MOTIENT CORP - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001
Commission file number 0-23044

MOTIENT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 93-0976127
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

10802 Parkridge Boulevard
Reston, VA 20191-5416
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (703) 758-6000

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
(Title of class)

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 report(s), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No

The aggregate market value of shares of Common Stock held by non-affiliates at
March 21, 2002 was approximately $2,698,466.

Number of shares of Common Stock outstanding at March 21, 2002: 58,366,408

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. /X/

MOTIENT CORPORATION

2001 ANNUAL REPORT ON FORM 10-K

PART I

This Annual Report on Form 10-K contains and incorporates forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements regarding our expected financial position and operating results, our
business strategy, our pending plan of reorganization, and our financing plans
are forward-looking statements. These statements can sometimes be identified by
our use of forward-looking words such as "may," "will," "anticipate,"
"estimate," "expect," "project," or "intend." These forward-looking statements
reflect our plans, expectations and beliefs and, accordingly, are subject to
certain risks and uncertainties. We cannot guarantee that any of such
forward-looking statements will be realized.

Statements regarding factors that may cause actual results to differ materially
from those contemplated by such forward-looking statements ("Cautionary
Statements") include, among others, those under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Overview," and elsewhere in this annual report, including in conjunction with
the forward-looking statements included in this annual report. All of our
subsequent written and oral forward-looking statements (or statements that may
be attributed to us) are expressly qualified by the Cautionary Statements. You
should carefully review the risk factors described in our other filings with the
Securities and Exchange Commission from time to time, including our report on
Form 8-K dated March 4, 2002 (File No. 0-23044), and our quarterly reports on
Form 10-Q to be filed after this annual report, as well as our other reports and
filings with the SEC.

Our forward-looking statements are based on information available to us today,
and we will not update these statements. Our actual results may differ
significantly from the results discussed.

References in this annual report to "Motient" and "we" or similar or related
terms refer to Motient Corporation and its subsidiaries together, unless the
context of such references requires otherwise.

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ITEM 1. BUSINESS.

OVERVIEW

We are a nationwide provider of two-way, wireless mobile data services and
mobile Internet services. Our customers use our network and applications for
email messaging and enterprise data communications services, enabling
businesses, mobile workers and consumers to transfer electronic information and
messages and access corporate databases and the Internet. Our network is
designed to offer a broad array of wireless data services such as:

- Two-way mobile Internet services, including our eLink(sm) wireless
email service and BlackBerry(TM) by Motient wireless email, that
provide users integrated wireless access to a broad range of corporate
and Internet email and Internet-based information;

- Telemetry systems that connect remote equipment, such as wireless
point-of-sale terminals, with a central monitoring facility; and

- Mobile data and fleet management systems used by large field service
organizations.

Our eLink service is a two-way wireless email device and electronic organizer
that uses our terrestrial network. We provide our eLink brand two-way wireless
email service to customers accessing email through corporate servers, Internet
Service Providers, Mail Service Provider accounts, and paging network suppliers.
We also offer a BlackBerry(TM) by Motient solution specifically designed for
large corporate accounts operating in a Microsoft Exchange and Lotus Notes
environment. BlackBerry(TM) is a popular wireless email solution developed by
Research In Motion and is being provided on the Motient network under an
agreement with RIM.

Motient has been providing terrestrial wireless services to customers for
several years, using a network, which possesses four key design attributes: (1)
two-way communication, (2) superior in-building penetration, (3) user mobility,
and (4) broad nationwide coverage. Motient's fully-deployed terrestrial wireless
two-way data network covers a geographic area populated by more than 220 million
people and is comprised of over 2,200 base stations that provide service to 520
of the nation's largest cities and towns, including all metropolitan statistical
areas. As of December 31, 2001, there were approximately 250,600 user devices
registered on Motient's network.

HISTORY

Motient was formed in 1988 under the name "American Mobile Satellite
Corporation" to construct, launch, and operate a mobile satellite services
system to provide a full range of mobile

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voice and data services via satellite to land, air and sea-based customers
subject to local regulation.

In March 1998, Motient acquired Motient Communications Inc., formerly ARDIS
Company, from Motorola, Inc. and combined the ARDIS terrestrial-based business
with Motient' satellite-based business to offer a broad range of integrated
end-to-end wireless solutions through two network configurations, either a
"satellite-only" service network or a "multi-mode" terrestrial and satellite
service network.

As discussed in greater detail below under "Mobile Satellite Ventures
Transaction," Motient's satellite and related assets and business were sold on
November 26, 2001 to Mobile Satellite Ventures LP.

In connection with Motient's acquisition of Motient Communications Inc.
(formerly ARDIS) from Motorola in March 1998, Motient's subsidiary, Motient
Holdings Inc. issued $335 million of 12.25% senior notes due 2008.

Motient's working capital and operational financing historically was derived
primarily from internally generated funds and from borrowings under two bank
loan facilities, a $100 million term loan facility, and a $100 million revolving
credit facility. Motient's borrowings under the bank facility were guaranteed by
Hughes Electronics Corporation, Singapore Telecommunications Ltd., and Baron
Capital Partners L.P. The indebtedness under the bank facility was also
guaranteed by Motient and certain of its subsidiaries and was secured by certain
assets of Motient. Motient also was required to reimburse the bank guarantors
for any payments made by the bank guarantors pursuant to their guarantees.

MOTIENT'S CHAPTER 11 FILING

ADDRESSING SEVERE LIQUIDITY NEEDS -- RARE MEDIUM MERGER UNSUCCESSFUL, LEADING TO
DEFAULTS

During 2001 Motient undertook a variety of transactions to address its liquidity
needs. These actions culminated in Motient's filing of a voluntary petition
under Chapter 11 of the Bankruptcy Code in January 2002, as described below.

During 2001, a number of factors were preventing Motient from accelerating
revenue growth at the pace required to enable it to generate cash in excess of
its operating expenses. These factors included competition from other wireless
data suppliers and other wireless communications providers with greater
resources, cash constraints that limited Motient's ability to generate greater
demand, unanticipated technological and development delays, and general economic
factors. During 2001, in particular, Motient's efforts were also hindered by the
downturn in the economy and poor capital and financing market conditions.

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In April 2001, Motient issued a $25 million note payable to Rare Medium.
Motient's obligation to repay this note was secured by its pledge of 3 million
shares of Class A common stock of XM Satellite Radio Holdings Inc. then held by
Motient.

On May 14, 2001, Motient signed a definitive merger agreement with Rare Medium
through which Motient would have acquired 100% of the ownership of Rare Medium,
using a combination of convertible preferred stock of Motient, and 9 million
shares of Class A common stock of XM Radio held by Motient.

In July 2001, Motient issued a second $25 million note payable to Rare Medium.
Motient's obligation to repay this note was secured by its pledge of 2 million
shares of Class A common stock of XM Radio held by Motient.

On September 26, 2001, Motient announced a plan to restructure its operations
with the goal of achieving earnings before interest, taxes, depreciation and
amortization - or EBITDA breakeven in mid- to late-2002. As part of this
restructuring, Motient laid off approximately 25% of its workforce, and canceled
certain of its product initiatives. In October 2001, Motient and Rare Medium
Group, Inc. terminated the merger agreement signed in May 2001. One of the
principal reasons Motient pursued the Rare Medium merger was to gain access to
cash held by Rare Medium. As a result of the termination of the Rare Medium
merger, Motient did not receive the anticipated cash from that transaction that
would have allowed it to fund certain debt and interest payment obligations. On
October 12, 2001, Motient repaid approximately $26.1 million of principal and
accrued interest under the Rare Medium notes by delivering to Rare Medium all of
the 5 million shares of stock of XM Radio pledged under the Rare Medium notes.

On October 1, 2001, Motient announced that it would not make the $20.5 million
semi-annual interest payment due on such date on its 12.25% senior notes due
2008 issued by Motient Holdings, Inc. On November 26, 2001, the trustee declared
all amounts owed under the senior notes immediately due and payable.

On November 6, 2001, the agent for the bank lenders under Motient's bank
financing declared all loans immediately due and payable, due to the existence
of several events of default. On the same date, the bank lenders sought payment
in full from the guarantors for the accelerated loan obligations. The guarantors
repaid all such loans on November 14, 2001 in the amount of approximately $97.6
million. As a result, Motient had a reimbursement obligation to the guarantors
in the amount of $97.6 million, which included accrued interest and fees.

On November 19, 2001, Motient sold 500,000 shares of XM Radio common stock owned
by it through a broker for aggregate proceeds of $4.75 million. The net proceeds
from this sale were paid to the bank loan guarantors, and on the same day
Motient delivered all of its remaining 9,257,262 shares of XM Radio common stock
to the guarantors in full satisfaction of the entire

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remaining amount of Motient's reimbursement obligations to them. As a result of
the delivery of the shares of XM Radio common stock, the maturity of the Rare
Medium Notes was accelerated to November 19, 2001.

MOBILE SATELLITE VENTURES TRANSACTION

On November 26, 2001, Motient sold the assets comprising its satellite
communications business to Mobile Satellite Ventures LP, a joint venture with
certain other parties, including TMI Communications and Company Limited
Partnership, the Canadian satellite services provider. In consideration for its
satellite business assets, Motient received the following: (i) a $24 million
cash payment in June 2000, (ii) a $45 million cash payment paid at closing, and
(iii) a 5-year $15 million note. In this transaction, TMI also contributed its
satellite communications business assets to Mobile Satellite Ventures. In
addition, Motient purchased a $2.5 million convertible note issued by Mobile
Satellite Ventures as part of this transaction, and certain other investors,
including a subsidiary of Rare Medium, purchased a total of $52.5 million of
convertible notes. On a fully diluted basis, Motient owns approximately 25.5% of
the equity of Mobile Satellite Ventures.

PURSUIT OF RESTRUCTURING PLAN UNDER PROTECTION OF BANKRUPTCY CODE - CONVERSION
OF OUTSTANDING DEBT

During these events, Motient determined that the continued viability of its
business required restructuring its highly leveraged capital structure. In
October 2001, Motient retained Credit Suisse First Boston, or CSFB, as financial
advisors to assist it in restructuring its debt. Shortly thereafter, CSFB and
Motient began meeting with Motient's principal creditor constituencies,
represented by (a) the guarantors of Motient's bank facilities, (b) an informal
committee representing the holders of Motient's senior notes, and (c) Rare
Medium.

In January 2002, Motient and the informal committee reached an agreement in
principle with respect to the primary terms of a plan of reorganization of
Motient and its principal subsidiaries. Accordingly, on January 10, 2002,
Motient and certain of its subsidiaries filed for protection under Chapter 11 of
the Bankruptcy Code. On January 17, 2002, Motient filed a plan of reorganization
with the U.S. Bankruptcy Court for the Eastern District of Virginia. The cases
are being jointly administered under the case name "In Re Motient Corporation,
et. al.," Case No. 02-80125. An amended plan of reorganization was filed on
February 28, 2002.

The restructuring plan provides that holders of the senior notes will exchange
their notes for new Motient common stock to be issued pursuant to the plan.
Shares of common stock held by existing common stockholders will be cancelled,
and the existing common stockholders will receive some warrants. The ownership
of Motient will change significantly, with creditors becoming the new owners,
but Motient would be relieved of over $337 million of debt and its obligations
to pay principal and interest would be discharged.

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The new equity warrants would have a nominal strike price to purchase at that
price a number of shares of the new common stock in the reorganized company that
will equal five percent of the outstanding shares of common stock of the
company, on a fully diluted basis assuming that all the warrants plus all other
securities to be issued pursuant to the restructuring plan are exercised. The
warrants will expire two years after the effectiveness of the reorganization and
will not be exercisable unless and until the price of the new common stock has
risen to the point at which the holders of the senior notes will have recovered
105 percent of the principal amount and accrued interest of the senior notes.

The restructuring plan generally provides that all of Motient's existing
contractual relationships with customers, vendors, and other business partners
will be maintained in full force and effect. During the Chapter 11 process,
Motient has continued to pay all of its ordinary course obligations to vendors
and others, and Motient expects to continue to do so as provided in the
restructuring plan.

Motient began mailing ballots and related voting materials on the plan to
creditors and other parties in interest on March 7, 2002. The deadline for
voting on the plan is April 16, 2002, and the confirmation hearing on the plan
is scheduled for April 25-26, 2002.

Motient cannot assure you that the restructuring plan will receive the requisite
acceptances by its creditors or by holders of Motient's equity securities or
that the Bankruptcy Court will confirm the plan. A creditor or equity security
holder who does not accept the plan might challenge it in the Bankruptcy Court.
In order for the plan to be confirmed, the Bankruptcy Court must find, among
other things, that the confirmation of the plan is not likely to be followed by
a liquidation or a need for further financial reorganization and that the value
of distributions to non-accepting holders of claims and interests within a
particular class under the plan will not be less than the value of distributions
such holders would receive if Motient and its subsidiaries were liquidated under
Chapter 7 of the Bankruptcy Code. Motient believes that the plan will not be
followed by a need for further financial reorganization and that non-accepting
holders within each class under the plan will receive distributions at least as
great as would be received following a liquidation under Chapter 7 of the
Bankruptcy Code when taking into consideration all administrative claims and the
costs and uncertainty associated with any such Chapter 7 case.

The confirmation and consummation of the plan are also subject to certain
conditions, including approval by the Federal Communications Commission of the
change of control that will take place in the ownership of Motient on the
effective date of the plan. If the plan is not confirmed, it is unclear whether
a restructuring of Motient could be implemented and what distribution holders of
claims or equity interests in Motient ultimately would receive. If an
alternative reorganization could not be agreed to, it is possible that Motient
may have to liquidate its assets.

For further details regarding the plan, please read the plan, which is filed as
Exhibit 10.62 to this

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Annual Report on Form 10-K, and Motient's Disclosure Statement regarding the
plan, which is filed as Exhibit 10.61 to this Annual Report on Form 10-K and
incorporated herein by reference.

EFFECTS OF CHAPTER 11 FILING

As a result of our Chapter 11 bankruptcy filing, we have seen a slower adoption
rate for our services. In a large customer deployment, the upfront cost of the
hardware can be significant. Because the hardware generally is usable only on
Motient's network, certain customers have delayed adoption while we are in
Chapter 11. In an effort to accelerate adoption of our services, we have, in
selected instances in the first quarter of 2002, offered certain incentives for
adoption of our services that are outside of our customary contract terms, such
as extended payment terms or temporary hardware rental. We do not believe that
these changes in terms are material to our cash flow or operations; however, a
delay in exiting the Chapter 11 bankruptcy process could have a material
negative impact on our ability to generate adequate subscriber growth.

While we continue to maintain our vendor payments on a current basis, certain of
our trade creditors have required either deposits for future services or
shortened payment terms. While we do not believe that the amounts or changes to
payment terms will have a material impact on our cash flow or operations, there
can be no assurance that future requirements will not be material. None of our
key suppliers has ceased to do business with us as a result of our filing.

For a fuller discussion of certain effects and expected effects of the Chapter
11 filing on Motient's business and results of operations, please read
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" elsewhere in this Annual Report on Form 10-K.

MOTIENT'S BUSINESS STRATEGY

As described above, Motient is seeking to emerge from its Chapter 11
restructuring in the spring of 2002 with a majority of its debt converted to
equity, relieving Motient from a significant portion of its obligations to pay
principal and interest. As it emerges from this restructuring process with a
significantly improved balance sheet, Motient's objective is to increase
revenues by continuing to penetrate the large markets for mobile Internet data
communications services and wireless telemetry applications while keeping costs
under control. To meet these objectives, Motient intends to:

LEVERAGE DISTRIBUTION RESOURCES OF STRATEGIC PARTNERS AND RESELLERS. To
penetrate target markets without significant direct sales and marketing
expenses, Motient has signed a number of strategic alliances with industry
leaders. Motient intends to leverage the marketing and distribution resources
and large existing customer bases of these partners to address significantly
more potential customers than Motient would be able to address on its own.
Motient has a roster of industry-leading resellers for its wireless email
services, including SkyTel, Metrocall, Aether Systems, Research In Motion, and
GoAmerica. In the market for small to medium-sized

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business users, Motient has signed a reseller agreement with CDW Computer
Centers. In the telemetry market, Motient has partnered with a number of device
manufacturers, resellers, and software vendors to develop and offer a variety of
customer-driven telemetry applications, including HVAC system monitoring, energy
monitoring, office and vending machine automation, and wireless point-of-sale
applications. Motient plans to continue to seek strategic distribution channels
that will enable it to more fully penetrate its existing markets and access
potential new markets on an incremental basis. In addition, in vertical markets
Motient intends to exploit cross-selling opportunities using some of its
existing large corporate customers.

WORK WITH VENDORS TO DEVELOP LESS EXPENSIVE AND MORE FUNCTIONAL USER DEVICES TO
ADDRESS COMPETITION AND INCREASE DEMAND FOR ITS SERVICES. Motient plans to
continue to work with vendors to develop new generations of user devices and
applications that combine improved functionality and convenience at a lower
price. Motient recently announced the introduction of the MobileModem, a
wireless modem that clips on to Palm V series and IBM WorkPad personal digital
assistants to provide these devices with email and Internet access via the
Motient network. Motient plans to continue to incorporate inexpensive, off the
shelf software or free software in its services. Motient believes that lower
price points will help accelerate the acceptance and adoption of its services in
its traditional markets, and will also enable Motient to better penetrate its
targeted new wireless markets. By working with suppliers and other business
partners and by making strategic software and hardware investments, Motient has
lowered the total cost of ownership of its products. At the same time, Motient
has improved the functionality of its devices and made them smaller and more
convenient.

DEVELOP NEW WIRELESS APPLICATIONS TO INCREASE DEMAND AND REVENUE PER SUBSCRIBER.
Motient intends to exploit the market potential of its wireless network by
working with value-added partners and major e-business solutions providers to
develop additional innovative wireless applications and content-based services,
including future enhancements to its eLink wireless email service. As market
acceptance and demand for wireless email grows, Motient believes users will
demand an increasing variety of Internet-based content and services. Motient
currently offers content-based services for use with its eLink service provided
by GoAmerica, OracleMobile, Novarra, and Neomar. Motient is continuing to
broaden and expand those services, as well as pursuing other similar agreements.

ENHANCE THE TECHNICAL ADVANTAGES OF MOTIENT'S NETWORK. Motient has been
providing terrestrial wireless services to customers for several years, using
the nation's largest, most fully deployed terrestrial wireless two-way data
network. Unlike many competitors who are in the process of building limited
city-wide or regional terrestrial networks, Motient has deployed a national
network that is well tested and reliable, and its future network expansion
requirements are expected to arise primarily from increased customer demand.
Motient believes that its terrestrial network provides key competitive
advantages, including:

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- broad nationwide geographic coverage,

- guaranteed two-way message delivery and "always on" real-time data
communication, and

- deep in-building penetration with superior performance characteristics
when compared with cellular-based architectures.

Motient also believes that its two-way messaging and wireless email products are
superior to currently available "two-way paging" services, based on the full,
two-way messaging capabilities that its network enables. Motient plans to
continue enhancing its terrestrial network's capacity and coverage by acquiring
additional frequency, building more base stations, both in existing and new
geographic markets, and selectively upgrading the technological capabilities of
existing base stations.

MOTIENT'S WIRELESS SERVICE OFFERINGS

GENERAL. Motient's wireless services include Motient's eLink wireless email and
BlackBerry(TM) by Motient email. Motient targets its data applications to both
vertical and horizontal markets. Applications include wireless email, Internet
and Intranet access, fax, paging, peer-to-peer communications, asset tracking,
dispatch, point-of-sale, and other telemetry applications. There are over 50
types of subscriber devices available from more than 15 manufacturers for use on
Motient's terrestrial network. These devices include Research In Motion handheld
devices, the new MobileModem for use with Palm V series and IBM WorkPad
handhelds, ruggedized laptops, handheld digital assistants, and wireless modems
for PC's. Motient has developed proprietary software, and has engaged a variety
of other software firms to develop other "middleware," to minimize its
customers' development efforts in connecting their applications to its network.
Also, a number of off-the-shelf software packages enable popular email software
applications on Motient's network.

In the field service market, long-standing customers such as IBM, Sears, Pitney
Bowes, and NCR use Motient's customized terrestrial data applications to enable
their mobile field service technicians to stay connected.

Motient's largest single terrestrial data application is in the package delivery
market. UPS has registered for service approximately 65,000 of its third
generation package tracking devices on Motient's network under a multi-year
agreement.

eLINK WIRELESS EMAIL. Motient's eLink wireless email service provides mobile
users with integrated wireless access to a broad range of corporate and Internet
email and personal information management (PIM) applications. Motient's eLink
service can be used on wireless handheld devices manufactured by Research In
Motion, including the RIM 850 and RIM 857

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wireless handhelds. In addition, eLink can be used with Palm V series and IBM
WorkPad handhelds by using Motient's new MobileModem, a wireless modem that
clips on to Palm V series and IBM WorkPad personal digital assistants to provide
these devices with email and Internet access via the Motient network

Motient currently offers two versions of eLink, "Agent(sm)," and
"Messenger(sm)." Agent and Messenger may also be combined, offering users the
functionality of both applications on a single handheld device.

Users of Motient's eLink Agent service can send and receive email messages,
using their existing corporate or Internet email address, over Motient's
terrestrial network, as long as the user's email system is compliant with the
industry protocol known as Post Office Protocol 3, or POP 3. Motient's eLink
service also features an IMAP 4 solution, providing greater flexibility to
customers by adding a more robust Internet email application protocol. Outgoing
mail sent from the device appears to have come from the user's desktop PC. eLink
synchronizes with a user's desktop PC so that full calendar, task list, and
contact information can be instantly swapped to and from the device. To address
the security needs of corporate customers, eLink Agent is also offered in a
self-contained format so that the corporate customer can install the network
gateway software behind its firewall on servers located on the customer's site.

Motient's eLink Messenger service assigns a unique email address (separate from
the user's corporate or Internet email address), allowing users to send and
receive wireless email messages independent of other email systems. In addition,
the Messenger service allows users to send faxes from their device, and the
device also functions as a pager. Messenger also enables users to synchronize
their device with calendar, task list, and contact information from their
desktop personal computer.

Motient is actively working on a number of innovative enhancements to its eLink
service that will enhance both security and functionality.

BLACKBERRY(TM) BY MOTIENT. BlackBerry(TM) by Motient is a wireless solution
specifically designed for corporate environments using Microsoft(R) Exchange.
BlackBerry(TM) by Motient operates on Motient's terrestrial network.
BlackBerry(TM) has substantially the same functionality as Motient's eLink
service, including wireless email, as well as a variety of similar PIM functions
and applications. BlackBerry(TM) integrates with Microsoft Exchange email
accounts. During 2001, in concert with Research In Motion, Motient also
introduced a version of BlackBerry(TM) that integrates with the Lotus Notes
email platform. Motient believes that the availability of an integrated Lotus
Notes email extension will help Motient move into new markets for
BlackBerry(TM).

The BlackBerry(TM) desktop software installs and runs on the user's desktop PC.
It is an integrated suite of applications that provides organizer
synchronization, folder management tools, email

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filtering capabilities, information backup utilities, and an application loader.

BlackBerry(TM) is designed to provide a high level of security. Encryption
occurs between the handheld and corporate email system to ensure message
integrity. BlackBerry(TM) incorporates Triple DES encryption technology to meet
stringent corporate security guidelines for remote email access.

Motient is authorized to resell BlackBerry(TM) by Motient pursuant to an
agreement with Research In Motion. Research In Motion also resells
BlackBerry(TM) by Motient on Motient's network through a variety of resellers
and value-added resellers. Motient also offers roaming services in Canada to its
eLink and BlackBerry(TM) by Motient customers through an agreement with the
Canadian network operator Bell Mobility.

TELEMETRY. Motient has partnered with a variety of resellers, device
manufacturers, and software vendors in the telemetry market. These partners
integrate customer-specific devices and systems with Motient's network to
provide a wireless means of transmitting data from a fixed or mobile site to a
central monitoring facility. Applications include HVAC system monitoring,
wireless point-of-sale systems, energy monitoring, vending and office machine
automation, and security/alarm monitoring.

PRICING OF SERVICES. Motient's customers are charged a monthly access fee. In
addition to this access fee, users pay for usage depending on the number of
kilobytes of data transmitted. Motient's pricing plans offer a wide variety of
volume packaging and discounts, consistent with customer demand and market
conditions. Generally, Motient reflects the addition of a subscriber unit upon
the registration of a unit on its network. In certain cases, primarily as it
relates to strategic partners and resellers, a percentage of these subscriber
units do not become revenue producing for up to several months from initial
registration on the network, which effectively drives down the reported average
revenue per unit. During the fourth quarter of 2001, Motient's average monthly
revenue per user, excluding the revenue associated with the satellite business
sold in November 2001, was approximately $17.00.

MOTIENT'S CUSTOMERS

The make-up of Motient's customer base changed during 2001 due to the sale in
November 2001 of Motient's former satellite communications business to Mobile
Satellite Ventures. As of December 31, 2001, there were approximately 250,600
user devices registered on Motient's network, and an established customer base
of large corporations in the following market segments:

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Excluding revenue recognized from a research and development agreement with
Mobile Satellite Ventures, which revenue accounted for approximately 9% of
Motient's service revenue in 2001, six customers and resellers - UPS, Aether
Systems, Inc., IBM, SkyTel, Pitney Bowes, and NCR - accounted for approximately
41% of Motient's service revenue for the year ended December 31, 2001, with
revenue from UPS exceeding 10% of total revenues. The loss of one or more of
these customers, or any event, occurrence or development which adversely affects
Motient's relationship with one or more of these customers, could harm Motient's
business. The contracts with these customers are generally multi-year contracts,
and the services provided pursuant to such contracts are generally customized
applications developed to work solely on Motient's network. The cost of
switching to an alternative wireless service provider would, in most cases, be
significant.

As of December 31, 2001, Motient's customer base included the following product
segments:

MARKETING AND DISTRIBUTION

Motient markets its wireless services through strategic distribution partners
and resellers, and its direct sales force.

STRATEGIC PARTNERS AND RESELLERS. To penetrate new wireless data markets with
significant growth potential, Motient has signed a variety of strategic
alliances, including with industry leaders. Motient intends to leverage the
marketing and distribution resources and large existing customer bases of these
partners to address significantly more potential customers than Motient would be
able to address on its own. Motient has a roster of industry-leading resellers
for its

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wireless email services, including SkyTel, Metrocall, Aether Systems, Research
In Motion, and GoAmerica. These alliances also include the following:

- In the market for small to medium-sized business users, Motient has
signed a reseller agreement with CDW Computer Centers.

- Motient has formed a strategic alliance with Wireless Knowledge, a
subsidiary of Qualcomm, to provide mobile data enterprise services for
corporate customers. Under this agreement, Wireless Knowledge will
develop and market wireless software applications that will run on
Motient's network.

- In the real estate market, Motient has signed a reseller agreement
with WheretoLive.com.

- Motient has teamed with Boundless Depot to provide wireless services
for the hearing impaired.

- In the telemetry market, Motient has partnered with a number of device
manufacturers, resellers, and software vendors to develop and offer a
variety of customer-driven telemetry applications. US Wireless is a
key partner in the wireless credit card processing and point-of-sale
segment, and eVendNet is developing telemetry applications using
Motient's network in the vending segment.

Motient is continuing to seek additional strategic distribution channels to help
Motient move forward with its plan to more fully penetrate its existing markets
and access potential new markets on an incremental basis.

DIRECT SALES FORCE. Motient has a direct sales force that is experienced in
selling its various wireless services. Historically, Motient's direct sales
force has focused on the requirements of business customers who need customized
applications. With the launch of its eLink wireless email service, Motient has
also built up a significant sales force concentrated on promoting its eLink(sm)
and BlackBerry(TM) by Motient services to vertical markets. Motient's corporate
accounts group is focused on promoting its eLink wireless email service to
wirelessly enable enterprise-wide email systems for Fortune 500 accounts. Sales
to corporate account targets generally require a sustained sales and marketing
effort lasting several months. Prior to making a buying decision, a majority of
the accounts exercise a due diligence process where competitive alternatives are
evaluated. Motient's employees often assist in developing justification studies,
application design support, hardware testing, planning and training. In the
wireless email area, Motient's internal sales force has been key to its ability
to convey customer feedback to its product management team, enabling Motient to
identify and develop new product and service features.

-13-

MOTIENT'S NETWORK

Motient's wireless network consists of the largest two-way terrestrial data
network in the United States, providing service to 520 of the nation's largest
cities and towns, including virtually all metropolitan statistical areas. The
network provides a wide range of mobile data services. Users of Motient's
network access it through subscriber units that may be portable, mobile or
stationary devices.

Subscriber units receive and transmit wireless data messages to and from
terrestrial base stations. Terrestrial messages are routed to their destination
via data switches that Motient owns, which connect to the public data network.

Motient's terrestrial network delivers superior in-building penetration,
completion rates and response times compared to other wireless data networks
through the use of a patented single frequency reuse technology developed by
Motorola. Single frequency reuse technology enables multiple base stations in a
given area to use the same frequency. As a result, a message sent by a
subscriber can be received by a number of base stations. This technology
contrasts with more commonly used multiple frequency reuse systems, which
provide for only one transmission path for a given message at a particular
frequency. In comparison with multiple frequency reuse systems, Motient's
technology provides superior in-building penetration and response times and
enables it to incrementally deploy additional capacity as required, instead of
in larger increments as required by most wireless networks.

EQUIPMENT AND SUPPLIER RELATIONSHIPS

Motient has contracts with a variety of vendors to supply end-user devices
designed to meet the requirements of specific end-user applications. Motient
continues to pursue enhancements to these devices that will result in additional
desirable features and reduced cost of ownership. Although many of the
components of its products are available from a number of different suppliers,
Motient relies on a relatively small number of key suppliers. The devices used
with Motient's services generally are subject to various product certification
requirements and regulatory approvals before they are delivered for use by its
customers.

Motient's eLink service can be used on wireless handheld devices manufactured by
Research In Motion, including the RIM 850 and RIM 857 wireless handhelds. In
addition, eLink can be used with Palm V series and IBM WorkPad handhelds by
using Motient's new MobileModem, a wireless modem that clips on to Palm V series
and IBM WorkPad personal digital assistants to provide these devices with email
and Internet access via the Motient network. Research In Motion also
manufactures modems designed to be integrated into handheld field service
terminals, telemetry devices, utility monitoring and security systems and
certain other computing

-14-

systems. Motient's supply arrangements with Research In Motion are not
exclusive, and Research In Motion manufactures similar hardware products for
other companies, including Cingular Wireless, a principal competitor in the
two-way wireless email market segment.

In addition to the messaging devices manufactured by Research In Motion, there
are currently over 50 other types of subscriber units available from
approximately 15 manufacturers that can operate on Motient's terrestrial
network. Examples of portable subscriber units include ruggedized laptop
computers, small external modems, handheld or palmtop "assistants," and pen
based "tablets."

Motient is also working with other device manufacturers and software developers
to bring its network services to other existing popular PDA and wireless email
platforms, such as palm-held and handheld devices. Most recently, Motient has
worked with Wavenet Technology Pty. Ltd. of Western Australia to design, develop
and manufacture the MobileModem, a wireless modem that clips onto Palm V Series
and IBM WorkPad personal digital assistants and provides these devices with
email and Internet access via the Motient Network. Motient's agreement with
Wavenet enables Motient and its resellers to purchase MobileModems and
associated accessories from Wavenet for resale to end user customers of Motient
and its resellers.

Compaq Computer provides the terrestrial network switching computers under a
multi-year lease that extends through 2003, while AT&T provides network services
including a nationwide wireline data network, and leased sites which house
regional switching equipment for Motient's terrestrial network. Motient also has
a relationship with AT&T as Motient's vendor for switched inbound and outbound
public switched telephone network services.

The terrestrial network, and certain of its competitive strengths such as deep
in-building penetration, is based upon single frequency reuse technology.
Motorola holds the patent for the single frequency reuse technology. Motient has
entered into several agreements with Motorola under which Motorola provides
certain continued support for the terrestrial network infrastructure, and
ongoing maintenance and service of the terrestrial network base stations. There
can be no assurance that Motorola will continue in the long term to be active in
this business, or that Motorola will not enter into arrangements with Motient's
competitors, or that if it does, such arrangements would not harm Motient's
business.

COMPETITION

The wireless communications industry is highly competitive and is characterized
by constant technological innovation. Motient competes by providing broad
geographic coverage, deep in-building penetration, and demonstrated reliability.
These features distinguish Motient from the competition. Motient's wireless
solutions are used by businesses that need critical customer and operational
information in a mobile environment.

-15-

Motient offers multiple business lines and competes with a variety of service
providers, from small startups to Fortune 500 companies. Motient's competitors
include service providers in several markets--dedicated mobile data,
PCS/cellular, narrowband PCS/enhanced paging and emerging technology platforms.

DEDICATED MOBILE DATA. Companies using packet data on dedicated mobile networks
provide wireless data services in direct competition with a number of Motient's
data services. In a packet data environment, messages are transmitted in short
bursts. Competitors using this technology include Cingular Wireless. Cingular
Wireless operates a terrestrial-only network that provides data services to
customers in field service, transportation and utility industries, and two-way
messaging service to the horizontal market.

Research In Motion offers BlackBerry(TM), a wireless email service, which runs
on both the Motient and Cingular networks. BlackBerry(TM) offers wireless email
and Personal Information Management (PIM) functionality. The enterprise versions
of BlackBerry(TM) serve users operating on either a Microsoft Exchange email
platform or a Lotus Domino email platform. Because Research In Motion offers
BlackBerry(TM) on the Motient and Cingular networks, Research In Motion is both
a reseller and a competitor. Research In Motion has also announced that it plans
to offer BlackBerry(TM) with voice functionality on General Packet Radio
Service, or GPRS, networks in the United States. With eLink, and BlackBerry(TM)
by Motient, as well as Motient's arrangements with other resellers and content
providers, Motient believes that it offers the most complete array of wireless
Internet and wireless email services currently available.

PCS/CELLULAR. PCS and cellular services presently serve the majority of mobile
communications users in the United States, with more than 120 million wireless
voice subscribers at the end of 2001. There are a large number of cellular and
PCS systems providing wireless voice service throughout most of the United
States, with no single competitor providing the seamless, national footprint
that is available through Motient's network. Because the average voice revenue
per subscriber has declined, wireless voice carriers have begun to focus on
delivering wireless data services in an effort to differentiate their voice
products and to retain customers. An example of these services is the Sprint PCS
Wireless Web. Sprint allows circuit switched wireless web access to several
content services using the phone's numeric keypad. Other voice carriers also
offer circuit switched wireless data services through mobile phones, but Motient
believes the limitations of today's circuit switched PCS and cellular features
and networks will limit competition in its target markets. Users must have a
digital phone and service, and must type messages using the awkward numeric
keypad. They do not have access to data services while roaming onto analog
networks, which detracts from the user experience.

