<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB

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

For the quarterly period ended June 30, 2003 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:                0-27166
                        ----------------------------------

                                XATA Corporation
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

           Minnesota                                          41-1641815
-------------------------------                          ----------------------
(State or Other Jurisdiction of                            (I.R.S. Employer
 Incorporation or Organization)                          Identification Number)

            151 E. Cliff Road, Suite 10, Burnsville, Minnesota 55337
--------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code: (952) 707-5600
                                                    ----------------------------

--------------------------------------------------------------------------------
                 (Former name, former address and former fiscal
                      year, if changed since last report)

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
As of August 1, 2003, the following securities of the Registrant were
outstanding: 6,937,825 shares of Common Stock, $.01 par value per share.

                                       1
<PAGE>

                                XATA Corporation
                                      Index

<Table>
<Caption>
PART I. FINANCIAL INFORMATION                                             Page No.
                                                                          --------
<S>     <C>                                                               <C>
        Item 1.   Financial Statements:
          Balance Sheets as of June 30, 2003
          and September 30, 2002                                                 3

          Statements of Operations for the Three and Nine
          Months Ended June 30, 2003 and 2002                                    5

          Statements of Cash Flows for the Nine Months
          Ended June 30, 2003 and 2002                                           6

          Notes to Financial Statements                                          7

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

        Item 3.   Controls and Procedures                                       15

PART II. OTHER INFORMATION

        Item 1.  Legal Proceedings                                              17

        Item 2.  Changes in Securities                                          17

        Item 3.  Defaults upon Senior Securities                                17

        Item 4.  Submission of Matters to a Vote of Security Holders            17

        Item 5.  Other Information                                              17

        Item 6.  Exhibits and Reports on Form 8-K                               17

SIGNATURES                                                                      18

EXHIBITS                                                                        19
</TABLE>

                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

XATA CORPORATION
BALANCE SHEETS
JUNE 30, 2003 AND SEPTEMBER 30, 2002

<Table>
<Caption>
                                                                                      JUNE 30,          September 30,
                                                                                        2003                2002
ASSETS                                                                               (UNAUDITED)          (audited)
                                                                                    --------------      --------------
<S>                                                                                 <C>                 <C>
Current Assets
     Cash and cash equivalents                                                      $       19,974      $    1,058,119
     Accounts receivable, less allowances for doubtful accounts
         of $96,000 and $122,000                                                         3,434,299           3,244,576
     Inventories                                                                         1,445,137           1,193,871
     Deferred product costs                                                                217,702                  --
     Prepaid expenses                                                                      103,867             111,468
                                                                                    --------------      --------------
                TOTAL CURRENT ASSETS                                                     5,220,979           5,608,034

Equipment and Leasehold Improvements, at cost
     Engineering and manufacturing equipment                                               341,038             258,289
     Office furniture and equipment                                                        981,836             968,568
     Leasehold improvements                                                                 24,948              24,948
                                                                                    --------------      --------------
                                                                                         1,347,822           1,251,805

     Less: accumulated depreciation and amortization                                      (871,915)           (682,769)
                                                                                    --------------      --------------
                TOTAL EQUIPMENT AND LEASEHOLD IMPROVEMENTS                                 475,907             569,036

Other Assets
     Capitalized software development costs, less accumulated
         amortization of $5,472,620 and $4,478,001                                       1,662,451           2,791,615
                                                                                    --------------      --------------
                TOTAL ASSETS                                                        $    7,359,337      $    8,968,685
                                                                                    ==============      ==============
</Table>

See Notes to Financial Statements

                                       3
<PAGE>

<Table>
<Caption>
                                                                               JUNE 30,           September 30,
                                                                                 2003                 2002
LIABILITIES AND SHAREHOLDERS' EQUITY                                          (UNAUDITED)           (audited)
                                                                             --------------      --------------
<S>                                                                          <C>                 <C>
Current Liabilities
     Bank line of credit                                                     $      579,085      $           --
     Current maturities of long-term debt                                           134,697             269,331
     Accounts payable                                                             1,403,030             922,625
     Accrued expenses                                                               993,906             567,375
     Deferred revenue                                                             1,373,142           1,037,470
                                                                             --------------      --------------
                TOTAL CURRENT LIABILITIES                                         4,483,860           2,796,801

Long-Term Debt, net of current maturities                                           307,010             373,176
                                                                             --------------      --------------
                TOTAL LIABILITIES                                                 4,790,870           3,169,977

Commitments                                                                              --                  --

