Back to GetFilings.com

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

Form 10-K

Commission file number 000-31511

@Road, Inc.
(Exact name of registrant as specified in its charter)

47071 Bayside Parkway
Fremont, CA 94538
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: 510-668-1638

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

Securities registered pursuant to Section 12(g) of the Act:
Common Stock

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

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

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

        The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $286,024,748 as of June 30, 2004, based upon the closing sale price on the Nasdaq National Market reported for such date. Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

        There were 54,846,967 shares of the registrant's Common Stock issued and outstanding as of February 28, 2005.

DOCUMENTS INCORPORATED BY REFERENCE

        Part III incorporates information by reference from the definitive proxy statement to be filed in connection with the registrant's 2005 annual meeting of stockholders.

TABLE OF CONTENTS

        Except for the historical information contained in this Report, the matters discussed in this Report are forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, but are not limited to, fluctuations in quarterly results, customer acceptance of our products and services, our ability to adapt to rapid technological change, our dependence on wireless networks, network infrastructure and positioning systems owned and controlled by others and general economic and political conditions. Further information regarding these and other risks is included in this Report and in our other filings with the Securities and Exchange Commission ("SEC").

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

PART I

Item 1.    Business

Overview

        We are a leading provider of mobile resource management solutions, a rapidly growing category of business productivity solutions that enable the effective management of mobile resources. We market and sell our solutions to a broad range of customers in the United States and Canada that vary in size, geographic location and industry. For the year ended December 31, 2004, total revenues increased to $75.2 million.

        On February 18, 2005, we acquired all of the outstanding shares of Vidus Limited ("Vidus"), a provider of dynamic field service automation solutions located in Ipswich, United Kingdom. The acquisition is intended to allow us to integrate technology for dynamic scheduling, dispatching, routing and appointment booking of mobile workers, and we intend to expand our business to Europe and other international markets.

        In exchange for all of the outstanding shares of Vidus capital stock, we issued approximately 5.5 million shares of our common stock valued at $38.2 million and newly created interest-bearing redeemable preferred stock in the face amount of approximately $10.2 million, extinguished for cash existing debt of approximately $4.6 million and issued approximately 146,000 vested options with a fair value of $532,000. Under the terms of the stock option grants, each option has been classified as a non-qualified stock option, is fully vested, has an exercise price ranging from $0.67 to $2.00 per share and generally has a one-year term. In addition, we extinguished for cash other existing debt of approximately $926,000. The purchase price also included estimated direct transaction costs of $1.3 million.

The @Road Solution

        Our mobile resource management ("MRM") solutions allow customers to improve productivity by enabling the effective management of the activities of their mobile workers, assets, goods and services. In addition, our solutions are designed to enable customers to increase the utility of their mobile resources and decrease their costs of operations by facilitating business processes, such as event confirmation, signature verification, forms processing, project management and timekeeping while their workers are in the field. Our solutions also provide location, reporting, dispatch, messaging, and other management services and are designed to be easy to implement and use. Our customers can manage their mobile workers in several ways, including by logging onto our website, receiving their data directly into their existing software applications, using any telephone to access our speech-to-text voice portal or requesting information from our data centers using application programming interfaces.

2

        The foundation of our solutions is our LocationSmart technology platform that combines wireless communications, Global Positioning System ("GPS") technology, hosted software applications and Internet technologies. The information technology infrastructure and network application software used in our LocationSmart technology platform reside on servers located in data centers in Virginia and California and our network operations center in California. Because we host our solutions, our customers do not need to make a substantial investment in acquiring and supporting capital equipment, such as software and data networking equipment, to use our solutions. The LocationSmart technology platform is depicted in Figure 1.

Figure 1

        Our service delivery architecture is designed to serve a growing number of users with increasing data transmission volumes without compromising performance, delivery times or data accuracy. Because key technology components of our solutions can be expanded to accommodate additional users, as in the case of wireless networks or the Internet, or are designed to accommodate a practically unlimited number of users, as in the case of GPS, we believe that we can support a significantly expanding customer base.

        We believe that customers use an anticipated or expected return on investment as a primary selection criterion when evaluating MRM solutions. We believe that the benefits of our solutions that drive a rapid return on investment for our customers include the following:

•

Improved productivity of mobile resources.    Customers use location, personalized mapping landmarks and path sequencing features to maximize the time spent completing work orders in the field and to minimize non-productive time. Customers also monitor the progress of jobs in

3

the field and re-allocate resources to better meet project deadlines. Customers measure improvements in their mobile workers' productivity from using our solutions in many ways, including by an increase in the number of jobs a mobile worker can complete per day or by the increase in revenue earned by a mobile worker per day.

•

Decreased costs of operations of mobile resources.    Customers use our two-way communications services for low-cost transmission of completed business forms, signature verification and messaging. Customers also use our services to automatically monitor and schedule maintenance activities for assets in the field. Customers measure decreases in their costs from using our solutions in many ways, including by a decrease in the cost of having a mobile worker in the field or by a decrease in the cost of insuring mobile workers and assets.



•

Improved efficiency of a customer's overall operations.    Customers use our solutions to capture timekeeping, workflow and inventory information in the field. This information can be delivered directly to our customers' existing software applications or downloaded from our website and imported into a payroll or customer invoicing system. These services can minimize the need for back-office data entry services, minimize data entry errors and accelerate invoicing processes. Customers measure improvements in their efficiency from using our solutions in many ways, including by a decrease in costs of general and administrative expenses and by a reduction in the number of days of outstanding accounts receivable.



•

Improved responsiveness to our customers' customers.    Customers use location and workflow information to update our customers' end-customers about pending work orders or deliveries. Our customers also use our location-on-demand feature to assign a pending work order to the closest or best-equipped mobile worker to provide the quickest response that meets the end-customer's demands. Customers enhance their customer relationship management operations by accessing stored information about end-customers, including workflow data records, audit trails of mobile worker messages, and daily mobile worker activity data. Customers measure improvements in their responsiveness from using our solutions in many ways, including by a reduction in aged receivables and by an improvement in internal customer satisfaction indexes.

        In addition, we offer multi-year subscription contracts and hardware purchase plans that allow our customers to pay us on a monthly basis and minimize upfront cash commitments. We believe a monthly payment subscription model further accelerates a customer's return on investment in our solutions.

Strategy

        We believe that leaders in the MRM market are evaluated on a number of criteria, including size, technology leadership, financial strength, strength of customer base, strategic relationships with wireless carriers and management experience. We believe that based on these criteria, we are a leader in the MRM market. Our objective is to enhance our leadership position in the MRM market. Key elements of our strategy are:

•

Further penetrate vertical markets in which we have or are developing leading reference customers.    We have developed relationships with leading companies in selected vertical markets, such as telecommunications and construction. We are leveraging our relationships with these customers and our knowledge of their MRM needs to attract other potential medium- to large-sized customers in these markets. In other vertical markets, we intend to replicate the model of deploying our solutions with a leading reference customer and leveraging this relationship and our MRM market expertise to attract other customers in those markets.



•

Create new value-added services for our customers.    We will continue to add new features and functionality to our solutions and develop new platforms that take advantage of improvements that are being made in wireless communications. We expect to continue to release new features

4

that synthesize the information currently retrieved by our existing services and which arise from working closely with our customers. We expect some of these features to be incorporated into our services as free enhancements, while others will be offered for additional fees. We intend to continue to use our global capabilities to help develop and support new features and functionality for our solutions. In addition, we are continuing to develop an open platform architecture to allow our customers and partners to integrate third-party applications with our solutions.

•

Expand our solutions internationally.    We intend to identify new geographic markets for which our solutions and our LocationSmart technology platform satisfy evolving customer demands. We believe that leveraging our technology leadership position, our experience with customers in the United States and Canada and the distribution resources of established vendors and wireless carriers will help us to establish customer awareness and acceptance of our solutions in international markets.



•

Acquire complementary businesses and technologies.    We intend to supplement our subscriber base, revenue and solutions by selectively acquiring complementary businesses and technologies.

        We continually evaluate opportunities to accelerate our growth and broaden our market share in the United States and abroad.

@Road Solutions

        Our current family of MRM solutions includes GeoManager, GeoManager PE, @Road Pathway iLM, @Road Pathway PE and @Road Portico iLM. In addition, we offer solutions comprised of bundled services that are designed to meet the needs of customers in a variety of vertical markets, including telecommunications, field service, construction, facilities/waste management, freight and passenger transportation, courier/delivery, distribution, cable/broadband and utilities. Taken together, our solutions are designed to meet the needs of customers of all sizes in our target vertical markets.

        Our solutions provide current and historical data relating to a customer's mobile resources in a variety of formats, including activity reports, maps and completed business forms. We provide these formats in a standard configuration, and customers can configure certain elements and views to help achieve compliance with their internal business rules. Customers can choose to submit queries through our applications to create reports and views on demand or they can have reports delivered on a pre-scheduled basis. Customers can also download reports to manipulate and store data as desired. Mobile resource data is typically stored by us for 30 to 45 days, but is stored for longer periods for customers that purchase our extended data storage service.

