SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

For the fiscal year ended December 31, 2003
Commission file number 0-23044

MOTIENT CORPORATION
(Exact name of registrant as specified in its charter)

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

300 Knightsbridge Parkway
Lincolnshire, IL 60069
847-478-4200
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (847) 478-4200

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

(Title of class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. Yes [X] No [ ]

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

The aggregate market value of shares of common stock held by non-affiliates at
June 30, 2004 was approximately $200,051,042.

Indicate by check mark whether registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes __ No X

Number of shares of common stock outstanding at June 24, 2004: 29,773,994

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

Page

PART I

Introductory Note 3
Cautionary Note Regarding Forward-Looking Statements 4
Item 1. Business 5
Item 2. Properties 46
Item 3. Legal Proceedings 47
Item 4. Submission of Matters to a Vote of Security Holders 47

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 48
Item 6. Selected Financial Data 51
Item 7. Management's Discussion and Analysis of Financial Condition and 55
Results of Operations
Item 7A. Quantative and Qualitative Disclosures About Market Risk 97
Item 8. Financial Statements and Supplementary Data 97
Item 9. Changes in and Disagreements with Accountants on Accounting and 97
Financial Disclosure
Item 9A. Controls and Procedures 98

PART III

Item 10. Directors and Executive Officers of Motient 104
Item 11. Executive Compensation 108
Item 12. Security Ownership of Certain Beneficial Owners and Management and 115
Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions 119
Item 14. Principal Accountant Fees and Services 123

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 124

Signatures
Financial Statements

PART I
------

INTRODUCTORY NOTE
-----------------

This annual report on Form 10-K relates to the year ended December 31, 2003. We
did not file a report on Form 10-K for this period previously because we have
only recently completed our financial statements for this period.

As previously disclosed in our prior reports, including most recently in our
quarterly report on Form 10-Q for the quarter ended September 30, 2003 filed on
June 7, 2004, we were not able to complete our financial statements for the year
ended December 31, 2002 and for the quarters ended June 30, 2002 and September
30, 2002 until we resolved the appropriate accounting treatment with respect to
certain transactions that occurred in 2000 and 2001. We initiated a review of
the appropriate accounting treatment for these transactions in July 2002. The
transactions in question involved the formation of and certain transactions with
Mobile Satellite Ventures LP, or MSV, in 2000 and 2001 and the sale of certain
of our transportation assets to Aether Systems, Inc. in 2000. We resolved these
accounting issues and, on March 22, 2004, we filed our annual report on Form
10-K for the year ended December 31, 2002, as well as our quarterly reports on
Form 10-Q for the quarters ended June 30, 2002 and September 30, 2002.
Concurrently with the filing of those reports, we also filed an amendment to our
quarterly report on Form 10-Q for the quarter ended March 31, 2002 to reflect
restated financial statements for such period. After completion of our annual
and quarterly reports for fiscal year 2002, we subsequently filed our quarterly
reports on Form 10-Q for the quarters ended March 31, June 30, and September 30,
2003 on April 26, May 14 and June 7, 2004, respectively.

We recently completed our financial statements for the year ended December 31,
2003 and those financial statements are included in this report. The 2001 and
the first quarter of 2002 comparative financial statements provided herein have
been restated (see Notes 2 and 16 of notes to consolidated financial
statements).

There have been a number of significant developments regarding Motient's
business, operations, financial condition, liquidity, and outlook subsequent to
December 31, 2003. Information regarding such matters is contained in this
report in Note 16 ("Subsequent Events") of notes to consolidated financial
statements.

On January 10, 2002, we filed for protection under Chapter 11 of the Bankruptcy
Code. Our Amended Joint Plan of Reorganization was filed with the United States
Bankruptcy Court for the Eastern District of Virginia on February 28, 2002. The
plan was confirmed on April 26, 2002, and became effective on May 1, 2002. In
the consolidated financial statements provided herein, all results for periods
prior to May 1, 2002 are referred to as those of the "Predecessor Company" and
all results for periods including and subsequent to May 1, 2002 are referred to
as those of the "Successor Company". Due to the effects of the "fresh start"
accounting, results for the Predecessor Company and the Successor Company are
not comparable (See Note 2, "Significant Accounting Policies," of notes to
consolidated financial statements).

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

Statements regarding factors that may cause actual results to differ materially
from those contemplated by such forward-looking statements, or cautionary
statements, include, among others, those under the captions "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Overview" and "Risk Factors," and elsewhere in this report, including in
conjunction with the forward-looking statements included in this report. All of
our subsequent written and oral forward-looking statements (or statements that
may be attributed to us) are expressly qualified in their entirety by the
cautionary statements referred to above and contained elsewhere in this report.
You should carefully review the risk factors described in our other filings with
the SEC from time to time, including our quarterly reports on Form 10-Q which
will be filed in the future, as well as our other reports and filings with the
SEC.

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

Item 1. Business.

Overview

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

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

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

o mobile data and fleet management systems used by large field service
organizations and transportation companies.

Our eLink service is a two-way wireless email device and electronic organizer
that uses our terrestrial network. We provide our eLink brand two-way wireless
email service to customers accessing email through corporate servers, Internet
service providers, mail service provider accounts and paging network suppliers.
We also offer a BlackBerryTM by Motient solution specifically designed for large
corporate accounts operating in a Microsoft(R) Exchange and Lotus Notes(R)
environment. BlackBerryTM is a popular wireless email solution developed by
Research In Motion Ltd. and is being provided on the Motient(R) Network under an
agreement with Research In Motion. Motient has been providing terrestrial
wireless services to customers for several years, using a network that possesses
four key design attributes:

o two-way communication;

o superior in-building penetration;

o user mobility; and

o broad nationwide coverage.

As of June 15, 2004, Motient's terrestrial wireless two-way data network covers
a geographic area populated by more than 225 million people and is comprised of
over 1,200 base stations that provide service to over 475 of the nation's
largest cities and towns, including virtually all metropolitan statistical
areas. Motient is in the process of rationalizing its network to remove
unprofitable base stations that may impact this coverage. (See "Management's
Discussion & Analysis of Financial Condition and Results of Operation - Cost

Reduction Actions"). As of December 31, 2003 and March 31, 2004, there were
approximately 204,000 user devices and 194,000 user devices, respectively,
registered and 115,000 user devices and 108,000 user devices, respectively, with
active usage on Motient's network. As of December 31, 2002 and 2001, there were
approximately 262,000 user devices and 250,600 user devices, respectively,
registered on Motient's network.

In addition to selling messaging services that use our own network, we are a
national premier dealer for T-Mobile USA and an authorized agent for Verizon
Wireless. Under our agreements with these providers, we sell nationwide network
subscriptions for T-Mobile's third generation global system for mobile
communications/general packet radio service, or GSM/GPRS, wireless voice and
data service, and for Verizon Wireless's third generation code division multiple
access/singular carrier radio transmission technology, or CDMA/1XRTT, wireless
voice and data service. These agreements allow us to sell and promote wireless
email and wireless Internet applications to enterprise accounts on networks with
greater capacity and speed than our own, and that are voice capable.

We are a Delaware corporation with our principal executive offices located at
300 Knightsbridge Parkway, Lincolnshire, Illinois 60069. Our principal executive
offices were formerly located in Reston, VA, but in July 2003, we substantially
completed the move of our corporate headquarters to our present facility. Our
telephone number is (847) 478-4200.

Motient presently has six wholly-owned subsidiaries and a 29.5% interest (on a
fully-diluted basis) in Mobile Satellite Ventures LP (MSV). For further details
regarding Motient's interest in MSV, please see "Recent Developments - Mobile
Satellite Ventures LP". Motient Communications Inc. owns the assets comprising
Motient's core wireless business, except for Motient's Federal Communications
Commission, or FCC, licenses, which are held in a separate subsidiary, Motient
License Inc. Motient License was formed on March 16, 2004, as part of Motient's
amendment of its credit facility, and is a special purpose wholly-owned
subsidiary of Motient Communications that holds all of the FCC licenses formerly
held by Motient Communications. A pledge of the stock of Motient License, along
with other assets of Motient Communications, secures borrowings under the term
credit facility. For further details regarding the formation of Motient License,
please see "Recent Developments - Credit Facility". Our other four subsidiaries
hold no material operating assets other than the stock of other subsidiaries and
Motient's interests in MSV. On a consolidated basis, we refer to Motient
Corporation and its six wholly-owned subsidiaries as "Motient."

Recent Developments

Cost Reduction Initiatives

During the fourth quarter of 2002 and the first quarter of 2003, we renegotiated
several of our key vendor and customer arrangements in order to reduce recurring
expenses and improve our liquidity position. In some cases, we were able to
negotiate a flat rate reduction for continuing services provided to us by our
vendors or a deferral of payable amounts, and in other cases we renegotiated the

scope of services provided in exchange for reduced rates or received
pre-payments for future services. For more information on our negotiations with
certain vendors and customers, please see "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Overview and Introduction --
Cost Reduction Actions."

Since December 31, 2003, we have taken a number of steps to continue to reduce
our operating and capital expenditures in order to lower our cash burn rate. For
example, in February 2004, we reduced our staffing levels from approximately 166
to 112, a reduction of approximately 32.5% of our then-remaining workforce. In
addition, we are currently in the process of assessing our wireless data network
in a coordinated effort to reduce network operating costs while also focusing on
minimizing the potential impact to our customers communications and coverage
requirements. This rationalization encompasses, among other things, the
reduction of unneeded capacity across the network by deconstructing
under-utilized and un-profitable base stations as well as deconstructing base
stations that pass an immaterial amount of customer data traffic. In some cases,
these base stations were originally constructed specifically to serve customers
with nationwide requirements that are no longer customers of Motient. In certain
instances, the geographic area that our network serves may be reduced by this
process and customer communications may be impacted. We have discussed these
changes to our network with many of our customers to assist them in evaluating
the potential impact, if any, to their respective communications requirements.
The full extent and effect of the changes to our network have yet to be
determined. For further information regarding cost reduction actions, please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Overview and Introduction -- Cost Reduction Actions."

Effective January 30, 2004, we hired Communications Technology Advisors LLC, or
CTA, to serve as "Chief Restructuring Entity" and advise us on various ways to
reduce our cash operating requirements. CTA's engagement is for six months but
may be extended at the Company's discretion. For further details regarding CTA's
engagement, please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Overview and Introduction - CTA
Arrangements."

Credit Facility

On March 16, 2004, we entered into an amendment to our January 27, 2003 term
credit facility. The amendment extended the borrowing availability period until
December 31, 2004. As part of this amendment, we provided the lenders a pledge
of all of the stock of a newly-formed special purpose subsidiary of Motient
Communications, Motient License, which holds all of our FCC licenses formerly
held by Motient Communications. On March 16, 2004, in connection with the
execution of the amendment to our credit agreement, we issued warrants to the
lenders to purchase, in the aggregate, 2,000,000 shares of our common stock. The
number of warrants was reduced to an aggregate of 1,000,000 shares of common
stock since we sold 4,215,910 shares of our common stock for aggregate
consideration of approximately $23.2 million in a private placement within 60
days of the execution of the amendment. The exercise price of the warrants is

$4.88 per share. The warrants were immediately exercisable upon issuance and
have a term of five years. The warrants were valued at $6.7 million using a
Black-Scholes pricing model and were recorded as a debt discount and are
amortized as additional interest expense over three years, the term of the
related debt. The warrants are also subject to a registration rights agreement.
Under such agreement, we agreed to register the shares underlying the warrants
upon the request of a majority of the warrant holders, or in conjunction with
the registration of other common stock of Motient. We will bear all the expenses
of such registration. We were also required to pay a commitment fee to the
lenders of $320,000, which accrued into the principal balances of the credit
facility at closing. These fees will be recorded on our balance sheet and will
be amortized as additional interest expense over three years, the term of the
related debt. The credit facility and the amendment impose certain conditions on
our ability to make draws, including compliance with certain financial and
operating covenants. For further details, please see "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Term Credit Facility,".

On April 12, 2004, we used approximately $6.8 million of the proceeds from the
private placement described above to repay all outstanding principal and
interest under this term credit facility (including the commitment fee described
above). This amount may not be reborrowed and approximately $5.7 million remains
available for borrowing by the Company under this facility. For further details,
please see "Overview Private Placement".

Mobile Satellite Ventures LP

On April 2, 2004, two existing investors in MSV invested $17.6 million in MSV in
exchange for class A preferred units of limited partnership interests of MSV. In
connection with this investment, MSV's amended and restated investment agreement
was amended to provide that of the total $17.6 million in proceeds, $5.0 million
was used to repay certain outstanding indebtedness of MSV, including $2.0
million of accrued interest under the $15.0 million promissory note issued to
Motient by MSV. Motient was required to use 25% of the $2.0 million it received
in this transaction, or $500,000, to prepay its existing notes owed to Rare
Medium Group and CSFB. The remainder of the proceeds from this investment were
used for general corporate purposes by MSV. As of the closing of the additional
investment on April 2, 2004, Motient's percentage ownership of MSV was
approximately 29.5% on an "as converted" basis giving effect to the conversion
of all outstanding convertible notes of MSV.

On May 17, 2004, MSV was awarded its first patent on a next generation satellite
system technology containing an ancillary terrestrial component (ATC)
innovation. MSV believes that patent will support its ability to deploy ATC in a
way that minimizes interference to other satellite systems, and addresses ways
to mitigate residual interference levels using interference-cancellation
techniques.

For further details, please see "Management Discussion and Analysis of
Financial Condition and Results of Operations - Mobile Satellite Ventures LP".

Accounting and Auditing Matters

On March 2, 2004, we dismissed PricewaterhouseCoopers as our independent
auditors. The audit committee of our board of directors approved the dismissal

of PricewaterhouseCoopers. PricewaterhouseCoopers was previously appointed to
audit our consolidated financial statements for the period May 1, 2002 to
December 31, 2002, and, by its terms, such engagement was to terminate upon the
completion of services related to such audit. PricewaterhouseCoopers has not
reported on our consolidated financial statements for such period or for any
other fiscal period. On March 2, 2004, the audit committee engaged Ehrenkrantz
Sterling & Co. LLC as Motient's independent auditors to audit our consolidated
financial statements for the period May 1, 2002 to December 31, 2002 and for the
fiscal year ended December 31, 2003.

On June 1, 2004, Ehrenkrantz Sterling & Co. LLC, merged with the firm of
Friedman Alpren & Green LLP. The new entity, Friedman LLP has been retained by
Motient and the Audit Committee of Motient's Board of Directors approved this
decision on June 4, 2004.

As discussed in the Introductory Note and in more detail in Note 2, "Significant
Accounting Policies," of notes to the consolidated financial statements, the
2001 and first quarter of 2002 comparative financial statements provided herein
have been restated and have been re-audited by our current independent auditing
firm, Friedman LLP. The 2001 financial information and the 2002 financial
results for the period January 1, 2002 to April 30, 2002 included herein are
referred to as Predecessor Company results and the financial results for the
period May 1, 2002 to December 31, 2002 and the year ended December 31, 2003
included herein are referred to as Successor Company results.

Management and Board Changes

On June 15, 2004, the board of directors designated Raymond L. Steele and
Jonelle St. John as the board's financial experts.

On May 24, 2004, the board of directors designated Myrna J. Newman, the
Company's controller and chief accounting officer, as the principal financial
officer of the Company.

Also on May 24, 2004, the board of directors elected Christopher W. Downie to
the position of executive vice president, chief operating officer and treasurer.
Mr. Downie remains the principal executive officer.

On May 6, 2004, the board of directors elected Raymond L. Steele to serve as a
member of the board. They also elected him to the Company's Audit Committee.

On May 6, 2004 the board of directors elected Robert L. Macklin to the position
of General Counsel and Secretary.

On March 18, 2004 the board of directors elected Christopher W. Downie to the
position of executive vice president, chief financial officer and treasurer, and
designated Mr. Downie as the Company's principal executive officer.

On February 18, 2004, Daniel Croft, senior vice president, marketing and
business development, and Michael Fabbri, senior vice president, sales, were
relieved of their duties as part of a reduction in force.

On February 10, 2004, our Board of Directors and Walter V. Purnell, Jr. mutually
agreed to end his employment as president and chief executive officer of Motient
and all of its wholly owned subsidiaries. Concurrently, Mr. Purnell resigned as
a director of such entities and of MSV and all of its subsidiaries.

Regulatory Matters

It was reported that in March of 2004, the staff of the FCC circulated a draft
order to the five FCC Commissioners recommending adoption of the plan for the
reallocation of the 800 MHz spectrum commonly known as the "Consensus Plan".
However, the staff apparently also recommended the rejection of Nextel's offer
to pay $850 million to recover the costs of the re-allocation of the spectrum,
as the staff apparently felt this amount to be insufficient to cover the costs
of such re-allocation. On April 8, 2004, Motient filed a request with the FCC
asking that the FCC relocate Motient into the so called "upper-800 MHz band" as
part of the Consensus Plan. The FCC did not adopt the order in April, and one
month later, the Cellular Telecommunications & Internet Association, or CTIA,
proposed a plan that would grant Nextel alternative spectrum in the less
valuable 2.1 GHz band. Verizon Wireless has advanced CTIA's and a similar plan,
and has pledged to bid $5 billion for the 1.9 GHz spectrum if those airwaves are
auctioned. Nextel has vigorously opposed the CTIA and Verizon Wireless plans,
insisting that it be allowed to relocate to the 1.9 GHz spectrum. News accounts
have stated that some senior officials at the FCC would prefer to grant Nextel
the 2.1 GHz spectrum because such a grant is less subject to a court challenge
as an impermissible sale of spectrum outside of an auction. Some members of
Congress have also expressed interest in the proceeding. Given the uncertain
outcome of this proceeding, we cannot assure you that our operations will not be
affected by it.

Legal Matters

On April 15, 2004, Motient filed a claim under the rules of the American
Arbitration Association in Fairfax County, VA, against Wireless Matrix
Corporation, a reseller of Motient's services, for the non-payment of certain
amounts due and owing to Motient under the "take-or-pay" agreement between
Motient and Wireless Matrix. Under this agreement, Wireless Matrix agreed to
purchase certain minimum amounts of air-time on the Motient network. In February
2004, Wireless Matrix informed Motient that it was terminating its agreement
with Motient. Motient does not believe that Wireless Matrix has any valid basis
to do so, and consequently filed the above mentioned claim seeking over $2.6
million in damages, which amount represents Wireless Matrix's total prospective
commitment under the agreement. On May 10, 2004, Motient received notice of a
counter-claim by Wireless Matrix of approximately $1 million, representing such
amounts as Wireless Matrix claims to have paid in excess of services rendered
under the agreement. In June 2004, Motient reached a favorable out of court
settlement with Wireless Matrix, under which Wireless Matrix will pay Motient
$1.1 million.

Sale of SMR Licenses to Nextel Communications, Inc.

On July 29, 2003, our wholly-owned subsidiary, Motient Communications,
entered into an asset purchase agreement with Nextel, under which Motient
Communications sold to Nextel certain of its SMR licenses issued by the FCC for
$3.4 million. The closing of this transaction occurred on November 7, 2003. On
December 9, 2003, Motient Communications entered into a second asset purchase
agreement, under which Motient Communications will sell additional licenses to
Nextel for $2.75 million resulting in a $1.5 million loss which was recorded in
December, 2003. In February, 2004, we closed the sale of licenses covering
approximately $2.2 million of the purchase price, and we closed the sale of
approximately one-half of the remaining licenses in April 2004. The transfer of
the other half of the remaining licenses has been challenged at the FCC by a
third-party. While we believe, based on the advice of counsel, that the FCC will
ultimately rule in our favor, we cannot assure you that we will prevail, and, in
any event, the timing of any final resolution is uncertain. None of these
licenses are necessary for our future network requirements. We have and expect
to continue to use the proceeds of the sales to fund its working capital
requirements and for general corporate purposes. The lenders under our term
credit agreement have consented to the sale of these licenses.

Private Placement

On April 7, 2004, we sold 4,215,910 shares of our common stock at $5.50 per
share for an aggregate purchase price of $23.2 million to The Raptor Global
Portfolio Ltd., The Tudor BVI Global Portfolio, Ltd., The Altar Rock Fund L.P.,
Tudor Proprietary Trading, L.L.C., Highland Crusader Offshore Partners, L.P.,
York Distressed Opportunities Fund, L.P., York Select, L.P., York Select Unit
Trust, M&E Advisors L.L.C., Catalyst Credit Opportunity Fund, Catalyst Credit
Opportunity Fund Offshore, DCM, Ltd., Greywolf Capital II LP and Greywolf
Capital Overseas Fund and LC Capital Master Fund. The sale of these shares was
not registered under the Securities Act of 1933, as amended and the shares may
not be sold in the United States absent registration or an applicable exemption
from registration requirements. The shares were offered and sold pursuant to the
exemption from registration afforded by Rule 506 under the Securities Act and/or
Section 4(2) of the Securities Act. In connection with this sale, we signed a
registration rights agreement with the holders of these shares. Among other
things, this registration rights agreement requires us to file and cause to make
effective a registration statement permitting the resale of the shares by the
holders thereof. We also issued warrants to purchase an aggregate of 1,053,978
shares of our common stock to the investors listed above, at an exercise price
of $5.50 per share. These warrants will vest if and only if we do not meet
certain deadlines between July and November, 2004, with respect to certain
requirements under the registration rights agreement. If the warrants vest, they
may be exercised by the holders thereof at any time through June 30, 2009.

In connection with this sale, we issued to Tejas Securities Group, Inc., our
placement agent for the private placement, and certain CTA affiliates, warrants

to purchase 600,000 shares and 400,000 shares, respectively, of our common
stock. The exercise price of these warrants is $5.50 per share. The warrants are
immediately exercisable upon issuance and have a term of five years. We also
paid Tejas Securities Group, Inc. a placement fee of $350,000 at closing. The
warrants were issued in reliance upon the exemption afforded by Section 4(2) of
the Securities Act.

Additional Equity Placement

On July 1, 2004, we sold 3,500,000 shares of our common stock at a per share
price of $8.57 for an aggregate purchase price of $30.0 million to The Raptor
Global Portfolio Ltd., The Tudor BVI Global Portfolio, Ltd., The Altar Rock Fund
L.P., Tudor Proprietary Trading, L.L.C., York Distressed Opportunities Fund,
L.P., York Select, L.P., York Select Unit Trust, York Global Value Partner,
L.P., Catalyst Credit Opportunity Fund, Catalyst Credit Opportunity Fund
Offshore, DCM, Ltd., Rockbay Capital Fund, LLC, Rockbay Capital Investment Fund,
LLC, Rockbay Capital Offshore Fund, Ltd., Glenview Capital Partner, L.P.,
Glenview Institutional Partners, L.P., Glenview Capital Master Fund, Ltd., GCM
Little Arbor Master Fund, Ltd., OZ Master Fund, Ltd., OZ Mac 13 Ltd., Fleet
Maritime, Inc., John Waterfall, Edwin Morgens, Greyhound Capital II, L.P.,
Greywolf Capital Overseas Fund, Highland Equity Focus Fund, L.P., Highland
Equity Fund, L.P., Singer Children's Management Trust and Strome Hedgecap
Limited. The sale of these shares was not registered under the Securities Act
and the shares may not be sold in the United States absent registration or an
applicable exemption from registration requirements. The shares were offered and
sold pursuant to the exemption from registration afforded by Rule 506 under the
Securities Act and/or Section 4(2) of the Securities Act. In connection with
this sale, we signed a registration rights agreement with the holders of these
shares. Among other things, this registration rights agreement requires us to
file and cause to make effective a registration statement permitting the resale
of the shares by the holders thereof. We also issued warrants to purchase an
aggregate of 525,000 shares of our common stock to the investors listed above,
at an exercise price of $8.57 per share. These warrants will vest if and only if
we do not meet certain registration deadlines beginning in November, 2004, with
respect to certain requirements under the registration rights agreement. If the
warrants vest, they may be exercised by the holders thereof at any time through
June 30, 2009.

In connection with this sale, we issued to certain CTA affiliates and certain
affiliates of Tejas Securities Group, Inc., our placement agent for the private
placement, warrants to purchase 340,000 and 510,000, respectively, shares of our
common stock. The exercise price of these warrants is $8.57 per share. The
warrants are immediately exercisable upon issuance and have a term of five
years. We also paid Tejas Securities Group, Inc. a placement fee of
approximately $850,000 at closing. The shares were offered and sold pursuant to
the exemption from registration afforded by Rule 506 under the Securities Act
and/or Section 4(2) of the Securities Act.

Termination of Motorola and Hewlett-Packard Agreements

In June 2004, we negotiated settlement agreements of our entire outstanding
amounts payable under our vendor financing facility and promissory note with
Motorola and our lease with Hewlett-Packard for certain network equipment. The
full amount due and owing under these agreements was a combined $6.8 million. We
paid or will pay by July 15, 2004 a combined $3.9 million in cash and will issue
a warrant to Motorola to purchase 200,000 shares of our common stock at a price
of $8.68 per share, in full satisfaction of the outstanding balances. In the
case of Hewlett-Packard, the letter of credit of $1.1 million securing payments
under this lease was released to us and we took title to all of the leased
equipment and software, and in the case of Motorola, there was no equipment or
service that Motorola was obligated to provide.

History

Motient was formed in 1988 under the name "American Mobile Satellite
Corporation" to construct, launch and operate a mobile satellite services system
to provide a full range of mobile voice and data services via satellite to land,
air and sea-based customers subject to local regulation. During 1995, Motient
successfully launched its first satellite and initiated commercial voice
service. In late 1996, Motient expanded its mobile data business through the
acquisition of Rockwell International Corporation's dual mode mobile messaging
and global positioning and monitoring service for commercial trucking fleets.

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

Following operation of a joint network for three years, Motient decided to base
its business primarily on the terrestrial network and make the satellite
available to a joint venture. Motient's satellite and related assets and
business were sold on November 26, 2001 to MSV. For more information regarding
this sale, please see the discussion under the caption "Mobile Satellite
Ventures" below.

In connection with Motient's acquisition of Motient Communications from Motorola
in March 1998, Motient's subsidiary, Motient Holdings Inc., issued $335.0
million of 12.25% senior notes due 2008.

Prior to 2002, Motient's working capital and operational financing historically
was derived primarily from internally generated funds and from borrowings under
two bank loan facilities, a $100.0 million term loan facility and a $100.0
million revolving credit facility. Borrowings under the bank facility were
guaranteed by Hughes Electronics Corporation, Singapore Telecommunications Ltd.
and Baron Capital Partners L.P. The indebtedness under the bank facility was
also guaranteed by Motient and certain of its subsidiaries and was secured by
certain assets of Motient. Motient also was required to reimburse the bank
guarantors for any payments made by the bank guarantors pursuant to their
guarantees.

XM Radio

As of December 31, 2000, we had an equity interest of approximately 33.1% (or
21.3% on a fully diluted basis) in XM Satellite Radio Holdings Inc., a public
company that launched its satellite radio service at the end of 2001, and we
controlled XM Radio through our board of director membership and common stock
voting rights. As a result, all of XM Radio's results for the period from July
7, 1999 (the date we acquired 100% voting interest of XM Radio) through December
31, 2000 have been included in our consolidated financial statements. Prior to
July 7, 1999, our investment in XM Radio was accounted for pursuant to the
equity method of accounting.

In January 2001, pursuant to FCC approval to cease control of XM Radio, the
number of directors that we appointed to XM Radio's board of directors was
reduced to less than 50% of XM Radio's directors, and we converted a portion of
our super-voting Class B common stock of XM Radio to Class A common stock. As a
result, we ceased to control XM Radio, and as of January 1, 2001, we accounted
for our investment in XM Radio pursuant to the equity method of accounting.
During 2001, we disposed of all of our remaining shares of XM Radio and ceased
to hold any interest in XM Radio as of November 19, 2001.

Sale of Transportation Business

In November 2000, Motient sold assets relating to its retail transportation
business to Aether Systems and received approximately $45 million. This
consisted of $30 million for the assets, of which $10 million was held in an
escrow account which was subsequently released in the fourth quarter of 2001
upon the satisfaction of certain conditions, and $15 million for a perpetual
license to use and modify any intellectual property owned by or licensed by
Motient in connection with the retail transportation business. Aether Systems
acquired all of the assets used or useful in the retail transportation business,
and assumed the related liabilities. Aether Systems also purchased the existing
inventory in the business. In the fourth quarter of 2000, Motient recognized a
gain of $6.6 million, which represented the difference between the net book
value of the assets sold and the $20 million cash portion of the purchase price
for the assets received at closing. Motient recognized an additional $8.3
million gain in the fourth quarter of 2001 when the additional $10 million of
proceeds were released from escrow. The $1.7 million difference between the
proceeds received and the gain recognized is a result of pricing modifications
that were made at the time of the release of the escrow related to network

capacity agreements. Motient deferred recognition of the $15 million perpetual
license payment over a four year period, which represents the life of the
network airtime agreement that Motient entered into with Aether Systems at the
time of the closing of the asset sale.

Concurrently with the closing of the asset sale, we and Aether Systems entered
into two long-term, prepaid network airtime agreements with a total value of $20
million, of which $5 million was paid at closing, pursuant to which Aether
Systems agreed to purchase airtime on our satellite and terrestrial networks.
Aether Systems also became an authorized reseller of our eLink and BlackBerry TM
by Motient wireless email service offerings.

Mobile Satellite Ventures

History

On June 29, 2000, we formed a joint venture subsidiary, MSV, with certain other
parties, in which we owned 80% of the membership interests. Through November
2001, MSV used our satellite network to conduct research and development
activities. The remaining 20% interests in MSV were owned by three investors
unrelated to Motient. However, the minority investors had the right to
participate in certain business decisions that were made in the normal course of
MSV's business. Therefore, in accordance with Emerging Issues Task Force Issue
No 96-16, "Investor's Accounting for an Investee When the Investor Has a
Majority of the Voting Interest but the Minority Shareholder or Shareholders
Have Certain Approval or Veto Rights", our investment in MSV has been recorded
for all periods presented in the consolidated financial statements included in
this annual report pursuant to the equity method of accounting.

On November 26, 2001, Motient sold the assets comprising its satellite
communications business to MSV. In consideration for its satellite business
assets, Motient received the following:

o a $24.0 million cash payment in June 2000;

o a $41.0 million cash payment paid at closing on November 26, 2001, net
of $4.0 million retained by MSV related to our sublease of real estate
from MSV; and

o a five-year, $15.0 million note.

In this transaction, TMI, a Canadian satellite services provider, also
contributed its satellite communications business assets to MSV. In addition,
Motient purchased a $2.5 million convertible note issued by MSV as part of this
transaction, and certain other investors, including a subsidiary of Rare Medium,
purchased a total of $52.5 million of MSV convertible notes. On August 12, 2002,
we purchased an additional $957,000 of MSV convertible notes. At December 31,
2002 and 2003, on a fully diluted basis, Motient owned approximately 25.5% and
29.5%, respectively, of the equity of MSV, assuming certain other investors
fully exercise their option to make additional investments in MSV as a result of
the FCC's ATC approval process described more fully below.

On April 2, 2004, the above-mentioned additional $17.6 million investment was
consummated. In connection with this investment, MSV's amended and restated
investment agreement was amended to provide that of the total $17.6 million in
proceeds, $5.0 million was used to repay certain outstanding indebtedness of
MSV, including $2.0 million of accrued interest under the $15.0 million
promissory note issued to Motient by MSV. The remainder of the proceeds from
this investment will be used for general corporate purposes by MSV. Motient was
required to use 25% of the $2 million it received in this transaction, or
$500,000, to make prepayments under its existing notes owed to Rare Medium
Group, Inc. and Credit Suisse First Boston. As of the closing of the initial
investment on April 2, 2004, Motient's percentage ownership of MSV was
approximately 29.5% on a fully diluted basis.

MSV's Next-Generation System: ATC Approval Process

In February 2003, the FCC adopted the ATC Order, giving mobile satellite
operators broad authority to use their assigned spectrum to operate an ATC. The
ATC Order established a set of preconditions and technical limits for ATC
operations, as well as an application process for ATC approval of the specific
system incorporating the ATCs that the licensee intends to use. On November 18,
2003, MSV filed an application with the FCC to expand the use of its L-band
spectrum and construct its next-generation hybrid network with ATC. As part of
its next-generation system, MSV intends to use its L-band spectrum, which the
FCC had previously limited to satellite-only services, for terrestrial wireless
services in conjunction with mobile satellite services.

In addition, both proponents and opponents of ATC (including MSV) have filed for
reconsideration of the ATC Order, and the opponents of ATC have filed an appeal
with the U.S. Court of Appeals for the District of Columbia Circuit. Oppositions
to the petitions for reconsideration were filed August 20, 2003; replies were
filed September 2, 2003. The Court of Appeals has held the appeal in abeyance
pending resolution of the reconsideration requests.

MSV's Spectrum Assets

MSV has more than 25 MHz of L-band spectrum that is authorized for use in every
market in North America. The L-band spectrum is positioned within the range of
frequencies used by terrestrial wireless providers in North America. If MSV's
ATC application is granted by the FCC, MSV believes its spectrum assets and

next-generation hybrid system using ATC will be attractive to U.S. wireless
providers to expand such providers' network capacity, provide universal
coverage, and deploy new technology platforms and innovative and differentiated
service offerings.

MSV plans to pursue partnership opportunities with other wireless providers to
optimize its spectrum and next-generation network assets, including joint
partnership arrangements that may include a commitment by a terrestrial operator
to build out the terrestrial component of MSV's next-generation hybrid network.

In addition to its L-band spectrum, MSV has the right to receive 8-10 MHz of
nationwide spectrum in the 2 GHz, or S-band, from TMI. In February 2003,
following petitions filed by several wireless carriers, the FCC cancelled TMI's
authorization in the S-band due to an alleged failure to enter into a
non-contingent satellite construction contract before the specified date. At
this time, the FCC also ceased processing a pending application to approve the
transfer of the authorization to TerreStar, a subsidiary of MSV. In March 2003,
TerreStar and TMI requested that the FCC reverse the cancellation order and
reinstate the license and the process to grant the assignment application. There
can be no assurance that the FCC will ultimately reinstate TMI's S-band license
and permit the transfer of such license to TerreStar or a TerreStar affiliate.

Please see "--Recent Developments--Mobile Satellite Ventures LP" and Note 2,
"Significant Accounting Policies - Restatement of Financial Statements," and
Note 16, "Subsequent Events," of notes to the consolidated financial statements,
for further information concerning MSV.

Motient's Chapter 11 Filing

Events Leading to Chapter 11 Filing

During 2001, Motient undertook a variety of transactions to address its
liquidity needs.

In mid-2001, Motient borrowed an aggregate of $50.0 million from Rare Medium
Group, Inc., or Rare Medium. Motient's obligation to repay this loan was secured
by its aggregate pledge of five million shares of Class A common stock of XM
Radio then held by Motient.

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

In September 2001, Motient laid off approximately 25% of its workforce and
canceled certain of its product initiatives, in order to preserve cash.

In October 2001, Motient and Rare Medium terminated their merger agreement. One
of the principal reasons Motient pursued the Rare Medium merger was to gain
access to cash held by Rare Medium. As a result of the termination of the Rare
Medium merger, Motient did not receive the anticipated cash from that
transaction that would have allowed it to fund certain debt and interest payment
obligations. On October 12, 2001, Motient repaid approximately $26.1 million of
principal and accrued interest owed to Rare Medium by delivering to Rare Medium
five million shares of stock of XM Radio.

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

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

On November 19, 2001, Motient sold 500,000 shares of XM Radio common stock owned
by it for aggregate proceeds of $4.8 million. Motient used such proceeds to
reduce the amount of its reimbursement obligation to the guarantors of its bank
financing by this amount. Also on November 19, 2001, Motient delivered all of
the remaining 9,257,262 shares of XM Radio common stock owned by it to the
guarantors of its bank financing in full satisfaction of the entire remaining
amount of Motient's reimbursement obligations to the bank guarantors.

Pursuit of restructuring plan under protection of bankruptcy code -
conversion of outstanding debt

In late 2001, Motient determined that the continued viability of its business
required restructuring its highly leveraged capital structure. In October 2001,
Motient retained Credit Suisse First Boston Corporation, or CSFB, as financial
advisors to assist it in restructuring its debt.

In January 2002, Motient and an informal committee of its senior noteholders
reached an agreement in principle with respect to the primary terms of a Plan of
Reorganization of Motient and its principal subsidiaries. Accordingly, on
January 10, 2002, Motient and certain of its subsidiaries filed for protection
under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court
for the Eastern District of Virginia. The Bankruptcy Court confirmed the Plan of
Reorganization on April 26, 2002, and the Plan became effective on May 1, 2002.

Upon effectiveness of the Plan, the ownership of Motient changed significantly,
with creditors becoming the new owners of substantially all of the equity of
Motient. Under the Plan, holders of the senior notes exchanged the principal
amount of their notes and all accrued interest thereon for shares of our common
stock. In addition, certain of our trade creditors received shares of our common
stock in settlement of their claims. All then outstanding shares of our
pre-reorganization common stock and all unexercised options and warrants were
cancelled. Holders of our pre-reorganization common stock received warrants to
purchase an aggregate of approximately 1,496,512 shares of common stock. The

warrants were exerciseable to purchase shares of our common stock at a price of
$.01 per share, if and only at such time, the average closing price of our
common stock for ninety consecutive trading days was equal to or greater than
$15.44 per share during the two years following our reorganization. The terms of
these warrants were not met and therefore, they expired May 1, 2004. Also
pursuant to our Plan of Reorganization, we issued to Evercore Partners LP,
financial advisor to the creditors' committee in our reorganization, a warrant
to purchase up to 343,450 shares of common stock, at an exercise price of $3.95
per share. The warrant has a term of five years.

Upon effectiveness of the Plan, our certificate of incorporation and bylaws were
amended and restated. Our restated certificate of incorporation authorizes
Motient to issue up to 100 million shares of common stock and up to 5 million
shares of preferred stock.

On the effective date of our Plan of Reorganization, a new board of directors of
Motient consisting of seven members was established. Effective May 1, 2002, we
adopted "fresh-start" accounting in accordance with the American Institute of
Certified Public Accountants Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code". We determined that the
selection of May 1, 2002 versus April 26, 2002 for the "fresh-start" date was
more convenient for financial statement reporting purposes and that the results
for the period from April 26, 2002 to May 1, 2002 were immaterial to our
consolidated financial statements. Under "fresh-start" accounting, a new entity
has been deemed created for financial reporting purposes.

Further details regarding the Plan of Reorganization are contained in our
disclosure statement with respect to the Plan of Reorganization, which was filed
as Exhibit 99.2 to our current report on Form 8-K dated March 4, 2002.

Effects of Chapter 11 Filing

As a result of our Chapter 11 bankruptcy filing, we saw a slower adoption rate
for our services during the first quarter of 2002. In a large customer
deployment, the upfront cost of the hardware can be significant. Because the
hardware generally is usable only on Motient's network, certain customers
delayed adoption while we were in Chapter 11. In an effort to accelerate
adoption of our services, we did, in selected instances in the first quarter of
2002, offer certain incentives for adoption of our services that were outside of
our customary contract terms, such as extended payment terms or temporary
hardware rental. None of these offers were accepted; therefore, there was no
impact to our financial statements.

Additionally, certain of our trade creditors required either deposits for future
services or shortened payment terms; however, none of these deposits or changes
in payment terms were material, and none of our key suppliers have ceased to do
business with us as a result of our reorganization.

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

Motient's Business Strategy

Motient's objective is to increase revenues by using its enterprise data
experience to continue to penetrate the large markets for mobile data
communications services and solutions and wireless telemetry applications while
keeping costs under control. To meet these objectives, we intend to:

Leverage Distribution Resources of Strategic Resellers. To penetrate target
markets without significant direct sales and marketing expenses, Motient has
signed a number of strategic alliances with industry leaders selling services in
the mobile Internet, field service, transportation and telemetry marketplaces.
Motient intends to leverage the relationships, marketing and distribution
resources and large existing customer bases of these resellers to address
significantly more potential customers than Motient would be able to address on
its own. Motient has a roster of resellers and wholesale arrangements with third
parties for its mobile data communications service and solutions, including
SkyTel Communications, Inc., Metrocall Wireless, Inc., Aether Systems (which
purchased our transportation assets in November 2000), Research In Motion, Ltd.
and Earthlink, Inc., among others. In the market for small to medium-sized
business users, Motient has signed a sales agent agreement with CDW Computer
Centers, Inc. In the telemetry market, Motient has entered into agreements with
a number of device manufacturers, resellers and software vendors to develop and
offer a variety of customer-driven telemetry applications, including heating,
ventilation and air conditioning, or HVAC, system monitoring, energy monitoring,
office and vending machine automation and wireless point-of-sale applications.
Motient plans to continue to seek strategic distribution channels that will
enable it to more fully penetrate its existing markets and access potential new
markets on an incremental basis. In addition, in vertical markets Motient
intends to exploit cross-selling opportunities using some of its existing large
corporate customers.

Leverage Motient's Expertise in Selling and Provisioning Complete Data Solutions
for Enterprise Customers. A key strategic asset of Motient is its experienced
sales, customer care and technical support team. This team is qualified to sell
complete data solutions that may include network services that utilize more than
Motient's core terrestrial network. Motient also has relationships with two
major carriers that enable it to broaden its network services offerings to
include a variety of next generation solutions, including both voice and data
solutions.

Effectively Manage the Anticipated Migration of our Mobile Internet Segment
Customers. Due to the emergence of high-bandwidth competitive data networks, and
with additional voice service capabilities, as well as limitations on the number
of available mobile internet user devices, primarily as a result of Research In
Motion's decision in 2003 to discontinue the RIM 857 product line, we are
implementing initiatives to manage the migration of these customers to
next-generation network solutions. These initiatives include supporting customer
migration efforts by referring these customer relationships to T-Mobile and

Verizon through our agent agreements. This allows us to continue to support our
customers needs, while also generating revenue from these customers. This
migration of customers could also allow for some excess capacity to be removed
from our network, which would reduce our operating costs.

Work With Vendors to Develop Less Expensive and More Functional User Devices to
Address Competition and Increase Demand for its Services. Motient plans to
continue to work with vendors to develop new generations of user devices and
applications that combine improved functionality and convenience at a lower
price. Motient plans to continue to incorporate inexpensive, off the shelf
software or free software in its services. Motient believes that lower price
points will help accelerate the acceptance and adoption of its services in its
traditional markets and will also enable Motient to better penetrate its
targeted new wireless markets. By working with suppliers and by making strategic
software and hardware investments, Motient has lowered the total cost of
ownership of its products. At the same time, Motient has improved the
functionality of its devices and made them smaller and more convenient.

Focus Growth Efforts on Telemetry and Transportation Applications. Telemetry and
transportation applications have several key attributes that make them an
efficient use of the Motient network. They typically have small bandwidth
requirements and can be designed to utilize the network on a 24 hours per day, 7
days per week basis, thus smoothing loading requirements and optimally using our
existing capacity. We believe that telemetry and transportation market segments
are poised for significant growth and that this growth can be accommodated
efficiently on the existing Motient network. The growth of the telemetry and
transportation markets could also allow for some excess capacity to be removed
from our network, which would reduce our operating costs.

Develop New Wireless Applications to Increase Demand and Revenue Per Subscriber.
Motient intends to exploit the market potential of its wireless network by
working with value-added resellers and major e-business solutions providers to
develop additional innovative wireless applications and content-based services.
As market acceptance and demand for wireless email grows, Motient believes users
will demand an increasing variety of Internet-based content and services.
Motient currently offers content-based services for use with its eLink service
provided by GoAmerica, Novarra, Inc., Notify Inc. and Neomar, Inc.

Enhance the Technical Advantages of Motient's Network. Motient has been
providing terrestrial wireless services to customers for several years,
leveraging its nationwide terrestrial wireless two-way data network. Motient
believes that its terrestrial network provides key competitive advantages,
including:

o broad nationwide geographic coverage,

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

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

Motient also believes that its two-way messaging and wireless email products are
superior to currently available "two-way paging" services, based on the full,
two-way messaging capabilities that its network enables.

Take Advantage of Motient's Professional Service and Back-Office Capabilities to
Potential Generate New Revenue Opportunities. Motient has a long track record of
deploying comprehensive and customized data communications solutions to
enterprise customers. These data communications solutions have often required
specialized billing, data switching requirements and inventory and reporting
requirements, among other tailored back-office capabilities. With little
development, these professional services and back-office capabilities can be
tailored to satisfy existing and new customers on Motient's network or an
alternative network. Motient believes that these professional services and
back-office capabilities can be positioned as network or carrier agnostic and
thus provide customers potentially expansive network capabilities and service at
the lowest cost.

Rationalize Cost Structure & Improve Network Utilization. Motient plans to
rationalize its network infrastructure by focusing on market segments that are
most appropriate for the technology. We intend to focus on the telemetry and
transportation markets because we believe that telemetry and transportation
solutions enable us to grow our revenue stream while also reducing the operating
cost of our network because telemetry and transportation applications are less
demanding on our network.

Motient's Wireless Service Offerings

General

Motient targets its data applications to both vertical and horizontal markets.
Applications include wireless email, Internet and Intranet access, fax, paging,
peer-to-peer communications, asset tracking, dispatch, point-of-sale and other
telemetry applications. There are over 22 types of subscriber devices available
from more than 17 manufacturers for use on Motient's terrestrial network. These
devices include Research In Motion handheld devices, ruggedized laptops,
handheld digital assistants and wireless modems for personal computers, or PCs.
Motient has also developed proprietary software and has engaged a variety of
other software firms to develop other "middleware," to minimize its customers'
development efforts in connecting their applications to its network. Also, a
number of off-the-shelf software packages enable popular email software
applications on Motient's network.

It is also Motient's intent to broaden its product line through its agreements
with wireless carriers to resell data solutions on their next generation
high-speed networks. In doing so, we believe we will be able to enhance our
sales performance by offering enterprise customers a full array of technology
solutions that meet their needs, independent of the network.

Mobile Internet

eLink Wireless Email

Motient's eLink wireless email service provides mobile users with integrated
wireless access to a broad range of corporate and Internet email and personal
information management, or PIM, applications. Motient's eLink service can be
used on wireless handheld devices manufactured by Research In Motion, including
the RIM 850 and RIM 857 wireless handhelds. Motient currently offers two
versions of eLink, "eLink AgentSM" and "eLink MessengerSM". eLink Agent and
eLink Messenger may also be combined, offering users the functionality of both
applications on a single handheld device.

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

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

BlackBerry(TM) by Motient

BlackBerry(TM) by Motient is a wireless solution specifically designed for
corporate environments using Microsoft Exchange. BlackBerry(TM) by Motient
operates on the Motient(R) Network and has substantially the same functionality
as Motient's eLink service, including wireless email, as well as a variety of
similar PIM functions and applications. BlackBerry(TM) integrates with Microsoft
Exchange email accounts. Motient also offers a version of BlackBerry(TM) that
integrates with the Lotus Notes email platform.

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

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

Motient is authorized to resell BlackBerry(TM) by Motient pursuant to an
agreement with Research In Motion. Research In Motion also resells
BlackBerry(TM) by Motient on Motient's network through a variety of resellers
and value-added resellers.

T-Mobile/Verizon Wireless

On March 1, 2003, Motient entered into a national premier dealer agreement with
T-Mobile USA, and on May 21, 2003 Motient entered into an authorized agency
agreement with Verizon Wireless. These agreements allow Motient to sell each of
T-Mobile's third generation global system for GSM/GPRS network subscriptions and
Verizon's third generation CDMA/1XRTT network subscriptions nationwide. Motient
is paid for each subscriber put onto either network. Each agreement allows
Motient to continue to actively sell and promote wireless email and wireless
Internet applications to enterprise accounts on networks with greater capacity
and speed, and that are voice capable.

Field Service

In the field service market, long-standing customers such as International
Business Machines Corporation, or IBM, use Motient's customized terrestrial
data applications and rely on certain Motient professional support services and
back-office capabilities to enable their mobile field service technicians to
stay connected. For these and other field service customers, Motient also
provides critical professional support service and back-office functionality
tailored to our customers' respective communications requirements, such as
specialized billing, data switching, inventory tracking, customer support and
reporting.

Transportation

In the transportation market, significant customers such as Aether Systems, take
advantage of Motient's nationwide network, data switching capabilities and
professional support services and back-office capabilities to provide effective
communications solutions to transportation fleets and other similar mobile fleet
customers. For these and other transportation customers, Motient also provide
critical professional support service and back-office functionality tailored to
our customers' respective communications requirements, such as specialized
billing, data switching, inventory tracking, customer support and reporting.

Telemetry

Motient has partnered with a variety of resellers, device manufacturers and
software vendors in the telemetry market. These resellers, device manufacturers
and software vendors integrate customer-specific devices and systems with
Motient's network to provide a wireless means of transmitting data from a fixed

or mobile site to a central monitoring facility. We have partnered with several
application service providers such as U.S. Wireless Data, Inc. and U.S.
Technologies to develop and offer a variety of customer-driven telemetry
applications. Applications include HVAC system monitoring, wireless
point-of-sale systems, energy monitoring, vending and office machine automation
and security/alarm monitoring. We believe that our expansive wireless network
and telemetry experience allow us to provide cost-effective and comprehensive
solutions for these communication requirements.

Pricing of Services

Motient's customers are charged a monthly access fee. In addition to this access
fee, users pay for usage depending on the number of kilobytes of data
transmitted. Motient's pricing plans offer a wide variety of volume packaging
and discounts, consistent with customer demand and market conditions. Generally,
Motient reflects the addition of a subscriber unit upon the registration of a
unit on its network. In certain cases, primarily as it relates to strategic
resellers, a percentage of these subscriber units do not become revenue
producing for up to several months from initial registration on the network.

Motient's Customers

As of December 31, 2003, there were approximately 204,000 user devices
registered on Motient's network, and an established customer base of large
corporations in the following market categories:

Percentage of
Market Categories Total Units
----------------- -----------
Transportation and package delivery 23%
Field service 9
Telemetry and point of sale 16
Wireless internet or email 52
-----------
Total 100%
===

For the year ended December 31, 2003, five customers accounted for approximately
47% of Motient's service revenue, with two of those customers, UPS and SkyTel,
each accounting for more than 11%. The loss of one or more of these customers,
or any event, occurrence or development, which adversely affects Motient's
relationship with one or more of these customers, could harm Motient's business.
The contracts with these customers are generally multi-year contracts, and the
services provided pursuant to such contracts are generally customized
applications developed to work solely on Motient's network.

UPS, Motient's second largest customer for the year ended December 31, 2003 and
eighth largest customer for the three months ended December 31, 2003,
substantially completed its migration to next generation network technology in
the first six months of 2003, and its monthly airtime usage of the Company's
network declined significantly. Consequently, the revenue and cash flows
generated by UPS declined significantly. While the Company expects that UPS will
remain a customer for the foreseeable future, there are no minimum purchase

requirements under the Company's contract with UPS and the contract may be
terminated by UPS on 30 days' notice. As of December 31, 2003, UPS had
approximately 7,120 active units on Motient's network.

In addition, due to a separate arrangement entered into in 2002 under which UPS
prepaid for network airtime to be used by it in 2004, we do not expect that UPS
will be required to make any cash payments to us in 2004 for service to be
provided in 2004. As of June 30, 2004, UPS has not been required to make any
cash payments to us in 2004 for service provided in 2004, and the value of our
remaining airtime service obligations to UPS in respect of the prepayment was
approximately $4.3 million as of May 31, 2004. If UPS terminates its contract
with Motient, any remaining prepayment would be required to be repaid. We have
implemented a number of initiatives to offset the loss of revenue and cash flow
from UPS, including the following:

o further reductions in our employee and network infrastructure costs;

o actions to grow in new revenue from our carrier relationships with
Verizon Wireless and T-Mobile, under which we will be selling voice
and data services on each carrier's next generation wireless networks
as a master agent;

o actions designed to initiate revenue growth from our various telemetry
applications and initiatives; and

o enhancements to our liquidity which are expected to involve the sale
of unneeded frequency assets, such as the sales of certain Specialized
Mobile Radio, or SMR, licenses to Nextel.

These measures may not be sufficient to offset the loss of cash flow and revenue
from UPS.

Marketing and Distribution

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

Strategic Alliances and Resellers

To penetrate new wireless data markets with significant growth potential,
Motient has signed a variety of strategic alliances, including with industry
leaders. Motient intends to leverage the marketing and distribution resources
and large existing customer bases of these resellers to address significantly
more potential customers than Motient would be able to address on its own.
Motient has a roster of industry-leading resellers for its wireless email
services, including SkyTel, Metrocall, Aether Systems, Research In Motion and
Earthlink. Other alliances include:

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

o Motient has teamed with Wynd Communications, Inc. to provide wireless
services for the hearing impaired.

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

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

Furthermore, Motient has broadened its product line by entering into agreements
with a number of wireless carriers to include their next generation high-speed
data services, as well as voice, in Motient's product offerings. By doing so, we
believe that Motient would be able to market itself as a "one-stop shop" for a
full array of technology and product offerings, not just those products
operating on the Motient network.

Direct Sales Force

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

Motient's Network

Motient's wireless network is one of the largest two-way terrestrial data
networks in the United States, providing service to over 475 of the nation's
largest cities and towns, including virtually all metropolitan statistical
areas. The network provides a wide range of mobile data services. Users of
Motient's network access it through subscriber units that may be portable,
mobile or stationary devices.

