available funds. If additional funds are raised through the
issuance of equity securities, the percentage ownership of our stockholders will
be reduced, stockholders may experience additional dilution in net book value
per share or such equity securities may have rights, preferences or privileges
senior to those of our stockholders. If additional funds are needed, we cannot
assure that additional financing will be available on terms favorable to us, if
at all.

      We lease our facilities under non-cancelable operating leases. Future
minimum payments under operating leases, net of any contracted third-party
sub-lease rental income at September 30, 2002 are as follows (in thousands):


                                      -17-
<PAGE>

                                                  Less Sub-        Net Future
                                Operating       Lease Rental         Minimum
                                  Leases           Income           Payments
                                  ------           ------           --------
2002                             $   710           $ (36)           $   674
2003                               2,390             (50)             2,340
2004                               2,484             (65)             2,419
2005                               2,410             (52)             2,358
2006                               2,290              --              2,290
2007                               1,769              --              1,769
                                 -------           -----            -------
Total                            $12,053           $(203)           $11,850
                                 =======           =====            =======

      Included in the table above is the restructuring liability of $4.8 million
associated with charges related to excess office space.

RISK FACTORS

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
September 30, 2002, we had an accumulated deficit of $133.7 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.

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 Small Cap Market. Our stock
moved from the Nasdaq National Market to the Nasdaq Small Cap Market on
September, 12, 2002, because it was no longer in compliance with the listing
requirements of the National Market. The Nasdaq Stock Market's Marketplace Rules
impose certain minimum financial requirements on us for the continued listing of
our stock on the Nasdaq Small Cap Market. One such requirement is a minimum bid
price on our stock of $1.00 per share, which must be maintained over a certain
period of time prescribed by Nasdaq. Our stock price is currently below the
minimums set forth by those rules. We expect to have until June 2, 2003, for our
stock price to remain above $1.00 for 10 consecutive days, or our stock could be
delisted.

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 Small Cap 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;


                                      -18-
<PAGE>

            o     changes in the handheld and wireless device industries;

            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;

            o     the potential for delisting by Nasdaq;

            o     the potential for a reverse stock split; and

            o     changes in interest rates and other general economic
                  conditions.

The slowdown in the adoption of mobile devices and mobile applications has
harmed and could continue to 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, particularly in the technology sector. 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
continue to reduce demand for our software and services.

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 25% of our total revenues for the
third quarter of 2002. We expect that McKesson Corporation will continue to
represent a significant portion of our revenues through March 2003. Any
disruption or termination of our commercial relationship with McKesson
Corporation would harm our revenues and results of operations.

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
retain 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.

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

      Our mobile enterprise software, which consists of our AvantGo M-Business
Server, and our mobile enterprise applications, including AvantGo Mobile Sales,
AvantGo Mobile Delivery, AvantGo Mobile Pharma and AvantGo Mobile Inspection, as
well as AvantGo Pylon products, has accounted for 56% of our revenues in the
nine months ended September 30, 2002, 56% of our revenues in 2001, and 56% of
our revenues in 2000. 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


                                      -19-
<PAGE>

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 intense competition, and we expect this competition to grow 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

            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 revenues to fall.

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. We
currently do not have redundant facilities. 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 and similar events.


                                      -20-
<PAGE>

      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 has experienced power shortages in the past, 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 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 enterprise 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.

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 mobile
software and Internet technologies. 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


                                      -21-
<PAGE>

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
mobile devices. We have expended considerable resources on sales and marketing
of our products and services. 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 further, jeopardizing our ability to generate
revenue from the sale of advertising and distribution products.

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 products or services that compete with AvantGo's mobile
software. Any of these manufacturers may choose either to promote its competing
product or service or promote the services of one or more of our other
competitors, which could limit the growth of our business.

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
promote the benefits and adoption of mobile technology, as well as in some
instances distribute our software, 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.

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.


                                      -22-
<PAGE>

      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,
mobile device 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 operations in
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 15% of our revenues
in the nine months ended September 30, 2002. Our business therefore is subject
to the risks associated with doing business internationally. The costs of
developing overseas revenues may 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 and recruiting key personnel.

