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<SEC-DOCUMENT>/in/edgar/work/0001095811-00-004115/0001095811-00-004115.txt : 20001030
<SEC-HEADER>0001095811-00-004115.hdr.sgml : 20001030
ACCESSION NUMBER:		0001095811-00-004115
CONFORMED SUBMISSION TYPE:	S-1/A
PUBLIC DOCUMENT COUNT:		4
FILED AS OF DATE:		20001027

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NOVATEL WIRELESS INC
		CENTRAL INDEX KEY:			0001022652
		STANDARD INDUSTRIAL CLASSIFICATION:	 [7370
]		IRS NUMBER:				860824673
		STATE OF INCORPORATION:			DE
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		S-1/A
			SEC ACT:		
			SEC FILE NUMBER:	333-42570
			FILM NUMBER:		746862
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		9360 TOWNE CENTRE DR
				STREET 2:		SUITE 110
				CITY:			SAN DIEGO
				STATE:			CA
				ZIP:			92121
				BUSINESS PHONE:		8583208800
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		9360 TOWNE CENTRE DR
					STREET 2:		SUITE 110
					CITY:			SAN DIEGO
					STATE:			CA
					ZIP:			92121
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-1/A
<SEQUENCE>1
<FILENAME>a62761a6s-1a.txt
<DESCRIPTION>AMENDMENT NO. 4 TO FORM S-1
<TEXT>

<PAGE>   1


    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 2000

                                                      REGISTRATION NO. 333-42570
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                AMENDMENT NO. 4

                                       TO

                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------

                             NOVATEL WIRELESS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------

<TABLE>
<S>                             <C>                                                        <C>
           DELAWARE                                        4812                                      86-0824673
(STATE OR OTHER JURISDICTION OF                (PRIMARY STANDARD INDUSTRIAL                       (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                 CLASSIFICATION CODE NUMBER)                     IDENTIFICATION NUMBER)
</TABLE>

                            9360 TOWNE CENTRE DRIVE
                                   SUITE 110
                              SAN DIEGO, CA 92121
                                 (858) 320-8800
         (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
            AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
                                   JOHN MAJOR
                            CHIEF EXECUTIVE OFFICER
                             NOVATEL WIRELESS, INC.
                            9360 TOWNE CENTRE DRIVE
                                   SUITE 110
                              SAN DIEGO, CA 92121
                                 (858) 320-8800
                (NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE
               NUMBER INCLUDING AREA CODE, OF AGENT FOR SERVICE)
                            ------------------------

                                   COPIES TO:

<TABLE>
<S>                                                   <C>
              BLASE P. DILLINGHAM, ESQ.                              J. SCOTT HODGKINS, ESQ.
               PATRICK T. WATERS, ESQ.                                  LATHAM & WATKINS
             JEAN-JACQUES B. DUPRE, ESQ.                              633 WEST FIFTH STREET
         ORRICK, HERRINGTON & SUTCLIFFE LLP                           LOS ANGELES, CA 90017
                 777 SOUTH FIGUEROA                                      (213) 485-1234
                LOS ANGELES, CA 90017
                   (213) 629-2020
</TABLE>

                            ------------------------
        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the effective date of this Registration Statement.
                            ------------------------

     If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box.  [ ]

     If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.  [ ] ______

     If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ______

     If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ______

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2

        The information in this preliminary prospectus is not complete and may
        be changed. We may not sell these securities until the registration
        statement filed with the Securities and Exchange Commission is
        effective. This preliminary prospectus is not an offer to sell these
        securities and it is not soliciting an offer to buy these securities in
        any state where the offer or sale is not permitted.


                 SUBJECT TO COMPLETION, DATED OCTOBER 27, 2000


                                7,000,000 Shares

                                 [NOVATEL LOGO]

                                  Common Stock
                               ------------------

     Prior to this offering, there has been no public market for our common
stock. The initial public offering price of the common stock is expected to be
between $10.00 and $12.00 per share. Subject to notice of issuance, our common
stock has been approved for listing on The Nasdaq Stock Market's National Market
under the symbol "NVTL".

     The underwriters have an option to purchase a maximum of 1,050,000
additional shares to cover over-allotments of shares.

     INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 6.

<TABLE>
<CAPTION>
                                                                            UNDERWRITING
                                                           PRICE TO         DISCOUNTS AND       PROCEEDS TO
                                                            PUBLIC           COMMISSIONS     NOVATEL WIRELESS
                                                           --------         -------------    ----------------
<S>                                                    <C>                <C>                <C>
Per Share............................................          $                  $                  $
Total................................................          $                  $                  $
</TABLE>

     Delivery of the shares of common stock will be made on or about
                    , 2000.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
CREDIT SUISSE FIRST BOSTON
                     U.S. BANCORP PIPER JAFFRAY
                                         BANC OF AMERICA SECURITIES LLC

           The date of this prospectus is                     , 2000
<PAGE>   3

     The inside front cover contains a graphic of our product portfolio.
<PAGE>   4

                               ------------------

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
PROSPECTUS SUMMARY....................    2
RISK FACTORS..........................    6
SPECIAL NOTE REGARDING FORWARD-
  LOOKING STATEMENTS..................   18
USE OF PROCEEDS.......................   19
DIVIDEND POLICY.......................   19
CAPITALIZATION........................   20
DILUTION..............................   21
SELECTED FINANCIAL DATA...............   22
MANAGEMENT'S DISCUSSION AND ANALYSIS
  OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.......................   24
BUSINESS..............................   32
MANAGEMENT............................   47
RELATED PARTY TRANSACTIONS............   59
</TABLE>

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
PRINCIPAL STOCKHOLDERS................   64
DESCRIPTION OF SECURITIES.............   67
SHARES ELIGIBLE FOR FUTURE SALE.......   70
IMPORTANT UNITED STATES TAX
  CONSEQUENCES TO NON-U.S. HOLDERS OF
  OUR COMMON STOCK....................   72
UNDERWRITING..........................   75
NOTICE TO CANADIAN RESIDENTS..........   78
LEGAL MATTERS.........................   79
EXPERTS...............................   79
WHERE YOU CAN FIND ADDITIONAL
  INFORMATION.........................   79
INDEX TO CONSOLIDATED FINANCIAL
  STATEMENTS..........................  F-1
</TABLE>

                               ------------------

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. NEITHER WE NOR THE UNDERWRITERS HAVE AUTHORIZED
ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY BE
USED ONLY WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS
PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS DOCUMENT.

                     DEALER PROSPECTUS DELIVERY OBLIGATION

     UNTIL             , 2000 (25 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>   5

                               PROSPECTUS SUMMARY

     You should read the following summary together with the more detailed
information regarding our company and financial statements appearing elsewhere
in this prospectus. This prospectus contains forward-looking statements. The
outcome of the events described in these forward-looking statements is subject
to risks and actual results could differ materially. The sections entitled "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," as well as those discussed elsewhere in
this prospectus, contain a discussion of some of the factors that could
contribute to those differences.

                                  OUR COMPANY

     We are a provider of wireless data communications access solutions. We
provide wireless data modems and software for use with handheld computing
devices and portable personal computers. Our products enable professionals and
consumers to access enterprise networks and the Internet "anytime, anywhere." We
also provide wireless data modems which can be integrated into other devices for
a wide range of vertical applications. We also offer provisioning, activation
and systems integration services to our customers to facilitate use of our
products.

     We have a strong history of designing innovative wireless access products.
We designed and delivered the first products to enable wireless connectivity for
the Palm family of handheld computing devices. We have successfully developed
and are continuing to develop solutions that enable our customers to wirelessly
access data utilizing a wide range of mobile computing devices across a broad
range of wireless data network technologies. Our current product portfolio
includes the following:

     - The Minstrel line of Wireless Modem cradles, for the Palm family of
       handheld computing devices and the Casio E-15 Windows Pocket PC handheld
       device;

     - The Merlin Type II PC Card, for portable and desktop personal computers
       (PCs);

     - The Sage Wireless Modem, for portable and desktop PCs;

     - The NRM-6812 and Expedite Wireless OEM Modem, for custom integration with
       computers and other devices; and

     - The Lancer 3W Wireless Modem, for vehicle-mounted applications.


     Our core modem technology is easily customized to address a broad range of
vertical applications. Our customers include wireless telecommunications
operators such as Verizon Wireless and AT&T Wireless, and wireless data content
and service providers such as OmniSky Corporation, GoAmerica Communications
Corp. and CreSenda Wireless. We also have original equipment manufacturer (OEM)
customers such as @Road, Harvest/Coca-Cola and KeyCorp and we have entered into
strategic technology and development relationships within the wireless
communications industry with Intel Corporation, Hewlett-Packard Company,
Metricom, Inc., OmniSky, Symbol Technologies, Inc. and VoiceStream Wireless
Corp.


     The convergence of mobile computing, wireless communications and the
Internet and enterprise networks is driving the rapidly expanding demand for
wireless data access. The explosion of the Internet and enterprise networks has
accelerated the development of applications for communications, information
access, content and commerce. As professionals and consumers have become
increasingly dependent on the growing functionality, productivity and
convenience offered by these applications, they are demanding wireless
connectivity for their mobile computing devices. We believe that demand for an
ever increasing range of wireless data applications will continue to grow as
wireless data network coverage, bandwidth and security improve to allow higher
quality service.

                                        2
<PAGE>   6

     To meet this rapidly growing demand, we provide the following advantages to
our customers:

     Breadth of Wireless Access Products. Our products enable both handheld
computing devices and portable PCs to wirelessly access the Internet and
enterprise networks. We also provide wireless modems to enable wireless
connectivity to a broad range of devices for vertical applications.

     Price Performance Leadership. We have designed our products to provide high
levels of performance and functionality with attractive pricing to drive
widespread adoption among users.

     Convenience. Our products provide users with wireless connectivity to the
Internet and enterprise networks with a focus on ease-of-use and real-time
access to e-mail, online content and critical personal and professional
information. We have designed our products to reduce their size and weight
without compromising performance.

     Productivity. Our products enhance productivity by enabling handheld
devices and portable PCs to be in constant connection with the Internet and
enterprise networks. Our products for handheld devices also enable wireless
synchronization so users can backup and access personal and professional data
from remote locations.

     Customized Solutions. Our technology platform enables us to provide
wireless data solutions for a wide range of specialized applications and to
adapt our products to specific customer needs. We enable our OEM customers to
provide their clients with tailored solutions for vertical market applications
such as securities trading, field services and sales, public safety
transportation, retail and point of sale terminals, telemetry and vending system
monitoring.

     Our objective is to be the leading global provider of wireless data access
products. The key elements of our strategy include:

     - Extending our technology leadership to capitalize on the evolution and
       expansion of global wireless data access technologies;

     - Driving widespread adoption of our products by increasing our sales and
       marketing activities, continuing to price our products strategically and
       to improve their ease-of-use;

     - Expanding and developing strategic relationships to improve the design
       and functionality of our wireless access products and rapidly gain market
       share;

     - Continuing to target key vertical markets by offering products that
       increase productivity, reduce costs and create operational efficiencies;
       and

     - Developing value-added applications to expand the capabilities of our
       products.

                             CORPORATE INFORMATION

     We were incorporated in Delaware on April 26, 1996 when we acquired certain
intellectual property rights relating to wireless communications. Our principal
executive offices are located at 9360 Towne Centre Drive, Suite 110, San Diego,
California 92121. Our telephone number at that location is (858) 320-8800.
References in the prospectus to "we," "our," "us" and the "Company" refer to
Novatel Wireless, Inc. together with our consolidated subsidiaries. Our Web site
is www.novatelwireless.com. This reference to our website is not an active
hyperlink, nor is the information contained in our Web site incorporated by
reference into this prospectus and it does not constitute part of this
prospectus.

     Our trademarks and service marks include Contact(R), Expedite(TM), Lancer
3W(TM), Merlin(TM), Minstrel(R), Minstrel IIIc(TM), Minstrel III(TM), Minstrel
V(TM), Minstrel Plus(TM), Minstrel S(TM), MissionONE(TM), Sage(R), Viking(TM),
Expedite(TM), each with its accompanying design, and the Novatel Wireless logo.
Novatel Wireless, our logo and other trademarks and service marks mentioned in
this prospectus are the property of Novatel Wireless, Inc. or its subsidiaries.
All other brand names, trademarks, or service marks of other companies and
products appearing in this prospectus are the property of their respective
holders.

                                        3
<PAGE>   7

                                  THE OFFERING

Common stock offered by us..........     7,000,000 shares of our common stock


Common stock to be outstanding after
  the offering......................     52,105,253 shares of our common stock


Use of proceeds.....................     For working capital and general
                                         corporate purposes, including increased
                                         research and development and sales and
                                         marketing expenditures. See "Use of
                                         Proceeds."

Nasdaq National Market symbol.......     NVTL


     The number of shares of our common stock to be issued and outstanding
immediately after this offering is based on the number of shares issued and
outstanding as of the date of this prospectus. It also reflects a three-for-one
split of each share of our common stock and preferred stock, which we effected
in September 2000, and the automatic conversion into shares of our common stock
upon completion of this offering of (i) all series of preferred stock
outstanding as of the date of this prospectus and (ii) all shares of preferred
stock of our subsidiary Novatel Wireless Technologies, Ltd. an Alberta, Canada
corporation (NWT) (discussed below). In addition to the shares of common stock
to be outstanding after this offering, there are:



     - 10,417,220 shares of common stock that could be issued upon the exercise
       of options outstanding as of September 30, 2000 at a weighted average
       exercise price of $4.55 per share;



     - 10,548,541 shares of common stock that could be issued upon the exercise
       of warrants outstanding as of September 30, 2000 at a weighted average
       exercise price of $2.79 per share;


     - 5,594,632 shares of common stock that could be issued in the future under
       our stock option plans as of September 30, 2000;

     - 1,500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.

     Prior to this offering, the authorized capital stock of our subsidiary,
NWT, consisted of an unlimited number of Series A preferred shares, an unlimited
number of Series B preferred shares and an unlimited number of common shares. In
September 2000, all the NWT Series A preferred shares and all the NWT Series B
preferred shares were exchanged for an equal number of shares of our Series A
preferred stock and our Series B preferred stock, respectively, and upon
consummation of this offering will automatically convert into an aggregate of
4,396,236 shares of our common stock. Additionally, all the outstanding warrants
to purchase NWT common stock have been exchanged for warrants to purchase an
equal number of shares of our common stock. In this prospectus, we refer to
these exchanges, together, as the "NWT Exchange."

     Except as otherwise specified in this prospectus, all information in this
prospectus assumes:

     - the three-for-one split of each share of our common stock and preferred
       stock which we effected in September 2000, after the occurrence of the
       NWT Exchange;

     - the automatic conversion of all the outstanding shares of our preferred
       stock into shares of our common stock immediately prior to the completion
       of this offering;

     - the filing of our amended and restated certificate of incorporation with
       the Delaware Secretary of State;

     - the effectiveness of our 2000 stock incentive plan and our 2000 employee
       stock purchase plan; and

     - no exercise of the underwriters' over-allotment option.

                                        4
<PAGE>   8

                             SUMMARY FINANCIAL DATA


     You should read the following selected financial data in conjunction with
our consolidated financial statements and the related notes and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which are included elsewhere in this prospectus. The consolidated
statements of operations data for the years ended December 31, 1997, 1998 and
1999, and the balance sheet data at December 31, 1998 and 1999, are derived from
our consolidated financial statements which have been audited by Arthur Andersen
LLP and which are included elsewhere in this prospectus. The consolidated
statement of operations data for the period from inception to December 31, 1996
is derived from audited consolidated financial statements not included in this
prospectus. The balance sheet data at September 30, 2000 and consolidated
statements of operations data for the nine months ended September 30, 1999 and
2000 are derived from unaudited consolidated financial statements which are
included elsewhere in this prospectus. See notes 4 and 14 of the notes to the
consolidated financial statements for an explanation of the number of shares
used to compute net loss per share and pro forma net loss per share. The
historical financial information may not be indicative of our future
performance, and results of interim periods may not be indicative of results
that may be expected for any other interim period or for the year as a whole.



<TABLE>
<CAPTION>
                                        PERIOD FROM                                                  NINE MONTHS
                                       APRIL 26, 1996                                                   ENDED
                                       (INCEPTION) TO      FISCAL YEAR ENDED DECEMBER 31,           SEPTEMBER 30,
                                        DECEMBER 31,    ------------------------------------   ------------------------
                                            1996           1997         1998         1999         1999         2000
                                       --------------   ----------   ----------   ----------   ----------   -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)                                                      (UNAUDITED)
<S>                                    <C>              <C>          <C>          <C>          <C>          <C>
CONSOLIDATED STATEMENT OF OPERATIONS
  DATA:
Revenue..............................    $      277     $    3,354   $    5,378   $    9,556   $    5,514   $    33,408
Cost of revenue......................           168          1,856        3,433       11,955        5,751        34,970
                                         ----------     ----------   ----------   ----------   ----------   -----------
Gross margin.........................           109          1,498        1,945       (2,399)        (237)       (1,562)
Operating expenses:
  Research and development...........         2,650          1,995        2,333        3,717        1,926         8,902
  Sales and marketing................           256          2,058        2,685        4,480        2,630        10,468
  General and administrative.........           656          1,944        2,496        4,443        3,335         3,345
  Amortization of deferred stock
    compensation.....................            --             --          115          220          166         6,523
Net loss.............................        (3,462)        (4,476)      (5,506)     (18,469)      (9,530)      (30,270)
Net loss per common share:
  Basic and diluted..................    $    (0.37)    $    (0.51)  $    (0.69)  $    (2.04)  $    (1.09)  $     (3.31)
  Weighted average shares
    outstanding......................     9,711,630      9,711,630    9,711,630    9,728,421    9,723,737    10,138,695
Pro forma net loss per share
  (unaudited)(1):
  Basic and diluted..................                                             $    (0.73)  $    (0.39)  $     (0.75)
  Weighted average shares
    outstanding......................                                             27,199,269   27,164,387    44,494,326
</TABLE>



<TABLE>
<CAPTION>
                                                                SEPTEMBER 30, 2000
                                                              ----------------------
                                                                             AS
                                                               ACTUAL    ADJUSTED(2)
                                                              --------   -----------
<S>                                                           <C>        <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...................................  $ 13,893    $ 86,403
Working capital.............................................    20,003      92,513
Total assets................................................    48,061     120,571
Total long-term liabilities.................................       289         289
Stockholders' equity........................................   (24,556)     99,446
</TABLE>


- ---------------
(1) See notes 4 and 14 of the notes to the consolidated financial statements for
    an explanation of the determination of the number of shares and share
    equivalents used in computing pro forma per share amounts.


(2) "As adjusted" reflects the application of the net proceeds from the sale of
    7,000,000 shares of common stock offered by us at an assumed initial public
    offering price of $11.00 per share, after deducting the underwriting
    discounts and commissions and the estimated offering expenses (See "Use of
    Proceeds" and "Capitalization") and the sale of 434,782 shares of our Series
    D preferred stock that we issued and sold in October 2000 for net proceeds
    of $2,500,000.


                                        5
<PAGE>   9

                                  RISK FACTORS

     An investment in our common stock involves a high degree of risk. You
should carefully consider the risks and uncertainties described below and the
other information contained in this prospectus before you decide whether to
invest in our common stock. If any of the following risks actually occurs, our
business, financial condition, results of operations and liquidity could be
materially adversely affected. This may cause the trading price of our common
stock to decline after this offering, and you could lose part or all of the
money you paid to purchase our common stock.

                         RISKS RELATED TO OUR BUSINESS

WE HAVE INCURRED SIGNIFICANT OPERATING LOSSES SINCE OUR INCEPTION AND WE EXPECT
TO CONTINUE TO INCUR SIGNIFICANT NET LOSSES AND NEGATIVE CASH FLOWS FOR THE
FORESEEABLE FUTURE.


     We have experienced operating losses and net losses in each quarterly and
annual period since our inception, and we expect to continue to incur
significant losses for the foreseeable future. We incurred net losses of $3.5
million for the eight months ended December 31, 1996, $4.5 million for the year
ended December 31, 1997, $5.5 million for the year ended December 31, 1998,
$18.5 million for the year ended December 31, 1999 and $30.3 million for the
nine months ended September 30, 2000. In addition, we had negative cash flows
from operations of $3.5 million for the year ended December 31, 1997, $5.0
million for the year ended December 31, 1998 and $5.2 million for the year ended
December 31, 1999 and $38.7 million for the nine months ended September 30,
2000. As of September 30, 2000, we had an accumulated deficit of $68.7 million.
We expect our operating expenses and negative cash flows will increase
substantially as we continue to attempt to expand our business. We also expect
to significantly increase our product development, sales and marketing, research
and development, manufacturing, and general and administrative expenses in
future periods. We have entered into and expect to continue to enter into
significant customer contracts for the development and supply of our products.
These contracts may place significant demands on our resources. If we are unable
to increase our revenue sufficiently to offset these expected increases in our
expenses, we will not achieve profitability and our operating losses, net losses
and negative cash flows will increase.


BECAUSE WE HAVE BEEN OPERATING ONLY SINCE 1996, OUR HISTORIC OPERATING RESULTS
MAY NOT BE MEANINGFUL TO AN INVESTOR EVALUATING OUR COMPANY.

     We launched our first wireless modem in 1996. Because we have a limited
operating history for you to evaluate when considering an investment in our
company, it may be difficult for you to evaluate our current business and
prospects. You must consider the risks, expenses and uncertainties that an early
stage company like ours faces, particularly in the new and rapidly evolving
wireless communications market. These considerations include our ability to
continue to expand our customer base, maintain our current
strategic-relationships and develop new ones, deliver products associated with
our key contracts in a profitable and timely manner, attract and retain
qualified personnel and manage our growth. Because we have only recently
commenced commercial sales of our products, our past results and rates of growth
may not be meaningful, and you should not rely on them as an indication of our
future performance.

IF WE DO NOT CORRECTLY ANTICIPATE DEMAND FOR OUR PRODUCTS, WE MAY NOT BE ABLE TO
ARRANGE COST-EFFECTIVE PRODUCTION OF OUR PRODUCTS OR WE COULD HAVE COSTLY EXCESS
INVENTORIES OR PRODUCTION.

     Historically, we have experienced steady increases in demand for our
products and generally have been able to arrange for increased production to
meet that demand. However, the demand for our products depends on many factors
and is difficult to predict. We expect that it will become more difficult to
predict demand for specific products as we introduce and support multiple
wireless communications products and

                                        6
<PAGE>   10

as competition in the market for our products intensifies. Significant
unanticipated fluctuations in demand could cause the following problems in our
operations:

     - If demand increases beyond what we anticipate, we would have to rapidly
       arrange for increased production at our third-party manufacturers. Our
       manufacturers depend on suppliers to provide additional volumes of
       components. If these suppliers cannot provide the additional volumes of
       components, our manufacturers may not be able to increase production
       rapidly enough to meet the unexpected demand. Even if our manufacturers
       are able to procure enough components, they may not be able to produce
       enough of our products to allow us to deliver them in a timely manner to
       our customers. The inability of our suppliers to provide material
       components or of our manufacturers to increase production rapidly enough
       or to sufficient levels could cause us to fail to meet customer demand.

     - Rapid increases in production levels to meet unanticipated demand could
       result in higher costs for manufacturing and supply of components and
       other expenses. These higher costs could lower our profit margins.
       Further, if production is increased rapidly, manufacturing yields could
       decline, which may also lower our profit margins.

     - If anticipated demand does not develop, we could have excess inventories
       of finished products and components, which would reduce our cash flow and
       could lead to write-offs of some or all of the excess inventories. Lower
       than anticipated demand could also result in manufacturing activity at
       our third-party manufacturers below the minimum manufacturing activity
       level for which we are financially committed, which could result in
       higher costs of goods sold and lower profit margins.

IF WE CANNOT DELIVER PRODUCTS ASSOCIATED WITH OUR SIGNIFICANT CONTRACTS IN A
PROFITABLE AND TIMELY MANNER, OUR REPUTATION COULD BE HARMED AND OUR REVENUE AND
PROFIT MARGINS MAY DECREASE.

     Our ability to generate future revenue under many of our significant supply
contracts depends upon our ability to manufacture and supply products that meet
defined specifications. To realize the benefits of these agreements, we will
have to manage the following risks successfully:

     - We have priced these contracts on our estimate of future production
       costs. If we incur higher costs than anticipated, our gross margins on
       these contracts will decrease and these contracts may not be as
       profitable as they otherwise may have been.

     - If we are unable to commit the necessary resources or are unable to
       deliver our products as required by the terms of these contracts, our
       customers may cancel the contracts. In that event, we might not recover
       any costs that we incurred for research and development, sales and
       marketing, production and otherwise and we may incur additional costs as
       contractual penalties.

     - If we fail to meet a delivery deadline, or a customer determines that the
       products we delivered do not meet the agreed-upon specifications, we may
       have to reduce the price we can charge for our products, or we may be
       liable to pay damages to the customer.

If we are unable to successfully manage these risks or meet required deadlines
in connection with one or more of our key contracts, our reputation could be
harmed and our business, financial condition, results of operations and
liquidity could be materially adversely affected.

IF THE MARKET FOR WIRELESS ACCESS TO THE INTERNET DOES NOT CONTINUE TO GROW, OUR
REVENUE WILL LIKELY DECLINE.

     The market for wireless access to the Internet has experienced significant
growth in recent years. However, we cannot assure you that the market for our
existing products will continue to grow, that potential customers within the
industry will adopt our products for integration with their wireless data
communications solutions, or that we will be successful in independently
establishing markets for our products. If the wireless data communications
market fails to grow, or grows more slowly than we

                                        7
<PAGE>   11

currently anticipate, or if we are unable to establish markets for our new
products, our business, financial condition, results of operations and liquidity
could be materially adversely affected.

THE MARKETABILITY OF OUR PRODUCTS MAY SUFFER IF WIRELESS TELECOMMUNICATIONS
OPERATORS DO NOT DELIVER ACCEPTABLE WIRELESS SERVICES.

     The success of our business depends on the capacity, affordability and
reliability of wireless data access provided by various wireless
telecommunications operators. Currently, various wireless telecommunications
operators such as Verizon Wireless and AT&T Wireless, either directly or jointly
with us, sell our products in connection with the sale of their wireless data
access services to their customers. Growth in demand for wireless data access
may be limited if wireless telecommunications operators fail to offer services
which customers consider valuable, fail to maintain sufficient capacity to meet
demand for wireless data access, delay the expansion of their wireless networks
and services, fail to offer and maintain reliable wireless network services or
fail to market their services effectively. If any of these occurs, or if for any
other reason the demand for wireless data access fails to grow, sales of our
products will decline and our business, financial condition and results of
operations could be materially adversely affected.

     In addition, our future growth depends on the successful deployment of next
generation wireless data networks by third parties, including those networks for
which we currently are developing products. If these next generation networks
are not deployed or widely accepted, or if deployment is delayed, there will be
no market for the products we are developing to operate on these networks. As a
result, we will not be able to recover our research and development expenses and
our financial condition and results of operations and liquidity could be
materially adversely affected.

OUR SUCCESS DEPENDS ON OUR ABILITY TO MANAGE ADDITIONAL GROWTH SUCCESSFULLY.

     Our ability to successfully offer our products and implement our business
plan in a rapidly evolving market requires an effective planning and management
process. We have continued to increase the scope of our operations domestically
and have grown our shipments and headcount substantially. At September 30, 2000,
we had a total of approximately 254 employees, representing an increase from 36
employees since March 31, 1997. In addition, we expect to continue to hire a
significant number of employees during the remainder of 2000. Our growth has
resulted, and any future growth will result, in increased responsibilities for
our management and increased demands on our resources. To be successful, we will
need to:

     - implement additional management information systems;

     - improve our operating, administrative, financial and accounting systems,
       procedures and controls;

     - maintain and expand our manufacturing capacity;

     - continue to train, motivate, manage and retain our existing employees and
       attract and integrate new employees; and

     - maintain close coordination among our executive, engineering,
       professional services, accounting, finance, marketing, sales and
       operations organizations.

     We may not adequately anticipate all the demands that growth may impose on
our systems, procedures and structure. If we fail to anticipate and respond
adequately to these demands or if we are otherwise unable to manage our growth
effectively, we may not be able to compete effectively and our business,
financial condition, results of operations and liquidity could be materially
adversely affected.

WE CURRENTLY RELY EXCLUSIVELY ON THIRD-PARTY MANUFACTURERS TO PRODUCE OUR
PRODUCTS, AND OUR ABILITY TO CONTROL THEIR OPERATIONS IS LIMITED.

     We currently outsource all our manufacturing to Sanmina Corporation, GVC
Corporation and Solectron de Mexico, S.A. de C.V. Because we only recently
entered into our agreements with GVC Corporation and Solectron, we have not had
any significant working experience with either of these
                                        8
<PAGE>   12

manufacturers. We expect GVC and Solectron to begin manufacturing some of our
products at their facilities in Taiwan and Mexico, respectively, in the near
future. We expect to continue to depend exclusively on third-party manufacturers
to produce our products in a timely fashion and at satisfactory quality levels.
Neither of these third-party manufactures is obligated to supply products to us
for any specific quantity, except as may be provided in particular purchase
orders which we submit to them from time to time. If our third-party
manufacturers experience delays, disruptions, capacity constraints or quality
control problems in their manufacturing operations, then product shipments to
our customers could be delayed, which would negatively impact our revenues and
our competitive position and reputation. The cost, quality and availability of
third-party manufacturing operations are essential to the successful production
and sale of our products. Our reliance on our third-party manufacturers exposes
us to a number of risks which are outside our control:

     - unexpected increases in manufacturing costs;

     - interruptions in shipments if our third-party manufacturers are unable to
       complete production timely;

     - inability to control quality of finished products;

     - inability to control delivery schedules;

     - inability to control production levels and to meet minimum volume
       commitments to our customers;

     - inability to control manufacturing yield;

     - inability to maintain adequate manufacturing capacity; and

     - inability to secure adequate volumes of components.

     If we are unable to manage successfully our relationships with these
third-party manufacturers, the quality and availability of our products may be
harmed. If any of our third-party manufacturers stopped manufacturing our
products or reduced its manufacturing capacity, we may be unable to replace the
lost manufacturing capacity on a timely basis. In addition, if any of our
third-party manufacturers changed the terms under which they manufacture for us,
our manufacturing costs could significantly increase. We generally place orders
with our third-party manufacturers at least three months prior to scheduled
delivery of products to our customers. Accordingly, if we inaccurately
anticipate demand for our products, we may be unable to obtain adequate
quantities of components to meet our customers' delivery requirements or we may
accumulate excess inventories. If one or more of these events were to occur, our
business, financial condition and results of operations could be materially
adversely affected by increased costs, reduced revenue and lower profit margins.

IF WE FAIL TO ADOPT NEW TECHNOLOGY AND FAIL TO DEVELOP AND INTRODUCE NEW
PRODUCTS SUCCESSFULLY, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.

     We operate in a highly competitive environment, characterized by rapidly
changing technology and industry standards. New products based on emerging
technologies or evolving industry standards may quickly render an existing
product obsolete and unmarketable. Our growth and future operating results
depend in part upon our ability to enhance existing products and introduce newly
developed products that conform to prevailing and evolving industry standards,
meet or exceed technological advances in the marketplace, meet changing customer
requirements, achieve market acceptance and respond to our competitors'
products.

     The development of new products can be very difficult and requires
technological innovation. The development process is also lengthy and costly. In
addition, wireless communications service providers require that wireless data
systems deployed on their networks comply with their own standards, which may
differ from the standards of other providers. If we fail to anticipate our
customers' needs and technological trends accurately or are otherwise unable to
complete the development of products on time and within budgeted amounts, we
will be unable to introduce new products into the market on a timely basis, if
at all.

                                        9
<PAGE>   13

If we are unsuccessful at developing and introducing new products that are
appealing to consumers, we may be unable to recover our significant research and
development costs and our business, financial condition and results of
operations could be materially adversely affected. In addition, as we introduce
new versions of our products or new products, our current customers may not
require the technological innovations of our new products and may not purchase
them.

     To grow our revenue and achieve profitability, we must retain our current
customers and develop new ones. If consumers view our competitors' products as
superior to ours, or if our products are unable to meet their expectations or
requirements, we may be unable to retain our existing customers or to develop
new customers which would materially and adversely effect our business,
financial condition and results of operations.

THE FLUCTUATION OF OUR QUARTERLY OPERATING RESULTS MAY CAUSE OUR STOCK PRICE TO
DECLINE.

     Our future quarterly operating results may fluctuate significantly and may
not meet the expectations of securities analysts or investors. If this occurs,
the market price of our stock would likely decline. The following factors may
cause fluctuations in our operating results:

     - INCREASES IN OPERATING EXPENSES. We expect that our operating expenses,
       particularly our sales and marketing, and our research and development
       costs, will increase. We budget our operating expenses based on
       anticipated sales, and a significant portion of our sales and marketing,
       research and development and general and administrative costs are fixed,
       at least in the short term. If revenue decreases and we are unable to
       reduce our operating costs quickly and sufficiently, our operating
       results could be materially adversely affected. We have entered into and
       expect to continue to enter into significant customer contracts for the
       development and supply of our products. We expect to incur significant
       research and development, sales and marketing and other costs relating to
       the development, manufacture and sale of these products prior to
       receiving revenue from these contracts.

     - PRODUCT MIX. The product mix of our sales affects profit margins in any
       given quarter. As our business evolves and the revenue from the product
       mix of our sales varies from quarter to quarter, our operating results
       will likely fluctuate.

     - NEW PRODUCT INTRODUCTIONS. As we introduce new products, the timing of
       these introductions will affect our quarterly operating results. We may
       have difficulty predicting the timing of new product introductions and
       the market acceptance of these new products. If products and services are
       introduced earlier or later than anticipated, or if market acceptance is
       unexpectedly high or low, our quarterly operating results may fluctuate
       unexpectedly. Our quarterly operating results also fluctuate because we
       incur substantial upfront research and development, sales and marketing,
       production and other costs to support new product introductions prior to
       the periods in which we will recognize revenue from new products.

     - USE OF SUPPLY CONTRACTS WITH CUSTOMERS. We rely on long-term supply
       contracts with our distributor customers. These contracts typically have
       minimum purchase volumes, and also typically include a non-binding,
       forward-looking rolling forecast and allow the customer to make certain
       volume changes within specified periods of time in advance of scheduled
       production dates. We use these forecasts for internal planning of
       material procurement and required manufacturing capacity, but cannot
       predict with certainty incoming orders or changes in forecasts. Our
       operating results may fluctuate as a result of deviations from forecasted
       amounts, the timing of substantial orders, decreases in orders, failure
       to fulfill orders, possible delays or shortages in component supplies, or
       possible delays in the manufacture or shipment of current or new
       products.

     - LENGTHY SALES CYCLE. In addition, the length of time between the date of
       initial contact with a potential customer and the execution of a contract
       may take several months, and is subject to delays over which we have
       little or no control. The sale of our products is subject to delays from
       our customers' budgeting, approval and competitive evaluation processes
       that typically accompany

                                       10
<PAGE>   14

       significant information technology purchasing decisions. For example,
       customers frequently begin by evaluating our products on a limited basis
       and devote time and resources to testing our products before they decide
       whether or not to purchase a product. We commit substantial time and
       resources to educate potential customers on the use and benefits of our
       products. Customers may also defer orders as a result of anticipated
       releases of newer or enhanced products by us or our competitors. As a
       result, our ability to anticipate the timing and volume of sales to
       specific customers is limited, and the delay or failure to complete one
       or more large transactions could cause our operating results to vary
       significantly from quarter to quarter.

     We believe that quarter-to-quarter comparisons of our operating results
will not necessarily be meaningful in predicting our future performance. If we
do not achieve our expected revenue, it is possible that our operating results
will fall below the expectations of market analysts or investors in some future
quarter or quarters. Our failure to meet these expectations would likely
adversely affect the trading price of our common stock.

WE DEPEND UPON A SMALL NUMBER OF OUR CUSTOMERS FOR A SUBSTANTIAL PORTION OF OUR
REVENUE.


     A significant portion of our revenue comes from a small number of
customers. Our top ten customers for the year ended December 31, 1999 and the
nine months ended September 30, 2000 accounted for approximately 83.7% and 79.1%
of our revenue, respectively. @Road, OmniSky and AirLink Communications, Inc.
accounted for 23.1%, 14.3% and 9.2% of our revenue, respectively, for the year
ended December 31, 1999. OmniSky, @Road, and Global Wireless Data accounted for
32.4%, 14.2% and 6.1% of our revenue, respectively, for the nine months ended
September 30, 2000. We expect that a small number of customers will continue to
account for a substantial portion of our revenue for the foreseeable future. If
there is a downturn in the business of any of these customers, if we are unable
to continue to retain their business, or if we are unable to diversify our
customer base, our revenue may decline.


     The term of our agreement with OmniSky expired on May 1, 2000. Although we
are currently negotiating a new agreement, there can be no assurance that we
will arrive at a new agreement with OmniSky or that we will arrive at a new
agreement with terms substantially similar to those contained in the expired
agreement. Also, although we are currently shipping and provisioning modems to
OmniSky, pursuant to an open purchase order with the same terms as those
contained in the expired agreement, there can be no assurance that we will
continue to do so. If we fail to negotiate a new agreement with OmniSky or if we
discontinue shipping and provisioning to OmniSky, our revenue may decline.

WE DEPEND ON SOLE SOURCE SUPPLIERS FOR SOME OF OUR COMPONENTS, AND OUR PRODUCT
AVAILABILITY AND SALES WOULD BE HARMED IF THESE SUPPLIERS ARE NOT ABLE TO MEET
OUR DEMAND AND ALTERNATIVE SOURCES ARE NOT AVAILABLE.

     Our products contain a variety of components that are procured from a
variety of suppliers. These components include both tooled parts and
industry-standard parts, many of which are similar to parts used in cellular
telephone handsets. The cost, quality and availability of components are
essential to the successful production and sale of our products. Some of these
components come from sole or single source suppliers for which alternative
sources may not be available. If suppliers are unable to meet our demand for
sole source components and if we are unable to obtain an alternative source or
if the price for a substitute is prohibitive, our ability to maintain timely and
cost-effective production of our products would be seriously harmed. Currently,
some components and certain integrated circuits are in short supply world-wide
due to the explosive growth in demand for cellular-telephone handsets. If the
shortage of such components or any other key component persists or worsens, we
may not be able to deliver sufficient quantities of our products to satisfy
demand.

IF WE FAIL TO DEVELOP AND MAINTAIN STRATEGIC ALLIANCES, WE MAY NOT BE ABLE TO
PENETRATE NEW MARKETS.

     A key element of our business strategy is to penetrate new markets by
developing new products through strategic alliances with leading companies. We
are currently investing, and plan to continue to

                                       11
<PAGE>   15

invest, significant resources to develop these relationships. We believe that
our success in penetrating new markets for our products will depend in part on
our ability to maintain these relationships and to cultivate additional or
alternative relationships. We cannot assure you that we will be able to develop
additional strategic alliances, that existing relationships will continue or be
successful in achieving their purposes or that strategic partners will not form
competing arrangements.

ANY SIGNIFICANT REDUCTION IN DEMAND FOR HANDHELD COMPUTING DEVICES OR FOR OUR
PRODUCTS DESIGNED FOR THOSE DEVICES MAY HARM OUR BUSINESS.

     A significant amount of our revenue is generated by our products for
handheld computing devices and portable PCs. Although the demand for handheld
computing devices and portable PCs has historically increased at a steady rate,
we cannot assure you that the demand for those devices will continue to grow in
the future. In addition, certain recent models of handheld computing devices and
portable PCs include internal wireless modems installed by the manufacturer
which reduce the need for consumers to purchase our wireless modem products. If
demand for handheld computing devices and portable PCs declines or as more
consumers purchase handheld computing devices and PCs with internal wireless
modems, the demand for our products would materially decrease and our revenue
would decline.

WE MAY NOT BE ABLE TO MAINTAIN AND EXPAND OUR BUSINESS IF WE ARE NOT ABLE TO
INTEGRATE OUR MANAGEMENT TEAM AND RETAIN, HIRE, INTEGRATE AND MANAGE ADDITIONAL
QUALIFIED PERSONNEL.

     Many members of our senior management have joined our company within the
last nine months. In particular, John Major, our chief executive officer, joined
us in July 2000. Melvin Flowers, our chief financial officer, and Steven
Schlief, our vice president of operations, joined us in February 2000 and July
2000, respectively. Peter Leparulo, our senior vice president of corporate and
strategic development and general counsel, joined us in September 2000. As a
result, our current management team has worked together for only a relatively
short time and is in the process of integrating as a management team. Our
ability to execute our strategies will depend upon our ability to integrate
these and future managers into our operations, and there can be no assurance
that we will be able to achieve the rapid execution necessary to fully exploit
the market opportunity for our products.

     Our success in the future depends in part on the continued contribution of
our executive, technical, engineering, sales, marketing, manufacturing and
administrative personnel. Recruiting and retaining skilled personnel, including
software and hardware engineers, is highly competitive, especially in the San
Diego area. Cash compensation is likely to increase for employees with these
skills whom we hire after our initial public offering because prospective
employees may perceive that the stock option component of our compensation
package is not as valuable as it was prior to the offering. In addition, most of
our senior management and other key personnel are not bound by employment
agreements. If we are not able to attract or retain qualified personnel in the
future, or if we experience delays in hiring required personnel, particularly
qualified engineers, we will not be able to maintain and expand our business.

     Over the past year, we have rapidly expanded our direct sales force and
expect to hire additional sales personnel commensurate with our sales
objectives. We may experience difficulty in integrating the new members of our
sales team into our operations. We have limited experience in managing a large,
expanding, geographically dispersed sales force. We cannot be certain that we
will be able to effectively manage the growing sales force in the future or that
newly-hired employees will achieve levels of productivity necessary to sustain
our sales and revenue growth.

ANY ACQUISITIONS WE MAKE COULD DISRUPT OUR BUSINESS AND HARM OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

     As part of our business strategy, we intend to review on an ongoing basis
acquisition opportunities that we believe would be advantageous to the
development of our business. While we have no current agreements or current
discussions with respect to any acquisitions, we may acquire businesses,
products, or technologies in the future. If we make any acquisitions, we could
take any or all of the following actions,

                                       12
<PAGE>   16

any one of which could adversely affect our business, financial condition,
results of operations and the price of our common stock:

     - issue equity securities that would dilute existing stockholders'
       percentage ownership;

     - use a substantial portion of our available cash, including proceeds from
       this offering;

     - incur substantial debt, which may not be available to us on favorable
       terms and may adversely affect our liquidity;

     - assume contingent liabilities; and

     - take substantial charges in connection with the amortization of goodwill
       and other intangible assets.

     Acquisitions also entail numerous risks, including: difficulties in
assimilating acquired operations, products and personnel; unanticipated costs;
diversion of management's attention from other business concerns; adverse
effects on existing business relationships with suppliers and customers; risks
of entering markets in which we have limited or no prior experience; and
potential loss of key employees from either our preexisting business or the
acquired organization. We may not be able to successfully integrate any
businesses, products, technologies or personnel that we might acquire in the
future, and our failure to do so could harm our business and operating results.

OUR FUTURE RESULTS COULD BE HARMED BY RISKS ASSOCIATED WITH INTERNATIONAL SALES
AND OPERATIONS.


     We plan to expand our international sales and marketing activities in the
future. We have limited experience in marketing, selling, distributing and
manufacturing our products and services internationally. For the year ended
December 31, 1999 and the nine months ended September 30, 2000, only
approximately 12% and 9%, respectively, of our revenue was derived from
international accounts. As we expand international sales, we expect to become
subject to a number of risks which may increase our costs, lengthen our sales
cycle and require significant management attention. These risks associated with
doing business internationally generally include:


     - changes in foreign currency exchange rates;

     - changes in a specific country's or region's political or economic
       conditions, particularly in emerging markets, and changes in diplomatic
       and trade relationships;

     - less effective protection of intellectual property;

     - trade protection measures and import or export licensing requirements;

     - potentially negative consequences from changes in tax laws;

     - increased expenses associated with customizing products for foreign
       countries;

     - unexpected changes in regulatory requirements resulting in unanticipated
       costs and delays;

     - longer collection cycles and difficulties in collecting accounts
       receivable; and

     - difficulty in managing widespread sales and research and development
       operations.

     Our sales and invoices are currently denominated in U.S. dollars. In the
future, however, we may record sales and invoice customers in the applicable
local foreign currency. If that occurs, we may be exposed to international
currency fluctuations.

THE WIRELESS COMMUNICATIONS MARKET IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO
COMPETE EFFECTIVELY.

     We compete in the wireless communications markets. The markets for wireless
data access products are highly competitive and we expect competition to
increase. Many of our competitors or potential competitors have significantly
greater financial, technical and marketing resources than we do. These
competitors may be able to respond more rapidly than we can to new or emerging
technologies or changes

                                       13
<PAGE>   17

in customer requirements. They also may devote greater resources than we do to
the development, promotion and sale of their products.

     Many of our competitors have more extensive customer bases and broader
customer relationships and industry alliances that they could leverage to
establish relationships with many of our current and potential customers. These
companies also have significantly more established customer support and
professional services organizations. In addition, these companies may adopt
aggressive pricing policies or offer more attractive terms to customers, may
bundle their competitive products with broader product offerings and may
introduce new products and enhancements. Current and potential competitors may
establish cooperative relationships among themselves or with third parties to
enhance their products. As a result, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share.

     Our wireless communications products compete with a variety of devices,
including wireless modems, traditional wired modems, wireless handsets, wireless
handheld computing devices and other wireless devices. Our current and potential
competitors include:

     - Wireless modem manufacturers, such as Sierra Wireless, Uniden, NextCell
       and Tellus;

     - Traditional wired modem manufacturers, such as 3Com and Xircom;

     - Wireless device manufacturers, such as Handspring, Palm and Research in
       Motion;

     - Wireless handset manufacturers and next generation wireless technology
       providers, such as Ericsson, Motorola and Nokia; and

     - Non-CDPD private communications network providers, such as Emotiant, Bell
       South and Metricom.

     We expect our competitors to continue to improve the performance of their
current products and to introduce new products, services and technologies.
Successful new product introductions or enhancements by our competitors could
reduce our sales and the market acceptance of our products, cause intense price
competition and make our products obsolete. To be competitive, we must continue
to invest significant resources in research and development, sales and
marketing, and customer support. We cannot be sure that we will have sufficient
resources to make these investments or that we will be able to make the
technological advances necessary to remain competitive. Increased competition
could result in price reductions, fewer customer orders, reduced margins and
loss of our market share. Our failure to compete successfully could seriously
harm our business, financial condition and results of operations.

OUR PRODUCTS MAY CONTAIN ERRORS OR DEFECTS WHICH COULD DECREASE THEIR MARKET
ACCEPTANCE.

     Our products are technologically complex and must meet stringent user
requirements. We must develop our software and hardware products quickly to keep
pace with the rapidly changing and technologically advanced wireless
communications market. Products as sophisticated as ours may contain undetected
errors or defects, especially when first introduced or when new models or
versions are released. Our products may not be free from errors or defects after
commercial shipments have begun, which could result in the rejection of our
products, damage to our reputation, lost revenues, diverted development
resources, and increased customer service and support costs and warranty claims.

WE COULD INCUR SUBSTANTIAL COSTS DEFENDING OUR INTELLECTUAL PROPERTY FROM
INFRINGEMENT OR A CLAIM OF INFRINGEMENT.

     Our success depends in large part on our proprietary technology. We rely on
a combination of patents, copyrights, trademarks and trade secrets,
confidentiality provisions and licensing arrangements to establish and protect
our proprietary rights. We may be required to spend significant resources to
monitor and police our intellectual property rights. Before we do so, we may not
be able to detect infringement and we may lose competitive position in the
market. Intellectual property rights also may be unavailable or limited in some
foreign countries, which could make it easier for competitors to capture market
share. The
                                       14
<PAGE>   18

unauthorized use of our technology by competitors could have a material adverse
effect on our ability to sell our products in some markets.

     Although we are not currently involved in any intellectual property
litigation, we may be a party to litigation in the future either to protect our
intellectual property or as a result of an alleged infringement of others'
intellectual property. These claims and any resulting litigation could subject
us to significant liability for damages and could cause our proprietary rights
to be invalidated. Litigation, regardless of the merits of the claim or outcome,
would likely be time-consuming and expensive to resolve and would divert
management time and attention. Any potential intellectual property litigation
could also force us to do one or more of the following:

     - stop using the challenged intellectual property and refrain from selling
       our products or services that incorporate it;

     - obtain a license to use the challenged intellectual property or to sell
       products or services that incorporate it, which license may not be
       available on reasonable terms, or at all; and

     - redesign those products or services that are based on or incorporate the
       challenged intellectual property.

     If we are forced to take any of the foregoing actions, we may be unable to
manufacture and sell our products, and our business, financial condition and
results of operations may be materially adversely affected.

WE MAY NOT BE ABLE TO DEVELOP PRODUCTS THAT COMPLY WITH APPLICABLE GOVERNMENT
REGULATIONS.

     Our products must comply with government regulations. For example, in the
United States, the Federal Communications Commission (FCC) regulates many
aspects of communications devices, including radiation of electromagnetic
energy, biological safety and rules for devices to be connected to the telephone
networks. Radio frequency devices, which include our modems, must be approved
under the above regulations by obtaining equipment authorization from the FCC
prior to being offered for sale. Additionally, we cannot anticipate the effect
that changes in government regulations may have on our ability to develop
products in the future. Failure to comply with existing or evolving government
regulations or to obtain timely regulatory approvals or certificates for our
products could materially adversely affect our business, financial condition and
results of operations.

     We currently have applications for FCC equipment authorization pending on
new products. An inability or delay in obtaining FCC authorization could result
in a decline in future revenue.

                        --------------------------------

                         RISKS RELATED TO THIS OFFERING

OUR STOCK PRICE COULD BE ADVERSELY AFFECTED BY SHARES BECOMING AVAILABLE FOR
SALE UNDER RULE 144 AND AS A RESULT OF REGISTRATION RIGHTS AGREEMENTS WE HAVE
ENTERED INTO WITH SOME OF OUR INVESTORS.

     Our current stockholders hold a substantial number of shares, which they
will be able to sell in the public market in the near future. Sales of a
substantial number of shares of our common stock under Rule 144, or the
perception that these sales could occur, could cause our common stock price to
fall and could impair our ability to raise capital through the sale of
additional equity securities. In addition, we have entered into registration
rights agreements with some investors that entitle these investors to have their
shares registered for sale in the public market. The exercise of these rights
could affect the market price of our common stock. See "Shares Eligible for
Future Sale" for further information concerning potential sales of our shares
after this offering, including information concerning Rule 144 and the
registration rights we have granted.

                                       15
<PAGE>   19

OUR STOCK PRICE MAY BE VOLATILE, AND WE CANNOT ASSURE YOU THAT OUR STOCK PRICE
WILL NOT DECLINE.

     The market price of our common stock could be subject to significant
fluctuations after this offering as a result of factors many of which are beyond
our control. Among the factors that could affect our stock price are:

     - quarterly variations in our operating results;

     - changes in revenue or earnings estimates or publication of research
       reports by analysts;

     - speculation in the press or investment community about our business or
       the wireless communications industry generally;

     - changes in market valuations of similar companies and stock market price
       and volume fluctuations generally;

     - strategic actions by us or our competitors such as acquisitions or
       restructurings;

     - regulatory developments;

     - additions or departures of key personnel;

     - general market conditions; and

     - domestic and international economic factors unrelated to our performance.

     The stock markets in general, and the markets for high technology stocks in
particular, have experienced extreme volatility that has often been unrelated to
the operating performance of particular companies. These broad market
fluctuations may adversely affect the trading price of our common stock. We
cannot assure you that you will be able to resell your shares at or above the
initial public offering price, which will be determined by negotiations between
the representatives of the underwriters and us.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW COULD
PREVENT OR DELAY A CHANGE IN CONTROL IN OUR COMPANY.

     Our certificate of incorporation and bylaws contain anti-takeover
provisions that could prevent or delay an acquisition of our business at a
premium price. These provisions:

     - provide for a staggered board;

     - prevent stockholders from taking action by written consent;

     - limit the persons who may call special meetings of stockholders; and

     - authorize our board of directors to approve the issuance of undesignated
       preferred stock without stockholder approval.

In addition, Delaware law imposes some restrictions on mergers and other
business combinations between us and any holder of 15% or more of our common
stock.

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK
VALUE OF YOUR SHARES.


     The initial public offering price per share of our common stock is
substantially higher than the average net tangible book value per share of
common stock. As a result, if you purchase shares of common stock in this
offering your interest will suffer immediate and substantial dilution. This
dilution will reduce the net tangible book value of your shares since any shares
of our common stock that you purchase in this offering will be at a
substantially higher per share price than the current average net tangible book
value per share of our common stock. The dilution will be $9.13 per share in the
net tangible book value of the common stock from the assumed initial public
offering price of $11.00 per share. If additional shares are sold by the
underwriters following exercise of their over-allotment option, or if
outstanding options or warrants to purchase shares of common stock are
exercised, any shares of our common stock that you may purchase in this offering
will be subject to further dilution. As a result of this dilution, in the event
of a liquidation, common stockholders purchasing stock in this offering may
receive significantly less than the full purchase price that they paid for the
shares they purchased in this offering.


                                       16
<PAGE>   20

OUR DIRECTORS, EXECUTIVE OFFICERS AND EXISTING STOCKHOLDERS AND THEIR AFFILIATES
WILL CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER US AFTER THIS OFFERING, AND THEIR
INTERESTS MAY DIFFER FROM AND CONFLICT WITH YOURS.


     Upon completion of this offering, our executive officers, directors and
principal stockholders will beneficially own, in total, 56.6% of our outstanding
common stock. As a result, these stockholders, whose interests may be different
from and may conflict with yours, will be able to influence matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. This could have the effect of delaying or
preventing a change of control of our company or otherwise cause us to take
action that may not be in the best interests of all stockholders, either of
which in turn could reduce the market price per share of our common stock.


                                       17
<PAGE>   21

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     You should not rely on forward-looking statements in this prospectus. This
prospectus contains forward-looking statements that relate to future events or
to our future business or performance. In some cases, you can identify
forward-looking statements by words such as "anticipates, " "believes," plans,"
"expects," "future," "intends," "may," "will," "should," "estimates,"
"predicts," "potential," "continue" and similar expressions. Our actual results
could differ materially from the results contemplated by these forward-looking
statements due to a number of factors, including those discussed in "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and elsewhere in this prospectus. This prospectus also
contains forward-looking statements attributed to third parties relating to
their estimates regarding the growth of our markets. Forward-looking statements
are subject to known and unknown risks, assumptions, limitations, uncertainties
and other factors that may cause our actual results, as well as those of the
markets we serve, levels of activity, performance, achievements and prospects to
be materially different from those expressed or implied by the forward-looking
statements. These risks, uncertainties and other factors include, among others,
those identified in "Risk Factors" and elsewhere in this prospectus. Except as
required by law, we undertake no obligation to update publicly any
forward-looking statement for any reason, even if new information becomes
available or other events occur.

                                       18
<PAGE>   22

                                USE OF PROCEEDS

     We will receive net proceeds of approximately $70 million from the sale of
7,000,000 shares of common stock at an assumed price of $11.00 per share and an
additional $10.7 million from the sale of 1,050,000 shares if the underwriters'
over-allotment option is exercised in full, after deducting underwriting
discounts and commissions and estimated offering expenses payable by us.

     We intend to use the net proceeds of this offering primarily for additional
working capital and other general corporate purposes, including in management's
estimation continued investment in research and development of between $20
million and $30 million and sales and marketing expenditures of between $20
million and $30 million. The amounts and timing of these expenditures will vary
depending on a number of factors, including the amount of cash generated by our
operations, competitive and technological developments and the rate of growth,
if any, of our business. While we have no specific plans for any remaining
proceeds, we may also use a portion of the net proceeds to acquire businesses,
products and technologies or to establish joint ventures that we believe will
complement our current or future business. However, we have no specific plans,
agreements or commitments to do so and are not currently engaged in any
negotiations for any acquisition or joint venture.

     Pending the uses described above, we intend to invest the net proceeds in
short-term, interest bearing, investment-grade securities. We cannot predict
whether the proceeds will be invested to yield a favorable return.

     We may find it necessary or advisable to use portions of the net proceeds
for other purposes, and our management will maintain broad discretion in the
allocation of the net proceeds of this offering. You will not have the
opportunity to evaluate the economic, financial or other information on which we
base our decisions on how to use the proceeds.

