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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2002

or

For the transition period from            to            .

Commission File Number: 0-18299

i3 MOBILE, INC.

(Exact name of registrant as specified in its charter)

(Registrant’s telephone number, including area code): (203) 428-3000

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

(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 reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

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

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

The aggregate market value of the voting common equity held by non-affiliates of the registrant on April 7, 2003, is $5,721,959.

As of April 7, 2003, there were 20,115,990 shares of the registrant’s common stock ($0.01 par value) outstanding.

Documents Incorporated by Reference

None.

PART I

This annual report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When used in this report, the words “believe,” “anticipate,” “think,” “intend,” “plan,” “expect,” “project,” “will be” and similar expressions identify such forward-looking statements, but their absence does not mean that the statement is not forward-looking. The forward looking statements included herein are based on current expectations and assumptions that involve a number of risks and uncertainties, including the statements in Liquidity and Capital Resources regarding the adequacy of funds to meet funding requirements. Our actual results may differ significantly from the results discussed in the forward-looking statements. A number of uncertainties exist that could affect our future short term operating results, including, without limitation, our ability to locate a suitable strategic investment partner, acquisition candidate or other investment opportunity and our ability to manage our cash resources until we are able to do so. In the event that the Company consummates a Transaction that involves relaunching the Pronto service and/or exploiting its core technologies, risks related to our Pronto service platform include the ability to secure marketing channel distribution, the growth rate of the market for wireless products, the progress and cost of re-establishing our service infrastructure, the cost, risk and timing of retaining, rehiring or identifying key personnel with the knowledge and experience to relaunch the platform and developing our products and services, the timing and market acceptance of those products and services and our history of losses, competitive economic conditions, and general economic factors. In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. We undertake no obligation to update publicly any forward-looking statements or reflect new information, events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

Item 1.    Business History and Overview

Our Business

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

Although we undertook substantial efforts to research, develop and market the Pronto product, as discussed below, we did not achieve the subscriber levels which had been estimated and were needed to sustain the core business model. Due to the challenges we faced in marketing the Pronto product, and our concerns about our cash resources going forward, in October 2002, we engaged the services of an investment banker to pursue strategic alternatives, including a potential merger or acquisition of the Company (collectively, a “Transaction”). As a result of that engagement, we have now entered into discussions with a potential Transaction partner, and to facilitate this or another Transaction, in March 2003, we announced the termination of the Pronto service and other cost saving measures in order to manage our cash resources. Although we have entered into discussions with a potential strategic partner for a merger transaction and may shortly enter into a nonbinding letter of intent, we have not entered into any definitive binding agreement and there can be no assurance we will be able to do so, or to do so on favorable terms. In the event we are unable to effect a Transaction in the near term, we will be required to implement additional cost reductions, obtain additional financing, or sell the assets of the Company and cease operations. However, management believes the Company has adequate cash resources to continue to realize its assets and discharge its liabilities as a company into the second quarter of 2004. See “Risk Factors.”

In fiscal 2001, we invested significant financial resources developing Pronto and its supporting technology infrastructure. In addition, we spent approximately $1 million on consumer research to identify specific consumer needs and preferences in order to develop applications that are most compelling to telephone users, especially mobile telephones. The Pronto experience, unlike the experience afforded by the current “wireless

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internet,” was designed to leverage the core voice interface functionality of telephones, rather than the telephone keypad, to create a seamless user experience.

Pronto was test marketed in the Hartford/New Haven region of Connecticut in the fourth quarter of 2001, and a coordinated national marketing campaign for Pronto was conducted during the second quarter of 2002. As of December 31, 2002 we had approximately 2,200 paying subscribers on our Pronto service accounting for 11.5% of net revenue at December 31, 2002.

During July 2002, in an effort to better manage working capital, the Company began the implementation of certain cost savings measures. These included a substantial reduction of television marketing and other initiatives, a transition of certain aspects of the customer provisioning and service activities of Pronto from an outside partner to an in-house solution, the renegotiation and/or termination of certain of our content relationships, and a reduction of approximately 30% of our workforce. The reduction of workforce has resulted in a $0.8 million charge included in our results of operations for the year ended December 31, 2002.