Shareholders' Equity
     Common stock, par value $0.01 per share; 25,000,000 and 12,000,000
         shares authorized; 6,933,825 and 6,928,825 shares issued                    69,338              69,288
     Additional paid-in capital                                                  17,754,172          17,748,440
     Accumulated deficit                                                        (15,255,043)        (12,019,020)
                                                                             --------------      --------------
                TOTAL SHAREHOLDERS' EQUITY                                        2,568,467           5,798,708
                                                                             --------------      --------------
                TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $    7,359,337      $    8,968,685
                                                                             ==============      ==============
</Table>

See Notes to Financial Statements

                                       4
<PAGE>

XATA CORPORATION
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2003 AND 2002

<Table>
<Caption>
                                                       Three Months Ended                 Nine Months Ended
                                                            June 30,                           June 30,
                                                 ------------------------------      ------------------------------
                                                     2003              2002              2003              2002
                                                  (UNAUDITED)       (unaudited)       (UNAUDITED)       (unaudited)
                                                 ------------      ------------      ------------      ------------
<S>                                              <C>               <C>               <C>               <C>
Net sales                                        $  3,062,247      $  2,716,266      $  7,777,503      $ 10,340,302
Cost of goods sold                                  2,278,318         2,261,363         5,909,135         6,896,310
                                                 ------------      ------------      ------------      ------------
         GROSS PROFIT                                 783,929           454,903         1,868,368         3,443,992

Operating expenses
     Selling, general and administrative            1,333,080         1,180,037         3,628,703         4,243,350
     Research and development                         468,908           486,588         1,444,339         1,608,121
                                                 ------------      ------------      ------------      ------------
                                                    1,801,988         1,666,625         5,073,042         5,851,471
                                                 ------------      ------------      ------------      ------------

         OPERATING LOSS                            (1,018,059)       (1,211,722)       (3,204,674)       (2,407,479)

Non-operating income (expense)
     Interest income                                      601            10,188             4,728            31,915
     Interest expense                                 (11,708)          (14,616)          (40,104)          (59,795)
     Other                                                 --             3,963             4,027            (2,829)
                                                 ------------      ------------      ------------      ------------
                                                      (11,107)             (465)          (31,349)          (30,709)
                                                 ------------      ------------      ------------      ------------

         NET LOSS BEFORE INCOME TAXES              (1,029,166)       (1,212,187)       (3,236,023)       (2,438,188)

Income taxes                                               --          (600,000)               --          (600,000)
                                                 ------------      ------------      ------------      ------------
         NET LOSS                                $ (1,029,166)     $ (1,812,187)     $ (3,236,023)     $ (3,038,188)
                                                 ============      ============      ============      ============

Net loss per common share
     Basic & Diluted                             $      (0.15)     $      (0.26)     $      (0.47)     $      (0.44)
                                                 ============      ============      ============      ============

Weighted average common and
common share equivalents
     Basic & Diluted                                6,933,825         6,927,638         6,933,372         6,907,442
                                                 ============      ============      ============      ============
</Table>

See Notes to Financial Statements

                                       5
<PAGE>

XATA CORPORATION
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 2003 AND 2002

<Table>
<Caption>
                                                                                       Nine Months Ended
                                                                                            June 30,
                                                                                  ------------------------------
                                                                                     2003              2002
                                                                                  (UNAUDITED)        (unaudited)
                                                                                  ------------      ------------
<S>                                                                               <C>               <C>
Cash provided by (used in) Operating Activities
Net loss                                                                            (3,236,023)       (3,038,188)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
     Depreciation and amortization of equipment and leasehold improvements             189,146           148,685
     Amortization of capitalized software development costs                          1,080,570         1,435,275
     Deferred income taxes                                                                  --           600,000
     Allowance for doubtful accounts                                                   (26,000)               --
     Write-off of software product                                                      48,594                --
     Changes in assets and liabilities:
         Accounts receivable                                                          (163,723)        1,734,771
         Inventories                                                                  (251,266)          (74,301)
         Accounts payable                                                              480,405          (647,968)
         Accrued expenses and deferred revenue                                         762,203           511,976
         Prepaid expenses and deferred product costs                                  (210,101)           60,018
                                                                                  ------------      ------------
                NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                 (1,326,195)          730,268

Cash used in Investing Activities
     Purchase of equipment                                                             (96,017)         (363,744)
                                                                                  ------------      ------------
                NET CASH USED IN INVESTING ACTIVITIES                                  (96,017)         (363,744)

Cash provided by (used in) Financing Activities
     Net borrowings on bank line of credit                                             579,085                --
     Payments on long-term debt                                                       (200,800)         (176,433)
     Proceeds from options and warrants exercised                                        5,782            91,085
                                                                                  ------------      ------------
                NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                    384,067           (85,348)
                                                                                  ------------      ------------

                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                    (1,038,145)          281,176