                                DIVIDEND POLICY

     We have never declared or paid cash dividends on our capital stock. We
currently intend to retain all available funds and any future earnings for use
in the operation of our business and do not anticipate declaring or paying any
cash dividends in the foreseeable future. The declaration and payment of
dividends, if any, will be at the discretion of our board of directors, after
taking into account various factors our board of directors deems relevant,
including our financial condition, operating results, current and anticipated
cash needs, expansion plans and debt covenants. Our revolving line of credit
with Venture Banking Group, a division of Cupertino National Bank, currently
prohibits us from paying dividends without its prior approval.

                                       19
<PAGE>   23

                                 CAPITALIZATION


     The following table sets forth our consolidated total capitalization as of
September 30, 2000. You should read this table in conjunction with "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and the notes to our financial statements appearing elsewhere in this
prospectus. This information is presented:



     - on an actual basis at September 30, 2000;



     - on a pro forma basis at September 30, 2000 after giving effect to the
       automatic conversion of all the outstanding shares of our preferred stock
       upon the closing of this offering, including a total of 434,782 shares of
       our Series D preferred stock that we issued and sold in October 2000, and
       the receipt of net proceeds of $2,500,000 as a result thereof.


     - on a pro forma as adjusted basis to give effect to the receipt of the net
       proceeds from the sale by us of shares of common stock in this offering
       at an assumed price of $11.00 per share and after deducting underwriting
       discounts and commissions and estimated offering expenses payable by us.


<TABLE>
<CAPTION>
                                                                     SEPTEMBER 30, 2000
                                                                        (UNAUDITED)
                                                            ------------------------------------
                                                                                      PRO FORMA
                                                             ACTUAL     PRO FORMA    AS ADJUSTED
(IN THOUSANDS)                                              --------    ---------    -----------
<S>                                                         <C>         <C>          <C>
Cash and cash equivalents.................................  $ 13,893    $ 16,393      $ 86,403
                                                            ========    ========      ========
Capital lease obligations, current portion................  $     71    $     71      $     71
Capital lease obligations, net of current portion.........       289         289           289
                                                            --------    --------      --------
Total indebtedness........................................       360         360           360
                                                            --------    --------      --------
Convertible and redeemable preferred stock................    51,492          --            --
                                                            --------
Stockholders' equity (deficit):
  Preferred stock.........................................         6          --            --
  Common stock............................................        10          45            52
  Additional paid in capital..............................    68,136     122,099       192,102
  Deferred stock compensation.............................   (24,013)    (24,013)      (24,013)
  Accumulated deficit.....................................   (68,695)    (68,695)      (68,695)
                                                            --------    --------      --------
     Total stockholders' equity (deficit).................   (24,556)     29,436        99,446
                                                            --------    --------      --------
     Total capitalization.................................  $ 27,296    $ 29,796      $ 99,806
                                                            ========    ========      ========
</TABLE>


- ---------------

The common stock outstanding as shown excludes:



     - 10,417,220 shares of common stock that could be issued upon the exercise
       of options outstanding as of September 30, 2000 at a weighted average
       exercise price of $4.55 per share;



     - 10,548,541 shares of common stock that could be issued upon the exercise
       of warrants outstanding as of September 30, 2000 at a weighted average
       exercise price of $2.79 per share;


     - 5,594,632 shares of common stock that could be issued in the future under
       our stock option plans as of September 30, 2000;

     - 1,500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.

                                       20
<PAGE>   24

                                    DILUTION


     If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering. The pro forma net tangible book value of
our common stock as of September 30, 2000 was approximately $27.7 million or
$0.61 per share of common stock including proceeds of $2.5 million from the
issuance of 434,782 shares of our Series D preferred stock in October 2000. Pro
forma net tangible book value per share represents the dollar amount of our
total tangible assets reduced by the dollar amount of our total liabilities and
divided by the total number of shares of our common stock including shares
issuable upon conversion of our preferred stock outstanding as of the date of
this prospectus.



     After giving effect to the receipt of the estimated net proceeds from this
offering, based upon an assumed initial public offering price of $11.00 per
share, and after deducting underwriting discounts and commissions and estimated
offering expenses and the adjustments, the pro forma net tangible book value of
our common stock as of September 30, 2000 would have been $97.7 million or $1.87
per share. This represents an immediate increase in net tangible book value of
$1.26 per share to existing stockholders and an immediate dilution of $9.13 per
share to new investors purchasing shares at the initial public offering price.
The following table illustrates this per share dilution:



<TABLE>
<S>                                                           <C>      <C>
Assumed initial public offering price per share.............           $11.00
  Pro forma net tangible book value per share as of
     September 30, 2000.....................................  $0.61
  Increase per share attributable to new investors..........   1.26
                                                              -----
Pro forma as adjusted net tangible book value per share
  after the offering........................................             1.87
                                                                       ------
Dilution per share to new investors.........................           $ 9.13
                                                                       ======
</TABLE>



     Assuming the exercise in full of the underwriters' over-allotment option,
our pro forma as adjusted net tangible book value at September 30, 2000 would
have been approximately $2.04 per share, representing an immediate increase in
net tangible book value of $1.43 per share to our existing stockholders and an
immediate dilution in net tangible book value of $8.96 per share to new
investors.



     The following table summarizes, at September 30, 2000, on a pro forma
basis, the total number of shares purchased from us, and consideration paid to
us and the average price per share paid by existing holders of common stock and
by new investors purchasing shares of common stock in this offering at an
assumed initial public offering price of $11.00 per share, before deducting the
estimated underwriting discounts and commissions and estimated offering
expenses:



<TABLE>
<CAPTION>
                                                 SHARES PURCHASED       TOTAL CONSIDERATION       AVERAGE
                                               --------------------    ----------------------      PRICE
                                                 NUMBER     PERCENT       AMOUNT      PERCENT    PER SHARE
                                               ----------   -------    ------------   -------    ---------
<S>                                            <C>          <C>        <C>            <C>        <C>
Existing stockholders........................  45,105,000    86.6%     $ 85,116,000     52.5%     $ 1.89
New investors................................   7,000,000    13.4        77,000,000     47.5      $11.00
                                               ----------    ----      ------------    -----      ------
  Total......................................  52,105,000     100%     $162,116,000    100.0%
                                               ==========    ====      ============    =====
</TABLE>


     The foregoing discussion and table assume no exercise of the underwriters'
overallotment option and exclude the effect of:


     - 10,417,220 shares of common stock that could be issued upon the exercise
       of options outstanding as of September 30, 2000 at a weighted average
       exercise price of $4.55 per share;



     - 10,548,541 shares of common stock that could be issued upon exercise of
       warrants outstanding as of September 30, 2000 at a weighted average
       exercise price of $2.79 per share;


     - 5,594,632 shares of common stock that could be issued in the future under
       our stock option plans as of September 30, 2000; and

     - 1,500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.

To the extent that any of our these options or warrants are exercised or shares
are issued, there will be further dilution to new public investors. See
"Capitalization," "Management -- Compensation Plans," "Description of
Securities," and notes 8 and 9 of notes to consolidated financial statements
contained elsewhere in this prospectus.

                                       21
<PAGE>   25

                            SELECTED FINANCIAL DATA


     You should read the following selected financial data in conjunction with
our consolidated financial statements and notes to our consolidated financial
statements and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," which are included elsewhere in this prospectus. The
consolidated statement of operations data for each of the years ended December
31, 1997, 1998 and 1999, and the balance sheet data at December 31, 1998 and
1999 are derived from our consolidated financial statements which have been
audited by Arthur Andersen LLP and which are included elsewhere in this
prospectus. The consolidated statement of operations data for the period from
inception to December 31, 1996 and the balance sheet data at December 31, 1996
and 1997 are derived from audited consolidated financial statements not included
in this prospectus. The consolidated balance sheet data at September 30, 1999 is
derived from unaudited consolidated financial statements not included in this
prospectus. The consolidated balance sheet data at September 30, 2000 is derived
from unaudited consolidated financial statements included elsewhere in this
prospectus. See notes 4 and 14 of the notes to consolidated financial statements
for an explanation of the number of shares used to compute net loss per share
and pro forma net loss per share. The historical financial information may not
be indicative of our future performance and results of interim periods may not
be indicative of results that may be expected for any other interim period or
for the year as a whole.



<TABLE>
<CAPTION>
                               PERIOD FROM                                                   NINE MONTHS ENDED
                             APRIL 26, 1996            YEAR ENDED DECEMBER 31,                 SEPTEMBER 30,
                             (INCEPTION) TO     --------------------------------------   -------------------------
                            DECEMBER 31, 1996      1997         1998          1999          1999          2000
                            -----------------   ----------   ----------   ------------   -----------   -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)                                                 (UNAUDITED)
<S>                         <C>                 <C>          <C>          <C>            <C>           <C>
CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
Revenue...................     $      277       $    3,354   $    5,378   $      9,556   $     5,514   $    33,408
Cost of revenue...........            168            1,856        3,433         11,955         5,751        34,970
                               ----------       ----------   ----------   ------------   -----------   -----------
Gross margin..............            109            1,498        1,945         (2,399)         (237)       (1,562)
                               ----------       ----------   ----------   ------------   -----------   -----------
Operating expenses:
  Research and
    development...........          2,650            1,995        2,333          3,717         1,926         8,902
  Sales and marketing.....            256            2,058        2,685          4,480         2,630        10,468
  General and
    administrative........            656            1,944        2,496          4,443         3,335         3,345
  Amortization of deferred
    stock compensation....             --               --          115            220           166         6,523
                               ----------       ----------   ----------   ------------   -----------   -----------
    Total operating
      expenses............          3,562            5,997        7,629         12,860         8,057        29,238
                               ----------       ----------   ----------   ------------   -----------   -----------
Loss from operations......         (3,453)          (4,499)      (5,684)       (15,259)       (8,294)      (30,800)
Other income (expense)
  net.....................             (9)              23          178         (3,210)       (1,236)          530
                               ----------       ----------   ----------   ------------   -----------   -----------
Net loss..................     $   (3,462)      $   (4,476)  $   (5,506)  $    (18,469)  $    (9,530)  $   (30,270)
                               ==========       ==========   ==========   ============   ===========   ===========
Net loss per common share:
  Basic and diluted.......     $    (0.37)      $    (0.51)  $    (0.69)  $      (2.04)  $     (1.09)  $     (3.31)
                               ==========       ==========   ==========   ============   ===========   ===========
  Weighted average shares
    outstanding...........      9,711,630        9,711,630    9,711,630      9,728,421     9,723,737    10,138,695
                               ==========       ==========   ==========   ============   ===========   ===========
Pro forma net loss per
  share (unaudited)(1):
  Basic and diluted.......                                                $      (0.73)  $     (0.39)  $     (0.75)
                                                                          ============   ===========   ===========
  Weighted average shares
    outstanding...........                                                  27,199,269    27,164,387    44,494,326
                                                                          ============   ===========   ===========
</TABLE>


                                       22
<PAGE>   26


<TABLE>
<CAPTION>
                                                                DECEMBER 31,                 SEPTEMBER 30,
                                                   ---------------------------------------   -------------
                                                    1996      1997       1998       1999         2000
                                                   -------   -------   --------   --------   -------------
(IN THOUSANDS)                                                                                (UNAUDITED)
<S>                                                <C>       <C>       <C>        <C>        <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents........................  $ 1,262   $ 1,927   $  3,497   $ 25,455     $ 13,893
Working capital..................................      274       937      3,383     15,769       20,003
Total assets.....................................    3,065     3,879      6,184     38,118       48,061
Long-term obligations, net of current portion....       --        --         --        106          289
Convertible and redeemable preferred stock.......    2,258     6,630     14,812     43,805       51,492
Preferred stock..................................       --        --         --         --            6
Common stock.....................................       10        10         10         10           10
Accumulated deficit..............................   (3,462)   (7,937)   (15,249)   (35,122)     (68,695)
Stockholders' equity (deficit)...................     (752)   (1,100)   (14,625)   (31,128)     (24,556)
</TABLE>


- ---------------
(1) See notes 4 and 14 of the notes to the consolidated financial statements for
    an explanation of the determination of the number of shares and share
    equivalents used in computing pro forma per share amounts.

                                       23
<PAGE>   27

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

     The following discussion of our consolidated financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this prospectus.
This prospectus contains certain statements of a forward-looking nature relating
to future events or our future financial performance. We caution prospective
investors that such statements involve risks and uncertainties, and that actual
events or results may differ materially. In evaluating such statements,
prospective investors should specifically consider the various factors
identified in this prospectus, including the matters set forth under the caption
"Risk Factors" contained elsewhere in this prospectus which could cause actual
results to differ materially from those indicated by such forward-looking
statements.

OVERVIEW

     We are a provider of wireless data access solutions. Since our inception in
April 1996, we have been focused on the development and commercialization of
two-way wireless data communications technologies. We launched our NRM-6812 OEM
module in September 1996, our Sage and first Minstrel products in 1997, our
Minstrel III Wireless Modem and Expedite Wireless Modem in April 1999 and our
Merlin Type II Wireless Modem in August 1999. In addition, we announced our
Minstrel V Wireless Modem for the Palm V handheld computing device in October
1999 and our Lancer 3W Modem in April 2000.


     Since our inception, we have incurred substantial costs to develop our
technology and products, to recruit and train personnel for our product
development, sales and marketing and professional services departments, and to
establish our administrative infrastructure. Historically, our operating
expenses have exceeded the revenue generated by our products and services. As a
result, we have incurred net operating losses in each quarter since inception
and had an accumulated deficit of $68.7 million as of September 30, 2000. In
addition, we have increased our number of employees and independent contractors
from 56 as of December 31, 1998 to 254 as of September 30, 2000.


     We have entered into, and expect to continue to enter into, significant
customer contracts for the development and supply of our products. These
contracts may place significant demands on our resources. As a result, we expect
research and development, sales and marketing and other costs relating to the
development, manufacture and sale of our products to increase. We also expect to
continue to incur these expenses in periods prior to recognizing revenue from
these contracts.


     Revenue. Our revenue has been generated from the sale of wireless modems to
wireless telecommunications operators, wireless data content and service
providers, resellers and OEM customers. We also generate revenue from product
activation services we provide prior to shipping; through September 30, 2000,
such revenue has not been significant. Revenue from product sales and services,
which includes product activation, is recognized upon the latter of transfer of
title or upon shipment of the product to the customer or upon rendering product
activation services, if applicable. Revenues from long-term supply contracts are
recognized as products are shipped to customers over the period of the contract.
We record deferred revenue for cash payments received from customers in advance
of product shipment. We grant price protection provisions to certain customers
and we track pricing and other terms offered to customers buying similar
products to assess compliance with these provisions. To date, the Company has
not incurred material price protection expenses. We establish reserves for
estimated product returns and warranty allowances in the period in which revenue
is recognized. Reserves for product returns were $0, $0 and $167,000 at December
31, 1998, 1999 and September 30, 2000, respectively.


     During 1997 and 1998 we generated revenue of $1.4 million and $650,000,
respectively, under a contract research and development and license agreement.
Revenue on this agreement was recognized under the contractual terms, which in
1997 included customer acceptance of our design and a license to use our
technology and in 1998 included successful manufacturing of the product by the
customer. Costs of revenue incurred under the agreement totaled approximately
$720,000 and $294,000 in 1997 and 1998, respectively.
                                       24
<PAGE>   28

     Cost of Revenue. Our cost of revenue typically consists of material
components, labor for system assembly and testing, product activations,
technical support, warranty costs and overhead expenses. We currently outsource
our manufacturing operations to third parties to minimize our capital
expenditures and to benefit from contract manufacturer economies of scale.

     Gross Margin. Our overall gross margin, or revenue less cost of revenue,
may fluctuate from quarter to quarter as a result of the availability and costs
of components, shifts in product mix, the proportion of direct and indirect
sales, anticipated decreases in average selling prices and our ability to manage
manufacturing costs.


     We have reported negative gross margins since our margins are at or near
break-even levels based on contracted purchase and sales prices, and our cost of
revenues includes costs to support operations well in excess of our current
revenue and units processed in anticipation of future growth. We consider these
excess capacity costs to be a period expense rather than a capitalizable
inventory cost, and we account for them accordingly. These factors have resulted
in negative gross margins for the year ended December 31, 1999 and for the first
half of 2000. We had positive gross margins during the third quarter of 2000 and
anticipate this trend to continue. This is primarily due to increased sales
volume and changes in product mix.


     Research and Development. Our research and development expenses consist of
employee compensation, related personnel expenses, consultant fees and prototype
expenses related to the design, development, testing and enhancement of our
products. Our research and development costs are expensed as incurred. We
believe that continued investment in research and development is critical to
achieving our strategic product development and cost reduction objectives and,
as a result, expect these expenses to continue to increase significantly in
absolute dollars in the future.

     Sales and Marketing. Our sales and marketing expenses consist of employee
compensation, sales commissions and related expenses for personnel engaged in
marketing, sales and field service support and advertising and promotional
materials. We anticipate that sales and marketing expenses will increase in
future quarters as we increase sales and marketing operations, expand
distribution channels, increase the number of sales and marketing personnel and
increase our international sales efforts.

     General and Administrative. Our general and administrative expenses consist
of employee compensation and related personnel expenses, recruiting and
relocation expenses, professional and consulting fees, and other general
corporate expenses. We expect these expenses to increase as we increase the
number of personnel and incur additional costs related to our operation as a
public company.


     Stock-Based Compensation Expense. We recorded cumulative deferred
compensation expense of $30.9 million as a result of stock options granted below
fair value for accounting purposes through September 30, 2000. This amount
represents the difference between the exercise price of these stock option
grants and the estimated fair value of the underlying common stock at the time
of grant. Of this amount, we have amortized approximately $6.9 million through
September 30, 2000. The remaining $24.0 million will be amortized over the
remaining vesting period of the options, which is generally four years.


                                       25
<PAGE>   29

RESULTS OF OPERATIONS

     The following table sets forth our consolidated statements of operations
expressed as a percentage of revenue for the periods indicated. Data for the
period from inception through December 31, 1996 is not presented because revenue
for that period was not material.


<TABLE>
<CAPTION>
                                                                              NINE MONTHS ENDED
                                                 YEAR ENDED DECEMBER 31,        SEPTEMBER 30,
                                                --------------------------    ------------------
                                                 1997      1998      1999      1999       2000
                                                ------    ------    ------    -------    -------
                                                           (AS A PERCENT OF REVENUE)
<S>                                             <C>       <C>       <C>       <C>        <C>
Revenue.....................................     100.0%    100.0%    100.0%    100.0%     100.0%
Cost of revenue.............................      55.3      63.8     125.1     104.3      104.7
                                                ------    ------    ------    ------     ------
Gross margin................................      44.7      36.2     (25.1)     (4.3)      (4.7)
                                                ------    ------    ------    ------     ------
Operating expenses:
  Research and development..................      59.5      43.4      38.9      34.9       26.7
  Sales and marketing.......................      61.4      49.9      46.9      47.7       31.3
  General and administrative................      58.0      46.4      46.5      60.5       10.0
  Amortization of deferred stock
     compensation...........................        --       2.1       2.3       3.0       19.5
                                                ------    ------    ------    ------     ------
     Total operating expenses...............     178.9     141.8     134.6     146.1       87.5
                                                ------    ------    ------    ------     ------
Loss from operations........................    (134.2)   (105.6)   (159.7)   (150.4)     (92.2)
                                                ------    ------    ------    ------     ------
Interest income.............................       0.7       3.3       0.5       0.6        1.7
Interest expense............................        --        --     (34.2)    (23.0)      (0.1)
Other, net..................................        --        --       0.1        --         --
                                                ------    ------    ------    ------     ------
Net loss....................................    (133.5)%  (102.3)%  (193.3)%  (172.8)%    (90.6)%
                                                ======    ======    ======    ======     ======
</TABLE>



NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999



     Revenue. Revenue for the nine months ended September 30, 2000 increased
$27.9 million, or 506%, to $33.4 million compared to $5.5 million for the same
period in 1999. In 2000, sales of existing products increased by $7.2 million
due to the overall increase in demand for wireless products. New products
contributed to the overall sales increases by $20.7 million with the
introduction of the Expedite Wireless Modem in April 1999, the Merlin Type II
Wireless Modem in August 1999 and the Minstrel V Wireless Modem in October 1999.



     Cost of Revenue. Our cost of revenue for the nine months ended September
30, 2000 increased $29.2 million, or 508%, to $35.0 million compared to $5.8
million in the same period in 1999. The increase in cost of revenue was
primarily the result of increased sales of existing products (approximately $5.8
million), costs associated with the production and sales of new products
(approximately $17.8 million) and costs associated with increasing our operating
capacity.



     Gross Margin. Our gross margin for the nine months ended September 30, 2000
decreased by $1.3 million, or 559%, to negative $1.6 million compared to
negative $237,000 in the same period in 1999.



     Research and Development. Our research and development expenses for the
nine months ended September 30, 2000 increased $7.0 million, or 362%, to $8.9
million compared to $1.9 million in the same period in 1999. The increase was
due to an increase in personnel expenses of $2.8 million and an increase in
expenses relating to projects in development of $4.2 million.



     Sales and Marketing. Sales and marketing expenses for the nine months ended
September 30, 2000 increased $7.8 million, or 298%, to $10.5 million compared to
$2.6 million in the same period in 1999. The increase was the result of
increased personnel expenses of $2.8 million, expanded advertising expenses of
$1.6 million, increased participation in trade shows resulting in a $1.6 million
increase and increased expenditures to support new products and expand
distribution channels.



     General and Administrative. General and administrative expenses for the
nine months ended September 30, 2000 remained consistent at $3.3 million
compared to the same period in 1999.


                                       26
<PAGE>   30


     Amortization of deferred stock compensation. Amortization of deferred stock
compensation for the nine months ended September 30, 2000 increased $6.4 million
to $6.5 million compared to $166,000 in the same period in 1999. This increase
is due to additional stock options issued during 2000, resulting in a deferred
compensation charge of $29.7 million.



     Interest Income. Interest income for the nine months ended September 30,
2000 increased $521,000 to $554,000 compared to $33,000 in 1999. The increase
was due to income on the proceeds from the Series C financing which closed on
December 31, 1999 and the proceeds from the Series D financing which closed in
June and July of 2000.



     Interest Expense. Interest expense amounted to $1.3 million for the nine
months ended September 30, 1999 due to the non-cash charges we incurred in
connection with the convertible subordinated debentures that we issued and sold
in 1999 and the related common stock warrants issued in connection with these
debentures. Interest expense of $30,000 for the nine months ended September 30,
2000 is due to capital leases entered into during 2000.



     Net Loss. The net loss for the nine months ended September 30, 2000
increased $20.8 million, or 218%, to $30.3 million compared to $9.5 million in
1999.


YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998

     Revenue. Revenue for 1999 increased $4.2 million, or 78%, to $9.6 million
compared to $5.4 million in 1998. In 1999, sales of existing products increased
by $1.5 million due to the overall increase in demand for wireless products. New
products also contributed to the overall sales by $3.3 million with the
introduction of the Expedite Wireless Modem in April 1999 and the Merlin Type II
Wireless Modem in August 1999. This increase is partially offset by a decrease
of $650,000 in contract research revenue during 1999 compared to 1998 as the
Company did not have any research contracts.


     Cost of Revenue. Our cost of revenue for 1999 increased $8.5 million, or
248%, to $12.0 million compared to $3.4 million in 1998. The increase in cost of
revenue was primarily the result of increased sales of existing products
(approximately $1.4 million), costs associated with the production and sales of
new products (approximately $2.8 million) and costs associated with changing
manufacturers and moving production during the year (approximately $1.0 million)
offset in part by a decrease in contract research costs of $720,000 as the
Company did not have any research contracts. Prior to 1999, we used offshore
contract manufacturers. In the first quarter of 1999, our principal manufacturer
experienced financial difficulties as a result of the general downturn in the
Asian economies and, as a result, ceased production of our finished goods. To
maintain production levels in the short-term, we and our new manufacturer were
forced to purchase raw materials for immediate delivery at premium prices.


     Gross Margin. Gross margin for 1999 decreased by $4.3 million, or 223%, to
negative $2.4 million compared to $1.9 million in 1998.

     Research and Development. Research and development expenses for 1999
increased $1.4 million, or 59%, to $3.7 million compared to $2.3 million in
1998. The increase was primarily due to an increase in personnel expenses of
$703,000 and an increase in expenses relating to projects in development of
$697,000.

     Sales and Marketing. Sales and marketing expenses for 1999 increased $1.8
million, or 67%, to $4.5 million compared to $2.7 million in 1998. The increase
was the result of increased personnel expenses of $1.1 million, expanded
advertising expenses of $388,000 and expenditures to support new products and to
expand our distribution channels resulting in a $171,000 increase.


     General and Administrative. General and administrative expenses for 1999
increased $1.9 million, or 78%, to $4.4 million compared to $2.5 million in
1998. This increase was due to an increase in the number of personnel from 1998
to 1999 resulting in a $434,000 increase, our relocation of the administrative
functions from Calgary to San Diego which amounted to an increase of $750,000
and an increase in professional fees of $440,000.


                                       27
<PAGE>   31


     Amortization of deferred stock compensation. Amortization of deferred stock
compensation for 1999 increased $105,000, or 91% to $220,000 compared to
$115,000 in 1998. This increase is due to stock options issued towards the end
of 1998, which were amortized for a full year in 1999, in addition to deferred
compensation expense recorded as a result of stock options issued in 1999 at a
price below fair value.


     Interest Expense. Interest expense amounted to $3.3 million for 1999 due to
the non-cash charges we incurred in connection with the convertible subordinated
debentures that we issued and sold in 1999 and the related common stock warrants
issued in connection with these debentures. We did not incur any interest
expense during 1998.

     Interest Income. Interest income for 1999 decreased $131,000, or 74%, to
$47,000 compared to $178,000 in 1998. The decrease was due to lower average cash
invested in 1999 compared to 1998.

     Net Loss. The net loss for the year ending December 31, 1999 increased
$13.0 million, or 235%, to $18.5 million compared to $5.5 million in 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997

     Revenue. Revenue for 1998 increased $2.0 million, or 60%, to $5.4 million
compared to $3.4 million in 1997. In 1998, sales of existing products increased
by $800,000 due to the overall increase in demand for wireless products. New
products also contributed to the overall sales by $2.5 million with the
introduction of the original Minstrel, Sage and Contact products in late 1997.
This increase was partially offset by a decrease of $750,000 in license and
research contract revenue during 1998 compared to 1997.

     Cost of Revenue. Our cost of revenue for 1998 increased $1.5 million, or
85%, to $3.4 million compared to $1.9 million in 1997. The increase in cost of
revenue was the result of the costs of increased units sold and the start-up
costs associated with the production of new products, offset by a decrease in
costs related to research contact of approximately $426,000.

     Gross Margin. Gross margin for 1998 increased by $400,000, or 30%, to $1.9
million compared to $1.5 million in 1997.

     Research and Development. Research and development expenses for 1998
increased $300,000, or 17%, to $2.3 million compared to $2.0 million in 1997.
Fiscal year 1997 included approximately $500,000 for research and development
costs to further projects we commenced in 1996.

     Sales and Marketing. Sales and marketing expenses for 1998 increased
$600,000, or 30%, to $2.7 million compared to $2.1 million in 1997. The increase
was the result of increased headcount. During 1998, we also increased marketing
expenditures to support new products and expand our distribution channels.


     General and Administrative. General and administrative expenses for 1998
increased $600,000, or 28%, to $2.5 million compared to $1.9 million in 1997.
This increase was due to additions to our senior management team and
administrative personnel.



     Amortization of deferred stock compensation. Amortization of deferred stock
compensation amounted to $115,000 for 1998 compared to none in 1997. During
1997, the Company did not issue any stock options at a price below fair value
and therefore did not record deferred compensation expense. In 1998, the Company
issued stock options at a price below fair value and therefore recorded deferred
compensation expense associated with those options.


     Interest Income. Interest income for 1998 increased $155,000, or 674%, to
$178,000 compared to $23,000 in 1997. This increase was due to additional
interest income earned on our increased average cash and short-term investment
balances.

     Net Loss. The net loss for the year ending December 31, 1998 increased $1.0
million or 23% to $5.5 million compared to $4.5 million in 1997.

                                       28
<PAGE>   32

SELECTED QUARTERLY RESULTS OF OPERATIONS


     The following table sets forth our historic unaudited quarterly
consolidated statements of operations data for each of the eleven fiscal
quarters ended September 30, 2000, and such information expressed as a
percentage of our revenue. This unaudited quarterly information has been
prepared on the same basis as the annual audited financial statements appearing
elsewhere in this prospectus, and includes all necessary adjustments, consisting
only of normal recurring adjustments, that we consider necessary to present
fairly the financial information for the quarters presented. The quarterly data
should be read in conjunction with the audited consolidated financial statements
and the notes thereto appearing elsewhere in this prospectus.


<TABLE>
<CAPTION>
                                                                     QUARTER ENDED
                               -----------------------------------------------------------------------------------------
                               MARCH 31,   JUNE 30,   SEPT. 30,   DEC. 31,   MARCH 31,   JUNE 30,   SEPT. 30,   DEC. 31,
                                 1998        1998       1998        1998       1999        1999       1999        1999
                               ---------   --------   ---------   --------   ---------   --------   ---------   --------
                                                                    (IN THOUSANDS)
<S>                            <C>         <C>        <C>         <C>        <C>         <C>        <C>         <C>
CONSOLIDATED STATEMENTS OF
  OPERATIONS DATA:
Revenue......................   $ 1,285    $ 1,732     $ 1,275    $ 1,086     $ 1,205    $ 1,096     $ 3,213    $ 4,042
Cost of revenue..............       626      1,290         787        730       1,025      1,752       2,974      6,204
                                -------    -------     -------    -------     -------    -------     -------    -------
Gross margin.................       659        442         488        356         180       (656)        239     (2,162)
                                -------    -------     -------    -------     -------    -------     -------    -------
Operating expenses:
  Research and development...       536        551         480        766         484        682         760      1,791
  Sales and marketing........       640        507         799        739         391        990       1,249      1,850
  General and
    administrative...........       425        644         385      1,042         893      1,289       1,141      1,120
  Amortization of deferred
    stock compensation.......        --         --          46         69          69         71          38         42
                                -------    -------     -------    -------     -------    -------     -------    -------
Total operating expense......     1,601      1,702       1,710      2,616       1,837      3,032       3,188      4,803
                                -------    -------     -------    -------     -------    -------     -------    -------
Loss from operations.........      (942)    (1,260)     (1,222)    (2,260)     (1,657)    (3,688)     (2,949)    (6,965)
Interest income..............        17         25          37         99          17          8           8         14
Interest expense.............        --         --          --         --          --         --      (1,268)    (1,999)
Other, net...................        --         --          --         --          (1)        --          --         11
                                -------    -------     -------    -------     -------    -------     -------    -------
Net loss.....................   $  (925)    (1,235)     (1,185)   $(2,161)    $(1,641)   $(3,680)    $(4,209)   $(8,939)
                                =======    =======     =======    =======     =======    =======     =======    =======

AS A PERCENTAGE OF REVENUE:
Revenue......................     100.0%     100.0%      100.0%     100.0%      100.0%     100.0%      100.0%     100.0%
Cost of revenue..............      48.7       74.5        61.7       67.2        85.1      159.8        92.6      153.5
                                -------    -------     -------    -------     -------    -------     -------    -------
Gross margin.................      51.3       25.5        38.3       32.8        14.9      (59.8)        7.4      (53.5)
                                -------    -------     -------    -------     -------    -------     -------    -------
Operating expenses:
  Research and development...      41.7       31.8        37.6       70.5        40.2       62.2        23.7       44.3
  Sales and marketing........      49.8       29.3        62.7       68.0        32.4       90.3        38.9       45.8
  General and
    administrative...........      33.1       37.2        30.2       96.0        74.1      117.6        35.5       27.7
  Amortization of deferred
    stock compensation.......        --         --         3.6        6.3         5.7        6.5         1.2        1.0
                                -------    -------     -------    -------     -------    -------     -------    -------
Total operating expense......     124.6       98.3       134.1      240.8       152.4      276.6        99.3      118.8
                                -------    -------     -------    -------     -------    -------     -------    -------
Loss from operations.........     (73.3)     (72.8)      (95.8)    (208.0)     (137.5)    (336.4)      (91.9)    (172.3)
Interest income..............       1.3        1.4         2.9        9.1         1.4        0.7         0.2        0.3
Interest expense.............        --         --          --         --          --         --       (39.5)     (49.5)
Other, net...................        --         --          --         --          --         --          --        0.3
                                -------    -------     -------    -------     -------    -------     -------    -------
Net loss.....................     (72.0)%    (71.4)%     (92.9)%   (198.9)%    (136.1)%   (335.7)%    (131.2)%   (221.2)%
                                =======    =======     =======    =======     =======    =======     =======    =======

<CAPTION>
                                        QUARTER ENDED
                               --------------------------------
                               MARCH 31,   JUNE 30,   SEPT. 30,
                                 2000        2000       2000
                               ---------   --------   ---------
                                        (IN THOUSANDS)
<S>                            <C>         <C>        <C>
CONSOLIDATED STATEMENTS OF
  OPERATIONS DATA:
Revenue......................   $ 6,837    $ 9,094    $ 17,477
Cost of revenue..............     7,865     10,149      16,956
                                -------    -------    --------
Gross margin.................    (1,028)    (1,055)        521
                                -------    -------    --------
Operating expenses:
  Research and development...     2,076      3,127       3,699
  Sales and marketing........     2,319      4,153       3,996
  General and
    administrative...........       946      1,246       1,153
  Amortization of deferred
    stock compensation.......       120        142       6,261
                                -------    -------    --------
Total operating expense......     5,461      8,668      15,109
                                -------    -------    --------
Loss from operations.........    (6,489)    (9,723)    (14,588)
Interest income..............       215         75         264
Interest expense.............       (11)        (9)        (10)
Other, net...................        17        (11)         --
                                -------    -------    --------
Net loss.....................   $(6,268)   $(9,668)   $(14,334)
                                =======    =======    ========
AS A PERCENTAGE OF REVENUE:
Revenue......................     100.0%     100.0%      100.0%
Cost of revenue..............     115.0      111.6        97.0
                                -------    -------    --------
Gross margin.................     (15.0)     (11.6)        3.0
                                -------    -------    --------
Operating expenses:
  Research and development...      30.4       34.4        21.2
  Sales and marketing........      33.9       45.7        22.9
  General and
    administrative...........      13.8       13.7         6.6
  Amortization of deferred
    stock compensation.......       1.8        1.6        35.8
                                -------    -------    --------
Total operating expense......      79.9       95.4        86.5
                                -------    -------    --------
Loss from operations.........     (94.9)    (107.0)      (83.5)
Interest income..............       3.1        0.8         1.5
Interest expense.............      (0.2)      (0.1)       (0.1)
Other, net...................       0.2       (0.1)         --
                                -------    -------    --------
Net loss.....................    (91. 8)%   (106.4)%     (82.1)%
                                =======    =======    ========
</TABLE>



     We have experienced and expect to continue to experience significant
fluctuations in quarterly operating results. We believe that quarter-to-quarter
comparisons of our operating results should not be relied upon as an indication
of our future performance. See "Risk Factors -- Because we have been operating
only since 1996, our historic operating results may not be meaningful to an
investor evaluating our company" and " -- The fluctuation of our quarterly
operating results may cause our stock price to decline."


                                       29
<PAGE>   33

LIQUIDITY AND CAPITAL RESOURCES


     Since our inception, we have funded our operations primarily through
private sales of our equity securities and the issuance of debt instruments, and
to a lesser extent, capital lease arrangements and borrowings under various
lines of credit. To date, gross proceeds from these transactions have totaled
approximately $85.1 million. These transactions included sales of our common
stock since inception of $0.8 million, the sale between August 1996 and December
1997 of preferred stock for total proceeds of approximately $7.5 million, the
sale between December 1997 and September 1998 of preferred stock and warrants to
purchase common stock for total proceeds of approximately $9.8 million, the sale
in June and July 1999 of convertible subordinated debentures and warrants to
purchase shares of our common stock in the total original principal amount of
approximately $3.1 million, the sale in December 1999 of preferred stock and
warrants to purchase common stock for total proceeds of approximately $27.5
million, the sale in June and July 2000 of preferred stock and warrants to
purchase common stock for total proceeds of approximately $33.9 million and the
sale in October 2000 of preferred stock for total proceeds of approximately $2.5
million. All the preferred stock will automatically convert into shares of our
common stock immediately prior to the completion of this offering. See "Related
Party Transactions" for more information about these transactions. At September
30, 2000 we had approximately $13.9 million in cash and cash equivalents.



     For the years ended December 31, 1997, 1998 and 1999, we used net cash in
operating activities of $3.5 million, $5.0 million and $5.2 million,
respectively. Our operating activities included major uses of cash to fund our
1999 net loss of $18.5 million which included a $3.1 million non-cash charge for
interest expenses related to the warrants we issued with our convertible
subordinated debentures. During 1999, we used cash in operating activities by
purchasing inventory in the amount of $4.7 million which was later transferred
to our contract manufacturer and classified as due from contract manufacturer on
the consolidated balance sheet. Additionally, we used cash by increasing
inventories by $4.1 million and accounts receivable by $900,000, and generated
cash flows by increasing accounts payable and accrued expenses by approximately
$11.0 million and our deferred revenue increased by $8.1 million. Substantially
all of the increase in deferred revenue represents cash received from customers
for advanced payments under long-term supply contracts. Our net cash used in
operating activities in the first nine months of 2000 amounted to $38.7 million.
Our operating activities included major uses of cash to fund our 2000 net loss
of $30.3 million, which included a $6.5 million non-cash stock compensation
charge. During 2000, we used cash in operating activities by increasing accounts
receivable in the amount of $10.9 million, increasing deferred revenues by $5.1
million, purchasing inventory in the amount of $4.2 million and increasing
prepaid expenses and other assets by $2.8 million. We generated cash flows by
increasing accounts payable and accrued expenses by approximately $5.0 million
and decreased our due from manufacturer receivable by $2.1 million.



     Our net cash used in investing activities in 1999 was $600,000, which was
primarily for purchases of property and equipment. Our net cash used in
investing activities in 1997 and 1998 was $800,000 and $300,000, respectively,
and $6.7 million during the nine months ending September 30, 2000, and was also
primarily for purchases of property and equipment. These capital expenditures
were primarily investments for equipment to test our products and to support our
business.



     Cash provided from financing activities, consisting primarily of net
proceeds from the sale of our equity securities, was approximately $4.7 million
for the year ending December 31, 1997, $7.2 million for the year ending December
31, 1998, $27.7 million for the year ending December 31, 1999 and $33.8 million
during the nine months ending September 30, 2000.



     We believe that our available cash reserves, which includes proceeds from
the sale of our Series D preferred stock completed in June, July and October
2000, together with the estimated net proceeds of this offering, will be
sufficient to fund operations and to meet our working capital needs and
anticipated capital expenditures for at least the next twelve months. We do not
anticipate significant capital expenditures over the course of the next twelve
months. We may also use a portion of the net proceeds to invest in complementary
products, to license other technology or to make acquisitions. Thereafter, we
may raise


                                       30
<PAGE>   34

additional funds to fund more rapid expansion of our business, fund unexpected
expenditures, continue to develop new products and enhancements to our current
products, or acquire technologies or businesses. Additional financing may not be
available when needed, on favorable terms, or at all.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


     We do not currently use derivative financial instruments. We generally
place our marketable security investments in high credit quality instruments,
primarily U.S. Government obligations and corporate obligations with contractual
maturities of less than one year. We do not expect any material loss from our
marketable security investments and therefore believe that our potential
interest rate exposure is not material; however, these investments are subject
to interest rate risk. We do not currently enter into foreign currency hedge
transactions. Through September 30, 2000, foreign currency fluctuations have not
had a material impact on our financial position or results of operations.


RECENT ACCOUNTING PRONOUNCEMENTS

     In 1998, the Financial Accounting Standards Board, or FASB, issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" and in June
1999 issued SFAS No. 137, "Accounting for Derivatives and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133." Under
SFAS No. 133, derivatives not meeting hedge criteria are recorded in the balance
sheet as either an asset or liability measured at fair value and changes in fair
value are recognized currently in earnings. The Company will be required to
implement SFAS No. 133, as amended by SFAS No. 137, in fiscal 2001. The Company
does not anticipate that the implementation of SFAS No. 133 and SFAS No. 137
will have a material impact on its financial position or results of operations.

     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB No. 101 is effective during the fourth quarter of fiscal 2000. Management
has reviewed and adopted the provisions of SAB No. 101 which did not have a
material impact on the Company's financial position or results of operations.

YEAR 2000 COMPLIANCE

     As a result of the change over from 1999 to 2000, none of our systems or
products was affected nor are we aware of any significant issues that have
affected our third-party suppliers or customers.

                                       31
<PAGE>   35

                                    BUSINESS

OVERVIEW

     We are a leading provider of wireless data modems and software for use with
handheld computing devices and portable personal computers. We also provide
wireless data modems which can be integrated into other devices for a wide range
of vertical applications. We also offer provisioning, activation and systems
integration services to our customers to facilitate use of our products.

     We have a strong history of designing innovative wireless access products.
We designed and delivered the first products to enable wireless connectivity for
the Palm family of handheld computing devices. We have successfully developed
and are continuing to develop solutions that enable our customers to wirelessly
access data utilizing a wide range of mobile computing devices across a broad
range of wireless data network technologies. Our current product portfolio
includes the following:

     - The Minstrel line of Wireless Modem cradles, for the Palm family of
       handheld computing devices and the Casio E-15 Windows Pocket PC handheld
       device;

     - The Merlin Type II PC Card for portable and desktop PCs;

     - The Sage Wireless Modem for portable and desktop PCs;

     - The NRM-6812 and Expedite Wireless OEM Modems for custom integration with
       computers and other devices; and

     - The Lancer 3W Wireless Modem for vehicle-mounted applications.


     Our core modem technology is easily customized to address a broad range of
vertical applications. Our customers include wireless telecommunications
operators such as Verizon Wireless and AT&T Wireless (which services our
products, through its distribution partner Global Data Wireless) as well as
wireless data content and service providers such as OmniSky, GoAmerica and
CreSenda. We also have OEM customers such as @Road, Harvest/Coca-Cola and
KeyCorp and we have entered into strategic technology and development
relationships within the wireless communications industry with Intel
Corporation, Hewlett-Packard, Metricom, OmniSky, Symbol and VoiceStream.


INDUSTRY BACKGROUND

     The convergence of mobile computing, wireless communications and the
Internet and enterprise networks is driving the rapidly expanding demand for
wireless data access. The explosion of the Internet and enterprise networks has
accelerated the development of applications for communications, information
access, content and commerce. As professionals and consumers increasingly depend
on the growing functionality, productivity and convenience that these
applications afford, they are demanding "anytime, anywhere" connectivity for
their mobile computing devices. International Data Corporation projects that by
the end of 2002, the number of worldwide mobile users with two-way
communications to the Internet could exceed the number of wired users.

Growth in Mobile Computing

     Competition and productivity demands are requiring an increasing number of
professionals to maintain remote and mobile access to the Internet, e-mail and
enterprise networks. International Data Corporation forecasts that the remote
and mobile workforce in the United States, defined as employees spending more
than 20% of their time on the job away from the office, will grow from 34
million individuals at the end of 1998 to 47 million at the end of 2003. This
trend towards mobile computing has led to the increased use of handheld
computing devices and portable PCs both on the road and in the office.
International Data Corporation projects that worldwide shipments of handheld
companions will grow from approximately 4 million in 1998 to approximately 19
million units in 2003, and that portable PC shipments will grow from
approximately 16 million in 1998 to approximately 35 million in 2003.

                                       32
<PAGE>   36

Growth in Wireless Communications

     The adoption of digital wireless voice communications has grown rapidly due
to improved service, declining prices, expanding network coverage and the
availability of extended service features such as voice and text messaging.
DataQuest projects that the number of worldwide digital wireless subscribers
will grow from approximately 217 million at the end of 1998 to approximately 828
million by the end of 2003. Recent developments in wireless data technology,
increased network coverage and deployment of digital data networks combined with
price reductions for data communications have enabled the adoption of wireless
data applications such as e-mail, financial services, news and lifestyle
content.

     There are currently several standards-based technologies for the
transmission and reception of wireless data. Existing digital wireless
communications technologies such as Time Division Multiple Access (TDMA), Code
Division Multiple Access (CDMA) and Global System for Mobile Communications
(GSM), collectively known as second generation, or 2G, wireless technologies,
offer low speed transmission rates. The transmission rates afforded by these
circuit-switched technologies are adequate for limited content applications such
as short messaging, financial services, news and other text-based applications.
Cellular Digital Packet Data (CDPD) technology is a packet-switched standard
that is deployed over traditional analog networks and provides a continuous
network connection at slightly higher transmission speeds.

     A new set of technologies, often referred to as 2.5G, is under development
to provide high-speed packet-based data services over GSM, CDMA and TDMA
networks. These 2.5G technologies are expected to support a broader set of data
applications, such as streaming media and Web browsing. Packet-based technology
affords its users several advantages over circuit-switched systems, including
continuous connectivity and higher bandwidth performance, leading to significant
cost savings for data transmission. As a result, the 2.5G standards are expected
to generate even wider use of wireless data access devices. Third generation, or
3G, systems are being developed for longer-term deployment eventually to replace
2G and 2.5G digital wireless systems. 3G networks will provide for broadband
transmission rates enabling enhanced multimedia applications.

Growth in the Internet and Enterprise Networks

     The Internet has emerged as a global communications medium enabling
millions of people to deliver and share information and conduct business
electronically. The development of applications for the digital delivery of
products and services such as news, weather, stock quotes and trading, books,
music, driving directions and lifestyle information is increasing the everyday
use of the Internet. International Data Corporation estimates that the number of
worldwide Internet users will grow from approximately 144 million in 1998 to 602
million by the end of 2003. This dramatic growth has led to a proliferation of
information and services available on or through the Internet. As access speed
and the breadth of applications for the Internet increase, we believe the
Internet is quickly becoming a necessary medium for information access, commerce
and communication.

     Similarly, the proliferation of enterprise networks continues to drive the
increasing need for the remote retrieval and use of information. As wireless
data communications improve, and as business computing systems are redesigned to
integrate and manage wireless enterprise solutions, wireless Internet access
applications and services will increasingly play a key role in providing mobile
access to corporate information.

Convergence of Mobile Computing, Wireless Communications and the Internet and
Enterprise Networks

     The increase in demand for "anytime, anywhere" access is driving the
convergence of mobile computing, wireless communications and the Internet and
enterprise networks, creating new opportunities for wireless data products and
services. We have designed our wireless products to capitalize on these
opportunities and to afford increased mobile access to enterprise networks and
the Internet. Although there can be no assurances that the estimates of
International Data Corporation or DataQuest will be achieved or that we will
realize similar growth, we believe that demand for wireless data applications
will continue
                                       33
<PAGE>   37

to increase as wireless data network coverage, bandwidth and security improve to
allow higher quality service. New wireless technologies that enable high speed
access to the Internet allow service providers to offer end-users greater access
to a vast array of services and content. These offerings are expected to
increase usage, attract new customers and improve customer loyalty. Dataquest
estimates that the number of wireless data subscribers worldwide will grow from
approximately 14 million at the end of 1998 to approximately 102 million by the
end of 2003.

     As this convergence evolves, a large opportunity exists to develop wireless
connectivity applications for a wide range of vertical industry segments, such
as:

     - Securities Trading;

     - Enterprise Networking, for access to corporate databases and intranets
       and the facilitation of virtual office applications;

     - Field Services and Sales, to provide Web access, enterprise network
       access and contact management in the field;

     - Public Safety, for police, fire and ambulance related applications such
       as remote database access, information dissemination, police substation
       communication and electronic monitoring;

     - Transportation, for applications related to trucking and mobile dispatch,
       vehicle fleet management and location, driver communications, order entry
       and vehicle location and tracking;

     - Retail and Point of Sale Terminals, for applications such as remote
       credit card verification and automated teller machines; and

     - Vending System Monitoring.

Need for Cost-Effective Wireless Data Access for Mobile Computing Devices

     We believe that as mobile professionals and consumers increasingly depend
on the Internet and other enterprise computing applications, they will demand
convenient, cost-effective and user-friendly wireless data solutions for all
mobile computing devices. Until now, devices such as smart phones and two-way
pagers have been introduced to address this demand. Smart phones are enhanced
cellular telephones that are designed for voice applications rather than data
applications, and two-way paging devices allow users to access e-mail and other
information, but are not currently suited for interactive or large display
applications. While these products may adequately address low bandwidth
applications, such as messaging, we believe devices that allow greater display
and interactive capabilities, such as handheld computing devices and portable
PCs, are better suited for wireless data applications.

OUR SOLUTION

     We are a provider of integrated wireless data access solutions. We provide
a suite of wireless data modems and enabling software for use with handheld
computing devices and portable PCs and for vertical applications. We provide our
customers the following advantages:

Breadth of Wireless Access Products

     Our products enable both handheld computing devices and portable PCs to
access the Internet and enterprise networks wirelessly. We also provide wireless
modems which enable connections to a broad range of appliances for vertical
applications. We are developing additional capabilities for emerging wireless
networks in order to afford our customers maximum flexibility in choosing their
wireless data access solutions.

Price Performance Leadership

     We have designed our products to provide high levels of performance and
functionality at an attractive price to drive widespread adoption among users.
We use software solutions where others still use
                                       34
<PAGE>   38

hardware and we build our products around a core common hardware and software
platform. As a result, we are able to offer products which present a
substantially better value proposition than do other wireless data access
products with similar functionality.

Convenience

     Our products provide users with a wireless connection to the Internet and
enterprise networks with a focus on ease-of-use and real-time access to e-mail,
online content and critical personal and professional information. We have
designed our products to reduce their size and weight without sacrificing
performance. For example, our Minstrel modems for handheld computing devices are
lightweight and slip easily into a suit pocket or purse. We have also designed
our products to enhance range and functionality with low power requirements, so
that they can be used for extended periods of time without needing to recharge.
Moreover, we offer activation services to service providers prior to shipping so
that our products are ready for immediate use upon their delivery.

Productivity

     Our products improve productivity by enabling handheld computing devices
and portable PCs to be continuously connected to the Internet and enterprise
networks. Our products for handheld computing devices also enable wireless
synchronization so users can backup and access personal and professional data
from remote locations. These features allow mobile professionals to access and
manage data and information even while they are away from traditional work
settings, thereby significantly increasing their productivity.

Customized Solutions

     Our technology platform enables us to provide wireless data solutions for a
wide range of specialized applications and to adapt our products to specific
customer needs. We enable our OEM customers to provide their clients with
tailored solutions for vertical market applications such as securities trading,
public safety, transportation and retail and point of sale terminals. Our
engineering group assists with the integration of our wireless products to
provide comprehensive solutions to our customers.

OUR STRATEGY

     Our objective is to be the leading global provider of wireless data access
products. The key elements of our strategy are to:

Extend Our Technology Leadership

     We intend to continue developing higher speed integrated wireless data
access solutions to capitalize on the expansion of global wireless data access
technologies. We plan to rapidly develop new modem technologies based on
evolving wireless data standards and to offer customers a comprehensive range of
wireless access products for mobile computing devices. We also intend to
continue to apply our technological expertise to reduce the overall size,
weight, cost and power consumption of our products, while increasing their
capabilities and performance.

Drive Widespread Adoption of Our Products and Increased Market Penetration

     We intend to drive widespread adoption of our products through increased
global marketing activities, strategic pricing and expansion of our
international and direct sales distribution networks. We believe these efforts
will increase our revenue and our brand recognition. Our product pricing is an
important part of this strategy and we will continue to adjust our prices to
ensure market penetration by offering value to our customers. We also intend to
promote and extend our technology integration services which, in simplifying
customer use, will help ensure the widespread adoption of our products.

                                       35
<PAGE>   39

Expand and Develop Strategic Relationships

     We plan to build and expand on strategic relationships to improve the
design and functionality of our wireless access products and rapidly gain market
share. We intend to establish and maintain relationships with a strategic focus
on:

     - Wireless computing communications companies, such as our existing
       relationships with Hewlett-Packard, Symbol and VoiceStream, to extend our
       platform and expand distribution of our products;

     - Software applications companies, such as our existing relationships with
       FusionOne, Inc. AvantGo, Inc., Puma Technologies, Inc. and JP Systems,
       Inc. to offer a wide array of value-added applications for our customers;
       and

     - Technology companies, such as our existing relationships with Metricom,
       Inc. and TPP Communications Ltd. to accelerate the time to market and
       expand the capabilities of our new products.

Continue to Target Key Vertical Markets

     We market our products to key vertical industry segments by offering them
products that increase productivity, reduce costs and create operational
efficiencies. We are currently working with, among others, Harvest in vending
system monitoring, KeyCorp in retail/point of sale, @Road in vehicle tracking
and Symbol in inventory control. We believe that continuing improvements in
wireless computing technologies will create additional vertical markets and more
applications for our products.

Focus on Developing Value-added Applications

     Developing value-added applications to expand the capabilities of our
products will be an important factor in increasing the overall demand for and
the use of our products. As competition in our marketplace intensifies, we
believe that developing proprietary value-added applications for our products in
vertical enterprise markets will give us a competitive advantage and
differentiate us from our competitors. To this end, we may pursue acquisition
opportunities to extend our product lines and provide additional solutions to
our customers.

PRODUCTS

     We successfully deliver innovative and comprehensive solutions to our
customers. We currently offer a variety of wireless data access solutions to
OEMs, VARs, systems integrators, wireless telecommunications operators,
enterprise, mobile professionals and consumers. We delivered the first wireless
cradle modem for the Palm family of handheld computing devices and currently
provide the only commercially available wireless cradle modem for the Palm III
and Palm V product families. We also offer a Type II PC Card modem for portable
personal computers and Windows Pocket PC mobile computing devices.

                                       36
<PAGE>   40

     The following table describes our principal product lines:

<TABLE>
<CAPTION>
                 PRODUCT                                  APPLICATION
                 -------                                  -----------
<S>                                        <C>

WIRELESS CRADLE DEVICES
- - Minstrel III Wireless Modem              - Palm III handheld device
- - Minstrel E-15 Wireless Modem             - Casio E-15 Palm-Size PC
- - Minstrel V Wireless Modem                - Palm V handheld device

WIRELESS PC CARD AND MODEMS
- - Merlin Type II Wireless Modem            - Portable and desktop PCs
- - Sage Wireless Modem                      - Portable and desktop PCs

OEM PRODUCTS
- - Expedite Wireless Modem                  - point of sale terminals, automated
                                           teller machines, vehicle tracking
- - NRM-6812 Wireless Modem                  - utility monitoring, vending system
- - Lancer 3W Wireless Modem                 monitoring
                                           - public safety vehicle mounted
                                           applications
</TABLE>

Wireless Cradle Devices

     Our Minstrel family of wireless data modems adds two-way communications
capability to the Palm family of handheld computing devices, private labeled
derivatives and the Casio E-15 Windows Pocket PC handheld device. The Minstrel
wireless "cradles" maintain the key advantages of these devices: size, ease-
of-use, synchronization and customization. Minstrel provides users with complete
portable access to enterprise networks, e-mail and the Internet without the
limitation of wired connections. The Minstrel/ Palm handheld computing device
integrated product is lightweight and slips easily into a suit pocket or purse.
Minstrel can also be used with most third-party software developed for the Palm
family of handheld computing devices.

     The Minstrel III Wireless Modem offers two-way wireless data communications
on the Palm III connected organizers. Improvements to prior versions include a
smaller and thinner form factor, lighter weight and improved battery life. The
Minstrel E-15 Wireless Modem, which is designed exclusively for the Casio E-15
Windows Pocket PC handheld computer, offers two-way wireless data
communications. The Minstrel V Wireless Modem, which is designed for the Palm V
connected organizer and is currently branded by OmniSky for sales and
distribution, also offers two-way wireless data communications.

Wireless PC Cards and Modems

     Our Merlin Type II Wireless Modem, which was designed for Windows
95/98/2000/NT/Pocket PC computers, allows mobile professionals and consumers to
send and receive e-mail, and to connect wirelessly to their enterprise networks
and to the Internet.

     Our Sage Wireless Modem is a self-powered, external, wireless modem for
desktop PCs. The key strengths of Sage include its low price, extended battery
life and versatility. Sage provides its users with wireless access to e-mail,
enterprise networks and the Internet. Sage is also well suited for fixed
installations, particularly in situations where telephone lines are unavailable
or inconvenient.