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

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

We are currently in the process of reducing the number of base stations
operating on our network to reduce network operating costs while also focusing
on minimizing the potential impact to our customers communications and coverage
requirements. This rationalization encompasses, among other things, the
reduction of unneeded capacity across the network by deconstructing
under-utilized and un-profitable base stations as well as deconstructing base
stations that pass an immaterial amount of customer data traffic. For further
information regarding cost reduction actions, please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Overview and Introduction -- Cost Reduction Actions."

Equipment and Supplier Relationships

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

Motient's eLink service can be used on wireless handheld devices manufactured by
Research In Motion, including the RIM 850 and RIM 857 wireless handhelds. In
addition, eLink can be used with Palm(TM) V series and IBM WorkPad handhelds by
using Motient's MobileModem, a wireless modem that clips on to Palm(TM) V series
and IBM WorkPad PDAs to provide these devices with email and Internet access via
the Motient Network. Research In Motion also manufactures modems designed to be
integrated into handheld field service terminals, telemetry devices, utility
monitoring and security systems and certain other computing systems. Motient's
supply arrangements with Research In Motion are not exclusive, and Research In
Motion manufactures similar hardware products for other companies, including
Cingular Wireless LLC, a principal competitor in the two-way wireless email
market segment.

On June 26, 2003, Research In Motion, Limited, or RIM, provided us with a
written End of Life Notification for the RIM 857 wireless handheld device. This
means that RIM will no longer produce this model of handheld device. RIM no
longer manufactures the RIM 850. The last date for accepting orders for the RIM

857 was September 30, 2003, and the last date for shipment of devices was
January 2, 2004. Motient continues to source limited quantities of RIM 857
devices from RIM and Motient has implemented a RIM 857 and RIM 850 "equivalent
to new" program and expects that there will be sufficient returned RIM 857 and
850s to satisfy demand for the foreseeable future. During the years ended
December 31, 2002 and 2003, a majority of Motient's equipment revenues were
attributable to sales of the RIM 857 device, and Motient estimates that
approximately 35% and 52%, respectively, of its monthly recurring service
revenues were derived from wireless messaging that use RIM 857 devices in
December 2002 and December 2003, respectively.

In addition to the messaging devices manufactured by Research In Motion, there
are currently over 21 other types of subscriber units available from
approximately 16 manufacturers that can operate on Motient's terrestrial
network. Examples of portable subscriber units include ruggedized laptop
computers, small external modems, handheld or palmtop "assistants" and pen based
"tablets."

Motient is also working with other device manufacturers and software developers
to bring its network services to other existing popular PDA and wireless email
platforms.

AT&T Corp. provides network telecommunications services, including a nationwide
wireline data network, and leased sites which house regional switching equipment
for Motient's terrestrial network. Motient also has a relationship with AT&T as
Motient's vendor for switched inbound and outbound public switched telephone
network services.

The terrestrial network, and certain of its competitive strengths such as deep
in-building penetration, is based upon single frequency reuse technology.
Motorola holds the patent for the single frequency reuse technology. Motient has
entered into several agreements with Motorola historically under which Motorola
provided certain continued support for the terrestrial network infrastructure,
and ongoing maintenance and service of the terrestrial network base stations. We
currently have certain debt obligations outstanding to Motorola. We do not
currently have any service agreement with Motorola.

Competition

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

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

Employees

In March 2003, we reduced our total staffing levels from approximately 197 to
166. In February 2004, we reduced our total staffing levels from 166 to 112
employees. On December 31, 2003 and May 31, 2004, Motient had 168 and 104
employees, respectively. None of Motient's employees is represented by a labor
union. Motient considers its relations with its employees to be good.

Regulation

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

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

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

The FCC's universal service fund supports the provision of affordable
telecommunications to high-cost areas and the provision of advanced
telecommunications services to schools, libraries, and rural health care
providers. Under the FCC's current rules, end-user revenues derived from the
sale of information and other non-telecommunication services and certain
wholesale revenues derived from the sale of telecommunications services are not
subject to universal service fund obligations. Based on the nature of its
business, Motient is currently not required to contribute to the universal
service fund. Current rules also do not require that Motient impute to its
contribution base retail revenues derived when it uses its own transmission
facilities to provide a service that includes both information service and

telecommunications components. There can be no assurances that the FCC will
retain the exclusions described herein or its current policy regarding the scope
of a carrier's contribution base. Motient may also be required to contribute to
state universal service programs. The requirement to make these state universal
service payments, the amount of which in some cases may be subject to change and
is not yet determined, may have a material adverse impact on the conduct of
Motient's business.

Motient is subject to the Communications Assistance for Law Enforcement Act, or
CALEA. Under CALEA, Motient must ensure that law enforcement agencies can
intercept certain communications transmitted over its networks. Motient must
also ensure that law enforcement agencies are able to access certain
call-identifying information relating to communications over Motient's networks.
The deadline for complying with the CALEA requirements and any rules
subsequently promulgated was June 30, 2002. Based on discussions with Federal
law enforcement agencies regarding the applicability of CALEA's provisions to
Motient, we do not believe that our network, which uses packet data technology,
is subject to the requirements of CALEA. At the suggestion of Federal law
enforcement agencies, we have developed an alternative methodology for
intercepting certain communications over our network for the purposes of law
enforcement surveillance. We believe this alternative methodology has
substantially the same functionality as the standards provided in CALEA. It is
possible that our alternative methodology may ultimately be found not to comply
with CALEA's requirements, or that our interpretation that CALEA does not apply
to our network may ultimately be found to be incorrect.

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

Motient's FCC licenses are granted for a term of 10 years, subject to renewal.
For Motient's non-market-based licenses, or non-auction licenses, renewal is
granted in the ordinary course. Motient no longer holds any auction licenses.
All such licenses were sold in November 2003 to Nextel Communications and its
affiliates.

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

Motient's FCC licenses are subject to restrictions in the Communications Act
that (i) some FCC licenses may not be held by a corporation of which more than
20% of its capital stock is directly owned of record or voted by non-U.S.

citizens or entities or their representatives and (ii) no such FCC license may
be held by a corporation controlled by another corporation, referred to as
indirect ownership, if more than 25% of the controlling corporation's capital
stock is owned of record or voted by non-U.S. citizens or entities or their
representatives, if the FCC finds that the public interest is served by the
refusal or revocation of such license. However, with the implementation of the
Basic Telecommunications Agreement, negotiated under the auspices of the World
Trade Organization and to which the United States is a party, the FCC will
presume that indirect ownership interests in our FCC licenses in excess of 25%
by non-U.S. citizens or entities will be permissible to the extent that the
ownership interests are from World Trade Organization-member countries. If the
25% foreign ownership limit is exceeded, the FCC could take a range of potential
actions that could harm Motient's business.

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

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

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

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

1990. The FCC incorporated a number of these waivers into its regulations when
it implemented Congress's statutory provision creating the commercial mobile
radio service classification. As of March 3, 1999, Motient completed its planned
construction of base stations for which extended implementation was granted by
the FCC in 1996.

On March 14, 2002, the FCC adopted a notice of proposed rulemaking exploring
options and alternatives for improving the spectrum environment for public
safety operations in the 800 MHz band. This notice of proposed rulemaking was
issued by the FCC after a "white paper" proposal was submitted to the FCC by
Nextel in November 2001 addressing largely the same issues. In its white paper,
Nextel proposed that some of its wireless spectrum in the 700 MHz band, lower
800 MHz band, and 900 MHz band be exchanged for spectrum in the upper 800 MHz
band and in the 2.1 GHz band. Nextel's proposal addressed the problem of
interference to public safety agencies by creating blocks of contiguous spectrum
to be shared by public safety agencies. Since the notice of proposed rulemaking
was issued, Motient has been actively participating with other affected
licensees, including Nextel, to reach agreement on a voluntary plan to
re-allocate spectrum to alleviate interference to public safety agencies. On
December 24, 2002, a group of affected licensees, including Motient, Nextel and
several other licensees, submitted a detailed proposal (commonly known as the
Consensus Plan) to the FCC for accomplishing the re-allocation of spectrum over
a period of several years. These parties have also been negotiating a mechanism
by which Nextel would agree to reimburse costs, up to $850.0 million, incurred
by affected licensees in relocating to different parts of the spectrum band
pursuant to the rebanding plan.

In mid-April 2003, the FCC's Office of Engineering and Technology, or OET, sent
a letter to several manufacturers requesting additional practical, technical and
procedural solutions or information that may have yet to be considered. Upon
reviewing the filed comments, OET has indicated that other technical solutions
were possible and were being reviewed by the FCC.

It was reported that in March of 2004, the staff of the FCC circulated a draft
order to the five FCC Commissioners recommending adoption of the "Consensus
Plan" for the reallocation of the 800 MHz spectrum. However, the staff
apparently also recommended the rejection of Nextel's offer to pay $850 million
to recover the costs of the re-allocation of the spectrum, as the staff
apparently felt this amount to be insufficient to cover the costs of such
re-allocation. On April 8, 2004, Motient filed a request with the FCC asking
that the FCC relocate Motient into the so called "upper-800 MHz band" as part of
the Consensus Plan. The FCC did not adopt the order in April, and one month
later, the Cellular Telecommunications & Internet Association, or CTIA, proposed
a plan that would grant Nextel alternative spectrum in the less valuable 2.1 GHz
band. Verizon Wireless has advanced CTIA's and a similar plan, and has pledged
to bid $5 billion for the 1.9 GHz spectrum if those airwaves are auctioned.
Nextel has vigorously opposed the CTIA and Verizon Wireless plans, insisting
that it be allowed to relocate to the 1.9 GHz spectrum. News accounts have
stated that some senior officials at the FCC would prefer to grant Nextel the
2.1 GHz spectrum because such a grant is less subject to a court challenge as an
impermissible sale of spectrum outside of an auction. Some members of Congress
have also expressed interest in the proceeding. Given the uncertain outcome of
this proceeding, we cannot assure you that our operations will not be affected
by it.

Accounting and Auditing Matters

In March 2003, we obtained the concurrence of the staff of the SEC with respect
to our conclusions regarding the appropriate accounting relating to the
formation of and certain transactions with MSV in 2000 and 2001 and the sale of
some of our transportation assets to Aether Systems in 2000. The staff of the
SEC did not object to some aspects of our prior accounting with respect to the
MSV and Aether Systems transactions, but did object to other aspects of our
prior accounting for these transactions. For a description of the material
differences between our original accounting treatment with respect to these
transactions and the revised accounting treatment that we concluded is
appropriate as a result of this process, please see our current report on Form
8-K dated March 14, 2003 and Note 2, "Significant Accounting Policies -
Restatement of Financial Statements," of notes to the consolidated financial
statements.

On April 17, 2003, we dismissed PricewaterhouseCoopers as our independent
auditors, effective upon the completion of services related to the audit of our
consolidated financial statements for the period May 1, 2002 to December 31,
2002. On April 25, 2003, our board of directors approved the engagement of
Ehrenkrantz Sterling & Co. LLC as our independent auditors to (i) re-audit our
consolidated financial statements for the fiscal years ended December 31, 2000
and 2001 and (ii) audit our consolidated financial statements for the period
from January 1, 2002 to April 30, 2002 and the fiscal year that ended on
December 31, 2003.

Please see "-Subsequent Events - Accounting and Auditing Maters" for additional
information.

Further Lane

On July 29, 2003, we entered into a letter agreement with Further Lane Asset
Management Corp. under which Further Lane is providing investment advisory
services to us. In connection with the execution of this letter agreement, we
issued Further Lane a warrant to purchase 200,000 shares of our common stock.
The exercise price of the warrant is $5.10 per share. The warrant is immediately
exercisable upon issuance and has a term of five years. The fair value of the
warrant was estimated at $927,000 using a Black-Scholes model. In September
2003, we recorded a non-cash consultant compensation charge of $927,000 based on
this valuation.

Risk Factors

Our business is subject to a number of significant risks and uncertainties,
including the following:

We have undergone significant organizational restructuring and we face
substantial operational challenges.

We are in the process of evaluating our future strategic direction. We have been
forced to take material actions to reduce operating costs and preserve our
remaining cash. For example, in February 2004 we effected a reduction in force
that reduced our workforce from approximately 166 to 112 employees. The
elimination of certain sales and other personnel may have a negative effect on
our future revenues and growth prospects and our ability to support new product
initiatives and generate customer demand. In addition, we are currently removing
unneeded capacity across the network by deconstructing under-utilized and
un-profitable base stations. The full extent and effect of the changes to our
network have yet to be determined, and these reductions in network capacity may
also have a negative effect on our future revenues and growth prospects.

We are not cash flow positive, and our prospects will depend on our ability to
control our costs while maintaining and improving our service levels.

We do not generate sufficient cash from operations to cover our operating
expenses, and it is unclear when, or if, we will be able to do so. As a result,
we have been involved in the process of reducing our expenditures in a variety
of areas, including a reduction in the number of our employees, the closure of
our Reston facility and the restructuring of our network. We also have
renegotiated several of our key vendor and customer arrangements and continue to
aggressively pursue further vendor cost reductions when opportunities arise. We
continue to use more cash than we generate from operations. Our prospects will
depend in part on our ability to reduce operating costs further and operate more
efficiently, while maintaining and improving our service levels.

We will need additional liquidity to fund our operations.

We do not generate sufficient cash from operations to cover our
operating expenses, and it is unclear when, or if, we will be able to do so.
Even after we begin to generate cash in excess of our operating expenses, we
expect to require additional funds to meet remaining interest obligations,
capital expenditures and other non-operating cash expenses. We currently
anticipate that our funding requirements through 2004 should be met through a
combination of various sources, including:

o cash on hand, including cash generated by our April 7, 2004 and July
1, 2004 private placements of common stock,

o net cash flow from operations,

o our term credit facility, of which $5.7 million remains available for
borrowing through December 31, 2004, and

o proceeds from the sale of certain frequency assets that are not
necessary for our future network requirements (See "Business--Recent
Developments--Sale of SMR Licenses to Nextel Communications, Inc.").

An additional potential funding source is the repayment of a $15.0 million note
from MSV. In April 2004, MSV repaid $2.0 million on this note. We also own an
aggregate of approximately $3.5 million of convertible notes from MSV, which are
mandatorily convertible into equity of MSV in certain circumstances. For
information about these notes and our transactions with MSV, please see
"Management's Discussion and Analysis of Results of Operations -- Mobile
Satellite Ventures LP." There can be no assurance that the foregoing sources of
liquidity will provide sufficient funds in the amounts or at the time that
funding is required. In addition, if our ability to realize such liquidity from
any such source is delayed or the proceeds from any such source are insufficient
to meet our expenditure requirements as they arise, we will seek additional
equity or debt financing, although it is unlikely under current conditions that
such additional financing will be available on reasonable terms, if at all.

We may not be able to meet our debt obligations, operating expenses, working
capital and other capital expenditures.

As of December 31, 2003, we had approximately $36.1 million of debt outstanding
(including our term credit facility, capital leases, notes with Rare Medium and
CSFB and obligations owed to Motorola and accrued interest thereon). See
"Subsequent Events" for further information on the negotiation of settlements
and the termination of certain of these obligations. In January 2003, we secured
a $12.5 million credit facility of which we had drawn $4.5 million as of
December 31, 2003. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources-- Term
Credit Facility" for more information on repayment of outstanding amounts under
this facility. Some of these debt obligations have current interest and
principal requirements. As of December 31, 2003, $3.9 million of our debt
obligations were recorded as current liabilities. We cannot assure you that our
operating cash flow will be adequate to pay the principal and interest payments
on this indebtedness when due, as well as to fund all of our contemplated
capital expenditures. Some of these debt obligations also have certain minimum
covenant requirements.

Our term credit facility imposes certain conditions on our ability to make
draws, including compliance with certain financial and operating covenants. We
provided notices of default and received respective waivers for our covenant
requirements in the monthly periods ended April 2003 through December 2003 under
our term credit facility. We cannot assure you that our operating results will
be adequate to meet future minimum covenant requirements, which could lead to
events of default and acceleration of these debt obligations. Please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Term Credit Facility" for more
information on our debt covenant compliance, defaults, waivers and repayment of
the outstanding amounts under this facility.

If we are not able to make required payments under our credit facility or other
debt obligations, the lenders thereunder could seek to accelerate such
obligations and take actions to seize collateral, any of which could render us
insolvent.

We believe that the implementation of our business strategy is crucial to our
future financial viability and the ability to generate the cash flow necessary
to pay principal and interest, and our working capital and capital expenditure
needs. Although we believe our business strategy will help improve our financial
viability and our cash flow, we cannot assure you that the financial resources
available to us will be sufficient for us to achieve profitability.

We will continue to incur significant losses.

If we do not become profitable, we could have difficulty obtaining funds to
continue our operations. We have incurred net losses every year since we began
operations. These losses are due to the costs of developing and building our
network and the costs of developing, selling and providing products and
services. Although we have significantly reduced our losses, we will continue to
have losses in the future.

We generate a large part of our revenues and cash flows from a small number of
customers, and the loss of one or more key customers could result in a
significant reduction in revenues and cash flows; UPS has recently deregistered
a majority of its units on our network.

For the year ended December 31, 2003, five customers accounted for approximately
47% of our service revenue, with two of those customers each accounting for more
than 11%. None of these significant customers are obligated to purchase any
minimum quantity of airtime, service or hardware from us. There can be no
assurance that the revenue generated from our largest customers will continue in
future periods. We may lose certain revenues from major customers due to churn
and migration to alternative technologies. The loss of one or more of our key
customers, a material reduction in such customers' use of our network, or any
other event, occurrence or development which adversely affects our relationship
with one or more of these customers, could harm our business by reducing revenue
and reducing net cash flow from operations.

In addition, UPS, our second largest customer for the year ended December 31,
2003 and our eighth largest customer for the three months ended December 31,
2003, substantially completed its migration to next generation network
technology by the end of the second quarter of 2003, and its monthly airtime
usage of our network declined significantly. While we expect that UPS will
remain a customer for the foreseeable future, our service contract with UPS may
be terminated by UPS on 30 days' notice. Until June 30, 2003, UPS had
voluntarily maintained its historical level of revenue to mitigate the near-term
revenue and cash flow impact of its reduced network usage. However, beginning in
July 2003, the revenues and cash flow from UPS declined significantly. In
addition, in December 2002 we entered into a separate agreement with UPS under
which UPS made a significant prepayment for network airtime service to be
provided beginning January 1, 2004. The prepayment will be credited against

airtime services provided to UPS beginning January 1, 2004, until the prepayment
is fully credited. If UPS terminates our contract, any remaining prepayment
would be required to be repaid. Based on the current level of network airtime
usage by UPS, we do not expect that UPS will be required to make any cash
payments to us in 2004 for service provided during 2004. For a further
discussion of developments regarding UPS and our plans to offset the loss of
revenue and cash flows from this customer, please see "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

Our growth has been curtailed by funding constraints.

We have significantly decreased the amount that we are spending on the
maintenance and growth of our operations, network and subscriber base due to our
liquidity constraints. We have taken a number of steps to continue to reduce our
operating and capital expenditures in order to lower our cash burn rate;
however, our capital resources currently are not sufficient to permit us to fund
the launch of new products and services. Failure to generate or raise sufficient
funds may require us to delay or abandon some of our expenditures, which could
harm our business and competitive position.

Our internal controls may not be sufficient to ensure timely and reliable
financial information.

During the course of the fiscal 2002 year-end closing process and subsequent
audit of our financial statements for the eight month period ended December 31,
2002, our management and our then-current independent auditors,
PricewaterhouseCoopers, identified several significant deficiencies in our
internal controls. In response to these concerns, we have implemented enhanced
measures and have dedicated more resources to improve our account reconciliation
process and to further strengthen our internal controls. For a description of
these measures, see "Item 14. Controls and Procedures."

We have not yet been able to fully execute all of the salutary procedures and
actions we deem desirable to address our internal control deficiencies.
Significant supplemental resources will continue to be required to maintain
appropriate controls and procedures and to prepare our financial statements and
other disclosures. Failure to maintain such controls and procedures may increase
the risk of future errors or omissions in our financial statements or public
reports or filings and may prevent us from meeting our filing deadlines.

There can be no assurance that these actions and any other actions that we take
to improve our internal controls and procedures will be successful. Our
inability to implement these actions could adversely affect our ability to
record, process, summarize and report financial data in compliance with our
reporting obligations.

We may not be able to realize value from our investment in MSV due to risks
associated with MSV's next-generation business plan.

MSV's next-generation business plan is novel and without established precedent.
Neither MSV nor any other company has developed an integrated hybrid network,
and MSV's success will depend on several factors, including

o the ultimate resolution of pending FCC and court proceedings with
respect to MSV's L-band license and S-band rights;

o MSV's ability to make use of spectrum in the S-band, which is
dependent on the FCC's reinstatement of the S-band authorization
granted to TMI , FCC approval of its transfer to MSV's subsidiary,
TerreStar Networks Inc., and MSV's ability to meet FCC milestones;

o MSV's ability to enter into contractual relationships with its
partners that comply with FCC rules concerning ATC;

o MSV's ability to coordinate with other satellite system operators to
optimize both its overall spectrum access and the utility of the
L-band for certain wireless protocols;

o whether the price paid for spectrum in prior transactions is
indicative of the future value of MSV's spectrum assets and MSV's
ability to effect transactions that realize the value of such spectrum
assets;

o the supply of available wireless spectrum in the marketplace;

o MSV's ability to develop and integrate the complex technologies
associated with its next-generation system,;

o MSV's ability to develop and deploy innovative network management
techniques to permit mobile phones to seamlessly transition between
satellite and terrestrial mode;

o the construction, delivery and launch of MSV's next-generation
satellites and the maintenance of MSV's existing geostationary
satellites;

o MSV's ability to obtain funding for the construction of the satellite
component of its next-generation service on favorable terms;

o MSV's dependence on one or more third party partners to construct the
terrestrial base station component of its next-generation network;

o market acceptance and level of demand for MSV's next-generation
network; and

o protection of MSV's proprietary information and intellectual property
rights.

If MSV is unable to implement its next-generation business strategy, our
investment in MSV could be materially and adversely affected.

Motient may have to take actions which are disruptive to its business to avoid
registration under the Investment Company Act of 1940.

Motient may have to take actions which are disruptive to its business if it is
deemed to be an investment company under the Investment Company Act of 1940.
Motient's equity investments, in particular its ownership interests in MSV, may
constitute investment securities under the Investment Company Act. A company may
be deemed to be an investment company if it owns investment securities with a
value exceeding 40% of its total assets excluding cash items and government
securities, subject to certain exclusions. Investment companies are required to
register under and comply with the Investment Company Act unless an exclusion or
SEC safe harbor applies. If Motient were to be deemed an investment company, it
would become subject to the requirements of the Investment Company Act. As a
consequence, Motient would be prohibited from engaging in business as it has in
the past and might be subject to civil and criminal penalties for noncompliance.
In addition, certain of its contracts might be voidable, and a court-appointed
receiver could take control of Motient and liquidate its business.

We could lose market share and revenues as a result of increasing competition
from companies in the wireless communications industry that have greater
resources and name recognition.

We expect to face intense competition in all of our markets, which could result
in a loss of customers and lower revenues and could make it more difficult for
us to enter new markets. Our competitors include service providers in several
markets -- dedicated mobile data, PCS/cellular, narrowband PCS/enhanced paging
and emerging technology platforms. The growth in wireless data opportunities has
led traditional hardware manufacturers and software developers to invest in
technologies that will allow the migration of core products and services to a
mobile environment. Companies like IBM, Oracle Corporation, Siebel Systems,
Inc., Sun Microsystems, Inc. and Lucent Technologies, Inc. have made significant
investments in the area of mobility to guarantee their place in both the desktop
and mobile/handheld computing environments.

Our eLink service competes with a variety of services that offer two-way
messaging and PDA functionality on small, portable devices. Most of these
competing services are better established in the marketplace, and many
competitors have substantially greater financial, technical, marketing, sales,
distribution and other resources than we have. We expect that we will continue
to compete primarily with Cingular Wireless, which offers wireless data services
over its network, including Research In Motion's BlackBerryTM email service. Our
agreement with Research In Motion permits us to market the BlackBerryTM service
in the United States on the Motient network. These and other firms may enter the
markets where we focus our sales efforts, which may create downward pressure on
the prices for our services and negatively impact our returns. Many of the
existing and potential competitors have financial and other resources far
greater than those of Motient. In addition, continuing consolidation in the
communications industry, including Cingular Wireless' proposed acquisition of
AT&T Wireless, may strengthen existing competitors or give rise to significant
new competitors which would threaten our business.

In addition, a variety of new technologies, devices and services will result in
new types of competition for us in the near future. The emergence of new
protocols such as the wireless access protocol, or WAP, and the Bluetooth
protocol enable the use of the Internet as a platform to exchange information
among people with different devices running on different networks. Also, several
large wireless providers are deploying new, so-called "2.5G" and "3G"
technologies, including new forms of CDMA, time division multiple access, or
TDMA, and GSM technologies, which will increase the data capabilities of
wireless voice and data services and will have a competitive impact on our
business.

Failure to keep pace with rapidly changing markets for wireless communications
would significantly harm our business.

The technology and markets for wireless communications services change rapidly.
Our success depends, in part, on our ability to respond and adapt to change. For
example, large wireless voice carriers are in the process of expanding their
ability to offer wireless data services that may compete with our services, by
deploying "2.5G" and "3G" technologies. These technologies, which include GPRS
and 1XRTT, support both wireless voice and packet data services. While we will
endeavor to enhance the efficiency and performance of our existing data-only
network through a variety of measures, we also expect to consider, as
appropriate, alliances or other contractual arrangements with larger wireless
communications providers, so that we can continue to offer as complete an array
of data services as possible. We cannot guarantee that we will be able to
compete effectively under, or adjust our contemplated plan of development to
meet, changing market conditions. We cannot guarantee that we will be able to
implement our strategy or that our strategy will be successful in these rapidly
evolving markets. The markets for wireless communications services are also
marked by the continuous introduction of new products and services and increased
capacity for services similar to those provided by Motient. Technological
advances may also increase the efficiency of existing products or services. If a
technology becomes available that is more cost-effective or creates a superior
product, we may be unable to access this technology or finance the necessary
substantial capital expenditures that may be required. Our technology may be
rendered less profitable or less viable by existing, proposed or as yet
undeveloped technologies. We cannot guarantee that we will have the financial
and other resources available to compete effectively against companies
possessing such technologies. We are unable to predict which of the many
possible future products and services will meet evolving industry standards and
consumer demands. We cannot guarantee that we can adapt to technological changes
or offer products or services on a timely basis to establish or maintain a
competitive position.

The success of our wireless communications business depends on our ability to
enter into and maintain third party distribution relationships.

A key element of our strategy is to develop and capitalize on distribution
relationships with leading companies who can provide access to significant
numbers of potential customers in our target markets. For example, Motient has
reseller agreements with SkyTel, Metrocall, Aether Systems and Earthlink, as
well as Research In Motion. Because we are relying on these distribution

companies to enable us to acquire subscribers, our success in penetrating our
targeted markets will depend, to a large extent, on the efforts of these
distribution companies, as well as future distribution companies. The rollout of
sales efforts by these distribution companies may be subject to delays, some of
which may be outside of our control. Some of our resellers have experienced
significant financial difficulties in recent periods. Our inability to fully
capitalize on our third party distribution agreements, the termination of or
failure to renew any of these agreements, or our inability to enter into similar
distribution relationships with other leading companies could reduce our access
and exposure to potential customers.

We expect to maintain a limited inventory of devices to be used in connection
with our eLink service, and any interruption in the supply of such devices could
significantly harm our business.

We depend on independent vendors to develop and manufacture wireless
communications devices for our networks, which are significant elements of our
business plan because most of our services require these devices. Some of our
important service offering initiatives are dependent on the timely delivery of a
sufficient quantity of user devices, including the palm-sized devices used with
Motient's eLink wireless email service which are manufactured by Research In
Motion. These suppliers do not sell these devices to us on an exclusive basis.

We carry a limited inventory of these devices and generally have no guaranteed
supply arrangements. Some of these suppliers and vendors are relatively small
companies and have limited resources and production capacities. In addition,
some of our sole-source suppliers themselves rely on sole- or limited-sources of
supply for components included in their devices.

We cannot guarantee that our suppliers will be able to supply us with components
and devices in the quantities and at the times we require, or at all.

We have short-term contracts with the majority of our suppliers. We cannot
guarantee that our suppliers will continue to provide products at attractive
prices, or at all, or that we will be able to obtain products in the future from
these or other providers on the scale and within the time frames we require. On
June 26, 2003, Research In Motion provided us with a written End of Life
Notification for the RIM 857 wireless handheld device. This means that Research
In Motion will no longer be producing this model of handheld device. The last
date for accepting orders was September 30, 2003, and the last date for shipment
of devices was January 2, 2004. Motient continues to source limited quantities
of RIM 857 devices from RIM and Motient has implemented a RIM 857 and RIM 850
"equivalent to new" program and expects that there will be sufficient returned
RIM 857 and 850s to satisfy demand for the foreseeable future. If we cannot
obtain a sufficient supply of RIM 857s, it may harm our business.

Additionally, some or all of our suppliers could enter into exclusive
arrangements with our competitors, or cease selling these components at
commercially reasonable prices, or at all. Research In Motion, which is our
primary supplier of devices for our eLink wireless email service, also markets
and sells BlackBerryTM, which is an alternative wireless email service offered

on the Cingular Interactive network. We also have an agreement with Research In
Motion permitting us to market the BlackBerryTM service in the United States on
our network. If we fail to obtain products on a timely basis at an affordable
cost, or experience any significant delays or interruptions of supply, our
business will be harmed.

If prices charged by suppliers for wireless devices do not decline as we
anticipate, our business may not experience the growth we expect.

Part of our growth is predicated on our suppliers reducing the cost of wireless
communications devices approved and available for use on our network. We believe
that reductions in the cost of wireless communications devices will result in
increased sales of devices, additional subscribers for our services and a
corresponding increase in our service revenues. If we fail to obtain cost
reductions on a timely basis, or experience any significant delays of these
reductions, our revenues could be diminished or fail to increase.

We may not be able to develop, acquire and maintain proprietary information and
intellectual property rights, which could limit the growth of our business and
reduce our market share.

Our wireless communications business depends on technical knowledge, and we
believe that our future success is based, in part, on our ability to keep up
with new technological developments and incorporate them in our products and
services. We own or have the right to use certain of our work products,
inventions, designs, software, systems and similar know-how. While we have taken
steps to diligently protect that information, there is no assurance that the
information will not be disclosed to others or that others will not
independently develop similar information, systems and know-how. Protection of
our information, systems and know-how may result in litigation, the cost of
which could be substantial. There is also no assurance that third parties will
not assert claims that our products or services, including our eLink and
BlackBerryTM by Motient service offerings, infringe on their proprietary rights.

If we are found to infringe or misappropriate a third party's proprietary
rights, we could be required to pay damages to the third party, alter our
products or services, obtain a license from the third party or cease activities
utilizing these proprietary rights, including making or selling products or
services utilizing the proprietary rights. Our inability to do any of the
foregoing on commercially favorable terms could have a material adverse impact
on our business, financial condition or results of operations.

We also rely on some technologies licensed from third parties. We cannot be sure
that these licenses will remain available on commercially reasonable terms or at
all. The loss of these technologies could require us to obtain substitute
technology of lower quality or performance standards or at a greater cost, which
could harm our business.

Patent infringement litigation against Research In Motion may impede our ability
to use and sell certain software and handheld devices.

Our rights to use and sell the BlackBerryTM software and Research In Motion's
handheld devices may be limited or made prohibitively expensive as a result of a
patent infringement lawsuit brought against Research In Motion by NTP Inc. (NTP
v. Research In Motion, Civ. Action No. 3:01CV767 (E.D. Va.)). In that action, a
jury concluded that certain of Research In Motion's BlackBerryTM products
infringed patents held by NTP covering the use of wireless radio frequency
information in email communications. On August 5, 2003, the judge in the case
ruled against Research In Motion, awarding NTP $53.7 million in damages and
enjoining Research In Motion from making, using, or selling the products, but
stayed the injunction pending appeal by Research In Motion. The appeal has not
yet been resolved. As a purchaser of those products, we could be adversely
affected by the outcome of that litigation.

Government regulation may increase our cost of providing services, slow our
expansion into new markets, subject our services to additional competitive
pressures and affect the value of our common stock.

Motient's ownership and operation of wireless communication systems are subject
to significant regulation by the FCC under authority granted by the
Communications Act of 1934 and related federal laws. There is no assurance that
the rules and regulations of the FCC will continue to support our operations as
presently conducted. A number of Motient's licenses are subject to renewal by
the FCC. We cannot guarantee that all existing licenses will be renewed and that
the requisite frequencies will be coordinated. Current federal law requires
prior FCC approval of greater than 25% ownership of Motient by citizens or
entities of foreign countries, which could limit the value of our common stock.

We face burdens relating to the recent trend toward stricter corporate
governance and financial reporting standards.

New legislation or regulations that follow the trend of imposing stricter
corporate governance and financial reporting standards, including compliance
with Section 404 of the Sarbanes-Oxley Act of 2002, may lead to an increase in
our costs of compliance. A failure to comply with these new laws and regulations
may impact market perception of our financial condition and could materially
harm our business. Additionally, it is unclear what additional laws or
regulations may develop, and we cannot predict the ultimate impact of any future
changes.

Motient's competitive position may be harmed if the wireless terrestrial network
technology it licenses from Motorola is made available to competitors.

Motient holds a non-exclusive license to use a single frequency reuse
technology. The terrestrial network, and some of its competitive strengths, such
as in-building penetration, is based upon this technology. Under the terms of
the non-exclusive license, Motorola could enter into arrangements to license
this technology to any of our competitors, and those agreements could harm our
ability to compete.

Motient could incur substantial costs if it is required to relocate its spectrum
licenses under a pending proposal being considered by the FCC.

On March 14, 2002, the FCC adopted a notice of proposed rulemaking exploring
options and alternatives for improving the spectrum environment for public
safety operations in the 800 MHz band. In connection with this proceeding,
Nextel has proposed, in a "white paper" to the FCC, that some of its wireless
spectrum in the 700 MHz band, lower 800 MHz band, and 900 MHz band be exchanged
for spectrum in the upper 800 MHz band and in the 2.1 GHz band. Nextel's
proposal creates blocks of contiguous spectrum to be shared by public safety
agencies. The Nextel proposal, as submitted to the FCC, would require that
Motient either (i) continue to operate using its existing lower 800 MHz band
spectrum on a secondary, non-interfering basis with the public safety agencies
who would be relocated in the same spectrum, or (ii) relocate, at its own
expense, to other spectrum in the 700 MHz or 900 MHz bands. Motient believes it
is highly unlikely that it could continue to operate in the lower 800 MHz bands
on a secondary, non-interfering basis. If Motient is required to relocate to
spectrum in the 700 MHz or 900 MHz bands, it would incur substantial operational
and financial costs, including costs relating to:

o manufacturing replacement infrastructure and user hardware to operate
on Motient's network in the 700 MHz or 900 MHz bands,

o disruptions to existing customers as a result of the relocation to
other spectrum bands,

o possible diminished data speed and

o coverage gaps.

There are also potential problems with the 700 MHz and 900 MHz bands that might
make it difficult, if not impossible, for Motient to duplicate its existing
operations in the 800 MHz band.

On December 24, 2002, a group of affected licensees, including Motient, Nextel,
and several other licensees, submitted a detailed proposal to the FCC for
accomplishing the re-allocation of spectrum over a period of several years.
These parties have also been negotiating a mechanism by which Nextel would agree
to reimburse costs, up to $850 million, incurred by affected licensees in
relocating to different parts of the spectrum band pursuant to the rebanding
plan.

In mid-April 2003, the FCC's Office of Engineering and Technology, or OET, sent
a letter to several manufacturers requesting additional practical, technical and
procedural solutions or information that may have yet to be considered.
Responses were due May 8, 2003. Upon reviewing the filed comments, the OET has
indicated that other technical solutions were possible and were being reviewed
by the FCC.

asking that the FCC relocate Motient into the so called "upper-800 MHz band" as
part of the Consensus Plan. The FCC did not adopt the order in April, and one
month later, the Cellular Telecommunications & Internet Association, or CTIA,
proposed a plan that would grant Nextel alternative spectrum in the less
valuable 2.1 GHz band. Verizon Wireless has advanced CTIA's and a similar plan,
and has pledged to bid $5 billion for the 1.9 GHz spectrum if those airwaves are
auctioned. Nextel has vigorously opposed the CTIA and Verizon Wireless plans,
insisting that it be allowed to relocate to the 1.9 GHz spectrum. News accounts
have stated that some senior officials at the FCC would prefer to grant Nextel
the 2.1 GHz spectrum because such a grant is less subject to a court challenge
as an impermissible sale of spectrum outside of an auction. Some members of
Congress have also expressed interest in the proceeding. Given the uncertain
outcome of this proceeding, we cannot assure you that our operations will not be
affected by it.

Our adoption of "fresh-start" accounting may make evaluating our financial
position and results of operations for 2002 and 2003, as compared to prior
periods, more difficult.

Due to our emergence from bankruptcy pursuant to the Plan of Reorganization,
effective May 1, 2002, we implemented "fresh-start" accounting. In accordance
with "fresh-start" accounting, all assets and liabilities were restated to
reflect their respective estimated fair values. As a result, the consolidated
financial statements for our reorganized company starting on and going forward
from May 1, 2002 will not be comparable to our consolidated financial statements
for the periods prior to May 1, 2002. The change in our accounting principles
may make it more difficult to compare our operations to prior periods.

Certain tax implications of our bankruptcy and reorganization may increase our
tax liability.

Certain U.S. tax attributes of Motient, including net operating loss carryovers,
or NOLs, have been reduced or eliminated as a consequence of our bankruptcy and
reorganization. The elimination or reduction of NOLs and such other tax
attributes may increase the amount of tax payable by Motient following its
reorganization as compared with the amount of tax payable had no such reduction
been required.

There is a very limited public trading market for our common stock, and our
equity securities may continue to be illiquid or experience significant price
volatility.

Our common stock is not listed on any national securities exchange or on the
Nasdaq National Market. Our common stock is quoted on the Pink Sheets under the
symbol "MNCP." On June 24, 2004, the last reported bid price for our common
stock was $10.09. We cannot assure you that a more active trading market will
develop for our common stock, or as to the degree of price volatility in any
such market.

We do not expect to pay any dividends on our common stock for the foreseeable
future.

We have never paid cash dividends on our common stock and do not anticipated
that any cash dividends will be paid on the common stock for the foreseeable
future. The payment of any dividend by us will be at the discretion of our board

of directors and will depend on, among other things, our earnings, capital
requirements and financial condition. In addition, under Delaware law, a
corporation cannot declare or pay dividends on its capital stock unless it has
an available surplus. Furthermore, the terms of some of our financing
arrangements directly limit our ability to pay cash dividends on our common
stock. The terms of any future indebtedness of our subsidiaries also may
generally restrict the ability of some of our subsidiaries to distribute
earnings or make other payments to us.

Future sales of our common stock could adversely affect its price and/or our
ability to raise capital.

Sales of substantial amounts of common stock, or the perception that such sales
could occur, could adversely affect the prevailing market price of the common
stock and our ability to raise capital. We may issue additional common stock in
future financing transactions or as incentive compensation for our executives
and other personnel, consultants and advisors. Issuing any equity securities
would be dilutive to the equity interests represented by our then-outstanding
shares of common stock. The market price for our common stock could decrease as
the market takes into account the dilutive effect of any of these issuances.

Finally, if Motient decides to file a registration statement to raise additional
capital, some of Motient's existing stockholders hold piggyback registration
rights that, if exercised, will require Motient to include their shares in the
registration statement, which could adversely affect Motient's ability to raise
needed capital.

Item 2. Properties.

Motient leases approximately 86,000 square feet for headquarters office space
and an operations center in Lincolnshire, IL, the lease for which expires
December 31, 2010. On April 1, 2003, Motient subleased approximately 8,500
square feet to a third party under a sublease agreement that expires on December
31, 2005.

Motient formerly sub-leased from MSV approximately 47,000 square feet at its
headquarters in Reston, VA for office space. This sub-lease expired in August
2003. On July 15, 2003, we substantially completed the transfer of our
headquarters to Lincolnshire, IL.

Motient also leases site space for over 1,000 base stations and antennae across
the country for the terrestrial network under one-to five-year lease contracts
with varied renewal provisions.

Motient believes that its existing facilities are adequate to meet its needs for
the foreseeable future.

Item 3. Legal Proceedings.

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

A former employee who was discharged as part of a reduction in force in July
2002 asserted a claim for a year's pay and attorney's fees under a change of
control agreement this employee had with Motient. The claim was subject to
binding arbitration. Although Motient believes that it had substantial defenses
on the merits, on July 11, 2003, Motient was informed that the arbitrator ruled
in the employee's favor. In August 2003, Motient made a $200,000 payment to this
employee for the disputed pay and related benefits costs and legal fee
reimbursement.

Our rights to use and sell the BlackBerryTM software and Research In Motion's
handheld devices may be limited or made prohibitively expensive as a result of a
patent infringement lawsuit brought against Research In Motion, or RIM, by NTP
Inc. (NTP v. Research In Motion, Civ. Action No. 3:01CV767 (E.D. Va.)). In that
action, a jury concluded that certain of RIM's BlackBerryTM products infringe
patents held by NTP covering the use of wireless radio frequency information in
email communications. On August 5, 2003, the judge in the case ruled against
RIM, awarding NTP $53.7 million in damages and enjoining RIM from making, using,
or selling the products, but stayed the injunction pending appeal by RIM. This
appeal has not yet been resolved. As a purchaser of those products, we could be
adversely affected by the outcome of that litigation.

On April 15, 2004, Motient filed a claim under the rules of the American
Arbitration Association in Fairfax County, VA, against Wireless Matrix
Corporation, a reseller of Motient's services, for the non-payment of certain
amounts due and owing under the "take-or-pay" agreement between Motient and
Wireless Matrix. Under this agreement, Wireless Matrix agreed to purchase
certain minimum amounts of air-time on the Motient network. In February 2004
Wireless Matrix informed Motient that it was terminating its agreement with
Motient. Motient does not believe that Wireless Matrix has any valid basis to do
so, and consequently filed the above mentioned claim seeking over $2.6 million
in damages, which amount represents Wireless Matrix's total prospective
commitment under the agreement. On May 10, 2004, Motient received notice of a
counter-claim by Wireless Matrix of approximately $1 million, representing such
amounts as Wireless Matrix claims to have paid in excess of services rendered
under the agreement. In June 2004, Motient reached a favorable out of court
settlement with Wireless Matrix in which Wireless Matrix will pay Motient $1.1
million.

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

No matters were submitted to a vote of our stockholders during the fourth
quarter of fiscal 2003.

PART II

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

Market Price of Common Stock

Our common stock is not listed on any national securities exchange or on the
Nasdaq Stock Market. Our common stock has been quoted under the symbol "MNCP" on
the Pink Sheets since May 2, 2002. Also, until May 1, 2004, the warrants to
purchase our common stock that we issued to holders of our pre-reorganization
common stock in our reorganization had been quoted under the symbol "MNCPW" on
the Pink Sheets since May 2, 2002. Our common stock and warrants to purchase
common stock were traded on the OTC Bulletin Board, but due to our failure to
timely file our Exchange Act reports, our common stock and warrants to purchase
common stock are no longer traded on the OTC Bulletin Board. The warrants to
purchase common stock that resulted from our reorganization were only
exerciseable for a two-year period following our emergence from bankruptcy on
May 1, 2002, if certain terms were met. The terms were not met and these
warrants expired, unvested, on May 1, 2004.

The following tables set forth the high and low bid prices for our Predecessor
Company's and Successor Company's common stock and warrants to purchase common
stock issued in our reorganization for the periods indicated for 2002 and 2003.
You should consider the changes in our circumstances and capitalization as a
result of our reorganization, including the fact that our common stock is a
different security from our pre-reorganization common stock, before drawing any
conclusions about the trading price of our common stock or warrants from the
information below about our pre-reorganization common stock.

Common Stock

2004 (Successor Company) High Low
-----------------------------------------------------------------
First Quarter $7.45 $4.05
Second Quarter (through June 24, 2004) $10.89 $6.15
----------------------------------------------------------------
2003 (Successor Company) High Low
-----------------------------------------------------------------
First Quarter $5.75 $2.75
Second Quarter $4.00 $2.00
Third Quarter $6.35 $4.35
Fourth Quarter $5.55 $3.50
-----------------------------------------------------------------
2002 (Successor Company) High Low
-----------------------------------------------------------------
Second Quarter (beginning May 1, 2002) $5.90 $3.60
Third Quarter $4.45 $0.75
Fourth Quarter $3.40 $0.65
-----------------------------------------------------------------
2002 (Predecessor Company) High Low
-----------------------------------------------------------------
First Quarter $0.45 $0.40
Second Quarter (through April 30, 2002) $0.085 $0.036

Warrants to Purchase Common Stock

2004 (Successor Company) High Low
----------------------------------------------------------------
First Quarter $0.25 $0.02
Second Quarter (through May 1, 2004) $0.11 $0.001
----------------------------------------------------------------
2003 (Successor Company) High Low
----------------------------------------------------------------
First Quarter $0.25 $0.05
Second Quarter $0.35 $0.07
Third Quarter $0.40 $0.12
Fourth Quarter $0.20 $0.02
-----------------------------------------------------------------
2002 (Successor Company) High Low
----------------------------------------------------------------
Second Quarter (beginning May 1, 2002) $3.00 $0.25
Third Quarter $0.50 $0.15
Fourth Quarter $0.38 $0.01

The high and low sales prices represent the intra-day prices on the OTC Bulletin
Board during the periods in which we were quoted on the CTO Bulletin Board, and
on the Pink sheets, thereafter. The warrants to purchase common stock were
issued as part of Motient's reorganization. In prior periods, no warrants were
quoted on any exchange or similar service. The quotations represent inter-dealer
quotations, without retail markups, markdowns or commissions, and may not
necessarily represent actual transactions.

On June 24, 2004, the last reported bid price of our common stock was $10.09 per
share on the Pink Sheets. As of June 24, 2004, there were approximately 25
record holders of our common stock. The warrants to purchase our common stock
were issued in conjunction with our reorganization and expired on May 1, 2004.
They were never exercisable.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock and do
not plan to pay dividends on our capital stock for the foreseeable future. Our
current credit facility and other financing documents prohibit us from paying
cash dividends.

We anticipate that all of our earnings in the foreseeable future will be
retained to finance the continued growth and development of our business, and we
have no current intention to pay dividends. Our future dividend and distribution
policy will depend on our earnings, capital requirements and financial
condition, requirements of the financing arrangements to which we are a party
and other factors considered relevant by our board of directors. There can be no
assurance that we will pay dividends on our capital stock at any time in the
future.

Recent Sales of Unregistered Securities

On January 27, 2003, in connection with the execution of our term credit
agreement, we issued warrants at closing to the lenders to purchase, in the
aggregate, 3,125,000 shares of our common stock. The exercise price for these
warrants is $1.06 per share. The warrants were immediately exercisable upon
issuance and have a term of five years. The warrants were issued in reliance
upon the exemption afforded by Section 4(2) of the Securities Act.

On July 29, 2003, in connection with the execution of the letter agreement with
Further Lane, we issued Further Lane a warrant to purchase 200,000 shares of our
common stock. The exercise price of the warrant is $5.10 per share. The warrant
was immediately exercisable upon issuance and has a term of five years. The
warrant was issued in reliance upon the exemption afforded by Section 4(2) of
the Securities Act.

On March 16, 2004, in connection with the execution of the amendment to our
credit agreement, we issued warrants to the lenders to purchase, in the
aggregate, 2,000,000 shares of our common stock. The number of warrants was
reduced to an aggregate of 1,000,000 shares of common stock as Motient raised in
excess of $7.5 million in equity funding within 60 days after March 16, 2004.
The exercise price of the warrants is $4.88 per share. The warrants were
immediately exercisable upon issuance and have a term of five years. The
warrants were issued in reliance upon the exemption afforded by Section 4(2) of
the Securities Act. The warrants are also subject to a registration rights
agreement. Under such agreement, we agreed to register the shares underlying the
warrants upon the request of a majority of the warrantholders, or in conjunction
with the registration of other common stock of the company. We will bear all the
expenses of such registration.

On April 7, 2004, Motient sold 4,215,910 shares of its common stock at $5.50 per
share for an aggregate purchase price of $23.2 million to The Raptor Global
Portfolio Ltd., The Tudor BVI Global Portfolio, Ltd., The Altar Rock Fund L.P.,
Tudor Proprietary Trading, L.L.C., Highland Crusader Offshore Partners, L.P.,
York Distressed Opportunities Fund, L.P., York Select, L.P., York Select Unit
Trust, M&E Advisors L.L.C., Catalyst Credit Opportunity Fund, Catalyst Credit
Opportunity Fund Offshore, DCM, Ltd., Greywolf Capital II LP and Greywolf
Capital Overseas Fund and LC Capital Master Fund. The sale of these shares was
not registered under the Securities Act and the shares may not be sold in the
United States absent registration or an applicable exemption from registration
requirements. The shares were offered and sold pursuant to the exemption from
registration afforded by Rule 506 under the Securities Act and/or Section 4(2)
of the Securities Act. In connection with this sale, we signed a registration
rights agreement with the holders of these shares. Among other things, this
registration rights agreement requires us to file and cause to make effective a
registration statement permitting the resale of the shares by the holders
thereof. Motient also issued warrants to purchase an aggregate of 1,053,978
shares of its common stock to the investors listed above, at an exercise price
of $5.50 per share. These warrants will vest if and only if Motient does not
meet certain deadlines between July and November 2004, with respect to certain
requirements under the registration rights agreement. If the warrants vest, they
may be exercised by the holders thereof at any time through June 30, 2009.

In connection with this sale, Motient issued to Tejas Securities Group, Inc.,
Motient's placement agent for the private placement, and certain CTA affiliates,
warrants to purchase 600,000 shares and 400,000 shares, respectively, of its
common stock. The exercise price of these warrants is $5.50 per share. The
warrants are immediately exercisable upon issuance and have a term of five
years. The warrants were issued pursuant to the exemption from registration
afforded by Rule 506 under the Securities Act and/or Section 4(2) of the
Securities Act.

Additional Equity Placement

No underwriters were involved in any of the foregoing distributions of
securities.

Item 6. Selected Financial Data.

The following table summarizes our financial results as of and for the fiscal
years ended December 31, 1999 through December 31, 2001, the four months ended
April 30, 2002, the eight months ended December 31, 2002, and the year ended
December 31, 2003. The consolidated balance sheet data and the consolidated
statement of operations data as of and for the year ended December 31, 1999 are
derived from the consolidated financial statements of Motient, which were
audited by Arthur Andersen LLP, independent accountants who have ceased
operations. The other consolidated balance sheet data and the other consolidated
statement of operations data are derived from the consolidated financial
statements of Motient, which were audited by Ehrenkrantz Sterling & Co. LLC,
independent public accounting firm, except for the December 31, 2003 balance
sheet, which were audited by Friedman LLP, successors-in-interest to Ehrenkrantz
Sterling & Co. LLC. The financial statements for certain historical periods have
been restated to give effect to the accounting treatment with respect to the
MSV, Aether Systems transactions and certain additional financial statement
adjustments discussed in the Introductory Note and in greater detail in Note 2,
"Significant Accounting Policies - Restatement of Financial Statements," of
notes to the consolidated financial statements. All of the financial information
for Motient up to and including April 30, 2002 is referred to as "Predecessor
Company" results. The financial information for Motient for the periods
subsequent to April 30, 2002 are referred to as "Successor Company" results.

You should read our selected financial data in conjunction with the information
contained in "Item 7 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and related notes thereto included elsewhere in this report. In reading the
following selected financial data, please note the following:

o Effective May 1, 2002, as a result of our emergence from bankruptcy,
we adopted "fresh-start" accounting in accordance with American
Institute of Certified Public Accountants Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization under the
Bankruptcy Code". "Fresh-start" accounting has resulted in material
changes to financial statements for periods beginning after May 1,
2002, to reflect adjustments required pursuant to SOP 90-7 to record
assets and liabilities at fair values in accordance with procedures
specified by Statement of Financial Accounting Standards No. 141,
"Business Combinations".

o Because the summary financial data below relates to periods prior to
May 1, 2002, the effective date we emerged from bankruptcy, we refer
to the summary financial data as that of the Predecessor Company. Due
to the reorganization and implementation of SOP 90-7, financial
statements issued for periods beginning after May 1, 2002 will not be
comparable to that of the Predecessor Company.

o In November 2002,we initiated a process to seek the concurrence of the
staff of the SEC with respect to our conclusions of the appropriate
accounting for the formation of and certain transactions with MSV in
2000 and 2001 and the sale of certain of our transportation assets to
Aether Systems in 2000. This process was completed in March 2003. The
staff of the SEC did not object to certain aspects of our prior
accounting with respect to the MSV and Aether Systems transactions,
but did object to other aspects of our prior accounting for these
transactions. For a description of the material differences between
our original accounting treatment with respect to the MSV and Aether
Systems transactions and the revised accounting treatment that we
concluded is appropriate as a result of this process, please see Note
2, "Significant Accounting Policies - Restatement of Financial
Statements," of notes to the consolidated financial statements and our
current report on Form 8-K dated March 14, 2003.

o As a result of our re-audit of the years ended December 31, 2000 and
2001 performed by, Ehrenkrantz Sterling & Co. LLC, certain additional
financial statement adjustments were proposed and accepted by us for
the periods noted above. See Note 2, "Significant Accounting Policies"
of notes to the consolidated financial statements.

