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

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________

FORM 10-Q

_____________

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the quarterly period ended June 30, 2003

[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the transition period from _____________ to _____________

Commission File Number 0-18299

_____________

i3 MOBILE, INC.
(Exact name of registrant as specified in its charter)

_____________

DELAWARE 51-0335259
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

181 Harbor Drive, Stamford, Connecticut 06902
(Address of principal executive offices) (Zip Code)

(203) 353-0383
(Registrant's telephone number, including area code)

_____________

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). [X] Yes [_] No

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Outstanding at
Class August 13, 2003
----- ---------------
Common Stock, Par Value $.01 20,115,990

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

INDEX

i3 MOBILE, INC.

PAGE NO.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited):

Consolidated Balance Sheet as of June 30, 2003 and December 31, 2002 3

Consolidated Statement of Operations for the Three and Six Months Ended June 30, 2003 and 2002 4

Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2003 and 2002 5

Notes to Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9

Item 3. Quantitative and Qualitative Disclosures about Market Risk 15

Item 4. Controls and Procedures 15

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K 16

Signatures and Certifications 17

i3 MOBILE, INC.

Consolidated Balance Sheet
(in thousands, except share data)

June 30, December 31,
2003 2002
----------- ------------
(unaudited) (note)

Assets
------

Current assets:
Cash and cash equivalents ................................ $ 11,826 $ 20,572
Accounts receivable, net of allowances ................... - 138
Prepaid expenses and other current assets ................ 734 558
--------- ---------
Total current assets .............................. 12,560 21,268
--------- ---------
Fixed assets, net ........................................ 209 1,765
Deposits and other non-current assets .................... 325 334
--------- ---------
Total assets ...................................... $ 13,094 $ 23,367
========= =========

Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
Accounts payable and accrued liabilities ................. $ 1,791 $ 4,328
--------- ---------
Total liabilities ................................. 1,791 4,328

Stockholders' equity:
Preferred stock; $.01 par value, 50,000 shares
authorized, none issued ............................... - -
Common stock; $.01 par value, 75,000,000 shares
authorized, 24,820,640 and 24,805,640 shares issued ... 248 248
Additional paid-in capital ............................... 166,983 166,945
Accumulated deficit ...................................... (148,291) (140,517)
Treasury stock at cost, 4,704,650 shares ................. (7,637) (7,637)
--------- ---------
Total stockholders' equity ........................ 11,303 19,039
--------- ---------
Total liabilities and stockholders' equity ........ $ 13,094 $ 23,367
========= =========

Note: The balance sheet at December 31, 2002 has been derived from the audited
consolidated financial statements at that date.

See accompanying notes to consolidated financial statements.

i3 MOBILE, INC.

Consolidated Statement of Operations
(in thousands, except per share data)

Three Months Ended Six Months Ended
---------------------- ----------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
-------- -------- -------- --------
(unaudited) (unaudited)

Net revenue ...................................... $ - $ 788 $ 267 $ 1,699
-------- -------- -------- --------
Expenses:
Operating .................................. - 1,859 1,198 3,557
Sales and marketing ........................ - 5,695 568 9,496
Product development ........................ - 1,379 1,150 2,858
General and administrative ................. 1,612 4,099 4,696 8,173
Long-lived asset impairment ................ - - 516 -
-------- -------- -------- --------
Total expenses ................................... 1,612 13,032 8,128 24,084
-------- -------- -------- --------
Operating loss ................................... (1,612) (12,244) (7,861) (22,385)
Interest income, net ............................. (34) (195) (87) (404)
-------- -------- -------- --------
Net loss ......................................... $ (1,578) $(12,049) $ (7,774) $(21,981)
======== ======== ======== ========
Net loss per share - basic and diluted ........... $ (0.08) $ (0.57) $ (0.39) $ (1.01)
======== ======== ======== ========
Shares used in computing net loss per share ...... 20,116 21,018 20,116 21,789
======== ======== ======== ========

See accompanying notes to consolidated financial statements.

i3 MOBILE, INC.

Consolidated Statement of Cash Flows
(in thousands)

Six Months Ended
-----------------------------
June 30, 2003 June 30, 2002
------------- -------------
(unaudited) (unaudited)

Cash flows from operating activities:
Net loss .................................................................. $ (7,774) $(21,981)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation ........................................................... 598 3,034
Non-cash stock compensation charges .................................... 33 108
Loss on sale of fixed assets ........................................... 257 -
Long-lived asset impairment ............................................ 516 -