OEM Products and Devices

     The Expedite Wireless Modem offers 0.6-watt full-duplex wireless CDPD modem
capabilities with minimal power requirements and a form factor almost four times
smaller than its predecessor. The Expedite's 3.6 volt power supply has an
extended battery life and is compatible with more integrated products. The
Expedite is currently used in numerous applications, including wireless
telemetry monitoring, inventory monitoring, point-of-sale terminals, automated
teller machines and automated vehicle location and tracking. The Expedite is
also priced below comparable products offered by our competitors, making it
extremely attractive to OEMs, VARs and systems integrators that require wireless
CDPD solutions. The
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<PAGE>   41

Expedite's small form factor, standards-based interfaces and adherence to
specifications, together with its simple design, make it easy for OEM customers
to incorporate a wireless CDPD solution into their existing or new product
lines.

     The forerunner of the Expedite, the NRM-6812 Wireless Modem, remains an
industry leader in terms of size, performance and cost. The NRM-6812 has a wider
temperature range and differing voltage levels than the Expedite, making it
preferable for certain types of wireless applications such as oil and gas
telemetry and vehicle tracking.

     The Lancer 3W is a wireless CDPD modem with extreme temperature tolerance
capabilities, high vibration tolerance and a ruggedized form factor which, with
input power voltage capabilities from 9 to 30 volts, is ideally suited for a
variety of applications ranging from public safety vehicle mounted applications
to field service and wireless telemetry monitoring. In addition, the Lancer 3W
has power saving capabilities offered by the "sleep mode," which maintains
network connection at low battery levels and reduces battery drainage. The
Lancer 3W is equipped with modem manager software and remote diagnostics which
allow users to monitor and control the modem remotely.

CURRENT WIRELESS TECHNOLOGY

     Wireless data communications are currently transmitted over various public
and private networks utilizing either circuit-switched data or packet-switched
data, such as Cellular Digital Packet Data (CDPD), ARDIS and Mobitex. The
following table outlines these technologies.

<TABLE>
<CAPTION>
      TECHNOLOGY STANDARD         DATA TRANSMISSION ATTRIBUTES      NOMINAL DATA RATES
      -------------------         ----------------------------      ------------------
<S>                              <C>                               <C>
Analog Circuit-Switched Data     Analog Circuit                      9.6 Kbps
Cellular Digital Packet Data     Digital Packet                      19.2 Kbps
ARDIS                            Digital Packet                      19.2 Kbps
Metricom                         Digital Packet                      28.8 Kbps
Mobitex                          Digital Packet                      9.6 Kbps
</TABLE>

     In a circuit-switched system the user is temporarily connected to the
network and pays for the total connection time. Although circuit-switched
systems cover a very broad geographical area, the newer packet networks have
significant performance, technical and economic advantages over circuit-switched
systems. CDPD uses a packet system which sends and receives content consisting
of individually addressed segments or "packets." The user is continually
connected to the network and pays either a flat monthly service fee or a fee
based on the amount of data transferred.

     We believe that one of our competitive advantages is our broad base of core
technologies. Currently, we offer products based on the CDPD standard. We have
developed and continue to build on the following key current technology areas:

     CDPD. CDPD is one of the most widely adopted wide-area wireless packet data
systems in North and South America. CDPD technology enhances the efficiency of a
cellular channel, but is transparent within it, allowing the voice system's
capability and quality to remain unaffected. CDPD technology improves the
efficiency of existing cellular channel infrastructure as it detects idle
moments when cellular channels are unused, packages data in small packets and
sends it in short bursts. As a result, CDPD is an extremely cost-effective
solution for cellular carriers to use to offer data services. CDPD provides for
access at speeds up to 19.2 Kbps.

     Metricom. Metricom designs, provisions and operates digital networks and
services for mobile users. Metricom's Ricochet network, which is based upon
modified CDPD network technology, works by broadcasting signals back and forth
from transceivers mounted on utility poles to small radio modems connected to
subscribers' computers. Ricochet is generally available at speeds up to 28.8
Kbps in the greater San Francisco Bay Area, Seattle, Washington DC, selected
areas of New York City and selected airports and college campuses. Metricom is
currently under construction in 21 major service areas to bring

                                       38
<PAGE>   42

its higher speed Ricochet II 128 Kbps network to market, and ultimately expects
to deploy a network in 46 markets covering 100 million in population.

EMERGING STANDARDS

     Current wireless data technologies work well with text-based applications
such as messaging and securities trading. Next generation wireless data
technologies are expected to allow for higher interaction levels, making
multi-media applications, such as Web browsing, appeal to a broader group of
wireless data users. 2.5G and 3G technologies based on GSM, TDMA, CDMA and
W-CDMA standards, will offer much higher bandwidth performance than existing
technology. These emerging standards, summarized in the following table, will
enable service providers to offer a broader range of wireless data services
relative to those currently available.

<TABLE>
<CAPTION>
TECHNOLOGY      DEVELOPMENT STAGE FOR           DATA TRANSMISSION        CURRENT/EXPECTED    2.5G/3G
 STANDARD         DATA TRANSMISSION                 ATTRIBUTES              DATA RATES      STANDARDS
- ----------   ----------------------------  ----------------------------  ----------------   ---------
<S>          <C>                           <C>                           <C>                <C>
GSM          Circuit-Switched and short    Digital Packet, Circuit-       14.4 Kbps/ 384    GPRS/
             messaging offered, standard   Switched                       Kbps              EDGE
             published for packet data

TDMA         Circuit-Switched and short    Digital Packet, Circuit-       9.6 Kbps/ 384     IS136
             messaging offered             Switched                       Kbps              GPRS/
                                                                                            EDGE

CDMA         Circuit-Switched and short    Digital Packet, Internet       14.4 Kbps/ 384    1XRTT/
             messaging offered, standard   Protocol, Circuit-Switched     Kbps 1-2 Mbps     3XRTT
             published for packet data

W-CDMA       Standard published for        Digital Packet                 115 Kbps/ 2       3Gpp
             digital packet voice, data                                   Mbps
             and multimedia
</TABLE>

     In addition to the products we offer based on current technology standards,
we are in the process of developing second and third generation versions of our
branded and OEM products that will include new technologies to enhance customer
usability and performance, as well as address new market opportunities. We
intend to develop solutions that build on the following emerging key technology
areas:

     GPRS. General Packet Radio Service (GPRS), commonly referred to as a 2.5G
standard, is a high-speed wireless packet data service that runs on GSM or TDMA
networks. GPRS is being adopted by many GSM and TDMA networks in North America,
Europe and Asia. GPRS is a packet network, allowing for always-on connectivity,
that offers data speeds up to 115 Kbps. This technology is expected to be
developed by major GSM carriers by the end of 2000.

     1XRTT. CDMAOne 2000 Phase 1 or 1XRTT, commonly referred to as a 2.5G
standard, is a spread spectrum technology, based on CDMA technology standards,
that forms the basis for 3G. CDMA is used primarily in North and South America,
Japan and South Korea. 1XRTT offers access speeds of up to 144 Kbps. This
technology is expected to be implemented by major CDMA carriers by the middle of
2001.

     W-CDMA. Wideband CDMA (W-CDMA), commonly referred to as a 3G standard, is a
high-speed wireless packet voice, data and multi-media services based on CDMA
technology. W-CDMA offers data speeds of up to 2 Mbps. W-CDMA technology meets
requirements adopted by major carriers and standard organizations as the global
standard for 3G. This technology is expected to be implemented in Japan by the
end of 2001 and in Europe and North America in 2003.

                                       39
<PAGE>   43

OUR TECHNOLOGY FOCUS

     In addition to developing products based on the technology standards
mentioned above, we have developed and continue to build on the following key
technology areas:

     Advanced Radio Frequency Design. Advanced Radio Frequency (RF) design is
the key technology that determines the performance of wireless devices. We have
specialized in the 800/900 MHz designs for analog and digital cellular, packet
data and spread spectrum systems. Our proprietary RF technology contributes to
the performance, small size and low cost of products. We are currently
developing the 1800 and 1900 MHz RF technology for future high speed wireless
systems including GPRS, 1XRTT and 3G technologies.

     Miniaturization and System Integration. Small systems integration is the
integration of application specific integrated circuits, RF, baseband and
packaging technologies. The complete wireless modem is packaged into a
sub-credit card module with the advent of proprietary integrated circuit design,
embedded software modem and multi-layer RF stripline technologies. We have one
of the smallest wireless modems available, the only pocket-sized wireless modem
for the Palm family of personal computing devices, and a Type II PC card modem.
We will continue to augment the miniaturization technology to drive down the
size and cost of current and future products.

CUSTOMERS

     Our customers include wireless telecommunications operators, wireless data
content and service providers, OEM customers, professionals and consumers. The
following is a representative selection of our customers:

<TABLE>
<CAPTION>
         WIRELESS
    TELECOMMUNICATIONS        WIRELESS DATA CONTENT AND SERVICE
    OPERATOR CUSTOMERS         PROVIDER AND RESELLER CUSTOMERS             OEM CUSTOMERS
    ------------------        ---------------------------------            -------------
<S>                           <C>                                <C>
Verizon Wireless              GoAmerica Communications Corp.     AirLink
AT&T Wireless(1)              CreSenda (Internet content         @Road (vehicle tracking)
Cellcom (Middle East)         provider)                          Harvest/Coca-Cola (vending)
Movilnet (Latin America)      OmniSky                            IVI Checkmate
NTE (China)                                                      KeyCorp (mobile point of sale)
                                                                 Pivot International (voting
                                                                 booths)
                                                                 Symbol (inventory control)
</TABLE>

- ---------------
(1) AT&T currently sources our products through its distribution partner, Global
    Wireless Data.


     Each of the customers listed in the table above has accounted for at least
$50,000 in revenue to us since January 1, 1999. OmniSky, @Road and Global
Wireless Data accounted for 32.4%, 14.2% and 6.1% of our revenue, respectively,
for the nine months ended September 30, 2000. @Road, OmniSky and Global Wireless
Data accounted for 23.1%, 14.3% and 8.2% of our revenue, respectively, for the
year ended December 31, 1999.


     Many of our customer relationships provide us with the opportunity to
expand our customer base and market reach. Among those mutually beneficial
relationships that augment our sales opportunities are the following:

     Wireless Telecommunications Operators. We work closely with our carrier
customers to generate demand for our products. Our carrier customers serve as an
important sales channel for our products. Verizon Wireless, which was recently
formed by AirTouch Communications, Bell Atlantic Mobile, GTE Wireless and
PrimeCo, sources our products through Global Wireless Data. AT&T Wireless also
sources our products, through its distribution partner Global Wireless Data.
Verizon Wireless and AT&T Wireless both maintain large sales forces that develop
sales opportunities for us. These sales leads are either consummated directly by
the carrier or jointly with our account executives. This approach allows us to
combine our wireless data expertise with the carriers' vast end-customer
relationships and broad sales

                                       40
<PAGE>   44

reach. Our carrier customers also provide us and our customers with important
services, including field trial participation, first-tier technical support,
wireless data marketing and access to additional indirect distribution channels.
To leverage these services, we provide carriers with early access to new
products, technical training and co-marketing resources.

     Wireless Data Content and Service Providers. Wireless data content and
service providers purchase our products either directly from us or from a
distributor and resell them to end-users. These providers typically integrate
our products with other elements and provide an overall wireless access solution
to the end-user in a particular field or vertical market. These solutions
include hardware, software and ongoing service components. Examples of our
content and service-provider customers include OmniSky and CreSenda.

     OEM Customers. Our OEM customers integrate our products into devices that
they manufacture and sell to end-users through their own direct sales forces and
indirect distribution channels. Our products are integrated into a broad range
of devices, including but not limited to, handheld computing devices, laptops,
vehicle location devices (AVLs), electric meters, vending machines, industrial
equipment, wireless credit processing and point of sale (POS). Major customers
include @Road, Harvest and KeyCorp. We build strong relationships with our OEM
customers because they rely heavily on our application engineering support
during the process of integrating our products into theirs.

STRATEGIC ALLIANCES

     We intend to develop and maintain strategic relationships within the
wireless communications industry which complement and expand our existing
distribution network and extend our technology and market reach. These
arrangements include strategic technology and marketing relationships with
providers of next generation wireless technology, application software
developers focused on wireless products, OEM customers which integrate our
products into other devices, value-added resellers, distributors, systems
integrators and cellular carriers. These strategic relationships allow us to
develop the most compelling wireless data products and provide us with access to
additional markets, channels of distribution and increased sales opportunities.
Our principal strategic alliances to date include the following:


     Intel Corporation. In October 2000, we entered into a five-year product
purchase and license agreement with Intel Corporation. Under the agreement we
will sell to Intel a variety of wireless modem modules for use in Intel's future
products and provide related technical support. We will also collaborate with
Intel on technology development and system architecture relating to the
agreement. The agreement also grants Intel the option to license from us a
manufacturing package relating to certain modems for a royalty fee, and a design
package relating to certain modems and PC Card modules for a fixed fee. The
agreement contains no volume commitment from Intel, and Intel is not currently
selling products that require our modems.


     Hewlett-Packard Company. Hewlett-Packard is a leading global provider of
computing and imaging solutions and services and focuses on capitalizing on the
opportunities of the Internet and the proliferation of electronic services. In
March 2000, we entered into a supply agreement under which we will sell and
provide technical support for a wireless modem cradle for use with the HP
Jornada 540 Series Color Pocket PC.

     Metricom, Inc. Metricom designs, provisions and operates networks and
services for mobile users. Metricom operates a Ricochet wireless network, which
is a system that broadcasts signals back and forth from transceivers mounted on
utility poles to small radio modems connected to subscribers' computers.
Ricochet network coverage is generally available at speeds up to 28.8 Kbps in
the greater San Francisco Bay Area, Seattle, Washington, DC, selected areas of
New York City and selected airports and college campuses. Metricom is currently
under construction in 21 major service areas to bring the higher speed Ricochet
128 Kbps network to market, and ultimately expects to deploy a network in the
markets covering 100 million in population. In October 1999, we entered into a
license, manufacturing and purchase agreement with Metricom under which we will
custom develop a wireless radio modem compatible with

                                       41
<PAGE>   45

Metricom's Ricochet network. Metricom will also purchase modems during the term
of the agreement, which lasts until October 2001. We currently expect to begin
shipping the modems later this year.

     OmniSky Corporation. OmniSky offers a wireless service under its own brand
for use on handheld mobile devices. In July 1999, we entered into an agreement
with OmniSky, a wireless Internet service provider, for the development and sale
of our Minstrel III and Minstrel V cradle modems for the Palm III and Palm V
handheld computing devices. In November 1999, we began shipments to OmniSky.
Although the term of this agreement expired on May 1, 2000, we are currently
shipping and provisioning modems to OmniSky pursuant to an open purchase order
with the same terms as those contained in the expired agreement.

     Symbol Technologies, Inc. Symbol is a manufacturer of bar code-driven data
transaction systems and is engaged in the design, manufacture and marketing of
bar code reading equipment, handheld computers and radio frequency (RF) data
communications systems. In March 2000, we entered into an agreement with Symbol
to integrate our Merlin OEM CDPD modems into Symbol's radio frequency data
communications systems.

     VoiceStream Wireless Corporation. VoiceStream is a leading provider of
digital wireless communications. Through a license from the FCC, VoiceStream
constructs and operates Personal Communication Service (PCS) networks. Nearly
three out of every four people in the United States live in areas licensed to be
served by VoiceStream or its affiliates. In March 2000, we entered into an
agreement with VoiceStream, under which we will develop three types of wireless
GPRS-PCS PC card modems for wireless mobile computing devices. The modems may be
co-branded by VoiceStream. VoiceStream will also purchase our modems during the
term of the agreement, which lasts until March 2003.

     Novatel Wireless Developer Program. Because of our commitment to mobile
computing platforms such as the Palm family of handheld computing devices,
Microsoft Windows Pocket PC, and Microsoft Windows 9x/NT, we formed the Novatel
Wireless Developer Program, which is a forum for us to work with application
software developers to develop wireless data products and markets. The mission
of the Developer Program is to encourage development of the best wireless data
solutions using our products, and successfully to market those solutions to our
customers. There are currently over 100 software developers enrolled in the
Novatel Wireless Developer Program. We have established a partner community
working together to create, deliver and support the best and most compelling
wireless data applications. Once these companies have a commercial software
package or service available, they are listed and promoted in the Wireless
Solutions Guide. This guide is available on our Web site and is frequently used
as a resource by internal sales personnel as well as carrier staff.

SALES AND MARKETING


     As of September 30, 2000, our sales and marketing organization consisted of
64 employees, including those located in six sales offices throughout the United
States.


Sales

     We sell our products using a multi-channel distribution model which
includes both direct and indirect sales. In order to maintain strong sales
relationships, we provide co-marketing, trade show, low-cost sales demo unit and
joint press release support. In addition to our direct sales relationships with
carriers and service providers, OEMs and VARs, we sell our products through the
following channels:


     - Domestic Distributors. In the United States, we sell our products through
       dedicated domestic distributors. As of September 30, 2000, our domestic
       distributors were D&H Distributing Company, Global Wireless Data and
       Ingram Micro.



     - International Distributors. We sell our products through international
       distributors in Latin America, Israel, the Far East and New Zealand. As
       of September 30, 2000, our international distributors were Bismark,
       Insite, Cellcom and Golden Net.


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<PAGE>   46

     - Mail-Order and Internet Catalogs. We sell our products to mail-order and
       Internet catalogues, including CDW, Mobile Planet, Multiple Zone,
       Outpost.com, PC Connection and PC Mall.

     - Direct End-User Sales. Some end-users purchase products directly from us.
       Direct sales are facilitated through our Web site and our toll-free
       telephone number.

Marketing

     We support our sales efforts through a variety of marketing initiatives.
Our marketing organization focuses on creating market awareness of and promoting
our products, generating sales leads, maintaining strong customer relationships,
and developing interest in and demand for our products in new market segments.

     We engage in a wide variety of marketing initiatives, which include:

     - conducting marketing programs in conjunction with industry, business and
       trade publications;

     - building awareness for our products and the Novatel Wireless brand
       through a wide variety of media;

     - participating in industry and technology related trade shows,
       associations and conferences; and

     - engaging in cooperative marketing programs and partnerships.

     We also conduct extensive market research through our end-users,
third-party developer community and channel customers. We use this information
on a continuous basis to refine our product development and the position and
assortment of our products in our sales channels.

PRODUCT DEVELOPMENT

     Our product development efforts are focused on developing innovative
products and improving the functionality, design and performance of our existing
products. We intend to continue to identify and respond to our customers' needs
by introducing new product designs with an emphasis on innovations in the
ease-of-use, performance, size, weight, cost and power consumption of our
products. We are also currently developing technology and products for high
bandwidth wireless applications to address opportunities presented by the next
generation of public and private wireless networks.

     Our product development effort is driven by a highly skilled and
experienced team. The core members of our research and development team have
worked together for over 16 years, and the entire team has benefited from a low
turnover rate in an intensely competitive environment for skilled engineers.
While we have developed most new products and enhancements to existing products
internally, we have also licensed technology from third parties.

     We manage our products through a structured life cycle process, from
identifying customer requirements through development and commercial
introduction to eventual phase-out. Product development emphasis is placed on
time-to-market, meeting industry standards and end-item product specifications,
ease of integration, cost reduction, manufacturability, quality and reliability.

     We believe that our future success will depend, in part, on our ability to
identify and respond to emerging technological trends in our target markets,
develop and maintain competitive products, enhance our existing products by
adding features and functionality that differentiate them from those of our
competitors, and bring products to market on a timely basis. As a result, we
have devoted a significant portion of our resources to product development, and
we intend to continue making substantial investments in research and
development.


     For the nine months ended September 30, 2000, our research and development
expense totaled $8.9 million. Our research and development expense totaled
approximately $3.7 million for the year ended December 31, 1999, $2.3 million
for the year ended December 31, 1998 and $2.0 million for the year ended
December 31, 1997. As of September 30, 2000, we had 154 engineering and
technical professionals


                                       43
<PAGE>   47

in product development and manufacturing, which includes purchasing,
fulfillment, quality assurance, quality control, reliability, technical
documentation and technical publication.

MANUFACTURING

     We currently have agreements to outsource our manufacturing operation with
Sanmina Corporation, GVC Corporation and Solectron de Mexico, S.A. de C.V. In
September 1999, April 2000, and August 2000, we entered into agreements with
Sanmina, GVC and Solectron, respectively, for the manufacture of our products.
The Sanmina and GVC agreements are for a term of two years, and the Solectron
agreement is for a term of one year with automatic successive one-year renewals.
Under the agreements, Sanmina, GVC and Solectron provide all component
procurement, product manufacturing, final assembly, testing, quality control and
delivery services for us. Under these agreements, we are required to provide
each manufacturer with firm purchase orders covering a minimum period of three
months. Recently, we moved our principal manufacturing operations from Sanmina's
facility in Calgary, Canada to its facility in Guntersville, Alabama. We expect
GVC and Solectron to begin manufacturing some of our products at their
facilities in Taiwan and Mexico, respectively, in the near future.

     Our outsourced manufacturing activity allows us to:

     - focus on our core competencies;

     - minimize our capital expenditures;

     - participate in contract manufacturer economies of scale and achieve rapid
       production scalability by adjusting to manufacturing volumes quickly to
       meet changes in demand;

     - access best-in-class manufacturing resources; and

     - operate without dedicating any space to manufacturing operations.

     We believe that additional assembly line efficiencies are realized due to
our product architecture and our commitment to process design. The components
that make up our products are supplied by a number of vendors. Direct materials
for our products consist of tooled parts such as printed circuit boards, molded-
plastic components, unique metal components and application-specific integrated
circuits (ASICs), as well as industry-standard components such as transistor,
integrated circuits, piezo-electric filters, duplexers, inductors, resistors and
capacitors, many of which are similar to components used in cellular telephone
handsets. Although we generally use standard components for our products and try
to maintain alternative sources of supply, some components, such as
printed-circuit boards, molded plastic components, unique metal components and
ASICs, are purchased from suppliers for which alternative sources are not
currently available in the quantities and at the prices we require.

     We employ our own manufacturing staff that focuses on managing the
relationship with our third-party manufacturers and particularly on
design-for-manufacturing, test procedures, quality, procurement and cost
optimization, production scheduling and continuous improvement. We also perform
certain manufacturing related functions internally, including manufacturing
engineering and the development of manufacturing test procedures and fixtures.

GOVERNMENT REGULATION

     Our products are subject to certain mandatory regulatory approvals. In the
United States, the FCC regulates many aspects of communications devices,
including radiation of electromagnetic energy, biological safety and rules for
devices to be connected to the telephone networks. Radio frequency devices,
which includes our modems, must be approved under the above regulations by
obtaining FCC equipment authorization prior to being offered for sale. FCC
equipment authorization is obtained by submitting a technical description of the
product and report showing compliance with FCC technical standards. We have
obtained from the FCC all necessary equipment authorization for all products we
currently manufacture and sell.

                                       44
<PAGE>   48

COMPETITION

     The wireless data communications market is intense, rapidly evolving and
highly competitive. It is subject to technological changes and is significantly
affected by new product introductions and the market activities of industry
participants. We compete in this market on the basis of price, form factor, time
to market, functionality, quality and variety of product offerings. Moreover, we
expect that this market will experience several new entrants in the future. To
maintain and improve our competitive position, we must continue to develop new
products, expand our customer base, grow our distribution network and leverage
our strategic partnerships.

     Our current and prospective competitors generally fall within the following
categories:

     - Wireless modem manufacturers, such as Sierra Wireless, Uniden, NextCell
       and Tellus;

     - Traditional wired modem manufacturers, such as 3Com and Xircom;

     - Wireless device manufacturers, such as Handspring, Palm and Research In
       Motion;

     - Wireless handset manufacturers and next generation wireless technology
       providers, such as Ericsson, Motorola, and Nokia; and

     - Non-CDPD private communications network providers, such as Emotiant, Bell
       South and Metricom.

     We believe the principal competitive factors impacting the market for our
products are functionality, features, performance, convenience, availability,
brand and price. We believe that we compete better than many of our current
competitors with respect to some or all of these factors due to the broad range
of products we offer, the ease-of-use in design and engineering of our products,
our ability to adapt our products to specific customer needs and our price
leadership.

     There can be no assurance that our current or potential competitors will
not develop products comparable or superior to those developed by us or adapt
more quickly to new technologies, evolving industry standards, new product
introductions, or changing customer requirements. As a result, we must
continuously introduce new products and educate existing and prospective
customers as to the advantages of our products versus those of our competitors.

     Many of our current and potential competitors have had longer operating
histories and significantly greater financial, manufacturing, technical, sales,
customer support, marketing and other resources, as well as greater name
recognition and a larger installed products and technologies base. In addition,
the global acceptance of our products could lead to increased competition as
third parties develop products competitive with our own. Any of these
competitors may be able to respond faster than we can to new or emerging
technologies and changes in customer requirements and to devote greater
resources to the development, promotion and sale of their products than we can.
We cannot assure you that our current or potential competitors will not develop
products comparable or superior to those that we develop or adapt more quickly
than we do to new technologies, evolving industry trends or changing customer
requirements.

     In addition, as the wireless data communications product market develops, a
number of companies with significantly greater resources than we have could
attempt to increase their presence in the market by acquiring or forming
strategic alliances with our competitors, resulting in increased competition.

PROPRIETARY TECHNOLOGY

     Our software, hardware and operations rely on and benefit from an extensive
portfolio of intellectual property. We currently hold 11 United States patents
issued for our technology and have four United States patent applications
pending. We also have four foreign patents issued and four foreign patent
applications pending.

     We own a number of trademarks and servicemarks, including Contact(R),
Expedite(TM), Lancer 3W(TM), Merlin(TM), Minstrel(R), Minstrel III(TM), Minstrel
IIIc(TM), Minstrel V(TM), Minstrel Plus(TM), Minstrel S(TM),

                                       45
<PAGE>   49

MissionONE(TM), Sage(R), Viking(TM), Expedite(TM), each with its accompanying
designs, and the Novatel Wireless logo.

     We license CDMA technology from QUALCOMM, Incorporated for integration into
our products. This license allows us to manufacture CDMA-based wireless modems
and sell or distribute them worldwide. The license does not have a specified
term and may be terminated by us or by QUALCOMM for cause or upon the occurrence
of other specified events. In addition, we may terminate the license for any
reason upon 60 days' prior written notice. We have also granted to QUALCOMM a
nontransferable, worldwide, nonexclusive, fully paid and royalty-free license to
use, in connection with wireless communications applications, certain
intellectual property of ours that is used in our products which incorporate the
CDMA technology licensed to us by QUALCOMM. This license allows QUALCOMM to
make, use, sell or dispose of such products and the components therein.


     In October 2000 we entered into a five-year product purchase and license
agreement with Intel Corporation. In connection with the agreement, under
certain circumstances we will not assert our patent rights against certain Intel
products which do not involve our core technology and, if we assign or sell any
of our patents that pertain to certain Intel products which do not involve our
core technology, we will grant Intel a nontransferable, worldwide, royalty-free
license to those patents.


     We primarily rely on a combination of copyright, trade secret and trademark
laws, and nondisclosure and other contractual restrictions on copying and
distribution to protect our proprietary technology. In addition, as part of our
confidentiality procedures, we generally enter into nondisclosure agreements
with our employees, consultants, distributors and corporate partners and limit
access to and distribution of our software, documentation and other proprietary
information. It may be possible for a third party to copy or otherwise obtain
and use our products or technology without authorization, or to develop similar
technology. In addition, our products are licensed in foreign countries and the
laws of such countries may treat the protection of proprietary rights
differently from and may not protect our proprietary rights to the same extent
as do laws in the United States.

EMPLOYEES

     As of September 30, 2000, we had a total of approximately 254 employees,
including 64 in sales and marketing, 154 in engineering, manufacturing, research
and development and 36 in general and administrative functions. Our future
performance depends, in significant part, upon our ability to attract new
personnel and retain existing personnel in key areas including engineering,
technical support and sales. Competition for personnel is intense, especially in
the San Diego area where we are headquartered, and we cannot be sure that we
will be successful in attracting or retaining personnel in the future. Our
employees are not represented by any collective bargaining unit, and we consider
our relationship with our employees to be good.

LEGAL PROCEEDINGS

     We are not a party to any legal proceedings which, if adversely determined,
would have a material adverse effect on our business, financial condition and
results of operations. We may, from time to time, become a party to various
legal proceedings arising in the ordinary course of business.

FACILITIES

     Our principal executive offices are located in San Diego, California where
we lease approximately 20,000 square feet under a lease that expires in July
2005. We also lease approximately 4,500 square feet in San Diego under a lease
that expires in March of 2005. In addition, we lease approximately 20,000 square
feet in Calgary, Alberta, Canada for our research and development organization
under a lease that expires in January 2002, and 14,500 square feet in Carlsbad,
California utilized for distribution purposes under a lease that expires in
August 2002. We also lease space in various geographic locations primarily for
sales and support personnel or for temporary facilities. We believe that our
existing facilities are adequate to meet our current needs, and that suitable
additional or substitute space will be available as needed.
                                       46
<PAGE>   50

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

     The following table sets forth information regarding our executive officers
and directors:


<TABLE>
<CAPTION>
            NAME              AGE                           POSITION(S)
            ----              ---                           -----------
<S>                           <C>   <C>
John Major..................  54    Chairman of the Board and Chief Executive Officer
Ambrose Tam.................  44    President, Chief Operating Officer and Chief Technology
                                    Officer
Bruce Gray..................  45    Senior Vice President, Sales and Marketing
Melvin Flowers..............  47    Vice President of Finance, Chief Financial Officer and
                                    Secretary
Peter Leparulo..............  41    Senior Vice President, Corporate and Strategic Development
                                    and General Counsel
Steven G. Schlief...........  44    Vice President, Operations
Robert Getz(1)..............  38    Director
Nathan Gibb(1)..............  30    Director
H.H. Haight(1)(2)...........  66    Director
David Oros..................  41    Director
Mark Rossi(2)...............  44    Director
Steven Sherman..............  54    Director
</TABLE>


- ---------------
(1) Member of Audit Committee

(2) Member of Compensation Committee

     John Major has served as our Chairman of the Board and Chief Executive
since July 2000. From November 1999 until July 2000, Mr. Major was Chief
Executive Officer of Wireless Internet Solutions Group, a strategic consulting
services firm. From November 1998 to November 1999, Mr. Major was President and
Chief Executive Officer of WirelessKnowledge, a joint venture between Microsoft
Corporation, a software and Internet technology company, and QUALCOMM,
Incorporated, a digital wireless communications company. From May 1997 to
November 1998, he was an Executive Vice-President of QUALCOMM and served as
President of QUALCOMM Infrastructure Products Division. From 1977 until he
joined QUALCOMM in 1997, Mr. Major held a number of executive positions at
Motorola, Inc., a communications and electronics company, ultimately serving as
Senior Vice President and Chief Technical Officer. Mr. Major currently serves on
the board of directors of Littelfuse Corporation, a circuit protection
technology company; Verilink, an intelligent edge connection wireline modem
company; Identix, Inc., an identification technology company; Advanced Remote
Communications Solutions, Inc., a communications systems company, and Lennox
Corporation, an HVAC products company. He also serves on the Board of Directors'
Executive Committee for the Telecommunications Industry Association and the
Electronics Industry Association. Mr. Major holds a Bachelor of Science degree
in Mechanical and Aerospace Engineering from the University of Rochester, and a
Master of Science degree in Mechanical Engineering from the University of
Illinois. He also holds a Master of Business Administration degree, with
distinction, from Northwestern University and a Juris Doctor from Loyola
University.

     Ambrose Tam has served as the President, Chief Operating Officer and Chief
Technology Officer of our company since August 1996. From 1990 to 1993, he was
the Research and Development Director of NovAtel Communications Ltd., which is
now NovAtel, Inc., and in 1994 he became the General Manager of the Personal
Communications Products division of NovAtel Communications. Our company was
founded when we acquired the assets of this division from NovAtel Communications
Ltd. Prior to joining NovAtel Communications, Mr. Tam spent 12 years in various
electronic and radio frequency engineering capacities with Astec Components
Ltd., a Hong Kong-based manufacturing, engineering and distribution company
specializing in radio frequency, satellite receivers and cellular phone
components. Mr. Tam holds a Higher Certificate in Electronic Engineering from
Hong Kong Polytechnic University and a Master of Business Administration degree
from the University of Calgary.

                                       47
<PAGE>   51

     Bruce Gray has served as our Senior Vice President of Sales and Marketing
since February 2000. Prior to that he was our vice president of sales and
marketing since joining our company in October 1998. From October 1997 to
October 1998, Mr. Gray was the Senior Director of Uniden Electronics
Corporation's Data Products Division, where he was responsible for sales
performance, strategic planning, channel development and new product
development. Prior to joining Uniden, a wireless communications company, Mr.
Gray was a Director of Sales and Marketing for Sensormatic Electronics
Corporation, a supplier of electronic security products, from December 1994 to
October 1997. From May 1992 to January 1994, Mr. Gray was a Director of
Marketing and Product Management for U.S. Robotics Corporation, a communications
products company. Mr. Gray holds a Bachelor of Science degree in Engineering
from the University of Alabama and a Master of Business Administration degree
from the University of San Diego.

     Melvin Flowers has served as our Vice President of Finance and Chief
Financial Officer since joining our company in February 2000, and Secretary of
our company since April 2000. Mr. Flowers served as a Vice President and the
Chief Financial Officer of KNC Software, LLC, an Internet software company, from
July 1999 until November 1999. Prior to joining KNC Software, Mr. Flowers served
as a Vice President and the Chief Financial Officer of Microwave dB, from
November 1998 until June 1999. Prior to joining Microwave, Mr. Flowers served as
the Chief Financial Officer and Vice President of Finance of ACT Networks, Inc.,
a network access device manufacturer, from July 1993 to October 1998.
Previously, Mr. Flowers also served as President and Chief Financial Officer of
Pacific Earth Resources, an ornamental horticultural company, and as Vice
President and Chief Financial Officer of Spectramed, Inc., a medical device
manufacturing company. Mr. Flowers received a Bachelor of Science degree in
Accounting from Northern Illinois University.

     Peter Leparulo has served as Senior Vice President, Corporate and Strategic
Development, and General Counsel of our company since September 2000. From June
1998 until September 2000, he was a senior partner at the law firm of Orrick,
Herrington & Sutcliffe LLP, where he specialized in corporate finance, mergers
and acquisitions, securities, intellectual property and general corporate
matters. Prior to joining Orrick, Mr. Leparulo was a partner at the law firm of
Pillsbury Madison & Sutro LLP, from January 1992 until June 1998, and an
associate at that firm from October 1989 until January 1992. He holds a Bachelor
of Science degree from Colgate University and a Juris Doctor from Case Western
Reserve University.

     Steven Schlief has served as Vice President of Operations since joining our
company in July 2000. Prior to joining us, he was Vice President, Supply Chain
Management, for the Asian operations of Celestica Inc., a contract manufacturer,
from September 1997 to July 2000. Prior to that, Mr. Schlief was Director of
Materials at Polycom Inc., a telecommunications and video conferencing company,
from January 1995 to September 1997. Mr. Schlief has also held positions with
Apple Computer, IEC Electronics and Lockheed Corporation where he worked in a
number of areas including materials, supply chain management and operations. Mr.
Schlief holds a Bachelor of Arts degree from San Jose State University and a
Master of Business Administration from Santa Clara University.

     Robert Getz has served as a director of our company since December 1999.
Since December 1996, Mr. Getz has served as a Managing Director of Cornerstone
Equity Investors, LLC, a private equity investment firm that specializes in
technology and telecommunications, business service and healthcare information
investments. Prior to joining Cornerstone, Mr. Getz served as a Managing
Director of Prudential Equity Investors, Inc., also a private equity investment
firm, from June 1994 until December 1996. Mr. Getz also serves as a director for
several private companies, including Artel Video Systems, Inc., a developer of
broadband video networking equipment, and Centurion International, Inc. a
designer and manufacturer of antenna and power solutions for the wireless device
industry. Mr. Getz holds a Bachelor of Arts degree from Boston University and a
Master of Business Administration in finance from the Stern School of Business
at New York University.

     Nathan Gibb has served as a director of our company since June 1999. Mr.
Gibb is an Investment Manager with Working Ventures Canadian Fund Inc., a
Canadian investment fund. Mr. Gibb joined Working Ventures after receiving his
Masters of Business Administration from the University of Western

                                       48
<PAGE>   52

Ontario in 1997. Mr. Gibb also serves on the board of directors of a number of
private portfolio companies, including InterUnion Asset Management Ltd., an
asset management firm consolidator. Mr. Gibb holds a Bachelor of Arts degree and
a Master of Business Administration degree from the University of Western
Ontario.

     H.H. Haight has served as a director of our company since August 1996. Mr.
Haight is President, Chief Executive Officer and founder of Argo Global Capital,
Inc., the entity that manages GSM Capital Limited Partnership, a venture capital
firm. Prior to founding Argo Global Capital, Inc., Mr. Haight was a Managing
Director and co-founder of Advent International, a venture capital firm, from
June 1983 to June 1998. Mr. Haight also currently serves as a director of Coast
Mountain Hardwoods, a lumber concern, Genelabs Technologies, Inc., a
pharmaceutical company, Saraide, a wireless service provider, and several other
private companies. Mr. Haight received a Bachelor of Science degree from the
University of California at Berkeley and a Master of Business Administration
degree from Harvard University.

     David S. Oros has served as a director of our company since July 2000. In
1996, Mr. Oros founded Aether Systems, Inc., a provider of wireless data
services and systems for wireless handheld devices, and has been Aether's
Chairman, Chief Executive Officer and President since its inception. Mr. Oros
also serves on the board of directors of OmniSky Corporation, which offers a
wireless service for use on handheld mobile devices. From 1994 until 1996, Mr.
Oros was President of NexGen Technologies, L.L.C., a wireless software
development company that contributed all of its assets to Aether. From 1992
until 1994, he was President of the Wireless Data Group at Westinghouse Electric
Company. Prior to that, Mr. Oros spent from 1982 until 1992 at Westinghouse
Electric directing internal research and managing large programs in advanced
airborne radar design and development. Mr. Oros received a Bachelor of Science
degree in mathematics and physics from the University of Maryland and holds a
U.S. patent for a multi-function radar system.

     Mark Rossi has served as a director of our company since December 1999.
Since December 1996, Mr. Rossi has served as Managing Director of Cornerstone
Equity Investors, LLC, a private equity investment firm that specializes in
technology and telecommunications, business service and healthcare information
investments. Prior to joining Cornerstone, Mr. Rossi served as the President of
Prudential Equity Investors, Inc., a private equity investment firm, from June
1994 to December 1996. Mr. Rossi also serves as a director of Maxwell
Technologies, Inc., a diversified technology products and services company,
MCMS, Inc. an electronics manufacturing services company, True Temper Sports,
Inc., a designer and manufacturer of golf shafts and specialty tubing products,
and several private companies. Mr. Rossi holds a Bachelor of Arts degree from
Saint Vincent College and a Master of Business Administration in finance from
the Kellogg School of Management at Northwestern University.

     Steven Sherman has served as a director of our company since August 1996.
Mr. Sherman also served as our Chief Executive Officer from August 1997 until
November 1998 and as Chairman of the Board from August 1997 until September
1999. In 1990, Mr. Sherman founded Main Street and Main, a restaurant franchise
holding company, and served as its Chairman until 1994. Since 1988, Mr. Sherman
has been the managing member of Sherman Capital Group, L.L.C., a merchant
banking organization. Mr. Sherman founded and served in various capacities,
including Chairman and Chief Executive Officer at Vodavi Communication Systems,
Inc., a telephone hardware and software company, until its acquisition of
Executone Information Systems, Inc. in 1988. He was a director of Executone from
1988 until 1990. Currently, Mr. Sherman is chairman of the board of Airlink
Communications, Inc., a wireless software infrastructure business. Mr. Sherman
holds a Bachelor of Arts degree in Business Administration from City College of
New York.

BOARD COMPOSITION

     We currently have authorized eight directors. Our amended and restated
certificate of incorporation provides for a classified board of directors that
consists of three classes of directors, each serving staggered three year terms.
As a result, a portion of the board of directors will be elected each year. The
three classes will be as nearly equal in number as possible, as determined by
the board of directors. The Class I

                                       49
<PAGE>   53

directors will serve an initial term until the annual meeting of stockholders to
be held in 2001, the Class II directors will serve an initial term until the
annual meeting of stockholders to be held in 2002, and the Class III directors
will serve an initial term until the annual meeting of stockholders to be held
in 2003. Each class will be elected for three-year terms following its
respective initial term. Messrs. Gibb and Haight have been designated Class I
directors whose terms expire at the 2001 meeting of stockholders. Messrs. Rossi
and Sherman have been designated Class II directors whose terms expire at the
2002 annual meeting of stockholders. Messrs. Getz, Major and Oros have been
designated Class III directors whose terms expire at the 2003 annual meeting of
stockholders. At each annual meeting of stockholders, directors will be elected
by the holders of common stock to succeed those directors whose terms are
expiring. Any additional directorships resulting from an increase in the number
of directors will be distributed among the three classes of directorships so
that, as nearly as possible, each class will consist of one-third of the total
number of directors. This classification of our board of directors may have the
effect of delaying or preventing changes in control of our company or in our
management. See "Description of Securities -- Delaware Antitakeover Law and
Charter and Bylaw Provisions." The executive officers are elected by and serve
at the discretion of our board of directors. Our non-employee directors devote
such time to the affairs of our company as is necessary to discharge their
duties. There are no family relationships among any of our directors or our
executive officers.

BOARD COMMITTEES

     We have established an audit committee composed of independent directors
that reviews and supervises our financial controls, including the selection of
our independent accountants, reviews our books and accounts, meets with our
officers regarding our financial controls, acts upon recommendations of our
auditors and takes further actions as the audit committee deems necessary to
complete an audit of our books and accounts. The audit committee also performs
other duties as may from time to time be determined. The audit committee
currently consists of three directors, Messrs. Getz, Gibb and Haight.

     We have also established a compensation committee that reviews and approves
the compensation and benefits of our executive officers, administers our
compensation, stock incentive, and stock purchase plans, makes recommendations
to the board of directors regarding these matters and performs other duties as
may from time to time be determined by our board of directors. The compensation
committee currently consists of two directors, Messrs. Haight and Rossi.

DIRECTOR COMPENSATION

     Directors do not currently receive any cash compensation from us for
attending board of directors or committee meetings, except for reimbursement of
reasonable expenses incurred in connection with attending those meetings.
Directors who are employees of ours are eligible to participate in our 2000
stock incentive plan and our 2000 employee stock purchase plan. Non-employee
directors who join our board after this offering are eligible to participate in
our 2000 stock incentive plan. Our 2000 stock incentive plan and our 2000
employee stock purchase plan were adopted by our board on July 24, 2000 and were
approved by our stockholders in September 2000. Our 2000 stock incentive plan
generally provides for an automatic initial grant of options to purchase 20,000
shares of our common stock to each non-employee director on the date on which a
person first becomes a non-employee director of our company. After the initial
grant, a non-employee director will be granted each year on the date of our
annual meeting of stockholders a subsequent option to purchase 5,000 shares of
our common stock, if he or she continues to serve after such annual meeting and
if he or she received an initial stock option grant. These options vest over a
four-year period with 25% of the option shares vesting on the first anniversary
of the date of grant and the remainder vesting in 36 equal monthly installments,
with accelerated vesting in the event of certain changes of control.
Non-employee directors receive grants solely at the discretion of the
compensation committee. The exercise price of options will be 100% of the fair
market value per share of our common stock on its date of grant. For an
additional description of these option plans, please refer to our discussion
under "Compensation Plans."

                                       50
<PAGE>   54

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION


     None of our compensation committee members has been an officer or employee
of our company or any subsidiary of our company at any time. None of our
executive officers serves on the board of directors or compensation committee of
any entity that has one or more executive officers serving as a member of our
board of directors or our compensation committee. Until April 2000, Mr. Sherman,
one of our directors, was a member of our compensation committee. Mr. Sherman
was chief executive officer of Novatel Wireless Solutions, Inc., one of our
subsidiaries, from April 1996 until September 2000.


EXECUTIVE COMPENSATION

     The following table sets forth summary information concerning the
compensation received for services rendered to us during the fiscal year ended
December 31, 1999 by our Chief Executive Officer and each of the other four most
highly compensated executive officers, each of whose aggregate compensation
during the last fiscal year exceeded $100,000, referred to collectively in this
prospectus as the named executive officers. No individual who would otherwise
have been includable in the table on the basis of salary and bonus earned during
1999 has resigned or otherwise terminated his or her employment during 1999.


     In July 2000, Mr. Major was appointed as our Chief Executive Officer. His
annual base salary is $325,000. In September 1999, Mr. Weitzner joined us as our
Vice President of Operations and Research and Development. His annualized salary
for 1999 was $220,000. Mr. Weitzner's employment was terminated in July 2000. In
July 2000, Mr. Schlief was appointed as our Vice President of Operations. His
annual base salary is $225,000, and he received a one time sign-on bonus of
$28,000. In September 2000, Mr. Leparulo was appointed our Senior Vice
President, Corporate and Strategic Development and General Counsel. His annual
base salary is $235,000 and he received a one time sign-on bonus of $25,000. In
February 2000, Mr. Flowers was appointed as our Chief Financial Officer.
Effective August 2000, his annual base salary is $200,000.


                                       51
<PAGE>   55

     Annual compensation listed in the following table excludes other
compensation in the form of perquisites and other personal benefits that is less
than the lesser of $50,000 or 10% of the total annual salary and bonus of each
of the named executive officers in 1999. The options listed in the following
table were originally granted under our 1997 employee stock option plan. These
options will be incorporated into our 2000 stock incentive plan, but will
continue to be governed by their existing terms. See "Management -- 2000 Stock
Incentive Plan."

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                    LONG-TERM
                                                                                   COMPENSATION
                                                                                      AWARDS
                                                                                   ------------
                                                            ANNUAL COMPENSATION     SECURITIES
                                                            -------------------     UNDERLYING
               NAME AND PRINCIPAL POSITION                   SALARY      BONUS       OPTIONS
               ---------------------------                  --------    -------    ------------
<S>                                                         <C>         <C>        <C>
Robert Corey(1)...........................................  $200,000    $50,000           --
  Chief Executive Officer
Ambrose Tam(2)............................................   159,045     47,520           --
  President, Chief Operating Officer and Chief Technology
  Officer
Bruce Gray................................................   141,750         --      150,000
  Senior Vice President, Sales and Marketing
Roger Hartman(1)..........................................   157,225     20,000           --
  Chief Financial Officer and Vice President
James Palmer(1)...........................................   179,815         --           --
  Vice President, Operations and Research & Development
</TABLE>

- ---------------
(1) Mr. Corey ceased serving as our Chief Executive Officer in July 2000, Mr.
    Hartman ceased serving as our Chief Financial Officer in February 2000 and
    Mr. Palmer ceased serving as our Vice President, Operations and Research and
    Development, in October 1999.

(2) Mr. Tam's annual salary compensation in 1999 was (Canadian) $238,568, and
    his annual bonus compensation in 1999 was (Canadian) $71,280. The amount
    shown is based on the daily Noon Buying Rate of (Canadian) $1.50 per (US)
    $1.00 on September 29, 2000.

OPTION GRANTS IN FISCAL YEAR 1999

     The following table provides summary information regarding stock options
granted to our named executive officers during the fiscal year ended December
31, 1999. No stock appreciation rights were granted during 1999.

     The potential realizable value is calculated assuming the fair market value
of the common stock appreciates at the indicated rate for the entire term of the
option and that the option is exercised and sold on the last day of its term at
the appreciated price. Stock price appreciation of 5% and 10% is assumed
pursuant to the rules of the Securities and Exchange Commission and does not
represent our estimate or projection of future common stock prices. We cannot
assure you that the actual stock price will appreciate over the term of the
options at the assumed 5% and 10% rates or at any other defined rate. Actual
gains, if any, on stock option exercises will depend on the future performance
of our common stock. Unless the market price of the common stock appreciates
over the option term, no value will be realized from the option grants made to
the named executive officers.

<TABLE>
<CAPTION>
                                                     INDIVIDUAL GRANTS                                   POTENTIAL REALIZABLE
                       ------------------------------------------------------------------------------      VALUE AT ASSUMED
                                          NUMBER OF     PERCENT OF                                      ANNUAL RATES OF STOCK
                                          SECURITIES   TOTAL OPTIONS                                    PRICE APPRECIATION FOR
                                          UNDERLYING    GRANTED TO     EXERCISE OR                           OPTION TERM
                           DATE OF         OPTIONS     EMPLOYEES IN    BASE PRICE       EXPIRATION      ----------------------
        NAME                GRANT          GRANTED      FISCAL YEAR     PER SHARE          DATE            5%           10%
        ----           ----------------   ----------   -------------   -----------   ----------------   ---------    ---------
<S>                    <C>                <C>          <C>             <C>           <C>                <C>          <C>
Bruce Gray...........  October 25, 1999    150,000         17.83%         $0.95      October 24, 2009   $ 89,932     $227,905
John Weitzner........   August 18, 1999    225,000         26.74%         $0.95       August 17, 2009   $134,898     $341,858
</TABLE>

                                       52
<PAGE>   56

     In 1999, we granted options to purchase up to a total of 852,000 shares to
employees, directors and consultants under our 1997 employee stock option plan
at an exercise price equal to the fair market value of our common stock on the
date of grant, as determined in good faith by our board of directors.


     Mr. Gray's options began to vest on January 1, 2000. The options vest over
a four-year period, with 25% of the option shares vesting on the first
anniversary of the date of grant, and the remaining shares vesting in equal
monthly installments over the 36-month period following that date. The vesting
of the options will immediately accelerate upon a sale or merger of our company.
Mr. Weitzner's options began to vest on September 1, 1999. Effective July 24,
2000, Mr. Weitzner ceased to be an employee of our company. As of that date, Mr.
Weitzner held options to purchase 225,000 shares of our common stock at an
exercise price of $0.95 per share, none of which had vested. In connection with
the termination of Mr. Weitzner's employment with us, we entered into a
separation agreement which provides that options exercisable for 65,625 shares
will vest on October 31, 2000.


     In July 2000, Mr. Major was appointed Chief Executive Officer, and we
granted Mr. Major options to purchase 3,036,543 shares of common stock at an
exercise price of $5.00 per share. The option shares will vest and become
exercisable as follows: 607,308 option shares are immediately exercisable;
379,569 option shares vest and become exercisable on July 24, 2001; 379,569
option shares vest and become exercisable on July 24, 2002; and 303,654 option
shares vest and become exercisable on each July 24 of 2001, 2002, 2003 and 2004.
In addition, 455,481 option shares shall vest and become exercisable on the
earlier to occur of (1) our attaining certain milestones before December 31,
2000 or (2) with respect to 227,748 option shares, on July 24, 2003 and with
respect to another 227,748 option shares, on July 24, 2004. The vesting of the
option shares will immediately accelerate upon a change in control of our
company. The options expire on the first to occur of 6 months after termination
(in the event of termination of Mr. Major's employment by death or disability),
90 days after termination (in the event of termination of Mr. Major's employment
for any other reason) or July 24, 2010.

     In July 2000, Mr. Schlief was appointed Vice President, Operations, and we
granted Mr. Schlief options to purchase 600,000 shares of common stock at an
exercise price of $5.00 per share. The options are subject to our 1997 employee
stock option plan and will vest over a four-year period, with 25% of the option
shares vesting each year.

     In February 2000, Mr. Flowers was appointed Vice President of Finance and
Chief Financial Officer, and at that time we granted Mr. Flowers options to
purchase 375,000 shares of common stock at an exercise price of $1.67 per share.
The options will vest over a four-year period, with 25% of the option shares
vesting on February 17, 2001, and the remainder vesting in equal monthly
installments over the 36-month period following that date. The vesting of the
options will immediately accelerate upon a change of control of our company.


     In September 2000, we appointed Mr. Leparulo our Senior Vice President,
Corporate and Strategic Development and General Counsel and at that time granted
him an option to purchase up to 600,000 shares of our common stock at an
exercise price of $11.00 per share. The shares subject to the option will vest
over a four-year period, with 25% of the shares vesting on the first anniversary
of the date of grant and the remaining shares vesting in equal monthly
installments over the 36-month period following that date. The vesting of the
shares will immediately accelerate upon a change of control of our company.


     In August 2000, we also granted to Messrs. Flowers, Gray and Tam options to
purchase an additional 225,000, 330,000 and 225,000 shares of common stock,
respectively, at an exercise price of $7.50 per share. The options will vest
over a four-year period, with 25% of the options vesting one year from the date
of grant, and the remainder vesting in equal monthly installments over the
36-month period following that date. The vesting of the options will immediately
accelerate upon a change of control of our company.

                                       53
<PAGE>   57

OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

     The following table sets forth information concerning the number and value
of shares of common stock underlying the unexercised options held by the named
executive officers as of December 31, 1999. The table also sets forth the value
realized upon exercise of stock options in fiscal year 1999, and the year-end
number and value of unexercised options with respect to each of the named
executive officers as of December 31, 1999. The value was calculated by
determining the fair market value of our common stock on the date of exercise,
as determined in good faith by our board of directors, less the exercise price
paid for the shares. The value of unexercised in-the-money options at December
31, 1999 is calculated based on an assumed initial public offering price of $11,
less the exercise prices of the options, multiplied by the number of shares
underlying those options.

                         FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                              NUMBER OF SECURITIES
                                                             UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                                             OPTIONS AT DECEMBER 31,        IN-THE-MONEY OPTIONS
                           NUMBER OF                                  1999                  AT DECEMBER 31, 1999
                        SHARES ACQUIRED                    ---------------------------   ---------------------------
         NAME             ON EXERCISE     VALUE REALIZED   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
         ----           ---------------   --------------   -----------   -------------   -----------   -------------
<S>                     <C>               <C>              <C>           <C>             <C>           <C>
Robert Corey(1).......           --                --        437,499       1,062,501     $4,395,407     $10,674,593
Ambrose Tam...........           --                --         45,000          45,000        463,050         463,050
John Weitzner(1)......           --                --             --         225,000             --       2,260,500
Bruce Gray............           --                --         30,000         240,000        301,400       2,411,200
Roger Hartman(1)......           --                --         75,000         225,000        753,500       2,260,500
James Palmer(1).......      300,000          $490,000        300,000              --      3,290,000              --
</TABLE>

- ---------------
(1) Messrs. Corey and Weitzner left the company in July 2000; Mr. Hartman left
    the company in February 2000; Mr. Palmer left the company in October 1999.

EMPLOYMENT-RELATED ARRANGEMENTS

     In July 2000, we entered into an employment agreement with John Major
covering an initial term of three years under which Mr. Major will serve as the
Chairman of our board of directors and as our Chief Executive Officer. The
agreement provides for Mr. Major to receive an annual base salary of $325,000,
subject to review by our board at least annually, and an annual performance
incentive bonus payable in a single installment in an amount equal to up to 100%
of Mr. Major's then applicable annual salary. The agreement provides for Mr.
Major to receive half his bonus in cash and the remaining half in shares of our
common stock. In addition, we granted Mr. Major options to purchase up to
3,036,543 shares of our common stock at an exercise price of $5.00 per share.
Twenty percent of these options vested and became exercisable on their date of
grant and the remaining options will vest and become exercisable with the
passage of time or upon the occurrence of specified events. In the event that we
terminate Mr. Major without cause, or in the event he terminates his employment
with us because we have materially breached the terms of his employment
agreement or because a change of control occurs, he is entitled to receive in a
lump sum payment an amount equal to his annual base salary then in effect and
all unvested options will immediately vest and become exercisable. Mr. Major
would then also be entitled to a bonus equal to the amount of the bonus he had
earned as of the date of his termination as well as to the continuation of
certain employee benefits pursuant to the terms of existing company plans. If we
terminate Mr. Major's employment for cause, or Mr. Major terminates his
employment without good reason, Mr. Major will be entitled to received severance
and other benefits only as may then be established under our existing severance
and benefit plans and policies at the time of such termination.