        We commence implementation of our solutions with the deployment of a device to each of the customer's mobile resources. We call each mobile resource with such a device a "subscriber." Our services operate with two device types:

•

A mobile worker can use our proprietary hardware device that integrates a GPS receiver and a wireless modem and which includes embedded operating and diagnostic software. This hardware device is called an Internet Location Manager ("iLM"). We offer several different models of iLM devices. An iLM is installed in a mobile worker's vehicle. Installation is typically completed in less than one hour and is performed by our subcontracted installation agents.

5

•

A mobile worker can use certain location- or wireless application protocol-enabled mobile telephones offered by several wireless carriers. Customers download our software into these mobile telephones as part of implementing our solutions.

        These devices send and receive a variety of information from time to time and on demand. Such data include location, velocity, time and operational diagnostics. These data are transmitted to our data centers using wireless networks and the Internet. If a wireless connection to a device is not available, then the device will store up to five days of captured data and seek to transmit the data when a wireless connection is available.

        The following table describes our current family of MRM solutions, including suites that we specifically developed for target vertical industries, selected features of our solutions and devices that operate with these solutions:

Solution		Description		Selected Features and Options		@Road-Supported Devices
GeoManager		Flagship service designed to provide comprehensive mobile resource management for customers in all of our markets. These services may be delivered on a hosted basis using a web browser on demand, continuously streamed to customer applications or by providing connections to other applications with application programming interfaces ("APIs").		•    Reporting—a set of configurable activity and maintenance reports and tools •    Exception Services—alerts and reports identifying incidents where mobile workers meet or exceed customer-defined business rules •    MobileForms—business transactions, signature capture and document workflow in the field using a ruggedized personal digital assistant •    DirectData—continuous transmission of @Road data directly to customer databases or applications •    Mapping—automatic geo-coding of location data and configurable map views of mobile workers and assets
GeoManager PE		Provides customers much of the same functionality as the GeoManager solution. Runs a java application on a location-enabled wireless telephone.		•    TimeConnect—automates the recording of mobile workers' daily activities and provides reporting tools •    Configurable Update Rate—customers can vary the frequency of @Road data transmissions to meet business needs
				•    Field Landmarking—subscribers can use mobile telephones to generate location-specific icons for use with Mapping, Reporting and other features •    Mapping
@Road Pathway iLM		Mid-level MRM solution that delivers metrics to measure mobile workforce performance and manage compliance with business rules.		•    Activity Reports—detailed reporting of individual mobile workers and groups •    Ping—locate workers in the field on demand using any web browser •    Mapping

6

Solution		Description		Selected Features and Options		@Road-Supported Devices
@Road Pathway PE		Provides the same functionality as the @Road Pathway iLM solution using a location-enabled mobile telephone.		•    TimeConnect •    Configurable Update Rate •    Auto-launch—automatically starts the @Road application software when the mobile telephone is powered on •    Activity Reports •    Ping •    Mapping
@Road Portico iLM		Provides customers a cost-effective, entry-level MRM solution.		•    Activity Reports •    Mapping
@Road Telco, Cable, and Utilities Suite		A specified set of @Road MRM services and devices specially designed for customers in the telecommunications, cable and utilities vertical markets.		•    Two-Way Communications—provides text messaging and automated forms for workers in the field •    Vehicle Diagnostics—using J1708 and OBD-II standards, monitors vehicle diagnostics and wirelessly transmits diagnostic data to @Road data centers •    @Road FieldServices—provides detailed on demand and historical reporting of mobile worker activity using metrics tailored to the target vertical markets •    @Road Mobile HotSpot—an optional feature enabling mobile workers to wirelessly connect their computing devices to the Internet and customer applications using 802.11 wireless technology •    DirectData •    Mapping

7

Solution		Description		Selected Features and Options		@Road-Supported Devices
@Road Transportation and Distribution Suite		A specified set of @Road MRM services and devices specially designed for customers in the transportation and distribution vertical markets.		•    Route Compliance—provides reports to help monitor route progress and which compare planned routes with actual routes traveled •    Vehicle Diagnostics •    Speed Radar—provides reports comparing posted speed limits with the actual speed traveled •    Driver Logs and State Mileage Reports—electronically record hours of service, duty status and state mileage information for mobile workers •    @Road Mobile HotSpot •    DirectData •    Mapping
@Road Facilities Management Suite		A specified set of @Road MRM services and devices specially designed for customers in the facilities management vertical market.		•    Route Compliance •    Electronic Cover Sheet—provides daily barcoded route sheets based on automated analysis of facilities, mobile worker schedules and other variables •    Barcode Wand—automatic data capture and reporting of barcoded information scanned in the field •    Two-Way Communications •    Vehicle Diagnostics •    DirectData •    Mapping

8

        We believe the following features and benefits of our solutions provide a variety of competitive advantages over other solutions:

•

Cost-effective.    Our solutions are cost-effective for our customers because we utilize existing infrastructure developed by other companies, such as the Internet and wireless networks, and GPS technology developed by the U.S. government. Our customers are not required to make a substantial capital investment because customer data and our software reside on our servers located at data centers, and customers may access our solutions by using the Internet or any telephone.



•

Ease of implementation.    The implementation of our solutions is designed to be quick and easy. When deploying our solutions using a location- or wireless application protocol-enabled mobile telephone as the hardware device, customers install a software program on the telephone. Once launched, this software program communicates with our data centers, and the customer deployment is complete. When deploying our solutions using an iLM, with or without additional optional hardware devices, we install this hardware in the customer's vehicles. As our customers grow, they can deploy software on additional mobile telephones or our hardware devices in additional vehicles to continue to expand their use of our solutions.



•

Ease of use.    We have designed our products and services to be deployed as end-to-end solutions. Our services are designed to be available over the Internet and by telephone 24 hours a day, seven days a week, with the exception of scheduled maintenance. Our user interfaces, including our Internet-browser applications, mobile telephones, Internet Data Terminals and our ruggedized personal digital assistant, are designed to be intuitive and easy to use and require minimal training. Certain elements of our user interface can be configured by the customer to meet each customer's particular requirements. Additionally, our DirectData service streams customer data directly to a customer's existing software applications and databases, and the business intelligence arising from use of our solutions with a customer's existing operations models enables a customer to maximize the value of its existing investments in information technology and productivity solutions.



•

Ease of maintenance.    We host and maintain all the services we provide. We also manage the wireless network and Internet connections between and among the devices in the field, our data centers and the Internet. Additionally, we implement service and software upgrades centrally at our data centers and remotely to the devices in the field over the same wireless connection used to transmit mobile resource information. Our implementation of enhancements to our solutions is designed to avoid interruption of our customers' regular operations. For these reasons, we believe customers benefit from enhancements to our solutions while avoiding information technology and infrastructure maintenance expenses.



•

Wireless data connectivity.    Our services operate with a number of wireless networks offered by some of the largest wireless carriers in the United States and Canada, including: General Packet Radio Services, Code Division Multiple Access 1XRTT, Integrated Digital Enhanced Network and Cellular Digital Packet Data. With our wireless carrier alliances, we deliver services in more than 200 of the top metropolitan statistical areas in the United States and Canada. Subject to a customer's preferences, we typically configure our solutions with the most cost-effective and efficient wireless network available in the customer's geographic area of operations. In some cases, a single customer with geographically disperse operations may deploy solutions that seamlessly use more than one wireless network. Wireless network configuration typically occurs in the background and does not require significant time or effort of the customer.



•

Communications capabilities.    Our customers may add optional communications capabilities to enhance their MRM solutions. For example, customers can deploy our @Road Mobile HotSpot device to wirelessly connect their computing devices in the field to the Internet and customer

9

applications. This device is designed to provide secure communications using 802.11 wireless technology combined with access point security and device-level encryption. @Road Mobile HotSpot is designed to provide field workers comprehensive access to customer applications for such purposes as accessing customer relationship data and using new product and service provisioning systems directly at a job site. Additionally, we offer two-way communications services, which operate with a mobile telephone or an iLM combined with our Internet Data Terminal ("iDT"). The iDT is a hardware device that provides a user interface, including a display and keyboard, for use by mobile workers in the field. These services enable our customers to communicate regularly and quickly with mobile workers. While our two-way communications services permit free-text messages, they also enable customers to pre-program a set of messages that can be transmitted with the push of a button to minimize distractions in the field. Messages are stored at our data centers and are accessible by our customers using a web browser. Customers can use the message database for customer relationship management, proof of service, minimization of lost change orders or missed appointments, audit or other communications.

•

Robust reporting and mapping capabilities.    Our solutions offer customers comprehensive, detailed reporting of workforce activity, either individually or for all or a selected group of a customer's mobile resources. Customers may download and format reports for additional sorting and analysis. Customer preferences are stored at our data centers and can be modified by the customer at any time to meet its changing needs. The current and past locations of each mobile worker or asset can be displayed on a map, making monitoring simple. Customers may personalize map views to graphically display different information about their mobile resources, including locating positions on maps by address or customer-defined landmarks and retracing routes traveled.



•

Location by Global Positioning System.    Our solutions use the Global Positioning System to determine the location of a mobile resource. We believe GPS technology is more reliable than other positioning technologies because of its proven accuracy, the large number of deployed satellites and its ability to determine location regardless of velocity and altitude. The Global Positioning System uses pre-existing infrastructure developed by the U.S. government, which minimizes our costs of service delivery.