Due to our operating results being substantially lower than anticipated, a decline in the Pronto subscriber base realized during the third quarter of 2002, the reduction of our direct to consumer marketing initiatives, our assessment of future cash flows, and the uncertainty surrounding the Pronto offering, management reviewed the fair value of the Company’s long-lived assets in accordance with SFAS 144 and determined to record a $6.7 million non-cash charge in the third quarter of 2002 to reduce the carrying value of the Company’s capitalized software, computer hardware and leasehold improvements to their estimated fair value. The charge has the effect of increasing the operating loss for the year ended December 31, 2002 by $6.7 million.

During March 2003, in an effort to continue to reduce recurring operating losses, preserve cash resources and working capital and facilitate a potential Transaction, the Company took action on a plan approved by the Board of Directors, and consequently elected to discontinue revenue producing operations and terminate the Pronto service and initiate cost saving measures including a reduction of 65 employees, approximately 78% of its workforce, the suspension of most of its research and development efforts at its Texas facility, and furthered our ongoing efforts to resolve contractual obligations. The reduction of workforce will result in a $1.7 million charge to our results of operations in the first quarter of 2003. As a result of the plan approved by the Board of Directors, management reviewed the fair value of the Company’s long-lived assets and will record a $0.5 million non-cash charge to our results of operations in the first quarter of 2003.

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

The Company has now focused its efforts on locating and consummating a Transaction, if the proper opportunity is presented. At this time, management believes that the public market price of our stock does not adequately reflect the quality of our technology, products and services, and growth prospects and accordingly a Transaction may be the best means available to leverage our remaining cash resources and to maximize shareholder value.

Additionally, subscription revenues from wireless network operators will continue to decrease substantially in the future as we have de-emphasized our legacy SMS wireless alert product. We expect this revenue stream will cease in 2003 as we continue to implement cost saving measures and seek to consummate a Transaction. Effective December 31, 2002, our relationship with our largest wireless network operator customer terminated, who accounted for 49%, 54%, and 18% of net revenues for the years ended December 31, 2002, 2001, and 2000 respectively. We recently terminated our relationship with our second largest wireless network customer, who accounted for 22%, 21%, and 22% of net revenues for the years ended December 31, 2002, 2001, and 2000 respectively effective January 31, 2003.

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It is possible our Board of Directors could determine not to further pursue a Transaction at all, or to consummate a Transaction that may or may not involve the ongoing development, marketing and commercialization of the Pronto platform, which could involve businesses unrelated to our present business.

The following discussion assumes we consummate a Transaction, and thereafter the Company (or its successors) will continue to seek to commercialize the Pronto platform and provide or seek to obtain funding for the initiatives described below. It is also possible that in connection with effecting a Transaction, the Company (or its successors) could determine to enter into new lines of business which might or might not involve continuation of the Pronto service or the utilization of its underlying technologies, in which case the following discussion would have limited or no application to the Company’s future operations. See “Risk Factors.”

Strategy

Despite the Company’s determination that its direct to consumer marketing approach for Pronto has not proven effective in quickly growing its subscriber base, and that the establishment of sales channels for Pronto through marketing and distribution relationships with third parties would not be a viable alternative at this time, we continue to believe that the fundamental principles that create economic value in media remain the aggregation of information and content and the distribution of that content through a user-friendly interface to individuals who have a need for it.

We believe that the Pronto platform can provide state of the art on demand information, branded content, communication and commerce services to consumers by phone. We continue to believe that the existing investment in the Pronto platform can be leveraged to create customized services and to develop a “partner branded” service to drive subscriber growth. Assuming we consummate a Transaction, the key elements of our strategy for the Pronto platform continue to be to:

Establish Third Party Distribution Partnerships.    During 2002, we incurred significant expenditures in order to increase awareness of our Pronto services and brand name through direct to consumer sales and marketing and other promotional activities. We believe at this time that wireless carriers may view Pronto as competitive with their own services and at $19.95/month too expensive, and that direct to consumer marketing is too expensive and would take too long to achieve positive cash flow. We have also pursued the establishment of sales channels for Pronto through marketing and distribution relationships with third parties, and have determined that the establishment of such sales channels would require the ability to fund negative cash flow and losses until such time as significant revenue streams were realized, which could take additional time beyond the Company’s current cash resources. Consequently, the Company has determined that the establishment and support of sales channels through marketing and distribution relationships are not, at this time, a viable alternative. In the event that we consummate a Transaction that involves relaunching the Pronto service and/or exploiting its core technologies, we believe that it will remain necessary to focus our efforts on securing marketing and distribution channels with branded content providers and subscriber-based wholesale partners who have significantly better financial resources and consumer access than we do. Our goal would be to leverage our intellectual know-how and experiences, technology infrastructure and platform with third parties who have existing brand recognition and established customer bases. These could include business enterprises, wireless network operators, Internet portals, and other vertical outlets.

Continue Enhancing Our Products and Services.    We believe that compelling products and services are created by aggregating and delivering information, which is relevant to consumers in a cost effective manner. The results of our subscribers’ usage of Pronto during 2002 indicates that they are interested in a diverse array of products and services. In the event that we consummate a Transaction that involves relaunching the Pronto service and/or exploiting its core technologies, this element of our strategy would entail:

Provide Niche Products and Services.    Our goal would be for the Pronto platform to deliver a suite of personal and commercial information categories that are relevant and, wherever practical, unique and specific to

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the needs of the given subscriber. Based on the results of Pronto achieved during 2002, we continue to see that premium content which is tailored to the mobile subscriber is more valuable than content configured for the Internet, and that telephone users have an appetite to have fast access to personalized audio content on an “anytime, anywhere” basis. We believe that, in order for the Pronto platform to succeed, we would need to focus the specificity of Pronto’s product offering via specific niche products focused on core groups of individuals comprising the existing subscriber base of the branded content vertical distribution partners. Specifically, we would aim to focus our efforts on product offerings for the sports and news centric consumer. Our strategy would be to identify branded, recognizable content that is subscriber relevant and time-sensitive.

Complete the Transaction.    In May of 2002, Pronto added the ability for its concierges to purchase movie tickets on behalf of its subscribers in addition to the existing movie review and theater location service. As a premium service, Pronto’s commerce strategy centered on being able to “complete the transaction” for its subscribers. For example, if a subscriber needs to know the next flight from Boston to Atlanta, Pronto would not only have the ability to provide the requested information, but in the future would also be able to arrange ticketing on the subscriber’s behalf. If a subscriber needs to entertain clients, Pronto has the capability to find a preferred restaurant in town and make reservations.

Products and Services

During 2002 we rolled out Pronto on a national basis and garnered invaluable insights as to how our subscribers utilized Pronto and which features were the most popular. Our goal was to determine the content and services most appealing to mobile users and to refine their user experience in accessing those product features. Demand for the “wireless web” continues to be minimal in North America and we continue to believe that the growth in use of telephones to obtain information and service is based on the familiarity of the user experience. For the same reason, we believe that voice interaction was the critical component to the Pronto platform because it was easy to use and familiar to a telephone user.

As a result, we believe that a sophisticated voice interface to our products that provides simple command-driven access to information makes our services worthy of usage ultimately garnering premium subscription price points.

Pronto.    Pronto was intended to be the first of a new breed of voice-activated services for the telephone platform, seamlessly integrating a flat menu voice recognition system, branded audio content, and live “on-call assistants”. The Company’s automated content was designed to have the capability to features news, stock quotes, sports, weather, movie reviews and schedules and leisure categories such as horoscopes and lottery results. The Company’s live operators were capable of utilizing Pronto’s information and service capabilities to provide its subscribers with services such as making restaurant reservations and providing driving directions.

Pronto was regionally beta tested in the Hartford/New Haven region of Connecticut in the fourth quarter of 2001. Based upon the results of this test, Pronto was rolled out, on a national test basis in April, 2002. By August, Pronto had reached 3,500 subscribers from around the country.

i3 Mobile’s focus had been to create an easy to use mobile information and communication service which combines superior service with premium, branded content. Pronto was the result of this intensive market research and product development.