Changes in operating assets and liabilities:
Decrease in accounts receivable, net ................................... 138 169
Decrease in deferred advertising ....................................... - 2,245
(Increase) in other assets ............................................. (342) (168)
(Decrease) increase in accounts payable and accrued liabilities ........ (2,537) 1,534
-------- --------
Net cash used in operating activities ......................................... (9,111) (15,059)
-------- --------
Cash flows from investing activities:
Purchase of fixed assets ............................................... (6) (711)
Proceeds from the sale of fixed assets ................................. 365 -
-------- --------
Net cash provided by (used in) investing activities ........................... 359 (711)
-------- --------
Cash flows from financing activities:
Payments on capital lease obligations .................................. - (310)
Proceeds from exercise of stock options and warrants ................... 6 17
Repurchase of common stock ............................................. - (2,174)
-------- --------
Net cash provided by (used in) financing activities ........................... 6 (2,467)
-------- --------
Decrease in cash and cash equivalents ......................................... (8,746) (18,237)
Cash and cash equivalents at beginning of period .............................. 20,572 52,612
-------- --------
Cash and cash equivalents at end of period .................................... $ 11,826 $ 34,375
======== ========

See accompanying notes to consolidated financial statements.

i3 MOBILE, INC.

Notes to Consolidated Financial Statements

Note 1 - Company Overview:

i3 Mobile, Inc., "i3" or the "Company", was incorporated in Delaware on June 28,
1991. From its inception in June 1991 until 2001, the Company's business was
comprised of distributing customized text-based information to mobile devices
under the "Powered by i3 Mobile" product brand. During 2001, the Company evolved
into a company that it believed was among the first to create a premium mobile
subscription information and communication service for telephones. This service,
Pronto, was marketed directly to consumers delivering information and service on
demand 24 hours a day, combining the service of a mobile concierge with the
simplicity of flat-menu voice recognition technology.

Although the Company undertook substantial efforts to research, develop and
market the Pronto product, the Company did not achieve the subscriber levels
which had been estimated and were needed to sustain the business model. Due to
the challenges the Company faced in marketing the Pronto product, and its
concerns about its cash resources going forward, in October 2002, the Company
engaged the services of an investment banker to pursue strategic alternatives,
including a potential merger or acquisition of the Company (collectively, a
"Transaction"). In order to facilitate a Transaction, in March 2003 the Company
announced the termination of the Pronto service and other cost saving measures
in order to manage its cash resources.

Liquidity:

The Company has incurred substantial losses and negative cash flows from
operations in every fiscal period since inception. For the six months ended June
30, 2003, the Company incurred a loss from operations of approximately $7.9
million and negative cash flows from operations of approximately $9.1 million.
As of June 30, 2003, the Company had an accumulated deficit of approximately
$148 million.

Management expects operating losses and negative cash flows to continue for the
foreseeable future as the Company incurs ongoing costs and expenses related to
consummating a potential Transaction, if any. The anticipated cash expenditures
for the remainder of 2003 include approximately $0.5 million of non-cancelable
operating commitments, which include, among other things, rent commitments,
which management will continue to resolve. During March 2003, the Company took
action on a plan approved by the Board of Directors in an effort to continue to
reduce recurring operating losses, preserve cash resources and working capital
and facilitate a potential Transaction. The Company discontinued revenue
producing operations and terminated the Pronto service and initiated cost saving
measures including a reduction of 65 employees, approximately 78% of its
workforce, the termination of its research and development efforts at its Texas
facility, and furthered its ongoing efforts to resolve contractual obligations.
The reduction of workforce resulted in a $1.7 million charge in its results of
operations during the first quarter of 2003. If the Company fails to enter into
a Transaction, the ongoing reduction of the Company's available cash resources
over time would have a material adverse effect on the Company's ability to
operate and therefore could result in the Company distributing its assets.
However, management believes the Company has adequate cash resources to continue
to realize its assets and discharge its liabilities as a company through 2004,
in the absence of a change in control related to a Transaction.

Note 2 - Basis of Presentation / Significant Accounting Policies:

The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America for interim financial information. Certain information and note
disclosures normally included in financial statements have been omitted pursuant
to Article 10 of Regulation S-X. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included in the accompanying unaudited financial
statements. Operating results for the three and six month periods ended June 30,
2003 are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2003.

For further information, refer to the consolidated financial statements and
footnotes thereto included in our annual report on Form 10-K for the year ended
December 31, 2002.

i3 MOBILE, INC.

Notes to Consolidated Financial Statements

Certain reclassifications have been made for consistent presentation.

Please refer to the discussion of our critical accounting policies contained in
the Management's Discussion and Analysis section of our 2002 Annual Report on
Form 10-K (which discussion is incorporated herein by reference).