•

Store-and-forward functionality.    Our solutions are designed to address common geographic limitations and network difficulties associated with wireless networks. When a subscriber travels outside a designated wireless network's coverage area, the Internet Location Manager or mobile telephone, as the case may be, continues to collect data and stores up to five days of information. The data are transmitted to our data centers when the subscriber returns to the wireless coverage area. Our solutions are designed to be tolerant of wireless network difficulties and to have the ability to confirm receipt of data from the field and re-transmit data when errors are detected.

Customers

        We market and sell our solutions to a broad range of customers in the United States and Canada that vary in size, geographic location and industry. The number of mobile resources enabled with our solutions has grown from 135 as of December 31, 1998 to approximately 133,000 as of December 31, 2004. We categorize a customer in a small-, medium- or large-sized customer group by reference to the total number of subscribers to our services for that customer. Small-sized customers have less than 30

10

subscribers, medium-sized customers have 31 to 1,000 subscribers and large-sized customers have more than 1,000 subscribers. Currently we have customers in the following industries:

        In 2004 and 2003, one customer, Verizon Communications, represented 17% of total revenues. No other customer comprised 10% or more of total revenues. In 2002, no single customer or group of related customers comprised 10% or more of total revenues.

Research and Development

        We concentrate our research and development activities on services and device engineering. Our U.S. research and development activities are supplemented by resources and personnel at our subsidiary in India. To enhance our existing solutions and to introduce new solutions to our existing and potential customers, we focus on the following key areas:

•

Services. We intend to continue to develop our services by offering new features while enhancing existing features. For example, in January 2004, we announced the availability of @Road FieldServices, which provides several on-demand and scheduled reports of mobile worker activity designed to measure actual versus planned activities and identify areas for productivity improvement. In May 2004, we announced the availability of Electronic Cover Sheet, a service designed to provide daily barcoded route sheets based on automated analysis of facilities, mobile worker schedules and other variables. In June 2004, we announced the availability of Mobile Enterprise Access, which is designed to provide mobile workers access to customer applications and data from mobile telephones.



•

Devices.    We intend to continue to develop and release platform upgrades to add new features as well as to enhance existing features. For example, in March 2004, we announced the availability of GeoManager PE and @Road Pathway services for Nextel i730 color mobile telephones. In October 2004, we announced the availability of @Road Pathway iLM, which provides the @Road Pathway service in connection with our iLM for those customers wanting the solution hardware installed in mobile worker vehicles. In October 2004, we announced the availability of @Road Mobile HotSpot, a device that is designed to enable mobile workers to wirelessly connect their computing devices to the Internet and customer applications using 802.11 wireless technology.

        We spent $6.2 million, $5.4 million and $5.9 million on research and development activities in 2004, 2003 and 2002, respectively. As of December 31, 2004, we had 84 employees in research and development.

Technology

        Our technology efforts focus on creating new solutions and enhancing the reliability, availability and features of our solutions while maintaining a scalable and cost effective architecture. Our proprietary technologies are designed to work with technologies from other companies, including our competitors. In addition, although our solutions utilize Global Positioning System technology, our solutions have been designed to work with other location technologies. We expect to continue to

11

develop additional proprietary technology where feasible and to purchase or license technology where cost-effective. Our technology efforts focus on the following areas:

•

Wireless technology.    Our solutions currently operate on several wireless networks offered by a number of wireless carriers, including General Packet Radio Services, Code Division Multiple Access 1XRTT, Integrated Digital Enhanced Network, and Cellular Digital Packet Data. One of our objectives is to continue to maintain our technological independence from any one wireless protocol or platform, enabling our customers to communicate with our data centers in the way or ways which best suit their needs.



•

Access and Internet technology.    The delivery of our solutions is complex in part because it involves the continuous collection, storage and processing of data from subscribers in the field as well as processing requests from users accessing our data centers from the Internet. To manage the throughput of customer information and to deliver our solutions to our customers, we use secure Internet connections between our data centers and customers and between our data centers and the wireless networks transmitting customer information. In addition to providing access to our solutions using any Internet connected computer, we provide access via any telephone with our speech-to-text interface technology. We also facilitate the integration of customer data collected by our solutions with a customer's existing software applications through our DirectData streaming service, application programming interfaces, TCP Connect Service and @Road Mobile HotSpot device.



•

Information technology.    We have an information technology organization dedicated to maintaining and enhancing our data centers. By using our data centers, we relieve our customers of the development and operations burden of managing wireless communications protocols, location technologies, hosted software applications, transaction processing infrastructure and Internet technologies. Our data centers include servers located in Redwood City, California and Ashburn, Virginia and at our network operations center in Fremont, California. We maintain variable-speed capacity connections between our data centers and the Internet and dedicated connections to the wireless networks we use. In addition, our data centers automatically replicate customer data on a minute-by-minute basis. In the event of a power failure, our systems would be powered by a backup power supply.



•

Software applications.    We have a software development organization that designs, builds and tests new software for use with our solutions. This organization includes personnel and other resources in Fremont, California and at our subsidiary in Chennai, India. We have created a specially designed environment that is designed to accelerate the development and testing of new software without impacting the availability of our solutions to existing customers. We also design, build and test software for installation in the hardware devices that are used to deliver our solutions, including the iLM, iDT and location- and wireless application protocol-enabled mobile telephones.

Key Alliances and Relationships

        We will continue to establish relationships with third parties for the purpose of accelerating the adoption of our solutions. We believe that establishing strategic relationships will facilitate our technological leadership and provide early access to emerging technologies and new customers. Some of our existing relationships include:

•

Wireless carriers.    We have established relationships with Bell Mobility, Cingular Wireless (which acquired AT&T Wireless, and therefore our relationship with AT&T Wireless, in October 2004), Nextel Communications, Nextel Partners, Sprint, TELUS Mobility and Verizon Wireless to provide wireless connectivity between our subscribers and the Internet. We contract directly with Cingular Wireless and Sprint for the provision of wireless communications, which are bundled

12

with our solutions. With Bell Mobility, Cingular Wireless, Nextel Communications, Nextel Partners, TELUS Mobility and Verizon Wireless, our customers generally have separate contracts for wireless communications with the carrier. In addition, we have established a relationship with Nextel Communications by which it can resell certain of our solutions in exchange for monthly fees.

•

Manufacturers.    We have established a relationship with Orient Semiconductor Electronics for the manufacture and testing of our iLM. Micronet manufactures our iDT, and Symbol Technologies manufactures a ruggedized personal digital assistant that can be used with some of our solutions. We have relationships with other companies that manufacture components for our solutions as well.

Sales and Marketing

        Our sales and marketing objective is to achieve broad market penetration through vertical marketing and targeted sales activities. We currently market and sell our solutions through a number of sales channels, including the following:

•

Strategic sales force.    We have a team of sales employees focused on marketing and selling our solutions to enterprise accounts. Enterprise accounts are defined as customers with greater than 1,000 mobile resources. The sales process with enterprise accounts often requires many months of activity, is competitive and requires a pilot test of our solutions.



•

Major account sales force.    We have a team of sales employees focused on marketing and selling our solutions to major accounts. Major accounts are defined as customers with between 100 to 1,000 mobile resources. This sales force is geographically dispersed throughout the United States.



•

Inside sales force.    We have a team of sales employees focused on marketing and selling our solutions to small business customers and selling additional solutions to existing customers. This sales force is located at our headquarters in Fremont, California.



•

Agent sales force.    We have a team of sales employees who manage a network of master agents and sales agents focused on marketing and selling our solutions. These sales agents are geographically dispersed throughout the United States. Participants in the agent sales program are compensated for the sale of our solutions and for the length of time during which a customer is under contract with us. Sales agents facilitate sales of our solutions through their own efforts and work with wireless carrier alliances to increase our subscriber base.



•

Wireless carrier sales force.    We have a team of sales employees focused on marketing and selling our solutions with the sales personnel of wireless carriers. These wireless carriers include Cingular Wireless (which acquired AT&T Wireless, and therefore our relationship with AT&T Wireless, in October 2004), Nextel Communications, Sprint and Verizon Wireless. Certain of these alliances market or facilitate sales of our solutions through their own sales channels or work with our dedicated wireless carrier sales force to increase our subscriber base.

        Our marketing department is engaged in a wide variety of activities, such as awareness and lead generation programs and product management. Generally, these activities include public relations, seminars, direct mail, trade shows, and co-marketing and co-branding with alliances.

        We spent $12.3 million, $11.4 million and $10.7 million on sales and marketing activities in 2004, 2003 and 2002, respectively. As of December 31, 2004, our sales and marketing team consisted of 103 employees.

13

Competition

        We face strong competition for our solutions, and this competition is expected to increase in the future. We compete primarily on the basis of functionality, ease of use, quality, price, service availability and corporate financial strength. As the demand by businesses for mobile resource management solutions increases, the quality, functionality and breadth of competing products and services will likely improve and new competitors will likely enter our market. In addition, the widespread adoption of industry standards may make it easier for new market entrants or existing competitors to improve their existing products and services, to offer some or all of the products and services we offer or may offer in the future, or to offer new products and services that we do not offer. We also do not know to what extent network infrastructure developers and wireless network operators will seek to provide integrated wireless communications, Global Positioning System, software applications, transaction processing, and Internet solutions, including access devices developed internally or through captive suppliers.