Cellular digital packet data (CDPD), a packet data service provided by the
cellular industry, is available in fewer geographic markets than Motient's
service, and covers approximately 60% of the U.S. population. Expansion of the
CDPD network has slowed considerably as carriers such as AT&T Wireless and
Verizon Wireless look to other means to provide data services to their voice

-16-

customers. Some cellular and PCS carriers offer short message capabilities,
depending on the protocol they use, and expect to offer larger capacity packet
data services in the near future using new GPRS and 1XRTT technologies, as
described below under "Emerging technology platforms."

NARROWBAND PCS/ ENHANCED PAGING. Most traditional paging companies, such as
SkyTel, Arch and Metrocall, are expanding beyond their traditional alpha/numeric
paging into two-way wireless messaging services using narrowband PCS. Typical
applications include wireless email, near-real time delivery of stock quotes and
other time sensitive information, and mobile workforce communications. Although
some paging companies offer limited two-way messaging services, challenges in
coverage, responsiveness and throughput, as well as the high cost of service,
currently limit their adoption by Motient's targeted customers. These services
primarily compete with Motient's eLink wireless email services. Motient has
signed reseller agreements with SkyTel and Metrocall under which these parties
market its eLink services to their customers. Motient has similar reseller
agreements with additional national distribution partners.

EMERGING TECHNOLOGY PLATFORMS. A variety of new technologies, devices and
services will result in new types of competition for Motient in the near future.

The emergence of protocols such as WAP (Wireless Access Protocol), Bluetooth and
IEEE 802.11b are expected to enable the use of the Internet as a platform to
exchange information among people with different devices running on different
networks. WAP defines a protocol for altering Internet sites to make their
content more readily accessible to mobile user devices, where bandwidth is
limited. Mobile telephone users have adopted this protocol, as WAP provides
Internet content access in a similar manner to Motient's products. Bluetooth, a
wireless personal area networking technology, operates in an unlicensed band of
the radio spectrum and enables wireless communications between disparate devices
in a home or office setting at distances up to approximately 33 feet. 802.11b,
also referred to as Wi-Fi, operates in an unlicensed band of the radio spectrum
and supplies high-speed wireless LAN connectivity to computers within a 300 foot
radius of a network base. Hardware manufacturers such as Nokia, Ericsson and
Qualcomm are developing mobile phones and other voice-based user devices to work
with the WAP, Bluetooth and 802.11b technologies.

In addition, wireless voice carriers are in the process of expanding their
ability to offer wireless data services that may compete with Motient's
services, by deploying "2.5G" and "3G" technologies. These technologies, which
include General Packet Radio Service, or GPRS, and CDMA 1XRTT, or 1XRTT, support
both wireless voice and packet data services. GPRS is being deployed by
VoiceStream, AT&T Wireless, and Cingular Wireless, and service has begun on a
regional basis. 1XRTT is being deployed by Verizon Wireless and Sprint PCS.
Verizon Wireless plans to begin rolling out 1XRTT services on a regional basis
in the spring of 2002, while Sprint PCS plans to activate its 1XRTT services on
a nationwide basis in the summer of 2002.

-17-

While GPRS and 1XRTT do offer improved data functionality in tandem with
existing wireless voice services, Motient believes that these new technologies
have certain drawbacks for users when compared with Motient's data-only network.
These limitations include shorter battery life for user devices because of the
greater amount of power used, reduced in-building penetration, the need for
users to replace their existing devices to utilize the new technologies, and
incomplete geographic coverage that will rely on inter-carrier roaming
agreements. Having data applications roam among multiple networks introduces
complexities that are likely to prevent any carrier from having a truly seamless
national footprint comparable to that of the Motient network. In addition,
independent tests by users of both technologies have demonstrated that actual
data transmission speeds are significantly slower than the theoretical maximum
of each because of factors such as error protection, coding schemes, network
resource limitations, and handset limitations. Motient believes that these new
technologies offer only incrementally faster throughput than that of the Motient
network.

Motient expects to compete with these new "2.5G" and "3G" technology platforms
in a number of ways. First, as described above, Motient believes that its
existing data-only nationwide network offers several compelling advantages over
certain of the new technologies currently being deployed. Second, Motient
believes it can significantly enhance the efficiency and performance of its
existing data-only network through a variety of measures, including installing a
high-speed overlay. Third, Motient expects to consider, as appropriate,
alliances or other contractual arrangements with larger wireless communications
providers, so that Motient can continue to offer as complete an array of data
services as possible.

EMPLOYEES

On February 1, 2002, Motient had 356 employees. None of Motient's employees is
represented by a labor union. Motient considers its relations with its employees
to be good.

REGULATION

The terrestrial two-way wireless data network used in Motient's wireless
business is regulated to varying degrees at the federal, state, and local
levels. Various legislative and regulatory proposals under consideration from
time to time by Congress and the Federal Communications Commission, or FCC, have
in the past materially affected and may in the future materially affect the
telecommunications industry in general, and Motient's wireless business in
particular. The following is a summary of significant laws, regulations and
policies affecting the operation of Motient's wireless business. In addition,
many aspects of regulation at the federal, state and local level currently are
subject to judicial review or are the subject of administrative or legislative
proposals to modify, repeal, or adopt new laws and administrative regulations
and policies. Neither the outcome of these proceedings nor their impact on
Motient's operations can be predicted at this time.

-18-

The ownership and operation of Motient's terrestrial network is subject to the
rules and regulations of the FCC, which acts under authority established by the
Communications Act of 1934 and related federal laws. Among other things, the FCC
allocates portions of the radio frequency spectrum to certain services and
grants licenses to and regulates individual entities using that spectrum.
Motient operates pursuant to various licenses granted by the FCC.

Motient is a commercial mobile radio service provider and therefore is regulated
as a common carrier. Motient must offer service at just and reasonable rates on
a first-come, first-served basis, without any unjust or unreasonable
discrimination, and Motient is subject to the FCC's complaint processes. The FCC
has forborne from applying numerous common carrier provisions of the
Communications Act to commercial mobile radio service providers. In particular,
Motient is not subject to traditional public utility rate-of-return regulation,
and is not required to file tariffs with the FCC.

The FCC's universal service fund supports the provision of affordable
telecommunications to high-cost areas, and the provision of advanced
telecommunications services to schools, libraries, and rural health care
providers. Under the FCC's current rules, end-user revenues derived from the
sale of information and other non-telecommunication services and certain
wholesale revenues derived from the sale of telecommunications services are not
subject to universal service fund obligations. Based on the nature of its
business, Motient is currently not required to contribute to the universal
service fund. Current rules also do not require that Motient impute to its
contribution base retail revenues derived when it uses its own transmission
facilities to provide a service that includes both information service and
telecommunications components. There can be no assurances that the FCC will
retain the exclusions described herein or its current policy regarding the scope
of a carrier's contribution base. Motient may also be required to contribute to
state universal service programs. The requirement to make these state universal
service payments, the amount of which in some cases may be subject to change and
is not yet determined, may have a material adverse impact on the conduct of
Motient's business.

Motient is subject to the Communications Assistance for Law Enforcement Act, or
CALEA. Under CALEA, Motient must ensure that law enforcement agencies can
intercept certain communications transmitted over its networks. Motient must
also ensure that law enforcement agencies are able to access certain
call-identifying information relating to communications over Motient's networks.
The deadline for complying with the CALEA requirements and any rules
subsequently promulgated was June 30, 2000. Motient has pending with the FCC a
petition for an extension of the deadline with respect to certain of its
equipment, facilities, and services and Motient has been working with law
enforcement to arrive at an agreement on a further extension of this deadline
and on an extension of the deadline for other Motient equipment, facilities, and
services. Possible sanctions for noncompliance include substantial fines and
possible imprisonment of company officials. It is possible that Motient may not
be able to comply with all of CALEA's requirements or do so in a timely manner.
Where compliance with any requirement

-19-

is deemed by the FCC to be not "reasonably achievable," Motient may be exempted
from such requirement. In addition, CALEA establishes a federal fund to
compensate telecommunications carriers for all reasonable costs directly
associated with modifications performed by carriers in connection with
equipment, facilities, and services installed or deployed on or before January
1, 1995. For equipment, facilities, and services deployed after January 1, 1995,
the CALEA fund is intended to compensate carriers for any reasonable costs
associated with modifications required to make compliance "reasonably
achievable." It is possible that all necessary modifications will not qualify
for this compensation and that the available funds will not be sufficient to
reimburse Motient. The requirement to comply with CALEA could have a material
adverse effect on the conduct of Motient's business.

Motient's FCC licenses are granted for a term of 10 years, subject to renewal.
For Motient's non-market-based licenses (i.e., non-auction licenses) renewal is
granted in the ordinary course. In order to obtain renewal of its auction
licenses, Motient must demonstrate that it has provided "substantial service"
during its license term. What level of service is considered "substantial" will
vary depending upon the type of offering by the licensee. Licensees are
required, prior to the expiration date of their licenses, to file renewal
applications with an exhibit demonstrating compliance with the substantial
service criteria. If an entity is deemed not to have provided substantial
service with respect to a license for which renewal is sought, the renewal will
not be granted and the license will be cancelled.

As a matter of general regulation by the FCC, Motient is subject to, among other
things, payment of regulatory fees and restrictions on the level of radio
frequency emissions of Motient's systems' mobile terminals and base stations.
Any of these regulations may have an adverse impact on the conduct of Motient's
business.

Motient's FCC licenses are subject to restrictions in the Communications Act
that (1) certain FCC licenses may not be held by a corporation of which more
than 20% of its capital stock is directly owned of record or voted by non-U.S.
citizens or entities or their representatives and (2) that no such FCC license
may be held by a corporation controlled by another corporation, referred to as
indirect ownership, if more than 25% of the controlling corporation's capital
stock is owned of record or voted by non-U.S. citizens or entities or their
representatives, if the FCC finds that the public interest is served by the
refusal or revocation of such license. However, with the implementation of the
Basic Telecommunications Agreement, negotiated under the auspices of the World
Trade Organization and to which the United States is a party, the FCC will
presume that indirect ownership interests in our FCC licenses in excess of 25%
by non-U.S. citizens or entities will be permissible to the extent that the
ownership interests are from World Trade Organization-member countries. If the
25% foreign ownership limit is exceeded, the FCC could potentially take a range
of actions, which could harm Motient's business.

Motient's terrestrial network consists of base stations licensed in the 800 MHz
business radio and specialized mobile radio services. The terrestrial network is
interconnected with the public switched telephone network.

-20-

The FCC's licensing regime in effect when the majority of authorizations used in
the terrestrial network were issued provided for individual, site-specific
licenses. The FCC has since modified the licensing process applicable to
specialized mobile radio licenses in the band. Specialized mobile radio licenses
are now issued by auction in wide-area, multi-channel blocks. The geographic
area and number of channels within a block vary depending on whether the
frequencies are in the so-called "Upper 200" specialized mobile radio channels,
the "General Category," or the "Lower 80." In addition, wide-area auction
winners in the Upper 200 have the right to relocate incumbent licensees to other
"comparable" spectrum. Auction winners in the General Category and Lower 80 do
not have these same relocation rights and must afford protection to incumbent
stations. Incumbent stations may not, however, expand their service areas.

Wide-area auction winners have substantial flexibility to install any number of
base stations including, in the case of the General Category and Lower 80
channels, base stations that operate on the same channels as incumbent
licensees. Motient was an incumbent in the Upper 200 and remains an incumbent on
certain General Category channels. Motient is also a General Category and Lower
80 auction winner. Although the FCC requires General Category and Lower 80
geographic licensees to protect incumbents from interference, there is some
concern that such interference may occur and that practical application of the
interference-protection rules may be uncertain.

Motient believes that it has licenses for a sufficient number of channels to
meet its current capacity needs on the terrestrial network. Motient recently
received authorizations for 33 wide-area licenses won in the General Category
auction. Motient was also the high bidder on two Lower 80 licenses. To the
extent that additional capacity is required, Motient may participate in other
upcoming auctions or acquire channels from other licensees. As part of its new
licensing regime, the FCC permits wide-area geographic licensees, with prior FCC
approval, to assign a portion of their spectrum or a portion of their geographic
service area, or a combination of the two, to another entity. While this
authority may increase Motient's flexibility to acquire additional base
stations, the practical utility of these options is uncertain at this time.

Motient operates the terrestrial network under a number of waivers involving the
FCC's technical rules, including rules on station identification, for-profit use
of excess capacity, system loading, and multiple station ownership. Several of
these waivers were first obtained individually by IBM and Motorola, which
operated separate wireless data systems until forming the ARDIS joint venture in
1990. The FCC incorporated a number of these waivers into its regulations when
it implemented Congress's statutory provision creating the commercial mobile
radio service classification, and Motient no longer requires those waivers. As
of March 3, 1999, Motient completed its planned construction of base stations
for which extended implementation was granted by the FCC in 1996.

-21-

In November 2001, Nextel proposed, in a "white paper" to the FCC, that certain
of its wireless spectrum in the 700 MHz band, lower 800 MHz band, and 900 MHz
band be exchanged for spectrum in the upper 800 MHz band and in the 2.1 GHz
band. Nextel stated that it was making this proposal to address existing
inadvertent interference problems for public safety communications systems
caused by the existing spectrum allocation. Nextel's proposal addresses this
problem by creating blocks of contiguous spectrum to be shared by public safety
agencies. The Nextel proposal, as submitted to the FCC, would require either (i)
that Motient continue to operate using its existing lower 800 MHz band spectrum
on a secondary, non-interfering basis with the public safety agencies who would
be relocated in the same spectrum, or (ii) that Motient relocate, at its own
expense, to other spectrum in the 700 MHz or 900 MHz bands. Motient believes it
is highly unlikely that it could continue to operate in the lower 800 MHz bands
on a secondary, non-interfering basis. If Motient is required to relocate to
spectrum in the 700 MHz or 900 MHz bands, it would incur substantial operational
and financial costs, including costs relating to: manufacturing replacement
infrastructure and user hardware to operate on Motient's network in the 700 MHz
or 900 MHz bands, disruptions to existing customers as a result of the
relocation to other spectrum bands, possible diminished data speed, and coverage
gaps. There are also potential problems with the 700 MHz and 900 MHz bands that
might make it difficult, if not impossible, for Motient to duplicate its
existing operations in the 800 MHz band.

On March 14, 2002, the FCC adopted a notice of proposed rulemaking exploring
options and alternatives for improving the spectrum environment for public
safety operations in the 800 MHz band. Motient does not believe its operations
will be impacted until the Commission adopts final rules in that proceeding and
it cannot predict what actions the FCC will take.

The effectiveness of Motient's plan of reorganization is subject to approval by
the FCC of the change of control of Motient that will occur as a result of the
plan. Motient submitted its change of control application to the FCC on March 7,
2002. The change of control application is subject to a 30-day period for the
filing of public comments. The Public Notice of the change of control
application was released on March 13, 2002.

ITEM 2. PROPERTIES.

Motient sub-leases from Mobile Satellite Ventures approximately 47,000 square
feet at its headquarters in Reston, Virginia for office space. The prime lease
has a term, which runs through August 3, 2003, which may be extended at MSV's
election for an additional five years. Motient also leases approximately 86,000
square feet for office space and an operations center in Lincolnshire, Illinois,
the lease for which expires December 31, 2005 (which may be extended at
Motient's election for an additional five years). Motient also leases site space
for nearly 2,200 base stations and antennae across the country for the
terrestrial network under one-to five-year lease contracts with renewal
provisions.

-22-

ITEM 3. LEGAL PROCEEDINGS.

Motient filed a voluntary petition for relief under Chapter 11 of the U.S.
Bankruptcy Code on January 10, 2002. For further details regarding this
proceeding, please see "Item 1 - Motient's Chapter 11 Filing," which is
incorporated herein by reference.

Motient is aware of two purported class action lawsuits filed by holders of Rare
Medium common stock challenging the previously proposed merger of Motient and
Rare Medium Group, Inc. that was terminated: In re Rare Medium Group, Inc.
Shareholders Litigation, C.A. No. 18879 NC (cases filed in Delaware Chancery
Court between May 15, 2001 and June 7, 2001, and consolidated by the Court on
June 22, 2001) , and Brickell Partners v. Rare Medium Group, Inc., et al.,
N.Y.S. Index No. 01602694 (filed in the New York Supreme Court on May 30, 2001).
Both complaints name Rare Medium, members of Rare Medium's board of directors,
the holders of Rare Medium preferred stock and certain of their affiliated
entities, and Motient as defendants. The complaints allege that the defendants
breached duties allegedly owed to the holders of Rare Medium common stock in
connection with the merger agreement, and include allegations that: (1) the
holders of Rare Medium preferred stock engaged in self-dealing in the proposed
merger; (2) the Rare Medium board of directors allegedly breached its fiduciary
duties by agreeing to distribute the merger consideration differently among Rare
Medium's common and preferred shares; and (3) Motient allegedly aided and
abetted the supposed breaches of fiduciary duties. The complaints sought to
enjoin the proposed merger, and also sought compensatory damages in an
unspecified amount.

Rare Medium, Motient, and the holders of Rare Medium preferred stock have filed
motions to dismiss the Delaware complaint, while Rare Medium and the holders of
Rare Medium preferred stock have filed motions to stay discovery in the Delaware
lawsuit. Plaintiffs have failed to respond to any of these motions. In light of
the termination of the proposed merger and the plaintiff's failure to pursue
their claims, Motient believes that the Delaware lawsuit will be dismissed as
moot.

Rare Medium and the holders of Rare Medium preferred stock have also filed a
motion to dismiss or stay the New York lawsuit. Motient was never served with
process in the New York lawsuit, and thus filed no motion to dismiss. However,
Motient has been informed by Rare Medium that an unopposed motion by Rare Medium
to dismiss the New York lawsuit as moot was granted on February 21, 2002, and
that Rare Medium will present to the court a final judgment to conclude this
litigation.

-23-

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

No matters were submitted to a vote of the Company's Stockholders during the
fourth quarter of fiscal 2001.

PART II

ITEMS 5, 6, 7, 7A AND 8.

The information called for by Items 5 through 8 of Part II is presented in a
separate section of this Annual Report on Form 10-K commencing on the page
numbers specified below and such information is incorporated herein by
reference:

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

None.

-24-

PART III

ITEMS 10, 11, 12 AND 13.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MOTIENT

The following table sets forth certain information about the directors and
executive officers of Motient and the named executive officers (as defined below
under "Item 11 - Executive Compensation").

The following sets forth biographical information about the directors of Motient
and the named executive officers.

WALTER V. PURNELL, JR., 56. Mr. Purnell has been a Motient director and the
Company's Chief Executive Officer since January 1999 and has been the President
of Motient since March 1998. Mr. Purnell also serves as a director of Mobile
Satellite Ventures LP. Previously, Mr. Purnell was President and Chief Executive
Officer of ARDIS Company since September 1995. Before that, Mr. Purnell served
as the chief financial officer of ARDIS since its founding in 1990. Before 1990,
Mr. Purnell held a broad range of senior executive positions with IBM over 23
years, with financial responsibility over significant telecommunications and
other business divisions, both domestically and internationally.

W. BARTLETT SNELL, 50. Mr. Snell has been Motient's Senior Vice President and
Chief Financial

-25-

Officer since March 1999. Mr. Snell also serves as a Director of Mobile
Satellite Ventures LP. Mr. Snell was formerly the Senior Vice President and
Chief Financial Officer at Orbcomm Global, L.P. which he joined in 1996. Prior
to joining Orbcomm, Mr. Snell spent 16 years at IBM in a variety of leadership
positions in diverse business areas.

DENNIS W. MATHESON, 41. Mr. Matheson has been Motient's Senior Vice President
and Chief Technology Officer since March 2000. From 1993 to March 2000, Mr.
Matheson held other technical positions with Motient, most recently as Vice
President of Engineering and Advanced Technology. Before joining Motient, Mr.
Matheson was Senior Manager of Systems Architecture for Bell Northern Research,
a subsidiary of Northern Telecom. Prior to that, he held various positions with
Northern Telecom and Bell Northern Research within the design and product
management organizations, and before that he held various engineering positions
with Texas Instruments.

DAVID H. ENGVALL, 37. Mr. Engvall has served as Vice President, General Counsel
and Secretary of Motient since May 2001. From April 2000 to May 2001, Mr.
Engvall served as Vice President, Executive Counsel and Assistant Secretary of
Motient, and from April 1999 to April 2000, Mr. Engvall served as Executive
Counsel and Assistant Secretary of Motient. From September 1996 to April 1999,
Mr. Engvall served as Assistant Vice President and Corporate Counsel of US
Office Products Company, a national office supply company. Previously, Mr.
Engvall was associated with the law firms of Sullivan & Cromwell and Hogan &
Hartson L.L.P.

GARY M. PARSONS, 51. Mr. Parsons is the Chairman of Motient's board of directors
and from 1996 to 1998 was the Chief Executive Officer and President of Motient.
Mr. Parsons also serves as the Chairman of the board of directors of XM Radio,
and as Chief Executive Officer and Chairman of the Board of Mobile Satellite
Ventures LP. Mr. Parsons joined Motient from MCI Communications Corporation
where he served in a variety of executive roles from 1990 to 1996, including
most recently as Executive Vice President of MCI Communications, and as Chief
Executive Officer of MCI's subsidiary MCImetro, Inc. From 1984 to 1990, Mr.
Parsons was one of the principals of Telecom*USA, which was acquired by MCI. Mr.
Parsons also serves on the board of directors of Sorrento Networks Corporation.

BILLY J. PARROTT, 66. Mr. Parrott has been a Motient director since May 1988.
Mr. Parrott is President and Chief Executive Officer of Antifire, Inc., a
manufacturer of non-toxic fire retardants. Mr. Parrott is also the founder and
co-founder of several telecommunications companies, including Private Networks,
Inc., a builder and operator of telecommunications and broadcast properties, and
Roanoke Valley Cellular Telephone Company, a cellular communications company.
Mr. Parrott is owner of a production company where he functions as a writer,
producer, director and marketing consultant to Fortune 500 companies.

ANDREW A. QUARTNER, 48. Mr. Quartner has been a Motient director since May 1988.
Mr. Quartner also serves as corporate counsel at XO Communications, Inc. and
Vice Chairman of

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CellPort Labs, Inc. Prior to 1997, Mr. Quartner was Senior Vice
President, Law, of AT&T Wireless, which he joined in November 1985. Prior to
joining AT&T Wireless, Mr. Quartner was associated with the law firm of
Debevoise & Plimpton in New York.

JONELLE ST. JOHN, 48. Ms. St. John has been a Motient director since November
2000. Ms. St. John was the Chief Financial Officer of MCI WorldCom International
in London from 1997 through 2000 following her positions as the Vice President
and Treasurer and Vice President for Corporation Planning and Business Analysis
of MCI Communications Corporation from 1990 to 1997. Prior to working with MCI,
Ms. St. John was the Vice President and Treasurer and the Vice President and
Controller of Telecom*USA, which she joined in 1985. Before 1985, Ms. St. John
held various positions at Arthur Andersen LLP.

Information regarding Motient's filing for protection under Chapter 11 of the
Bankruptcy Code is provided in Item 1 under "Business--Motient's Chapter 11
Filing" and is incorporated herein by reference.

BOARD COMPENSATION

Each non-employee member of the Board of Directors is entitled to receive an
annual retainer of $19,000, and each member of the committees of the Board is
entitled to receive additional amounts as follows: Executive Committee, $3,500
per year; Audit Committee, $2,500 per year; Independent Committee, $2,500 per
year; Nominating Committee, $2,000 per year; and Compensation and Stock Option
Committee, $2,000 per year. Directors have the right to elect to retain or
forego these amounts, or to have them donated to a charity of their choice. Ms.
St. John and Messrs. Parrott and Quartner elected to have such amounts paid to
them directly.

Each non-employee member of the Board of Directors (an "Eligible Director") has
been entitled to receive options exercisable for the Company's common stock as
provided in the Company's Stock Award Plan. Pursuant to this plan, each Eligible
Director (other than directors electing not to receive such options) may receive
discretionary grants at an exercise price equal to the fair market value of the
common stock on the date of grant. Each option expires on the earlier of (i) ten
years from the date of grant or (ii) seven months after a director's termination
of service as a director.

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the securities laws of the United States, our directors, executive
officers, and any persons holding more than ten percent of our common stock are
required to report their ownership of the common stock and any changes in that
ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established by the Securities and Exchange Commission
and we are required to report in this Annual Report any failure to file by these
dates. Based on our review of these reports filed during and in connection with
the year ended December 31, 2001, and on certain written representations, we do
not believe that any of our directors, officers or beneficial owners of more
than ten percent of our common stock failed to file a form or report a
transaction on a timely basis.

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ITEM 11. EXECUTIVE COMPENSATION

The following tables set forth (a) the compensation paid or accrued by the
Company to the Company's chief executive officer and its four other most highly
compensated executive officers receiving over $100,000 per year, all of whom are
referred to herein as the "named executive officers" for services rendered
during the fiscal years ended December 31, 2001, 2000, and 1999 and (b) certain
information relating to options granted to such individuals.

SUMMARY COMPENSATION TABLE

(1) Includes group term life insurance premiums.

(2)In September 2001, the Company completed an option exchange program in which
holders of previously-granted options, including the Named Executive Officers,
were entitled to exchange such options for a number of shares of restricted
stock equal to 75% of the number of shares covered by the exchanged options. The
amounts shown in this column for 2001 represent such restricted stock awarded in
September 2001. The restricted stock issued in the exchange program vests
according to the vesting schedule of the options that were exchanged, except
that no restricted stock vests before March 25, 2002. These shares of restricted
stock vest as follows:

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As of December 31, 2001, the dollar value of restricted stock held by each of
Messrs. Parsons, Purnell, Engvall, Matheson and Snell was $267,750, $150,255 ,
$11,025, $50,431 and $68,712 respectively, and the total number of shares of
restricted stock held by each of Messrs. Parsons, Purnell, Engvall, Matheson and
Snell was 637,500, 357,750, 26,250, 120,073, and 163,600, respectively. Under
Motient's plan of reorganization, unvested shares of restricted stock will be
cancelled as of the effective date of the plan.

(3) In January 2001, vesting of all previously issued unvested shares of
restricted stock was accelerated, and, accordingly, such shares are not included
in the end-of-year restricted stock holdings.

(4) The numbers reflect grants of options to purchase shares of common stock
under the Stock Award Plan. The Company has not granted stock appreciation
rights ("SARs").

(5) Relates to relocation expenses..

(6) Mr. Engvall assumed his position in May 2001.

(7) Mr. Matheson assumed his position in March 2000.

(8) Mr. Snell joined the Company in March 1999.

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The following table sets forth each grant of stock options made during fiscal
year 2001 to each of the named executive officers.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

(1) Based on actual option term and annual compounding. Following the grant date
of the above options, the market price of Motient's common stock declined
significantly, and pursuant to Motient's plan of reorganization, all unexercised
options will be cancelled as of the effective date of the plan. Accordingly,
there is no assurance that the value ultimately realized by a Named Executive
Officer, if any, will be at or near the values indicated.

(2) These options become exercisable in three annual installments, vesting at
the rate of 33 1/3 % per year for three years.

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The following table sets forth, for each of the named executive officers, the
value of unexercised options at fiscal year-end:

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES (1)

(1) The Company has not granted SARs.

COMPENSATION OF DIRECTORS

Information about compensation of directors appears in Item 10 of this Annual
Report on Form 10-K and is incorporated herein by reference.

COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended December 31, 2001, the Compensation and Stock
Option Committee of Motient's Board of Directors consisted of Ms. St. John and
Messrs. Parrott, Parsons, Purnell, and Quartner. Also, Mr. Jack Shaw, Chief
Executive Officer of Hughes Electronics Corporation, served on the Compensation
and Stock Option Committee until his resignation from the Board of Directors on
July 31, 2001. During 2001, Mr. Parsons and Mr. Purnell were executive officers
of Motient. In addition, during 2001, the Company and/or certain of its
subsidiaries were party to certain contracts and/or transactions with Hughes or
certain affiliates thereof. All of these contracts and transactions were
approved by Motient's Board of Directors, and the Company believes that the
contracts and transactions were made on terms substantially as favorable to the
Company as could have been obtained from unaffiliated third parties. The
following is a description of such contracts and transactions.

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As described under "Item 1. Business," in November 2001 Motient entered into
certain transactions with Hughes and the other two bank guarantors, pursuant to
which Motient transferred certain shares of XM Radio common stock owned by it to
Hughes and the other bank guarantors, in addition to cash proceeds from the sale
of certain shares of XM Radio stock, in exchange for the extinguishment of all
remaining obligations to Hughes and the other bank guarantors under the Bank
Financing and related guarantors and reimbursement and security agreements. For
more information regarding these transactions, see the description of them in
"Item 1. Business-Motient's Chapter 11 Filing," which is incorporated herein by
reference.

In addition to the foregoing, on April 2, 2001, the exercise price of the
warrants issued to Motient's bank guarantors was reduced to $1.31 per share, in
consideration of Hughes' and Baron's agreement to consent to the Company's
issuance of a $25 million note to Rare Medium Group, Inc., which note was
secured by a pledge of 3,000,000 shares of common stock of XM Radio owned by the
Company. In connection with this waiver and in consideration of Singapore
Telecommunications' agreement to consent to such transaction, the Company also
agreed to issue a new warrant to Singapore Telecommunications, exercisable for
300,000 shares of Company common stock, at $1.31 per share.

For more information regarding this waiver and warrant repricing and a
description of certain other historical transactions involving Hughes in its
role as a bank guarantor, please see the discussion in "Certain Relationships
and Related Transaction - Bank Financing Facilities," which is incorporated
herein by reference.

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ITEM 12. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

The following table and the accompanying notes set forth certain information, as
of February 28, 2002 (or any other date that is indicated) concerning the
beneficial ownership of Motient's common stock by (1) each person who is known
by Motient to own beneficially more than five percent of Motient's common stock,
(2) each director, (3) each executive officer named in the Summary Compensation
Table and (4) all directors and executive officers as a group. Except as
otherwise indicated, each person listed in the table has informed Motient that
such person has (1) sole voting and investment power with respect to such
person's shares of common stock and (2) record and beneficial ownership with
respect to such person's shares of common stock.

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(1) Certain holders of common stock, including certain of the beneficial owners
of more than 5% of the common stock listed in the table, are parties to a
stockholders' agreement dated December 1, 1993. The parties to the
stockholders' agreement may be deemed to constitute a group having
beneficial ownership of all common stock held by members of such group. See
"-- Certain Relationships and Related Transactions--Stockholders'
Agreement" for more information about this agreement. Each such 5%
Stockholder disclaims beneficial ownership as to shares of common stock
held by other 5% Stockholders.

(2) Through its subsidiaries, Transit Communications, Inc. (681,818 shares),
Satellite Communications Investments Corporation (1,113,135 shares) and
Space Technologies Investments, Inc. (1,206,192). Transit Communications,
Inc. is indirectly 80%-owned by LIN Broadcasting Corporation, which is an
indirect subsidiary of AT&T Wireless. Satellite Communications Investments
Corporation and Space Technologies Investments, Inc. are direct or indirect
subsidiaries of AT&T Wireless.

(3) Includes (1) 6,692,108 shares of Motient common stock owned by Hughes
Communications Satellite Services, Inc., an indirect wholly owned
subsidiary of Hughes Electronics, and (2) 4,969,688 shares of Motient
common stock issuable upon exercise of warrants issued to Hughes
Electronics in connection with certain bank financings. To the extent not
exercised, all outstanding warrants will be cancelled on the effective date
of Motient's plan of reorganization.

(4) This information presented is based on a Schedule 13G filed with the
Securities and Exchange Commission dated November 5, 2001.

(5) Includes shares owned through the Company's matching 401(k) Plan and/or
Employee Stock Purchase Plan. 401(k) Plan shares reflect balances as of
December 31, 2001, the most recent date practicable.

(6) Includes 3,334 shares issuable upon the exercise of options granted under
the stock award plan which options ( will be vested and exercisable within
sixty days after March 31, 2002, subject to compliance with applicable
securities laws.

(7) Includes 7,500 shares owned by Private Networks, Inc., a company in which
Mr. Parrott owns a one-third equity interest. Mr. Parrott disclaims
beneficial ownership as to all such shares of common stock.

(8) Includes 300 shares owned by Mr. Purnell's wife, as to which Mr. Purnell
disclaims beneficial ownership.

(9) Includes 1,050 shares owned by trusts for the benefit of each of Mr.
Quartner's three children, of which Mr. Quartner is trustee, and 100 shares
owned by Mr. Quartner's wife. Mr. Quartner disclaims beneficial ownership
as to all such shares of common stock.

(10) Includes shares of restricted stock awarded under the stock award plan,
which will become vested and as to which conditions of forfeiture will
lapse within sixty days after March 31, 2002.

-35-

Motient's plan of reorganization, if approved by the Bankruptcy Court, will
result in a change of control of Motient on its effective date. Information
regarding the plan of reorganization appears in "Item 1. Business--Motient's
Chapter 11 Filing-- Pursuit of restructuring plan under protection of bankruptcy
code - conversion of outstanding debt" and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MOTOROLA AGREEMENT

In connection with the acquisition of ARDIS from Motorola by Motient on March
31, 1998, and pursuant to the Stock Purchase Agreement dated as of December 31,
1997, as amended March 31, 1998, Motient, Motorola and Motient's principal
stockholders Hughes Electronics and AT&T Wireless agreed to registration rights
with respect to Motient common stock. Pursuant to the terms of the Participation
Rights Agreement entered into on December 31, 1997, Motorola is entitled to
demand and piggyback registration rights with respect to the shares of common
stock issued to Motorola as part of the ARDIS acquisition. Motorola has
registered all of its shares of Motient common stock on a shelf registration
statement filed by Motient and declared effective by the SEC on March 31, 1999.
In addition, Motorola is no longer a greater than 5% beneficial owner of
Motient. Motorola's registration rights will be extinguished under the terms of
Motient's plan of reorganization.

STOCKHOLDERS' AGREEMENT

Motient and each holder of shares of its common stock who acquired shares prior
to Motient's initial public offering are parties to a stockholders' agreement,
amended and restated as of December 1, 1993. The remaining parties to the
stockholders' agreement, AT&T Wireless and Hughes Electronics, hold
approximately 23.5% of the outstanding common stock on a fully diluted basis.
The stockholders' agreement includes provisions relating to certain corporate
governance matters, as well as the voting and transferability of shares of
Motient common stock held by the parties to such agreement, and provisions
intended to ensure compliance with applicable laws and FCC regulations. While
the stockholders' agreement technically remains in effect, its practical effect
has been reduced, or eliminated, as a result of the changing nature of Motient's
stockholder base and the increasing portion of the outstanding shares of Motient
common stock held by the public.

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BANK FINANCING FACILITIES

As discussed in greater detail under "Item 1. Business - Significant Recent
Events," on November 19, 2001, Motient sold 500,000 shares of XM Radio common
stock owned by it for aggregate proceeds of $4,750,000, and used such proceeds
to reduce the amount of Motient's reimbursement obligation to the bank
guarantors by such amount. In this transaction, Hughes Electronics received
$3,562,381, and each of Baron Capital and Singapore Telecommunications received
$593,730.