In June 2002, Statement of Financial Accounting Standards ("SFAS") No. 146,
"Accounting for Exit or Disposal Activities" ("SFAS No. 146") was issued. SFAS
No. 146 addresses the accounting for costs to terminate a contract that is not a
capital lease, costs to consolidate facilities and relocate employees, and
involuntary termination benefits under one-time benefit arrangements that are
not an ongoing benefit program or an individual deferred compensation contract.
A liability for contract termination costs should be recognized and measured at
fair value either when the contract is terminated or when the entity ceases to
use the right conveyed by the contract. A liability for one-time termination
benefits should be recognized and measured at fair value at the communication
date if the employee would not be retained beyond a minimum retention period
(i.e., either a legal notification period or 60 days, if no legal requirement
exists). For employees which will be retained beyond the minimum retention
period, a liability should be accrued ratably over the future service period.
The provisions of the statement will be effective for disposal activities
initiated after December 31, 2002. During the first quarter of 2003, the Company
adopted SFAS No. 146 and recorded a charge of $1.7 million. Refer to Note 1.

The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25), and related interpretations in accounting
for its stock option plan and stock awards with the disclosure provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation." Under APB 25,
compensation expense is computed to the extent that the fair value of the
underlying stock on the date of grant exceeds the exercise price of the employee
stock option or stock award. Compensation so computed is deferred and then
recognized over the vesting period of the stock option or award.

The Company applies SFAS No. 123, Emerging Issues Task Force Abstract No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services" (EITF 96-18) and
related interpretations in accounting for issuances of stock awards to
non-employees. Under SFAS No. 123 these equity transactions are accounted for
based on the fair value of the consideration received or the fair value of the
equity instruments issued, whichever is more reliably measurable. The value of
the equity instruments is calculated under a fair value based method using a
Black-Scholes pricing model. EITF 96-18 defines the measurement date for
determining fair value as the earlier of the date at which a commitment for
performance by the counterparty to earn the equity instruments is reached or the
date at which the counterparty's performance is complete.

If compensation expenses had been recognized based on the fair value of the
options at their grant date, in accordance with SFAS No. 123, the Company's net
loss and net loss per share would have been reduced to the pro-forma amounts
indicated below for the periods ended June 30:

Three Months Ended Six Months Ended
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------

Net loss:
As reported .................................. $ (1,578) $(12,049) $ (7,774) $(21,981)
Add (Deduct): Total stock-based employee
compensation income (expense) determined under
fair value methods for all awards ............ 7 (157) (94) (314)
-------- -------- -------- --------
Pro forma .................................... (1,571) (12,206) (7,868) (22,295)

Basic and diluted net loss per share
As reported .................................. $ (0.08) $ (0.57) $ (0.39) $ (1.01)
Pro forma .................................... $ (0.08) $ (0.58) $ (0.39) $ (1.02)

i3 MOBILE, INC.

Notes to Consolidated Financial Statements

Note 3 - Significant Customers:

During the six months ended June 30, 2003, revenues from the Company's Pronto
product offering and from one wireless network operator customer for its legacy
wireless alert product accounted for 39% and 24% of total net revenues,
respectively. During the six months ended June 30, 2002, the Company had two
wireless network operator customers for its legacy wireless alert product, which
combined, accounted for approximately 75% of its total net revenues. In
conjunction with the Company's March 2003 decision to terminate the Pronto
service and implement cost saving measures while seeking a Transaction, all
revenue producing activities from both the Pronto product offering and from its
legacy wireless alert product offerings were ceased.

Note 4 - Long-lived Asset Impairment:

During March 2003, the Company took action on a plan approved by its Board of
Directors and consequently terminated the Pronto service and initiated further
cost saving measures. As a result of this plan, management reviewed the fair
value of the Company's long-lived assets, including related prepaid maintenance
contracts, in accordance with SFAS No. 144 and recorded a $0.5 million non-cash
charge to the Company's results of operations. During its impairment review, the
Company assessed its future cash flows and determined that it was necessary to
record an impairment charge to reduce the carrying value of its long-lived
assets to their estimated fair value.

Note 5 - Subsequent Event:

On August 5, 2003, the Company announced that it had entered into a nonbinding
letter of intent with ACE*COMM Corporation ("ACEC"), a publicly traded global
provider of advanced convergent mediation products and enterprise telemanagement
software applications. Although the Company has entered into a nonbinding letter
of intent for a merger transaction with ACEC, the Company has not yet entered
into any definitive binding agreement and there can be no assurance the Company
will be able to do so, or to do so on the terms as outlined in the letter of
intent. In the event the Company is unable to effect a transaction with ACEC in
the near future, or to do so on favorable terms, the Company may be required to
pursue alternative potential transactions to maximize stockholder value or
distribute the assets of the Company and there can be no assurance that the
Company can be able to do so or do so on favorable terms.

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

The following discussion of our financial condition and results of operations
should be read together with our consolidated financial statements and the
related notes included in this document and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the audited
financial statements and notes thereto for the years ended December 31, 2002,
2001 and 2000 included in our annual report on Form 10-K for the year ended
December 31, 2002, and presumes that readers have access to, and will have read,
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" contained in such Form 10-K.

