PHONE COM INC, S-1/A, 1999-05-24

PHONE COM INC
S-1/A, 1999-05-24
PREPACKAGED SOFTWARE

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<PAGE>

As filed with the Securities and Exchange Commission on May 24, 1999
Registration No. 333-75219
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

Amendment No. 4
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------

PHONE.COM, INC.
(Formerly known as "Unwired Planet, Inc.")
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<C> <C> <S>
Delaware 3661 94-3219054
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

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800 Chesapeake Drive
Redwood City, California 94063
(650) 562-0200
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

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

Alain Rossmann
Chairman and Chief Executive Officer
Phone.com, Inc.
800 Chesapeake Drive
Redwood City, California 94063
(650) 562-0200
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)

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

Copies to:
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<S> <C>
Mark A. Medearis Mark A. Bertelsen
Laurel Finch Elise M. Brinck
Carl L. Spataro, Jr. Wilson Sonsini Goodrich & Rosati
Venture Law Group Professional Corporation
A Professional Corporation 650 Page Mill Road
2775 Sand Hill Road Palo Alto, CA 94304
Menlo Park, CA 94025 (650) 493-9300
(650) 854-4488
</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, 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. [_]

CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed
Proposed Maximum
Title Of Each Class Maximum Aggregate Amount Of
Of securities Amount To Be Offering Price Offering Registration
To Be registered Registered (1) Per Share (2) Price (2) Fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$0.001................ 4,600,000 shares $12.00 $55,200,000 $15,346 (3)
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</TABLE>
(1) Includes 600,000 shares of Common Stock issuable upon exercise of the
Underwriters' over-allotment option.
(2) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(a) under the Securities Act.
(3) Previously paid.
---------------

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>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this 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 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 MAY 24, 1999

4,000,000 Shares

[PHONE.COM LOGO]

Phone.com, Inc.

Common Stock

--------

Prior to this offering, there has been no public market for the common stock
of Phone.com, Inc. The initial public offering price of the common stock is
expected to be between $10.00 and $12.00 per share. We have made application to
list the common stock on The Nasdaq Stock Market's National Market under the
symbol "PHCM."

The underwriters have an option to purchase a maximum of 600,000 additional
shares to cover over-allotments of shares.

Investing in the common stock involves risks. See "Risk Factors" starting on
page 7.

<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to
Price to Public Commissions Phone.com
--------------- --------------- ---------------
<S> <C> <C> <C>
Per Share....................... $ $ $
Total........................... $ $ $
</TABLE>

The shares of common stock will be delivered on or about , 1999.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

Credit Suisse First Boston

BancBoston Robertson Stephens

Hambrecht & Quist

U.S. Bancorp Piper Jaffray

Prospectus dated , 1999
<PAGE>

[INSIDE FRONT COVER]

[COLOR ARTWORK]

PHONE.COM works with device manufacturers, including the following companies,
to enable Internet access for wireless telephones.

[Description of graphic on inside front cover page: Unwired Planet logo in
center of concentric circles. Located around the circles are photos of
wireless telephones that incorporate UP.Browser, as well as logos and names of
the manufacturers.]

UP.Applications, UP.Browser, UP.Link, UP.Organizer, UP.Web, and the
Phone.com name and logotype are trademarks, UP.Mail is a registered trademark
of Phone.com, Inc. All Rights Reserved. All other brand, company or product
names and marks are used only for the purpose of identification and may be
trademarks or registered trademarks, which are the sole property of their
respective owners. Copyright(C) 1999 Phone.com, Inc. All Rights Reserved.
<PAGE>

[Description of graphics and text on left front gatefold page:]

[Series of photos of persons using wireless telephones enabled with UP.Browser.
Next to the photos are the following captions, as well as screen captures and
the logos of the Internet content providers referenced in each caption:]

TRAVEL
I use UP.Browser to connect to Biztravel.com for flight information.

YELLOW PAGES
With UP.Browser and InfoSpace.com, I found the local 24-hour copy center, as
well as a nearby Chinese restaurant.

EMAIL
I check my email on my phone screen. With UP.Browser I can respond with an email
or an automatically dialed voice call.

NEWS
With Data Broadcasting Corporation and UP.Browser I have key news items and
information about customers and competitors at my fingertips.

SPORTS
I get stats and scores from SportsFeed, right on the screen of my wireless
telephone.
<PAGE>

[Description of graphics and text on right front gatefold page]

UP.LINK SERVER SUITE is a turnkey software solution that enables network
operators to offer Internet-based services to their wireless subscribers.
UP.Link Server Suite also provides network operators with subscriber
provisioning and network management functions on a robust and scalable software
platform.

[Description of graphic: Schematic of components of UP.Link Server Suite in the
center of concentric circles. The schematic is connected on the left by a
horizontal line to a radio tower with the words "WIRELESS NETWORK" next to it.
The schematic is connected on the right by a diagnonal line to a computer server
labeled "Network Operator Telephony Applications" and by a horizontal line to a
cloud labeled "Internet." The cloud, in turn is connected by vertical lines to
two computer servers labeled "Content Provider Web Sites" and "Corporate
Applications."]

The components of UP.Link Server Suite include:

UP.Applications is a suite of wireless Internet-based applications including
UP.Mail, an email application; UP.Organizer, a suite of personal information
management applications; and UP.Web, a Web-based interface for accessing
UP.Organizer data using personal computers.

The Services component includes the following services, which interact with
applications through a framework of open application programming interfaces.
The Push Server allows applications to push information to wireless subscribers.
The Fax Server enables the forwarding of email and other data content to fax
machines. The Identity Server maintains a subscriber registry that retains
subscribers' service settings and allows network operators to track their
subscribers' service usage. The Content Translation Framework provides forward
and backward compatibility of content formats between different generations of
browsers and wireless telephones.

UP.Link gateway provides network-layer functions and connects Internet- and
intranet-based services to wireless networks and wireless telephones.

The Administration component provides a Web-based administration control system
to keep the network operator's Internet-based network components up and running,
assess system status and provision new subscribers.
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TABLE OF CONTENTS

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Page
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Prospectus Summary....................................................... 4
Risk Factors............................................................. 7
Use Of Proceeds.......................................................... 16
Dividend Policy.......................................................... 16
Additional Information About Phone.com................................... 16
Capitalization........................................................... 17
Dilution................................................................. 18
Selected Consolidated Financial Data..................................... 19
Management's Discussion And Analysis Of Financial Condition And Results
Of Operations........................................................... 20
Business................................................................. 36
</TABLE>

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Page
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Management................................................................. 52
Certain Transactions....................................................... 64
Principal Stockholders..................................................... 66
Description Of Capital Stock............................................... 68
Shares Eligible For Future Sale............................................ 71
Underwriting............................................................... 73
Notice To Canadian Residents............................................... 75
Legal Matters.............................................................. 76
Experts.................................................................... 76
Where You Can Find More Information........................................ 76
Index To Consolidated Financial Statements................................. F-1
</TABLE>
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Dealer Prospectus Delivery Obligation

Until , 1999 (25 days after the 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.

3
<PAGE>

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary is not complete and does not contain all the information you
should consider before buying shares in this offering. You should read the
entire prospectus carefully.

Phone.com, Inc.

We are a leading provider of software that enables the delivery of Internet-
based services to mass-market wireless telephones. Using our software, network
operators can provide Internet-based services to their wireless subscribers,
and wireless telephone manufacturers can turn their mass-market wireless
telephones into mobile Internet appliances. Wireless subscribers thus have
access to Internet- and corporate intranet-based services, including email,
news, stocks, weather, travel and sports. In addition, subscribers have access
via their wireless telephones to network operators' intranet-based telephony
services, which may include over-the-air activation, call management, billing
history information, pricing plan subscription and voice message management.
Our software platform consists of the UP.Link Server Suite, which is installed
on network operators' systems, and UP.Browser, which is embedded in wireless
telephones.

We were a pioneer in the convergence of the Internet and mobile telephony.
To provide a worldwide standard for the delivery of Internet-based services
over mass-market wireless telephones, we formed the Wireless Application
Protocol Forum in close cooperation with co-founders Ericsson, Motorola and
Nokia. In April 1998, the WAP Forum published technical specifications for
application development and product interoperability, substantial portions of
which are based on our technology and on Internet standards. Over 100 leading
network operators, telecommunications device and equipment manufacturers, and
software companies worldwide have joined the WAP Forum as of May 1999.

We focus on selling our UP.Link Server Suite and related technical support
to network operators to enable them to offer a variety of wireless Internet-
based services to their subscribers. The UP.Link Server Suite includes (1) a
means of exchanging data between the Internet and mass-market wireless
telephones, commonly referred to as a gateway; (2) a service platform that
performs subscriber management and service provisioning functions and
communicates with the network operator's customer care and billing systems; and
(3) Internet-based wireless applications such as email and personal information
management software. As of May 1999, 24 network operators have licensed our
software and have commenced or announced commercial service or are in market or
laboratory trials. Our current network operator customers include:

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<S> <C>
. AT&T Wireless Services . IDO Corporation
. Bell Atlantic Mobile . LG TeleCom
. Bell Mobility . Nextel
. SFR/CEGETEL . Omnitel
. DDI Corporation . Orange
. Deutsche Telekom Mobilnet . Telecom Italia Mobile
. France Telecom Mobile . Telenor
. GTE Wireless . Telstra
</TABLE>

The UP.Browser is a browser and messaging software product that is
specifically designed for mass-market wireless telephones. We license our
UP.Browser software to wireless telephone

4
<PAGE>

manufacturers, who embed UP.Browser into their products. In order to encourage
these manufacturers to include UP.Browser in their wireless telephone models,
no per-unit royalty is charged. As of May 1999, 23 wireless telephone
manufacturers have licensed UP.Browser, including:

<TABLE>
<S> <C>
. Alcatel . Panasonic (Matsushita)
. Casio . Qualcomm
. Hitachi . Sagem
. Hyundai . Samsung Electronics
. IGS . Sharp
. Kyocera . Siemens
. LG Information & Communications . Sony
. Mitsubishi . Toshiba
. Motorola
</TABLE>

In addition, Ericsson and Nokia have announced that they will introduce
wireless telephones that will be interoperable with the UP.Link Server Suite.

Our current stockholders include the following companies or their
affiliates:

<TABLE>
<S> <C>
. AT&T Wireless Services . Kyocera Corporation
. Bell Atlantic Mobile . Mitsubishi Electric Corporation
. Bell Mobility . Paribas
. Citicorp . Qualcomm
. DDI Corporation . Reuters
. Gemplus . Sema Group
. Hikari Tsushin . Siemens
. Itochu Corporation
</TABLE>

Our principal executive offices are located at 800 Chesapeake Drive, Redwood
City, California 94063, and our telephone number is (650) 562-0200.

The Offering

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<C> <S>
Common stock offered....................... 4,000,000 shares
Common stock to be outstanding after this
offering.................................. 30,506,858 shares
Use of proceeds............................ Working capital and general
corporate purposes
Proposed Nasdaq National Market symbol..... PHCM
</TABLE>

This table is based on shares outstanding as of March 31, 1999. This table
excludes:

. 3,321,346 shares subject to outstanding options at a weighted average
exercise price of $1.86 as of March 31, 1999,
. 31,486 shares issuable upon exercise of outstanding warrants at a
weighted average exercise price of $3.81 per share as of March 31, 1999,
. an aggregate of 5,672,807 shares available for future issuance under our
1995 Stock Plan, 1996 Stock Plan, 1999 Directors' Stock Option Plan and
1999 Employee Stock Purchase Plan as of March 31, 1999.

5
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Summary Consolidated Financial Data

<TABLE>
<CAPTION>
Nine Months
December 16, 1994 Year Ended June 30, Ended March 31,
(Inception) to -------------------------- -----------------
June 30, 1995 1996 1997 1998 1998 1999
----------------- ------- ------- -------- ------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Operations Data:
Revenues:
License................ $ -- $ -- $ 80 $ 522 $ 289 $ 1,530
Maintenance and support
services.............. -- -- 212 1,683 635 3,786
Consulting services.... -- -- -- -- -- 1,401
------ ------- ------- -------- ------- --------
Total revenues........ -- -- 292 2,205 924 6,717
------ ------- ------- -------- ------- --------
Gross profit (loss)..... -- -- (61) 1,047 150 4,023
------ ------- ------- -------- ------- --------
Operating loss.......... (103) (2,666) (8,455) (11,605) (8,258) (14,402)
------ ------- ------- -------- ------- --------
Net loss................ $ (103) $(2,470) $(7,991) $(10,623) $(7,730) $(13,973)
====== ======= ======= ======== ======= ========
Basic and diluted net
loss per share......... $(0.02) $ (0.53) $ (1.67) $ (2.03) $ (1.50) $ (2.49)
====== ======= ======= ======== ======= ========
Shares used in computing
basic and diluted net
loss per share......... 4,671 4,704 4,776 5,221 5,142 5,618
====== ======= ======= ======== ======= ========
</TABLE>

<TABLE>
<CAPTION>
March 31, 1999
-------------------
Actual As Adjusted
------- -----------
<S> <C> <C>
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments......... $47,831 $87,651
Total assets.............................................. 57,320 97,140
Equipment loan and capital lease obligations, less current
portion.................................................. 607 607
Total stockholders' equity................................ 31,998 71,818
</TABLE>
- --------
See Note 1 of Notes to Consolidated Financial Statements for an explanation of
the method used to determine the number of shares used to compute the net loss
per share amounts.

The as adjusted numbers in the table above are adjusted to give effect to
receipt of the net proceeds from the sale of shares of common stock offered by
us at an assumed initial public offering price of $11.00 per share after
deducting the estimated underwriting discounts and commissions and estimated
offering expenses payable by us. See also "Use of Proceeds," "Capitalization"
and "Underwriting."

Except as otherwise noted herein, all information in this prospectus assumes
no exercise of the underwriters' over-allotment option and gives effect to:

. the conversion of all outstanding shares of our convertible preferred
stock into shares of common stock upon completion of this offering,
. a two-for-three reverse stock split to be completed prior to this
offering, and
. the filing of our amended and restated certificate of incorporation upon
completion of this offering.

6
<PAGE>

RISK FACTORS

You should carefully consider the following risks before making an
investment decision. The risks described below are intended to highlight risks
that are specific to us and are not the only ones that we face. Additional
risks and uncertainties, such as those that generally apply to our industry or
to companies undertaking initial public offerings, also may impair our business
operations. You should also refer to the other information set forth in this
prospectus, including the discussions set forth in "Special Note Regarding
Forward-Looking Statements," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business," as well as our
consolidated financial statements and the related notes. You should rely only
on the information contained in this document. We have not authorized anyone to
provide you with information that is different. The information in this
document may only be accurate on the date of this document.

Our future profitability is uncertain because we have a limited operating
history.

Because we commenced operations in December 1994 and commercially released
our first products in June 1996, we only have a limited operating history on
which you can base your evaluation of our business. We may not continue to grow
or achieve profitability. We face a number of risks encountered by early stage
companies in the wireless telecommunications and Internet software industries,
including:

. our need for network operators to launch and maintain commercial services
utilizing our products;
. the uncertainty of market acceptance of commercial services utilizing our
products;
. our substantial dependence on products with only limited market
acceptance to date;
. our need to introduce reliable and robust products that meet the
demanding needs of network operators and wireless telephone
manufacturers;
. our need to expand our marketing, sales, consulting and support
organizations, as well as our distribution channels;
. our ability to anticipate and respond to market competition;
. our need to manage expanding operations; and
. our dependence upon key personnel.

Our business strategy may not be successful, and we may not successfully
address these risks. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations-- Overview."

We may not achieve or sustain our revenue or profit goals.

Because we expect to continue to incur significant product development,
sales and marketing, and administrative expenses, we will need to generate
significant revenues to become profitable and sustain profitability on a
quarterly or annual basis. We may not achieve or sustain our revenue or profit
goals, and our ability to do so depends on a number of factors outside of our
control, including the extent to which:

. there is market acceptance of commercial services utilizing our products;
. our competitors announce and develop, or lower the prices of, competing
products; and
. our strategic partners dedicate resources to selling our products and
services.