Also on November 19, 2001 Motient delivered all of the remaining 9,257,262
shares of XM Radio common stock owned by it to the bank guarantors in full
satisfaction of the entire remaining amount of Motient's reimbursement
obligations to the bank guarantors. Motient delivered 7,108,184 shares to Hughes
Electronics, 964,640 shares to Singapore Telecommunications, and 1,184,438
shares to Baron Capital. Upon delivery of these shares, the bank guarantors
released Motient from all of its remaining obligations to the bank guarantors
under the Bank Financing and the related guarantees and reimbursement and
security agreements.

At the time of the foregoing transactions, in addition to guaranteeing Motient's
obligations under its bank financing agreements, each of Hughes Electronics and
Baron Capital owned shares of common stock of Motient, and each of the three
bank guarantors also owned certain warrants to purchase shares of common stock
of Motient. At the time of these transactions, Hughes Electronics owned
6,692,108 shares of common stock and warrants to purchase 4,969,688 shares of
common stock, Baron Capital owned 1,286,275 shares and warrants to purchase
828,281 shares of common stock, and Singapore Telecommunications owned warrants
to purchase 300,000 shares of common stock.

The following section describes certain historical events and transactions with
the lenders and bank guarantors, prior to the extinguishment of the bank
facilities and the transactions described in the previous paragraph.

In exchange for the additional risks undertaken by Hughes Electronics, Singapore
Telecom and Baron Capital in connection with the bank financing facilities,
Motient agreed, pursuant to a Guaranty Issuance Agreement dated March 31, 1998,
to compensate Hughes Electronics, Singapore Telecom and Baron Capital,
principally in the form of 1 million additional warrants and repricing of 5.5
million warrants previously issued. As originally issued, the warrants had an
exercise price of $12.51. Further, in connection with the guarantees, Motient
agreed to reimburse Hughes Electronics, Singapore Telecom and Baron Capital in
the event that any of them were required to make payment under the guarantees
and, in connection with this reimbursement commitment, provided Hughes
Electronics, Singapore Telecom and Baron Capital a junior security interest with
respect to the assets of Motient, principally its stockholdings in XM Radio,
Motient Holdings Inc. and Mobile Satellite Ventures. As a result of these
transactions, Hughes Electronics owned warrants to purchase 4,969,688 shares of
common stock, and each of Baron Capital and Singapore Telecommunications owned
warrants to purchase 828,281 shares of common stock.

-37-

Hughes Electronics, Singapore Telecom and Baron Capital also obtained certain
demand and piggy-back registration rights with regard to the unregistered shares
of Motient's common stock held by them or issuable upon exercise of their
warrants. Pursuant to the terms of the Amended and Restated Registration Rights
Agreement among Hughes Electronics, Singapore Telecom, Baron Capital and
Motient, Motient agreed to (1) extend the expiration date for demand
registration rights with respect to Hughes Electronic's, Singapore Telecom's and
Baron Capital's existing warrants, (2) provide registration rights for the
warrants issued pursuant to the guaranty issue agreement, and (3) provide
registration rights for other restricted securities held by Hughes Electronics,
Singapore Telecom and Baron Capital. Under the registration rights agreement,
Hughes Electronics, Singapore Telecom and Baron Capital are entitled to up to
three demand registrations with respect to their shares of Motient's common
stock, subject to certain registration priorities and postponement rights of
Motient. In addition Hughes Electronics, Singapore Telecom and Baron Capital are
entitled to piggyback registration in connection with any registration of
securities by Motient, whether or not for its own account, subject to priorities
for sale under the registration rights agreements between Motient and some of
its other stockholders. These parties' registration right will be extinguished
under the terms of Motient's plan of reorganization.

On March 22, 1999, Motient, Hughes Electronics, Singapore Telecom and Baron
Capital agreed to amend the registration rights agreement to (1) extend the
expiration date for exercise of the demand registration rights granted
thereunder to March 31, 2007, (2) clarify that the rights provided in the
registration rights agreement are assignable by Hughes Electronics, Singapore
Telecom and Baron Capital provided that the prospective assignee agrees to
become a party to that agreement, and (3) provide one additional demand
registration right that may be exercised only by Hughes Electronics or its
assignee.

On March 29, 1999, the bank facility guarantors agreed to eliminate certain
covenants contained in the Guaranty Issuance Agreement relating to Motient's
Earnings Before Interest, Depreciation, Amortization and Taxes, referred to here
as EBITDA, and service revenue. In exchange for this waiver, Motient agreed to
amend the exercise price of the warrants from $12.51 per share to $7.50 per
share. As a result of the automatic application of certain adjustment provisions
following the issuance of 7.0 million shares of common stock in Motient's public
offering in August 1999, the exercise price of the warrants was further reduced
to $7.36 per share, and the warrants became exercisable for an additional
129,246 shares.

On June 29, 2000, Hughes Electronics and Baron, the only bank facility
guarantors who still owned warrants as of such date, agreed with Motient to
amend the exercise price of the warrants from $7.36 per share to $6.25 per
share, in consideration of Hughes Electronic's and Baron's agreements to
waive Motient's obligation to prepay a portion of the bank facility
guaranteed by Hughes Electronics and Baron in connection with Motient's
receipt of certain funds at the time of Mobile Satellite Ventures' formation.

-38-

On April 2, 2001, the exercise price of the warrants was further reduced to
$1.31 per share, in consideration of Hughes Electronic's and Baron's agreement
to consent to Motient's issuance of a $25 million note to Rare Medium, which
note was secured by a pledge of 3,000,000 shares of common stock of XM Radio
owned by Motient. In connection with this waiver and in consideration of
Singapore Telecom's agreement to consent to such transaction, Motient also
agreed to issue a new warrant to Singapore Telecom, exercisable for 300,000
shares of Motient common stock, at $1.31 per share.

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PART IV

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

(1) 1. Financial Statements.

The following consolidated financial statements of the Company and its
subsidiaries are included in a separate section of this Annual Report on Form
10-K commencing on the page numbers specified below:

INDEX....................................................................................F-1

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

Report of Arthur Andersen LLP, Independent Public Accountants ...........................F-31

Report of KPMG LLP, Independent Auditors to XM Satellite Radio Holdings Inc..............F-32

Consolidated Statements of Operations of Motient ........................................F-33

Consolidated Balance Sheets of Motient ..................................................F-34

Consolidated Statements of Stockholders' (Deficit) Equity of Motient ....................F-35

Consolidated Statements of Cash Flows of Motient ........................................F-36

Notes to Consolidated Financial Statements of Motient ...................................F-37

Quarterly Financial Data of Motient ....................................................F-83

Selected Financial Data of Motient ......................................................F-84

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2. Financial Statement Schedules.

Financial Statement Schedules not included below have been omitted because they
are not required or not applicable, or because the required information is shown
in the financial statements or notes thereto.

1. Schedule I - Condensed Financial
Information of Registrant.........................Page S-1

2. Schedule II - Valuation and
Qualifying Accounts..............................Page S-16

3. Exhibits

3.1 - Restated Certificate of Incorporation of the Company (as
restated effective May 23, 2000) (Incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-3
(File No. 333-42104)

3.2 - Amended and Restated Bylaws of the Company (as amended and
restated effective May 23, 2000)(incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on Form S-3
(File No. 333-42104))

9.1 - Amended and Restated Stockholders' Agreement dated as of
December 1, 1993, between the Company and certain holders of its
capital stock (Incorporated by reference to Exhibit 9.1 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-
70468))

10.6* - Motient Corporation Stock Award Plan (as amended and restated
effective May 23, 2000) (filed herewith)

10.6a* - Form of Nonstatutory Stock Option Agreement under the Stock
Award Plan (Incorporated by reference to Exhibit 10.6a to the
Company's Annual Report on Form 10-K for the year ended December
31, 1999)

10.6b* - Form of Restricted Stock Agreement, dated September 25, 2001,
used for grants of restricted stock in the Company's Option
Exchange Program completed on September 25, 2001 (filed herewith)

10.7* - Employee Stock Purchase Plan, as amended May 23, 2000
(Incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-8 (Reg. No. 333-40566)

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10.8* - Form of Directors and Officers Indemnification Agreement
(Incorporated by reference to Exhibit 10.41 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (File No. 0-23044))

10.9* - 1994 Stock Option Plan for Non-Employee Directors (Incorporated
by reference to Exhibit 10.53 to the Company's Annual Report on
Form 10-K filed for the period ended December 31, 1996 (File No.
0-23044))

10.14 - Deed of Lease at Reston, Virginia, dated February 4, 1993 and
amended June 21, 1993, between Motient Services Inc. and Trust
Company of the West as Trustee (Incorporated by reference to
Exhibit 10.20 to the Company's Registration Statement on Form S-1
(Reg. No. 33-70468))

10.14a - Amendment No. 4 to Deed of Lease, dated October 7, 1994,
between Motient Services Inc. and Trust Company of the West
as Trustee (Incorporated by reference to Exhibit 10.20a to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 0-23044))

10.14b - Sub-lease Agreement, dated as of November 26, 2001 between
Motient Services Inc. and Mobile Satellite Ventures LP (filed
herewith).

10.14c - Assignment and Assumption of Deed of Lease for Reston
Premises, dated November 8, 2001 (filed herewith).

10.20 - Stock Purchase Agreement for the Acquisition of Motorola ARDIS
Acquisition, Inc. and Motorola ARDIS, Inc. by Motient Holdings
Inc., a Wholly-Owned Subsidiary of the Company, dated as of
December 31, 1997 (Incorporated by reference to Exhibit 10.65
previously filed with the Company's Report on Form 10-K for the
period ending December 31, 1997 (File No. 0-23044)).

10.20a - Amendment No. 1 dated March 31, 1998 to the Stock Purchase
Agreement for the Acquisition of Motorola ARDIS Acquisition,
Inc. and Motorola ARDIS, Inc. by Motient Holdings Inc., a
Wholly-Owned Subsidiary of the Company (Incorporated by
reference to Exhibit 4.2 to the Schedule 13D dated March 31,
1998, filed by Motorola, Inc.).

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10.21 - Participation Rights Agreement by and among Motorola, Inc., the
Company, and the parties listed on Schedule A, dated as of
December 31, 1997 (Incorporated by reference to Exhibit 10.65
previously filed with the Report on Form 10-K for the period
ending December 31, 1997 (File No. 0-23044)).

10.21a - Registration Rights Agreement by and among Motorola, Inc. and
the Company dated as of March 31, 1998 (Incorporated by
reference to Exhibit 4.4 to the Schedule 13D dated March 31,
1998, filed by Motorola, Inc.)

10.22 - Credit Agreement by and between Motorola Inc. and ARDIS Company
dated June 17, 1998 (Incorporated by reference to Exhibit 10.61
to the Company's Current Report on Form 10-Q dated June 30, 1998
(File No. 0-23044)).

10.22a - Amendment No. 2, dated September 1, 2000, to the Credit
Agreement, dated as of June 17, 1998, by and between Motorola,
Inc. and Motient Communications Company (formerly known as
ARDIS Company) (Incorporated by reference to Exhibit 10.22a
to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2000 (File No. 0-23044)).

10.22b - Assumption, Release, Amendment and Waiver Agreement by and
among Motorola, Inc., Motient Communications Inc. and Motient
Communications Company, dated as of December 29, 2000 (filed
herewith).

10.23 - Indenture of Motient Holdings Inc., Series A and Series B, 12
1/4% senior notes Due 2008, dated March 31, 1998 (Incorporated by
reference to Registration Statement on Form S-4 filed on May 15,
1998 (File No. 333-52777)).

10.24 - Debt Registration Rights Agreement dated March 31, 1998 by and
among Motient Holdings Inc., Bear, Stearns & Co. Inc., J.P.
Morgan Securities Inc., TD Securities (USA) Inc. and BancAmerica
Robertson Stephens, and guarantors party thereto (Incorporated by
reference to Registration Statement on Form S-4 filed on May 15,
1998 (File No. 333-52777)).

10.25 - Unit Agreement Among Motient Corporation, Motient Holdings Inc.
and State Street Bank and Trust Company as Unit Agent, dated
March 31, 1998 (Incorporated by reference to Registration
Statement on Form S-4 filed on May 15, 1998 (File No.
333-52777)).

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10.26 - Warrant Agreement between Motient Corporation as Issuer and
State Street Bank and Trust Company as Warrant Agent dated March
31, 1998 (Incorporated by reference to Registration Statement on
Form S-4 filed on May 15, 1998 (File No. 333-52777)).

10.27 - Warrant Registration Rights Agreement dated March 31, 1998 By
and Among Motient Corporation and Bear, Stearns & Co. Inc., J.P.
Morgan Securities Inc., T.D. Securities (USA) Inc., BancAmerica
Robertson Stephens (Incorporated by reference to Registration
Statement on Form S-4 filed on May 15, 1998 (File No.
333-52777)).

10.28 - Pledge and Security Agreement by and among Motient Holdings
Inc., State Street Bank and Trust Company, as Trustee and State
Street Bank and Trust Company, as Collateral Agent dated March
31, 1998 (Incorporated by reference to Registration Statement on
Form S-4 filed on May 15, 1998 (File No. 333-52777))

10.30 - Warrant No. 1 for the Purchase of 3,750,000 Shares (subject to
adjustment) of Common Stock of the Company issued to Hughes
Electronics Corporation, dated June 28, 1996 (Incorporated by
reference to Exhibit XIII to the Amended and Restated Schedule
13D dated July 1, 1996, filed by Hughes Communications Satellite
Services, Inc., Hughes Communications, Inc., Hughes Aircraft
Company, Hughes Electronics Corporation and General Motors
Corporation with respect to shares of Common Stock, $.01 par
value, of the Company)

10.30a - Amendment No. 1 to the Warrant Certificate, dated as of March
27, 1997, by and among the Company and Hughes Electronics
Corporation, Singapore Telecommunications Ltd., and Baron
Capital Partners, L.P. (Incorporated by reference to Exhibit 4
to the Schedule 13D dated March 31, 1997, filed by Hughes
Communications Satellite Services, Inc.)

10.30b - Amendment No. 2 to the Warrant Certificate, dated as of March
31, 1998, by and among the Company and Hughes Electronics
Corporation, Singapore Telecommunications Ltd., and Baron
Capital Partners, L.P. (Incorporated by reference to Exhibit 4
to the Schedule 13D dated March 31, 1998, filed by Hughes
Communications Satellite Services, Inc.)

-44-

10.30c - Amendment No. 3 to the Warrant Certificates for the Purchase
of Shares of Common Stock of the Company, dated as of April 1,
1999, by and among the Company and Hughes Electronics
Corporation, Singapore Telecommunications Ltd., and Baron
Capital Partners, L.P. (incorporated by reference to
Exhibit 10.29b to the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 (File No. 0-23044))

10.30d - Amendment No. 4 to Warrant Certificates for the purchase of
shares of common stock of Motient Corporation dated as of
June 29, 2000 issued to each of Hughes Electronics Corporation
and Baron Capital Partners, L.P. (Incorporated by reference to
Exhibit 10.30d to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000 (File No. 0-23044))

10.30e - Letter Agreement dated April 2, 2001 between the Company and
Hughes Electronics Corporation, Baron Capital Partners, L.P.,
and Singapore Telecommunications Ltd. (incorporated by
reference to Exhibit 10.30e to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2001 (File
No. 0-23044)).

10.31 - Registration Rights Agreement dated as of June 28, 1996, among
the Company, Hughes Electronics Corporation, Singapore
Telecommunications Ltd., and Baron Capital Partners, L.P.
(Incorporated by reference to Exhibit XIV to the Amended and
Restated Schedule 13D dated July 1, 1996, filed by Hughes
Communications Satellite Services, Inc., Hughes Communications,
Inc., Hughes Aircraft Company, Hughes Electronics Corporation and
General Motors Corporation with respect to shares of Common
Stock, $.01 par value, of the Company). (Incorporated by
reference to Exhibit 10.57 to the Company's Quarterly Report on
Form 10-Q filed for the period ended June 30, 1996 (File No.
0-23044))

10.32 - Warrant for the Purchase of Shares of Common Stock of the
Company, dated as of March 31, 1998 (Incorporated by reference to
Exhibit 2 to the Schedule 13D dated March 31, 1998, filed by
Hughes Communications Satellite Services, Inc.)

10.32a - Amendment No. 1 to Warrant Certificates for the Purchase of
Shares of Common Stock of the Company, dated as of April 1,
1999 by and among Hughes Electronics Corporation, Singapore
Telecommunications Ltd. and Baron Capital Partners, L.P.
(incorporated by reference to Exhibit 10.29b to the Company's
Annual Report on Form 10-K for the year ended December 31,
1998 (File No. 0-23044))

-45-

10.32b - Amendment No. 2 to Warrant Certificates for the purchase of
common stock of Motient Corporation dated as of June 29,
2000 issued to each of Hughes Electronics Corporation and
Baron Capital Partners, L.P. (Incorporated by reference to
Exhibit 10.32b to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000 (File No. 0-23044)).

10.32c - Letter Agreement, dated April 2, 2001, between the Company and
Hughes Electronics Corporation, Baron Capital Partners, L.P.,
and Singapore Telecommunications Ltd. (incorporated by
reference to Exhibit 10.32c to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2001 (File
No. 0-23044)).

10.33 - Amended and Restated Registration Rights Agreement, dated as of
March 31, 1998, among the Company and Hughes Electronics
Corporation, Singapore Telecommunications Ltd., and Baron Capital
Partners, L.P. (Incorporated by reference to Exhibit 3 to the
Schedule 13D dated March 31, 1998, filed by Hughes Communications
Satellite Services, Inc.)

10.33a - Amendment No. 1, dated as of May 10, 1999, to Amended and
Restated Registration Rights Agreement among the Company,
Hughes Electronics, Singapore Telecommunications Ltd., and
Baron Capital Partners, L.P. (incorporated by reference to
Exhibit 10.33a to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999 (File No. 0-23044))

10.34 - Term Credit Agreement dated as of March 31, 1998 among the
Company, Morgan Guaranty Trust Company of New York, Toronto
Dominion (Texas), Inc. and other banks party thereto
(Incorporated by reference to Exhibit 10.61 to the Company's
Current Report on Form 10-Q dated March 31, 1998 (File No.
0-23044))

10.34k - Term Loan Master Agreement, dated as of November 19, 2001, by
and among the Company, Hughes Electronics Corporation, Baron
Capital Partners, L.P., and Singapore Telecommunications Ltd.
(incorporated by reference to Exhibit 10.34k to the Company's
Current Report on Form 8-K dated November 19, 2001 (File
No. 0-23044))

-46-

10.35 - Revolving Credit Agreement dated as of March 31, 1998 among
Motient Holdings Inc., the Company, Morgan Guaranty Trust Company
of New York and Toronto Dominion (Texas), Inc. and other banks
party thereto (Incorporated by reference to Exhibit 10.61 to the
Company's Current Report on Form 10-Q dated March 31, 1998 (File
No. 0-23044))

10.35j - Revolving Loan Master Agreement, dated as of November 19,
2001, by and among the Company, Hughes Electronics
Corporation, Baron Capital Partners, L.P., and Singapore
Telecommunications Ltd. (incorporated by reference to
Exhibit 10.35j to the Company's Current Report on Form 8-K
dated November 19, 2001 (File No. 0-23044))

10.36* - 1999 Stock Option Plan for Non-Employee Directors (Incorporated
by reference to Exhibit 4.4 to the Company's Registration
Statement on Form S-8 (File No. 333-88807)

10.37 - Exchange Agreement, dated June 7, 1999, by and among the
Company, WorldSpace, Inc., XM Satellite Radio Holdings Inc., and
Noah A. Samara, as trustee of XM Ventures (Incorporated by
reference to Exhibit 2.1 to the Company's Report on Form 8-K
dated July 9, 1999 (File No. 0-23044))

10.41 - Investment Agreement dated as of June 22, 2000, by and among
the Company, Motient Satellite Ventures LLC, and certain other
investors (Incorporated by reference to Exhibit 10.41 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000 (File No. 0-23044)).

10.42 - Asset Sale Agreement between Motient Satellite Ventures LLC and
Motient Services Inc. dated as of June 29, 2000 (Incorporated by
reference to Exhibit 10.42 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2000 (File No.
0-23044)).

10.42a - Amendment No. 1, dated as of November 29, 2000, to Asset Sale
Agreement, dated as of June 29, 2000, between Motient
Satellite Ventures LLC and Motient Services Inc. (incorporated
by reference to Exhibit 10.42a to the Company's annual report
on Form 10-K for the year ended December 31, 2000 (File
No. 0-23044)).

10.42b - Amended and Restated Asset Sale Agreement, dated as of
January 8, 2001, between Mobile Satellite Ventures LLC and
Motient Services Inc. (incorporated by reference to
Exhibit 10.42b to the Company's annual report on Form 10-K
for the year ended December 31, 2000 (File No. 0-23044)).

-47-

10.42c - Amendment, dated as of October 12, 2001, to the Amended and
Restated Asset Sale Agreement, dated as of January 8, 2001, by
and between Motient Services Inc. and Mobile Satellite
Ventures LLC (incorporated by reference to Exhibit 10.42c to
the Company's quarterly report on Form 10-Q for the quarter
ended September 30, 2001 (File No. 0-23044)).

10.43 - Research and Development, Marketing and Service Agreement,
dated as of June 29, 2000, by and between Motient Satellite
Ventures LLC and Motient Services Inc. (Incorporated by reference
to Exhibit 10.43 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2000 (File No. 0-23044)).

10.43a - Amendment, dated as of January 8, 2001, to Research and
Development, Marketing and Service Agreement (Incorporated by
reference to Exhibit 10.43a to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000 (File No.
0-23044)).

10.44 - First Amended and Restated Limited Liability Company Agreement
of Motient Satellite Ventures LLC dated as of June 29, 2000
(Incorporated by reference to Exhibit 10.44 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
(File No. 0-23044)).

10.44a - Amendment, dated December 19, 2000, to First Amended and
Restated Limited Liability Company Agreement of Mobile
Satellite Ventures LLC (Incorporated by reference to
Exhibit 10.44a to the Company's Annual Report on Form 10-K
for the year ended December 31, 2000 (File No. 0-23044)).

10.45 - Registration Rights Agreement, dated as of June 29, 2000, by
and among the Company and certain holders of securities
convertible into or exchangeable for Common Stock (Incorporated
by reference to Exhibit 10.45 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 2000 (File No.
0-23044)).

10.45a - Amendment, dated as of January 8, 2001, to Registration Rights
Agreement dated as of June 29, 2000 (incorporated by reference
to Exhibit 10.45 to the Company's annual report on Form 10-K
for the year ended December 31, 2000 (File No. 0-23044)).

-48-

10.46 - Asset Sale Agreement, dated November 29, 2000, by and among the
Company, Motient Services Inc. and Aether Systems, Inc.
(Incorporated by reference to Exhibit 10.46 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2000
(File No. 0-23044)).

10.47 - Escrow Agreement, dated as of November 29, 2000, by and among
Motient Services Inc., Aether Systems, Inc. and Sun Trust Bank
(Incorporated by reference to Exhibit 10.47 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2000
(File No. 0-23044)).

10.48 - January 2001 Investment Agreement, dated as of January 8, 2001,
by and among the Company, Mobile Satellite Ventures LLC, TMI
Communications and Company, Limited Partnership, and the other
investors named therein (Incorporated by reference to Exhibit
10.48 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 (File No. 0-23044)).

10.49 - Restoral Capacity Letter Agreement, dated January 8, 2001,
between Motient Services Inc. and TMI Communications and Company,
Limited Partnership (Incorporated by reference to Exhibit 10.49
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2000 (File No. 0-23044)).

10.50 - Document Standstill and Termination Agreement, dated as of
January 8, 2001, by and among the Company, Mobile Satellite
Ventures LLC, Motient Services Inc., and certain investors named
therein (incorporated by reference to Exhibit 10.50 to the
Company's annual report on Form 10-K for the year ended December
31, 2000 (File No. 0-23044)).

10.50a - Amended and Restated Document Standstill and Termination
Agreement, dated as of October 12, 2001 (Incorporated by
reference to Exhibit 10.50a to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 2001 (File
No. 0-23044))

10.51 - Agreement and Plan of Merger by and among Motient, MR
Acquisition Corp., and Rare Medium Group, Inc., dated as of May
14, 2001 (incorporated by reference to Motient's current report
on Form 8-K/A (File No. 0-23044) filed with the SEC on May 15,
2001)

-49-

10.51a - Letter Agreement by and among Motient, MR Acquisition Corp.
and Rare Medium Group, Inc., dated as of May 16, 2001
(incorporated by reference to Motient's current report on
Form 8-K (File No. 0-23044) filed with the SEC on May 18,
2001)

10.51b - Letter Agreement between Rare Medium Group, Inc. and Motient
Corporation, dated October 1, 2001 (Incorporated by reference
to Exhibit 10.51b to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2001 (File
No. 0-23044)).

10.52 - Amended and Restated Registration Rights Agreement by and among
Motient, Apollo Investment Fund IV, L.P., Apollo Overseas
Partners IV, L.P., and AIF IV/RRRR L.L.C., dated June 11, 2001
(incorporated by reference to Exhibit 10.1 to Motient's
registration statement on Form S-4 (File No. 333-63826)).

10.53 - Agreement, dated May 14, 2001, by and among Motient, Rare
Medium Group, Inc. and Glenn S. Meyers (incorporated by reference
to Exhibit 10.113 to Motient's registration statement on Form S-4
(File No. 333-63826))

10.54 - Note Purchase Agreement dated as of April 2, 2001 between
Motient and Rare Medium Group, Inc. (incorporated by reference to
Exhibit 10.112 to Motient's registration statement on Form S-4
(File No. 333-63826))

10.54a - Letter Agreement, dated October 1, 2001, between Rare Medium
Group, Inc. and Motient Corporation (incorporated by reference
to Exhibit 10.54a to the Company's quarterly report on
Form 10-Q for the quarter ended September 30, 2001 (File
No. 0-23044))

10.54b - Letter Agreement between Rare Medium Group, Inc. and Motient
Corporation, dated October 8, 2001 (incorporated by reference
to Exhibit 10.54b to the Company's quarterly report on
Form 10-Q for the quarter ended September 30, 2001 (File
No. 0-23044))

10.54c - Letter Agreement between Rare Medium Group, Inc. and Motient
Corporation, dated October 12, 2001 (incorporated by reference
to Exhibit 10.54c to the Company's quarterly report on
Form 10-Q for the quarter ended September 30, 2001 (File
No. 0-23044))

-50-

10.55 - Amended and Restated Investment Agreement, dated October 12,
2001, by and among Motient Corporation, Mobile Satellite Ventures
LLC, TMI Communications and Company, Limited Partnership, and the
other investors named therein (incorporated by reference to
Exhibit 10.55 to the Company's quarterly report on Form 10-Q for
the quarter ended September 30, 2001 (File No. 0-23044))

10.56 - Form of Stockholders' Agreement of Mobile Satellite Ventures GP
Inc. (incorporated by reference to Exhibit 10.56 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30,
2001 (File No. 0-23044))

10.56a - Stockholders' Agreement, dated as of November 26, 2001, of
Mobile Satellite Ventures GP Inc. (incorporated by reference
to Exhibit 10.56a of the Company's Current Report on
Form 8-K dated November 19, 2001 (File No. 0-23044)).

10.57 - Form of Limited Partnership Agreement of Mobile Satellite
Ventures LP (incorporated by reference to Exhibit 10.57 to the
Company's quarterly report on Form 10-Q for the quarter ended
September 30, 2001 (File No. 0-23044))

10.58 - Form of Convertible Note of Mobile Satellite Ventures LP, in
the amount of $50 million issued to MSV Investors LLC
(incorporated by reference to Exhibit 10.58 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30,
2001 (File No. 0-23044))

10.59 - Form of Promissory Note of Mobile Satellite Ventures LP, in the
amount of $15 million issued to Motient Services Inc.
(incorporated by reference to Exhibit 10.59 to the Company's
quarterly report on Form 10-Q for the quarter ended September 30,
2001 (File No. 0-23044))

10.60 - Form of Letter of Intent signed by Motient and the holders of a
majority in principal amount of the 12.25% senior notes due 2008
issued by Motient Holdings Inc. (incorporated by reference to
Exhibit 99.2 to the Company's Current Report on Form 8-K dated
January 10, 2002 (File No. 0-23044))

10.61 - Disclosure Statement with respect to Motient's Amended Joint
Plan of Reorganization dated February 27, 2002 (filed herewith)

10.62 - Motient's Amended Joint Plan of Reorganization dated February
27, 2002 (filed herewith)

-51-

21.1 - Subsidiaries of the Company (filed herewith)

23.1 - Consent of Arthur Andersen LLP (filed herewith)

23.2 - Consent of KPMG LLP (filed herewith)

99.1 - Letter to the Commission regarding Arthur Andersen LLP (filed
herewith)

- ----------

* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this report pursuant to Item 14(c) of this report.

(2) Reports on Form 8-K:

On November 19, 2001, the Company filed a Current Report on Form 8-K, describing
in response to Item 5-Other Events, the transfer of its remaining shares of XM
Satellite Radio Holdings Inc. to Hughes Electronics, Singapore
Telecommunications Limited and Baron Capital Partners.

On November 28, 2001, the Company filed a Current Report on Form 8-K, describing
in response to Item 2-Acquisition or Disposition of Assets, that it disposed of
all of its remaining 9,757,262 shares of common stock of XM Satellite Radio
Holdings Inc., in satisfaction of certain outstanding debt obligations that
Motient consummated the previously-announced sale of its satellite
communications business assets to Mobile Satellite Ventures LP.

On December 4, 2001, the Company filed an amendment, on form 8-K/A, to its
Current Report on Form 8-K, filed November 28, 2001, describing in response to
Item 7-Financial Statement and Exhibits, providing the pro forma financials.

On January 10, 2002, the Company filed a Current Report on Form 8-K, describing
in response to Item 3-Bankruptcy or Receivership, that it filed a plan of
reorganization under Chapter 11 of the Federal Bankruptcy Code.

On March 4, 2002, the Company filed a Current Report on Form 8-K, reporting on
the bankruptcy court's approval of the Company's Disclosure Statement with
respect to its Amended Joint Plan of Reorganization under Chapter 11.

-52-

SIGNATURES

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

MOTIENT CORPORATION

By /s/Walter V. Purnell, Jr.
-------------------------
Walter V. Purnell, Jr.
President and Chief Executive Officer

Date: March 28, 2002

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

/s/Walter V. Purnell, Jr. President and Chief Executive Officer
- ------------------------- (principal executive officer) March 28, 2002
Walter V. Purnell, Jr.

/s/W. Bartlett Snell Senior Vice President and
- ------------------------- Chief Financial Officer (principal
W. Bartlett Snell financial and accounting officer) March 28, 2002

/s/Gary M. Parsons Chairman of the Board March 28, 2002
- -------------------------
Gary M. Parsons

/s/Billy J. Parrott Director March 28, 2002
- -------------------------
Billy J. Parrott

/s/Andrew A. Quartner Director March 28, 2002
- -------------------------
Andrew A. Quartner

/s/Jonelle St. John Director March 28, 2002
- -------------------------
Jonelle St. John

-53-

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

Report of Arthur Andersen LLP, Independent Public Accountants...................F-31

Report of KPMG LLP, Independent Auditors to XM Satellite Radio Holdings Inc.....F-32

Consolidated Statements of Operations of Motient................................F-33

Consolidated Balance Sheets of Motient..........................................F-34

Consolidated Statements of Stockholders' (Deficit) Equity of Motient ...........F-35

Consolidated Statements of Cash Flows of Motient................................F-36

Notes to Consolidated Financial Statements of Motient...........................F-37

Quarterly Financial Data of Motient.............................................F-83

Selected Financial Data of Motient..............................................F-84

F-1

Management's Discussion and Analysis of Financial Condition and Results of
Operations

This Annual Report on Form 10-K contains and incorporates forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements regarding our expected financial position and operating results, our
business strategy, our pending plan of reorganization, and our financing plans
are forward-looking statements. These statements can sometimes be identified by
our use of forward-looking words such as "may," "will," "anticipate,"
"estimate," "expect," "project," or "intend." These forward-looking statements
reflect our plans, expectations and beliefs and, accordingly, are subject to
certain risks and uncertainties. We cannot guarantee that any of such
forward-looking statements will be realized.

Statements regarding factors that may cause actual results to differ materially
from those contemplated by such forward-looking statements ("Cautionary
Statements") include, among others, those under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Overview," and elsewhere in this annual report, including in conjunction with
the forward-looking statements included in this annual report. All of our
subsequent written and oral forward-looking statements (or statements that may
be attributed to us) are expressly qualified by the Cautionary Statements. You
should carefully review the risk factors described in our other filings with the
Securities and Exchange Commission (the "SEC") from time to time, including our
report on Form 8-K dated March 4, 2002 (File No. 0-23044), and our quarterly
reports on Form 10-Q to be filed after this annual report, as well as our other
reports and filings with the SEC.

Our forward-looking statements are based on information available to us today,
and we will not update these statements. Our actual results may differ
significantly from the results discussed.

References in this Annual Report to "Motient" and "we" or similar or related
terms refer to Motient Corporations and its wholly owned subsidiaries
collectively, unless the context requires otherwise.

MOTIENT'S CHAPTER 11 FILING

On January 10, 2002, Motient filed a voluntary petition for reorganization under
Chapter 11 of the Federal Bankruptcy Code. On January 14, 2002, Motient
voluntarily delisted its common stock from Nasdaq's National Market. For a more
detailed description of Motient's Chapter 11 filing and its pending plan of
reorganization, please see "Item 1. Business - Motient's Chapter 11 Filing," and
" -- Liquidity and Capital Resources" below.

GENERAL - THE CURRENT AND FORMER COMPONENTS OF MOTIENT'S BUSINESS

This section provides information regarding the various current and prior
components of Motient's business which we believe is relevant to an assessment
and understanding of the financial condition and consolidated results of
operations of Motient Corporation. Our significant acquisitions in recent years,
the sale of the satellite assets to Mobile Satellite Ventures LP, or MSV, in
2001, the sale of the retail transportation assets to Aether Systems in 2000,
and the impact of consolidating the results of XM Satellite Radio Inc., or XM
Radio, for 2000, make period to period comparison of our financial results less
meaningful, and therefore, you should not rely on them as an indication of
future operating performance. The discussion should be read in conjunction with
the consolidated financial statements and notes thereto.

F-2

Motient presently has four wholly-owned subsidiaries and an interest in MSV.
Motient Communications Inc. owns the assets comprising Motient's core wireless
business. The other three subsidiaries hold no material operating assets other
than the stock of other subsidiaries or Motient's interests in MSV. On a
consolidated basis, we refer to Motient Corporation and its four wholly owned
subsidiaries as "Motient." Our indirect, less-than 50 % interest in MSV is not
consolidated with Motient including for financial statement purposes.

Certain factors have placed significant pressures on our financial condition and
liquidity position, especially in recent periods. A number of factors were
preventing us from accelerating revenue growth at the pace required to enable us
to generate cash in excess of our operating expenses. These factors included
competition from other wireless data suppliers and other wireless communications
providers with greater resources, cash constraints that have limited our ability
to generate greater demand, unanticipated technological and development delays,
and general economic factors. During 2001, in particular, our efforts were also
hindered by the downturn in the economy and poor capital and financing market
conditions. These factors led us to file a voluntary petition for reorganization
under Chapter 11 of the United States Federal Bankruptcy Code in January 2002.
See "Liquidity and Capital Resources". If we successfully complete our
reorganization and emerge with a significantly improved balance sheet, we
intend to continue to focus on growing our core wireless business.