Cash and Cash Equivalents
     Beginning                                                                       1,058,119         2,031,432
                                                                                  ------------      ------------
     Ending                                                                             19,974         2,312,608
                                                                                  ============      ============

Supplemental Disclosures of Cash Flow Information
     Cash payments for interest                                                   $     40,105      $     56,134
</Table>

See Notes to Financial Statements

                                       6
<PAGE>


NOTES TO FINANCIAL STATEMENTS

NOTE 1.  MANAGEMENT STATEMENT

In the opinion of management of the Company, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal,
recurring accruals) necessary to present fairly the financial position of the
Company as of June 30, 2003, and the results of operations for the three and
nine months and cash flows for the nine months ended June 30, 2003 and 2002. The
results of operations for any interim period are not necessarily indicative of
the results for the fiscal year ending September 30, 2003. These interim
financial statements should be read in conjunction with the Company's annual
financial statements and related notes thereto included in the Company's Form
10-KSB and Annual Report to shareholders for the fiscal year ended September 30,
2002.


NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION. The Company derives its revenue from sales of hardware,
software and related services, and from application service contracts. The
Company recognizes revenue in accordance with Statement of Position (SOP) 97-2,
Software Revenue Recognition, as amended by SOP 98-9, Modification of SOP 97-2,
Software Revenue Recognition with Respect to Certain Transactions, and
Securities and Exchange Commission Staff Accounting Bulletin (SAB) 101, Revenue
Recognition in Financial Statements.

Hardware and software revenue is recognized under SOP 97-2 and SAB 101 when (i)
persuasive evidence of an arrangement exists, for example a signed agreement or
purchase order, (ii) delivery has occurred, as evidenced by shipping documents
and customer acceptance, (iii) the fee is fixed or determinable and payable
within twelve months, and (iv) collectibility is probable and supported by
credit checks or past payment history. Pursuant to certain contractual
arrangements, revenues are recognized for completed systems held at the
Company's warehouse pending the receipt of delivery instructions from the
customer.

Many of the Company's customers purchase software maintenance agreements
annually. Customers may also purchase extended warranty and service support
contracts. Revenue from maintenance agreements, extended warranty and service
support contracts are deferred and recognized ratably over the contract period.
Fees for professional services are recognized as they are performed, regardless
of when billed to the customer.

Application service revenue, which is composed of monthly fees, is recognized
ratably over the minimum service contract period, which commences upon the
activation of the mobile application module. When system products are sold in
conjunction with an application service contract, the Company defers the product
revenue and associated production costs at shipment and recognizes both ratably
over the minimum service contract, which is generally a one to five year period.

CAPITALIZED SOFTWARE DEVELOPMENT COSTS. Software development costs incurred
after establishing technological feasibility are capitalized. These costs are
amortized to cost of goods sold beginning when the product is first released for
sale to the general public. Amortization is at the greater of the amount
computed using the ratio of current gross revenues for the product to the total
of current and anticipated future gross revenues or the straight-line method
over the estimated economic life of the product (two to five years). The Company
reviews its long-lived assets periodically to determine potential impairment by
comparing the carrying value of the long-lived assets with estimated future cash
flows expected to result from the use of the assets, including cash flows from
disposition. Should the sum of the expected future cash flows be less than the
carrying value, the Company would recognize an impairment loss. An

                                       7
<PAGE>

impairment loss would be measured by comparing the amount by which the carrying
value exceeds the fair value of the long-lived assets. In the three month period
ended March 31, 2003, the Company recorded an impairment loss of $48,594,
included in cost of sales, to write off the net balance of capitalized software
development costs related to a product line for which revenue is not expected to
be realized in the foreseeable future.

RESEARCH AND DEVELOPMENT COSTS. Expenditures for research and development
activities performed by the Company are charged to operations as incurred.

BASIC AND DILUTED NET LOSS PER SHARE. Basic and diluted net loss per common
share is computed by dividing the net loss by the weighted average common shares
outstanding for the period.

At June 30, 2003 and 2002, the Company had options and warrants outstanding to
purchase a total of 1,056,736 and 922,339 shares of common stock, at a
weighted-average exercise price of $3.59 for both years. Because the Company
incurred losses for the three and nine months ended June 30, 2003 and 2002, the
inclusion of potential common shares in the calculation of diluted loss per
common share would have an antidilutive effect. Therefore, basic and diluted
loss per common share amounts are the same for the three and nine month periods
ending June 30, 2003 and 2002.