     On August 21, 1996, Ambrose Tam entered into a five-year employment
agreement with us and one of our subsidiaries, NWT, under which Mr. Tam agreed
to serve as our and NWT's President and Chief Operating Officer. The employment
agreement provides for an annual salary of no less than (Canadian) $187,440 (US
$124,960) adjusted from time to time, and an annual performance incentive bonus
targeted to be 33% of his annual base salary, based on the achievement of
certain performance objectives. The employment agreement provides that if Mr.
Tam is terminated without cause, he will be entitled to

                                       54
<PAGE>   58

(Canadian) $250,000 (US $166,667), payable in two equal installments, the first
of which would occur upon his termination and the second of which would occur
six months thereafter. In this event, Mr. Tam would also receive a performance
bonus prorated for the period it covers and he would continue to receive certain
employee benefits for 12 months. If Mr. Tam terminates his employment because of
a material breach of the employment agreement by either us or NWT, he will be
entitled to (Canadian) $250,000 (US $166,667), his incentive bonus prorated for
the year and the continuation of certain employee benefits for 12 months. In the
event of a change of control of either us or NWT, Mr. Tam will be entitled to
(Canadian) $125,000 (US $83,333) if he resigns from employment within 30 days
from the date of the change of control. All US dollar amounts presented above
are based on the daily Noon Buying Rate of (Canadian) $1.50 per (US)$1.00 on
September 29, 2000.

     We have entered into arrangements with several of our employees which
provide that the salary of each of these employees will continue for six months
if we cease to do business or if the employee's employment is terminated without
cause.

     On April 17, 2000, we entered into a separation agreement and general
release with Roger Hartman pursuant to which, effective April 30, 2000, Mr.
Hartman agreed to terminate his employment with us. As of April 30, 2000, Mr.
Hartman held options to purchase 300,000 shares of our common stock at an
exercise price of $0.95 per share, 75,000 of which had vested. Under our
agreement, Mr. Hartman will serve as a consultant to us for a period of six
months ending October 31, 2000 for a monthly consultant fee of approximately
$12,000 and will be considered an employee for purposes of the vesting of his
stock options and participation in our 401(k) plan. After October 31, 2000, for
the two-month period ending December 31, 2000, Mr. Hartman will serve us as a
part-time consultant for which he will not be paid a consulting fee, though his
stock options will continue to vest.


     In connection with the termination of Mr. Weitzner's employment with us
effective July 24, 2000, on July 30, 2000 we entered into a separation agreement
and general release. As of July 24, 2000, Mr. Weitzner held options to purchase
225,000 shares of our common stock, none of which had vested. The agreement
provides that 65,625 shares of Mr. Weitzner's options will vest on October 31,
2000.


COMPENSATION PLANS

1997 EMPLOYEE STOCK OPTION PLAN


     Our 1997 employee stock option plan provided for the grant to employees of
incentive and nonstatutory stock options. We have 12,000,000 shares of common
stock authorized under our 1997 stock option plan. As of September 30, 2000,
10,417,220 shares were subject to outstanding options and 1,094,632 shares will
remain available for future grant. Our board of directors has determined that no
further options will be granted under the 1997 stock option plan after the
completion this offering. The remaining shares issuable under the 1997 employee
stock option plan shall be available for issuance under our 2000 stock incentive
plan.


2000 STOCK INCENTIVE PLAN

     Our 2000 stock incentive plan was adopted by our board of directors on July
24, 2000 and was approved by our stockholders in September 2000. The plan will
become effective upon our initial public offering. At that time, all outstanding
options under our 1997 employee stock option plan will be transferred to the
2000 stock incentive plan, and no further option grants will be made under the
1997 plan. The transferred options will continue to be governed by their
existing terms, unless a committee of our board administrating the plan decides
to extend one or more features of the 2000 stock incentive plan to those
options.

     The 2000 stock incentive plan provides for the discretionary grant of
incentive stock options to employees, including officers and employee directors,
and for the discretionary grant of nonstatutory stock options, stock
appreciation rights, stock units and stock purchase rights to employees,
directors and consultants. A total of 16,500,000 shares of our common stock has
been reserved for issuance under the

                                       55
<PAGE>   59


2000 stock incentive plan including those shares under the 1997 employee stock
option plan for which options have not been granted as of the completion of this
offering. Beginning with the first fiscal year following the effective date of
the 2000 stock incentive plan, on the first day of each fiscal year, shares will
be added to the 2000 stock incentive plan equal to the lesser of (i) 1,500,000
shares, (ii) three percent of the shares of our common stock outstanding in the
last day of the prior fiscal year, or (iii) such lesser number of shares as may
be determined by our board in its sole discretion. Unless terminated sooner, the
2000 stock incentive plan will terminate on July 23, 2010.


     A committee of our board which is comprised solely of independent directors
will generally serve as administrator of the 2000 stock incentive plan from and
after the date of this offering. The administrator of our 2000 stock incentive
plan generally has the power to select the key employees who are to receive
awards under the plan, interpret and operate the plan, determine the type,
number, vesting requirements and other features and conditions of an award of
the options, restricted stock, stock appreciation rights and stock units
granted. The compensation committee shall consist of at least two independent
directors who shall satisfy the requirements of Rule 16b-3 (or its successor)
promulgated under the Securities Exchange Act of 1934, as amended, with respect
to awards granted to our officers and directors under Section 16 of this Act.

     Our board is the administrator of the 2000 stock incentive plan's
non-employee director grant program. Non-employee directors who first join our
board after the effective date of our initial public offering will receive a
grant of an option to purchase 20,000 shares of our common stock when they
become non-employee directors. In addition, all non-employee directors who
receive such an initial grant will receive a grant each subsequent annual
meeting of an option to purchase 5,000 shares, provided they continue to serve
after such annual meeting. These options generally vest over a four-year period
with 25% of the option shares vesting on the first anniversary of the date of
grant and the remainder vesting in 36 equal monthly installments commencing on
the date one month and one year after the date of grant. These options also
provide for accelerated vesting in the event of certain changes of control.
Implementation of the 2000 stock incentive plan's non-employee director grant
program is at the discretion of our board.

     Our board has the authority to amend, suspend or terminate the 2000 stock
incentive plan at any time for any reason, but no such action shall affect any
award previously granted under the plan. The maximum number of shares subject to
options and/or stock appreciation rights that each optionee may be granted
during a fiscal year is 1,000,000 shares, or 2,000,000 shares in the first
fiscal year of an optionee's employment with us. Restricted stock and stock unit
grants are limited to 500,000 shares per person in any fiscal year, or 1,000,000
shares, in the first fiscal year of a participant's employment with us.

     Awards granted under our 2000 stock incentive plan are generally not
transferable by the optionee, and each option and stock appreciation right is
exercisable during the lifetime of the optionee only or by the optionee's
guardian or legal representative. The plan provides that a stock option or a
stock appreciation rights agreement under the plan may provide for accelerated
exercisability in the event of the optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the optionee's service to us.

     In the case of restricted stock and stock units, unless the administrator
determines otherwise, the restricted stock purchase agreement shall grant us a
repurchase option exercisable after the purchaser's employment or other service
relationship with us has ended for any reason, including his or her death or
disability. Each award of restricted stock and stock units will be granted
pursuant to an agreement between us and the participant, and will vest in full
or in installments in accordance with the respective agreement, which may
provide for acceleration upon the occurrence of certain events. The purchase
price for shares repurchased pursuant to the restricted stock purchase agreement
shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to us. The repurchase option
shall lapse at a rate determined by the administrator.

     The exercise price of all incentive stock options and nonstatutory stock
options granted automatically to non-employee directors must be at least equal
to the fair market value of our common stock on the date of grant. The exercise
price of other nonstatutory stock options and stock purchase rights granted
under
                                       56
<PAGE>   60

the 2000 stock incentive plan is determined by the administrator, but with
respect to nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended (Internal Revenue Code), the exercise price must be at least
equal to the fair market value of our common stock on the date of the grant.
With respect to any participant who owns stock possessing more than 10% of the
voting power of all classes of our outstanding capital stock, the exercise price
of any incentive stock option granted must at least equal 110% of the fair
market value on the grant date and the term of such incentive stock option must
not exceed five years. The term of all other options granted under the 2000
stock incentive plan may not exceed ten years.

     The 2000 stock incentive plan provides that in the event that our company
is a party to a merger or other reorganization, outstanding awards, other than
grants to directors, shall be subject to the agreement of merger or
reorganization. Such agreement may provide, without limitation, for the
assumption of outstanding awards by the surviving corporation or its parent, for
their continuation by us if we are the surviving corporation, for accelerated
vesting or for their cancellation with or without consideration. The plan
administrator may determine, at the time of granting an award or thereafter,
that such award shall become fully vested as to all shares subject to such award
in the event that a change in control occurs with respect to our company.

2000 EMPLOYEE STOCK PURCHASE PLAN

     Our 2000 employee stock purchase plan (2000 purchase plan) was adopted by
our board of directors on July 24, 2000 and was approved by our stockholders in
September 2000. The plan will become effective upon our initial public offering.
A total of 1,500,000 shares of our common stock will be reserved for issuance
under the 2000 purchase plan. Also, beginning with our first fiscal year
beginning after the effective date of the 2000 purchase plan, on the first day
of each fiscal year, shares will be added to the 2000 purchase plan equal to the
lesser of (a) 0.5% of the outstanding shares of our common stock on the last day
of the prior fiscal year, (b) 270,000 shares, or (c) such lesser number of
shares as may be determined by our board in its sole discretion.

     Under the 2000 purchase plan, which is intended to qualify under Section
423 of the Internal Revenue Code, our board of directors may determine the
duration and frequency of stock purchase periods. Initially the plan will
operate using consecutive, overlapping, twenty-four month offering periods. Each
offering period will include four approximately six-month purchase periods. The
offering periods generally start on the first trading day on or after February 1
and August 1 of each year, except for the first such offering period which
commences on the effective date of the initial public offering and ends on the
last trading day on or before January 31, 2002.

     Employees of our company or of any designated subsidiary of ours will be
eligible to participate. However, no employee may be granted an opportunity to
purchase stock under the 2000 purchase plan if immediately after the grant, he
or she would own stock possessing 5% or more of the total combined voting power
or value of all classes of our capital stock.

     The 2000 purchase plan permits participants to purchase our common stock
through payroll deductions of up to 10% of their total annual compensation.
Amounts deducted and accumulated by the participant are used to purchase shares
of common stock at the end of each purchase period. The price of stock purchased
under the 2000 purchase plan is generally 85% of the lower of the fair market
value of the common stock either at the beginning of the offering period (85% of
the price at which a share is first offered by the underwriters to the public in
the case of the first offering period) or at the end of the purchase period. In
the event the fair market value at the end of a purchase period is less than the
fair market value at the beginning of the offering period, the participants will
be withdrawn from the current offering period following exercise and
automatically re-enrolled in a new offering period. Participants may end their
participation at any time during an offering period, and they will be paid their
payroll deductions to date. Participation ends automatically upon termination of
employment with us.

     Rights granted under the 2000 purchase plan are not transferable by a
participant other than upon his or her death or by a special determination by
the plan administrator. Each outstanding option under the
                                       57
<PAGE>   61

2000 purchase plan will be subject to the acquisition agreement in the event we
merge with or into another corporation or sell substantially all of our assets.

     Our board of directors has the authority to amend or terminate the 2000
purchase plan at any time for any reason. Unless earlier terminated by our board
of directors, the 2000 purchase plan will terminate automatically 10 years from
its effective date.

401(k) PLAN

     Our 401(k) plan covers our employees located in the United States. The
401(k) plan is intended to qualify under Section 401(k) of the Internal Revenue
Code. Consequently, contributions to the 401(k) plan by the employees or by us,
and the investment earnings thereon, are not taxable to employees until
withdrawn from the 401(k) plan. Further, contributions by us, if any, will be
deductible by us when made. Employees may elect to contribute up to 15% of their
current annual compensation to the 401(k) plan up to the statutorily prescribed
annual limit. The 401(k) plan does not currently permit, but may in the future
be amended to permit, additional matching contributions to the 401(k) plan by us
on behalf of all participants in the 401(k) plan.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

     As permitted by the Delaware General Corporation Law, we have included a
provision in our amended and restated certificate of incorporation to indemnify
our officers and directors against liability for monetary damages for breach or
alleged breach of their fiduciary duties as officers or directors, other than in
cases of fraud or other willful misconduct. Our bylaws provide that we will
indemnify our officers and directors to the maximum extent permitted by Delaware
law and may indemnify our other employees and agents to the maximum extent
permitted by Delaware. In addition, our bylaws provide that we will advance
expenses to our officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. In addition, we plan
to enter into indemnification agreements with our officers and directors. The
indemnification agreements will require us, among other things, to indemnify
officers and directors against liabilities that may arise by reason of their
status or service as officers and directors (but not for liabilities arising
from willful misconduct of a culpable nature), and to advance sums covering the
expenses they incurred as a result of any proceeding against them as to which
they could be indemnified.

     We have obtained an insurance policy covering directors and officers for
claims they would otherwise be required to pay or for which we are required to
indemnify them.

     At present, we are not aware of any pending or threatened litigation or
proceeding involving a director, officer, employee or agent of ours in which
indemnification would be required or permitted. We are not aware of any
threatened litigation or proceeding that might result in a material claim for
such indemnification. We believe that our charter provisions and indemnification
agreements are necessary to attract and retain qualified persons as directors
and officers.

                                       58
<PAGE>   62

                           RELATED PARTY TRANSACTIONS

     Since January 1, 1997, there has not been any transaction or series of
similar transactions to which we were or are a party in which the amount
exceeded or exceeds $60,000 and in which any executive officer, director or any
holder of more than 5% of any class of our voting securities or any member of
the immediate family or any of the foregoing persons had or will have a direct
or indirect material interest, other than the transactions described below.

SERIES D FINANCING


     On June 30, 2000, July 14, 2000 and October 23, 2000 we issued and sold an
aggregate of 6,326,932 shares of our Series D preferred stock at a purchase
price of $5.75 per share. We also issued warrants to purchase an aggregate of
1,178,400 shares of our common stock at an exercise price of $5.75 per share. Of
the 6,326,932 shares of Series D preferred stock and the 1,178,400 accompanying
warrants that we issued and sold, we issued and sold a total of 5,256,315 such
shares and a total of 1,051,254 warrants to the following executive officers,
directors, and greater than 5% stockholders of our company and persons
associated with them for a total purchase price of approximately $30,223,812.


<TABLE>
<CAPTION>
                                                          NUMBER OF    NUMBER OF        TOTAL
                       PURCHASER                           SHARES      WARRANTS     PURCHASE PRICE
                       ---------                          ---------    ---------    --------------
<S>                                                       <C>          <C>          <C>
Aether Capital, LLC.....................................  3,478,260     695,652      $19,999,995
Cornerstone Equity Investors IV, L.P. ..................    869,565     173,913        4,999,999
GSM Capital Limited Partnership.........................    516,519     103,302        2,969,984
Bank of Montreal Capital Corporation....................    181,914      36,381        1,046,006
Working Ventures Canadian Fund, Inc.....................    173,913      34,782        1,000,000
Ventures West Investments Limited.......................     27,288       5,457          156,906
ARGC III, LLC...........................................      5,217       1,041           29,998
Sam Znaimer.............................................      3,639         726           20,924
</TABLE>

     Aether Capital, LLC is an investment arm of Aether Systems, Inc. which is
the sole member of Aether Capital LLC. David S. Oros, one of our directors,
serves as Chairman, Chief Executive Officer and President of Aether Systems,
Inc., which is the sole member of Aether Capital, LLC. Mr. Oros is also a
director of OmniSky Corporation, in which Aether Systems, Inc. is an investor.
In July 1999, we entered into an agreement with OmniSky for the development and
sale of our Minstrel III and Minstrel V cradle modems for the Palm III and Palm
V handheld computing devices. Although the term of this agreement expired on May
1, 2000, we are currently negotiating a new agreement with OmniSky and are
shipping and provisioning modems to OmniSky pursuant to an open purchase order
with the same terms as those contained in the expired agreement. For the year
ended December 31, 1999 OmniSky accounted for 14.3% of our revenue.

     Cornerstone Equity Investors IV, L.P. is an investment fund whose managing
general partner is Cornerstone Equity Investors, LLC. Robert Getz and Mark
Rossi, two of our directors, are each managing directors of Cornerstone Equity
Investors, LLC.

     Bank of Montreal Capital Corporation and Ventures West Investments Limited
are both controlled by Ventures West Capital Ltd. Sam Znaimer, one of our former
directors, is a senior vice president and a member of the board of directors of
Ventures West Capital Ltd.

     GSM Capital Limited Partnership is an investment fund that is managed by
Argo Global Capital Inc. H.H. Haight, one of our directors, and Bernice Bradin,
one of our former directors, are both executives at Argo Global Capital, Inc.

     ARGC III, LLC is an investment fund in which H.H. Haight, one of our
current directors, and Bernice Bradin, one of our former directors, are members.
Mr. Haight and Ms. Bradin are also both limited partners of Advent Partners
Limited Partnership, an entity that participated in some of our earlier
financing rounds. In addition, they are entitled to receive a percentage of the
carried interest payable to the managing general partner of each of Advent
Israel Limited Partnership, Advent Israel (Bermuda)

                                       59
<PAGE>   63

Limited Partnership, Golden Gate Development & Investment Limited Partnership
and Digital Media & Communications Limited Partnership provided these funds show
a gain on their investments. Each such fund purchased shares of our preferred
stock in earlier rounds of financing.

     Working Ventures Canadian Fund, Inc. is a Canadian venture capital fund at
which Nathan Gibb, one of our directors, is an investment manager.

SERIES C FINANCING

     On December 31, 1999, we issued and sold a total of 11,022,831 shares of
Series C preferred stock at a purchase price of $2.78 per share. We also issued
warrants to purchase a total of 2,119,071 and 29,568 shares of common stock at
an exercise price of $3.33 and $2.78 per share, respectively, on or prior to
December 31, 2004.

     Of the 11,022,831 shares of Series C preferred stock that we issued and
sold, a total of 5,749,884 shares of Series C preferred stock and warrants to
purchase a total of 2,037,372 shares of common stock were issued and sold to the
following executive officers, directors and greater than 5% stockholders of our
company and persons affiliated with them for a total purchase price of
approximately $16.0 million:

<TABLE>
<CAPTION>
                                                         NUMBER OF    NUMBER OF        TOTAL
                       PURCHASER                          SHARES      WARRANTS     PURCHASE PRICE
                       ---------                         ---------    ---------    --------------
<S>                                                      <C>          <C>          <C>
Cornerstone Equity Investors IV, L.P. .................  5,395,683    1,079,136     $15,000,000
Bank of Montreal Capital Corporation...................    302,739      819,003         841,614
Ventures West Investments Limited......................     45,408      122,850         126,234
Sam Znaimer............................................      6,054       16,383          16,830
</TABLE>

1999 BRIDGE FINANCING

     On June 24, 1999 and July 15, 1999, we issued and sold convertible
subordinated debentures to purchasers in the total original principal amount of
$3,120,000 bearing interest at the rate of 8% per annum. Of this amount,
$500,000 was issued and sold by our subsidiary NWT. We also issued warrants to
purchase a total of 3,930,006 shares of common stock at an exercise price of
$0.67 per share on or prior to June 24, 2004 or July 15, 2004, respectively. NWT
also issued warrants to purchase 750,000 shares of NWT's common stock at an
exercise price of $0.67 per share. Upon the exercise of these NWT Warrants, the
resulting shares of NWT common stock are thereafter exchangeable on a
one-for-one basis for shares of our common stock. Immediately upon the closing
of our Series C preferred stock financing, the principal amount then outstanding
under the convertible subordinated debentures that we and NWT issued, together
with accrued but unpaid interest thereon, automatically converted into an
aggregate of 1,166,721 shares of Series C preferred stock at a price of $2.78
per share. In September 2000, the warrants that NWT issued in connection with
this financing were exchanged on a one-for-one basis for warrants to purchase
our common stock.

                                       60
<PAGE>   64

     Of the $3,120,000 original principal amount of debentures that we and NWT
issued and sold, we and NWT issued and sold a total original principal amount of
$2,772,522 and warrants to purchase a total of 4,158,783 shares of our common
stock and NWT common stock to the following executive officers, directors or
greater than 5% stockholders of our company and persons affiliated with them:

<TABLE>
<CAPTION>
                                                                          TOTAL PRINCIPAL
                                                                             AMOUNT OF
                                                                            CONVERTIBLE
                                                              NUMBER OF    SUBORDINATED
                         PURCHASER                            WARRANTS      DEBENTURES
                         ---------                            ---------   ---------------
<S>                                                           <C>         <C>
GSM Capital Limited Partnership.............................  1,316,652      $877,768
Bank of Montreal Capital Corporation........................    798,234       532,156
Working Ventures Canadian Fund, Inc. .......................    750,000       500,000
Marco Polo Industries Co., Ltd. ............................    446,955       297,970
Digital Media & Communications Limited Partnership..........    285,393       190,262
Robert Corey................................................    150,000       100,000
Ventures West Investments Limited...........................    119,736        79,824
Golden Gate Development & Investment Limited Partnership....    118,722        79,148
Advent Israel Limited Partnership...........................     81,474        54,316
Advent Partners Limited Partnership.........................     39,033        26,022
Roger Hartman...............................................     30,000        20,000
Sam Znaimer.................................................     15,966        10,644
ARGC, LLC...................................................      6,618         4,412
</TABLE>

     Robert Corey is a former director and chief executive officer and Roger
Hartman is a former chief financial officer of ours.

     Marco Polo Industries Co., Ltd., an investment firm, is owned by Horst
Pudwill, one of our former directors.

     ARGC, LLC is an investment fund in which H.H. Haight, one of our directors,
and Bernice Bradin, one of our former directors, are members.

SERIES B FINANCING

     On December 23, 1997, April 24, 1998 and September 1, 1998, we issued and
sold a total of 6,252,843 shares of our Series B preferred stock at a purchase
price of $1.42 per share. We also issued warrants to purchase a total of
2,344,815 shares of common stock at an exercise price of $1.42 per share on or
prior to December 31, 2002 or December 31, 2004, depending on their date of
issuance. In addition, on December 23, 1997 and on April 24, 1998, our
subsidiary NWT issued an aggregate of 640,842 shares of its Series B preferred
stock at a purchase price of $1.42 per share and warrants to purchase a total of
240,315 shares of NWT's common stock at an exercise price of $1.42 per share on
or prior to December 31, 2002 or December 31, 2003, depending on their date of
issuance. In September 2000, these NWT shares and the accompanying NWT common
stock purchase warrants were exchanged on a one-for-one basis for shares of our
Series B preferred stock, and warrants to purchase our common stock.

                                       61
<PAGE>   65

     Of the 6,893,685 shares of Series B preferred stock that each of Novatel
Wireless and NWT issued and sold, a total of 4,977,126 shares of Series B
preferred stock and warrants to purchase a total of 1,866,423 of common stock
were issued and sold to the following executive officers, directors and greater
than 5% stockholders of Novatel Wireless and persons associated with them:

<TABLE>
<CAPTION>
                                                         NUMBER OF    NUMBER OF        TOTAL
                       PURCHASER                          SHARES      WARRANTS     PURCHASE PRICE
                       ---------                         ---------    ---------    --------------
<S>                                                      <C>          <C>          <C>
GSM Capital Limited Partnership........................  3,082,569    1,155,963      $4,377,248
Working Ventures Canadian Fund, Inc. ..................    640,842      240,315         909,996
Bank of Montreal Capital Corporation...................    530,379      198,891         753,138
Steven Sherman.........................................    352,113      132,042         500,000
Marco Polo Industries Co., Limited.....................    176,055       66,021         249,998
Sherman Capital Group, LLC.............................    105,000       39,375         149,100
Ventures West Investments Limited......................     79,557       29,835         112,971
Sam Znaimer............................................     10,611        3,981          15,068
</TABLE>

     Sherman Capital Group, LLC is an investment firm at which Steven Sherman,
one of our directors, is the managing member.

SERIES A FINANCING

     Between August 26, 1996, and December 11, 1997, we issued and sold a total
of 6,791,571 shares of our Series A preferred stock at a purchase price of $0.71
per share. In addition, during that period our subsidiary NWT issued a total of
3,755,394 shares of its Series A preferred stock at a purchase price of $0.71
per share. In September 2000, these NWT shares were exchanged on a one-for-one
basis for shares of our Series A preferred stock, which will automatically
convert into shares of our common stock immediately prior to the completion of
this offering.

     Of the 10,546,965 shares of Series A preferred stock that we and NWT issued
and sold a total of 10,314,048 shares were issued and sold to the following
executive officers, directors and greater than 5% stockholders of our company
and persons affiliated with them.

<TABLE>
<CAPTION>
                                                              NUMBER OF        TOTAL
                         PURCHASER                             SHARES      PURCHASE PRICE
                         ---------                            ---------    --------------
<S>                                                           <C>          <C>
Working Ventures Canadian Fund, Inc. .......................  3,755,394      $2,666,330
Bank of Montreal Capital Corporation........................  1,877,841       1,333,267
Digital Media & Communications Limited Partnership..........  1,689,795       1,199,754
GSM Capital Limited Partnership.............................    865,602         614,577
Golden Gate Development & Investment Limited................    703,125         499,219
Advent Israel Limited Partnership...........................    482,400         342,504
Steven Sherman..............................................    324,030         230,061
Ventures West Investments Limited...........................    281,685         199,996
Advent Partners Limited Partnership.........................    231,120         164,095
Advent Israel (Bermuda) Limited Partnership.................     59,040          41,918
Sam Znaimer.................................................     37,536          26,651
ARGC, LLC...................................................      6,480           4,601
</TABLE>

     We believe that each transaction set forth above was made on terms no less
favorable to us than we could have obtained from unaffiliated third parties. All
future transactions, including loans, if any, between us and our officers,
directors and principal stockholders and their affiliates and any transaction
between us and any entity with which our officers, directors or greater than 5%
stockholders are affiliated will be approved by a majority of the members of the
board of directors, including a majority of the independent and disinterested
outside members of our board of directors and will be on terms no less favorable
to us than we could obtain from unaffiliated third parties.

                                       62
<PAGE>   66

RELATIONSHIPS WITH OFFICERS AND DIRECTORS

     In June 1998 we entered into a consulting services agreement with one of
our directors, Steven Sherman. Pursuant to the agreement, Mr. Sherman agreed to
serve us as a special consultant for strategic business development in return
for monthly compensation in the amount of $7,000. In October 1999, this
agreement was terminated.

                                       63
<PAGE>   67

                             PRINCIPAL STOCKHOLDERS

     The following table sets forth information regarding the beneficial
ownership of our common stock as of September 30, 2000, and as adjusted for this
offering, by:

     - each person or entity whom we know beneficially to own more than 5% of
       our outstanding stock;

     - each of our directors and named executive officers; and

     - all directors and executive officers as a group.


     Each stockholder's percentage ownership in the following table prior to the
offering is based on 45,105,253 shares of common stock outstanding as of
September 30, 2000, including a total of 434,782 shares of our Series D
preferred stock that we issued and sold in October 2000. For purposes of
calculating each stockholder's percentage ownership, all options and warrants
exercisable within 60 days of September 30, 2000 held by the particular
stockholder and that are included in the first column are treated as outstanding
shares, but are not deemed outstanding for purposes of computing the percentage
ownership of any other person. The numbers shown in the table below assume no
exercise by the underwriters of their over-allotment option.


     Except as otherwise noted, the principal address of each person listed in
the table below is c/o Novatel Wireless, Inc., 9360 Towne Centre Drive, Suite
110, San Diego, CA 92121. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission and includes voting and
investment power with respect to shares. To our knowledge, except under
applicable community property laws or as otherwise indicated, the persons named
in the table have sole voting and sole investment control with respect to all
shares beneficially owned.


<TABLE>
<CAPTION>
                                                                                PERCENTAGE OF SHARES
                                                                                 BENEFICIALLY OWNED
                                                                            ----------------------------
                                                        NUMBER OF SHARES      PRIOR TO         AFTER
                                                          BENEFICIALLY          THE             THE
         NAME AND ADDRESS OF BENEFICIAL OWNER                OWNED            OFFERING        OFFERING
         ------------------------------------           ----------------    ------------    ------------
<S>                                                     <C>                 <C>             <C>
Cornerstone Equity Investors LLC(1)...................      7,518,297          16.22%          14.09%
  717 Fifth Avenue, Suite 1100
  New York, NY 10022.
Robert Getz(1)........................................      7,518,297          16.22           14.09
Mark Rossi(1).........................................      7,518,297          16.22           14.09
Entities affiliated with GSM Capital Limited
  Partnership(2)......................................      7,391,250          15.50           13.51
  Lynnfield Woods Office Park
  210 Broadway, Suite 101
  Lynnfield, MA 01949
H.H. Haight(2)........................................      7,391,250          15.50           13.51
Working Ventures Canadian Fund, Inc.(3)...............      5,782,512          12.54           10.88
  250 Bloor Street, East Suite 1600
  Toronto, Ontario
  CANADA M4W 1E6
Nathan Gibb(3)........................................             --             --              --
Steven Sherman(4).....................................      5,030,742          11.09            9.61
Entities affiliated with Ventures West Capital
  Limited(5)..........................................      4,716,816          10.17            8.84
  1285 West Pender Street, Suite 280
  Vancouver, British Columbia
  CANADA V6E 4B1
Aether Capital, LLC(6)................................      4,229,616           9.23            8.01
  11460 Cronridge Drive
  Owings Mills, MD
</TABLE>


                                       64
<PAGE>   68


<TABLE>
<CAPTION>
                                                                                PERCENTAGE OF SHARES
                                                                                 BENEFICIALLY OWNED
                                                                            ----------------------------
                                                        NUMBER OF SHARES      PRIOR TO         AFTER
                                                          BENEFICIALLY          THE             THE
         NAME AND ADDRESS OF BENEFICIAL OWNER                OWNED            OFFERING        OFFERING
         ------------------------------------           ----------------    ------------    ------------
<S>                                                     <C>                 <C>             <C>
David Oros(6).........................................      4,229,616           9.23            8.01
Entities affiliated with Advent International
  Corporation(7)......................................      3,821,106           8.37            7.26
  75 State Street, 29th Floor
  Boston, MA 02109
Marco Polo Industries Co., Ltd.(8)....................      3,492,273           7.66            6.64
  1806, 18F, Central Plaza
  18 Harbour Road
  Wanchai, Hong Kong
  Hong Kong
Ambrose Tam(9)........................................      1,729,350           3.83            3.31
John Major(10)........................................      1,062,789           2.36            2.04
Melvin Flowers........................................             --             --              --
Bruce Gray(11)........................................         97,500              *               *
Peter Leparulo(12)....................................          5,214              *               *
Steven Schlief........................................             --             --              --
                                                           ----------          -----           -----
All directors and executive officers as a group (12
  persons)............................................     32,847,270          64.32%          56.57%
                                                           ----------          -----           -----
</TABLE>


- ---------------
  *  Less than one percent of the outstanding shares of our common stock.

 (1) Represents 6,265,248 shares of common stock and warrants to purchase
     1,253,049 shares of common stock. Mark Rossi and Robert Getz hold voting
     and investment control over these securities and each disclaims beneficial
     ownership of these securities except to the extent of his respective
     pecuniary interest.

 (2) Represents 4,807,200 shares of common stock and warrants to purchase
     2,584,050 shares of common stock. H.H. Haight and Bernice Bradin hold
     voting and investment control over these securities and each disclaims
     beneficial ownership of these securities except to the extent of his or her
     respective pecuniary interest.

 (3) Represents 4,757,415 shares of common stock and warrants to purchase
     1,025,097 shares of common stock. Working Ventures Canadian Fund Inc. is a
     widely held Canadian mutual fund whose board of directors holds voting and
     investment control over these securities. Mr. Gibb disclaims beneficial
     ownership of these securities except to the extent of his pecuniary
     interest.


 (4) Represents 4,791,825 shares of common stock, warrants to purchase 171,417
     shares of common stock and options to purchase 67,500 shares of common
     stock which are vested and immediately exercisable.


 (5) Represents 3,456,954 shares of common stock and warrants to purchase
     1,259,862 share of common stock. The board of directors of Ventures West
     Capital Limited, which is composed of Ted Anderson, Barry Gekiere, Nancy
     Harrison, Robin Louis, Howard Riback and Sam Znaimer, holds voting and
     investment control with respect to 3,326,811 shares of common stock and
     warrants to purchase 1,212,417 shares of common stock. Sam Znaimer holds
     voting and investment control over 57,840 shares of common stock and
     warrants to purchase 21,090 shares of common stock. Robin Louis holds
     voting and investment control over 72,303 shares of common stock and
     warrants to purchase 26,355 shares of common stock. Both Messrs. Znaimer
     and Louis disclaim beneficial ownership of the shares that Ventures West
     Capital Limited controls except to the extent of his pecuniary interest.


 (6) Represents 3,478,260 shares of common stock and warrants to purchase
     695,652 shares of common stock, held of record by Aether Capital LLC. Mr.
     Oros is Chairman, Chief Executive Officer and President of Aether Systems,
     Inc., the sole member of Aether Capital, LLC. The board of directors of
     Aether Systems, Inc. holds voting and investment control over these
     securities. Mr. Oros disclaims beneficial ownership of these securities
     except to the extent of his pecuniary interest. Also represents 36,666
     shares of common stock and warrants to purchase 19,038 shares of common
     stock held of record by Mr. Oros.


                                       65
<PAGE>   69

 (7) Represents 3,296,484 shares of common stock and warrants to purchase
     524,622 shares of common stock. In its capacity as manager of a number of
     investment funds that are the holders of record of our securities, Advent
     International Corporation exercises voting and investment control with
     respect to all our securities of which these funds are the holders of
     record. Advent International Corporation exercises its voting and
     investment control through a group of four persons: Douglas R. Brown,
     President and Chief Executive Officer, Andrew I. Fillat, Senior Vice
     President responsible for venture investments in North America, Greg C.
     Smitherman, Vice President responsible for the investment in the Company,
     and Janet L. Hennessy, Vice President responsible for monitoring public
     securities, none of whom may act independently and a majority of whom must
     act in concert to exercise voting or investment control over these
     securities.

 (8) Represents 2,979,297 shares of common stock and warrants to purchase
     512,976 shares of common stock. Horst Pudwill owns a limited partnership
     interest in Marco Polo Industries Co., Ltd., holds voting and investment
     control over these securities and disclaims beneficial ownership of them
     except to the extent of his pecuniary interest.

 (9) Represents 1,661,850 shares of common stock and options to purchase 67,500
     shares of our common stock which are vested and immediately exercisable.

(10) Represents 607,308 shares of common stock issuable upon exercise of
     immediately exercisable options and 455,481 shares of common stock issuable
     upon the exercise of options which may become exercisable before December
     31, 2000.


(11) Represents options to purchase 97,500 shares of common stock which are
     vested and immediately exercisable.


(12) Represents 4,347 shares of common stock and warrants to purchase 867 shares
     of common stock, but excludes options to purchase 600,000 shares of common
     stock which are unvested.

                                       66
<PAGE>   70

                           DESCRIPTION OF SECURITIES


     Upon the completion of this offering, we will be authorized to issue up to
350,000,000 shares of common stock, $0.001 par value per share, and up to
15,000,000 shares of undesignated preferred stock, $0.001 par value per share.
All shares of preferred stock currently outstanding will be converted into
shares of common stock upon the completion of this offering. As of September 30,
2000, assuming conversion of all outstanding shares of preferred stock into
common stock, including the 434,782 shares of our Series D preferred stock
issued in October 2000, there were outstanding 45,105,253 shares of our common
stock warrants to purchase 10,548,541 shares of common stock, and options to
purchase 10,417,220 shares of common stock.


     The following description of our securities does not purport to be complete
and is subject to and qualified by our amended and restated certificate of
incorporation and by our amended and restated bylaws, each of which is included
as an exhibit to the registration statement of which this prospectus forms a
part, and by the provisions of applicable Delaware law.

COMMON STOCK


     As of September 30, 2000, we had 70 holders of record of our common stock,
assuming the conversion of all outstanding shares of our preferred stock. There
will be 52,105,253 shares of common stock outstanding after giving effect to
this offering, based on the number of shares outstanding as of September 30,
2000, assuming no exercise of the underwriter's overallotment option or exercise
of outstanding warrants or options under our stock option plans after September
30, 2000.


     The holders of our common stock are entitled to one vote for each share
held of record on each matter submitted to a vote of our stockholders. Subject
to preferences that may be applicable to any outstanding preferred stock,
holders of our common stock are entitled to receive ratably such dividends as
may be declared by our board of directors from funds legally available for that
purpose. See "Dividend Policy." In the event of our liquidation, dissolution or
winding up, the holders of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities and subject to the prior
distribution rights of any outstanding preferred stock. Our common stock carries
no preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to it. The outstanding shares
of common stock are, and the shares of common stock to be issued upon completion
of this offering will be, duly authorized, validly issued, fully paid and non-
assessable.

PREFERRED STOCK

     Our board of directors has the authority, without the need for further
action by our stockholders, to issue any or all our authorized but unissued
shares of preferred stock in one or more series. Our board of directors also has
the authority to designate the rights, preferences, privileges and restrictions
of each such series, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series. Any series of
preferred stock may possess voting, dividend, liquidation and redemption rights
superior to those of our common stock.

     The issuance of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of entrenching our board of directors or of delaying, deferring or preventing a
third party from acquiring a majority of our outstanding voting stock. The
issuance of preferred stock with voting or conversion rights may also adversely
affect the voting power of the holders of our common stock. In certain
circumstances, an issuance of preferred stock could have the effect of
decreasing the market price of shares of our common stock and delaying or
preventing a change of control. As of the closing of the offering, no shares of
preferred stock will be outstanding. We currently have no plans to issue any
shares of, or designate any series of, our preferred stock.

                                       67
<PAGE>   71

WARRANTS


     As of September 30, 2000, there were warrants outstanding to purchase a
total of 10,548,541 shares of our common stock. The warrants to purchase shares
of preferred stock that survive the closing of this offering will automatically
convert into warrants to purchase shares of our common stock on the closing of
this offering on a one-for-one basis. Generally, each warrant contains
provisions for the adjustment of its exercise price and the number of shares
issuable upon its exercise upon the occurrence of any stock dividend, stock
split, reorganization, reclassification, consolidation and certain dilutive
issuances of securities at prices below the then existing applicable warrant
exercise price. In addition, the shares of our common stock issuable upon any
exercise of the warrants provide their holders with rights to have those shares
registered and qualified under federal and state securities laws, as discussed
more fully below. Some of these warrants have net exercise provisions under
which the holder may, in lieu of payment of the exercise price in cash,
surrender the warrant and receive a net amount of shares based on the fair
market value of our common stock at the time of exercise of the warrant after
deduction of the aggregate exercise price.


REGISTRATION RIGHTS


     Upon completion of this offering, under an amended and restated
registration rights agreement dated June 15, 1999, the holders of approximately
17,440,650 shares of our common stock and warrants to purchase approximately
2,505,904 shares of our common stock will be entitled to certain rights with
respect to the registration of shares under the Securities Act. Under the terms
of this agreement, if we propose to register any of our securities under the
Securities Act, these holders are entitled to notice of the registration and are
entitled to include shares of common stock in the registration. The rights are
subject to conditions and limitations, among them the right of the underwriters
of an offering to limit the number of shares included in the registration. At
any time following 180 days after this offering and prior to five years after
this offering, the holders of a majority of these securities may require us to
file registration statements under the Securities Act with respect to their
shares of common stock, and we are required to use our best efforts to effect
the registrations, subject to conditions and limitations. Additionally, if any
holder of these securities requests that we file a registration statement on
Form S-3 when such form becomes available to us, we are required to effect such
registration as long as the holders propose to sell such securities at an
aggregate price to the public of not less than $500,000. Subject to the
limitations contained in the agreement, we will be responsible for paying all
registration expenses and the holders selling their shares will be responsible
for paying all selling expenses.



     In addition, upon completion of this offering, under an amended and
restated investors' rights agreement dated June 30, 2000, the holders of
approximately 17,349,763 shares of common stock and warrants to purchase up to
approximately 8,042,637 shares of common stock will be entitled to certain
rights with respect to the registration of shares under the Securities Act. If
we propose to register any of our securities under the Securities Act, these
holders are entitled to notice of the registration and are entitled to include
shares of common stock in the registration. The rights are subject to conditions
and limitations, among them the right of the underwriters of an offering to
limit the number of shares included in the registration. At any time following
the first anniversary of this offering, the holders of at least 30% of these
securities may require that we file up to two registration statements under the
Securities Act with respect to their shares of common stock, and we are required
to use our best efforts to effect those registrations, subject to conditions and
limitations. Additionally, if any holder of these securities requests that we to
file a registration statement on Form S-3 when such form becomes available to
us, we are required to effect such registration as long as the holders propose
to sell such securities at an aggregate price to the public of not less than
$1,000,000.


     The registration rights granted in this amended and restated investors'
rights agreement will expire on the third anniversary of this offering, or
earlier with respect to a particular stockholder if that holder can resell all
its securities in a three month period under Rule 144 of the Securities Act.
Subject to the limitations contained in the amended and restated investors'
rights agreement, we will be responsible for

                                       68
<PAGE>   72

paying all registration expenses and the holders selling their shares will be
responsible for paying all selling expenses.

DELAWARE ANTI-TAKEOVER LAW AND CHARTER AND BYLAW PROVISIONS

     Certain provisions of Delaware law and our amended and restated certificate
of incorporation and bylaws could make it more difficult for a third party to
acquire us through a tender offer, a proxy contest or otherwise and the removal
of incumbent officers and directors. These provisions are expected to discourage
certain types of coercive takeover practices and inadequate takeover bids and to
encourage persons seeking to acquire control of us to negotiate with us first.
We believe that the benefits of increased protection of our potential ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to acquire
or restructure us outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation of such proposals could result in an
improvement of their terms.

     Our amended and restated certificate of incorporation authorizes our board
to establish one or more series of undesignated preferred stock, the terms of
which can be determined by our board at the time of issuance without the need
for stockholder approval. Our amended and restated certificate of incorporation
also provides that stockholder action can be taken only at an annual or special
meeting of stockholders and may not be taken by written consent. In addition,
our bylaws provide that special meetings of stockholders can be called only by
our board of directors, the chairman of our board or our chief executive
officer, but do not permit our stockholders to call a special meeting of
stockholders. Our amended and restated certificate of incorporation also
provides that our board of directors is divided into three classes, with each
director assigned to a class with a term of three years. Our bylaws establish an
advance notice procedure with regard to stockholder proposals and the nomination
of candidates for election of directors other than by or at the direction of our
board of directors.

     We are subject to Section 203 of the Delaware General Corporation Law,
which includes anti-takeover provisions. In general, Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date that
the person became an interested stockholder unless, subject to exceptions, the
business combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the interested stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior to the determination of interested
stockholder status, did own, 15% or more of the corporation's voting stock.
These provisions may have an anti-takeover effect, including discouraging
attempts that might result in the payment of a premium over the market price for
the shares of common stock held by stockholders, or delaying, deferring or
preventing a change in control without further action by the stockholders.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for shares of our common stock is U.S.
Stock Transfer Corporation. The transfer agent's address and telephone number is
1745 Gardena Avenue, Glendale, California 91204, (818) 502-1404.

                                       69
<PAGE>   73

                        SHARES ELIGIBLE FOR FUTURE SALE

     Prior to this offering there has been no market for our common stock.
Future sales of substantial amounts of common stock, including shares issuable
upon the exercise of outstanding options and warrants, in the public market
could adversely affect prevailing market prices. Sales of substantially all
amounts of our common stock in the public market after contractual restrictions
lapse could adversely affect the prevailing market price and our ability to
raise equity capital in the future.


     Upon completion of the offering, we will have outstanding 52,105,253 shares
of common stock, and 53,155,253 if the underwriters exercise their overallotment
option in full, which excludes:



     - 10,417,220 shares of common stock that could be issued upon the exercise
       of options outstanding as of September 30, 2000;



     - 10,548,541 shares of common stock that could be issued upon the exercise
       of warrants outstanding as of September 30, 2000;


     - 5,594,632 shares of common stock that could be issued in the future under
       our stock option plans as of September 30, 2000;

     - 1,500,000 shares of common stock that could be issued in the future under
       our 2000 employee stock purchase plan.


     Of the outstanding shares, all the shares of common stock sold in this
offering will be freely tradable without restriction under the Securities Act,
except that shares purchased by our affiliates, as Rule 144 promulgated under
the Securities Act defines that term, may be sold only in compliance with the
limitations described below. The remaining 45,105,253 shares of common stock
will be deemed "restricted securities" as defined under Rule 144. Restricted
shares may be sold in the public market only if they are registered under the
Securities Act or if they qualify for an exemption from registration under Rules
144 or 701 promulgated under the Securities Act, which we summarize below.
Subject to the lock-up agreements described below in "Underwriting" and the
provisions of Rules 144 and 701, shares will be available for sale in the public
market as follows:



<TABLE>
<CAPTION>
NUMBER OF SHARES                               DATE
- ----------------                               ----
<C>                <S>
    7,018,750      After the date of this prospectus, freely tradable shares
                   sold in this offering and shares eligible for resale under
                   Rule 144(k) that are not subject to the 180-day lock-up.
   37,581,171      After 180 days from the date of this prospectus, the 180-day
                   lock-up is released and these share are saleable under Rule
                   144 (subject, in some cases, to volume limitations).
    3,148,366      After 180 days from the date of this prospectus, the 180-day
                   lock-up is released and these share are saleable under Rule
                   701.
    7,505,332      After 180 days from the date of this prospectus, restricted
                   securities that are held for less than one year and are not
                   yet saleable under Rule 144.
</TABLE>


     Credit Suisse First Boston Corporation may, in its sole discretion and at
any time without notice, release some or all of the securities subject to the
lock-up agreements prior to the expiration of the 180-day lock-up period,
although we are not aware of any current intention for them to do so.

RULE 144


     In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the number of shares of our common stock then outstanding, or the average weekly
trading volume of the common stock on The Nasdaq National Market during the four
calendar weeks preceding the filing with the Securities and Exchange Commission
of a notice on Form 144 with respect to the proposed sale. Sales under Rule 144
are also subject to manner-of-sale provisions and notice requirements and to the
availability of current public information about us.


                                       70
<PAGE>   74

RULE 144(k)


     Under Rule 144(k), a person who has not been one of our affiliates at any
time during the 90 days preceding a proposed disposition of the subject
securities and who has beneficially owned the shares proposed to be sold for at
least two years is entitled to sell those shares without complying with the
manner-of-sale, public information, volume limitation or notice provisions of
Rule 144. However, because substantially all shares that we have issued are
subject to lock-up agreements, they will become eligible for re-sale only when
the 180-day lock-up agreements expire. As a result, they may be sold 90 days
after the offering only if the holder obtains our prior written consent.


RULE 701

     Any of our employees, officers, directors or consultants who purchased his
or her shares under a written compensatory plan or contract may be entitled to
sell those shares in reliance on Rule 701. Rule 701 permits our affiliates to
sell their Rule 701 shares under Rule 144 without complying with the holding
period requirements of Rule 144. Rule 701 further provides that non-affiliates
may sell these shares in reliance on Rule 144 without having to comply with the
holding period, public information, volume limitation or notice provisions of
Rule 144. Under this rule, all holders of Rule 701 shares are required to wait
until 90 days after the date of this prospectus before selling those shares.
However, because substantially all shares that we have issued under Rule 701 are
subject to lock-up agreements, they will become eligible for sale only when the
180-day lock-up agreements expire. As a result, they may be sold 90 days after
the offering only if the holder obtains our prior written consent.

REGISTRATION RIGHTS


     Following this offering, under specified circumstances and subject to
customary conditions, holders of approximately 45,338,954 shares of our common
stock, including approximately 10,548,541 shares that may be acquired upon the
exercise of warrants to purchase our common stock, will have registration rights
with respect to their shares of common stock. These registration rights require
us to register their shares of common stock under the Securities Act, and permit
these holders to participate in any future registrations of our securities. If
the holders of these registrable securities request that we register their
shares, and if the registration is declared effective, these shares will become
freely tradable without restriction under the Securities Act. Any sales of
securities by these stockholders could have a material adverse effect on the
trading price of our common stock. See "Description of
Securities -- Registration Rights."


                                       71
<PAGE>   75

                    IMPORTANT UNITED STATES TAX CONSEQUENCES
                    TO NON-U.S. HOLDERS OF OUR COMMON STOCK

     This section is a general discussion of important United States federal
income and estate tax consequences of the ownership and disposition of our
common stock by a non-U.S. holder. You are a "non-U.S. holder" if you are, for
United States federal income tax purposes:

     - a nonresident alien individual;

     - a foreign corporation;

     - a foreign partnership; or

     - an estate or trust that in either case is not subject to United States
       federal income tax on a net income basis on income or gain from our
       common stock.

     We do not, however, discuss all aspects of United States federal taxation
that may be important to a particular non-U.S. holder in light of specific facts
and circumstances relevant to that non-U.S. holder. For example, this section
does not describe special tax rules that could apply to a non-U.S. holder who
was previously a U.S. resident or citizen. This section also does not address
the treatment of a non-U.S. holder under the laws of any state, local or foreign
taxing jurisdiction. This section is based on the tax laws of the United States,
including the Internal Revenue Code of 1986, as amended, or the Code, existing
and proposed regulations, and administrative and judicial interpretations, all
as currently in effect. These laws are subject to change, possibly on a
retroactive basis.


     YOU ARE URGED TO CONSULT A TAX ADVISOR REGARDING THE UNITED STATES FEDERAL
TAX CONSEQUENCES OF ACQUIRING, HOLDING AND DISPOSING OF OUR COMMON STOCK IN YOUR
PARTICULAR CIRCUMSTANCES, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER
THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION.


DIVIDENDS


     Except as described below, if you are a non-U.S. holder of our common
stock, dividends paid, if any, to you are subject to withholding of United
States federal income tax at a 30% rate or at a lower rate if you are eligible
for the benefits of an income tax treaty that provides for a lower rate. Under
currently effective United States Treasury regulations, for purposes of
determining if dividends are subject to the 30% withholding tax, dividends paid
to an address in a foreign country are presumed to be paid to a resident of that
country, unless the person making the payment has knowledge to the contrary.
Under current interpretations of United States Treasury regulations, this
presumption also applies for purposes of determining whether a lower withholding
rate applies under an income tax treaty.


     Under United States Treasury regulations that will generally apply to
dividends paid after December 31, 2000, you must satisfy certification
requirements in order to claim the benefit of a lower treaty rate. In addition,
if you are a partner in a foreign partnership, you, as well as the foreign
partnership, must satisfy the certification requirements and the partnership
must provide certain information. A look-through rule will apply in the case of
tiered partnerships.

     If you are eligible for a reduced rate of United States withholding tax
under a tax treaty, you may obtain a refund of any amounts withheld in excess of
that tax by filing a refund claim with the United States Internal Revenue
Service, or the IRS.


     If the dividends are "effectively connected" with your conduct of a trade
or business within the United States, and, if required by a tax treaty, the
dividends are attributable to a permanent establishment that you maintain in the
United States, then the dividends generally are not subject to withholding tax.
Instead, "effectively connected" dividends are taxed at rates applicable to
United States citizens, resident aliens and domestic United States corporations.


     If you are a corporate non-U.S. holder, "effectively connected" dividends
that you receive may be subject to an additional "branch profits tax" at a 30%
rate or at a lower rate if you are eligible for the benefits of an income tax
treaty that provides for a lower rate.
                                       72
<PAGE>   76

GAIN ON DISPOSITION OF COMMON STOCK

     If you are a non-U.S. holder, you generally will not be subject to United
States federal income tax on gain that you recognize on a disposition of our
common stock unless:

     - the gain is "effectively connected" with your conduct of a trade or
       business in the United States, and the gain is attributable to a
       permanent establishment that you maintain in the United States, if that
       is required by an applicable income tax treaty as a condition for
       subjecting you to United States taxation on a net income basis;

     - you are an individual, you hold the common stock as a capital asset, you
       are present in the United States for 183 or more days of the taxable year
       of the sale or other disposition and certain other conditions exist; or

     - we are or have been a United States real property holding corporation for
       federal income tax purposes and you held, directly or indirectly, at any
       time during the five-year period ending on the date of disposition more
       than 5% of our common stock and you are not eligible for any treaty
       exemption.

     If you are an individual non-U.S. holder described in the first bullet
point above, you will be subject to tax on the net gain derived from the sale
under regular graduated United States federal income tax rates, if you are an
individual non-U.S. holder described in the second bullet point above, you will
be subject to a flat 30% tax on the gain derived from the sale, which may be
offset by United States source capital losses (even though you are not
considered a resident of the United States). If you are a non-U.S. holder that
is a foreign corporation and you are described in the first bullet point above,
"effectively connected" gains that you recognize may also, in some
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
at a lower rate if you are eligible for the benefits of an income tax treaty
that provides for a lower rate.

     We have not been, are not and do not anticipate becoming a United States
real property holding corporation for United States federal income tax purposes.

     Special rules may apply to certain non-U.S. holders, such as "controlled
foreign corporations," "passive foreign investment companies," "foreign personal
holding companies" and corporations that accumulate earnings to avoid United
States federal income tax, that are subject to special treatment under the Code.
These entities should consult their own tax advisors to determine the United
States federal, state, local and other tax consequences that may be relevant to
them.

FEDERAL ESTATE TAXES

     Common stock held by an individual who is a non-U.S. holder at the time of
death will be included in the holder's gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING

     We must report annually to the IRS and to each non-U.S. holder the amount
of dividends paid to each holder and the tax withheld with respect to the
dividends, regardless of whether withholding was required. Copies of the
information returns reporting dividends and withholding may also be made
available to the tax authorities in the country in which the non-U.S. holder
resides under the provisions of an applicable tax treaty.

     Under currently applicable law, if you are a non-U.S. holder, dividends
paid to you at an address outside the United States generally will not be
subject to backup withholding tax. Beginning with payments made after December
31, 2000, a non-U.S. holder will be entitled to such exemption only if the
non-U.S. holder provides a Form W-8BEN or otherwise meets documentary evidence
requirements for establishing that it is a non-U.S. holder, or otherwise
establishes an exemption.

                                       73
<PAGE>   77

     The gross proceeds from the disposition of our common stock may be subject
to information reporting and backup withholding tax at a rate of 31%. If you
sell your common stock outside of the United States through a non-U.S. office of
a non-U.S. broker, and the sales proceeds are paid to you outside the United
States, then United States backup withholding and information reporting
requirements generally will not apply to that payment. However, United States
information reporting, but not backup withholding, will apply to a payment of
sales proceeds, even if that payment is made outside the United States, if you
sell your common stock through a non-U.S. office of a broker that:

     - is a United States person;


     - derives 50% or more of its gross income in specific periods from the
       conduct of a trade or business in the United States;


     - is a "controlled foreign corporation" as to the United States; or

     - with respect to payments made after December 31, 2000 is a foreign
       partnership, if at any time during its tax year:


      - one or more of its partners are U.S. persons, as defined in United
        States Treasury regulations, who in the aggregate hold more than 50% of
        the income or capital interests in the partnership; or


      - at any time during its tax year, the foreign partnership is engaged in a
        United States trade or business

unless the broker has documentary evidence in its files that you are a non-U.S.
person or you otherwise establish an exemption.

     If you receive payments of the proceeds of a sale of common stock to or
through a United States office of a broker, the payment is subject to both
United States backup withholding and information reporting unless you certify,
under penalty of perjury, that you are a non-U.S. person or you otherwise
establish an exemption.

     You generally may obtain a refund of any amounts withheld under the backup
withholding rules that exceed your income tax liability by filing a refund claim
with the IRS.

                                       74
<PAGE>   78

                                  UNDERWRITING

     Under the terms and subject to the conditions contained in an underwriting
agreement dated                     , 2000, we have agreed to sell to the
underwriters named below, for whom Credit Suisse First Boston Corporation, U.S.
Bancorp Piper Jaffray Inc. and Banc of America Securities LLC are acting as
representatives, the following respective numbers of shares of common stock:


<TABLE>
<CAPTION>
                                                               NUMBER
                        UNDERWRITER                           OF SHARES
                        -----------                           ---------
<S>                                                           <C>
Credit Suisse First Boston Corporation......................
U.S. Bancorp Piper Jaffray Inc..............................
Banc of America Securities LLC..............................
                                                              ---------
  Total.....................................................  7,000,000
                                                              =========
</TABLE>


     The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering, if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that, if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering may be terminated.

     We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to 1,050,000 additional shares from us at the initial public
offering price less the underwriting discounts and commissions. The option may
be exercised only to cover any over-allotments of common stock.

     The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a selling concession of $     per share. The
underwriters and the selling group members may allow a discount of $     per
share on sales to other broker/dealers. After the initial public offering, the
public offering price and concession and discount to broker/dealers may be
changed by the representatives.

     The following table summarizes the compensation and estimated expenses we
will pay.