Overview

From our inception in June 1991 until 2001, our business was comprised of
distributing customized text-based information to mobile devices under the
"Powered by i3 Mobile" product brand. During 2001, we evolved from a company
that distributed customized text-based information to mobile devices under the
"Powered by i3 Mobile" product brand into a company that we believed was among
the first to create a premium mobile subscription information and communication
service for telephones. This service, Pronto, was marketed directly to consumers
delivering information and service on demand 24 hours a day, combining the
service of a mobile concierge with the simplicity of flat-menu voice recognition
technology.

We have determined that our direct to consumer marketing approach for Pronto has
not proven effective in quickly growing our subscriber base. While we have
pursued the establishment of sales channels for Pronto through marketing and
distribution relationships with third parties, we have determined that the
establishment of such sales channels would require the ability to fund negative
cash flow and losses until such time as significant revenue streams were
realized, which could take additional time beyond the Company's current cash
resources. Consequently, we have determined that the establishment of sales
channels through marketing and distribution relationships are not a viable
alternative.

Although we undertook substantial efforts to research, develop and market the
Pronto product, we did not achieve the subscriber levels which had been
estimated and were needed to sustain the core business model. Due to challenges
we faced in marketing the Pronto product, and our concerns about our cash
resources going forward, in October 2002, we engaged the services of an
investment banker to pursue strategic alternatives, including a potential merger
or acquisition of the Company (collectively, a "Transaction"). In order to
facilitate a Transaction, in March 2003 we announced the termination of the
Pronto service and other cost saving measures in order to manage our cash
resources.

During March 2003, in an effort to continue to reduce recurring operating
losses, preserve cash resources and working capital and facilitate a potential
Transaction, we took action on a plan approved by our Board of Directors and
discontinued revenue producing operations and terminated the Pronto service and
initiated cost saving measures including a reduction of 65 employees,
approximately 78% of its workforce, the termination of our research and
development efforts at our Texas facility, and furthered our ongoing efforts to
resolve contractual obligations. The reduction of workforce resulted in a $1.7
million charge to our results of operations in the first quarter of 2003. As a
result of the plan approved by our Board of Directors, we reviewed the fair
value of our long-lived assets, including prepaid maintenance contracts and
recorded a $0.5 million non-cash charge to our results of operations in the
first quarter of 2003. Additionally, subscription revenues from wireless network
operators were ceased subsequent to March 31, 2003 as we began implementing cost
saving measures and seek to consummate a Transaction.

On August 5, 2003, we announced that we had entered into a nonbinding letter of
intent with ACE*COMM Corporation ("ACEC"), a publicly traded global provider of
advanced convergent mediation products and enterprise telemanagement software
applications. Although we have entered into a nonbinding letter of intent for a
potential merger transaction with ACEC, we have not yet entered into any
definitive binding agreement and there can be no assurance we will be able to do
so, or to do so on the terms as outlined in the letter of intent. Further, the
final economic terms of the potential transaction have not been determined at
this time. In the event we are unable to effect a Transaction in the near
future, or to do so on favorable terms, we may be required to pursue alternative
potential transactions to maximize stockholder value or distribute the assets of
the Company. See "Other Risks and Uncertainties."

Results of Operations

Three Months Ended June 30, 2003 And June 30, 2002

Net Revenue. Net revenue was $0.8 million for the three months ended June 30,
2002 of which $0.7 million was comprised of subscription revenues from wireless
network operators from the Company's wireless alert product offering. In
conjunction with the Company's March 2003 decision to terminate the Pronto
service and continue to implement cost saving measures while seeking a
Transaction, there were no revenue producing activities during the three months
ended June 30, 2003. See "Liquidity and Capital Resources".

Operating Expenses. Operating expenses were $1.9 million for the three months
ended June 30, 2002 and included $1.1 million of call center activities related
to the Pronto product offering in the 2002 period. In conjunction with the
Company's March 2003 decision to terminate the Pronto service and continue to
implement cost saving measures while seeking a Transaction, there were no
operating expenses during the comparative period in 2003.

Sales and Marketing Expenses. Sales and marketing expenses were $5.7 million for
the three months ended June 30, 2002 and were primarily attributable to direct
marketing initiatives incurred for the Pronto product offering. In conjunction
with the Company's March 2003 decision to terminate the Pronto service and
continue to implement cost saving measures while seeking a Transaction, there
were no sales and marketing activities during the comparative period in 2003.