CORE WIRELESS BUSINESS

We are a nationwide provider of two-way, wireless mobile data services and
mobile Internet services. Our customers use our network for a variety of
wireless data communications services, including email messaging and other
services that enable businesses, mobile workers and consumers to transfer
electronic information and messages and access corporate databases and the
Internet.

Over the last several years, we have made substantial investments in new
products and services, including our eLink(sm) wireless email service, which
we believe will capitalize on the rapid expansion of Internet email usage and
wireless data, particularly in the business-to-business environment.

Our eLink service is a two-way wireless email device and electronic organizer
that uses our terrestrial network. We provide our eLink brand two-way wireless
email service to customers accessing email through corporate servers, Internet
Service Providers ("ISP"), Mail Service Provider ("MSP") accounts, and paging
network suppliers. We also offer a BlackBerry(TM) by Motient solution
specifically designed for large corporate accounts operating in a Microsoft
Exchange and Lotus Notes environment. BlackBerry(TM) is a popular wireless email
solution developed by Research In Motion ("RIM") and is being provided on the
Motient network under an agreement with RIM.

XM RADIO

As of December 31, 2000, we had an equity interest of approximately 33.1% (or
21.3% on a fully diluted basis) in XM Satellite Radio Holdings Inc. ("XM
Radio"), a public company that launched its satellite radio service toward the
end of 2001; and, as of December 31, 2000 we controlled XM Radio through our
Board of Director membership and common stock voting rights. As a result, all of
XM Radio's results for the period from July 7,

F-3

1999 (the date we acquired 100% voting interest of XM Radio) through December
31, 2000 have been included in our consolidated financial statements. Prior to
July 7, 1999, our investment in XM Radio was accounted for pursuant to the
equity method of accounting.

In January 2001, pursuant to Federal Communication Commission ("FCC") approval
to cease to control XM Radio, the number of directors that we appointed to XM
Radio's Board of Directors was reduced to less than 50% of XM Radio's directors,
and we converted a portion of our super-voting Class B Common Stock of XM Radio
to Class A Common Stock. As a result, we ceased to control XM Radio, and as of
January 1, 2001, we accounted for our investment in XM Radio pursuant to the
equity method of accounting. During 2001, Motient either sold or exchanged all
of its remaining shares of XM Radio and ceased to hold any interest in XM Radio
as of November 19, 2001. See "Item 1. Business - Significant Recent Events."

SALE OF RETAIL TRANSPORTATION BUSINESS IN NOVEMBER 2000

In November 2000, Motient sold assets relating to its retail transportation
business to Aether Systems, Inc. ("Aether"). The purchase price for these assets
was $45 million, plus the then-current book value of the inventory for the
business. All of this amount was paid at closing, except for $10 million which
was escrowed, and $3.7 million which was payable upon collection of certain
accounts receivable sold to Aether. As of March 15, 2002, approximately $2.2
million of the outstanding accounts receivable had been received by Motient. On
October 11, 2001, the $10 million escrow was paid to us, and, at the same time,
we agreed to modify certain of the pricing related terms of our network capacity
agreements with Aether. A gain of $8.3 million, representing the difference
between the net proceeds of the escrow received and the amount deferred pursuant
to the modification of the network capacity agreements, was recorded in 2001.

Following the asset sale, Motient has been selling network capacity to Aether as
a distributor, on a wholesale basis.

MOBILE SATELLITE VENTURES LP

On June 29, 2000, we formed a joint venture subsidiary, MSV, in which we owned
80% of the membership interests. The remaining 20% interests in MSV were owned
by three investors unrelated to Motient; however, the minority investors had
certain participating rights which provided for their participation in certain
business decisions that were made in the normal course of business; therefore,
in accordance with Emerging Issues Task Force Issue No 96-16, our investment in
MSV has been recorded for all periods presented pursuant to the equity method
of accounting.

Through November 26, 2001, MSV used our satellite network to conduct research
and development activities. On November 26, 2001, we sold the assets comprising
our satellite communications business to MSV, as part of a transaction in which
certain other parties joined MSV, including TMI Communications and Company
Limited Partnership ("TMI"), a Canadian satellite services provider. In
consideration for our satellite business assets, we received the following: (i)
a $24 million cash payment in June 2000, (ii) a $45 million cash payment paid at
closing, of which $4 million was held by MSV related to our sublease of real
estate from MSV, and (iii) a 5-year $15 million note. In this transaction, TMI
also contributed its satellite communications business assets to MSV. In
addition, we purchased a $2.5 million convertible note issued by MSV, and
certain other investors, including a subsidiary of Rare Medium Group, Inc. ,
purchased a total of $52.5 million of convertible notes.

F-4

As of December 31, 2001, we had an equity interest, on an undiluted basis, of
approximately 48% in MSV. Assuming that all of MSV's convertible notes issued in
such transaction are converted into limited partnership units of MSV, Motient
would have a 33.3% equity interest in MSV.

MSV has also filed a separate application with the FCC with respect to MSV's
plans for a new generation satellite system utilizing ancillary terrestrial base
stations. Within 90 days of the receipt of approval and final order from the
FCC, and provided that such approval occurs by March 31, 2003, certain of the
investors in MSV, excluding Motient, will invest an additional $50 million in
MSV and receive additional equity interests. Upon consummation of such
additional investment, an $11.5 million note issued by MSV to TMI and the $15
million note to Motient will be repaid in full, and Motient's ownership interest
in MSV will be reduced to approximately 25.5%.

MERGER AGREEMENT WITH RARE MEDIUM

On May 14, 2001, we signed a definitive merger agreement with Rare Medium
pursuant to which we would have acquired Rare Medium. On October 1, 2001, we and
Rare Medium announced the mutual agreement to terminate the pending merger.

OVERVIEW OF LIQUIDITY AND RISK FACTORS

LIQUIDITY AND FINANCING SOURCES

We have incurred significant operating losses and negative cash flows in each
year since we started operations, due primarily to the costs of developing and
building the networks and the cost of developing, selling and providing our
products and services. Prior to filing for protection under Chapter 11, we were
highly leveraged. These factors and others have placed significant pressures on
our financial condition and liquidity position. As a result, we filed for
Chapter 11 protection, as described more fully below, in an effort to
restructure our debt. If our restructuring plan is approved, our total debt will
be substantially reduced; however, even if we are successful in our
restructuring efforts, we expect to continue to incur operating losses and
negative cash flows for at least several more quarters, and do not expect to
achieve EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
break even until the latter half of 2002 at the earliest. We expect to continue
to make significant capital outlays to fund remaining interest expense, new
product rollouts, capital expenditures, and working capital before we begin to
generate cash in excess of our operating expenses. We are focusing our efforts
on improving our cash flow through growth in our subscriber base, while
maintaining, or even reducing, our operating expenses. We believe that a large
percentage of our costs are fixed; therefore, we are attempting to increase our
revenue without incurring significant cost increases.

As discussed in greater detail below, the November 2001 MSV transaction provided
additional funding which, together with other available working capital funding
sources, we expect should fund operations through 2002. While we believe there
are potential alternatives and additional sources of liquidity to fund our
operations if the MSV proceeds are insufficient, in the current environment we
expect that it will be difficult for us to access such funding sources. In
addition, our financial performance could deteriorate, and there is no assurance
that we will be able to meet our financial projections. If our cash requirements
are more than we currently expect, we will require additional financing in
amounts that may be material.

F-5

During 2001, Rare Medium loaned Motient an aggregate of $50 million, and Motient
issued notes payable in such amount to Rare Medium. Motient's obligation to
repay these notes was secured by its pledge of 5 million shares of Class A
common stock of XM Radio then held by Motient. On October 12, 2001, Motient
repaid approximately $26.2 million of principal and accrued interest under the
Rare Medium Notes by delivering to Rare Medium all of the 5 million shares of
Class A common stock of XM Radio pledged there under.

In November 2001, all of our obligations under our term loan and revolving
credit facility, including all associated guarantee and reimbursement
obligations, were repaid and extinguished. As part of these transactions, we
sold or transferred all of our remaining shares of XM Radio. See "Item 1.
Business - Motient's Chapter 11 Filing."

For a more detailed discussion of our funding requirements and outlook, see
"Liquidity and Capital Resources - Summary of Liquidity and Financing Sources
for Core Wireless Business."

EFFECT OF CHAPTER 11 FILING

As a result of our Chapter 11 bankruptcy filing, we have seen a slower adoption
rate for our services. In a large customer deployment, the upfront cost of the
hardware can be significant. Because the hardware generally is usable only on
Motient's network, certain customers have delayed adoption while we are in
Chapter 11. In an effort to accelerate adoption of our services, we have, in
selected instances in the first quarter of 2002, offered certain incentives for
adoption of our services that are outside of our customary contract terms, such
as extended payment terms or temporary hardware rental. We do not believe that
these changes in terms are material to our cash flow or operations; however, a
delay in exiting the Chapter 11 bankruptcy process could have a material
negative impact on our ability to generate adequate subscriber growth.

While we continue to maintain our vendor payments on a current basis, certain of
our trade creditors have required either deposits for future services or
shortened payment terms. While we do not believe that the amounts or changes to
payment terms will have a material impact on our cash flow or operations, there
can be no assurance that future requirements will not be material. None of our
key suppliers have ceased to do business with us as a result of our filing.

The hearing date for the confirmation of our plan of reorganization is scheduled
for April 25, 2002. If the plan is confirmed on that date, we would expect the
reorganization to be effective by mid-May; however, there are several factors
that are outside of our control, such as not receiving the required number of
votes necessary to approve the plan or the judge's decision that the plan is not
fair, that could adversely affect that schedule. For more details regarding our
plan of reorganization and the Chapter 11 process, please see "Item 1 - Business
- - Motient's Chapter 11 Filing."

Upon emergence from Chapter 11, we will be required to adopt "fresh start"
accounting, which requires that the value of Motient, as determined by the
court, be allocated to our assets and liabilities in accordance with Accounting
Principles Bulletin Opinion 16, or APB 16 No. 16, BUSINESS COMBINATIONS, for
transactions reported on the basis of the purchase method. If any portion of our
reorganization value cannot be attributed to specific tangible or intangible
assets, we will be required to report as an intangible asset "reorganization
value in excess of amounts allocable to identifiable assets."

F-6

SUMMARY OF RISK FACTORS

Additionally, our future operating results could be adversely affected by a
number of uncertainties and factors, including:

- our ability to successfully restructure our balance sheet, including
the conversion of most, if not all, of our current debt to equity
securities,

- our ability to exit the Chapter 11 bankruptcy process in a timely
manner,

- our ability to attract and retain customers despite our liquidity
issues and bankruptcy filing,

- our ability to secure additional financing necessary to fund
anticipated capital expenditures, operating losses and any remaining
debt service requirements,

- our ability to convert customers who have purchased devices from us
into active users of our airtime service and thereby generate revenue
growth,

- the timely roll-out of certain key customer initiatives and the launch
of new products or the entry into new market segments, which may
require us to continue to incur significant operating losses,

- our ability to fully recover the value of our inventory in a timely
manner,

- our ability to procure new inventory in a timely manner in the
quantities, quality, price and at the times required,

- our ability to gain market acceptance of new products and services,
including eLink and BlackBerry(TM) by Motient, and our ability to
make a profit thereon,

- our ability to respond and react to changes in our business and the
industry because we have substantial indebtedness,

- our ability to modify our organization, strategy and product mix to
maximize the market opportunities as the market changes,

- our ability to manage growth effectively,

- competition from existing companies that provide services using
existing communications technologies and the possibility of
competition from companies using new technology in the future,

- our ability to maintain, on commercially reasonable terms, or at all,
certain technologies licensed from third parties,

- our dependence on technology we license from Motorola, which may
become available to our competitors,

- the loss of one or more of our key customers,

- our ability to attract and retain key personnel, especially in light
of our recent headcount reductions,

- our ability to keep up with new technological developments and
incorporate them into our existing products and services and our
ability to maintain our proprietary information and intellectual
property rights,

- our dependence on third party distribution relationships to provide
access to potential customers,

- our ability to expand our networks on a timely basis and at a
commercially reasonable cost, or at all, as additional future demand
increases,

- our limited disaster recovery system which could hinder or prevent us
from continuing to provide service to some or all of our customers in
the event of a natural disaster or other occurrence that rendered the
system unavailable,

F-7

- the risk that Motient could incur substantial costs if certain
proposals regarding spectrum reallocation, that are now pending with
the FCC, are adopted,

- regulation by the FCC, and

- technical anomalies that may occur within the network, including
product development, which could impact, among other things, customer
performance, satisfaction and revenue under contractual arrangements
with certain customers.

For a more complete description of the above factors, please see the section
entitled "Risk Factors" in Motient's Disclosure Statement with respect to its
Amended Joint Plan of Reorganization, dated February 28, 2002, which is filed as
Exhibit 10.61 to this Annual Report on Form 10-K and incorporated herein by
reference.

YEAR ENDED DECEMBER 31, 2001 AND 2000

REVENUE AND SUBSCRIBER STATISTICS

Service revenue, which includes our data, voice, capacity reseller services as
well as royalty income, approximated $71.1 million for the year ended December
31, 2001, which was a $2.4 million reduction as compared to the year ended
December 31, 2000. We experienced a 125% growth in subscribers within our
wireless Internet sector, but these subscribers produced lower average revenue
per unit, or ARPU, than certain other segments, such as the voice and retail
transportation sectors. In those segments, we also saw decreases in revenue,
primarily as a result of our sale of satellite assets to MSV in November 2001,
and our sale of the majority of the retail transportation assets to Aether in
November 2000.

The tables below summarize our revenue and subscriber base for 2001 and 2000. An
explanation of certain changes in revenue and subscribers is set forth below
under the caption "Summary of Year over Year Revenue."

The make up of our subscriber base was as follows:

F-8

Telemetry 22,616 16,052 6,564 41
Maritime and other 890 25,912 (25,022) (97)
------- ---------- ----------- ========
Total 250,644 205,875 44,769 22%
======= ========== =========== ========

Excluding the transfer of approximately 37,000 subscribers in the Maritime and
other category to MSV as a result of the sale of the satellite business to MSV
in November 2001, we had a 40% increase in subscribers as of December 31, 2001,
as compared to December 31, 2000.

As is common in our industry, we report subscriber information and ARPU (Average
Revenue Per Unit) per month statistics. Although these figures are operational
numbers and not financial numbers recognized under Generally Accepted Accounting
Principles, or GAAP, we believe that this information helps to demonstrate
important trends in our business.

Excluding the revenue derived from the satellite business that was sold to MSV
in November 2001, our ARPU statistics would have been as follows:

F-9

SUMMARY OF YEAR OVER YEAR REVENUE

- - The growth in Wireless Internet revenue reflects the overall growth in the
number of units. Our eLink and Blackberry products were introduced in late
1999 and early 2000 and did not begin to achieve a significant growth rate
until the middle of 2000 as certain reseller initiatives were launched.
Additionally, a number of our resellers have units in inventory that have
not yet become revenue-producing units. Since those units are included in
our subscriber totals, they serve to drive down our ARPU. As more of these
units became revenue producing in the latter part of 2001, our ARPU
increased as compared to ARPU for 2000.

- - The decrease in revenue and ARPU from field services reflects primarily
rate reductions that occurred in connection with the renewal of a
significant customer contract in the first quarter of 2001. Additionally,
as part of this contract renewal, the customer upgraded to one of our new
devices, which greatly reduced their requirement for spare units, for which
we had previously received revenue. We also experienced churn of
approximately 6,000 registrations to several customers primarily as a
result of contract terminations or their corporate downsizings.

- - The decrease in revenue from our transportation product was primarily the
result of a shift from retail rates for our direct customers to wholesale
rates through Aether following the sale of our transportation assets to
Aether in November 2000 and the resulting decrease in ARPU. This decrease
was partially offset by the increase in the number of units under our
United Parcel Service contract.

- - The decrease in telemetry revenue reflects the change from a take or pay
agreement to a usage based agreement with one customer.

- - The growth in maritime and other revenue was primarily the result of (i)
$3.0 million more of revenue earned in 2001 as compared to 2000, from our
contract to provide MSV with satellite capacity as they pursued their
research and development program and (ii) a $1.75 million royalty payment
from the one-time licensing of our network software. This increase was
partially offset by ARPU decreases in the maritime market as a result of
more efficient use of their satellite phones by the maritime market, which
resulted in reduced minutes of use.

- - The decrease in equipment revenue is primarily a result of (i) the loss of
$9.1 million of equipment sales associated with the sale of our
transportation business and (ii) a $925,000 decrease in voice equipment
sales. These reductions in equipment revenue were offset by an increase of
approximately $5.9 million in equipment sales for our eLink product lines.

In connection with the sale of the voice and other satellite-related assets to
MSV in November 2001, our subscriber count was reduced by approximately 37,000
units, and our quarterly revenue is projected to decrease by approximately $6.4
million; however, cash expenses are expected to be reduced proportionately, and
therefore, we believe the impact of the sale of these assets should be
approximately cash flow neutral.

EXPENSES

F-10

General & Administration-XM Radio -- 76.1 (76.1) (100)
Operational Restructuring Charge 4.7 -- 4.7 100
Depreciation & Amortization-core wireless 32.4 35.4 (3.0) (8)
Depreciation & Amortization-XM Radio -- 3.4 (3.4) (100)
-------- ---------- -----------
Total $188.3 $ 280.2 $ (91.9) (33)%
======== ========== =========== ============

The results for the year ended December 31, 2000, included expenses incurred by
XM Radio, as we were required to consolidate their results. As noted above, as
of January 1, 2001, we ceased consolidating the results of XM Radio.

Cost of service and operations includes costs to support subscribers. The 4%
year-over-year decrease is made up of the following factors:

1. a 2% reduction, or $276,000 decrease, in communication charges
associated with reductions in the cost of usage as a result of the
sale of the satellite and transportation assets and the renegotiation
of our telecommunications contract, offset by cost increases
associated with a 10% increase in the number of terrestrial base
stations in service as compared to 2000,

2. a $648,000 increase in base station maintenance costs associated with
an approximate 18% increase in the average cost per base station
primarily as a result of new rates under our maintenance contract, as
well as a 10% increase in the number of base stations,

3. a $1.5 million increase for site rental costs associated with the 10%
increase in base stations year over year and an average 3% increase in
the average lease rate, and

4. approximately $2.5 million in licensing and commission payments to
third parties with whom we've partnered to provide certain eLink and
Blackberry by Motient services.

The increases were offset by:

1. a reduction of approximately $3.9 million associated with reduced
headcount levels, primarily as a result of our sale of the
transportation and satellite assets, as well as our cost control
efforts undertaken in 2001,

2. a reduction of $1.7 million in research and development spending, and

3. a $1.5 million decrease in costs associated with the sale of the
satellite business to MSV, including a $1.0 million reduction in
in-orbit insurance costs for the year.

The increase in cost of equipment sold for the year ended December 31, 2001, as
compared to 2000, was a result of $7.5 million inventory valuation charges in
2001 associated with our early-generation eLink inventory, as compared to a $3.6
million inventory charge in 2000. These charges were taken as a result of
evaluating our current sales trends, as well as pricing announcements made by
certain of our competitors. This was offset by a shift from the higher-cost
products associated with our transportation business, as compared to the
lower-cost eLink product line.

Sales and advertising expenses as a percentage of total revenue were
approximately 25% for 2001, compared to 36% for 2000. The decrease in sales and
advertising expenses period over period was primarily attributable to:

1. a $4.6 million reduction in spending on advertising and trade shows,

2. a 26%, or $5.6 million, decrease in headcount costs, primarily as a
result of the sale of our transportation and satellite assets,

3. $600,000 of costs associated with our name change in 2000 and

F-11

4. $600,000 in savings associated with reductions in various components
of costs incurred to acquire customers.

General and administrative expenses for the core wireless business as a
percentage of total revenue were approximately 21% for 2001 as compared to 22%
for 2000. The decrease in 2001 costs over 2000 costs in our core wireless
business general and administrative expenses was primarily attributable to:

1. approximately $1.2 million of savings associated with having fewer
employees throughout 2001, primarily as a result of the April 2001
cost-saving initiatives as well as the sale of the transportation
assets in late 2000,

2. a reduction of approximately $1.3 million associated with a 22%
reduction in general and administrative staff,

3. approximately $428,000 of reductions in regulatory expenditures in
2001 as compared to 2000, and

4. approximately $300,000 in reduced bad debt expense as a result of the
sale of the transportation assets.

These costs savings were offset by a $1.3 million charge associated with the
vesting of certain restricted stock grants in 2001.

Operational restructuring costs of $4.7 million represent those costs associated
with the restructuring program that we announced and implemented on September
26, 2001. Of these costs, approximately $1.6 million are cash charges that are
associated with severance packages for the approximate 16% of our direct work
force that was laid off. These cash expenditures did, in some cases, carry into
the first quarter of 2002. Approximately $3.0 million of charges were associated
with the termination of a product initiative, and represent primarily non-cash
charges associated with the write off of prepaid advertising costs.

Depreciation and amortization for the core wireless business was approximately
35% of total revenue for 2001, as compared to 37% for 2000. The $3.0 million
decrease in depreciation and amortization expense in 2001 was primarily
attributable to the sale of our transportation assets in the fourth quarter of
2000 and their associated depreciation, as well as the sale of our satellite
assets to MSV in late November 2001.

Interest income was $1.1 million for the year ended December 31, 2001, as
compared to $31.4 million (of which $27.6 million was earned by XM Radio) for
the year ended December 31, 2000. Excluding interest earned by XM Radio, the
$2.7 million decrease in interest earned by the core wireless business reflects
reduced interest earned on our escrow established for the senior notes as a
result of a lower escrow balance. The final payment was made out of the escrow
in April 2001.

We incurred $61.7 million of interest expense in 2001, compared to $62.5 million
during 2000. The $800,000 decrease was a result of:

1. a decrease in amortization of warrants and prepaid interest and debt
offering costs due to the debt discount costs that were written off in
2000 and 2001 when we extinguished debt under the bank facilities and

2. lower average outstanding debt balances on the bank facilities as a
result of repayments made to the bank facilities in the second half of
2000 and throughout 2001.

These decreases were offset by:

1. increased interest as a result of the $50 million Rare Medium notes
issued in 2001 and

F-12

2. $1.5 million of interest charges associated with the amortization of
the Rare Medium Notes discount.

Additionally, we recorded a number of other non-recurring charges in 2001 as a
result of our various financing transactions (see "Liquidity and Capital
Resources"):

- As noted above, we purchased $50 million of notes from Rare Medium
that were secured and exchangeable into up to 5.0 million of our
shares of XM Radio stock. The embedded call options included in these
notes were deemed to be a derivative, and we recorded a net gain of
$1.5 million on the mark-to-market adjustment of these securities.

- We sold or exchanged all of our shares of XM Radio stock for cash or
debt extinguishment. As a result of these various transactions, we
recorded a mark-to-market loss of $81.50 million on the shares
disposed of, and an extraordinary gain of $10.1 million on the
extinguishment of debt exchanged for these shares.

- As a result of the permanent reductions in our bank facility, we also
recorded an extraordinary loss on the extinguishment of debt in the
amount of $11.3 million, representing the write off of fees and
unamortized warrants associated with the original placement of this
debt.

- We recorded a gain of approximately $35.5 million on the sale of our
satellite assets to MSV. Since we had an 80% interest in MSV (on an
undiluted basis), we deferred 80% of the gain on this sale, and
recognized a net gain of $7.6 million in 2001.

- We incurred approximately $1.3 million of costs associated with our
debt restructuring efforts.

- We incurred approximately $4.1 million of costs associated with the
Rare Medium Merger, which was terminated.

Net capital expenditures for the year ended December 31, 2001 for property and
equipment were $13.8 million compared to $22.2 million (excluding XM Radio) for
2000. Expenditures consisted primarily of assets necessary to continue the build
out of our terrestrial network.

YEAR ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999

REVENUE AND SUBSCRIBER STATISTICS

Service revenue, which for the years ended December 31, 2000 and 1999 was
classified into data, voice, and capacity reseller services, approximated $73.5
million for the year ended December 31, 2000, which constituted a $5.8 million,
or 9% increase over 1999. The increase in service revenues in 2000 was
attributable to a 46% increase in subscribers, partially offset by a reduction
in ARPU.

F-13

Our data service revenue increased as a result of approximately 61,900
additional subscribers at December 31, 2000, as compared to December 31, 1999,
broken down as follows:

The growth in the transportation segment was primarily related to usage by UPS
and to increased usage by multi-mode customers. The decrease in field service
was a result of (i) contract price reductions from existing large customers and
(ii) the expiration of a large contract.

The decrease in service revenue from voice services was primarily the result of
a decrease in ARPU caused by a shift in customer usage to lower-usage emergency
response services, and a continued drop in ARPU for our maritime customers,
partially offset by our 8% increase in the number of voice subscribers.

Service revenue from capacity resellers, who handle both voice and data
services, and other sources, increased primarily as a result of approximately
$3.6 million in revenue under our research and development agreement with MSV,
as well as $250,000 of revenue recognized from the licensing of certain of our
technologies.

For the year ended December 31, 2000 we experienced a 28% decrease in ARPU. This
was primarily caused by:

1. late year subscriber additions and delayed sales through the reseller
channels for our eLink product that did not add materially to
revenues,

2. the impact of a one-time voice contract credit, and

3. a larger percentage of our customers using our data service, versus
our voice service, which typically have a higher ARPU.

These factors were offset by an increase in ARPU caused by the revenue from the
research and development agreement with MSV for which no subscribers were
added. When normalized for the late year loading, one-time adjustment and
revenue from the research and development agreement, our ARPU decreased by 19%
as compared with ARPU as of December 31, 1999.

The increase in equipment revenue for the year ended December 31, 2000, as
compared to 1999 is a result of an increase of approximately $12.6 million in
equipment sales for our eLink product lines, offset by a $7.7 million decrease
in voice equipment sales and a $2.0 million decrease in the revenue from the
multi-mode data product.

The tables below summarizes subscriber base and ARPU for 2000 and 1999.

F-14

EXPENSES

Effective July 7, 1999, as a result of our acquisition of all other ownership
interest in XM Radio and changes in certain participating rights, we
consolidated its results with ours from that point forward. Consequently, the
discussion of the 2000 results reflect the costs of the consolidated entity. The
results for the year ended December 31, 1999 included expenses on a consolidated
basis from July 7, 1999 forward.

Cost of service and operations includes costs to support subscribers and to
operate the network. The increase in cost of service and operations was
primarily attributable to:

1. a $3.4 million or 22% increase in communication charges associated
with increased service usage and an 11% increase in base stations year
over year, and increased rates under communication contracts to
support the terrestrial network, 2

2. a $1.7 million or 22% increase in maintenance costs primarily for
maintenance of our base stations,

3. a $3.4 million, or 21% increase, in headcount as we continue the
build-out and support of our network,

F-15

4. a $1.6 million or 20% increase for site rental costs associated with
the build out of the terrestrial network, and

5. an increase of $1.1 million for research and development efforts
primarily associated with our eLink product.

These costs were offset by a reduction of approximately $3.6 million in Year
2000 costs and a $1.4 million reduction in in-orbit insurance premiums.

The $3.3 million increase in cost of equipment sold for the year ended December
31, 2000, as compared to 1999, was a result of our growth in the sales of our
eLink product line, which was introduced in the third quarter of 1999, and a
$3.6 million inventory write-down associated with certain of these first
generation eLink devices. Additionally, sales of our single-mode, multi-mode and
voice products were down 55% from last year.

Sales and advertising expenses as a percentage of total revenue were
approximately 36% for 2000, compared to 25% for 1999. The increase in sales and
advertising expenses year over year was primarily attributable to:

1. $800,000 of increased costs of providing demonstration equipment in an
effort to seed the market for our new products,

2. an $8.4 million increase in advertising and trade show activity to
heighten our presence in the marketplace and to highlight our new
product offerings, including our roll out of our eLink fortified with
Yahoo!(TM) product in November 2000 (see below),

3. $600,000 of costs incurred in connection with our company name change
in April 2000, and

4. a $2.6 million 9% increase in headcount to support the new sales and
marketing initiatives.

In July 2000, we signed an agreement with Yahoo! to promote our
newly-developed eLink Fortified with Yahoo!(TM) wireless product. In addition
to our advertising commitment under this contract, we also issued common
stock purchase warrants to Yahoo!. The Yahoo! warrants were valued at
approximately $4.8 million. These warrants were amortized to sales and
advertising in accordance with the roll out of the advertising plan.

General and administrative expenses for the core wireless business as a
percentage of total revenue were approximately 22% for 2000, compared to 21% for
1999. The increase in 2000 costs over 1999 costs in our core wireless business
general and administrative expenses was attributable to:

1. $1.0 million or 9% increase in general and administrative headcount
from the prior year,

2. An $800,000 or an overall 16% increase from 1999 in total headcount
causing an increase in employee-related costs,

3. an increase in bad debt expense primarily associated with two
customers, and

4. a $300,000 increase in regulatory costs, associated principally with
our appeal of the FCC's decision to grant applications to competitors
to provide mobile satellite services in the United States.

General and administrative expenses for XM Radio increased as XM Radio prepared
for the launch of service. Increases in costs are associated with research and
development efforts, additional facility charges, and headcount related
expenses. Additionally, in 2000, XM Radio incurred non-cash compensation charges
of approximately $1.2 million for performance-based stock options as a result of
adopting the provisions of Financial Accounting Standards Board, or FASB,
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation," or FIN 44.

F-16

Depreciation and amortization for the core wireless business was approximately
35% of total revenue for 2000, compared to 60% for 1999. The decrease in
depreciation and amortization expense in 2000 was primarily attributable to the
$97.4 million asset impairment charge related to our satellite and satellite
related ground segment assets taken in the fourth quarter of 1999. This resulted
in a reduction in depreciation expense of approximately $16.3 million for 2000.
Further reductions in depreciation expense are a result of older assets,
particularly those associated with the mobile messaging business, being fully
depreciated by the end of 1999.

Interest and other income was $31.4 million (of which $27.6 million was earned
by XM Radio) for the year ended December 31, 2000, as compared to $8.5 million
(of which $2.8 million was earned by XM Radio) for the year ended December 31,
1999. Excluding interest earned by XM Radio, the $1.9 million decrease in
interest earned by the core wireless business reflects reduced interest earned
on our escrow established for our senior notes as a result of lower escrow
balances, which was essentially offset by interest earned in 1999 on our note
receivable from XM Radio, as XM Radio was accounted for under the equity method
of accounting during the first six months of 1999.

We incurred $62.5 million of interest expense in 2000, all of which related to
our core wireless business, as XM Radio capitalized interest associated with
constructing their satellite system, compared to $66.0 million during 1999, of
which $2.7 million was incurred by XM Radio. The net decrease, excluding XM
Radio, of $0.8 million for the year was a result of:

1. a $4.3 million decrease in amortization of warrants,

2. prepaid interest and debt offering costs due to the debt discount costs
that were written off in 1999 and 2000 when we extinguished $82.8
million of debt on the bank facilities, and

3. lower debt balances, offset by an approximate 3% increase in interest
rates on our bank facility.

In January 1999, we issued a note payable in the amount of $21.5 million to
Baron Asset Fund, a stockholder and a guarantor of our bank facility. The note
was secured and exchangeable for a portion of our shares of XM Radio. Since the
note was indexed to XM Radio stock, which decreased in value from December 1999
to January 2000, we recorded an unrealized gain of $3.9 million before the note
was exchanged. The note payable was exchanged for XM Radio stock in January
2000, and we recorded a non-recurring gain of $32.9 million for the difference
between the carrying value of the debt and XM Radio stock exchanged to settle
the obligation.

Net capital expenditures for the year ended December 31, 2000, excluding XM
Radio, for property and equipment were $22.2 million compared to $13.8 million
in 1999. Expenditures consisted primarily of assets necessary to continue the
build out of our terrestrial network, including approximately $3.6 million for
the purchase of new frequencies. In addition, XM Radio spent $51.4 million in
2000 for leasehold improvements on its new office building, as well as for other
expenditures for office furniture and equipment.

Net capital expenditures for property under construction represent those costs
associated with the build out of the XM Radio network. For the year ended
December 31, 2000, XM Radio spent $414.9 million for property under
construction.

LIQUIDITY AND CAPITAL RESOURCES

As described above, in January 2002, we filed a voluntary petition for
reorganization under Chapter 11 of the Federal Bankruptcy Code. One of the
principal goals of the reorganization process is to significantly deleverage

F-17

Motient's balance sheet, so that Motient's ongoing interest expense is
substantially reduced. If Motient's plan of reorganization is confirmed, Motient
expects to have up to approximately $34.0 million of debt (comprised of capital
leases, new notes payable to Rare Medium and any other creditors in the same
class as Rare Medium, and the outstanding Motorola credit facility). However,
even upon emergence from reorganization, Motient's business plan will require
substantial additional funds to finance the maintenance and growth of its
operations, network and subscriber base and to expand into new markets.

We expect to continue to require significant additional funds before we begin to
generate cash in excess of our operating expenses, and do not expect to achieve
EBITDA break even until the latter half of 2002, at the earliest. Also, even if
we begin to generate cash in excess of our operating expenses, we expect to
continue to require significant additional funds to meet remaining interest
obligations, capital expenditures, and other non-operating cash expenses. The
MSV transaction in November 2001 provided additional funding which, together
with other available funding sources, such as net cash from operations and
changes in working capital, should fund operations through 2002. While we
believe there are potential alternatives and additional sources of liquidity to
fund our operations if the MSV proceeds are insufficient, in the current
environment we expect that it will be difficult for us to access such funding
sources. In addition, our financial performance could deteriorate, and there is
no assurance that we will be able to meet our financial projections. If our cash
requirements are more than we currently expect, we will require additional
financing in amounts that may be material.

During 2001, we executed the following liquidity-related transactions and
initiatives:

- - In January and February 2001, we sold, in two separate transactions, 2
million shares of our XM Radio Class A Common Stock, at an average price of
$16.77 per share, for total proceeds of $33.5 million. Approximately $8.5
million of the proceeds were used to repay and permanently reduce our bank
financing.

- - In the second and third quarters of 2001, we received a total of $50
million from Rare Medium, and issued Rare Medium notes payable for such
amount at 12.5% annual interest. Of the total of $50 million that we
received, we used $12.25 million to repay and permanently reduce our bank
financing, and $36.75 million was used to fund general operations. These
notes were collateralized by 5 million of our XM Radio shares. On October
12, 2001, in accordance with the terms of the notes, we repaid $26.2
million of the Rare Medium notes, representing $23.8 million in principal
and $2.4 million of accrued interest, in exchange for 5 million of our XM
Radio shares. The $26.9 million of principal and accrued interest remaining
outstanding at December 31, 2001 is unsecured.