STOCK-BASED COMPENSATION. The Company utilizes the intrinsic value method of
accounting for its employee stock-based compensation plans. All stock options
pursuant to the Company's stock option plans have been granted at fair market
value at the date of grant, and accordingly, no compensation expense has been
recorded for all periods presented. The following table illustrates the effect
on net loss and net loss per share if the Company had applied the fair value
method of accounting:

<Table>
<Caption>
                                                 Three Months Ended                   Nine Months Ended
                                                       June 30,                            June 30,
                                            ------------------------------      ------------------------------
                                                2003              2002              2003              2002
                                            ------------      ------------      ------------      ------------
<S>                                         <C>               <C>               <C>               <C>
 Net loss, as reported                      $ (1,029,166)     $ (1,812,187)     $ (3,236,023)     $ (3,038,188)
 Deduct:  Total stock-based
      employee compensation expense
      determined under fair value based
      methods for all awards, net of
      related tax effects                        (97,000)         (112,000)         (325,000)         (308,000)
                                            ------------      ------------      ------------      ------------
 Pro forma net loss                         $ (1,126,166)     $ (1,924,187)     $ (3,561,023)     $ (3,346,188)

 Basic and diluted net loss
 per common share
      As reported                           $      (0.15)     $      (0.26)     $      (0.47)     $      (0.44)
      Pro forma                                    (0.16)            (0.28)            (0.51)            (0.48)
</Table>

COMMON STOCK WARRANTS: The Company has, on occasion, issued warrants for the
purchase of common stock to directors, consultants and placement agents.
Compensation expense associated with the warrants has not been material. At June
30, 2003 and 2002, warrants were outstanding to purchase a total of 47,478 and
53,478 shares of common stock at a weighted-average exercise price of $2.19 and
$2.54 per share, with a weighted-average remaining life of approximately 1.21
years and 2.01 years.

                                       8
<PAGE>

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting for Certain Financial Instruments
In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. The changes in this statement will result
in a more complete depiction of an entity's liabilities and equity and will,
thereby, assist investors and creditors in assessing the amount, timing, and
likelihood of potential future cash outflows and equity share issuances.
Reliability of accounting information will be improved by providing a portrayal
of an entity's capital structure that is unbiased, verifiable, and more
representationally faithful than information reported prior to issuance of this
statement. This statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. Management does not believe
the adoption of this statement will have any immediate material impact on the
Company.

Derivative Instruments and Hedging Activities
In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This statement amends SFAS 133,
Accounting for Derivative Instruments and Hedging Activities, to clarify
financial accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred to as
derivatives) and for hedging activities. The changes in this statement improve
financial reporting by requiring that contracts with comparable characteristics
be accounted for similarly, resulting in more consistent reporting of contracts
as either derivatives or hybrid instruments. This statement is effective for
contracts entered into or modified after June 30, 2003. Because the Company does
not currently utilize derivative instruments or engage in hedging activities,
management does not believe the adoption of this statement will have any
immediate material impact on the Company.

NOTE 3.  COMMITMENTS

On October 11, 2002, the Company entered into a U.S. Value Added Reseller
Agreement with ORBCOMM LLC. Pursuant to this agreement, the Company is
authorized to resell certain satellite communication services in conjunction
with its products. In exchange for favorable pricing, the Company has committed
to certain volume minimums. On March 27, 2003, the Company and ORBCOMM amended
this agreement by revising certain commitment dates. Approximate future minimum
purchases are as follows:

<Table>
<Caption>
 Year ending September 30:
--------------------------
<S>                                   <C>
2003                                  $         --
2004                                       700,000
2005                                     2,600,000
2006                                       900,000
                                      ------------
                                      $  4,200,000
                                      ============
</Table>

                                       9
<PAGE>

NOTE 4.  CORPORATE LIQUIDITY

On December 23, 2002, the Company entered into a $2,000,000 credit line
agreement with a commercial lender. Advances under the line of credit accrue
interest at prime rate plus 2.90 percent. The terms of the credit agreement
include a provision for minimum monthly interest payments. The line is subject
to borrowing base requirements, based on eligible accounts receivable, and is
collateralized by substantially all Company assets. On June 30, 2003, the
maximum borrowing availability on the line was $1.44 million. The agreement
expires in December 2003 and is automatically renewed for successive thirty day
periods unless otherwise terminated by either the Company or the lender. As of
September 30, 2002 the Company did not have a line of credit in place.