7
<PAGE>

As a result, we may not be able to increase revenue or achieve profitability
on a quarterly or annual basis. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview."

Our quarterly operating results are subject to significant fluctuations, and
our stock price may decline if we do not meet expectations of investors and
analysts.

Our quarterly revenues and operating results are difficult to predict and
may fluctuate significantly from quarter to quarter. If we do not meet
expectations of investors and analysts in a given quarter, our stock price
could decline. Most of our expenses are relatively fixed. As a result, any
shortfall in revenues relative to our expectations could cause a significant
decline in our quarterly operating results. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Quarterly Results of
Operations."

Our sales cycle is long, and our stock price could decline if sales are delayed
or cancelled.

Quarterly fluctuations in our operating performance are exacerbated by our
sales cycle, which is lengthy, typically between nine and twelve months, and
unpredictable. Because our products represent a significant capital investment
for our customers, we spend a substantial amount of time educating customers
regarding the use and benefits of our products and they in turn spend a
substantial amount of time performing internal reviews and obtaining capital
expenditure approvals before purchasing our products. Any delay in sales of our
products could cause our quarterly operating results to vary significantly from
projected results, which could cause our stock price to decline. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results of Operations."

Our success depends on acceptance of our products and services by network
operators.

From inception through March 31, 1999, 42% of our total cumulative revenues
have come from fees paid to us by wireless telephone manufacturers that embed
our browser in their wireless telephones. However, our future success depends
on our ability to increase revenues from sales of our UP.Link Server Suite
software and related services to new and existing network operator customers,
and we may not be able to achieve widespread adoption by these customers. This
dependence is exacerbated by the relatively small number of network operators
worldwide. We currently have only a limited number of network operator
customers. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview."

The market for the delivery of Internet-based services through wireless
telephones is rapidly evolving, and we may not be able to adequately address
this market.

The market for the delivery of Internet-based services through wireless
telephones is rapidly evolving and is characterized by an increasing number of
market entrants that have introduced or developed, or are in the process of
introducing or developing, products that facilitate the delivery of Internet-
based services through wireless telephones. As a result, the life cycle of our
products is difficult to estimate. We may not be able to develop and introduce
new products, services and enhancements that respond to technological changes
or evolving industry standards on a timely basis, in which case our business
would suffer. In addition, we cannot predict the rate of adoption by wireless
subscribers of these services or the price they will be willing to pay for
these services. As a result, it is extremely difficult to predict the pricing
of these services and the future size and growth rate of this market.

8
<PAGE>

Our network operator customers face implementation and support challenges in
introducing Internet-based services via wireless telephones, which may slow
their rate of adoption or implementation of the services our products enable.
Historically, network operators have been relatively slow to implement new
complex services such as Internet-based services. In addition, network
operators may encounter greater customer service demands to support Internet-
based services via wireless telephones than they do for their traditional voice
services. We have limited or no control over the pace at which network
operators implement these new services. The failure of network operators to
introduce and support services utilizing our products in a timely and effective
manner could harm our business. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview."

To date, we have relied on sales to a small number of customers, some of whom
are our stockholders, and the failure to retain these customers or add new
customers may harm our business.

To date, a significant portion of our revenues in any particular period has
been attributable to a limited number of customers, comprised primarily of
network operators and wireless telephone manufacturers, some of whom are our
stockholders. We believe that we will continue to depend upon a limited number
of customers for a significant portion of our revenues for each quarter for the
foreseeable future. Any failure by us to capture a significant share of those
customers could materially harm our business. For example, during the year
ended June 30, 1998, AT&T Wireless Services, which will own approximately 2.5%
of our common stock after this offering, and Matsushita Communication
Industrial accounted for approximately 22% and 18%, respectively, of our total
revenues. For the nine months ended March 31, 1999, AT&T Wireless Services, DDI
Corporation, who will own approximately 0.6% of our common stock after this
offering, and a wireless telephone manufacturer accounted for approximately
14%, 11% and 13%, respectively, of our total revenues.

If wireless telephones are not widely adopted for mobile delivery of Internet-
based services, our business could suffer.

We have focused our efforts on mass-market wireless telephones as the
principal means of delivery of Internet-based services using our products. If
wireless telephones are not widely adopted for mobile delivery of Internet-
based services, our business would suffer materially. Mobile individuals
currently use many competing products, such as portable computers, to remotely
access the Internet and email. These products generally are designed for the
visual presentation of data, while wireless telephones historically have been
limited in this regard. If mobile individuals do not adopt wireless telephones
as a means of accessing Internet-based services, our business would suffer. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview."

If we fail to achieve widespread integration of our UP.Browser in wireless
telephones, our business could suffer.

Because our UP.Link Server Suite software offers enhanced features and
functionality that are not currently covered by the specifications promulgated
by the WAP Forum, subscribers currently must use UP.Browser-enabled wireless
telephones in order to fully utilize these features and functionality. Thus, if
we fail to achieve widespread integration of our UP.Browser in wireless
telephones, our business could suffer materially. All of our agreements with
wireless telephone

9
<PAGE>

manufacturers are nonexclusive, so they may choose to embed a browser other
than ours in their wireless telephones. We may not succeed in maintaining and
developing relationships with telephone manufacturers, and any arrangements may
be terminated early or not renewed at expiration. In addition, wireless
telephone manufacturers may not produce products using UP.Browser in a timely
manner and in sufficient quantities, if at all. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Overview."

The market for our products and services is highly competitive.

The market for our products and services is becoming increasingly
competitive. The widespread adoption of open industry standards such as the WAP
specifications may make it easier for new market entrants and existing
competitors to introduce products that compete with our software products. We
expect that we will compete primarily on the basis of price, time to market,
functionality, quality and breadth of product and service offerings. Our
current and potential competitors include the following:

. Wireless equipment manufacturers, such as Ericsson and Nokia;

. Microsoft;

. Wireless Knowledge, a joint venture of Microsoft and Qualcomm;
. Systems integrators, such as CMG plc and APiON Ltd., and software
companies, such as Oracle Corporation; and
. Providers of Internet software applications and content, electronic
messaging applications and personal information management software
solutions.

In particular, Microsoft Corporation has announced its intention to
introduce products and services that may compete directly with our UP.Link,
UP.Browser and UP.Application products. In addition, Microsoft has announced
that it intends to enable its Windows CE operating system to run on wireless
handheld devices, including wireless telephones, and to develop and market its
own browser for these devices. Many of our existing competitors, as well as
potential competitors, have substantially greater financial, technical,
marketing and distribution resources than we do. See "Business--Competition."

Our software products may contain defects or errors, and shipments of our
software may be delayed.

The software we develop is complex and must meet the stringent technical
requirements of our customers. We must develop our products quickly to keep
pace with the rapidly changing Internet software and telecommunications
markets. Software products and services as complex as ours are likely to
contain undetected errors or defects, especially when first introduced or when
new versions are released. We have in the past experienced delays in releasing
some versions of our products until software problems were corrected. Our
products may not be free from errors or defects after commercial shipments have
begun, which could result in the rejection of our products and damage to our
reputation, as well as lost revenues, diverted development resources, and
increased service and warranty costs, any of which could harm our business. See
"Business--Research and Product Development."

10
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We depend on recruiting and retaining key management and technical personnel
with telecommunications and Internet software experience.

Because of the technical nature of our products and the dynamic market in
which we compete, our performance depends on attracting and retaining key
employees. In particular, our future success depends in part on the continued
services of each of our current executive officers. We currently maintain key
person life insurance policies for Alain Rossmann, our Chief Executive Officer,
and Charles Parrish, our Executive Vice President. We are seeking to hire a
Vice President of Worldwide Sales. Competition for qualified personnel in the
telecommunications and Internet software industries is intense, and finding
qualified personnel with experience in both industries is even more difficult.
We believe that there are only a limited number of persons with the requisite
skills to serve in many key positions, and it is becoming increasingly
difficult to hire and retain these persons. Competitors and others have in the
past, and may in the future, attempt to recruit our employees. See "Business--
Employees."

We may fail to support our anticipated growth in operations.

To succeed in the implementation of our business strategy, we must rapidly
execute our sales strategy and further develop products and expand service
capabilities, while managing anticipated growth by implementing effective
planning and operating processes. If we fail to manage our growth effectively,
our business could suffer materially. To manage anticipated growth, we must:

. continue to implement and improve our operational, financial and
management information systems;
. hire, train and retain additional qualified personnel;
. continue to expand and upgrade core technologies; and
. effectively manage multiple relationships with various network operators,
wireless telephone manufacturers, content providers, applications
developers and other third parties.

Our systems, procedures and controls may not be adequate to support our
operations, and our management may not be able to achieve the rapid execution
necessary to exploit the market for our products and services. See "Business--
Employees."

Our success, particularly in international markets, depends in part on our
ability to maintain and expand our distribution channels.

Our success depends in part on our ability to increase sales of our products
and services through value-added resellers and systems integrators and to
expand our indirect distribution channels. If we are unable to maintain the
relationships that we have with our existing distribution partners, increase
revenues derived from sales through our indirect distribution channels, or
increase the number of distribution partners with whom we have relationships,
then we may not be able to increase our revenues or achieve profitability.

To date, almost all of our revenues from international markets have resulted
from our direct sales efforts. However, we expect that network operators in
international markets generally will require that our products and support
services be supplied through value-added resellers and systems

11
<PAGE>

integrators. Thus, we expect that a significant portion of international sales
will be made through value-added resellers and systems integrators, and the
success of our international operations will depend on our ability to maintain
productive relationships with value-added resellers and systems integrators.

In addition, our agreements with our distribution partners do not restrict
the sale by them of products and services that are competitive with our
products and services, and each of our partners generally can cease marketing
our products and services at their option and, in some circumstances, with
little notice and with little or no penalty. See "Business--Sales and
Marketing."

We depend on others to provide content and develop applications for wireless
telephones.

In order to increase the value to customers of our product platform and
encourage subscriber demand for Internet-based services via wireless
telephones, we must successfully promote the development of Internet-based
applications and content for this market. If content providers and application
developers fail to create sufficient applications and content for Internet-
based services via wireless telephones, our business could suffer materially.
Our success in motivating content providers and application developers to
create and support content and applications that subscribers find useful and
compelling will depend, in part, on our ability to develop a customer base of
network operators and wireless telephone manufacturers large enough to justify
significant and continued investments in these endeavors. See "Business--
Research and Product Development" and "--Sales and Marketing."

If we are unable to integrate our products with third-party technology, such as
network operators' systems, our business may suffer.

Our products are integrated with network operators' systems and wireless
telephones. If we are unable to integrate our platform products with these
third-party technologies, our business could suffer materially. For example,
if, as a result of technology enhancements or upgrades of these systems or
telephones, we are unable to integrate our products with these systems or
telephones, we could be required to redesign our software products. Moreover,
many network operators use legacy, or custom-made, systems for their general
network management software. Legacy systems are typically very difficult to
integrate with new server software such as our UP.Link Server Suite. We may not
be able to redesign our products or develop redesigned products that achieve
market acceptance. See "Business--Research and Product Development."

An interruption in the supply of software that we license from third parties
could cause a decline in product sales.

We license technology that is incorporated into our products from third
parties, such as RSA Data Security, Inc. and other companies. Any significant
interruption in the supply of any licensed software could cause a decline in
product sales, unless and until we are able to replace the functionality
provided by this licensed software. We also depend on these third parties to
deliver and support reliable products, enhance their current products, develop
new products on a timely and cost-effective basis, and respond to emerging
industry standards and other technological changes. The failure of these third
parties to meet these criteria could materially harm our business. See
"Business--Research and Product Development."

We may be unable to adequately protect our proprietary rights.

Our success depends significantly on our ability to protect our proprietary
rights to the technologies used in our products. If we are not adequately
protected, our competitors could use the

12
<PAGE>

intellectual property that we have developed to enhance their products and
services, which could harm our business. We rely on patent protection, as well
as a combination of copyright and trademark laws, trade secrets,
confidentiality provisions and other contractual provisions, to protect our
proprietary rights, but these legal means afford only limited protection. See
"Business--Intellectual Property Rights."

We may be sued by third parties for infringement of their proprietary rights.

The telecommunications and Internet software industries are characterized by
the existence of a large number of patents and frequent litigation based on
allegations of patent infringement or other violations of intellectual property
rights. As the number of entrants into our market increases, the possibility of
an intellectual property claim against us grows. Any intellectual property
claims, with or without merit, could be time-consuming and expensive to
litigate or settle and could divert management attention from administering our
core business. See "Business--Intellectual Property Rights."

International expansion is an important part of our strategy, and this
expansion carries specific risks.

International sales of products and services accounted for 7% and 44% of our
total revenues in the years ended June 30, 1997 and 1998, respectively, and 64%
of our total revenues for the nine months ended March 31, 1999. We expect
international sales to continue to account for a significant portion of our
revenues, although the percentage of our total revenues derived from
international sales may vary. Risks inherent in our international business
activities include business risks, economic and political risks, and legal
risks. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Overview" and "Business--Sales and Marketing."

Our year 2000 compliance efforts may involve significant time and expense, and
uncorrected problems could harm our business.

Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, beginning on January
1, 2000, computer systems and software used by many companies in a wide variety
of industries, including technology, transportation, utilities, finance and
telecommunications, will produce erroneous results or fail unless they have
been modified or upgraded to process date information correctly. Year 2000
compliance efforts may involve significant time and expense, and uncorrected
problems could materially and adversely affect our business. We may face claims
based on year 2000 issues arising from the integration of multiple products,
including ours, within an overall system. Network operators may also cease or
delay purchase and installation of new complex systems, such as our server
software products, as a result of, and during, their own internal year 2000
testing. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Year 2000 Readiness Disclosure."

We may acquire technologies or companies in the future, and these acquisitions
could result in the dilution of our stockholders and disruption of our
business.

We may acquire technologies or companies in the future. Entering into an
acquisition entails many risks, any of which could materially harm our
business, including:

. diversion of management's attention from other business concerns;
. failure to assimilate the acquired company with our pre-existing
business;

13
<PAGE>

. potential loss of key employees from either our pre-existing business or
the acquired business;
. dilution of our existing stockholders as a result of issuing equity
securities; and
. assumption of liabilities of the acquired company.

We have no current agreements or negotiations underway with respect to any
acquisitions.

Our stock price, like that of many companies in the Internet and
telecommunications software industries, may be volatile.

We expect that the market price of our common stock will fluctuate as a
result of variations in our quarterly operating results. These fluctuations may
be exaggerated if the trading volume of our common stock is low. In addition,
due to the technology-intensive and emerging nature of our business, the market
price of our common stock may rise and fall in response to:

. announcements of technological or competitive developments;
. acquisitions or strategic alliances by us or our competitors;
. the gain or loss of a significant customer or order; and
. changes in estimates of our financial performance or changes in
recommendations by securities analysts.

Our executive officers and directors own a large percentage of our voting stock
and could exert significant influence over matters requiring stockholder
approval after this offering.

Immediately after this offering, our executive officers and directors and
their respective affiliates, will continue to own approximately 39% of our
outstanding common stock. Accordingly, these stockholders may, as a practical
matter, be able to exert significant influence over matters requiring approval
by our stockholders, including the election of directors and the approval of
mergers or other business combinations. This concentration could have the
effect of delaying or preventing a change in control.

Our certificate of incorporation and bylaws and Delaware law contain provisions
that could discourage a takeover.

Provisions of our certificate of incorporation and bylaws and Delaware law
may discourage, delay or prevent a merger or acquisition that a stockholder may
consider favorable. These provisions include the following:

. establishing a classified board in which only a portion of the total
board members will be elected at each annual meeting;
. authorizing the board to issue preferred stock;
. prohibiting cumulative voting in the election of directors;
. limiting the persons who may call special meetings of stockholders;
. prohibiting stockholder action by written consent; and
. establishing advance notice requirements for nominations for election of
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.