Pronto was designed to have its subscribers call a toll-free number and request information or service specific to the subscriber’s needs. Pronto’s design enabled it to be platform independent and available through any phone twenty-four hours a day, seven days a week. Pronto’s innovative “ask a question get an answer” approach to information-on-demand was designed to use a proprietary flat menu which eliminated the need to push multiple buttons, program special functions, or “drill-down” a lengthy voice menu to access the desired information. Utilizing this leading-edge technology, the Pronto platform has the ability to deliver information to its subscribers in a user-friendly fashion.

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Quick Information–On–Demand Audio Content.    Pronto utilized a diverse mix of more than twenty third-party content providers to deliver high-quality branded audio content. These audio feeds had the effect of allowing Pronto subscribers to obtain thousands of discrete, personalized informational selections. Each information offering was tailored with the mobile user in mind, in terms of length of story and feature. To date, Pronto has licensed content from media companies such as CNN, ESPN, and the Wall Street Journal, to well-known celebrities, such as Jeffrey Lyon’s movie reviews. All of the time-sensitive content feeds within the Pronto platform are capable of being updated at least hourly (ESPN every 20 minutes) throughout the day.

On-Call Assistants.    Prior to the termination of our live Pronto service, Pronto’s live operators utilized high-speed access to the Internet, and were trained to fulfill “concierge” type requests ranging from location-based service queries such as restaurant recommendations and reservations, to “ultra 411 directory assistance” calls, to driving directions, to flight information and status, to fact checking and research, or virtually any request one might want.

Furthermore, Pronto was designed to employ a whisper transfer technology for live operator requests, which had the effect of enabling each operator to hear the request as passed from the voice response system thereby avoiding the need for the subscriber to repeat the request. Additionally, each subscriber’s mobile identification number and personal profile automatically “popped on” to the operator’s terminal.

Customized Information—“My Pronto”.    Upon subscribing to the service, users had the ability to personalize Pronto for his/her preferences. From setting up stock portfolios, to weather in frequently traveled to cities, to scores for favorite teams, and horoscopes, Pronto let the subscriber personalize the information they use regularly.

Communication and Personal Information Management Features.    In the 1st Quarter of 2003, Pronto added a voice-activated e-mail and appointment management tool. With Microsoft Outlook^™, Pronto customers had the ability to synchronize their existing e-mail accounts to their Pronto account to check and respond to  e-mails by just using their voice. The new appointment feature allowed customers to hear their schedule, set up new appointments and manage their existing schedule with Pronto’s integrated live operators, or via  http://www.askpronto.com. Pronto users also had voice access and management capabilities for their contact lists, including separate e-mail addresses, cell, home, and office numbers.

m-Commerce Capabilities.    In May of 2002, Pronto added the ability for its on-call assistants to purchase movie tickets on behalf of its subscribers in addition to accessing movie reviews and locating the theater. This service was seamless to both the subscriber and the Pronto concierge in that the subscriber’s credit card information and other confidential information is embedded within Pronto’s system, thereby reducing the time of the call and avoiding potential security breaches.

Content Partnerships

In its efforts to broaden the capabilities of Pronto and the options afforded to its subscribers, i3 Mobile formed partnerships and strategic relationships with a variety of media and information companies in order to provide premium content. The Company entered into agreements with over twenty media and information companies, including, Dow Jones & Company, Inc., CNN, ESPN, and AP. These relationships allowed i3 Mobile to provide high quality, branded content at low costs. The Company’s aim was to offer content providers the opportunity to leverage their existing information in a new medium at little or no incremental cost to them and with significant co-branding and advertising opportunities. The amount i3 Mobile pays to the content provider is either a flat monthly fee, a monthly fee based on the number of subscribers using the content or the number of messages requested, or a combination thereof. The Company is currently in the process of renegotiating these agreements as a result of the termination of the Pronto service.

“Powered by i3 Mobile”

Through our “Powered by i3 Mobile” program, in 2002 we continued to offer wireless alert products in many different categories for mobile device consumers. Our “Powered by i3 Mobile” products were sold

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primarily through relationships with wireless network operators on a subscription basis. During fiscal 2002, 88% of our revenue was subscription revenue derived from the “Powered by i3 Mobile” wireless alert products, with 49% of our total consolidated revenue coming from Cingular and 22% coming from T-Mobile. Subscription revenues from wireless network operators will continue to decrease substantially in 2003, and cease to generate any significant revenues, as we have de-emphasized our legacy SMS wireless alert product. Effective December 31, 2002, our relationship with Cingular terminated and, during January 2003 we terminated our relationship with T-Mobile.