Based on current operating and cash flow projections, management believes that
the Company may be required to raise additional funds to continue its new
product development, marketing and other operating activities at desired levels
during the next twelve months. The amount of funds required, if any, will depend
in part on the level of near-term revenue of current and new products. A decline
in revenue, delay in shipments of new products, significant revenue growth or an
increase in product development in the near term would require additional
external funding. Moreover, it is possible that the Company's cash needs may
vary significantly from its predictions due to failure to generate anticipated
cash flow or other reasons. No assurance can be given that the Company's
predictions regarding its cash needs will prove accurate, that the Company will
not require additional financing, that the Company will be able to secure any
required additional financing when needed or at all, or that such financing, if
obtained, will be on terms favorable or acceptable to the Company. If additional
financing is required and the Company is unable to secure such additional
financing, the Company may need to implement measures to reduce operating costs,
including reductions to product development, marketing and other operating
activities.

NOTE 5.  TRANSACTIONS WITH RELATED PARTY

On June 10, 2003, the Company amended its note payable to Deere & Company, the
Company's largest shareholder. The note, which originated April 20, 2000 in the
amount of $1,000,000, includes monthly principal and interest payments to Deere.
The amendment relieves the Company's obligation to make further principal
payments until January, 2004. As of June 30, 2003, the principal balance owed on
the note was $416,000.

The Company purchases certain components for its products from a subsidiary of
Deere & Company. Payments under this relationship totaled $187,000 and
$1,105,000 in the three and nine month periods ended June 30, 2003.

                                       10
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following discussion and analysis provides information we believe is
relevant to an assessment and understanding of our results of operations and
financial condition. This discussion should be read in conjunction with the
financial statements in Item 1 and our report on Form 10-KSB for the year ended
September 30, 2002.

CRITICAL ACCOUNTING POLICIES

Accounting policies, methods and estimates are an integral part of our financial
statements and are based upon management's current judgments. Certain accounting
policies, methods and estimates are particularly important because of their
significance to the financial statements. Note 2 of the Notes to Financial
Statements includes a summary of the significant accounting policies and methods
we use. The following is a discussion of what we believe to be the most critical
of these policies and methods.

Revenue recognition. We derive our revenue from sales of hardware, software and
related services, and from application service contracts. We recognize revenue
for hardware and software revenue, in accordance with Statement of Position 97-2
and Securities and Exchange Commission Staff Accounting Bulletin 101, when (i)
persuasive evidence of an arrangement exists, for example a signed agreement or
purchase order, (ii) delivery has occurred, as evidenced by shipping documents
and customer acceptance, (iii) the fee is fixed or determinable and payable
within twelve months, and (iv) collectibility is probable and supported by
credit checks or past payment history. Pursuant to certain contractual
arrangements, we recognize revenue for completed systems held at our warehouse
pending the receipt of delivery instructions from the customer. We defer
recognition of revenue on products sold in conjunction with application service
contracts, as discussed below.

Many of our customers purchase software maintenance agreements annually.
Customers may also purchase extended warranty and service support contracts.
Revenue from maintenance agreements, extended warranty and service support
contracts are deferred and recognized ratably over the contract period. Fees for
professional services are recognized as they are performed, regardless of when
billed to the customer.

Application service revenue, which is composed of monthly fees, is recognized
ratably over the minimum service contract period, which commences upon the
activation of the mobile application module. When system products are sold in
conjunction with an application service contract, we defer the product revenue
and associated production costs, and recognize both ratably over the minimum
service contract term (generally one to five years) rather than upon shipment of
the product. Because sales of our XATANET fleet management system are currently
accounted for under this policy, and because we expect the proportion of sales
treated under this policy, including sales of XATANET, to increase relative to
sales of other products, we expect deferred revenue to increase over time. This
will have the effect of delaying revenue recognition of XATANET system sales to
future periods, and thus will lower the amount of revenue recognized in earlier
periods.

Capitalized software development costs. We capitalize software development costs
incurred after establishing technological feasibility. These costs are later
amortized to cost of goods sold beginning when the product is first released for
sale to the general public. Amortization is at the greater of the amount
computed using the ratio of current gross revenues for the product to the total
of current and anticipated future gross revenues or the straight-line method
over the estimated economic life of the product. Capitalization of software
development costs has the effect of reducing operating costs and increasing
reported profitability in the period in which such costs occur. Amortization of
these costs increases cost of sales in the periods over which such amortization
takes place, thus decreasing reported profitability in those

                                       11
<PAGE>

periods. We are currently amortizing previously capitalized software development
costs, which increased our reported net loss in the current period.

We review our long-lived assets periodically to determine potential impairment
by comparing the carrying value of the long-lived assets with estimated future
cash flows expected to result from the use of the assets, including cash flows
from disposition. If the sum of the expected future cash flows is less than the
carrying value, we will recognize an impairment loss equal to the amount by
which the carrying value exceeds the fair value of the long-lived assets.

Research and development costs. We charge expenditures for research and
development activities to operations as incurred. If we expend funds on the
development of software, including software development salaries, for projects
or products that we deem to have achieved technological feasibility, such costs
would be capitalized, which would have the effect of reducing research and
development costs in the current period.