<TABLE>
<CAPTION>
                                                       PER SHARE                           TOTAL
                                            -------------------------------   -------------------------------
                                               WITHOUT            WITH           WITHOUT            WITH
                                            OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT   OVER-ALLOTMENT
                                            --------------   --------------   --------------   --------------
<S>                                         <C>              <C>              <C>              <C>
Underwriting Discounts and
  Commissions paid by us..................     $                $                $                $
Expenses payable by us....................     $                $                $                $
</TABLE>

     The representatives have informed us that the underwriters do not expect
discretionary sales to exceed 5% of the shares of common stock being offered.

     We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or any securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus, except issuances
pursuant to the exercise of employee stock options outstanding on the date
hereof.


     Our officers and directors and the holders of all but 18,750 shares of our
common stock or securities convertible into or exchangeable or exercisable for
any shares of our common stock have agreed that they will not offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
shares of our common stock or securities convertible into or exchangeable or
exercisable for any shares of our common stock, enter into a transaction which
would have the same effect, or enter into any swap, hedge or other arrangement
that transfers, in whole or in part, any of the economic consequences of
ownership of our common stock, whether any of these transactions are to be
settled by delivery of our common stock or other securities, in cash or
otherwise, or publicly disclose the intention to make any such offer, sale,
pledge


                                       75
<PAGE>   79

or disposition, or to enter into any of these types of transactions, swap, hedge
or other arrangement, without, in each case, the prior written consent of Credit
Suisse First Boston Corporation for a period of 180 days after the date of this
prospectus.

     The underwriters have reserved for sale, at the initial public offering
price, up to           shares of the common stock for employees, directors and
other persons associated with us who have expressed an interest in purchasing
common stock in the offering. The number of shares available for sale to the
general public in the offering will be reduced to the extent these persons
purchase the reserved shares. Any reserved shares not so purchased will be
offered by the underwriters to the general public on the same terms as the other
shares.

     We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be required
to make in that respect.

     Subject to notice of issuance, our common stock has been approved for
listing on the Nasdaq Stock Market's National Market under the symbol "NVTL".


     Prior to this offering, there has been no public market for our common
stock. The initial public offering price will be determined by negotiation
between us and the underwriters. The principal factors to be considered in
determining the public offering price include the following:


     - the information included in this prospectus and otherwise available to
       the representatives;

     - market conditions for initial public offerings;

     - the history and the prospects for the industry in which we compete;

     - the ability of our management;

     - the prospects for our future earnings;

     - the present state of our business development and our current financial
       condition;

     - the general condition of the securities markets at the time of this
       offering; and

     - the recent market prices of, and the demand for, publicly traded common
       stock of generally comparable companies.

     We cannot be sure that the initial public offering price will correspond to
the price at which the common stock will trade in the public market following
this offering or that an active trading market for the common stock will develop
and continue after this offering.

     U.S. Bancorp Piper Jaffray Inc. and its affiliates have provided financial
services to us in the past for which they received customary compensation.

     Prior to this offering, U.S. Bancorp Piper Jaffray Inc. participated in our
private placement as placement agent in which it received warrants to purchase
our common stock as compensation and its affiliates purchased our Series C
preferred stock and warrants to purchase our common stock. In addition, U.S.
Bancorp Piper Jaffray's affiliates purchased Series D preferred stock and
warrants to purchase our common stock. U.S. Bancorp Piper Jaffray and its
affiliates currently hold 55,755 shares of our Series C preferred stock, 28,689
shares of our Series D preferred stock and warrants to purchase 194,295 shares
of our common stock. U.S. Bancorp Piper Jaffray and its affiliates are in
compliance with section 2710 of the National Association of Securities Dealers
Rules of Conduct regarding underwriter compensation.

     In connection with the offering the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

     - Stabilizing transactions permit bids to purchase the underlying security
       so long as the stabilizing bids do not exceed a specified maximum.

                                       76
<PAGE>   80

     - Over-allotment involves sales by the underwriters of shares in excess of
       the number of shares the underwriters are obligated to purchase, which
       creates a syndicate short position. The short position may be either a
       covered short position or a naked short position. In a covered short
       position, the number of shares over-allotted by the underwriters is not
       greater than the number of shares that they may purchase in the
       over-allotment option. In a naked short position, the number of shares
       involved is greater than the number of shares in the over-allotment
       option. The underwriters may close out any short position by either
       exercising their over-allotment option and/or purchasing shares in the
       open market.

     - Syndicate covering transactions involve purchases of the common stock in
       the open market after the distribution has been completed in order to
       cover syndicate short positions. In determining the source of shares to
       close out the short position, the underwriters will consider, among other
       things, the price of shares available for purchase in the open market as
       compared to the price at which they may purchase shares through the
       over-allotment option. If the underwriters sell more shares than could be
       covered by the over-allotment option -- a naked short position -- that
       position can only be closed out by buying shares in the open market. A
       naked short position is more likely to be created if the underwriters are
       concerned that there may be downward pressure on the price of the shares
       in the open market after pricing that could adversely affect investors
       who purchase in the offering.

     - Penalty bids permit the representatives to reclaim a selling concession
       from a syndicate member when the common stock originally sold by the
       syndicate member is purchased in a stabilizing or syndicate covering
       transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids
may have the effect of raising or maintaining the market price of the common
stock or preventing or retarding a decline in the market price of the common
stock. As a result the price of the common stock may be higher than the price
that might otherwise exist in the open market. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

     A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters for
sale to their online brokerage account holders. Internet distributions will be
allocated by the underwriters that will make internet distributions on the same
basis as other allocations.

                                       77
<PAGE>   81

                          NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

     The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the common stock are made. Any resale of the common stock in Canada
must be made under applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of the common stock.

REPRESENTATIONS OF PURCHASERS

     By purchasing common stock in Canada and accepting a purchase confirmation,
a purchaser is representing to us and the dealer from whom the purchase
confirmation is received that:

     - the purchaser is entitled under applicable provincial securities laws to
       purchase such common stock without the benefit of a prospectus qualified
       under those securities laws,

     - where required by law, the purchaser is purchasing as a principal and not
       as an agent, and

     - the purchaser has reviewed the text above under "Resale Restrictions."

RIGHTS OF ACTION (ONTARIO PURCHASERS)

     The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

     All the issuer's directors and officers as well as the experts we name
herein may be located outside Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

     A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by the purchaser pursuant to this offering. The report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one report must
be filed for common stock acquired on the same date and under the same
prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

     Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences in their particular circumstances
of an investment in our common stock and about the eligibility of our common
stock for investment by the purchaser under relevant Canadian legislation.

                                       78
<PAGE>   82

                                 LEGAL MATTERS

     The validity of the common stock offered hereby will be passed upon for us
by Orrick, Herrington & Sutcliffe LLP, Los Angeles, California. Orrick,
Herrington & Sutcliffe LLP owns a total of 17,391 shares of our preferred stock
and warrants to purchase 3,477 shares of our common stock. Individuals who are
partners of Orrick, Herrington & Sutcliffe LLP own 7,044 shares of our preferred
stock and warrants to purchase 1,386 shares of our common stock. Certain legal
matters in connection with this offering will be passed upon for the
underwriters by Latham & Watkins, Los Angeles, California.

                                    EXPERTS

     The consolidated balance sheets as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31, 1999
included in the prospectus and elsewhere in the registration statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of such firm as experts in accounting and auditing in giving said
report.

                   WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the common stock
offered by this prospectus. This prospectus does not contain all the information
set forth in the registration statement and its exhibits and schedules. For
further information about us and our common stock, we refer you to the
registration statement and to its exhibits and schedules. Statements made in
this prospectus concerning the contents of any document referred to in this
prospectus are not necessarily complete. With respect to each such document
filed as an exhibit to the registration statement, we refer you to the exhibit
for a more complete description of the matter involved. Each statement in this
prospectus relating to a contract or document filed as an exhibit to the
registration statement is qualified in all respects by the filed exhibit. You
may read or obtain a copy of the registration statement with exhibits at the
SEC's public reference room located at 450 Fifth Street, N.W., Washington, DC
20549. You may obtain information on the operation of the public reference room
by calling the SEC at 1-800-SEC-0330. The SEC maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC. The address of the site is
http://www.sec.gov.

     As a result of the offering, the information and reporting requirements of
the Securities Exchange Act of 1934, as amended, will apply to us. We will
fulfill our obligations with respect to those requirements by filing periodic
reports and other information with the SEC. We intend to furnish our
stockholders with annual reports containing consolidated financial statements
certified by an independent public accounting firm.

                                       79
<PAGE>   83

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Public Accountants....................  F-2
Consolidated Balance Sheets.................................  F-3
Consolidated Statements of Operations.......................  F-4
Consolidated Statements of Stockholders' Equity (Deficit)...  F-5
Consolidated Statements of Cash Flows.......................  F-6
Notes to Consolidated Financial Statements..................  F-7
</TABLE>

                               ------------------

                                       F-1
<PAGE>   84

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Novatel Wireless, Inc.:

     We have audited the accompanying consolidated balance sheets of Novatel
Wireless, Inc. (a Delaware corporation) and Subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for each of the three years in the period ended
December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Novatel Wireless, Inc. and
Subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.

     Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule II -- Valuation and Qualifying
Accounts is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP

San Diego, California
September 13, 2000

                                       F-2
<PAGE>   85

                             NOVATEL WIRELESS, INC.

                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                                  PRO FORMA
                                                       DECEMBER 31,                             STOCKHOLDERS'
                                                ---------------------------   SEPTEMBER 30,         EQUITY
                                                    1998           1999           2000        SEPTEMBER 30, 2000
                                                ------------   ------------   -------------   ------------------
                                                                               (UNAUDITED)       (UNAUDITED)
<S>                                             <C>            <C>            <C>             <C>
                                                     ASSETS
Current assets:
  Cash and cash equivalents...................  $  3,497,000   $ 25,455,000   $ 13,893,000
  Short-term investments......................       296,000             --             --
  Accounts receivable, net of reserve of
    $44,000
    (1998), $181,000 (1999), and $293,000
      (2000)..................................       607,000      1,345,000     12,091,000
  Inventories.................................       656,000      4,706,000      8,927,000
  Due from contract manufacturers.............            --      4,732,000      2,627,000
  Prepaid expenses and other..................       224,000        480,000      3,301,000
                                                ------------   ------------   ------------
    Total current assets......................     5,280,000     36,718,000     40,839,000
                                                ------------   ------------   ------------
  Property and equipment, net.................       904,000      1,346,000      5,264,000
  Intangible asset............................            --             --      1,735,000
  Other assets................................            --         54,000        223,000
                                                ------------   ------------   ------------
                                                $  6,184,000   $ 38,118,000   $ 48,061,000
                                                ============   ============   ============

                                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
  Accounts payable............................  $  1,169,000   $ 11,560,000   $ 14,884,000
  Accrued expenses............................       728,000      1,174,000      3,003,000
  Deferred revenues...........................            --      8,134,000      2,878,000
  Current portion of capital lease
    obligations...............................            --         81,000         71,000
                                                ------------   ------------   ------------
    Total current liabilities.................     1,897,000     20,949,000     20,836,000
                                                ------------   ------------   ------------
Capital lease obligations, net of current
  portion.....................................            --        106,000        289,000
Convertible and redeemable minority
  interest....................................     4,100,000      4,386,000             --
Convertible and redeemable preferred stock,
  13,044,414 (1998), 24,067,245 (1999),
  28,463,481 (2000), and 0 (Pro Forma) shares
  issued and outstanding, at liquidation
  value, net of unamortized offering costs of
  $127,000 (1998), $2,875,000 (1999) and
  $2,438,000 (2000)...........................    14,812,000     43,805,000     51,492,000
Commitments and contingencies
Stockholders' equity (deficit):
  Preferred stock, par value $.001, 7,800,000
    shares authorized, 0 (1998 and 1999) and
    5,892,150 (2000) and 0 (Pro Forma) issued
    and outstanding...........................            --             --          6,000                 --
  Common stock, par value $.001, 79,500,000
    shares authorized, 9,711,630 (1998),
    9,752,880 (1999), 10,314,840 (2000) and
    44,670,471 (Pro Forma) shares issued and
    outstanding...............................        10,000         10,000         10,000       $     45,000
  Additional paid-in capital..................       775,000      4,784,000     68,136,000        119,599,000
  Deferred stock compensation.................      (161,000)      (800,000)   (24,013,000)       (24,013,000)
  Accumulated deficit.........................   (15,249,000)   (35,122,000)   (68,695,000)       (68,695,000)
                                                ------------   ------------   ------------       ------------
    Total stockholders' equity (deficit)......   (14,625,000)   (31,128,000)   (24,556,000)      $ 26,936,000
                                                ------------   ------------   ------------       ------------
                                                $  6,184,000   $ 38,118,000   $ 48,061,000
                                                ============   ============   ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>   86

                             NOVATEL WIRELESS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                     YEAR ENDED DECEMBER 31,            NINE MONTHS ENDED SEPTEMBER 30,
                             ----------------------------------------   --------------------------------
                                1997          1998           1999            1999              2000
                             -----------   -----------   ------------   --------------    --------------
                                                                         (UNAUDITED)       (UNAUDITED)
<S>                          <C>           <C>           <C>            <C>               <C>
Revenue....................  $ 3,354,000   $ 5,378,000   $  9,556,000    $  5,514,000      $ 33,408,000
Cost of revenue............    1,856,000     3,433,000     11,955,000       5,751,000        34,970,000
                             -----------   -----------   ------------    ------------      ------------
     Gross margin..........    1,498,000     1,945,000     (2,399,000)       (237,000)       (1,562,000)
                             -----------   -----------   ------------    ------------      ------------
Operating costs and
  expenses:
  Research and
     development...........    1,995,000     2,333,000      3,717,000       1,926,000         8,902,000
  Sales and marketing......    2,058,000     2,685,000      4,480,000       2,630,000        10,468,000
  General and
     administrative........    1,944,000     2,496,000      4,443,000       3,335,000         3,345,000
  Amortization of deferred
     stock
     compensation(*).......           --       115,000        220,000         166,000         6,523,000
                             -----------   -----------   ------------    ------------      ------------
                               5,997,000     7,629,000     12,860,000       8,057,000        29,238,000
                             -----------   -----------   ------------    ------------      ------------
     Operating loss........   (4,499,000)   (5,684,000)   (15,259,000)     (8,294,000)      (30,800,000)
Other income (expense):
  Interest income..........       23,000       178,000         47,000          33,000           554,000
  Interest expense.........           --            --     (3,267,000)     (1,268,000)          (30,000)
  Other, net...............           --            --         10,000          (1,000)            6,000
                             -----------   -----------   ------------    ------------      ------------
     Net loss..............  $(4,476,000)  $(5,506,000)  $(18,469,000)   $ (9,530,000)     $(30,270,000)
                             ===========   ===========   ============    ============      ============
Per share date (Note 14):
  Net loss applicable to
     common stockholders...  $(4,979,000)  $(6,657,000)  $(19,873,000)   $(10,580,000)     $(33,573,000)
  Weighted average shares
     used in computation of
     basic and diluted net
     loss per common
     share.................    9,711,630     9,711,630      9,728,421       9,723,737        10,138,695
                             -----------   -----------   ------------    ------------      ------------
  Basic and diluted net
     loss per common
     share.................  $     (0.51)  $     (0.69)  $      (2.04)   $      (1.09)     $      (3.31)
                             ===========   ===========   ============    ============      ============
  Shares used in
     computation of pro
     forma basic and
     diluted net loss per
     share.................                                27,199,269      27,164,387        44,494,326
                                                         ------------    ------------      ------------
  Pro forma basic and
     diluted net loss per
     share.................                              $      (0.73)   $      (0.39)     $      (0.75)
                                                         ============    ============      ============
(*)Amortization of deferred
   stock compensation:
      Cost of revenue......  $        --   $        --   $         --    $         --      $     46,000
      Research and
      development..........           --            --             --              --           121,000
      Sales and
      Marketing............           --            --             --              --           118,000
      General and
      Administrative.......           --       115,000        220,000         166,000         6,238,000
                             -----------   -----------   ------------    ------------      ------------
                             $        --   $   115,000   $    220,000    $    166,000      $  6,523,000
                             ===========   ===========   ============    ============      ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>   87

                             NOVATEL WIRELESS, INC.

           CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                            PREFERRED STOCK         COMMON STOCK       ADDITIONAL
                                           ------------------   --------------------     PAID-IN     ACCUMULATED      DEFERRED
                                            SHARES     AMOUNT     SHARES     AMOUNT      CAPITAL       DEFICIT      COMPENSATION
                                           ---------   ------   ----------   -------   -----------   ------------   ------------
<S>                                        <C>         <C>      <C>          <C>       <C>           <C>            <C>
Balance, January 1, 1997.................         --      --     9,711,630   $10,000   $   499,000   $ (3,613,000)  $         --
 Accretion of dividends on minority
   interest in NWT.......................         --      --            --        --            --       (189,000)            --
 Accretion of dividends on convertible
   and redeemable preferred stock of
   NWI...................................         --      --            --        --            --       (308,000)            --
 Amortization of offering costs for
   convertible and redeemable preferred
   stock.................................         --      --            --        --            --         (6,000)            --
 Net loss................................         --      --            --        --            --     (4,476,000)            --
                                           ---------   ------   ----------   -------   -----------   ------------   ------------
Balance, December 31, 1997...............         --      --     9,711,630    10,000       499,000     (8,592,000)            --
 Deferred compensation for stock options
   issued................................         --      --            --        --       276,000             --       (276,000)
 Amortization of deferred compensation...         --      --            --        --            --             --        115,000
 Accretion of dividends on minority
   interest in NWT.......................         --      --            --        --            --       (273,000)            --
 Accretion of dividends on convertible
   and redeemable preferred stock of
   NWI...................................         --      --            --        --            --       (859,000)            --
 Amortization of offering costs for
   convertible and redeemable preferred
   stock.................................         --      --            --        --            --        (19,000)            --
 Net loss................................         --      --            --        --            --     (5,506,000)            --
                                           ---------   ------   ----------   -------   -----------   ------------   ------------
Balance, December 31, 1998...............         --      --     9,711,630    10,000       775,000    (15,249,000)      (161,000)
 Additional paid-in capital from stock
   options exercised.....................         --      --        41,250        --        30,000
 Deferred compensation for stock options
   issued................................         --      --                      --       859,000             --       (859,000)
 Amortization of deferred compensation...         --      --            --        --            --             --        220,000
 Accretion of dividends on minority
   interest in NWT.......................         --      --            --        --            --       (286,000)            --
 Accretion of dividends on convertible
   and redeemable preferred stock of
   NWI...................................         --      --            --        --            --     (1,096,000)            --
 Amortization of offering costs for
   convertible and redeemable preferred
   stock.................................         --      --            --        --            --        (22,000)            --
 Imputed value of warrants issued with
   convertible subordinated debentures...         --      --            --        --     3,120,000             --             --
 Net loss................................         --      --                                          (18,469,000)
                                           ---------   ------   ----------   -------   -----------   ------------   ------------
Balance, December 31, 1999...............         --      --     9,752,880    10,000     4,784,000    (35,122,000)      (800,000)
 Issuance of convertible preferred
   stock.................................  5,892,150   6,000            --        --    33,333,000             --             --
 Additional paid-in capital from stock
   options and warrants exercised
   (unaudited)...........................         --      --       561,960        --       283,000             --             --
 Deferred compensation for stock options
   issued (unaudited)....................         --      --            --        --    29,736,000             --    (29,736,000)
 Amortization of deferred compensation
   (unaudited)...........................         --      --            --        --            --             --      6,523,000
 Accretion of dividends on minority
   interest in NWT (unaudited)...........         --      --            --        --            --       (197,000)            --
 Accretion of dividends on convertible
   and redeemable preferred stock of NWI
   (unaudited)...........................         --      --            --        --            --     (2,669,000)            --
 Amortization of offering costs for
   convertible and redeemable preferred
   stock (unaudited).....................         --      --            --        --            --       (437,000)            --
 Net loss (unaudited)....................         --      --            --        --            --    (30,270,000)            --
                                           ---------   ------   ----------   -------   -----------   ------------   ------------
Balance, September 30, 2000
 (unaudited).............................  5,892,150   $6,000   10,314,840   $10,000   $68,136,000   $(68,695,000)  $(24,013,000)
                                           =========   ======   ==========   =======   ===========   ============   ============

<CAPTION>
                                                TOTAL
                                            STOCKHOLDERS'
                                           EQUITY (DEFICIT)
                                           ----------------
<S>                                        <C>
Balance, January 1, 1997.................    $ (3,104,000)
 Accretion of dividends on minority
   interest in NWT.......................        (189,000)
 Accretion of dividends on convertible
   and redeemable preferred stock of
   NWI...................................        (308,000)
 Amortization of offering costs for
   convertible and redeemable preferred
   stock.................................          (6,000)
 Net loss................................      (4,476,000)
                                             ------------
Balance, December 31, 1997...............      (8,083,000)
 Deferred compensation for stock options
   issued................................              --
 Amortization of deferred compensation...         115,000
 Accretion of dividends on minority
   interest in NWT.......................        (273,000)
 Accretion of dividends on convertible
   and redeemable preferred stock of
   NWI...................................        (859,000)
 Amortization of offering costs for
   convertible and redeemable preferred
   stock.................................         (19,000)
 Net loss................................      (5,506,000)
                                             ------------
Balance, December 31, 1998...............     (14,625,000)
 Additional paid-in capital from stock
   options exercised.....................          30,000
 Deferred compensation for stock options
   issued................................              --
 Amortization of deferred compensation...         220,000
 Accretion of dividends on minority
   interest in NWT.......................        (286,000)
 Accretion of dividends on convertible
   and redeemable preferred stock of
   NWI...................................      (1,096,000)
 Amortization of offering costs for
   convertible and redeemable preferred
   stock.................................         (22,000)
 Imputed value of warrants issued with
   convertible subordinated debentures...       3,120,000
 Net loss................................     (18,469,000)
                                             ------------
Balance, December 31, 1999...............     (31,128,000)
 Issuance of convertible preferred
   stock.................................      33,339,000
 Additional paid-in capital from stock
   options and warrants exercised
   (unaudited)...........................         283,000
 Deferred compensation for stock options
   issued (unaudited)....................              --
 Amortization of deferred compensation
   (unaudited)...........................       6,523,000
 Accretion of dividends on minority
   interest in NWT (unaudited)...........        (197,000)
 Accretion of dividends on convertible
   and redeemable preferred stock of NWI
   (unaudited)...........................      (2,669,000)
 Amortization of offering costs for
   convertible and redeemable preferred
   stock (unaudited).....................        (437,000)
 Net loss (unaudited)....................     (30,270,000)
                                             ------------
Balance, September 30, 2000
 (unaudited).............................    $(24,556,000)
                                             ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>   88

                             NOVATEL WIRELESS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                                     NINE MONTHS ENDED
                                                              YEAR ENDED DECEMBER 31,                  SEPTEMBER 30,
                                                      ----------------------------------------   --------------------------
                                                         1997          1998           1999          1999           2000
                                                      -----------   -----------   ------------   -----------   ------------
                                                                                                 (UNAUDITED)   (UNAUDITED)
<S>                                                   <C>           <C>           <C>            <C>           <C>
Operating activities:
  Net loss..........................................  $(4,476,000)  $(5,506,000)  $(18,469,000)  $(9,530,000)  $(30,270,000)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
    Depreciation and amortization...................      462,000       442,000        672,000       503,000      1,046,000
    Provision for bad debt..........................           --            --        137,000            --        116,000
    Compensation for stock options issued below fair
      value.........................................           --       115,000        220,000       166,000      6,523,000
    Compensation for warrants issued in connection
      with convertible subordinated debentures......           --            --      3,120,000            --             --
    Changes in assets and liabilities:
      Accounts receivable...........................      (56,000)     (214,000)      (875,000)   (1,778,000)   (10,861,000)
      Due from contract manufacturers...............           --            --     (4,732,000)           --      2,105,000
      Inventories...................................       22,000      (226,000)    (4,050,000)   (5,749,000)    (4,222,000)
      Prepaid expenses and other....................      (86,000)     (127,000)      (256,000)     (187,000)    (2,821,000)
      Other assets..................................           --            --        (54,000)           --       (169,000)
      Accounts payable..............................      544,000       332,000     10,391,000     7,388,000      3,323,000
      Accrued expenses..............................       78,000       156,000        576,000        65,000      1,700,000
      Deferred revenues.............................           --            --      8,134,000     3,358,000     (5,127,000)
                                                      -----------   -----------   ------------   -----------   ------------
        Net cash used in operating activities.......   (3,512,000)   (5,028,000)    (5,186,000)   (5,764,000)   (38,657,000)
                                                      -----------   -----------   ------------   -----------   ------------
Investing activities:
  Purchases of property and equipment...............     (521,000)     (313,000)      (880,000)     (663,000)    (4,966,000)
  Purchase of intangibles...........................           --            --             --            --
  Net change in short-term investments..............     (260,000)      (36,000)       296,000       296,000     (1,735,000)
                                                      -----------   -----------   ------------   -----------   ------------
        Net cash (used in) provided by investing
          activities................................     (781,000)     (349,000)      (584,000)     (367,000)    (6,701,000)
                                                      -----------   -----------   ------------   -----------   ------------
Financing activities:
  Borrowings on promissory notes....................      500,000            --             --            --             --
  Payments on promissory notes......................   (1,000,000)     (500,000)            --            --             --
  Issuance of convertible and redeemable preferred
    stock...........................................    4,128,000     7,197,000     24,625,000            --             --
  Issuance of convertible and redeemable minority
    interest shares.................................    1,070,000       510,000             --            --             --
  Issuance of convertible preferred stock...........           --            --             --            --     33,339,000
  Proceeds from exercise of stock options...........           --            --         30,000        21,000        283,000
  Proceeds from issuance of convertible subordinated
    debentures......................................           --            --      3,120,000     3,120,000             --
  Proceeds (payments) under capital lease
    obligation......................................           --            --        (47,000)           --        174,000
                                                      -----------   -----------   ------------   -----------   ------------
        Net cash provided by financing activities...    4,698,000     7,207,000     27,728,000     3,141,000     33,796,000
                                                      -----------   -----------   ------------   -----------   ------------
        Net increase (decrease) in cash and cash
          equivalents...............................      405,000     1,830,000     21,958,000    (2,990,000)   (11,562,000)
Cash and cash equivalents, beginning of period......    1,262,000     1,667,000      3,497,000     3,497,000     25,455,000
                                                      -----------   -----------   ------------   -----------   ------------
Cash and cash equivalents, end of period............  $ 1,667,000   $ 3,497,000   $ 25,455,000   $   507,000   $ 13,893,000
                                                      ===========   ===========   ============   ===========   ============
Supplemental disclosures of non-cash investing and
  financing activities:
  Conversion of convertible subordinated debentures
    and related accrued interest into Series C
    convertible and redeemable preferred stock......  $        --   $        --   $  3,250,000   $        --   $         --
  Accretion of dividends on minority interest.......      189,000       273,000        286,000       215,000        197,000
  Accretion of dividends on convertible and
    redeemable preferred stock......................      308,000       859,000      1,096,000       820,000      2,669,000
  Amortization of offering costs for convertible and
    redeemable preferred stock......................        6,000        19,000         22,000        15,000        437,000
  Deferred compensation for stock options issued....           --       276,000        859,000            --     29,736,000
  Property and equipment acquired under capital
    lease obligations...............................           --            --        234,000            --             --
Supplemental disclosures of cash flows information:
  Cash paid during the period for:
    Interest........................................  $        --   $        --   $      7,000   $     4,000   $     30,000
    Income taxes....................................        1,000         1,000          1,000         1,000          1,000
</TABLE>


See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>   89

                             NOVATEL WIRELESS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


1. THE COMPANY


     Novatel Wireless, Inc., a Delaware corporation ("NWI," the "Company," or
"we") is headquartered in San Diego, California. We are a provider of wireless
data communications access solutions. We provide wireless data modems and
enabling software for use with handheld computing devices and portable personal
computers. We also provide wireless data modems that can be integrated into
other devices for vertical OEM applications. Our products enable professionals
and consumers to access enterprise networks and the Internet.


     Prior to being established as an independent operating entity in April of
1996, the Company was formerly the Personal Communications Product Division of
NovAtel Communications, a Canadian telecommunications company. The Company's
subsidiaries include wholly owned Novatel Wireless Solutions, Inc., incorporated
in Delaware, and fifty-percent owned Novatel Wireless Technologies Ltd. ("NWT"),
incorporated in Alberta, Canada.

2. RISKS AND UNCERTAINTIES

Company Operations

     The Company is subject to a number of risks and uncertainties associated
with companies at a similar stage of maturity, has only a limited operating
history and the revenue and income potential of the Company's business and
market are unproven. Further, the market for wireless Internet products and
services is relatively new and rapidly evolving both technologically and
competitively.


     The Company has experienced net losses in each year since its inception and
had an accumulated deficit of $35.1 million at December 31, 1999 and $68.7
million (unaudited) at September 30, 2000. The Company incurred net losses of
$4.5 million, $5.5 million, $18.5 million, $9.5 million (unaudited) and $30.3
million (unaudited) and negative cash flows from operations of $3.5 million,
$5.0 million, $5.2 million, $5.8 million (unaudited) and $38.7 million
(unaudited) for the years ended December 31, 1997, 1998 and 1999 and the nine
months ended September 30, 1999 and 2000, respectively. The Company expects to
continue to incur net losses for at least the next several quarters. While the
Company is unable to predict accurately its future operating expenses, the
Company currently expects these expenses to increase substantially, as it, among
other things, expands its selling and marketing activities, increases its
research and development efforts to upgrade its existing services and develop
new services and technologies, upgrades its operational and financial systems,
procedures and controls, and hires and trains additional personnel.


     The Company will need to significantly increase its revenues to achieve and
maintain profitability. If we fail to significantly increase our revenues, the
Company will continue to experience losses indefinitely and, accordingly, the
Company may be required to obtain additional financing in the future. Management
believes that the Company's cash reserves including net proceeds from the Series
D financing (see Note 3) will be sufficient to fund operations for at least the
next twelve months.

Initial Public Offering

     In April 2000, the Company's Board of Directors authorized management to
file a registration statement with the Securities and Exchange Commission to
permit the Company to offer shares of common stock to the public. In April 2000,
the Company's Board of Directors authorized an increase in the capitalization of
the Company to 350,000,000 shares of common stock, par value $.001 per share,
and up to 15,000,000 shares of undesignated preferred stock, par value $.001 per
share, upon the effective date of the Company's public offering. If the offering
is consummated under terms presently anticipated, all

                                       F-7
<PAGE>   90
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)



outstanding shares of convertible and redeemable preferred stock outstanding at
September 30, 2000 will convert into 34,355,631 shares of common stock.
Unaudited pro forma stockholders' equity reflects the assumed conversion of the
convertible preferred stock and minority interest shares outstanding at
September 30, 2000 into common stock.


     In August 2000, the Company's Board of Directors approved a 3 for 1 stock
split. The effects of this stock split have been retroactively reflected for all
periods presented.

3. RECENT FINANCINGS AND EQUITY ACTIVITY

Series D


     In June and July of 2000, the Company issued 5,892,150 shares of Series D
preferred stock to accredited investors in a private offering. Net proceeds from
the financing amounted to approximately $33.6 million, or $5.75 per share, after
offering costs of approximately $541,000. We also issued warrants to purchase a
total of 1,178,400 shares of NWI common stock at an exercise price of $5.75
expiring June 30, 2005.


     The Company amended its Certificate of Incorporation to authorize 7,800,000
shares of Series D Convertible Preferred Stock, par value $0.001.

     In September 2000, the holders of the NWT Series A and B convertible and
redeemable preferred shares exercised their right to exchange all of their
shares into Series A and B convertible and redeemable preferred shares of NWI.
(See Note 7)


Series D -- October 2000 (Unaudited)



     In October 2000, the Company issued 434,782 shares of Series D preferred
stock to a qualified institutional buyer in a private offering. Net proceeds
from the financing amounted to approximately $2.5 million, or $5.75 per share.
The per share price represents a discount of $5.25 compared to the fair value on
the date of issuance. Concurrently, the Company entered into a product purchase
and licensing agreement with the same investor and accordingly, will record the
sale of the preferred stock measured at fair value pursuant to the guidance in
SFAS No. 123. Compensation of approximately $2.3 million will be recorded in
connection with this transaction.


Line of Credit Commitment

     In July 2000, the Company entered into a commitment for credit facility
with a bank, which will allow the Company to borrow up to the lesser of $10
million or 80% of eligible accounts receivable. This credit facility will bear
interest at prime plus 1%, will be collateralized by substantially all assets of
the Company and will expire in June 2001.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation


     The consolidated financial statements include the accounts of Novatel
Wireless, Inc., its wholly owned subsidiary Novatel Wireless Solutions, Inc. and
its 50% owned subsidiary NWT, which is consolidated because NWI has financial
and managerial control over NWT and has the ability to unilaterally obtain a
majority share ownership position and voting control. The other shareholder in
NWT is a passive investor with no operational influence, no veto voting rights
and no obligation to fund NWT's operations. The other shareholder's rights under
the terms of the NWT shareholder agreement do not provide for that


                                       F-8
<PAGE>   91
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)



shareholder to affect participation in significant decisions that would be
expected to be made in the ordinary course of business. The remaining 50%
ownership of NWT is reflected in the accompanying balance sheets as convertible
and redeemable minority interest. Refer to Note 7 for further discussion of the
minority interest. All significant intercompany transactions and balances have
been eliminated in consolidation. Certain reclassifications have been made to
amounts included in the prior years' financial statements to conform to the
presentation for the year ended December 31, 1999.


Unaudited Interim Results


     The accompanying balance sheet as of September 30, 2000, the statements of
operations and cash flows for the nine months ended September 30, 1999 and
September 30, 2000 and the statement of stockholders' equity (deficit) for the
nine months ended September 30, 2000 are unaudited. The unaudited interim
financial statements have been prepared on the same basis as the annual
financial statements and, in the opinion of management, reflect all adjustments,
which include only normal recurring adjustments, necessary to present fairly the
Company's financial position and its results of operations and its cash flows
for the nine months ended September 30, 1999 and September 30, 2000. The
financial data and other information disclosed in these notes to financial
statements related to these periods are also unaudited. The results for the nine
months ended September 30, 2000 are not necessarily indicative of the results to
be expected for the year ending December 31, 2000.


Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets, liabilities, revenues, expenses and disclosures of contingent
assets and liabilities. Actual results could differ from these estimates.

Revenue Recognition


     Our revenue has been generated from the sale of wireless modems to wireless
telecommunications operators, wireless data content and service providers,
resellers and OEM customers. We also generate revenue from product activation
services we provide prior to shipping; through September 30, 2000, such revenue
has not been significant. Revenue from product sales and services, which
includes product activation, is recognized upon the latter of transfer of title
or upon shipment of the product to the customer or upon rendering product
activation services, if applicable. Revenues from long-term supply contracts are
recognized as products are shipped to customers over the period of the contract.
We record deferred revenue for cash payments received from customers in advance
of product shipments. We grant price protection provisions to certain customers
and we track pricing and other terms offered to customers buying similar
products to assess compliance with these provisions. To date, the Company has
not incurred material price protection expenses. We establish reserves for
estimated product returns and warranty allowances in the period in which revenue
is recognized. Reserves for product returns were $0, $0, and $167,000 at
December 31, 1998, 1999 and September 30, 2000, respectively.


     During 1997 and 1998 we generated revenues of $1.4 million and $650,000,
respectively, under a contract research and development and license agreement.
Revenues on this agreement were recognized under the contractual terms, which in
1997 included customer acceptance of our design and a license to use our
technology and in 1998 included successful manufacturing of the product by the
customer. Cost of revenues incurred under the agreement totaled approximately
$720,000 and $294,000 in 1997 and 1998, respectively.

                                       F-9
<PAGE>   92
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB No. 101 is effective during the fourth quarter of fiscal 2000. Management
has reviewed and adopted the provisions of SAB No. 101 which did not have a
material impact on the Company's financial position or results of operations.

Research and Development Costs

     Research and development costs are expensed as incurred. To date, we have
not incurred significant software development costs that would be capitalized in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 86,
"Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed."

Warranty Costs

     We accrue warranty costs based on our best estimates, with reference to our
past experience.

Cash and Cash Equivalents

     Cash and cash equivalents include highly liquid investments with original
maturities of three months or less. Cash and cash equivalents consist of money
market and mutual funds and are carried at market, which approximates cost.

Short-Term Investments

     From time to time, the Company invests its excess cash in U.S. government
securities and debt instruments of financial institutions and corporations with
strong credit ratings. The Company has established guidelines to diversify its
short-term investments and their maturities to manage safety and liquidity.
These guidelines are periodically reviewed and modified to take advantage of
trends in yields and interest rates. The Company has not experienced any
significant losses on its short-term investments.

Inventories

     Inventories are stated at the lower of cost (first-in, first-out method) or
market. The Company provides reserves against inventories which it believes to
be excess or obsolete to state such inventories at realizable value.


Due from Contract Manufacturers



     Due from contract manufacturers represents amounts due from the Company's
outsourced product manufacturers from the sale of materials inventories by the
Company to the manufacturers. These sales represented a transfer of assets and
were not recognized as revenues in the accompanying consolidated statements of
operations.


Property and Equipment

     Property and equipment are stated at cost and depreciated primarily using
the straight-line method. Test equipment, computer equipment and software,
furniture and fixtures and product tooling are depreciated over lives between
one and five years and leasehold improvements are depreciated over the shorter
of the related lease period or useful life.

                                      F-10
<PAGE>   93
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


Intangible Asset

     Intangible asset consists of a non-exclusive and perpetual worldwide
software product license. The Company capitalized the cost to acquire the
license and will amortize the cost on a straight-line basis over the estimated
useful life of the asset which is 5 years.

Long-Lived Assets

     The Company continually evaluates the carrying value of the unamortized
balances of its long-lived assets to determine whether any impairment of these
assets has occurred or whether any revision to the related amortization periods
should be made. This evaluation is based on management's projections of the
undiscounted future cash flows associated with each asset. If management's
evaluation were to indicate that the carrying values of these assets were
impaired, such impairment would be recognized by a write down of the applicable
asset to its estimated fair value and expensed through operations.

Income Taxes

     The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires the use of the liability method of
accounting for deferred income taxes. Under this method, deferred income taxes
are recorded to reflect the tax consequences on future years of temporary
differences between the tax bases of assets and liabilities and their financial
reporting amounts at each period end. If it is more likely than not that some
portion or all of a deferred tax asset will not be realized, a valuation
allowance is recognized.

Stock-Based Compensation

     As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company accounts for costs of stock-based employee compensation in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Accordingly, the Company discloses the pro forma
effect on net loss and related per share amounts as if the fair-value method
prescribed by SFAS No. 123 had been used to account for its stock-based employee
compensation. The Company accounts for equity instruments issued to
non-employees in accordance with the provisions of SFAS No. 123 and related
interpretations.

Computation of Net Loss Per Share

     SFAS No. 128, "Earnings Per Share," requires companies to compute basic and
diluted per share data for all periods for which a statement of operations is
presented. Basic net loss per share is computed by dividing the net loss
applicable to common stockholders by the weighted average number of common
shares that were outstanding during the period. Diluted earnings per share is
computed by giving effect to all potentially dilutive securities that were
outstanding for the periods presented. Potentially dilutive securities
consisting of options, warrants, convertible and redeemable minority interest
and convertible and redeemable preferred stock were not considered in the
calculation of diluted earnings per share as their impact would be antidilutive.
For the periods presented, there is no difference between the basic and diluted
net loss per share.

     Pro forma net loss per share (unaudited) is computed by dividing net loss
applicable to common stockholders by the weighted average number of common
shares outstanding and the weighted average number of shares of convertible and
redeemable preferred stock, including the minority interest shares, outstanding
as if such shares were converted to common stock at the time of issuance.

                                      F-11
<PAGE>   94
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


Foreign Currency Translation

     Monetary balance sheet accounts of the Company's Canadian subsidiary are
translated from Canadian dollars into U.S. dollars at the exchange rate in
effect at the balance sheet date, non-monetary balance sheet accounts are
translated at historical rates and revenue and expense accounts are translated
using an average exchange rate during the period of recognition. The functional
currency of the Canadian subsidiary is the U.S. dollar, thus translation gains
and losses are reflected in operations. Exchange gains and losses arising from
transactions denominated in foreign currencies are recorded using the actual
exchange differences on the date of the transaction and are reflected in
operations.

Fair Value of Financial Instruments

     The carrying amounts of the Company's financial instruments, primarily
including cash, accounts receivable, accounts payable and accrued expenses
approximate their fair value due to their short term nature. The Company
performs credit evaluations of key customers and management believes it is not
exposed to significant credit risk on its accounts receivable in excess of
established reserves.

Comprehensive Income

     SFAS No. 130, "Comprehensive Income," requires that all items recognized
under accounting standards as components of comprehensive income be reported
with the same prominence as other financial statements. The Company has no items
requiring separate display of comprehensive income.

Segment Information

     SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," requires public companies to report financial and descriptive
information about their reportable operating segments. The Company identifies
its operating segments based on how management internally evaluates separate
financial information, business activities and management responsibility. The
Company believes it operates in a single business segment consisting of the
development, manufacture and sale of wireless Internet products.

Recent Accounting Pronouncements

     In 1998, the Financial Accounting Standards Board, ("FASB"), issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" and in
June 1999 issued SFAS No. 137, "Accounting for Derivatives and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133." Under
SFAS No. 133, derivatives not meeting hedge criteria are recorded in the balance
sheet as either an asset or liability measured at fair value and changes in fair
value are recognized currently in earnings. The Company will be required to
implement SFAS No. 133, as amended by SFAS No. 137, in fiscal 2001. The Company
does not anticipate that the implementation of SFAS No. 133, as amended by SFAS
No. 137, will have a material impact on its financial position or results of
operations.

5. FINANCIAL STATEMENT DETAILS


Due from Contract Manufacturers



     Due from contract manufacturers represents amounts due from the Company's
third party product manufacturers from the transfer of materials inventories by
the Company to the manufacturers. These transfers of assets were not recognized
as revenues in the accompanying consolidated statements of operations. At
December 31, 1999, the inventory amount transferred to the contract
manufacturers was


                                      F-12
<PAGE>   95
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)



$4.7 million. Subsequent to year-end, we received $4.5 million of this
receivable from our contract manufacturers.


Inventories

     Inventories consist of the following:


<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         ----------------------    SEPTEMBER 30,
                                                           1998         1999           2000
                                                         --------    ----------    -------------
                                                                                    (UNAUDITED)
<S>                                                      <C>         <C>           <C>
Finished goods.........................................  $656,000    $3,377,000     $ 3,412,000
Raw materials and components...........................        --     1,942,000       6,420,000
                                                         --------    ----------     -----------
                                                          656,000     5,319,000       9,832,000
  Less -- reserve for estimated excess and
     obsolescence......................................        --      (613,000)       (905,000)
                                                         --------    ----------     -----------
                                                         $656,000    $4,706,000     $ 8,927,000
                                                         ========    ==========     ===========
</TABLE>


Property and Equipment

     Property and equipment consists of the following:


<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                      --------------------------    SEPTEMBER 30,
                                                         1998           1999            2000
                                                      -----------    -----------    -------------
                                                                                     (UNAUDITED)
<S>                                                   <C>            <C>            <C>
Test equipment......................................  $   449,000    $   650,000     $ 2,571,000
Computer equipment and purchased software...........    1,013,000      1,550,000       3,530,000
Furniture and fixtures..............................      291,000        396,000         804,000
Product tooling.....................................      235,000        491,000         768,000
Leasehold improvements..............................           --         15,000         378,000
                                                      -----------    -----------     -----------
                                                      $ 1,988,000      3,102,000       8,051,000
  Less -- accumulated depreciation and
     amortization...................................   (1,084,000)    (1,756,000)     (2,787,000)
                                                      -----------    -----------     -----------
                                                      $   904,000    $ 1,346,000     $ 5,264,000
                                                      ===========    ===========     ===========
</TABLE>



     Depreciation expense was $462,000, $442,000, $672,000, $503,000 (unaudited)
and $1,046,000 (unaudited) for the years ended December 31, 1997, 1998, 1999 and
the nine months ended September 30, 1999 and 2000, respectively. At December 31,
1999, assets held under capital leases had a net book value of $190,000, net of
accumulated amortization of $31,000.


                                      F-13
<PAGE>   96
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


Accrued Expenses

     Accrued expenses consist of the following:


<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         ----------------------    SEPTEMBER 30,
                                                           1998         1999           2000
                                                         --------    ----------    -------------
                                                                                    (UNAUDITED)
<S>                                                      <C>         <C>           <C>
Sales taxes............................................  $  5,000    $  346,000     $  166,000
Payroll and related....................................    80,000       430,000      1,235,000
Product warranty.......................................   244,000       236,000        874,000
Royalties..............................................   176,000        62,000         59,000
Other..................................................   223,000       100,000        669,000
                                                         --------    ----------     ----------
                                                         $728,000    $1,174,000     $3,003,000
                                                         ========    ==========     ==========
</TABLE>


6. LINE OF CREDIT


     The Company has a line of credit agreement with a bank that allows the
Company to borrow the lesser of $2.5 million, or 80%, of eligible accounts
receivable balances plus 40% of raw materials and finished goods inventories, as
defined in the agreement. The line of credit bears interest at prime rate plus
0.5% (9.0% at December 31, 1999), is collateralized by substantially all assets
of the Company and expires during September 2000. In connection with this line
of credit, 71,430 NWI warrants were granted to purchase shares of Series C
convertible and redeemable preferred stock. As of December 31, 1999 and
September 30, 2000 (unaudited), there were no borrowings outstanding under the
line of credit. However, the Company was in violation of certain covenants
defined in the line of credit agreement. The Company has obtained a waiver from
the bank related to such covenant violations through September 30, 2000. (See
Note 3)


7. CONVERTIBLE AND REDEEMABLE MINORITY INTEREST

     Minority interest consists of 3,755,394 Series A convertible and redeemable
preferred shares (Series A shares) and 640,842 Series B (Series B shares)
convertible and redeemable preferred shares of NWT at December 31, 1998 and
1999.

     In 1996, we issued 2,812,500 Series A shares to accredited investors in a
private offering. Proceeds from the financing were approximately $1,997,000, or
$0.71 per share.

     In 1997, we issued 942,894 Series A shares to accredited investors in a
private offering. Proceeds from the financing were approximately $669,000, or
$0.71 per share. Additionally, we issued 281,688 Series B shares to accredited
investors in a private offering. Proceeds from the financing were approximately
$400,000, or $1.42 per share. In connection with this offering, we also caused
our subsidiary, NWT, to issue warrants to purchase a total of 105,633 shares of
NWT common stock at an exercise price of $1.42 on or prior to December 31, 2002.

     In 1998, we issued 359,154 Series B shares to accredited investors in a
private offering. Proceeds from the financing were approximately $510,000, or
$1.42 per share. We also caused our subsidiary, NWT, to issue warrants to
purchase a total of 134,682 shares of NWT common stock at an exercise price of
$1.42 on or prior to April 24, 2003.

     The NWT Series A shares are exchangeable at the option of the holder, on a
1:1 basis to NWI Series A preferred shares without the payment of any additional
consideration any time after issuance but before August 21, 2002. The NWT Series
B shares are exchangeable, at the option of the holder, on a 1:1

                                      F-14
<PAGE>   97
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


basis to NWI Series B preferred shares without the payment of any additional
consideration any time after issuance but before December 23, 2003. In the event
that NWI becomes listed on a public exchange, the Company has the right to
require holders of the Series A and Series B shares to exchange all such shares
into NWI Series A and NWI Series B shares. In the event that NWT becomes listed
on a public exchange, merges or consolidates with or into another company or
sells all or substantially all of its assets, these Series A and Series B shares
would be automatically converted into NWT common shares, provided certain
minimum proceeds requirements are met. Further, automatic conversion into NWT
common shares for each Series would occur provided two-thirds of the preferred
stockholders of that Series voted to convert.

     NWT's preferred stockholders may elect, after August 21, 2000 for Series A
preferred shares and after December 23, 2001 for Series B preferred shares, to
have NWT redeem the shares provided that funds are legally available. After
August 21, 2002 for Series A preferred shares and after December 23, 2003 for
Series B preferred shares, NWT must redeem all of the outstanding preferred
shares provided that funds are legally available. If funds legally available are
not sufficient to redeem the total number of shares submitted for redemption, or
those subject to mandatory redemption, those shares not redeemed will carry a
dividend rate of 12%.


     Each of NWT's preferred stockholders are entitled to receive, from funds
legally available, a cumulative annual dividend of 8% per annum based on their
respective purchase price upon any liquidation, dissolution or winding up of the
affairs of NWT, redemption, or when declared by the Board of Directors provided
that, upon optional or automatic conversion of the preferred shares, all accrued
and unpaid dividends are forfeited. Dividends on these shares of $189,000,
$273,000, $286,000, $215,000 (unaudited) and $197,000 (unaudited) for the years
ended December 31, 1997, 1998 and 1999 and for the nine months ended September
30, 1999 and 2000, respectively, have been accrued and recorded in the
accompanying consolidated financial statements.


     In September 2000, the NWT Series A & Series B Holders exchanged their NWT
Series A and Series B shares on a 1:1 basis into NWI Series A preferred and
Series B preferred shares.

8. CONVERTIBLE AND REDEEMABLE PREFERRED STOCK

     The Company has three classes of convertible and redeemable preferred stock
as follows.


<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                      --------------------------    SEPTEMBER 30,
                                                         1998           1999            2000
                                                      -----------    -----------    -------------
                                                                                     (UNAUDITED)
<S>                                                   <C>            <C>            <C>
Convertible and redeemable preferred stock, Series
  A, par value $.001, 16,500,000 shares authorized,
  6,791,571 (1998 and 1999) and 10,546,965 (2000)
  shares issued and outstanding.....................  $ 5,472,000    $ 5,870,000     $ 9,661,000
Convertible and redeemable preferred stock, Series
  B, par value $.001, 7,500,000 shares authorized
  (485,241 are non-voting), 6,252,843 (1998 and
  1999) and 6,893,685 (2000) shares issued and
  outstanding.......................................    9,340,000     10,060,000      11,707,000
Convertible and redeemable preferred stock, Series
  C, par value $.001, 16,500,000 shares authorized,
  11,022,831 shares issued and outstanding..........           --     27,875,000      30,124,000
                                                      -----------    -----------     -----------
                                                      $14,812,000    $43,805,000     $51,492,000
                                                      ===========    ===========     ===========
</TABLE>


                                      F-15
<PAGE>   98
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


     In 1996, the Company issued 3,089,565 shares of Series A convertible and
redeemable preferred stock (Series A) to accredited investors in a private
offering. Proceeds from the financing were approximately $2,194,000, or $0.71
per share.

     In 1997, the Company issued 3,702,006 shares of Series A preferred stock to
accredited investors in a private offering. Proceeds from the financing were
approximately $2,628,000, or $0.71 per share and related offering costs were
approximately $83,000. Additionally, we issued 1,126,761 shares of Series B
convertible and redeemable preferred stock (Series B) to accredited investors in
a private offering. Proceeds from the financing were approximately $1,600,000,
or $1.42 per share and related offering costs were approximately $17,000. We
also issued warrants to purchase a total of 422,535 shares of NWI common stock
at an exercise price of $1.42 on or prior to December 31, 2002.

     In 1998, the Company issued 5,126,082 shares of Series B preferred stock to
accredited investors in a private offering. Proceeds from the financing were
approximately $7,279,000, or $1.42 per share and related offering costs were
approximately $82,000. We also issued warrants to purchase a total of 1,922,280
shares of NWI common stock at an exercise price of $1.42 on or prior to December
31, 2004.

     In December 1999, the Company issued 11,022,831 shares of Series C
convertible and redeemable preferred stock (Series C) to accredited investors in
a private offering at a price of $2.78 per share. Proceeds from the financing
were approximately $27,875,000, including conversion of subordinated debentures
of $3,120,000 and related accrued interest of $130,000 after deducting offering
costs and underwriters' commissions of approximately $2,768,000.

     Subject to adjustment under certain circumstances, the Series A, Series B,
and Series C shares are convertible to NWI common shares on a 1:1 basis without
the payment of additional consideration at the option of the holder at any time
after issuance but before August 21, 2002 for Series A, before December 23, 2001
for Series B, and before June 30, 2001 for Series C. Automatic conversion occurs
if:

          a. NWI becomes listed on a public exchange with minimum net proceeds
     of $10 million and the offering price is not less than $1.42 per share for
     Series A, $2.50 per share for Series B, and $4.87 per share for Series C.

          b. NWI sells all or substantially all of its assets, merges or
     consolidates into or with another corporation provided the portion of
     proceeds distributable are not less than $1.42 per share for Series A,
     $2.50 per share for Series B, and $4.87 per share for Series C.

          c. Two-thirds of each Series of the preferred stockholders vote to
     convert.

     Holders of the Series A, Series B and Series C shares may elect, after
January 1, 2005 to have the Company redeem the shares, provided that funds are
legally available. After January 1, 2005, the Company must redeem all of the
outstanding preferred shares, provided that funds are legally available. If
funds legally available are not sufficient to redeem the total number of shares
submitted for redemption, or those subject to mandatory redemption, those shares
not redeemed will carry a dividend rate of 12%.


     The holders of the Series A, Series B and Series C shares are entitled to
receive, from funds legally available, a cumulative annual dividend of 8% of the
purchase price upon any liquidation, dissolution or winding up of the affairs of
the Company, upon redemption, or when declared by the Board of Directors,
provided that upon optional or automatic conversion of the preferred shares all
accrued and unpaid dividends shall be forfeited. Dividends on these shares of
$308,000, $859,000, $1,096,000, $820,000 (unaudited) and $2,669,000 (unaudited)
for the years ended December 31, 1997, 1998 and 1999, and the nine months ended
September 30, 1999 and 2000, respectively, have been accrued and recorded in the
accompanying consolidated financial statements.

                                      F-16
<PAGE>   99
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


9. STOCKHOLDERS' EQUITY

     During fiscal 1999, the Company amended its Certificate of Incorporation to
change its authorized share capital. As a result, the Company is authorized to
issue 79,500,000 shares of common stock, par value $.001; 16,500,000 shares of
Series A convertible and redeemable preferred stock, par value $.001; 7,500,000
shares of Series B convertible and redeemable preferred stock (of which 485,241
are non-voting), par value $.001; and 16,500,000 shares of Series C convertible
and redeemable preferred stock, par value $.001. With the exception of 56,364
outstanding shares of Series B convertible and redeemable preferred stock, all
outstanding shares carry voting rights (see Note 3).

Convertible Subordinated Debentures

     On June 24, 1999 and July 15, 1999, the Company issued convertible
subordinated debentures to accredited investors in the total principal amount of
$3,120,000 bearing interest at the rate of 8% per annum. The Company also issued
warrants to purchase a total of 3,930,006 common shares of NWI and 750,000
common shares of NWT at an exercise price of $0.67 per share. Of these warrants,
4,650,621 expire on June 24, 2004 and 29,385 expire on July 15, 2004.
Immediately upon the closing of the Series C preferred stock financing, the
principal amount under convertible subordinated debentures and accrued interest
of approximately $130,000 thereon converted into shares of Series C preferred
stock at $2.78 per share.

Warrants

     Since inception, NWI and NWT have issued warrants to purchase shares of NWI
and NWT stock to various investors and lenders as approved by the Board of
Directors.

     A summary of warrant activity is as follows:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                        ------------------------------------------------------------------
                                                1997                   1998                   1999
                                        --------------------   --------------------   --------------------
                                                    WEIGHTED               WEIGHTED               WEIGHTED
                                                    AVERAGE                AVERAGE                AVERAGE
                                         NUMBER     EXERCISE    NUMBER     EXERCISE    NUMBER     EXERCISE
                                        OF SHARES    PRICE     OF SHARES    PRICE     OF SHARES    PRICE
                                        ---------   --------   ---------   --------   ---------   --------
<S>                                     <C>         <C>        <C>         <C>        <C>         <C>
NWI WARRANTS
Outstanding, beginning of year........        --        --       422,535    $1.42     2,344,815    $1.42
  Granted.............................   422,535     $1.42     1,922,280    $1.42     6,150,075    $1.61
                                         -------               ---------              ---------
Outstanding, end of year..............   422,535     $1.42     2,344,815    $1.42     8,494,890    $1.56
                                         =======               =========              =========
NWT WARRANTS
Outstanding, beginning of year........        --                 105,633    $1.42       240,315    $1.42
  Granted.............................   105,633     $1.42       134,682    $1.42       750,000    $0.67
                                         -------               ---------              ---------
Outstanding, end of year..............   105,633     $1.42       240,315    $1.42       990,315    $0.85
                                         =======               =========              =========
</TABLE>

     In connection with Series C financing in 1999 (see Note 8), the Company
issued warrants to buy 2,148,639 common shares of the Company. These warrants
may be exercised at $3.33 per share (for 2,119,071 warrants) and $2.78 per share
(for 29,568 warrants) at any time up to December 31, 2004. The Company estimated
the fair market value of these warrants at the date of issuance was nominal and,
accordingly, no value has been assigned to them.