- - In April 2001 we undertook certain capital and expense reductions,
principally in the areas of employee hiring, advertising and capital
spending. We estimate that these reductions resulted in up to approximately
$15 million of budgetary savings in 2001, while not reducing our ability to
sell our products or lowering our service levels.

- - On September 26, 2001, we announced an operational restructuring that
included the termination of approximately 25% of our work force, including
consultants. The total cash outlay of this restructuring was
approximately $1.7 million over the last quarter of 2001 and the first
quarter of 2002 and represents primarily employee severance costs. It is
expected that this reduction in force will save us approximately

F-18

$1.8 million per quarter, starting in early 2002.

- - On October 11, 2001, we received $10 million that had been held in escrow
as part of the Aether transaction.

- - On November 6, 2001, the agent for the bank lenders under our term loan
facility and revolving credit facility declared all loans under the bank
financing immediately due and payable, due to the existence of several
events of default under the bank financing. On the same date, the bank
lenders sought payment in full from Hughes Electronics Corporation,
Singapore Telecommunications, Ltd. and Baron Capital Partners, L.P. as
guarantors for the accelerated loan obligations. The guarantors repaid all
such loans on November 14, 2001 in the amount of approximately $97.6
million. As a result, we had a reimbursement obligation to the guarantors
in the amount of $97.6 million, which included accrued interest and fees.

On November 19, 2001, we sold 500,000 shares of our XM Radio common stock
through a broker for $9.50 per share, for aggregate proceeds of $4.75
million. The net proceeds from this sale were paid to the guarantors,
thereby reducing the amount of our reimbursement obligation to the
guarantors by such amount. Also on November 19, 2001 we delivered all of
our remaining 9,257,262 shares of XM Radio common stock to the guarantors
in full satisfaction of the entire remaining amount of our reimbursement
obligations to the guarantors. Upon delivery of these shares, the
guarantors released us from all of our remaining obligations to the
guarantors under the bank financing and the related guarantees and
reimbursement and security agreements. We delivered 7,108,184 shares to
Hughes Electronics Corporation, 964,640 shares to Singapore
Telecommunications, Ltd., and 1,184,438 shares to Baron Capital Partners,
L.P.

As a result of the delivery of the shares of XM Radio common stock
described above, the maturity of the Rare Medium Notes was accelerated to
November 19, 2001.

- - On November 26, 2001, we sold our satellite assets to MSV for net cash
proceeds of $42.5 million and a $15 million note receivable from MSV.

- - On December 20, 2001, we executed an amendment to our reseller agreement
with Research In Motion, or RIM, whereby RIM agreed to prepay for
approximately $4.8 million of service, which can be used by RIM at their
discretion until December 7, 2004. Additionally, we reached a settlement
with RIM whereby we agreed to pay RIM approximately $9.9 million,
representing payment in full, plus interest, for all amounts due and
payable under the RIM supply and service agreement.

- - On December 28, 2001, we negotiated the release of a $10 million escrow
held by Motorola, Inc. in accordance with a customer guarantee. Motorola
applied a portion of this escrow to accounts payable for maintenance work
and past-due payments under our vendor financing agreement. Approximately
$4.9 million of the balance of the escrow was released to Motorola and will
be used to fund future maintenance costs that we incur under our
maintenance contract. It is expected that this balance will be fully
utilized by the end of the third quarter of 2002. Additionally, as part of
this release, Motorola agreed to suspend all scheduled principal payments
under our vendor financing agreement until January 1, 2003, and the
maturity date and amortization schedule of all loans outstanding under this
agreement was extended by twelve months.

F-19

BACKGROUND ON MOTIENT'S CHAPTER 11 FILING

As noted above, in October 2001, Motient and Rare Medium terminated the merger
agreement signed in May 2001. One of the principal reasons we pursued the Rare
Medium merger was to gain access to cash held by Rare Medium. As a result of the
termination of the Rare Medium merger, we did not receive the anticipated cash
from that transaction that would have allowed us to fund certain debt and
interest payment obligations. Accordingly, on October 1, 2001, we announced that
we would not make a $20.5 million semi-annual interest payment due on the senior
notes on such date. On November 26, 2001, the trustee declared all amounts owed
under the senior notes immediately due and payable.

Following these events, we determined that the continued viability of our
business required restructuring our highly leveraged capital structure. In
October 2001, we retained Credit Suisse First Boston ("CSFB") as financial
advisors to assist us in restructuring our debt. Shortly thereafter, we and CSFB
began meeting with our principal creditor constituencies, represented by (a) the
bank guarantors, (b) an informal committee representing the holders of the
12.25% senior notes due 2008 issued by Motient Holdings Inc., and (c) Rare
Medium.

In January 2002, we and the informal committee reached an agreement in principle
with respect to the primary terms of a plan of reorganization of Motient and its
principal subsidiaries. We determined that the continued viability of our
business required a restructuring of our highly leveraged capital structure.
Accordingly, on January 10, 2002, we filed for protection under Chapter 11 of
the U.S. Bankruptcy Code. Our Amended Joint Plan of Reorganization was filed
with the U.S. Bankruptcy Court for the Eastern District of Virginia on February
28, 2002. The cases are being jointly administered under the case name "In Re
Motient Corporation, et. al.," Case No. 02-80125. An amended plan of
reorganization was filed on February 28, 2002.

The plan generally provides that holders of the senior notes will exchange their
notes for new Motient stock to be issued pursuant to the plan. Shares of common
stock held by existing common stockholders will be cancelled, and the existing
common stockholders will receive warrants with a nominal strike price to
purchase 5 percent of the new common stock (on a fully diluted basis) in the
reorganized company. The warrants will have a term of two years and will be
exercisable once the holders of the senior notes have recovered 105 percent of
the principal amount and accrued interest on the senior notes. Warrants and
options to purchase existing common stock that are outstanding as of the
effective date of the plan will be cancelled.

While we are pursuing a financial restructuring through the Chapter 11 filing,
we are not able to predict when or if we will be able to satisfactorily
implement our plan of reorganization. If we are not able to complete our plan of
reorganization, or do so on the desired timetable, there can be no assurance
that we will be able to continue as a going concern.

The hearing date for the confirmation of our plan of reorganization is scheduled
for April 25, 2002. If the plan is confirmed on that date, we would expect the
reorganization to be effective by mid-May; however, there are several factors
that are outside of our control that could adversely affect that schedule.

Further details regarding the plan are contained in Motient's Disclosure
Statement with respect to the plan, which is filed as Exhibit 10.61 to this
Annual Report and incorporated herein by reference.

F-20

SUMMARY OF LIQUIDITY AND FINANCING

Currently, Motient has the following sources of financing in place:

- - MSV issued a $15 million note to Motient as part of the November 26, 2001
asset sale. The payment of such note by MSV is due the sooner of ninety
days from the date of the approval and issuance of the final order by the
FCC of MSV's pending application, or November 25, 2006. It is currently
anticipated that this approval and final order could be received sometime
in 2002; however, there can be no assurances that this approval will be
received in a timely manner, if at all.

Motient currently has the following financing obligations outstanding:

- - A vendor financing commitment from Motorola, a stockholder, to provide up
to $15 million of vendor financing to finance up to 75% of the purchase
price of additional terrestrial network base stations. Loans under this
facility bear interest at a rate equal to LIBOR plus 7.0% and are
guaranteed by Motient and each of its wholly-owned subsidiaries. The terms
of the facility require that amounts borrowed be secured by the equipment
purchased therewith. As of December 31, 2001, $3.3 million was outstanding
under this facility at 9.59%. As noted above, all principal payments under
this arrangement have been deferred until January 1, 2003. No additional
amounts may be drawn under this facility.

- - A capital lease for network equipment acquired in July 2000. The lease has
a term of three years and an effective interest rate of 14.718%, and as of
December 31, 2001, had a balance of $8.3 million. As a result of our
default under the senior notes, we are deemed to be in default under the
terms of this lease agreement; however, we expect the default to be cured
on upon the acceptance of our plan of reorganization. It is expected that
the lease terms will remain unchanged as a result of this default, and we
have not been notified by the lessor that we are deemed to be in default.

- - $335 million of senior notes issued in 1998, at the time Motient acquired
Motient Communications. The notes bear interest at 12.25% annually and are
due in 2008. Interest payments are due semi-annually, in arrears. As
discussed above in greater detail, we failed to make a semi-annual interest
payment due October 1, 2001, which failure constitutes an event of default
under the senior notes.

- - Unsecured note payable to Rare Medium in the amount of $26.9 million of
principal and accrued interest thereon. The Rare Medium note is currently
in default. Under our plan of reorganization, we expect that the Rare
Medium note will be cancelled and replaced by a new note in the principal
amount of $19.0 million. The new note will be issued by a new subsidiary of
Motient Corporation that will own 100% of Motient Ventures Holding Inc.,
which owns all of our interests in MSV. The new note will have a term of 3
years and will carry interest at 9%. The new note would allow us to elect
to accrue interest and add it to the principal, instead of paying interest
in cash The note will require that it be prepaid using 25% of the proceeds
of any repayment of the $15 million note from MSV.

If we are successful in restructuring all or a substantial portion of our debt,
we anticipate that our funding requirements through 2002 would be met with a
combination of cash on hand, net cash flow from operations,

F-21

and proceeds realized through the sale of inventory relating to eLink and
BlackBerry(TM). The foregoing projected cash needs are based on certain
assumptions about our business model and projected growth rate, including,
specifically, assumed rates of growth in subscriber activations and assumed
rates of growth of service revenue. While we believe these assumptions are
reasonable, these growth rates are difficult to predict and there is no
assurance that the actual results that we experience will meet the assumptions
included in our business model and projections. If our results of operations are
less favorable than currently anticipated, our cash requirements will be more
than projected, and we will require additional financing in amounts that may be
material. The type, timing and terms of financing that we select will be
dependent upon our cash needs, the availability of financing sources and the
prevailing conditions in the financial markets. We cannot guarantee that
additional financing sources will be available at any given time or available on
favorable terms. In addition, if the proceeds from any such source are
insufficient to meet our expenditure requirements as they arise, we will be
required to seek additional equity or debt financing, although it is unlikely
under current conditions that such additional financing will be available to us
on reasonable terms, if at all.

Additionally, we believe that $15.0 million (plus accrued interest), less any
amount required to be used to prepay the note payable to Rare Medium, would be
available upon the second closing of the MSV transaction and the associated
repayment of the note that was issued at the November 2001 closing of the MSV
transaction. This second closing is contingent upon the FCC's approval and final
order of the MSV's terrestrial re-use application, which may not occur by the
time we would need the funds, or may not occur at all.

COMMITMENTS

As of December 31, 2001, we had the following outstanding cash contractual
commitments:

F-22

We are also obligated under our satellite construction contract, which contained
flight performance incentives payable by us to the contractor if the satellite
performed according to the contract. As a result of certain previously-disclosed
performance considerations, we raised additional contract issues associated with
the flight performance incentive payments. As a result of the sale of our
satellite assets to MSV, any future liabilities under this contract will be the
responsibility of MSV; however, we are responsible for any incentive payments
deemed to have been earned prior to the sale of the assets to MSV. We have
recorded a liability of approximately $1.5 million associated with this
contract. As part of our Chapter 11 bankruptcy plan of reorganization, if
approved, any amounts that are deemed to be due by us will be converted into
new equity of the restructured company; however, there can be no assurance that
this plan will be approved and that these amounts will not become payable in
cash.

SUMMARY OF CASH FLOW FOR THE YEAR ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000

(1) As noted above, the year ended December 31, 2000, includes the results of
XM Radio. As of January 1, 2001, results of XM Radio were recorded pursuant
to the equity method.

Cash used in operating activities by the core business increased year over year
by approximately $9.9 million. During 2000, we received $14.6 million of
deferred revenue associated with the June 2000 MSV transaction. In 2001, we
reduced our operating expenses and working capital requirements; however, we
incurred costs

F-23

associated with the terminated Rare Medium merger and our bankruptcy filing. We
expect that cash used in operating activities will be reduced going forward as a
result of the cost saving measures that we have put into place and our
anticipated revenue growth.

The $62.1 million increase in cash provided by investing activities of the core
business was primarily attributable to:

1. the sale in 2001 of 2.5 million shares of our XM Radio stock for net
proceeds of approximately $38.3 million,

2. the release of the $10 million escrow held by Motorola,

3. the receipt of the $10 million escrow held by Aether as part of the sale
of our transportation assets, and

4. an $8.4 million reduction in capital spending.

The $23.1 million decrease in cash provided by financing activities in the core
business was a result of:

1. a net change in borrowings under the bank facility of a decrease of
$46.8 million,

2. the reduction in proceeds from the sale of stock under the employee
stock purchase plan and the exercise of stock options and warrants in
the amount of $5.2 million in 2000, as compared to $402,000 in 2001,

3. proceeds of $18.6 million received in the June 2000 MSV transaction that
were allocated to the investors' option to convert to Motient common
stock,

4. a $1.3 million increase in debt issuance costs from 2000 to 2001, and

5. $2.3 million more of vendor debt and capital lease repayments in 2001 as
compared to 2000.

These decreases in cash provided by financing activities were offset by the $50
million in proceeds from the Rare Medium notes.

Other

All of our wholly owned subsidiaries are subject to financing agreements that
limit the amount of cash dividends and loans that can be advanced to Motient
Parent. At December 31, 2001, all of the subsidiaries' net assets were
restricted under these agreements. These restrictions will have an impact on our
ability to pay dividends.

REGULATION

The terrestrial two-way wireless data network used in Motient's wireless
business is regulated to varying degrees at the federal, state, and local
levels. Various legislative and regulatory proposals under consideration from
time to time by Congress and the FCC, have in the past materially affected and
may in the future materially affect the telecommunications industry in general,
and our wireless business in particular. In addition, many aspects of regulation
at the federal, state and local level currently are subject to judicial review
or are the subject of administrative or legislative proposals to modify, repeal,
or adopt new laws and administrative regulations and policies. Neither the
outcome of these proceedings nor their impact on our operations can be predicted
at this time.

The ownership and operation of our terrestrial network is subject to the rules
and regulations of the FCC, which acts under authority established by the
Communications Act of 1934 and related federal laws. Among other

F-24

things, the FCC allocates portions of the radio frequency spectrum to certain
services and grants licenses to and regulates individual entities using that
spectrum. We operate pursuant to various licenses granted by the FCC.

We believe that we have licenses for a sufficient number of channels to meet our
current capacity needs on the terrestrial network. To the extent that additional
capacity is required, we may participate in other upcoming auctions or acquire
channels from other licensees. As part of its new licensing regime, the FCC
permits wide-area geographic licensees, with prior FCC approval, to assign a
portion of their spectrum or a portion of their geographic service area, or a
combination of the two, to another entity. While this authority may increase our
flexibility to acquire additional base stations, the practical utility of these
options is uncertain at this time.

We are subject to the Communications Assistance for Law Enforcement Act, or
CALEA. Under CALEA, the Company must ensure that law enforcement agencies can
intercept certain communications transmitted over its networks. The deadline for
complying with the CALEA requirements and any rules subsequently promulgated was
June 30, 2000. We have pending with the FCC a petition for an extension of the
deadline with respect to certain of its equipment, facilities, and services and
we have been working with law enforcement to arrive at an agreement on a further
extension of this deadline and on an extension of the deadline for other of our
equipment, facilities, and services. It is possible that we may not be able to
comply with all of CALEA's requirements or do so in a timely manner. Where
compliance with any requirement is deemed by the FCC to be not "reasonably
achievable," we may be exempted from such requirement. Should we not be exempted
from complying, of if federal funds are not available to us to assist in the
funding of any required changes , the requirement to comply with CALEA could
have a material adverse effect on the conduct of our business.

Motient is subject to the requirements of the FCC's universal service fund,
which supports the provision of affordable telecommunications to high-cost
areas, and the provision of advanced telecommunications services to schools,
libraries, and rural health care providers. Currently excluded from a carrier's
universal service contribution base are end-user revenues derived from the sale
of information and other non-telecommunications services and wholesale revenues
derived from the sale of telecommunications. All of the terrestrial network
revenue falls within the excluded categories, thereby eliminating Motient's
universal service assessments. Current rules also do not require that Motient
impute to its contribution base retail revenues derived when it uses its own
transmission facilities to provide a service that includes both information
service and telecommunications components. There can be no assurances that the
FCC will retain the exclusions described herein or its current policy regarding
the scope of a carrier's contribution base. Motient may also be required to
contribute to state universal service programs. The requirement to make these
state universal service payments, the amount of which in some cases may be
subject to change and is not yet determined, may have a material adverse impact
on the conduct of Motient's business.

In November 2001, Nextel proposed, in a "white paper" to the FCC, that certain
of its wireless spectrum in the 700 MHz band, lower 800 MHz band, and 900 MHz
band be exchanged for spectrum in the upper 800 MHz band and in the 2.1 GHz
band. Nextel stated that it was making this proposal to address existing
inadvertent interference problems for public safety communications systems
caused by the existing spectrum allocation. Nextel's proposal addresses this
problem by creating blocks of contiguous spectrum to be shared by public safety
agencies. The Nextel proposal, as submitted to the FCC, would require either (i)
that we continue to operate using our existing lower 800 MHz band spectrum on a
secondary, non-interfering basis with the public safety agencies who would be
relocated in the same spectrum, or (ii) that we relocate, at our own expense, to
other spectrum in the 700 MHz or 900 MHz bands. We believe it is highly unlikely
that we could continue to

F-25

operate in the lower 800 MHz bands on a secondary, non-interfering basis. If we
are required to relocate to spectrum in the 700 MHz or 900 MHz bands, we would
incur substantial operational and financial costs, including costs relating to:
manufacturing replacement infrastructure and user hardware to operate on our
network in the 700 MHz or 900 MHz bands, disruptions to existing customers as a
result of the relocation to other spectrum bands, possible diminished data
speed, and coverage gaps. There are also potential problems with the 700 MHz and
900 MHz bands that might make it difficult, if not impossible, for us to
duplicate our existing operations in the 800 MHz band.

On March 14, 2002, the FCC adopted a notice of proposed rulemaking exploring
options and alternatives for improving the spectrum environment for public
safety operations in the 800 MHz band. Motient does not believe its operations
will be impacted until the Commission adopts final rules in that proceeding and
it cannot predict what actions the FCC will take.

The effectiveness of Motient's plan of reorganization is subject to approval by
the FCC of the change of control of Motient that will occur as a result of the
plan. Motient submitted its change of control application to the FCC on March 7,
2002. The change of control application is subject to a 30-day period for the
filing of public comments. The Public Notice of the change of control
application was released on March 13, 2002.

For further details, please see "Item 1 - Business - Regulation."

DERIVATIVES

In September 1998, the Financial Accounting Standards Board ("FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," ("SFAS No. 133") which requires the recognition of all derivatives
as either assets or liabilities measured at fair value, with changes in value
reflected as current period income (loss). The effective date of SFAS No. 133,
as amended by SFAS 138, is for fiscal years beginning after September 15, 2000.
Except for the Rare Medium Note embedded call options discussed in the following
paragraph, SFAS No. 133 was not material to our financial position or results of
operations as of or for the period ended December 31, 2001.

In April and July 2001, we sold notes to Rare Medium totaling $50 million. The
notes were collateralized by up to 5 million of our XM Radio shares, and, until
maturity, which was extended until October 12, 2001, Rare Medium had the option
to exchange the note for a number of XM Radio shares equivalent to the principal
of the note plus any accrued interest thereon. We have determined the embedded
call options in the notes, which permit Rare Medium to convert the borrowings
into shares of XM Radio, to be derivatives which must be accounted for in
accordance with SFAS No.133 and accordingly recorded a gain in the amount of
$1.5 million in 2001 related to the Rare Medium Note call options. On October
12, 2001, the embedded call options in the Rare Medium notes expired
unexercised.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

Below are our accounting policies which are both important to our financial
condition and operating results, and require management's most difficult,
subjective and complex judgments in determining the underlying estimates and
assumptions. The estimates and assumptions affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the

F-26

reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates as they require assumptions that are
inherently uncertain.

INVENTORY

Inventories, which consist primarily of communication devices, are stated at the
lower of cost or market. Cost is determined using the weighted average cost
method. We periodically assess the market value of our inventory, based on sales
trends and forecasts and technological changes and record a charge to current
period income when such factors indicate that a reduction to net realizable
value is appropriate. We consider both inventory on hand and inventory which we
have committed to purchase. We recorded inventory write-downs to cost of
equipment sold to reduce inventory amounts to their net realizable value, in the
amount of $7.5 million in 2001, $3.6 million in 2000, and $4.2 million in 1999.

REVENUE RECOGNITION

We generate revenue through equipment sales, airtime service agreements, and
consulting services. In 2000, we adopted Staff Accounting Bulletin No. 101,
"Revenue Recognition" ("SAB 101"), issued by the SEC. SAB 101 provides guidance
on the recognition, presentation and disclosure of revenue in financial
statements. In certain circumstances, SAB 101 requires us to defer the
recognition of revenue and costs related to equipment sold as part of a service
agreement. Revenue is recognized as follows:

Service revenue: Revenues from our wireless services are recognized when the
services are performed, evidence of an arrangement exits, the fee is fixed and
determinable and collectibility is probable. Service discounts and incentives
are recorded as a reduction of revenue when granted, or ratably over a contract
period.

To date, the majority of our business has been transacted with
telecommunications, field services, natural resources, professional service and
transportation companies located throughout the United States. We grant credit
based on an evaluation of the customer's financial condition, generally without
requiring collateral or deposits. We establish a valuation allowance for
doubtful accounts receivable for bad debt and other credit adjustments.
Valuation allowances for revenue credits are established through a charge to
revenue, while valuation allowances for bad debts are established through a
charge to general and administrative expenses. We assess the adequacy of these
reserves quarterly evaluating factors, such as the length of time individual
receivables are past due, historical collection experience, the economic
environment, and changes in credit worthiness of our customers. We believe that
our established valuation allowance was adequate as of December 31, 2001 and
2000. If circumstances related to specific customers change or economic
conditions worsen such that our past collection experience and assessments of
the economic environment are no longer relevant, our estimate of the
recoverability of our trade receivables could be further reduced.

EQUIPMENT AND SERVICE SALES: We sell equipment to resellers who market our
terrestrial product and airtime service to the public. We also sell our product
directly to end-users. Revenue from the sale of the equipment as well as the
cost of the equipment, are initially deferred and are generally recognized over
a period corresponding to our estimate of customer life of 2 years. Equipment
costs are deferred only to the extent of deferred revenue.

CONSULTING SERVICES: We occasionally provide consulting services to our
customers. Revenue from such services is generally recognized following the
contract terms as milestones are achieved.

F-27

LONG-LIVED ASSETS

We follow the provisions of SFAS No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," which requires
that long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to management's best estimate of future undiscounted net cash flows expected to
be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or their fair value less
costs to sell. The cash flow projections used to make this assessment are
consistent with the cash flow projections that management uses internally to
assist in making key decisions, including the development of our plan of
reorganization. We believe that no such impairment existed in accordance with
SFAS No. 121 as of December 31, 2001 or 2000. In the event that there are
changes in the planned use of our long-term assets or significant reductions in
our expected future undiscounted cash flows are reduced significantly due to
reductions in demand for our services, our assessment of our ability to recover
the carrying value of these assets under SFAS No. 142 would change.

Our intangible assets consist primarily of our frequencies, which are amortized
using the straight-line method over an estimated useful life of 20 years. As of
December 31, 2001, we had less than $5.0 million of goodwill and other
intangible assets. As discussed in "New Accounting Pronouncements", we will
adopt SFAS No. 142 in the first quarter of 2002. We are currently evaluating the
impact of SFAS No. 142 on our accounting for our frequencies.

ACCOUNTING STANDARDS

In July 2001, the FASB issued SFAS No. 141 "Business Combinations" and SFAS No.
142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles will
be evaluated against this new criteria and may result in certain intangibles
being subsumed into goodwill, or alternatively, amounts initially recorded as
goodwill may be separately identified and recognized apart from goodwill. SFAS
No. 142 requires the use of a nonamortization approach to account for purchased
goodwill and certain intangibles. Under a nonamortization approach, goodwill and
certain intangibles will not be amortized into results of operations, but
instead will be reviewed for impairment and written down and charged to results
of operations only in the periods in which the recorded value of goodwill and
certain intangibles is more than its fair value. We adopted the provisions of
each statement which apply to goodwill and intangible assets acquired prior to
June 30, 2001, on January 1, 2002. We are in the process of evaluating, but have
yet to determine, the financial statement impact of adoption of SFAS No. 142
will have on our financial statements.

On August 16, 2001 the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Specifically, this standard
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. The entity is
required to capitalize the cost by increasing the carrying amount of the related
long-lived asset. The capitalized

F-28

cost is then depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss. The standard is effective for fiscal
years beginning after June 15, 2002. On October 3, 2001 the FASB issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" that
replaces SFAS 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of." The statement requires that all long-lived
assets be measured at the lower of carrying amount or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
Therefore, discontinued operations will no longer be measured on a net
realizable value basis and will not include amounts for future operating losses.
The statement also broadens the reporting requirements for discontinued
operations to include disposal transactions of all components of an entity
(rather than segments of a business). Components of an entity include operations
and cash flows that can be clearly distinguished from the rest of the entity
that will be eliminated from the ongoing operations of the entity in a disposal
transaction. The statement is effective for fiscal years beginning after
December 15, 2001. We are currently evaluating, but have yet to determine, the
impact that adoption of SFAS No. 143 and SFAS No. 144 will have on our financial
statements.

F-29

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the impact of interest rate changes related to our credit
facilities. We manage interest rate risk through the use of a combination of
fixed and variable rate debt. Currently, we do not use derivative financial
instruments to manage our interest rate risk. We have minimal cash flow exposure
due to general interest rate changes for our fixed rate, long-term debt
obligations. We invest our cash in short-term commercial paper, investment-grade
corporate and government obligations and money market funds.

Our senior notes bear interest at a fixed rate of 12.25%. We run the risk that
market rates will decline and the required payments will exceed those based on
current market rates.

Motient is subject to fair market value fluctuations of its fixed rate senior
high yield debt. As these high yield securities are freely traded, the fair
market value is impacted by market conditions which are based not only on the
interest rates of the notes, but also on the market's assessment of the risk
associated with these notes. Therefore, Motient does not believe that it is
possible to quantify a fair value fluctuation that may occur solely as a result
of interest rate fluctuations. For the period ended December 31, 2001, the fair
market value of Motient's fixed rate senior high yield notes was $100.5 million.
The fair value of these notes would be impacted by $3.35 million for every $0.01
change in the trading price of the notes.

F-30

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Motient Corporation:

We have audited the accompanying consolidated balance sheets of Motient
Corporation (a Delaware Corporation) and Subsidiaries (together the "Company")
as of December 31, 2001 and 2000, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of XM Satellite Radio Holdings Inc. and subsidiaries
(together "XM Radio"), the investment in which is reflected in the accompanying
financial statements using the equity method of accounting for the year ended
December 31, 2001 and consolidated in December 31, 2000 and 1999. The investment
in XM Radio represents 0 percent of total assets at December 31, 2001, and the
equity in XM Radio's net loss represents 17 percent of consolidated net losses
in 2001. The investment in XM Radio represents 79 percent of consolidated total
assets at December 31, 2000 and 0 percent and 0 percent of consolidated total
revenues in 2000 and 1999, respectively. XM Radio's financial statements were
audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for XM Radio, is based
solely on the report of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the report of other auditors
provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Motient Corporation and Subsidiaries as of December
31, 2001 and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations,
has a net capital deficiency, is in default under certain credit agreements, and
currently expects that a restructuring will be made through a reorganization
under Chapter 11 of the United States Bankruptcy Code, which raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.

/s/Arthur Andersen LLP
Vienna, Virginia
March 19, 2002

F-31

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
XM Satellite Radio Holdings Inc. and Subsidiaries:

We have audited the consolidated balance sheets of XM Satellite Radio Holdings
Inc. and subsidiaries as of December 31, 2000 and 2001, and the related
consolidated statements of operations, stockholders' equity (deficit), and cash
flows for each of the years in the three-year period ended December 31, 2001,
which are not included herein. These consolidated financial statements are the
responsibility of the XM Satellite Radio Holdings Inc. and subsidiaries'
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of XM Satellite Radio
Holdings Inc. and subsidiaries as of December 31, 2000 and 2001, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.

The consolidated financial statements have been prepared assuming that XM
Satellite Radio Holdings Inc. and subsidiaries will continue as a going concern.
As discussed in note 2 to the consolidated financial statements, XM Satellite
Radio Holdings Inc. and subsidiaries is dependent upon additional debt or equity
financing, which raises substantial doubt about its ability to continue as a
going concern. Management's plan in regard to these matters is also described in
note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ KPMG LLP

McLean, VA
January 23, 2002

F-32

MOTIENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
(in thousands, except per share data)

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

F-33

MOTIENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND 2000
(in thousands, except share and per share data)

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

F-34

MOTIENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 (DOLLARS IN THOUSANDS)

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

F-35

MOTIENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(in thousands)

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

F-36

MOTIENT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001, 2000 AND 1999

1. ORGANIZATION, BUSINESS AND LIQUIDITY

Motient Corporation (with its subsidiaries, "Motient" or the "Company") provides
two-way mobile communications services principally to business-to-business
customers and enterprises. Motient serves a variety of markets including mobile
professionals, telemetry, transportation, and field service. Motient provides
its eLink(sm) brand two-way wireless email services to customers accessing email
through corporate servers, Internet Service Providers ("ISP"), Mail Service
Provider ("MSP") accounts, and paging network suppliers. Motient also offers its
BlackBerry (TM) by Motient wireless email solution, developed by Research In
Motion ("RIM") and licensed to operate on Motient's network. BlackBerry (TM) by
Motient is designed for large corporate accounts operating in a Microsoft
Exchange or Lotus Notes environment and contains advanced encryption features.
The Company considers these two-way mobile communications services to be its
Core Wireless Business.

Motient is devoting its efforts to expanding its Core Wireless Business. This
effort involves substantial risk. Future operating results will be subject to
significant business, economic, regulatory, technical, and competitive
uncertainties and contingencies. Depending on their extent and timing, these
factors, individually or in the aggregate, could have an adverse effect on the
Company's financial condition and future results of operations.
Certain factors have placed significant pressures on our financial condition and
liquidity position, especially in recent periods. For a variety of reasons,
Motient has not been able to accelerate revenue growth at the pace required to
enable it to generate cash in excess of its operating expenses. These factors
include competition from other wireless data suppliers and other wireless
communications providers with greater resources, cash constraints that have
limited Motient's ability to generate greater demand, unanticipated
technological and development delays, and general economic factors. During 2001,
in particular, Motient's efforts were also hindered by the downturn in the
economy and capital markets. These factors contributed to the Company's decision
to file a voluntary petition for reorganization under Chapter 11 of the United
States Federal Bankruptcy Code in January 2002. See "Motient's Chapter 11
Filing" below.

XM RADIO

As of December 31, 2000, Motient had an equity interest of approximately 33.1%
(or 21.3% on a fully diluted basis) in XM Satellite Radio Holdings Inc. ("XM
Radio"), a public company; and , as of December 31, 2000 the Company controlled
XM Radio through Board of Director membership and common stock voting rights. As
a result, all of XM Radio's results for the period from July 7, 1999, (the date
Motient acquired 100% voting interest of XM Radio) through December 31, 2000
have been included in the Company's consolidated financial statements. Prior to
July 7, 1999, the Company's investment in XM Radio was accounted for pursuant to
the equity method of accounting.

In January 2001, pursuant to Federal Communications Commission ("FCC") approval
authorizing Motient to relinquish control of XM Radio, the number of directors
appointed by the Company to XM Radio's Board of

F-37

Directors was reduced to less than 50% of XM Radio directors, and the Company
converted a portion of its super-voting Class B Common Stock of XM Radio to
Class A Common Stock. As a result, the Company ceased to control XM Radio, and,
for the period from January 1, 2001, through November 19, 2001, accounted for
its investment in XM Radio pursuant to the equity method. As described below, as
of November 19, 2001, the Company ceased to own any shares of XM Radio common
stock.

SALE OF TRANSPORTATION BUSINESS

In November 2000, Motient sold assets relating to its retail transportation
business to Aether Systems, Inc. ("Aether"). The purchase price for these assets
was $45 million, plus the then-current book value of the inventory for the
business. All of this amount was paid at closing, except for $10 million which
was deposited in an escrow account to be released to Motient upon satisfaction
of certain performance criteria, and $3.7 million which was to be paid to
Motient upon collection of certain accounts receivable sold to Aether. As of
March 15, 2002, approximately $2.2 million of the outstanding accounts
receivable had been received by Motient. On October 11, 2001, the $10 million
escrow was paid to Motient, and, concurrent with the release of the escrow, the
Company agreed to modify certain terms of its network capacity agreements with
Aether. The Company recorded an $8.3 million gain representing the difference
between the net proceeds of the escrow received and the amount deferred pursuant
to the modification of the network capacity agreements.

MOBILE SATELLITE VENTURES LP

On June 29, 2000, the Company formed a joint venture subsidiary, Mobile
Satellite Ventures LP, ("MSV"), in which we owned, until November 26, 2001, 80%
of the membership interests. The remaining 20% interests in MSV were owned by
three investors unrelated to Motient; however, the minority investors had
certain participating rights which provided for their participation in certain
business decisions that were made in the normal course of business; therefore,
in accordance with Emerging Issues Task Force Issue No 96-16, the Company's
investment in MSV has been recorded for all periods presented pursuant to the
equity method of accounting.

Through November 26, 2001, MSV used the Company's satellite network to
conduct research and development activities. On November 26, 2001, Motient
sold the assets comprising its satellite communications business to MSV, as
part of a transaction in which certain other parties joined MSV , including
TMI Communications and Company Limited Partnership ("TMI"), a Canadian
satellite services provider. In consideration for its satellite business
assets, Motient received the following: (i) a $24 million cash payment in
June 2000, (ii) a $45 million cash payment paid at closing, of which $4
million was held by MSV to fund the Company's future sublease obligations to
MSV for rent and utilities, and (iii) a 5-year $15 million note. In this
transaction, TMI also contributed its satellite communications business assets
to MSV. In addition, Motient purchased a $2.5 million convertible note issued
by MSV, and certain other investors, including a subsidiary of Rare Medium
Group, Inc. ("Rare Medium"), purchased a total of $52.5 million of
convertible notes. As of December 31, 2001, the Company had an ownership
percentage, on an undiluted basis, of approximately 48% of MSV.

Assuming that all of MSV's convertible notes are converted into limited
partnership units of MSV, Motient would have a 33.3% equity interest in MSV.

MSV has also filed a separate application with the FCC with respect to MSV's
plans for a new generation satellite system utilizing ancillary terrestrial base
stations. Within 90 days of the receipt of approval and final

F-38

order from the FCC, and provided that such approval occurs by March 31, 2003,
certain of the investors (excluding Motient) in MSV will invest an additional
$50 million in MSV and receive additional equity interests. Upon consummation of
such additional investment, an $11.5 million note, issued by MSV to TMI and the
$15 million note to Motient will be repaid in full, and Motient's ownership
interest in MSV will be reduced to approximately 25.5%. Should the consummation
of such additional investment not occur prior to November 25, 2006, both the
$11.5 million note (plus accrued interest thereon) to TMI and the $15.0 million
note (plus accrued interest thereon) to the Company will be due in full.