See "Management--Board Composition" and "Description of Capital Stock--Anti-
Takeover Provisions of Delaware Law and Charter Provisions."

14
<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," and elsewhere in this prospectus are forward-looking
statements. These statements involve known and unknown risks, uncertainties,
and other factors that may cause our or our industry's actual results, levels
of activity, performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements expressed or
implied by these forward-looking statements. These factors are described in
"Risk Factors," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and other sections of this prospectus.

In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or "continue" or the negative of these
terms or other comparable terminology.

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of forward-
looking statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform them to actual results.

15
<PAGE>

USE OF PROCEEDS

The net proceeds to us from the sale of the 4,000,000 shares of common stock
offered by us are estimated to be approximately $39.8 million (approximately
$46.0 million if the underwriters' over-allotment option is exercised in full)
at an assumed initial public offering price of $11.00 per share, after
deducting the estimated underwriting discounts and commissions and the
estimated offering expenses.

We intend to use the net proceeds of this offering primarily for additional
working capital and other general corporate purposes, including increased sales
and marketing expenditures, increased research and development expenditures and
capital expenditures. We have not yet determined our expected use of these
proceeds, but we currently estimate that we will incur at least $22 million in
research and development expenditures, $16 million in sales and marketing
expenditures and $6 million in capital expenditures during the next twelve
months. 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. We may also use a portion of the net proceeds to acquire
additional businesses, products and technologies, to lease additional
facilities, 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. The amounts that we actually expend for working
capital and other general corporate purposes will vary significantly depending
on a number of factors, including future revenue growth, if any, and the amount
of cash we generate from operations. As a result, we will retain broad
discretion in the allocation of the net proceeds of this offering. Pending the
uses described above, we will invest the net proceeds in short-term, interest-
bearing, investment-grade securities.

The principal purposes of this offering are to create a public market for
our common stock, to obtain additional capital, to increase our visibility and
to facilitate future access to the public capital markets.

DIVIDEND POLICY

We have never paid cash dividends on our common stock. We currently intend
to retain any future earnings to fund the development and growth of our
business. Therefore, we do not currently anticipate paying any cash dividends
in the foreseeable future. In addition, the terms of our current equipment loan
prohibit us from paying dividends without our lender's consent.

ADDITIONAL INFORMATION ABOUT PHONE.COM

We were incorporated in Delaware under the name "Libris, Inc." in December
1994 and changed our name to"Unwired Planet, Inc." in April 1996. In April
1999, we changed our name from "Unwired Planet, Inc." to "Phone.com, Inc." Our
principal executive offices are located at 800 Chesapeake Drive, Redwood City,
California 94063, and our telephone number is (650) 562-0200. The address of
our Web site is "www.phone.com." Information contained on our Web site shall
not be deemed to be a part of this prospectus.

16
<PAGE>

CAPITALIZATION

The following table sets forth the following information:

. the actual capitalization of Phone.com as of March 31, 1999;
. the pro forma capitalization of Phone.com after giving effect to the
conversion of all outstanding shares of convertible preferred stock into
20,174,170 shares of common stock and the filing of our amended and
restated certificate of incorporation upon completion of this offering;
and
. the as adjusted capitalization to give effect to the sale of shares of
common stock at an assumed initial public offering price of $11.00 per
share in this offering after deducting the estimated underwriting
discounts and commissions Phone.com expects to pay in connection with
this offering and estimated offering expenses payable by Phone.com.

This table should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
As of March 31, 1999
----------------------------
Pro As
Actual Forma Adjusted
-------- -------- --------
(In thousands, except
share data)
<S> <C> <C> <C>
Equipment loan and capital lease obligations, less
current portion.................................. $ 607 $ 607 $ 607
-------- -------- -------
Stockholders' equity:
Convertible preferred stock $0.001 par value,
20,329,720 shares authorized, 20,174,170 shares
issued and outstanding, actual;
5,000,000 shares authorized, none issued or
outstanding, pro forma
and as adjusted................................ 20 -- --
Common stock $0.001 par value, 32,000,000 shares
authorized,
6,332,688 shares issued and outstanding,
actual; 100,000,000 shares authorized,
26,506,858 shares issued and outstanding, pro
forma; and 100,000,000 shares authorized,
30,506,858 shares issued and outstanding, as
adjusted(1).................................... 6 26 30
Additional paid-in capital...................... 69,158 69,158 108,974
Deferred stock-based compensation............... (1,545) (1,545) (1,545)
Treasury stock.................................. (196) (196) (196)
Notes receivable from stockholders.............. (285) (285) (285)
Accumulated deficit............................. (35,160) (35,160) (35,160)
-------- -------- -------
Total stockholders' equity.................... 31,998 31,998 71,818
-------- -------- -------
Total capitalization........................ $ 32,605 $ 32,605 $72,425
======== ======== =======
</TABLE>
- ---------------------
(1) This table excludes the following shares:
. 3,321,346 shares issuable upon exercise of outstanding options at a
weighted average exercise price of $1.86 per share as of March 31, 1999,
. 31,486 shares issuable upon exercise of outstanding warrants at a
weighted average exercise price of $3.81 per share as of March 31, 1999,
and
. an aggregate of 5,672,807 shares available for future issuance under our
1995 Stock Plan, 1996 Stock Plan, 1999 Directors' Stock Option Plan and
1999 Employee Stock Purchase Plan as of March 31, 1999. See "Management--
Stock Plans" and Notes 4 and 5 of the Notes to Consolidated Financial
Statements.

17
<PAGE>

DILUTION

The pro forma net tangible book value of our common stock on March 31, 1999
was $32.0 million, or approximately $1.21 per share. Pro forma net tangible
book value represents the amount of our total tangible assets less total
liabilities, divided by the number of shares of common stock outstanding.
Dilution in net tangible book value per share represents the difference between
the amount per share paid by purchasers of shares of our common stock in this
offering and the net tangible book value per share of our common stock
immediately following this offering. After giving effect to our sale of shares
of common stock offered by this prospectus at an assumed initial public
offering price of $11.00 per share and after deducting the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, our net tangible book value would have been $71.8 million, or
approximately $2.35 per share. This represents an immediate increase in net
tangible book value of $1.14 per share to existing stockholders and an
immediate dilution in net tangible book value of $8.65 per share to new
investors.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................... $11.00
Net tangible book value per share as of March 31, 1999........... $1.21
Increase per share attributable to new investors................. 1.14
-----
Pro forma net tangible book value per share after this offering.... 2.35
------
Dilution per share to new investors................................ $ 8.65
======
</TABLE>

The following table sets forth, as of March 31, 1999, the differences
between the number of shares of common stock purchased from us, the total price
and average price per share paid by existing investors and by the new
investors, before deducting the estimated underwriting discounts and
commissions and estimated offering expenses payable by us, assuming an initial
public offering price of $11.00 per share.

<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ -------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders..... 26,506,858 86.9% $ 70,003,000 61.4% $ 2.64
New investors ............ 4,000,000 13.1 44,000,000 38.6 11.00
---------- ----- ------------ -----
Total..................... 30,506,858 100.0% $114,003,000 100.0%
========== ===== ============ =====
</TABLE>

If the underwriters' over-allotment option is exercised in full, the
following will occur:

. the number of shares of common stock held by existing stockholders will
decrease to approximately 85.2% of the total number of shares of our
common stock outstanding after this offering; and
. the number of shares held by new investors will be increased to or
approximately 14.8% of the total number of shares of our common stock
outstanding after this offering.

18
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The tables that follow present portions of our consolidated financial
statements and are not complete. You should read the following selected
consolidated financial data in conjunction with our consolidated financial
statements and related notes thereto and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
in this prospectus. The consolidated statements of operations data for the
years ended June 30, 1996, 1997 and 1998, and the nine months ended March 31,
1999, and the consolidated balance sheet data as of June 30, 1997 and 1998, and
March 31, 1999 are derived from our consolidated financial statements that have
been audited by KPMG LLP, independent auditors, which are included elsewhere in
this prospectus. The consolidated statements of operations data for the period
from December 16, 1994 (inception) to June 30, 1995 and the consolidated
balance sheet data as of June 30, 1995 and 1996 are derived from audited
consolidated financial statements that are not included in this prospectus. The
consolidated statements of operations data for the nine months ended March 31,
1998 is derived from our unaudited consolidated financial statements included
elsewhere in this prospectus and include, in the opinion of management, all
adjustments, consisting only of normal recurring adjustments, that we consider
necessary for the fair presentation of our consolidated financial position and
results of operations for those periods. The historical results presented below
are not necessarily indicative of the results to be expected for any future
fiscal year. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

<TABLE>
<CAPTION>
Nine Months
December 16, Year Ended June 30, Ended March 31,
1994 (Inception) -------------------------- -----------------
to June 30, 1995 1996 1997 1998 1998 1999
---------------- ------- ------- -------- ------- --------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Statements
of Operations Data:
Revenues:
License................ $ -- $ -- $ 80 $ 522 $ 289 $ 1,530
Maintenance and
support services...... -- -- 212 1,683 635 3,786
Consulting services.... -- -- -- -- -- 1,401
------ ------- ------- -------- ------- --------
Total revenues....... -- -- 292 2,205 924 6,717
------ ------- ------- -------- ------- --------
Cost of revenues:
License................ -- -- 87 95 59 172
Maintenance and
support services...... -- -- 266 1,063 715 1,876
Consulting services.... -- -- -- -- -- 646
------ ------- ------- -------- ------- --------
Total cost of
revenues............ -- -- 353 1,158 774 2,694
------ ------- ------- -------- ------- --------
Gross profit (loss).. -- -- (61) 1,047 150 4,023
------ ------- ------- -------- ------- --------
Operating expenses:
Research and
development........... 92 1,387 3,959 5,732 3,871 8,406
Sales and marketing.... 6 757 3,198 5,011 3,307 6,504
General and
administrative........ 5 522 1,237 1,801 1,185 2,731
Stock-based
compensation.......... -- -- -- 108 45 784
------ ------- ------- -------- ------- --------
Total operating
expenses............ 103 2,666 8,394 12,652 8,408 18,425
------ ------- ------- -------- ------- --------
Operating loss....... (103) (2,666) (8,455) (11,605) (8,258) (14,402)
Interest income, net.... -- 196 464 982 528 1,139
------ ------- ------- -------- ------- --------
Loss before income
taxes............... (103) (2,470) (7,991) (10,623) (7,730) (13,263)
Income taxes............ -- -- -- -- -- 710
------ ------- ------- -------- ------- --------
Net loss............. $ (103) $(2,470) $(7,991) $(10,623) $(7,730) $(13,973)
====== ======= ======= ======== ======= ========
Basic and diluted net
loss per share......... $(0.02) $ (0.53) $ (1.67) $ (2.03) $ (1.50) $ (2.49)
====== ======= ======= ======== ======= ========
Shares used in computing
basic and diluted net
loss per share......... 4,671 4,704 4,776 5,221 5,142 5,618
====== ======= ======= ======== ======= ========
</TABLE>

<TABLE>
<CAPTION>
As of June 30, As of
---------------------------- March 31,
1995 1996 1997 1998 1999
------ ------ ------ ------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term
investments........................... $2,300 $5,848 $8,014 $33,464 $47,831
Total assets........................... 2,315 6,767 9,759 39,144 57,320
Equipment loan and capital lease
obligations, less current portion..... -- -- -- 915 607
Total stockholders' equity............. 2,243 6,464 8,125 28,393 31,998
</TABLE>

19
<PAGE>

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

This section of this prospectus includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. We use words such as "anticipates," "believes,"
"expects," "future," and "intends," and similar expressions to identify
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.
These forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from historical results or our
predictions. These risks are described in "Risk Factors" and elsewhere in this
prospectus. See "Special Note Regarding Forward-Looking Statements."

Overview

We were incorporated in December 1994 and, from inception until June 1996,
our operations consisted primarily of various start-up activities, including
development of technologies central to our business, recruiting personnel and
raising capital. In 1995, we developed our initial technology, which enables
the delivery of Internet-based services to wireless telephones. In 1996, we
introduced and deployed our first products based on this technology. We first
recognized license revenues in August 1996, and generated license revenues of
approximately $80,000 and $522,000 for the fiscal years ended June 30, 1997 and
1998, respectively, and $1.5 million for the nine months ended March 31, 1999.
We incurred net losses of approximately $8.0 million and $10.6 million for the
fiscal years ended June 30, 1997 and 1998, respectively, and $14.0 million for
the nine months ended March 31, 1999. As of March 31, 1999, we had an
accumulated deficit of $35.2 million.

To provide a worldwide standard for the delivery of Internet-based services
over mass-market wireless telephones, we formed the WAP Forum in close
cooperation with Ericsson, Motorola and Nokia, the world's three largest
manufacturers of wireless telephones. In February 1998, the WAP Forum published
technical specifications for application development and product
interoperability based substantially on Phone.com's technology and on Internet
standards. Leading network operators, telecommunications device and equipment
manufacturers and software companies worldwide have sanctioned the
specifications promulgated by the WAP Forum.

We generate revenues from licenses, maintenance and support services and
consulting services. We receive license revenues from licensing our UP.Link
Server Suite software directly to network operators and indirectly through
value-added resellers. From our inception through March 31, 1999, cumulative
revenues from licensing our UP.Link Server Suite software represented 42% of
total cumulative revenues, inclusive of installation, training and support
services provided to network operators. Maintenance and support services
revenues also include engineering and support services provided to wireless
telephone manufacturers. Cumulative engineering and support services fees from
UP.Browser agreements with wireless telephone manufacturers represented 42% of
our total cumulative revenues from inception through March 31, 1999. Consulting
services revenues are derived from consulting services provided to network
operator customers either directly by us or indirectly through resellers.

Our future success depends on our ability to increase revenues from sales of
products and services to new and existing network operator customers. If the
market for Internet-based services via wireless telephones fails to develop or
develops more slowly than expected, then our business would be materially and
adversely affected. In addition, because there is a relatively small number of

20
<PAGE>

network operators worldwide, any failure to sell our products to network
operator customers successfully could result in a shortfall in revenues that
could not be readily offset by other revenue sources.

Our business strategy also relies to a significant extent on the widespread
propagation of UP.Browser-enabled telephones through our relationships with
network operators and wireless telephone manufacturers. In order to encourage
adoption of UP.Browser-enabled wireless telephones, we license our UP.Browser
software to wireless telephone manufacturers free of per-unit royalties and
other license fees and provide maintenance and support services for an annual
flat fee. As of May 1999, we had licensed UP.Browser to 23 wireless telephone
manufacturers. As of May 1999, five wireless telephone manufacturer customers
had made commercial shipments of telephones with the UP.Browser embedded. In
addition, we are currently providing engineering support services in connection
with 45 browser integration projects.

During the year ended June 30, 1998, AT&T Wireless Services, which will own
approximately 2.5% of our common stock after this offering, and Matsushita
Communication Industrial accounted for approximately 22% and 18%, respectively,
of our total revenues. For the nine months ended March 31, 1999, AT&T Wireless
Services, DDI Corporation, which will own approximately 0.6% of our common
stock after this offering, and a wireless telephone manufacturer accounted for
approximately 14%, 11% and 13%, respectively, of our total revenues.

For agreements entered into prior to July 1, 1998, we recognized revenues in
accordance with the provisions of the American Institute of Certified Public
Accountants' Statement of Position No. 91-1, Software Revenue Recognition.
Effective July 1, 1998, we adopted SOP 97-2, Software Revenue Recognition, as
amended. SOP 97-2 generally requires revenue earned on software arrangements
involving multiple elements to be allocated to each element based on the
relative fair value of the elements. The adoption of SOP 97-2 did not have a
significant impact on our accounting for revenues.