                                      F-17
<PAGE>   100
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


     In connection with the convertible subordinated debenture transaction, the
Company issued warrants to buy 3,930,006 common shares of NWI and 750,000 common
shares of NWT. These warrants may be exercised at $0.67 per share. The Company
estimated that the fair value of the warrants at the date of issuance was
approximately $4.3 million as the exercise price per common share was less than
deemed fair value per common share. Accordingly, the Company allocated the gross
debenture proceeds of $3,120,000 toward the value of these warrants. This also
resulted in non-cash interest expense totaling $3,120,000 in fiscal 1999 to
accrete the debt discount (resulting from the allocation of proceeds to the
warrant) from the time of debenture issuance to conversion to Series C.

     In connection with line of credit financing (see Note 6), the Company
issued warrants to buy 71,430 Series C convertible and redeemable preferred
shares of the Company. These warrants may be exercised at $2.10 per share at any
time up to expiration at December 31, 2004. The Company believes the fair value
of these warrants at the date of issuance was nominal and, accordingly, no value
has been assigned to them.

     In connection with the Series B financing in 1997 and 1998 (see Note 8),
NWI issued warrants to buy 422,535 and 1,922,280 common shares of NWI,
respectively, and NWT issued warrants to buy 105,633 and 134,682 common shares
of NWT, respectively. These warrants may be exercised at $1.42 per share at any
time up to December 31, 2002 (for 528,168 of the warrants) and April 24, 2003
(for 2,056,962 of the warrants). The Company believes the fair market value of
these warrants at the date of issuance was nominal and, accordingly, no value
has been assigned to them.

Stock Option Plans

     The Company's June 1997 stock option plan (the "1997 Plan") for employees
authorizes the granting of options for up to 12,000,000 shares of the Company's
common stock as of December 31, 1999. Generally, options are to be granted at
prices equal to at least 100% of the fair value of the stock at the date of
grant, expire not later than ten years from the date of grant and become
exercisable ratably over a four-year period following the date of grant. From
time to time, as approved by the Company's Board of Directors, options with
differing terms have also been granted. The Plan provides that any shares issued
come from the Company's authorized but unissued or reacquired common stock.

     In July 2000 the Company's Board of Directors approved the 2000 Stock
Incentive Plan (the "2000 Plan"). The Company will implement the 2000 Plan upon
the effective date of an initial public offering (see Note 2). Options granted
under the 2000 Plan generally vest on the same terms as the 1997 Plan and are
exercisable for a period of ten years.

                                      F-18
<PAGE>   101
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


     A summary of stock option activity is as follows:


<TABLE>
<CAPTION>
                                                                     OPTIONS      WEIGHTED AVERAGE
                                                       OPTIONS      AVAILABLE      EXERCISE PRICE
                                                     OUTSTANDING    FOR GRANT        PER SHARE
                                                     -----------    ----------    ----------------
<S>                                                  <C>            <C>           <C>
Options authorized at inception (June 2, 1997).....          --      1,800,000            --
  Granted..........................................   1,521,000     (1,521,000)        $0.72
  Cancelled........................................    (115,500)       115,500         $0.71
  New authorized options...........................          --        588,150            --
                                                     ----------     ----------         -----
Options outstanding, December 31, 1997.............   1,405,500        982,650         $0.72
  New authorized options...........................          --      1,500,000            --
  Granted..........................................   2,337,000     (2,337,000)        $0.84
  Cancelled........................................    (322,500)       322,500         $0.76
                                                     ----------     ----------         -----
Options outstanding, December 31, 1998.............   3,420,000        468,150         $0.80
  New authorized options...........................          --      2,111,850            --
  Granted..........................................     852,000       (852,000)        $0.95
  Exercised........................................     (41,250)            --         $0.71
  Cancelled........................................    (198,750)       198,750         $0.78
                                                     ----------     ----------         -----
Options outstanding, December 31, 1999.............   4,032,000      1,926,750         $0.83
  New authorized options...........................          --      6,000,000            --
  Granted (unaudited)..............................   7,836,744     (7,836,744)        $5.78
  Exercised (unaudited)............................    (446,898)            --         $2.57
  Cancelled (unaudited)............................  (1,004,626)     1,004,626         $1.08
                                                     ----------     ----------         -----
Options outstanding, September 30, 2000
  (unaudited)......................................  10,417,220      1,094,632         $4.55
                                                     ==========     ==========         =====
Exercisable, December 31, 1997.....................       5,001                        $0.71
                                                     ==========                        =====
Exercisable, December 31, 1998.....................     328,752                        $0.65
                                                     ==========                        =====
Exercisable, December 31, 1999.....................   1,327,752                        $0.66
                                                     ==========                        =====
Exercisable, September 30, 2000 (unaudited)........   2,010,281                        $2.11
                                                     ==========                        =====
</TABLE>


     Additional information relating to stock options outstanding and
exercisable at December 31, 1999, summarized by exercise price is as follows:


<TABLE>
<CAPTION>
                                OUTSTANDING                 EXERCISABLE
                              WEIGHTED AVERAGE            WEIGHTED AVERAGE
      EXERCISE         ------------------------------   --------------------
        PRICE                       LIFE     EXERCISE               EXERCISE
      PER SHARE         SHARES     (YEARS)    PRICE      SHARES      PRICE
- ---------------------  ---------   -------   --------   ---------   --------
<S>                    <C>         <C>       <C>        <C>         <C>
        $0.03            300,000    8.77      $0.03       300,000    $0.03
        $0.71            909,750    7.00      $0.71       471,003    $0.71
        $0.95          2,811,750    9.10      $0.95       556,749    $0.95
                       ---------                        ---------
                       4,021,500                        1,327,752
                       =========                        =========
</TABLE>


     In 1998, the Company granted 300,000 options to an employee at $0.03 per
share. On the grant date, the deemed fair value of a share of common stock was
in excess of the exercise price. Accordingly, the Company has recognized gross
deferred compensation of $276,000, of which $115,000 and $161,000 were
recognized in 1998 and 1999, respectively.

                                      F-19
<PAGE>   102
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


     In 1999, the Company issued 852,000 options at $0.95 per share to
employees. On the grant dates the deemed fair value of a share of common stock
was in excess of $0.95 per share. Accordingly, the Company has recognized gross
deferred compensation related to these grants of $859,000 of which $800,000 is
unamortized as of December 31, 1999. This deferred charge will be amortized to
expense over the four-year vesting period of these options.

     Of the remaining 3,558,000 options granted through December 31, 1999,
1,521,000 and 2,037,000 were granted in 1997 and 1998, respectively. These
options were granted at exercise prices which the Company believes approximated
fair value at the date of grant.

     In February 2000, the Company granted 375,000 additional stock options at
$1.67 per share. In connection with this grant, the Company has recorded
$295,000 (unaudited) of gross deferred stock compensation in the first quarter
of fiscal 2000. The deferred compensation will be amortized over the four year
vesting from the date of the grant.

     In April and May 2000, the Company granted a total of 907,950 options to
employees at an average price of $3.33 per share. In connection with this grant,
the Company has recorded $169,000 (unaudited) of gross deferred stock
compensation in the second quarter of fiscal 2000.


     In July 2000, the Company granted 3,636,543 options to employees at an
exercise price of $5.00 per share. In connection with these grants, the Company
has recorded $21,819,000 (unaudited) of gross deferred stock compensation in the
third quarter of fiscal 2000. Additionally, $659,000 (unaudited) of gross
deferred compensation expense related to 65,625 options was recorded for the
extension of the vesting period related to a terminated employee.



     In August 2000, the Company granted 1,941,150 options to employees at an
exercise price of $7.50 per share. In connection with these grants, the Company
has recorded $6,794,000 (unaudited) of gross deferred stock compensation in the
third quarter of fiscal 2000.


     In September 2000, the Company granted 664,400 options to employees at an
exercise price of $11.00. The Company believes these options were granted at
fair value as of the date of the grant.


     As permitted, the Company has adopted the disclosure only provisions of
SFAS No. 123. Accordingly, no compensation expense, except as specifically
described above, has been recognized for the stock option plans. The fair value
of these option grants were estimated on the date of grant using an
option-pricing model with the following weighted-average assumptions: zero
dividend yield; risk-free interest rates between 5.28% and 6.45%; and an
expected life of five years. Had compensation expense been determined based on
the fair value at the dates of grant for the years ended December 31, 1997,
1998, 1999 and for the nine months ended September 30, 1999 and 2000 consistent
with the provisions of SFAS No. 123, the Company's net loss per share would have
been reported as the pro forma amounts indicated below:



<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED
                                       YEAR ENDED DECEMBER 31,                   SEPTEMBER 30,
                               ----------------------------------------   ---------------------------
                                  1997          1998           1999           1999           2000
                               -----------   -----------   ------------   ------------   ------------
                                                                          (UNAUDITED)    (UNAUDITED)
<S>                            <C>           <C>           <C>            <C>            <C>
Net loss applicable to common
  stockholders, as
  reported...................  $(4,979,000)  $(6,657,000)  $(19,873,000)  $(10,580,000)  $(33,573,000)
Net loss applicable to common
  stockholders, pro forma....  $(5,031,000)  $(6,789,000)  $(20,201,000)  $(10,798,000)  $(34,850,000)
Net loss per share, as
  reported...................  $     (0.51)  $     (0.69)  $      (2.04)  $      (1.09)  $      (3.31)
Net loss per share, pro
  forma......................  $     (0.52)  $     (0.70)  $      (2.08)  $      (1.11)  $      (3.44)
</TABLE>


                                      F-20
<PAGE>   103
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


     The option pricing model was developed for use in estimating the fair value
of traded options that have no vesting restrictions and are fully transferable.
Option valuation models also require the input of highly subjective assumptions.
Because the Company's employee stock-based compensations plans have
characteristics significantly different from these of traded options and because
changes in the subjective input assumptions can materially affect fair value
estimates, the Company believes that existing option valuation models do not
necessarily provide a reliable single measure of the fair value of awards from
the plans.

Common Shares Reserved for Future Issuance

     The Company has reserved shares of common stock as follows:


<TABLE>
<CAPTION>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  1999           2000
                                                              ------------   -------------
                                                                              (UNAUDITED)
<S>                                                           <C>            <C>
Stock options outstanding...................................    4,032,000     10,417,220
Stock options available for future grant....................    1,926,750      5,594,632
Conversion of:
  Series A NWI convertible and redeemable preferred stock...    6,791,571     10,546,965
  Series B NWI convertible and redeemable preferred stock...    6,252,843      6,893,685
  Series C NWI convertible and redeemable preferred stock...   11,022,831     11,022,831
  Series D NWI convertible preferred stock..................           --      5,892,150
  Series A NWT convertible and redeemable preferred stock...    3,755,394             --
  Series B NWT convertible and redeemable preferred stock...      640,842             --
  Stock warrants -- NWI.....................................    8,494,890     10,548,543
  Stock warrants -- NWT.....................................      990,315             --
                                                               ----------     ----------
     Total reserved shares for issuance of common stock.....   43,907,436     60,916,026
                                                               ==========     ==========
</TABLE>



     In October 2000, the Company issued 434,782 shares of Series D preferred
stock to a qualified investor buyer in a private offering. (Unaudited).


Employee Stock Purchase Plan


     In July 2000, the Company's Board of Directors approved the 2000 Employee
Stock Purchase Plan (ESPP), subject to stockholder approval. The Company will
implement the ESPP upon the effective date of an initial public offering (see
Note 2). The ESPP, subject to certain limitations, will permit eligible
employees of the Company to purchase common stock through payroll deductions of
up to 10% of their compensation. The Company has authorized the issuance of
1,500,000 shares of common stock under the ESPP, plus an automatic annual
increase, to be added on the first day of the fiscal year beginning in 2001,
equal to the lesser of (a) 0.5% of the outstanding shares on the last day of the
prior fiscal year, (b) 270,000 shares, or (c) such lesser number of shares as
may determined by the Board in its sole discretion. If purchases of stock
through the plan deplete this supply, we will limit, suspend or discontinue
purchases under the plan until additional shares of stock are available.


                                      F-21
<PAGE>   104
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


10. INCOME TAXES

     The Company's deferred tax assets and liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              --------------------------
                                                                 1998           1999
                                                              -----------    -----------
<S>                                                           <C>            <C>
Current deferred taxes:
  Accounts receivable reserve...............................  $    18,000    $   327,000
  Accrued expenses..........................................      125,000        393,000
  Other.....................................................           --        183,000
                                                              -----------    -----------
  Deferred tax asset -- current.............................      143,000        903,000
  Valuation allowance.......................................     (143,000)      (903,000)
                                                              -----------    -----------
  Net current deferred taxes................................           --             --
                                                              ===========    ===========
Long-term deferred taxes:
  Depreciation and amortization.............................      879,000      1,095,000
  Research and development costs............................      205,000        205,000
  Net operating loss and credit carryforwards...............    3,802,000      8,462,000
                                                              -----------    -----------
  Deferred tax asset -- noncurrent..........................    4,886,000      9,762,000
  Valuation allowance.......................................   (4,886,000)    (9,762,000)
                                                              -----------    -----------
  Net long-term deferred taxes..............................           --             --
                                                              -----------    -----------
Net deferred income taxes...................................  $        --    $        --
                                                              ===========    ===========
</TABLE>

     Management has established a valuation allowance against its net deferred
tax assets due to the uncertainty surrounding the realization of such assets. At
December 31, 1999 the Company has U.S. federal net operating loss carryforwards
of approximately $13.6 million, which expire at various dates through 2020. The
Company has California net operating loss carryforwards of approximately $8.2
million, which expire at various dates through 2004. In addition, the Company
has state operating loss carryforwards of approximately $9.2 million, which
expire at various dates through 2006. The Company's use of net operating loss
carryforwards in future years will be substantially limited due to previous
ownership changes as defined under Internal Revenue Code section 382.

     The provision for income taxes reconciles to the amount computed by
applying the statutory federal income tax rate to income before provision for
income taxes as follows:


<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                      -----------------------------------------   NINE MONTHS ENDED
                                         1997           1998           1999       SEPTEMBER 30, 2000
                                      -----------    -----------    -----------   ------------------
                                                                                     (UNAUDITED)
<S>                                   <C>            <C>            <C>           <C>
Federal tax provision, at statutory
  rate..............................  $(1,567,000)   $(1,927,000)   $(6,464,000)     $ (9,614,000)
State tax, net of federal benefit...      (42,000)      (195,000)      (543,000)         (805,000)
Change in valuation allowance.......    1,602,000      2,069,000      5,636,000        10,307,000
Interest expense on convertible
  subordinated debentures...........           --             --      1,279,000                --
Other...............................        7,000         53,000         92,000           112,000
                                      -----------    -----------    -----------      ------------
                                      $        --    $        --    $        --      $         --
                                      ===========    ===========    ===========      ============
</TABLE>


                                      F-22
<PAGE>   105
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


11. COMMITMENTS AND CONTINGENCIES

Operating and Capital Leases

     The Company leases its office space and certain equipment under
non-cancelable operating and capital leases. Rental expense under operating
leases in fiscal 1997, 1998 and 1999 was approximately $327,000, $370,000 and
$517,000, respectively. The minimum future lease payments under non-cancelable
operating leases and future minimum capital lease payments as of December 31,
1999 are:

<TABLE>
<CAPTION>
                                                              OPERATING    CAPITAL
                                                              ----------   --------
<S>                                                           <C>          <C>
2000........................................................  $1,053,000   $108,000
2001........................................................   1,104,000     76,000
2002........................................................     826,000     24,000
2003........................................................     742,000     19,000
2004........................................................     759,000     13,000
Thereafter..................................................      87,000         --
                                                              ----------   --------
          Total minimum lease payments......................  $4,571,000    240,000
                                                              ==========
Less -- amount representing interest (at rates ranging from
  9.9% to 20.1%)............................................                (53,000)
                                                                           --------
Present value of net minimum lease payments.................                187,000
Less -- current installments of obligations under capital
  leases....................................................                (81,000)
                                                                           --------
Obligations under capital leases, excluding current
  installments..............................................               $106,000
                                                                           ========
</TABLE>

Royalties

     The Company is required to pay quarterly royalties for its products shipped
with CDPD technology. The Company incurred royalty expenses of $27,000, $136,000
and $353,000 in fiscal 1997, 1998 and 1999, respectively.

Employment Agreements

     The Company has entered into an employment agreement with its President and
Chief Operating Officer that provides for compensation in the event of
termination of employment of 250,000 Canadian dollars (approximately $168,000 at
December 31, 1999) or 125,000 Canadian dollars (approximately $84,000 at
December 31, 1999) in the event of resignation within 30 days of a change in
control of the Company, plus continuation of certain benefits and pro rata
payment of incentive bonuses. The Company has also entered into an employment
agreement with its Chief Executive Officer that provides for a lump sum payment
equivalent to annual base salary and certain additional benefits upon
termination without cause or upon a change in control of the Company. Employment
agreements with certain other key employees provide for six months salary
payment in the event of termination without cause.

Legal Matters

     The Company is party to various legal matters and subject to claims in the
ordinary course of business. In the opinion of management, such matters will not
have a material adverse impact on the Company's financial position or results of
operations.

                                      F-23
<PAGE>   106
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


12. SEGMENT INFORMATION AND CONCENTRATIONS OF RISK

Segment Information

     The Company operates in the wireless data modem technology industry and all
sales of the Company's products and services are made in this segment.
Management makes decisions about allocating resources based on this one
operating segment.


     The Company has operations in the United States and Canada. The
distribution of the Company's assets in the United States and Canada as of
December 31, 1998, December 31, 1999, and September 30, 2000 are $3.5 million
and $2.7 million, $27.4 million and $10.7 million, and $39.0 and $9.1 million,
respectively.


Concentrations of Risk

     Two customers accounted for 23% and 14%, respectively, of 1999 revenues. No
customer accounts for more than 10% of 1998 revenues and one customer accounts
for 19% of 1997 revenues. Substantially all of the Company's revenues come from
wireless Internet products. Any decline in market acceptance of the Company's
products may impair the Company's ability to operate effectively.

     The Company currently outsources substantially all of its manufacturing
operations to a single third party. This outsource manufacturer provides the
Company with procurement, manufacturing, assembly, test, quality control and
delivery services. Subsequent to December 31, 1999, the Company has entered into
a manufacturing agreement with another vendor, but manufacturing activities have
not begun with this new vendor. If there were disruptions to, or terminations
of, the Company's outsourced manufacturing relationships, the Company's
financial position and results of operations would be materially adversely
effected.

13. RETIREMENT SAVINGS PLAN

     The Company has a defined contribution 401(k) retirement savings plan (the
"Plan"). Substantially all of the Company's U.S. employees are eligible to
participate in the Plan after meeting certain minimum age and service
requirements. Employees may make discretionary contributions to the Plan subject
to Internal Revenue Service limitations. As of December 31, 1999, there are no
provisions for employer contributions to the Plan. Participants are fully vested
in all contributions to the Plan.

14. UNAUDITED PRO FORMA NET LOSS PER COMMON SHARE AND PRO FORMA STOCKHOLDERS'
EQUITY (DEFICIT)


     Upon the closing of the Company's initial public offering, all outstanding
NWI Series A, B and C convertible and redeemable preferred stock and Series D
convertible preferred stock as of September 30, 2000, will be converted into NWI
common stock. The pro forma effect of this conversion has been presented as a
separate column in the accompanying balance sheet.



     Pro forma basic and diluted net loss per share have been computed to give
effect to common equivalent shares from convertible and redeemable preferred
stock and minority interest shares that will convert upon the closing of the
Company's initial public offering (using the as-if-converted method) for the
year ended December 31, 1999 and the nine months ended September 30, 1999 and
2000.


                                      F-24
<PAGE>   107
                             NOVATEL WIRELESS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 1998 AND 1999

                       AND SEPTEMBER 30, 2000 (UNAUDITED)


     A reconciliation of the numerator and denominator used in the calculation
of pro forma basic and diluted net loss per common share follows (in thousands,
except per share data):


<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED
                                       YEAR ENDED DECEMBER 31,                   SEPTEMBER 30,
                               ----------------------------------------   ---------------------------
                                  1997          1998           1999           1999           2000
                               -----------   -----------   ------------   ------------   ------------
                                                                          (UNAUDITED)    (UNAUDITED)
<S>                            <C>           <C>           <C>            <C>            <C>
Net loss.....................  $(4,476,000)  $(5,506,000)  $(18,469,000)  $ (9,530,000)  $(30,270,000)
Adjustments to net loss used
  in computing basic and
  diluted net loss applicable
  to common stockholders:
Accretion of dividends on
  minority interest..........     (189,000)     (273,000)      (286,000)      (215,000)      (197,000)
Accretion of dividends on
  convertible and redeemable
  preferred stock............     (308,000)     (859,000)    (1,096,000)      (820,000)    (2,669,000)
Amortization of offering
  costs for convertible and
  redeemable preferred
  stock......................       (6,000)      (19,000)       (22,000)       (15,000)      (437,000)
                               -----------   -----------   ------------   ------------   ------------
Net loss applicable to common
  stockholders...............  $(4,979,000)  $(6,657,000)  $(19,873,000)  $(10,580,000)  $(33,573,000)
                               ===========   ===========   ============   ============   ============
Denominator:
  Weighted average common
     shares outstanding......                                 9,728,421      9,723,737     10,138,695
  Adjustments to reflect
     assumed conversion of
     convertible and
     redeemable preferred
     stock from the date of
     issuance:
     Series A NWI............                                 6,791,571      6,791,571     10,546,965
     Series B NWI............                                 6,252,843      6,252,843      6,893,685
     Series C NWI............                                    30,198             --     11,022,831
     Series D NWI............                                        --             --      5,892,150
     Class A NWT.............                                 3,755,394      3,755,394             --
     Class B NWT.............                                   640,842        640,842             --
                                                           ------------   ------------   ------------
     Weighted average shares
       used in computing pro
       forma basic and
       diluted net loss per
       share.................                                27,199,269     27,164,387     44,494,326
                                                           ============   ============   ============
</TABLE>


                                      F-25
<PAGE>   108

     The inside back cover contains a diagram showing the relationship and
architecture of our product line to the Internet through wireless networks.
<PAGE>   109

                                 [NOVATEL LOGO]
<PAGE>   110

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee and the Nasdaq National Market listing
fee.

<TABLE>
<CAPTION>
                                                              AMOUNT TO
                                                               BE PAID
                                                              ----------
<S>                                                           <C>
SEC registration fee........................................  $   27,720
NASD filing fee.............................................      11,000
Nasdaq National Market listing fee..........................      95,000
Printing and engraving expenses.............................     250,000
Legal fees and expenses.....................................     600,000
Accounting fees and expenses................................     500,000
Blue Sky qualification fees and expenses....................      25,000
Transfer Agent and Registrar fees...........................      15,000
Miscellaneous fees and expenses.............................      76,280
                                                              ----------
  Total.....................................................  $1,600,000
                                                              ==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under some circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the Securities Act). Article XIV of our amended and restated
certificate of incorporation (Exhibit 3.1 to this registration statement) and
Article VI of our bylaws (Exhibit 3.2 to this registration statement) provide
for indemnification of our directors, officers, employees and other agents to
the maximum extent permitted by Delaware law. In addition, we have entered into
Indemnification Agreements (Exhibit 10.6 to this registration statement) with
our officers and directors. The underwriting agreement (Exhibit 1.1 to this
registration statement) also provides for cross-indemnification among us and the
underwriters with respect to certain matters, including matters arising under
the Securities Act. Our amended and restated certificate of incorporation
provides that subject to Delaware law, our directors will not be personally
liable for monetary damages awarded as a result of a breach of their fiduciary
duty owed to Novatel Wireless, Inc. and its stockholders. This provision does
not eliminate our directors' fiduciary duty and in appropriate circumstances
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

     During the past three years, we have issued and sold the following
securities:


          1. On June 30 and July 14, 2000, we issued and sold a total of
     5,892,150 shares of our Series D preferred stock to accredited investors
     and on October 23, 2000, we issued and sold a total of 434,782 shares of
     our Series D preferred stock to a qualified institutional buyer at a
     purchase price of $5.75 per share. We also issued and sold warrants to
     purchase a total of 1,178,400 shares of our common stock at an exercise
     price of $5.75 per share. These warrants are exercisable upon the earliest
     to occur of June 30, 2001, the closing of this offering or a transaction
     which results in a change of control of our company.


                                      II-1
<PAGE>   111

          2. On December 31, 1999, we issued and sold a total of 11,022,831
     shares of our Series C preferred stock to accredited investors at a
     purchase price of $2.78 per share. We also issued and sold warrants to
     purchase a total of 2,119,071 and 29,568 shares of common stock at an
     exercise price of $3.33 and $2.78 per share, respectively, on or prior to
     December 31, 2004.

          3. On October 12, 1999, we issued and sold a warrant to purchase
     71,430 shares of our Series C preferred stock to a financial institution in
     connection with a working line of credit at an exercise price of $2.10 per
     share.

          4. On June 24, 1999 and on July 15, 1999, we and our subsidiary NWT
     issued and sold convertible subordinated debentures to accredited investors
     in the total original principal amount of $3,120,000 bearing interest at
     the rate of 8% per annum. Of this amount, $500,000 in original principal
     amount was issued by NWT. We also issued warrants to purchase a total of
     3,930,006 shares of common stock at an exercise price of $0.67 per share on
     or prior to June 24, 2004 or July 15, 2004 depending on their date of
     issuance. In connection with this financing, NWT issued warrants to
     purchase 750,000 shares of NWT's common stock, which shares of NWT common
     stock were upon issuance exchangeable on a one-for-one basis for shares of
     our common stock. Immediately upon the closing of our Series C preferred
     stock financing, the principal amount then outstanding under these
     convertible subordinated debentures, together with accrued interest
     thereon, automatically converted into 1,166,721 shares of our Series C
     preferred stock at a price of $2.78 per share without the payment of
     additional consideration.

          5. On December 23, 1997, April 24, 1998 and September 1, 1998, we
     issued and sold a total of 6,252,843 shares of our Series B preferred stock
     to accredited investors at a purchase price of $1.42 per share. In
     addition, on December 23, 1997, and on April 24, 1998 our subsidiary NWT
     issued an aggregate of 640,842 shares of its Series B preferred stock.
     These NWT shares were, upon issuance, exchangeable on a one-for-one basis
     for shares of our Series B preferred stock. During this period, we also
     issued warrants to purchase 2,344,815 shares of our common stock at an
     exercise price of $1.42 per share. In connection with this financing, NWT
     issued warrants to purchase 240,315 shares of NWT's common stock at an
     exercise price of $1.42 per share which shares of NWT common stock were,
     upon issuance, exchangeable on a one-for-one basis for shares of our common
     stock. 528,168 of the warrants that each of Novatel and NWT issued in
     connection with this Series B financing are exercisable on or before
     December 31, 2002 and 2,056,962 of such warrants are exercisable on or
     before December 31, 2003.


          6. At September 30, 2000, we have outstanding options to purchase
     10,417,220 shares of our common stock to a number of our employees,
     directors and consultants.


     None of the foregoing transactions involved any underwriters, underwriting
discounts or commissions, or any public offering, and we believe that each
transaction was exempt from the registration requirements under the Securities
Act by virtue of Section 4(2) thereof, Regulation D promulgated thereunder or
Rule 701 with respect to compensatory benefit plans and contracts relating to
compensation as provided under Rule 701. The recipients of securities in each
such transaction represented their intention to acquire the securities for
investment purposes only and not with a view to or for sale in connection with
any distribution thereof, and appropriate legends were affixed to the stock
certificates and warrants issued in such transactions. All recipients had
adequate access, through their relationships with us, to information about us.

                                      II-2
<PAGE>   112

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                       DESCRIPTION OF DOCUMENT
- --------                      -----------------------
<C>         <S>
   1.1**    Form of underwriting agreement.
   3.1**    Form of Amended and Restated Certificate of Incorporation of
            Novatel Wireless, Inc., to be effective upon consummation of
            this offering.
   3.2**    Form of Amended and Restated Bylaws of Novatel Wireless,
            Inc., to be effective upon consummation of this offering.
   4.1**    Form of Specimen Common Stock Certificate.
   5.1**    Opinion of Orrick, Herrington & Sutcliffe LLP regarding the
            legality of the common stock being registered.
  10.1**    Amended and Restated 1997 Stock Option Plan of Novatel
            Wireless, Inc.
  10.2**    2000 Stock Incentive Plan of Novatel Wireless, Inc.
  10.3**    2000 Employee Stock Purchase Plan of Novatel Wireless, Inc.
  10.4**    Amended and Restated Registration Rights Agreement, dated as
            of June 15, 1999, by and among Novatel Wireless, Inc. and
            some of its stockholders.
  10.5**    Amended and Restated Investors' Rights Agreement, dated as
            of June 30, 2000, by and among Novatel Wireless, Inc. and
            some of its stockholders.
  10.6**    Form of Indemnification Agreement to be entered into by and
            between Novatel Wireless, Inc. and its officers and
            directors.
  10.7**    Loan and Security Agreement, dated as of October 12, 1999,
            by and between Novatel Wireless, Inc. and Venture Banking
            Group, a division of Cupertino National Bank, as amended.
  10.8**    Real Property Sublease, dated as of July 7, 2000, by and
            between Sicor Inc. (formerly Gensia Sicor, Inc.) and Novatel
            Wireless, Inc., for 9360 Towne Centre Drive, San Diego,
            California.
  10.9**    Real Property Lease, dated as of February 1, 1997, by and
            between Novatel Wireless Technologies Ltd. and Sun Life
            Assurance Company of Canada, for 6715 8th St., N.E.,
            Calgary, Alberta.
10.10+**    Supply Agreement, dated as of March 31, 2000, by and between
            Novatel Wireless, Inc. and Hewlett-Packard Company.
10.11+**    Technology License, Manufacturing and Purchase Agreement,
            dated as of October 13, 1999, by and between Novatel
            Wireless, Inc. and Metricom, Inc.
10.12+**    Supply Agreement, dated as of July 15, 1999, by and between
            Novatel Wireless, Inc. and OpenSky Corporation (currently
            known as OmniSky Corporation).
10.13+**    Electronic Manufacturing Services, dated as of September 3,
            1999, by and between Novatel Wireless, Inc. and Sanmina
            (Canada) ULC.
10.14+**    Letter Agreement, dated as of March 15, 2000, by and between
            Novatel Wireless, Inc. and Symbol Technologies, Inc.
10.15+**    Agreement for Purchase and Sale of Novatel Wireless, Inc.
            Mobile Terminal Units dated as March 2000 by and between
            Novatel Wireless, Inc. and VoiceStream Wireless Corporation.
10.16+**    Agreement for Electronic Manufacturing Services, dated as of
            April 8, 2000, by and between Novatel Wireless, Inc. and GVC
            Corporation.
 10.17**    Employment Agreement, dated as of July 24, 2000, by and
            between Novatel Wireless, Inc. and John Major.
 10.18**    Employment Agreement, dated as of August 21, 1996, by and
            among Novatel Wireless, Inc., Novatel Wireless Technologies
            Ltd. and Ambrose Tam.
 10.19**    Standard Manufacturing Agreement, dated as of August 8,
            2000, by and between Novatel Wireless, Inc. and Solectron de
            Mexico, S.A. de C.V.
 10.20**    First Amendment to Employment Agreement, dated as of
            September 22, 2000, by and among Novatel Wireless, Inc.,
            Novatel Wireless Technologies Ltd. and Ambrose Tam.
</TABLE>


                                      II-3
<PAGE>   113


<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                       DESCRIPTION OF DOCUMENT
- --------                      -----------------------
<C>         <S>
  10.21+    Product Purchase and License Agreement, dated as of October
            23, 2000, by and between Novatel Wireless, Inc. and Intel
            Corporation.
  21.1**    Subsidiaries of Novatel Wireless, Inc.
  23.1      Consent of Arthur Andersen LLP, Independent Public
            Accountants.
  23.2**    Consent of Orrick, Herrington & Sutcliffe LLP (contained in
            their opinion filed as Exhibit 5.1).
  24.1**    Power of Attorney (included in the signature page to this
            registration statement).
  27.1      Financial Data Schedule.
</TABLE>


- ---------------
 * To be filed by amendment.
** Previously filed.
 + Confidential treatment requested as to some portions of this exhibit.

(b) FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
<S>                                                           <C>
Schedule II -- Valuation and Qualifying Accounts............  S-1
</TABLE>

ITEM 17. UNDERTAKINGS

     We undertake to provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names the underwriters require to permit prompt delivery to each purchaser in
the offering.

     To the extent indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, our certificate of
incorporation, our bylaws, indemnification agreements entered into between the
company and our officers and directors, the underwriting agreement, or
otherwise, we have been advised that in the opinion of the Securities and
Exchange Commission this indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against these liabilities (other than our payment of
expenses incurred or paid by any of our directors, officers or controlling
persons in the successful defense of any action, suit or proceeding) is asserted
by a director, officer or controlling person in connection with the securities
being registered, we will, unless our legal counsel opines that controlling
precedent has settled the matter, submit to a court of appropriate jurisdiction
the question whether this indemnification by us is against public policy as
expressed in the Securities Act and we will be governed by the final
adjudication of the issue.

     The undersigned registrant undertakes:

          (1) For the purpose of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this registration statement in reliance upon Rule 430A and contained in a
     form of prospectus we filed pursuant to Rule 424(b)(1) or (4) or 497(h) of
     the Securities Act shall be deemed to be part of this registration
     statement as of the time the registration statement was declared effective.

          (2) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of those securities at that time shall be
     deemed to be the initial bona fide offering thereof.

                                      II-4
<PAGE>   114

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 4 to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the city of San Diego,
State of California on October 27, 2000.


                                          NOVATEL WIRELESS, INC.

                                          By:        /s/ JOHN MAJOR
                                            ------------------------------------
                                                         John Major
                                                  Chief Executive Officer


     Pursuant to the requirements of the Securities Act, this Amendment No. 4 to
the registration statement has been signed by the following persons in the
capacities and on the dates indicated:



<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
<S>                                                  <C>                               <C>
                  /s/ JOHN MAJOR                       Chief Executive Officer and     October 27, 2000
- ---------------------------------------------------    Chairman of the Board (Chief
                    John Major                              Executive Officer)

                  /s/ AMBROSE TAM                       President, Chief Operating     October 27, 2000
- ---------------------------------------------------    Officer and Chief Technology
                    Ambrose Tam                                  Officer

                /s/ MELVIN FLOWERS                    Chief Financial Officer (Chief   October 27, 2000
- ---------------------------------------------------      Financial and Accounting
                  Melvin Flowers                                 Officer)

                         *                                       Director              October 27, 2000
- ---------------------------------------------------
                   H. H. Haight

                         *                                       Director              October 27, 2000
- ---------------------------------------------------
                    Nathan Gibb

                         *                                       Director              October 27, 2000
- ---------------------------------------------------
                    Robert Getz

                         *                                       Director              October 27, 2000
- ---------------------------------------------------
                    David Oros

                         *                                       Director              October 27, 2000
- ---------------------------------------------------
                    Mark Rossi
</TABLE>


                                      II-5
<PAGE>   115


<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
<S>                                                  <C>                               <C>
                         *                                       Director              October 27, 2000
- ---------------------------------------------------
                  Steven Sherman

                *By: /s/ JOHN MAJOR                              Director              October 27, 2000
   ---------------------------------------------
           John Major, Attorney-In-Fact
</TABLE>


                                      II-6
<PAGE>   116

                                  SCHEDULE II

                             NOVATEL WIRELESS, INC.
                       VALUATION AND QUALIFYING ACCOUNTS
                   THREE YEAR PERIOD ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                             BALANCE AT    ADDITIONS     DEDUCTIONS     BALANCE
                                             BEGINNING     CHARGED TO       FROM         AT END
                                              OF YEAR      OPERATIONS     RESERVES      OF YEAR
                                             ----------    ----------    ----------    ----------
<S>                                          <C>           <C>           <C>           <C>
Allowance for doubtful accounts year ended:
  December 31, 1997........................  $       --    $   47,000     $     --     $   47,000
  December 31, 1998........................      47,000            --        3,000         44,000
  December 31, 1999........................      44,000       137,000           --        181,000
Warranty reserve year ended:
  December 31, 1997........................      11,000        78,000           --         89,000
  December 31, 1998........................      89,000       155,000           --        244,000
  December 31, 1999........................     244,000       132,000      140,000        236,000
Deferred tax asset valuation allowance:
  December 31, 1997........................   1,652,000     1,406,000           --      3,058,000
  December 31, 1998........................   3,058,000     1,828,000           --      4,886,000
  December 31, 1999........................   4,886,000     4,876,000           --      9,762,000
</TABLE>

                                       S-1
<PAGE>   117

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT                                                                    PAGE
 NUMBER                       DESCRIPTION OF DOCUMENT                     NUMBER
- --------                      -----------------------                     ------
<C>         <S>                                                           <C>
   1.1**    Form of underwriting agreement..............................
   3.1**    Form of Amended and Restated Certificate of Incorporation of
            Novatel Wireless, Inc., to be effective upon consummation of
            this offering...............................................
   3.2**    Form of Amended and Restated Bylaws of Novatel Wireless,
            Inc., to be effective upon consummation of this offering....
   4.1**    Form of Specimen Common Stock Certificate...................
   5.1**    Opinion of Orrick, Herrington & Sutcliffe LLP regarding the
            legality of the common stock being registered...............
  10.1**    Amended and Restated 1997 Stock Option Plan of Novatel
            Wireless, Inc. .............................................
  10.2**    2000 Stock Incentive Plan of Novatel Wireless, Inc. ........
  10.3**    2000 Employee Stock Purchase Plan of Novatel Wireless,
            Inc. .......................................................
  10.4**    Amended and Restated Registration Rights Agreement, dated as
            of June 15, 1999, by and among Novatel Wireless, Inc. and
            some of its stockholders....................................
  10.5**    Amended and Restated Investors' Rights Agreement, dated as
            of June 30, 2000, by and among Novatel Wireless, Inc. and
            some of its stockholders....................................
  10.6**    Form of Indemnification Agreement to be entered into by and
            between Novatel Wireless, Inc. and its officers and
            directors...................................................
  10.7**    Loan and Security Agreement, dated as of October 12, 1999,
            by and between Novatel Wireless, Inc. and Venture Banking
            Group, a division of Cupertino National Bank, as amended....
  10.8**    Real Property Sublease dated as of July 7, 2000, by and
            between Sicor Inc. (formerly Gensia Sicor, Inc.) and Novatel
            Wireless, Inc., for 9360 Towne Centre Drive, San Diego,
            California..................................................
  10.9**    Real Property Lease, dated as of February 1, 1997, by and
            between Novatel Wireless Technologies Ltd. and Sun Life
            Assurance Company of Canada, for 6715 8th St., N.E.,
            Calgary, Alberta............................................
10.10+**    Supply Agreement, dated as of March 31, 2000, by and between
            Novatel Wireless, Inc. and Hewlett-Packard Company..........
10.11+**    Technology License, Manufacturing and Purchase Agreement,
            dated as of October 13, 1999, by and between Novatel
            Wireless, Inc. and Metricom, Inc. ..........................
10.12+**    Supply Agreement, dated as of July 15, 1999, by and between
            Novatel Wireless, Inc. and OpenSky Corporation (currently
            known as OmniSky Corporation)...............................
10.13+**    Electronic Manufacturing Services, dated as of September 3,
            1999, by and between Novatel Wireless, Inc. and Sanmina
            (Canada) ULC................................................
10.14+**    Letter Agreement, dated as of March 15, 2000, by and between
            Novatel Wireless, Inc. and Symbol Technologies, Inc. .......
10.15+**    Agreement for Purchase and Sale of Novatel Wireless, Inc.
            Mobile Terminal Units dated as March 2000 by and between
            Novatel Wireless, Inc. and VoiceStream Wireless
            Corporation.................................................
10.16+**    Agreement for Electronic Manufacturing Services, dated as of
            April 8, 2000, by and between Novatel Wireless, Inc. and GVC
            Corporation.................................................
 10.17**    Employment Agreement, dated as of July 24, 2000, by and
            between Novatel Wireless, Inc. and John Major...............
 10.18**    Employment Agreement, dated as of August 21, 1996, by and
            among Novatel Wireless, Inc., Novatel Wireless Technologies
            Ltd. and Ambrose Tam........................................
 10.19**    Standard Manufacturing Agreement, dated as of August 8,
            2000, by and between Novatel Wireless, Inc. and Solectron de
            Mexico, S.A. de C.V.........................................
</TABLE>

<PAGE>   118


<TABLE>
<CAPTION>
EXHIBIT                                                                    PAGE
 NUMBER                       DESCRIPTION OF DOCUMENT                     NUMBER
- --------                      -----------------------                     ------
<C>         <S>                                                           <C>
 10.20**    First Amendment to Employment Agreement, dated as of
            September 22, 2000, by and among Novatel Wireless, Inc.,
            Novatel Wireless Technologies Ltd. and Ambrose Tam..........
  10.21+    Product Purchase and License Agreement, dated as of October
            23, 2000, by and between Novatel Wireless, Inc. and Intel
            Corporation.
  21.1**    Subsidiaries of Novatel Wireless, Inc. .....................
  23.1      Consent of Arthur Andersen LLP, Independent Public
            Accountants.................................................
  23.2**    Consent of Orrick, Herrington & Sutcliffe LLP (contained in
            their opinion filed as Exhibit 5.1).........................
  24.1**    Power of Attorney (included in the signature page to this
            registration statement).....................................
  27.1      Financial Data Schedule.....................................
</TABLE>


- ---------------
 * To be filed by amendment.
** Previously filed.
 + Confidential treatment requested as to some portions of this exhibit.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>2
<FILENAME>a62761a6ex10-21.txt
<DESCRIPTION>EXHIBIT 10.21
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10.21

                     PRODUCT PURCHASE AND LICENSE AGREEMENT

                          AGREEMENT NO. ______________

                                     BETWEEN

                  INTEL CORPORATION AND NOVATEL WIRELESS, INC.


This Agreement dated this 23 day of October, 2000 ("Effective Date") is
between Novatel Wireless, Inc., with a place of business at 9360 Towne Centre
Drive, Suite 110, San Diego, CA 92121, and Intel Corporation, with a place of
business at 2111 N.E. 25th Avenue, Hillsboro, OR 97124-6497. The "Agreement,"
"Novatel Wireless" and "Intel" are defined more fully below. Novatel Wireless
and Intel are collectively referred to as "Parties", and each individually as a
"Party", in this Agreement.

                                    RECITALS

1.      Novatel Wireless develops, markets, sells and licenses wireless modems
        and related firmware and software.

2.      Subject to the terms of this Agreement, Intel desires to purchase, and
        Novatel Wireless desires to sell, wireless modems for incorporation in
        or integration with Intel's Products, including without limitation a
        family of wireless computing products that Intel may distribute to end
        user customers directly and through Intel's distribution channel of
        resellers, distributors, OEMs and system integrators. Subject to the
        terms and conditions of this Agreement, Intel also desires that Novatel
        Wireless sell wireless modems to Intel's contract manufacturers and to
        third party resellers of wireless computing products on terms and
        conditions similar to those set forth herein.

3.      In addition, subject to the terms of this Agreement, Intel desires to
        license from Novatel Wireless the necessary rights to manufacture and
        have such wireless modems manufactured and, under certain circumstances,
        to enhance and modify the design of such modems.

                                    AGREEMENT

        Now, therefore, in consideration of the foregoing, the covenants stated
herein, and for other good and valuable consideration, the receipt and
sufficiency of which the Parties hereby acknowledge, the Parties agree as
follows:

1.      DEFINITIONS. The capitalized terms in this Agreement shall have the
        following definitions.

        1.1 "Agreement" shall mean this document and its Exhibits, schedules,
        attachments or addenda, and any amendments to the foregoing.

        1.2 " *** " shall mean the *** of the Products, *** .

        1.3 "Derivative" means (a) for material subject to copyright protection,
        any work that is based upon one or more pre-existing works, such as a
        revision, modification, translation, abridgment, condensation,
        expansion, collection, compilation or any other form in which such
        pre-existing works may be recast, transformed or adapted and (b) for
        patentable or patented materials, any adaptation, subset, addition,
        improvement or combination.

        1.4 "Design Package" shall mean, with respect to each Form Factor, all
        of the documentation, including all Updates thereto, necessary to permit
        the design and manufacture of such Form Factor. The Design Package shall
        include without limitation the items listed in Exhibit C-2.

        1.5 "Documentation" shall mean training materials, product descriptions,
        specifications, technical manuals and other printed information in any
        medium for the Products including all Updates thereto,

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<PAGE>   2




        shipped to Intel and shall include Updates to such Documentation created
        from time to time during the term of this Agreement.

        1.6. "Form Factor" shall mean each of the ***.

        1.7 "Intel" shall mean Intel Corporation and its Subsidiaries.

        1.8 "Intel Manufacturer" shall mean an OEM that manufactures products
        for or for Intel.

        1.9 "Intel Product" shall mean a product manufactured by or for Intel.

        1.10 "Intellectual Property Rights" means (i) all United States and
        foreign letters patent and applications for letters patent, industrial
        models, industrial designs, utility models, certificates of invention,
        and other indications of invention ownership, including any such rights
        granted upon any reissue, division, or continuation or
        continuation-in-part applications now or hereafter filed; (ii) all trade
        secret rights arising under the laws of any jurisdiction; (iii) all
        United States and foreign semiconductor mask work rights and
        registrations for such rights; and (iv) all copyright rights and all
        other literary property and author rights, whether or not copyrightable,
        and all copyrights and copyrighted interests, including any renewals
        thereof. Intellectual Property Rights do not include any rights in any
        trademarks, trade names, service marks, logos, and the goodwill
        associated therewith.

        1.11 "Invention" shall mean any idea, design, concept, technique,
        invention, discovery or improvement relating to software, firmware,
        microcode, or the hardware intended to run such software, firmware,
        and/or microcode, whether or not patentable, that is first conceived or
        reduced to practice by one or more of the inventing party's employees
        during the term and in the performance of this Agreement.

        1.12 "Manufacturing Package" shall mean all of the documentation
        including all Updates thereto necessary for the manufacture of the
        Products. The Manufacturing Package shall include without limitation the
        items set forth in Exhibit C-1.

        1.13 "Novatel Wireless" shall mean Novatel Wireless, Inc, and its
        Subsidiaries.

        1.14 "Novatel Wireless Intellectual Property Rights" means all
        Intellectual Property Rights owned by, controlled by, or licensed to,
        Novatel Wireless on or after the Effective Date.

        1.15 "Novatel Wireless Manufacturer" shall mean an OEM that manufactures
        products by or for Novatel Wireless.

        1.16 "OEM" means original equipment manufacturer.

        1.17 *** shall mean the *** of the Products, as described in Exhibit A.

        1.18 "Patent Rights" means with respect to a party all of such party's
        rights arising from or related to all classes or types of patents,
        utility models and design patents and applications for these classes or
        types of patent rights and any equivalent rights in all countries of the
        world that are owned or controlled by such party.

        1.19 "***" means *** manufactured by or on behalf of Intel or
        third-parties that are or will be used in connection with the ***.

        1.20 "***" means the *** and *** being developed by and for Intel for a
        family of ***, ***, ***.

        1.21 "***" shall mean the *** of the Products, as described in
        Exhibit A.

        1.22 "Products" shall mean Novatel Wireless's wireless modems and
        related firmware and software which are sold or licensed to Intel under
        this Agreement, consisting of the ***, ***, including without limitation
        the Product Software, all as described in Exhibit A, and any Updates


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<PAGE>   3

        thereto.

        1.23 "Product Support" mean the support that Novatel Wireless is
        required to provide Intel with respect to the Products, as described in
        Exhibit D.

        1.24 "Product Software" shall mean the software and firmware, including
        all related Documentation and Updates thereto, that is required or
        normally provided by Novatel Wireless for the operation of the Products,
        in compiled object code form (or, only if licensed pursuant to the
        Design Package license provisions in Section 5, in source code form), as
        described in Exhibit A, including without limitation the TTP Com
        Software.

        1.25 "Product Software Utilities" shall mean the Product Software
        Utilities described in Exhibit A hereto, including any Updates thereto.

        1.26 "Shipment" or "Shipped" refers to a shipment by Intel or an Intel
        Manufacturer of a Product out of finished goods.

        1.27 "Subsidiary" shall mean a corporation, company or other entity more
        than fifty percent (50%) of whose outstanding shares or securities
        (representing the right to vote for the election of directors or other
        managing authority) are owned or controlled, directly or indirectly, by
        a party hereto. However, such corporation, company or other entity shall
        be deemed to be a Subsidiary only so long as such ownership or control
        exists.

        1.28 "Substitutable Product" shall mean a wireless modem, whether
        Novatel Wireless's or a third party's, which would be considered a
        substitute or replacement product for Products.

        1.29 "TTP Com Software" shall mean the Layer 2/3 Protocol Stack and
        Application Layer software licensed from TTPCom to Novatel Wireless as
        in existence on the Effective Date, and any Updates thereto.

        1.30 "Updates" shall mean with respect to any Product (including Product
        Software) any modifications to or Derivatives of the Products developed
        by Novatel Wireless during the term of this agreement that correct
        errors, fix bugs, or provide other incidental corrections, or improve
        functions, add new functions, or improve performance by changes in
        system design and coding (including modifications to hardware, firmware
        and software), including carrier-mandated hardware and software fixes,
        component (vendor) changes, implemented cost reduction strategies;
        software/firmware changes; changes to the connector or antenna (and
        related Documentation), which are made available at no additional charge
        to any customer of Novatel Wireless who purchases such Product, except
        that notwithstanding the foregoing, "Updates" shall not include
        modifications to or Derivatives of the Products implementing changes in
        the band or mode for current Form Factor sizes (e.g., single or
        multi-band; single or multi-mode), changes in the form factor relating
        to a specific host, or substantial changes to the host connector or
        antenna. "Updates" with respect to the Manufacturing Package and the
        Design Package shall include all of the Updates as specified above for
        Products, and also information and support documentation with respect to
        any change in the manufacturing process that supports any Updates to
        Products.

2. PURCHASE OF PRODUCTS. Intel may purchase and Novatel Wireless shall sell the
Products at the prices specified in Exhibit B-1 and in accordance with the
specifications set forth in Exhibit A, as updated from time to time by Novatel
Wireless in accordance with Section 2.6 hereof ( "Product Specifications",
"Product specifications" or "specifications"), the quality requirements set
forth in Exhibit E, and the terms and conditions of Exhibit B. Intel shall have
no obligation to purchase a minimum number of Product units from Novatel
Wireless. In addition, Novatel Wireless shall sell Products directly to Intel's
Manufacturers of *** and to third party resellers private labeling *** on terms
and subject to conditions substantially similar to the terms and conditions of
this Agreement.

        2.1 Object Code License to Product Software. Novatel Wireless grants to
        Intel, ***

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<PAGE>   4


        license (with the right to sublicense only as expressly set forth
        herein) to reproduce, display, perform, and distribute the Product
        Software in object code form to end users directly or indirectly through
        Intel's distribution channels, including without limitation, OEMs,
        value-added resellers, system integrators, distributors and resellers;
        but solely to the extent that the Product Software is incorporated in or
        integrated with Products purchased by Intel under this Section 2 or
        manufactured by or for Intel under the license to the Manufacturing
        Package, and for no other purpose. In connection with the exercise of by
        Intel of the license to the Manufacturing Package, the Product Software
        shall not include the TTP Com Software. Intel shall have the right to
        sublicense the foregoing rights to third parties in relation to the
        distribution of the Products or to Intel Manufacturers in connection
        with its exercise of the license to the Manufacturing Package
        Manufacturer subject to appropriate restrictions on disclosure and use
        by such Intel Manufacturer. The license granted under this Section 2.1
        shall terminate upon termination of the Agreement, except that it shall
        be perpetual with respect to Products which utilize the Product Software
        and which have been: 1) made by Intel or an Intel Manufacturer pursuant
        to the manufacturing license granted in Section 4.1; or 2) sold to Intel
        under this Agreement by Novatel Wireless.

        2.2 Source Code License to Product Software Utilities and Delivery of
        Product Software Utilities. Within ten (10) days of the Effective Date
        of this Agreement, Novatel Wireless will deliver or have delivered to
        Intel the Product Software Utilities, in source code form. Novatel
        Wireless grants to Intel, *** license to reproduce, internally display,
        internally perform and make Derivatives of (only under the conditions
        provided herein) the Product Software Utilities solely for the internal
        development and support of the Products and to compile and distribute in
        object code form such Product Software Utilities as incorporated in or
        integrated with Intel Products, and for no other purposes. Intel shall
        promptly report to Novatel Wireless any Derivatives made using the
        Product Software Utilities and shall send a copy of any such Derivatives
        to Novatel Wireless in both source code and object code format and shall
        provide Novatel Wireless with a non-exclusive, worldwide, irrevocable,
        perpetual, fully-paid, royalty-free license to such Derivatives.

        2.3 Other Intellectual Property License. Novatel Wireless grants to
        Intel a license under all of its other Intellectual Property Rights
        sufficient for Intel to exercise the copyright rights granted to it in
        Sections 2.1 and 2.2 and for no other purpose.

        2.4 Obligation to Meet Product Milestones; Access to Prototypes: (a)
        Novatel Wireless will complete the following milestones with respect to
        the development and production readiness of the Products by the dates
        specified below (each, a "Product Milestone"):

                ***

        For the purpose of this Section 2.4, the following terms shall have the
        following meanings: "PROTOTYPE" - Functionally incomplete, not in final
        Form Factor, demonstrable with significant effort. "ALPHA" -
        Functionally complete (code complete), in final Form Factor, integration
        into other systems is possible with some effort, demonstrable with ease,
        bugs are to be expected. "BETA" - Has passed a significant amount of
        quality assurance and validation tests, new bugs are few


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<PAGE>   5

        and far between, integration with other systems is complete, may be
        certified by FCC and other regulatory bodies. "PRODUCTION READY" -
        Certified against and validated against specifications, ready for first
        customer ship.

        (b) Novatel Wireless will provide Intel the Prototypes, Alpha and Beta
        units described in Section 2.4(a) prior to providing such Prototypes to
        any other entity and Novatel Wireless will provide Production Ready
        units of the Products to Intel prior to providing such units to any
        other entity.

        2.5 [***]



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2.6     Product Specifications Input Process. The parties understand that the
        Product specifications set forth in Exhibit A hereto are in some
        respects incomplete and will be modified and updated by Novatel Wireless
        during the course of this Agreement as part of Novatel Wireless's normal
        process of development. The parties agree that they will follow the
        following process with regard to permitting Intel to have input with
        respect to the development and updating of specifications for the
        Products:

        A. [***]

        B. [***]

        C. Novatel Wireless provides pre 1.0 release specification to Intel in
either Word or PDF format on either major revisions or modifications to the
specification(s).

        D. Intel reviews each specification and provides written feedback to
Novatel Wireless for each specification.

        E. Intel and Novatel Wireless hold a review teleconference to go over
the specifications.

        F. Each company will iterate on this until all specifications reach a
1.0 release level, it being understood by the parties that Novatel Wireless
shall have sole discretion as to the final specifications.

3.      SERVICES.

        3.1 Product Support. During the term of this Agreement, Novatel
        Wireless, [***], shall provide Product
        Support in accordance with Exhibit D. Product Support shall be provided
        by Novatel Wireless for the term of this Agreement for all the Products,
        regardless of whether Novatel Wireless discontinues the manufacture or
        ends the life of any Product.

        3.2 Product Updates. During the term of this Agreement, Novatel
        Wireless, [***], Novatel Wireless shall
        deliver to Intel Updates made by or for it to Products (including the
        Product Software) no later than the delivery to any other customer.

        3.3 Implementation Services. In the event Intel exercises its option to
        license the Manufacturing Package or Design Package, [***]


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<PAGE>   7
        ***

        3.4 Additional Consulting Services. ***

        3.5 Interoperability Testing. Novatel Wireless will provide, *** the
        interoperability Testing services described in Exhibit H hereto in a
        manner consistent with the requirements of Exhibit B, except for
        Sections 3 and 4 thereof. The Statements of Work developed by the
        parties and governed by Exhibit B will be based on Exhibit H.