MERGER AGREEMENT WITH RARE MEDIUM GROUP, INC.

On May 14, 2001, the Company signed a definitive merger agreement with Rare
Medium pursuant to which the Company would acquire Rare Medium. On October 1,
2001, the Company and Rare Medium announced their mutual termination of the
merger. The Company recorded a charge of $4.1 million in 2001 representing costs
incurred by the Company to pursue this transaction.

OPERATIONAL RESTRUCTURING

On September 26, 2001, the Company announced a plan to restructure its business
with the goal of achieving earnings before interest, taxes, depreciation and
amortization - or EBITDA, which is not a generally accepted accounting principle
measurement - breakeven in late-2002. As part of this restructuring, the Company
laid off approximately 25% of its workforce, or 50, 22, and 13 employees in the
Company's operations, sales and marketing and general and administrative
functions, respectively, and canceled certain of its product initiatives The
Company recorded a restructuring charge in 2001 of $4.75 million. This charge
represents $1.6 million of costs directly associated with employee severance
packages, $3.0 million of costs associated with product initiative cancellations
and $0.1 million of costs associated with capital assets that will no longer be
in service. Of the $4.7 million charge, approximately $1.7 million represented
cash outlays made over the last quarter of 2001 and the first quarter of 2002.
The balance represents the write off of assets previously acquired. As of
December 31, 2001, the Company had a remaining operational restructuring
liability of approximately $0.5 million.

LIQUIDITY AND FINANCING REQUIREMENTS

As described below under "Motient's Chapter 11 Filing," in January 2002, the
Company filed a voluntary petition for reorganization under Chapter 11 of the
Federal Bankruptcy Code. One of the principal goals of the reorganization
process is to significantly deleverage Motient's balance sheet, so that
Motient's ongoing interest expense is substantially reduced. If Motient's plan
of reorganization is confirmed, Motient expects to have up to approximately
$34.0 million of debt (comprised of capital leases, the new notes payable to
Rare Medium and any other creditors in the same class as Rare Medium, and the
outstanding Motorola credit facility).

The Company expects to continue to require significant additional funds before
it begins to generate cash in excess of its operating expenses, and does not
expect to achieve EBITDA break even until the latter half of 2002, at the
earliest. Also, even if the Company begins to generate cash in excess of its
operating expenses, it expects to continue to require significant additional
funds to meet remaining interest obligations, capital expenditures, and other
non-operating cash expenses. The MSV transaction in November 2001 provided
additional funding which, together with other available funding sources such as
net cash from operations and

F-39

changes in working capital, should fund operations through 2002. While the
Company believes there are potential alternatives and additional sources of
liquidity to fund the operations if the MSV proceeds are insufficient, in the
current environment the Company expects that it will be difficult for it to
access such funding sources. In addition, the Company's financial performance
could deteriorate, and there is no assurance that it will be able to meet its
financial projections. If the cash requirements are more than currently
expected, the Company will require additional financing in amounts that may be
material.

Additionally, the capital resources of reorganized Motient may not be sufficient
to permit it to fund its planned launch of new products and services or achieve
operating profitability. Failure to generate or raise sufficient funds may
require the Company to delay or abandon some of its plans, which could harm its
business and competitive position. The Company may meet additional capital needs
by issuing debt or equity securities or borrowing funds from one or more
lenders; however, it may not have timely access to additional financing sources
on acceptable terms. If it does not, it may not be able to expand its
operations, network and services as intended.

During 2001, the Company executed the following liquidity-related transactions
and initiatives:

- - In January and February 2001, the Company sold, in two separate transactions,
2 million shares of its XM Radio Class A Common Stock, at an average price of
$16.77 per share, for total proceeds of $33.5 million. Approximately $8.5
million of the proceeds were used to repay and permanently reduce its bank
financing.

- - In the second and third quarters of 2001, the Company received a total of $50
million from Rare Medium, and issued Rare Medium notes payable for such
amount at 12.5% annual interest. Of the total of $50 million that the Company
received, it used $12.25 million to repay and permanently reduce its bank
financing, and $36.75 million was used to fund general operations. These
notes were collateralized by 5 million of the Company's XM Radio shares. On
October 12, 2001, in accordance with the terms of the notes, the Company
repaid $26.2 million of the Rare Medium notes, representing $23.8 million in
principal and $2.4 million of accrued interest, in exchange for 5 million of
the Company's XM Radio shares. The $26.9 million of principal and accrued
interest remaining outstanding at December 31, 2001, is unsecured, and, as
discussed in Note 8, is currently in default.

- - In April 2001, the Company undertook certain capital and expense reductions,
principally in the areas of employee hiring, advertising and capital
spending. The Company estimates that these reductions resulted in up to
approximately $15 million of budgetary savings in 2001, while not reducing
its ability to sell its products or lowering service levels.

- - On September 26, 2001, the Company announced an operational restructuring
that included the termination of approximately 25% of its work force,
including consultants. The total cash outlay of this restructuring was
approximately $1.7 million over the last quarter of 2001 and the first
quarter of 2002 and represents primarily employee severance costs. It is
expected that this reduction in force will save the Company approximately
$1.8 million per quarter, starting in early 2002.

- - On October 11, 2001, the Company received $10 million that had been held in
escrow as part of the Aether transaction.

F-40

- - On November 6, 2001, the agent for the bank lenders under the Company's term
loan facility and revolving credit facility (the "Bank Financing") declared
all loans under the Bank Financing immediately due and payable, due to the
existence of several events of default under the Bank Financing. On the same
date, the bank lenders sought payment in full from Hughes Electronics
Corporation, Singapore Telecommunications, Ltd. and Baron Capital Partners,
L.P. (collectively, the "Bank Guarantors") for the accelerated loan
obligations. The Bank Guarantors repaid all such loans on November 14, 2001
in the amount of approximately $97.6 million. As a result, the Company had a
reimbursement obligation to the Bank Guarantors in the amount of $97.6
million, which included accrued interest and fees.

On November 19, 2001, the Company sold 500,000 shares of its XM Radio common
stock through a broker for $9.50 per share, for aggregate proceeds of
approximately $4.75 million. The net proceeds from this sale were paid to the
Bank Guarantors, thereby reducing the amount of the Company's reimbursement
obligation to the Bank Guarantors by such amount. Also on November 19, 2001,
the Company delivered all of its remaining 9,257,262 shares of XM Radio
common stock to the Bank Guarantors in full satisfaction of the entire
remaining amount of its reimbursement obligations to the Bank Guarantors.
Upon delivery of these shares, the Bank Guarantors released the Company from
all of its remaining obligations to the Bank Guarantors under the Bank
Financing and the related guarantees and reimbursement and security
agreements.

As a result of the delivery of the shares of XM Radio common stock described
above, the maturity of the Rare Medium Notes was accelerated to November 19,
2001.

- - On November 26, 2001, the Company sold its satellite assets to MSV for net
cash proceeds of $42.5 million and a $15 million note receivable from MSV.

- - On December 20, 2001, the Company executed an amendment to its reseller
agreement with Research In Motion ("RIM") whereby RIM agreed to prepay for
approximately $4.8 million of service, which can be used by RIM at its
discretion until December 7, 2004. Additionally, the Company reached a
settlement with RIM whereby the Company agreed to pay RIM approximately $9.9
million, representing payment in full, plus interest, for all amounts due and
payable under the RIM supply and services agreement.

- - On December 28, 2001, the Company negotiated the release of a $10 million
escrow held by Motorola, Inc. ("Motorola") in accordance with a customer
guarantee. Motorola applied a portion of this escrow to accounts payable for
maintenance work and past-due payments under the Vendor Financing Agreement
(see Note 8). Approximately $4.9 million of the balance of the escrow was
released to Motorola and will be used to fund future maintenance costs that
the Company incurs under its maintenance contract. It is expected that this
balance will be fully utilized by the end of the third quarter of 2002.
Additionally, as part of this release, Motorola agreed to suspend all
scheduled principal payments under the Vendor Financing Agreement until
January 1, 2003, and the maturity date and amortization schedule of all loans
outstanding under this agreement was extended by twelve months.

MOTIENT'S CHAPTER 11 FILING

F-41

On October 1, 2001, the Company announced that it would not make a $20.5 million
semi-annual interest payment due on the senior notes on such date. On November
26, 2001, the Senior Note trustee declared all amounts owed under the senior
notes immediately due and payable.

Following these events, the Company determined that the continued viability of
its business required restructuring its highly leveraged capital structure. In
October 2001, the Company retained Credit Suisse First Boston ("CSFB") as
financial advisors to assist in restructuring the Company's debt. Shortly
thereafter, the Company and CSFB began meeting with the principal creditor
constituencies, represented by (a) the Bank Guarantors, (b) an informal
committee (the "Informal Committee") representing the holders of the 12.25%
senior notes due 2008 issued by Motient Holdings Inc., and (c) Rare Medium.

In January 2002, the Company and the Informal Committee reached an agreement in
principle with respect to the primary terms of a plan of reorganization of
Motient and its principal subsidiaries, and on January 10, 2002, the Company
filed for protection under Chapter 11 of the Bankruptcy Code. The Company's
Amended Joint Plan of Reorganization was filed with the U.S. Bankruptcy Court
for the Eastern District of Virginia on February 28, 2002. The cases are being
jointly administered under the case name "In Re Motient Corporation, et. al.,"
Case No. 02-80125.

The plan generally provides that holders of the Senior Notes will exchange their
notes for new Motient stock to be issued pursuant to the PLAN. Shares of common
stock held by existing common stockholders will be cancelled, and the existing
common stockholders will receive warrants with a nominal strike price to
purchase 5 percent of the new common stock (on a fully diluted basis) in the
reorganized company. The warrants will have a term of two years and will be
exercisable once the holders of the senior notes have recovered 105 percent of
the face amount of their investment. Warrants or options to purchase existing
common stock that are outstanding as of the effective date will be cancelled.

EFFECTS OF THE CHAPTER 11 FILING

While the Company is pursuing a financial restructuring through the Chapter 11
filing, it is not able to predict when or if it will be able to complete and
satisfactorily implement, on a timely basis, its restructuring plan. There can
be no assurance that the Company will be able to achieve a satisfactory
restructuring of its capital structure or that it will be able to continue as a
going concern.

As a result of its Chapter 11 bankruptcy filing, the Company has seen a slower
adoption rate for its services. In a large customer deployment, the upfront cost
of the hardware can be significant. Because the hardware generally is usable
only on Motient's network, certain customers have delayed adoption while the
Company is in Chapter 11. In an effort to accelerate adoption of its services,
the Company has, in 2002, in selected instances, offered certain incentives for
adoption of its services that are outside of its customary contract terms, such
as extended payment terms or temporary hardware rental. The Company does not
believe that these changes in terms are material to its cash flow or operations;
however, a delay in exiting the Chapter 11 bankruptcy process could have a
material negative impact on the Company's ability to generate adequate
subscriber growth.

While the Company continues to maintain its vendor payments on a current basis,
certain of its trade creditors

F-42

have required either deposits for future services or shortened payment terms.
While the Company does not believe that the amounts or changes to payment terms
will have a material impact on its cash flow or operations, there can be no
assurance that future requirements will not be material. None of the Company's
key suppliers have ceased to do business with it as a result of it's Chapter 11
filing.

The hearing date for the confirmation of the Company's plan of reorganization is
scheduled for April 25, 2002. If the plan of reorganization is confirmed on that
date, the Company would expect the reorganization to be effective by mid-May;
however, there are several factors that are outside of the Company's control,
such as not receiving the required number of votes necessary to approve the plan
or the judge's decision that the plan is not fair, that could adversely affect
that schedule.

Further details regarding the plan are contained in Motient's Disclosure
Statement with respect to the plan, which is filed as Exhibit 10.61 to this
Annual Report.

Upon emergence from Chapter 11, the Company will be required to adopt "fresh
start" accounting, which requires that the value of the Company, as determined
by the court, be allocated to the Company's assets and liabilities in accordance
with Accounting Principles Bulletin Opinion 16 ("APB No. 16"), BUSINESS
COMBINATIONS, for transactions reported on the basis of the purchase method. If
any portion of the Company's reorganization value cannot be attributed to
specific tangible or intangible assets, the Company will be required to report
as an intangible asset "reorganization value in excess of amounts allocable to
identifiable assets."

SUMMARY OF LIQUIDITY AND FINANCING SOURCES FOR THE CORE WIRELESS BUSINESS

If the Company is successful in restructuring a substantial portion of its
debt, it anticipates that its funding requirements through 2002 would be met
with cash on hand, net cash from operations, and proceeds realized through
the sale of inventory relating to eLink and BlackBerry (TM). The Company's
projected cash requirements are based on certain assumptions about the
Company's business model and projected growth rate, including, specifically,
assumed rates of growth in subscriber activations and assumed rates of growth
of service revenue. While the Company believes these assumptions are
reasonable, these growth rates are difficult to predict and there is no
assurance that the actual results that are experienced will meet the
assumptions included in the Company's business model and projections. If the
results of operations are less favorable than currently anticipated, the
Company's cash requirements will be more than projected, and it will require
additional financing in amounts that may be material. The type, timing and
terms of financing that the Company selects will be dependent upon its cash
needs, the availability of financing sources and the prevailing conditions in
the financial markets. The Company cannot guarantee that additional financing
sources will be available at any given time or available on favorable terms.

Additionally, the Company believes that $15.0 million (plus accrued
interest), less any amount required to be used to prepay the note payable to
Rare Medium, if any, would be available upon the second closing of the MSV
transaction and the associated repayment of the note that was issued at the
November 2001 closing of the MSV transaction. This second closing is
contingent upon the FCC's approval and final order of MSV's terrestrial
re-use application, which may not occur by the time the Company would need
the funds, or may not occur at all. If the second closing does not happen
prior to November 25, 2006, the $15 million note receivable from MSV,
including accrued interest thereon, becomes due and payable.

F-43

The Company's consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The successful implementation of
the Company's business plan requires substantial funds to finance the
maintenance and growth of its operations, network and subscriber base and to
expand into new markets. The Company has an accumulated deficit and has
historically incurred losses from operations which are expected to continue for
additional periods in the future. There can be no assurance that its operations
will become profitable. These factors, along with the Company's negative
operating cash flows have placed significant pressures on the Company's
financial condition and liquidity position, resulting in the Company seeking a
financial restructuring through a Chapter 11 filing, and create substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments relating to the
possible effects on the recoverability and classification of assets or amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

2. SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amount of 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. The Company's most significant estimates relate to the valuation of
inventory, the allowance for doubtful accounts receivable, and the realizability
of long-lived assets.

RECLASSIFICATIONS

Certain amounts in prior periods have been reclassified to conform with the 2001
presentation.

CONSOLIDATION

The consolidated financial statements include the accounts of Motient and its
wholly owned subsidiaries, and XM Radio for the period from July 7, 1999 through
December 31, 2000. All significant inter-company transactions and accounts have
been eliminated.

For the period from January 1, 2001, through November 19, 2001, the Company's
investment in XM Radio was recorded pursuant to the equity method of accounting.
For the year ended December 31, 2001, XM Radio recorded $0.5 million of revenue,
incurred $282.1 million of operating expenses and had a net loss attributable to
common stockholders of $307.5 million.

As noted above (see Note 1), the results of MSV have been accounted for pursuant
to the equity method of accounting.

CASH EQUIVALENTS

F-44

The Company considers highly liquid investments with remaining maturities of 3
months or less at the time of acquisition to be cash equivalents.

RESTRICTED INVESTMENTS

As of December 31, 2000, restricted investments represented those investments
made to fund customer obligations, milestone payments under certain of XM
Radio's construction contracts, certificates of deposit to collateralize
letters of credit required by facility leases, or required interest payments
associated with the Senior Notes and XM Radio's Senior Secured Notes. The
securities included in restricted investments which were required to be used
for interest payments under the Senior Notes and XM Radio's Senior Secured
Notes were classified as held-to-maturity securities under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The Company classified
restricted investment amounts which would mature within one year as current
assets in the accompanying balance sheet. The Company accounted for these
investments at amortized cost. The Company had no restricted investments at
December 31, 2001.

INVENTORIES

Inventories, which consist primarily of communication devices, are stated at the
lower of cost or market. Cost is determined using the weighted-average cost
method. The Company periodically assesses the market value of its inventory,
based on sales trends and forecasts and technological changes and records a
charge to current period income when such factors indicate that a reduction to
net realizable value is appropriate. Management considers both inventory on hand
and inventory which it has committed to purchase. The Company recorded inventory
write-downs to cost of equipment sold to reduce inventory amounts to their net
realizable value, in the amount of $7.5 million in 2001, $3.6 million in 2000,
and $4.2 million in 1999.

The Company's eLink and BlackBerry (TM) by Motient wireless services use
handheld devices manufactured primarily by Research in Motion ("RIM") and
Wavenet Technology Pty. Ltd. ("Wavenet"). RIM and Wavenet also manufacture
modems designed to be integrated into mobile terminals manufactured by other
vendors and used for other wireless communications services sold by the
Company. The Company's supply arrangements with RIM and Wavenet are not
exclusive, and RIM and Wavenet manufacture similar hardware products for
other companies. There are a limited number of manufacturers of similar
wireless devices, and a change in suppliers or delays in deliveries from RIM
or Wavenet could result in loss of sales which would adversely effect
operating results.

OTHER CURRENT ASSETS

Other current assets consist of the following:

F-45

FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires
disclosures of the fair value of certain financial instruments. The carrying
amount for cash and cash equivalents, short-term investments, accounts
receivable, non-trade receivables included in other assets, lease receivables
included in non-current deferred charges and other assets, accounts payable and
accrued expenses, deferred trade payables and XM Radio accrued royalty payments
approximate fair value because of the short maturity of these instruments. The
fair value of the Senior Notes was estimated using quoted market prices. The
fair value of the interest rate swap was the estimated amount that the Company
would receive to terminate the swap agreement based on quoted market prices,
taking into account current interest rates and the current creditworthiness of
the swap counter parties. As a result of the Guarantees that were associated
with the Bank Financing, it was not practicable to estimate the fair value of
this facility. For debt issues that are not quoted on an exchange, interest
rates currently available to the Company for issuance of debt with similar terms
and remaining maturities are used to estimate fair value.

CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash, short term investments, and accounts
receivable. The Company periodically invests its cash balances in temporary or
overnight investments. The Company's short term investments included debt
securities such as commercial paper, time deposits, certificates of deposit,
bankers acceptances, and marketable direct obligations

F-46

of the United States Treasury.

To date, the majority of the Company's business has been transacted with
telecommunications, field services, natural resources, professional service, and
transportation companies located throughout the United States. The Company
grants credit based on an evaluation of the customer's financial condition,
generally without requiring collateral or deposits. Exposure to losses on trade
accounts receivable, for both service and for equipment sales, is principally
dependent on each customer's financial condition. For the year ended December
31, 2001, revenue from the MSV research and development efforts accounted for
approximately 9% of the Company's service revenue. Excluding revenue earned from
MSV, 6 other customers accounted for approximately 41% of the Company's service
revenue, with one customer individually accounting for more than 10%. The
Company anticipates that its credit risk with respect to trade accounts
receivable in the future will become more diversified due to the large number of
customers expected to comprise the Company's subscriber base and their expected
dispersion across many different industries and geographies.

SOFTWARE DEVELOPMENT COSTS

During 1998, the Company adopted Statement of Position ("SOP") No. 98-1 -
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." As of December 31, 2001 and 2000, net capitalized internal use
software costs were $9.3 million and $6.4 million, respectively, and are
included in property and equipment in the accompanying consolidated balance
sheets and are amortized over three years.

DEFERRED CHARGES AND OTHER ASSETS

Deferred charges and other assets as of December 31, 2001, primarily consist of
the long-term portion of deferred equipment costs, the unamortized financing
costs and debt issue costs associated with the Senior Notes, and the long-term
portion of the amounts prepaid to MSV for the funding of certain operating
expenses. Deferred Charges and Other Assets as of December 31, 2000, also
included unamortized financing costs and debt issue costs associated with the
Bank Financing and the long-term portion of prepaid expenses of XM Radio.

Financing costs are amortized over the term of the related facility using the
straight-line method, which approximates the effective interest method.

OTHER LONG-TERM LIABILITIES

F-47

Other long-term liabilities consist of the following:

REVENUE RECOGNITION

The Company generates revenue through equipment sales, airtime service
agreements, and consulting services. In 2000, the Company adopted Staff
Accounting Bulletin No. 101, "Revenue Recognition" ("SAB 101"), issued by the
Securities and Exchange Commission (the "SEC"). The adoption of SAB 101 did not
have a material impact on the Company's reported financial position or results
of operations. SAB 101 provides guidance on the recognition, presentation and
disclosure of revenue in financial statements. In certain circumstances, SAB 101
requires the Company to defer the recognition of revenue and costs related to
equipment sold as part of a service agreement. Revenue is recognized as follows:

SERVICE REVENUE: Revenues from our wireless services are recognized when the
services are performed, evidence of an arrangement exits, the fee is fixed and
determinable and collectibility is probable. Service discounts and incentives
are recorded as a reduction of revenue when granted, or ratably over a contract
period.

EQUIPMENT AND SERVICE SALES: The Company sells equipment to resellers who market
its terrestrial product and airtime service to the public. The Company also
sells its product directly to end-users. Revenue from the sale of the equipment
as well as the cost of the equipment, are initially deferred and are generally
recognized over a period corresponding to the Company's estimate of customer
life of 2 years. Equipment costs are deferred only to the extent of deferred
revenue. As of December 31, 2001 and 2000, the Company had capitalized a total
of $16.0 million and $27.9 million of deferred equipment revenue, respectively,
and had deferred equipment costs in the amount of $16.0 million and $27.9
million, respectively.

CONSULTING SERVICES: The Company occasionally provides consulting services to
its customers. Revenue from such services is generally recognized following the
contract terms as milestones are achieved.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. Such costs include
internal research and development activities and expenses associated with
external product development agreements. The Company's core wireless business
incurred research and development costs of approximately $0.4 million in 2001,
$2.1 million in 2000, and $1.0 million in 1999. The Company's consolidated
results also included research and development costs

F-48

incurred by XM Radio in the amount of $7.4 million in 2000 and $2.9 million in
1999.

ADVERTISING COSTS

Advertising costs are charged to operations in the year incurred and totaled
$11.0 million in 2001, $12.6 million in 2000, and $4.2 million in 1999. A
portion of the advertising costs associated with certain of the Company's
Internet promotion, were prepaid in the form of warrants to acquire common stock
issued by the Company, valued at $4.8 million. The warrants were expensed as the
associated page views were delivered. The Company recognized advertising expense
associated with the warrants issued for this Internet promotion in the amount of
$1.4 million in 2001 and $0.7 million in 2000. In September 2001, the Company
cancelled the Internet promotion, and the $2.9 million of remaining prepaid
advertising was written off as part of the operational restructuring.

CAPITALIZED INTEREST

XM Radio System Under Construction included capitalized interest cost as a
component of the cost of the digital audio radio service, or DARS, license and
satellite system under construction. XM Radio capitalized interest in the amount
of $39.1 million in 2000 and $15.3 million in 1999.

STOCK BASED COMPENSATION

The Company accounts for employee stock options using the method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees." Generally, no expense is recognized related to
the Company's stock options because the option's exercise price is set at the
stock's fair market value on the date the option is granted. In cases where the
Company has issued shares of restricted stock, the Company has recorded an
expense based on the value of the restricted stock on the measurement date.

ASSESSMENT OF ASSET IMPAIRMENT

The Company follows the provisions of SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
which requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future undiscounted net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or their fair value less costs to sell.

The Company assessed the carrying value of its satellite and related assets as
of December 31, 1999, and determined that an impairment did exist. The Company's
geostationery satellite was originally designed for voice services. Following
the Company's acquisition of Motient Communications in 1998, the Company focused
its business towards a data strategy, relying primarily on its terrestrial
network, and as a result of this shift, data service revenue in 1999 increased
to 73% of service revenue from 69% in 1998. Voice service revenue in 1998
represented 24% of service revenue versus only 20% in 1999. This shift to a data
strategy was also apparent in the Company's new primary product offerings in
1999. In addition to these factors, TMI

F-49

Communications Company Limited Partnership ("TMI") and SatCom Systems, Inc. were
each granted applications in November 1999 to use TMI's Canadian-licensed
satellite system to provide service in the United States. TMI's system operates
in the Mobile Satellite Services ("MSS") L-band and has footprints covering the
United States. These companies' entry in the United States marketplace
represented additional competition to the Company in the voice business. Given
these factors, management evaluated the satellite and related ground segment
assets for impairment. Based on the analysis, the Company determined that future
cash flows were less than the carrying value of the assets. Accordingly, the
Company determined the fair value of the assets and it recorded an impairment
charge of $97.4 million to reduce the carrying value of the satellite and
related ground segment assets to the Company's estimate of fair value at
December 31, 1999. The determination of fair value was based on management's
best estimate of the expected discounted future cash flows attributable to the
satellite and related ground segment.

COMPREHENSIVE INCOME

SFAS No. 130, "Reporting of Comprehensive Income" requires "comprehensive
income" and the components of "other comprehensive income" to be reported in the
financial statements and/or notes thereto. Since the Company does not have any
components of "other comprehensive income," reported net income is the same as
"comprehensive income" for the years ended December 31, 2001, 2000, and 1999.

SEGMENT DISCLOSURES

In accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," as of January 1, 2001, the Company has one operating
segment: its Core Wireless Business. During 2000, as a result of the Company's
consolidation of the results of XM Radio, the Company reported an additional
segment for XM Radio's satellite-based digital audio radio service. The Company
provides its Core Wireless Business to the continental United States, Alaska,
Hawaii, Puerto Rico, the U.S. Virgin Islands, and certain U.S. coastal waters.
The following summarizes the Company's Core Wireless Business revenue by major
market segments:

LOSS PER SHARE

Basic and diluted loss per common share is computed by dividing income available
to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or

F-50

converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. Options and warrants to purchase
shares of common stock were not included in the computation of loss per share as
the effect would be antidilutive. As a result, the basic and diluted earnings
per share amounts are identical.

DERIVATIVES

In September 1998, the Financial Accounting Standards Board ("FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities," ("SFAS No. 133") which requires the recognition of all derivatives
as either assets or liabilities measured at fair value, with changes in value
reflected as current period income (loss) unless specific hedge accounting
criteria are met. The effective date of SFAS No. 133, as amended by SFAS 138, is
for fiscal years beginning after September 15, 2000. Except for the Rare Medium
Note embedded call options discussed in the following paragraph, SFAS No. 133
was not material to the Company's financial position or results of operations as
of or for the periods ended December 31, 2001.

In April and July 2001, the Company sold notes to Rare Medium totaling $50
million. The notes were collateralized by up to 5 million of the Company's XM
Radio shares, and, until maturity, which was extended until October 12, 2001,
Rare Medium had the option to exchange the notes for a number of XM Radio shares
equivalent to the principal of the note plus any accrued interest thereon (see
Note 8). The Company determined the embedded call options in the notes, which
permitted Rare Medium to convert the borrowings into shares of XM Radio, to be
derivatives which were accounted for in accordance with SFAS No.133 and
accordingly recorded a gain in the amount of $1.5 million in 2001 related to the
Rare Medium Note call options. On October 12, 2001, the embedded call options in
the Rare Medium Notes expired unexercised.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141 "Business Combinations" and SFAS No.
142 "Goodwill and Other Intangible Assets." SFAS No. 141 requires business
combinations initiated after June 30, 2001 to be accounted for using the
purchase method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill. Recorded goodwill and intangibles will
be evaluated against this new criteria and may result in certain intangibles
being subsumed into goodwill, or alternatively, amounts initially recorded as
goodwill may be separately identified and recognized apart from goodwill. SFAS
No. 142 requires the use of a nonamortization approach to account for purchased
goodwill and certain intangibles. Under a nonamortization approach, goodwill and
certain intangibles will not be amortized into results of operations, but
instead will be reviewed for impairment and written down and charged to results
of operations only in the periods in which the recorded value of goodwill and
certain intangibles is more than its fair value. The provisions of each
statement which apply to goodwill and intangible assets acquired prior to June
30, 2001 were adopted by the Company on January 1, 2002. The Company is in the
process of evaluating, but has yet to determine, the financial statement impact
of adoption of SFAS No. 142.

On August 16, 2001 the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. Specifically, this standard
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. The entity is
required to capitalize the cost by increasing the carrying amount of the related
long-lived asset. The capitalized

F-51

cost is then depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss. The standard is effective for
fiscal years beginning after June 15, 2002. On October 3, 2001, the FASB
issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" that replaces SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of." The statement requires that
all long-lived assets be measured at the lower of carrying amount or fair
value less cost to sell, whether reported in continuing operations or in
discontinued operations. Therefore, discontinued operations will no longer be
measured on a net realizable value basis and will not include amounts for
future operating losses. The statement also broadens the reporting
requirements for discontinued operations to include disposal transactions of
all components of an entity (rather than segments of a business). Components
of an entity include operations and cash flows that can be clearly
distinguished from the rest of the entity that will be eliminated from the
ongoing operations of the entity in a disposal transaction. The statement is
effective for fiscal years beginning after December 15, 2001. The Company is
currently evaluating, but has yet to determine, the impact that adoption of
SFAS No. 143 and SFAS No. 144 will have on the Company's financial statements.

3. STOCKHOLDERS' (DEFICIT) EQUITY

The Company has authorized 200,000 shares of Preferred Stock and 150,000,000
shares of Common Stock. The par value per share is $0.01 for each class of
stock. For each share held, common stockholders are entitled to one vote on
matters submitted to the stockholders. Cumulative voting applies for all
elections of directors of the Company.

The Preferred Stock may be issued in one or more series at the discretion of the
Board of Directors (the "Board"), without stockholder approval. The Board is
authorized to determine the number of shares in each series and all
designations, rights, preferences, and limitations on the shares in each series,
including, but not limited to, determining whether dividends will be cumulative
or non-cumulative.

Certain significant stockholders of the Company have entered into a
Stockholders' Agreement (the "Agreement") which contains provisions relating to
the election of directors, procedures for maintaining compliance with the
Federal Communication Commission's ("FCC") alien ownership restrictions, certain
restrictions on the transfer, sale and exchange of Common Stock, and procedures
for appointing directors to the Executive Committee of the Board, among others.
The Agreement continues in effect until terminated by an affirmative vote of
holders of three-fourths of the Company's Common Stock held by parties to the
Agreement. Other matters relating to the Company's governance of the Company are
set forth in the Certificate of Incorporation and Bylaws.

As of December 31, 2001, the Company had reserved Common Stock for future
issuance as detailed below.

F-52

XM RADIO

During 1999, 2000 and 2001, XM Radio has executed certain equity transactions
that affected the Company's ownership percentage in XM Radio. As a result of
these transactions, and in accordance with Staff Accounting Bulletin 51 (SAB
51), the Company recorded a decrease to its investment in XM Radio of $12.2
million in 2001, and an increase to its investment in XM Radio of $129.5 million
in 2000 and $80.7 million in 1999. SAB 51 addresses the accounting for sales of
stock by a subsidiary. Because XM Radio was a development stage company until
November 12, 2001, SAB 51 required the difference in the carrying amount of the
Company's investment in XM Radio and the net book value of XM Radio after the
stock issuances be reflected in the financial statements of the Company as a
capital transaction in the accompanying consolidated statements of stockholders'
(deficit) equity.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

Property and equipment is recorded at cost and depreciated over its useful life
using the straight-line method. Assets recorded as capital leases are amortized
over the shorter of their useful lives or the term of the lease. The estimated
useful lives of office furniture and equipment vary from 2-10 years, and the
network equipment is depreciated over 7 years. The Company has also capitalized
certain costs to develop and implement its computerized billing system. These
costs are included in property and equipment and are depreciated over 3 years.

The Company was depreciating its satellite, MSAT-2, over its estimated useful
life of 10 years, which was based on several factors, including current
conditions and the estimated remaining fuel of MSAT-2. The original estimated
useful life was periodically reviewed using current Telemetry Tracking and
Control data. The Company's ground segment was depreciated over 8 years. As
discussed in Note 2, during 1999, the Company wrote down the value of the space
and ground segment assets to their estimated fair value.

F-53

XM Radio System Under Construction consisted of the following:

The balances at December 31, 2000 included capitalized interest of $65,176.

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consist of the following:

FCC Licenses and Goodwill are being amortized on a straight-line basis over 20
years.

6. STOCK OPTIONS AND RESTRICTED STOCK

The Company has two active stock option plans. The Motient Corporation Stock
Award Plan (the "Plan") permits the grant of non-statutory options and
stock-based awards up to a total of 7.3 million shares of Common Stock. Under
the Plan, the exercise price and vesting schedule for options is determined by
the Compensation Committee of the Board, which was established to administer the
Plan. Generally, options vest over a three year period and will have an exercise
price not less than the fair market value of a share on the date the option is
granted or have a term greater than ten years. In May 2000, the Company's
stockholders approved certain amendments to the Plan, including permitting
non-employee directors to be eligible for option grants under the Plan.

The Company also has a Stock Option Plan for Non-Employee Directors (the
"Director Plan") which provides for the grant of options up to a total of
100,000 shares of Common Stock. Effective March 25, 1999, Directors

F-54

receive an initial option to purchase 5,000 shares of Common Stock, with annual
option grants to purchase 2,500 shares of Common Stock. In addition, the Board
of Directors may also grant discretionary options at such times and on such
terms and conditions as it deems appropriate. Options under the Director Plan
can be exercised at a price equal to the fair market value of the stock on the
date of the grant and are fully vested and immediately exercisable on the date
of grant. Each Director Plan option expires on the earlier of (i) ten years from
the date of grant or (ii) seven months after the Director's termination.

In January 1998, the Board of Directors granted restricted stock to certain
members of senior management. These grants included both a three-year vesting
schedule as well as specific corporate performance targets. The Company did not
record any compensation expense associated with these shares during 1999 or
2000; however, in January 2001, in recognition of employee services in entering
into the second MSV transaction (see Note 13), the Board lifted the remaining
restrictions, and the shares were released upon vesting. Accordingly, the
Company recorded compensation expense in the amount of $1.4 million in 2001
associated with the vesting of these shares. Additional compensation costs will
be recorded in 2002 upon the final vesting of these shares.

On September 25, 2001, the Company issued approximately 3.2 million shares of
restricted stock to employees, with a price on the date of issuance of $0.13 per
share, in exchange for approximately 4.3 million outstanding employee stock
options, which were cancelled. With the exception of restricted stock issued to
employees terminated on September 26, 2001, which shares vested immediately
based on the terminated employees' then-vested exchanged options, all other
shares of restricted stock issued on September 25, 2001 are subject to a six
month holding period, at which time the shares of restricted stock will vest in
accordance with the vesting schedule of the options for which the restricted
stock was exchanged. The Company has recorded a deferred compensation charge in
the amount of $419,000 associated with the issuance of these shares. This
compensation is being charged to income over the employees' service period.