Product Development Expenses. Product development expenses were $1.4 million for
the three months ended June 30, 2002 which included labor and related costs in
for the ongoing refinement and enhancement of Pronto. In conjunction with the
Company's March 2003 decision to terminate the Pronto service and continue to
implement cost saving measures while seeking a Transaction, there were no
product development activities during the comparative period in 2003.

General and Administrative Expenses. General and administrative expenses
decreased by 61% to $1.6 million for the three months ended June 30, 2003 from
$4.1 million for the three months ended June 30, 2002. This decrease from the
June 30, 2002 period was primarily attributable to decreases in personnel and
related costs of $0.9 million and depreciation and maintenance costs of $1.4
million due to the impairment of our long-lived assets in the first quarter of
2003 partially offset by the loss on the sale of our fixed assets in the 2003
period of $0.3 million. We anticipate that general and administrative expenses
will continue to decrease on a quarterly basis for the remainder of 2003, as
compared to the quarter ended June 30, 2003, as a result of our decision to
terminate the Pronto service and focus on the consummation of a Transaction.

Interest Income, Net. Net interest income was $34,000 for the three months ended
June 30, 2003 vs. $0.2 million for the three months ended June 30, 2002. The
decrease was attributable to a lower amount of funds invested in the 2003 period
as compared to 2002 as well as lower average returns on investments due to a
general decrease in interest rates.

Results of Operations

Six Months Ended June 30, 2003 and June 30, 2002

Net Revenue. Net revenue decreased 84% to $0.3 million for the six months ended
June 30, 2003 from $1.7 million for the six months ended June 30, 2002. This
decrease was attributable to a decrease in subscription revenues from wireless
network operators during the 2003 period as compared to the 2002 period as we
had begun to de-emphasize our legacy wireless alert product during 2002. In
conjunction with our March 2003 decision to terminate the Pronto service and
continue to implement cost saving measures while seeking a Transaction, all
revenue producing activities from both the Pronto product offering and from our
legacy wireless alert product offerings were ceased effective March 31, 2003.
See "Liquidity and Capital Resources".

Operating Expenses. Operating expenses decreased by 66% to $1.2 million for the
six months ended June 30, 2003 from $3.6 million for the six months ended June
30, 2002. The decrease was primarily attributable to reduced call center
activities related to the Pronto product offering in the 2003 period. The 2003
period, however, includes approximately $0.1 million in severance and related
costs associated with the March 2003 reduction in our workforce. As of March 31,
2003 all operating activities were ceased as a result of our decision to
terminate the Pronto service and focus on the consummation of a Transaction.

Sales and Marketing Expenses. Sales and marketing expenses decreased by 94% to
$0.6 million for the six months ended June 30, 2003 from $9.5 million for the
six months ended June 30, 2002. The decrease from the June 30, 2002 period is
primarily attributable to direct marketing initiatives incurred during the 2002
period for the Pronto product which were not incurred in the 2003 period. The
2003 period, however, includes approximately $0.3 million in severance and
related costs associated with the March 2003 reduction in our workforce. As of
March 31, 2003 all sales and marketing activities were ceased as a result of our
decision to terminate the Pronto service and focus on the consummation of a
Transaction.

Product Development Expenses. Product development expenses decreased by 60% to
$1.2 million for the six months ended June 30, 2003 from $2.9 million for the
six months ended June 30, 2002. The decrease was primarily as a result of
reduced labor and related costs in the 2003 period for the ongoing refinement
and enhancement of Pronto versus the 2002 period. The 2003 period, however,
includes approximately $0.3 million in severance and related costs associated
with the March 2003 reduction in our workforce. As of March 31, 2003 all product
development activities were ceased as a result of our decision to terminate the
Pronto service and focus on the consummation of a Transaction.

General and Administrative Expenses. General and administrative expenses
decreased by 43% to $4.7 million for the six months ended June 30, 2003 from
$8.2 million for the six months ended June 30, 2002. This decrease from the June
30, 2002 period was primarily attributable to decreases in personnel and related
costs of $1.3 million due to our March 2003 reductions in workforce and
depreciation and maintenance costs of $2.7 million due to the impairment of our
long-lived assets in the first quarter of 2003. These decreases were partially
offset by approximately $1.0 million in severance costs incurred during the 2003
period associated with the reductions in our workforce and $0.3 million for the
loss on the sale of our fixed assets in the 2003 period.

Interest Income, Net. Net interest income was $0.1 million for the six months
ended June 30, 2003 as compared to $0.4 million for the six months ended June
30, 2002. The decrease was attributable to a lower amount of funds invested in
the 2003 period as compared to 2002 as well as lower average returns on
investments due to a general decrease in interest rates.

Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through sales of
our common and preferred securities and the issuance of long-term debt, which
has resulted in aggregate cash proceeds of $130.1 million through June 30, 2003.
We have incurred substantial losses and negative cash flows from operations in
every fiscal period since inception. Our working capital decreased to $10.8
million at June 30, 2003 from $16.9 million at December 31, 2002. As of June 30,
2003, we have an accumulated deficit of approximately $148 million.