We license our UP.Link Server Suite products to network operators through
our direct sales force and indirectly through our channel partners. Our license
agreements do not provide for a right of return. Allowances for future
estimated warranty costs are provided at the time revenue is recognized.
Licenses can be purchased on an as-deployed basis or on a prepaid basis. For
licenses purchased on an as-deployed basis, license revenue is recognized as
subscribers are activated to use the services that are based on our UP.Link
Server Suite products. We have no obligation to provide standards-compliant
products once a subscriber has been activated. For licenses purchased on a
prepaid basis, prepaid license fees are recognized under subscription
accounting due to our commitment to provide standards-compliant products for
each license covered by the prepaid arrangement. This subscription revenue is
recognized ratably over the contractual term of the prepaid arrangement (i.e.,
the date the prepaid licenses expire if not used), beginning after delivery and
acceptance have occurred. The prepaid license period is generally twelve to
thirty months. Licenses expire if not activated prior to the end of the prepaid
license term. We recognize revenues from maintenance and support services
provided to network operators ratably over the term of the agreement, generally
one year, and recognize revenues from consulting services provided to network
operators as the services are performed.

We recognize revenues from UP.Browser agreements with wireless telephone
manufacturers ratably over the period during which the services are performed,
generally one year. We provide our wireless telephone manufacturer customers
with support associated with their efforts to port our UP.Browser software to
their wireless telephones, software error corrections and new releases as they
become available commercially.

21
<PAGE>

Deferred revenue was $18.7 million as of March 31, 1999. We expect that
deferred revenue will decline in the long term as network operators deploy
services based on our products. In particular, license revenue was recognized
in the third quarter of fiscal 1999 in connection with the launch by
CEGETEL/SFR of commercial services based on our products and the acceptance of
our products by DDI Corporation. We recognized previously deferred license
revenues of $135,000 in the quarter ended March 31, 1999, and will recognize
approximately $400,000 in each of the quarters ending June 30, 1999,
September 30, 1999, December 31, 1999 and March 31, 2000 relating to our sales
to CEGETEL/SFR. With regard to sales to DDI Corporation, we recognized
previously deferred license revenues of $364,000 in the quarter ended March 31,
1999, and will recognize approximately $550,000 in each of the quarters ending
June 30, 1999, September 30, 1999 and December 31, 1999.

License revenue also was recognized in the third quarter of fiscal 1999
under an agreement with AT&T Wireless Services initially entered into in May
1996. Under that agreement, AT&T Wireless Services, prepaid $4.7 million for
the right to deploy up to a fixed number of licenses through December 1999. Due
to the early nature of the commercial deployments of our products by network
operators and because we believed we would assume additional obligations to
assist AT&T Wireless Services in deploying the software licenses if
difficulties were encountered during the deployment, the license portion of the
prepaid fee was recognized as licenses were deployed. Between August 1997 and
December 1998, $484,000 was recognized relating to this prepayment. In
connection with an amendment to the agreement entered into in March 1999, AT&T
Wireless Services agreed that we would not be further obligated to assist them
in the deployment of the prepaid licenses discussed above. Therefore, the
remaining deferred revenue of approximately $4.2 million as of the date of the
contract amendment in March 1999 that related to the prepayment is being
recognized as revenue ratably over the remaining contractual term of the
prepaid arrangement. Accordingly, we recognized revenue of $465,000 in the
quarter ending March 31, 1999, and will recognize approximately $1.25 million
in each of the quarters ending June 30, 1999, September 30, 1999, and December
31, 1999, associated with the prepayment.

To date, we have not recognized significant revenues derived from sales
through our indirect channels. We expect that our gross profit on revenues
derived from sales through indirect channel partners will be less than the
gross profit on revenues from direct sales. Our success, in particular in
international markets, depends in part on our ability to increase sales of our
products and services through value-added resellers and to expand our indirect
distribution channels. In addition, our agreements with our distribution
partners generally do not restrict the sale of products that are competitive
with our products and services, and each of our partners can cease marketing
our products and services at their option.

. failure by us and/or third parties to develop localized content and
applications that are used with our products;
. costs of localizing our products for foreign markets;
. difficulties in staffing and managing foreign operations;
. longer accounts receivable collection time;
. political and economic instability;
. fluctuations in foreign currency exchange rates;

22
<PAGE>

. reduced protection of intellectual property rights in some foreign
countries;
. contractual provisions governed by foreign laws;
. export restrictions on encryption and other technologies;
. potentially adverse tax consequences; and
. the burden of complying with complex and changing regulatory
requirements.

Since early 1997, we have invested substantially in research and
development, marketing, domestic and international sales channels, professional
services and our general and administrative infrastructure. These investments
have significantly increased our operating expenses, contributing to net losses
in each fiscal quarter since our inception. Our limited operating history makes
it difficult to forecast future operating results. Although our revenues have
grown in recent quarters, our revenues may not increase at a rate sufficient to
achieve and maintain profitability, if at all. We anticipate that our operating
expenses will increase substantially in absolute dollars for the foreseeable
future as we expand our product development, sales and marketing, professional
services and administrative staff. Even if we were to achieve profitability in
any period, we may not sustain or increase profitability on a quarterly or
annual basis.

Nine Months Ended March 31, 1998 and 1999

License Revenues

License revenues increased from $289,000 for the nine months ended March 31,
1998 to $1.5 million for the nine months ended March 31, 1999. The increase in
license revenues was due primarily to the launch by CEGETEL/SFR of commercial
services based on our products, the acceptance of our products by DDI
Corporation and the satisfaction of our deployment obligations related to AT&T.
Revenues recognized during the nine months ended March 31, 1999 as a result of
these three customers were $135,000, $364,000 and $393,000, respectively.

Maintenance and Support Services Revenues

Maintenance and support services revenues increased from $635,000 for the
nine months ended March 31, 1998 to $3.8 million for the nine months ended
March 31, 1999. The increase in maintenance and support services revenues was
attributable primarily to increased demand for maintenance and engineering
support services by wireless telephone manufacturers, resulting in an increase
of approximately $2.3 million, and to revenues of $884,000 associated with
trials of our UP.Link Server Suite software by wireless network operators.

Consulting Services Revenues

Consulting services revenues were $1.4 million for the nine months ended
March 31, 1999. No consulting services were performed in the nine months ended
March 31, 1998.

Cost of License Revenues

Cost of license revenues consists primarily of third-party license and
support fees. Cost of license revenues increased from $59,000 for the nine
months ended March 31, 1998 to $172,000 for the nine months ended March 31,
1999. The growth in cost of license revenues was attributable primarily to the
increase in license revenues. As a percentage of license revenues, cost of
license revenues for the nine months ended March 31, 1998 and 1999 was 20% and
11%, respectively. The decrease as a percentage of license revenues was
attributable primarily to higher license revenues for the nine months ended
March 31, 1999 and to the amortization of fixed maintenance fees relating to
third party software licenses. We expect that cost of license revenues will
vary as a percentage of license revenues from period to period.

23
<PAGE>

Cost of Maintenance and Support Services Revenues

Cost of maintenance and support services revenues consists of compensation
and related overhead costs for personnel engaged in the delivery of
installation, training and support services to network operators, and
engineering and support services to wireless telephone manufacturers. The
engineering and support services performed for wireless telephone manufacturers
includes assistance relating to integrating our UP.Browser software into the
manufacturers' wireless telephones. Cost of maintenance and support services
revenues increased from $715,000 for the nine months ended March 31, 1998 to
$1.9 million for the nine months ended March 31, 1999. The growth in cost of
maintenance and support services revenues was attributable primarily to an
increase in personnel dedicated to support a larger number of wireless
telephone manufacturer customers, which increased costs by approximately
$500,000 from March 31, 1998 to March 31, 1999, and increased staffing in
anticipation of growth in the number of network operator customers, which
increased costs by approximately $650,000 during the same period. As a
percentage of maintenance and support service revenues, cost of maintenance and
support services revenues for the nine months ended March 31, 1998 and 1999 was
113% and 50%, respectively. Gross profit on maintenance and support services
increased between March 31, 1998 and March 31, 1999 due to the increase in the
number of browser integration assignments for wireless telephone manufacturers,
which had the effect of spreading our costs over a greater revenue base. In
addition, the number of trials in progress by network operators increased
during this period. We anticipate that the cost of maintenance and support
services revenues will increase in absolute dollars in future operating
periods.

Cost of Consulting Services Revenues

Cost of consulting services revenues consists of compensation and
independent consultant costs for personnel engaged in our consulting services
operations and related overhead. We commenced our consulting operations in
fiscal 1999. Cost of consulting services revenues for the nine months ended
March 31, 1999 was $646,000. No consulting services were performed in the nine
months ended March 31, 1998. As a percentage of consulting services revenues,
cost of consulting services revenues for the nine months ended March 31, 1999
was 46%. Gross profit on consulting services revenues is impacted by the mix of
company personnel and independent consultants assigned to projects. The gross
profit we achieve is also impacted by the contractual terms of the consulting
assignments we undertake, and the gross profit on fixed price contracts
typically is more susceptible to fluctuation than contracts performed on a
time-and-materials basis. We anticipate that the cost of consulting services
revenues will increase in absolute dollars as we continue to invest in the
growth of our consulting services operations.

Research and Development Expenses

Research and development expenses consist primarily of compensation and
related costs for research and development personnel. Research and development
expenses increased 117% from $3.9 million for the nine months ended March 31,
1998 to $8.4 million for the nine months ended March 31, 1999. This increase
was attributable primarily to the addition of personnel in our research and
development organization associated with product development. We expect to
continue to make substantial investments in research and development and
anticipate that research expenses will continue to increase in absolute
dollars.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of compensation and related
costs for sales and marketing personnel, sales commissions, marketing programs,
public relations, promotional materials,

24
<PAGE>

travel expenses and trade show exhibit expenses. Sales and marketing expenses
increased 97% from $3.3 million for the nine months ended March 31, 1998 to
$6.5 million for the nine months ended March 31, 1999. This increase resulted
from the addition of personnel in our sales and marketing organizations,
reflecting our increased selling effort to develop market awareness of our
products and services. We anticipate that sales and marketing expenses will
increase in absolute dollars as we increase our investment in these areas.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and
related expenses, accounting, legal and administrative expenses, professional
service fees and other general corporate expenses. General and administrative
expenses increased 130% from $1.2 million for the nine months ended March 31,
1998 to $2.7 million for the nine months ended March 31, 1999. This increase
consisted of approximately $900,000 related to the addition of personnel
performing general and administrative functions and, to a lesser extent, legal
expenses associated with increased product licensing and patent activity. We
expect general and administrative expenses to increase in absolute dollars as
we add personnel and incur additional expenses related to the anticipated
growth of our business and operation as a public company.

Stock-Based Compensation

Some stock options granted and restricted stock sold during the fiscal year
ended June 30, 1998 and during the nine months ended March 31, 1999 have been
deemed to be compensatory. Total deferred stock-based compensation associated
with these equity arrangements through March 31, 1999 amounted to $2.4 million
related to stock options granted and restricted stock issued from October 1997
through March 1999. These amounts are being amortized over the respective
vesting periods of these equity arrangements in a manner consistent with
Financial Accounting Standards Board Interpretation No. 28. Of the total
deferred stock-based compensation, $45,000 and $784,000 was amortized in the
nine months ended March 31, 1998 and 1999, respectively. We expect amortization
of approximately $227,000, $696,000, $375,000, $185,000 and $62,000 in the
fourth quarter of the fiscal year ending June 30, 1999, and in the fiscal years
ending June 30, 2000, 2001, 2002 and 2003, respectively.

Interest Income, Net

Net interest income is comprised primarily of interest earned on cash and
cash equivalents and short-term investments, offset by interest expense related
to obligations under capital leases and our
equipment loan. Net interest income was $528,000 and $1.1 million for the nine
months ended
March 31, 1998 and 1999, respectively. The increase was primarily attributable
to increased cash balances as a result of our private placement financing
consummated in February 1998, and to a lesser extent, to our private placement
financing consummated in March 1999.

Income Taxes

Income tax expense of $710,000 for the nine months ended March 31, 1999,
consisted of foreign taxes. Since inception, we have incurred net losses for
federal and state tax purposes and have not recognized any tax provision or
benefit. As of March 31, 1999, we had net operating loss carryforwards of
approximately $31.0 million for both federal and California income tax
purposes. These carryforwards, if not utilized, expire beginning in the year
2004 through 2019. We also have

25
<PAGE>

research and development credit carryforwards of approximately $367,000 and
$279,000 for federal and California income tax purposes, respectively. We also
have a foreign tax credit carryforward of $670,000, which expires in 2004.
Federal and California tax laws impose significant restrictions on the
utilization of net operating loss carryforwards in the event of a shift in our
ownership that constitutes an "ownership change," as defined in Section 382 of
the Internal Revenue Code. If we have an ownership change, the ability to
utilize the stated carryforwards could be significantly reduced. See Note 7 of
Notes to Consolidated Financial Statements.

As of March 31, 1999, we had deferred tax assets of $14.6 million, which
were fully offset by a valuation allowance. Deferred tax assets consist
principally of the federal and state net operating loss carryforwards,
capitalized start-up expenditures, accruals and reserves not currently
deductible for tax purposes, research and development credits, and foreign tax
credit carryforwards. We have provided a valuation allowance due to the
uncertainty of generating future profits that would allow for the realization
of these deferred tax assets. Accordingly, no tax benefit was recorded in the
accompanying consolidated statements of operations.

Fiscal Years Ended June 30, 1996, 1997 and 1998

License Revenues

License revenues increased from $80,000 in the fiscal year ended June 30,
1997 to $522,000 in the fiscal year ended June 30, 1998. No license revenues
were recognized in the fiscal year ended June 30, 1996. The increase in license
revenues was due primarily to the launch of wireless Internet-based services by
network operators.

Maintenance and Support Services Revenues

Maintenance and support services revenues increased from $212,000 in the
fiscal year ended June 30, 1997 to $1.7 million in the fiscal year ended June
30, 1998. The increase in maintenance and support services revenues was due
primarily to an increase in services provided to wireless telephone
manufacturers and increased installation and support fees from network
operators. No maintenance and support services were performed in the fiscal
year ended June 30, 1996.

Cost of License Revenues

Cost of license revenues increased from $87,000 in the fiscal year ended
June 30, 1997 to $95,000 in the fiscal year ended June 30, 1998. As a
percentage of license revenues, cost of license revenues in the fiscal years
ended June 30, 1997 and 1998 was 109% and 18%, respectively. Costs of license
revenues in the fiscal year ended June 30, 1997 included $74,000 attributable
to non-recurring third-party software license and software customization fees.

Cost of Maintenance and Support Services Revenues

Cost of maintenance and support services revenues increased from $266,000 in
the fiscal year ended June 30, 1997 to $1.1 million in the fiscal year ended
June 30, 1998. The growth in cost of maintenance and support services revenues
was attributable primarily to growth in the number of wireless telephone
manufacturing customers and costs associated with installation of our UP.Link
Server Suite software at network operators' facilities. As a percentage of
maintenance and support services revenues, cost of maintenance and support
services revenues in the fiscal years ended June 30, 1997 and 1998 was 125% and
63%, respectively.

26
<PAGE>

Research and Development Expenses

Research and development expenses increased 185% from $1.4 million in the
fiscal year ended June 30, 1996 to $4.0 million in the fiscal year ended June
30, 1997 and increased 45% to $5.7 million in the fiscal year ended June 30,
1998. The increases in the fiscal years ended June 30, 1997 and 1998 were
attributable primarily to the addition of personnel in our research and
development organization associated with product development and increased
patent prosecution activity.

Sales and Marketing Expenses

Sales and marketing expenses increased 322% from $757,000 in the fiscal year
ended June 30, 1996 to $3.2 million in the fiscal year ended June 30, 1997 and
increased 57% to $5.0 million in the fiscal year ended June 30, 1998. The
increases in the fiscal years ended June 30, 1997 and 1998 reflected the
addition of personnel in our sales and marketing organizations, as well as
costs associated with increased selling efforts to develop market awareness of
our products and services.