Information regarding the Company's stock option plans is summarized below:

F-55

Options exercisable at December 31:

The Company accounts for stock compensation costs in accordance with the
provisions of APB No. 25, "Accounting for Stock Issued to Employees." Had
compensation cost been determined based on the fair value at the grant dates for
awards under the Company's stock plans in accordance with SFAS No. 123,
"Accounting for Stock Based Compensation," the net loss would have been
increased by $5.9 million ($0.12 per share) in 2001, $7.3 million ($0.15 per
share) in 2000, and $6.2 million ($0.16 per share) in 1999. As required by SFAS
No. 123, the fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions for
2001, 2000, and 1999: no historical dividend yield; an expected life of 10
years; historical volatility of 197% in 2001, 135% in 2000, and 115% in 1999,
and risk-free rates of return ranging from 1.71% to 5.82%.

Exercise prices for options outstanding as of December 31, 2001, were as
follows:

7. INCOME TAXES

The Company accounts for income taxes under the liability method as required in
SFAS No. 109, "Accounting for Income Taxes." Under the liability method,
deferred income taxes are recognized for the tax consequences of "temporary
differences" by applying enacted statutory tax laws and rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities. Under this method, the effect
on deferred taxes of a change in tax rates is recognized in income in the period
that includes the enactment date. Potential tax benefits, related to net
operating losses and temporary differences, have been recorded as an asset, and
a valuation allowance for the same amount has been established. The Company has
paid no income taxes since inception. The following is a summary of the

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Company's net deferred tax assets.

Significant timing differences affecting deferred taxes in 2001 reflect the
treatment of the sale of the satellite assets and XM Radio stock for
financial reporting purposes compared to tax purposes. As of December 31,
2001, the Company had estimated net operating loss carryforwards ("NOLs") of
$1.1 billion. In July 1999, as a result of the Company's investment in XM
Radio which triggered a change in control as defined by the Internal Revenue
Code, utilization of the Company's NOLs were limited to approximately $42.1
million per year. It is expected that, should the debt restructuring be
successful, the Company will have triggered another change of control, which
will further limit the utilization of the Company's NOLs. While the Company
cannot yet determine the full extent of the limitation, it is expected to be
material and may effectively eliminate the Company's ability to utilize a
significant portion of its NOLs to offset future taxable income. The
Company's NOLs expire between 2004 and 2021.

8. DEBT

$335 MILLION UNIT OFFERING

On March 31, 1998, Motient Holdings, a wholly-owned subsidiary of Motient,
issued $335 million of Units (the "Units") consisting of 12 1/4% Senior Notes
due 2008 (the "Senior Notes"), and one warrant to purchase 3.75749

F-57

shares of Common Stock of the Company for each $1,000 principal amount of Senior
Notes (the "Warrants") at an exercise price of $12.51 per share. The Warrants
were valued at $8.5 million and were recorded as a debt discount. A portion of
the net proceeds of the sale of the Units were used to finance the Motient
Communications Acquisition in 1998. In connection with the Senior Notes, Motient
Holdings purchased approximately $112.3 million of restricted investments that
were restricted for the payment of the first six interest payments on the Senior
Notes. Interest payments are due semi-annually, in arrears, beginning October 1,
1998. As a result of the automatic application of certain adjustment provisions
following the issuance of 7.0 million shares of Common Stock in a public
offering in 1999, the exercise price of the warrants associated with the Senior
Notes was reduced to $12.28 per share, the number of shares per warrant was
increased to 3.83 shares for each $1,000 principal amount of Senior Notes, and
the aggregate number of shares issuable upon exercise of such warrants was
increased by 24,294. The additional Senior Note warrants and re-pricing were
valued at $440,000. This was recorded as additional debt discount in the third
quarter of 1999. The Senior Notes are fully guaranteed by Motient Corporation.

The Company failed to make a semi-annual interest payment due October 1, 2001,
which failure constitutes an event of default under the Senior Notes. As a
result of the Company's failure to make the required semi-annual interest
payment, the missed interest payment will accrue interest at the annual rate of
13.25%. As a result of this event of default, the Company has classified the
Senior Notes as current liabilities in the Consolidated Balance Sheet as of
December 31, 2001.

As discussed above (see Note 1), the Company has filed a Chapter 11 bankruptcy
petition which includes a plan of reorganization that would, if approved, cause
the Senior Notes to be exchanged in full, including accrued interest thereon,
for new equity of the reorganized Company.

RARE MEDIUM NOTES

In 2001 Motient received a total of $50 million from Rare Medium, and issued
Rare Medium notes payable for such amount at 12.5% annual interest. These notes
were collateralized by 5 million of the Company's XM Radio shares. On October
12, 2001, in accordance with the terms of the notes, the Company repaid $26.2
million of the Rare Medium notes, representing $23.8 million in principal and
$2.4 million of accrued interest, in exchange for 5 million of its XM Radio
shares. The $26.9 million of principal and accrued interest remaining
outstanding at December 31, 2001 is unsecured.

As a result of the delivery of the shares of XM Radio common stock described
above (see Note 1 - Liquidity and Financing Requirements), the maturity of
the Rare Medium Notes was accelerated to November 19, 2001. The Rare Medium
note is currently in default; and, therefore, the Company has classified the
Rare Medium Notes as current liabilities in the accompanying Consolidated
Balance Sheet. Under the Company's plan of reorganization, the Company
expects that the Rare Medium notes will be cancelled and replaced by a new
note in the principal amount of $19.0 million. The new note will be issued by
a new subsidiary of Motient Corporation that will own 100% of Motient
Ventures Holding Inc., which owns all of the Company's interests in MSV. The
new note will have a term of 3 years and will carry interest at 9%. The new
note would allow the Company to elect to accrue interest and add it to the
principal, instead of paying interest in cash. The note will require that it
be prepaid using 25% of the proceeds of any repayment of the $15 million note
from MSV.

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BANK FINANCING

In March 1998, the Company entered into a $200 million Bank Financing (the "Bank
Financing") consisting of two facilities: (i) the Revolving Credit Facility, a
$100 million unsecured five-year reducing revolving credit facility maturing
March 31, 2003, and (ii) the Term Loan Facility, a $100 million five-year, term
loan facility with up to three additional one-year extensions subject to the
lenders' approval. In 1999, the Term Loan Facility was reduced to $41 million.
In 2000, the Term Loan Facility was reduced to $40 million, and the Revolving
Credit Facility was reduced to $77.25 million. During 2001, the Bank Financing
was completely extinguished.

THE TERM LOAN FACILITY

The Term Loan Facility bore an interest rate, generally, of 100 basis points
above London Interbank Offered Rate ("LIBOR"). The Term Loan Agreement did not
include any scheduled amortization until maturity, but did contain certain
provisions for prepayment based on certain proceeds received by the Company,
unless otherwise waived by the banks and the Bank Facility Guarantors.

THE REVOLVING CREDIT FACILITY

The Revolving Credit Facility bore an interest rate, generally, of 100 basis
points above LIBOR and was unsecured, with a negative pledge on the assets of
Motient Holdings and its subsidiaries and ranked pari passu with the Senior
Notes. Certain proceeds received by Motient Holdings were required to repay
and reduce the Revolving Credit Facility, unless otherwise waived by the banks
and the Bank Facility Guarantors.

THE GUARANTEES

In connection with the Bank Financing, Hughes Electronics Corporation, Singapore
Telecommunications, Ltd. and Baron Capital Partners, L.P. (collectively, the
"Bank Facility Guarantors"), extended separate guarantees of the obligations of
each of Motient Holdings and the Company to the banks, which on a several basis
aggregated to $200 million. In their agreement with each of Motient Holdings and
the Company (the "Guarantee Issuance Agreement"), the Bank Facility Guarantors
agreed to make their guarantees available for the Bank Financing. In exchange
for the additional risks undertaken by the Bank Facility Guarantors in
connection with the Bank Financing, the Company agreed to compensate the Bank
Facility Guarantors, principally in the form of 1 million additional warrants
and re-pricing of 5.5 million warrants previously issued in connection with the
original Bank Facility (together, the "Guarantee Warrants"). The Guarantee
Warrants were issued with an exercise price of $12.51 and were valued at
approximately $17.7 million. The amounts initially assigned to the Guarantee
Warrants and subsequent repricings are recorded as Common Stock Purchase
Warrants and Unamortized Guarantee Warrants in the accompanying consolidated
balance sheets. The amount assigned to Unamortized Guarantee Warrants was
amortized to interest expense over the life of the related debt. On March 29,
1999, the Bank Facility Guarantors agreed to eliminate certain covenants
contained in the Guarantee Issuance Agreement relating to earnings before
interest, depreciation, amortization, and taxes ("EBITDA") and service revenue.
In exchange for this elimination of covenants, the Company agreed to re-price
their Guarantee Warrants, effective April 1,1999, from $12.51 to $7.50. The
value of the re-pricing was approximately $1.5 million.

As a result of the automatic application of certain adjustment provisions
following the issuance of the 7.0

F-59

million shares in the August 1999 public offering, the exercise price of the
Guarantee Warrants was reduced to $7.3571 per share and the Guarantee Warrants
became exercisable for an additional 126,250 shares. The additional Guarantee
Warrants and re-pricing were valued at $2.4 million. Additionally, in June 2000,
the Bank Facility Guarantors agreed to partially reduce the debt repayment
requirements associated with the MSV transaction. In exchange, the Company
further reduced the price of the Guarantee Warrants to $6.25, which was valued
at $1.4 million. In 2001, the Bank Facility Guarantors agreed to waive certain
repayment obligations under the Bank Financing. In exchange for these waivers,
the Company repriced the warrants held by certain of the Bank Facility
Guarantors from $6.25 to $1.31 per share, and issued new warrants to one Bank
Facility Guarantor with an exercise price of $1.31 per share. The value of the
repricing and warrant issuance was $2.3 million.

Further, in connection with the Guarantee Issuance Agreement, the Company had
agreed to reimburse the Bank Facility Guarantors in the event that the
Guarantors were required to make payment under the Bank Financing guarantees,
and, in connection with this reimbursement commitment it provided the Bank
Facility Guarantors a junior security interest with respect to the assets of the
Company, principally its stockholdings in XM Radio and Motient Holdings.

DEBT EXTINGUISHMENTS

In 1999, the Company raised $116 million, net of underwriting discounts and
expenses, through the issuance of 7.0 million shares of common stock in a public
offering. Of the net proceeds, $59 million was used to pay down a portion of the
Term Loan Facility. In 2000, the Company paid down and permanently reduced the
Term Loan Facility by an additional $1 million with proceeds from stock and
warrant exercises, and the Revolving Credit Facility was permanently reduced by
$22.8 million with a portion of the proceeds of the MSV and Aether transactions.
In 2001, the Company sold 2.5 million shares of XM Radio stock and used $8.5
million of the proceeds to permanently reduce the Term Loan Facility.
Additionally, $12.25 million of proceeds from the Rare Medium Note were used to
pay down and permanently reduce the Term Loan Facility.

On November 6, 2001, the agent for the bank lenders under the Bank Financing
declared all loans under the Bank Financing immediately due and payable, due to
the existence of several events of default under the Bank Financing. On the same
date, the bank lenders sought payment in full from the Bank Financing Guarantors
for the accelerated loan obligations. The Bank Facility Guarantors repaid all
such loans on November 14, 2001 in the amount of approximately $97.6 million. As
a result, the Company had a reimbursement obligation to the Bank Guarantors in
the amount of $97.6 million, which included accrued interest and fees.

On November 19, 2001, the Company sold 500,000 shares of its XM Radio common
stock through a broker for $9.50 per share, for aggregate proceeds of $4.75
million. The net proceeds from this sale were paid to the Bank Facility
Guarantors, thereby reducing the amount of the Company's reimbursement
obligation to the Bank Facility Guarantors by such amount. Also on November 19,
2001, the Company delivered all of its remaining 9,257,262 shares of XM Radio
common stock to the Bank Facility Guarantors in full satisfaction of the entire
remaining amount of its reimbursement obligations to the Bank Facility
Guarantors. Upon delivery of these shares, the Bank Facility Guarantors released
the Company from all of its remaining obligations to the Bank Facility
Guarantors under the Bank Financing and the related guarantees and reimbursement
and security agreements. The Company delivered 7,108,184 shares to Hughes
Electronics Corporation, 964,640 shares to Singapore Telecommunications, Ltd.,
and 1,184,438 shares to Baron Capital Partners, L.P.

F-60

As a result of the permanent reductions of the Term Facility and Revolving
Credit Facility, the Company recorded an extraordinary loss on extinguishment of
debt of approximately $1.2 million in 2001, $3.0 million in 2000 and $12.1
million in 1999, which reflects the write-off, on a pro-rata basis, of
unamortized Guarantee Warrants and deferred financing fees associated with the
placement of the Bank Financing.

INTEREST RATE SWAP AGREEMENT

In connection with the Bank Financing, the Company entered into an interest rate
swap agreement, with an implied annual rate of 6.51%. The swap agreement reduces
the impact of interest rate increases on the Term Loan Facility. The Company
paid a fixed fee of approximately $17.9 million for the swap agreement. In
return, the counter-party is obligated to pay a variable rate equal to LIBOR
plus 50 basis points, paid on a quarterly basis directly to the respective banks
on behalf of the Company, on a notional amount of $100 million until the
termination date of March 31, 2001. In connection with the pay down of a portion
of the Term Loan Facility during 1999, the Company reduced the notional amount
of its swap agreement from $100 million to $41 million and realized net proceeds
of approximately $6 million due to early termination of a portion of the swap
agreement. The interest rate swap expired in March 2001.

MOTOROLA VENDOR FINANCING

Motorola has entered into an agreement with the Company to provide up to $15
million of vendor financing, to finance up to 75% of the purchase price of
additional network base stations. Loans under this facility bear interest at a
rate equal to LIBOR plus 7.0% and will be guaranteed by the Company and each
subsidiary of Motient Holdings. The terms of the facility require that amounts
borrowed be secured by the equipment purchased therewith. Advances made during a
quarter constitute a loan, which is then amortized on a quarterly basis over
three years. As of December 31, 2001, $3.3 million was outstanding under this
facility at an interest rate of 9.59%. As of December 31, 2000, $8.5 million was
outstanding under this facility at interest rates ranging from 13.0% to 13.8%.
As noted above, all principal payments under this arrangement have been deferred
until January 1, 2003. No additional amounts are available for borrowing under
this facility.

DEFERRED TRADE PAYABLES

The Company has arranged the financing of certain trade payables, which are
included in current maturities in the accompanying consolidated balance sheets.
As of December 31, 2000, $2.2 million of deferred trade payables were
outstanding at rates ranging from 5.9% to 7.2%. No amounts were outstanding as
of December 31, 2001.

BARON XM RADIO CONVERTIBLE NOTE

In January 1999 the Company issued to Baron Asset Fund ("Baron"), a stockholder
and guarantor of its bank facility, a $21.5 million note convertible into shares
of common stock of XM Radio (the "Convertible Note Payable to Related Party" or
"Baron XM Radio Convertible Note".) The Company subsequently loaned
approximately $21.4 million to XM Radio in exchange for XM Radio Common stock
and a note convertible into XM Radio shares (the "XM Radio Note Receivable"). On
October 8, 1999 XM Radio completed its initial public offering of 10.2 million
shares of Class A common stock, which triggered the conversion of the XM Radio
Note receivable into approximately 1.5 million shares of XM Radio Class B common
stock.

F-61

On January 13, 2000, Baron notified the Company of its intention to exchange the
Baron XM Radio Convertible Note for 1,314,914 shares of XM Radio Class B Stock.
The exchange of the convertible note resulted in a gain in 2000 of approximately
$36.8 million computed as the difference in the carrying value of the Baron XM
Radio Convertible Note and the Company's cost basis in XM Radio stock exchanged
upon conversion of this note.

ASSETS PLEDGED AND SECURED

All wholly owned subsidiaries of the Company are subject to financing agreements
that limit the amount of cash dividends and loans that can be advanced to the
Company. At December 31, 2001, all of the subsidiaries' net assets were
restricted under these agreements. These restrictions will have an impact on
Motient Corporation's ability to pay dividends.

COVENANTS

The debt agreements entered into by the Company contain various restrictions,
covenants, defaults, and requirements customarily found in such financing
agreements. Among other restrictions, these provisions include limitations on
cash dividends, restrictions on transactions between Motient and its
subsidiaries, restrictions on capital acquisitions, material adverse change
clauses, and maintenance of specified insurance policies.

9. RELATED PARTIES

The Company has entered into transactions with various entities of Hughes
Electronics Corporation, which included primarily the purchase by Motient of
services, computer hardware and software, and computer maintenance agreements.

The Company has also entered into various transactions and agreements with
Motorola, Inc. ("Motorola"), a Motient stockholder, which include the purchase
by Motient of services, network hardware and software maintenance services,
facility rentals, and network gateway fees. Additionally, Motorola has provided
the Vendor Financing Commitment, which will be available to finance up to 75% of
the purchase price of additional network base stations (see Note 8). As a result
of Motorola's divestiture of a portion of their shares of Motient stock, they
ceased to be a related party in 2000.

F-62

The following table represents a summary of all related party transactions.

For the periods ended December 31, 2001 and 2000, the Company recorded revenue
related to the MSV research and development agreement in the amount of $6.6
million and $3.7 million, respectively.

10. LEASES

CAPITAL LEASES

The Company leases certain office equipment, ground segment equipment and
switching equipment under agreements accounted for as capital leases. Assets
recorded as capital leases in the accompanying balance sheets include the
following:

As a result of its default under the Senior Notes, the Company is deemed to be
in default under one of its capital leases. The Company has classified this
capital lease obligation as current in the accompanying balance sheet. The
Company believes that this default will be cured upon the acceptance of the plan
of reorganization, with no changes in the terms or amounts of the lease. The
Company has not received notice from the lessor of a default.

OPERATING LEASES

The Company leases substantially all of its base station sites through
cancelable operating leases. The majority of these leases provide for renewal
options for various periods at their fair rental value at the time of renewal.
In the normal course of business, the operating leases are generally renewed or
replaced by other leases. Additionally, the Company leases certain facilities
and equipment under arrangements accounted for as operating leases. Certain of
these arrangements have renewal terms. Total rent expense, under all operating

F-63

leases, and excluding amounts related to the consolidation of XM Radio in 1999
and 2000, approximated, $15.2 million, $13.4 million, and $12.5 million in 2001,
2000, and 1999, respectively.

At December 31, 2001, minimum future lease payments under noncancelable
operating and capital leases are as follows:

11. COMMITMENTS

COMMITMENTS

At December 31, 2001, we had remaining contractual commitments to purchase eLink
and other subscriber equipment inventory in the amount of $844,000, all of which
will be paid in 2002.

Additionally, we have other certain other minimum commitments associated with
our operations that total approximately $50,000 and will be due in 2002.

The Company also has certain contingent and/or disputed obligations under its
satellite construction contract, which contained flight performance incentives
payable by the Company to the contractor if the satellite performed according to
the contract. The Company has raised certain issues relating to payment of the
flight performance incentives, as a result of certain performance and satellite
health considerations. As a result of the sale of the satellite assets to MSV,
any liabilities under this contract in respect of the period after November 26,
2001 will be the responsibility of MSV; however, the Company is responsible for
any incentive payments deemed to have been earned prior to such date. The
Company has recorded a liability of approximately $1.5 million associated with
this contract. Under the Company's Chapter 11 bankruptcy plan of reorganization,
if approved, any amounts that are deemed to be due by the Company will be
converted, according to a formula set forth in the plan of reorganization, into
new equity of the restructured company; however, there can be no assurance that
this plan will be approved and that these amounts will not become payable in
cash.

12. EMPLOYEE BENEFITS

F-64

DEFINED CONTRIBUTION PLAN

The Company sponsors a 401(k) defined contribution plan ("401(k) Savings Plan")
in which all employees of Motient can participate. The 401(k) Savings Plan
provides for (i) a Company match of employee contributions, in the form of
Common Stock, at a rate of $1 for every $1 of an employee's contribution not to
exceed 4% of an employee's eligible compensation, (ii) a discretionary annual
employer non-elective contribution, (iii) the option to have plan benefits
distributed in the form of installment payments, and (iv) the reallocation of
forfeitures, if any, to active participants. The Company's matching expense was
$1.1 million for 2001, $1.4 million for 2000 and $1.1 million for 1999. During
2001, the Company authorized an additional 5,025,000 shares for the Defined
Contribution Plan, and authorized an additional 268,000 shares in January 2002.

In 2001, effective January 2002, the Company amended its 401(k) Savings Plan to
make the matching contribution discretionary, as well as to allow the match to
be made in either cash or shares of Common Stock, at the Company's sole
discretion.

EMPLOYEE STOCK PURCHASE PLAN

The Company has an Employee Stock Purchase Plan ("Stock Purchase Plan") to allow
eligible employees to purchase shares of the Company's Common Stock at 85% of
the lower of market value on the first and last business day of the six-month
option period. An aggregate of 217,331 shares, 30,687 shares, and 90,867 shares
of Common Stock were issued under the Stock Purchase Plan in 2001, 2000, and
1999, respectively.

Effective January 2002, the Company discontinued the Stock Purchase Plan.

13. BUSINESS ACQUISITIONS AND DISPOSITIONS

SALE OF RETAIL TRANSPORTATION BUSINESS TO AETHER SYSTEMS

In November 2000, the Company sold its retail transportation business to Aether
Systems, Inc. Concurrently, Aether entered into two long-term, prepaid network
airtime agreements with a total value of $20 million, of which $5 million was
paid at closing, pursuant to which Aether will purchase airtime on the Company's
satellite and terrestrial networks. Aether also became an authorized reseller of
the Company's eLink and BlackBerry TM by Motient wireless email service
offerings. Aether acquired all of the assets used or useful in the retail
transportation business, and assumed the related liabilities. Aether also
purchased the existing inventory in the business, and was granted a perpetual
license to use and modify any intellectual property owned by or licensed to the
Company in connection with the business.

The purchase price for these assets was $45 million, plus the then-current book
value of the inventory for the business. All of this amount was paid at closing,
except for $10 million which was escrowed, and $3.7 million which was payable
upon collection of certain accounts receivable sold to Aether. As of March 15,
2002, approximately $2.2 million of the outstanding accounts receivable had been
received by Motient. On October 11, 2001, the $10 million escrow was paid to
Motient. At the time of this release, the Company also agreed to modify certain
terms of its network capacity agreements with Aether. The Company recorded a
gain of $8.3 million, representing the difference between the net proceeds of
the escrow received and the amount deferred pursuant to the modification of the
network capacity agreements in 2001. The net book value of assets sold to

F-65

Aether was $14.3 million.

MSV

On June 29, 2000, the Company formed a joint venture subsidiary, MSV, and
received 80% of the membership interests. The remaining 20% interests in MSV
were owned by three investors unrelated to Motient. Through November 26,
2001, MSV used the Company's satellite network to conduct research and
development activities. The other investors paid $50 million to MSV (in the
aggregate), in exchange for their 20% interest. Of the $50 million payment
received by MSV, $6.0 million was retained by MSV to fund certain research
and development activities, $24 million was paid to Motient Services Inc.
("Motient Services"), which owned Motient's satellite and related assets, as
a deposit on the purchase of the satellite assets, and $20 million was paid
to Motient Services for the use of the satellite and frequency under a
research and development agreement.

The $44 million received by Motient Services was allocated to the deferred
revenue related to the research and development agreement, asset purchase
deposit and the Investors' right to convert their minority interest in MSV into
shares of the Company's common stock, based on each component's estimated fair
value. Based on an independent valuation, the Company assigned approximately
$18.6 million to the Investors' conversion right, which is recorded as common
stock warrants in the accompanying consolidated balance sheets. The research and
development agreement and asset purchase deposit were assigned relative fair
values of approximately $14.6 million and $10.8 million, respectively, and, as
of December 31, 2000, were reflected in the accompanying consolidated balance
sheet as other long-term liabilities. The funds received pursuant to the
research and development agreement were being recognized as service revenue over
two years until November 2001. All remaining unamortized balances were written
off as part of the gain on the sale of the satellite assets, discussed below.

On November 26, 2001, Motient sold the assets comprising its satellite
communications business to MSV, as part of a transaction in which certain other
parties joined the venture, including TMI Communications and Company Limited
Partnership ("TMI"), the Canadian satellite services provider. In consideration
for its satellite business assets and in addition to the $44 million received in
June 2000, Motient received the following: (i) a $45 million cash payment paid
at closing, of which $4 million was held by MSV to fund certain of the Company's
future obligations to MSV, such as rent and utilities, through November 2003 and
(ii) a 5-year $15 million note. In this transaction, TMI also contributed its
satellite communications business assets to MSV. In addition, Motient purchased
a $2.5 million convertible note issued by MSV, and certain other investors,
including a subsidiary of Rare Medium Group, Inc. ("Rare Medium"), purchased a
total of $52.5 million of convertible notes. The Company realized a gain of
approximately $35.5 million on the sale of its net assets; however, 80% of the
gain, or $28.4 million, was deferred and will be recognized over 5 years.

Assuming that all of the convertible notes issued in such transaction are
converted into limited partnership units of MSV, Motient would have a 33.3%
equity interest in MSV.

MSV has also filed a separate application with the FCC with respect to MSV's
plans for a new generation satellite system utilizing ancillary terrestrial base
stations. Within 90 days of the receipt of approval from the FCC, and provided
that such approval occurs by March 31, 2003, certain of the investors in MSV
will invest an additional $50 million in MSV and receive additional Class A
Preferred Units. Upon consummation of such

F-66

additional investment, an $11.5 million note to TMI and the $15 million note
to Motient will be repaid in full, and Motient's ownership interest in MSV
will be reduced to approximately 25.5%

XM RADIO

On July 7, 1999, the Company acquired all outstanding debt and equity interests
in XM Radio from the other investor, other than a $75 million loan from the
other investor in XM Radio, in exchange for approximately 8.6 million shares of
the Company's common stock (the "XM Acquisition"). The total consideration given
for the purchase of XM Radio was $129 million. The Company also incurred
approximately $0.9 million for certain acquisition related expenses. In
conjunction with the XM Acquisition, XM Radio was recapitalized and issued an
$82 million convertible note receivable to the Company. This note was
convertible into Class B common shares of XM Radio and was subsequently
converted, see below. Concurrently with this transaction, XM Radio issued $250
million of Series A subordinated convertible notes to several new strategic and
financial investors, including General Motors Corporation, Clear Channel
Investments, DIRECTV, Telcom Ventures, Columbia Capital and Madison Dearborn
Partners. XM Radio used $75 million of the proceeds from these notes to repay
the outstanding loan payable to the former investor. As a result of these
transactions, the Company owned all of the issued and outstanding stock of XM
Radio as of July 7, 1999.

On October 8, 1999, XM Radio consummated an initial public offering (IPO) of
10.2 million shares of its Class A Common Stock. The initial public offering
price was $12 per share. The Company purchased 200,000 shares of XM Radio Class
A Common Stock from the underwriters at the IPO price of $12 per share. As a
result of the IPO, all of the Company's convertible notes of XM Radio were
automatically converted into approximately 11 million shares of XM Radio Class B
common stock. Class B shares have three-for-one voting rights. Additionally, the
$250 million Series A convertible notes of XM Radio converted into approximately
10.8 million shares of Series A Convertible Preferred Stock of XM Radio and
approximately 16.2 million shares of Class A Common Stock of XM Radio at a
conversion price of $9.52.

Prior to July 7, 1999, the Company's proportionate share of XM Radio's losses
were included in the accompanying statement of operations pursuant to the equity
method of accounting. The acquisition was accounted for under the purchase
method of accounting for business combinations. The purchase price was assigned
to the assets and liabilities of XM Radio based on their estimated fair values
on the date of the acquisition. Subsequent to the date of acquisition and upon
valuation of certain intangibles and licenses, the fair value of the assets
acquired in excess of the purchase price was $3.2 million was allocated
proportionately to the non-current assets acquired in the acquisition. The
results of XM Radio are included in the consolidated financial statements as of
the effective date of the acquisition, July 7, 1999 through December 31, 1999,
and for all of 2000.

On a pro forma basis, assuming the XM Acquisition had been consummated on
January 1, 1999, the following results would have been reflected. The pro forma
results are based on historical information and do not necessarily reflect the
actual results that would have occurred if the combination occurred at the
beginning of 1999, nor reflects the future results of the combined entity.

F-67

In January 2001, pursuant to Federal Communication Commission ("FCC") approval
to cease to control XM Radio, the number of directors that the Company appointed
to XM Radio's Board of Directors was reduced to less than 50% of XM Radio's
directors, and the Company converted a portion of its super-voting Class B
Common Stock of XM Radio to Class A Common Stock. As a result, the Company
ceased to control XM Radio, and as of January 1, 2001, the Company accounted for
its investment in XM Radio pursuant to the equity method of accounting.

In January and February 2001, the Company sold, in two separate transactions,
2 million shares of its XM Radio Class A Common Stock, at an average price of
$16.77 per share, for total proceeds of $33.5 million. In October 2001, as
noted above, the Company repaid $26.2 million of the Rare Medium notes in
exchange for 5 million of its XM Radio shares. On November 19, 2001, the
Company sold 500,000 shares of its XM Radio common stock through a broker for
$9.50 per share, for aggregate proceeds of $4.75 million. Also on November 19,
2001, the Company delivered all of its remaining 9,257,262 shares of XM
Radio common stock to the Bank Guarantors in full satisfaction of the entire
remaining amount of the Company's reimbursement obligations to the Bank
Guarantors. As of November 19, 2001, the Company ceased to have any interest
in XM Radio.

In anticipation of the exchange of the XM Radio shares for debt, the Company
recorded an impairment loss of $81.5 million. This loss represents the write
down of the Company's investment in XM Radio to the fair market value on the
date of the exchange. Upon the actual exchange of shares, the Company recognized
a net extraordinary gain of $10.0 million, which represented the difference
between the fair market value of the XM Radio stock as compared to the value of
the debt cancelled in exchange for the shares.

14. LEGAL AND REGULATORY MATTERS

LEGAL

The Company filed a voluntary petition for relief under Chapter 11 of the U.S.
Bankruptcy Code on January 10, 2002. For further details regarding this
proceeding, please see "Item 1 - Motient's Chapter 11 Filing," which is
incorporated herein by reference.

The Company is aware of two purported class action lawsuits filed by holders of
Rare Medium common stock challenging the previously proposed merger of Motient
and Rare Medium Group, Inc. that was terminated: In re Rare Medium Group, Inc.
Shareholders Litigation, C.A. No. 18879 NC (cases filed in Delaware Chancery
Court between May 15, 2001 and June 7, 2001, and consolidated by the Court on
June 22, 2001) , and Brickell Partners v. Rare Medium Group, Inc., et al.,
N.Y.S. Index No. 01602694 (filed in the New York Supreme Court on May 30, 2001).
Both complaints name Rare Medium, members of Rare Medium's board of directors,
the holders of Rare Medium preferred stock and certain of their affiliated
entities, and Motient as defendants. The complaints allege that the defendants
breached duties allegedly owed to the holders of Rare Medium common stock in
connection with the merger agreement, and include allegations that: (1) the
holders of Rare Medium preferred stock engaged in self-dealing in the proposed
merger; (2) the Rare Medium board of

F-68

directors allegedly breached its fiduciary duties by agreeing to distribute
the merger consideration differently among Rare Medium's common and preferred
shares; and (3) Motient allegedly aided and abetted the supposed breaches of
fiduciary duties. The complaints sought to enjoin the proposed merger, and
also sought compensatory damages in an unspecified amount.

Rare Medium, the Company, and the holders of Rare Medium preferred stock have
filed motions to dismiss the Delaware complaint, while Rare Medium and the
holders of Rare Medium preferred stock have filed motions to stay discovery in
the Delaware lawsuit. Plaintiffs have failed to respond to any of these motions.
In light of the termination of the proposed merger and the plaintiff's failure
to pursue their claims, the Company believes that the Delaware lawsuit will be
dismissed as moot.

Rare Medium and the holders of Rare Medium preferred stock have also filed a
motion to dismiss or stay the New York lawsuit. The Company was never served
with process in the New York lawsuit, and thus filed no motion to dismiss.
However, the Company has been informed by Rare Medium that an unopposed motion
by Rare Medium to dismiss the New York lawsuit as moot was granted on February
21, 2002, and that Rare Medium will present to the court a final judgment to
conclude this litigation.

REGULATORY

The terrestrial two-way wireless data network used in Motient's wireless
business is regulated to varying degrees at the federal, state, and local
levels. Various legislative and regulatory proposals under consideration from
time to time by Congress and the Federal Communications Commission, or FCC, have
in the past materially affected and may in the future materially affect the
telecommunications industry in general, and Motient's wireless business in
particular. In addition, many aspects of regulation at the federal, state and
local level currently are subject to judicial review or are the subject of
administrative or legislative proposals to modify, repeal, or adopt new laws and
administrative regulations and policies. Neither the outcome of these
proceedings nor their impact on Motient's operations can be predicted at this
time.

The ownership and operation of the Company's terrestrial network is subject to
the rules and regulations of the FCC, which acts under authority established by
the Communications Act of 1934 and related federal laws. Among other things, the
FCC allocates portions of the radio frequency spectrum to certain services and
grants licenses to and regulates individual entities using that spectrum.
Motient operates pursuant to various licenses granted by the FCC.

The Company is subject to the Communications Assistance for Law Enforcement Act,
or CALEA. Under CALEA, the Company must ensure that law enforcement agencies can
intercept certain communications transmitted over its networks. The deadline for
complying with the CALEA requirements and any rules subsequently promulgated was
June 30, 2000. The Company has pending with the FCC a petition for an extension
of the deadline with respect to certain of its equipment, facilities, and
services and the Company has been working with law enforcement to arrive at an
agreement on a further extension of this deadline and on an extension of the
deadline for other Motient equipment, facilities, and services. It is possible
that the Company may not be able to comply with all of CALEA's requirements or
do so in a timely manner. Where compliance with any requirement is deemed by the
FCC to be not "reasonably achievable," the Company may be exempted from such
requirement. Should the Company not be exempted from complying, of if federal
funds are not

F-69

available to the Company to assist in the funding of any required changes , the
requirement to comply with CALEA could have a material adverse effect on the
conduct of the Company's business.

The Company is also subject to the FCC's universal service fund, which supports
the provision of affordable telecommunications to high-cost areas, and the
provision of advanced telecommunications services to schools, libraries, and
rural health care providers. All of the terrestrial network revenue falls within
excluded categories, thereby eliminating the Company's universal service
assessments. There can be no assurances that the FCC will retain the exclusions
or its current policy regarding the scope of a carrier's contribution base. The
Company may also be required to contribute to state universal service programs.
The requirement to make these state universal service payments, the amount of
which in some cases may be subject to change and is not yet determined, may have
a material adverse impact on the conduct of the Company's financial results.

The Company believes that it has licenses for a sufficient number of channels to
meet its current capacity needs on the terrestrial network. To the extent that
additional capacity is required, the Company may participate in other upcoming
auctions or acquire channels from other licensees.