        3.6 Applicability of Exhibit B to Product Support and Implementation
        Services. Product Support and the Implementation Services provided under
        this Agreement shall be rendered in a manner consistent with the terms
        and conditions of Sections 8, 12, 14, 15, 17, 19, 20 of Exhibit B, and
        will be considered "Services" for the purposes of such sections of
        Exhibit B.

4.      MANUFACTURING PACKAGE AND LICENSE

        4.1 Manufacturing License. Intel shall have the option, in its sole
        discretion, and upon ten (10) days written notice to Novatel Wireless at
        any time during the term of this Agreement, to license the Manufacturing
        Package pursuant to the terms and conditions of this Agreement,
        including without limitation this Section 4.1. Upon such notice, Novatel
        Wireless grants to Intel a ***

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                                       7
<PAGE>   8
        ***, with the right to sublicense only as expressly permitted by this
        Agreement, under Novatel Wireless's Intellectual Property Rights in the
        Manufacturing Package, to use, import, reproduce, perform, display and
        distribute such Manufacturing Package solely to manufacture, or have
        manufactured the Products for incorporation in or integration with Intel
        Products, and to make, have made, use, sell, offer to sell, import,
        reproduce, display, perform and distribute the Products incorporated in
        or integrated with Intel Products to end users directly or indirectly
        through Intel's distribution channels, including without limitation,
        OEMs, value-added resellers, system integrators, distributors and
        resellers, and for no other purposes. Such manufacturing license shall
        include a license under Novatel Wireless's Patent Rights that is
        sufficient in scope in order for Intel to manufacture and have
        manufactured the Products as specified above. Intel shall have the right
        to sublicense such rights to an Intel Manufacturer subject to
        appropriate restrictions on disclosure and use by such Intel
        Manufacturer , and Intel agrees to cause such Intel Manufacturers to
        abide by all of the terms and conditions of this Section 4.1 and with
        respect to the confidentiality provisions of Section 10.1 as they relate
        to the Manufacturing Package.

4.2     Royalty Prepayment for Implementation Services. In consideration for the
        Implementation Services with respect to the Manufacturing Package, Intel
        shall pay Novatel Wireless ***.

4.3     Manufacturing Royalty.

(a) Subject to Section 4.3(b), for each Product manufactured under the license
set forth in Section 4.1 for which a Shipment has been made, Intel shall pay
Novatel Wireless royalties ("Manufacturing Royalties") in an amount equal to

                      ***

               ***


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                                       8
<PAGE>   9


               ***

        4.4 Generation Deposit and Return of Manufacturing Package: In support
        of Novatel Wireless's obligations under this Section 4, Novatel Wireless
        shall generate and deposit the Manufacturing Package in escrow with the
        escrow agent identified in Exhibit C-3 pursuant to the terms and
        conditions of Exhibit C-3. Upon termination of this Agreement, unless
        the manufacturing license is renewed under terms mutually agreed to in
        writing by the parties, Intel shall immediately return all copies of the
        Manufacturing Package to Novatel Wireless or certify in writing that it
        all such copies have been destroyed, including any copies in the
        possession of Intel Manufacturers.

        4.5 Updates to Manufacturing Package: During the term of this Agreement,
        Novatel Wireless shall deposit in escrow, or if applicable, make
        available to Intel, Updates to the Manufacturing Package, whether the
        Manufacturing Package is in escrow or has been accessed by Intel
        pursuant to the exercise of the license granted in Section 4.1. Such
        Updates shall be delivered to the escrow agent, or if applicable, to
        Intel on a quarterly basis or promptly upon a change in the
        Manufacturing Package, whichever is more frequent with respect to any
        Products, until Intel notifies Novatel Wireless in writing that it has
        permanently ceased distribution of such Products or upon the
        discontinuance of use of such Products by Intel, but in any event not
        later than the expiration or termination of this Agreement. Such Updates
        may include materials which Intel has reasonably requested which are not
        listed in Exhibit C-1, subject to the consent of Novatel Wireless which
        shall not be unreasonably withheld, conditioned or delayed.

        4.6 Royalty Reports. Intel will submit a royalty report with respect to
        Products Shipped by Intel and Intel Manufacturers under the
        manufacturing license, and pay to Novatel Wireless Manufacturing
        Royalties on the same due within *** of the end of each calendar quarter
        in which such amounts are due. Such royalty reports will contain
        adequate detail for Novatel Wireless to determine the basis for such
        payments, and the royalty reports and the underlying information from
        which they were prepared shall be subject to the audit rights of Section
        13 of this Agreement. Novatel Wireless agrees to maintain royalty
        reports as Confidential Information under this Agreement. Payment of
        royalties shall be made by wire transfer of immediately available funds
        to the following account: ________________________.


5.      DESIGN PACKAGE AND LICENSE

        5.1  Design License:

               (a) License Grant:Intel shall have the option, in its sole
        discretion and upon notice to Novatel Wireless at any time during the
        term of this Agreement, to license the Design Package for any Form
        Factor. Upon such notice, or upon the occurrence of any one of the
        conditions set forth in Section 5.1(b), Novatel Wireless grants to Intel
        A ***

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                                       9


<PAGE>   10
        [***] with the right to sublicense only as expressly permitted by this
        Agreement, under Novatel Wireless's Intellectual Property Rights in the
        Design Package, use, import, reproduce, display, perform, and modify
        (but only under the terms set forth in this Section 5.1(a)) such Design
        Package for such Form Factor of the Products and any authorized
        modification thereof, to manufacture and have manufactured such Form
        Factor of the Products and any authorized modifications thereof for
        incorporation in or integration with [***], and to make, have made, use,
        sell, offer to sell, import, reproduce, display, perform and distribute
        such Form Factor of the Products and any authorized modification thereof
        incorporated in or integrated with such [***] to end users directly or
        indirectly through Intel's distribution channels, including without
        limitation, OEMs, value-added resellers, system integrators,
        distributors and resellers. Such design license shall include a license
        under Novatel Wireless's Patent Rights that is sufficient in scope in
        order for Intel to exercise fully the license grant set forth above.
        Intel may sublicense such rights (other than the right to make
        modifications of the Products) to an Intel Manufacturer subject to
        appropriate restrictions on disclosure and use by such Intel
        Manufacturer and Intel agrees to cause such Intel Manufacturers to abide
        by all of the terms and conditions of this Section 5.1 and with respect
        to the confidentiality provisions of Section 10.1 as they relate to the
        Design Package. Intel has the right to make modifications to the Design
        Package and to the Products, without seeking the consent of Novatel
        Wireless only if such modifications are substantially similar in nature
        and scope to Updates previously provided by Novatel Wireless (such
        modifications hereafter referred to as "Update Modifications"). Intel
        shall grant to Novatel Wireless [***]. Such Update Modifications,
        including all related information and Documentation, shall be promptly
        delivered to Novatel Wireless, in source code form, consistent with the
        manner set forth in Section 5.4 with respect to delivery of Updates to
        the Design Package by Novatel Wireless. Intel may request of Novatel
        Wireless, the right to make additional modifications to the Design
        Package that do not constitute Update Modifications, and may make such
        additional modifications upon receipt of written consent from Novatel
        Wireless, which consent shall not be unreasonably withheld, conditioned
        or delayed. Subject to the foregoing, Novatel Wireless shall give or
        refuse such consent within twenty (20) days of Intel's initial request
        (such approved modifications hereafter referred to as "Approved
        Modifications"). Intel shall grant to Novatel Wireless a perpetual,
        world-wide, license to use, reproduce, display, perform, modify,
        distribute and sublicense any such Approved Modifications, at a
        consideration and upon appropriate terms and conditions to be negotiated
        in good faith by the parties.

(b)     Design License Conditions.

                  (i) Novatel Wireless ceases doing business or exits the
               business of developing and manufacturing all of the Products;
                  (ii) All or substantially all of the assets of Novatel
               Wireless are transferred to an assignee for the benefit of
               creditors, to a receiver or to a trustee in bankruptcy.

                  (iii) Novatel Wireless fails in a material respect to provide
               Product Support for any Product, and such failure is not
               remedied within sixty (60) days of Intel providing written notice
               to Novatel Wireless of such failure to provide Product Support.

               (c) Restrictions on Use by Intel of Design Package in Event of
               Failure of Product Support.

               In the event Intel believes that Design License Condition (iii)
               in section 5.1(b)(iii) has occurred, Intel shall give written
               notice of such event to Novatel Wireless and upon receipt of such
               notice, Novatel Wireless shall have sixty (60) days to cure such
               alleged breach. During the sixty (60) day period, Intel shall
               reasonably cooperate with Novatel Wireless to effect a cure. If,
               after sixty (60)


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                days, Intel is not satisfied that Novatel Wireless has cured the
                alleged breach, Intel shall send notice to Novatel Wireless that
                an Escrow Event has occurred and Novatel Wireless shall have two
                (2) business days to consent or object to such characterization.
                If Novatel Wireless objects to such characterization, the
                parties shall submit the matter to a third-party consultant (the
                "Consultant") as selected pursuant to Exhibit C-3, hereto. The
                parties shall submit arguments and the Consultant shall render a
                decision on the matter within ten (10) days after it is referred
                to such Consultant. If the Consultant rules that an Escrow Event
                has occurred, the Consultant must then also determine, based on
                the parties arguments, the appropriate portion of the Design
                Package to release from escrow (i.e., that portion required in
                order for Intel to provide itself the specific Product Support
                which Novatel Wireless failed to provide), and promptly order
                the release of such portion of the Design Package. Any use of
                the Design Package by Intel for this purpose of replacing failed
                Product Support shall be limited to replacement of the failed
                Product Support, and any other use by Intel of the released
                portion of the Design Package is strictly prohibited.

        5.2 License Fee to Novatel Wireless for Design Package: [***]

               5.3    Generation and Deposit of Design Package: In support of
                      Novatel Wireless's obligations under this Section 5,
                      Novatel Wireless shall generate and deposit the Design
                      Package into escrow with the escrow agent identified in
                      Exhibit C-3 pursuant to the terms and conditions of
                      Exhibit C-3.

        5.4 Updates to Design Package: During the term of this Agreement,
        Novatel Wireless shall deliver to the escrow agent, or if applicable
        make available to Intel, Updates to the Design Package, whether the
        Design Package is in escrow or has been accessed by Intel pursuant to
        its exercise of the Design Package License. Such Updates shall be
        delivered to Intel on a quarterly basis or promptly upon a change in the
        Design Package, whichever is more frequent, until Intel notifies Novatel
        Wireless in writing that it has permanently ceased distribution of such
        Products or upon the discontinuance of such Products by Intel, but in
        any event not later than the expiration or termination of this
        Agreement. Such Updates may include materials which Intel has reasonably
        requested which are not listed in Exhibit C-2.

        [***]

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[***]

8. QUARTERLY REVIEWS, CONTRACT ADMINISTRATION AND CHANGES TO CONTRACT DOCUMENTS.
Intel and Novatel Wireless will meet approximately once per calendar quarter
(each party bearing their own expenses). The content of such quarterly meetings
shall typically include, but not be limited to the following: 1) product roadmap
review; 2) current product development status; 3) sales and inventory of the
Products and 4) identifying additional product areas where other collaborative
efforts may exist. The Parties may also meet on an as-needed basis, in order to
address on-going issues such as support or manufacturing issues.


9.      INVENTIONS & OWNERSHIP.

        9.1 Pre-existing Intellectual Property Rights. Each Party shall retain
        sole and exclusive ownership of and/or unrestricted right to license any
        pre-existing Intellectual Property Rights owned by such Party or in
        which such Party has an interest.

        9.2 Ownership of Intellectual Property Rights in Modification. Except
        for Intellectual Property Rights in modifications to the Products made
        by Intel solely or in collaboration with others in connection with
        Intel's exercise of the Design Package license, which rights shall be
        owned by Intel (and which shall be subject to the provisions of 5.1(a)
        above), all Intellectual Property Rights in modifications to the
        Products developed by the Parties solely or in collaboration with others
        in the course of the performance the interoperability testing (as
        provided in Section 3.5 of this Agreement), the Implementation Services,
        or the Product Support, shall be owned by Novatel Wireless. Intel agrees
        to assign (or cause to be assigned) and hereby does assign fully to
        Novatel Wireless, all such Intellectual Property Rights. All
        Intellectual Property Rights in modifications to any [***]
        developed by the Parties solely or in collaboration with others in the
        course of the performance of the interoperability testing (as provided
        in Section 3.5 of this Agreement), the Implementation Services or the
        Product Support, shall be owned by Intel. Novatel Wireless agrees to
        assign (or cause to be assigned) and hereby does assign fully to Intel,
        all such Intellectual Property Rights. Intellectual Property Rights with
        respect to any Additional Consulting Services shall be determined by
        mutual agreement of the parties.

        9.3 Other Inventions. Except as otherwise provided herein, the Inventing
        Party shall own each

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<PAGE>   13

        Invention made by its employees, applications filed thereon, and patents
        issuing thereon.

         9.4 No Other License. Except as explicitly granted in this Agreement,
        no other patent license or immunity, or other license or right of any
        kind, shall be deemed granted hereunder, at any time to either party,
        whether expressly or by implication, estoppel, or otherwise.

        9.5 Assignment of Rights. Each party agrees to assist the other, or its
        designee, at such other party's expense, in every proper way, to secure
        the rights assigned to such other party under Section 9.2 of this
        Agreement, including the disclosure to such other Party of all pertinent
        information or data with respect thereto and the execution of all
        applications, specifications, oaths, assignments, and all other
        instruments which such other Party may deem reasonably necessary in
        order to apply for and obtain such rights and in order to assign and
        convey to such other party, its successors and assigns, the sole and
        exclusive rights, title and interest in and to such rights, including
        without limitation, in the case of the interoperability testing (as
        provided in Section 3.5 of this Agreement), the Certificate of
        Originality set forth on Exhibit B-3 and the Assignment of Intellectual
        Property set forth in Exhibit B-4. Each Party hereby waives any and all
        moral rights, including the right to identification of authorship or
        limitation on subsequent modification, that such Party or its employees
        has or may have in any rights assigned to the other party under Section
        9.2 of this Agreement.

10.     CONFIDENTIALITY AND INFORMATION EXCHANGE.

        10.1 General Applicability of CNDA. This Agreement and all information
        and disclosures made by either Party under this Agreement in writing and
        whether or not such information or disclosure is listed on any
        Confidential Information Transmittal Record shall constitute
        "Confidential Information" as defined in the Parties' Corporate
        Nondisclosure Agreement # 698343 dated August 2, 2000, which is attached
        to this Agreement as Exhibit G and incorporated in this Agreement in its
        entirety ("CNDA"). Except as provided for in this Agreement, neither
        Party shall disclose the existence or content of this Agreement without
        the prior written consent of the other Party.

10.2    Confidentiality of Terms.

        (a)     Confidentiality of Terms. Confidential Information (as defined
                below) shall not be disclosed by any party hereto to any third
                party, including, without limitation, the Securities and
                Exchange Commission or any other governmental authority or
                regulatory body, except in accordance with the provisions set
                forth below. For purposes of this Agreement, the term
                "Confidential Information" refers to the following items: (i)
                the existence of this Agreement, (ii) the terms and provisions
                of this Agreement, and (iii) such other agreements between Intel
                and Novatel Wireless that incorporate this section of this
                Agreement by reference. "Confidential Information" does not
                include information that is publicly filed with the Securities
                and Exchange Commission.
        (b)     Prohibition on Announcements and Other Disclosures. No
                announcement or other disclosure (including, without limitation,
                any filing with any governmental authority or regulatory body)
                regarding any Confidential Information shall be made in a press
                release, conference, advertisement, announcement, professional
                or trade publication, mass marketing materials, private
                placement memorandum, offering circular, prospectus,
                registration statement, filing, notice or otherwise without the
                prior written consent of each of the parties hereto.
        (c)     Permitted Disclosures. Notwithstanding the foregoing, (i) any
                party may disclose any of the Confidential Information to its
                senior management, employees, investment bankers, lenders,
                accountants and attorneys, in each case only where such persons
                or entities have a reasonable need to know such information and
                are under appropriate nondisclosure obligations; and (ii) Intel
                may disclose its investment in Novatel Wireless and other
                Confidential Information to third parties or to the public at
                its sole discretion and, if it does so, Novatel Wireless shall
                have the right to disclose to third parties any such information
                disclosed in a press release or other public announcement by
                Intel.
        (d)     Legally Compelled Disclosure. Subject to the terms and
                conditions of Intel's Consent of even date herewith, in the
                event that Novatel Wireless is requested or is legally required
                or becomes legally compelled (or reasonably believes it is
                legally required or compelled) by any governmental authority or
                regulatory body (including, without limitation, the Securities
                and Exchange Commission) or by statute or regulation or by oral
                questions, interrogatories, requests for

                                       13
<PAGE>   14
                information or documents, subpoena, criminal or civil
                investigative demand or similar process, including, without
                limitation, in connection with any public or private offering of
                Novatel's capital stock to disclose any Confidential Information
                relating to the terms and conditions of this Agreement, Novatel
                Wireless shall disclose only that portion of the Confidential
                Information that Novatel Wireless is legally required to
                disclose. The Company will not file this Agreement with any
                governmental authority or regulatory body, or disclose the
                identity of Intel or any other Confidential Information in any
                manner except as permitted above and Intel hereby consents to
                such disclosure if it is in the manner permitted above.

        (E)     Other Information. The provisions of this Section 10.2 shall be
                in addition to, and not in substitution for, the provisions of
                any separate nondisclosure agreement executed by any of the
                parties hereto with respect to the transactions contemplated
                hereby. Disclosures and exchange of confidential information
                between the Company and Intel not covered by this Section 10 or
                any other nondisclosure agreement executed by the parties
                hereto, shall be governed by the terms of the Corporate
                Non-Disclosure Agreement No. 6983494, dated August 2, 2000,
                executed by Novatel Wireless and Intel, and any Confidential
                Information Transmittal Records provided in connection
                therewith.

11. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants that it
has all rights necessary to enter into this Agreement and that there exist no
prior commitments or other obligations which prevent such Party from making all
of the grants and undertakings provided for in this Agreement. Further, Novatel
Wireless represents and warrant that it has not, as of the Effective Date,
received any notice from a third party alleging that any of the Products,
Product Software, the Design Package or the Manufacturing Package, respectively,
infringe or violate any Intellectual Property Rights of such third party.

        11.1 Novatel Wireless's Warranties. In addition, Novatel Wireless makes
the following warranties regarding the Design Package and the Manufacturing
Package furnished hereunder, which warranties shall survive any delivery of such
Design Package or Manufacturing Package:

        (a) the Manufacturing Package contains all the documents and other items
sufficient in detail and comprehensiveness to permit the commercially reasonable
manufacture of the Products by a manufacturer with reasonable background and
experience such that functional test yield of *** is achieved for Products that
meet the specifications set forth in Exhibit A and the Quality Requirements of
Exhibit E.

        (b) the Design Package contains all the documents and other items
sufficient in detail and comprehensiveness necessary to permit the commercially
reasonable design, maintenance and support of the Products by a wireless product
designer with reasonable background and experience.

        (c) Novatel Wireless has the necessary right, title, and interest to
license the Design Package and the Manufacturing Package to Intel (Except with
respect to any TTP Com Software included in either the Design Package or the
Manufacturing Package), and the Design Package and the Manufacturing Package
will be free of financial or security interest liens and encumbrances subject to
a general first lien on all of Novatel Wireless's assets by financial
institutions with which Novatel Wireless has loans outstanding.

        11.2 Intel Warranty.
        Intel warrants that upon exercise of the license to the Manufacturing
Package or the Design Package, it will have all necessary license rights from
TTPCom with respect to TTP Com Software in order to be able to be able to use
the TTP Com Software as integrated in or with Products manufactured in
accordance with the terms of the manufacturing license in Section 4.1 and the
design license in Section 5.1.

12.     INTELLECTUAL PROPERTY INDEMNIFICATION.

        12.1 Indemnity Regarding Packages. Novatel Wireless agrees to defend,
        indemnify, and hold Intel harmless against any loss, cost, liability,
        and expense (including reasonable attorneys' fees) arising from any
        action or claim brought or threatened against Intel alleging that any of
        the Manufacturing Package or the Design Package, or any product
        manufactured in accordance with Novatel Wireless's specifications using
        such Manufacturing Package or Design Package (collectively, the
        "Indemnified Items") infringe any patent, copyright, trademark, trade
        secret, or other intellectual property right of any third party. Intel
        agrees to provide Novatel Wireless with (i) prompt written notice of
        such claim or action, (ii) the


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<PAGE>   15

        opportunity to control the defense or settlement of such claim or
        action, and (iii) reasonable information and assistance in the defense
        and/or settlement any such claim or action. Notwithstanding the
        foregoing, if Novatel Wireless controls the defense, Intel shall be
        permitted to participate in the defense at Intel's sole option and
        expense. Novatel Wireless further agrees that if Novatel Wireless fails
        to defend Intel in a timely and proper manner, Intel shall be permitted
        to assume control of the defense and settlement of the claim, all at
        Novatel Wireless's cost and expense. Intel shall not enter into any
        settlement or compromise any claim without Novatel Wireless's prior
        written consent, which shall not be unreasonably withheld, conditioned,
        or delayed. In the event that any Indemnified Item is held to constitute
        such an infringement, Novatel Wireless, at its expense, may, at it's
        sole option either (i) obtain for Intel or its customers the right to
        continue to use such Indemnified Item as contemplated herein, (ii)
        modify such Indemnified Item so that it becomes non-infringing, but
        without materially altering its functionality, or (iii) replace such
        Indemnified Item with a functionally substantially equivalent
        non-infringing Indemnified Item. Regardless of which of the foregoing
        remedies is effected, Novatel Wireless shall pay to Intel reasonable
        rework expenses and reasonable incremental cost incurred by Intel to
        procure alternative products reasonably required to fill orders placed
        by Intel and accepted by Novatel Wireless as of the effective date of
        the injunction relative to an Indemnified Item.

        12.2 Indemnification Obligation for Products. Novatel Wireless shall
        indemnify and hold Intel harmless from any costs, expenses (including
        reasonable attorneys' fees), losses, damages, or liabilities incurred
        because of actual or alleged infringement of any patent, copyright,
        trade secret, trademark, maskwork, or other intellectual property right
        arising out of the use or sale by Intel or Intel's customers of Products
        or Intel's products manufacturing using the Product(s) or containing or
        integrated with the Products(s), except as otherwise provided in Section
        12.3 of this Agreement. Intel shall notify Novatel Wireless of such
        claim or demand and shall permit Novatel Wireless to participate in the
        defense or settlement thereof. If an injunction issues as a result of
        any claim or action, Novatel Wireless agrees at its expense and sole
        option to either: (i) procure for Intel and Intel's customers the right
        to continue using the Products; (ii) replace them with non-infringing
        Products; (iii) modify them so they become non-infringing; or if Intel,
        in its sole discretion determines that the previous remedies are
        commercially unreasonable (iv) refund to Intel the amount paid for any
        Products returned to Novatel Wireless or destroyed. Regardless of which
        of the foregoing remedies is effected, Novatel shall pay to Intel
        reasonable rework expenses and reasonable incremental cost incurred by
        Intel to procure alternative products reasonably required to fill orders
        placed by Intel and accepted by Novatel as of the effective date of the
        injunction against the Products.


        12.3 Limitations. Notwithstanding the foregoing, Novatel Wireless
        assumes no liability for infringement claims arising from (i) the
        combination of an Product with other products not provided by Novatel
        Wireless where such claim would not have arisen but for such
        combination, (ii) any modification or alteration of such Product not
        made by or under the authority of Novatel Wireless, where such
        infringement would not have occurred but for such modifications or
        alterations, or (iii) any use of the Products other than as permitted by
        this Agreement where such claim would not have occurred but for such
        use.

        12.4 Intel Indemnification Obligation for Intel Products that contain
        Products. Intel shall indemnify and hold Novatel Wireless harmless from
        any costs, expenses (including reasonable attorneys' fees), losses,
        damages, or liabilities incurred because of actual or alleged
        infringement of any patent, copyright, trade secret, trademark,
        maskwork, or other intellectual property right arising out of: 1)
        Intel's or Intel Manufacturers' manufacture of Products under the
        manufacturing license granted under Section 4.1 or the design license
        granted under Section 5.1 which do not comply to Novatel Wireless
        specifications where such claim would not have occurred but for such
        non-compliance; or 2) the combination of a Product with other products
        not provided by Novatel Wireless where such claim would not have arisen
        but for such combination. Novatel Wireless agrees to provide Intel with
        (i) prompt written notice of such claim or action, (ii) the opportunity
        to control the defense or settlement of such claim or action, and (iii)
        reasonable information and assistance in the defense and/or settlement
        any such claim or action.

13.     AUDIT

        The Parties, and Intel Manufacturers shall maintain complete and
        accurate accounting, manufacturing, Shipping and salesrecords, in
        accordance with generally acceptable accounting practices, to support
        and document all compliance with (i) Novatel Wireless's obligations
        under this agreement related to the most


                                       15
<PAGE>   16
        favored customer pricing requirements set forth in this Agreement, (ii)
        the calculation and payment of royalties by Intel to Novatel Wireless
        under this Agreement (iii) the services performed by Novatel Wireless
        under this Agreement, and (iv) the occurrence of any *** Termination
        Event. Such records, as they pertain to accrual of payments, shall be
        retained for a period of at least three years after the accrual of the
        payments resulting from such obligations, all other records shall be
        kept for two (2) years following termination of the Agreement, Each
        Party shall, upon written request, during normal business hours, but not
        more frequently than once each calendar year (and in the event of an
        occurrence of an *** Termination Event), provide access to such
        accounting to an independent accounting firm chosen by the Party being
        audited and compensated by the requesting Party, for purposes of an
        audit. Such accounting firm shall be required to sign an agreement
        protecting the audited Party's Confidential Information, as defined in
        Section 10, and shall be authorized to report only the compliance with
        the above-mentioned provisions. The Parties agree that if a discrepancy
        of more than five percent (5%) is found in such audit then the audited
        Party shall pay for the costs of the audit if an underpayment occurred.
        If there is a five percent (5%) or more overpayment found, the Parties
        shall each pay half of the cost of the audit. Any underpayment or
        overpayment amount shall be paid to the appropriate Party within thirty
        (30) days of the date of any audit report. The Parties also agree that
        where the audited Party is found to be in non-compliance with the terms
        of this Agreement, the audited Party shall bear the cost of the audit.
        Novatel Wireless shall, upon reasonable notice to Intel, have the right
        to have an independent auditor chosen by Intel and and compensated by
        Novatel Wireless, inspect and investigate the compliance of Intel and
        Intel Manufacturers with the substantive, non-monetary provisions
        relating to the manufacturing license and the design license as set
        forth in Section 4.1 and Section 5.1, respectively. Such auditing firm
        shall be required to sign an agreement protecting Intel's Confidential
        Information, as defined in Section 10, and shall be authorized to report
        only the compliance with the above-mentioned provision. If Intel is
        found to be in material non-compliance with such license provisions,
        Intel shall bear the costs of the audit.


14.     ***


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                                       16
<PAGE>   17

        ***


15.     TERM AND TERMINATION.

        15.1 Stated Term of Agreement. Unless sooner terminated under the
        provisions of this Section 15 the term of the Agreement begins on the
        Effective Date and expires five (5) years thereafter.

        15.2 Termination of the Agreement For Cause. Either Party shall have the
        right to terminate this Agreement if the other Party fails to cure a
        material breach of the terms of this Agreement within forty-five (45)
        days of receipt of written notice thereof from the non-breaching Party.

        15.3 Survival. Upon expiration or termination of this Agreement the
        following Sections of this Agreement shall survive and continue in
        effect: 2.1 (but only as provided therein), 2.2 (but only as provided
        therein) 2.3 (but only to the extent Section 2.1 and 2.2 survive), 5.1
        (but only as provided therein), 15.3 and 18.1 and Articles 9, 10, 11,
        12, 13, 14 (but only as provided therein), and 16. Upon expiration or
        termination of this Agreement, each Party shall: (i) return the
        Confidential Information of the other Party to such Party except such
        Confidential Information as is necessary to provide support services to
        existing customers; and (ii) have the right to ship and sell Products in
        Intel's inventory subject to the payment of royalties to Novatel
        Wireless as provided in Section 4.3. In addition, upon termination of
        this Agreement the Design and Manufacturing Packages held in escrow, if
        any, shall be immediately released to Novatel Wireless.

16.     LIMITATION OF LIABILITIES.

IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY, END USERS
OR ANY OTHER THIRD PARTY, FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES
ARISING OUT OF THIS AGREEMENT, UNDER ANY CAUSE OF ACTION OR THEORY OF LIABILITY,
AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE. ANY LIABILITY OF either party ARISING OUT OF THIS AGREEMENT SHALL IN NO
CASE EXCEED THE GREATER OF (A) three TIMES THE TOTAL AMOUNT OF PAYMENTS RECEIVED
BY NOVATEL WIRELESS FROM INTEL UNDER THIS AGREEMENT AND (B) fifteen million
dollars, except that NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED TO LIMIT
either party's liability for personal injury (including bodily injury), death,
physical damage to property or ANY INDEMNITY PROVIDED BY either party to the
other UNDER Section 12 of THIS AGREEMENT.

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17.      ADDITIONAL COLLABORATION

        Novatel Wireless and Intel will engage in the following technical
collaboration:

        a)      Novatel Wireless, in consultation with and support from Intel,
                will provide all personnel, resources, and IP to complete the
                work described in the statement of work attached in Exhibit J-1,
                also referred to as Phase 1b. The parties recognize that they
                have not set forth in full detail all technical aspects of the
                statement of work attached in Exhibit J-1. Upon execution of
                this agreement, the parties will complete this statement in
                reasonable detail. If the parties are unable for any reason to
                agree on such details within sixty (60) calendar days following
                the effective date, Novatel Wireless will in good faith perform
                the work as presently described with a goal of making Novatel
                Wireless technology work as well on platforms targeted in the
                statement of work attached as Exhibit J-1 as on any other
                silicon, board or system architecture.

        b)      Novatel Wireless presently intends to perform the work described
                in the statements of work set forth in Exhibits J-2 also
                referred to as Phase 2. The parties recognized that they have
                reached full agreement upon the advisability or the scope of
                this work. Upon execution of this agreement, Novatel Wireless
                will in good faith agree with Intel on this scope of this work.
                If the parties are unable for any reason to agree on such
                details within ninety (90) calendar days following the effective
                date, Novatel Wireless will in good faith perform the work as
                presently described with a goal of making Novatel Wireless
                technology for Software Reconfigurable Radios work on Intel
                Silicon.

        c)      Assuming the success of Phase 2 technology development (as
                mutually defined and agreed to by both companies), the
                productization of such technology will be undertaken as set
                forth in Exhibit J-3 also referred to as Phase 2b. The parties
                recognized that they have reached full agreement upon the
                advisability or the scope of this work - given that the Phase 2
                technology achieves its performance and cost targets. Upon
                execution of this agreement, Novatel Wireless will in good faith
                agree with Intel on the next level of details for this phase. If
                the parties are unable for any reason to agree on such details
                within 365 calendar days following the effective date, the high
                level terms set forth in the current exhibit will continue to
                remain in effect - unless mutually agreed to in writing between
                the two companies.

18.     GENERAL.

        18.1 Notice. Unless otherwise agreed to by the Parties, all notices
        required under this Agreement shall be deemed effective when received
        and made in writing by either (i) registered mail, (ii) certified mail,
        return receipt requested, or (iii) overnight mail, addressed and sent to
        the attention:

               INTEL:        Intel Corporation
                             2111 N.E. 25th Avenue
                             MS JF3-147
                             Hillsboro, Oregon 97124-6497
                             Attn:   General Counsel

                             With a copy of non-technical notices to

                             Intel Corporation
                             2111 N.E. 25th Avenue
                             MS JF3-147
                             Hillsboro, Oregon 97124-6497
                             Attn: Post Contracts Management

               Novatel Wireless:    Novatel Wireless, Inc.

                                       18
<PAGE>   19

                             9360 Towne Centre Drive
                             Suite 110
                             San Diego, California 92121
                             Attn:  Bruce Gray, Senior Vice President of Sales
                                    and Marketing.



                Each Party may designate another address for notices hereunder
                in a written notice to the other from time to time.

        18.2    Construction.

                (1)     Headings. The headings of this Agreement are provided
                        for reference only and shall not be used as a guide to
                        interpretation.

                (2)     Order of Precedence. In the event of inconsistency
                        between or among the various Agreement documents, the
                        following order of precedence shall govern
                        interpretation:

                        (a)     The Statement of Work, solely as to its subject
                                matter;

                        (b)     This document and its Exhibits other than the
                                Statement of Work and the Purchase Order; and

                        (c)     Purchase Orders and Invoices.

        18.3 Independent Contractor. Each Party is and shall remain an
        independent contractor with respect to all performance rendered pursuant
        to the Agreement documents. Neither Party nor any employee thereof shall
        be considered an employee or agent of the other Party for any purpose
        and shall have no authority to bind or make commitments on behalf of
        such other Party for any purpose and shall not hold itself or themselves
        out as having such authority. In performing Services under this
        Agreement, Novatel Wireless is an independent contractor and its
        personnel and other representatives shall not act as nor be agents or
        employees of Intel. As an independent contractor, Novatel Wireless will
        be solely responsible for determining the means and methods for
        performing the required Services. Novatel Wireless shall have complete
        charge and responsibility for personnel employed by Novatel Wireless.

        18.4 Independent Development. Except as set forth in Section 2.4, this
        Agreement does not preclude Intel or Novatel Wireless from evaluating,
        acquiring from third parties not a party to this Agreement,
        independently developing or marketing similar technologies or products
        to the Products, or making and entering into similar arrangements with
        other companies. Neither Party is obligated by this Agreement to make
        such products or technologies available to the other.

        18.5 Compliance with Laws. Each Party shall, at its own expense, comply
        with any governmental law, statute, ordinance, administrative order,
        rule or regulation relating to its duties, obligations and performance
        under this Agreement and shall procure all licenses and pay all fees and
        other charges required thereby.

        18.6 Export of Technical Data. The Parties shall not, nor shall they
        authorize or permit their employees, agents or subcontractors to, export
        or re export any Deliverable or Products, any technical information, or
        any process, product or service that is produced under this Agreement to
        any country specified as a prohibited destination in applicable
        national, state and local laws, regulations and ordinances, including
        the Regulations of the U.S. Department of Commerce and/or the U.S. State
        Department, without first obtaining government approval.

        18.7 Taxes. Except as otherwise set forth in Section 4 of Exhibit B,
        each Party shall have sole responsibility for the payment of all taxes
        and equivalents and duties imposed by all governmental entities, as they
        pertain to its duties, obligations and performance under this Agreement,
        without reimbursement for tax liability, penalty, or interest, assessed
        upon either Party.

        18.8 Dispute Resolution. All disputes arising directly under the express
        terms of this Agreement or the grounds for termination thereof shall be
        resolved as follows: The senior management of both parties shall

                                       19
<PAGE>   20

        meet to attempt to resolve such disputes. If the disputes cannot be
        resolved by the senior management, either party may make a written
        demand for formal dispute resolution and specify therein the scope of
        the dispute. Within thirty (30) days after such written notification,
        the parties agree to meet for one (1) day with an impartial mediator and
        consider dispute resolution alternatives other than litigation,
        including referral to the National Patent Board. If an alternative
        method of dispute resolution is not agreed upon within thirty (30) days
        after the one day mediation, either party may begin litigation
        proceedings.

        18.9 Force Majeure. Neither Party shall be held liable for failure to
        fulfill its obligations other than payment obligations under this
        Agreement, if the failure is caused by flood, extreme weather, fire, or
        other natural calamity, acts of governmental agency, or similar causes
        beyond the control of such party, and the term for performance shall be
        increased to a reasonable period of time.

        18.10 Assignment. Neither party may assign or otherwise transfer its
        rights or obligations under this Agreement without prior written consent
        of the other party, which shall not be unreasonably withheld,
        conditioned or delayed; provided that Intel may assign this Agreement to
        a successor in interest, by merger, operation of law, or by assignment,
        purchase or otherwise of the particular business or substantially all of
        the assets of the particular business within Intel to which this
        Agreement relates, without Novatel Wireless's consent. A change of
        control shall not be considered a transfer or assignment under this
        Section 18.10. Any attempt by either party to assign or delegate any
        rights, duties or obligations set forth in this Agreement without the
        other party's prior written consent , except as permitted herein, shall
        be deemed a material breach of this Agreement and shall be null and
        void. Except as provided above, the terms and conditions of this
        Agreement shall bind and enure to the benefit of each party's successors
        and assigns.


        18.11 Governing Law, Jurisdiction and Venue. Any claim arising under or
        relating to this Agreement shall be governed by the internal substantive
        laws of the State of Delaware or federal courts located in Delaware,
        without regard to principles of conflict of laws. Each party hereby
        agrees to jurisdiction and venue in the courts of the State of Delaware
        for all disputes and litigation arising under or relating to this
        Agreement. This provision is meant to comply with 6 Del. C. Section
        2708(a). The provisions of the United Nations Convention on Contracts
        for the International Sale of Goods shall not apply to this Agreement.
        The parties agree that the predominance of this Agreement is the sale of
        goods, and agree that the Delaware version of the Uniform Commercial
        Code, Article 2, shall be applicable to this Agreement.

        18.12 No Other Rights. This Agreement shall not be construed to grant
        any rights by implication, estoppel, or otherwise, that are not granted
        through its express provisions.

        18.13 Severability. The terms and conditions stated herein are declared
        to be severable. If any paragraph, provision, or clause in this
        Agreement shall be found or be held to be invalid or unenforceable in
        any jurisdiction in which this Agreement is being performed, the
        remainder of this Agreement shall be valid and enforceable and the
        parties shall use good faith to negotiate a substitute, valid and
        enforceable provision which most nearly effects the parties' intent in
        entering into this Agreement.

        18.14 Waiver. Failure by either party to enforce any term of this
        Agreement shall not be deemed a waiver of future enforcement of that or
        any other term in this Agreement or any other agreement that may be in
        place between the parties

        18.15 Entire Agreement. The terms and conditions of this Agreement,
        including its exhibits, constitutes the entire agreement between the
        parties with respect to the subject matter hereof, and merges and
        supersedes all prior and contemporaneous agreements, understandings,
        negotiations and discussions. Neither of the parties shall be bound by
        any conditions, definitions, warranties, understandings, or
        representations with respect to the subject matter hereof other than as
        expressly provided herein. The section headings contained in this
        Agreement are for reference purposes only and shall not affect in any
        way the meaning or interpretation of this Agreement. No oral explanation
        or oral information by either party hereto shall alter the meaning or
        interpretation of this Agreement. No amendments or modifications shall
        be effective unless in a writing signed by authorized representatives of
        both parties. These terms and conditions will prevail notwithstanding
        any different, conflicting or additional terms and conditions which

                                       20
<PAGE>   21


        may appear on any purchase order, acknowledgment or other writing not
        expressly incorporated into this Agreement. This Agreement may be
        executed in two (2) or more counterparts, all of which, taken together,
        shall be regarded as one and the same instrument. The following exhibits
        are attached hereto and incorporated herein:

               Exhibit A: Product Definition and Specifications
               Exhibit B: Purchasing Terms
               Exhibit B-1: Product and Services Pricing; Statements of Work
               Exhibit B-2: Intentionally Omitted
               Exhibit B-3  Certificate of Originality
               Exhibit B-4  Assignment of Intellectual Property
               Exhibit C-1: Manufacturing Package
               Exhibit C-2: Design Package
               Exhibit C-3: Escrow Provisions
               Exhibit D:  Support and Training Requirements
               Exhibit E:  Quality Assurance Requirements
               Exhibit F:  Intentionally Omitted
               Exhibit G: Executed CNDA
               Exhibit H: Interoperability Statement of Work
               Exhibit I:  Intentionally Omitted
               Exhibit J-1:  Phase 1b Statement of Work
               Exhibit J-2:  Phase 2 Collaboration
               Exhibit J-3:  Phase 3b Collaboration

                                       21
<PAGE>   22



18.16   Marketing Collaboration. In the event Intel chooses to brand the
        products with an Intel brand, rather than co-brand the Products, the
        parties shall discuss in good faith opportunities for joint
        participation in trade shows and other joint marketing opportunities.






IN WITNESS WHEREOF the Parties, through their respective duly authorized
representatives, hereby execute this Agreement on the Effective Date.


INTEL CORPORATION                         NOVATEL WIRELESS, INC.


By: /s/ ANGELA BIEVER                     By: /s/ BRUCE GRAY
   ----------------------------------        ----------------------------------

Printed Name: Angela Biever               Printed Name: Bruce Gray
             ------------------------                  ------------------------

Title: General Manager, NBI               Title: Senior Vice President,
      -------------------------------            Sales and Marketing
                                                -------------------------------

Date:  October 23, 2000                   Date:  October 23, 2000
     --------------------------------          --------------------------------




                                       22

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                                    EXHIBIT A

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                                             EXHIBIT A-1
EXHIBIT A-1
PRODUCT SPECIFICATIONS



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Exhibit A-6

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                                   71 OF 117
<PAGE>   97

                                    EXHIBIT B

         TERMS AND CONDITIONS OF PURCHASE AGREEMENT - GOODS AND SERVICES



1.      DEFINITIONS. The following terms shall have the meanings ascribed to
        them for the purpose of the Agreement.

A.      "Hazardous Materials" are or contain dangerous goods, chemicals,
        contaminants, substances, pollutants, or any other materials that are
        defined as hazardous by relevant local, state, national, or
        international law, regulations, and standards.

B.      "Purchase Order" is Intel's document setting forth specific Services to
        be rendered and/or specific Products ordered, and Release information.

C.      "Release" means Intel's authorization for Novatel Wireless to provide
        the Services and/or to ship a definite quantity of Products to a
        specified schedule. The Release is contained in the Purchase Order sent
        to Novatel Wireless.

D.      "Service(s)" means the additional consulting services to be performed by
        Novatel Wireless as set forth in Section 3.4 of the Agreement and the
        interoperability testing services set forth in Section 3.5 of the
        Agreement.


2.      DELIVERY AFTER EXPIRATION

        At Intel's option, Products may be scheduled for delivery up to six (6)
        months following expiration of the Agreement.


3.     PRICING

A.      Except as set forth in Exhibit B-1, Pricing for the Products and
        Services shall be in accordance with Exhibit B-1 for the duration of
        this Agreement. The parties may substitute a revised Exhibit B-1 at any
        time by each signing a dated copy that shall from such date be the
        effective Exhibit B-1. At Intel's request, Services shall be provided in
        accordance with a Statement of Work in the form specified in Exhibit B-1

B.      In consideration for including the Products exclusively in the reference
        design for the ***, the price charged Intel for any Product or Service
        shall always be Novatel Wireless's *** for that Product or equivalent
        Service regardless of any special terms, conditions, rebates, or
        allowances of any nature (hereinafter "***"), provided that the price
        charged by Novatel Wireless for *** and *** shall be *** of such price.
        If Novatel Wireless sells any Product or Service to any customer at a
        price *** that set forth herein, Novatel Wireless shall adjust its price
        to the *** for any un-invoiced Products or Service and for all future
        invoices for such Product or Service. Each of the above adjustments
        shall be calculated from the date Novatel Wireless first sells the
        Product or Service at the ***.

C.      In the event Novatel Wireless offers ***, either as a general *** or
        only to *** for any reason, Novatel Wireless shall immediately inform
        Intel of this price and price protect Intel's inventory of affected
        Products or Service by *** to Intel an amount equal to *** by Intel and
        the *** Products pulled into Intel's manufacturing process for
        consumption or Service retroactive to the date the Novatel Wireless
        first sells the Product or Service at a lower price.

D.      Intel may return up to *** of its inventory of Products purchased from
        Novatel Wireless during the previous ninety (90) days in unopened,
        original, individual Product packaging for a credit against any future
        Novatel Wireless invoices.

E.      All applicable taxes, including but not limited to sales/use taxes,
        transaction privilege taxes, gross receipts taxes, and other charges
        such as duties, customs, tariffs, imposts, and government imposed
        surcharges shall be stated separately on Novatel Wireless's invoice.
        Novatel Wireless shall remit all such charges to the appropriate tax
        authority unless Intel provides sufficient proof of tax exemption. In
        the event that Intel is prohibited by law from making payments to
        Novatel Wireless unless Intel deducts or withholds taxes therefrom and
        remits such taxes to the local taxing jurisdiction, then Intel shall
        duly withhold such taxes and shall pay to Novatel Wireless the remaining
        net amount after the taxes have been withheld. Intel shall not reimburse
        Novatel Wireless for the amount of such taxes withheld. When property is
        delivered and/or services are provided or the benefit of services occurs
        within jurisdictions in which Novatel Wireless collection and remittance
        of taxes is required by law, Novatel Wireless shall have sole
        responsibility for payment of said taxes to the appropriate tax
        authorities. In the event Novatel Wireless does not collect tax from
        Intel, and is subsequently audited by any tax authority, liability of
        Intel will be limited to the tax assessment, with no reimbursement for
        penalty or interest charges. Each party is responsible for its own
        respective income taxes or taxes based upon gross revenues, including
        but not limited to business and occupation taxes.

F.      Additional costs will not be reimbursed without Intel's prior written
        approval.


4.     INVOICING AND PAYMENT

A.      Intel shall make payment within *** days of Intel's receipt of the
        proper original invoice or Intel's receipt of Products or performance of
        Services, whichever is later. Payment is made when Intel's check is
        mailed or EDI funds transfer initiated.

B.      Original invoices or packing lists shall be submitted and shall include:
        purchase agreement number from the Purchase Order, Purchase Order
        number, line Product number, Release number, part number, complete bill
        to address, description of Products, quantities, unit price, extended
        totals, and any applicable taxes or other charges. All costs forwarded
        to Intel for reimbursement of expenses agreed under the terms of this
        Agreement shall be net of any reclaimable Value Added Taxes ("VAT")
        incurred on such expenses. Intel's payment shall not constitute
        acceptance.

C.      Novatel Wireless shall be responsible for and shall hold Intel harmless
        for any and all payments to its vendors or subcontractors utilized in
        performing the Services.

D.      Novatel Wireless agrees to invoice Intel no later than one hundred
        eighty (180) days after completion of Services or shipment of Products.
        Intel will not be obligated to make payment against any invoices
        submitted after such period.


5.      TERMINATION FOR CONVENIENCE

A.      Subject to Section 2.4 of the Agreement (Exclusivity), Intel may
        terminate any Purchase Order or Release issued, or any part thereof, at
        any time for its sole convenience by giving written notice of
        termination to Novatel Wireless. Upon Novatel Wireless's receipt of such
        notice, Novatel Wireless shall, unless otherwise specified in such
        notice, immediately stop all work hereunder and give immediate written
        notice to and cause all of its suppliers or subcontractors to cease all
        related work.

B.      There shall be no charges for termination of orders for Products or
        Services not yet provided. Intel will be responsible for payment of
        authorized Services and Products already provided by Novatel Wireless,
        but not yet invoiced. Notwithstanding anything to the contrary, Novatel
        Wireless shall not be compensated in any way for any work done after
        receipt of Intel's notice, nor for any costs incurred by Novatel
        Wireless's vendors or subcontractors after Novatel Wireless gives them
        notice of termination, nor for any costs Novatel Wireless could
        reasonably have avoided. Novatel Wireless will be responsible to
        immediately notify its relevant suppliers of any relevant termination
        pertaining to this agreement.

C.      Notwithstanding anything else in the Agreement, failure to meet the
        delivery date(s) in the Purchase Order shall be considered a material
        breach of contract and shall allow Intel to terminate the order for the
        Product and/or any subsequent Releases in the Purchase Order without any
        liability.

D.      Novatel Wireless may terminate any Purchase Order or Release issued, or
        any part thereof, by providing Intel written notice of termination upon
        the occurrence of any of the following events:

        (a) Intel materially breaches its payment obligations under this
Agreement, unless such failure is cured within sixty (60) days from receipt of
written demand for such payment.




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        (b) Intel materially breaches any material provision of this Agreement
and fails to institute reasonable efforts to cure such material breach within
sixty (60) days from receipt of written notice describing the breach. This
section in no way limits Novatel Wireless's rights to terminate the Agreement
pursuant to Section 15 thereof.


6.      CONTINGENCIES

        Neither party shall be responsible for its failure to perform due to
        causes beyond its reasonable control, such as acts of God, fire, theft,
        war, riot, embargoes or acts of civil or military authorities. If
        delivery of Products or performance of Services are to be delayed by
        such contingencies, Novatel Wireless shall immediately notify Intel in
        writing and Intel may either: (i) extend time of performance; or (ii)
        terminate all or part of the uncompleted portion of the Purchase Order
        at no cost to Intel.


7.      DELIVERY, RELEASES, AND SCHEDULING

A.      Any forecasts provided by Intel are non-binding forecasts that are made
        for planning purposes only and do not constitute a Release or other
        commitment by Intel. Within *** following execution of this Agreement,
        Intel shall furnish Novatel Wireless with a forecast ("Estimated Product
        Forecast"), estimating on at least a monthly basis, the quantity of each
        type of Products that Intel may purchase during the succeeding ***
        period and the desired date therefor ("Delivery Date"). Thereafter, on
        or before the first day of each calendar month, and at such other time
        as appropriate in the event forecasts are more frequent than monthly,
        Intel shall provide Novatel Wireless with an updated forecast for the
        succeeding *** period. Novatel Wireless will use its commercially
        reasonable efforts to ensure that supply of Products is available
        consistent with Intel's forecasts, as updated, but Intel will have no
        liability for any differences between the Estimated Product Forecast and
        the actual Product volume ordered by Intel in any Purchase Order
        Release.

B.      All Purchase Orders placed by Intel under this Agreement shall reference
        this Agreement and shall be governed only by the terms and conditions of
        this Agreement. The terms and conditions of any Purchase Order, or any
        other document submitted by Intel, which conflicts with or in any way
        purports to amend this Agreement are hereby specifically objected to and
        shall be of no force or effect, unless the same refers to this
        Agreement, is agreed to in writing by an authorized officer of Novatel
        Wireless and an authorized representative of Intel. Intel shall submit
        in writing firm Purchase Orders which cover the Products Intel is
        purchasing and identify (i) the desired Products, (ii) desired quantity,
        (iii) requested delivery dates, (iv) destinations of each Product
        ordered per shipment and (v) desired method of transportation.

C.      Novatel Wireless shall notify Intel in writing within four (4) business
        days of receipt of Intel's Purchase Order if Novatel Wireless is unable
        to make any scheduled delivery and shall state the reasons therefor. The
        absence of such notice constitutes acceptance of the Purchase Order and
        commitment to the Release terms.

D.      Novatel Wireless shall deliver Products per the Release schedule and
        Intel may return non-conforming shipments at Novatel Wireless's risk and
        expense.

E.      Novatel Wireless shall promptly perform Services as scheduled or shall
        promptly notify Intel if unable to perform any scheduled Services and
        shall state the reasons.

F.      Intel may reschedule any Release in whole or in part prior to the
        Release date at no additional charge.

G.      Intel may place any portion of a Release on hold by notice that shall
        take effect immediately upon receipt. Releases placed on hold will be
        rescheduled or terminated in accordance with Section 5 within a
        reasonable time.

H.      Intel shall have no obligation with respect to the purchase of Products
        or Services under this Agreement until such Products are specified in an
        issued Purchase Order that contains specific Release dates for specific
        Products and, for Products, the other information set forth in Section
        7.B.

I.      If for any reason Novatel Wireless discontinues the manufacture of any
        Product during the term of this Agreement or within one (1) year after
        the final delivery under this Agreement, Novatel Wireless shall give
        Intel at least twelve (12) months prior written notice of such Product
        discontinuance, during which time Intel shall have the option to place a
        final Release for such Products for delivery to Intel within an agreed
        upon period. If any warranty return claims are made for such
        discontinued Products, then such returns will be subject to the warranty
        provisions in Section 8.

J.      During the term of the Agreement, Novatel Wireless will fulfill Intel's
        requirements for the Products prior to supplying any third party with
        Products or Substitutable Products. In addition, Novatel Wireless will
        fulfill Intel's Purchase Order for Products within *** weeks of
        receiving such Purchase Order, provided that such Purchase Order does
        not exceed the most recent forecast, and will fulfill any amount by
        which the Purchase Order exceeds the most recent forecast (up to ***),
        within *** weeks of receiving Intel's Purchase Order.


8.      INSPECTION, ACCEPTANCE AND WARRANTY

A.      Intel may inspect and test all Products at reasonable times before,
        during, and after manufacture. If any inspection or test is made on
        Novatel Wireless's premises, Novatel Wireless shall provide reasonable
        facilities and assistance for the safety and convenience of Intel's
        inspectors in such manner as shall not unreasonably hinder or delay
        Novatel Wireless's performance. All Products and Services shall be
        received subject to Intel's inspection, testing, approval, and
        acceptance at Intel's premises (provided that such inspection, testing,
        approval and acceptance is not to exceed a period of ten (10) days)
        notwithstanding any inspection or testing at Novatel Wireless's premises
        or any prior payment for such Products or Services. All products not
        rejected by Intel within ten (10) days will be deemed accepted by Intel.
        Products or Services rejected by Intel as not conforming to this
        Agreement or Product specifications (including without limitation the
        Product Specifications set forth in Exhibit A of the Agreement), whether
        provided by Intel or furnished with the Product, may be returned to
        Novatel Wireless and in accordance with the terms of this Section at
        Novatel Wireless's risk and expense , at Intel's request, shall
        immediately be repaired or replaced.

B.      Novatel Wireless makes the following warranties regarding Products and
        Services furnished hereunder, which warranties shall run from the date
        of acceptance of Products or Services by Intel and which shall survive
        any delivery, inspection, acceptance, payment, or resale of the
        Products:

        (i)     Novatel Wireless has the necessary right, title, and interest to
                provide said Products and Services to Intel, and the Products
                will be free of liens and encumbrances;

        (ii)    Products are new, and of the grade and quality specified;

        (iii)   Products and Services are free from defects in workmanship and
                material, conform to all samples, drawings, descriptions, and
                specifications furnished or published by Novatel Wireless, and
                to any other agreed-to specifications, including without
                limitation the Product Specifications set forth in Exhibit A of
                the Agreement. This warranty does not extend to (1) defects,
                errors, or nonconformities in a Product due to use other than in
                accordance with Novatel Wireless's specifications and (2)
                defects, errors or nonconformities in the Product due to
                modifications, alterations, additions or changes in the Product
                not permitted by this Agreement.



        (iv)    Products conform to the manufacturing quality provisions set
                forth in Exhibit E of the Agreement;

        (v)     Novatel Wireless has all necessary rights, title, and interest
                to grant the rights set forth herein to Intel, free of any
                claims, liens, or conflicting rights in favor of any third
                party;

        (vi)    The Product Software licensed in this Agreement is free from
                significant programming errors and defects in workmanship and
                materials, and substantially complies with functionality and
                performance set forth in Novatel Wireless's published
                specifications and the specifications set forth in Exhibit A of
                the Agreement;

        (vii)   The Product Software contains no disabling code and is free from
                any viruses at the time of delivery to Intel;

C.      If Novatel Wireless breaches any of the foregoing warranties, or
        Products (including the Product Software) or Services are otherwise
        defective or non-conforming, during a period of two (2) years after
        Intel's acceptance of Products or Services, Novatel Wireless shall,
        promptly repair or replace, such Products and Services. Novatel Wireless
        shall bear the cost of shipping and


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                                  CONFIDENTIAL                              73
<PAGE>   99

        shall bear the risk of loss of all defective or non-conforming Products
        while in transit.