Selected Consolidated Financial Data
(Amounts in thousands except per share data)

Successor Company Predecessor Company(1)(2)(3)(4)
-------------------------------------------------------------------------------------------
Eight Months Four Months (Restated) (Restated)
Year Ended Ended Ended Year Ended Year Ended Year Ended
December 31, December 31, April 30, December 31, December 31, December 31,
2003 2002 2002 2001 2000 1999
---- ---- ---- ---- ---- ----

Revenues $54,485 $36,617 $22,373 $90,265 $95,756 $91,071
Operating Loss (40,167) (33,800) (21,430) (97,223) (182,914) (224,392)
Income (loss) before
reorganization items (62,122) (58,786) (24,138) (267,000) (134,851) (330,931)

Reorganization items -- (772) 256,116 (2,497) (3,035) --

Income tax provision -- -- -- -- -- --

Net (loss) income (62,122) (59,558) 231,978 (269,497) (137,886) (330,931)

XM radio preferred stock
dividend requirement -- -- -- -- (5,081) --

XM beneficial conversion -- -- -- -- (44,438) --
------- ------- ------- -------- --------- --------
Net (loss) income before
cumulative effect of accounting
change $(62,122) $(59,558) $231,978 $(269,497) $(187,405) $(330,931)
------- ------- ------- -------- -------- --------

Cumulative effect of change in
accounting principle -- -- -- -- (4,677) --

Net (loss) income attributable
to common shareholders $(62,122) $(59,558) $231,978 $(269,497) $(192,082) $(330,931)
------- ------- ------- -------- -------- --------

Basic and diluted net income
(loss) per common share $ (2.47) $ (2.37) $ 3.98 $ (5.27) $ (3.89) $ (8.33)

Weighted-average common shares
outstanding during the period -
basic and diluted 25,145 25,097 58,251 51,136 49,425 39,704
Total assets 157,028 202,221 257,401 240,465 1,572,036 809,948
Long term liabilities $33,189 $33,913 $29,785 $30,652 $753,376 $470,784

(1) Motient restated certain of its financial data reflected above to
reflect certain transactions with MSV in 2000 and 2001, the sale of assets to
Aether Systems in 2000 and certain additional adjustments. For further
information, please see Note 2, "Significant Accounting Policies - Restatement
of Financial Statements," of notes to the consolidated financial statements
herein.

(2) As of December 31, 2000, we had an equity interest of approximately 33.1%
(or 21.3% on a fully diluted basis) in XM Radio, a public company that
launched its satellite radio service at the end of 2001, and we controlled XM
Radio through our board of director membership and common stock voting rights.
As a result, all of XM Radio's results for the period from July 7, 1999 (the
date we acquired 100% voting interest of XM Radio) through December 31, 2000
have been included in our consolidated financial statements. Prior to July 7,
1999, our investment in XM Radio was accounted for pursuant to the equity method
of accounting. In January 2001, pursuant to FCC approval to cease to control XM
Radio, the number of directors that we appointed to XM Radio's board of
directors was reduced to less than 50% of XM Radio's directors, and we converted
a portion of our super-voting Class B common stock of XM Radio to Class A common
stock. As a result, we ceased to control XM Radio, and as of January 1, 2001, we
accounted for our investment in XM Radio pursuant to the equity method of
accounting. During 2001, we disposed of all of our remaining

shares of XM Radio and ceased to hold any interest in XM Radio as of
November 19, 2001. For further information, please Note 13, "Business
Acquisitions and Dispositions--XM Radio," of notes to the consolidated financial
statements herein.

(3) In June 2000, we formed a joint venture subsidiary, MSV, in which we
owned 80% of the membership interests. The remaining 20% interests in MSV were
owned by three investors unrelated to Motient; however, the minority investors
had the right to participate in certain MSV business decisions that were made in
the normal course of business; therefore, in accordance with EITF Issue No
96-16, "Investor's Accounting for an Investee When the Investor Has a Majority
of the Voting Interest but the Minority Shareholder or Shareholders Have Certain
Approval or Veto Rights", our investment in MSV has been recorded for all
periods presented in the consolidated financial statements included in this
annual report pursuant to the equity method of accounting. On November 26, 2001,
Motient sold the assets comprising its satellite communications business to MSV.
For further information, please see Note 1, "Organization and Going Concern,"
and Note 13, "Business Acquisitions and Dispositions," of notes to the
consolidated financial statements herein.

(4) In November 2000, Motient sold assets related to its retail
transportation business to Aether Systems. Concurrently with the closing of the
asset sale, we and Aether Systems entered into two long-term, prepaid network
airtime agreements with a total value of $20 million, of which $5 million was
paid at closing, pursuant to which Aether Systems agreed to purchase airtime on
Motient's satellite and terrestrial networks. Aether Systems also became an
authorized reseller of Motient's eLink and BlackBerry TM by Motient wireless
email service offerings. Aether Systems acquired all of the assets used or
useful in the retail transportation business, and assumed the related
liabilities. Aether Systems also purchased the existing inventory in the
business. For further information, please see Note 1 "Organization and Going
Concern," and Note 13, "Business Acquisitions and Dispositions," of notes to the
consolidated financial statements herein.

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

Overview and Introduction

As previously disclosed in prior reports, most recently in our quarterly report
on Form 10-Q for the quarter ended September 30, 2003, we were not able to
complete our financial statements for the year ended December 31, 2002 and for
the quarters ended June 30, 2002 and September 30, 2002 until we resolved the
appropriate accounting treatment with respect to certain transactions that
occurred in 2000 and 2001. We initiated a review of the appropriate accounting
treatment for these transactions following the appointment of
PricewaterhouseCoopers as our independent auditors in July 2002. The
transactions in question involved the formation of and certain transactions with
MSV in 2000 and 2001 and the sale of certain of our transportation assets to
Aether Systems in 2000.

In November 2002, we initiated a process to seek the concurrence of the staff of
the SEC with respect to our conclusions of the appropriate accounting for these
matters. This process was completed in March 2003. The staff of the SEC did not
object to certain aspects of our prior accounting with respect to the MSV and
Aether Systems transactions, but did object to other aspects of our prior
accounting for these transactions. For a description of the material differences
between our original accounting treatment with respect to the MSV and Aether
Systems transactions and the revised accounting treatment that we concluded is
appropriate as a result of this process, please see Note 2, "Significant
Accounting Policies - Restatement of Financial Statements," of notes to the
consolidated financial statements and our current report on Form 8-K dated March
14, 2003.

On March 2, 2004, we dismissed PricewaterhouseCoopers as our independent
auditors effective immediately. The audit committee of Motient's board of
directors approved the dismissal of PricewaterhouseCoopers.
PricewaterhouseCoopers was previously appointed to audit Motient's consolidated
financial statements for the period May 1, 2002 to December 31, 2002, and, by
its terms, such engagement was to terminate upon the completion of services
related to such audit. PricewaterhouseCoopers has not reported on Motient's
consolidated financial statements for such period or for any other fiscal
period. On March 2, 2004, our audit committee engaged Ehrenkrantz Sterling & Co.
LLC to replace PricewaterhouseCoopers to audit Motient's consolidated financial
statements for the period May 1, 2002 to December 31, 2002 and for the year
ended December 31, 2003.

On June 1, 2004, Ehrenkrantz Sterling & Co. LLC, merged with the firm of
Friedman Alpren & Green LLP. The new entity, Friedman LLP, has been retained by
Motient and the Audit Committee of Motient's Board of Directors approved this
decision on June 4, 2004.

We recently completed our financial statements as of and for the twelve months
ended December 31, 2003, which are included in this report. These financial

statements give effect to the accounting treatment with respect to the MSV and
Aether Systems transactions that was agreed to be appropriate as a result of the
above-described process. As a result of our re-audit of the years ended December
31, 2000 and 2001 performed by Ehrenkrantz Sterling & Co. LLC, certain
additional financial statement adjustments were proposed and accepted by us for
the periods noted above (See Note 2, "Significant Accounting Policies" of notes
to the consolidated financial statements). Our financial statements for the
years ended December 31, 2000 (restated) and December 31, 2001 (restated) and
the period from January 1, 2002 to April 30, 2002 (restated) and May 1, 2002 to
December 31, 2002 have been audited by Ehrenkrantz Sterling & Co. LLC. Friedman
LLP has audited our financial statements for the year ended December 31, 2003
(see "Business--Recent Developments--Accounting and Auditing Matters").

Motient's Chapter 11 Filing

On January 10, 2002, Motient and three of its wholly-owned subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of the Federal
Bankruptcy Code. Motient's Plan of Reorganization was confirmed on April 26,
2002 and became effective on May 1, 2002. For a more detailed description of
Motient's Chapter 11 filing and its Plan of Reorganization, please see
"Liquidity and Capital Resources" below.

General - The Current and Former Components of Motient's Business

This section provides information regarding the various current and prior
components of Motient's business which we believe are relevant to an assessment
and understanding of our financial condition and consolidated results of
operations. The sale of our satellite assets to MSV in 2001 makes period to
period comparison of our financial results less meaningful, and therefore, you
should not rely on such comparisons as an indication of future operating
performance. Additionally, on April 26, 2002, our Plan of Reorganization was
confirmed by the United States Federal Bankruptcy Court and we emerged from
bankruptcy on May 1, 2002. As a result of the reorganization and the recording
of the restructuring transaction and implementation of "fresh-start" reporting,
our results of operations after April 30, 2002 are not comparable to results
reported in prior periods. See Notes 1 and 2 of notes to the consolidated
financial statements for information on consummation of the Plan of
Reorganization and implementation of "fresh-start" reporting. The discussion
should be read in conjunction with our consolidated financial statements and
notes thereto.

Motient has six wholly-owned subsidiaries and a 29.5% interest in MSV (on a
fully-diluted basis). For further details regarding Motient's interest in MSV,
please see "Business - Recent Developments - Mobile Satellite Ventures
Transaction". Motient Communications Inc. owns the assets comprising Motient's
core wireless business, except for Motient's FCC licenses, which are held in a
separate subsidiary, Motient License. Motient License was formed on March 16,
2004, as part of Motient's amendment of its credit facility, as a special
purpose wholly-owned subsidiary of Motient Communications and holds all of the
FCC licenses formerly held by Motient Communications. A pledge of the stock of
Motient License, along with the other assets of Motient Communications, secures
borrowings under our term credit facility. For further details regarding the

formation of Motient License Co., please see "Business - Recent Developments -
Overview". Our other four subsidiaries hold no material operating assets other
than the stock of other subsidiaries and Motient's interest in MSV. On a
consolidated basis, we refer to Motient Corporation and its six wholly-owned
subsidiaries as "Motient." Our indirect, less-than 50% voting interest in MSV is
not consolidated with Motient for financial statement purposes. Rather, we
account for our interest in MSV under the equity method of accounting.

Core Wireless Business

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

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

In addition to selling messaging services that use our own network, we are a
national premier dealer for T-Mobile USA and an authorized agent for Verizon
Wireless. Under our agreements with these providers, we sell nationwide network
subscriptions for T-Mobile's third generation GSM/GPRS wireless voice and data
service, and for Verizon Wireless's third generation CDMA/1XRTT wireless voice
and data service. These agreements allow us to sell and promote wireless email
and wireless Internet applications to enterprise accounts on networks with
greater capacity and speed than our own, and that are voice capable.

XM Radio

As of December 31, 2000, we had an equity interest of approximately 33.1% (or
21.3% on a fully diluted basis) in XM Radio, a public company that launched its
satellite radio service at the end of 2001, and we controlled XM Radio through
our board of director membership and common stock voting rights. In January
2001, pursuant to FCC approval authorizing us to relinquish control of XM Radio,
the number of directors appointed by us to XM Radio's Board of Directors was
reduced to less than 50% of XM Radio directors, and we converted a portion of
our super-voting Class B Common Stock of XM Radio to Class A Common Stock. As a
result, we ceased to control XM Radio.

Throughout 2001, we disposed of our equity interest in XM Radio, and as of
November 19, 2001, we did not hold any interest in XM Radio. For the period from
January 1, 2001 through November 19, 2001, we accounted for our investment in XM
Radio pursuant to the equity method of accounting. In November 2001, as a result
of a series of transaction to cure defaults under our bank financing and to the
bank facility guarantors, we sold and/or delivered all of our shares of XM Radio
common stock to the bank facility guarantors in full satisfaction of the entire
remaining amount of our reimbursement obligations to the bank facility
guarantors. The agent for the bank lenders under the bank financing declared all
loans under the bank financing immediately due and payable, due to the existence
of several events of default under the bank financing. On the same date, the
bank lenders sought payment in full from the bank financing guarantors for the
accelerated loan obligations. For the year ended December 31, 2001, we recorded
proceeds of approximately $38.3 million from the sale in 2001 of two million
shares of our XM Radio stock, and we recorded equity in losses of XM Radio of
$48.5 million.

The operations and financing of XM Radio, a public company, were maintained
separate and apart from our operations and financing.

Sale of Retail Transportation Business in November 2000

In November 2000, Motient sold assets relating to its retail transportation
business to Aether Systems and received approximately $45 million. This
consisted of $30 million for the assets, of which $10 million was held in an
escrow account which was subsequently released in the fourth quarter of 2001
upon the satisfaction of certain conditions, and $15 million for a perpetual
license to use and modify any intellectual property owned or licensed by Motient
in connection with the retail transportation business. Aether Systems acquired
all of the assets used or useful in the retail transportation business, and
assumed the related liabilities. Aether Systems also purchased the existing
inventory in the business. In the fourth quarter of 2000, Motient recognized a
gain of $6.6 million, which represented the difference between the net book
value of the assets sold and the $20 million cash portion of the purchase price
for the assets received at closing. Motient recognized an additional $8.3
million gain in the fourth quarter of 2001 when the additional $10 million of
proceeds were released from escrow. The $1.7 million difference between the
proceeds received and the gain recognized is a result of pricing modifications
that were made at the time of the release of the escrow related to certain
network capacity arrangements. Motient deferred the $15 million perpetual
license payment over a four year period, which represents the life of the
network airtime agreement that Motient entered into with Aether Systems at the
time of the closing of the asset sale.

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

Mobile Satellite Ventures LP

On June 29, 2000, we formed a joint venture subsidiary, MSV, in which we owned
80% of the membership interests. The remaining 20% interests in MSV were owned

by three investors unrelated to Motient; however, the minority investors had
certain participating rights which provided for their participation in certain
business decisions that were made in the normal course of business; therefore,
in accordance with Emerging Issues Task Force Issue No 96-16, "Investor's
Accounting for an Investee When the Investor Has a Majority of the Voting
Interest but the Minority Shareholder or Shareholders Have Certain Approval or
Veto Rights", our investment in MSV has been recorded for all periods presented
in the consolidated financial statements included in this annual report pursuant
to the equity method of accounting.

Through November 26, 2001, MSV used our satellite network to conduct research
and development activities. On November 26, 2001, we sold the assets comprising
our satellite communications business to MSV, as part of a transaction in which
certain other parties joined MSV, including TMI, a Canadian satellite services
provider. In consideration for our satellite business assets, we received the
following: (i) a $24.0 million cash payment in June 2000, (ii) a $45.0 million
cash payment paid at closing, of which $4.0 million was held by MSV related to
our sublease of real estate from MSV, and (iii) a five-year $15.0 million note.
Motient has recorded the $15.0 million note receivable from MSV, plus accrued
interest thereon at its fair value, estimated to be approximately $13.0 million
at the May 1, 2002 fresh-start accounting date, after giving effect to
discounted future cash flows at market interest rates. In this transaction, TMI
also contributed its satellite communications business assets to MSV. In
addition, we purchased a $2.5 million convertible note issued by MSV, and
certain other investors, including a subsidiary of Rare Medium, purchased a
total of $52.5 million of MSV convertible notes. In July 2002, MSV commenced a
rights offering seeking total funding in the amount of $3.0 million. While we
were not obligated to participate in the offering, our board determined that it
was in our best interests to participate so that our interest in MSV would not
be diluted. On August 12, 2002, we funded an additional $957,000 to MSV pursuant
to this offering, and received a new convertible note in such amount. In
February 2003, the FCC adopted its Spectrum Flexibility Order, which we refer to
as the ATC Order, giving mobile satellite operators broad authority to use their
assigned spectrum to operate an ATC. The ATC Order established a set of
preconditions and technical limits for ATC operations, as well as an application
process for ATC approval of the specific system incorporating the ATCs that the
licensee intends to use. On November 18, 2003, MSV filed an application with the
FCC for ATC authority to expand the use of its L-band spectrum and construct its
next-generation hybrid network. In addition, both proponents and opponents of
ATC (including MSV) have filed for reconsideration of the ATC Order, and the
opponents of ATC have filed an appeal with the U.S. Court of Appeals for the
District of Columbia Circuit. Oppositions to the petitions for reconsideration
were filed August 20, 2003; replies were filed September 2, 2003. The Court of
Appeals has held the appeal in abeyance pending resolution of the
reconsideration requests.

In November 2003, we engaged CTA to perform a valuation of our equity interests
in MSV as of December 31, 2002. Concurrent with CTA's valuation, Motient reduced
the book value of its equity interest in MSV from $54 million (inclusive of our
$2.5 million convertible note from MSV) to $41 million as of May 1, 2002 to
reflect certain preference rights on liquidation of certain classes of equity
holders in MSV. Including its notes receivable from MSV ($13 million at May 1,
2002), the book value of Motient's aggregate interest in MSV as of May 1, 2002
was reduced from $67 million to $53.9 million. Also, as a result of CTA's
valuation of MSV, we determined that the value of our equity interest in MSV was
impaired as of December 31, 2002. This impairment was deemed to have occurred in
the fourth quarter of 2002. Motient reduced the value of its equity interest in
MSV by $15.4 million as of December 31, 2002. Including its notes receivable
from MSV ($19 million at December 31, 2002), the book value of Motient's
aggregate interest in MSV was $32 million as of December 31, 2002. It was
determined that there was no further impairment of this interest in MSV as of
December 31, 2003. For additional information concerning this valuation process,
please see Note 2, "Significant Accounting Policies," of notes to the
consolidated financial statements.

Cost Reduction Actions

Since emerging from bankruptcy in May 2002, several factors have restrained our
ability to grow revenue at the rate we previously anticipated. These factors
include the weak economy generally and the weak telecommunications and wireless
sector specifically, the financial difficulty of several of our key resellers,
on whom we rely for a majority of our new revenue growth, and our continued
limited liquidity.

We have taken a number of steps to improve our liquidity and reduce operating
and capital expenditures in order to maintain our cash and lower our cash burn
rate:

Reductions in Workforce. We undertook reductions in March 2003 and February
2004. These actions eliminated approximately 10% (19 employees) and 32.5% (54
employees), respectively, of our then-remaining workforce. In the aggregate, we
have reduced our work force by approximately 39% since December 31, 2002 and
reduced employee and related expenditures by approximately $0.5 million per
month.

Network Rationalization. We are in the process of reducing the number of base
stations in our network in a coordinated effort to reduce network operating
costs. One aspect of this rationalization encompasses reducing unneeded capacity
across the network by deconstructing under-utilized and un-profitable base
stations. In certain instances, the geographic area that the network serves may
be reduced by this process. The full extent of the changes to network coverage
have yet to be determined.

Closure of Reston, VA Facility. On July 15, 2003, we substantially completed the
transfer of our headquarters to Lincolnshire, IL, where we already had a
facility. This action reduced our monthly operating expenses by an amount of
approximately $65,000 per month or $780,000 per year.

Refinancing of Vendor Obligations and Certain Customer Arrangements. During the
fourth quarter of 2002 and the first quarter of 2003, we renegotiated several of
our key vendor and customer arrangements in order to reduce recurring expenses
and improve our liquidity position. In some cases, we were able to negotiate a
flat rate reduction for continuing services provided to us by our vendors or a
deferral of payable amounts, and in other cases we renegotiated the scope of
services provided in exchange for reduced rates or received pre-payments for
future services. We continue to aggressively pursue further vendor cost
reductions where opportunities arise.

In the case of financing arrangements, we negotiated, among other things, a
deferral of approximately $2.6 million of accounts payable that was owed for
services provided for which we issued a promissory note for such amount, with
the note to be paid off ratably over a two-year period beginning in January
2004.

We also restructured certain of our vendor and capital lease obligations to
significantly reduce the monthly amortization requirements of these facilities
on an on-going basis. As part of such negotiations, we agreed to fund a letter
of credit in twelve monthly installments during 2003, in the aggregate amount of
$1.125 million, to secure certain payment obligations. This letter of credit
will be released to us in fifteen monthly installments beginning in July 2004,
assuming no defaults have occurred and are occurring.

In March 2004, we further restructured our vendor financing facility and an
outstanding promissory note to the same vendor by extending the repayment
schedule, thereby reducing the combined monthly amortization requirements under
these obligations. In June 2004, we negotiated settlements of our entire amounts
outstanding under our vendor financing facility, promissory note and capital
lease. Please see "--Liquidity and Capital Resources - Summary of Liquidity and
Financing" for further details on these facilities.

On December 1, 2002, we entered into a letter agreement with UPS, under which
UPS agreed to make a series of eight prepayments to us totaling $5 million for
future services we are obligated to provide to it after January 1, 2004. In
addition to any other rights it has under its network services agreement with
us, the letter agreement provides that UPS may terminate the network services
agreement, in whole or in part, by providing 30 days' notice to us, at which
point the remaining prepayment would be required to be repaid. As of July 31,
2003, all eight prepayments had been made. The $5 million prepayment is credited
against airtime services provided to UPS beginning January 1, 2004, until the
prepayment is fully credited. Based on UPS' current level of network airtime
usage, we do not expect that UPS will be required to make any cash payments to
us in 2004 for service provided during 2004.

Despite these initiatives, we continue to be cash flow negative, and there can
be no assurances that we will ever be cash flow positive.

Term Credit Facility

On January 27, 2003, our wholly-owned subsidiary, Motient Communications Inc.,
closed a $12.5 million term credit agreement with a group of lenders, including
several of our existing stockholders. As of December 31, 2003, we had borrowed
$4.5 million under the credit agreement to fund general working capital
requirements.

For the monthly periods ended April 2003 through December 2003, we reported
events of default under the terms of the credit facility to the lenders. In each
period, the lenders waived these events of default. There can be no assurance
that Motient will not have to report additional events of default or that the
lenders will continue to provide waivers in such event.

Borrowing availability under our term credit facility terminated on December 31,
2003. On March 16, 2004, we entered into an amendment to the credit facility
which extended the borrowing availability period until December 31, 2004. As
part of this amendment, Motient provided the lenders with a pledge of all of the
stock of a newly-formed subsidiary of Motient Communications, Motient License,
which holds all of our FCC licenses formerly held by Motient Communications. The
credit facility imposes certain conditions on our ability to make draws,
including compliance with certain financial and operating covenants. We borrowed
an additional $1.5 million in March 2004.

On April 12, 2004, we repaid all outstanding principal and interest, in
aggregate $6.8 million, under the term credit facility. This amount may not be
re-borrowed and $5.7 million remains available under the credit facility. For
further details, including details related to the repayment of amounts owed
under this facility, please see "-- Liquidity and Capital Resources -- Term
Credit Facility."

CTA Arrangements

CTA continued its engagement as a consultant by the Company for all of 2003.

In November 2003, we engaged CTA to provide a valuation of our equity interest
in MSV as of December 31, 2002. CTA was paid $150,000 for this valuation.

On January 30, 2004, we engaged CTA to act as chief restructuring entity. The
term of CTA's engagement is currently scheduled to end on August 1, 2004. As
consideration for this work, we agreed to pay to CTA a monthly fee of $60,000.
The new agreement modifies our existing consulting arrangement with CTA.

As part of our private placements in April 2004 and July 2004, certain CTA
affiliates received 400,000 and 340,000 warrants respectively, to purchase our
common stock at a price of $5.50 and $8.57, respectively per share.

Stock Option Plan

Options to purchase 1,757,513 shares of our common stock were outstanding as of
December 31, 2003 under our 2002 stock option plan. A portion of the options
granted under the plan will either vest or be rescinded based on Motient's
performance. These options are accounted for in accordance with variable plan
accounting, which requires that the value of these options be measured at their
intrinsic value and any change in that value be charged to the income statement
upon the determination that the fulfillment of the performance criteria is
probable. The other options are accounted for as a fixed plan and in accordance
with intrinsic value accounting, which requires that the excess of the market
price of stock over the exercise price of the options, if any, at the time that
both the exercise price and the number of options are known be recorded as
deferred compensation and amortized over the option vesting period. As of the
date of grant, the option price per share was in excess of the market price;
therefore, these options are not deemed to have any value and no expense has
been recorded to date.

In March 2003, our board of directors approved the reduction in the exercise
price of all of the then outstanding stock options from $5.00 per share to $3.00
per share. The repricing will require that all options be accounted for in
accordance with variable plan accounting, which requires that the value of these
options are measured at their intrinsic value and any change in that value be
charged to the income statement each quarter based on the difference (if any)
between the intrinsic value and the then-current market value of the common
stock.

In July and September 2003, the compensation and stock option committee of our
Board, acting pursuant to our 2002 stock option plan, granted 26 employees and
officers options to purchase an aggregate of 470,000 shares of our common stock
at a price of $5.15 per share and 25,000 shares of our common stock at a price
of $5.65 per share. One-half of each option grant vests with the passage of time
and the continued employment of the recipient, in three equal increments, on the
first, second and third anniversary of the date of grant. The other half of each
grant is to either vest or be rescinded based on Motient's performance in 2004.
In May 2004, the compensation and stock option committee of our board approved
the vesting of a certain portion of the stock options related to 2003
performance criteria and cancelled the remainder related to 2003 performance
criteria.

Research In Motion Matters

Our rights to use and sell the BlackBerryTM software and Research In Motion's
handheld devices may be limited or made prohibitively expensive as a result of a
patent infringement lawsuit brought against Research In Motion by NTP Inc. (NTP
v. Research In Motion, Civ. Action No. 3:01CV767 (E.D. Va.)). In that action, a
jury concluded that certain of Research In Motion's BlackBerryTM products
infringe patents held by NTP covering the use of wireless radio frequency
information in email communications. On August 5, 2003, the judge in the case
ruled against Research In Motion, awarding NTP $53.7 million in damages and
enjoining Research In Motion from making, using, or selling the products, but
stayed the injunction pending appeal by Research In Motion. The appeal has not
yet been resolved. As a purchaser of those products, we could be adversely
affected by the outcome of that litigation.

On June 26, 2003 Research In Motion provided us with a written End of Life
Notification for the RIM 857 wireless handheld device. This means that Research
In Motion will no longer produce this model of handheld device. The last date
for accepting orders was September 30, 2003, and the last date for shipment of
devices was January 2, 2004. Motient continues to source limited quantities of
RIM 857 devices from RIIM and Motient has implemented a RIM 857 "equivalent to
new" program and expects that there will be sufficient returned RIM 857s to
satisfy demand for the foreseeable future. During the year ended December 31,
2003, a majority of our equipment revenues were attributable to sales of the RIM
857 device, and we estimate that approximately 52% of our monthly recurring
service revenues were derived from wireless messaging using RIM 857 devices as
of December 31, 2003.

Results of Operations

Due to the consummation of our bankruptcy and the application of our
"fresh-start" accounting, results of operations for the periods after April 30,
2002 are not comparable to the results for previous periods. However, for the
discussion of results of operations, the four months ended April 30, 2002
(Predecessor Company) has been combined with the eight months ended December 31,
2002 (Successor Company) and then compared to the year ended December 31, 2003.
Differences between periods due to "fresh-start" accounting adjustments are
explained when necessary.

Years Ended December 31, 2003 and 2002

Revenue and Subscriber Statistics

The tables below summarize our revenue and subscriber base for 2003 and 2002. An
explanation of certain changes in revenue and subscribers is set forth below
under the caption "Summary of Year-over-Year Revenue."

Successor Company Predecessor Company
----------------- -------------------

Eight Months Combined Year
Year Ended Ended Four Months Ended Ended
December 31, December 31, April 30, December 31,
Summary of Revenue 2003 2002 2002 2002 Change % Change
- ------------------ ---- ---- ---- ---- ------ --------
(in millions

Wireless Internet $27.8 $15.5 $ 5.6 $21.1 $6.7 32%
Field Services 9.9 10.5 5.6 16.1 (6.2) (39)
Transportation 7.9 7.4 4.1 11.5 (3.6) (31)
Telemetry 2.3 1.8 0.8 2.6 (0.3) (12)
All Other 1.4 0.3 0.7 1.0 0.4 40
----- ----- ----- ----- ------ -----
Service Revenue $49.3 $35.5 $16.8 $52.3 $(3.0) (6)
Equipment Revenue 5.2 1.1 5.6 6.7 (1.5) (22)
----- ----- ----- ----- ------ -----
Total $54.5 $36.6 $22.4 $59.0 $(4.5) (8)%
===== ===== ===== ===== ======= =====

The make up of our registered subscriber base was as follows:

As of December 31,
--------------------------------
2003 2002 Change % Change
---- ---- ------ --------

Wireless Internet 106,600 106,082 518 0%
Field Services 17,468 30,263 (12,795) (42)
Transportation (1) 45,902 94,825 (48,923) (52)
Telemetry 32,420 30,171 2,249 7
All Other 1,305 653 652 100
------- ------- -------- -----
Total 203,695 261,994 (58,299) (22)%
======= ======= ======== =====

(1) UPS migrated their units to another network over the course of the
second half of 2003. At December 31, 2002, UPS had 70,955 units
registered on Motient's network. At December 31, 2003, UPS had 11,829
units registered on Motient's network.

Summary of Year-over-Year Revenue

Service revenue approximated $49.3 million for the year ended December 31, 2003,
which was a $3.0 million reduction as compared to the year ended December 31,
2002. The decrease in revenue year-over-year was primarily the result of
decreases in field services and transportation revenues, partially offset by an
increase in revenue in the wireless internet segment. We experienced a 22%
decrease in total subscribers primarily in the field services and transportation
market segments. It should be noted that UPS deactivated a significant number of
units on our network during the third and fourth quarters of 2003 and our
revenue from UPS declined significantly during this period. Total revenues
approximated $54.5 million for the year ended December 31, 2003, which was a
$4.5 million reduction as compared to the year ended December 31, 2002. In
addition to the service revenue decline discussed above, this reduction was also
the result of a 22% decrease in equipment revenue.

o Wireless internet revenue grew $6.7 million from the year ended
December 31, 2002 to the year ended December 31, 2003. The revenue
growth in the Wireless Internet sector during this period represented
our focus on expanding the adoption of eLink and BlackBerry TM
wireless email offerings to corporate customers with both direct sales
people and reseller channel partners. Our existing reseller channel
partners represented a significant portion of the revenue growth
during this period. The number of wireless internet units registered
on our network did not change materially from 2002 to 2003. The
increase in revenues was a result of the activation of existing
registered units into service. Despite this growth in 2003, it should
be noted that Motient is experiencing increased churn and migration in
this customer segment in 2004.

o Field service revenue decreased by $6.2 million from the year ended
December 31, 2002 to the year ended December 31, 2003. The decrease in
revenue from field services is primarily the result of the termination
of several customer contracts, including NCR Corporation, Sears,
Lanier, and Bank of America, as well as the general reduction of units
and rates across the remainder of our field service customer base,
primarily IBM, and certain consulting revenues included in 2002 that
were not included in 2003.

o Transportation revenue decreased by $3.6 million from the year ended
December 31, 2002 to the year ended December 31, 2003. The decrease in
revenue from our transportation segment was primarily the result of
UPS migrating a majority of its units to another network provider over
the course of the second half of 2003. UPS represented $0.3 million of
revenue for the three months ended December 31, 2003, as compared to
$2.5 million for the three months ended December 31, 2002. Another
reason for the decrease was the elimination, as part of fresh-start
accounting, of the recognition of deferred revenue that resulted from
the sale of intellectual property license sold to Aether Systems Inc.
in 2000. These decreases were partially offset by an increase in units
and usage for AMSC and Metra.

o Telemetry revenues decreased by $0.3 million from the year ended
December 31, 2002 to the year ended December 31, 2003. Although
subscriber units grew by 2,249 or 7% year-over-year, this growth was
offset by other churn and negative rate changes in other telemetry
accounts.

o Other revenue increased $0.4 million from the year ended December 31,
2002 to the year ended December 31, 2003. This increase in revenue was
primarily attributable to commissions earned pursuant to the agency
and dealer agreements with Verizon Wireless and T-Mobile USA.

o Equipment revenue decreased by $1.5 million from the year ended
December 31, 2002 to the year ended December 31, 2003. The decrease in
equipment revenue was primarily a result of our decision to decrease
the prices for our equipment to customers over the course of the
second quarter of 2002 due to lower sales of certain of our customer
devices and our assessment of market conditions, demand and

competitive pricing dynamics. These reductions in equipment revenue
were partially offset by the sales of devices attributable to the
agency and dealer agreements with Verizon Wireless and T-Mobile USA.

For the year ended December 31, 2003, five customers accounted for approximately
47% of Motient's service revenue, with two customers, UPS and SkyTel, each
accounting for more than 11%. As of December 31, 2003, no single customer
accounted for more than 6% of our net accounts receivable. The revenue
attributable to such customers varies with the level of network airtime usage
consumed by such customers, and none of the service contracts with such
customers requires that the customers use any specified quantity of network
airtime, nor do such contracts specify any minimum level of revenue. There can
be no assurance that the revenue generated from these customers will continue in
future periods. As discussed in "Business -- Recent Developments," UPS has
deregistered a majority of its units as it migrates to another network provider
for its next generation solution.

Due to the bankruptcy of WorldCom, beginning in the quarter ended June 30, 2002,
we reserved 100% of all amounts then due from Skytel, a wholly-owned subsidiary
of WorldCom. In October 2002, we received payment from SkyTel of a significant
portion of the amount of our pre-petition claim amount. We have received full,
timely payments thereafter and believe that amounts from SkyTel are currently
fully collectible.

Expenses

Predecessor
Successor Company Company
----------------- -------

Eight Months Four Months Combined
Year Ended Ended Ended Year Ended
December 31, December 31, April 30, December 31,
Summary of Expense 2003 2002 2002 2002 Change % Change
- ------------------ ---- ---- ---- ---- ------ --------
(in millions)

Cost of Service and Operations $51.4 $38.1 $21.9 $60.0 $ (8.6) (14)%
Cost of Equipment Sales 5.9 2.2 6.0 8.2 (2.3) (28)
Sales and Advertising 4.6 4.8 4.3 9.1 (4.5) (49)
General and Administration 11.3 9.7 4.1 13.8 (2.5) (18)
Restructuring Charges -- -- 0.6 0.6 (0.6) (100)
Depreciation and Amortization 21.5 15.5 6.9 22.4 (0.9) (4)
----- ----- ----- ------ ------ -------
Total Operating $94.7 $70.3 $43.8 $114.1 $(19.4) (17)%
===== ===== ===== ====== ======= =======

Cost of service and operations includes costs to support subscribers, such as
network telecommunications charges and site rent for network facilities, network
operations employee salary and related costs, network and hardware and software
maintenance charges, among other things. The fourteen percent year-over-year
decrease is made up of:

o decreases in telecommunication charges associated with rate reductions
in certain telecommunication contracts,

o decreases in site lease costs due to the removal of older-generation
base stations from our network,
o reductions in hardware and software maintenance costs as a result of
the reduction of personnel and the negotiation of lower rates on
maintenance service contracts,
o decreases in network maintenance costs as a result of the removal of
older-generation base stations from our network as well as the
reduction of rates under our national contract for these services, and
o lower employee and related costs due to the workforce reductions
implemented in July and September 2002 and March 2003, as well as the
reversal of certain employee bonus accruals from current and prior
periods related to these workforce reductions.

These decreases were partially offset by:

o an increase in the average lease rate for our site leases,
o increases in licensing and commission payments to third parties with
whom we have partnered to provide certain eLink and BlackBerry(TM) by
Motient services, as a result of the revenue increase over the year in
our mobile internet segment,
o compensation expenses associated with stock options issued to
employees in 2003 as compared to 2002, and
o certain expenditures for the removal of older-generation base stations
from our network.

Cost of service and operations expenses as a percentage of total revenues were
approximately 94% for 2003, as compared to 102% for 2002.

Cost of equipment sales expenses as a percentage of total revenue were
approximately 11% for 2003 as compared to 14% for 2002. The 28% decrease in 2003
expenses over 2002 expenses in the cost of equipment sold expenses was primarily
the result of reduced terrestrial hardware sales prices during 2002, partially
offset by the increased cost of sales of devices attributable to the agency and
dealer agreements with Verizon Wireless and T-Mobile USA. The Company also wrote
down the value of its inventory in the second quarter of 2002 by $4.5 million.

Sales and advertising expenses as a percentage of total revenue were
approximately 8% for 2003, compared to 15% for 2002. The 49% decrease in sales
and advertising expenses year over year was primarily attributable to lower
employee salary and related costs due to the workforce reductions implemented in
July and September 2002 and March 2003 as well as significant reductions in or
elimination of public relations costs and sales and marketing programs as a
result of the Company's reorganization in May of 2002 and the reversal of
certain employee bonus accruals from current and prior periods related to these
workforce reductions. These decreases were partially offset by compensation
expenses associated with stock options issued to employees in 2003 as compared
to 2002.

General and administrative expenses for the core wireless business as a
percentage of total revenue were approximately 21% for 2003 as compared to 23%
for 2002. The 18% decrease in 2003 costs over 2002 costs in the general and

administrative expenses was primarily attributable to lower employee salary and
related costs due to the workforce reductions implemented in July and September
2002 and March of 2003 as well as the reversal of certain employee bonus
accruals from current and prior periods related to these workforce reductions.
In addition, this decrease was attributable to lower rent expense from the
closure of our Reston facility in July 2003, lower directors and officers
liability insurance costs subsequent to our reorganization, and a reduction in
bad debt charges primarily due to the lowering of our reserves after our
reorganization. These decreases were partially offset by compensation expenses
associated with stock options issued to employees in 2003 a compared to 2002,
increases in the consulting costs related to the engagement and the related
compensation costs of CTA and Further Lane in May 2002 and July 2003,
respectively, and increases in audit, tax and legal fees related to our fiscal
year 2002 audit and re-audits of fiscal year 2001 and 2000, occurring
principally during the last nine months of 2003. Certain events in 2002 also
contributed to this decrease in general and administrative expenses from 2002 to
2003, including the compensation expense associated with the issuance of
warrants to CTA in December 2002 and fees incurred as a result of Motient's
withdrawal from certain FCC frequency auctions in the second quarter of 2002.

Cost of service and operations, sales and advertising and general and
administrative expenses were also impacted the reversal of certain bonus
accruals from 2002. In July 2003, the Compensation Committee of the Board of
Directors approved an aggregate payout of the 2002 corporate and personal
portions of employee bonuses in the amount of 37.5% accrued for this period.

There were no restructuring costs in 2003. Operational restructuring costs in
2002 of $0.6 million are associated with certain employee reduction initiatives
and reorganization expenses.

Depreciation and amortization for the core wireless business was approximately
40% of total revenue for 2003, as compared to 38% for 2002. Depreciation and
amortization decreased from $22.4 million for 2002 to $21.5 million for 2003.
The $0.9 million decrease in depreciation and amortization expense in 2003 was
partially attributable to the impairment of the value of our customer contract
intangibles as of September 2003. In May 2004, we engaged a financial advisory
firm to prepare a valuation of customer intangibles as of September 2003. Due to
the loss of UPS as a core customer in 2003 as well as the migration and customer
churn occurring in our mobile internet base that is impacting the average life
of a customer in this base, among other things, we determined an impairment of
the value of these customer contracts was probable. As a result of this
valuation, the value of customer intangibles was determined to be impaired as of
September 2003 and was reduced by $5.5 million

Interest expense from May 1, 2002, is associated with our various debt
obligations, including the $19.75 million notes payable to Rare Medium and CSFB,
our capital lease obligations, our vendor financing commitment and our term
credit facility put in place in January of 2003. We incurred $6.4 million of
interest expense in 2003, compared to $3.8 million during 2002. The $2.6 million
increase was due primarily to the amortization of fees and the value ascribed to
warrants provided to the term credit facility lenders on our closing of our term

credit facility in January of 2003. We issued warrants at closing to the lenders
to purchase, in the aggregate, 3,125,000 shares of our common stock. The
exercise price for these warrants is $1.06 per share. The warrants were valued
at $10 million using a Black-Scholes pricing model and have been recorded as a
debt discount and are being amortized as additional interest expense over three
years, the term of the related debt. Upon closing of the credit agreement, we
paid closing and commitment fees to the lenders of $500,000, which are also
being amortized over three years.

On July 29, 2003, our wholly-owned subsidiary, Motient Communications,
entered into an asset purchase agreement with Nextel, under which Motient
Communications sold to Nextel certain of its SMR licenses issued by the FCC for
$3.4 million. The closing of this transaction occurred on November 7, 2003. On
December 9, 2003, Motient Communications entered into a second asset purchase
agreement, under which Motient Communications will sell additional licenses to
Nextel for $2.75 million resulting in a $1.5 million loss which was recorded in
December, 2003. In February, 2004, we closed the sale of licenses covering
approximately $2.2 million of the purchase price, and we closed the sale of
approximately one-half of the remaining licenses in April 2004. The transfer of
the other half of the remaining licenses has been challenged at the FCC by a
third-party. While we believe, based on the advice of counsel, that the FCC will
ultimately rule in our favor, we cannot assure you that we will prevail, and, in
any event, the timing of any final resolution is uncertain. None of these
licenses are necessary for our future network requirements. we have and expect
to continue to use the proceeds of the sales to fund its working capital
requirements and for general corporate purposes. The lenders under our term
credit agreement have consented to the sale of these licenses.

Effective May 1, 2002, we were required to reflect our equity share of the
losses of MSV. We recorded equity in losses of MSV of $9.9 million and $8.8
million for the years ended December 31, 2003 and 2002. The MSV losses for the
years ended December 31, 2003 and 2002 are Motient's 46.5% and 48% share of
MSV's losses for the same period reduced by the loans in priority. For the years
ended December 31, 2003 and 2002, MSV had revenues of $27.1 million and $28.2
million, operating expenses of $46.5 million and $26.8 million and a net loss of
$28.0 million and $24.9 million, respectively. Our calculations give effect to
the impairment of our investment in MSV in the fourth quarter of 2002 in the
amount of $15.4 million.

We recorded other income from Aether in 2003 of $2.2 million, as compared to
$2.1 million in 2002.

Additionally, we recorded a number of other non-recurring charges in 2003 and
2002 as a result of our various transactions. For additional information
concerning these non-recurring charges, please see "-- Liquidity and Capital
Resources."

In 2003:

o Loss on impairment of asset of $5.5 million, discussed above

o We recorded a loss on the sale of certain assets of $3.0 million.

In 2002:

o As a result of our debt restructuring efforts, we recorded costs of
$23.1 million.

o We recorded a gain on the sale of our transportation and satellite
assets of $0.8 million.

o We recorded a loss on the sale of certain assets of $1.2 million.

o Related to our reorganization in May of 2002, we recorded a gain on
fair market adjustment of $94.7 million and a gain on the
restructuring of debt of $183.7 million.

o Net capital expenditures for the year ended December 31, 2003 for
property and equipment were $0.2 million, as compared to $1.1 million
for 2002. Expenditures consisted primarily of assets related to our
terrestrial network.

Years Ended December 31, 2002 and 2001

Revenue and Subscriber Statistics

The tables below summarize our revenue and subscriber base for 2002 and 2001. An
explanation of certain changes in revenue and subscribers is set forth below
under the caption "Summary of Year-over-Year Revenue."

Successor Predecessor Predecessor
Company Company Company
------- ------- -------
Eight Months Four Months Combined Year
Ended Ended Ended Year Ended
December 31, April 30, December 31, December 31,
Summary of Revenue 2002 2002 2002 2001 Change % Change
- ------------------- ---- ---- ---- ---- -------- --------
(in millions)

Wireless Internet $15.5 $ 5.6 $21.1 $11.4 $ 9.7 85%
Field Services 10.5 5.6 16.1 19.4 (3.3) (17)
Transportation 7.4 4.1 11.5 15.9 (4.4) (28)
Telemetry 1.8 0.8 2.6 2.6 (0.0) (0)
All Other 0.3 0.7 1.0 18.8 (17.8) (95)
---- ---- ---- ---- ------ -----
Service Revenue 35.5 16.8 52.3 68.1 (15.8) (23)
Equipment Revenue 1.1 5.6 6.7 22.2 (15.5) (70)
---- ---- ---- ---- ------ -----
Total $36.6 $22.4 $59.0 $90.3 $(31.3) (35)%
===== ===== ===== ===== ======= ======

The make up of our registered subscriber base was as follows:

As of December 31,
------------------------
2002 2001 Change % Change
---- ---- ------ --------

Wireless Internet 106,082 102,258 3,824 4%
Field Services 30,263 36,752 (6,489) (18)
Transportation 94,825 88,128 6,697 8
Telemetry 30,171 22,616 7,555 33
All Other 653 890 (237) (27)
------- ------- ------ ----
Total 261,994 250,644 11,350 5%
======= ======= ====== ====

Summary of Year over Year Revenue

o Service revenue approximated $52.3 million for the year ended December
31, 2002, which was a $15.8 million reduction as compared to the year
ended December 31, 2001. The majority of the decrease in revenue
year-over-year was primarily the result of the sale of satellite
assets to MSV in November 2001, offset by an increase in revenue in
the wireless internet segment. Total revenue approximated $59.0
million in the year ended December 31, 2002, which was a $31.3 million
reduction as compared to the year ended December 31, 2001. This
decrease resulted from the service revenue decline discussed above, as
well as the decline in equipment revenue as a result of the reduction
in device pricing in 2002.

o Wireless internet revenue grew $9.7 million from the year ended
December 31, 2001 to the year ended December 31, 2002. While our
wireless subscribers only grew 4% from 102,258 to 106,082, the active,
revenue-producing units grew from approximately 31,500 units to 56,400
units, or a 79% year-over-year increase. Resellers of our eLink and
BlackBerryTM products purchased units to stock their inventory in 2000
and 2001; these units became revenue-producing as resellers moved from
initial end-user pilots trials to full deployments.

o Field service revenue decreased by $3.3 million from the year ended
December 31, 2001 to the year ended December 31, 2002. The decrease in
revenue from field services primarily reflects the churn of units as a
result of contract terminations and corporate downsizings.
Additionally, certain contract renewals resulted in rate reductions.

o Transportation revenue decreased by $4.4 million from the year ended
December 31, 2001 to the year ended December 31, 2002. The decrease in
revenue from our transportation product was primarily the result of
the sale of our satellite assets to MSV in November 2001. The
remaining reduction was due to the change in accounting treatment for
the amortization of certain software licensing revenue related to the
sales of our transportation business to Aether Systems in November
2000. These decreases were partially off-set by an increase in units
and usage for our largest customer.

o Telemetry revenues remained virtually flat from the year ended
December 31, 2001 to the year ended December 31, 2002. Although
subscriber units grew by 7,555 or 33% year-over-year, this growth was
offset by contractual pricing reductions for one of our largest
telemetry customers.

o All other revenue decreased $17.8 million from the year ended December
31, 2001 to the year ended December 31, 2002. This decrease in revenue
was due entirely to the sale of the satellite assets to MSV in
November 2001, partially offset by satellite capacity revenues paid by
MSV as it pursued its research and development program.

o The decrease in equipment revenue is primarily a result of the sale of
our satellite business in November 2001 and the loss of equipment
sales from that business. These reductions in equipment revenue were
offset by an increase in equipment sales for our eLink product lines.
This reduction was also a result of write-downs of deferred equipment
revenue.

For the year ended December 31, 2002, five customers accounted for approximately
47% of Motient's service revenue, with two customers, UPS and SkyTel, each
accounting for more than 10%. As of December 31, 2002, SkyTel represented
approximately 14% of our net accounts receivable, all of which was current. The
revenue attributable to such customers varies with the level of network airtime
usage consumed by such customers, and none of the service contracts with such
customers requires that the customers use any specified quantity of network
airtime, nor do such contracts specify any minimum level of revenue. There can
be no assurance that the revenue generated from these customers will continue in
future periods. As discussed in "Business -- Recent Developments," UPS has
deregistered most of its units as it migrates to another network provider for
its next generation solution.

Expenses Successor Predecessor Predecessor
Company Company Company
------- ------- --------
Eight Months Four Months Combined Year
Ended Ended Ended Year Ended
December 31, April 30, December 31, December 31,
Summary of Expense 2002 2002 2002 2001 Change % Change
- ------------------------ ---- ---- ---- ---- ------ --------
(in millions)

Cost of Service and Operations $38.1 $21.9 $ 60.0 $ 73.1 $(13.1) (18)%
Cost of Equipment Sales 2.2 6.0 8.2 34.1 (25.9) (76)
Sales and Advertising 4.8 4.3 9.1 22.6 (13.5) (60)
General and Administration 9.7 4.1 13.8 20.5 (6.7) (33)
Restructuring Charges 0.0 0.6 0.6 4.7 (4.1) (87)
Depreciation and Amortization 15.5 6.9 22.4 32.4 (10.0) (31)
----- ----- ------ ------ ------- -----
Total Operating $70.3 $43.8 $114.1 $187.4 $(73.3) (39)%
===== ===== ====== ====== ======= =====

o decreases in communication charges associated with reductions in the
cost of usage as a result of the sale of the satellite and
transportation assets and rate reductions in certain telecommunication
contracts,
o cost reductions associated with reduced headcount levels, primarily as
a result of the sale of our satellite assets and cost control efforts
undertaken in the second half 2001, and
o the operational restructurings in July and September 2002,
o reductions in research and development spending. and
o decreases in costs associated with the sale of the satellite business
to MSV, including a reduction in in-orbit insurance costs for the
year.

These decreases were offset by:

o increases in base station maintenance costs associated with an
increase in the number of base stations,
o increases in site rental costs associated with the increase in base
stations year-over-year,
o an increase in the average lease rate, increases in licensing and
commission payments to third parties with whom we have partnered to
provide certain eLink and BlackBerry(TM) by Motient services, and fees
incurred as a result of Motient's withdrawal from certain frequency
auctions, and

The decrease in cost of equipment sold for the year ended December 31, 2002, as
compared to 2001, was a result of reduced terrestrial hardware sales prices
during 2002, and no hardware sales in 2002 were associated with the satellite
voice business that was sold to MSV in November 2001. These decreases were
offset by $4.5 million of writedowns in second quarter of 2002. These
write-downs compared to $7.5 million inventory valuation charges in 2001
associated with our early-generation eLink inventory. This reduction was also a
result of write-downs of deferred equipment costs.

Sales and advertising expenses as a percentage of total revenue were
approximately 15% for 2002, compared to 25% for 2001. The 60% decrease in sales
and advertising expenses year over year was primarily attributable to reductions
in spending on advertising and trade shows, and decreases in headcount costs,
primarily as a result of the sale of our satellite assets, cost control efforts
undertaken in the second half 2001, and the operational restructurings in July
and September 2002.

General and administrative expenses for the core wireless business as a
percentage of total revenue were approximately 23% for 2002 as compared to 23%
for 2001. The 33% decrease in 2002 costs over 2001 costs in the general and
administrative expenses of our core wireless business was primarily attributable
to savings associated with having fewer employees throughout 2002, primarily as
a result of the sale of our satellite assets and cost control efforts undertaken
in the second half 2001, and the operational restructurings in July and
September 2002, reductions associated with various savings from the sales of our
satellite business, and reductions in regulatory expenditures in 2002 as
compared to 2001.

Operational restructuring costs in 2002 of $0.6 million are associated with our
staff reductions. Operational restructuring costs in 2001 of $4.7 million
represent those costs associated with the restructuring program that we
announced and implemented on September 26, 2001. Of these costs, approximately
$1.6 million are cash charges that are associated with severance packages for
approximately 16% of our direct work force that was laid off. These cash
expenditures did, in some cases, carry into the first quarter of 2002.
Additional charges were associated with the termination of a product initiative,
and represent primarily non-cash charges associated with the write off of
prepaid advertising costs.

Depreciation and amortization for the core wireless business was approximately
38% of total revenue for 2002, as compared to 36% for 2001. The $10.0 million
decrease in depreciation and amortization expense in 2002 was primarily
attributable to the sale of our satellite assets to MSV in late November 2001,
and the associated depreciation on those assets.

Interest income was $0.1 million for the year ended December 31, 2002, as
compared to $1.1 million for the year ended December 31, 2001. Due to our
reorganization efforts, we were limited in our ability to invest excess
available cash.

We incurred $3.8 million of interest expense in 2002, compared to $61.7 million
during 2001. The $57.9 million decrease was primarily a result of the
elimination of the majority of our debt as a result of the bankruptcy
reorganization in 2002 and the retirement of a term loan. Interest expenses in
2002 are primarily associated with our Rare Medium and CSFB notes, capital
leases and vendor financing.

We recorded equity in losses for MSV in 2002 of $24.2 million (after giving
effect to the impairment of our investment in MSV in the fourth quarter of 2002
in the amount of $15 million). In 2001, we recorded equity losses for XM Radio
of $48.5 million. In 2001, we also recorded our XM Radio equity investment
impairment charge of $81.5 million as a result of the sale or exchange of all of
our shares of XM Radio stock for cash or debt extinguishment, which resulted in
mark-to-market losses of $81.5 million on the shares disposed of, and a gain of
$10.1 million on the extinguishment of debt exchanged for these shares.

Additionally, we recorded a number of other non-recurring charges in 2002 and
2001 as a result of our various financing transactions. For additional
information concerning these non-recurring charges, please see "-- Liquidity and
Capital Resources."