        If we are unable to compete successfully, our business may suffer and our sales cycles could lengthen, resulting in a loss of market share or revenues. We face competition from a number of different business productivity solutions, including:

•

Solutions developed internally by our prospective customers' information technology staffs;



•

Discrete means of communication with mobile workers, such as pagers, two-way radios, handheld devices and wireless telephones;



•

Solutions targeted at specific vertical markets, such as services offered by Qualcomm that monitor assets in the long-haul transportation sector; and



•

Solutions offered by smaller market entrants.

        Many of our existing and potential competitors have substantially greater financial, technical, marketing and distribution resources than we do. Additionally, many of these companies have greater name recognition and more established relationships with our target customers. Furthermore, these competitors may be able to adopt more aggressive pricing policies and offer customers more attractive terms than we can.

Intellectual Property

        We rely on a combination of patent, trade secret, trademark and copyright laws, nondisclosure agreements and other contractual restrictions to protect our proprietary technology. As of December 31, 2004, we possessed 14 patents, which we believe cover our GPS chipset technology and some of the methods and structures for distributing information over a network as well as applications of those methods, and @Road has over 30 additional patents pending in jurisdictions throughout the world. Although we have applied for patent protection primarily in the United States, we have filed and intend to continue to file patent applications in other countries where there is a strategic, technological or business justification.

        As part of our confidentiality procedures, we generally enter into nondisclosure agreements with our employees, consultants, distributors and corporate alliances and limit access to and distribution of our software, documentation and other proprietary information. In the event that a third party breaches the confidentiality provisions or other obligations in one or more of our agreements or misappropriates or infringes our intellectual property or the intellectual property licensed to us by third parties, our business could be seriously harmed. Third parties may independently discover or invent competing technologies or reverse engineer our trade secrets, software or other technology. Furthermore, laws in some foreign countries may not protect our proprietary rights to the same extent as the laws of the United States. Therefore, the measures we take to protect our proprietary rights may not be adequate.

14

        Third parties may claim that our current or future products or services infringe their proprietary rights or assert other claims against us. As the number of entrants into our market increases, the possibility of an intellectual property or other claim against us grows. Any intellectual property or other claim, with or without merit, would be time-consuming and expensive to litigate or settle and could divert management attention from focusing on our core business. As a result of such a dispute, we may have to pay damages, incur substantial legal fees, develop costly non-infringing technology, if possible, or enter into license agreements, which may not be available on terms acceptable to us, if at all. Any of these results would increase our expenses and could decrease the functionality of our solutions, which would make our solutions less attractive to our current or potential customers. We have agreed in some of our agreements, and may agree in the future, to indemnify other parties for any expenses or liabilities resulting from claimed infringements of the proprietary rights of third parties.

Employees

        As of December 31, 2004, we had 432 employees, 350 of whom were located in the U.S. and 82 of whom were located in Chennai, India. Our future success is substantially dependent on the performance of our executive and senior management and key technical personnel, and on our continuing ability to find and retain highly qualified technical and managerial personnel. We believe relationships with our employees are good.

Item 2.    Properties

        We have offices in Fremont, California and Chennai, India.

        While we believe our existing facilities are adequate to meet our immediate needs, it may become necessary to lease or acquire additional or alternative space to accommodate any future growth.

        For a discussion of the accounting treatment of our leased properties, see "Note 10—Commitments and Contingencies" of the notes to our consolidated financial statements, included elsewhere in this Report.

Item 3.    Legal Proceedings

        From time to time, we are subject to claims in legal proceedings arising in the normal course of our business. We do not believe that we are party to any pending legal action that could reasonably be expected to have a material adverse effect on our business, financial condition, or operating results.

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

        None.

15

PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters

Price Range of Common Stock

        Our common stock has been listed for quotation on the Nasdaq National Market under the symbol "ARDI" since our initial public offering on September 28, 2000. The following table shows the high and low sales prices of our common stock as reported by the Nasdaq National Market for the period indicated.

        At December 31, 2004, there were approximately 110 holders of record of our common stock, although we believe that there is a significantly larger number of beneficial owners of our common stock.

        The market price of our common stock has been and may continue to be subject to wide fluctuations in response to a number of events and factors, such as quarterly variations in our operating results, announcements of technological innovations or new products or services or customers by us or our competitors, changes in financial estimates and recommendations by securities analysts, the operating and stock performance of other companies that investors may deem comparable to us, and news reports relating to trends in our markets. In addition, the stock market in recent years has experienced extreme price and volume fluctuations that have particularly affected the market prices of many high technology companies that have often been unrelated or disproportionate to the operating performance of those companies. These fluctuations, as well as general political, economic and market conditions, may adversely affect the market price for our common stock.

Dividend Policy

        We have never paid cash dividends on our common stock. We currently intend to retain any future earnings to fund the development and growth of our business. Therefore, we do not currently anticipate declaring any cash dividends in the foreseeable future.

16

Item 6.    Selected Financial Data

        The selected consolidated financial data set forth below should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations, the consolidated financial statements, the related notes and other information contained in this Report.

17

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion should be read in conjunction with the consolidated financial statements and the related notes contained elsewhere in this Report. This Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those in such forward-looking statements as a result of many factors, including those discussed in "Risk Factors," "Business" and elsewhere in this Report.

Overview

        We are a leading provider of mobile resource management solutions, a rapidly growing category of business productivity solutions that enable the effective management of mobile resources. Our MRM solutions allow customers to improve productivity by enabling the effective management of the activities of their mobile workers, assets, goods and services. In addition, our solutions are designed to enable customers to increase the utility of their mobile resources and decrease their costs of operations by facilitating business processes, such as event confirmation, signature verification, forms processing, project management and timekeeping while their workers are in the field. Our solutions also provide location, reporting, dispatch, messaging, and other management services and are designed to be easy to implement and use. Our customers can manage their mobile workers in several ways, including by logging onto our website, receiving their data directly into their existing software applications, using any telephone to access our speech-to-text voice portal or requesting information from our data centers using application programming interfaces.

18

        From July 1996 through June 1998, our operations consisted primarily of various start-up activities relating to our current business, including development of Global Positioning System technologies, recruiting personnel and raising capital. We did not recognize any revenues prior to June 1998, and our expenses consisted of research and development, sales and marketing and general and administrative expenses. In 1998, we expanded our strategy and redirected our focus to provide location-relevant and time-sensitive information solutions to companies managing mobile resources. In the second half of 1998, we introduced the first version of a solution that is now called GeoManager, which is a solution that leverages existing infrastructure, including the Global Positioning System, wireless networks and the Internet along with integrated transaction processing and software applications, to enable companies to efficiently manage their mobile resources. Subsequent to the introduction of GeoManager, we have introduced a number of new solutions, such as:

•

GeoManager PE—a solution that uses a location-enabled mobile telephone to provide the GeoManager service.



•

@Road Pathway iLM—a mid-level MRM solution that delivers metrics to measure mobile workforce performance and manage compliance with business rules.



•

@Road Pathway PE—a solution that uses a location-enabled mobile telephone to provide the @Road Pathway iLM service.



•

@Road Portico iLM—an entry-level offering providing a cost-effective MRM solution.

        In addition, we have developed and packaged a specified set of @Road products and services for three of our target vertical markets. These application suites are designed to provide industry-appropriate products and services in a single solution. We currently offer the following solution suites:

•

The @Road Telco, Cable and Utilities Suite



•

The @Road Transportation and Distribution Suite



•

The @Road Facilities Management Suite

        Our solutions provide current and historical data relating to a customer's mobile resources in a variety of formats, including activity reports, maps and completed business forms. We provide these formats in a standard configuration, and customers can configure certain elements and views themselves to help achieve compliance with their internal business rules. Customers can choose to submit queries through our applications to create reports and views on demand or they can have reports delivered on a pre-scheduled basis. Customers can also download reports to manipulate and store data as desired. Mobile resource data is typically stored by us for 30 to 45 days, but is stored for longer periods for customers that purchase our extended data storage service.

        We commence implementation of our solutions with the deployment of a device to each of the customer's mobile resources. We call each mobile resource with such a device a "subscriber." Our services operate with two device types:

•

A mobile worker can use our proprietary hardware device that integrates a GPS receiver and a wireless modem and which includes embedded operating and diagnostic software. This hardware device is called an Internet Location Manager ("iLM"). We offer several different models of iLM devices. An iLM is installed in a mobile worker's vehicle. Installation is typically completed in less than one hour and is performed by our subcontracted installation agents.



•

A mobile worker can use certain location- or wireless application protocol-enabled mobile telephones offered by several wireless carriers. Customers download our software into these mobile telephones as part of implementing our solutions.

19

        These device types send and receive a variety of information from time to time and on demand. Such data include location, velocity, time and operational diagnostics. These data are transmitted to our data centers using wireless networks and the Internet. If a wireless connection to a device is not available, then the device will store up to five days of captured data and seek to transmit the data when a wireless connection is available.