General and Administrative Expenses

General and administrative expenses increased 137% from $522,000 in the
fiscal year ended June 30, 1996 to $1.2 million in the fiscal year ended June
30, 1997 and increased 46% to $1.8 million in the fiscal year ended June 30,
1998. The increases in the fiscal years ended June 30, 1997 and 1998 were due
primarily to the addition of personnel performing general and administrative
functions and higher legal expenses associated with increased product licensing
activity.

Stock-Based Compensation

We recorded deferred stock-based compensation of $1.9 million through June
30, 1998, associated with stock options granted and restricted stock issued
from October 1997 through June 1998. Amortization of stock-based compensation
was $108,000 for the fiscal year ended June 30, 1998. We recorded no deferred
stock based compensation for the fiscal years ended June 30, 1996 and 1997.

Interest Income, Net

Net interest income was $196,000, $464,000 and $982,000 in the fiscal years
ended June 30, 1996, 1997 and 1998, respectively. The year-to-year increases
resulted primarily from earnings on rising cash, cash equivalent and short-term
investment balances as a result of our private placement financings, partially
offset in the fiscal year ended June 30, 1998 by interest expense related to
obligations under capital leases and our equipment loan.

Income Taxes

Since inception, we have incurred net losses for federal and state tax
purposes and have not recognized any tax provision or benefit. As of June 30,
1998, we had net operating loss carryforwards of approximately $19.0 million
for both federal and California income tax purposes. These carryforwards, if
not utilized, expire beginning in the year 2004 through 2019. We also had
research and development credit carryforwards of approximately $379,000 and
$287,000 for federal and California income tax purposes, respectively. See Note
7 of Notes to Consolidated Financial Statements.

27
<PAGE>

As of June 30, 1997 and 1998, we had deferred tax assets of $4.7 million and
$8.8 million, respectively, which were fully offset by a valuation allowance.
Deferred tax assets consist principally of the federal and state net operating
loss carryforwards, capitalized start-up expenditures, accruals and reserves
not currently deductible for tax purposes and research and development credits.
We have provided a valuation allowance due to the uncertainty of generating
future profits that would allow for the realization of these deferred tax
assets. Accordingly, no tax benefit was recorded in the accompanying
consolidated statements of operations.

28
<PAGE>

Quarterly Results of Operations

The following table sets forth our consolidated operating results for each
of the seven quarters ended March 31, 1999. This data has been derived from
unaudited consolidated financial statements that, in the opinion of our
management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of this information when read in
conjunction with our annual audited consolidated financial statements and notes
thereto appearing elsewhere in this prospectus. These operating results are not
necessarily indicative of results of any future period.

<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------------------------------------
Sept. 30, Dec. 31, March 31, June 30, Sept. 30, Dec. 31, March 31,
1997 1997 1998 1998 1998 1998 1999
--------- -------- --------- -------- --------- -------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
License................ $ 17 $ 158 $ 114 $ 233 $ 202 $ 64 $ 1,264
Maintenance and
support services...... 94 222 319 1,048 1,005 1,327 1,454
Consulting services.... -- -- -- -- 161 426 814
------- ------- ------- ------- ------- ------- -------
Total revenues....... 111 380 433 1,281 1,368 1,817 3,532
------- ------- ------- ------- ------- ------- -------
Cost of revenues:
License................ 5 25 29 36 62 26 84
Maintenance and
support services...... 175 245 295 348 433 676 767
Consulting services.... -- -- -- -- 58 77 511
------- ------- ------- ------- ------- ------- -------
Total cost of
revenues............ 180 270 324 384 553 779 1,362
------- ------- ------- ------- ------- ------- -------
Gross profit (loss).. (69) 110 109 897 815 1,038 2,170
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Research and
development........... 1,072 1,381 1,418 1,861 2,446 2,492 3,468
Sales and marketing.... 837 1,128 1,342 1,704 1,801 2,074 2,629
General and
administrative........ 341 403 441 616 684 955 1,092
Stock-based
compensation.......... -- 6 39 63 249 255 280
------- ------- ------- ------- ------- ------- -------
Total operating
expenses............ 2,250 2,918 3,240 4,244 5,180 5,776 7,469
------- ------- ------- ------- ------- ------- -------
Operating loss....... (2,319) (2,808) (3,131) (3,347) (4,365) (4,738) (5,299)
Interest income, net.... 96 76 356 454 415 365 359
------- ------- ------- ------- ------- ------- -------
Loss before income
taxes............... (2,223) (2,732) (2,775) (2,893) (3,950) (4,373) (4,940)
Income taxes............ -- -- -- -- -- -- 710
------- ------- ------- ------- ------- ------- -------
Net loss............. $(2,223) $(2,732) $(2,775) $(2,893) $(3,950) $(4,373) $(5,650)
======= ======= ======= ======= ======= ======= =======
Basic and diluted net
loss per share......... $ (0.44) $ (0.53) $ (0.53) $ (0.53) $ (0.71) $ (0.78) $ (0.99)
======= ======= ======= ======= ======= ======= =======
Shares used in computing
basic and diluted net
loss per share......... 5,050 5,147 5,230 5,459 5,539 5,617 5,699
======= ======= ======= ======= ======= ======= =======
As a Percentage of Total
Revenues
Revenues:
License................ 15 % 42 % 26 % 18 % 15 % 4 % 36 %
Maintenance and
support services...... 85 58 74 82 73 73 41
Consulting services.... -- -- -- -- 12 23 23
------- ------- ------- ------- ------- ------- -------
Total revenues....... 100 100 100 100 100 100 100
------- ------- ------- ------- ------- ------- -------
Cost of revenues:
License................ 4 7 7 3 4 2 2
Maintenance and
support services...... 158 64 68 27 32 37 23
Consulting services.... -- -- -- -- 4 4 14
------- ------- ------- ------- ------- ------- -------
Total cost of
revenues............ 162 71 75 30 40 43 39
------- ------- ------- ------- ------- ------- -------
Gross profit (loss).. (62) 29 25 70 60 57 61
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Research and
development........... 966 363 327 145 179 137 98
Sales and marketing.... 754 297 310 133 132 114 74
General and
administrative........ 307 106 102 48 50 53 31
Stock-based
compensation.......... -- 2 9 5 18 14 8
------- ------- ------- ------- ------- ------- -------
Total operating
expenses............ 2,027 768 748 331 379 318 211
------- ------- ------- ------- ------- ------- -------
Operating loss....... (2,089) (739) (723) (261) (319) (261) (150)
Interest income, net.... 86 20 82 35 30 20 10
------- ------- ------- ------- ------- ------- -------
Loss before income
taxes............... (2,003) (719) (641) (226) (289) (241) (140)
Income taxes............ -- -- -- -- -- -- 20
------- ------- ------- ------- ------- ------- -------
Net loss............. (2,003)% (719)% (641)% (226)% (289)% (241)% (160)%
======= ======= ======= ======= ======= ======= =======
As a Percentage of
Related Revenues
Cost of license
revenues............... 29% 16 % 25 % 15 % 31 % 41 % 7 %
Cost of maintenance and
support services
revenues............... 186% 110 % 92 % 33 % 43 % 51 % 53 %
Cost of consulting
services revenues...... -- -- -- -- 36 % 18 % 63 %
</TABLE>

29
<PAGE>

During the six quarters ended December 31, 1998, our license revenues were
not significant and varied widely, as we continued to make substantial
investments in our business. In the quarter ended March 31, 1999, our license
revenues increased substantially to $1.3 million, as we recognized previously
deferred revenue of $964,000 under agreements with CEGETEL/SFR, DDI Corporation
and AT&T Wireless Services. During each of the next three calendar quarters of
1999, we will recognize license revenues of approximately $2.2 million under
these agreements.

Revenues from maintenance and support services were not significant through
the quarter ended March 31, 1998. Beginning in the quarter ended June 30, 1998,
our revenues from maintenance and support services increased substantially due
principally to increasing UP.Browser license activity with wireless telephone
manufacturers and UP.Link Server Suite trial agreements with network operators.

Cost of license revenues increased from $26,000 in the quarter ended
December 31, 1998 to $84,000 in the quarter ended March 31, 1999. As a
percentage of license revenues, cost of license revenues was 41% and 7% in the
quarters ended December 31, 1998 and March 31, 1999, respectively. The decrease
as a percentage of license revenues was attributable primarily to higher
license revenues in the quarter ended March 31, 1999 and to the amortization of
fixed maintenance fees relating to third party software licenses. Because this
fixed cost has been amortized over revenues that vary from quarter to quarter,
our cost of license revenues as a percentage of license revenues has fluctuated
historically. We expect that cost of license revenues will vary as a percentage
of license revenues from period to period.

Cost of maintenance and support services as a percentage of related revenues
declined from 186% for the quarter ended September 30, 1997 to 33% for the
quarter ended June 30, 1998 as increased efficiencies were realized as revenues
increased over the corresponding period. Cost of maintenance and support
services as a percentage of related revenues increased from 33% for the quarter
ended June 30, 1998 to 53% for the quarter ended March 31, 1999 as personnel
were added in anticipation of increased demand for maintenance and support
services.

Cost of consulting services revenues increased from $77,000 in the quarter
ended December 31, 1998 to $511,000 in the quarter ended March 31, 1999. As a
percentage of consulting services revenues, cost of consulting services
revenues was 18% and 63% in the quarters ended December 31, 1998 and March 31,
1999, respectively. The increase reflects a higher mix of consulting services
performed on a time and materials basis during the latter period, and we expect
that cost of consulting services revenues will vary as a percentage of
consulting services revenues from period to period.

The total number of our employees grew from 47 at September 30, 1997 to 157
at April 30, 1999. As a result of the growth in the number of employees in our
research and development, sales and marketing, and general and administrative
organizations, our research and development, sales and marketing, and general
and administrative expenses have increased on a quarter-to-quarter basis.

We believe that period-to-period comparisons of our operating results are
not necessarily meaningful. You should not rely on them to predict future
performance. The amount and timing of our operating expenses generally may
fluctuate significantly in the future as a result of a variety of factors. We
face a number of risks and uncertainties encountered by early stage companies,
particularly those in rapidly evolving markets such as the wireless
telecommunications and the

30
<PAGE>

Internet software industries. We may not be able to successfully address these
risks and difficulties. In addition, although we have experienced revenue
growth recently, our revenue growth may not continue, and we may not achieve or
maintain profitability in the future.

Our quarterly revenues and operating results are difficult to predict and
may fluctuate significantly from quarter to quarter due to a number of factors,
some of which are outside of our control. These factors include, but are not
limited to:

. delays in market acceptance or implementation by our customers of our
products and services;
. changes in demand by our customers for additional products and services;
. our lengthy sales cycle, our concentrated target market and the
potentially substantial effect on total revenues that may result from
the gain or loss of business from each incremental network operator
customer;
. introduction of new products or services by us or our competitors;
. delays in developing and introducing new products and services;
. changes in our pricing policies or those of our competitors or
customers;
. changes in our mix of domestic and international sales;
. risks inherent in international operations;
. changes in our mix of license, consulting and maintenance and support
services revenues;
. changes in accounting standards, including standards relating to revenue
recognition, business combinations and stock-based compensation; and
. the impact of Year 2000 concerns on the timing of capital expenditures
by network operators and their launches of commercial services utilizing
our products and services.

Our sales cycle, which is lengthy--typically between nine and twelve
months--contributes to fluctuations in our quarterly operating results. Many
factors outside our control add to the lengthy education and customer approval
process for our products. For example, many of our prospective customers have
neither budgeted expenses for the provision of Internet-based services to
wireless subscribers nor specifically dedicated personnel for the procurement
and implementation of our products and services. Further, the emerging and
evolving nature of the market for Internet-based services via wireless
telephones may lead prospective customers to postpone their purchasing
decisions. In addition, general concerns regarding year 2000 compliance may
further delay purchase decisions by prospective customers.

Most of our expenses, such as employee compensation and lease payments for
facilities and equipment, are relatively fixed. In addition, our expense levels
are based, in part, on our expectations regarding future revenues. As a result,
any shortfall in revenues relative to our expectations could cause significant
changes in our operating results from quarter to quarter. Due to the foregoing
factors, we believe period to period comparisons of our revenue levels and
operating results are not meaningful. You should not rely on our quarterly
revenues and operating results to predict our future performance.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily through private
sales of convertible preferred stock, which totaled $66.0 million in aggregate
net proceeds through March 31, 1999. We have also financed our operations
through an equipment loan and a capitalized lease, which totaled $1.0 million
in principal amount outstanding at March 31, 1999. As of March 31, 1999, we had
$20.2 million of cash and cash equivalents and $27.6 million of short-term
investments, and working capital of $29.4 million.

31
<PAGE>

Net cash used for operating activities was $2.3 million, $6.6 million and
$5.1 million for the fiscal years ended June 30, 1996, 1997 and 1998,
respectively, and $1.0 million for the nine months ended March 31, 1999. For
each of the fiscal years ended June 30, 1996, 1997 and 1998, and for the nine
months ended March 31, 1999, cash used for operating activities was
attributable primarily to net losses and an increase in accounts receivable
offset in part by depreciation and amortization, increases in accounts payable
and accrued liabilities, and increases in deferred revenue. For the nine months
ended March 31, 1999, accounts receivable increased by approximately $2.7
million. This increase was due to increased sales to both wireless telephone
manufacturers and network operators. To date, we have had no write-offs of
accounts receivable and we have not recorded any allowance for doubtful
accounts. Accrued liabilities increased by approximately $3.0 million during
the nine months ended March 31, 1999, which was primarily due to the accrual of
approximately $1.0 million of costs associated with the Series E convertible
preferred stock financing completed in March 1999 and an increase in accrued
consulting costs of approximately $650,000. Deferred revenue increased by
approximately $11.7 million during the nine months ended March 31, 1999, as a
result of increased license prepayments by network operators of approximately
$9.9 million and increased fees from wireless telephone manufacturers of
approximately $1.8 million.

Net cash used for investing activities was $852,000, $4.8 million and $18.0
million for the fiscal years ended June 30, 1996, 1997 and 1998, respectively,
and $7.9 million for the nine months ended March 31, 1999. For each of the
fiscal years, cash used in investing activities reflects purchases of property
and equipment, with increased purchases of short-term investments in the fiscal
years ended June 30, 1997 and 1998 and in the nine months ended March 31, 1999.

Net cash provided by financing activities was $6.7 million, $9.7 million and
$31.7 million for the fiscal years ended June 30, 1996, 1997 and 1998,
respectively. Cash provided by financing activities in each of these periods
was attributable to proceeds from the issuance of preferred stock, and for the
fiscal year ended June 30, 1998, cash provided by financing activities also was
attributable in part to proceeds from our equipment loan. In March 1999 we
completed the sale of 2,458,543 shares of Series E convertible preferred stock
at a purchase price of $7.24 per share, which resulted in net proceeds to us of
approximately $16.7 million. We intend to use the proceeds from the Series E
convertible preferred stock financing for general corporate purposes. All of
these shares will automatically convert into shares of common stock upon the
closing of this offering.

As of March 31, 1999, our principal commitments consisted of obligations
outstanding under operating leases, our equipment loan and capitalized lease
obligations. Although we have no material commitments for capital expenditures,
we expect to increase capital expenditures and lease commitments consistent
with our anticipated growth in operations, infrastructure and personnel. We
also may increase our capital expenditures as we expand into additional
international markets. See Notes 3, 4 and 6 of Notes to Consolidated Financial
Statements.

We have not yet determined our anticipated use of the proceeds of this
offering, but we currently estimate that we will incur at least $22 million in
research and development expenditures, $16 million in sales and marketing
expenditures and $6 million in capital expenditures during the next twelve
months. 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. We believe that the net proceeds from this offering, together
with our current cash, cash equivalents and short-term investments, will be
sufficient to meet our anticipated cash needs for working capital and capital
expenditures for at least

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<PAGE>

the next twelve months. If cash generated from operations is insufficient to
satisfy our liquidity requirements, we may seek to sell additional equity or
debt securities or to obtain a credit facility. If additional funds are raised
through the issuance of debt securities, these securities could have rights,
preferences and privileges senior to holders of common stock, and the terms of
any debt could impose restrictions on our operations. The sale of additional
equity or convertible debt securities could result in additional dilution to
our stockholders, and additional financing may not be available in amounts or
on terms acceptable to us, if at all. If we are unable to obtain this
additional financing, we may be required to reduce the scope of our planned
product development and marketing efforts, which could harm our business,
financial condition and operating results.