In 2002:

o As a result of our debt restructuring efforts, we recorded costs of
$23.1 million.

o We recorded a gain on the sale of our transportation and satellite
assets of $0.8 million.

o We recorded a loss on the sale of certain assets of $1.2 million.

o Related to our reorganization in May of 2002, we recorded a gain on
fair market adjustment of $94.7 million and a gain on the
restructuring of debt of $183.7 million.

In 2001:

o As noted below in "-- Derivatives," we purchased $50.0 million of
notes from Rare Medium that were secured and exchangeable into up to
five million of our shares of XM Radio stock. The embedded call
options included in these notes were deemed to be a derivative, and we
recorded a net gain of $1.5 million on the mark-to-market adjustment
of these securities.

o We sold or exchanged all of our shares of XM Radio stock for cash or
debt extinguishment. As a result of these various transactions, we
recorded a mark-to-market loss of $81.5 million on the shares disposed
of, and a gain of $10.1 million on the extinguishment of debt
exchanged for these shares.

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

o We recorded a gain of approximately $23.2 million on the sale of our
satellite assets to MSV.

o We incurred approximately $4.1 million of costs associated with the
Rare Medium merger, which was terminated in October 2001.

Net capital expenditures for the year ended December 31, 2002 for property and
equipment were $1.1 million compared to $13.8 million for 2001. Expenditures
consisted primarily of assets necessary to continue the build out of our
terrestrial network.

Material Off-Balance Sheet Transactions

As of December 31, 2003, 2002 and 2001, we did not have any material off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) under Regulation S-K.

Liquidity and Capital Resources

As of December 31, 2003, we had approximately $4.1 million of cash on hand and
short-term investments. As of May 31, 2004, we had approximately $15 million of
cash on hand and short-term investments.

Since emerging from bankruptcy protection in May 2002, we have undertaken a
number of actions to reduce our operating expenses and cash burn rate. Our

liquidity constraints have been exacerbated by weak revenue growth since
emerging from bankruptcy protection, due to a number of factors including the
weak economy generally and the weak telecommunications and wireless sector
specifically, the financial difficulty of several of our key resellers, on whom
we rely for a majority of our new revenue growth, the loss of UPS as a material
customer and our continued limited liquidity which has hindered efforts at
demand generation.

For a description of our significant cost reduction initiatives since emerging
from bankruptcy, please see "-- Overview and Introduction -- Cost Reduction
Actions."

In addition to cash generated from operations, we own a $15.0 million promissory
note issued by MSV in November 2001. This note matures in November 2006, but may
be fully or partially repaid prior to maturity in certain circumstances, subject
to certain conditions and priorities with respect to payment of other
indebtedness, involving the consummation of additional investments in MSV. Under
the terms of our $19.8 million of notes issued to Rare Medium and CSFB in
connection with our Plan of Reorganization, in certain circumstances we must use
25% of any proceeds from the repayment of the $15.0 million note from MSV to
repay the Rare Medium and CSFB notes, on a pro-rata basis. In April 2004, MSV
repaid $2 million of accrued interest on this note, of which Motient used
$500,000 to partially repay certain obligations outstanding to Rare Medium and
CSFB. For a discussion of certain recent developments regarding MSV and the
repayment of a portion of the MSV note, please see "-- Overview and Introduction
- -- Mobile Satellite Ventures LP" above.

Our future financial performance will depend on our ability to continue to
reduce and manage operating expenses, as well as our ability to grow revenue. We
may lose certain revenues from major customers due to churn and migration to
alternative technologies. Our future financial performance also could be
negatively affected by unforeseen factors and unplanned expenses.

In December 2002 we entered into an agreement with UPS pursuant to which UPS
prepaid an aggregate of $5 million in respect of network airtime service to be
provided beginning January 1, 2004. The $5 million prepayment will be credited
against airtime services provided to UPS beginning January 1, 2004, until the
prepayment is fully credited. Based on UPS' current level of network airtime
usage, we do not expect that UPS will be required to make any cash payments to
us in 2004 for service provided during 2004. If UPS does not make any cash
payments to us in 2004, our cash flows from operations in 2004 will decline, and
our liquidity and capital resources could be materially and negatively affected.
As of May 31, 2004, the remaining balance under this prepayment was $4.3
million.

In the first half of 2003, UPS substantially completed its migration to next
generation network technology, and beginning in July 2003 its monthly airtime
usage of our network has declined significantly. Until June 2003, UPS had
voluntarily maintained its historical level of payments to mitigate the
near-term revenue and cash flow impact of its recent and anticipated continued
reduced network usage. There are no minimum purchase requirements under our
contract with UPS, and UPS may terminate the contract on 30 days' notice. If UPS
terminates the contract, we will be required to refund any remaining portion of
the prepayment to UPS. While we expect that UPS will remain a customer for the
foreseeable future, over time we expect that the bulk of UPS' units will migrate
to another network.

We have implemented a number of initiatives to offset the loss of revenue and
cash flow from UPS, including the following:

o further reductions in employee and our network infrastructure costs;

o actions to grow revenue from our recently-announced carrier
relationships with Verizon Wireless and T-Mobile, under which we will
be selling voice and data services on each carrier's next generation
wireless networks as a master agent;

o actions designed to initiate revenue growth to grow revenue from our
various telemetry applications and initiatives; and

o enhancements to our liquidity which are expected to involve the sale
of certain frequency assets, such as the sales of certain SMR licenses
to Nextel.

These measures may not be sufficient to offset the loss of revenue and cash flow
from UPS.

We continue to pursue all potential funding alternatives. Among the alternatives
for raising additional funds are issuances of debt or equity securities, other
borrowings under secured or unsecured loan arrangements, and sales of assets.
There can be no assurance that additional funds will be available to us on
acceptable terms or in a timely manner. Subsequent to the period covered by this
report, we sold 7,715,910 shares of our common stock in two separate
transactions for aggregate consideration of $53.2 million in such private
placements. Please see "Business -- Recent Developments - Private Placement,"
for further details.

We expect to continue to require significant additional funds before we begin to
generate cash in excess of our operating expenses. It is not clear when, or if,
we will begin to generate cash from operations in excess of our cash operating
expenses. Also, even if we begin to generate cash in excess of our operating
expenses, we expect to continue to require significant additional funds to meet
remaining interest obligations, capital expenditures and other non-operating
cash expenses.

We are in the process of evaluating our future strategic direction. We have been
forced to take material actions to reduce operating costs and preserve our
remaining cash. For example, in February 2004 we effected a reduction in force
that reduced our workforce from approximately 166 to 112 employees. The
substantial elimination of sales and other personnel may have a negative effect
on our future revenues and growth prospects and our ability to support new
product initiatives and generate customer demand. Cash generated from operations
may not be sufficient to pay all of our obligations and liabilities.

Our projected cash requirements are based on certain assumptions about our
business model, including, specifically, assumed rates of growth in subscriber
activations and assumed rates of growth of service revenue. While we believe
these assumptions are reasonable, these growth rates continue to be difficult to
predict, and there is no assurance that the actual results that are experienced
will meet the assumptions included in our business model and projections. If the
future results of operations are significantly less favorable than currently
anticipated, our cash requirements will be more than projected, and we may
require additional financing in amounts that will be material. The type, timing
and terms of financing that we select will be dependent upon our cash needs, the
availability of financing sources and the prevailing conditions in the financial
markets. We cannot guarantee that additional financing sources will be available
at any given time or available on favorable terms.

We believe that our available funds, together with existing and anticipated
credit facilities, will be adequate to satisfy our current and planned
operations for at lease the next 12 months.

Motient's Chapter 11 Filing and Plan of Reorganization

Under our Plan of Reorganization, all then-outstanding shares of our
pre-reorganization common stock and all unexercised options and warrants to
purchase our pre-reorganization common stock were cancelled. The holders of
$335.0 million in senior notes exchanged their notes plus accrued interest for
25,000,000 shares of our new common stock. Some of our other creditors received
an aggregate of 97,256 shares of our new common stock in settlement for amounts
owed to them. These shares were issued upon completion of the bankruptcy claims
process; however, the value of these shares has been recorded in the financial
statements as if they had been issued on the effective date of the
reorganization. Holders of our pre-reorganization common stock received warrants
to purchase an aggregate of approximately 1,496,512 shares of new common stock.
The warrants never became exercisable by their terms, and were cancelled on May
1, 2004. All warrants issued to the holders of our pre-reorganization common
stock, including those shares held by our 401(k) savings plan, have been
recorded in the financial statements as if they had been issued on the effective
date of the reorganization. Also, in July 2002, we issued to Evercore Partners
LP, financial advisor to the creditors' committee in our reorganization, a
warrant to purchase up to 343,450 shares of common stock, at an exercise price
of $3.95 per share. The warrant was dated May 1, 2002, and has a term of five
years. If the average closing price of our common stock for thirty consecutive

trading days is equal to or greater than $20.00, we may require Evercore to
exercise the warrant, provided that our common stock is then trading in an
established public market. The value of this warrant has been recorded in the
financial statements as if it had been issued on May 1, 2002.

As a result of our Chapter 11 bankruptcy filing, we saw a slower adoption rate
for our services in the periods following emergence from bankruptcy. In a large
customer deployment, the upfront cost of the hardware can be significant.
Because the hardware generally is usable only on Motient's network, some of our
customers delayed adoption while we were in Chapter 11 proceedings. In an effort
to accelerate adoption of our services, we did, in selected instances in the
first quarter of 2002, offer certain incentives for adoption of our services
that were outside of our customary contract terms, such as extended payment
terms or temporary hardware rental. None of these offers were accepted;
therefore, these changes in terms were not material to our cash flow or
operations. Additionally, certain of our trade creditors required either
deposits for future services or shortened payment terms; however, none of these
deposits or changes in payment terms were material and none of our key suppliers
have ceased to do business with us as a result of our reorganization.

Effective May 1, 2002, we adopted "fresh-start" accounting, which required that
the $221 million of reorganization value of our assets be allocated in
accordance with procedures specified by Statement of Financial Accounting
Standards No. 141, "Business Combinations". The bankruptcy court originally set
a reorganization value for our assets of $234 million. In November 2003, Motient
engaged CTA to perform a valuation of its equity interests in MSV as of December
31, 2002. Concurrent with CTA's valuation, Motient reduced the book value of its
equity interest in MSV from $54 million (inclusive of Motient's $2.5 million
convertible notes from MSV) to $41 million as of May 1, 2002 to reflect certain
preference rights on liquidation of certain classes of equity holders in MSV.
Motient's reorganization value was reduced by $13 million to $221 million as a
result of this valuation revision.

Further details regarding the plan are contained in our disclosure statement
with respect to the plan, which was filed as Exhibit 99.2 to our current report
on Form 8-K dated March 4, 2002.

Summary of Liquidity and Financing

We have the following sources of financing in place:

o MSV issued a $15.0 million note to Motient as part of the November 26,
2001 asset sale. The note matures in November 2006, but is payable
sooner in certain circumstances, subject to certain conditions and
priorities with respect to payment of other indebtedness, involving
the consummation of additional investments in MSV. There can be no
assurances that this note will be repaid prior to its stated maturity
date, or that MSV will have the resources to repay such note when due.
Of the $15.0 million of proceeds from this note, $3.75 million would
be required to be used to prepay a pro-rata portion of the $19.0
million note payable to Rare Medium and a $750,000 note payable to
CSFB. In April 2004, MSV repaid $2 million of accrued interest on this

note, of which Motient used $500,000 to partially repay certain
obligations outstanding to Rare Medium and CSFB. Motient also owns an
aggregate of approximately $3.5 million of convertible notes issued by
MSV. The convertible notes mature on November 26, 2006, bear interest
at 10% per annum, compounded semiannually, and are payable at
maturity. The convertible notes are convertible at any time at
Motient's discretion, and automatically in certain circumstances, into
class A preferred units of limited partnership interests of MSV. For a
discussion of more details related to these recent developments
relating to MSV, please see " -- Overview and Introduction -- Mobile
Satellite Ventures LP" above.

o Motient entered into a term credit facility in January 2003. The
borrowing availability period under this facility ended on December
31, 2003. In March 2004, the borrowing availability period was
extended to December 31, 2004. In April 2004, we paid all outstanding
principal and accrued interest, totaling $6.8 million, under this term
credit facility and this amount may not be reborrowed. Approximately
$5.7 million remains available for borrowing under this term credit
facility. Please see "--Term Credit Facility" below for a discussion
of this facility and certain defaults and waivers.

o Motient sold 7,715,910 shares of its common stock in two separate
transactions for aggregate consideration of $53.2 million in private
placements on April 7, 2004 and July 1, 2004. Please see "--Private
Placement" below for a discussion of this transaction.

We currently anticipate that our funding requirements through 2004 should be met
through a combination of cash on hand, including cash raised in the private
placements described above, net cash flow from operations, borrowings under our
term credit facility described above, proceeds from the sale of certain
frequency assets, and the proceeds from the sale of certain inventory will be
adequate to satisfy our current and planned operations for at least the next 12
months.

Debt and Capital Lease Obligations

Motient has the following financing obligations outstanding:

o Note payable to Rare Medium in the amount of $22.5 million. The note
was issued by a subsidiary of Motient Corporation, MVH Holdings Inc.,
that owns 100% of Motient Ventures Holdings, Inc., which owns all of
our interests in MSV. The note matures on May 1, 2005 and carries
annual interest at 9%. The note allows us to elect to add interest to
the principal or pay interest in cash. The note requires that it be
prepaid using 25% of the proceeds of any repayment of the $15.0
million note from MSV. Certain outstanding principal and interest on
this note was repaid in April 2004. For further discussion of certain
recent developments relating to MSV, please see " -- Overview and
Introduction -- Mobile Satellite Ventures LP" above.

o Note payable to CSFB in the amount of $0.9 million. The note was also
issued by MVH Holdings Inc. The note matures on May 1, 2005 and
carries annual interest at 9%. The note allows us to elect to add
interest to the principal or pay interest in cash. The note requires
that it be prepaid using 25% of the proceeds of any repayment of the
$15.0 million note from MSV. Certain outstanding principal and
interest on this note was repaid in April 2004. For further discussion
of certain recent developments relating to MSV, please see " --
Overview and Introduction -- Mobile Satellite Ventures LP" above.

o A capital lease for network equipment. The lease had an effective
interest rate of 12.2%. In January 2003, this agreement was
restructured to provide for a modified payment schedule. We also
negotiated a further extension of the repayment schedule that became
effective upon the satisfaction of certain conditions, including our
funding of a letter of credit in twelve monthly installments beginning
in 2003, in the aggregate amount of $1.125 million, to secure our
payment obligations. The letter of credit was to have been released in
fifteen equal installments beginning in July 2004, assuming no
defaults have occurred or are occurring. As of December 30, 2003 and
May 31, 2004, approximately $3.3 million and $2.7 million was
outstanding under this capital lease. In June 2004, we negotiated a
settlement of the entire outstanding amounts and terminated this
lease. We also cancelled the letter of credit.

o Obligations under a vendor financing facility and promissory note.
Loans under our vendor financing facility with Motorola, which were
held by Motient Communications, were guaranteed by Motient Corporation
and Motient Holdings. No additional amounts may be drawn under this
facility. In January 2003, we restructured the then-outstanding
principal under this facility of $3.5 million, with such amount to be
paid off in equal monthly installments over a three-year period from
January 2003 to December 2005. In January 2003, we negotiated a
deferral of approximately $2.6 million that was owed for maintenance
services provided pursuant to a separate service agreement with
Motorola, and we issued a promissory note for such amount, with the
note to be paid off over a two-year period beginning in January 2004.
The interest rate on this promissory note is LIBOR plus 4%. In March
2004, we further restructured both the vendor financing facility and
the promissory note, primarily to extend the amortization periods for
both the vendor financing facility and the promissory note. We
amortized the combined balances in the amount of $100,000 per month
beginning in March 2004. We also agreed that interest would be paid on
the vendor financing facility at LIBOR plus 4%. As part of this
restructuring, we agreed to grant Motorola a second lien (junior to
the lien held by the lenders under our term credit facility) on the
stock of Motient License. This pledge secures our obligations under
both the vendor financing facility and the promissory note. As of
December 30, 2003 and May 31, 2004, approximately $4.8 million and
$4.2 million, respectively, was outstanding under these debt
obligations to Motorola. In June, 2004, we reached an agreement to
prepay the entire amounts outstanding under these obligations in
negotiated settlements with Motorola and issue a warrant to purchase
200,000 shares of our common stock at a price of $8.68 per share, in
full satisfaction of the outstanding balances.

Term Credit Facility

On January 27, 2003, our wholly-owned subsidiary, Motient Communications, closed
a $12.5 million term credit agreement with a group of lenders, including several
of our existing stockholders. The lenders include the following entities or
their affiliates: M&E Advisors, L.L.C., Bay Harbour Partners, York Capital and
Lampe Conway & Co. York Capital is affiliated with James G. Dinan and JGD
Management Corp. JGD Management Corp., James G. Dinan, James D. Dondero and
Highland Capital Management each hold 5% or more of our common stock. The
lenders also include Gary Singer, directly or through one or more entities. Gary
Singer is the brother of Steven G. Singer, one of our directors.

The table below shows, as of June 24, 2004 the number of shares of Motient
common stock beneficially owned by the following parties to the term credit
agreement, based solely on filings made by such parties with the SEC:

Name of Beneficial Owner Number of Shares
------------------------ ----------------
James G. Dinan* 2,276,445
JGD Management Corp.* 2,276,445
Highland Capital Management** 4,424,559
James Dondero** 4,424,559

*JGD Management Corp and James G. Dinan share beneficial ownership with
respect to the 2,276,445 shares of our common stock. Mr. Dinan is the
president and sole stockholder of JGD Management Corp, which manages
the other funds and accounts that hold our common stock over which Mr.
Dinan has discretionary investment authority.
**James D. Dondero, a member of our board of directors, is the
President of Highland Capital Management, L.P., which, pursuant to
an arrangement with M&E Advisors, L.L.C., has indirectly made a
commitment under the credit facility.

In the credit agreement, the lenders have made commitments to lend Motient
Communications up to $12.5 million. The commitments are not revolving in nature
and amounts repaid or prepaid may not be reborrowed. Borrowing availability
under our term credit facility terminated on December 31, 2003. On March 16,
2004, we entered into an amendment to the credit facility which extended the
borrowing availability period until December 31, 2004. As part of this
amendment, we provided the lenders with a pledge of all of the stock of a
newly-formed special purpose subsidiary of Motient Communications, Motient
License, which holds all of Motient's FCC licenses formerly held by Motient
Communications. On March 16, 2004, in connection with the execution of the
amendment to our credit agreement, we issued warrants to the lenders to
purchase, in the aggregate, 2,000,000 shares of our common stock. The number of
warrants was reduced to an aggregate of 1,000,000 shares of common stock since,
within 60 days after March 16, 2004, we obtained $23.2 million of equity
financing in a private placement of our common stock. The exercise price of the
warrants is $4.88 per share. The warrants were immediately exercisable upon
issuance and have a term of five years. The warrants were valued using a
Black-Scholes pricing model at $6.7 million and were recorded as a debt discount
and are being amortized as additional interest expense over three years, the
term of the related debt. The warrants are also subject to a registration rights
agreement. Under such agreement, we agreed to register the shares underlying the

warrants upon the request of a majority of the warrantholders, or in conjunction
with the registration of other common stock of the company. We will bear all the
expenses of such registration. We were also required to pay a commitment fee to
the lenders of $320,000, which accrued into the principal of the credit facility
at closing. This fee was recorded on our balance sheet and will be amortized as
additional interest expense over three years, the term of the related debt.

Under this facility, the lenders have agreed to make loans to Motient
Communications through December 31, 2004 upon Motient Communications' request no
more often than once per month, in aggregate principal amounts not to exceed
$1.5 million for any single loan, and subject to satisfaction of other
conditions to borrowing, including certain financial and operating covenants,
contained in the credit agreement. As of the date of this report, we had
borrowed $6.0 million in principal amounts under this facility, all of which,
including additional accrued interest, was repaid in April 2004 and may not be
reborrowed.

Each loan borrowed under the credit agreement has a term of three years. Loans
carry interest at 12% per annum. Interest accrues, compounding annually, from
the first day of each loan term, and all accrued interest is payable at each
respective loan maturity, or, in the case of mandatory or voluntary prepayments,
at the point at which the respective loan principal is repaid. Loans may be
prepaid at any time without penalty.

The obligations of Motient Communications under the credit agreement are secured
by a pledge of all the assets owned by Motient Communications that can be
pledged as security. Motient Communications, directly or indirectly, owns all of
our assets relating to our terrestrial wireless communications business. In
addition, we and our wholly-owned subsidiary, Motient Holdings, have guaranteed
Motient Communications' obligations under the credit agreement, and we have
delivered a pledge of the stock of Motient Holdings, Motient Communications,
Motient Services Inc. and Motient License to the lenders. Upon the repayment in
full of the outstanding $19,750,000 in senior notes due 2005 issued by MVH
Holdings to Rare Medium and CSFB in connection with our approved Plan of
Reorganization, we will pledge the stock of MVH Holdings to the lenders.

In connection with the signing of the credit agreement in January 2003, we
issued warrants at closing to the lenders to purchase, in the aggregate,
3,125,000 shares of our common stock. The exercise price for the warrants is
$1.06 per share. The warrants were immediately exercisable upon issuance and
have a term of five years. The warrants were valued at $10 million using a
Black-Scholes pricing model and have been recorded as a debt discount and are
being amortized as additional interest expense over three years, the term of the
related debt. Upon closing of the credit agreement, we paid closing and
commitment fees to the lenders of $500,000. These fees have been recorded on our
balance sheet and are being amortized as additional interest expense over three
years, the term of the related debt. Under the credit agreement, we must pay an
annual commitment fee of 1.25% of the daily average of undrawn amounts of the
aggregate commitments from the period from the closing date to December 31,
2003. In December 2003, we paid a commitment fee to the lenders of approximately
$113,000.

In each of April, June and August 2003 and March 2004, we made draws under the
credit agreement in the amount of $1.5 million, for an aggregate principal
amount of $6.0 million. We used such funds to fund general working capital
requirements of operations.

In April 2004, Motient repaid all principal amounts then owing under its term
credit facility, including accrued interest thereon, in an amount of $6.8
million. The remaining availability under the credit facility of $5.7 million
will be available for borrowing to Motient until December 31, 2004, subject to
the lending conditions in the credit agreement.

For the monthly periods ended April 2003 through December 2003, we reported
events of default under the terms of the credit facility to the lenders. These
events of default related to non-compliance with covenants requiring minimum
monthly revenue, earnings before interest, depreciation and amortization and
taxes, and free cash flow performance. In each period, the lenders waived these
events of default. There can be no assurance that Motient will not have to
report additional events of default or that the lenders will continue to provide
waivers in such event. Ultimately, there can be no assurances that the liquidity
provided by the credit facility will be sufficient to fund our ongoing
operations. For further details, please see "Risk Factors - We will need
additional liquidity to fund our operations."

The following table reflects the maturity of our various obligations over the
next five years.

Less then
---------
3 - 5 More than
Total 1 year 1-3 years Years 5 years
----- ------ --------- ----- ---------
(in thousands)

Notes Payable $22,885 $ --- $22,885 $ --- $ ---
Term Credit Facility 4,914 --- 4,914 --- ---
Capital lease obligations, including interest thereon 3,504 1,752 1,752 --- ---
Vendor financing commitment and note payable 4,814 2,413 2,401 --- ---
------- ------ -------- ----- -----
Total Contractual Cash Obligations $36,117 $4,165 $31,952 $ --- $ ---

Commitments

As of December 31, 2003, we had the following outstanding cash contractual
commitments:

More than
Total <1 year 1-3 years 3 - 5 years 5 years
-------- ------- --------- ----------- ---------
(in thousands)

Operating leases (1) $33,685 $12,170 $17,417 $1,614 $2,484
Capital lease obligations, including interest thereon (1) 3,504 1,752 1,752 --- ---
Notes Payable (2) 22,885 --- 22,885 --- ---
Term Credit Facility 4,914 --- 4,914 --- ---
Equipment financing commitment (1) 4,814 2,413 2,401 --- ---
------- ------- ------- ------ ------
Total Contractual Cash Obligations $69,802 $16,335 $49,369 $1,614 $2,484
======= ======= ======= ====== ======

(1) These commitments generally contain provisions that provide for an
acceleration of rent upon a default by us, except that certain long-term real
estate leases, categorized as Operating Leases, may not contain such provisions.

(2) In addition to being accelerable upon default, notes payable to Rare
Mediumand CSFB, which comprise approximately $21 million of this amount, must be
prepaid with 25% of the proceeds due from any repayment of the $15 million
principal note issued to Motient by MSV.

In May 2002, the FCC filed a proof of claim with the United States Bankruptcy
Court, asserting a pre-petition claim in the approximate amount of $1.0 million
in fees incurred as a result of our withdrawal from certain auctions. Under our
court-approved Plan of Reorganization, subsequent to June 30, 2002 the FCC's
claim was classified as an "other unsecured" claim, and the FCC was issued a
pro-rata portion of 97,256 shares of common stock issued to creditors with
allowed claims in such class. We recorded a $1.0 million expense in April 2002
for this claim.

At April 30 2002, we had certain contingent and/or disputed obligations under
our satellite construction contract entered into in 1995, which contained flight
performance incentives payable by us to the contractor if the satellite
performed according to the contract. Upon the implementation of the Plan of
Reorganization, this contract was terminated, and in satisfaction of all amounts
alleged to be owed by us under this contract, the contractor received a pro-rata
portion of the 97,256 shares issued to creditors holding allowed unsecured
claims. The shares were issued upon closure of the bankruptcy claims process.

On December 1, 2002, we entered into a letter agreement with UPS under which UPS
agreed to make a series of eight prepayments to us totaling $5 million for
future services we are obligated to provide to it after January 1, 2004. In
addition to any other rights it has under its network services agreement with
us, the letter agreement provides that UPS may terminate the network services
agreement, in whole or in part, by providing 30 days' notice to us, at which
point the remaining prepayment would be required to be repaid. As of July 31,
2003, all eight prepayments had been made. The $5 million prepayment will be
credited against airtime services provided to UPS beginning January 1, 2004,
until the prepayment is fully credited. Based on UPS' current level of network
airtime usage, we do not expect that UPS will be required to make any cash
payments to us in 2004 for service provided during 2004. The balance remaining
as of May 31, 2004 under this prepayment was $4.3 million.

MSV Investment

In July 2002, MSV commenced a rights offering seeking total funding in the
amount of $3.0 million. While we were not obligated to participate in the
offering, our board determined that it was in our best interests to participate
so that our interest in MSV would not be diluted. On August 12, 2002, we funded
an additional $957,000 to MSV pursuant to this offering, and received a new
convertible note in such amount. At December 31, 2002, our percentage ownership
of MSV was approximately 25.5% on a fully-diluted basis assuming certain other
investors exercise their right to make additional investment in MSV as a result
of the FCC ATC application process.

On August 21, 2003, two investors in MSV (excluding Motient) invested an
additional $3.7 million in MSV in exchange for Class A preferred units of
limited partnership interests in MSV. MSV used the proceeds from this investment
to repay other indebtedness that is senior in its right of repayment to
Motient's promissory note. Under the terms of the amended and restated
investment agreement, these investors also had the option of investing an
additional $17.6 million in MSV by December 31, 2003; however, if, prior to this
time, the FCC had not issued a decision addressing MSV's petition for
reconsideration with respect to the ATC Order, the option will be automatically
extended to March 31, 2004. As of the closing of the initial investment on
August 21, 2003, Motient's percentage ownership of MSV was approximately 29.5%
on a fully diluted basis, assuming certain other investors fully exercised their
option to make the $17.6 million additional investment in MSV as a result of the
FCC ATC approval process.

On April 2, 2004, two exiting investors in MSV invested $17.6 million in MSV in
exchange for class A preferred units of limited partnership interests of MSV. In
connection with this investment, MSV's amended and restated investment agreement
was amended to provide that of the total $17.6 million in proceeds, $5.0 million
was used to repay certain outstanding indebtedness of MSV, including $2.0
million of accrued interest under the $15.0 million promissory note issued to
Motient by MSV. Motient was required to use 25% of the $2.0 million it received
in this transaction, or $500,000, to prepay its existing notes owed to Rare
Medium Group and CSFB. The remainder of the proceeds from this investment were
used for general corporate purposes by MSV. As of the closing of the additional
investment on April 2, 2004, Motient's percentage ownership of MSV was
approximately 29.5% on an "as converted" basis giving effect to the conversion
of all outstanding convertible notes of MSV.

For a discussion of certain recent developments relating to MSV, please see " --
Overview and Introduction-- Mobile Satellite Ventures LP" above.

Private Placement

On April 7, 2004, we sold 4,215,910 shares of our common stock at a per share
price of $5.50 for an aggregate purchase price of $23.2 million to The Raptor
Global Portfolio Ltd., The Tudor BVI Global Portfolio,

Ltd., The Altar Rock Fund L.P., Tudor Proprietary Trading, L.L.C., Highland
Crusader Offshore Partners, L.P., York Distressed Opportunities Fund, L.P., York
Select, L.P., York Select Unit Trust, M&E Advisors L.L.C., Catalyst Credit
Opportunity Fund, Catalyst Credit Opportunity Fund Offshore, DCM, Ltd., Greywolf
Capital II LP and Greywolf Capital Overseas Fund and LC Capital Master Fund. The
sale of these shares was not registered under the Securities Act and the shares
may not be sold in the United States absent registration or an applicable
exemption from registration requirements. The shares were offered and sold
pursuant to the exemption from registration afforded by Rule 506 under the
Securities Act and/or Section 4(2) of the Securities Act. In connection with
this sale, we signed a registration rights agreement with the holders of these
shares. Among other things, this registration rights agreement requires us to
file and cause to make effective a registration statement permitting the resale
of the shares by the holders thereof. We also issued warrants to purchase an
aggregate of 1,053,978 shares of our common stock to the investors listed above,
at an exercise price of $5.50 per share. These warrants will vest if and only if
we do not meet certain deadlines between July and November, 2004, with respect
to certain requirements under the registration rights agreement. If the warrants
vest, they may be exercised by the holders thereof at any time through June 30,
2009.

In connection with this sale, we issued to Tejas Securities Group, Inc., our
placement agent for the private placement, and certain CTA affiliaites, warrants
to purchase 600,000 and 400,000 shares, respectively, of our common stock. The
exercise price of these warrants is $5.50 per share. The warrants are
immediately exercisable upon issuance and have a term of five years. We also
paid Tejas Securities Group, Inc. a placement fee of $350,000 at closing. The
shares were offered and sold pursuant to the exemption from registration
afforded by Rule 506 under the Securities Act and/or Section 4(2) of the
Securities Act.

Additional Equity Placement

Summary of Cash Flow for the year ended December 31, 2003 (Successor Company),
the eight months ended December 31, 2002 (Successor Company), and the four
months ended April 30, 2002 (Predecessor Company)

Predecessor
Successor Company Company
----------------- -------
Eight Months Four Months
Year Ended Ended Ended
December 31, December 31, April 30,
2003 2002 2002
---- ---- ----

Cash (Used In) Provided by Operating Activities $(7,120) $(8,908) $(14,546)
------- ------- --------
Cash (Used In) Provided by Investing Activities 4,893 (1,173) (122)
----- ------ ----
Cash (Used In) Provided by Financing Activities:
Equity issuances -- -- 17
Debt payments on capital leases and
vendor financing (4,006) (1,425) (1,273)
Net proceeds from debt issuances 4,500 -- --
Other (489) (117) --
----- ------- ------
Cash Provided (Used) in Financing Activities 5 (1,542) (1,256)
----- ------- ------
Total Change in Cash (2,222) (11,623) (15,924)
===== ======= =======
Cash and Cash Equivalents, end of period $3,618 $5,840 $17,463
====== ======= ========

Cash used in operating activities decreased from the year ended December 31,
2002 to December 31, 2003 as a result of decreases in operating losses, due
substantially to our reduction in employee salary and related expenditures,
reductions in network maintenance, site lease and telecommunications charges,
lower insurance costs subsequent to reorganization, and decreases in funds
provided by working capital, among other things discussed above.

The increase in cash provided by investing activities for the year ended
December 31, 2002 to December 31, 2003 was primarily attributable to the sale of
FCC licenses, offset by the purchase of restricted investments in 2002.

The increase in cash provided by financing activities for the year ended
December 31, 2002 to December 31, 2003 was the result of the proceeds from
borrowings under the term credit facility, offset by vendor debt and capital
lease repayments.

Other

On May 1, 2002, the effective date of our Plan of Reorganization, the financing
agreements that included restrictions on our ability to pay dividends were
terminated as part of the implementation of our Plan of Reorganization; however,
various financing documents prohibit us from paying cash dividends. We have
never paid dividends and do not expect to do so in the near future.

Derivatives

In September 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which requires
the recognition of all derivatives as either assets or liabilities measured at
fair value, with changes in value reflected as current period income (loss). The
effective date of SFAS No. 133, as amended by SFAS 138, is for fiscal years
beginning after September 15, 2000. Except for the Rare Medium note embedded
call options and the bank financing swap agreement discussed in the following
paragraphs, SFAS No. 133 was not material to our financial position or results
of operations as of or for the periods ended December 31, 2001, April 30, 2002,
December 31, 2002 and December 31, 2003.

In April and July 2001, we sold notes to Rare Medium totaling $50.0 million. The
notes were collateralized by up to five million of our XM Radio shares, and,
until maturity, which was extended until October 12, 2001, Rare Medium had the
option to exchange the note for a number of XM Radio shares equivalent to the
principal of the note plus any accrued interest thereon. We determined the
embedded call options in the notes, which permit Rare Medium to convert the
borrowings into shares of XM Radio, were derivatives which were accounted for in
accordance with SFAS No. 133 and accordingly we recorded a gain in the amount of
$1.5 million in 2001 related to the Rare Medium note call options. On October
12, 2001, the embedded call options in the Rare Medium notes expired
unexercised.

In connection with our bank financing in March 1998, we entered into an interest
rate swap agreement, with an implied annual rate of 6.51%. The swap agreement
reduced the impact of interest rate increases on our then-existing term loan
facility. We paid a fixed fee of approximately $17.9 million for the swap
agreement. In return, the counter-party was obligated to pay a variable rate
equal to LIBOR plus 50 basis points, paid on a quarterly basis directly to the
respective banks on our behalf, on a notional amount of $100 million until the
termination date of March 31, 2001. In connection with the pay down of a portion
of the term loan facility during 1999, we reduced the notional amount of our
swap agreement from $100 million to $41 million and realized net proceeds of
approximately $6 million due to early termination of a portion of the swap
agreement. The interest rate swap agreement expired in March 2001, and our bank
financing credit facility was extinguished in 2001.

Critical Accounting Policies and Significant Estimates

Below are our accounting policies that are both important to our financial
condition and operating results, and require management's most difficult,
subjective and complex judgments in determining the underlying estimates and
assumptions. The estimates and assumptions affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates as they require assumptions that are inherently uncertain.

"Fresh-Start" Accounting

In accordance with SOP No. 90-7, effective May 1, 2002, we adopted
"fresh-start" accounting and allocated the reorganization value of $221.0
million to our net assets in accordance with procedures specified by Statement
of Financial Standards No. 141, "Business Combinations".

We allocated the $221.0 million reorganization value among our net assets based
upon our estimates of the fair value of our assets and liabilities. In the case
of current assets, we concluded that their carrying values approximated fair
values. The values of our frequencies and its investment in and notes receivable

from MSV were based on independent analyses presented to the bankruptcy court
and subsequently modified as part of our valuation process in November 2003.
Please see "--Recent Developments--Mobile Satellite Ventures LP" and Note 2,
"Significant Accounting Policies - Restatement of Financial Statements," and
Note 16, "Subsequent Events," of notes to the consolidated financial statements
for further information concerning MSV. The value of our fixed assets was based
upon a valuation of our software and estimates of replacement cost for network
and other equipment, for which we believe that our recent purchases represent a
valid data point. The value of our other intangible assets was based on third
party valuations as of May 1, 2002.

For a complete description of the application of "fresh-start" accounting,
please refer to Note 2, "Significant Accounting Policies", of notes to the
consolidated financial statements.

Inventory

Inventory, which consists primarily of communication devices and accessories,
such as power supplies and documentation kits, are stated at the lower of cost
or market. Cost is determined using the weighted average cost method. We
periodically assess the market value of our inventory, based on sales trends and
forecasts and technological changes and record a charge to current period income
when such factors indicate that a reduction to net realizable value is
appropriate. We consider both inventory on hand and inventory that we have
committed to purchase, if any. Periodically, we will offer temporary discounts
on equipment purchases. In cases where this causes a write-down of the inventory
basis to the lower of cost or market, the write-down is recorded in the period
of the offer.

Investment in MSV and Note Receivable from MSV

As reported in our current report on Form 8-K dated March 14, 2003 and detailed
in Note 2, "Significant Accounting Policies - Restatement of Financial
Statements", of notes to the consolidated financial statements we have
determined that certain adjustments to our historical financial information for
2000, 2001 and 2002 were required to reflect the effects of several complex
transactions, including the formation of and transactions with MSV.

As a result of the application of "fresh-start" accounting and as subsequently
modified by our valuation process in November 2003 (please see "--Recent
Developments--Mobile Satellite Ventures LP," and Note 2, "Significant Accounting
Policies - Restatement of Financial Statements," and Note 16, "Subsequent
Events," of notes to the consolidated financial statements for further
information concerning MSV), the notes and investment in MSV were valued at fair
value, and we recorded an asset in the amount of approximately $53.9 million
representing the estimated fair value of our investment in and note receivable
from MSV. Included in this investment is the historical cost basis of our
approximately 48% of common equity ownership as of May 1, 2002, or approximately
$19.3 million. In accordance with the equity method of accounting, we recorded
our approximately 48% share of MSV losses against this basis.

Of the $53.9 million, approximately $6.2 million of the value attributed to MSV
is the excess of fair value over cost basis and is amortized over the estimated
lives of the underlying MSV assets that gave rise to the basis difference. We
are amortizing this excess basis in accordance with the pro-rata allocation of
various components of MSV's intangible assets as determined by MSV through
recent independent valuations. Such assets consist of FCC licenses, intellectual
property and customer contracts.

At December 31, 2002, our investment in MSV was impaired and we recorded a
charge of approximately $15.4 million. As of January 1, 2003, approximately $6.2
million is the excess of fair value over cost basis subject to amortization.

Of the $53.9 million, we have recorded the $15.0 million note receivable from
MSV, plus accrued interest thereon at its fair value, estimated to be
approximately $13.0 million as of the "fresh-start" accounting date, after
giving affect to discounted future cash flows at market interest rates. This
note matures in November 2006, but may be fully or partially repaid prior to
maturity in certain circumstances, subject to certain conditions and priorities
with respect to payment of other indebtedness, involving the consummation of
additional investments in MSV. We also recorded the $2.5 million convertible
note issued to Motient from MSV. Please see "--Recent Developments--Mobile
Satellite Ventures LP," for additional information regarding payments on the
$15.0 million note.

In November 2003, we engaged CTA to perform a valuation of our equity
interests in MSV as of December 31, 2002. Concurrent with CTA's valuation,
Motient reduced the book value of its equity interest in MSV from $54 million
(inclusive of Motient's $2.5 million convertible note from MSV) to $41 million
as of May 1, 2002 to reflect certain preference rights on liquidation of certain
classes of equity holders in MSV. Including its note receivable from MSV ($13
million at May 1, 2002), the book value of Motient's aggregate interest in MSV
as of May 1, 2002 was reduced from $67 million to $53.9 million. Also, as a
result of CTA's valuation of MSV, we determined that the value of our equity
interest in MSV was impaired as of December 31, 2002. This impairment was deemed
to have occurred in the fourth quarter of 2002. Motient reduced the value of its
equity interest in MSV by $15.4 million as of December 31, 2002. Including its
notes receivable from MSV ($19 million at December 31, 2002), the book value of
Motient's aggregate interest in MSV was $32 million as of December 31, 2002. It
was determined that no further impairment was required at December 31, 2003. For
additional information concerning this valuation process, please see Note 2,
"Significant Accounting Policies," of notes to the consolidated financial
statements.

The valuation of our investment in MSV and our note receivable from MSV are
ongoing assessments that are, by their nature, judgmental given that MSV is not
traded on a public market and is in the process of developing certain next
generation technologies, which depend on approval by the FCC. While the
financial statements currently assume that there is value in our investment in
MSV and that the MSV note is collectible, there is the inherent risk that this
assessment will change in the future and we will have to write down the value of
this investment and note.

Deferred Taxes

We have generated significant net operating losses for tax purposes as of
December 31, 2003. We have had our ability to utilize these losses limited on
two occasions as a result of transactions that caused a change of control in

accordance with the Internal Revenue Service Code Section 382. Additionally,
since we have not yet generated taxable income, we believe that our ability to
use any remaining net operating losses has been greatly reduced; therefore, we
have provided a full valuation allowance for any benefit that would have been
available as a result of our net operating losses. See Note 2, "Significant
Accounting Policies - Deferred Taxes," of notes to the consolidated financial
statements for further details.

Revenue Recognition

We generate revenue principally through equipment sales and airtime service
agreements. In 2000, we adopted SAB No. 101, which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements. In
certain circumstances, SAB No. 101 requires us to defer the recognition of
revenue and costs related to equipment sold as part of a service agreement.

In December 2003, the Staff of the SEC issued SAB No. 104, "Revenue
Recognition", which supersedes SAB No. 101, "Revenue Recognition in Financial
Statements." SAB No. 104's primary purpose is to rescind accounting guidance
contained in SAB No. 101 related to multiple-element revenue arrangements and to
rescind the SEC's "Revenue Recognition in Financial Statements Frequently Asked
Questions and Answers" ("FAQ") issued with SAB No. 101. Selected portions of the
FAQ have been incorporated into SAB No. 104. The adoption of SAB No. 104 did not
have a material impact on our revenue recognition policies.

Revenue is recognized as follows:

Service revenue: Revenues from our wireless services are recognized when the
services are performed, evidence of an arrangement exists, the fee is fixed and
determinable and collectibility is probable. Service discounts and incentives
are recorded as a reduction of revenue when granted, or ratably over a contract
period. We defer any revenue and costs associated with activation of a
subscriber on our network over an estimated customer life of two years.

To date, the majority of our business has been transacted with
telecommunications, field services, natural resources, professional service and
transportation companies located throughout the United States. We grant credit
based on an evaluation of the customer's financial condition, generally without
requiring collateral or deposits. We establish a valuation allowance for
doubtful accounts receivable for bad debt and other credit adjustments.
Valuation allowances for revenue credits are established through a charge to
revenue, while valuation allowances for bad debts are established through a
charge to general and administrative expenses. We assess the adequacy of these
reserves quarterly, evaluating factors such as the length of time individual
receivables are past due, historical collection experience, the economic
environment and changes in credit worthiness of our customers. As of December
31, 2003 and December 31, 2002, we had a valuation allowance of approximately
16.6% and 9.7% of our accounts receivable, respectively. We believe that our
established valuation allowance was adequate as of December 31, 2003 and 2002.

If circumstances related to specific customers change or economic conditions
worsen such that our past collection experience and assessments of the economic
environment are no longer relevant, our estimate of the recoverability of our
trade receivables could be further reduced.

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

Long-lived Assets

On January 1, 2002, we adopted the provisions of SFAS No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No.
141 requires business combinations initiated after June 30, 2001 to be accounted
for using the purchase method of accounting, and broadens the criteria for
recording intangible assets separate from goodwill. Recorded goodwill and
intangibles will be evaluated against these new criteria and may result in
certain intangibles being subsumed into goodwill, or alternatively, amounts
initially recorded as goodwill may be separately identified and recognized apart
from goodwill. SFAS No. 142 requires the use of a nonamortization approach to
account for purchased goodwill and certain intangibles. Under a nonamortization
approach, goodwill and certain intangibles will not be amortized into results of
operations, but instead will be reviewed for impairment and written down and
charged to results of operations only in the periods in which the recorded value
of goodwill and certain intangibles is more than its fair value. As of January
1, 2002, we had approximately $5.0 million of recorded goodwill. However, as
part of our adoption of "fresh-start" accounting, our recorded goodwill was
reduced to zero.

We account for our frequencies as finite-lived intangibles and amortize them
over a 20-year estimated life. As described in note 5 of notes to consolidated
financial statements, we are monitoring a pending FCC rulemaking proposal that
may affect our 800 MHz spectrum, and we may change our accounting policy for FCC
frequencies in the future as new information is available.

On January 1, 2002, we also adopted SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", which supercedes SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
Of". The statement requires that all long-lived assets be measured at the lower
of carrying amount or fair value less cost to sell, whether reported in
continuing operations or in discontinued operations. Therefore, discontinued
operations will no longer be measured on a net realizable value basis and will
not include amounts for future operating losses. The statement also broadens the
reporting requirements for discontinued operations to include disposal
transactions of all components of an entity (rather than segments of a
business). Components of an entity include operations and cash flows that can be
clearly distinguished from the rest of the entity that will be eliminated from
the ongoing operations of the entity in a disposal transaction. Subsequent to

the period covered by this report, we engaged a financial advisor to value
certain of our assets as of December 31, 2002, among other things, to test for
potential impairment of certain of our long-lived assets under SFAS No. 144.
This testing included valuations of software and customer-related intangibles.
Based on these tests, no recording of impairment charges was required. However,
we subsequently engaged this financial advisor to reevaluate the value of our
customer-related intangibles as of September 30, 2003 due primarily to the
decline in revenue from UPS in this time period. This valuation resulted in an
impairment of the customer-related intangibles of $5.5 million in the third
quarter of 2003. The adoption of SFAS No. 144 had no other material impact on
our financial statements.

Recent Accounting Standards

In February, 2002, EITF No. 01-09, "Accounting for Consideration Given by a
Vendor to a Customer (Including a Reseller of the Vendor's Products)", was
issued to provide guidance on whether consideration paid by a vendor to a
reseller should be recorded as expenses or against revenues. The Company has
reviewed EITF 01-09 and believes that all such consideration is properly
recorded by the Company as operating expenses. The Company adopted the
provisions of this consensus on January 1, 2002, and it had no material impact
on the Company's consolidated financial statements.

In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4,
44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.". SFAS
No. 145 rescinded three previously issued statements and amended SFAS No. 13,
"Accounting for Leases". The statement provides reporting standards for debt
extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
We adopted SFAS No. 145 as of our "fresh-start" accounting date of May 1, 2002.
In accordance with SFAS No. 145, we have reclassified all prior period
extraordinary losses on extinguishment of debt as ordinary non-operating losses
on extinguishment of debt.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing or other exit or disposal activity. Previous accounting
guidance was provided by Emerging Issues Task Force, or EITF, No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring)". SFAS
No. 146 replaces EITF No. 94-3. SFAS No. 146 is to be applied prospectively to
exit or disposal activities initiated after December 31, 2002. We adopted SFAS
No. 146 as of January 1, 2003, and this adoption had no material impact on our
consolidated financial statements.

In November 2002, the EITF reached consensus on EITF No. 00-21, "Accounting for
Revenue Arrangements with Multiple Deliverables". This consensus requires that
revenue arrangements with multiple deliverables be divided into separate units
of accounting if the deliverables in the arrangement meet specific criteria. In
addition, arrangement consideration must be allocated among the separate units
of accounting based on their relative fair values, with certain limitations. The
sale of our equipment with related services constitutes a revenue arrangement
with multiple deliverables. We will be required to adopt the provisions of this
consensus for revenue arrangements entered into after June 30, 2003, and we have
decided to apply it on a prospective basis. We do not have any revenue
arrangements that would have a material impact on our consolidated financial
statements with respect to EITF No. 00-21.

In November 2002, the FASB issued FASB Interpretation, or FIN No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others". FIN No. 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. However, a liability does not have to be recognized for a
parent's guarantee of its subsidiary's debt to a third party or a subsidiary's
guarantee of the debt owed to a third party by either its parent or another
subsidiary of that parent. The initial recognition and measurement provisions of
FIN No. 45 are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002 irrespective of the guarantor's fiscal year
end. The disclosure requirements of FIN No. 45 are effective for financial
statements with annual periods ending after December 15, 2002. Motient does not
have any guarantees that would require disclosure under FIN No. 45.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-based
Compensation - Transition and Disclosure - an Amendment to SFAS No. 123". SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value-based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 for
public companies. This statement is effective for fiscal years beginning after
December 15, 2002. We adopted the disclosure requirements of SFAS No. 148 as of
January 1, 2003 and plan to continue to follow the provisions of APB Opinion No.
25 for accounting for stock based compensation.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities -- An Interpretation of ARB No. 51", which clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN No. 46 provides guidance related to identifying
variable interest entities (previously known generally as special purpose
entities, or SPEs) and determining whether such entities should be consolidated.
FIN No. 46 must be applied immediately to variable interest entities created or
interests in variable interest entities obtained, after January 31, 2003. For
those variable interest entities created or interests in variable interest

entities obtained on or before January 31, 2003, the guidance in FIN No. 46 must
be applied in the first fiscal year or interim period beginning after June 15,
2003. FIN No. 46 did not have a material impact on our results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity". This statement
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances) because that financial instrument embodies the characteristics of
an obligation of the issuer. This standard is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. We have determined that we do not have any financial instruments that are
impacted by SFAS No. 150.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Prior to our reorganization, we were exposed to the impact of interest rate
changes related to our credit facilities and we managed interest rate risk
through the use of fixed rate debt. Currently, we are only exposed to the impact
of interest rate changes related to our capital lease and vendor financing
obligations. We do not use derivative financial instruments to manage our
interest rate risk. We invest our cash in short-term commercial paper,
investment-grade corporate and government obligations and money market funds.

Effective May 1, 2002, Motient's senior notes and accrued interest thereon were
eliminated in exchange for new common stock of the company. All of Motient's
remaining debt obligations, excluding its vendor financing, are fixed rate
obligations. We do not believe that we have any material cash flow exposure due
to general interest rate changes on these debt obligations.

Item 8. Financial Statements and Supplementary Data.

The financial statements and supplementary data required by this item are found
at the end of this annual report, beginning on page F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

Matters required by this item were previously reported in our current reports on
Form 8-K filed with the SEC on June 4, 2002 and April 23, 2003 and the amendment
to our current report on Form 8-K/A filed with the SEC on March 9, 2004.

some of our transportation assets to Aether Systems in 2000. The staff of the
SEC did not object to some aspects of our prior accounting with respect to the
MSV and Aether Systems transactions, but did object to other aspects of our
prior accounting for these transactions. For a description of the material
differences between our original accounting treatment with respect to these
transactions and the revised accounting treatment that we concluded is
appropriate as a result of this process, please see our current report on Form
8-K dated March 14, 2003 and Note 2, "Significant Accounting Policies -
Restatement of Financial Statements," of notes to the consolidated financial
statements.

Please see "-Subsequent Events - Accounting and Auditing Maters" for additional
information.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15 and
15d-15 under the Securities Exchange Act of 1934, as amended) that are designed
to ensure that information required to be disclosed in our filings and reports
under the Exchange Act is recorded, processed, summarized and reported within
the periods specified in the rules and forms of the SEC. Such information is
accumulated and communicated to our management, including our principal
executive officer (currently our executive vice president, chief operating
officer and treasurer) and principal financial officer (currently our controller
and chief accounting officer), as appropriate, to allow timely decisions
regarding required disclosure. Our management, including the principal executive
officer (currently our executive vice president, chief operating officer and
treasurer) and the principal financial officer (currently our controller and
chief accounting officer), recognizes that any set of disclosure controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives.

As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of our management,
including our principal executive officer (currently our executive vice
president, chief operating officer and treasurer), principal financial officer
and chief accounting officer (currently our controller and chief accounting
officer), of the effectiveness of our disclosure controls and procedures. Based
on this evaluation, we concluded that our disclosure controls and procedures
required improvement.

As a result of our evaluation, we have taken a number of steps to improve our
disclosure controls and procedures.

o First, we have established a disclosure committee comprised of senior
management and other officers and employees responsible for, or
involved in, various aspects of our financial and non-financial
reporting and disclosure functions. Although we had not previously
established a formal disclosure committee, the functions performed by
such committee were formerly carried out by senior management and
other personnel who now comprise the disclosure committee.

o Second, we have instituted regular bi-quarterly meetings to review
each department's significant activities and respective disclosure
controls and procedures.

o Third, department managers have to document their own disclosure
controls and procedures.

o Fourth, department managers have been tasked with tracking relevant
non-financial operating metrics such as network statistics, headcount
and other pertinent operating information. Quarterly reports
summarizing this information will be prepared and presented to the
disclosure committee and the principal executive officer (currently
our executive vice president, chief operating officer and treasurer),
principal financial officer (currently our controller and chief
accounting officer).

o Fifth, certain department heads prepare weekly activities reviews,
which are shared with the members of the disclosure committee as well
as the principal executive officer (currently our executive vice
president, chief operating officer and treasurer), principal financial
officer (currently our controller and chief accounting officer). These
weekly reviews and the bi-quarterly disclosure committee meetings and
associated reports are intended to help inform senior management of
material developments that affect our business, thereby facilitating
consideration of prompt and accurate disclosure.

As a result of these improvements, management believes that its disclosure
controls and procedures, though not as mature or as formal as management intends
them ultimately to be, are adequate and effective under the circumstances, and
that there are no material inaccuracies or omissions in this annual report on
Form 10-K.

In addition to the initiatives outlined above, we have taken the following steps
to further strengthen our disclosure controls and procedures:

o We conduct and document quarterly reviews of the effectiveness of our
disclosure controls and procedures;

o We circulate drafts of our public filings and reports for review to
key members of the senior management team representing each functional
area; and

o In conjunction with the preparation of each quarterly and annual
report to be filed with the SEC, each senior vice president and
department head is required to complete and execute an internal
questionnaire and disclosure certification designed to ensure that all
material disclosures are reported.