      Our future success depends to a significant extent on the continued
services of our senior management and other key personnel. 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. Despite recent reductions 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 adoption of
mobile technology and sales of our products and services. In particular, the


                                      -23-
<PAGE>

unavailability of anti-virus protection that our users deem to be adequate to
combat these viruses could have a material adverse effect on our business.

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.

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. 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 would likely
cause our stock price to decline substantially.

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
products and services 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.


                                      -24-
<PAGE>

      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 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 which, if any of 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.

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.


                                      -25-
<PAGE>

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.

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.


                                      -26-
<PAGE>

ITEM 3. 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 September 30, 2002, we had unrestricted cash and cash equivalents of
$32.2 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 September 30, 2002, 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 September 30, 2002.

      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 include $126,000 of unrealized other income due to exchange rate
fluctuations in the third quarter of 2002.

ITEM 4. Controls and Procedures

      We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating our disclosure controls and procedures,
our management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and our management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.

      An evaluation has been performed under the supervision and with the
participation of our management, including the CEO and CFO, of the effectiveness
of the design and operation of our disclosure controls and procedures within 90
days prior to the filing of this report. Based on that evaluation, our
management, including the CEO and CFO, concluded that our disclosure controls
and procedures were effective as of September 30, 2002. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to September 30, 2002.

PART II OTHER INFORMATION

ITEM 1. 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 (the "Individual Defendants"), and


                                      -27-
<PAGE>

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 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. A
consolidated amended complaint has been filed. A motion to dismiss addressing
issues common to the companies and individuals who have been sued in these
actions was filed on July 15, 2002. The Court has not yet ruled on this motion.
On October 9, 2002, the Court dismissed the Individual Defendants from the case
without prejudice based upon Stipulations of Dismissal filed by the plaintiffs
and the Individual Defendants. We believe we have meritorious defenses, and we
intend to defend the action vigorously.

ITEM 6. Exhibits and Reports on Form 8-K

     (a) Exhibits.

         Exhibit No        Description
         ----------        -----------

10.42    Letter Agreement with Lesko Associates, dated July 18, 2002
10.43    Separation Agreement and General Release with Mike Aufricht, dated
         September 4, 2002
10.44    Separation Agreement and General Release with Felix Lin, dated
         September 28, 2002
10.45    Separation Agreement and General Release with David Moore, dated
         September 3, 2002
10.46    Separation Agreement and General Release with Richard Owen, dated
         September 30, 2002
10.47    Separation Agreement and General Release with Paul Kanneman, dated
         August 19, 2002
10.48    Offer Letter to David B. Pratt from Jim T. Richardson dated
         September 25, 2002
99.1     Certification of Chief Executive Officer and Chief Financial Officer
         pursuant to 18 U.S.C Section 1350 as adopted pursuant to Section 906
         of Sarbanes-Oxley Act of 2002

    (b)  Reports on Form 8-K.

     Current report on Form 8-K filed on August 14, 2002, under Item 9 thereof.


                                      -28-
<PAGE>

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                              AVANTGO, INC.


Date:  November 13, 2002                      By: /s/ David B. Cooper, Jr.
                                              ------------------------------
                                              David B. Cooper, Jr.
                                              Chief Financial Officer
                                              (Principal financial and chief
                                               accounting officer)


                                      -29-
<PAGE>

                                 CERTIFICATIONS

I, David Pratt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AvantGo, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entitles, particularly during the period in which this quarterly report is
      being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

      c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

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

      a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: November 13, 2002                       /s/ David Pratt
                                              ---------------
                                              David Pratt
                                              Interim Chief Executive Officer


                                      -30-
<PAGE>

                                 CERTIFICATIONS

I, David B. Cooper, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of AvantGo, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

      a) designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entitles, particularly during the period in which this quarterly report is
      being prepared;

      b) evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

      c) presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date;

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

      a) all significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and

      b) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: November 13, 2002                                 /s/ David B. Cooper, Jr.
                                                        ------------------------
                                                        David B. Cooper, Jr.
                                                        Chief Financial Officer


                                      -31-