D.      During the warranty period, Intel may give Novatel Wireless written
        notice of any defect, deficiency or non-conformance of any Product or
        Services, or parts thereof. Novatel Wireless shall, at no cost to Intel,
        and with the "Turn-Around Time" defined in Section 8(E), repair or
        replace such Products or provide such Services, provided, however, with
        respect to Products, that the Products have been maintained in
        accordance with Novatel Wireless's specifications as set forth in
        Exhibit A of this Agreement and have not been modified by any party
        other than Novatel Wireless except as expressly permitted by this
        Agreement. Novatel Wireless shall bear the cost of shipping and shall
        bear the risk of loss of all defective or non-conforming Products while
        in transit, and for the return of the repaired and/or replaced Products
        to the appropriate destination. Repaired or replaced Products shall be
        subject to the same warranties and remedies as the initial Product for a
        period of eighteen (18) months after repair and/or replacement Products
        have been received by Intel, or the remainder of the original warranty
        period, whichever is longer. Notwithstanding the foregoing, Intel shall
        bear all expenses if no fault on the part of Novatel Wireless was found
        in the Products returned for repair or replacement. In addition, Novatel
        Wireless shall be responsible for all rework costs incurred by Intel as
        a result of defective or non-conforming products. For purposes of this
        Agreement, the term "rework" means the process of (i) diagnosing,
        retrieving, and accessing a non-conforming or defective Product; (ii)
        repairing such Product so that it is conforming and free from defects
        and/or replacing such Product with an Product which is conforming and
        free from defects, (iii) if necessary, reconfiguring an Intel product to
        accommodate the repaired or replaced Product or the covered item, (iv)
        testing the repaired or replaced Product to ensure that the repaired or
        replaced Product is conforming and free from defects; and (v) returning
        the Product which is conforming and free from defects to the location
        where the non-conforming or defective Product was at the time the
        non-conformance or defect was discovered

E.      "Turn-Around Time" for purposes of this section means thirty (30) days
        from the date on which such defective Product, or defective or
        non-conforming part thereof, is furnished to Novatel Wireless for repair
        or replacement, until the date on which such replaced or repaired
        Product is returned to Intel. With respect to Services, "Turn-Around
        Time" for providing the required Services shall be thirty (30) days from
        the date Novatel Wireless receives notice that Services are not being
        provided as required under the Agreement.

F.      The warranty granted in this Section 8 sets forth Intel's sole and
        exclusive remedy and Novatel Wireless's sole and exclusive liability for
        any claim of warranty for any Product or Service delivered by Novatel
        Wireless.

G.      Intel acknowledges that it is not authorized to make any warranty or
        representation on behalf of Novatel Wireless or its suppliers regarding
        the Products, whether express or implied, other than the warranty terms
        set forth in this Section 8.

H.      THE WARRANTY MADE UNDER THIS SECTION 8 IS EXPRESSLY IN LIEU OF ALL OTHER
        WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ALL
        IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
        PURPOSE.


9.      PRODUCT SPECIFICATIONS/ IDENTIFICATION/ERRATA

A.      Novatel Wireless shall not modify the specifications for Products or
        Services without Intel's written consent. Novatel Wireless shall notify
        Intel at least sixty (60) days in advance of any changes in the
        manufacturing process.

B.      Novatel Wireless shall cooperate with Intel to provide configuration
        control and traceability systems for Products supplied hereunder.

C.      Novatel Wireless shall provide Intel with an errata list for each
        Product and shall promptly notify Intel in writing of any new errata
        with respect to the Products.


10.     PACKING AND SHIPMENT

A.      All Products shall be prepared for shipment in a manner that: (i)
        follows good commercial practice; (ii) is acceptable to common carriers
        for shipment at the lowest rate; and (iii) is adequate to ensure safe
        arrival. Novatel Wireless shall mark all containers with necessary
        lifting, handling and shipping information, Purchase Order number, date
        of shipment, and the names of the Intel and Novatel Wireless. Intel
        shall notify Novatel Wireless of the method of shipment and expected
        delivery date. If no instructions are given, Novatel Wireless shall
        select the most cost effective carrier, given the time constraints known
        to Novatel Wireless. Novatel Wireless shall ship only the quantity of
        Products specified in the Release. Intel may return at Novatel
        Wireless's expense any Products in excess of the quantity stated in the
        Release.

B.      Intel shall manage all freight shipped pursuant to this Agreement unless
        Intel indicates, in writing, on the Purchase Order, at the time it is
        first submitted to Novatel Wireless, that Novatel Wireless is to manage
        the freight with respect to that particular Purchase Order. The party
        selected to manage freight shall do so in accordance with the following
        terms and conditions:

        (i)     For Novatel Wireless Managed Freight: All Products shall be
                shipped Delivered Duty Paid, Intel's Dock (DDP: Intel's Dock,
                Incoterms 2000) for non free trade zone factory sites or
                Delivered Duty Unpaid, Intel's Dock (DDU: Intel's Dock,
                Incoterms 2000) for free trade zone factory sites. Title and
                Risk of loss shall pass to Intel upon delivery of Products to
                Intel's Dock.

        (ii)    For Intel Managed Freight: All Products shall be shipped Free
                Carrier, Novatel Wireless's Dock (FCA: Novatel Wireless's Dock,
                Incoterms 2000). Title and Risk of loss shall pass to Intel upon
                delivery of Products to Intel's agent at the Novatel Wireless
                Dock.


11.     OWNERSHIP AND BAILMENT RESPONSIBILITIES

A.      Any specifications, drawings, schematics, technical information, data,
        tools, dies, patterns, masks, gauges, test equipment, and other
        materials furnished or paid for by Intel shall: (i) be kept
        confidential; (ii) remain or become Intel's property; (iii) be used by
        Novatel Wireless exclusively for Intel's orders; (iv) be clearly marked
        as Intel's property and segregated when not in use; (v) be kept in good
        working condition at Novatel Wireless's expense; and (vi) be shipped to
        Intel promptly on demand.

B.      Novatel Wireless shall insure Intel's property and be liable for loss or
        damage while in Novatel Wireless's possession or control, ordinary wear
        and tear excepted.


12.     HAZARDOUS MATERIALS

A.      If Products or Services provided hereunder include Hazardous Materials,
        Novatel Wireless represents and warrants that Novatel Wireless and its
        personnel providing Services to Intel understand the nature of and
        hazards associated with the design and/or Service of Products including
        handling, transportation, and use of such Hazardous Materials, as
        applicable to Novatel Wireless. Prior to causing Hazardous Materials to
        be on Intel's property, Novatel Wireless shall obtain written approval
        from Intel's Site Environmental/Health/ Safety organization. Novatel
        Wireless will be fully responsible for and indemnify Intel from any
        liability resulting from the actions of Novatel Wireless or its
        contractors in connection with: (i) providing such Hazardous Materials
        to Intel; and/or (ii) the use of such Hazardous Materials in providing
        Services to Intel.

B.      Novatel Wireless will timely provide Intel with material safety data
        sheets and any other documentation reasonably necessary to enable Intel
        to comply with applicable laws and regulations.

C.      Novatel Wireless hereby certifies that Products supplied to Intel do not
        contain and are not manufactured with any ozone depleting substances, as
        those terms are defined by law.


13.     CUSTOMS CLEARANCE

        Upon Intel's request, Novatel Wireless will promptly provide Intel with
        a statement of origin for all Products and with applicable



                                  CONFIDENTIAL                              74
<PAGE>   100


        customs documentation for Products wholly or partially manufactured
        outside of the country of import.


14.     INSURANCE

A.      Without limiting or qualifying Novatel Wireless's liabilities,
        obligations, or indemnities otherwise assumed by Novatel Wireless
        pursuant to this Agreement, Novatel Wireless shall maintain, at its sole
        cost and expense, with companies acceptable to Intel, Commercial General
        Liability and Automobile Liability Insurance with limits of liability
        not less than $1,000,000.00 per occurrence and including liability
        coverage for bodily injury or property damage (1) assumed in a contract
        or agreement pertaining to Novatel Wireless's business and (2) arising
        out of Novatel Wireless's product, Services, or work. Novatel Wireless's
        insurance shall be primary, and any applicable insurance maintained by
        Intel shall be excess and non-contributing. The above coverages shall
        name Intel as additional insured.

B.      Novatel Wireless shall also maintain statutory Workers' Compensation
        coverage, including a Broad Form All States Endorsement in the amount
        required by law, and Employers' Liability Insurance in the amount of
        $1,000,000.00 per occurrence.

C.      If Novatel Wireless is providing any professional service to Intel,
        Novatel Wireless shall maintain Professional Liability Insurance
        (including errors and omissions coverage) with liability limits not less
        than $1,000,000.

D.      Novatel Wireless shall provide Intel with properly executed
        certificate(s) of insurance prior to commencement of any operation
        hereunder and shall notify Intel, no less than thirty (30) days in
        advance, of any reduction or cancellation of the above coverages. Such
        certificates shall be sent to the attention of Intel's Material
        Representative at the address forth in the Notices section of this
        Agreement.


15.     COMPLIANCE WITH LAWS AND RULES

A.      Novatel Wireless shall comply with all national, state, and local laws
        and regulations governing the manufacture, transportation, import,
        export, and/or sale of Items and/or the performance of Services in the
        course of this Agreement. In the United States, these may include, but
        are not limited to, Department of Commerce including U. S. Export
        Administration regulations, Securities Exchange Commission,
        Environmental Protection Agency, and Department of Transportation
        regulations applicable to Hazardous Materials. Neither Novatel Wireless
        nor any of its subsidiaries will export/re-export any technical data,
        process, product, or service, directly or indirectly (including the
        release of controlled technology to foreign nationals from controlled
        countries), to any country for which the United States government or any
        agency thereof requires an export license or other government approval
        without first obtaining such license. In addition, Novatel Wireless
        agrees not to provide foreign nationals from controlled countries as
        employees or contractors for work on any Intel site. For a current list
        of "Controlled Countries" refer to http://www.bxa.doc.gov.

B.      Novatel Wireless agrees to abide by all Intel's rules and regulations
        while on Intel's premises or performing Services including, but not
        limited to, safety, health and Hazardous Material management rules, and
        rules prohibiting misconduct on Intel's premises including, but not
        limited to, use of physical aggression against persons or property,
        harassment, and theft. Novatel Wireless will perform only those Services
        identified on Addendum "A" and will work only in areas designated for
        such Services. Novatel Wireless shall take all reasonable precautions to
        ensure safe working procedures and conditions for performance on Intel's
        premises and shall keep Intel's site neat and free from debris.

C.      Novatel Wireless represents and agrees that it is in compliance with
        Executive Order 11246 and implementing Equal Employment Opportunity
        regulations, the Vietnam Era Veterans' Readjustment Assistance Act as
        amended by the Veterans Employment Opportunities Act of 1998 (to
        include: Vietnam-era Veterans and other Veterans who served on active
        duty during a war or campaign or expedition for which a campaign badge
        has been authorized), and the Immigration Act of 1987, unless exempted
        or inapplicable.

E.      Novatel Wireless shall comply with all applicable laws regarding
        non-discrimination in terms and conditions of employment, payment of
        minimum wage and legally mandated employee benefits and compliance with
        mandated work hours. Novatel Wireless shall comply with all applicable
        laws regarding employment of underage or child labor and shall not
        employ children under the age of 16.


16.     INTENTIONALLY OMITTED.


17.     SECURITY

        Novatel Wireless confirms that to the best of its knowledge, employees
        of Novatel Wireless performing work at Intel's facilities have no record
        of criminal convictions involving drugs, assaultive or combative
        behavior, or theft within the last five years. Novatel Wireless
        understands that such employees may be subject to criminal history
        investigations by Intel at Intel's expense and will be denied access to
        Intel's facilities if any such criminal convictions are discovered.


18.     INTENTIONALLY OMITTED.


19.     ELECTRONIC TRANSACTIONS

A.      Subject to the terms and conditions of this Section, the parties agree
        to receive electronic documents and accept electronic signatures
        relating to transactions contemplated by the Agreement, including
        Releases, Purchase Orders, Purchase Order Acknowledgments, Invoices and
        other transactions as may be agreed by the parties from time to time.
        Electronic documents and electronic signatures shall be a substitute for
        paper-based documents and signatures, and the legal validity of a
        transaction will not be denied on the ground that it is not in writing.

B.      All electronic documents shall be transmitted through the use of EDI,
        XML or other WEB based transmission formats. Electronic documents may be
        transmitted or received electronically directly by the parties or
        through designated third party communication network service providers
        with which either party may contract. Each party agrees to designate all
        transmissions as confidential and protect all electronic documents from
        improper or unauthorized access in accordance with Section 10 of the
        Agreement. Information contained in any electronic document or otherwise
        exchanged electronically between the parties shall be considered the
        confidential information of the disclosing party and shall be maintained
        in accordance with Section 10 of the Agreement.

C.      For purposes of this Agreement, an electronic signature shall mean
        information or data in electronic form that is attached to or logically
        associated with an electronic document and executed or adopted with the
        intent to sign the electronic document. An oral communication or a
        recording of an oral communication shall not qualify as an electronic
        signature. Nothing in this section shall be construed to limit or
        otherwise affect the rights of either party to assert that an electronic
        signature is a forgery, is used without authority, or otherwise is
        invalid for reasons that would invalidate the effect of a signature in
        written form.

D.      Novatel Wireless acknowledges that its use of Intel's websites is at
        Novatel Wireless's own risk and that Intel makes no representations or
        warranties of any kind whatsoever regarding Intel's websites (including
        any software, hardware, equipment, communications providers or
        connections), whether express or implied, written or oral, including any
        warranty that the Intel's websites will be operational at any particular
        time, free from outages or errors, compatible with any other computer or
        telecommunications hardware or software, fit for any particular purpose,
        or any warranty arising out of course of performance, course of dealing
        or usage of trade. Novatel Wireless hereby releases Intel from any and
        all liability of any kind whatsoever arising out of Novatel Wireless's
        use of or inability to access Intel's website.



                                  CONFIDENTIAL                              75


<PAGE>   101


20.     USE OF INTELS PASSWORDS

A.      During the term of the Agreement, Intel may provide Novatel Wireless's
        employees and/or agents with user names and passwords ("Password[s]")
        for access to certain of Intel's confidential websites ("Website[s]").
        Intel may revoke a Password and access rights to any Website, at any
        time without notice to Novatel Wireless. Novatel Wireless agrees that
        the Passwords are the confidential information of Intel and shall be
        maintained in accordance with Section 10 of the Agreement.

B.      Passwords will only be granted to Novatel Wireless's employees or agents
        that execute an on-line password use agreement. Novatel Wireless agrees
        that this on-line password use agreement will be a valid and binding
        agreement when executed by such employees or agents. Novatel Wireless
        agrees to take all reasonable efforts to ensure that such employees and
        agents comply with the terms of such password use agreements and to
        notify Intel within ten (10) business days of such an employee or agent
        terminating their employment with Novatel Wireless.

C.      Novatel Wireless and Novatel Wireless's employees and/or agents are
        authorized to use Passwords only for accessing the Websites for the
        business purposes intended by Intel and for no other purpose. All
        information found on the Website or downloaded, transferred, printed or
        otherwise obtained from the Website is the Confidential Information of
        Intel and is subject to the terms and conditions of the CNDA referenced
        on the signature page of this Agreement. Before accessing and receiving
        Confidential Information from the Website, Novatel Wireless's employees
        and/or agents must electronically accept the terms and conditions of the
        electronic Confidential Information Transmittal Record ("CITR") found on
        the Website, which the parties agree will substitute for the CITR
        procedure in the CNDA. Intel will record and store a record of each and
        every time Novatel Wireless's employees and/or agents access the Website
        with the Password. In addition to the terms and conditions of the CNDA,
        Novatel Wireless's employees and/or agents will comply with any other
        restrictions found on the Website.



                                  CONFIDENTIAL                              76
<PAGE>   102


EXHIBIT B-1




                                       ***

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<PAGE>   103


                                       ***

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                                   EXHIBIT B-2

                              INTENTIONALLY OMITTED







                                  CONFIDENTIAL                              79

<PAGE>   105

                                   EXHIBIT B-3

                           CERTIFICATE OF ORIGINALITY


This Certificate of Originality must be completed by Novatel Wireless when
furnishing software material (program product or offering and related
documentation, or other software material) for Intel.

One Certificate of Originality can cover one complete product, even if that
product includes multiple modules. However, a separate Certificate of
Originality must be completed for the code and another for its related
documentation (if any.)

Please leave no questions blank. Write "not applicable" or "N/A" if a question
is not relevant to the furnished software material.



1.      Name of the software material (provide complete identification,
        including version, release and modification numbers for programs and
        documentation):________________________________________________________

2.      Was the software material or any portion thereof written by any party
        other than you, or your employees working within their job assignment?

        Yes ______         No ______ If Yes, provide the following information:

        (a)     Indicate if the whole of the software material or only a portion
                thereof was written by such party, and identify such portion:__
        _______________________________________________________________________

        (b)     Specify for each involved party:

                (i)     Name: _________________________________________________

                (ii)    Company: ______________________________________________

                (iii)   Address: ______________________________________________

                (iv)    If the party is a company, how did it acquire title to
                        the software material (e.g., software material was
                        written by company's employees as part of their job
                        assignment)?

                (v)     If the party is an individual, did s/he create the
                        software material while employed by or under contractual
                        relationship with another party? Yes ______   No ______

                        If Yes, provide name and address of the other party and
                        explain the nature of the obligations: ________________

        (c)     How did you acquire tittle to the software material written by
                the other party? ______________________________________________

3.      Was the software material or any portion thereof derived from any third
        party's pre-existing material(s)?   Yes ______  No ______

        If Yes, provide the following information for each of the pre-existing
        materials:

        (a)     Name of the materials: ________________________________________

        (b)     Owner: ________________________________________________________

        (c)     How did you get the right to use the pre-existing material (s)_
        _______________________________________________________________________

4.      Identify below, or in an attachment, any other circumstances that might
        affect Intel's ability to reproduce and market this software product,
        including:

        (a)     Confidentiality or trade secrecy of pre-existing materials: ___
        _______________________________________________________________________

        (b)     Known or possible royalty obligations to others: ______________

        (c)     Pre-existing material developed for another party or customer
                (including government) where you may not have retained full
                rights to the material: _______________________________________

        (d)     Materials acquired from a person or company possibly not having
                title to them: ________________________________________________

        (e)     Other circumstances: __________________________________________




NOVATEL WIRELESS:
____________________________________________


Signature:__________________________________


Printed Name :______________________________


Title: _____________________________________


Date: ______________________________________




                                  CONFIDENTIAL                              80

<PAGE>   106

                                   EXHIBIT B-4



                       ASSIGNMENT OF INTELLECTUAL PROPERTY



In consideration of the disclosure of Intellectual Property and Confidential
Information of Intel and the compensation paid by Intel to ("Assignor") under
the Intel Corporation Purchase Agreement/Goods & Services No._____, effective
("Agreement") the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

Assignor has created or obtained exclusive title to the following work(s)
(hereinafter "Work") entitled:



1.

2.


In this Agreement, "Work" means all works, including literary works, pictorial,
graphic and sculptural works, architectural works, works of visual art, mask
works, and any other work that may be the subject matter of copyright
protection; advertising and marketing concepts; information; data; formulas;
designs; models; drawings; computer programs; including all documentation,
related listings, design specifications, and flowcharts, trade secrets, and any
inventions including all processes, machines, manufactures and compositions of
matter, and any other invention that may be the subject of patent protection;
and all statutory protection obtained or obtainable thereon including those in
foreign countries.

The undersigned hereby assigns to Intel all right, title, and interest to all
Work created by Assignor arising out of or utilized by the Assignor in the
performance of the Agreement, and the ownership of the same shall be vested
solely in Intel. In respect to copyrights, this assignment shall be effective
for the entire duration of the copyrights and shall include, but not be limited
to all rights to derivative works. Assignor waives all rights of attribution,
and integrity for specific works created by Assignor under the Agreement in
respect of all marketing, advertising, and commercial uses thereof.

Assignor represents and warrants that the Work is original; that neither the
Assignor's interest in the Work nor the copyright therein is encumbered or
subject to any undisclosed lien or charge; and that Assignor is free to make the
present assignment and has no legal obligation or prior commitment that is
inconsistent with this Agreement.



ASSIGNOR


Signature: _________________________________

Printed Name:_______________________________

Date:_______________________________________






                                  CONFIDENTIAL                              81


<PAGE>   107


                                    EXHIBIT C





<PAGE>   108

                                   EXHIBIT C-1

                              Manufacturing Package




                                       ***

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<PAGE>   109
                                  EXHIBIT C-2

                                 Design Package

                                       ***


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  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

<PAGE>   110

                                   EXHIBIT C-3
                                ESCROW PROVISIONS


1.      Manufacturing Package and Design Package Deposit. Within thirty days
        after the Effective Date, Novatel Wireless shall deliver to the escrow
        agent identified below (the "Escrow Agent", respectively), such
        documents and other specified media comprising the Manufacturing and
        Design Packages, respectively, consisting of the software, firmware,
        schematics, process specifications, etc. as set forth in Exhibits C-1
        and C-2, respectively as are then available to Novatel Wireless (it
        being understood by Intel that the Products are still under development
        and that the remaining portions of the Manufacturing and Design Packages
        will be delivered to the Escrow Agent when available to Novatel Wireless
        as set forth in Exhibits C-1 and C-2). Novatel Wireless shall deliver
        the Manufacturing and Design Packages to the Escrow Agent at the
        following address:

                Data Securities International, Inc.
                [Attn:  Contract Administration
                6165 Greenwich Drive
                Suite 220
                San Diego, CA  92122
                Telephone:  (619) 457-5199
                Facsimile:   (619) 457-4252]


2.      Delivery of Updates. During the term of the Agreement and pursuant to
        Sections 4.5 and 5.4 of the Agreement, Novatel Wireless shall provide
        Updates to the Manufacturing and Design Packages. Novatel Wireless shall
        give written notice to Intel and Escrow Agent, before delivering the
        Manufacturing and Design Packages of the applicable Release to Escrow
        Agent, stating that the Manufacturing and Design Packages are ready for
        delivery. Upon ten (10) days prior written notice, Intel will have the
        right to have a third party consultant as agreed between the parties and
        subject to an obligation of confidentiality present at Novatel
        Wireless's site in San Diego, California, to inspect the Manufacturing
        and Design Packages to ensure that they are complete and accurate prior
        to their delivery to the Escrow Agent. Such inspection shall occur
        during regular business hours and at mutually agreeable times. The
        parties understand and agree that the role of the third party consultant
        is only to review the materials and that the designated Novatel Wireless
        engineer(s) will be responsible for actually preparing the materials.
        Following completion of the review, the parties' representatives shall
        jointly ensure that the Manufacturing and Design Packages are sent
        immediately by overnight courier to the Escrow Agent at the address set
        forth above.


3. Escrow Agreement. Within ten days of the execution of this Agreement, the
parties shall enter into an escrow agreement in a form mutually agreeable to the
parties and with the Escrow Agent. In the event Intel believes that and Escrow
Event has occurred, Intel shall send notice to Novatel Wireless that and Escrow
Event has occurred and Novatel Wireless shall have two (2) business days to
consent or object to such characterization, if Novatel Wireless objects to such
characterization, the parties shall submit the matter to a third-party
consultant (the "Consultant") selected either 1) by mutual agreement; or 2) if
the parties cannot agree, by allowing the American Arbitration Association to
appoint an independent arbitrator for the parties. The parties shall submit
arguments and the Consultant who will decide the matter based upon the
submissions of the parties and shall render a decision on the matter within ten
(10) days after its referral to the Consultant. If the Consultant rules that an
Escrow Event has occurred, the Consultant must then also determine, based on the
parties arguments, the appropriate portion of the Design Package to release from
escrow (ie. that portion expressly required in order for Intel to provide

<PAGE>   111

itself the specific Product Support which Novatel Wireless failed to provide),
and promptly order the release of such portion of the Design Package. Any use of
the Design Package by Intel for this purpose of replacing failed Product Support
shall be limited to replacement of the failed Product Support, and any other use
by Intel of the released portion of the Design Package is prohibited. Intel
covenants and agrees that it shall not provide such written certification unless
an Escrow Event has occurred or Intel has notified Novatel Wireless that Intel
is exercising its option to license the Design Package or the Manufacturing
Package, as the case may be. Novatel Wireless will incur all expenses billed by
the Escrow Agent directly relating to the escrow and the escrow agreement but
not any other costs incurred by Intel relating to the escrow or escrow
agreement.

                                                                              88
                                  CONFIDENTIAL

<PAGE>   112

                                    EXHIBIT D

<PAGE>   113

                                    EXHIBIT D

                        SUPPORT AND TRAINING REQUIREMENTS

DEFINITIONS

        Error definition and severity shall mean the following:

        a)      A "critical" error is one that causes a critical service of the
                device to fail, resulting in interruption of basic service
                severely degrading the performance of the device. There is
                generally no recovery or workaround for this type of error.

        b)      An "important" error is one that degrades basic service on the
                device and some functions of the device are either nor available
                or not adequate. There is no convenient workaround available for
                this type of error.

        c)      A "minor" error is one that causes results in unexpected or
                incorrect behavior but does not prevent operation of the device.
                Minor errors will normally have convenient workarounds.

        d)      A "discretionary" error is one that is a suggestion or comment
                by the user.

PRODUCT SUPPORT

1. Customer Support Contacts

        Parties will assign designated technical support specialist at their
        respective centralized customer support locations. Parties will also
        assign a designated contact for escalation and provide that contact to
        the other party. Novatel Wireless will be responsible for first line
        customer support if Intel  ***  any Novatel Wireless  ***  Product.
        Intel will be responsible for first line customer support for any Intel
        *** Product.

2. Bug Information

        Novatel Wireless will provide Intel copies of Novatel Wireless's
        customer support database.

3. Customer support Escalation Procedure

        a)      If Intel is unable to solve a customer problem related to the
                Products, it shall submit to Novatel Wireless a written
                explanation of the problem (a problem report along with an end
                user report if applicable) along with a severity designation as
                outlined in the procedure below. Novatel Wireless shall
                acknowledge the receipt of such submitted problem reports within
                one business day of such submission. Novatel Wireless will
                assist the Intel in solving such problems as outlined in the
                procedure below. Such assistance will be available to the Intel
                at no cost, at least during Intel's normal business hours (8-5pm
                PST), for so long as Intel continues to purchase the Products.
                For support provided outside that period, a mutually agreed
                charge shall be established for such


*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   114

                assistance.

        b)      There will be weekly meetings, at Intel's request, between the
                Parties' technical support specialists to discuss such problem
                reports, the respective problems, solutions to existing
                problems, and for Novatel Wireless to provide Product Changes
                (and work-arounds) to current problems. This meeting will
                generally be a conference call, but at times may be a
                face-to-face meeting (at each parties expense) depending upon
                the severity of the problems.

        c)      The Parties agree that Intel shall receive one of the following
                resolutions to the problem:

                Complete resolution, which results in the problem's
                resolution and removal from the problem list.

                Interim workaround, which results in delivering an
                interim patch and giving Intel a date for a complete
                resolution. The problem will be tracked through the
                Parties' weekly support meeting.

                The problem is logged as a bug and Intel is given an
                interim workaround or a projected resolution date. The
                bug is tracked through the Parties' weekly support
                meeting.

        d)      Problem expected response time

                a)      For each error type, Novatel Wireless has a specific
                        numbers of days to acknowledge the problem, and a
                        specific number of days to respond with a fix, plan for
                        a fix, or have the problem logged for a future update.
                        Note that all time frames listed below assume that
                        correction of the specified problem is possible within
                        the allowed time frame. Novatel Wireless commits to
                        making every reasonable effort to meet these time
                        frames. If a fix or workaround is not possible within
                        the allowed time frame, Novatel Wireless will work with
                        Intel to provide an estimate of the time required to
                        correct the problem, will use its reasonable efforts to
                        correct the problem as close to the allowed time frame
                        as possible, and will report regularly to Intel until
                        corrective action is complete.

                b)      The parties shall use good faith to escalate response
                        times when necessary from time to time. Milestones below
                        are based on indicated days after problem is reported to
                        Novatel Wireless.

                c)      Time-frames below are based on indicated days after
                        problem is reported to Novatel Wireless.


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                                  CONFIDENTIAL

<PAGE>   115

<TABLE>
<CAPTION>
NUMBERS IN DAYS        CRITICAL          IMPORTANT          MINOR              DISCRETIONARY
- ---------------        --------          ---------          -----              -------------
<S>                    <C>               <C>                <C>                <C>
RESPOND                1                 3                  10                 30

FIX, PLAN, OR LOG      3                 5                  90                 90
</TABLE>

        e)      Customer Support Contacts

        Parties will assign designated technical support specialists at their
        respective centralized customer support locations. Parties will also
        assign a designated contact for escalation and provide that contact to
        the other party.

IMPLEMENTATION SERVICES

        1.      Novatel Wireless shall provide an engineering focal contact for
                Intel

                a)      Available Normal Novatel Wireless Business Hours based
                        on the location in which the engineering contact
                        resides.

                b)      Engineering focal point must have access to both
                        hardware and software engineering; otherwise expertise
                        in both areas is required.

                c)      Novatel Wireless will make reasonable efforts to provide
                        schematic and board design review for any device using
                        the  *** .

                d)      Novatel Wireless will make reasonable efforts to provide
                        schematic and board design review for any module built
                        by Intel from the design and manufacturing package.

                e)      Novatel will make reasonable efforts to provide
                        facilities for test and evaluation of the RF subsystem
                        on any device produced by Intel containing Novatel
                        Wireless radios or  *** .

        2.      Manufacturing Test Engineering Support. The Implementation
                Services provided by Novatel Wireless pursuant to Section 3.3 of
                the Agreement shall include without limitation the following:

                a)      Novatel Wireless will test and functional validation
                        plans for manufacturing tests.

                b)      Novatel Wireless will provide any software test code
                        using for manufacturing validation and test.

                c)      Novatel Wireless will provide necessary design
                        specifications for jigs used in manufacturing validation
                        and test.

                d)      Onsite support for manufacturing test validation at
                        Intel or manufacturer of choice. If such request is made
                        by Intel subsequent to Intel or Intel's Manufacturer(s)
                        achieving a functional test yield of  ***  as provided
                        in Section 3.3 of the Agreement, Intel shall reimburse
                        Novatel Wireless for the expenses incurred by Novatel
                        Wireless in fulfilling such request.

TRAINING

        1.      Novatel Wireless to provide one day of hardware training per new
                module release and interface supported a minimum of 90 days
                before the release is generally

                                                                              92
                                  CONFIDENTIAL

*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   116

                available.

        2.      Novatel Wireless to provide one day of software training per new
                software update or release if the new release or update adds or
                removes functionality. Training to be provided a minimum of 45
                days before the release is generally available.

        3.      Novatel Wireless to provide one week of support training per
                released product or Intel manufactured product based on the
                Novatel Wireless design package.

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                                  CONFIDENTIAL

<PAGE>   117

                                    EXHIBIT E

<PAGE>   118

                                    EXHIBIT E

                         QUALITY ASSURANCE REQUIREMENTS

                                     PURPOSE

This document outlines Intel's minimum expectations for information submitted
and actions taken by Novatel Wireless to manage and continuously improve the
quality and reliability of products purchased by Intel.

                                    CONTENTS

        1.      Quality Definitions

        2.      Quality Systems

        3.      Workmanship Standards

        4.      Data Reporting Format

        5.      Equipment Calibration

        6.      Part Placement Inspection

        7.      Wave Soldering Machines

        8.      Post ICT Part/Solder Inspection

        9.      Packaging Requirements

       10.      Outgoing Quality Audit (OQA)

       11.      Training

       12.      Incoming Inspection at Intel

       13.      Quality Telephone Call

       14.      Engineering Change Notification (ECN) Approval Process

       15.      MRB Review

       16.      Process Change Notification (PCN) Approval Process

       17.      Design Approval and Revision Control

       18.      Quality Action Notification (QAN)

       19.      Customer Line Fallout FA/CA

       20.      Supplier Control

       21.      Material Handling

       22.      1000 DPM Quality Plan

1.      QUALITY DEFINITIONS

        1.) I.P.C.-A-610B: Workmanship standard for Printed circuit board
        assemblies created by the Institute for Interconnecting and Packaging of
        Electronic Circuits.

        2.) Intel Workmanship Standards: Workmanship standards created by Intel
        for the manufacture of printed circuit board assemblies
        (Doc#99-0007-001).

        3.) Mil-Std 105E: Military Standard covering Sampling and Inspection
        procedures.

        4.) A.Q.L.: Acceptable Quality Level.

        5.) I.S.O.: International Standards Organization.

        6.) DPM: Defective Parts per Million.

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<PAGE>   119

        7.) C.L.F.: Customer Line Fallout at Intel customer location measured in
        defective parts per million.

        8.) F.L.F.: Factory Line Fallout at Intel factory measured in defective
        parts per million.

        9.) O.R.T.: On-going Reliability Testing at Supplier factory specifying
        type of environmental chamber used; sampling, and duration of testing

2.      QUALITY SYSTEM

        Novatel Wireless is responsible for developing and implementing a
        quality system based on an ISO program. Novatel Wireless should be ISO
        certified or planning to do so within the next calendar year. Novatel
        Wireless will be expected to maintain certification as long as they are
        building products for Intel.


3.      WORKMANSHIP STANDARDS

        Intel will judge supplier quality to Intel Workmanship Standards
        (Doc#99-0007-001) . For items not addressed in the IWS document then
        defer to IPC-A-610B.


4.      DATA REPORTING FORMAT

        Novatel Wireless shall submit quality data to Intel on a regular basis.
        This data will consist of Novatel Wireless product, factory and critical
        parameter performance. The following is a list of the data that will be
        sent to Intel:

<TABLE>
<S>             <C>                                       <C>
        1.      Supplier Initial Test Yield Data          -Sent monthly

        2.      Supplier Final Test Yield Data            -Sent monthly

        3.      Supplier Out-going Quality Audit          -Sent monthly

        4.      Supplier ORT                              -Sent monthly
</TABLE>

        Item 4, ORT test data to be available by the end of ***.

        Data to be sent monthly should arrive before the 15th of each month for
        the previous month's data. Data reported to: Materials Quality Engineer.
        Novatel Wireless will work with Intel to detail the content of the
        report, and will pass on to our supplier as our data reporting
        requirements.

5.      EQUIPMENT CALIBRATION

*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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                                  CONFIDENTIAL

<PAGE>   120

        Novatel Wireless mechanical measuring instruments, tools, test equipment
        will be calibrated at a specified interval of time to ensure accuracy of
        measurement. Novatel Wireless will keep records which show the equipment
        location, calibration date due data and the equipment's detail. Novatel
        Wireless QC will ensure that the calibration is done on schedule.


6.      PART PLACEMENT INSPECTION

        For all Intel production runs, Novatel Wireless will require its
        supplier to inspect two boards per line every two hours prior to wave
        solder for proper placement of all components. Novatel Wireless will
        require its supplier to maintain a record of parts found missing or
        incorrectly placed, segregated by placement station. Trends, reversed
        diodes and electrolytic capacitors will require written corrective
        action. Novatel Wireless will require its supplier to retain records for
        at least one year and these will be available to Intel upon request.


7.      WAVE SOLDERING MACHINES

        Novatel Wireless will require its supplier to check wave solder heat
        profile at the beginning of each production run.

        Novatel Wireless will require its supplier to use X-bar r charts to
        monitor and control the wave soldering machines' flux density, conveyer
        speed, pre-heat temperature(s), solder wave height, and solder pot
        temperature. Novatel Wireless will require its supplier to take sample
        readings for charts four times daily. Novatel Wireless will require its
        supplier to check solder pot cleaning system every 2 hrs. (if
        applicable) Novatel Wireless will require its supplier to retain all
        charts for a period of at least one year and be made available to Intel
        upon request.


8.      POST ICT PART/SOLDER INSPECTION:

        Novatel Wireless will require its supplier to perform sample inspections
        of all parts not included in ICT for proper placement, type,
        orientation, and solder joint quality. Novatel Wireless will require its
        supplier to provide a list of these components and a layout drawing with
        parts highlighted for use by inspector for each Intel P/N.

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                                  CONFIDENTIAL

<PAGE>   121

9.      PACKAGING REQUIREMENTS

        Adherence to Intel Specification General Supplier Packaging Standard,
        Intel Doc #662394 is required.

        Packaging must prevent any functional damage to units contained therein,
        when the package is dropped from a height of 99.14cm onto a flat
        concrete surface. Boxes arranged on palette for shipment will be secured
        using stretch-wrap or cardboard. Novatel Wireless will ship no packages
        to Intel which are damaged without prior approval from Intel Material
        Engineering.

        Intel reserves the right, for one time as to each modem SKU, to place
        sensors in and on Novatel Wireless packaging at Novatel Wireless's
        factories for the purpose of collecting data on the forces being
        experienced by Intel-bound modems during shipment. This data can and
        will be used by Intel to drive continuous improvement in packaging
        methods and revisions to this section of the Quality Management Plan.


10.     OUTGOING QUALITY AUDIT (OQA):

        Outgoing Quality Audit to be performed on all Intel products. This audit
        will be performed on each production lot in accordance with MIL-STD
        105E, single sample size, level II inspection level, AQL (critical 0%,
        major .65% , min 1.5%). Samples will be randomly selected from boxed
        units. Units will be unpacked, inspected, tested, and repacked for
        shipment. All rejected lots will be re-tested or screened by production
        using electrical or mechanical inspections as applicable. A checklist
        will be used to document all OQA inspections, test parameters and their
        relative classifications (critical, major, or minor). A current copy of
        this list will be made available to Intel upon request. This list will
        include, but is not limited to, the following inspections: packing,
        visual, safety, and electrical tests (per Novatel Wireless Test Spec).


11.     TRAINING

        Prior to allocation of jobs, all new production personnel and inspectors
        at Novatel Wireless qualified suppliers shall be trained to Novatel
        Wireless workmanship standards and QC system, both on and off the job as
        necessary.

12.     INCOMING INSPECTION AT INTEL

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                                  CONFIDENTIAL

<PAGE>   122

        Intel does reserve the right to perform incoming inspections at Intel
        facilities and/or outgoing inspections at Supplier's facility on
        Intel-bound product as necessary. If necessary, Intel will use a
        statistical sampling method deemed appropriate whereby any one failure
        will be cause for rejection of the entire lot. Disposition of the lot
        will be determined by Intel Materials Engineer and may include return
        for credit or repair. Novatel Wireless agrees to perform a 100% screen
        of lot(s) if requested by Intel Materials Engineer.

13.     QUALITY TELEPHONE CALL

        A monthly Quality call will be established at a mutually agreed upon
        time to discuss all on-going issues such as:

        a)      Product Change Notification's (PCNs)

        b)      Failure analysis of fallouts

        c)      Business issues

        d)      Quality Action Notice's (QANs)

        e)      New Issues

        f)      ld issues

        The following job titles and functions to be represented by both Buyer
        and Supplier on the monthly quality call include:

        a)      Engineering Manager - scope includes but not limited to general
                engineering issues and ECNs

        b)      Production Supervisor and/or Manager - scope includes but not
                limited to PCNs

        c)      QC Supervisor and/or Manager - scope includes but not limited to
                FA of fallouts and CAs

        d)      Account Manager - scope includes but not limited to business and
                new issues

Novatel Wireless will schedule the quality telephone call meeting when
production starts.


14.     ENGINEERING CHANGE NOTIFICATION (ECN) APPROVAL PROCESS

        All ECN'S that affect the fit, form, and/or function of the power supply
        will require Intel's approval before implementation. In certain
        instances Intel may require Novatel Wireless to submit samples for
        approval. Novatel Wireless will notify Intel at least 60 days prior to
        proposed implementation date, with exceptions made for safety assurance
        and lines down avoidance.


15.     MRB REVIEW

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                                  CONFIDENTIAL

<PAGE>   123

        Novatel Wireless will perform MRB reviews for special or urgent issues
        (safety, etc.).


16.     PROCESS CHANGE NOTIFICATION (PCN) APPROVAL PROCESS

        Novatel Wireless process changes, if deemed to have an effect by Novatel
        Wireless on Intel product quality, will require Intel's approval before
        implementation. Novatel Wireless will provide justification and/or
        additional details if requested by Intel. Novatel Wireless will notify
        Intel at least 60 days prior to proposed implementation date, with
        exceptions made for safety assurance and lines down avoidance.



17      DESIGN APPROVAL AND REVISION CONTROL

        Novatel Wireless shall complete all elements of the following test
        procedures for new Intel modem designs. Test results must be reviewed by
        Intel Materials Engineer, and Intel must have a hard copy on file prior
        to being released for production.

                1. Novatel Wireless Design Review Procedures

                2. Novatel Wireless Q.A. and Reliability Procedures

        Novatel Wireless shall maintain a document control system which insures
        that the latest revision of all prints, specifications, and drawings is
        used for all Intel production, inspection and testing. Only component
        specifications issued by Intel Commodity Management should be considered
        valid for production purposes.


18.     QUALITY ACTION NOTIFICATION (QAN)

        A QAN will take priority over all sustaining issues and a teleconference
        call/meeting between Intel and Novatel Wireless will take place with 24
        hours to formulate strategy and exchange information. Intel expects
        Novatel Wireless to take ownership of all supplier-attributable quality
        excursions, and provide immediate containment plan(s) for an issue and
        root cause analysis/long term corrective action. Intel's expectation for
        Novatel Wireless response time is: short term CA/containment methods
        within 48 hours of notification.

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<PAGE>   124

19.     CUSTOMER LINE FALLOUT FA/CA

        Intel expects that Novatel Wireless will provide failure analysis and
        short term containment and corrective actions within 48 hours of receipt
        of customer failures. Long-term corrective action will be received
        within 10 business days. All reports will be sent to both the regional
        Intel office involved, and Intel Materials Engineer.


20      SUPPLIER CONTROL

        Novatel Wireless shall maintain a supplier control system which assures
        that purchased material and services are of sufficient quality to
        conform to Intel specified requirements. Novatel Wireless shall use and
        control Purchase Orders to ensure that the correct information is
        communicated to Novatel Wireless. Novatel Wireless shall perform
        manufacturing/quality system audits of all key component suppliers
        periodically to ensure their continuous improvement. For each sub
        component purchased, Novatel Wireless shall implement one or both of the
        following:

        1. Require statistical process control (SPC) and test data from
        suppliers to assure conformance to specified requirements.

        2. Perform incoming inspections at a statistical sampling rate
        sufficient to assure conformance to specified requirements.

        Novatel Wireless will retain records of incoming inspections, SPC data,
        and audit reports for at least one year and make them available to Intel
        upon request.


21.     MATERIAL HANDLING

        Novatel Wireless shall maintain a material handling system which ensures
        that all incoming material are handled properly to avoid physical
        damage, temperatures beyond those recommended for materials, or other
        conditions which might degrade the quality and/or reliability of the
        materials. This system must assure that no material is stored beyond its
        recommended shelf-life. All non-conforming material must be tagged, and
        placed away from conforming materials in a controlled area designated
        for non-conforming material only.

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<PAGE>   125

22.     1000 DPM QUALITY PLAN


        Schedule to reduce DPM is as follows:

<TABLE>
<S>                   <C>
        Q2 2000       1800DPM

        Q3            1500DPM

        Q4            1000DPM
</TABLE>


        Action to reduce DPM are the following:

        a)      Implement shop floor system and closed loop corrective action
                plans

        b)      Total process review implementation in ***.

        c)      Double inspection line implementation in ***.

        Detailed standard procedures for above items are documented for internal
        control purposes.

*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

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                                  CONFIDENTIAL

<PAGE>   126

                                    EXHIBIT F

                              INTENTIONALLY OMITTED

<PAGE>   127

                                    EXHIBIT G

<PAGE>   128


                          [DOUBLE-CLICK HERE TO BEGIN]

                   CORPORATE NON-DISCLOSURE AGREEMENT ("CNDA")
                      PRE-SIGNED VERSION - ASMO & EMEA ONLY
                                  INSTRUCTIONS

PLEASE NOTE: This form is for ASMO and EMEA only, including Ireland and Israel.
This form should not be used for IJKK, APAC or Russia. The instructions for
completing the blanks on the CNDA are as follows:

(a)     Agreement Date: Date that Participant signs the CNDA.

(b)     CNDA Number: By entering your WWID# you should have generated a unique
        CNDA number.

(c)     Intel Contact: The Intel employee who can answer questions about the
        CNDA and Participant, with mail stop and telephone number. This is
        generally the Intel employee who asked Participant to sign the CNDA.

(d)     Participant Name: Use complete company name. For a multi-location
        company, clearly indicate whether the CNDA applies to the entire company
        or a specific division or site. For example, Participant's name should
        state "ABC Company," "ABC Company, P.C. Division," or "ABC Company,
        North Carolina Research Facility."

(e)     Participant Address: Use headquarters' address. If the CNDA applies only
        to a specific division or location, then use the address of the division
        or location.

(f)     Printing: Print TWO (2) original CNDA's for Participant signature.

(g)     Signatures: Signatures must be by an authorized officer (i.e.,
        President, Vice President or General Manager). This Agreement is
        designed to authorize disclosures of Confidential Information using the
        CITR or MP-CITR. Therefore, Participant's authorized representative must
        understand and agree to this procedure. If an officer of the Participant
        is not available, use an Intel SU-NDA. NOTE: To enable quick execution,
        Intel has pre-signed this CNDA. Any modifications to the CNDA will
        render the CNDA and Intel's signature null and void.

(h)     Return: Keep one signed original for your records, and return one signed
        original to Intel as follows: For ASMO, one signed original must be
        returned to: Intel Corporation, Attn. Post Contract Mgmt, FM6-03, 1900
        Prairie City RD., Folsom, CA 95630. For EMEA, one signed original must
        be returned to Participant's local Intel contact.

<PAGE>   129

AGREEMENT DATE:  Wednesday, August 02, 2000                       CNDA#  6983494

                       CORPORATE NON-DISCLOSURE AGREEMENT

This Corporate Non-Disclosure Agreement ("Agreement") is entered into and made
effective as of the date set forth above, by and between Intel Corporation and
its majority owned worldwide subsidiaries ("Intel"), and the Participant, as
identified below, and its majority owned worldwide subsidiaries (the
"Participant"). Unless the Participant indicates on the Participant's line below
that this Agreement will apply only to a specific division or location, this
Agreement will apply to the Participant's entire company worldwide.

THE PARTIES AGREE AS FOLLOWS:

1.      CONFIDENTIAL INFORMATION TRANSMITTAL FORM. The confidential, proprietary
        and trade secret information of the disclosing party ("Confidential
        Information") to be disclosed hereunder is that information which (i) is
        described in the Confidential Information Transmittal Record ("CITR")
        executed from time to time hereafter and (ii) is marked with a
        "confidential", "proprietary", or similar legend. CITRs are subject to
        the terms of this Agreement. CITRs will be executed, in writing or in
        electronic form, by the parties prior to the disclosure of Confidential
        Information. All Confidential Information received from the disclosing
        party will be in tangible form. To be considered Confidential
        Information, non-tangible visual and/or verbal disclosures must be
        identified as confidential prior to disclosure and reduced to writing,
        marked as provided above and delivered to the receiving party within
        thirty (30) days of the original date of disclosure. A mutually signed
        CITR form will suffice as a writing for such non-tangible disclosures
        between the parties. The CITR will indicate the disclosing party, a
        description of the Confidential Information disclosed, the names of the
        representatives of the parties and the date when the disclosure covered
        by the CITR commenced.

2.      OBLIGATIONS OF RECEIVING PARTY. The receiving party will maintain the
        confidentiality of the Confidential Information of the disclosing party
        with at least the same degree of care that it uses to protect its own
        confidential and proprietary information, but no less than a reasonable
        degree of care under the circumstances. The receiving party will not
        disclose any of the disclosing party's Confidential Information to any
        employees or to any third parties except to the receiving party's
        employees, parent company and majority-owned subsidiaries who have a
        need to know and who agree to abide by nondisclosure terms at least as
        comprehensive as those set forth herein; provided that the receiving
        party will be liable for breach by any such entity. For the purposes of
        this Agreement, the term "employees" shall include independent
        contractors of each party. The receiving party will not make any copies
        of the Confidential Information received from the disclosing party
        except as necessary for its employees, parent company and majority-owned
        subsidiaries with a need to know. Any copies which are made will be
        identified as belonging to the disclosing party and marked
        "confidential", "proprietary" or with a similar legend.

3.      PERIOD OF NON-ASSERTION. Unless a shorter period is indicated in the
        applicable CITR, the disclosing party will not assert any claims of
        breach of this Agreement or misappropriation of trade secrets against
        the receiving party arising from the receiving party's disclosure of the
        disclosing party's Confidential Information made more than five (5)
        years from the date of the CITR under which such information was
        disclosed. However, unless at least one of the exceptions set forth in
        Section 4 below has occurred, the receiving party will continue to treat
        such Confidential Information as the confidential information of the
        disclosing party and only disclose any such Confidential Information to
        third parties under the terms of a non-disclosure agreement.

4.      TERMINATION OF OBLIGATION OF CONFIDENTIALITY. The receiving party will
        not be liable for the disclosure of any Confidential Information which
        is:

        (a)     rightfully in the public domain other than by a breach of a duty
                to the disclosing party;

        (b)     rightfully received from a third party without any obligation of
                confidentiality;

        (c)     rightfully known to the receiving party without any limitation
                on use or disclosure prior to its receipt from the disclosing
                party;

        (d)     independently developed by employees of the receiving party; or

        (e)     generally made available to third parties by the disclosing
                party without restriction on disclosure.

5.      TITLE. Title or the right to possess Confidential Information as between
        the parties will remain in the disclosing party.

6.      NO OBLIGATION OF DISCLOSURE; TERMINATION. Neither party has any
        obligation to disclose Confidential Information to the other. Either
        party may terminate this Agreement at any time without cause upon
        written notice to the other party; provided that each party's
        obligations with respect to Confidential Information disclosed during
        the term of this Agreement will survive any such termination. Either
        party may, at any time: (a) cease giving Confidential Information to the
        other party without any liability, and/or (b) request in writing the
        return or destruction of all or part of its Confidential Information
        previously disclosed, and all copies thereof, and the receiving party
        will promptly comply with such request, and certify in writing its
        compliance.

7.      RESIDUALS. Either party may use Residuals for any purpose, including,
        for example, use in the development, manufacture, promotion, sale and
        maintenance of its products and services; provided that this right to
        use Residuals does not result in or amount to a license under any
        patents, copyrights, trademarks, or maskworks of the disclosing party.
        The term "Residuals" means any information retained in the unaided
        memories of the receiving party's employees who have had access to the
        disclosing party's Confidential Information pursuant to the terms of
        this Agreement. An employee's memory is unaided if the employee has not
        intentionally memorized the information for the purpose of retaining and
        subsequently using or disclosing it to a third party. Subject to the
        terms and conditions of this Agreement, the receiving party's employees
        shall not be prevented from using Residual information as part of the
        employee's skill, knowledge, talent, and/or expertise on future
        projects.

8.      GENERAL.

        (a)     This Agreement is neither intended to nor will it be construed
                as creating a joint venture, partnership or other form of
                business association between the parties, nor an obligation to
                buy or sell products using or incorporating the Confidential
                Information.

        (b)     Both parties understand and acknowledge that no license under
                any patents, copyrights, trademarks, or maskworks is granted to
                or conferred upon either party in this Agreement or by the
                disclosure of any Confidential Information by one party to the
                other party as contemplated hereunder, either expressly, by
                implication, inducement, estoppel or otherwise, and that any
                license under such intellectual property rights must be express
                and in writing.

        (c)     The failure of either party to enforce any right resulting from
                breach of any provision of this Agreement by the other party
                will not be deemed a waiver of any right relating to a
                subsequent breach of such provision or of any other right
                hereunder.

        (d)     This Agreement will be governed by the laws of the State of
                Delaware without reference to conflict of laws principles, if
                any.

        (e)     This Agreement, any accompanying CITR and CITRs executed from
                time to time hereafter which incorporate the terms of this
                Agreement, constitutes the entire agreement between the parties
                with respect to the disclosure(s) of Confidential Information
                described in each CITR, and may not be amended except in a
                writing signed by a duly authorized representative of the
                respective parties. Any other agreements between the parties,
                including non-disclosure agreements, will not be affected by
                this Agreement.

        (f)     The disclosing party disclaims all warranties regarding all
                Confidential Information disclosed pursuant to this Agreement,
                including all warranties as to the accuracy or utility of such
                Confidential Information.

INTEL CONTACT:  Debashis Chowdhury     M/S: Ch6-329     TEL. NO:  (480) 554 2582

AGREED:
INTEL CORPORATION                      PARTICIPANT: Novatel Wireless Inc.
2200 Mission College Blvd.                          ----------------------------
Santa Clara, CA  95052-8119                         (Company Name, Division/Sub,
                                                     if applicable)

                                                    ----------------------------
/s/ SEAN MALLONEY                                   (Street Address)
- ---------------------------
Sean Malloney                                       ----------------------------
Vice President                                      (City)     (State)     (Zip)
Director, Sales and Marketing
                                                    ----------------------------
                                                    Signature of Authorized
                                                    Representative (e.g.
                                                    President or V.P.)

                                                    ----------------------------
                                                    Printed Name & Title

NOTE: TO ENABLE QUICK EXECUTION, INTEL HAS PRE-SIGNED THIS STANDARD CNDA. ANY
MODIFICATIONS TO THIS CNDA WILL RENDER THIS CNDA AND INTEL'S SIGNATURE NULL AND
VOID.

<PAGE>   130

                                    EXHIBIT H

<PAGE>   131

                                    EXHIBIT H

                       INTEROPERABILITY STATEMENT OF WORK

This statement of work covers Intel's use and integration of radio *** into
its designs. It is meant as a process placeholder for a more detailed Statement
of Work that will include dates, times, resources, and deliverables by each
party, in the form of Part C of Exhibit B-1 of the Agreement , which shall be
mutually agreed by the parties. The first statement of work will be done for the
*** for both *** and *** and additional statements of work will be
mutually agreed by the parties for the   ***. An outline for the
Statement of Work for the   *** is set forth below.

        1)      Novatel Wireless shall provide ***  specifications, and
                schematics to Intel for use in ***  for the  ***
                listed in Exhibit A of the Agreement.

        2)      Hardware Design Review (after Intel completes initial hardware
                design) (approx. *** )

                a.      Intel will provide to Novatel Wireless a schematic
                        layout package for its production design incorporating
                        one of the Novatel Wireless *** .

                b.      Novatel Wireless will review with Intel the design and
                        provide feedback to Intel on any performance
                        improvements or errors that are found in the design.

                c.      Intel will perform any needed changes and modifications
                        on the design and submit it to Novatel Wireless for a
                        final review.

                d.      A final design review will take place on the hardware
                        design package with both parties signing off on the
                        Intel design.

        3)      Software Design Review (After Intel completes initial software
                design) (Approx. *** )

                a.      Intel will provide to Novatel Wireless a SW architecture
                        design document that details Intel's use of the
                        ***  design SW features and functionality Intel is
                        planning to use.

                b.      Novatel Wireless will review the design in detail with
                        Intel's software engineers providing feedback on
                        performance improvement, errors, and or features that
                        are not available or functioning in the ***.

                c.      Intel will perform changes and modifications to the
                        software design and submit it to Novatel Wireless for a
                        final review.

                d.      A final design review will take place on the SW
                        architecture design with both parties signing off on the
                        Intel design.

        4)      Onsite Integration (When boards are ready and   *** is
                available) (Approx. *** )

                a.      At Intel's request, Novatel Wireless will provide onsite
                        hardware engineering support for board bring up,
                        diagnostics, and debugging of the Intel ***
                        incorporating the *** from Novatel Wireless.

                b.      At Intel's request, Novatel Wireless will provide onsite
                        software engineering support for software bring up,
                        diagnostics, and debugging of the software interfaces
                        between the embedded   ***   software stack and the ***.

        5)      Resources

                Each party shall provide sufficient resources to perform the
                obligations ascribed to it in

                                                                             107
                                  CONFIDENTIAL



*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   132

        this Exhibit B.

                                                                             108
                                  CONFIDENTIAL

<PAGE>   133

                                    EXHIBIT I

                              INTENTIONALLY OMITTED

<PAGE>   134

                                    EXHIBIT J

<PAGE>   135

                                   EXHIBIT J-1



                                       ***



*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   136






                                       ***



                                  CONFIDENTIAL                               113



*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.
<PAGE>   137

                                   EXHIBIT J-2

                                       ***

*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                                                             114
                                  CONFIDENTIAL

<PAGE>   138
                                       ***

*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                                                             115
                                  CONFIDENTIAL

<PAGE>   139

                                   Exhibit J-3

                                       ***

*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.

                                                                             116
                                  CONFIDENTIAL

<PAGE>   140
                                       ***

*** Certain information on this page has been omitted and filed separately with
  the Commission. Confidential treatment has been requested with respect to the
  omitted portions.



                                                                             117
                                  CONFIDENTIAL

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>3
<FILENAME>a62761a6ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 23.1


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this Amendment
No. 4 to Registration Statement No. 333-42570.




/s/  Arthur Andersen LLP

San Diego, California
October 23, 2000
</TEXT>
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<FILENAME>a62761a6ex27-1.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
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