Internal Controls

During the course of the fiscal 2002 year-end closing process and subsequent
audit of the financial statements for the eight month period ended December 31,
2002, our management and our then-current independent auditors,
PricewaterhouseCoopers, identified several matters related to internal controls
that needed to be addressed. Several of these matters were classified by the
auditors as "reportable conditions" in accordance with the standards of the
American Institute of Certified Public Accountants, or AICPA. Reportable
conditions involve matters coming to management's or our auditor's attention
relating to significant deficiencies in the design or operation of internal
control that, in the judgment management and the auditors, could adversely
affect our ability to record, process, summarize and report financial data in
the financial statements. Our principal executive officer, chief technology
officer, principal financial officer (currently our controller and chief
accounting officer) and audit committee are aware of these conditions and of our
responses thereto, and consider them to be significant deficiencies as defined
in the applicable literature embodying generally accepted auditing standards, or
GAAS. On March 2, 2004, we dismissed PricewaterhouseCoopers as our independent
auditors. PricewaterhouseCoopers has not reported on Motient's consolidated
financial statements for any fiscal period. On March 2, 2004, we engaged
Ehrenkrantz Sterling & Co. LLC as our independent auditors to replace
PricewaterhouseCoopers and audit our consolidated financial statements for the
period May 1, 2002 to December 31, 2002 and the year ended December 31, 2003.

The following factors contributed to the significant deficiencies identified by
PricewaterhouseCoopers:

o Rapid shifts in strategy following our emergence from bankruptcy on
May 1, 2002, particularly with respect to a sharply increased focus on
cost reduction measures;

o Significant reductions in workforce following our emergence from
bankruptcy and over the course of 2002 and 2003, in particular layoffs
of accounting personnel, which significantly reduced the number and
experience level of our accounting staff;

o Turnover at the chief financial officer position during the 2002 audit
period and subsequently in March of 2003; and

100

o The closure in mid-2003 of our Reston, VA facility, which required a
transition of a large number of finance and general and administrative
personnel to our Lincolnshire, IL facility.

Set forth below are the significant deficiencies identified by management and
PricewaterhouseCoopers, together with a discussion of our corrective actions
with respect to such deficiencies through June 15, 2004.

PricewaterhouseCoopers recommended several adjustments to the financial
statements for the periods ended April 30, June 30, September 30 and December
31, 2002. During the 2002 audit period, PricewaterhouseCoopers noted several
circumstances where our internal controls were not operating effectively.
Although these circumstances continued in 2003, management began to address
these issues formally in March 2003.

Specifically, PricewaterhouseCoopers noted that:

o Timely reconciliation of certain accounts between the general ledger
and subsidiary ledger, in particular accounts receivable and fixed
assets, was not performed;

o Review of accounts and adjustments by supervisory personnel on monthly
cut-off dates, in particular fixed assets clearing accounts, accounts
receivable reserve and inventory reserve calculations, was not
performed;

o Cut-off of accounts at balance sheet dates related to accounts
payables, accrued expenses and inventories was not achieved; and

o No formal policy existed to analyze impairment of long-lived assets on
a recurring basis.

PricewaterhouseCoopers recommended that management institute a thorough
close-out process, including a detailed review of the financial statements,
comparing budget to actual and current period to prior period to determine any
unusual items. They also recommended that we prepare an accounting policy and
procedures manual for all significant transactions to include procedures for
revenue recognition, inventory allowances, accounts receivable allowance, and
accruals, among other policies.

In response to these comments, we have taken the following actions:

o In June 2003, we initiated a process of revising, updating and
improving our month-end closing process and created a checklist
containing appropriate closing procedures.

101

o We have increased our efforts to perform monthly account
reconciliations on all balance sheet accounts in a timely fashion.

o Beginning in July 2003, on a monthly basis the corporate controller
began reviewing balance sheet account reconciliations.

o We have implemented and distributed a written credit and collections
policy, which includes reserve calculations and write-off
requirements.

o All accounts receivable sub-ledgers are reconciled to the general
ledger monthly, and on a monthly basis inventory reports are produced,
sub-ledgers are reconciled to the general ledger and the reserve
account is analyzed.

o Since September 2003, the fixed assets clearing account is no longer
being used, and all asset additions are reviewed by the corporate
controller to determine proper capitalization and balance sheet
classification.

o As of July 2003, all monthly income statement accounts are analyzed by
the corporate controller prior to release of the financial statements.

o We are preparing an accounting policy and procedures manual to include
procedures for all significant policies, business practices, and
routine and non-routine procedures performed by each functional area.
Our goal is to finalize this manual by July 31, 2004. While we believe
our procedures are adequate, our efforts in this regard have been
delayed to our continuing efforts to produce our financial reports on
a timely basis.

o Over the course of the third quarter of 2003, we updated our
procedures for the preparation of a monthly financial reporting
package to include management's discussion and analysis of results of
operations, financial statements, cash and investments reporting and
month-to-month variances. Under these procedures, departmental results
of operations are also prepared and provided to appropriate department
managers on a monthly basis.

In addition to the above, since April 2003 we have reevaluated our staffing
levels, reorganized the finance and accounting organization and replaced ten
accounting personnel with more experienced accounting personnel, including,
among others, a new chief financial officer, chief accounting officer and
corporate controller, a manager of revenue assurance and a manager of financial
services.

While management has moved expeditiously and committed considerable resources to
address the identified internal control deficiencies, management has not been
able to fully execute all of the salutary procedures and actions it deems
desirable. It will take some additional time to realize all of the benefits of
management's initiatives, and we are committed to undertaking ongoing periodic

102

reviews of our internal controls to assess the effectiveness of such controls.
We believe the effectiveness of our internal controls is improving and we
further believe that the financial statements included in this annual report on
Form 10-K are fairly stated in all material respects. However, new deficiencies
may be identified in the future. Management expects to continue its efforts to
improve internal controls with each passing quarter.

Our current auditors, Friedman LLP, successors-in-interest to Ehrenkrantz
Sterling & Co. LLC, agree that the matters described above constitute
significant deficiencies and have communicated this view to our audit committee.

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PART III

Item 10. Directors and Executive Officers of Motient.

The following table sets forth certain information about our executive officers,
directors and key employees.

Name Title Age Began Service
- ---- ----- --- -------------

Christopher W. Downie Executive Vice President, Chief Operating 35 2003
Officer and Treasurer
Dennis W. Matheson Senior Vice President and Chief 43 1993
Technology Officer
Robert L. Macklin General Counsel and Secretary 29 2003
Myrna J. Newman Controller and Chief Accounting Officer 47 2003
Steven G. Singer Director, Chairman 43 2002
Gerald S. Kittner Director 51 2002
Peter D. Aquino Director 43 2003
Jonelle St. John Director 50 2000
James D. Dondero Director 41 2002
Raymond L. Steele Director 69 2004

Christopher W. Downie, 35. Mr. Downie was appointed executive vice president,
chief operating officer and treasurer in May 2004. From March 2004 to May 2004,
Mr. Downie was the executive vice president, chief financial officer and
treasurer, and designated our principal executive officer. From April 2003 to
March 2004, he served as vice president, chief financial officer and treasurer.
From May 2002 to April 2003, Mr. Downie worked as a consultant for CTA, a
communications consulting firm. While with CTA, Mr. Downie was primarily engaged
on Motient-related and other telecom-related matters. From February 2000 to May
2002, Mr. Downie served as a senior vice president and chief financial officer
of BroadStreet Communications, Inc. From August 1993 to February 2000, Mr.
Downie was a vice president in the Investment Banking Division of Daniels &
Associates, LP, an investment bank focused on communications. From 1991 to 1993,
Mr. Downie served as a financial analyst at Bear Stearns & Co. Inc.

Dennis W. Matheson, 43. Mr. Matheson has been Motient's senior vice president
and chief technology officer since March 2000. From 1993 to March 2000, Mr.
Matheson held other technical positions within Motient, most recently as vice
president of engineering and advanced technology. Before joining Motient, Mr.
Matheson was senior manager of systems architecture for Bell Northern Research,
a subsidiary of Nortel Networks Corporation (formerly known as Northern Telecom
Limited). Prior to that, he held various positions with Northern Telecom and

104

Bell Northern Research within the design and product management organizations
and held various engineering positions with Texas Instruments Incorporated.

Mr. Matheson was an executive officer of Motient at the time it filed for
Chapter 11 protection. Information regarding Motient's filing under Chapter 11
of the Bankruptcy Code is provided in "Business - Motient's Chapter 11 Filing,"
and is incorporated herein by reference.

Robert Macklin, 29. Mr. Macklin has served as Motient's general counsel and
secretary since May 2004. From September 2003 to May 2004, Mr. Macklin served as
Motient's associate general counsel and secretary. From May 2001 to September
2003, he was in-house counsel to Herman Dodge & Son, Inc., a national housewares
manufacturer and distributor. Prior to May 2001, he was an attorney in the
corporate department of Skadden, Aprs, Slate, Meagher & Flom (Illinois).

Myrna J. Newman, 47. Ms. Newman has served as Motient's controller, chief
accounting officer and principal financial officer since May 2004. From April
2003 to May 2004, she served as controller and chief accounting officer. From
2001 to 2003, she was vice president of finance for Heads and Threads
International LLC, a subsidiary of Allegheny Corporation and distributor of
fasteners. Prior to that, from 1995 to 2001, she was the controller of Heads and
Threads.

Steven G. Singer, 43. Mr. Singer has been a Motient director since May 2002 and
chairman of the board since June 2003. Since November 2000, Mr. Singer has
served as chairman and chief executive officer of American Banknote Corporation,
a public company providing documents of value (such as currency, checks,
passports, and credit cards) and related services. Since 1994, Mr. Singer has
also been chairman and chief executive officer of Pure 1 Systems, a privately
held drinking water treatment company. From 1994 to 2000, Mr. Singer was
executive vice president and chief operating officer of Romulus Holdings, Inc.,
a family-owned investment fund. Mr. Singer also currently serves as the
non-executive chairman of Globix Corporation, a public company.

Gerald S. Kittner, 50. Mr. Kittner has been a Motient director since May 2002.
Since October 2001, Mr. Kittner has been an advisor and consultant for CTA. From
1996 to 1999, Mr. Kittner was a senior vice president for legislative and
regulatory affairs with CAI Wireless Systems. When CAI Wireless Systems was
acquired by WorldCom, Inc. (then MCI) in 1999, Mr. Kittner remained with
WorldCom as a senior vice president for approximately one year. From 1996 to
2000, Mr. Kittner served on the board of directors of the Wireless
Communications Association, and was a member of its executive and government
affairs committees. Previously, Mr. Kittner was a partner with the law firm
Arter & Hadden and worked with a variety of telecommunications clients.

Mr. Kittner was involved with CAI Wireless Systems, Inc. when it filed for
protection under Chapter 11 of the Bankruptcy Code in 1998. During all relevant
time periods relating to the Chapter 11 proceeding captioned In re CAI Wireless
Systems, Inc., Debtor, Chapter 11 Case No. 98-1766 (JJF) and In re Philadelphia
Choice Television, Inc., Debtor, Chapter 11 Case No. 98-1765 (JJF), commenced in

105

the United States Bankruptcy Court for the District of Delaware on July 30,
1998, Mr. Kittner was a senior vice president of CAI Wireless Systems. CAI
Wireless Systems and Philadelphia Choice Television consummated their joint plan
of reorganization and emerged from bankruptcy on October 14, 1998.

Peter D. Aquino, 43. Mr. Aquino has been a Motient director since June 2003. Mr.
Aquino has been a senior managing director of CTA since February 2002. From July
1995 to January 1998, Mr. Aquino was a partner of Wave International, Inc., a
telecommunications investment firm. From January 1998 to February 2002, Mr.
Aquino was the chief operating officer of, and a board advisor to, Veninfotel,
LLC, one of Wave International's private telecom holdings in Venezuela. From
1983 to 1995, Mr. Aquino held various positions in finance, regulatory and
corporate development at Bell Atlantic Corporation (now Verizon). Mr. Aquino is
a director of Neon Communications, Inc., a private company.

Jonelle St. John, 50. Ms. St. John has been a Motient director since
November 2000. Ms. St. John was the chief financial officer of MCI WorldCom
International in London from 1998 through 2000 following her positions as the
treasurer of MCI Communications Corporation from 1993 to 1998. Prior to working
with WorldCom, Ms. St. John was the vice president and treasurer and the vice
president and controller of Telecom*USA, which she joined in 1985. Before 1985,
Ms. St. John held various positions at Arthur Andersen LLP.

James D. Dondero, 41. Mr. Dondero has been a Motient director since July
2002. Mr. Dondero has been president of Highland Capital Management, L.P. since
1993. Mr. Dondero is also a director of Audio Visual Services Corp., Genesis
Health Ventures, Inc. and American Banknote Corporation, all of which are public
companies.

Raymond L. Steele, 69. Mr. Steele was elected to the board of directors in May
2004. Mr. Steele has been a director of Globix since June 2003, and is also a
member of the board of directors of Dualstar Technologies Corporation and
American Banknote Corporation. From August 1997 until October 2000, Mr. Steele
served as a board member of Video Services Corp. Prior to his retirement, Mr.
Steele held various senior positions such as Executive Vice President of
Pacholder Associates, Inc. (from August 1990 until September 1993), Executive
Advisor at the Nickert Group (from 1989 through 1990), and Vice President, Trust
Officer and Chief Investment Officer of the Provident Bank (from 1984 through
1988).

Audit Committee Financial Expert

Our board of directors has determined that Jonelle St. John and Raymond L.
Steele are "audit committee financial experts", as such term is defined under
Item 401(h) of Regulation S-K. Each of them is "independent" of management as
independence for audit committee members is defined by NASDAQ rules.
Stockholders should understand that this designation is a disclosure requirement
of the SEC related to Ms. St. John's and Mr. Steele's experience and
understanding with respect to certain accounting and auditing matters. The
designation does not impose on Ms. St. John or Mr. Steele any duties,
obligations or liability that are greater than are generally imposed on her as a

106

member of the audit committee and board of directors, and their designations as
audit committee financial experts pursuant to this SEC requirement does not
affect the duties, obligations or liability of any other member of the audit
committee or board of directors.

Board Compensation

Each non-employee member of the board of directors is entitled to receive $2,000
per month, and each member of the audit committee (currently Ms. St. John, Mr.
Aquino, Mr. Kittner and Mr. Steele) and the compensation and stock option
committee (currently Mr. Singer, Mr. Kittner and Mr. Dondero) are entitled to
receive an additional $500 and $250 per month, respectively. Each non-employee
member of the board of directors also is entitled to receive an additional
$1,000 for each board or committee meeting that is in excess of four meetings
per year. In calculating the number of meetings held with respect to which this
additional fee is to be paid, multiple meetings held on the same day are
regarded as a single meeting. Further, each non-employee member of our board is
eligible to receive grants of stock options under our 2002 stock option plan. No
options have been granted to non-employee directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Under the securities laws of the United States, our directors, executive
officers and any persons holding more than ten percent of our common stock are
required to report their ownership of the common stock and any changes in that
ownership to the SEC. Specific due dates for these reports have been established
by the SEC, and we are required to report in this annual report any failure to
file by these dates. Based on our review of these reports filed during and in
connection with the year ended December 31, 2003, and on certain written
representations, we do not believe that any of our directors, officers or
beneficial owners of more than ten percent of our common stock failed to file a
form or report a transaction on a timely basis other than a Form 3 for Peter D.
Aquino, and a Form 4 for each of Walter Purnell, Michael Fabbri, Daniel Croft,
Dennis Matheson and Christopher Downie, each of which were not filed on a timely
basis.

Code of Ethics

We have adopted a code of ethics that applies to our principal executive
officer, principal financial officer and principal accounting officer. This code
of ethics has been approved by our board of directors, and has been designed to
deter wrongdoing among directors, officers and employees and promote honest and
ethical conduct, full, fair, accurate and timely disclosure, compliance with
applicable laws, rules and regulations, prompt internal reporting of code
violations, and accountability for adherence to our code. We will, upon request,
provide any person, without charge, a copy of our code of ethics. To request a
copy, please contact our investor relations department at 847-478-4200.

107

Item 11. Executive Compensation.

The following tables set forth (a) the compensation paid or accrued by Motient
to Motient's chief executive officer and its six other most highly compensated
executive officers receiving over $100,000 per year in 2003, all of whom are
referred to herein as the "named executive officers" for services rendered
during the fiscal years ended December 31, 2001, 2002, and 2003 and (b) certain
information relating to options granted to such individuals.

Summary Compensation Table
All Other
Annual Compensation Long-Term Compensation Compensation
----------------------------------------------------------------------------------------------

Restricted Securities
Name and Other Annual Stock Underlying
Principal Position Year Salary Bonus Compensation(1) Awards(2) $ Options/SARs(3)
- ------------------------------ ---- -------- ------- --------------- ----------- ---------------

Christopher W. Downie 2003 $129,688 $0 $88 $0 40,000
Executive Vice President, Chief
Operating Officer and Treasurer (4)

Walter V. Purnell, Jr. (5) 2003 $272,813 $0 $774 $0 160,000
Former President and 2002 $280,763 $50,000 $774 $0 500,000
Chief Executive Officer 2001 $286,953 $83,000 $774 $46,508 100,000

Dennis W. Matheson 2003 $181,067 $0 $168 $0 40,000
Senior Vice President 2002 $177,923 $25,000 $476 $0 120,000
and Chief Technology Officer 2001 $182,355 $51,940 $158 $15,609 40,000

Daniel Croft(6) 2003 $168,420 $0 $229 $0 50,000
Former Senior Vice President, 2002 $173,184 $20,000 $40,146 $0 120,000
Business Development 2001 $177,145 $14,892 $19,319 $5,850 15,000

Michael Fabbri(6) 2003 $171,658 $0 $24,446 $0 40,000
Former Senior Vice 2002 $176,515 $30,000 $29,539 $0 120,000
President, Sales 2001 $184,220 $22,423 $41,175 $9,604 40,000

Robert L. Macklin (7) 2003 $32,392 $0 $14 $0 25,000
General Counsel and Secretary

Myrna J. Newman (8) 2003 $80,985 $0 $87 $0 15,000
Controller and principal
financial officer

(1) Includes group term life insurance premiums. For Mr. Croft, also
includes commissions in 2001, 2002 and 2003 in the amounts of $19,086, $39,913
and $0, respectively. For Mr. Fabbri, also includes commissions in 2001, 2002
and 2003 in the amounts of $40,942, $29,062 and $24,290, respectively.

108

(2) In September 2001, Motient completed an option exchange program in
which holders of previously-granted options, including the named executive
officers, were entitled to exchange such options for a number of shares of
restricted stock equal to 75% of the number of shares covered by the exchanged
options. The amounts shown in this column for 2001 represent such restricted
stock awarded in September 2001. Under Motient's Plan of Reorganization, all
shares of restricted stock were cancelled as of May 1, 2002, the effective date
of the Plan. On that date, holders of restricted stock received warrants to
purchase 0.02613 shares of common stock at a price of $0.01 per share for each
vested share of restricted stock held. Holders did not receive anything in
exchange for their canceled unvested shares. The warrants expired May 1, 2004,
and were never exercisable. The shares of restricted stock issued in the
exchange program were to vest according to the vesting schedule of the options
that were exchanged, except that no shares of restricted stock vested before May
1, 2002. These shares of restricted stock were to have vested as follows:

Name Total Number of Shares Vesting Schedule
- ----------------------- ---------------------- --------------------------

Walter V. Purnell, Jr. 357,750 182,750 shares on March 25, 2002
25,000 shares on January 25, 2003
12,500 shares on January 27, 2003
25,000 shares on January 25, 2004
112,500 shares on January 27, 2007

Dennis W. Matheson 120,073 72,573 shares on March 25, 2002
10,000 shares on January 25, 2003
2,500 shares on January 27, 2003
2,500 shares on March 23, 2003
10,000 shares on January 25, 2004
22,500 shares on January 27, 2007

Daniel Croft 45,000 33,750 shares on March 25, 2002
3,750 shares on January 25, 2003
3,750 shares on January 27, 2003
3,750 shares on January 25, 2004

Michael Fabbri 73,875 46,375 shares on March 25, 2002
10,000 shares on January 25, 2003
7,500 shares on January 27, 2003
10,000 shares on January 25, 2004

As of December 31, 2001, the dollar value of restricted stock held by each of
Messrs. Purnell, Matheson, Croft, and Fabbri was $150,255, $50,431, $18,900 and
$31,028 respectively, and the total number of shares of restricted stock held by
each of Messrs. Purnell, Matheson, Croft and Fabbri was 357,750, , 120,073,
45,000 and 73,875, respectively.

(3) For 2000 and 2001, the numbers reflect grants of options to purchase
shares of common stock under Motient's former stock award plan, which was
terminated in conjunction with Motient's Plan of Reorganization in 2002. Under
Motient's Plan of Reorganization, all unexercised options outstanding as of May
1, 2002 were cancelled on May 1, 2002, the effective date of the Plan. For 2002
and 2003, the numbers reflect grants of options to purchase shares of common
stock under Motient's 2002 stock option plan. Motient has not granted stock
appreciation rights, or SARs.

(4) Mr. Downie's employment began in April 2003.

(5) Mr. Purnell's employment terminated in March 2004.

109

(6) Mr. Croft's and Mr. Fabbri's employment terminated in February 2004.

(7) Mr. Macklin's employment began in September 2003.

(8) Ms. Newman's employment began in April 2003.

The following table sets forth each grant of stock options made during fiscal
year 2003 to each of the named executive officers.

Option/SAR Grants in Last Fiscal Year

Individual Grants
---------------------------------------------------------------
Potential Realizable
Value at Assumed Annual
Number of % of Total Rates of Stock Price
Securities Options/SARs Appreciation for
Underlying Granted to Exercise or Option Term(1)
Options/SARs Employees/ Base Price -----------------------
Name Granted Fiscal Year ($/Share) Expiration Date 5% 10%
---- ------- ----------- --------- --------------- -- ---

Christopher W. Downie (5) 40,000 8% $5.15 7/15/2013 $130,000 $329,000
Walter V. Purnell, Jr. 160,000 31% $5.15 7/15/2013 $519,000 $1,314,000
Dennis W. Matheson 40,000 8% $5.15 7/15/2013 $130,000 $329,000
Daniel Croft(4) 50,000 10% $5.15 7/15/2013 $162,000 $411,000
Michael Fabbri(4) 40,000 8% $5.15 7/15/2013 $130,000 $329,000
Robert Macklin 25,000 5% $5.65 9/14/2013 $89,000 $225,000
Myrna Newman 15,000 3% $3.00 4/20/2013 $29,000 $72,000

(1) Based on actual option term and annual compounding.

(2) One-half of these options become exercisable in three annual installments,
vesting at the rate of 33-1/3 % per year for three years. The other one-half of
these options become exercisable only upon the attainment of specified operating
and performance targets for the year ending December 31, 2004.

(4) Mr. Croft's and Mr. Fabbri's vested options will terminate on February 18,
2006.

(5) Mr. Downie's options vested with his designation as principal executive
officer in April 2004.

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

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values (1)

Number of Securities Value of Unexercised
Underlying in-the-Money
Unexercised Options at Options/SARs at
Shares Fiscal Year-End Fiscal Year-End($)
Acquired on Exercisable/ Exercisable/
Name Exercise (#) Value-Realized ($) Unexercisable Unexercisable
---- ------------ ------------------ ------------- -------------

Christopher W. Downie -- -- 0/40,000 0/0
Walter V. Purnell, Jr. -- -- 493,316/660,000 0/0
Dennis W. Matheson -- -- 40,000/120,000 0/0

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Daniel Croft -- -- 40,000/130,000 0/0
Michael Fabbri -- -- 40,000/120,000 0/0
Robert Macklin -- -- 0/25,000 0/0
Myrna Newman -- -- 0/15,000 0/0

(1) Motient has not granted SARs.

(2) Upon the termination of Messers. Croft and Fabbri as part of its
February 2004 reduction in force, Motient accelerated outstanding
options to purchase an aggregate of 100,000 shares of our common
stock at $3.00 per share and 22,500 shares at $5.15 per share
(split approximately equally between Messrs. Croft and Fabbri).
All remaining outstanding options held by Messrs. Croft and
Fabbri were cancelled.

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

Change of Control Agreements

Pursuant to the Plan of Reorganization, Motient entered into a change of control
agreement, effective May 1, 2002, with each of Messrs. Matheson, Fabbri, and
Croft and six other vice presidents of Motient. Under the agreements, each
officer is eligible to receive one year of their annual base salary (excluding
cash bonus) in the event that both (x) a "change in control" or an anticipated
"change in control," as defined in the change of control agreement, has occurred
and (y) the employee is terminated or his or her compensation or
responsibilities are reduced. The events constituting a "change of control"
generally involve the acquisition of greater than 50% of the voting securities
of Motient, as well as certain other transactions or events with a similar
effect. In July 2002, Mr. Purnell's change of control agreement was superseded
by the executive retention agreement described below. As part of their
termination from Motient in February 2004, Messrs. Fabbri and Croft were
provided severance pay and certain outstanding options were accelerated as
settlement of their change of control agreements.

Executive Retention Agreement for Mr. Purnell

On July 16, 2002, we entered into an executive retention agreement with Mr.
Purnell, which was amended in connection with the termination of Mr. Purnell's
employment in March 2004. Pursuant to the terms of the amended agreement, we
will pay Mr. Purnell a severance payment equal to one-half of his base salary
through September 2005. Additionally, we agreed to make a lump sum severance
payment to Mr. Purnell in September 2005 equal to the other half of his base
salary through such period. Mr. Purnell is entitled to receive certain medical
benefits until September 2005. As part of these severance arrangements, Mr.
Purnell entered into a waiver and release agreement and a non-compete agreement.

Compensation of Directors

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

111

2002 Stock Option Plan

Our 2002 stock option plan was adopted by the board of directors on May 31, 2002
and received stockholder approval on July 11, 2002. A total of 2,993,024 shares
of common stock have been reserved for issuance under the 2002 stock option
plan. Under the 2002 stock option plan, we are authorized to grant options to
purchase shares of common stock intended to qualify as incentive stock options,
as defined under section 422 of the Internal Revenue Code of 1986, as amended,
and non-qualified stock options to any employees, outside directors,
consultants, advisors and individual service providers whose participation in
the 2002 stock option plan is determined by our compensation and stock option
committee to be in our best interests. The term of each stock option is fixed by
the board of directors or the compensation committee, and each stock option is
exercisable within ten years of the original grant date. Generally, an option is
not transferable by the recipient except by will or the laws of descent and
distribution. Some change of control transactions, such as a sale of Motient,
may cause awards granted under the 2002 stock option plan to vest. As of
December 31, 2003, options to purchase 1,757,513 shares of our common stock were
outstanding. In March 2003, the board of directors approved a reduction in the
exercise price of all of our then-outstanding stock options from $5.00 per share
to $3.00 per share.

Compensation and Stock Option Committee Interlocks and Insider Participation

From January 1, 2002 to May 1, 2002, the compensation and stock option
committee of Motient's board of directors consisted of Ms. St. John and Messrs.
Parrott, Parsons, Purnell and Quartner. During this time, Messrs. Parsons and
Purnell were executive officers of Motient. From May 1, 2002 to December 31,
2002, the compensation and stock option committee of Motient's board of
directors consisted of Messrs. Singer, Kittner and Stranzl. During this time,
none of these individuals were executive officers of Motient. In 2003, the
compensation and stock option committee of Motient's board of directors
consisted of Messrs. Singer, Kittner and Dondero. During this time, none of
these individuals were executive officers of Motient.

Mr. Kittner is an advisor and consultant for CTA. During 2002, Motient and/or
certain of its subsidiaries were party to certain contracts and/or transactions
with CTA. All of these contracts and transactions were approved by Motient's
board of directors, and Motient believes that the contracts and transactions
were made on terms substantially as favorable to Motient as could have been
obtained from unaffiliated third parties. The following is a description of such
contracts and transactions. In addition, this section describes the relationship
between Steven Singer and one of the lenders under our credit facility. For
additional information concerning these relationships, see "Item 13 -- Certain
Relationships and Related Transactions."

112

three months each. For the first three months of the agreement, CTA was paid a
flat fee of $60,000 per month, and for the period August 2002 to May 2003, the
monthly fee was $55,000. We also agreed to reimburse CTA for CTA's out-of-pocket
expenses incurred in connection with rendering services during the term of the
agreement.

Beginning in May 2003, the monthly fee was reduced to $39,000. This agreement
was modified on January 30, 2004.

In November 2003, CTA was engaged to provide valuation of Motient's equity
interest in MSV as of December 31, 2002. CTA was paid $150,000 for this
valuation.

On January 30, 2004, Motient engaged CTA to act as chief restructuring entity.
The term of CTA's engagement is currently scheduled to end in August 2004. As
consideration for this work, we agreed to pay to CTA a monthly fee of $60,000.
The new agreement modifies the consulting arrangement discussed above.

CTA had previously acted as the spectrum and technology advisor to the official
committee of unsecured creditors in connection with our Chapter 11 case. CTA
received a total of $475,000 in fees for such advice and was reimbursed a total
of $4,896 for expenses in connection with the rendering of such advice.

Except for the warrant offered and provided to certain CTA affiliates described
below, neither CTA, nor any of its principals or affiliates is a stockholder of
Motient, nor does it hold any debt of Motient (other than indebtedness as a
result of consulting fees and expense reimbursement owed to CTA in the ordinary
course under our existing agreement with CTA). CTA has informed us that in
connection with the conduct of its business in the ordinary course, (i) it
routinely advises clients in and appears in restructuring cases involving
telecommunications companies throughout the country, and (ii) certain of our
stockholders and bondholders and/or certain of their respective affiliates or
principals, may be considered to be (A) current clients of CTA in matters
unrelated to Motient; (B) former clients of CTA in matters unrelated to Motient;
and (C) separate affiliates of clients who are (or were) represented by CTA in
matters unrelated to Motient.

In July 2002, our board of directors approved the offer and sale to CTA (or
affiliates thereof) of a warrant (or warrants) for 500,000 shares of our common
stock, for an aggregate purchase price of $25,000. The warrant (or warrants) has
an exercise price of $3.00 per share and a term of five years. These warrants
were valued at $1.5 million and were recorded as a consultant compensation
expense in December of 2002. Certain affiliates of CTA purchased the warrants in
December 2002.

In April 2004 and July 2004, as part of two private placements, certain CTA
affiliates received warrants for 400,000 and 340,000 shares, respectively, of
our common stock at an exercise price of $5.50 and $8.57, respectively, per
share.

113

In addition, on January 27, 2003, our wholly-owned subsidiary, Motient
Communications, closed a term credit agreement with a group of lenders,
including several of our existing stockholders. The lenders include Gary Singer,
directly or through one or more entities. Gary Singer is the brother of Steven
G. Singer, one of our directors serving on the compensation and stock option
committee. Steven Singer has, and continues to recuse himself from all
discussions of the credit agreement and has abstained from voting on all matters
regarding the credit agreement.

114

Item 12. Security Ownership Of Certain Beneficial Owners and Management and
Related Shareholder Matters.

The following table and the accompanying notes set forth certain information, as
of June 24, 2004 (or any other date that is indicated) concerning the beneficial
ownership of Motient's common stock by (i) each person who is known by Motient
to own beneficially more than five percent of Motient's common stock, (ii) each
director, (iii) each executive officer named in the summary compensation table
and (iv) all directors and executive officers as a group. Except as otherwise
indicated, each person listed in the table has informed Motient that such person
has sole voting and investment power with respect to such person's shares of
common stock and record and beneficial ownership with respect to such person's
shares of common stock.

Number of %of Class
Name of Beneficial Owner Shares (1) (1)
------------------------ ---------- ---

Highland Capital Management, L.P. (2)
13445 Noel Road
Suite 3300
Dallas, TX 75240 4,424,559 14.9%

Paul Tudor Jones, II (3)
c/o Tudor Investment Corporation
1275 King St. 2,545,455 8.5%
Greenwich, CT 06831

George W. Haywood (4)
c/o Cronin & Vris, LLP
380 Madison Avenue
24th Floor 3,389,500 11.4%
New York, NY 10017

James G. Dinan (5)
York Capital Management & affiliates
350 Park Avenue
4th Floor 2,276,445 7.6%
New York, NY 10022

John C. Waterfall
c/o Morgens, Waterfall, Vintiadis & Co., Inc. (6)
600 Fifth Avenue 2,610,000 8.8%
27th Floor
New York, NY 10020

115

Directors and Executive Officers

Dennis W. Matheson (7) 60,990 *
Christopher W. Downie (8) 141,160 *
Robert Macklin (7) 619 *
Myrna Newman (7) 2,500 *
Peter D. Aquino 0 *
Gerald S. Kittner 0 *
Steven G. Singer 0 *
Jonelle St. John 0 *
Raymond L. Steele 0 *
James D. Dondero (2) 4,424,559 14.9%
All directors and named executive officers as a group (13
persons) 4,629,828 15.5%

* Less than 1% of the outstanding shares.

(1) The information regarding beneficial ownership of our common stock has been
presented in accordance with the rules of the SEC and is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership of common stock includes any shares as to which a
person, directly or indirectly, has or shares voting power or investment
power and also any shares as to which a person has the right to acquire such
voting or investment power within 60 days through the exercise of any stock
option or other right. The percentage of beneficial ownership as to any
person as of a particular date is calculated by dividing the number of
shares beneficially owned by such person by the sum of the number of shares
outstanding as of such date and the number of shares as to which such person
has the right to acquire voting or investment power within 60 days. As used
in this report, "voting power" is the power to vote or direct the voting of
shares and "investment power" is the power to dispose or direct the
disposition of shares. Except as noted, each stockholder listed has sole
voting and investment power with respect to the shares shown as beneficially
owned by such stockholder.

(2) Highland Capital Management, L.P., Strand Advisors, Inc. and James Dondero
are deemed to beneficially own 4,424,559 shares of our common stock, which
include 1,155,224 shares owned by Prospect Street High Income Portfolio
Inc., 1,627,545 shares owned by Highland Crusader Offshore Partners, L.P.,
223,880 shares owned by Highland Legacy, Limited, 223,880 shares owned by
Pamco Cayman Limited, 1,082,090 shares owned by Pam Capital Funding, LP and
111,940 shares owned by Prospect Street Income Shares Inc. Highland Capital
Management is the investment advisor of the above-named entities, and Strand
Advisors is the general partner of Highland Capital Management. As such,
Highland Capital Management and Strand Advisors has shared voting and
investment power over these shares and accordingly is deemed to beneficially
own them. Mr. Dondero is the president of Highland Capital Management and
the president and a director of Strand Advisors, Inc., Prospect Street High
Income Portfolio Inc. and Prospect Street Income Shares Inc. and may be
deemed to share voting and investment power with respect to all shares held
by the Highland Capital Management entities named above. Mr. Dondero
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest.

116

(3) The shares of common stock reported herein as beneficially owned are owned
directly by Tudor Proprietary Trading, L.L.C. (224,221 shares), The Altar
Rock Fund, L.P. (20,682 shares), The Raptor Global Portfolio, Ltd.
(1,882,115 shares), and The Tudor BVI Global Portfolio Ltd. (418,437
shares). Because Tudor Investment Corporation is the sole general partner of
Altar Rock and provides investment advisory services to Raptor Portfolio and
BVI Portfolio, Tudor Investment Corporation may be deemed beneficially to
own the shares of Common Stock owned by each. Tudor Investment Corporation
expressly disclaims such beneficial ownership. In addition, because Mr.
Jones is the controlling shareholder of Tudor Investment Corporation and the
indirect controlling equity holder of Tudor Proprietary Trading, Mr.
Jones may be deemed beneficially to own the shares of Common Stock deemed
beneficially owned by Tudor Investment Corporation and Tudor Proprietary
Trading. Mr. Jones expressly disclaims such beneficial ownership. Share
ownership is based on a Schedule 13G filed April 26, 2004.

(4) Does not includes 130,000 shares owned indirectly, including 50,000 shares
of our common stock beneficially owned by Mr. Haywood's spouse and 36,000
shares of our common stock beneficially owned by Mr. Haywood's children.
Share ownership is based on the latest publicly available information, a
Form 4 filed with the SEC on May 5, 2004.

(5) James G. Dinan beneficially owns the 2,276,445 shares of our common stock,
which includes shares owned by York Investment Limited, York Capital
Management L.P., York Select L.P., York Select Unit Trust, York Distressed
Opportunities Fund, L.P., York Offshore Investment Unit Trust and certain
shares held by certain other funds and accounts over which Mr. Dinan has
discretionary investment authority. Mr. Dinan is the senior managing member
and holder of a controlling interest in Dinan Management, L.L.C., York
Select Domestic Holdings, LLC, York Select Offshore Holdings, LLC, York
Offshore Holdings L.L.C. and York Distressed Domestic Holdings, LLC. Mr.
Dinan is also a director and holder of a controlling interest in York
Offshore Holdings, Limited. York Offshore Holdings is the investment manager
of York Investment. Dinan Management is the general partner of York Capital
Management. York Select Domestic Holdings is the general partner of York
Select. York Select Offshore Holdings is the investment manager of York
Select Unit Trust. York Distressed Domestic Holdings is the investment
manager of York Distressed Opportunities Fund. York Offshore Holdings is the
investment manager of York Offshore Investors. Mr. Dinan is the president
and sole shareholder of JGD Management Corp., which manages the other funds
and accounts that hold our common stock over which Mr. Dinan has
discretionary investment authority. Share ownership is based on a Schedule
13G/A and a Form 3 filed with the SEC on March 10, 2004 and a form 4 filed
on April 5, 2004. York Capital Management, York Investment Limited, York
Distressed Opportunities Fund and York Offshore Investors Unit Trust
received warrants to purchase 52,500, 118,750, 72,500 and 68,750 shares of
our common stock, respectively, in January 2003 upon the closing of a term
credit facility. These warrants are fully vested and exercisable.

(6) John C. Waterfall is the president and treasurer of Morgens, Waterfall,
Vintiadis & Co., Inc. and beneficially owns 2,610,000 shares of common
stock, which includes 200,000 shares of common stock for his own account and
10,000 shares of common stock held in trust for his children. Morgens,
Waterfall, Vintiadis & Co. beneficially owns 2,400,000 shares of common
stock, which includes 967,200 shares held by Phaeton International (BVI)

117

Ltd., 1,101,600 shares Morgens, the vice president and secretary of Morgens,
Waterfall, Vintiadis & Co. beneficially owns 2,410,000 shares of our common
stock. Share ownership is based on a Form 3 and a Schedule 13G/A filed with
the SEC on March 10, 2004.

(7) Comprised of shares underlying stock options that have vested.

(8) Comprised of shares underlying options and a warrant that are fully vested
and exercisable.

118

Securities Issued Under Equity Compensation Plans

The following table provides information regarding equity compensation plans
under which our equity securities were authorized for issuance as of December
31, 2003.

Equity Compensation Plan Information

Number of
securities
remaining available
Number of for future issuance
securities to be under equity
issued upon Weighted-average compensation plans
exercise of exercise price of (excluding
outstanding outstanding securities
options, warrants options, warrants reflected in
and rights and rights column(a))
Plan Category (a) (b) (c)
- ------------- --- --- ---

Equity compensation plans approved by security holders 2,993,024 $3.61(1) 1,235,511
Equity compensation plans not approved by security
holders 0 0 0
--------- ------- ---------
Total 2,993,024 $3.61(1) 1,235,511

(1) In March 2003, our board of directors approved the reduction in the exercise
price of all of the outstanding stock options from $5.00 per share to $3.00 per
share.

Item 13. Certain Relationships and Related Transactions.

This section describes arrangements with CTA, an entity in which (i) Jared E.
Abbruzzese, a director until June 20, 2003, is the chairman, (ii) Gerald S.
Kittner, a Motient director, is an advisor and consultant, (iii) Christopher W.
Downie, Motient's executive vice president, chief operating officer and
treasurer, was formerly affiliated and (iv) Peter Aquino, a Motient director, is
a senior managing director. Additionally, this section describes related party
transactions concerning our credit facility.

Communication Technology Advisors LLC

Jared E. Abbruzzese, a director until June 20, 2003, is the chairman of CTA.
Gerald S. Kittner, a Motient director, is an advisor and consultant for CTA.
Peter D. Aquino, also a Motient director, is a senior managing director of CTA.
Christopher W. Downie was formerly affiliated with CTA and is now our executive
vice president, chief operating officer and treasurer.

119

In May 2002, we entered into a consulting agreement with CTA under which CTA
provided consulting services to us. CTA is a consulting and private advisory
firm specializing in the technology and telecommunications sectors. Our
agreement with CTA had an initial term of three months ending August 15, 2002,
and was extended by mutual agreement for several additional terms of two or
three months each. For the first three months of the agreement, CTA was paid a
flat fee of $60,000 per month, and for the period August 2002 to May 2003, the
monthly fee was $55,000. We also agreed to reimburse CTA for CTA's out-of-pocket
expenses incurred in connection with rendering services during the term of the
agreement.

Beginning in May 2003, the monthly fee was reduced to $39,000. This agreement
was modified on January 30, 2004.

In November 2003, CTA was engaged to provide valuation of Motient's equity
interest in MSV as of December 31, 2002. CTA was paid $150,000 for this
valuation.

On January 30, 2004, we engaged CTA to act as chief restructuring entity. The
term of CTA's engagement is currently scheduled to end in August, 2004. As
consideration for this work, Motient agreed to pay to CTA a monthly fee of
$60,000. The new agreement amends the consulting arrangement discussed above.

Except for the warrants offered to certain CTA affiliates described below, or
certain warrants received by certain CTA affiliates in connection with the April
7, 2004 and July 1, 2004 private placements of our common stock, neither CTA,
nor any of its principals or affiliates is a stockholder of Motient, nor does it
hold any debt of Motient (other than indebtedness as a result of consulting fees
and expense reimbursement owed to CTA in the ordinary course under our existing
agreement with CTA). CTA has informed us that in connection with the conduct of
its business in the ordinary course, (i) it routinely advises clients in and
appears in restructuring cases involving telecommunications companies throughout
the country, and (ii) certain of our stockholders and bondholders and/or certain
of their respective affiliates or principals, may be considered to be (A)
current clients of CTA in matters unrelated to Motient; (B) former clients of
CTA in matters unrelated to Motient; and (C) separate affiliates of clients who
are (or were) represented by CTA in matters unrelated to Motient.

120

expense in December of 2002. Certain affiliates of CTA purchased the warrants in
December 2002. Christopher W. Downie received a warrant for 100,000 of the
500,000 shares.

In April 2004, certain CTA affiliates received warrants to purchase 400,000
shares of our common stock at an exercise price of $5.50. The warrant (or
warrants) has a term of five years. These warrants were valued at $2.5 million
and were recorded in April of 2004.

In July 2004, certain CTA affiliates received warrants to purchase 340,000
shares of our common stock at an exercise price of $8.57 per share. The warrants
have a term of five years.

Mr. Abbruzzese, Mr. Kittner and Mr. Aquino did not participate in the
deliberations or vote of the board of directors with respect to the foregoing
matters while serving as a member of the board.

Term Credit Facility

On January 27, 2003, our wholly-owned subsidiary, Motient Communications, closed
a $12.5 million term credit agreement with a group of lenders, including several
of our existing stockholders. For more information regarding the term credit
agreement, please see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources -- Term
Credit Facility". The lenders include the following entities or their
affiliates: M&E Advisors, L.L.C, Bay Harbour Partners, York Capital, and Lampe
Conway & Co. York Capital is affiliated with James G. Dinan and JGD Management
Corp. JGD Management Corp., James G. Dinan, James D. Dondero and Highland
Capital Management each hold 5% or more of our common stock. The lenders also
include Gary Singer, directly or through one or more entities. Gary Singer is
the brother of Steven G. Singer, one of our directors.

*JGD Management Corp and James G. Dinan share beneficial ownership with
respect to the 2,276,445 shares of our common stock. Mr. Dinan is the
president and sole stockholder of JGD Management Corp, which manages
the other funds and accounts that hold our common stock over which Mr.
Dinan has discretionary investment authority.
** James D. Dondero, a member of our board of directors, is the
President of Highland Capital Management, L.P., which, pursuant to an
arrangement with M&E Advisors, L.L.C., has indirectly made a
commitment under the credit facility.

121

Private Placement of Common Stock

Certain of our directors and holders of more than 5% of our common stock
participated in the April 7, 2004,and July 1, 2004 private placements of our
common stock. PDA Group, LLC, an entity wholly owned by Peter D. Aquino, one of
our directors, was assigned by Tejas Securities, our placement agent, warrants
to purchase 56,250 shares of our common stock at a price of $5.50 per share.
James D. Dondero, a director and beneficial owner of more than 5% of our common
stock, purchased an aggregate of 1,020,455 shares of our common stock in such
private placement. In addition, he also received warrants to purchase 136,364
shares of our common stock at a price of $5.50 per share, and warrants to
purchase 71,250 shares of our common stock at a price of $8.57 per share, which
will vest if and only if we do not meet certain deadlines with respect to the
registration of the common stock sold in the private placement.

122

Item 14. Principal Accountant Fees and Services.

Auditor Fees

The following table outlines our fees from our auditors for 2003 and 2002.

Twelve Months Ended Twelve Months Ended
December 31, 2003 December 31, 2002
------------------- -------------------
Audit fees $695,193 $237,558
Audit related fees 64,425 8,846
Tax fees 25,325 --
Other 20,338 --
Total $805,281 $246,404

Audit Committee Policies

The audit committee of Motient's board of directors is solely responsible for
the approval in advance of all audit and permitted non-audit services to be
provided by the independent auditors (including the fees and other terms
thereof), subject to the de minimus exceptions for non-audit services provided
by Section 10A(i)(1)(B) of the Exchange Act, which services are subsequently
approved by the audit committee prior to the completion of the audit. None of
the fees listed above are for services rendered pursuant to such de minimus
exceptions.

123

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) The following documents are filed as part of this Form 10-K:

1) The following consolidated financial statements are included as follows:

Page

Report of Independent Registered Public Accounting Firm ......................................................F-1

Consolidated Statements of Operations ........................................................................F-2

Consolidated Balance Sheets ..................................................................................F-3

Consolidated Statements of Changes in Stockholders' Equity (Deficit) ..........................................F-4

Consolidated Statements of Cash Flows ........................................................................F-5

Notes to Consolidated Financial Statements ...................................................................F-6

Quarterly Financial Data .....................................................................................F-70

124

2. Financial Statement Schedules

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

Schedule II - Valuation and Qualifying Accounts

3. Exhibits

3.1 - Restated Certificate of Incorporation of the Company (as
restated effective May 1, 2002) (incorporated by reference
to Exhibit 3.1 of the Company's Amendment No. 2 to
Registration Statement on Form 8-A, filed May 1, 2002).

3.2 - Amended and Restated Bylaws of the Company (as amended and
restated effective May 1, 2002) (incorporated by reference
to Exhibit 3.1 of the Company's Amendment No. 2 to
Registration Statement on Form 8-A, filed May 1, 2002).

4.1 - Specimen of Common Stock Certificate (incorporated by
reference to Exhibit 4.1 of the Company's Amendment No. 2 to
Registration Statement on Form 8-A, filed May 1, 2002).

4.2 - Warrant Agreement between the Registrant and Equiserve Trust
Company, N.A., as warrant agent, dated May 1, 2002
(incorporated by reference to Exhibit 4.1 of the Company's
Registration Statement on Form 8-A, filed May 1, 2002).

4.2a - Specimen of Warrant Certificate of the Company (incorporated
by reference to Exhibit 4.2 of the Company's Registration
Statement on Form 8-A, filed May 1, 2002).

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

10.2a - Amendment No. 2, dated September 1, 2000, to the Credit
Agreement, dated as of June 17, 1998, by and between
Motorola, Inc. and Motient Communications Company (formerly
known as ARDIS Company) (incorporated by reference to
Exhibit 10.22a to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 2000 (File No.
0-23044)).

10.2b - Assumption, Release, Amendment and Waiver Agreement by and
among Motorola, Inc., Motient Communications Inc. and
Motient Communications Company, dated as of December 29,
2000 (incorporated by reference to Exhibit 10.22b to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2001 (File No. 0-23044)).

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

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

10.4a - Amendment No. 1, dated as of November 29, 2000, to Asset
Sale Agreement, dated as of June 29, 2000, between Motient
Satellite Ventures LLC and Motient Services Inc.
(incorporated by reference to Exhibit 10.42a to the
Company's annual report on Form 10-K for the year ended
December 31, 2000 (File No. 0-23044)).

10.4b - Amended and Restated Asset Sale Agreement, dated as of
January 8, 2001, between Mobile Satellite Ventures LLC and
Motient Services Inc. (incorporated by reference to Exhibit
10.42b to the Company's annual report on Form 10-K for the
year ended December 31, 2000 (File No. 0-23044)).

10.4c - Amendment, dated as of October 12, 2001, to the Amended and
Restated Asset Sale Agreement, dated as of January 8, 2001,
by and between Motient Services Inc. and Mobile Satellite
Ventures LLC (incorporated by reference to Exhibit 10.42c to
the Company's quarterly report on Form 10-Q for the quarter
ended September 30, 2001 (File No. 0-23044)).

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

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

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

10.7a - Amended and Restated Document Standstill and Termination
Agreement, dated as of October 12, 2001 (incorporated by
reference to Exhibit 10.50a to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2001
(File No. 0-23044)).

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

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

10.9a - Stockholders' Agreement, dated as of November 26, 2001, of
Mobile Satellite Ventures GP Inc. (incorporated by reference
to Exhibit 10.56a of the Company's Current Report on Form
8-K dated November 19, 2001 (File No. 0-23044)).

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

10.11 - Form of Convertible Note of Mobile Satellite Ventures LP, in
the amount of $50.0 million issued to MSV Investors LLC
(incorporated by reference to Exhibit 10.58 to the Company's
quarterly report on Form 10-Q for the quarter ended
September 30, 2001 (File No. 0-23044)).

10.12 - Form of Promissory Note of Mobile Satellite Ventures LP, in
the amount of $15.0 million issued to Motient Services Inc.
(incorporated by reference to Exhibit 10.59 to the Company's
quarterly report on Form 10-Q for the quarter ended
September 30, 2001 (File No. 0-23044)).

10.13 - Registration Rights Agreement between the Company and
Highland Capital Management, L.P., and Morgan Stanley
Investment Management, dated May 1, 2002 (incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2002) (File No.
0-23044)).

10.14* - Form of Change of Control Agreement for Officers of the
Company (incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002 (File No. 0-23044)).

10.15 - Senior Indebtedness Note of MVH Holdings Inc., in the amount
of $19.0 million issued to Rare Medium Group, Inc., dated
May 1, 2002 (incorporated by reference to Exhibit 10.3 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002 (File No. 0-23044)).

10.16 - Senior Indebtedness Note of MVH Holdings Inc., in the amount
of $750,000 issued to Credit Suisse First Boston, dated May
1, 2002 (incorporated by reference to Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2002 (File No. 0-23044)).

10.17 - Settlement Agreement by and among the Registrant and Rare
Medium Group, Inc., dated March 28, 2002 (incorporated by
reference to Exhibit 10.5 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 2002 (File No.
0-23044)).

10.18 - Form of Warrant to purchase 343,450 shares of the Company's
common stock at an exercise price of $3.95 per share issued
to Evercore Partners, L.P. (incorporated by reference to
Exhibit 10.28 to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (File No. 333-87844)).

10.19 - Debtors' Amended Joint Plan of Reorganization Under Chapter
11 of the Bankruptcy Code, dated February 27, 2002
(incorporated by reference to Exhibit 99.2 to the
Registrant's Current Report on Form 8-K dated March 4, 2002
(File No. 0-23044)).

10.20* - Motient Corporation 2002 Stock Option Plan (incorporated by
reference to Exhibit 99.1 to the Company's registration
statement on Form S-8 (File No. 333-92326)).

10.21* - Form of Stock Option Agreement (incorporated by reference to
Exhibit 99.2 to the Company's registration statement on Form
S-8 (File No. 333-92326)).

10.22 - Form of Warrant to purchase up to 500,000 shares of the
Company's common stock at an exercise price of $3.00 per
share issued to certain affiliates of Communication
Technology Advisors LLC (incorporated by reference to
Exhibit 10.22 to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002).

10.23* - Executive Retention Agreement, dated as of July 16, 2002, by
and between Walter V. Purnell, Jr. and the Company
(incorporated by reference to Exhibit 10.23 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002).

10.24 - Amended and Restated Term Credit Agreement, dated January
27, 2003, by and among the Company, Motient Communications
Inc., Motient Holdings Inc., the Lenders named therein, and
M&E Advisors, L.L.C., as Administrative Agent and Collateral
Agent (incorporated by reference to Exhibit 10.24 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2002).

10.25 - Security Agreement, dated as of January 27, 2003, between
Motient Communications Inc. and M&E Advisors L.L.C. as
Collateral Agent (incorporated by reference to Exhibit 10.25
to the Company's Annual Report on Form 10-K for the year
ended December 31, 2002).

10.26 - First Amendment to Security Agreement, dated as of January
30, 2003, between Motient Communications Inc. and M&E
Advisors L.L.C. as Collateral Agent (incorporated by
reference to Exhibit 10.26 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2002).

10.27 - Motient Corporation Share Pledge Agreement, dated as of
January 27, 2003, between Motient Corporation and M&E
Advisors L.L.C., as Collateral Agent (incorporated by
reference to Exhibit 10.27 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2002).