        Since 1998, we have derived substantially all of our revenues from the sale of our services and the associated product hardware. Our service revenue is comprised of monthly fees. Our customers contract to receive our services for terms of one, two or three years and can purchase enhanced service features for additional fees. Upon the completion of the initial term of a customer's contract, the customer's service continues on a month-to-month basis. As more customers use our services, the impact on our service revenue is compounded. Our product revenue consists of sales of the Internet Location Manager, Internet Data Terminal, ruggedized personal digital assistant and other products.

        To date, we have not sold our solutions outside the United States and Canada; however, we intend to expand our solution offerings to additional countries in the future. In 2004 and 2003, one customer, Verizon Communications, represented 17% of total revenues. No other customer or group of related customers comprised 10% or more of total revenues in 2004 and 2003. In 2002, no single customer or group of related customers comprised 10% or more of total revenues.

        Since inception we have invested substantially in research and development, marketing, the building of our sales channels and our overall infrastructure. We anticipate that such investments may increase in the future. We incurred losses in each quarter from inception through the quarter ending June 30, 2003, and may incur net losses in the future. At December 31, 2004, we had an accumulated deficit of $107 million. Our limited operating history makes it difficult to forecast future operating results. We may not sustain or increase profitability on a quarterly or annual basis.

        In the third quarter of 2002, AT&T Wireless announced that it expected to cease operating its Cellular Digital Packet Data ("CDPD") network by June 30, 2004. On March 11, 2004, we received notice that AT&T Wireless would continue to operate its CDPD network for "certain valuable partners," including us, until at least September 30, 2004. The letter also stated that this extension of CDPD network availability extended across all AT&T Wireless geographic locations. On May 28, 2004, we received notice that AT&T Wireless extended availability of its CDPD network to June 30, 2005. In October 2004, AT&T Wireless was acquired by Cingular Wireless and is now a direct wholly owned subsidiary of Cingular Wireless.

        We are in discussions with AT&T Wireless to minimize any disruption to the delivery of our services to our customers. We have notified customers comprising substantially all of the subscribers whose service would be affected by the proposed termination of the AT&T Wireless CDPD network. At December 31, 2004, less than one quarter of our total subscribers utilize the AT&T Wireless CDPD network. The majority of those subscribers have yet to complete their negotiations with us for migration to an alternate network. We estimate that as of June 30, 2005, approximately 2,500 of those subscribers will be in their initial contract periods with us.

        In its Report on Form 10-K filed with the SEC on March 27, 2003, Verizon Wireless disclosed that it expects to cease operating its CDPD network at the end of 2005. We are in discussions with Verizon Wireless to minimize any disruption to the delivery of our services to our customers. We have notified customers comprising substantially all of the subscribers whose service would be affected by the proposed termination of the Verizon Wireless CDPD network. At December 31, 2004, less than one quarter of our total subscribers utilize the Verizon Wireless CDPD network. Less than half of those subscribers, or approximately 10% of our total subscribers, have yet to complete their negotiations with us for migration to an alternate network. We estimate that as of December 31, 2005, approximately 5,000 of those subscribers will be in their initial contract periods with us.

20

        To use an alternate network, existing iLM hardware devices would have to be replaced by subscribers currently using an iLM with a CDPD network. While we do not anticipate losses on the sale of these replacement hardware devices, if we are unable to migrate our customers in a timely fashion, we may offer price concessions. If we were to offer such concessions, they could have a material adverse impact on our financial results.

        On February 18, 2005, we acquired all of the outstanding shares of Vidus Limited, a provider of dynamic field service automation solutions located in Ipswich, United Kingdom. The acquisition is intended to allow us to integrate technology for dynamic scheduling, dispatching, routing, and appointment booking of mobile workers, and we intend to expand our business to Europe and other international markets.

        In exchange for all of the outstanding shares of Vidus capital stock, we issued approximately 5.5 million shares of our common stock valued at $38.2 million and newly created interest-bearing redeemable preferred stock in the face amount of approximately $10.2 million, extinguished for cash existing debt of approximately $4.6 million and issued approximately 146,000 vested options with a fair value of $532,000. In addition, we extinguished for cash existing debt of approximately $926,000. Under the terms of the stock option grants, each option has been classified as a non-qualified stock option, is fully vested, has an exercise price ranging from $0.67 to $2.00 per share and generally has a one-year term. The purchase price also included estimated direct transaction costs of $1.3 million.

Critical Accounting Policies, Judgments and Estimates

General

        The preparation of our consolidated financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our senior management has discussed the development, selection and disclosure of these estimates with the Audit Committee of our Board of Directors. Actual results may differ from these estimates.

        An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. We believe the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements. The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and other disclosures included elsewhere in this Report.

Revenue Recognition

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

        Through December 31, 2004, our services have been available only by using our proprietary hardware devices or a location- or wireless application protocol-enabled mobile telephone. Accordingly, through December 31, 2004, service revenue, which is comprised of monthly fees, was recognized ratably over the minimum service contract period, which commenced (a) upon installation where

21

customers have installed our proprietary hardware devices in mobile worker vehicles or (b) upon the creation of subscription licenses and a customer account on our website where customers have elected to use our services with a location-enabled mobile telephone.

        Our product revenue primarily consists of sales of the Internet Location Manager, Internet Data Terminal and a ruggedized personal digital assistant. We defer product revenue at installation and recognize it ratably over the minimum service contract period, which generally is two or three years. Renewal rates for our services are not considered priced at a bargain in comparison to the initial sales price of an associated product (as described in Staff Accounting Bulletin No. 104, Revenue Recognition). Changes to the pricing of our products and services in the future could result in the recognition of product revenue over periods that extend beyond the minimum service contract period.

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

Allowances for Doubtful Accounts

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

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

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

Accounting for Income Taxes

        We have substantial deferred tax assets that relate to prior period losses, primarily in the United States. We evaluate these deferred tax assets in each tax jurisdiction by estimating the likelihood of generating future profits to realize these assets. In most cases, we have assumed that we will not be able to generate sufficient future taxable income to realize these assets and have recorded valuation reserves to reduce the net asset values to zero. If these estimates and assumptions change in the future, we may be able to reverse the valuation allowances in future periods should we generate taxable income and our assumptions regarding the generation of future taxable income change. At December 31, 2004, we had approximately $43.2 million of valuation allowances related to our net deferred tax assets.

22

Results of Operations for the Years Ending December 31, 2004, 2003 and 2002

        The following table sets forth, for the periods indicated, selected statements of operations data as a percentage of our total revenue:

Total Revenues

        Total revenues increased to $75.2 million in 2004 from $63.4 million and $44.4 million in 2003 and 2002, respectively, as a direct result of the growth in our installed base of subscribers. The number of our subscribers totaled approximately 133,000, 125,000 and 90,000 at December 31, 2004, 2003 and 2002, respectively.

Total Cost of Revenues

        Total cost of revenues decreased to $34.9 million in 2004 from $36.0 million in 2003. The decrease is attributed to a reduction in the provision for inventory valuation of $1.2 million, a reduction in other cost of products of $692,000, associated with lower product returns, a decrease in the amortization of

23

intangibles of $427,000 and a decrease in direct service delivery expenses of $243,000. These decreases were offset in part by an increase in employee-related expenses of $1.0 million, associated with higher average headcount during the year and an increase in deferred cost of revenues recognized of $805,000, consistent with growth in our installed base of subscribers. Total cost of revenues increased to $36.0 million in 2003 from $32.3 million in 2002. The increase in total cost of revenues resulted from an increase of $2.0 million in direct service delivery expenses, an increase in deferred cost of revenues recognized of $728,000, consistent with growth in our installed base of subscribers, an increase in employee-related costs of $1.1 million, associated with a higher average headcount during the year, an increase in product repair and refurbishment costs of $731,000 and an increase in provisions for inventory valuation of $311,000. These costs were offset in part by a reduction in the amortization of intangibles of $1.2 million and a reduction in depreciation expense of $637,000 as certain assets became fully depreciated. Direct expenses generally increase at a rate proportional to the growth in our subscribers. Personnel costs and depreciation expense generally increase at a rate slower than the growth rate of our subscribers. As a result, we expect that the growth in total revenues will be greater than the growth in total cost of revenues as we continue to add subscribers.

Total Gross Margins

        During the year ended December 31, 2004 total gross margins improved to 54% from 43% and 27% in 2003 and 2002, respectively. The increase in total gross margins is reflective of the fact that our total cost of revenues includes fixed indirect expenses that generally increase at a rate slower than the growth in our installed base of subscribers, combined with the impact of intangibles and fixed assets becoming fully amortized.