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

Recently issued accounting pronouncements. See Note 2 in Notes to Financial
Statements.

RESULTS OF OPERATIONS

Net Sales. Our net sales for the three months ended June 30, 2003 were $3.06
million, versus net sales of $2.72 million for the three months ended June 30,
2002. For the nine months ended June 30, 2003, net sales were $7.78 million,
versus net sales of $10.34 million for the nine months ended June 30, 2002. We
currently anticipate that total revenue for fiscal 2003 will be between $10.0
million and $11.0 million, compared to fiscal 2002 total revenue of $13.2
million. We believe the decrease in sales in the current fiscal year was due to
continuing weak economic conditions for technology products, increased
competition, delays in customer purchase commitments, and delays in the rollout
of our new products. Additionally, revenue from sales of our subscription-based
XATANET product is deferred and recognized ratably over the minimum contract
term of the subscription (generally one to five years), which negatively
impacted revenue reported in the current quarter.

Cost of Goods Sold. Cost of goods sold includes the direct product costs
associated with fulfilling customer orders as well as certain fixed expenses.
Such fixed expenses include costs relating to our system implementation and
support staff, expenses associated with the enhancement of released products,
and non-cash amortization expense of capitalized software development costs.
Cost of goods sold in the three months ended June 30, 2003 were $2.28 million
(74% of net sales), versus $2.26 million (83% of net sales) for the comparable
prior year period. For the nine months ended June 30, 2003, cost of goods sold
were $5.91 million (76% of net sales), versus $6.90 million (67% of net sales)
for the comparable prior year period. Cost of goods sold decreased in the
current year nine month period because of the decrease in net sales combined
with lower amortization expense. Cost of goods sold as a percent of net sales
increased in the current fiscal year due to the effect of spreading the fixed
expense items, including amortization, over a lower revenue amount. Our direct
cost of filling customer orders in the first nine months of fiscal 2003,
including the costs associated with producing our mobile computing and
communication units, was comparable to that of the first nine months of fiscal
2002.

                                       12
<PAGE>

Operating Expenses. Operating expenses include research and development
expenses, as well as selling, general and administrative expenses. Total
operating expenses were $1.80 million (59% of net sales) for the three months
ended June 30, 2003 compared to $1.67 million (61% of net sales) for the
comparable prior year period. For the nine months ended June 30, 2003, total
operating expenses were $5.07 million (65% of net sales), versus $5.85 million
(57% of net sales) for the comparable prior year period.

Selling, general and administrative expenses were $1.33 million (44% of net
sales) for the three months ended June 30, 2003, compared to $1.18 million (43%
of net sales) for the comparable prior year period. The increase in these
expenses in the current year three month period was primarily due to accrued
severance expenses of approximately $250,000 associated with the separation of
an officer from the Company. For the nine months ended June 30, 2003, selling,
general and administrative expenses were $3.63 million (47% of net sales),
versus $4.24 million (41% of net sales) for the comparable prior year period.
The decrease in selling, general and administrative expenses in the current year
nine month period was due to lower salary expenses combined with reduced sales
commissions and other selling expenses, partially offset by accrued severance
expenses. We expect these expenses for fiscal 2003 to be lower than fiscal 2002
due to actions implemented to reduce future operating expenses, including the
elimination of several non-critical positions.

Research and development expenses during the three months ended June 30, 2003
were $469,000, versus $487,000 in the comparable fiscal 2002 period. For the
nine months ended June 30, 2003, research and development expenses were $1.44
million, versus $1.61 million in the comparable fiscal 2002 period. Costs
associated with research and development activities are expensed in the period
they are incurred. We capitalize software development expenditures after we
establish technological feasibility of new products, and later amortize these
capitalized amounts to cost of goods sold. In the three and nine months ended
June 30, 2003, we did not capitalize any software development costs because the
expenditures were primarily on products that have not attained technological
feasibility.

Overall product development expenses totaled $705,000 in the three months ended
June 30, 2003. These include $469,000 of research and development expense
associated with the development of new products, coupled with $236,000 expended
on the enhancement of released products (included as a component of cost of
goods sold). For the nine months ended June 30, 2003, overall product
development expenses totaled $2.18 million, including $1.44 million of research
and development expense associated with the development of new products and
$732,000 expended on the enhancement of released products.