Year 2000 Readiness Disclosure

Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These systems and
software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. This problem may result in software
failures or the creation of erroneous results.

We have conducted a year 2000 readiness review for the current versions of
our products. The review includes assessment, implementation (including
remediation, upgrading and replacement of some product versions), validation
testing, and contingency planning.We have largely completed all phases of this
plan, except for contingency planning, for the current versions of our
products. As a result, we believe all current versions of our products are
capable of properly distinguishing between 20th and 21st century dates, when
configured and used in accordance with the related documentation, and provided
that the underlying operating system of the host machine and any other software
used with our products are also capable of properly distinguishing between 20th
and 21st century dates. We have not tested all noncurrent versions of our
products and do not intend to do so. However, we have delivered software
releases containing corrections to all identified year 2000 errors in our
UP.Link Server Suite software to our network operator customers with our
software in production and expect that those releases will be implemented by
our customers prior to December 31, 1999.

We are testing software obtained from third parties (licensed software,
shareware, and freeware) that is incorporated into our products, and we have
contacted our vendors to confirm that licensed software is capable of properly
distinguishing between 20th and 21st century dates. We have been informed by
many of our vendors that their products that we use are capable of properly
distinguishing between 20th and 21st century dates. Despite testing by us and
by current and potential customers, and assurances from developers of products
incorporated into our products, our products may contain undetected errors or
defects associated with year 2000 date functions. Known or unknown errors or
defects in our products could result in delay or loss of revenues, diversion of
development resources, damage to our reputation, or increased service and
warranty costs, any of which could materially and adversely affect our
business, operating results or financial condition. Some commentators have
predicted significant litigation regarding year 2000 compliance issues, and we
are aware of lawsuits against other software vendors. Because of the
unprecedented nature of this litigation, it is uncertain whether or to what
extent we may be affected by it.

Our internal systems include our information technology, or IT, non-IT
systems and embedded systems. We have completed an assessment of our material
internal IT, non-IT and embedded systems, including both our own software
products and third-party software and hardware technology. We expect to
complete validation testing of our IT systems and related contingency planning
by September 1999. To the extent that we are not able to test the technology
provided by

33
<PAGE>

third-party vendors, we are seeking assurances from vendors that their systems
are year 2000 compliant. We are not currently aware of any material operational
issues associated with preparing our internal IT, non-IT and embedded systems
for the year 2000. However, we may experience material unanticipated problems
or additional costs caused by undetected errors or defects in the technology
used in our internal IT, non-IT and embedded systems.

We do not currently have any information concerning the year 2000 compliance
status of our customers. Our network operator customers face implementation and
support challenges in introducing Internet-based services via wireless
telephones. Historically, network operators have been relatively slow to
implement new complex services, such as Internet-based services, and year 2000
compliance issues could slow adoption or implementation of our products. If our
current or future customers fail to achieve year 2000 compliance or if they
divert technology expenditures, especially technology expenditures that were
earmarked for our products, to address year 2000 compliance problems, our
business could suffer.

We have funded our year 2000 plan from available cash and have not
separately accounted for these expenses in the past. To date, these expenses
have not been material. Most of our expenses have related to, and are expected
to continue to relate to, the operating costs associated with time spent by
employees and management consultants in the evaluation process and year 2000
compliance matters generally. We expect to incur approximately $500,000 to
verify that our IT, non-IT and embedded systems are capable of properly
distinguishing between 20th century and 21st century dates. In addition, we may
experience material problems and expenses associated with year 2000 compliance
that could adversely affect our business, results of operations, and financial
condition. Finally, we are also subject to external forces that might generally
affect industry and commerce, such as year 2000 compliance failures by utility
or transportation companies and related service interruptions.

Quantitative and Qualitative Disclosures About Market Risk Derivatives and
Financial Instruments

Foreign Currency Hedging Instruments

We transact business in various foreign currencies and, accordingly, we are
subject to exposure from adverse movements in foreign currency exchange rates.
To date, the effect of changes in foreign currency exchange rates on revenues
and operating expenses have not been material. Substantially all of our
revenues are earned in U.S. dollars. Operating expenses incurred by our
European and Japanese subsidiaries are denominated primarily in U.K. pounds
sterling and Japanese yen, respectively.

We currently do not use financial instruments to hedge operating expenses in
the U.K. or Japan denominated in their respective local currency. We intend to
assess the need to utilize financial instruments to hedge currency exposures on
an ongoing basis.

We do not use derivative financial instruments for speculative trading
purposes, nor do we currently hedge our foreign currency exposure to offset the
effects of changes in foreign exchange rates.

Fixed Income Investments

Our exposure to market risks for changes in interest rates relates primarily
to corporate debt securities. We place our investments with high credit quality
issuers and, by policy, limit the amount of the credit exposure to any one
issuer.

34
<PAGE>

Our general policy is to limit the risk of principal loss and ensure the
safety of invested funds by limiting market and credit risk. All highly liquid
investments with a maturity of less than three months at the date of purchase
are considered to be cash equivalents; all investments with maturities of three
months or greater are classified as available-for-sale and considered to be
short-term investments.

35
<PAGE>

BUSINESS

Phone.com, Inc.

Industry Background

Growth of the Internet

The Internet has emerged as a global communications medium enabling millions
of people to share information and conduct business electronically.
International Data Corporation, or IDC, estimates that there were approximately
159 million users of the Internet worldwide at the end of 1998 and that the
number of users will grow to 410 million by the end of 2002. We cannot assure
you that this estimate will be achieved. The dramatic growth in the number of
business and consumer Internet users has led to a proliferation of useful
information and services on the Internet, including email, news, electronic
commerce, educational and entertainment applications and a multitude of other
value-added services. As a result, the Internet has become a primary and
ubiquitous daily resource for millions of people.

Growth of Wireless Telecommunications

Worldwide use of wireless telecommunications has grown rapidly as cellular
and other emerging wireless communications services have become more widely
available and affordable for the mass business and consumer markets. Advances
in technology, changes in telecommunications regulations and the allocation and
licensing of additional radio spectrum have contributed to this growth
worldwide. Dataquest estimates that there were approximately 187 million
digital wireless subscribers worldwide at the end of 1998 and that the number
of subscribers will grow to 590 million by the end of 2002. We cannot assure
you that this estimate will be achieved.

The Wireless Network Operator Environment

As a result of deregulation, new radio frequency spectrum licenses,
privatizations and rapid network expansion by new entrants, the competitive
environment among network operators in major markets worldwide has become
intense. Efforts to attract and retain subscribers have resulted in significant
price-based competition. Increased competition has in turn raised the costs
associated with acquiring new subscribers, has lowered average revenues per
subscriber, and has increased the propensity of subscribers to switch from one
network operator to another. For these reasons, network operators are looking
for new revenue sources in the form of value-added services they can deliver to

36
<PAGE>

their wireless subscribers. They are also looking for ways to differentiate
their product offerings in an effort to retain customers. Finally, they are
focused on finding and deploying solutions that enable them to deliver and
support their services in a more cost-effective manner.

The Convergence of the Internet and Mobile Telephony

As people have become increasingly dependent on email services, remote
access to corporate intranets, and other Internet-based services, mass-market
wireless telephones that provide mobile access to these resources have become
increasingly useful tools. Phone.com was a pioneer in the convergence of the
Internet and mobile telephony. In 1995, Phone.com developed its initial
technology, which enables the delivery of Internet-based services to wireless
telephones. In 1996, Phone.com introduced and deployed its first products based
on this technology.

To provide a worldwide open standard enabling the delivery of Internet-based
services to mass-market wireless telephones, Phone.com, Ericsson, Motorola and
Nokia formed the Wireless Application Protocol Forum. In 1998, the WAP Forum
published technical specifications for application and content development and
product interoperability based on Internet technology and standards. By
complying with WAP specifications, wireless telephone manufacturers, network
operators, content providers and application developers can provide Internet-
based products and services that are interoperable.

In 1998, the WAP Forum published the Wireless Markup Language, or WML. WML
is compliant with the Extensible Markup Language, or XML, specification
published by the World Wide Web Consortium. XML is a programming language that
provides a means of describing and exchanging data in an open format. Content
providers and application developers use WML to optimize the display of, and
interaction with, Web-based data on wireless telephones. Based substantially on
technology that Phone.com contributed to the public domain, WML is optimized
for delivery of Internet content to mass-market wireless telephones, which have
numeric keypads instead of full keyboards, small screens, and limited memory
capacity, processing power, battery life and bandwidth. In the same manner that
the programming language known as Hypertext Markup Language, or HTML, has
provided an open standard that has fueled the development of Internet
applications and content for personal computers, WML is designed to be an
industry standard that will encourage the development of Internet applications
and content for wireless telephones.

Leading network operators, telecommunications device and equipment
manufacturers, and software companies worldwide have sanctioned the
specifications promulgated by the WAP Forum. The WAP Forum is currently chaired
by Charles Parrish, Executive Vice President of Phone.com, and, as of May 1999,
has grown to over 100 members, including the following companies:

Board Members

<TABLE>
<S> <C>
Phone.com Motorola
Alcatel Nokia Mobile Phones
CEGETEL/SFR (Societe Francaise du NTT Mobile Communications Network
Radio Telephone) (NTT DoCoMo)
DDI Corporation SBC Communications
Ericsson Mobile Communications AB Sprint PCS
IBM Telstra Corporation
Matsushita Communication Industrial
</TABLE>

37
<PAGE>

Network Operators

<TABLE>
<S> <C>
AT&T Wireless Services Rogers Cantel Mobile Communications
Bell Atlantic Mobile Sonera Corporation
BellSouth Cellular SWISSCOM LTD.
Bouygues Telecom Telefonica Servicios Moviles
Cellnet Communications Telia Mobile AB
Deutsche Telecom Mobilnet GmbH Tokyo Digital Phone
France Telecom Telecom Italia Mobile
Hongkong Telecom Mobile Services Telenor Mobil Group
IDO Corporation TU-KA Cellular Tokyo
Omnitel Vodafone
One 2 One
</TABLE>

Device and Equipment Manufacturers

<TABLE>
<S> <C>
Acer Peripherals ORGA Kartensysteme GmbH
Bosch Telecom Danmark A/S Philips Consumer Communications
CMG Telecommunications & Utilities Qualcomm
De La Rue Card Systems RTS Wireless
Gemplus Samsung Electronics
Hewlett-Packard Schlumberger Industries S.A.
ICO Global Communications Sema Group Telecom
Intel Corporation Siemens AG
LG Information & Communications Sony International (Europe) GmbH
Logica Aldiscon Tecnomen Oy
Lucent Technologies Telital S.p.A.
Mitsubishi Wireless Communications Toshiba
NEC Technologies (UK) Uniden
Nortel Unisys

Software Companies

APiON M.D. Communications
Bussan Systems Integration Company Microsoft
Certicom Oracle Corporation
Comverse Network Systems Puma Technology
CCL (Computer & Communications RSA Data Security
Research Laboratories, ITRI) Sendit AB
CTC (Itochu Techno-Science Corporation) Scandinavian Softline Technology Oy
Dr. Materna GmbH Spyglass
Dolphin Telecommunications Symbian
Fujitsu Software Corporation Systems Engineering Consultants
Geoworks Corporation Tegic Communications
Glenayre Technologies VTT Information Technology
GSM Information Network
</TABLE>

The Market Opportunity

In response to an increasingly competitive environment, network operators
are seeking to deliver Internet-based services to their wireless subscribers as
a means to generate revenues from new sources, differentiate their service
offerings and reduce operating costs. To do this, network operators

38
<PAGE>

require a scalable turnkey software solution to deliver Internet-based services
and content to their wireless subscribers.

The Phone.com Solution

We provide a leading software communications platform that enables the
delivery of Internet-based services to mass-market wireless telephones. Using
our scalable platform, network operators can provide Internet-based services to
their wireless subscribers, and wireless telephone manufacturers can turn their
mass-market wireless telephones into mobile Internet appliances. Wireless
subscribers thus have access to Internet- and corporate intranet-based
services, including email, news, stocks, weather, travel and sports.

[Diagram depicting components of UP.Link platform and relationships of various
systems, including wireless telephones, servers and Internet]

Our platform consists of the UP.Link Server Suite and UP.Browser software
products. The UP.Link Server Suite includes:

. a means of exchanging data between the Internet and mass-market wireless
telephones, commonly referred to as a gateway;
. a service platform that performs subscriber management and service
provisioning functions, as well as communicating with the network
operator's customer care and billing systems; and
. Internet-based applications such as email and personal information
management software.

The UP.Browser is a browser and messaging software product that is designed and
optimized for mass-market wireless telephones. In addition, approximately 4,500
third-party developers have registered to use our UP.SDK software development
kit, and a variety of third-party content is currently available for wireless
telephones equipped with UP.Browser, including information from ABCNews.com,
Bloomberg, Reuters, Quote.com and ESPN Sportszone.

With the introduction of the next version of our software solution,
currently expected to be commercially available in the second half of 1999, our
products will provide an open, interoperable, WAP-compliant platform for the
delivery of Internet-based services. Our software solution supports all major
digital wireless telephony standards in use around the world:

<TABLE>
<C> <S>
. CDMA (Code Division Multiple Access) . GSM (Global System for Mobile
. TDMA (Time Division Multiple Access) Communication)
. iDEN (Integrated Digital Enhanced Network) . CDPD (Cellular Digital Packet Data)
. PHS (Personal Handyphone System) . PDC (Personal Digital Cellular)
</TABLE>

39
<PAGE>

Key benefits of our platform for network operators include the following:

. Opportunity to generate incremental revenues. Network operators can
generate additional revenues by offering value-added Internet-based
services. They can also charge for the increased data and voice airtime
that these applications encourage. For example, a user can access an
email message via UP.Mail and initiate a voice call to any phone number
appearing in the message with the press of one button.

. Ability to differentiate services and improve subscriber retention. Using
our products, network operators can offer new Internet-based services to
wireless subscribers. In addition, by enabling wireless subscribers to
store personal contact information in their networks and to personalize
the selection and presentation of Internet content such as stock quotes,
sports scores and news, network operators can enhance subscriber
retention.

. Opportunity to reduce operating costs. Our UP.Link Server Suite can also
be used by network operators to reduce operating costs. For example,
network operators' call centers are burdened by high rates of calls from
subscribers inquiring about billing, service availability, usage and
other service-related matters. Our software platform enables network
operators to leverage standards-based Internet technology to allow
subscribers to make many of these inquiries using their wireless
telephones without assistance by customer care representatives. By
bypassing the call center infrastructure for these activities, network
operators can reduce their operating costs.

The Phone.com Strategy

Our objective is to be the leading supplier to network operators of software
and services that enable the convergence of the Internet and mobile telephony.
Key elements of our strategy include:

. Focus on Providing Products and Services to Network Operators. We focus
on providing comprehensive solutions that enable network operators to
deliver Internet-based services to their wireless subscribers. Our close
working relationships with network operators provide us with a valuable
understanding of our customers' technology and operations, which we
intend to leverage to accelerate time to market of our products and
identify new sales opportunities. In order to drive revenues from our
UP.Link Server software and related services, we utilize direct and
indirect sales channels. Our direct sales force focuses on selling
products and consulting services and assists our indirect channel
partners in selling our products and services. Our indirect sales channel
partners are currently Alcatel, Itochu Techno-Science Corporation, Sema
Group and Siemens. These partners sell our products and services as an
integral part of their product and service offerings to network operators
primarily in international markets. We intend to add new partners to our
indirect sales channel to serve customers in key markets and expect that
sales through our indirect sales channel partners will represent an
increasing portion of our revenues.