Service Revenue

        Service revenue increased to $58.8 million in 2004 from $49.6 million and $33.7 million in 2003 and 2002, respectively, as a direct result of the growth in our installed base of subscribers to our services. The number of subscribers using our services totaled approximately 133,000, 125,000 and 90,000 at December 31, 2004, 2003 and 2002, respectively. In addition to subscriber growth, our service revenue is affected by a number of factors, including the rate at which service features or add-ons are adopted and the pricing associated with the size and term of customer contracts. Given the fixed nature of our arrangements with our customers and ratable revenue recognition, the impact on revenues of changes in current prices for products and services is tempered because revenues from new pricing are layered on top of revenues from existing subscribers. Average monthly revenue per subscriber was approximately $37.73 for 2004, down from $38.19 in 2003. Of the decrease, approximately $0.67 was the result of price changes associated with the types of services and size and term of contracts for new subscribers as those new revenues were layered on top of revenues from existing subscribers. The decrease was partially offset by an increase of approximately $0.21 that was related to adoption of

24

additional service capabilities and features by subscribers. Average monthly revenue per subscriber was approximately $38.19 for 2003, up from $36.02 in 2002. Of the increase, approximately $0.76 was related to adoption of additional service capabilities and features by subscribers. The remaining increase of approximately $1.41 was the result of price changes associated with the types of services and size and term of contracts for new subscribers as those new revenues were layered on top of revenues from existing subscribers.

        Underlying price changes is a trend related to the variety of wireless protocols we now offer customers, including General Packet Radio Services, Code Division Multiple Access 1XRTT and the Integrated Digital Enhanced Network. We describe those arrangements in which customers contract directly with wireless carriers for the wireless airtime component of our solution as "unbundled". Conversely, we describe arrangements in which we contract directly with customers for the wireless airtime portion as "bundled". The nature of our relationship with the wireless carriers dictates whether we will be entering into a bundled or unbundled arrangement with the customer. Selection of the appropriate protocol is related primarily to optimal wireless coverage for a specific customer area of operation. Additionally, we are generally indifferent as to whether bundled or unbundled arrangement results with a new customer because we have priced our solutions such that a similar contribution to gross profits results from either arrangement. We have observed an increase in the proportion of new subscribers being added on an unbundled basis. We expect that this trend will continue through the next 12 to 18 months.

Cost of Service Revenue (excluding intangibles amortization)

        Cost of service revenue consists of expenses related to the delivery and support of our services. Direct expenses are comprised of costs associated with connecting our services to wireless networks and the Internet and royalty and subscription fees paid to others. Support and other delivery costs include such expenses as employee salaries and related expenses and depreciation of our data centers. Cost of service revenue increased to $16.5 million in 2004 from $15.7 million in 2003. The increase is attributed to an increase in employee-related expenses of $1.0 million, associated with higher average headcount during the year, offset in part by a decrease in direct service delivery expenses of $243,000. Cost of service revenue increased to $15.7 million in 2003 from $13.5 million in 2002. The increase in cost of service revenue resulted from an increase of $2.0 million in direct service delivery expenses, consistent with growth in our installed base of subscribers, and an increase in employee-related costs of $744,000, associated with a higher average headcount during the year. These costs were partially offset by a reduction in depreciation expense of $637,000 as certain assets became fully depreciated. Direct expenses generally increase at a rate proportional to the growth in subscribers using our services. Personnel costs and depreciation expense generally increase at a rate slower than the growth rate of subscribers to our services. As a result, we expect that the growth in service revenue will be greater than the growth in cost of service revenue as we add subscribers.

Service Gross Margin

        During the year ended December 31, 2004 service gross margins improved to 72% from 67% and 55% in 2003 and 2002, respectively, as a result of increased service revenue associated with growth in our installed base of subscribers and a smaller increase in the total cost of service revenue, including intangibles amortization. The average number of subscribers to our services increased 20% in 2004 over

25

2003 and 39% in 2003 over 2002. Cost of service revenue includes fixed indirect expenses and, therefore, generally increases at rates slower than the growth in our installed base of subscribers.

Product Revenue

        Product revenue increased 19% and 28% over each prior year in 2004 and 2003, respectively. This growth is consistent with the growth in our installed base of subscribers whose services are enabled by deployment of an Internet Location Manager.

        As new subscribers are added to our installed base, the amount of both deferred revenue and deferred costs recognized ratably over the minimum service contract period increases. This effect is tempered by subscribers whose solution is deployed through the use of a location or wireless application protocol-enabled mobile telephone installed with our software application because we do not sell these devices and therefore do not recognize any revenues or costs for such sales. A similar tempering effect occurs upon completion of the initial term of a customer's contract because recognition of deferred product revenue is complete. Those customers may then renew their agreements for future services without the purchase of new hardware and, therefore, we would generally expect that product revenue should grow more slowly than service revenue. Because the migration of existing customers who utilize CDPD networks requires replacement of their existing hardware, product revenue may increase accordingly. Given these factors, we anticipate that product revenue will grow in future periods, but more slowly than the expected growth of service revenue.

Cost of Product Revenue

        Cost of product revenue consists of the cost of the Internet Location Manager, Internet Data Terminal, ruggedized personal digital assistant and related parts; costs associated with the final assembly, testing, provisioning, delivery and installation of our products; and other costs such as provisions for inventory and repair costs. Product costs not in excess of related product revenue are deferred at the time of shipment and amortized ratably over the minimum service contract period. Where the selling prices of our products are below our costs, we expense the difference at the time of shipment of the related products. Generally, we expect the selling prices of our products to be approximately equal to or exceed the product costs in future periods. The impact of selling products below our cost on future cash flow from operations is expected to be minimal. As new subscribers are added to our installed base, the amount of both deferred revenue and deferred costs recognized ratably increases. Upon completion of the initial term of a customer's contract, recognition of both deferred product revenue and product cost is complete. Customers may then renew their agreements for future services without the purchase of new hardware and, therefore, we anticipate that product revenue and cost of product revenue will grow more slowly than service revenue.

        Cost of product revenue decreased to $18.3 million in 2004 from $19.8 million in 2003. The decrease in cost of product revenue of $1.5 million was primarily attributable to a reduction in the

26

provision for inventory valuation of $1.2 million, and a decrease in product repair and refurbishment costs of $692,000, associated with lower product returns. These decreases were offset in part by an increase in deferred product cost recognized of $805,000, associated with higher product revenue. Cost of product revenue rose to $19.8 million in 2003 from $16.9 million in 2002. The increase in cost of product revenue of $2.9 million was primarily attributable to an increase in product repair and refurbishment costs of $731,000, an increase in deferred product cost recognized during the period of $728,000, an increase in employee-related costs of $355,000, and an increase in provisions for inventory valuation of $311,000.

Product Gross Deficit

        Product gross deficit improved to (12)% in 2004 from (43)% in 2003 and from (59)% in 2002. Increases in product revenue from deferrals associated with the growth in our installed base of subscribers were greater than the related increases in product costs from deferrals. While we expect the selling prices of our products to be approximately equal to or to exceed product costs in future periods, after considering other costs, such as those described in "Cost of Product Revenue" above, we do not expect to generate significant product gross margin during the next twelve months.

Sales and Marketing Expenses

        Sales and marketing expenses consist of employee salaries, sales commissions, and marketing and promotional expenses. Sales and marketing expenses increased to $12.3 million in 2004 from $11.4 million in 2003. The increase resulted from higher employee-related costs of $1.3 million, associated with higher average headcount during the year, and an increase in travel expenses of $238,000, partially offset by decreases in sales commission of $420,000 and promotional expenses of $324,000. Sales and marketing headcount increased to 103 at December 31, 2004 from 86 at December 31, 2003. We expect that sales and marketing expenses will increase as we expand our sales and marketing efforts, including, but not limited to, modest headcount growth and promotional expenses related to new product and service offerings.

        Sales and marketing expenses increased to $11.4 million in 2003 from $10.7 million in 2002. The increase resulted from higher employee-related costs of $1.1 million, associated with higher average headcount during 2003, offset by decreases in depreciation of $221,000 as certain assets became fully depreciated and decreases in travel expenses of $204,000. Sales and marketing headcount decreased to 86 at December 31, 2003 from 88 at December 31, 2002.

Research and Development Expenses

        Research and development expenses consist of employee salaries and expenses related to development personnel and consultants, as well as expenses associated with software and hardware development. Research and development expenses increased to $6.2 million in 2004 from $5.4 million in 2003. The increase was primarily attributed to an increase in employee-related costs of $454,000, associated with an increase in the average headcount during the year, and increases in external development expenses of $387,000. Headcount increased to 84 at December 31, 2004 from 56 at December 31, 2003, with the majority of this increase occurring in India. We anticipate that research and development expenses will increase in future periods as we develop and introduce new products and services, including modest increases in consultant and employee-related expenses associated with those introductions.

        Research and development expenses decreased to $5.4 million in 2003 from $5.9 million in 2002. The reduction in expense is attributed to decreases in depreciation of $257,000 as certain assets became fully depreciated during the year, decreases in indirect allocated costs of $158,000 and decreases in

27

employee-related costs of $113,000, associated with a decrease in the average headcount. Headcount decreased to 56 at December 31, 2003 from 59 at December 31, 2002.

        In accordance with American Institute of Certified Public Accountants Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use ("SOP 98-1"), we capitalize qualifying computer software costs that are incurred during the application development stage and amortize them over the software's estimated useful life. Consistent with the requirements of SOP 98-1, we did not capitalize any research and development costs in 2004, 2003 or 2002.

