MOTIENT CORP - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

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

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

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

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

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

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

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

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

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

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

MOTIENT CORPORATION

2001 ANNUAL REPORT ON FORM 10-K

PART I

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

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

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

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

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ITEM 1. BUSINESS.

OVERVIEW

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

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

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

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

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

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

HISTORY

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

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

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

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

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

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

MOTIENT'S CHAPTER 11 FILING

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

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

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

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

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

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

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

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

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

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

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

MOBILE SATELLITE VENTURES TRANSACTION

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

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

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

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

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

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

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

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

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

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

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

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

EFFECTS OF CHAPTER 11 FILING

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

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

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

MOTIENT'S BUSINESS STRATEGY

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

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

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

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

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

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

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- broad nationwide geographic coverage,

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

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

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

MOTIENT'S WIRELESS SERVICE OFFERINGS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MOTIENT'S CUSTOMERS

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

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

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

MARKETING AND DISTRIBUTION

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

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

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

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

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

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

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

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

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

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

-13-

MOTIENT'S NETWORK

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

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

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

EQUIPMENT AND SUPPLIER RELATIONSHIPS

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

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

-14-

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

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

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

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

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

COMPETITION

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

-15-

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

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

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

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

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

-16-

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

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

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

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

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

-17-

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

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

EMPLOYEES

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

REGULATION

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

-18-

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

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

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

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

-19-

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

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

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

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

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

-20-

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

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

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

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

-21-

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

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

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

ITEM 2. PROPERTIES.

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

-22-

ITEM 3. LEGAL PROCEEDINGS.

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

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

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

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

-23-

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

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

PART II

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

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

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

None.

-24-

PART III

ITEMS 10, 11, 12 AND 13.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MOTIENT

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

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

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

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

-25-

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

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

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

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

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

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

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

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

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

BOARD COMPENSATION

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

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

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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

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ITEM 11. EXECUTIVE COMPENSATION

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

SUMMARY COMPENSATION TABLE

(1) Includes group term life insurance premiums.

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

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

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

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

(5) Relates to relocation expenses..

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

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

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

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

OPTION/SAR GRANTS IN LAST FISCAL YEAR

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

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

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

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

(1) The Company has not granted SARs.

COMPENSATION OF DIRECTORS

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

COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

-35-

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

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MOTOROLA AGREEMENT

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

STOCKHOLDERS' AGREEMENT

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

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BANK FINANCING FACILITIES

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

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

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

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

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

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

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

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

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

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

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PART IV

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

(1) 1. Financial Statements.

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

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

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

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

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

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

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

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

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

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

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

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

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2. Financial Statement Schedules.

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

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

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

3. Exhibits

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

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

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

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

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

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

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

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10.8*