In November 2001, Nextel proposed, in a "white paper" to the FCC, that certain
of its wireless spectrum in the 700 MHz band, lower 800 MHz band, and 900 MHz
band be exchanged for spectrum in the upper 800 MHz band and in the 2.1 GHz
band. Nextel stated that it was making this proposal to address existing
inadvertent interference problems for public safety communications systems
caused by the existing spectrum allocation. Nextel's proposal addresses this
problem by creating blocks of contiguous spectrum to be shared by public safety
agencies. The Nextel proposal, as submitted to the FCC, would require either (i)
that Motient continue to operate using its existing lower 800 MHz band spectrum
on a secondary, non-interfering basis with the public safety agencies who would
be relocated in the same spectrum, or (ii) that Motient relocate, at its own
expense, to other spectrum in the 700 MHz or 900 MHz bands. Motient believes it
is highly unlikely that it could continue to operate in the lower 800 MHz bands
on a secondary, non-interfering basis. If Motient is required to relocate to
spectrum in the 700 MHz or 900 MHz bands, it would incur substantial operational
and financial costs, including costs relating to: manufacturing replacement
infrastructure and user hardware to operate on Motient's network in the 700 MHz
or 900 MHz bands, disruptions to existing customers as a result of the
relocation to other spectrum bands, possible diminished data speed, and coverage
gaps. There are also potential problems with the 700 MHz and 900 MHz bands that
might make it difficult, if not impossible, for Motient to duplicate its
existing operations in the 800 MHz band.

On March 14, 2002, the FCC adopted a notice of proposed rulemaking exploring
options and alternatives for improving the spectrum environment for public
safety operations in the 800 MHz band. The Company does not believe its
operations will be impacted until the Commission adopts final rules in that
proceeding and it cannot predict what actions the FCC will take.

The effectiveness of the Company's plan of reorganization is subject to approval
by the FCC of the change of control of the Company that will occur as a result
of the plan. The Company submitted its change of control application to the FCC
on March 7, 2002. The change of control application is subject to a 30-day
period for the filing of public comments. The Public Notice of the change of
control application was released on March 13, 2002.

See "Item 1 - Business - Regulation" for further details.

F-70

15. SUPPLEMENTAL CASH FLOW INFORMATION

In connection with the pay downs of the Term Loan Facility and Revolver Loan
Facilities, the Company's extraordinary loss on extinguishment of debt includes
the write off of all unamortized deferred financing fees associated with the
placement of the Bank Facility and of the unamortized portion of the Guarantee
Warrants that were held by shareholder guarantors of the Bank Facility.

16. SUBSEQUENT EVENTS

On January 10, 2002, the Company and certain of its subsidiaries filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. The Company's Amended
Joint Plan of Reorganization was filed with the U.S. Bankruptcy Court for the
Eastern District of Virginia on February 28, 2002. The cases are being jointly
administered under the case name "In Re Motient Corporation, et. al.," Case No.
02-80125.

The plan generally provides that holders of the Senior Notes will exchange their
notes for new Motient stock to be issued pursuant to the plan. Shares of common
stock held by existing common stockholders will be cancelled, and the existing
common stockholders will receive warrants with a nominal strike price to
purchase 5 percent of the new common stock (on a fully diluted basis) in the
reorganized company. The warrants will

F-71

have a term of two years and will be exercisable once the holders of the senior
notes have recovered 105 percent of the face amount of their investment.
Warrants or options to purchase existing common stock that are outstanding as of
the effective date will be cancelled.

Further details regarding the plan are contained in Motient's Disclosure
Statement with respect to the plan, which is filed as Exhibit 10.61 to this
Annual Report on Form 10-K.

17. FINANCIAL STATEMENTS OF SUBSIDIARIES

In connection with the Company's acquisition of Motient Communications on March
31, 1998, and related financing discussed above, the Company formed a new
wholly-owned subsidiary, Motient Holdings. The Company contributed all of its
inter-company notes receivables and transferred its rights, title and interests
in Motient Services Inc. and Motient Communications Inc. (together, the
"Subsidiary Guarantors") to Motient Holdings, and Motient Holdings was the
acquirer of Motient Communications Inc. and the issuer of the Senior Notes.
Motient Corporation ("Motient Parent") is a guarantor of the Senior Notes. The
Senior Notes contain covenants that, among other things, limit the ability of
Motient Holdings and its Subsidiaries to incur additional indebtedness, pay
dividends or make other distributions, repurchase any capital stock or
subordinated indebtedness, make certain investments, create certain liens, enter
into certain transactions with affiliates, sell assets, enter into certain
mergers and consolidations, and enter into sale and leaseback transactions.

The Senior Notes are jointly and severally guaranteed on full and unconditional
basis by the Subsidiary Guarantors and Motient Parent. The following unaudited
condensed consolidating information for these entities presents:

- Condensed consolidating balance sheets as of December 31, 2001 and 2000,
the condensed consolidating statements of operations and cash flows for
the years ended December 31, 2001, 2000 and 1999, and the condensed
consolidating statements of stockholders' (deficit) equity for the
period January 1, 1999 through December 31, 2001.

- Elimination entries necessary to combine the entities comprising Motient.

F-72

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2001

(UNAUDITED)

(IN THOUSANDS)

F-73

CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2000

(UNAUDITED)

(IN THOUSANDS)

F-74

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2001

(UNAUDITED)

(IN THOUSANDS)

F-75

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000

(UNAUDITED)

(IN THOUSANDS)

F-76

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999

(UNAUDITED)

(IN THOUSANDS)

F-77

CONDENSED CONSOLIDATING STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

(UNAUDITED)

(IN THOUSANDS)

F-78

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
AS OF DECEMBER 31, 2001

(UNAUDITED)

(IN THOUSANDS)

F-79

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
AS OF DECEMBER 31, 2000

(UNAUDITED)

(IN THOUSANDS)

F-80

F-81

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOW
AS OF DECEMBER 31, 1999

(UNAUDITED)

(IN THOUSANDS)

F-82

QUARTERLY FINANCIAL DATA (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

(1) Operating expenses include charges of approximately $4.5 million in the
second quarter of 2001, $1.2 million in the third quarter of 2001, $1.7
million in the fourth quarter of 2001, and $3.6 million in the third
quarter of 2000 related to the realizability of the Company's
inventory.
(2) Loss per share calculations for each of the quarters are based on the
weighted average number of shares outstanding for each of the periods,
and the sum of the quarters is not equal to the full year loss per
share amount.
(3) Until January 14, 2002, the Company's Common Stock was listed under the
symbol MTNT on the Nasdaq National Market System. The Company
voluntarily delisted from Nasdaq's National Market on January 14, 2002
as a result of its Chapter 11 bankruptcy filing. The Company's Common
Stock is currently traded under the symbol MTNTQ on the Nasdaq
over-the-counter bulletin board quotation system. The quarterly high
and low sales price represents the intra-day prices in the Nasdaq
National Market System. The quotations represent inter-dealer
quotations, without retail markups, markdowns or commissions, and may
not necessarily represent actual transactions. As of March 21, 2001,
there were 678 stockholders of record of the Company's Common Stock.

F-83

SELECTED FINANCIAL DATA

Set forth below is the selected financial data for the Company for the five
fiscal years ended December 31, 2001. The Company's significant acquisitions in
recent years, the sale of the satellite assets to MSV in 2001, the sale of the
retail transportation assets to Aether Systems in 2000, and the impact of
consolidating the result of XM Radio for 2000, make period to period comparison
of the Company's financial results less meaningful; and, therefore, you should
not rely on them as an indication of future operating performance. For a more
complete discussion of these transactions, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations - General - The
Current and Former Components of Motient's Business."

- ----------

(1) The Company has paid no dividends on its Common Stock since inception and
does not plan to pay dividends on its Common Stock in the foreseeable
future. In addition, the payment of dividends is subject to restrictions
described in Note 8 and Note 17 to the financial statements and discussed in
Management's Discussion and Analysis.

F-84

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Motient Corporation

We have audited, in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements of Motient
Corporation and Subsidiaries (a Delaware corporation) included in this Form
10-K and have issued our report thereon dated March 19, 2002. Our audits were
made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The schedules listed in Item 14 are the responsibility of
the Company's management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in
our opinion, fairly state, in all material respects, the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.

/s/ Arthur Andersen LLP
Vienna, Virginia,
March 19, 2002

S-1

SCHEDULE I

MOTIENT CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS

S-2

SCHEDULE I

MOTIENT CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY ONLY)
Condensed Statements of Operations

S-3

SCHEDULE I

MOTIENT CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY ONLY)
Condensed Statements of Cash Flows

S-4

SCHEDULE I

MOTIENT CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(PARENT COMPANY ONLY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE A -- BACKGROUND AND BASIS OF PRESENTATION

Motient Corporation ("Motient" or the "Company") is a holding company that
presently has four wholly-owned subsidiaries and an interest in Mobile Satellite
Ventures LP ("MSV"). Motient Communications Inc. ("Motient Communications") owns
the assets comprising Motient's core wireless business. The other three
subsidiaries hold no material operating assets other than the stock of other
subsidiaries or Motient's interests in MSV. The Company's indirect, less-than
50% interest in MSV is not consolidated with Motient including for financial
statement purposes.

Motient Communications provides two-way mobile communications services
principally to business-to-business customers and enterprises, serving a
variety of markets including mobile professionals, telemetry, transportation,
and field service. Motient Communications also provides its eLink(sm) brand
two-way wireless email services to customers accessing email through
corporate servers, Internet Service Providers ("ISP"), Mail Service Provider
("MSP") accounts, and paging network suppliers, and also offers its
BlackBerry(TM) by Motient wireless email solution, developed by Research In
Motion ("RIM") and licensed to operate on Motient Communication's network.
BlackBerry(TM) by Motient is designed for large corporate accounts operating
in a Microsoft Exchange or Lotus Notes environment and contains advanced
encryption features.

Motient Communications is devoting its efforts to expanding its wireless
business. This effort involves substantial risk. Future operating results will
be subject to significant business, economic, regulatory, technical, and
competitive uncertainties and contingencies. Depending on their extent and
timing, these factors, individually or in the aggregate, could have an adverse
effect on the Company's financial condition and its ability to meet future debt
service obligations or to pay dividends. The Company has not paid any dividends
since inception and does not plan on paying dividends on its Common Stock in the
foreseeable future.

Certain factors have placed significant pressures on the Company's financial
condition and liquidity position, especially in recent periods. For a variety of
reasons, the Company's subsidiaries have not been able to accelerate revenue
growth at the pace required to enable them to generate cash in excess of their
operating expenses. These factors include competition from other wireless data
suppliers and other wireless communications providers with greater resources,
cash constraints that have limited Motient Communication's ability to generate
greater demand, unanticipated technological and development delays, and general
economic factors. During 2001, in particular, Motient

S-5

Communication's efforts were also hindered by the downturn in the economy and
capital markets. These factors contributed to the Company's decision to file a
voluntary petition for reorganization under Chapter 11 of the United States
Federal Bankruptcy Code in January 2002. See "Motient's Chapter 11 Filing"
below.

XM RADIO

As of December 31, 2000, Motient had an equity interest of approximately 33.1%
(or 21.3% on a fully diluted basis) in XM Satellite Radio Holdings Inc. ("XM
Radio"), a public company; and, as of December 31, 2000 the Company controlled
XM Radio through Board of Director membership and common stock voting rights. As
a result, all of XM Radio's results for the period from July 7, 1999, (the date
Motient acquired 100% voting interest of XM Radio) through December 31, 2000
have been included in the Company's consolidated financial statements. Prior to
July 7, 1999, the Company's investment in XM Radio was accounted for pursuant to
the equity method of accounting.

In January 2001, pursuant to Federal Communications Commission ("FCC") approval
authorizing Motient to relinquish control of XM Radio, the number of directors
appointed by the Company to XM Radio's Board of Directors was reduced to less
than 50% of XM Radio directors, and the Company converted a portion of its
super-voting Class B Common Stock of XM Radio to Class A Common Stock. As a
result, the Company ceased to control XM Radio, and, for the period from January
1, 2001, through November 19, 2001, accounted for its investment in XM Radio
pursuant to the equity method of accounting. As described below, as of
November 19, 2001, the Company ceased to own any shares of XM Radio common
stock.

MOBILE SATELLITE VENTURES LP

On June 29, 2000, the Company formed a joint venture subsidiary, Mobile
Satellite Ventures LP, ("MSV"), in which it owned, until November 26, 2001, 80%
of the membership interests. The remaining 20% interests in MSV were owned by
three investors unrelated to Motient; however, the minority investors had
certain participating rights which provided for their participation in certain
business decisions that were made in the normal course of business; therefore,
in accordance with Emerging Issues Task Force Issue No 96-16, the Company's
investment in MSV has been recorded for all periods presented pursuant to the
equity method of accounting.

On November 26, 2001, a subsidiary of the Company, Motient Services Inc.
("Motient Services") sold the assets comprising its satellite communications
business to MSV, as part of a transaction in which certain other parties joined
MSV, including TMI Communications and Company Limited Partnership ("TMI"), a
Canadian satellite services provider. In consideration for its satellite
business assets, Motient Services received the following: (i) a $24 million cash
payment in June 2000, (ii) a $45 million cash payment paid at closing, of which
$4 million was held by MSV to fund Motient Services' future real estate sublease
from MSV, for rent and utilities, and (iii) a 5-year $15 million note. In this
transaction, TMI also contributed its satellite communications

S-6

business assets to MSV. In addition, the Company purchased a $2.5 million
convertible note issued by MSV, and certain other investors, including a
subsidiary of Rare Medium Group, Inc. ("Rare Medium"), purchased a total of
$52.5 million of convertible notes. As of December 31, 2001, the Company had a
ownership percentage, on an undiluted basis, of approximately 48% of MSV.

Assuming that all of MSV's convertible notes are converted into limited
partnership units of MSV, Motient would have a 33.3% equity interest in MSV.

MSV has also filed a separate application with the FCC with respect to MSV's
plans for a new generation satellite system utilizing ancillary terrestrial base
stations. Within 90 days of the receipt of approval and final order from the
FCC, and provided that such approval occurs by March 31, 2003, certain of the
investors (excluding Motient) in MSV will invest an additional $50 million in
MSV and receive additional equity interests. Upon consummation of such
additional investment, an $11.5 million note, issued by MSV to TMI and the $15
million note to Motient Services will be repaid in full, and Motient's ownership
interest in MSV will be reduced to approximately 25.5%.

MERGER AGREEMENT WITH RARE MEDIUM GROUP, INC.

On May 14, 2001, the Company signed a definitive merger agreement with Rare
Medium pursuant to which the Company would acquire Rare Medium. On October 1,
2001, the Company and Rare Medium announced their mutual termination of the
merger. The Company recorded a charge of $4.1 million in 2001 representing costs
incurred by the Company to pursue this transaction.

INVESTMENT IN SUBSIDIARIES

In the Company-only financial statements, the Company's investment in
subsidiaries is stated at cost less losses of subsidiaries. The net loss of
subsidiaries is included in these financial statements using the equity method
of accounting. Certain amounts have been reclassified from prior years to
reflect the push down of interest expense related to the Revolving Credit
Facility (see below) held by its subsidiaries. The Company has entered into
various transactions with its subsidiaries which have not been eliminated in the
December 31, 2001 audited consolidated financial statements and are summarized
as follows:

S-7

NOTE B -- INVESTMENT IN SUBSIDIARIES AND LIQUIDITY AND FINANCING REQUIREMENTS

As stated in Note A, the Company records its investment in subsidiaries on the
equity method of accounting. The recoverability of the Company's investments is
subject to the risks associated with expanding a developing business.
Specifically, future operating results will be subject to significant business,
economic, regulatory, technical, and competitive uncertainties and
contingencies. Depending on their extent and timing, these factors, individually
or in the aggregate, could have an adverse effect on the subsidiaries' financial
condition and future results of operations.

LIQUIDITY AND FINANCING REQUIREMENTS

As described below under "Motient's Chapter 11 Filing," in January 2002, the
Company filed a voluntary petition for reorganization under Chapter 11 of the
Federal Bankruptcy Code. One of the principal goals of the reorganization
process is to significantly deleverage Motient's balance sheet, and the balance
sheet of Motient's subsidiary, Motient Holdings Inc. ("Motient Holdings") which
has senior notes outstanding in the amount of $335 million, so that Motient's
and Motient Holdings' ongoing interest expense is substantially reduced.

If Motient's plan of reorganization is confirmed, a newly formed,
wholly-owned subsidiary of the Company, which would have no operations, would
have approximately $19.0 million of debt due to Rare Medium. Additionally,
the court may, at its discretion, allow certain other claims to become
indebtedness of this new subsidiary; however, the Company does not believe
that the total debt remaining at this new subsidiary would be in excess of
$21.0 million. The Company would not be a guarantor of any of this debt. The
Company is, however, a guarantor to certain other capital leases and vendor
financing held by Motient Communications in the amount of $12.3 million.

There can be no assurance that the operations of Motient Communications will
become profitable, and no assurance can be made that operating cash flow will
be adequate to fund the principal and interest payments, if any, under the
Company's post-reorganization indebtedness when due.

During 2001, the Company executed the following liquidity-related transactions
and initiatives to assist in funding Motient Communications and Motient
Services, and to reduce its debt and that of Motient Holdings:

o In January and February 2001, the Company sold, in two separate
transactions, 2 million shares of its XM Radio Class A Common Stock, at
an average price of $16.77 per share, for total proceeds of $33.5
million. Approximately $8.5 million of the proceeds were used to repay
and permanently reduce its bank financing.

o In the second and third quarters of 2001, the Company received a total
of $50 million from Rare Medium, and issued Rare Medium notes payable
for such amount at 12.5% annual interest. Of

S-8

the total of $50 million that the Company received, it used $12.25
million to repay and permanently reduce its bank financing, and $36.75
million was used to fund general operations. These notes were
collateralized by 5 million of the Company's XM Radio shares. On
October 12, 2001, in accordance with the terms of the notes, the
Company repaid $26.2 million of the Rare Medium notes, representing
$23.8 million in principal and $2.4 million of accrued interest, in
exchange for 5 million of the Company's XM Radio shares. The $26.9
million of principal and accrued interest remaining outstanding at
December 31, 2001 is unsecured.

o On November 6, 2001, the agent for the bank lenders under the Company's
term loan facility and revolving credit facility (the "Bank Financing")
declared all loans under the Bank Financing immediately due and
payable, due to the existence of several events of default under the
Bank Financing. On the same date, the bank lenders sought payment in
full from Hughes Electronics Corporation, Singapore Telecommunications,
Ltd. and Baron Capital Partners, L.P. (collectively, the "Bank
Guarantors") for the accelerated loan obligations. The Bank Guarantors
repaid all such loans on November 14, 2001 in the amount of
approximately $97.6 million. As a result, the Company had a
reimbursement obligation to the Bank Guarantors in the amount of $97.6
million, which included accrued interest and fees.

On November 19, 2001, the Company sold 500,000 shares of its XM Radio
common stock through a broker for $9.50 per share, for aggregate
proceeds of $4.75 million. The net proceeds from this sale were paid
to the Bank Guarantors, thereby reducing the amount of the Company's
reimbursement obligation to the Bank Guarantors by such amount. Also on
November 19, 2001, the Company delivered all of its remaining 9,257,262
shares of XM Radio common stock to the Bank Guarantors in full
satisfaction of the entire remaining amount of our reimbursement
obligations to the Bank Guarantors. Upon delivery of these shares, the
Bank Guarantors released the Company from all of its remaining
obligations to the Bank Guarantors under the Bank Financing and the
related guarantees and reimbursement and security agreements.

As a result of the delivery of the shares of XM Radio common stock
described above, the maturity of the Rare Medium Notes was accelerated
to November 19, 2001.

On December 28, 2001, the Company negotiated the release of a $10 million escrow
held by Motorola, Inc. ("Motorola") in accordance with a customer guarantee.
Motorola applied a portion of this escrow to accounts payable for maintenance
work and past-due payments under a financing agreement between Motient
Communications and Motorola. Approximately $4.9 million of the balance of the
escrow was released to Motorola and will be used to fund future maintenance
costs that Motient Communications incurs under its maintenance contract. It is
expected that this balance will be fully utilized by the end of the third
quarter of 2002.

S-9

MOTIENT'S CHAPTER 11 FILING

On October 1, 2001, Motient Holdings announced that it would not make a
$20.5 million semi-annual interest payment due on its senior notes on such
date. On November 26, 2001, the senior note trustee declared all amounts
owed under the senior notes immediately due and payable.

Following these events, the Company determined that the continued viability of
its business required restructuring its highly leveraged capital structure. In
October 2001, the Company retained Credit Suisse First Boston ("CSFB") as
financial advisors to assist in restructuring the Company's debt. Shortly
thereafter, the Company and CSFB began meeting with the principal creditor
constituencies, represented by (a) the Bank Guarantors, (b) an informal
committee (the "Informal Committee") representing the holders of the 12.25%
senior notes due 2008 issued by Motient Holdings, and (c) Rare Medium.

In January 2002, the Company and the Informal Committee reached an agreement in
principle with respect to the primary terms of a plan of reorganization of
Motient and its principal subsidiaries, and on January 10, 2002, the Company
filed for protection under Chapter 11 of the United States Bankruptcy Code.
The Company's Amended Joint Plan of Reorganization was filed with the U.S.
Bankruptcy Court for the Eastern District of Virginia on February 28, 2002.
The cases are being jointly administered under the case name "In Re Motient
Corporation, et. al.," Case No. 02-80125.

The plan generally provides that holders of the senior notes will exchange their
notes for new Motient stock to be issued pursuant to the plan. Shares of common
stock held by existing common stockholders will be cancelled, and the existing
common stockholders will receive warrants with a nominal strike price to
purchase 5 percent of the new common stock (on a fully diluted basis) in the
reorganized company. The warrants will have a term of two years and will be
exercisable once the holders of the senior notes have recovered 105 percent of
the face amount of their investment. Warrants or options to purchase existing
common stock that are outstanding as of the effective date will be cancelled.

EFFECTS OF THE CHAPTER 11 FILING

While the Company is pursuing a financial restructuring through the Chapter 11
filing, it is not able to predict when or if it will be able to complete and
satisfactorily implement its restructuring plan. There can be no assurance that
the Company will be able to achieve a satisfactory restructuring of its capital
structure or that it will be able to continue as a going concern.

The hearing date for the confirmation of the Company's plan of reorganization is
scheduled for April 25, 2002. If the plan is confirmed on that date, the Company
would expect the reorganization to be effective by mid-May; however, there are
several factors that are outside of the Company's control

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that could adversely affect that schedule.

Further details regarding the Plan are contained in Motient's Disclosure
Statement with respect to the Plan, which is filed as Exhibit 10.61 to this
Annual Report.

SUMMARY OF LIQUIDITY AND FINANCING SOURCES FOR THE CORE WIRELESS BUSINESS

If the Company is successful in restructuring a substantial portion of
its debt, it anticipates that the funding requirements of its wholly-owned
subsidiaries through 2002 would be met with cash on hand, net cash from
operations, and proceeds realized through the sale of inventory relating to
eLink and BlackBerry(TM). The Company's projected cash requirements are based on
certain assumptions about the Company's business model and projected growth
rate, including, specifically, assumed rates of growth in subscriber activations
and assumed rates of growth of service revenue. While the Company believes these
assumptions are reasonable, these growth rates are difficult to predict and
there is no assurance that the actual results that are experienced will meet the
assumptions included in the Company's business model and projections. If the
results of operations are less favorable than currently anticipated, the
Company's cash requirements will be more than projected, and it will require
additional financing in amounts that may be material. The type, timing and terms
of financing that the Company selects will be dependent upon its cash needs, the
availability of financing sources and the prevailing conditions in the financial
markets. The Company cannot guarantee that additional financing sources will be
available at any given time or available on favorable terms.

Additionally, the Company believes that $15.0 million (plus accrued interest),
less any amount required to be used to prepay the note payable to Rare Medium,
would be available to the operating subsidiaries upon the second closing of the
MSV transaction and the associated repayment of the note that was issued at the
November 2001 closing of the MSV transaction. This second closing and note
repayment is contingent upon the FCC's approval and final order of MSV's
terrestrial re-use application, which may not occur by the time the Company
would need the funds, or may not occur at all.

The Company's consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The successful implementation of
the Company's business plan requires substantial funds to finance the
maintenance and growth of its operations, network and subscriber base and to
expand into new markets. The Company has an accumulated deficit and has
historically incurred losses from operations which are expected to continue for
additional periods in the future. There can be no assurance that its operations
will become profitable. These factors, along with the Company's negative
operating cash flows have placed significant pressures on the Company's
financial condition and liquidity position, resulting in the Company seeking a
financial restructuring through a Chapter 11 filing, and create substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments relating to the

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possible effects on the recoverability and classification of assets or amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

NOTE C -- DEBT

RARE MEDIUM NOTES

In 2001 Motient received a total of $50 million from Rare Medium, and issued
Rare Medium notes payable for such amount at 12.5% annual interest. These notes
were collateralized by 5 million of the Company's XM Radio shares. On October
12, 2001, in accordance with the terms of the notes, the Company repaid $26.2
million of the Rare Medium notes, representing $23.8 million in principal and
$2.4 million of accrued interest, in exchange for 5 million of its XM Radio
shares. The $26.9 million of principal and accrued interest remaining
outstanding at December 31, 2001 is unsecured.

As a result of the delivery of the shares of XM Radio common stock described
above (see Note 1 Liquidity and Financing Requirements), the maturity of the
Rare Medium Notes was accelerated to November 19, 2001. The Rare Medium note is
currently in default. Under the Company's plan of reorganization, the Company
expects that the Rare Medium notes will be cancelled and replaced by a new note
in the principal amount of $19.0 million. The new note will be issued by a new
subsidiary of Motient Corporation that will own 100% of Motient Ventures Holding
Inc., which owns all of the Company's interests in MSV. The new note will have a
term of 3 years and will carry interest at 9%. The new note would allow the
subsidiary to elect to accrue interest and add it to the principal, instead of
paying interest in cash. The note will require that it be prepaid using 25% of
the proceeds of any repayment of the $15 million note from MSV.

BANK FINANCING

In March 1998, the Company entered into a $200 million Bank Financing consisting
of two facilities: (i) the Revolving Credit Facility, held by Motient Holdings,
a $100 million unsecured five-year reducing revolving credit facility maturing
March 31, 2003, and (ii) the Term Loan Facility, held by the Company, a $100
million five-year, term loan facility with up to three additional one-year
extensions subject to the lenders' approval. In 1999, the Term Loan Facility was
reduced to $41 million. In 2000, the Term Loan Facility was reduced to $40
million, and the Revolving Credit Facility was reduced to $77.25 million. During
2001, the Bank Financing was completely extinguished.

THE TERM LOAN FACILITY

The Term Loan Facility bore an interest rate, generally, of 100 basis points
above London Interbank Offered Rate ("LIBOR"). The Term Loan Agreement did not
include any scheduled amortization until maturity, but did contain certain
provisions for prepayment based on certain proceeds received by the Company,
unless otherwise waived by the banks and the Bank Facility Guarantors.

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THE REVOLVING CREDIT FACILITY

The Revolving Credit Facility bore an interest rate, generally, of 100 basis
points above LIBOR and was unsecured, with a negative pledge on the assets of
Motient Holdings and its subsidiaries and ranked pari passu with the Senior
Notes. Certain proceeds received by Motient Holdings were required to repay
and reduce the Revolving Credit Facility, unless otherwise waived by the banks
and the Bank Facility Guarantors.

THE GUARANTEES

In connection with the Bank Financing, Hughes Electronics Corporation, Singapore
Telecommunications, Ltd. and Baron Capital Partners, L.P. (collectively, the
"Bank Facility Guarantors"), extended separate guarantees of the obligations of
each of Motient Holdings and the Company to the banks, which on a several basis
aggregated to $200 million. In their agreement with each of Motient Holdings and
the Company (the "Guarantee Issuance Agreement"), the Bank Facility Guarantors
agreed to make their guarantees available for the Bank Financing. In exchange
for the additional risks undertaken by the Bank Facility Guarantors in
connection with the Bank Financing, the Company agreed to compensate the Bank
Facility Guarantors, principally in the form of 1 million additional warrants
and re-pricing of 5.5 million warrants previously issued in connection with the
original Bank Facility (together, the "Guarantee Warrants"). The Guarantee
Warrants were issued with an exercise price of $12.51 and were valued at
approximately $17.7 million. The amounts initially assigned to the Guarantee
Warrants and subsequent repricings are recorded as Common Stock Purchase
Warrants and Unamortized Guarantee Warrants in the accompanying consolidated
balance sheets. The amount assigned to Unamortized Guarantee Warrants was
amortized to interest expense over the life of the related debt. On March 29,
1999, the Bank Facility Guarantors agreed to eliminate certain covenants
contained in the Guarantee Issuance Agreement relating to earnings before
interest, depreciation, amortization, and taxes ("EBITDA") and service revenue.
In exchange for this elimination of covenants, the Company agreed to re-price
their Guarantee Warrants, effective April 1,1999, from $12.51 to $7.50. The
value of the re-pricing was approximately $1.5 million.

As a result of the automatic application of certain adjustment provisions
following the issuance of the 7.0 million shares in the August 1999 public
offering, the exercise price of the Guarantee Warrants was reduced to $7.3571
per share and the Guarantee Warrants became exercisable for an additional
126,250 shares. The additional Guarantee Warrants and re-pricing were valued at
$2.4 million. Additionally, in June 2000, the Bank Facility Guarantors agreed to
partially reduce the debt repayment requirements associated with the MSV
transaction. In exchange, the Company further reduced the price of the Guarantee
Warrants to $6.25, which was valued at $1.4 million. In 2001, the Bank Facility
Guarantors agreed to waive certain repayment obligations under the Bank
Financing. In exchange for these waivers, the Company repriced the warrants held
by certain of the Bank Facility Guarantors from $6.25 to $1.31 per share, and
issued new warrants to one Bank Facility

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Guarantor with an exercise price of $1.31 per share. The value of the repricing
and warrant issuance was $2.3 million.

Further, in connection with the Guarantee Issuance Agreement, the Company had
agreed to reimburse the Bank Facility Guarantors in the event that the
Guarantors were required to make payment under the Bank Financing guarantees,
and, in connection with this reimbursement commitment it provided the Bank
Facility Guarantors a junior security interest with respect to the assets of the
Company, principally its stockholdings in XM Radio and Motient Holdings.

DEBT EXTINGUISHMENTS

In 1999, the Company raised $116 million, net of underwriting discounts and
expenses, through the issuance of 7.0 million shares of common stock in a public
offering. Of the net proceeds, $59 million was used to pay down a portion of the
Term Loan Facility. In 2000, the Company paid down and permanently reduced the
Term Loan Facility by an additional $1 million with proceeds from stock and
warrant exercises, and the Revolving Credit Facility was permanently reduced by
$22.8 million with a portion of the proceeds from the sales of certain of
Motient Services' satellite assets. In 2001, the Company sold 2.5 million shares
of XM Radio stock and used $8.5 million of he proceeds to permanently reduce the
Term Loan Facility. Additionally, $12.25 million of proceeds from the Rare
Medium Note were used to pay down and permanently reduce the Term Loan Facility.

On November 6, 2001, the agent for the bank lenders under the Bank Financing
declared all loans under the Bank Financing immediately due and payable, due to
the existence of several events of default under the Bank Financing. On the same
date, the bank lenders sought payment in full from the Bank Financing Guarantors
for the accelerated loan obligations. The Bank Facility Guarantors repaid all
such loans on November 14, 2001 in the amount of approximately $97.6 million. As
a result, the Company had a reimbursement obligation to the Bank Guarantors in
the amount of $97.6 million, which included accrued interest and fees.

On November 19, 2001, the Company sold 500,000 shares of its XM Radio common
stock through a broker for $9.50 per share, for aggregate proceeds of $4.75
million. The net proceeds from this sale were paid to the Bank Facility
Guarantors, thereby reducing the amount of its reimbursement obligation to the
Bank Facility Guarantors by such amount. Also on November 19, 2001, the Company
delivered all of its remaining 9,257,262 shares of XM Radio common stock to the
Bank Facility Guarantors in full satisfaction of the entire remaining amount of
its reimbursement obligations to the Bank Facility Guarantors. Upon delivery of
these shares, the Bank Facility Guarantors released the Company from all of its
remaining obligations to the Bank Facility Guarantors under the Bank Financing
and the related guarantees and reimbursement and security agreements. The
Company delivered 7,108,184 shares to Hughes Electronics Corporation, 964,640
shares to Singapore Telecommunications, Ltd., and 1,184,438 shares to Baron
Capital Partners, L.P.

As a result of the permanent reductions of the Term Facility, the Company
recorded an extraordinary

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gain on extinguishment of debt of approximately $0.3 million in 2001, a loss of
$0.1 million in 2000 and a loss of $12.1 million in 1999, which reflects the
write-off, on a pro-rata basis, of unamortized Guarantee Warrants and deferred
financing fees associated with the placement of the Bank Financing.

INTEREST RATE SWAP AGREEMENT

In connection with the Bank Financing, the Company entered into an interest rate
swap agreement, with an implied annual rate of 6.51%. The swap agreement reduces
the impact of interest rate increases on the Term Loan Facility. The Company
paid a fixed fee of approximately $17.9 million for the swap agreement. In
return, the counter-party is obligated to pay a variable rate equal to LIBOR
plus 50 basis points, paid on a quarterly basis directly to the respective banks
on behalf of the Company, on a notional amount of $100 million until the
termination date of March 31, 2001. In connection with the pay down of a portion
of the Term Loan Facility during 1999, the Company reduced the notional amount
of its swap agreement from $100 million to $41 million and realized net proceeds
of approximately $6 million due to early termination of a portion of the swap
agreement. The interest rate swap expired in March 2001.

All wholly owned subsidiaries of the Company are subject to financing agreements
that limit the amount of cash dividends and loans that can be advanced to the
Company. At December 31, 2001, all of the subsidiaries' net assets were
restricted under these agreements. These restrictions will have an impact on the
Company's ability to pay dividends.

NOTE D -- SUBSEQUENT EVENTS

On January 10, 2002, the Company and certain of its subsidiaries filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. The Company's Amended
Joint Plan of Reorganization was filed with the U.S. Bankruptcy Court for the
Eastern District of Virginia on February 28, 2002. The cases are being jointly
administered under the case name "In Re Motient Corporation, et. al.," Case No.
02-80125.

The plan generally provides that holders of the senior notes will exchange their
notes for new Motient stock to be issued pursuant to the plan. Shares of common
stock held by existing common stockholders will be cancelled, and the existing
common stockholders will receive warrants with a nominal strike price to
purchase 5 percent of the new common stock (on a fully diluted basis) in the
reorganized company. The warrants will have a term of two years and will be
exercisable once the holders of the senior notes have recovered 105 percent of
the face amount of their investment. Warrants or options to purchase existing
common stock that are outstanding as of the effective date will be cancelled.

Further details regarding the plan are contained in Motient's Disclosure
Statement with respect to the Plan, which is filed as Exhibit 10.61 to this
Annual Report on Form 10-K.

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