Technology and Systems

During 2002, our technology and product development team focused on creating additional service and functionality for the Pronto platform and was able to further refine the infrastructure supporting such platform in order to improve the user experience. Specifically, these efforts included:

The operation of Pronto requires a unique blending of people and systems. The product, while easy to use, is actually the bundling of various proprietary and licensed technologies and services to connect a group of complex scalable systems owned by third parties into a seamless, integrated consumer service. Each system was designed to provide easy upgrade paths.

Competition

We believe the overall market for mobile information services is large, highly fragmented and in its early stages. Among the carriers only AT&T’s M-life and Sprint PCS’s Vision approached the depth of content and service comparable to Pronto; while most of the other companies only compete in segments of the total market: (i) Enhanced directory assistance companies such as MetroOne and InfoNXX; (ii) voice portals such AolbyPhone, TellMe, HeyAnita, and BeVocal; (iii) telematic providers such as OnStar; (iv) concierge providers such as VIP Desk and Circles, and (v) wireless internet providers such as Palm and Blackberry services.

Intellectual Property Rights

We had filed applications to register in the United States the marks “Pronto,” “The New Mobile Experience,” “i3 Mobile,” “Powered by i3 Mobile,” “Mobile Communities,” “The Possibilities are Wireless” (Class 42), “Kewlphone” and “i3 (m)Power Portal.” In addition, we have registered the marks “The Possibilities are Wireless” (Class 38), “Eyes on the Web,” “Village Square,” “News Alert Service,” “Sports Alert Service,” “Powered by III” and “Intelligent Information Incorporated” on the Principal Register of the United States Patent and Trademark Office.

We rely on a combination of copyright, trademark, service mark, trade secret laws and contractual restrictions to establish and protect certain proprietary rights in our products and services.

See “Products and Services” for a discussion of the various licenses under which we obtain the content and information we provided to Pronto subscribers.

Government Regulation

We are not currently subject to direct federal, state or local government regulation, other than regulations that apply to businesses generally. The wireless network operators with which we have contracts are subject to

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regulation by the Federal Communications Commission. Therefore, changes in Federal Communications Commission regulations could affect the availability of wireless coverage these carriers are willing or able to provide to us.

Legislative proposals have been made in the United States that, if enacted, would afford broader protection to owners of databases of information, such as stock quotes and sports scores. If enacted, this legislation could result in an increase in the price of services that provide data to wireless communications devices and could create potential liability for unauthorized use of this data.

Employees

As of December 31, 2002, we had 1 part-time and 90 full-time employees. We consider our relations with our employees to be adequate. None of our employees are represented by a union.

Where You Can Find More Information

We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any material we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330 for further information on the public reference rooms.

Item 2.    Properties

Our principal executive offices are located on the third floor at 181 Harbor Drive, Stamford, Connecticut. We currently operate two facilities under leases as follows:

We believe that our present space is adequate for current purposes and offers moderate expansion possibilities.

Item 3.    Legal Proceedings

None.

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

None.

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Part II.

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

Our shares have traded on the Nasdaq National Stock Market under the trading symbol “IIIM” from our initial public offering on April 6, 2000 until September 19, 2002, at which time our shares began trading on the Nasdaq Small Cap Market. The following table sets forth, for the periods indicated, the range of high and low closing bid quotations as reported by Nasdaq for each quarter of the past two years. The bid quotations set forth below reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

On April 7, 2003, the last reported closing price for our shares was $0.39 per share, as reported by Nasdaq. At April 7, 2003, we had approximately 82 stockholders of record. We estimate that there are approximately 3,802 beneficial owners of our common stock.

We have never paid cash dividends on our common stock and do not expect to pay such dividends in the foreseeable future. We currently intend to retain any future earnings for use in our business. The payment of any future dividends on our common stock will be determined by our Board in light of the conditions then existing, including our financial condition and requirements, future prospects, restrictions in future financing agreements, business conditions and other relevant factors.

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Item 6.    Selected Financial Data

The selected consolidated financial data set forth below should be read along with such consolidated financial statements and the related notes and the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”