10.28 - Motient Holdings Share Pledge Agreement, dated as of January
27, 2003, between Motient Holdings Inc. and M&E Advisors
L.L.C., as Collateral Agent (incorporated by reference to
Exhibit 10.28 to the Company's Annual Report on Form 10-K
for the year ended December 31, 2002).

10.29 - Form of Warrant to purchase shares of common stock of
Motient Corporation issued to lenders under the Amended and
Restated Term Credit Agreement dated as of January 27, 2003
(incorporated by reference to Exhibit 10.29 to the Company's
Annual Report on Form 10-K for the year ended December 31,
2002).

10.30* - Letter amendment to Executive Retention Agreement, dated as
of February 10, 2004, by and between Walter V. Purnell, Jr.
and the Company (incorporated by reference to Exhibit 10.30
to the Company's Annual Report on Form 10-K for the year
ended December 31, 2002).

10.31 - Amendment No. 1 to Amended and Restated Term Credit
Agreement, dated March 16, 2004, by and among Motient
Communications Inc., Motient License Inc., the Required
Lenders party thereto, and M&E Advisors, L.L.C., as
Administrative Agent and Collateral Agent (incorporated by
reference to Exhibit 10.31 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2002).

10.32 - Omnibus Amendment to SLA Note and Credit Facility, dated as
of March 16, 2004, by and among Motient Communications Inc.,
Motient Corporation, Motient Holdings Inc., Motient Services
Inc., and Motorola, Inc. (incorporated by reference to
Exhibit 10.32 to the Company's Annual Report on Form 10-K
for the year ended December 31, 2002).

10.33 - Share Pledge Agreement, dated as of March 16, 2004, by and
between Motient Communications Inc. and M&E Advisors, L.L.C.
(incorporated by reference to Exhibit 10.33 to the Company's
Annual Report on Form 10-K for the year ended December 31,
2002).

10.34 - Warrant to purchase shares of common stock of Motient
Corporation, issued to lenders under Amendment No. 1 to
Amended and Restated Term Credit Agreement, dated March 16,
2004 (incorporated by reference to Exhibit 10.34 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2002).

10.35 - Registration Rights Agreement, dated March 16, 2004, by and
between Motient Corporation and M&E Advisors, L.L.C. in its
capacity as Administrative and Collateral Agent under
Amendment No. 1 to Amended and Restated Term Credit
Agreement (incorporated by reference to Exhibit 10.35 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 2002).

10.36 - Collateral Agency, Subordination and Intercreditor
Agreement, dated as of March 16, 2004, by and among Motient
Communications Inc., Motient License Inc., M&E Advisors
L.L.C., and Motorola, Inc. (incorporated by reference to
Exhibit 10.36 to the Company's Annual Report on Form 10-K
for the year ended December 31, 2002).

10.37 - Subordinate Motient Communications Share Pledge Agreement,
dated as of March 16, 2004, by and between Motient
Communications Inc. and Motorola, Inc. (incorporated by
reference to Exhibit 10.37 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2002).

10.38 - Common Stock Purchase Agreement, dated as of April 7, 2004,
by and among Motient Corporation and the Raptor Global
Portfolio, Ltd., et al (incorporated by reference to Exhibit
10.38 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003).

10.39 - Registration Rights Agreement, dated as of April 7, 2004, by
and among Motient Corporation and the Raptor Global
Portfolio, Ltd., et al (incorporated by reference to Exhibit
10.39 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003).

10.40 - Form of Common Stock Purchase Warrant, dated as of April 7,
2004 (incorporated by reference to Exhibit 10.40 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003).

10.41 - Form of Common Stock Purchase Warrant, dated as of April 7,
2004 (incorporated by reference to Exhibit 10.41 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004).

21.1 - Subsidiaries of the Company (filed herewith).

23.1 - Consent of Friedman LLP , Independent Registered Public
Accounting Firm (filed herewith)

31.1 - Certification Pursuant to Rule 13a-14(a)/15d-14(a), of the
Executive Vice President, Chief Operating Officer and
Treasurer (principal executive officer).

31.2 - Certification Pursuant to Rule 13a-14(a)/15d-14(a), of the
Controller and Chief Accounting Officer (principal financial
officer)

32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
of Executive Vice President, Chief Operating Officer and and
Treasurer (principal executive officer)

32.2 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
of the Controller and Chief Accounting Officer (principal
financial officer)

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

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

(b) Reports on Form 8-K:

On November 4, 2003, the Company filed a Current Report on
Form 8-K, in response to Item 5, to report an update of
recent transaction with Nextel, to report the loss of its
largest customer, UPS, and to provide an update on the
status of its periodic SEC reports.

On December 11, 2003, the Company filed a Current Report on
Form 8-K, in response to Item 5, to report a recent
transaction with Nextel.

On February 13, 2004, the Company filed a Current Report on
Form 8-K, in response to Item 5, to report that the
termination of employment of Walter V. Purnell, Jr. as the
Company's president and chief executive officer, and to
provide an update on the status of its periodic SEC reports.

On February 20, 2004, the Company filed a Current Report on
Form 8-K, in response to Item 5, to report a reduction in
personnel.

On March 9, 2004, the Company filed an amendment to Current
Report on Form 8-K/A, in response to Item 4, to report the
dismissal of PricewaterhouseCoopers as its independent
auditors for the period May 1, 2002 to December 31, 2002 and
the engagement of Ehrenkrantz Sterling & Co. LLC as the
Company's independent auditors for the period May 1, 2002 to
December 31, 2002.

On April 8, 2004, the Company filed a Current Report on Form
8-K, in response to Items 5 and 7, to report the sale of
4,215,910 shares of its common stock at a per share price of
$5.50 per share.

SIGNATURES

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

MOTIENT CORPORATION

By /s/ Christopher W. Downie
-------------------------
Christopher W. Downie
Executive Vice President
Chief Operating Officer and Treasurer

Date: July 2, 2004

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

/s/ Christopher W. Downie Executive Vice President, Chief Operating Officer July 2, 2004
- ------------------------------- and Treasurer (principal executive officer)
Christopher W. Downie

/s/ Myrna J. Newman Controller and Chief Accounting Officer (principal July 2, 2004
- ------------------------------- financial officer)
Myrna J. Newman

/s/ Steven G. Singer Chairman of the Board July 2, 2004
- -------------------------------
Steven G. Singer

/s/ Jonelle St. John Director July 2, 2004
- -------------------------------
Jonelle St. John

/s/ Gerald S. Kittner Director July 2, 2004
- -------------------------------
Gerald S. Kittner

/s/ James D. Dondero Director July 2, 2004
- -------------------------------
James D. Dondero

/s/ Raymond L. Steele Director July 2, 2004
- -------------------------------
Raymond J. Steele

INDEX TO FINANCIAL STATEMENTS

MOTIENT CORPORATION AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm ..................................................... F-1

Consolidated Statements of Operations ....................................................................... F-2

Consolidated Balance Sheets ................................................................................. F-3

Consolidated Statements of Changes in Stockholders' Equity (Deficit) ........................................ F-4

Consolidated Statements of Cash Flows ....................................................................... F-5

Notes to Consolidated Financial Statements .................................................................. F-6

Quarterly Financial Data .................................................................................... F-70

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Motient Corporation:

We have audited the accompanying consolidated balance sheets of Motient
Corporation (a Delaware Corporation) and Subsidiaries (together the "Company")
as of December 31, 2003 and 2002 (Successor Company), and the related
consolidated statements of operations, changes in stockholders' equity (deficit)
and cash flows for the year ended December 31, 2003 (Successor Company), the
eight months ended December 31, 2002 (Successor Company), the four months ended
April 30, 2002 (Predecessor Company) and the year ended December 31, 2001
(Predecessor Company). Our audits also included the financial statement schedule
listed in the index at Item 15(a). These financial statements and schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

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

In our opinion, based on our audits, the financial statements referred to above
present fairly, in all material respects, the financial position of Motient
Corporation and Subsidiaries as of December 31, 2003 and 2002 (Successor
Company) and the results of their operations and their cash flows flows for the
year ended December 31, 2003 (Successor Company), the eight months ended
December 31, 2002 (Successor Company), the four months ended April 30, 2002
(Predecessor Company) and the year ended December 31, 2001 (Predecessor Company)
in conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

/s/ Friedman LLP
- ----------------
Livingston, New Jersey
July 2, 2004

F-1

Motient Corporation and Subsidiaries
Consolidated Statements of Operations
For the Year Ended December 31, 2003, the Eight Months Ended December 31, 2002,
the Four Months Ended April 30, 2002 and the Year Ended December 31, 2001
(in thousands, except per share data)

Successor Company Predecessor Company
----------------- -------------------

Eight Months Four Months (Restated)
Year Ended Ended Ended Year Ended
December 31, December 31, April 30, December 31,
2003 2002 2002 2001
---- ---- ---- ----

REVENUES
Services and related revenues $ 49,275 $ 35,501 $ 16,809 $ 68,063
Sales of equipment 5,210 1,116 5,564 22,202
--------- --------- --------- ---------
Total revenues 54,485 36,617 22,373 90,265
--------- --------- --------- ---------

COSTS AND EXPENSES
Cost of services and operations (including
stock-based compensation of $211 for the year
ended December 31, 2003; exclusive of
depreciation and amortization below) 51,393 38,141 21,909 73,064
Cost of equipment sold (exclusive of
depreciation and amortization) 5,942 2,226 5,980 34,116
Sales and advertising (including stock-based
compensation of $151 for the year ended December 31, 2003) 4,552 4,825 4,287 22,618
General and administrative (including
stock-based compensation of $241 for the year
ended December 31, 2003) 11,299 9,691 4,130 20,543
Restructuring charges -- 25 584 4,739
Depreciation and amortization 21,466 15,509 6,913 32,408
--------- --------- --------- ---------
Total Costs and Expenses 94,652 70,417 43,803 187,488
--------- --------- --------- ---------

Operating loss (40,167) (33,800) (21,430) (97,223)

Interest and other income (expense) 662 (89) 145 1,128
Interest expense (6,365) (1,910) (1,850) (61,675)
Other income from Aether/MSV 2,203 1,017 1,125 --
Gain (loss) on disposal of assets (3,037) (2,116) (591) 67
Loss on impairment of asset (5,535) -- -- --
Gain on sale of transportation and satellite assets -- 385 372 23,201
Gain on Rare Medium Note call option -- -- -- 1,511
Rare Medium merger costs -- -- -- (4,054)
XM Radio equity investment impairment charge -- -- -- (81,467)
Equity in losses of XM Radio and MSV (9,883) (22,273) (1,909) (48,488)
--------- --------- --------- ---------
Loss before reorganization items (62,122) (58,786) (24,138) (267,000)

Reorganization items:
Costs associated with debt restructuring -- (772) (22,324) (1,254)
Gain (loss) on extinguishment of debt -- -- 183,725 (1,243)
Gain on fair market adjustment of assets/liabilities -- -- 94,715 --
--------- --------- --------- ---------

(Loss) income before income taxes (62,122) (59,558) 231,978 (269,497)

Income tax provision -- -- -- --
--------- --------- --------- ---------

Net (loss) income $ (62,122) $ (59,558) $ 231,978 $(269,497)
========= ========= ========= =========

Net (loss) income - basic and diluted $ (2.47) $ (2.37) $ 3.98 $ (5.27)
========= ========= ========= =========

Weighted-Average Common Shares Outstanding - 25,145 25,097 58,251 51,136
basic and diluted

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

F-2

Motient Corporation and Subsidiaries
Consolidated Balance Sheets
as of December 31, 2003 and 2002
(in thousands, except share and per share data)

Successor Successor
Company Company
------- -------
2003 2002
---- ----
ASSETS
CURRENT ASSETS:

Cash and cash equivalents $3,618 $ 5,840
Accounts receivable-trade, net of allowance for doubtful accounts of $759
and $1,003 at December 31, 2003 and 2002 3,804 9,339
Inventory 240 1,077
Due from Mobile Satellite Ventures LP, net 93 234
Assets held for sale 2,734 --
Deferred equipment costs 3,765 2,755
Other current assets 5,091 6,796
Restricted cash and short-term investments 504 604
--- ---
Total current assets 19,849 26,645
------ ------

RESTRICTED INVESTMENTS 1,091 --
PROPERTY AND EQUIPMENT, net 31,381 46,405
FCC LICENSES AND OTHER INTANGIBLES, net 74,021 94,921
INVESTMENT IN AND NOTES RECEIVABLE FROM MSV 22,610 32,493
DEFERRED CHARGES AND OTHER ASSETS 8,076 1,757
----- -----
Total assets $157,028 $202,221
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $12,365 $ 13,040
Deferred equipment revenue 3,795 2,861
Deferred revenue and other current liabilities 11,005 5,308
Obligations under capital leases, current 1,454 3,031
Vendor financing commitment, current 2,413 1,020
----- -----
Total current liabilities 31,032 25,260
------ ------
LONG-TERM LIABILITIES:
Notes payable, including accrued interest thereon 22,885 20,943
Term Credit Facility 4,914 --
Capital lease obligations, net of current portion 1,642 3,219
Vendor financing commitment, net of current portion 2,401 4,927
Other long-term liabilities 1,347 4,824
----- -----
Total long-term liabilities 33,189 33,913
------ ------
Total liabilities 64,221 59,173
------ ------
COMMITMENTS AND CONTINGENCIES -- --

STOCKHOLDERS' EQUITY:
Preferred Stock; par value $0.01; authorized 5,000,000 shares and no shares -- --
outstanding at December 31, 2003 and 2002
Common Stock; voting, par value $0.01; authorized 100,000,000 shares;
25,196,840 and 25,097,256 shares issued and outstanding at December 31, 2003
and 2002, respectively 252 251
Additional paid-in capital 198,743 197,814
Common stock purchase warrants 15,492 4,541
Accumulated deficit (121,680) (59,558)
--------- --------
STOCKHOLDERS' EQUITY 92,807 143,048
------ -------
Total liabilities, and stockholders' equity $157,028 $202,221
======== ========

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

F-3

Motient Corporation and Subsidiaries
Consolidated Statements of Changes In Stockholders' Equity (Deficit)
For the Year Ended December 31, 2003, the Eight Months Ended December 31, 2002,
the Four Months Ended April 30, 2002 and the Year Ended December 31, 2001 (Restated)

Common
Common Stock Additional Deferred Stock Unamortized
Par Paid-In Stock Purchase Guarantee Accumulated
Shares Value Capital Compensation Warrants Warrants Deficit Total
------ ----- ------- --------------------- -------- ------- -----

Predecessor Company
-------------------
BALANCE, December 31, 2000 $49,539,222 $495 $984,532 $(1,327) $92,249 $(11,504) $(1,043,861) $20,584
Common Stock issued under the 401(k)
Savings & Stock Purchase Plan 3,006,756 30 1,475 -- -- -- -- 1,505
Common Stock issued for exercise of stock
options and award of bonus stock 2,015 -- 1 -- -- -- -- 1
Common Stock issued for exercise of Stock
Purchase Warrants 38,228 -- 845 -- (845) -- -- --
Capital Gain in connection with sale of
stock by MSV -- -- 12,883 -- -- -- -- 12,883
Change in deferred compensation on
non-cash compensation -- -- 539 1,048 -- -- -- 1,587
Cancellation of restricted stock (88,200) -- (264) 264 -- -- -- --
Reduction of Guarantee Warrants for
extinguishment of debt -- -- -- -- -- 8,837 -- 8,837
Compensatory stock options issued to
employees -- -- 138 -- -- -- -- 138
Amortization of Guarantee Warrants -- -- -- -- -- 4,993 -- 4,993
Loss in connection with sale of stock by
XM Radio -- -- (12,180) -- -- -- -- (12,180)
Guarantee Warrants revaluation -- -- -- -- 2,326 (2,326) -- --
Issuance of Restricted Stock 3,219,236 32 386 (418) -- -- -- --
Net Loss -- -- -- -- -- -- (269,497)(269,497)
--------------------------------------------------------------------------------
BALANCE, December 31, 2001 55,717,257 557 988,355 (433) 93,730 -- (1,313,358)(231,149)
Common Stock issued under the 401(k)
Savings & Stock Purchase Plan 2,718,041 27 176 -- -- -- -- 203
Change in deferred compensation on
non-cash compensation -- -- -- 97 -- -- -- 97
Net Income - Predecessor Company -- -- -- -- -- -- 231,978 231,978
---------- ---- -------- ------ ------- ------ ----------- ------
Balance before fresh-start-Predecessor
Company 58,435,298 $584 $988,531 $(336) $93,730 $-- $(1,081,380) $1,129
========== ==== ======== ====== ======= ====== =========== ======

Successor Company
-----------------
Issuance of New Equity through bankruptcy 25,097,256 $251 $197,814 $-- $-- $-- $-- $198,065
Issuance of Common Stock Warrants -- -- -- -- 3,077 -- -- 3,077
--------------------------------------------------------------------------------
BALANCE, April 30, 2002 25,097,256 251 197,814 -- 3,077 -- -- 201,142
Issuance of Common Stock Warrants -- -- -- -- 1,464 -- -- 1,464
Net Loss -- -- -- -- -- -- (59,558) (59,558)
--------------------------------------------------------------------------------
BALANCE, December 31, 2002 25,097,256 251 197,814 -- 4,541 -- (59,558) 143,048
Common Stock issued under the 401(k)
Savings & Stock Purchase Plan 84,172 1 280 -- -- -- -- 281
Common Stock issued for exercise of stock
options 15,412 -- 46 -- -- -- -- 46
Issuance of Common Stock Warrants -- -- -- -- 10,951 -- -- 10,951
Change in deferred compensation on
non-cash compensation -- -- 603 -- -- -- -- 603
Net loss -- -- -- -- -- -- (62,122)(62,122)
--------------------------------------------------------------------------------
BALANCE, December 31, 2003 25,196,840 $252 $198,743 $-- $15,492 $-- $(121,680)$92,807
========== ==== ======== ===== ======= ====== ========= =======

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

F-4

Motient Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For the Year Ended December 31, 2003, the Eight Months Ended December 31, 2002,
the Four Months Ended April 30, 2002 and the Year Ended December 31, 2001
(in thousands)

Successor Company Predecessor Company
----------------- -------------------
Four
Eight Months Months (Restated)
Year Ended Ended Ended Year Ended
December 31, December 31, April 30, December 31,
2003 2002 2002 2001
---- ---- ---- ----

CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (62,122) $ (59,558) $ 231,978 $(269,497)
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Amortization of Guarantee Warrants and debt related costs -- -- 5,629 11,499
Depreciation and amortization 21,466 15,509 6,913 32,408
Provision for inventory write-downs -- -- -- 7,891
Equity in loss of XM Radio and MSV 9,883 22,319 1,909 48,488
(Gain) loss on disposal of assets 8,572 2,116 591 (67)
Impairment loss on XM Radio common stock held for sale -- -- -- 81,467
Gain on Rare Medium Note call option -- -- -- (1,511)
Gain on sale of transportation assets -- (385) (372) (23,201)
(Gain) loss on extinguishment of debt -- -- (183,725) 1,243
Gain on debt restructuring (573) -- -- --
Issuance of warrants 927 -- -- --
Fresh-Start valuation and other non-cash adjustments -- -- (94,715) --
Non cash amortization of deferred financing costs 3,292 -- -- --
Non cash stock compensation 603 -- -- 1,150
Changes in assets and liabilities, net of acquisitions
and dispositions:
Inventory 837 2,765 (2,167) (1,118)
Accounts receivable-- trade 5,535 782 1,370 462
Other current assets (80) 4,263 15,833 10,764
Accounts payable and accrued expenses (255) (217) 7,619 (10,327)
Accrued interest 2,510 1,193 1,320 20,810
Deferred trade payables -- -- -- (2,212)
Deferred revenue and other deferred items 2,285 2,305 (6,729) (7,097)
--------- --------- --------- ---------
Net cash (used in) operating activities (7,120) (8,908) (14,546) (98,848)
--------- --------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 6,116 616 -- --
Proceeds from sale of satellite assets to MSV -- -- -- 42,500
Proceeds from sale of transportation assets -- 385 372 10,000
Proceeds (purchase) of restricted investments (991) (604) -- 11,307
Proceeds from the sale of XM Radio common stock -- -- -- 38,289
Receipt of Senior Note Interest from escrow -- -- -- 20,503
Investment in MSV -- (957) -- --
Additions to property and equipment (232) (613) (494) (13,751)
--------- --------- --------- ---------
Net cash (used in) provided by investing activities 4,893 (1,173) (122) 108,848
--------- --------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of equity securities -- -- 17 354
Proceeds from Rare Medium note -- -- -- 50,000
Principal payments under capital leases (2,986) (1,425) (1,273) (3,582)
Principal payments under vendor financing (1,020) -- -- (5,176)
Repayment from Term Loan -- -- -- (25,500)
Proceeds from Term Credit Facility 4,500 -- -- --
Proceeds from Bank Financing -- -- -- 6,000
Proceeds from issuance of employee stock options 47 -- -- --
Debt issuance costs and other charges (536) (117) -- (1,229)
--------- --------- --------- ---------
Net cash provided by (used in) financing activities 5 (1,542) (1,256) 20,867
--------- --------- --------- ---------
Net (decrease) increase in cash and cash equivalents (2,222) (11,623) (15,924) 30,867
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, beginning of period 5,840 17,463 33,387 227,423
Less XM Radio cash included in 2000 consolidated cash total -- -- -- 224,903
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 3,618 $ 5,840 $ 17,463 $ 33,387
========= ========= ========= =========

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

F-5

MOTIENT CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1. ORGANIZATION

Motient Corporation (with its subsidiaries, "Motient" or the "Company") provides
two-way mobile communications services principally to business-to-business
customers and enterprises. Motient serves a variety of markets including mobile
professionals, telemetry, transportation and field service. Motient provides its
eLinkSM brand two-way wireless email services to customers accessing email
through corporate servers, Internet Service Providers, Mail Service Provider
accounts and paging network service providers. Motient also offers BlackBerry TM
by Motient, a wireless email solution developed by Research In Motion Ltd.
("RIM") and licensed to operate on Motient's network. BlackBerryTM by Motient
is designed for large corporate accounts operating in a Microsoft Exchange or
Lotus Notes environment. The Company considers the two-way mobile communications
service described in this paragraph to be its core wireless business.

Motient presently has six wholly-owned subsidiaries and a 29.5% interest (on a
fully-diluted basis) in Mobile Satellite Ventures LP (MSV). For further details
regarding Motient's interest in MSV, please see "Recent Developments - Mobile
Satellite Ventures LP". Motient Communications Inc. owns the assets comprising
Motient's core wireless business, except for Motient's Federal Communications
Commission, or FCC, licenses, which are held in a separate subsidiary, Motient
License Inc. (Motient License). Motient License was formed on March 16, 2004, as
part of Motient's amendment of its credit facility, and is a special purpose
wholly-owned subsidiary of Motient Communications that holds all of the FCC
licenses formerly held by Motient Communications. A pledge of the stock of
Motient License, along with other assets of Motient Communications, secures
borrowings under the term credit facility. For further details regarding the
formation of Motient License, please see Note 16 ("Subsequent Events"). Our
other four subsidiaries hold no material operating assets other than the stock
of other subsidiaries and Motient's interests in MSV. On a consolidated basis,
we refer to Motient Corporation and its six wholly-owned subsidiaries as
"Motient."

Motient is devoting its efforts to expanding its core wireless business, while
also focusing on cost-cutting efforts. These efforts involve substantial risk.
Future operating results will be subject to significant business, economic,
regulatory, technical and competitive uncertainties and contingencies. Depending
on their extent and timing, these factors, individually or in the aggregate,
could have an adverse effect on the Company's financial condition and future
results of operations. In recent periods, certain factors have placed
significant pressures on Motient's financial condition and liquidity position.
These factors also have restrained Motient's ability to accelerate revenue
growth at the pace required to enable it to generate cash in excess of its
operating expenses. These factors include competition from other wireless data
suppliers and other wireless communications providers with greater resources,
cash constraints have limited Motient's ability to generate greater demand,

F-6

unanticipated technological and development delays and general economic factors.
Motient's results in recent periods, including the period covered by this
report, have also been hindered by the downturn in the economy and capital
markets. These factors contributed to the Company's decision in January 2002 to
file a voluntary petition for reorganization under Chapter 11 of the United
States Federal Bankruptcy Code. Motient's Plan of Reorganization was confirmed
on April 26, 2002 and became effective on May 1, 2002. Please see Note 2
("Significant Accounting Policies -- Motient's Chapter 11 Filing and Plan of
Reorganization and "Fresh-start" Accounting") below.

For a discussion of certain significant recent developments and trends in
Motient's business after the end of the period covered by this report, please
see Note 16 ("Subsequent Events"). As discussed in more detail in Note 2
("Significant Accounting Policies"), the 2002 comparative financial statements
provided herein have been restated and have been audited by the Company's former
independent registered public accounting firm, Ehrenkrantz Sterling & Co. LLC,
predecessor-in-interest to Friedman LLP.

The financial results for the year ended December 31, 2001 and the financial
results for the period January 1, 2002 to April 30, 2002 are herein referred to
as Predecessor Company results and the financial results for the period May 1,
2002 to December 31, 2002 and the year ended December 31, 2003 included herein
are referred to as Successor Company results. Due to the effects of the
"fresh-start" accounting, results for the periods defined above are not
comparable to periods beginning after May 1, 2002. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows for
all periods presented have been made.

XM Radio

XM Satellite Radio Holdings Inc. ("XM Radio"), a public company that launched
its satellite radio service at the end of 2001, was incorporated on December 15,
1992 for the purpose of procuring a digital audio radio service license. As of
December 31, 2000, Motient had an equity interest of approximately 33.1% (or
21.3% on a fully diluted basis) in XM Satellite Radio Holdings Inc. ("XM
Radio"), and Motient controlled XM Radio through its board of director
membership and common stock voting rights. In January 2001, pursuant to FCC
approval authorizing Motient to relinquish control of XM Radio, the number of
directors appointed by the Company to XM Radio's Board of Directors was reduced
to less than 50% of XM Radio directors, and the Company converted a portion of
its super-voting Class B Common Stock of XM Radio to Class A Common Stock. As a
result, the Company ceased to control XM Radio.

Throughout 2001, Motient disposed of its equity interest in XM Radio, and as of
November 19, 2001, Motient did not hold any interest in XM Radio. For the period
from January 1, 2001 through November 19, 2001, the Company accounted for its
investment in XM Radio pursuant to the equity method of accounting.

F-7

Mobile Satellite Ventures LP

On June 29, 2000, the Company formed a joint venture subsidiary, Mobile
Satellite Ventures LP (formerly known as Mobile Satellite Ventures LLC) ("MSV"),
in which it owned, until November 26, 2001, 80% of the membership interests, in
order to conduct research and development activities. In June 2000, the other
20% interest in MSV was purchased by three investors unrelated to Motient. The
minority investors had certain participating rights which provided for their
participation in certain business decisions that were made in the normal course
of business; therefore, in accordance with EITF No 96-16, "Investor's Accounting
for an Investee When the Investor Has a Majority of the Voting Interest but the
Minority Shareholder or Shareholders Have Certain Approval or Veto Rights", the
Company's investment in MSV has been recorded for all periods presented in the
consolidated financial statements pursuant to the equity method of accounting.
On November 26, 2002, Motient's interest in MSV was reduced to approximately
48%. As of December 31, 2003 and March 31, 2004, Motient held a 29.5% interest
in MSV on a fully-diluted basis. Please see Note 13 ("Business Acquisitions and
Dispositions - MSV").

Network Offerings: T-Mobile/Verizon Wireless

On March 1, 2003, Motient entered into a national premier dealer agreement with
T-Mobile USA, and, on May 21, 2003, Motient entered into an authorized agency
agreement with Verizon Wireless. These agreements allow Motient to sell each of
T-Mobile's third generation global system for GSM/GPRS network subscriptions and
Verizon's third generation CDMA/1XRTT network subscriptions nationwide. Motient
is paid for each subscriber put onto either network. Each agreement allows
Motient to continue to actively sell and promote wireless email and wireless
Internet applications to enterprise accounts on networks with greater capacity
and speed, and that are voice capable.

Effects of the Chapter 11 Filing and Emergence

As a result of the Company's Chapter 11 bankruptcy filing, the Company saw a
slower adoption rate for its services during the first quarter of 2002. In a
large customer deployment, the upfront cost of the hardware can be significant.
Because the hardware generally is usable only on Motient's network, certain
customers delayed adoption while Motient was in Chapter 11.

Additionally, certain of the Company's trade creditors required either deposits
for future services or shortened payment terms; however, none of these deposits
or changes in payment terms were material, and none of the Company's key
suppliers has ceased to do business with the Company as a result of its
reorganization.

Since emerging from bankruptcy protection in May 2002, the Company has
undertaken a number of actions to reduce its operating expenses and cash burn
rate. The Company's liquidity constraints have been exacerbated by weak revenue
growth since emerging from bankruptcy protection, due to a number of factors
including the weak economy generally and the weak telecommunications and
wireless sector specifically, the financial difficulty of several of its key
resellers, on whom it relies for a majority of its new revenue growth, and its
continued limited liquidity which has hindered efforts at demand generation.

F-8

Management and Board Changes

On January 17, 2003, David Engvall resigned as senior vice president, general
counsel and secretary.

On March 18, 2003, Brandon Stranzl resigned from the Board of Directors.

On April 17, 2003, the board of directors elected Christopher W. Downie to the
position of Vice President, Chief Financial Officer and Treasurer. Mr. Downie
had previously been a consultant with CTA, working on Motient matters, since May
2002.

On June 20, 2003, Jared Abbruzzese resigned his position as Chairman of the
Board. Steven Singer was elected Chairman of the Board and a new director, Peter
Aquino, was elected to the Board. Mr. Aquino is a senior managing director for
CTA.

For additional information on management and board changes for periods after
this report, please see Note 16, "Subsequent Events".

Change in Accountants

On May 31, 2002, the Company dismissed Arthur Anderson as its independent
auditors. On July 10, 2002, the Company engaged PricewaterhouseCoopers as its
independent auditors.

On April 17, 2003, the Company dismissed PricewaterhouseCoopers as its
independent auditors, effective upon the completion of services related to the
audit of the Company's consolidated financial statements for the period May 1,
2002 to December 31, 2002. On March 2, 2004, Motient dismissed
PricewaterhouseCoopers as its independent auditors effective immediately. The
audit committee of the Company's board approved the dismissal.

On April 25, 2003, the Company's Board approved the engagement of Ehrenkrantz
Sterling & Co. LLC as its independent registered public accounting firm to (i)
re-audit the Company's consolidated financial statements for the fiscal year
ended December 31, 2000 and the fiscal year ended December 31, 2001, and (ii)
audit the Company's consolidated financial statements for the interim period
from January 1, 2002 to April 30, 2002, and the fiscal year that ended on
December 31, 2003.

For additional information on changes in accountants for periods after this
report, please see Note 16, ("Subsequent Events").

Cost Reduction Actions

Predecessor Company reductions in workforce. On September 26, 2001, the Company
announced a plan to restructure its business. As part of this restructuring, the

F-9

Company laid off 25% of its workforce, or 50, 22 and 13 employees in the
Company's operations, sales and marketing and general and administrative
functions, respectively, and cancelled certain of its product initiatives. The
Company recorded a restructuring charge in 2001 of $4.74 million. This charge
represents $1.6 million of costs directly associated with employee severance
packages, $3.0 million of costs associated with product initiative cancellations
and $0.1 million of costs associated with capital assets that were no longer in
service. Of the $4.7 million charge, approximately $1.7 million represented cash
outlays made over the last quarter of 2001 and the first quarter of 2002. The
balance represents the write down of assets previously acquired. As of December
31, 2001, the Company had a remaining operational restructuring liability of
approximately $0.6 million, which was fully utilized in 2002.

Successor Company Reductions in Workforce. The Company undertook reductions in
its workforce in July 2002, September 2002, March 2003 and February 2004. These
actions eliminated approximately 29% (95 employees), 13% (26 employees), 10% (19
employees) and 32.5% (54 employees), respectively, of its then-remaining
workforce. In the aggregate, the Company has reduced its work force by
approximately 68% since July 2002 and reduced employee and related expenditures
by approximately $1.5 million per month.

Network Rationalization. The Company is in the process of analyzing its wireless
data network in a coordinated effort to reduce network operating costs. One
aspect of this rationalization encompasses reducing unneeded capacity across the
network by deconstructing under-utilized and unprofitable base stations. In
certain instances, the geographic area that the network serves may be reduced by
this process. The full extent of the changes to network coverage have yet to be
determined.

Closure of Reston, VA Facility. On July 15, 2003, the Company substantially
completed the transfer of its headquarters from Reston, VA to Lincolnshire, IL,
where it already had a facility. This action reduced the Company's monthly
operating expenses by a net amount of approximately $65,000 per month, or
$780,000 per year.

Refinancing of Vendor Obligations. During the fourth quarter of 2002 and the
first quarter of 2003, the Company renegotiated several of its key vendor and
customer arrangements in order to reduce recurring expenses and improve its
liquidity position. In some cases, the Company was able to negotiate a flat rate
reduction for continuing services provided to it by its vendors or a deferral of
payable amounts, and in other cases the Company renegotiated the scope of
services provided in exchange for reduced rates or received pre-payments for
future services. The Company continues to aggressively pursue further vendor
cost reductions where opportunities arise.

In the case of financing arrangements, the Company negotiated, among other
things, a deferral of approximately $2.6 million of accounts payable that was
owed for services provided for which the Company issued a promissory note for
such amount, with the note to be paid off ratably over a two-year period
beginning in January 2004. The Company also restructured certain of its vendor
and capital lease obligations to significantly reduce the monthly amortization
requirements of these facilities on an on-going basis. As part of such
negotiations, the Company agreed to fund a letter of credit in twelve monthly
installments during 2003, in the aggregate amount of $1.125 million, to secure
certain payment obligations. This letter of credit will be released to Motient

F-10

in fifteen monthly installments beginning in July 2004, assuming no defaults
have occurred or are occurring. In March, 2004, Motient further restructured its
vendor financing facility and an outstanding promissory note to the same vendor
by extending the repayment schedule, thereby reducing the combined monthly
amortization requirements under these facilities. In June 2004, the Company
negotiated settlements of its vendor financing obligations, promissory notes and
capital lease and terminated these obligations and leases. Please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations"--Liquidity and Capital Resources - Summary of Liquidity and
Financing" for further details on these facilities. For more information on
these events, please see Note 16, ("Subsequent Events").

UPS Revenue

On December 1, 2002, Motient entered into a letter agreement with UPS under
which UPS agreed to make a series of eight prepayments to Motient totaling $5
million for future services Motient is obligated to provide after January 1,
2004. In addition to any other rights it has under its network services
agreement with Motient, the letter agreement does not contain any minimum
purchase requirement and provides that UPS may terminate the network services
agreement, in whole or in part, by providing 30 days' notice to Motient at which
point any remaining prepayment would be required to be returned. As of July 31,
2003, all eight prepayments had been made. The $5 million prepayment is credited
against airtime services provided to UPS beginning January 1, 2004, until the
prepayment is fully credited.

UPS, the Company's largest customer as of December 31, 2002, has substantially
completed its migration to next generation network technology as of July 2003,
and its monthly airtime usage of the Company's network has declined
significantly in the last six months of 2003. UPS was our second largest
customer for the twelve months ended December 31, 2003 and our eighth largest
customer for the three months ended December 31, 2003. While the Company expects
that UPS will remain a customer for the foreseeable future, the bulk of UPS'
units have migrated to another network. As of December 31, 2003, UPS had
approximately 7,120 active units on Motient's network.

Until June 2003, UPS had voluntarily maintained its historical level of payments
to mitigate the near-term revenue and cash flow impact of its recent and
anticipated continued reduced network usage. However, beginning in July 2003,
the revenues and cash flow from UPS declined significantly. Also, due to the
arrangement entered into in 2002 under which UPS prepaid for network airtime to
be used by it in 2004, the Company does not expect that UPS will be required to
make any cash payments to the Company in 2004 for service to be provided in
2004. Pursuant to such agreement, and, as of May 31, 2004, UPS has not been
required to make any cash payments to the Company in 2004, and the value of the
Company's remaining airtime service obligations to UPS in respect of the
prepayment was approximately $4.3 million. The Company is planning a number of
initiatives to offset the loss of revenue and cash flow from UPS, including the
following:

o further reductions in the Company's employee and network
infrastructure costs;

F-11

o actions to grow new revenue from the Company's carrier relationships
with Verizon Wireless and T-Mobile, under which the Company will be
selling voice and data services on such carrier's next generation
wireless networks as a master agent;

o actions to grow revenue from the Company's various telemetry
applications and initiatives; and

o enhancements to the Company's liquidity which are expected to involve
the sale of unneeded frequency assets, such as the sales of certain
Specialized Mobile Radio ("SMR") licenses to Nextel.

Despite these initiatives, Motient continues to be cash flow negative, and there
can be no assurances that we will ever be cash flow positive.

Liquidity and Financing Requirements

The Company's future financial performance will depend on its ability to
continue to reduce and manage operating expenses, as well as its ability to grow
revenue. The Company's future financial performance could be negatively affected
by unforeseen factors and unplanned expenses.

The Company expects to continue to require significant additional funds before
it begins to generate cash in excess of its operating expenses, and does not
expect to generate cash from operations in excess of its operating costs until
the second quarter of 2005, at the earliest. Also, even if the Company begins to
generate cash in excess of its operating expenses, it expects to continue to
require significant additional funds to meet remaining interest obligations,
capital expenditures and other non-operating cash expenses.

In March 2004, the Company amended its term credit facility. As of June 25,
2004, the Company had borrowed $6.8 million under this term credit facility, all
of which has been repaid and may not be reborrowed. The Company continues to
pursue all potential funding alternatives. Among the alternatives for raising
additional funds are the issuances of debt or equity securities, other
borrowings under secured or unsecured loan arrangements and sales of assets.
There can be no assurance that additional funds will be available to the Company
on acceptable terms or in a timely manner. In April 2004, the Company sold
4,215,910 shares of its common stock for aggregate consideration of $23.2
million in a private placement. In July 2004, the Company sold an additional
3,500,000 shares of its common stock for aggregate consideration of $30.0
million. For additional information on these events, please see Note 16
("Subsequent Events").

The Company's projected cash requirements are based on certain assumptions about
its business model and projected growth rate, including, specifically, assumed
rates of growth in subscriber activations and assumed rates of growth of service
revenue. While the Company believes these assumptions are reasonable, these
growth rates continue to be difficult to predict and there is no assurance that
the actual results that are experienced will meet the assumptions included in

F-12

the Company's business model and projections. If the future results of
operations are significantly less favorable than currently anticipated, the
Company's cash requirements will be more than projected, and it may require
additional financing in amounts that will be material. The type, timing and
terms of financing that the Company obtains will be dependent upon its cash
needs, the availability of financing sources and the prevailing conditions in
the financial markets. The Company cannot guarantee that additional financing
sources will be available at any given time or available on favorable terms.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

On a consolidated basis, we refer to Motient Corporation and its six
wholly-owned subsidiaries as "Motient." All intercompany transactions have been
eliminated in consolidation.

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

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

Motient's Chapter 11 Filing and Plan of Reorganization and "Fresh-Start"
Accounting

On October 1, 2001, the Company announced that it would not make a $20.5 million
semi-annual interest payment due on the Senior Notes on such date. On November
26, 2001, the Senior Notes trustee declared all amounts owed under the senior
notes immediately due and payable. Following these events, the Company
determined that the continued viability of its business required restructuring
its highly leveraged capital structure. In October 2001, the Company retained
Credit Suisse First Boston ("CSFB") as its financial advisor to assist in the
restructuring the Company's debt. Shortly thereafter, the Company and CSFB began
meeting with the principal creditor constituencies.

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

F-13

Reorganization was confirmed on April 26, 2002 and the Company's emergence from
bankruptcy became effective on May 1, 2002 (the "Effective Date"). The Company
adopted "fresh-start" accounting as of May 1, 2002 in accordance with procedures
specified by AICPA Statement of Position ("SOP") No. 90-7, "Financial Reporting
by Entities in Reorganization under the Bankruptcy Code." The Company determined
that its selection of May 1, 2002 versus April 26, 2002 for the "fresh-start"
date was more convenient for financial reporting purposes and that the results
for the period from April 26, 2002 to May 1, 2002 were immaterial to the
consolidated financial statements. All results for periods prior to the
Effective Date are referred to as those of the "Predecessor Company" and all
results for periods including and subsequent to the Effective Date are referred
to as those of the "Successor Company".

In accordance with SOP No. 90-7, the reorganized value of the Company was
allocated to the Company's assets based on procedures specified by SFAS No. 141,
"Business Combinations". Each liability existing at the plan confirmation date,
other than deferred taxes, was stated at the present value of the amounts to be
paid at appropriate market rates. It was determined that the Company's
reorganization value computed immediately before the Effective Date was $234
million. Subsequent to the determination of this value, the Company determined
that the reorganization value ascribed to MSV did not reflect certain preference
rights on liquidation available to certain equity holders in MSV. Therefore, the
reorganization value of MSV was reduced by $13 million and the Company's
reorganization value was reduced to $221 million. The Company adopted
"fresh-start" accounting because holders of existing voting shares immediately
before filing and confirmation of the plan received less than 50% of the voting
shares of the emerging entity and its reorganization value is less than its
postpetition liabilities and allowed claims, as shown below:

Postpetition current liabilities $49.9 million
Liabilities deferred pursuant to Chapter 11 Proceedings 401.1 million
-------------
Total postpetition liabilities and allowed claims 451.0 million
Reorganization value (221.0 million)
----------------
Excess of liabilities over reorganization value $(230.0 million)
================

The reorganization value of Motient was determined by considering of several
factors and by reliance on various valuation methods. For the valuation of the
core wireless business, consideration was given to discounted cash flows and
price/earnings and other applicable ratios, a liquidation value analysis,
comparable company trading multiples and comparable acquisition multiple
analysis. The factors considered by Motient included the following:

o Forecasted operating cash flow results which gave effect to the
estimated impact of limitations on the use of available net operating
loss carryovers and other tax attributes resulting from the Plan of
Reorganization and other events,
o The discounted residual value at the end of the forecast period based
on the capitalized cash flows for the last year of that period,
o Market share and position,
o Competition and general economic considerations,

F-14

o Projected sales growth, and
o Working capital requirements.

For the valuation of the Company's investment in MSV, consideration was given to
the valuation of MSV's equity reflected by recent arms-length investments in
MSV, subsequently adjusted as discussed above.

After consideration of the Company's debt capacity, and after extensive
negotiations among parties in interest, it was agreed that Motient's
reorganization capital structure should be as follows:

Notes payable to Rare Medium and CSFB $19.8 million
Shareholders' Equity 201.2 million
-------------
$221.0 million
==============

The Company allocated the $221.0 million reorganization value among its net
assets based upon its current estimates of the fair value of its assets. In the
case of current assets, with the exception of inventory, the Company concluded
that their carrying values approximated fair values. The values of the Company's
frequencies and its investment in and note receivable from MSV were based on
independent analyses presented to the bankruptcy court and subsequently adjusted
as discussed above. The value of the Company's fixed assets was based upon a
valuation of the Company's software and estimates of replacement cost for
network and other equipment, for which the Company believes that its recent
purchases represent a valid data point. The value of the Company's other
intangible assets was based on third party valuations as of May 1, 2002.

In February 2003, the Company engaged a financial advisory firm to prepare a
valuation of software and customer intangibles. Software and customer
intangibles were not taken into consideration when the original fresh-start
balance sheet was determined at May 1, 2002. The changes for the software and
customer contracts are reflected below and in the financial statements and notes
herein.

The effect of the plan of reorganization and application of "fresh-start"
accounting on the Predecessor Company's balance sheet as of April 30, 2002, is
as follows:

F-15

Debt
Preconfirmation Discharge Reorganized
Predecessor and Exchange Fresh Start Successor
(in thousands) Company(j) of Stock Adjustments Company
---------- -------- ----------- -------

Assets:
Current assets
Cash $17,463 $17,463
Receivables 10,121 10,121
Inventory 8,194 (4,352) 3,842
Deferred equipment costs 11,766 (11,766) (e) --
Other current assets 11,443 11,443
------ ------ ------
Total current assets 58,987 (16,118) 42,869
Property and equipment 58,031 (1,553) (i) 56,478
FCC Licenses and other intangibles 45,610 56,866 (f)(i) 102,476
Goodwill 4,981 (4,981) (i) --
Investment in and notes receivable from MSV 27,262 26,593 (f) 53,855
Other long-term assets 2,864 (1,141) (e) 1,723
----- ------- -----
Total Assets $197,735 $59,666 $257,401
======== ======= ========

Liabilities & Stockholders' (Deficit) Equity
Liabilities Not Subject to Compromise:
Current liabilities:
Current maturities of capital leases $4,096 $4,096
Accounts payable - trade 1,625 1,625
Vendor financing 655 655
Accrued expenses 15,727 15,727
Deferred revenue 23,284 (18,913) (g)(e) 4,371
------ -------- ------
45,387 (18,913) 26,474
Long term liabilities:
Vendor financing 2,661 2,661
Capital lease obligation 3,579 3,579
Deferred revenue 19,931 (16,136) (e)(g) 3,795

Liabilities Subject to Compromise:
Prepetition liabilities 8,785 (8,785) (a) --
Senior note, including accrued interest thereon 367,673 (367,673) (b) --
Rare Medium Note, including accrued interest thereon 27,030 (27,030) (c) --
------ ------- -------- ----------
403,488 (403,488) --
Rare Medium and CSFB Notes -- 19,750 (a)(c) 19,750
---------- ------ -------- ------

Total liabilities 475,046 (383,738) (35,049) 56,259

Stockholders' (deficit) equity:
Common stock - old 584 (584) (h) --
Common stock - new 251 (d) 251
Additional paid-in capital 988,531 (988,531)
197,814 (d)(h) 197,814
Common stock purchase
warrants - old 93,730 (93,730) (h)
Common stock purchase
warrants - new 3,077 (d) 3,077
Deferred stock compensation (336) 336 (h) --
Retained (deficit) earnings (1,359,820) 1,359,820 94,715 --
----------- (183,725) ------ ----------
(94,715) (d)(h)
183,725 (h)

Stockholders' Equity (Deficit) (277,311) 383,738 94,715 201,142
--------- ------- ------ -------
Total Liabilities & Stockholders' Equity (Deficit) $197,735 $ -- $59,666 $257,401
======== ========= ======= ========

F-16

a) Represents the cancellation of the following liabilities:

i. Amounts due to Boeing $1,533
ii. Amounts due to CSFB 2,000
iii. Amounts due to JP Morgan Chase 1,550
iv. Amounts due to Evercore Partners LP ("Evercore") 1,948
v. Amounts due to the FCC 1,003
vi. Other amounts 751
------
$8,785
Liabilities were cancelled in exchange for the following:

a. 97,256 shares of new Motient common stock,
b. a note to CSFB in the amount of $750 and
c. a warrant to Evercore Partners to purchase 343,450 shares of new
Motient common stock, and
d. a note to Rare Medium in the amount of $19,000.
(b) Represents the cancellation of the senior notes in the amount of $367,673,
including interest threron, in exchange for 25,000,000 shares of new
Motient common stock. Certain of the Company's other creditors received an
aggregate of 97,256 shares of the Company's common stock in settlement for
amounts owed to them.
(c) Represents the cancellation of $27,030 of notes due to Rare Medium,
including accrued interest thereon, in exchange for a new note in the
amount of $19,000. The Company also issued CSFB a note in the principal
amount of $750 for certain investment banking services.
(d) Represents the issuance of the following:
i. 25,097,256 shares of new Motient common stock.
ii. warrants to the holders of pre-reorganization common stock
to purchase an aggregate of approximately 1,496,512 shares
of common stock, with such warrants being valued at
approximately $1,100.
iii. a warrant to purchase up to 343,450 shares of common stock
to Evercore, valued at approximately $1,900. The retained
earnings adjustment includes the gain on the discharge of
debt of $183,725.
(e) Represents the write off of deferred equipment costs of $12,907 and
deferred equipment revenue of $12,907 since there is no obligation to
provide future service post "fresh-start".
(f) To reflect the step-up in assets in accordance with the reorganization
value and valuations performed.
(g) Represents the write off of the deferred gain associated with the Company's
sale of its satellite assets to MSV in November 2001 and the write-off of
the unamortized balance of the $15,000 perpetual license sold to Aether in
November 2000, both of which total approximately $22,142, since there is no
obligation to provide future service post-"fresh-start".
(h) To record the cancellation of the Company's pre-reorganization equity and
to reverse the gain on extinguishment of debt of $183,725 and the gain on
fair market adjustment of $94,715.
(i) To record the valuation and resulting increase of customer intangibles of
approximately $11,501 and frequencies of $45,365. The reduction of $4,981
is due to a write-off of goodwill. The reduction of property and equipment
relates to a subsequent reduction in the carrying value of certain software
from $4,942 to $3,389 and the reduction to inventory from $8,194 to $3,842
to its net realizable value.
(j) The balances do not match the balances in the Company's Plan of
Reorganization due to subsequent audit adjustments.

Under the Plan of Reorganization, all then-outstanding shares of the Company's
pre-reorganization common stock and all unexercised options and warrants to
purchase the Company's pre-reorganization common stock were cancelled. The
holders of $335 million in senior notes exchanged their notes for 25,000,000
shares of the Company's new common stock. Certain of the Company's other
creditors received an aggregate of 97,256 shares of the Company's new common
stock in settlement for amounts owed to them. These shares were issued following
completion of the bankruptcy claims process; however, the value of these shares
has been recorded in the financial statements as if they had been issued on the
effective date of the reorganization. Holders of the Company's
pre-reorganization common stock received warrants to purchase an aggregate of
approximately 1,496,512 shares of common stock. The warrants expired May 1,
2004, or two years after the Effective Date. The warrants were exerciseable to
purchase shares of Motient common stock at a price of $.01 per share only if and

F-17

when the average closing price of Motient's common stock over a period of ninety
consecutive trading days was equal to or greater than $15.44 per share.
Motient's common stock did not trade at this level from May 1, 2002 to May 1,
2004. All warrants issued to the holders of the Company's pre-reorganization
common stock, including those shares held by the Company's 401(k) savings plan,
have been recorded in the financial statements as if they had been issued on the
effective date of the reorganization. Also, in July 2002, Motient issued to
Evercore, financial advisor to the creditors' committee in Motient's
reorganization, a warrant to purchase up to 343,450 shares of common stock, at
an exercise price of $3.95 per share. The warrant was dated May 1, 2002, and has
a term of five years. If the average closing price of Motient's common stock for
thirty consecutive trading days is equal to or greater than $20.00, Motient may
require Evercore to exercise the warrant, provided the common stock is then
trading in an established public market. The value of this warrant has been
recorded in the financial statements as if it had been issued on May 1, 2002.

Cash (used) provided by reorganization items were as follows:

Predecessor
Successor Company Company
----------------- -------
Eight Months Four Months
Year Ended Ended Ended
December 31, December 31, April 30,
2003 2002 2002
---- ---- ----

(in thousands)

Professional Fees $-- $(3,434) $(5,892)
Interest Income -- -- 145
-------- -------- -------
$-- $(3,434) $(5,747)
======== ======== =======

Further details regarding the plan are contained in Motient's Disclosure
Statement with respect to the plan, which was filed as Exhibit 99.2 to the
Company's current report on Form 8-K dated March 4, 2002.

Accounting Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles ("GAAP") requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The Company's most significant estimates relate to the valuation of
its net assets and assets in "fresh-start" accounting, the valuation on its
investment in MSV, the valuation of inventory, the allowance for doubtful
accounts receivable, the valuation of deferred tax assets and the realizability
of long-lived assets.

F-18

Cash Equivalents

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

Short-term Investments

The Company considers highly liquid investments with original or remaining
maturities at the time of purchase of between three months and a year to be
short-term investments.

Restricted Investments

At December 31, 2003, the Company had $1.6 million of restricted investments. At
December 31, 2002, the Company had $0.6 million of restricted investments. The
securities included in restricted investments were classified as
held-to-maturity under the provision of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". The Company classified restricted
investment amounts which would mature within one year as current assets in the
accompanying balance sheet. The Company accounted for these investments at their
amortized cost.

Inventory

Inventory, which consists primarily of communication devices and accessories,
such as power supplies and documentation kits, is stated at the lower of cost or
market. Cost is determined using the weighted average cost method. The Company
periodically assesses the market value of its inventory, based on sales trends
and forecasts and technological changes and records a charge to current period
income when such factors indicate that a reduction to net realizable value is
appropriate. The Company considers both inventory on hand and inventory which it
has committed to purchase, if any. The Company recorded inventory write-downs to
cost of equipment sold to reduce inventory amounts to its net realizable value,
in the amount of $0.2 million in 2003 and $4.4 million in 2002.

Other Current Assets

Other current assets consist of the following:

Successor Company
-------------------------------

December 31,
2003 2002
---- ----
(in thousands)

Prepaid site rent $3,416 $4,175
Prepaid maintenance 271 289
Prepaid expenses - other 806 1,802
Deposits 10 55
Non-trade receivables and other 588 475
--- ---
$5,091 $6,796
====== ======

F-19

Fair Value of Financial Instruments

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires
disclosures of the fair value of certain financial instruments. The carrying
amount for cash and cash equivalents, short-term investments, accounts
receivable, non-trade receivables included in other assets, accounts payable and
accrued expenses, and deferred revenues approximates their fair values. For debt
issues that are not quoted on an exchange, interest rates currently available to
the Company for issuance of debt with similar terms and remaining maturities are
used to estimate fair value. The fair value of the Company's equity investment
in MSV was determined by an independent third-party valuation performed in
November 2003 as part of Company's preparation of its December 31, 2002
financial statements. This same valuation methodology was utilized to value the
Company's equity interest in MSV as of December 31, 2003. The fair value of the
notes receivable from MSV approximates its carrying value as of December 31,
2003.