Non-operating Income and Expense. Interest expense for the three months ended
June 30, 2003 was $12,000 compared to $15,000 in the same prior year period. For
the nine months ended June 30, 2003, interest expense was $40,000 compared to
$60,000 in the same prior year period. Interest expense in the current year,
which included interest associated with our current operating line of credit,
decreased because the prior year included an annual minimum interest assessment
associated with a former bank line of credit, which we subsequently terminated.
Interest expense for both periods also included interest on a note payable.
Interest income for the three months ended June 30, 2003 was negligible, versus
$10,000 in the comparable prior year period. For the nine months ended June 30,
2003, interest income was $5,000, versus $32,000 in the comparable prior year
period. The decrease in the current year was due to our lower cash balance
combined with a lower rate of interest paid on our investment account.

Income Taxes. No income tax benefit or expense was recorded for the three or
nine month periods ended June 30, 2003. In the three month period ended June 30,
2002, an income tax expense of $600,000 was recorded in connection with the
write-off of a deferred tax asset. We periodically review the valuation
allowance we have established for our deferred tax assets. Realization of
deferred tax assets is dependent upon sufficient future taxable income during
periods when deductible temporary differences and carryforwards are expected to
be available to reduce taxable income. The amount of the net deferred tax

                                       13
<PAGE>

asset considered realizable could be increased in the future if we return to
profitability and actual future taxable income is higher than currently
estimated.

Net Loss. Net loss for the three months ended June 30, 2003 was $1.03 million,
compared to $1.81 million for the three months ended June 30, 2002. The
decreased net loss in the current year three month period was primarily due to
higher revenue and the prior year deferred tax asset write-off, partially offset
by management severance expenses incurred in the current year period. For the
nine months ended June 30, 2003, net loss was $3.24 million, compared to $3.04
million for the nine months ended June 30, 2002. The increased net loss in the
current year was primarily caused by our lower net sales, partially offset by
reduced operating expenses and lower amortization expense.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2003, we had working capital of $737,000 compared to working capital
of $2.81 million at September 30, 2002. The decrease in working capital was
primarily caused by our net loss for the period coupled with purchases of
equipment and payments on our long-term debt, partially off-set by non-cash
depreciation and amortization expenses.

Cash used in operating activities during the nine months ended June 30, 2003
totaled $1.33 million compared to cash provided by operating activities of
$730,000 for the same period last year. Cash used by operating activities for
the nine months ended June 30, 2003 primarily resulted from our net loss of
$3.24 million, combined with a $251,000 increase in inventories, a $164,000
increase in accounts receivable, and an increase in prepaid expenses and
deferred product costs totaling $210,000, partially offset by a $480,000
increase in accounts payable, a $762,000 increase in accrued expenses and
deferred revenue, and non-cash amortization and depreciation expenses totaling
$1.27 million. The increase in deferred revenue in the current year period was
primarily due to sales of system products associated with application service
contracts. Deferred product costs relate to the manufacturing costs of the
system products for which revenue has been deferred. We expect deferred revenue
and deferred product costs to increase going forward due to our anticipated
growth in application service contract related sales relating to our XATANET(TM)
system. We expect non-cash amortization expense to decrease over the next two
fiscal years as we complete the amortization of the majority of previously
capitalized software development costs.

Cash used in investing activities was $96,000 for purchases of equipment in the
nine months ended June 30, 2003 compared to $364,000 during the same period last
year. The prior year period included investments relating to the start of
production of our XATA Application Module mobile computing unit.

Cash provided by financing activities was $384,000 in the nine months ended June
30, 2003 compared to cash used by financing activities of $85,000 during the
same period a year ago. Cash provided by financing activities was due to our use
of our bank line of credit, offset by principal payments on long-term debt.

On December 23, 2002, we entered into a $2,000,000 credit line agreement with a
commercial lender. Advances under the line of credit accrue interest at prime
rate plus 2.90 percent. The terms of the credit agreement include a provision
for minimum monthly interest payments. The line is subject to borrowing base
requirements, based on eligible accounts receivable, and is collateralized by
substantially all Company assets. On June 30, 2003, the maximum borrowing
availability on the line was $1.44 million. The agreement expires in December
2003 and is automatically renewed for successive thirty day periods unless
otherwise terminated by either us or the lender. As of September 30, 2002 we did
not have a line of credit in place.

On June 10, 2003, we amended our note payable to Deere & Company. The note,
which originated April 20, 2000 in the amount of $1,000,000, includes monthly
principal and interest payments to Deere. The

                                       14
<PAGE>

amendment relieves our obligation to make further principal payments until
January, 2004. As of June 30, 2003, the principal balance owed on the note was
$416,000.