Net cash used in operating activities was $9.1 million for the six months ended
June 30, 2003 and $15.1 million for the six months ended June 30, 2002. The
principal use of cash in each of these periods was to fund our losses from
operations.

We believe that our current cash and cash equivalents would be sufficient to
meet our anticipated cash needs for working capital which includes approximately
$0.5 million of non-cancelable commitments for the remainder of 2003 including
among other things, rent commitments, which management will continue to resolve.
We have determined, however, that we will not continue to operate Pronto at this
time and will instead focus on effecting a Transaction. We anticipate that we
will continue to incur net losses for the foreseeable future. If we effect a
Transaction, we may incur significant uses of cash in connection with a possible
merger or acquisition. If the we fail to enter into a Transaction in the near
term, the resultant reduction of the Company's available cash resources would
have a material adverse effect on our ability to ultimately consummate a
Transaction and therefore could result in distributing our assets. However,
management believes that we have adequate cash resources to continue to
discharge our liabilities as a company through 2004, in the absence of a change
in control related to a Transaction.

During March 2003, in an effort to continue to reduce recurring operating
losses, preserve cash resources and working capital and facilitate a potential
Transaction, we took action on a plan approved by the Board of Directors and
discontinued revenue producing operations and terminated the Pronto service and
initiated cost saving measures including a reduction of 65 employees,
approximately 78% of its workforce, the suspension of its research and
development efforts at its Texas facility, and furthered our ongoing efforts to
resolve contractual obligations. The reduction of workforce resulted in a $1.7
million charge to our results of operations in the first quarter of 2003 in
accordance with Statement of Financial Accounting Standards No. 146. As a result
of the plan approved by the Board of Directors, management reviewed the fair
value of our long-lived assets, including prepaid maintenance contracts and
recorded a $0.5 million non-cash charge to our results of operations in the
first quarter of 2003. Additionally, subscription revenues from wireless network
operators were ceased subsequent to March 31, 2003 as we began implementing cost
saving measures and seek to consummate a Transaction.

Net cash provided by investing activities was $0.4 million for the six months
ended June 30, 2003 vs. cash used in investing activities of $0.7 million for
the six months ended June 30, 2002. The amounts provided in the 2003 period were
attributed to the sale of the majority of the Company's fixed assets. The
amounts invested in the 2002 period were principally related to Pronto.

Net cash used in financing activities was $2.5 million for the six months ended
June 30, 2002. The amounts used in the 2002 period included $2.2 million for the
repurchase of treasury stock and $0.3 million for the repayment of certain
capital lease obligations. No such amounts were expended in the 2003 period.

Critical Accounting Policies

Certain Factors that May Affect Future Results

This quarterly report on Form 10-Q contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. When used in this report, the words
"believe," "anticipate," "think," "intend," "plan," "expect," "project," "will
be" and similar expressions identify such forward-looking statements, but their
absence does not mean that the statement is not forward-looking. The forward
looking statements included herein are based on current expectations and
assumptions that involve a number of risks and uncertainties, including the
statements in Liquidity and Capital Resources regarding the

adequacy of funds to meet funding requirements. Our actual results may differ
significantly from the results discussed in the forward-looking statements. A
number of uncertainties exist that could affect our future short term operating
results, including, without limitation, our ability to locate and consummate a
Transaction with a suitable strategic investment partner, acquisition candidate
or other investment opportunity and our ability to manage our cash resources
until we are able to do so. In light of the significant risks and uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such statements should not be regarded as a representation by the Company or any
other person that the objectives and plans of the Company will be achieved. We
undertake no obligation to update publicly any forward-looking statements or
reflect new information, events or circumstances after the date of this report
or to reflect the occurrence of unanticipated events.

OTHER RISKS AND UNCERTAINTIES

Before deciding to invest in i3 Mobile or to maintain or increase your
investment, you should carefully consider the risks described below, in addition
to the other information contained in this report and in our other filings with
the SEC. Additional risks and uncertainties not presently known to us may also
affect our business operations. If any of these risks actually occur, our
business, financial condition or results of operations could be seriously
harmed. In that event, the market price of our common stock could decline and
you may lose all or part of your investment.

There can be no assurance that we will be able to consummate a Transaction. We
have incurred recurring operating losses, and operations have not generated
positive cash flows. We have determined that a Transaction may be the best means
available to leverage our remaining cash resources and to maximize stockholder
value. Although we have entered into a nonbinding letter of intent for a
potential merger transaction on August 4, 2003, we have not entered into any
definitive binding agreement, and there can be no assurance we will be able to
consummate a Transaction, or to do so on favorable terms. Further, the letter of
intent does not finalize the exact economic terms of a potential transaction
with ACEC. Such final terms may be less favorable than anticipated. In the event
we are unable to effect a Transaction, we will be required to implement
additional cost reductions or distribute our assets.