As of December 31, 2003 As of December 31, 2002
Successor Company Successor Company
Carrying Carrying
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------

(in thousands)
Assets:
Restricted investments $1,595 $1,595 $604 $604
Investment in and notes receivable from MSV 22,610 31,294 32,493 32,493

Liabilities:
Rare Medium Note $22,016 $22,016 $20,148 $20,148
CSFB Note 869 869 795 795
Term Credit Facility 4,914 4,914 -- --
Vendor financing commitment 4,814 4,814 6,096 6,096
Capital leases $3,096 $3,096 $6,250 $6,250

Concentrations of Credit Risk and Major Customers

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

F-20

Motient's rights to use and sell the BlackBerryTM software and RIM's handheld
devices may be limited or made prohibitively expensive as a result of a patent
infringement lawsuit brought against RIM by NTP Inc. As a purchaser of those
products, Motient could be adversely affected by the outcome of that litigation.
Please see Note 14, "Legal and Regulatory Matters"

For the year ended December 31, 2003, five customers accounted for approximately
47% of the Company's service revenue, with two of those customers, SkyTel and
UPS, each accounting for more than 11% of the Company's service revenue. As of
December 31, 2003, no single customer accounted for more than 6% of the
Company's net accounts receivable.

For the four months ended April 30, 2002 and the eight months ended December 31,
2002, SkyTel and UPS accounted for approximately 11% and 16%, respectively, and
15% and 18%, respectively of the Company's service revenue. As of December 31,
2002, SkyTel represented approximately 14% of the Company's net receivables, all
of which was current.

For the year ended December 31, 2001, revenue from the MSV research and
development efforts accounted for approximately 9% of the Company's service
revenue. Excluding revenue earned from MSV, six other customers accounted for
approximately 41% of the Company's service revenue, with one customer
individually accounting for more than 10% of such revenue.

The revenue attributable to such customers varies with the level of network
airtime usage consumed by such customers, and none of the service contracts with
such customers requires that the customers use any specified quantity of network
airtime, nor do such contracts specify any minimum level of revenue. There can
be no assurance that the revenue generated from these customers will continue in
future periods.

Software Development Costs

During 1998, the Company adopted SOP No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." As of December 31,
2003 and 2002, net capitalized internal use software costs were $1.3 million and
$4.0 million, respectively, are included in property and equipment in the
accompanying consolidated balance sheets and are amortized over three years.

Deferred Charges and Other Assets

Deferred charges and other assets consist of the following:

Successor Company
-----------------
December 31,
2003 2002
---- ----
(in thousands)
Deferred equipment costs $709 $1,640
Term credit facility financing fees 7,367 --
Other long term assets -- 117
------ ------
$8,076 $1,757
====== ======

F-21

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

Deferred Revenue and other Current Liabilities

Deferred Revenue and other current liabilities consist of the following:

Successor Company
-----------------
December 31,
2003 2002
---- ----
(in thousands)

Deferred Revenue - UPS $4,678 $--
Deferred Revenue - Aether 3,447 1,947
Deferred Revenue - RIM 1,397 3,163
Deferred Registration fees 175 90
Deposits - other 693 10
Deferred Revenue - other 615 98
------- ------
$11,005 $5,308
======= =======

Other Long-Term Liabilities

Other long-term liabilities consist of the following:

Successor Company
-----------------

December 31,
2003 2002
---- ----
(in thousands)
Deferred revenue, Aether, RIM, MSV and other $622 $3,115
Deferred equipment revenue 725 1,709
------ ------
$1,347 $4,824
====== ======

Revenue Recognition

The Company generates revenue through equipment sales, airtime service
agreements and consulting services. In 2000, the Company adopted SAB No. 101,
which provides guidance on the recognition, presentation and disclosure of
revenue in financial statements. In certain circumstances, SAB No. 101 requires
the Company to defer the recognition of revenue and costs related to equipment
sold as part of a service agreement.

In December 2003, the Staff of the SEC issued SAB No. 104, "Revenue
Recognition", which supersedes SAB No. 101, "Revenue Recognition in Financial
Statements." SAB No. 104's primary purpose is to rescind accounting guidance
contained in SAB No. 101 related to multiple-element revenue arrangements and to
rescind the SEC's "Revenue Recognition in Financial Statements Frequently Asked
Questions and Answers" ("FAQ") issued with SAB No. 101. Selected portions of the
FAQ have been incorporated into SAB No. 104. The adoption of SAB No. 104 will
not have a material impact on the Company's revenue recognition policies.

Revenue is recognized as follows:

Service revenue: Revenues from the Company's wireless services are recognized
when the services are performed, evidence of an arrangement exists, the fee is
fixed and determinable and collectibility is probable. Service discounts and
incentives are recorded as a reduction of revenue when granted, or ratably over
a contract period. The Company defers any revenue and costs associated with
activation of a subscriber on the Company's network over an estimated customer
life of two years.

F-22

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

Equipment and service sales: The Company sells equipment to resellers who market
its terrestrial product and airtime service to the public. The Company also
sells its product directly to end-users. Revenue from the sale of the equipment,
as well as the cost of the equipment, are initially deferred and are recognized
over a period corresponding to the Company's estimate of customer life of two
years. Equipment costs are deferred only to the extent of deferred revenue.

As of December 31, 2003 and 2002, the Company had capitalized a total of $4.5
million and $4.4 million of deferred equipment revenue, respectively, and had
deferred equipment costs of $4.3 million and $4.4 million, respectively.

Advertising Costs

Advertising costs are charged to operations as incurred and totaled $6.6 million
in 2003, $4.3 million for the eight months ended December 31, 2002 and $2.5
million for the four months ended April 30, 2002 and $10.0 million in 2001. In
2001, a portion of the advertising costs associated with certain of the
Company's Internet promotions, were prepaid in the form of warrants to acquire
common stock issued by the Company, valued at $4.8 million. The warrants were
expensed as the associated page views were delivered. The Company recognized
advertising expense associated with the warrants issued for this Internet
promotion in the amount of $1.4 million in 2001. In September 2001, the Company
cancelled the Internet promotion, and the $2.9 million of remaining prepaid
advertising was written off.

Stock-Based Compensation

As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation", which
establishes a fair value based method of accounting for stock-based compensation
plans, the Company has elected to follow Accounting Principles Board Opinion
No.25 "Accounting for Stock Issued to Employees" for recognizing stock-based
compensation expense for financial statement purposes. For companies that choose
to continue applying the intrinsic value method, SFAS No. 123 mandates certain

F-23

pro forma disclosures as if the fair value method had been utilized. The Company
accounts for stock based compensation to consultants in accordance with EITF
96-18, "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services" and
SFAS No. 123.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement
No.123", which provides optional transition guidance for those companies
electing to voluntarily adopt the accounting provisions of SFAS No. 123. In
addition, SFAS No. 148 mandates certain new disclosures that are incremental to
those required by SFAS No. 123. The Company continued to account for stock-based
compensation in accordance with APB No. 25.

The following table illustrates the effect on income (loss) attributable to
common stockholders and earnings (loss) per share if the Company had applied the
fair value recognition provisions of SFAS No. 123 to stock-based employee
compensation.

Predecessor
Successor Company Company
----------------- -------

Twelve Months Eight Months Four Months
Ended Ended Ended
December 31, December 31, April 30,
2003 2002 2002
---- ---- ----

Net loss, as reported $(62,122) $(59,558) $231,978
Add: Stock-based employee compensation expense
included in net income, net of related tax effects 603 --- ---
Deduct: Total stock-based employee compensation
expense determined under fair value based method for
all awards, net of tax related effects (2,488) (567) (57)
-------- -------- --------
Pro forma net loss $(64,007) $(60,125) $231,921

Weighted average common shares outstanding 25,145 25,097 58,251
Earnings per share:
Basic and diluted---as reported $(2.47) $(2.37) $3.98
Basic and diluted---pro-forma $(2.55) $(2.40) $3.98

Under SFAS No. 123 the fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions:

F-24

Predecessor
Successor Company Company
----------------- -------

Twelve Months Eight Months Four Months
Ended Ended Ended
December 31, December 31, April 30,
2003 2002 2002
---- ---- ----
Expected life (in years) 10 10 10
Risk-free interest rate 0.88%-0.93% 1.71% 1.71%
Volatility 148%-162% 173% 197%
Dividend yield 0.0% 0.0% 0.0%

Options to purchase 1,631,025 shares and 1,757,513 shares of the Company's
common stock were outstanding at December 31, 2002 and 2003, respectively, under
the Company's 2002 Stock Option Plan. Options to purchase 2,683,626 shares of
the Predecessor Company's stock were outstanding at April 30, 2002. These
options were cancelled as part of the Company's reorganization.

In March 2003, the Company's board of directors approved the reduction in the
exercise price of all of the outstanding stock options from $5.00 per share to
$3.00 per share. The repricing requires that all options be accounted for in
accordance with variable plan accounting, under which the value of these options
are measured at their intrinsic value and any change in that value is charged to
the income statement each quarter based on the difference (if any) between the
intrinsic value and the then-current market value of the common stock. The other
options are accounted for as a fixed plan and in accordance with intrinsic value
accounting, which requires that the excess of the market price of stock over the
exercise price of the options, if any, at the time that both the exercise price
and the number of options are known be recorded as deferred compensation and
amortized over the option vesting period. For the three and twelve months ended
December 31, 2003, the Company recorded a mark-to-market adjustment of $(0.6)
million and $0.6 million respectively relating to these re-priced options.

In July 2003, the compensation and stock option committee of the Company's board
of directors, acting pursuant to the Company's 2002 stock option plan, granted
26 employees and officers options to purchase an aggregate of 470,000 shares of
the Company's common stock at a price of $5.15 per share. In September 2003, one
additional employee received a grant for 25,000 shares of the Company's common
stock at a price of $5.65 per share. One-half of each option grant vests with
the passage of time and the continued employment of the recipient, in three
equal increments, on the first, second and third anniversary of the date of
grant. The other half of each grant will either vest or be rescinded based on
the performance of the Company in 2004. If vested and not exercised, the options
will expire on the 10th anniversary of the date of grant.

F-25

Assessment of Asset Impairment

The Company follows the provisions of SFAS No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
which requires that long-lived assets and certain identifiable intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future undiscounted net cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are reported at
the lower of the carrying amount or their fair value less costs to sell. On
January 1, 2002, the Company also adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", which supercedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of". The statement requires that all long-lived assets be measured at
the lower of carrying amount or fair value less cost to sell, whether reported
in continuing operations or in discontinued operations. Therefore, discontinued
operations will no longer be measured on a net realizable value basis and will
not include amounts for future operating losses. The statement also broadens the
reporting requirements for discontinued operations to include disposal
transactions of all components of an entity (rather than segments of a
business). Components of an entity include operations and cash flows that can be
clearly distinguished from the rest of the entity that will be eliminated from
the ongoing operations of the entity in a disposal transaction. Subsequent to
the period covered by this report, we engaged a financial advisor to value
certain of our assets as of December 31, 2002, among other things, to test for
potential impairment of certain of our long-lived assets under SFAS No. 144.
This testing included valuations of software and customer-related intangibles.
Based on these tests, no recording of impairment charges was required. However,
we subsequently engaged this financial advisor to reevaluate the value of our
customer-related intangibles as of September 30, 2003 due primarily to the
decline in revenue from UPS in this time period. This valuation resulted in an
impairment of the customer-related intangibles of $5.5 million in the third
quarter of 2003. The adoption of SFAS No. 144 had no other material impact on
our financial statements.

Deferred Taxes

The Company accounts for income taxes under the liability method as required in
SFAS No. 109, "Accounting for Income Taxes". Under the liability method,
deferred income taxes are recognized for the tax consequences of "temporary
differences" by applying enacted statutory tax laws and rates applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities. Under this method, the effect
on deferred taxes of a change in tax rates is recognized in income in the period
that includes the enactment date. A valuation reserve is established for
deferred tax assets if the realization of such benefits cannot be sufficiently
assured.

Property and Equipment

Property and equipment are recorded at cost for the Predecessor Company and
adjusted for impairment, and includes "fresh-start" adjustments for the

F-26

Successor Company and depreciated over their useful life using the straight-line
method. All identifiable assets recognized in accordance with "fresh-start"
accounting were recorded at the effective date based upon independent appraisal.
Assets recorded as capital leases are amortized over the shorter of their useful
lives or the term of the lease. The estimated useful lives of office furniture
and equipment vary from two to ten years, and the network equipment is
depreciated over seven years. The Company has also capitalized certain costs to
develop and implement its computerized billing system. These costs are included
in property and equipment and are depreciated over three years. Repairs and
maintenance do not significantly increase the utility or useful life of an asset
and are expensed as incurred.

Segment Disclosures

In accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information", the Company has one operating segment: its core
wireless business. Since January 1, 2001, the Company had one operating segment:
its core wireless business. The Company provides its core wireless business to
the continental United States, Alaska, Hawaii and Puerto Rico. The following
summarizes the Company's core wireless business revenue by major market
categories:

Predecessor Predecessor
Successor Company Company Company
----------------- ------- -------
Eight Months Four Months (Restated)
Year Ended Ended Ended Year Ended
December 31, December 31, April 30, December 31,
2003 2002 2002 2001
---- ---- ---- ----

Summary of Revenue
- ------------------
(in millions)
Wireless Internet $27.8 $15.5 $5.6 $11.4
Field Services 9.9 10.5 5.6 19.4
Transportation 7.9 7.4 4.1 15.9
Telemetry 2.3 1.8 0.8 2.6
All and other 1.4 0.3 0.7 18.8
--- --- --- ----
Service Revenue 49.3 35.5 16.8 68.1
Equipment Revenue 5.2 1.1 5.6 22.2
--- --- --- ----
Total $54.5 $36.6 $22.4 $90.3
===== ===== ===== =====

The Company does not measure ultimate income or loss or track its assets by
these market categories.

(Loss) Per Share

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

Options and warrants to purchase shares of common stock were not included in the
computation of loss per share as the effect would be antidilutive for the years
ended December 31, 2003 and 2001 and for the four and eight months ended April
30, 2002 and December 31, 2002, respectively. As a result, the basic and diluted

F-27

earnings per share amounts for all periods presented are the same. As of
December 31, 2003, there were warrants to acquire approximately 5,664,962 shares
of common stock and 1,757,513 options outstanding that were not included in this
calculation because of their antidilutive effect. As of December 31, 2002, there
were warrants to acquire approximately 2,339,962 shares of common stock and
1,631,025 options outstanding that were not included in this calculation because
of their antidilutive effect. For the four months ended April 30, 2002, no
options or warrants had exercise prices in excess of the fair market value of
the Company's common stock and thus were not factored into the per share
calculation. As of December 31, 2001 there were options outstanding for
approximately 393,353 shares of common stock that were not included in this
calculation because of their antidilutive effect.

Derivatives

In April and July 2001, the Company sold notes to Rare Medium totaling $50
million. The notes were collateralized by up to 5,000,000 of the Company's XM
Radio shares, and, until maturity, which was extended until October 12, 2001,
Rare Medium had the option to exchange the notes for a number of XM Radio shares
equivalent to the principal of the note plus any accrued interest thereon (see
Note 8, "Debt and Capital Leases"). The Company determined the embedded call
options in the notes, which permitted Rare Medium to convert the borrowings into
shares of XM Radio, were derivatives which were accounted for in accordance with
SFAS No. 133 and accordingly recorded a gain in the amount of $1.5 million in
2001 related to the Rare Medium note call options. On October 12, 2001, the
embedded call options in the Rare Medium notes expired unexercised. The Rare
Medium note was cancelled and replaced by a new Rare Medium note in the amount
of $19.0 million as part of the Company's reorganization.

In connection with the bank financing in March 1998, the Company entered into an
interest rate swap agreement, with an implied annual rate of 6.51%. The swap
agreement reduced the impact of interest rate increases on then-existing term
loan facility. The Company paid a fixed fee of approximately $17.9 million for
the swap agreement. In return, the counter-party was obligated to pay a variable
rate equal to LIBOR plus 50 basis points, paid on a quarterly basis directly to
the respective banks on behalf of the Company, on a notional amount of $100
million until the termination date of March 31, 2001. In connection with the pay
down of a portion of the term loan facility during 1999, the Company reduced the
notional amount of its swap agreement from $100 million to $41 million and

F-28

realized net proceeds of approximately $6 million due to early termination of a
portion of the swap agreement. The interest rate swap agreement expired in March
2001.

Investment in MSV and Notes Receivable from MSV

As a result of the application of "fresh-start" accounting, restatements and the
subsequent modifications described below, the notes and investment in MSV were
valued at fair value and the Company recorded an asset in the amount of
approximately $53.9 million representing the estimated fair value of our
investment in and note receivable from MSV. Included in this investment is the
historical cost basis of the Company's common equity ownership of approximately
48% as of May 1, 2002, or approximately $19.3 million. In accordance with the
equity method of accounting, we recorded our approximate 48% share of MSV losses
against this basis.

Approximately $6.2 million of the value attributed to the equity interest in MSV
is the excess of fair value over cost basis and is amortized over the estimated
lives of the underlying MSV assets that gave rise to the basis difference. The
Company is amortizing the excess basis in accordance with the pro-rata
allocation of various components of MSV's intangible assets as determined by MSV
through recent independent valuations. Such assets consist of FCC licenses,
intellectual property and customer contracts, which are being amortized over a
weighted-average life of approximately 12 years.

Additionally, Motient has recorded the $15.0 million note receivable from MSV,
plus accrued interest thereon at its fair value, estimated to be approximately
$13.0 million at "fresh start", after giving affect to discounted future cash
flows at market interest rates. This note matures in November 2006 and is
subject to certain conditions and priorities with respect to payment of other
indebtedness.

In November 2003, Motient engaged CTA to perform a valuation of its equity
interests in MSV as of December 31, 2002. Concurrent with CTA's valuation,
Motient reduced the book value of its equity interest in MSV from $53.9 million
(inclusive of Motient's $2.5 million convertible notes from MSV) to $40.9
million as of May 1, 2002 to reflect certain preference rights on liquidation of
certain classes of equity holders in MSV.

Also, as a result of CTA's valuation of MSV, Motient determined that the value
of its equity interest in MSV was impaired as of December 31, 2002. This
impairment was deemed to have occurred in the fourth quarter of 2002 and the
Company reduced the value of its equity interest in MSV by $15.4 million as of
December 31, 2002. It was determined that no further impairment was required as
of December 31, 2003.

The valuation of Motient's investment in MSV and its note receivable from MSV
are ongoing assessments that are, by their nature, judgmental given that MSV is
not traded on a public market and is in the process of developing certain next
generation technologies, which depend on approval by the FCC. There is the
inherent future risk that due to the uncertainties described above, Motient may
have to write down the value of this investment and note. For information
regarding recent developments involving MSV, please see Note 16 ("Subsequent
Events").

F-29

For the year ended December 31, 2003, MSV had revenues of $27.1 million,
operating expenses of $46.5 million and a net loss of $28 million. For the
eight-month period ended December 31, 2002, MSV had revenues of $19.1 million,
operating expenses of $17.5 million and a net loss of $15.7 million. For the
four-month period ended April 30, 2002, MSV had revenues of $9.1 million,
operating expenses of $9.3 million and a net loss of $9.2 million. For the year
ended December 31, 2003, the Company's equity in losses of MSV were $9.7
million. For the eight-month period ended December 31, 2002, the Company's
equity in losses of MSV were $6.9 million, and for the four-month period ended
April 30, 2002, the Company's equity in losses of MSV were $1.9 million. Results
for MSV for these periods and for the years ended December 31, 2003, 2002 and
2001 are outlined below.

Eight Months Four Months
Year Ended Ended Ended Year Ended
December 31, December 31, April 30, December 31,
2003 2002 2002 2001
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(in thousands)

Revenue $27,124 $19,145 $9,088 $2
Income (loss) from continuing operations (19,332) 1,599 (175) (16,156)
Net Loss (28,000) (15,698) (9,203) (16,525)

Current Assets 12,147 12,383 14,292 14,335
Non-current assets 120,140 131,912 142,081 148,328
Current liabilities 11,841 10,555 14,801 11,999
Non-current liabilities $133,272 $121,029 $101,348 $101,238

Recent Accounting Pronouncements

F-30

the provisions of this consensus for revenue arrangements entered into after
June 30, 2003, and the Company has decided to apply it on a prospective basis.
Motient did not have any revenue arrangements that would have a material impact
on its financial statements with respect to EITF No. 00-21.

In January 2003, the FASB issued FASB Interpretation No. 46 or FIN No. 46,
"Consolidation of Variable Interest Entities -- An Interpretation of ARB No.
51", which clarifies the application of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements", to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties. FIN No. 46
provides guidance related to identifying variable interest entities (previously
known generally as special purpose entities, or SPEs) and determining whether
such entities should be consolidated. FIN No. 46 must be applied immediately to
variable interest entities created or interests in variable interest entities
obtained after January 31, 2003. For those variable interest entities created or
interests in variable interest entities obtained on or before January 31, 2003,
the guidance in FIN No. 46 must be applied in the first fiscal year or interim
period beginning after June 15, 2003. The Company has reviewed the implications
that adoption of FIN No. 46 would have on its financial position and results of
operations and it did not have a material impact.

F-31

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity". This statement
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances) because that financial instrument embodies the characteristics of
an obligation of the issuer. This standard is effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June 15,
2003. The Company has determined that it does not have any financial instruments
that are impacted by SFAS No. 150.

Restatement of Financial Statements

Subsequent to the issuance of the Company's financial statements for the quarter
ended March 31, 2002 and year ended December 31, 2001, the Company became aware
that certain accounting involving the effects of several complex transactions
from these years, including the formation of and transactions with a joint
venture, MSV, in 2000 and 2001 and the sale of certain of our transportation
assets to Aether in 2000, required revision. These transactions were described
in more detail in Note 13 ("Business Acquisitions and Dispositions") of notes to
consolidated financial statements in each of Motient's annual reports on Form
10-K for the fiscal years ended December 31, 2000 and 2001. In addition, as a
result of the Company's re-audit of the years ended December 31, 2001 and 2000
performed by the Company's former independent accounting firm, Ehrenkrantz
Sterling & Co. LLC, certain accounting adjustments were proposed and accepted by
the Company. A description of these adjustments is provided below.

Summary of Adjustments to Prior Period Financial Statements with respect to MSV
and Aether Transactions

The following is a brief description of the material differences between our
original accounting treatment with respect to the MSV and Aether transactions
and the revised accounting treatment that Motient has concluded was appropriate
and has been reflected in the accompanying financial statements for the
respective periods.

Allocation of initial proceeds from MSV formation transactions in June 2000. In
the June 2000 transaction with MSV, Motient Services received $44 million from
MSV. This amount represented payments due under a research and development
agreement, a deposit on the purchase of certain of Motient's assets at a future
date, and payment for a right for certain of the investors in MSV to convert
their ownership in MSV into shares of common stock of Motient. Since the
combined fair value of the three components exceeded $44 million, based on
valuations of each component, Motient initially allocated the $44 million of
proceeds first to the fair value of the research and development agreement and
then the remaining value to the asset deposit and investor conversion option
based on their relative fair values. Upon review, Motient revised its intial
accounting treatment and allocated the $44 million of proceeds first to the
investor conversion option based on its fair value, and the remainder to the
research and development agreement and asset deposit based on their relative
fair values. The effect of this reallocation increased shareholders' equity at
the time of the initial recording by $12 million, as well as reduced subsequent
service revenue by $4 million in 2001, as a result of the lower recorded value
allocated to the research and development agreement. All remaining unamortized
balances were written off as part of the gain on the sale of the satellite
assets.

F-32

Recording of suspended losses associated with MSV in fourth quarter of 2001. In
November 2001, when the asset sale described in Note 13 was consummated, Motient
and MSV amended the asset purchase agreement, with Motient agreeing to take a
$15 million note as part of the consideration for the sale of the assets to MSV.
Additionally, at the time of this transaction, Motient purchased a $2.5 million
convertible note issued by MSV. As Motient had no prior basis in its investment
in MSV, Motient had not recorded any prior equity method losses associated with
its investment in MSV. When Motient agreed to take the $15 million note as
partial consideration for the assets sold to MSV, Motient recorded its share of
the MSV losses that had not been previously recognized by Motient ($17.5
million), having the effect of completely writing off the notes receivable in
2001.

Upon review, Motient determined that it should not have recorded any suspended
losses of MSV, since those losses should have been absorbed by certain of the
senior equity holders in MSV. As a result, Motient concluded that it should not
have written off its portion ($17.5 million) of the prior MSV losses against the
value of both notes in 2001.

Recording of increase in Motient's investment in MSV in November 2001. Also in
the November 2001 transaction, MSV acquired assets from another company, TMI, in
exchange for cash, a note and equity in MSV. Motient initially considered
whether or not a step-up in the value of its investment in MSV was appropriate
for the value allocated to TMI for its equity interest, and determined that a
step-up was not appropriate. Upon review, Motient determined that it should have
recognized a step-up in value of the MSV investment of $12.9 million under Staff
Accounting Bulletin No. 51, "Accounting for Sales of Stock of a Subsidiary"
("SAB 51"), with an offsetting gain recorded directly to shareholders' equity.

Recognition of gain on sale of assets to MSV in November 2001. Upon the
completion of the November 2001 transactions, Motient determined that 80% of its
gain from the sale of the assets should be deferred, since that was Motient's
equity ownership percentage in MSV at the time the assets were sold to MSV. Upon
review, Motient has determined that it was appropriate to apply Motient's
ownership percentage at the completion of all of the related transactions that
occurred on the same day as the asset sale transaction, since the transactions
were dependent upon one another and effectively closed simultaneously.
Accordingly, Motient should have deferred approximately 48% of the gain
(Motient's equity ownership percentage in MSV following the completion of such
transactions) as opposed to 80%. This change resulted in an increased gain on
the sale of MSV of $7.9 million in 2001.

Allocation of proceeds from the sale of the transportation business to Aether in
November 2000. Motient received approximately $45 million for the sale of its
retail transportation business assets and assumption of its liabilities to
Aether. This consisted of $30 million for the assets, of which $10 million was
held in an escrow account that was subsequently released in the fourth quarter
of 2001 upon the satisfaction of certain conditions, and $15 million for a

F-33

perpetual license to use and modify any intellectual property owned or licensed
by Motient in connection with the retail transportation business. In the fourth
quarter of 2000, Motient recognized a gain of $8.9 million, which represented
the difference between the net book value of the assets sold and the $20 million
cash portion of the purchase price for the assets received at closing. Motient
recognized an additional $8.3 million gain in the fourth quarter of 2001 when
the additional $10 million of proceeds were released from escrow. The $1.7
million difference between the proceeds received and the gain recognized is a
result of pricing modifications that were made at the time of the release of the
escrow plus certain compensation paid to former employees of the transportation
business as a result of certain performance criteria having been met.

Motient deferred the $15 million perpetual license payment, which was then
amortized into revenue over a five-year period, the estimated life of the
customer contracts sold to Aether at the time of the transaction. Upon review,
Motient determined that the $15 million in deferred revenue should be recognized
over a four year period, which represents the life of a network airtime
agreement that Motient entered into with Aether at the time of the closing of
the asset sale. The decrease in the amortization period resulted in increased
revenue of $63,000 and $750,000 in 2000 and 2001, respectively.

Recognition of costs associated with certain options granted to Motient
employees who were subsequently transferred to Aether upon consummation of the
sale of Motient's transportation business to Aether in November 2000. Motient
valued the vested options based on their fair value at the date of the
consummation of the asset sale and recorded that value against the gain on the
sale of the assets to Aether. Upon review, Motient has determined to value these
vested options as a repricing under the intrinsic value method, with any charge
recorded as an operating expense. In addition, for each subsequent quarter for
which the unvested options continued to vest, Motient had valued these options
on a fair value basis and recorded any adjustment in value as an operating
expense. Upon review, Motient has determined that any adjustments in value
should have been reflected as an increase or reduction of the gain on the sale
of the assets to Aether. The revised accounting resulted in an increase in
expenses of $1.0 million in 2001.

Recognition of difference between strike price and fair market value at
measurement date for options issued to ARDIS employees. Motient has restated its
consolidated financial statements to recognize compensation expense related to
the issuance of stock options with an exercise price below fair market value.
The revised accounting resulted in a decrease in net income and a corresponding
increase in additional paid in capital of $0.01 million for the year ended
December 31, 2001.

Recognition of adoption of SAB 101,"Revenue Recognition in Financial
Statements". Motient has restated its consolidated financial statements as of
January 1, 2000, based on guidance provided in Securities and Exchange
Commission Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements", as amended ("SAB101"). Motient's adoption of SAB101 resulted in a
change of accounting for certain product shipments and activation fees. The
cumulative effect of the change to retained earnings as of January 1, 2000 was
$4.6 million. The cumulative effect was recognized as income in 2001 as the
amounts were amortized into revenue and ultimately recognized as additional gain
on the sale of the Company's satellite, transportation and certain other assets.

F-34

Accrual of advertising expense in December 2000. Motient has restated its
consolidated financial statements in 2000 to recognize an additional $1.1
million in advertising expense previously recognized in 2001.

Recognition of costs associated with inventory write-downs. Motient has restated
its consolidated financial statements in 2000 to recognize an additional $1
million in Cost of Goods Sold for inventory write-downs previously recognized in
2001. In addition, Motient has restated its consolidated financial statements
for the three-months ended March 31, 2002 to recognize an additional $0.4
million in Cost of Goods Sold for inventory write-downs not previously recorded.

Summary of Impact of the Restatement

The revised accounting treatment described above required that certain
adjustments be made to the income statements and balance sheets for the years
ended December 31, 2001 and the quarter ended March 31, 2002. The effect of
these adjustments is illustrated in the table below. Certain of the adjustments
are based on assumptions that we have made about the fair value of certain
assets.

Quarter Ended Year Ended
March 31, December 31,
2002 2001
---- ----

(in thousands)
Statement of operations data
Net Revenue, as previously reported $ 16,495 $ 93,293
Adjustments 188 (3,028)
--------- ---------
As restated $ 16,683 $ 90,265
========= =========

Net Operating Loss, as previously reported $ (15,970) $ (94,996)
Adjustments 208 (2,227)
--------- ---------
As restated $ (15,762) $ (97,223)
========= =========

Net Loss, as previously reported $ (32,885) $(292,089)
Adjustments (2,544) 22,592
--------- ---------
As restated - inclusive of the cumulative
effect of $4,677 $ (35,429) $(269,497)
========= =========

Basic and Fully Diluted Loss Per Share of
Common Stock, as previously reported $ (0.56) $ (5.71)
Adjustments (0.05) 0.44
--------- ---------
As restated $ (0.61) $ (5.27)
========= =========

Balance sheet data
Total Assets, as previously reported $ 177,628 $ 209,617
Adjustments 27,654 30,848
--------- ---------
As restated $ 205,282 $ 240,465
========= =========

Total Liabilities, as previously reported $ 485,681 $ 485,086
Adjustments (14,122) (13,472)
--------- ---------
As restated $ 471,559 $ 471,614
========= =========

Stockholders' Equity, as previously
reported $(308,053) $(275,469)
Adjustments 41,776 44,320
--------- ---------
As restated $(266,277) $(231,149)
========= =========

Total Liabilities & Stockholders' Equity,
as previously reported $ 177,628 $ 209,617
Adjustments 27,654 30,848
--------- ---------
As restated $ 205,282 $ 240,465
========= =========

F-35

3. STOCKHOLDERS' (DEFICIT) EQUITY

As of December 31, 2003 and 2002, the Company has authorized 5,000,000 shares of
preferred stock and 100,000,000 shares of common stock. For each share of common
stock held, common stockholders are entitled to one vote on matters submitted to
the stockholders.

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

As of December 31, 2003, the Company had reserved common stock for future
issuance as detailed below.

Shares issuable upon exercise of warrants 5,664,962
2002 Stock Option Plan 2,993,024
Defined Contribution Plan 115,828
---------
Total 8,773,814
=========

XM Radio

During 2000 and 2001, XM Radio executed certain equity transactions that
affected the Company's ownership percentage in XM Radio. As a result of these
transactions, and in accordance with SAB 51, the Company recorded a decrease to
its investment in XM Radio of $12.2 million in 2001, and an increase to its
investment in XM Radio of $129.5 million in 2000. SAB 51 addresses the
accounting for sales of stock by a subsidiary. Because XM Radio was a
development stage company until November 12, 2001, SAB 51 required the
difference in the carrying amount of the Company's investment in XM Radio and
the net book value of XM Radio after the stock issuances be reflected in the
financial statements of the Company as a capital transaction in the accompanying
consolidated statements of stockholders' (deficit) equity. As of November 19,
2001, the Company did not hold any interest in XM Radio.

Mobile Satellite Ventures LP

During 2001, MSV executed certain equity transactions that affected the
Company's ownership percentage in MSV. As a result of these transactions, and in
accordance with SAB 51, the Company recorded an increase to its investment in
MSV of $12.9 million in 2001, with an offsetting gain recorded directly to
shareholders' equity.

F-36

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

Successor Company
-----------------
December 31,
2003 2002
---- ----
(in thousands)
Network equipment $35,865 $47,384
Office equipment and furniture 2,846 3,951
Construction in progress -- 1,409
------- -------
38,711 52,744
Less accumulated depreciation and
amortization (7,330) (6,339)
------- -------
Property and equipment, net $31,381 $46,405
======= =======

Depreciation expense totaled $13,770 for the year ended December 31, 2003;
$9,816 for the eight months ended December 31, 2002 and $5,924 for the four
months ended April 30, 2002.

5. FCC LICENSES AND OTHER INTANGIBLE ASSETS

FCC licenses and other intangible assets consist of the following:

Successor Company
-----------------
December 31,
2003 2002
---- ----
(in thousands)
FCC Licenses $80,594 $88,997
Customer contracts 1,893 11,501
----- ------
82,487 100,498
Less accumulated amortization (8,466) (5,577)
------- -------
FCC licenses and other intangible
assets, net $74,021 $94,921
======= =======

Amortization totaled $7,696 for the year ended December 31, 2003; $5,693 for the
eight months ended December 31, 2002 and $989 for the four months ended April
30, 2002.

Motient accounts for its frequencies as finite-lived intangibles and amortizes
them over a 20-year estimated life. Motient's FCC licenses are granted for a
term of 10 years, subject to renewal. Renewal of Motient's current licenses are
granted in the ordinary course. Motient had amortized its goodwill on a
straight-line basis over 20 years, however, this goodwill was eliminated as part
of Motient's "fresh-start" accounting. As part of its "fresh-start" accounting,
Motient valued its long-term customer contracts and amortizes these contracts
over a four-year life.

F-37

Subsequent to the period covered by this report, we engaged a financial advisor
to value certain of our customer-intangible assets as of December 31, 2002,
among other things, to test for potential impairment of certain of our
long-lived assets under SFAS No. 144. Based on these tests, no recording of
impairment charges was required. However, we subsequently engaged this financial
advisor to reevaluate the value of our customer-related intangibles as of
September 30, 2003 due primarily to the decline in revenue from UPS in this time
period. This valuation resulted in an impairment of the customer-related
intangibles of $5.5 million in the third quarter of 2003.

The table below outlines Motient's amortization requirements for the five year
period from December 31, 2003.

December 31,
2004 2005 2006 2007 2008 Thereafter
---- ---- ---- ---- ---- ----------

FCC Licenses $4,819 $4,819 $4,819 $4,819 $4,819 $48,191
Customer contracts 631 631 473 --- --- ---

6. STOCK OPTIONS AND RESTRICTED STOCK

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

The Company also had a Stock Plan for Non-Employee Directors (the "Director
Plan") which provided for the grant of the options up to a total of 100,000
shares of common stock. Effective March 25, 1999, Directors received an initial
option to purchase 5,000 shares of common stock, with annual option grants to
purchase 2,500 shares of common stock. In addition, the Board was allowed to
grant discretionary options at such time and on such terms and conditions as it
deemed appropriate. Options under the Director Plan were excercisable at a price
equal to the fair market value of the stock on the date of grant and were fully
vested and immediately excercisable on the date of grant. Each Director Plan
option expired on the earlier of (i) ten years from the date of grant or (ii)
seven months after the Director's termination.

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

F-38

On September 25, 2001, the Company issued approximately 3.2 million shares of
restricted stock to employees, with a price on the date of issuance of $0.13 per
share, in exchange for approximately 4.3 million outstanding employee stock
options, which were cancelled. With the exception of restricted stock issued to
an employee terminated on September 26, 2001, which shares vested immediately
based on the terminated employees' then-vested exchanged options, all other
shares of restricted stock issued on September 25, 2001 were subject to a six
month holding period, at which time the shares of restricted stock vested in
accordance with the vesting schedule of the options for which the restricted
stock was exchanged. The Company recorded a deferred compensation charge as of
December 31, 2001 in the amount of $419,000 associated with the issuance of
these shares. This compensation was charged expense over the employees' service
period.

All of the above mentioned plans and the respective authorized and issued stock
options were cancelled as part of the Company's reorganization on May 1, 2002.

In May 2002, the Company's Board approved the 2002 Stock Option Plan with
2,993,024 authorized shares of common stock, of which options to purchase
1,757,513 shares of the Company's common stock were outstanding at December 31,
2003. The plan was approved by the Company's stockholders on July 11, 2002. The
2002 options are subject to vesting in two parts - 50% of the shares vest in
three equal parts on the first, second and third anniversary of the date of
grant, and the other 50% vest in three equal parts, or are rescinded, based on a
comparison of the Company's performance in 2002, 2003, and 2004 to certain
objectives established by the compensation and stock option committee of the
Board following the availability of the annual results. A portion of the options
granted under the 2002 Stock Option Plan have a performance-based component.
These options will be accounted for in accordance with variable plan accounting,
which requires that the value of these options are measured at their intrinsic
value and any change in that value be charged to the income statement upon the
determination that the fulfillment of the performance criteria is probable. The
other options were previously accounted for as a fixed plan and in accordance
with intrinsic value accounting, which require that the excess of the market
price of stock over the exercise price of the options, if any, at the time that
both the exercise price and the number of options are known be recorded as
deferred compensation and amortized over the option vesting period.

In March 2003, the Company's board of directors approved the reduction in the
exercise price of all of the outstanding stock options from $5.00 per share to
$3.00 per share. The re-pricing requires that all options be accounted for in
accordance with variable plan accounting, which requires that the value of these
options are measured at their intrinsic value and any change in that value be
charged to the income statement each quarter based on the difference (if any)
between the intrinsic value and the then-current market value of the common
stock.

F-39

shares of the Company's common stock at a price of $5.65 per share. One-half of
each option grant vests with the passage of time and the continued employment of
the recipient, in three equal increments, on the first, second and third
anniversary of the date of grant. The other half of each grant will either vest
or be rescinded based on the performance of the Company in 2004. If vested and
not exercised, the options will expire on the 10th anniversary of the date of
grant.

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

Restricted
Stock and
Options Options Granted Weighted Average
Available and Option Price
For Grant Outstanding Per Share
--------- ----------- ---------

Predecessor Company
-------------------
Balance, December 31, 2000 2,194,432 3,920,605 $11.65
Options granted (1,274,336) 1,274,336 5.88
Restricted stock granted (3,219,236) -- --
Restricted stock cancelled 88,200 -- --
Exercised -- (2,015) 0.68
Forfeited 4,799,573 (4,799,573) 10.28
--------- ----------
Balance, December 31, 2001 2,588,633 393,353 9.65
MTNT Restricted stock and options available for
grant cancelled (2,588,633) (393,353)
---------- --------
Balance, April 30, 2002 (Predecessor Company) -- -- --

- -------------------------------------------------------------------------------------------------------------------
Successor Company
-----------------
Reorganized MNCP shares authorized for grant 2,993,024 -- 5.00(1)
MNCP options granted (2,244,250) 2,244,250 --
Exercised -- -- 5.00
Forfeited 613,225 (613,225) 5.00
------- ---------
Balance, December 31, 2002 1,361,999 1,631,025
Options granted (495,000) 495,000 5.18
Exercised 15,412 (15,412) 3.00
Forfeited 353,100 (353,100) 3.02
------- ---------
Balance, December 31, 2003 1,235,511 1,757,513

(1) In March 2003, our board of directors approved the reduction
in the exercise price of all of the outstanding stock
options from $5.00 per share to $3.00 per share.

Options exercisable at December 31:

Average
Options Exercise Price
------- --------------
2003 437,266 $3.00
2002 0 N/A
2001 231,844 $10.08

F-40

Exercise prices for options outstanding as of December 31, 2003, were as
follows:

Options Outstanding Options Exercisable
------------------- -------------------

Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
as of Contractual Average as of Average
Range of December 31, Life Exercise December 31, Exercise
Exercise Prices 2003 Remaining Price 2003 Price
- --------------- ---- --------- ----- ---- -----

$5.00(1) 1,265,513 9 years $3.00 426,289 $3.00
$5.15 467,000 10 years $5.15 --- $5.15
$5.65 25,000 10 years $5.65 --- $5.65

(1) In March 2003, our board of directors approved the reduction in the exercise price of all of the outstanding stock options
from $5.00 per share to $3.00 per share.

7. INCOME TAXES

The following is a summary of the Company's net deferred tax assets.

Successor Company
-----------------
December 31,
2003 2002
---- ----
(in thousands)

Net Operating Loss Carryforwards $165,933 $148,699
Deferred Taxes Related to Temporary Differences:
Tangible asset bases, lives and depreciation methods (11,000) (13,736)
Other (8,515) (13,518)
------- --------
Total deferred tax asset, net 146,418 121,445
Less valuation allowance (146,418) (121,445)
-------- --------
Net deferred tax asset $ -- $ --
======== ========

Potential tax benefits, related to net operating losses and temporary
differences, have been recorded as an asset, and a valuation allowance for the
same amount has been established. The Company has paid no income taxes since
inception.

As of December 31, 2003 and 2002, the Company had estimated net operating loss
carryforwards ("NOLs") of $412 million and $370 million, respectively. In April
2002, due to the debt restructuring and reorganization, the Company has
triggered a change of control, which has limited the availability and
utilization of the NOLs. The Company's NOL's expire between 2004 and 2024.

F-41

8. DEBT & CAPITAL LEASES

Debt and capital leases consists of the following:

December 31,
------------
Successor Company
-----------------
2003 2002
---- ----
(in thousands)
Rare Medium note payable, including accrued interest $22,016 $20,148
CSFB note payable, including accrued interest 869 795
Term Credit Facility 4,914 ---
Vendor financing, including accrued interest 4,814 5,947
Capital leases 3,096 6,250
----- -----
35,709 33,140
Less current maturities 3,867 4,051
----- -----
Long-term debt $31,842 $29,089
======= =======

The following table reflects the maturity of our various obligations over the
next five years:

Less then
Total 1 year 1-4 years After 5 years
----- ------ --------- -------------

(in thousands)
Operating leases (1) $33,685 $12,170 $19,031 $2,484
Capital lease obligations, including interest thereon (1) 3,504 1,752 1,752 ---
Notes Payables (2) 22,885 --- 22,885 ---
Term Credit Facility 4,914 --- 4,914 ---
Vendor financing commitment and note payable (1) 4,814 2,413 2,401 ---
----- ----- ----- -----
Total Contractual Cash Obligations $69,802 $16,335 $50,983 $2,484
======= ======= ======= ======

(2) In addition to being accelerable upon default, notes payable to Rare Medium
and CSFB, which comprise approximately $21 million of this amount, must be
prepaid with 25% of the proceeds due from any repayment of the $15 million
principal note issued to Motient by MSV.

Term Credit Facility

On January 27, 2003, the Company's wholly-owned subsidiary, Motient
Communications, closed a $12.5 million term credit agreement with a group of
lenders, including several of the Company's existing stockholders. The lenders
include the following entities or their affiliates: M&E Advisors, L.L.C., Bay
Harbour Partners, York Capital and Lampe Conway & Co. York Capital is affiliated
with JGD Management Corp. and James G. Dinan. JGD Management Corp., James G.
Dinan, James D. Dondero and Highland Capital Management each hold 5% or more of
Motient's common stock. The lenders also include Gary Singer, directly or
through one or more entities. Gary Singer is the brother of Steven G. Singer,
one of our directors.

F-42

** James D. Dondero, a member of our board of directors, is the
President of Highland Capital Management, L.P., which, pursuant to an
arrangement with M&E Advisors, L.L.C., has indirectly made a
commitment under the credit facility.

Under the credit agreement, the lenders have made commitments to lend Motient
Communications up to $12.5 million. The commitments are not revolving in nature
and amounts repaid or prepaid may not be reborrowed. Borrowing availability
under Motient's term credit facility terminated on December 31, 2003. On March
16, 2004, Motient Communications entered into an amendment to the credit
facility which extended the borrowing availability period until December 31,
2004. As part of this amendment, Motient Communications provided the lenders
with a pledge of all of the stock of a newly-formed special purpose subsidiary
of Motient Communications, Motient License, which holds all of Motient's FCC
licenses formerly held by Motient Communications.

Under this facility, the lenders have agreed to make loans to Motient
Communications through December 31, 2004 upon Motient Communications' request no
more often than once per month, in aggregate principal amounts not to exceed
$1.5 million for any single loan, and subject to satisfaction of other
conditions to borrowing, including certain financial and operating covenants,
contained in the credit agreement. As of April 1, 2004, the Company had borrowed
$6.0 million under this facility, all of which has since been repaid and may not
be re-borrowed.

Each loan borrowed under the credit agreement has a term of three years. Loans
carry interest at 12% per annum. Interest accrues, compounding annually, from
the first day of each loan term, and all accrued interest is payable at each
respective loan maturity, or, in the case of mandatory or voluntary prepayment,
at the point at which the respective loan principal is repaid. Loans may be
prepaid at any time without penalty.

The obligations of Motient Communications under the credit agreement are secured
by a pledge of all the assets owned by Motient Communications that can be
pledged as security (including, but not limited to Motient Communication's
shares in Motient License). Motient Communications owns, directly or indirectly,
all of the Company's assets relating to its terrestrial wireless communications
business. In addition, Motient and its wholly-owned subsidiary, Motient Holdings
Inc., have guaranteed Motient Communications' obligations under the credit
agreement, and the Company has delivered a pledge of the stock of Motient

F-43

Holdings Inc., Motient Communications, Motient Services and Motient License to
the lenders. In addition, upon the repayment in full of the outstanding
$19,750,000 in senior notes due 2005 issued by MVH Holdings Inc. to Rare Medium
and CSFB in connection with the Company's approved Plan of Reorganization, the
Company will pledge the stock of MVH Holdings Inc. to the lenders.

On January 27, 2003, in connection with the signing of the credit agreement,
Motient issued warrants at closing to the lenders to purchase, in the aggregate,
3,125,000 shares of its common stock. The exercise price for these warrants is
$1.06 per share. The warrants were immediately exercisable upon issuance and
have a term of five years. The warrants were valued at $10 million using a
Black-Scholes pricing model and have been recorded as a debt discount and are
being amortized as additional interest expense over three years, the term of the
related debt. Upon closing of the credit agreement, the Company paid closing and
commitment fees to the lenders of $500,000. These fees have been recorded on the
Company's balance sheet and are being amortized as additional interest expense
over three years, the term of the related debt. Under the credit agreement, the
Company must pay an annual commitment fee of 1.25% of the daily average of
undrawn amounts of the aggregate commitments from the period from the closing
date to December 31, 2003. In December 2003, the Company paid the lenders a
commitment fee of approximately $113,000.

In each of April, June and August 2003 and March of 2004, the Company made draws
under the credit agreement in the amount of $1.5 million for an aggregate amount
of $6.0 million. The Company used such funds to fund general working capital
requirements of operations.

For the monthly periods ended April 2003 through December 2003, the Company
reported events of default under the terms of the credit facility to the
lenders. These events of default related to non-compliance with covenants
requiring minimum monthly revenue, earnings before interest, taxes and
depreciation and amortization and free cash flow performance. In each period,
the lenders waived these events of default. There can be no assurance that
Motient will not have to report additional events of default or that the lenders
will continue to provide waivers in such event. Ultimately, there can be no
assurances that the liquidity provided by the credit facility will be sufficient
to fund Motient's ongoing operations.

For further information about amendments to and repayments of amounts due and
owing under this Credit Agreement, please see Note 16 ("Subsequent Events").

$335 Million Unit Offering

On March 31, 1998, Motient Holdings Inc., a wholly-owned subsidiary of Motient,
issued $335 million of Units (the "Units") consisting of 12 1/4% Senior Notes
due 2008 (the "Senior Notes"), and one warrant to purchase 3.75749 shares of
common stock of the Company for each $1,000 principal amount of Senior Notes
(the "Warrants") at an exercise price of $12.51 per share. The Warrants were
valued at $8.5 million and were recorded as a debt discount. A portion of the
net proceeds of the sale of the Units were used to finance the Motient
Communications acquisition in 1998. In connection with the Senior Notes, Motient
Holdings Inc. purchased approximately $112.3 million of restricted investments

F-44

that were restricted for the payment of the first six interest payments on the
Senior Notes. Interest payments are due semi-annually, in arrears, beginning
October 1, 1998. As a result of the automatic application of certain adjustment
provisions following the issuance of 7.0 million shares of common stock in a
public offering in 1999, the exercise price of the warrants associated with the
Senior Notes was reduced to $12.28 per share, the number of shares per warrant
was increased to 3.83 shares for each $1,000 principal amount of Senior Notes,
and the aggregate number of shares issuable upon exercise of such warrants was
increased by 24,294. The additional Senior Note warrants and re-pricing were
valued at $440,000. This was recorded as additional debt discount in the third
quarter of 1999. The Senior Notes were jointly and severally guaranteed on a
full and unconditional basis by Motient Corporation and all of its subsidiaries.

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

As discussed above (please see Note 2, "Significant Accounting Policies"), as
part of the Company's Plan of Reorganization, the Senior Notes, including
accrued interest thereon, and related warrants were exchanged in full for new
equity of the reorganized Company.

Rare Medium Notes

In 2001, Motient issued two notes to Rare Medium in the aggregate principal
amount of $50 million, at 12.5% annual interest. These notes were collateralized
by five million of the Company's XM Radio shares. On October 12, 2001, in
accordance with the terms of the notes, the Company exchanged $26.2 million of
the Rare Medium notes, representing $23.8 million in principal and $2.4 million
of accrued interest, for five million of its XM Radio shares. The $26.9 million
of principal and accrued interest remaining outstanding at December 31, 2001 was
unsecured.

As a result of the delivery of the shares of XM Radio common stock described
above (see Note 13, "Business Acquisitions and Dispositions"), the maturity of
the Rare Medium notes was accelerated to November 19, 2001. As of December 31,
2001, the Rare Medium notes were in default; and, therefore, the Company
classified the Rare Medium notes as current liabilities in the Consolidated
Balance Sheet as of December 31, 2001.

Under the Company's Plan of Reorganization, the Rare Medium notes were cancelled
and replaced by a new note in the principal amount of $19.0 million. The new
note was issued by a new subsidiary of Motient Corporation that owns 100% of
Motient Ventures Holding Inc., which owns all of the Company's interests in MSV.
The new note has a term of three years and carries interest at 9%. The note
allows the Company to elect to accrue interest and add it to the principal,
instead of paying interest in cash. The note requires that it be prepaid using
25% of the proceeds of any repayment of the $15 million note receivable from
MSV.

F-45

In April 2004, the Company made certain payments on the Rare Medium Note, please
see "Subsequent Events - Developments Relating to MSV".

CSFB Note

Under the Company's Plan of Reorganization, the Company issued a note to CSFB,
in satisfaction of certain claims by CSFB against Motient, in the principal
amount of $750,000. The new note was issued by a new subsidiary of Motient
Corporation that owns 100% of Motient Ventures Holding Inc., which owns all of
the Company's interests in MSV. The new note has a term of three years and
carries interest at 9%. The note allows the Company to elect to accrue interest
and add it to the principal, instead of paying interest in cash. The note
requires that it be prepaid using 25% of the proceeds of any repayment of the
$15 million note receivable from MSV.

In April 2004, the Company made certain payments on the CSFB Note, please see
"Subsequent Events - Development Relating to MSV".

Bank Financing

In March 1998, the Company entered into a $200 million bank financing (the "Bank
Financing") consisting of two facilities: (i) the revolving credit facility
("Revolving Credit Facility"), a $100 million unsecured five-year reducing
revolving credit facility maturing March 31, 2003, and (ii) the term loan
facility ("Term Loan Facility"), a $100 million five-year, term loan facility
with up to three additional one-year extensions subject to the lenders'
approval. In 1999, the Term Loan Facility was reduced to $41 million. In 2000,
the Term Loan Facility was reduced to $40 million, and the Revolving Credit
Facility was reduced to $71.3 million. During 2001, the Bank Financing was
completely extinguished.

The Term Loan Facility

The Term Loan Facility bore an interest rate, generally, of 100 basis points
above London Interbank Offered Rate ("LIBOR"). The Term Loan Agreement did not
include any scheduled amortization until maturity, but did contain certain
provisions for prepayment based on certain proceeds received by the Company,
unless otherwise waived by the banks and the Bank Facility Guarantors (as
defined below). During 2001, the Term Loan Facility was completely extinguished.