General and Administrative Expenses

        General and administrative expenses consist of employee salaries and related expenses for executive and administrative costs, accounting and professional fees, recruiting costs and provisions for doubtful accounts. General and administrative expenses increased to $12.0 million in 2004 from $9.2 million in 2003. The increase primarily resulted from our Sarbanes-Oxley compliance costs of $2.2 million consisting of consulting fees, temporary employee-related expenses and accounting and audit fees, an increase in our employee-related costs of $1.2 million associated with an increase in the average headcount and increased recruiting fees of $292,000. These increases were offset in part by a decrease in the provision for doubtful accounts of $597,000, which resulted from improved collection activity and receivables management, and lower franchise and minimum state taxes of $278,000. We expect that general and administrative expenses will decrease slightly in future periods due to the completion of our initial Sarbanes-Oxley compliance efforts.

        General and administrative expenses increased to $9.2 million in 2003 from $8.6 million in 2002. The increase resulted from higher employee-related expenses of $433,000 related to growth in average headcount during the year, increases in franchise and minimum state taxes of $362,000, increases in professional fees of $242,000 and a rise in general operating expenses such as insurance and bank fees of $173,000. These increases were consistent with our anticipated expenditures associated with our growth and were offset in part by a decrease in the provision for doubtful accounts of $588,000, due to improved collection activity and receivables management.

        Provisions for doubtful accounts decreased to $(724,000) in 2004 from $(127,000) in 2003 and from $461,000 in 2002, due to improved collection activity and receivables management. We expect that provisions for doubtful accounts may increase because of the non-recurring nature of favorable adjustments that occurred during 2004 and 2003; however, we do not expect that these provisions will return to the levels reported in 2002.

        General and administrative headcount totaled 81, 53 and 47 at December 31, 2004, 2003, and 2002, respectively.

Terminated Acquisition Costs

        On April 12, 2004, we entered into a Combination Agreement with MDSI Mobile Data Solutions, Inc. ("MDSI") providing for the acquisition of MDSI. On July 27, 2004, the parties mutually agreed to terminate the Combination Agreement. As a result, for the year ended December 31, 2004, we expensed approximately $2.1 million of acquisition-related costs.

Intangibles Amortization

        Intangibles amortization relates to the intangible assets purchased from Differential Corrections, Inc. in April 2000 and ConnectBusiness.com, Inc. in September 2002. The costs were amortized over their estimated useful lives of three and two years, respectively. As of December 31, 2004 these intangibles were fully amortized.

28

Stock Compensation Expense

        Deferred stock compensation related to the granting of stock options to employees and consultants was approximately $0 and $4,000 as of December 31, 2004 and 2003, respectively. Stock compensation expense decreased to $4,000 in 2004 from $467,000 in 2003 and $1.1 million in 2002, and primarily represents the amortization of deferred stock compensation over the vesting periods of related options granted in 2000 and 1999. As of December 31, 2004 our deferred stock compensation was fully amortized.

Interest Income

        Interest income is composed primarily of interest earned on cash, cash equivalents and short-term investments. Interest income increased to approximately $1.5 million in 2004 from $686,000 in 2003, but decreased to $686,000 in 2003 from $964,000 in 2002. The increase in 2004 is the result of larger invested balances and higher rates of return. The decrease in 2003 is the result of lower average invested balances and lower rates of return.

Interest Expense

        Interest expense is composed primarily of interest expense related to the financing of directors and officers insurance costs. Interest expense decreased to $0 in 2004 from $11,000 in 2003, and decreased to $11,000 in 2003 from $15,000 in 2002.

Investment Impairment Charge

        At December 31, 2004, we held approximately 43,000 shares of preferred stock in Cellport Systems, Inc., with an original cost of $1.0 million which represented less than one percent ownership in Cellport Systems, Inc. We accounted for this investment using the cost method. During 2002, we determined that the investment had experienced a decline in value that was other than temporary. Accordingly, we expensed $1.0 million in 2002.

Other (Expense) Income, Net

        In 2004, 2003 and 2002, other (expense) income consisted primarily of immaterial net foreign currency exchange losses and gains related to our subsidiary in India.

Income Taxes

        Through 2002, we incurred net losses for federal and state tax purposes, and except for only minimum state and franchise taxes recorded within general and administrative expenses, we have not recognized any tax provision or benefit. Net income earned during 2004 and 2003 was offset by the utilization of prior years' net operating loss carryforwards; therefore, no income tax expense was provided.

Net Income (Loss)

        Net income increased to $9.2 million in 2004 from $1.7 million in 2003. Total revenues increased to $75.2 million in 2004 from $63.4 million in 2003, while operating costs increased at a slower rate to $67.5 million in 2004 from $62.4 million in 2003. Specifically, cost of service revenue, sales and marketing expenses, research and development expenses, and general and administrative expenses grew modestly, while amortization of intangibles and cost of product revenue declined. Generally, we expect that our revenues will grow at a faster rate than our operating expenses.

29

        Net income (loss) increased to $1.7 million in 2003 from $(14.2) million in 2002. Total revenues increased to $63.4 million in 2003 from $44.4 million in 2002, while operating costs increased at a slower rate to $62.4 million in 2003 from $58.5 million in 2002. Specifically, cost of revenue, sales and marketing expenses, and general and administrative expenses grew modestly, while amortization of intangibles and research and development expenses declined.

Changing Prices

        We conduct operations primarily within the U.S. where inflation during 2004, 2003 and 2002 has been low and has not materially impacted our operating results. Foreign currency exchange losses resulting from transactions with our wholly-owned subsidiary in India, which began business in 1999, were not material during 2004, 2003 and 2002 and were expensed as incurred within other (expense) income, net.

Quarterly Results of Operations

        The following table presents certain unaudited consolidated statement of operations data for our eight most recent fiscal quarters. The information for each of these quarters is unaudited and has been prepared on the same basis as our audited consolidated financial statements appearing elsewhere in this Report. In the opinion of our management, all necessary adjustments, consisting only of normal recurring adjustments, have been included to present fairly the unaudited quarterly results when read in conjunction with our consolidated financial statements and related notes included elsewhere or incorporated by reference in this Report. We believe that results of operations for interim periods should not be relied upon as any indication of the results to be expected or achieved in any future period or any fiscal year as a whole.

30

Liquidity and Capital Resources

        As of December 31, 2004, we had $14.5 million of cash and cash equivalents, $103.2 million of short-term investments and working capital of $119.4 million.

        We have generated annual cash provided by operating activities in amounts greater than net income in 2004 and 2003. In 2002, we used less cash than our net loss. These results were driven mainly by non-cash charges to earnings. Non-cash charges to earnings included the write-off of deferred acquisition costs, depreciation and amortization, investment impairment charge, amortization of deferred stock compensation and the provision for inventory valuation. In 2003, operating cash flows were also positively impacted by the net cash amounts provided by year-over-year changes in working capital assets and liabilities. We believe we will continue to generate cash from operations.

        The net cash flows used in investing activities in 2004, 2003 and 2002 were due primarily to the movement of cash between cash and investments and the purchase of property and equipment. Purchases of property and equipment, totaled $2.7 million, $1.5 million and $755,000 in 2004, 2003 and 2002, respectively. Purchases of property and equipment related mainly to purchases of computer equipment and software to support our growth in operations, infrastructure and headcount. Our capital expenditures have been consistent with our anticipated needs in operations, infrastructure and personnel. We currently do not have any material commitments for capital expenditures, although we anticipate increases in capital expenditures and lease commitments with our expected growth in operations and infrastructure over the next twelve months. We also may establish additional operations as we expand globally.

        The net cash flows provided by financing activities in 2004, 2003 and 2002 were due primarily to proceeds from sale of our common stock. Proceeds from the sale of our common stock totaled $3.6 million, $57.9 million and $2.4 million in 2004, 2003 and 2002, respectively. Proceeds from the sale of our common stock in 2004 and 2002 primarily relate to the exercise of stock options and purchases under our employee stock purchase plan. Proceeds from the sale of our common stock in 2003 primarily relate to the proceeds from our secondary offering of $51.9 million. Our future cash flows from stock options are difficult to project as such amounts are a function of our stock price, the number of options outstanding and decisions by the holders to exercise stock options. In general, we expect proceeds from stock option exercises to increase during periods in which our stock price has increased relative to historical levels.

        We believe that existing cash, cash equivalents and investments, together with any cash generated from operations, will be sufficient to fund our operating activities, capital expenditures and other obligations for the foreseeable future. However, if during that period or thereafter we are not successful in generating sufficient cash flows from operations or in raising additional capital when required in sufficient amounts and on terms acceptable to us, our business could suffer.

Commitments and Contingencies

        We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of all payments. We have presented below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of

31

operations and cash flows. The following table summarizes our fixed contractual obligations and commitments (in thousands):

        Other long-term liabilities in our consolidated balance sheet as of December 31, 2004 include a deferred rent liability of $1,000. The payments related to this amount are included in operating lease commitments above.

        Operating lease commitments include minimum rental payments under our non-cancelable operating leases for office facilities, as well as limited office equipment that we utilize under lease arrangements. The amounts presented are consistent with contractual terms and are not expected to differ significantly unless a substantial change in our headcount needs requires us to exit an office facility early or expand our occupied space.

        Inventory purchase commitments include minimum payments under non-cancelable commitments for goods that were entered into through our ordinary course of business.

        Other purchase obligation amounts include minimum purchase commitments for marketing, computer equipment, software applications, engineering development services and other goods and services that were entered into through our ordinary course of business. These contractual arrangements contain significant performance requirements. Given the significance of the performance requirements, actual payments could differ significantly from these estimates.