Based on current operating and cash flow projections, we believe that we may be
required to raise additional funds to continue our new product development,
marketing and other operating activities at desired levels during the next
twelve months. The amount of funds required, if any, will depend in part on the
level of near-term revenue of current and new products. A decline in revenue,
delay in shipments of new products, significant revenue growth or an increase in
product development in the near term would require external funding. Moreover,
it is possible that our cash needs may vary significantly from our predictions
due to failure to generate anticipated cash flow or other reasons. No assurance
can be given that our predictions regarding our cash needs will prove accurate,
that we will not require additional financing, that we will be able to secure
any required additional financing when needed or at all, or that such financing,
if obtained, will be on terms favorable or acceptable to us. If additional
financing is required and we are unable to secure such additional financing, we
may need to implement measures to reduce operating costs, including reductions
to product development, marketing and other operating activities.

TRANSACTIONS WITH RELATED PARTY

We purchase our new XATA Application Module (XAM) mobile computing and
communication devices from Phoenix International Corporation, a wholly owned
subsidiary of Deere & Company. Deere is our largest shareholder and is currently
represented by three individuals serving on our Board of Directors. Phoenix
International fabricates the XAM units to our detailed design specifications. We
retain full ownership to the intellectual property rights of the XAM design. Our
terms with Phoenix International are comparable to those we have with
non-affiliated vendors. Payments to Phoenix International in the three and nine
month periods ended June 30, 2003 totaled $187,000 and $1,105,000. These amounts
may increase over time to the extent sales of our XAM units and related products
increase. We have no dependence on this vendor and are able to purchase the
fabrication of this product from other vendors if necessary or desirable.

ITEM 3. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer have concluded, based on
their evaluation within 90 days of the filing date of this report, that our
disclosure controls and procedures are adequately designed to ensure that
information required to be disclosed by us in the reports we file or submit
under the Securities and Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported, within the time periods specified in
applicable rules and forms. There have not been any significant changes in our
internal controls or in other factors that could significantly affect those
controls, subsequent to the date of such evaluation, including any corrective
actions taken with regard to significant deficiencies and material weaknesses.

FORWARD-LOOKING STATEMENTS

This document includes forward-looking statements based on current expectations.
Actual results may differ materially. These forward-looking statements involve a
number of risks and uncertainties about us, our business, our customers, and the
economy and business environment in general. Risks and uncertainties about us
include, for example, the following:

                                       15
<PAGE>

    o    although we expect to incur operating losses in the current fiscal
         year, these losses may continue beyond the expected timeframe or in
         excess of the expected magnitude, and we may be dependent upon external
         investment to support our operations during periods in which we incur
         operating losses;

    o    we may be unable to adapt to technological change quickly enough to
         grow or to retain our customer base;

    o    we will continue to be dependent upon positioning systems and
         communication networks owned and controlled by others, and accordingly,
         their problems may adversely impact us;

    o    for the foreseeable future, we are dependent upon the continued receipt
         and fulfillment of new orders for our current products;

    o    our growth and profitability depend on our timely introduction and
         market acceptance of new products, our ability to continue to fund
         research and development activities, and our ability to establish and
         maintain strategic partner relationships.

You are encouraged to read more about the specific risks and uncertainties of
our business. We have described those which we currently consider most important
in our report on Form 10-KSB for our fiscal year ended September 30, 2002. We
undertake no obligation to update our disclosures in this regard.

                                       16
<PAGE>

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None

ITEM 2.  CHANGES IN SECURITIES

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

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

         None

ITEM 5.  OTHER INFORMATION

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<Table>
<Caption>
  Exhibit
  -------
  <S>       <C>
    10.29   Separation Agreement and Release dated June 11, 2003 with William P.
            Flies, Chief Technical Officer

    31.1    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
            2002

    31.2    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
            2002

    32.1    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
            to Section 906 of the Sarbanes-Oxley Act of 2002

    32.2    Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant
            to Section 906 of the Sarbanes-Oxley Act of 2002
</Table>

<Table>
<Caption>
  Reports on Form 8-K
  -------------------
  <S>       <C>
    1.      Report on Form 8-K dated April 10, 2003 concerning the announcement
            of a product distribution agreement with a major truck leasing
            company.

    2.      Report on Form 8-K dated May 1, 2003 concerning the press release
            for financial results for the three month period ending March 31,
            2003.

    3.      Report on Form 8-K dated May 22, 2003 concerning the announcement
            that, effective June 20, 2003, William P. Flies would discontinue
            his role as Chairman and Chief Technology Officer, but would remain
            as a director of the Company.
</Table>

                                       17
<PAGE>

SIGNATURES

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

Dated: August 8, 2003     XATA Corporation
       --------------     (Registrant)

                          by: /s/ John G. Lewis
                              --------------------------------------------------
                              John G. Lewis
                              Chief Financial Officer
                              (Signing as Principal Financial and Accounting
                              Officer and as Authorized Signatory of Registrant)

                                       18