The Revolving Credit Facility

The Revolving Credit Facility bore an interest rate, generally, of 100 basis
points above LIBOR and was unsecured, with a negative pledge on the assets of
Motient Holdings and its subsidiaries and ranked pari passu with the Senior
Notes. Certain proceeds received by Motient Holdings were required to repay and
reduce the Revolving Credit Facility, unless otherwise waived by the banks and
the Bank Facility Guarantors (as defined below). During 2001, the Revolving
Credit Facility was completely extinguished.

F-46

The Guarantees

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

As a result of the automatic application of certain adjustment provisions
following the issuance of the 7.0 million shares in the August 1999 public
offering, the exercise price of the Guarantee Warrants was reduced to $7.3571
per share and the Guarantee Warrants became exercisable for an additional
126,250 shares. The additional Guarantee Warrants and re-pricing were valued at
$2.4 million. Additionally, in June 2000, the Bank Facility Guarantors agreed to
partially reduce the debt repayment requirements associated with the MSV
transaction. In exchange, the Company further reduced the price of the Guarantee
Warrants to $6.25, which was valued at $1.4 million. In 2001, the Bank Facility
Guarantors agreed to waive certain repayment obligations under the Bank
Financing. In exchange for these waivers, the Company re-priced the warrants
held by certain of the Bank Facility Guarantors from $6.25 to $1.31 per share,
and issued new warrants to one Bank Facility Guarantor with an exercise price of
$1.31 per share. The value of the re-pricing and warrant issuance was $2.3
million.

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

F-47

Debt Extinguishments

In 1999, the Company raised $116 million, net of underwriting discounts and
expenses, through the issuance of 7.0 million shares of common stock in a public
offering. Of the net proceeds, Motient used $59 million to pay down a portion of
the Term Loan Facility. In 2000, the Company paid down and permanently reduced
the Term Loan Facility by an additional $1 million with proceeds from stock and
warrant exercises, and the Revolving Credit Facility was permanently reduced by
$22.8 million with a portion of the proceeds of the MSV and Aether transactions.
In 2001, the Company sold 2.0 million shares of XM Radio stock and used $8.5
million of the proceeds to permanently reduce the Term Loan Facility.
Additionally, $12.25 million of proceeds from the Rare Medium note were used to
pay down and permanently reduce the Term Loan Facility.

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

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

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

Interest Rate Swap Agreement

In connection with the Bank Financing in March 1998, the Company entered into an
interest rate swap agreement, with an implied annual rate of 6.51%. The swap
agreement reduced the impact of interest rate increases on the Term Loan
Facility. The Company paid a fixed fee of approximately $17.9 million for the
swap agreement. In return, the counter-party was obligated to pay a variable
rate equal to LIBOR plus 50 basis points, paid on a quarterly basis directly to
the respective banks on behalf of the Company, on a notional amount of $100
million until the termination date of March 31, 2001. In connection with the pay
down of a portion of the Term Loan Facility during 1999, the Company reduced the

F-48

notional amount of its swap agreement from $100 million to $41 million and
realized net proceeds of approximately $6 million due to early termination of a
portion of the swap agreement. The interest rate swap agreement expired in March
2001.

Motorola Vendor Financing

In June 1998, Motorola had entered into an agreement with the Company
to provide up to $15 million of vendor financing, to finance up to 75% of the
purchase price of network base stations. Loans under this facility bear interest
at a rate equal to LIBOR plus 7.0% and are guaranteed by the Company and each
subsidiary of Motient Holdings. The terms of the facility require that amounts
borrowed be secured by the equipment purchased therewith. Advances made during a
quarter constitute a loan, which is then amortized on a quarterly basis over
three years. As of December 31, 2003, $4.8 million was outstanding, including
accrued interest, under this facility at an interest rate of 5.4%. As of
December 31, 2002, $5.9 million was outstanding, including accrued interest,
under this facility at an interest rate of 9%. No additional amounts are
available for borrowing under this facility. In January 2003 and subsequently in
March 2004, the Company restructured this liability. In June 2004, the Company
negotiated a settlement of the entire amounts of these obligations. Please see
Note 16, ("Subsequent Events") for additional information.

Hewlett-Packard Capital Lease

The Company has a capital lease for network equipment with Hewlett-Packard, now
Compaq Corporation. The lease has an effective interest rate of 12.2%. This
capital lease was in default for non-payment at December 31, 2002, however, in
January 2003, this agreement was restructured to provide for a modified payment
schedule. In June 2004, the Company negotiated a settlement of the entire
amounts under this lease. Please see Note 16, ("Subsequent Events") for
additional information.

Assets Pledged and Secured

Prior to the Company's reorganization in May 2002, all wholly-owned
subsidiaries of the Company were subject to financing agreements that limited
the amount of cash dividends and loans that could be advanced to the Company. At
December 31, 2001, all of the subsidiaries' net assets were restricted under
these agreements. At December 31, 2003 and 2002, the Company was subject to
financing agreements with Rare Medium, CSFB, Motorola and Hewlett-Packard that
continued to limit the amount of cash dividends and loans that could be advanced
to the Company. The Company's term credit facility that also restricts the
Company's ability to pay cash dividends and receive additional loans that could
be advanced to the Company. These restrictions will have an impact on Motient's
ability to pay dividends. Please see Note 16, "Subsequent Events" for additional
information on payment and settlement of certain of those obligations.

Restricted net assets of the Company's subsidiaries were approximately $35.7
million and $33.1 million at December 31, 2003 and December 31, 2002
respectively.

Covenants

The Company's historical and current debt agreements contain various
restrictions, covenants, defaults, and requirements customarily found in such
financing agreements. Among other restrictions, these provisions include

F-49

limitations on cash dividends, restrictions on transactions between
Motient and its subsidiaries, restrictions on capital acquisitions, material
adverse change clauses, and maintenance of specified insurance policies. Please
see Note 16, "Subsequent Events" for additional information on payment and
settlement of certain of these obligations.

9. RELATED PARTIES

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

Successor Successor Predecessor Predecessor
Company Company Company Company
------- ------- ------- -------
Year Ended (Restated)
December 31, Eight Months Ended Four Months Ended Year Ended
2003 December 31, 2002 April 30, 2002 2001
---- ----------------- -------------- ----

Payments made to (from) related parties:
Proceeds from the sale of assets to MSV $ -- $ -- $ -- $(42,500)
Operating expenses 258 -- 49 125
Additional investment in MSV -- 957 -- --
Funding of future sub-lease
obligations to MSV -- -- 361 4,000
-------- -------- -------- --------
Net payments to (from) related parties $ 258 $ 957 $ 410 $(38,375)
-------- -------- -------- --------

Due to (from) related parties:
Operating expenses $ 322 $ (234) $ 618 $ (521)
Note Receivable from MSV (18,781) (18,732) (12,345) (15,000)
-------- -------- -------- --------
Net amounts due (from) to related parties $(18,459) $(18,966) $(11,727) $(15,521)
-------- -------- -------- --------

For the year ended December 31, 2003, the four months ended April 30, 2002,
eight months ended December 31, 2002, and for the year ended December 31, 2001,
the Company recorded revenue related to the MSV research and development
agreement in the amount of $0, $0, $0 and $2.6 million, respectively.

Communication Technology Advisors LLC

In May 2002, the Company entered into a consulting agreement with Communication
Technology Advisors LLC ("CTA") under which CTA provided consulting services to
the Company. CTA's chairman, Jared E. Abbruzzese, was a director of the Company
until June 20, 2003. Peter Aquino, elected to the Company's Board on June 20,
2003, is a senior managing director of CTA. Gerry S. Kittner, also a Motient
director, is an advisor and consultant for CTA.

CTA is a consulting and private advisory firm specializing in the technology and
telecommunications sectors. The Company's agreement with CTA had an initial term
of three months ending August 15, 2002, and was extended by mutual agreement for
several additional terms of two or three months each. For the first three months
of the agreement, CTA was paid a flat fee of $60,000 per month, and for the

F-50

period August 2002 to May 2003, the monthly fee was $55,000. Beginning in May
2003, the monthly fee was reduced to $39,000. The Company also agreed to
reimburse CTA for CTA's out-of-pocket expenses incurred in connection with
rendering services during the term of the agreement. This agreement was modified
on January 30, 2004.

CTA had previously acted as the spectrum and technology advisor to the official
committee of unsecured creditors in connection with the Company's Chapter 11
case. CTA received a total of $475,000 in fees for such advice and was
reimbursed a total of $4,896 for expenses in connection with the rendering of
such advice.

Except for the warrant offered to CTA described below and the warrants granted
to certain members of CTA in connection with the private placement of the
Company's common stock on April 7, 2004, neither CTA, nor any of its principals
or affiliates is a stockholder of Motient, nor does it hold any debt of Motient
(other than indebtedness as a result of consulting fees and expense
reimbursement owed to CTA in the ordinary course under the Company's existing
agreement with CTA). CTA has informed the Company that in connection with the
conduct of its business in the ordinary course, (i) it routinely advises clients
in and appears in restructuring cases involving telecommunications companies
throughout the country, and (ii) certain of the Company's stockholders and
bondholders and/or certain of their respective affiliates or principals, may be
considered to be (a) current clients of CTA in matters unrelated to Motient; (b)
former clients of CTA in matters unrelated to Motient; and (c) separate
affiliates of clients who are (or were) represented by CTA in matters unrelated
to Motient.

In July 2002, the Company's Board approved the offer and sale to CTA (or
affiliates thereof) of a warrant (or warrants) for 500,000 shares of the
Company's common stock, for an aggregate purchase price of $25,000. The warrant
has an exercise price of $3.00 per share and a term of five years. These
warrants were valued at $1.5 million and were recorded as a consultant
compensation expense in December of 2002. Certain affiliates of CTA purchased
the warrants in December 2002. Christopher W. Downie received a warrant for
100,000 of the 500,000 shares.

In November 2003, CTA was engaged to provide valuation of Motient's equity
interest in MSV as of December 31, 2002. CTA was paid $150,000 for this
valuation.

At December 31, 2003, CTA was owed $415,000.

On January 30, 2004, the Company engaged CTA to act as chief restructuring
entity. The term of CTA's engagement is currently scheduled to end on August 1,
2004. As consideration for this work, Motient agreed to pay to CTA a monthly fee
of $60,000, one-half of which will be paid monthly in cash and one-half of which
will deferred. The new agreement amends the consulting arrangement discussed
above. In April 2004, Motient paid CTA $440,000 for all past deferred fees.

In April 2004 and July 2004, certain members of CTA were granted warrants to
purchase 400,000 shares and 340,000 shares, respectively, of common stock in
conjunction with the private placements of the Company's common stock on April
7, 2004 and July 1, 2004. The warrants have an exercise price of $5.50 and $8.57
per share, respectively, and a term of five years.

F-51

Mr. Abbruzzese, Mr. Kittner and Mr. Aquino did not participate in the
deliberations or vote of the Board with respect to the foregoing matters while
serving as a member of the Board.

10. LEASES

Capital Leases

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

Successor Company
------------------------

December 31,
2003 2002
---- ----
(in thousands)
Switch equipment $9,795 $9,795
Office equipment --- 2,501
Less accumulated depreciation (5,280) (5,669)
------- -------
Total $4,515 $ 6,627
====== =======

Subsequent to the end of the period covered by this report, the Company
restructured certain of its existing lease obligations. Please see Note 16
("Subsequent Events").

Operating Leases

The Company leases substantially all of its base station sites through operating
leases. The majority of these leases provide for renewal options for various
periods at their fair rental value at the time of renewal. In the normal course
of business, the operating leases are generally renewed or replaced by other
leases. Additionally, the Company leases certain facilities and equipment under
arrangements accounted for as operating leases. Certain of these arrangements
have renewal terms. Total rent expense, under all operating leases, approximated
$15.2 million for the year ended December 31, 2003, $10.5 million for the eight
months ended December 31, 2002, $5.6 million for the four months ended April 30,
2002, and $13.4 million in for the year ended December 31 2001.

At December 31, 2003, minimum future lease payments under noncancelable
operating and capital leases are as follows:

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Operating Capital
--------- -------
(in thousands)

2004 $12,170 $1,752
2005 9,238 1,752
2006 6,089 --
2007 2,090 --
2008 and thereafter 4,098 --
------- ------
Total $33,685 3,504
------- -------
Less: Interest (408)
------
Present value of minimum lease payments $3,096
Less: Current maturities, including those amounts
deemed to be in default (1,454)
------
Non current capital lease obligation $1,642
------

11. COMMITMENTS AND CONTINGENCIES

As of December 31, 2003, the Company had no contractual inventory commitments.

UPS, the Company's largest customer as of December 31, 2002, has substantially
completed its migration to next generation network technology, and its monthly
airtime usage of the Company's network has declined significantly. UPS was our
second largest customer for the twelve months ended December 31, 2003 and our
eighth largest customer for the three months ended December 31, 2003. There are
no minimum purchase requirements under the Company's contract with UPS and the
contract may be terminated by UPS on 30 days' notice at which point any
remaining prepayment would be require to be repaid. While the Company expects
that UPS will remain a customer for the foreseeable future, the bulk of UPS'
units have migrated to another network. As of May 31, 2004, UPS had
approximately 3,800 active units on Motient's network.

Until June 2003, UPS had voluntarily maintained its historical level of payments
to mitigate the near-term revenue and cash flow impact of its recent and
anticipated continued reduced network usage. However, beginning in July 2003,
the revenues and cash flow from UPS declined significantly. Also, due to a
separate arrangement entered into in 2002 under which UPS prepaid for network
airtime to be used by it in 2004, the Company does not expect that UPS will be
required to make any cash payments to the Company in 2004 for service to be
provided in 2004. Pursuant to such agreement, and, as of April 30, 2004, UPS has
not been required to make any cash payments to the Company in 2004, and the
value of the Company's remaining airtime service obligations to UPS in respect
of the prepayment was approximately $4.3 million. If UPS terminates the
contract, we will be required to refund any unused portion of the prepayment to
UPS.

F-53

As of December 31, 2003, we had the following outstanding cash contractual
commitments:

Total <1 year 1-3 years 3 - 5 years More than 5 years
----- ------- --------- ----------- -----------------

(in thousands)
Operating leases (1) $33,685 $12,170 $17,417 $1,614 $2,484
Capital lease obligations, including interest thereon (1) 3,504 1,752 1,752 --- ---
Notes Payable (2) 22,885 --- 22,885 --- ---
Term Credit Facility 4,914 --- 4,914 --- ---
Equipment financing commitment (1) 4,814 2,413 2,401 --- ---
----- ----- ----- ----- -----
Total Contractual Cash Obligations $69,802 $16,335 $49,369 $1,614 $2,484
======= ======= ======= ====== ======

(2) In addition to being accelerable upon default, notes payable to Rare Medium
and CSFB, which comprise approximately $21 million of this amount, must be
prepaid with 25% of the proceeds due from any repayment of the $15 million
principal note issued to Motient by MSV.

12. EMPLOYEE BENEFITS

Prior to the Company's reorganization, the Company had several active stock
plans. All of these plans and the respective authorized and issued stock options
were cancelled as part of the Company's reorganization on May 1, 2002.

F-54

Defined Contribution Plan

The Company sponsored a 401(k) defined contribution plan ("401(k) Savings Plan")
in which all employees of Motient could participate. The 401(k) Savings Plan
provided for (i) a Company match of employee contributions, in the form of
common stock, at a rate of $1 for every $1 of an employee's contribution not to
exceed 4% of an employee's eligible compensation, (ii) a discretionary annual
employer non-elective contribution, (iii) the option to have plan benefits
distributed in the form of installment payments, and (iv) the reallocation of
forfeitures, if any, to active participants. In 2001, effective January 2002,
the Company amended its 401(k) Savings Plan to make the matching contributions
discretionary, as well as to allow the match to be made in either cash or shares
of common stock, at the Company's sole discretion. The Company's matching
expense was $0.36 million for 2003, $0 for 2002 and $1.1 million for 2001.
During 2001, the Company authorized an additional 5,025,000 shares for the
401(k) Savings Plan, and authorized an additional 268,000 shares in January
2002. As part of Company's plan of reorganization, all of the outstanding shares
of the Company's common stock were cancelled. During 2002, the Company
authorized 200,000 shares for the 401(K) Savings Plan.

Employee Stock Purchase Plan

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

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

2002 Stock Option Plan

The Company's 2002 stock option plan was adopted by the Board on May 31, 2002
and received stockholder approval on July 11, 2002. A total of 2,993,024 shares
of common stock have been reserved for issuance under the 2002 stock option
plan. Under the 2002 stock option plan, the Company is authorized to grant
options to purchase shares of common stock intended to qualify as incentive
stock options, as defined under section 422 of the Internal Revenue Code of
1986, as amended, and non-qualified stock options to any employees, outside
directors, consultants, advisors and individual service providers whose
participation in the 2002 stock option plan is determined by the Company's
compensation and stock option committee to be in the Company's best interests.
The term of each stock option is fixed by the Board or the compensation and
stock option committee, and each stock option is exercisable within ten years of
the original grant date. Some change of control transactions involving the
Company, such as a sale of Motient, may cause awards granted under the 2002
stock option plan to vest. Generally, an option is not transferable by the
recipient except by will or the laws of descent and distribution. As of December
31, 2003, options to purchase 2,993,024 shares of common stock had been
authorized under the 2002 stock option plan at a price of $5.00 per share, of
which options to purchase 1,757,513 shares of the Company's common stock were
outstanding at December 31, 2003. In March 2003, the Board approved the
reduction in the exercise price of all of the outstanding stock options from
$5.00 per share to $3.00 per share.

F-55

A portion of the options granted under the plan will either vest or be rescinded
based on Motient's performance. These options are accounted for in accordance
with variable plan accounting, which requires that the value of these options be
measured at their intrinsic value and any change in that value be charged to the
income statement upon the determination that the fulfillment of the Company
performance criteria is probable. The other options are accounted for as a fixed
plan and in accordance with intrinsic value accounting, which requires that the
excess of the market price of stock over the exercise price of the options, if
any, at the time that both the exercise price and the number of options are
known be recorded as deferred compensation and amortized over the option vesting
period. As of the date of grant, the option price per share was in excess of the
market price; therefore, these options are not deemed to have any value and no
expense has been recorded to date.

The 2002 options are subject to vesting in two parts - 50% of the shares vest in
three equal parts on the first, second and third anniversary of the date of
grant, and the other 50% vest in three equal parts, or are rescinded, based on a
comparison of the Company's performance in 2002, 2003, and 2004 to certain
objectives established by the compensation and stock option committee of the
Board following the availability of the annual results. In May 2004, the
compensation committee of the Company's Board made a determination to vest a
portion of the 2003 performance options.

In July and September 2003, the compensation and stock option committee of the
Company's Board, acting pursuant to the Company's 2002 stock option plan,
granted 26 employees and officers options to purchase an aggregate of 470,000
shares of the Company's common stock at a price of $5.15 per share and 25,000
shares of the Company's common stock at a price of $5.65 per share. One-half of
each option grant vests with the passage of time and the continued employment of
the recipient, in three equal increments, on the first, second and third
anniversary of the date of grant. The other half of each grant will either vest
or be rescinded based on the performance of the Company in 2004. If vested and
not exercised, the options will expire on the 10th anniversary of the date of
grant.

13. BUSINESS ACQUISITIONS AND DISPOSITIONS

Sale of Retail Transportation Business to Aether

In November 2000, Motient sold assets relating to its retail transportation
business to Aether Systems, Inc. ("Aether") and received approximately $45
million. This consisted of $30 million for the assets, of which $10 million was
held in an escrow account which was subsequently released in the fourth quarter
of 2001 upon the satisfaction of certain conditions, and $15 million for a
perpetual license to use and modify any intellectual property owned by or
licensed by Motient in connection with the retail transportation business.

Motient recognized an $8.3 million gain in the fourth quarter of 2001 when the
additional $10 million of proceeds were released from escrow. The $1.7 million
difference between the proceeds received and the gain recognized is a result of
pricing modifications that were made at the time of the release of the escrow

F-56

related to network capacity agreements. Motient amortized the $15 million
perpetual license payment, as restated, over a four year period through the
adoption of "fresh-start" accounting, which represented the life of the network
airtime agreement that Motient entered into with Aether at the time of the
closing of the asset sale.

Concurrent with the closing of the asset sale, the Company and Aether entered
into two long-term, prepaid network airtime agreements valued at $20 million, of
which $5 million was paid at closing, pursuant to which Aether agreed to
purchase airtime on the Company's satellite and terrestrial networks. Aether
also became an authorized reseller of the Company's eLink and BlackBerry TM by
Motient wireless email service offerings.

MSV

On June 29, 2000, the Company formed a joint venture subsidiary, MSV, in which
it owned until November 26, 2001, 80% of the membership interests in order to
conduct research and development activities. The remaining 20% interests in MSV
were owned by three investors unrelated to Motient. The other investors paid $50
million to MSV (in the aggregate), in exchange for their 20% interest. Motient
Services Inc. ("Motient Services") owned the Company's satellite and related
assets.

Of the $50 million payment received by MSV, $6.0 million was retained by MSV to
fund certain research and development activities, $24 million was paid to
Motient Services as a deposit on the purchase of the satellite assets, and $20
million was also paid to Motient Services for the use of the satellite and
frequency under a research and development agreement.

On November 26, 2001, Motient sold the assets comprising its satellite
communications business to MSV, as part of a transaction in which certain other
parties joined MSV, including TMI, a Canadian satellite services provider. In
consideration for its satellite business assets, Motient Services received the
following: (i) a $24 million cash payment in June 2000, (ii) a $41 million cash
payment paid at closing on November 26, 2001, net of $4 million retained by MSV
to fund the Company's future sublease obligations to MSV for rent and utilities
through August 2003 and (iii) a five-year $15 million note. In this transaction,
TMI also contributed its satellite communications business assets to MSV. In
addition, Motient purchased a $2.5 million convertible note issued by MSV, and
certain other investors, including a subsidiary of Rare Medium, purchased a
total of $52.5 million of convertible notes. The Company realized a gain of
approximately $29.8 million on the sale of its net assets; however, 48% of the
gain, or $14.3 million, was deferred and amortized over five years through the
adoption of "fresh-start" accounting.

MSV has also filed a separate application with the FCC with respect to MSV's
plans for a new generation satellite system utilizing ancillary terrestrial base
stations. For further information on the FCC approval process, see Note 2
("Significant Accounting Policies - Investment in MSV and Notes Receivable from
MSV").

In July 2002, MSV commenced a rights offering seeking total funding in the
amount of $3.0 million. While the Company was not obligated to participate in

F-57

the offering, the Company's board determined that it was in the Company's best
interests to participate so that its interest in MSV would not be diluted. On
August 12, 2002, the Company funded an additional $957,000 to MSV pursuant to
this offering, and received a new convertible note in such amount. This rights
offering did not impact the Company's ownership position in MSV.

As of December 31, 2002, the Company had an ownership percentage, on an
undiluted basis, of approximately 48% of the common and preferred units of MSV,
and approximately 55% of the common units. Assuming that all of MSV's
outstanding convertible notes are converted into limited partnership units of
MSV, as of December 31, 2002 Motient had a 33.3% partnership interest in MSV on
an "as converted" basis giving effect to the conversion of all outstanding
convertible notes of MSV, and 25.5% on a fully-diluted basis, assuming certain
other investors exercise their right to make additional investment in MSV as a
result of the FCC ancillary terrestrial components ("ATC") application process.

On August 21, 2003, two investors in MSV (excluding Motient) invested an
additional $3.7 million in MSV in exchange for Class A preferred units of
limited partnership interests in MSV. MSV used the proceeds from this investment
to repay other indebtedness that is senior in its right of repayment to
Motient's promissory note. Under the terms of the amended and restated
investment agreement, these investors also have the option of investing an
additional $17.6 million in MSV by December 31, 2003; however, if, prior to this
time, the FCC does not issue a decision addressing MSV's petition for
reconsideration with respect to the ATC Order (as hereinafter defined), the
option will be automatically extended to March 31, 2004.

F-58

Motient by MSV. Motient was required to, and paid 25% of the $2.0 million it
received in this transaction, or $500,000, to prepay its existing notes owed to
Rare Medium Group and CSFB. The remainder of the proceeds from this investment
were used for general corporate purposes by MSV. As of the closing of the
additional investment on April 2, 2004, Motient's percentage ownership of MSV
was approximately 29.5% on an "as converted" basis giving effect to the
conversion of all outstanding convertible notes of MSV.

Please see note 2, "Significant Accounting Policies- Investment in MSV and Notes
Receivable from MSV" and note 16, "Subsequent Events-Developments Relating to
MSV."

Sale of SMR Licenses to Nextel Communications, Inc.

On July 29, 2003, our wholly-owned subsidiary, Motient Communications,
entered into an asset purchase agreement with Nextel, under which Motient
Communications sold to Nextel certain of its SMR licenses issued by the FCC for
$3.4 million. The closing of this transaction occurred on November 7, 2003. On
December 9, 2003, Motient Communications entered into a second asset purchase
agreement, under which Motient Communications will sell additional licenses to
Nextel for $2.75 million resulting in a $1.5 million loss whcih was recorded in
December, 2003. In February 2004, the Company closed the sale of licenses
covering approximately $2.2 million of the purchase price, and in April 2004,
the Company closed the sale of approximately one-half of the remaining licenses.
The transfer of the other half of the remaining licenses has been challenged at
the FCC by a third-party. While the Company believes, based on the advice of
counsel, that the FCC will ultimately rule in its favor, the Company cannot be
assured that it will prevail, and, in any event, the timing of any final
resolution is uncertain. None of these licenses are necessary for Motient's
future network requirements. Motient has and expects to continue to use the
proceeds of the sales to fund its working capital requirements and for general
corporate purposes. The lenders under Motient Communications' term Credit
Agreement have consented to the sale of these licenses.

XM Radio

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

In January and February 2001, the Company sold, in two separate transactions,
two million shares of its XM Radio Class A common stock, at an average price of
$16.77 per share, for total proceeds of $33.5 million. In October 2001, as noted
above, the Company repaid $26.2 million of the Rare Medium notes in exchange for
five million of its XM Radio shares. On November 19, 2001, the Company sold

F-59

500,000 shares of its XM Radio common stock through a broker for $9.50 per
share, for aggregate proceeds of $4.75 million. Also on November 19, 2001, as a
result of a series of transaction to cure defaults under its Bank Financing and
to the Bank Facility Guarantors, the Company sold and/or delivered all of its of
its remaining 9,257,262 shares of XM Radio common stock to the Bank Facility
Guarantors in full satisfaction of the entire remaining amount of its
reimbursement obligations to the Bank Facility Guarantors. The agent for the
bank lenders under the Bank Financing declared all loans under the Bank
Financing immediately due and payable, due to the existence of several events of
default under the Bank Financing. On the same date, the bank lenders sought
payment in full from the Bank Financing Guarantors for the accelerated loan
obligations. For the year ended December 31, 2001, the Company recorded proceeds
of approximately $38.3 million from the sale in 2001 of two million shares of
its XM Radio stock. For the year ended December 31, 2001, the Company recorded
equity in losses of XM Radio of $48.5 million. As of November 19, 2001, the
Company ceased to have any interest in XM Radio.

In anticipation of the exchange of the XM Radio shares for debt, the Company
recorded an impairment loss of $81.5 million in 2001. This loss represents the
write down of the Company's investment in XM Radio to the fair value on the date
of the exchange. Upon the actual exchange of shares, the Company recognized a
net extraordinary gain of $10.0 million, which represented the difference
between the fair market value of the XM Radio stock as compared to the value of
the debt cancelled in exchange for the shares. For the twelve months ended
December 31, 2001, the Company recorded equity in losses of XM Radio of $48.5
million.

Merger Agreement with Rare Medium Group, Inc.

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

14. LEGAL AND REGULATORY MATTERS

Legal

Motient filed a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code on January 10, 2002. The Bankruptcy Court confirmed Motient's Plan of
Reorganization on April 26, 2002, and Motient emerged from bankruptcy on May 1,
2002. For further details regarding this proceeding, please see Note 2
("Significant Accounting Policies -- Motient's Chapter 11 Filing and Plan of
Reorganization and "Fresh-Start" Accounting").

A former employee who was discharged as part of a reduction in force in July
2002 asserted a claim for a year's pay and attorney's fees under a Change of
Control Agreement that the employee had with the Company. This claim was subject
to binding arbitration. Although the Company believed that it had substantial
defenses on the merits, on July 11, 2003, the Company was informed that the
arbitrator ruled in the employee's favor. In August 2003, the Company made a
$200,000 payment to this employee for the disputed pay and related benefits
costs and legal fee reimbursement.

F-60

Motient's rights to use and sell the BlackBerryTM software and RIM's handheld
devices may be limited or made prohibitively expensive as a result of a patent
infringement lawsuit brought against RIM by NTP Inc. (NTP v. Research In Motion,
Civ. Action No. 3:01CV767 (E.D. Va.)). In that action, a jury concluded that
certain of RIM's BlackBerryTM products infringe on patents held by NTP covering
the use of wireless radio frequency information in email communications. On
August 5, 2003, the judge in the case ruled against RIM, awarding NTP $53.7
million in damages and enjoining RIM from making, using, or selling the
products, but stayed the injunction pending appeal by RIM. The appeal has not
yet been resolved. As a purchaser of those products, Motient could be adversely
affected by the outcome of that litigation.

For further details regarding legal matters related to periods after this
report, please see Note 16 ("Subsequent Events").

Regulatory

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

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

F-61

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

Motient is subject to the Communications Assistance for Law Enforcement Act, or
CALEA. Under CALEA, Motient must ensure that law enforcement agencies can
intercept certain communications transmitted over its networks. Motient must
also ensure that law enforcement agencies are able to access certain
call-identifying information relating to communications over Motient's networks.
The deadline for complying with the CALEA requirements and any rules
subsequently promulgated was June 30, 2002. Based on discussions with Federal
law enforcement agencies regarding the applicability of CALEA's provisions to
the Company, the Company does not believe that its network, which uses packet
data technology, is subject to the requirements of CALEA. At the suggestion of
Federal law enforcement agencies, the Company has developed an alternative
methodology for intercepting certain communications over its network for the
purposes of law enforcement surveillance. The Company believes this alternative
methodology has substantially the same functionality as the standards provided
in CALEA. It is possible that the Company's alternative methodology may
ultimately be found not to comply with CALEA's requirements, or the Company's
interpretation that CALEA does not apply to its network may ultimately be found
to be incorrect. Should these events occur, the requirement to comply with CALEA
could have a material adverse effect on the conduct of the Company's business.

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

F-62

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

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

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

F-63

Motient believes that it has licenses for a sufficient number of channels to
meet its current capacity needs on the terrestrial network.

Motient operates the terrestrial network under a number of waivers involving the
FCC's technical rules, including rules on station identification, for-profit use
of excess capacity, system loading, and multiple station ownership. Several of
these waivers were first obtained individually by IBM and Motorola, which
operated separate wireless data systems until forming the ARDIS joint venture in
1990. The FCC incorporated a number of these waivers into its regulations when
it implemented Congress's statutory provision creating the commercial mobile
radio service classification. As of March 3, 1999, Motient completed its planned
construction of base stations for which extended implementation was granted by
the FCC in 1996.

On March 14, 2002, the FCC adopted a notice of proposed rulemaking exploring
options and alternatives for improving the spectrum environment for public
safety operations in the 800 MHz band. This notice of proposed rulemaking was
issued by the FCC after a "white paper" proposal was submitted to the FCC by
Nextel Communications Inc. in November 2001 addressing largely the same issues.
In its white paper, Nextel proposed that certain of its wireless spectrum in the
700 MHz band, lower 800 MHz band, and 900 MHz band be exchanged for spectrum in
the upper 800 MHz band and in the 2.1 GHz band. Nextel's proposal addressed the
problem of interference to public safety agencies by creating blocks of
contiguous spectrum to be shared by public safety agencies. Since the notice of
proposed rulemaking was issued, Motient has been actively participating with
other affected licensees, including Nextel, to reach agreement on a voluntary
plan to re-allocate spectrum to alleviate interference to public safety
agencies. On December 24, 2002, a group of affected licensees, including
Motient, Nextel, and several other licensees, submitted a detailed proposal to
the FCC for accomplishing the re-allocation of spectrum over a period of several
years. These parties have also been negotiating a mechanism by which Nextel
would agree to reimburse costs, up to $850 million, incurred by affected
licensees in relocating to different parts of the spectrum band pursuant to the
rebanding plan.

In mid-April 2003, the FCC's Office of Engineering and Technology ("OET") sent a
letter to several manufacturers requesting additional practical, technical and
procedural solutions or information that may have yet to be considered. Upon
reviewing the filed comments, OET has indicated that other technical solutions
were possible and were being reviewed by the FCC. To date, no action has been
taken by the FCC. We cannot assure you that our operations will not be affected
by this proceeding.

For further details regarding regulatory matters related to periods after this
report, please see Note 16 ("Subsequent Events").

F-64

15. SUPPLEMENTAL CASH FLOW INFORMATION

Successor Company Predecessor Company
----------------- -------------------

Year Ended
Year Ended Eight Months Ended Four Months December 31,
December 31, December 31, Ended April 30, (Restated)
2003 2002 2002 2001
---- ---- ---- ----
(in thousands)

Cash payments for interest $572 $396 $427 $26,240
Cash payment for income taxes -- -- -- --
Noncash investing and financing activities:
Leased asset and related obligations -- -- -- 632
Issuance of restricted stock -- -- -- 419
Cancellation of restricted stock -- -- -- (264)
Additional deferred compensation on non-cash
compensation -- -- 97 1,587
Issuance and repricing of common stock
purchase warrants 10,024 1,464 -- 2,326
Capital (loss) gain in connection with the
sale of stock by XM Radio -- -- -- (12,180)
Capital gain in connection with the sale of
stock by MSV -- -- -- 12,883
Vendor financing for property in service -- -- -- --
Vendor financing under maintenance agreement -- 2,631 -- --
Issuance of Common Stock under the Defined
Contribution Plan $280 $ -- $(203) $1,151

16. SUBSEQUENT EVENTS

Private Placement

On April 7, 2004, Motient sold 4,215,910 shares of its common stock at $5.50 per
share for an aggregate purchase price of $23,187,505 to The Raptor Global
Portfolio Ltd., The Tudor BVI Global Portfolio, Ltd., The Altar Rock Fund L.P.,
Tudor Proprietary Trading, L.L.C., Highland Crusader Offshore Partners, L.P.,
York Distressed Opportunities Fund, L.P., York Select, L.P., York Select Unit
Trust, M&E Advisors L.L.C., Catalyst Credit Opportunity Fund, Catalyst Credit
Opportunity Fund Offshore, DCM, Ltd., Greywolf Capital II LP and Greywolf
Capital Overseas Fund and LC Capital Master Fund. The sale of these shares was
not registered under the Securities Act of 1933 and the shares may not be sold
in the United States absent registration or an applicable exemption from
registration requirements. The shares were offered and sold pursuant to the
exemption from registration afforded by Rule 506 under the Securities Act and/or
Section 4(2) of the Securities Act. In connection with

F-65

this sale, Motient signed a registration rights agreement with the holders of
these shares. Among other things, this registration rights agreement requires
Motient to file and cause to make effective a registration statement permitting
the resale of the shares by the holders thereof. Motient also issued warrants to
purchase an aggregate of 1,053,978 shares of our common stock to the investors
listed, at an exercise price of $5.50 per share. These warrants will vest if and
only if Motient does not meet certain deadlines between July and November, 2004,
with respect to certain requirements under the registration rights agreement. If
the warrants vest, they may be exercised by the holders thereof at any time
through June 30, 2009.

In connection with this sale, Motient issued to Tejas Securities Group, Inc.,
its placement agent for the private placement, and certain members of CTA,
warrants to purchase 600,000 shares and 400,000 shares, respectively, of our
common stock. The exercise price of these warrants is $5.50 per share. The
warrants are immediately exercisable upon issuance and have a term of five
years. Motient also paid Tejas Securities Group, Inc. a placement fee of
$350,000 at closing. The warrants were issued in reliance upon the exemption
afforded by Section 4(2) of the Securities Act.

Additional Private Placement

On July 1, 2004, Motient sold 3,500,000 shares of our common stock at a per
share price of $8.57 for an aggregate purchase price of $30.0 million to The
Raptor Global Portfolio Ltd., The Tudor BVI Global Portfolio, Ltd., The Altar
Rock Fund L.P., Tudor Proprietary Trading, L.L.C., York Distressed Opportunities
Fund, L.P., York Select, L.P., York Select Unit Trust, York Global Value
Partner, L.P., Catalyst Credit Opportunity Fund, Catalyst Credit Opportunity
Fund Offshore, DCM, Ltd., Rockbay Capital Fund, LLC, Rockbay Capital Investment
Fund, LLC, Rockbay Capital Offshore Fund, Ltd., Glenview Capital Partner, L.P.,
Glenview Institutional Partners, L.P., Glenview Capital Master Fund, Ltd., GCM
Little Arbor Master Fund, Ltd., OZ Master Fund, Ltd., OZ Mac 13 Ltd., Fleet
Maritime, Inc., John Waterfall, Edwin Morgens, Greyhound Capital II, L.P.,
Greywolf Capital Overseas Fund, Highland Equity Focus Fund, L.P., Singer
Children's Management Trust and Strome Hedgecap Limited. The sale of these
shares was not registered under the Securities Act and the shares may not be
sold in the United States absent registration or an applicable exemption from
registration requirements. The shares were offered and sold pursuant to the
exemption from registration afforded by Rule 506 under the Securities Act and/or
Section 4(2) of the Securities Act. In connection with this sale, Motient signed
a registration rights agreement with the holders of these shares. Among other
things, this registration rights agreement requires us to file and cause to make
effective a registration statement permitting the resale of the shares by the
holders thereof. Motient also issued warrants to purchase an aggregate of
525,000 shares of our common stock to the investors listed above, at an exercise
price of $8.57 per share. These warrants will vest if and only if Motient does
not meet certain registration deadlines beginning in November, 2004, with
respect to certain requirements under the registration rights agreement. If the
warrants vest, they may be exercised by the holders thereof at any time through
June 30, 2009.

In connection with this sale, Motient issued to certain CTA affiliates and
certain affiliates of Tejas Securities Group, Inc., our placement agent for the
private placement, warrants to purchase 340,000 and 510,000, respectively,
shares of our common stock. The exercise price of these warrants is $8.57 per
share. The warrants are immediately exercisable upon issuance and have a term of
five years. Motient also paid Tejas Securities Group, Inc. a placement fee of
approximately $850,000 at closing. The shares were offered and sold pursuant to
the exemption from registration afforded by Rule 506 under the Securities Act
and/or Section 4(2) of the Securities Act.

Term Credit Facility

On March 16, 2004, Motient entered into an amendment to its credit facility
which extended the borrowing availability period until December 31, 2004. As
part of this amendment, Motient provided the lenders with a pledge of all of the
stock of a newly-formed special purpose subsidiary of Motient Communications,
Inc., Motient License Inc. ("Motient License") which holds all of Motient's FCC
licenses formerly held by Motient Communications. On March 16, 2004, in
connection with the execution of the amendment to the credit agreement, the
Company issued warrants to the lenders to purchase, in the aggregate, 2,000,000
shares of Motient's common stock. The number of warrants was reduced to an
aggregate of 1,000,000 shares of common stock since, within 60 days after March
16, 2004, the Company obtained at least $7.5 million of additional debt or
equity financing. The exercise price of the warrants is $4.88 per share. The
warrants were immediately exercisable upon issuance and have a term of five
years. The warrants were valued at $6.7 million using a Black-Scholes pricing
model and are being recorded as a debt discount and will be amortized as
additional interest expense over three years, the term of the related debt. The
warrants are also subject to a registration rights agreement. Under such
agreement, Motient agreed to register the shares underlying the warrants upon
the request of a majority of the warrantholders, or in conjunction with the
registration of other common stock of the company. Motient will bear all the
expenses of such registration. The Company also paid a commitment fees to the
lenders of $320,000 which accrued into the principal balance at closing. These
fees will be recorded on Motient's balance sheet and will be amortized as
additional interest expense over three years, the term of the related debt.

F-66

On April 13, 2004, Motient repaid all principal amounts then owing under its
term credit facility, including accrued interest thereon, in an amount of $6.7
million. The remaining availability under the credit facility of $5.8 million
will be available for borrowing to the Company until December 31, 2004, subject
to the lending conditions in the credit agreement.

Developments Relating to MSV

In June 2004, MSV obtained certain rights to receive 8-10 MHz of nationwide
spectrum in the S-band (2.1 GHz range) from its affiliate, TMI Communications
and Company, Limited Partnership, or TMI, as a result of the FCC's reinstatement
of TMI's S-band authorization on June 29, 2004. This reinstatement of TMI's
S-band authorization is subject to certain conditions. In addition, the S-band
authorization requires the satisfaction of certain satellite construction and
other milestones. There can be no assurances that such conditions and milestones
will be satisfied.

Further Cost Reduction Actions

Please see Note 1, "Organization and Going Concern - - Cost Reduction Actions".

UPS Revenue

Please see Note 1, "Organization and Going Concern - - UPS Revenue".

Motorola Debt Obligation Renegotiation

In March 2004, Motient further restructured both the vendor financing facility
and the promissory note to Motorola, primarily to extend the amortization
periods for both the vendor financing facility and the promissory note. Motient
will amortize the combined balances in the amount of $100,000 per month
beginning in March 2004. Motient also agreed that interest would accrue on the
vendor financing facility at LIBOR plus 4%. As part of this restructuring,
Motient agreed to grant Motorola a second lien (junior to the lien held by the
lenders under our term credit facility) on the stock of Motient License. This
pledge secures Motient's obligations under both the vendor financing facility
and the promissory note.

Management and Board Changes

On February 10, 2004, the Company and Walter V. Purnell, Jr. mutually agreed to
end his employment as President and Chief Executive Officer of Motient and all
of its wholly owned subsidiaries. Concurrently, Mr. Purnell resigned as a
director of such entities and of MSV and all of its subsidiaries.

On February 18, 2004, Daniel Croft, Senior Vice President, Marketing and
Business Development, and Michael Fabbri, Senior Vice President, Sales, were
relieved of their duties as part of a reduction in force.

F-67

On May 6, 2004, the board of directors elected Raymond L. Steel to serve as a
member of the board. Mr. Steele was also elected to the Company's audit
committee.

On May 6, 2004 the board of directors elected Robert L. Macklin to the position
of General Counsel and Secretary.

On May 24, 2004 the board of directors designated Myrna J. Newman, the Company's
controller and chief accounting officer, as the principal financial officer of
the Company.

On June 15, 2004, the board of directors designated Jonelle St. John
and Raymond J. Steele as the board's financial experts.

Change in Accountants

On March 2, 2004, Motient dismissed PricewaterhouseCoopers as its independent
auditors effective immediately. The audit committee of the Company's Board
approved the dismissal of PricewaterhouseCoopers. PricewaterhouseCoopers was
previously appointed to audit Motient's consolidated financial statements for
the period May 1, 2002 to December 31, 2002, and, by its terms, such engagement
was to terminate upon the completion of services related to such audit.
PricewaterhouseCoopers has not reported on Motient's consolidated financial
statements for such period or for any other fiscal period. On March 2, 2004, the
audit committee engaged Ehrenkrantz Sterling & Co. LLC as Motient's independent
auditors to replace PricewaterhouseCoopers to audit Motient's consolidated
financial statements for the period May 1, 2002 to December 31, 2002.

For further details regarding the change in accountants, please see the
Company's current report on Form 8K filed with the SEC on April 23, 2003 and the
Company's amendment to its current report on Form 8-K/A filed with the SEC on
April 23, 2003 and March 9, 2004.

CTA Arrangements

On January 30, 2004, the Company engaged CTA to act as chief restructuring
entity. The term of CTA's engagement is currently scheduled to end on August 1,
2004. As consideration for this work, Motient agreed to pay to CTA a monthly fee
of $60,000. The new agreement amends our existing consulting arrangement with
CTA. In addition, since the initial engagement of CTA, the payment of certain
monthly fees to CTA has been deferred. In April 2004, Motient paid CTA $440,000
for all past deferred fees.

F-68

Termination of Motorola and Hewlett-Packard Agreements

In June 2004, the Company negotiated settlements terminating its outstanding
financing facilities with Motorola and its lease with Hewlett-Packard for
certain network equipment. The full amount due and owing under these agreements
was a combined $6.8 million. We paid or will pay a combined $3.9 million in cash
and will issue a warrant to Motorola to purchase 200,000 shares of the Company's
common stock at a price of $8.68, in full satisfaction of the outstanding
balances. In the case of Hewlett-Packard, the Company took title to all of the
leased equipment and software, and in the case of Motorola, there was no
equipment or service that Motorola was obligated to provide. Additionally,
Hewlett-Packard released to the Company its $1.1 million letter of credit.

Regulatory

Legal

On April 15, 2004, Motient filed a claim under the rules of the American
Arbitration Association in Fairfax County, VA, against Wireless Matrix
Corporation, a reseller of Motient's services, for the non-payment of certain
amounts due and owing under the "take-or-pay" agreement between Motient and
Wireless Matrix. Under this agreement, Wireless Matrix agreed to purchase
certain minimum amounts of air-time on the Motient network. In February 2004
Wireless Matrix informed Motient that it was terminating its agreement with
Motient. Motient does not believe that Wireless Matrix has any valid basis to do
so, and consequently filed the above mentioned claim seeking over $2.6 million
in damages, which amount represents Wireless Matrix's total prospective
commitment under the agreement. On May 10, 2004, Motient received notice of a
counter-claim by Wireless Matrix of approximately $1 million, representing such
amounts as Wireless Matrix claims to have paid in excess of services rendered
under the agreement. In June 2004, Motient reached a favorable out of court
settlement with Wireless Matrix in which Wireless Matrix will pay Motient $1.1
million.

F-69

QUARTERLY FINANCIAL DATA
(dollars in thousands, except for per share data)
(unaudited)

Successor Company
-----------------
2003-Quarters
-------------
3/31/03 6/30/03 9/30/03 12/31/03
------- ------- ------- --------

Revenues $14,370 $14,992 $12,051 $13,072
Operating expenses (1) 24,424 25,358 24,311 20,559
------ ------ ------ ------
Loss from operations (10,054) (10,366) (12,260) (7,487)
Net Income (loss) $(12,394) $(13,010) $(22,345) $(14,373)
Basic and Diluted Loss Per
Share of common stock $(0.49) $(0.52) $(0.89) $(0.57)
Weighted-average common
shares outstanding
during the period 25,097 25,137 25,170 25,145
Market price per share (3)
High $4.00 $2.00 $5.00 $5.45
Low $2.75 $5.75 $6.35 $3.95

Predecessor Company through April 30, 2002 and
Successor Company from May 1, 2002 to December 31, 2002 Predecessor Company
------------------------------------------------------- -------------------
2002-Quarters 2001-Quarters (restated)
------------- ------------------------

(Predecessor (Successor
Company) Company)
1 Month 2 Months
(Predecessor Ended Ended (Successor (Successor
Company) April 30, June 30, Company) Company)
3/31/02 2002 2002 9/30/02 12/31/02 3/31/01 6/30/01 9/30/01 12/31/01
------- ---- ---- ------- -------- ------- ------- ------- --------

Revenues $16,683 $5,690 $8,719 $13,297 $14,601 $22,565 $22,641 $23,547 $21,513
Operating expenses (1) 32,445 11,358 19,796 25,426 25,195 48,225 47,832 50,342 41,092
------ ------ ------ ------ ------ ------ ------ ------ ------
Loss from operations (15,762) (5,668) (11,077) (12,129) (10,594) (25,660) (25,191) (26,795) (19,579)

Net Income (loss) $(35,429) $267,408 $(13,010) $(16,644) $(29,904) (54,948) (65,317) (49,636) (99,597)
Basic and Diluted Loss Per
Share of common stock $(0.61) $4.58 $(0.52) $(0.66) $(1.19) $(1.11) $(1.32) $(0.99) $(1.81)
Weighted-average common
shares outstanding
during the period 58,256 58,366 25,097 25,097 25,097 49,639 49,654 50,175 55,027
Market price per share (3)
High $0.45 $0.040 $5.90 $4.45 $3.40 $6.59 $2.05 $1.10 $0.60
Low $0.055 $0.080 $3.60 $0.40 $0.65 $1.25 $0.38 $0.09 $0.05

(1) Operating expenses include restructuring charges of approximately $25,000
in the second quarter of 2002, $4.7 million in the third quarter of 2001.
Of the $4.7 million restructuring expense in 2001, $3.8 million was paid in
2001. Of the $0.6 million restructuring expense in 2002, $0.5 million was
paid in 2002.

F-70

(2) Loss per share calculations for each of the quarters are based on the
weighted average number of shares outstanding for each of the periods, and
the sum of the quarters is not equal to the full year loss per share amount
due to rounding.
(3) Until January 14, 2002, the Company's common stock was listed under the
symbol MTNT on the Nasdaq Stock Market. The Company voluntarily delisted
from the Nasdaq Stock Market on January 14, 2002 as a result of its Chapter
11 bankruptcy filing. The Company's common stock is currently traded under
the symbol MNCP on the Pink Sheets. The quarterly high and low sales price
represents the intra-day prices in the Nasdaq Stock Market for the
Company's pre-reorganization common stock for the periods indicated for
2001 and the high and low bid prices for Motient pre- and
post-reorganization common stock for the periods indicated. The quotations
represent inter-dealer quotations, without retail markups, markdowns or
commissions, and may not necessarily represent actual transactions. As of
December 31, 2003, there were 11 stockholders of record of the Company's
common stock.

Summary of Impact of the Restatement of Financial Statements

The revised accounting treatment described in Note 2 ("Significant Accounting
Policies -- Restatement of Financial Statements") requires that certain
adjustments be made to the income statements and balance sheets for the
respective quarters of 2001 and the quarter ended March 31, 2002. The effect of
these adjustments is illustrated in the table below. The adjustments reflected
in the table below were reviewed by Motient's independent auditor, Ehrenkrantz
Sterling & Co. LLC. Certain of the adjustments are based on assumptions that
Motient has made about the fair value of certain assets.

Quarter Ended March 31, Quarter Ended June 30, Quarter Ended September 30,
2001 2001 2001
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
As reported As restated As reported As restated As reported As restated
----------- ----------- ----------- ----------- ----------- -----------

(in thousands)

Net Revenue $ 23,407 $ 22,565 $ 23,657 $ 22,641 $ 24,447 $ 23,547
Loss from Operations (25,217) (25,660) (25,224) (25,191) (25,933) (26,795)
Net Loss (54,006) (54,948) (65,324) (65,317) (48,707) (49,636)
Basic and Fully
Diluted EPS $ (1.09) $ (1.11) $ (1.32) $ (1.32) $ (0.97) $ (0.99)
Total Assets 536,608 536,772 485,682 486,694 448,542 449,474
Total Liabilities 588,579 580,840 599,931 593,032 610,106 604,055
Stockholders' Deficit (51,971) (44,068) (114,249) (106,338) (161,564) (154,582)
Total Liabilities &
Stockholders' Deficit $ 536,608 $ 536,772 $ 485,682 $ 486,694 $ 448,542 $ 449,474

Quarter Ended December 31, Year Ended December 31, Quarter Ended March 31,
2001 2001 2002
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
As reported As restated As reported As restated As reported As restated
----------- ----------- ----------- ----------- ----------- -----------

(in thousands)

Net Revenue $21,782 $21,513 $93,293 $90,265 $16,495 $16,683
Loss from Operations (18,622) (19,579) (94,996) (97,223) (15,970) (15,763)
Net Loss (124,052) (99,597) (292,089) (269,497) (32,885) (35,430)
Basic and Fully
Diluted EPS $(2.25) $(1.81) $(5.71) $(5.27) $(0.56) $(0.61)
Total Assets 209,617 240,465 209,617 240,465 177,628 205,283
Total Liabilities 485,086 471,614 485,086 471,614 485,681 471,559
Stockholders' Deficit (275,469) (231,149) (275,469) (231,149) (308,053) (266,277)
Total Liabilities &
Stockholders' Deficit $209,617 $240,465 $209,617 $240,465 $177,628 $205,283

F-71

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED 2001(restated),
FOUR MONTHS ENDED APRIL 30, 2002, EIGHT MONTHS ENDED DECEMBER 31, 2002, and
YEAR ENDED DECEMBER 31, 2003

Charged
Balance at to Costs
Beginning and Balance at End of
Description of Period Expenses Deductions Period
- ----------- --------- -------- ---------- ------

Predecessor Company
- -------------------
Year Ended December 31, 2001
Allowance for doubtful accounts $1,317 $1,375 $(1,728) $964
Four Months Ended April 30, 2002
Allowance for doubtful accounts $964 $(52) $(139) $773
Successor Company
- -----------------
Eight Months Ended December 31, 2002
Allowance for doubtful accounts $773 $994 $(764) $1,003
Year Ended December 31, 2003
Allowance for doubtful accounts $1,003 $194 $(438) $759

Charged
Balance at to Costs
Beginning and Balance at End of
Description of Period Expenses Deductions Period
- ----------- --------- -------- ---------- ------

Predecessor Company
- -------------------
Year Ended December 31, 2001
Allowance for Obsolescence $1,633 $7,891 $(2,451) $7,073
Four Months Ended April 30, 2002
Allowance for Obsolescence $7,073 $4,687 $(797) $10,963
Successor Company
- -----------------
Eight Months Ended December 31, 2002
Allowance for Obsolescence $10,963 $287 $(1,699) $9,551
Year Ended December 31, 2003
Allowance for Obsolescence $9,551 $199 $(2,000) $7,750

F-72