The potential benefits of a Transaction may not be realized. Although we believe
that a Transaction may enhance stockholder value, any potential Transaction
involves significant risks, many of which will be beyond our control. We may not
realize the benefits of any potential Transaction because of numerous
integration challenges, exposures to unforeseen liabilities, and the increased
risk of costly and time-consuming litigation, including stockholder lawsuits.
Further, the market price of common stock received may decline as a result of
any potential Transaction if the integration with any potential Transaction
partner is unsuccessful, if we do not achieve the perceived benefits of any
potential Transaction as rapidly or to the extent anticipated by financial
analysts or investors, or if the effect of any potential Transaction is not
consistent with our expectations

Insiders own a large percentage of our stock, which could delay or prevent a
change in control and may negatively affect your investment. As of June 30,
2003, our officers, directors and affiliated persons beneficially owned
approximately 27% of our voting securities. J. William Grimes, our President,
interim Chief Executive Officer and Chairman of the Board of Directors,
beneficially owned approximately 24% of our voting securities as of that date.
These stockholders will be able to exercise significant influence over all
matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions, which could have the effect of
delaying or preventing a third party from acquiring control over us and could
affect the market price of our common stock.

We do not plan to pay any dividends. Investors who need income from their
holdings should not purchase our shares. We intend to retain any future earnings
to fund the operation and expansion of our business. We do not anticipate paying
cash dividends on our shares in the future. As a result, our common stock is not
a good investment for people who need income from their holdings.

Our stock price may be volatile due to factors outside of our control. Since our
initial public offering on April 6, 2000, our stock price has been extremely
volatile. During that time, the stock market in general, and The Nasdaq National
and SmallCap Markets and the securities of technology companies in particular,
has experienced extreme price and trading volume fluctuations. These
fluctuations have often been unrelated or disproportionate to the operating
performance of individual companies. The following factors, among others, could
cause our stock price to fluctuate: the amount of our limited cash resources, an
announcement of our intention to consummate a Transaction

with a suitable strategic investment partner or acquisition candidate, actual or
anticipated variations in operating results; announcements of operating results
and business conditions by our customers and suppliers; announcements by our
competitors relating to new customers, technological innovation or new services;
economic developments in our industry as a whole; and general market conditions.
These broad market fluctuations may materially adversely affect our stock price,
regardless of our operating results. Our stock price may fluctuate due to
variations in our operating results.

Certain provisions of our charter documents provide for limited personal
liability of members of our board of directors. Our certificate of incorporation
and by-laws contain certain provisions which reduce the potential liability of
members of our board of directors for certain monetary damages and provide for
indemnity of other persons. We are unaware of any pending or threatened
litigation against us or our directors that would result in any liability for
which any of our directors would seek indemnification or other protection.

We have in place anti-takeover provisions that could make it more difficult to
acquire us. Our certificate of incorporation, our bylaws and Delaware law
contain provisions that could make it more difficult for a third party to
acquire us without the consent of our board of directors, even if doing so would
be beneficial to our stockholders. For example, a takeover bid otherwise favored
by a majority of our stockholders might be rejected by our board of directors.
During 2001, we changed our charter to include provisions classifying our board
of directors into three groups so that the directors in each group will serve
staggered three-year terms, which would make it difficult for a potential
acquirer to gain control of our board of directors. We are also afforded the
protections of Section 203 of the Delaware General Corporation Law, which
provides certain restrictions against business combinations with interested
stockholders.