        In relation to our acquisition of Vidus, we issued approximately 5.5 million shares of our common stock valued at $38.2 million, newly created interest-bearing redeemable preferred stock in face amount of approximately $10.2 million and approximately 146,000 vested options with a fair value of $532,000, and extinguished for cash debt of approximately $4.6 million. Additionally, we utilized cash to extinguish debt of approximately $926,000, reimbursed Vidus and certain of its shareholders for acquisition related transaction costs incurred of approximately $1.2 million and we have incurred estimated direct transaction costs of $1.3 million.

Impact of Recently Issued Accounting Standards

        In December 2004, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004), Share-Based Payments ("SFAS 123R"), that addresses the accounting for share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments.

        The statement eliminates the ability to account for share-based compensation transactions using the intrinsic value method as prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and generally requires that such transactions be accounted for using a fair-value-based method and recognized as expenses in the consolidated statement of operations. The statement requires companies to assess the most appropriate model to calculate the value of the options. We currently use the Black-Scholes option pricing model to value options and are

32

assessing which model we may use upon adoption of such standard. The use of an alternative model to value options may result in a different fair value than the use of the Black-Scholes option pricing model.

        There are a number of other requirements under the new standard that will result in differing accounting treatment than that currently required. These differences include, but are not limited to, the accounting for the tax benefit on employee stock options and for stock issued under our employee stock purchase plan.

        We will also be required to determine the transition method to be used at date of adoption. The allowed transition methods include modified prospective and modified retroactive adoption alternatives. Under the modified retroactive method, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. This method would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The modified prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R. The effective date of the new standard for public companies is currently for the interim period beginning after June 15, 2005. As such, we will adopt the statement in our interim reporting period ended September 30, 2005.

        Upon adoption, this statement will have a significant impact on our consolidated statement of operations as we will be required to expense the fair value of our stock option grants and stock purchases under our employee stock purchase plan rather than disclose the impact on our consolidated net income (loss) within our footnotes, as is our current practice.

        In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of ARB No. 43, Chapter 4 ("SFAS 151"). SFAS 151 clarifies that abnormal inventory costs such as costs of idle facilities, excess freight and handling costs and wasted materials (spoilage) are required to be recognized as current period charges. The provisions of SFAS 151 are effective for fiscal years beginning after July 1, 2005. We are currently evaluating the effect that the adoption of SFAS 151 will have on our consolidated statement of operations and financial condition, but do not expect it to have a material impact.

        In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets—An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions ("SFAS 153"). SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary Transactions, and replaces it with an exception for exchanges that do not have commercial substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The effective date of this standard is for fiscal periods beginning after June 15, 2005. We are currently evaluating the effect that the adoption of SFAS 153 will have on our consolidated statement of operations and financial condition, but do not expect it to have a material impact.

33

Risk Factors

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

On February 18, 2005, we acquired Vidus Limited ("Vidus"). The combined company may not realize expected benefits because of integration and other challenges.

        If the combined company fails to meet the challenges involved in integrating their operations and products successfully or otherwise fails to realize any of the anticipated benefits of the acquisition, then the results of operations of the combined company could be seriously harmed. Realizing the benefits of the acquisition, if any, will depend in part on the successful integration of technology, operations and personnel. The integration of the companies is a complex, time-consuming and expensive process that could significantly disrupt the business of the combined company.

        The combined company may not successfully integrate the operations of @Road and Vidus in a timely manner, or at all, and the combined company may not realize the anticipated benefits of the acquisition to the extent, or in the timeframe, anticipated. The anticipated benefits of the acquisition are based on projections and assumptions, including successful integration, not actual experience. In addition to the integration risks discussed above, the combined company's ability to realize those benefits could be adversely effected by practical or legal constraints on its ability to combine operations.

@Road and Vidus each expect to incur significant costs associated with the acquisition of Vidus.

        In connection with the acquisition of Vidus, we estimate that we will incur direct costs of approximately $889,000 in addition to the $393,000 which we have already incurred through December 31, 2004. We reimbursed Vidus and certain Vidus shareholders upon the completion of the acquisition for the direct transaction costs incurred of approximately $1.2 million, which will be recognized as an expense in 2005. There can be no assurance that the combined company will not incur additional material charges in subsequent quarters to reflect additional costs associated with the acquisition and the integration of the two companies.

        Under the purchase method of accounting, the combined company will allocate the total estimated purchase price of $55.7 million to Vidus' tangible assets, purchased technology and other intangible assets and liabilities assumed of Vidus based on their fair values as of the date of completion of the acquisition, and record the excess of the purchase price over those fair values as goodwill. The combined company will incur amortization expense over the useful lives of amortizable intangible assets acquired in connection with the acquisition. In addition, to the extent the value of goodwill becomes impaired, the combined company may be required to incur material charges relating to the impairment of that asset. Any potential impairment charge could have a material impact on the combined company's results of operations and could have a material adverse effect on the market value of the common stock of the combined company following completion of the acquisition.

If, pursuant to its announcements, AT&T Wireless ceases to operate its Cellular Digital Packet Data network in June 2005, we may be unable to migrate some of our customers to an alternate wireless network and our financial results could be adversely affected.

        Beginning March 31, 2003, AT&T Wireless discontinued new sales of its CDPD service. AT&T Wireless has also indicated that it expects to cease operating its CDPD network by June 30, 2005. As of December 31, 2004, less than one quarter of our total subscribers utilize the AT&T Wireless CDPD network ("AT&T Subscribers"). We are working with the AT&T Subscribers to migrate them to an alternate wireless protocol. If the AT&T Wireless CDPD network is terminated, the AT&T Subscribers

34

who have not switched to an alternate wireless protocol would have to use another CDPD network, if available, or, if no other CDPD network is available, the AT&T Subscribers would be unable to utilize our services. While we believe that we have the capability to transition all of the AT&T Subscribers to another protocol if all of the AT&T Subscribers choose to transition to another protocol, there can be no assurance that we will be able to migrate all such subscribers by June 30, 2005. Any resulting decrease in the total number of subscribers of our services, even if for only a brief period, could have a material adverse effect on our financial results. If a large percentage of the AT&T Subscribers choose not to migrate to an alternate wireless protocol or other CDPD network, if available, or seek to terminate their @Road services, such loss of customers would have a material adverse impact on our financial results. In October 2004, AT&T Wireless was acquired by Cingular Wireless and is now a direct wholly owned subsidiary of Cingular Wireless.

If, pursuant to its announcement, Verizon Wireless ceases to operate its Cellular Digital Packet Data network by the end of 2005, we may be unable to migrate some of our customers to an alternate wireless network and our financial results could be adversely affected.

        Verizon Wireless has indicated that it expects to cease operating its CDPD network by the end of 2005. As of December 31, 2004, less than one quarter of our total subscribers utilize the Verizon Wireless CDPD network ("Verizon Subscribers"). We are working with the Verizon Subscribers to migrate them to an alternate wireless protocol. If the Verizon Wireless CDPD network is terminated, the Verizon Subscribers who have not switched to an alternate wireless protocol would have to use another CDPD network, if available, or, if no other CDPD network is available, Verizon Subscribers would be unable to utilize our services. While we believe that we have the capability to transition all of the Verizon Subscribers to another protocol if all of the Verizon Subscribers choose to transition to another protocol, there can be no assurance that we will be able to migrate all such subscribers by December 31, 2005. Any resulting decrease in the total number of subscribers of our services, even if for only a brief period, could have a material adverse effect on our financial results. If a large percentage of the Verizon Subscribers choose not to migrate to an alternate wireless protocol or other CDPD network, if available, or seek to terminate their @Road services, such loss of customers would have a material adverse impact on our financial results.

Any material weakness or significant deficiency identified in our internal controls could have an adverse effect on our business.

        Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on their internal control structure and procedures over financial reporting. In addition, our independent accountants must report on management's evaluation as well as evaluate our internal control structure and procedures. Due to the ongoing evaluation and testing of our internal controls, there can be no assurance that there may not be significant deficiencies or material weaknesses that would be required to be reported in the future. In addition, we expect the evaluation process and any required remediation, if applicable, to increase our accounting, legal and other costs, and may divert management resources from other business objectives and concerns.

Our stock price is volatile, which may cause you to lose money and could lead to costly litigation against us that could divert our resources.

        From time to time, stock markets experience dramatic price and volume fluctuations, particularly for shares of technology companies. These fluctuations can be unrelated to the operating performance of these companies. Broad market fluctuations may reduce the market price of our common stock and cause you to lose some or all of your investment. These fluctuations may be exaggerated if the trading volume of our common stock is low. In addition, due to the technology-intensive nature and growth

35

rate of our business and the mobile resource management market, the market price of our common stock may rise and fall in response to:

•

quarterly variations in operating results;



•

failure to achieve operating results anticipated by securities analysts and investors;



•

changes in estimates of our financial performance or changes in recommendations by securities analysts;



•

announcements of technological or competitive developments;



•

the gain or loss of a significant customer or order;



•

disposition of shares of our common stock held by large investors; and



•

acquisitions or strategic alliances by us or our competitors.