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

Form 10-K

Commission file number 000-31511

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

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

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

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

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

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

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

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE

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

TABLE OF CONTENTS

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

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

PART I

Item 1.    Business

Overview

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

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

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

The @Road Solution

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

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

Figure 1

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

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

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

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

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



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



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

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

Strategy

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

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



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

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

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



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

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

@Road Solutions

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

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

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

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

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

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

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

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

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

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

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

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



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



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



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



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



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

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

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



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



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

Customers

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

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

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

Research and Development

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

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



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

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

Technology

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

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

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



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



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



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

Key Alliances and Relationships

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

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

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

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

Sales and Marketing

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

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



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



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



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



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

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

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

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Competition

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

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

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



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



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



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Solutions offered by smaller market entrants.

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

Intellectual Property

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

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

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

Employees

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

Item 2.    Properties

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

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

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

Item 3.    Legal Proceedings

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

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

        None.

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PART II

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

Price Range of Common Stock

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

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

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

Dividend Policy

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

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Item 6.    Selected Financial Data

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