. Continue to Invest in our Technology. Network operators have stringent
requirements for server software performance, scalability and
reliability. Extensive technical expertise is required to integrate these
solutions with the network operators' complex systems. We also expect
that network operators will demand regular upgrades that include new
functions and features. Consequently, we intend to continue to invest
heavily in research and product development. We also intend to maintain
our technology leadership by leveraging our role in prominent industry
standard-setting organizations such as the WAP Forum and the World Wide
Web Consortium.

40
<PAGE>

. Drive the Sale and Development of Internet-Based Applications. Network
operators that offer Internet-based services by using our UP.Link Server
Suite generally seek new value-added applications to offer to their
subscribers. We currently offer the following Internet-based
applications:

. UP.Mail, which delivers email to wireless telephones,
. UP.Organizer, a personal information management application, and
. UP.Web, which enables subscribers to access, manage and update
their personal information and configuration for UP.Mail and
UP.Organizer from their personal computers.

We are continuously enhancing our existing products and developing new
applications to provide additional functionality for network operators
and wireless subscribers.

. Propagate Widespread Use of UP.Browser in Mass-Market Wireless
Telephones. We believe that increasing the number of wireless telephone
manufacturers that incorporate UP.Browser into their mass-market wireless
telephones enhances the attractiveness of our UP.Link server software to
network operators. Therefore, in order to drive widespread adoption, we
license UP.Browser to wireless telephone manufacturers, free of per-unit
royalties. As of May 1999, we have licensed UP.Browser to 23 wireless
telephone manufacturers.

. Promote the Development of Internet-Based Services Over Mass-Market
Wireless Telephones. To encourage the growth of our business, we actively
encourage Internet content and application developers to create WML
applications. In connection with this activity, we provide our UP.SDK
software development kit and support to Internet content and application
developers free of charge. To date, there are over 4,500 registered
developers in our Developer Program. Internet content providers that
currently deliver content for wireless telephones equipped with
UP.Browser include ABCNews.com, BizTravel.com, Bloomberg, Data
Broadcasting Corporation, ESPN Sportszone, InfoSpace.com, Quote.com,
Reuters and Sportsfeed.

Products and Services

Products

Our software products enable the delivery of Internet-based services to
mass-market wireless telephones. Our software products include:

. UP.Link Server Suite--a product that network operators use to connect
their subscribers' mass-market wireless telephones to Internet services
. UP.Browser--a browser that is embedded in mass-market wireless telephones
and enables wireless subscribers to access Internet services
. UP.Smart--a suite of software applications that delivers personal digital
assistant features to smartphones
. UP.SDK--a software development kit that Internet content providers and
third-party developers use to create WML-compliant applications

UP.Link Server Suite

UP.Link Server Suite is a turnkey software solution with features and
applications that enable network operators to offer Internet-based services to
their wireless subscribers. UP.Link Server Suite connects data-enabled wireless
telephones to applications and content hosted by Web servers on the

41
<PAGE>

Internet or private intranets. UP.Link Server Suite also provides network
operators with subscriber provisioning and network management functions on a
robust and scalable software platform. The UP.Link Server Suite consists of the
following components:

<TABLE>
<CAPTION>
Components Description
<C> <S>
Gateway UP.Link Gateway provides the network-layer functions of the
UP.Link Server Suite, and connects Internet- and intranet-
based services to wireless networks and wireless telephones.
UP.Link Gateway connects the multiple protocols for wireless
data communications to the open standards of the Internet,
thereby enabling Web servers to recognize a wireless telephone
as an Internet standards-compliant client.
- -------------------------------------------------------------------------------
Administration The UP.Link administration component provides a Web-based
administration control system to keep the network operator's
Internet-based network components up and running, assess
system status and provision new subscribers.
The UP.Link Provisioning Application Programming Interface, or
PAPI, enables integration of UP.Link with the network
operator's existing customer care, help desk and billing
systems.
- -------------------------------------------------------------------------------
Services The services component provides an open application
programming framework with interfaces, or APIs, that
standardize the way that the services component interacts with
applications. These services include:
. Push Server--allows applications to push information to
wireless subscribers. For example, an email application can
use the Push Server to notify a wireless subscriber of new
messages.
. Fax Server--enables the forwarding of email attachments and
other data content to fax machines for printing.
. Identity Server--maintains a subscriber registry that
retains wireless subscribers' service settings and allows
network operators to track their subscribers' service usage.
. Content Translation Framework--provides forward and backward
compatibility of content formats between different
generations of browsers and wireless telephones. Translates
between international character sets in real-time. Also
translates standard HTML Web pages into WML pages for
viewing on wireless telephones.
. Application Registry--provides a structure for the
interoperability of different applications. For example,
third-party applications can retrieve and store contact
records in the UP.Organizer's address book or pass an email
address to UP.Mail.
- -------------------------------------------------------------------------------
Applications UP.Applications is a suite of wireless Internet-based
applications, including:
. UP.Mail--provides access to the same email account through
both wireless telephones and personal computers.
. UP.Organizer--provides a suite of synchronized Internet-
based personal information management applications,
including an address book, calendar and to-do list.
. UP.Web--a Web-based user interface that allows subscribers
to use their personal computers to perform many of the same
tasks they perform on their wireless telephones with
UP.Organizer.
</TABLE>

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<PAGE>

UP.Browser

UP.Browser is a browser and messaging software product that is designed and
optimized for mass-market wireless telephones. Using UP.Browser, subscribers
can access Web-based information and services that are hosted on network
operators' or third-party Web servers. Due to its open and highly portable
architecture, UP.Browser can be embedded into different types of wireless
telephones and utilize each telephone's specific display and input
characteristics, such as graphical displays and programmable keys. Key features
of UP.Browser include:

<TABLE>
<CAPTION>
Features Description
<C> <S>
Browsing UP.Browser displays WML-designed pages from any
Web or intranet site. In addition, UP.Browser
incorporates text-input software from Tegic
Communications.
- -------------------------------------------------------------------------------
Universal Inbox Notifies subscribers with a visual or audible
indication when a Web page or other data has
been proactively "pushed" to their wireless
telephones. Universal Inbox also integrates in
a single local mailbox diverse alert types,
including email and voice mail, as well as Web-
based content such as stock quotes, traffic
alerts and flight information.
- -------------------------------------------------------------------------------
Local Application Environment Allows access to important information when out
of network coverage. Increases efficiency of
applications and minimizes perceived delay when
used over bandwidth-constrained networks.
- -------------------------------------------------------------------------------
Security UP.Browser employs the same encryption
technology used by many commercial Web sites.
Consequently, all interaction between the
wireless telephone and a Web site can be
authenticated and encrypted.
</TABLE>

UP.Smart

UP.Smart is a suite of software applications that augments UP.Browser with a
set of popular functions commonly found on personal digital assistants.
UP.Smart includes address book, calendar, to-do list and memo functions.
UP.Smart also utilizes Puma Technology's synchronization software to enable a
user to synchronize UP.Smart with PC-based personal information management
applications by connecting the UP.Smart-equipped wireless telephone to a
personal computer through a serial cable. The information is stored both on the
wireless telephone and personal computer, making it accessible even when the
wireless telephone is not connected to the network.

UP.SDK

Our software development kit, known as UP.SDK, provides tools and
documentation for Internet content providers and developers to create and
maintain WML-based Internet services. UP.SDK consists of the following
components:

. The UP.Simulator, a Windows-based application that simulates the behavior
of UP.Browser-equipped wireless telephones, allowing developers to more
easily test WML services.
. Specialized functions and libraries that simplify the process of
generating WML applications.

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<PAGE>

. Tools for establishing secure communications between WML applications and
UP.Link Servers.
. Sample WML files and application source code.

Services

We offer consulting services to network operators and wireless telephone
manufacturers. Our consulting services help us to shorten our software license
sales cycle, accelerate deployment of our technology and deepen our
understanding of our customers' networks. We also provide both customer support
and custom software development services for network operators, as well as
software consulting services to wireless telephone manufacturers that license
UP.Browser.

Customers

Wireless Network Operators

We sell our UP.Link Server Suite and related technical support to network
operators worldwide to enable them to offer a variety of wireless Internet
services to their subscribers. These network operators have licensed our
software and have either announced a commercial service launch or are in a
market or laboratory trial phase.

As of May 1999, 24 network operators, including the following companies,
have licensed our software:

<TABLE>
<CAPTION>
Name Stage Technology Country
<S> <C> <C> <C>
AT&T Wireless Services Deployed in July 1996 CDPD USA
- -----------------------------------------------------------------------------------------
Bell Atlantic Mobile Deployed in September 1996 CDPD USA
- -----------------------------------------------------------------------------------------
GTE Wireless Deployed in May 1997 CDPD USA
- -----------------------------------------------------------------------------------------
SFR/CEGETEL Deployed in March 1999 GSM France
- -----------------------------------------------------------------------------------------
DDI Corporation Deployed in April 1999 CDMA Japan
- -----------------------------------------------------------------------------------------
IDO Corporation Deployed in April 1999 CDMA Japan
- -----------------------------------------------------------------------------------------
Bell Mobility Deployed in May 1999 CDMA Canada
- -----------------------------------------------------------------------------------------
LG TeleCom Commercial Launch expected CDMA South Korea
June 1999
- -----------------------------------------------------------------------------------------
Nextel Communications Announced Commercial Launch iDEN USA
(expected third quarter calendar 1999)
- -----------------------------------------------------------------------------------------
France Telecom Mobile Trial GSM France
- -----------------------------------------------------------------------------------------
Omnitel Trial GSM Italy
- -----------------------------------------------------------------------------------------
Orange Trial GSM U.K.
- -----------------------------------------------------------------------------------------
Deutsche Telekom Trial GSM Germany
Mobilnet GmbH (T-Mobil)
- -----------------------------------------------------------------------------------------
Telecom Italia Mobile Trial GSM Italy
- -----------------------------------------------------------------------------------------
Telstra Trial GSM Australia
- -----------------------------------------------------------------------------------------
Telenor Trial GSM Norway
</TABLE>

We also provide our network operator customers with consulting services that
enable them to rapidly adopt our technology and bring wireless Internet-based
services to market. Our consulting

44
<PAGE>

services focus on those areas where our products interface with the network
operators' internal systems such as billing, provisioning and customer care. We
also provide our network operator customers with assistance in choosing the
appropriate content and applications for their subscribers and creating the
promotion and pricing strategies for their service.

Our agreements with network operators provide these customers with a non-
exclusive license to use our UP.Link Server Suite software in connection with
providing Internet-based services to their subscribers. Pricing and payment
terms for these licenses are negotiated with the customer based on the number
of subscriber licenses purchased by the network operator, and the licenses can
be purchased on an as-deployed basis or on a prepaid basis. While these
agreements do not provide for a right of return, these agreements typically
provide for a six-month warranty, indemnification against intellectual property
infringement claims, a commitment to provide standards-compliant products, and
a source code escrow. In addition, we typically provide fee-based maintenance
and support services to these customers, under which they receive error
corrections and remote support. They can also elect to receive new releases of
UP.Link Server Suite for an additional fee.

Wireless Telephone Manufacturers

We license our UP.Browser software to wireless telephone manufacturers, who
embed UP.Browser into their products. In order to encourage these manufacturers
to include UP.Browser in their wireless telephone models, no per-unit royalty
is charged. In addition, we provide engineering and support services to
accelerate the introduction of new wireless telephone models that contain
UP.Browser. These services are provided to manufacturers on an annual flat-fee
basis per digital wireless telephony standard.

As of May 1999, 23 wireless telephone manufacturers have licensed
UP.Browser, and the following manufacturers have publicly announced products
that will include UP.Browser:

<TABLE>
<S> <C>
. Alcatel . Panasonic (Matsushita)
. Casio . Qualcomm
. Hitachi . Sagem
. Hyundai Electronics . Samsung Electronics
. IGS . Sharp
. Kyocera . Siemens
. LG Information & Communications . Sony
. Mitsubishi . Toshiba
. Motorola
</TABLE>

Additionally, Nokia and Ericsson have announced that they will introduce
wireless telephones that will be compatible with our UP.Link Server Suite. As
of May 1999, five wireless telephone manufacturer customers had made commercial
shipments of telephones with the UP.Browser embedded. In addition, we are
currently providing engineering support services in connection with 45 browser
integration projects.

Our agreements with wireless telephone manufacturers generally provide these
customers with a non-exclusive, royalty-free license to sell wireless
telephones containing UP.Browser. These agreements typically provide for a 90-
day warranty, indemnification against intellectual property infringement claims
and a source code escrow. In addition, customers can elect to receive varying
levels of maintenance and support services for a fee.

45
<PAGE>

During the year ended June 30, 1998, AT&T Wireless Services and Matsushita
Communication Industrial accounted for approximately 22% and 18%, respectively,
of our total revenues. For the nine months ended March 31, 1999, AT&T Wireless
Services, DDI Corporation and a wireless telephone manufacturer accounted for
approximately 14%, 11% and 13%, respectively, of our total revenues.

Research and Product Development

We continue to enhance the features and performance of our existing products
and introduce new products. For example, in the second half of 1999, we expect
to release the fourth generation of our UP.Link Server Suite and UP.Browser
products. These products are expected to be compliant with version 1.1 of the
specifications promulgated by the WAP Forum. We are currently developing other
applications, including a secure provisioning server, which enables network
operators to automate customer provisioning, and compatibility with two-way
short messaging service systems. In addition, our Carrier Services Group
provides outsourced application development and services to our network
operator customers.

Our success depends on a number of factors, which include 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 and at competitive
prices. As a result, we have made, and we intend to continue to make,
significant investments in research and product development. Our research and
development expenses were $4.0 million and $5.7 million for the years ended
June 30, 1997 and 1998, respectively, and $8.4 million for the nine months
ended March 31, 1999. As of April 30, 1999, we had 86 employees engaged in
research and product development activities. We are recruiting additional
skilled engineers for research and product development, and our business could
be adversely affected if we are unable to hire these engineers on a timely
basis.

Technology

Our technology has contributed both to driving open standards for the
delivery of Internet-based services to mass-market wireless telephones and to
providing network operators and wireless telephone manufacturers with software
solutions that are robust and scalable, and take into account the specific
characteristics of wireless telephony networks and telephones.

Wireless Application Protocol and Wireless Markup Language

Phone.com, along with Ericsson, Motorola and Nokia, founded the WAP Forum in
1997, and published open standards-based technical specifications for
application and content development, as well as product interoperability based
on Internet technology and standards. Leading network operators,
telecommunications device and equipment manufacturers, and software companies
worldwide have joined the WAP Forum, which has grown to over 100 members as of
May 1999.

The WAP specifications consist of the following components:

. A Transport Specification, which defines the way in which data is
exchanged between the network operator's server and the wireless
telephone. The WAP Transport Specification mirrors the Internet-standard
secure HTTP protocol, but is optimized for wireless telephone networks.
For example, on a typical PC-based Internet connection, all functions
such as

46
<PAGE>

security provisioning and application downloading and interaction are
performed on the PC. In the WAP Transport Specification, functions are
divided between the wireless telephone and the network operator's server
because of the bandwidth constraints over the wireless network and the
wireless telephone's limited processing power.

. A Wireless Markup Language (WML), which optimizes the display of and
interaction with Web-based content on wireless telephones and allows
Internet applications to take advantage of the voice capabilities of the
wireless telephony network. WML is compliant with the Extensible Markup
Language, or XML, specification published by the World Wide Web
Consortium.

. WML Script, which enables a developer to add procedural logic to WML
pages.

In order to implement interoperability with Internet-based content, the WAP
Transport Specification and WML use the open standards-based Internet model of
interaction, in which content and applications reside on Web servers that are
physically distributed, and requests for the data on these servers are sent
via open-standard Internet addresses, commonly known as URLs.

On standard Internet Web servers, content typically resides in databases,
but is provided to users via a number of content formats, including HTML and
Java. WML and WML Script function as standard content formats, so Internet
content providers can add WML and WML Script access to their servers without
having to change the underlying data. WML and WML Script applications deliver
content in a format that is optimized for wireless telephone interfaces.