Our common stock will be subject to delisting from the Nasdaq Small Cap market.
Our common stock is currently trading on the Nasdaq SmallCap Market ("Nasdaq
SmallCap"). By letter dated March 18, 2003 from Nasdaq, we have been made aware
that we currently do not meet the minimum $1 per share requirement for continued
listing on the Nasdaq SmallCap Market. In accordance with Marketplace Rule
4310(c)(8)(D), we have been provided with 180 days, until September 15, 2003, to
regain compliance. If at anytime before September 15, 2003, the bid price of our
common stock closes at $1.00 per share or more for a minimum of 10 consecutive
trading days, we will be provided with notification that we are in compliance
with the rule for continued listing. If compliance cannot be demonstrated by
September 15, 2003, we would need to meet the initial listing criteria for the
SmallCap Market under Marketplace Rule 4310(c)(2)(A), whereby we would be
granted an additional 180 day grace period to regain compliance. For continued
listing, and in addition to the $1 minimum bid price, we must have (i) $2.5
million in stockholders' equity or $35 million market value of listed securities
or $500,000 net income from continuing operations; (ii) 500,000 publicly held
shares; (iii) $1 million market value of publicly held shares; (iv) at least 300
stockholders; and (v) at least two market makers. Furthermore, if we are able to
regain compliance with the listing standards for the Nasdaq National Market in
accordance with Nasdaq Marketplace Rule 4450(a)(2), we would again be eligible
for listing on the Nasdaq National Market; however there can be no assurance of
our ability to meet the standards of the Nasdaq National market and regain
listing. If we are unable to demonstrate compliance with the Nasdaq SmallCap
criteria for maintaining our listing, our common stock would be subject to
delisting. Except for a couple of days, our common stock has continued to close
at less than $1.00 per share. If our common stock were to be delisted from
trading on the Nasdaq SmallCap and were neither re-listed thereon nor listed for
trading on another recognized securities exchange, trading, if any, in the
common stock may continue to be conducted on the OTC Bulletin Board or in the
non-Nasdaq over-the-counter market. Delisting would result in limited release of
the market price of the common stock and limited news coverage of our company
and services and could restrict investors' interest in our common stock and
materially adversely affect the trading market and prices for our common stock
and our ability to issue additional securities or to secure additional
financing.

Information that we may provide to investors from time to time is accurate only
as of the date we disseminate it, and we undertake no obligation to update the
information. From time to time, we may publicly disseminate forward-looking
information or guidance in compliance with Regulation FD promulgated by the
Securities and Exchange Commission. This information or guidance represents our
outlook only as of the date that we disseminated it, and we undertake no
obligation to provide updates to this information or guidance in our filings
with the Securities and Exchange Commission or otherwise.

If our cash balances and operating results fall below investors' expectations,
our stock price could significantly decline. Our quarterly operating results
have fluctuated in the past and are likely to fluctuate significantly in the

future due to a variety of factors, many of which are outside of our control. If
our quarterly or annual operating results do not meet the expectations of
investors and securities analysts, the trading price of our common stock could
significantly decline. As a result of any of these factors, our quarterly or
annual operating results could fall below the expectations of public market
analysts and investors. In this event, the price of our common stock could
significantly decline.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We have limited exposure to financial market risks, including changes in
interest rates. We do not currently transact significant business in foreign
currencies and, accordingly, are not subject to exposure from adverse movements
in foreign currency exchange rates. Our exposure to market risks for changes in
interest rates relates primarily to corporate debt securities. We place our
investments with high credit quality issuers and, by policy, limit the amount of
the credit exposure to any one issuer. Our general policy is to limit the risk
of principal loss and ensure the safety of invested funds by limiting market and
credit risk. All highly liquid investments with a maturity of less than three
months at the date of purchase are considered to be cash equivalents.

As of June 30, 2003, we had no debt outstanding. We currently have no plans to
incur debt during the next twelve months. As such, changes in interest rates
will only impact interest income. The impact of potential changes in
hypothetical interest rates on budgeted interest income in 2003 has been
estimated at approximately $0.1 million or approximately 1% of budgeted net loss
for each 1% change in interest rates.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness the our disclosure controls
and procedures as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures as of the end of the period covered
by this report were designed and are functioning effectively to provide
reasonable assurance that the information required to be disclosed by us in
reports filed under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms. We believe a controls system, no matter how well designed and operated,
cannot provide absolute assurance that the objectives of the controls system are
met, and no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within a company have been
detected.

(b) Change in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during
our most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

Part II
Other Information

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 3.1 Bylaws of i3 Mobile, Inc., as amended through June 23,
2003

Exhibit 31.1 Certification of Chief Executive Officer as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2 Certification of Chief Financial Officer as adopted
pursuant Section 302 of the Sarbanes-Oxley Act of 2002

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

Exhibit 32.2 Certification of Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K-The Company filed the following Current Reports
on Form 8-K during the second quarter:

On May 16, 2003, under Items 7 and 9, to furnish a press release
announcing its results for the quarterly period ended March 31,
2003.

On August 5, 2003, under Item 5, to furnish a press release
announcing the execution of a Letter of Intent, dated August 4,
2003 (the "Letter of Intent"), between i3 Mobile, Inc. and ACE*COMM
Corporation and to furnish the Letter of Intent.

SIGNATURES

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

Dated: August 13, 2003

i3 MOBILE, INC.

By: /s/ Edward J. Fletcher
---------------------------
Chief Financial Officer

Exhibit Index

Exhibit
Number Exhibit Description
------ -------------------

3.1 Bylaws of i3 Mobile, Inc., as amended through June 23, 2003

31.1 Certification of Chief Executive Officer as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer as adopted pursuant
Section 302 of the Sarbanes-Oxley Act of 2002

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

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002