Components of UP.Link Technology

Our UP.Link Server Suite is designed to be modular, expandable, flexible,
scalable and reliable. Using an architecture based on scalable, object-
oriented technology, the UP.Link Server Suite typically runs on a large,
distributed set of servers. The UP.Link Server Suite, which runs on Sun
Microsystems' Solaris operating system, is designed to meet the stringent
performance, scalability and reliability requirements of network operators.

Server Side Agents. Since wireless networks have limited bandwidth and
wireless telephones have limited processing power and memory, programs called
agents that reside on the server are used to provide processing power and
other computing resources to UP.Browser-enabled wireless telephones. These
agents allow some operations to be offloaded from the wireless telephone to
the UP.Link server. This means that the duties that are typically performed by
the Web browser on standard personal computers can be divided between the
browser on the wireless telephone and a "proxy" running in the agent. The
exact split of functionality can vary depending on the particular capabilities
of the wireless telephone. The agent can perform many functions, including
translating wireline Internet protocols such as HTTP to wireless Internet
protocols such as WAP, as well as compiling Internet content so that it is
more compact to transmit and easier to display on the wireless telephone.

Dispatcher. At the core of our scalable server architecture is a dispatcher
that dynamically load balances user proxies between a number of agents. The
dispatcher is much like the line at a bank that funnels a queue of customers
to the next available teller. The dispatcher also provides a basic level of
protection against faults by automatically rerouting subscriber requests if a
proxy server malfunctions.

47
<PAGE>

Messenger. The UP.Link messenger server provides store-and-forward messaging
capabilities from Web servers to UP.Browser-enabled wireless telephones over a
wide range of wireless protocols such as Short Message Service and Cellular
Digital Packet Data. Store-and-forward means that if a wireless telephone is
turned off or out of its coverage area, the message will be stored and
delivered once the wireless telephone is connected to the network. The
messenger accepts data through standard Web interfaces such as HTTP and
converts the data for transmittal over the wireless network without requiring
modifications to the Web server.

Narrow Band Router. The Narrow Band Router provides a common interface to a
wide range of narrow band, or low-bandwidth, wireless networks. This feature
makes the protocol-specific components of message addressing, routing and
delivery transparent to Internet applications, enabling developers to easily
create applications for wireless networks without customizing their
applications to work with each individual protocol. Thus the same application
can work across a number of wireless data networks and protocols in a
transparent manner.

Translation Framework. Wireless telephones are different than personal
computers in that they are mass-market consumer devices with software that is
embedded in the wireless telephone at the factory and very difficult and costly
to modify in the field. The WML specification, however, is regularly evolving
as features and functionality are introduced and refined. To address this
issue, the translation framework enables the translation of content in real-
time. Software translators can be implemented that transparently translate
content based on newer versions of WML to make it compatible with wireless
telephones that contain older versions of UP.Browser, or vice versa.

Sales and Marketing

We sell our products through both a direct sales force and third-party
resellers, currently Alcatel, CTC, Sema Group and Siemens. In addition, we have
a joint sales and marketing relationship with Lucent Technologies. As of April
30, 1999, we had 34 persons in sales and marketing serving the United States
market, and 14 persons in sales and marketing outside the United States. We
plan to significantly expand this group over the next 12 months. In addition,
we have offices in London and Tokyo. Our direct sales force focuses on selling
products and consulting services and assists our indirect channel partners in
selling our products and services. International sales of products and services
accounted for 7% and 44% of our total revenues in the years ended June 30, 1997
and 1998, respectively, and 64% of our total revenues for the nine months ended
March 31, 1999. We expect international revenues to continue to account for a
significant portion of our revenues, although the percentage of our total
revenues derived from international sales may vary. Our international sales
strategy is to partner with leading distributors and systems integrators that
have strong industry backgrounds and market presence in their respective
markets and geographic regions.

Our success depends in part on our ability to increase sales of our products
and services through value-added resellers and to expand our indirect
distribution channels. Under the arrangements that we make with our value-added
resellers, a value-added reseller sells, installs and services our products to
wireless network operators. These agreements are not exclusive and do not have
territorial restrictions. Our value-added resellers generally are not
restricted from selling products that are competitive with our products, and
each of our partners can cease marketing our products and services at their
option.

We believe that customer service and ongoing technical support is an
essential part of the sales process in the wireless communications industry. In
order to provide high levels of customer service,

48
<PAGE>

senior management and assigned account managers play a role in ongoing account
management and relationships. We believe these customer relationships enable us
to improve customer satisfaction and develop products to meet specific customer
needs. Our agreements with our network operator customers provide for 24 hour
per day support seven days per week.

We actively recruit content and application developers to our platform and
provide to them free of charge our software developer's kit, UP.SDK. We also
provide them with free membership in our Developer Program, free email-based
support and the opportunity to participate in our Alliances Program. To date,
there are over 4,500 registered developers in our Developer Program who have
downloaded UP.SDK, including:

<TABLE>
<S> <C>
. 724 Solutions . Lotus
. biztravel.com . Mapquest.com
. BroadVision . NewsAlert
. CableData . Reuters
. Comverse Network Systems . SmartServOnline
. Data Broadcasting Corporation . Sportsfeed.com
. eDispatch.com . StockTips
. InfoSpace.com . Vantive
. Internet Travel Network . The Weather Underground
. KLELine . Webraska Mobile Technologies
. Lightbridge
</TABLE>

Our Alliances Program is comprised of a select group of our content and
application developers. We screen applications to our Alliances Program based
on the availability and quality of the content or applications produced by the
partner. We perform joint marketing activities with the partner, as well as
provide introductions between our wireless network operators and our Alliances
Program members.

Competition

The market for our products and services is becoming increasingly
competitive. The widespread adoption of open industry standards such as the WAP
specifications may make it easier for new market entrants and existing
competitors to introduce products that compete with our software products. We
expect that we will compete primarily on the basis of price, time-to-market,
functionality, quality and breadth of product and service offerings. Our
current and potential competitors include the following:

. Wireless equipment manufacturers, such as Ericsson and Nokia, which are
developing and marketing competitive server, browser and application
software products. These companies already sell billions of dollars of
wireless telephones and other telecommunications products to network
operators which are our existing and potential customers.

. Microsoft, which recently announced plans to deliver a wireless portal
designed to work with handheld devices, wireless telephones and
interactive pagers via Microsoft's MSN network of Internet services.
Nextel is Microsoft's first customer for these services. Nextel plans to
use a co-branded version of Microsoft's MSN portal to enable Nextel
customers to access a customized set of Internet services. This
arrangement also provides for Microsoft to invest $600 million in Nextel
to support Nextel's development of wireless Internet services. In
addition, Microsoft has announced that it intends to enable its Windows
CE operating system

49
<PAGE>

to run on wireless handheld devices, including wireless telephones, and to
develop and market its own browser for these devices.

. Wireless Knowledge, a joint venture of Microsoft and Qualcomm, which has
announced its intention to introduce products and services that may
compete directly with our UP.Link and UP.Browser products, as well as our
UP.Applications.
. Systems integrators, such as CMG and APiON, and software companies, such
as Oracle Corporation and Sendit, which are developing and marketing
server software that is compliant with the specifications promulgated by
the WAP Forum.
. Providers of Internet software applications and content, electronic
messaging applications and personal information management software
solutions, any of whom could offer products and services that compete
with ours.

Many of our existing competitors as well as potential competitors have
substantially greater financial, technical, marketing and distribution
resources than we do. Several of these companies also have greater name
recognition and more well-established relationships with our target customers.
Furthermore, these competitors may be able to adopt more aggressive pricing
policies and offer more attractive terms to customers than we can. We may face
increasing price pressure from our network operator customers. In addition,
current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to compete
more effectively. Finally, existing and potential competitors may develop
enhancements to, or future generations of, competitive products that will have
better performance features than our products.

Intellectual Property Rights

Our performance depends significantly on our ability to protect our
proprietary rights to the technologies used in our products. If we are not
adequately protected, our competitors could use the intellectual property that
we have developed to enhance their products and services, which could harm our
business. As of May 1999, we had two issued United States patents. The first
patent relates to two-way communications between browser-enabled wireless
devices and wireless networks and expires in 2015. Our second patent relates
to the storage of frequently used links to internet-based URLs, or bookmarks,
on a remote server. This patent expires in 2017. We also had one United States
patent application with allowed claims and 58 pending United States patent
applications, as well as foreign counterparts with respect to many of these
applications. In addition, we rely on a combination of copyright and trademark
laws, trade secrets, confidentiality provisions and other contractual
provisions to protect our proprietary rights, but these legal means afford
only limited protection. Despite any measures taken to protect our
intellectual property, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary. In
addition, the laws of some foreign countries may not protect our proprietary
rights as fully as do the laws of the United States. Thus, the measures we are
taking to protect our proprietary rights in the United States and abroad may
not be adequate. Finally, our competitors may independently develop similar
technologies.

The telecommunications and Internet software industries are characterized
by the existence of a large number of patents and frequent litigation based on
allegations of patent infringement. As the number of entrants into our market
increases, the possibility of an infringement claim against us grows. For
example, we may be inadvertently infringing a patent of which we are unaware.
In addition, because patent applications can take many years to issue, there
may be a patent application now pending of which we are unaware, which will
cause us to be infringing when it issues in the future. To address any patent
infringement claims, we may have to enter into royalty or licensing

50
<PAGE>

agreements on disadvantageous commercial terms. A successful claim of product
infringement against us, and our failure to license the infringed or similar
technology, would harm our business. In addition, any infringement claims, with
or without merit, would be time-consuming and expensive to litigate or settle
and could divert management attention from administering our core business.

We rely on a license of encryption technology from RSA Data Security, Inc.
The license from RSA is perpetual unless terminated by either party as the
result of a material breach or insolvency or, at our election, for convenience.

As a member of the WAP Forum, we have agreed to license our intellectual
property to other WAP members on fair and reasonable terms to the extent that
the license is required to develop noninfringing products under the
specifications promulgated by the WAP Forum. Each other member of the WAP Forum
has entered into a reciprocal agreement.

Employees

As of April 30, 1999, we had a total of 157 employees. None of our employees
is covered by any collective bargaining agreements. We believe that our
relations with our employees are good.

Facilities

Our principal offices are located in Redwood City, California in a 41,000
square foot facility under a lease expiring in June 2005, with a renewal option
for an additional five-year term. We also lease space for our offices in London
and Tokyo.

Legal Proceedings

We are not currently subject to any material legal proceedings; however, we
may from time to time become a party to various legal proceedings arising in
the ordinary course of our business.

51
<PAGE>

MANAGEMENT

Executive Officers and Directors

Our executive officers and directors and their ages as of April 30, 1999 are
as follows:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<C> <C> <S>
Alain Rossmann....... 43 Chairman and Chief Executive Officer

Charles Parrish...... 52 Executive Vice President and Director

Alan Black........... 39 Vice President, Finance and Administration, Chief
Financial Officer and Treasurer

Andrew Laursen....... 40 Vice President, Product Development and Engineering

Benjamin Linder...... 33 Vice President, Marketing

Maurice Jeffery...... 35 Vice President, North America Sales

Tony Miranzadeh...... 36 Vice President of Sales and Business Development,
Asia Pacific and Latin America

Malcolm Bird......... 43 Managing Director, Phone.com (Europe) Ltd.

Roger Evans(1)(2).... 53 Director

Reed Hundt........... 50 Director

David Kronfeld(1).... 51 Director

Andrew Verhalen(2)... 42 Director
</TABLE>
- ---------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.

Alain Rossmann. Mr. Rossmann is the founder, Chairman and Chief Executive
Officer of Phone.com. Prior to founding Phone.com in December 1994, he was
Chief Executive Officer of EO Corporation, a pioneer in personal digital
assistant devices, from 1991 to 1993, when it was sold to AT&T. Prior to his
involvement with EO, he was Vice President of Operations for C-Cube
Microsystems Inc., a semiconductor design company, from 1989 to 1991. From 1986
to 1989, Mr. Rossmann co-founded and served as Vice President of Marketing and
Sales at Radius, Inc., a developer of digital video products. From 1983 to
1986, Mr. Rossmann was manager of the third-party developer group at Apple
Computer, Inc. Mr. Rossmann holds an M.S. degree in Mathematics from the Ecole
Polytechnique, an M.S. degree in Civil Engineering from Ecole Nationale des
Ponts et Chaussees and an M.B.A. degree from Stanford University.

Charles Parrish. Mr. Parrish joined Phone.com as President and a director in
June 1995, and was appointed Executive Vice President in June 1997. Mr. Parrish
was General Manager of the Mobile Data Division of GTE Mobile Communications, a
telecommunications company, from 1994 to June 1995, and Vice President of
Marketing for GTE, from 1991 to 1994. Prior to working for GTE, Mr. Parrish was
Senior Vice President of Operations for Contel Cellular, a telecommunications
company, from July 1990 to 1991, when Contel was acquired by GTE. Prior to
serving at Contel, he was the co-Founder, President and Chief Executive Officer
of AmeriCom Corporation, a telecommunications equipment company, from 1984 to
June 1990. Mr. Parrish served as Executive Assistant to the Secretary of the
United States Department of the Interior under the Carter Administration. Mr.
Parrish holds a B.S. degree in Industrial Management from the Georgia Institute
of Technology.

52
<PAGE>

Alan Black. Mr. Black joined Phone.com as Vice President of Finance and
Administration and Chief Financial Officer in August 1997 and was appointed to
the additional office of Treasurer in September 1997. Mr. Black was Chief
Financial Officer of Vicor, Inc., a provider of Internet information capture
and delivery systems for financial services firms, from August 1992 to August
1997. Prior to his tenure at Vicor, Mr. Black was with KPMG LLP between 1982
and 1992, most recently with the firm's High Technology practice. Mr. Black
holds a Bachelor of Commerce and a graduate diploma in Public Accountancy from
McGill University. Mr. Black is a member of the California Society of Certified
Public Accountants and the Canadian Institute of Chartered Accountants.

Andrew Laursen. Mr. Laursen joined Phone.com as Vice President of Product
Development and Engineering in June 1996, after working from August 1986 to
June 1996 at Oracle Corporation, most recently as the Vice President and
general manager of the Network Computer Division. Prior to this position, he
pioneered Oracle's efforts in the area of digital video and worked in various
management and development roles in the database server division. Before
working at Oracle, Mr. Laursen was employed with Tolerant Systems, a computer
systems company, where he was responsible for the development of their fault-
tolerant UNIX file system. Mr. Laursen began his career at AT&T Bell
Laboratories. He holds a B.S. degree in Computer Science from Michigan State
University and an M.S. degree in Computer Science from the University of
Illinois.

Benjamin Linder. Mr. Linder joined Phone.com in January 1996 as Vice
President of Product Management and was appointed as Vice President of
Marketing in October 1996. From July 1987 to December 1995 Mr. Linder worked at
Oracle Corporation, where he most recently served as Vice President of
Marketing, co-founding Oracle's New Media Division in 1992. Prior to working in
the New Media division of Oracle, Mr. Linder was Director of Technical Services
for the massively parallel processing technology at Oracle. He holds B.S.
degrees in Electrical Engineering and Computer Science from the Massachusetts
Institute of Technology.

Maurice Jeffery. Mr. Jeffery joined Phone.com in August 1996 as Director of
Business Development and was promoted to Vice President of North American Sales
in August 1997. Prior to joining Phone.com, Mr. Jeffery held various management
positions, including European Managing Director, at General Magic, Inc., a
telecommunications software and services infrastructure company, from September
1994 to August 1996. Prior to working at General Magic, he held various
management positions in technical support, business development and marketing
at Hewlett-Packard Company from September 1984 to September 1994. Mr. Jeffery
holds a B.S. degree in Computer Science and Commercial Studies from GCAT,
England.

Tony Miranzadeh. Tony Miranzadeh joined Phone.com as Vice President of Sales
and Business Development, Asia Pacific and Latin America in March 1999. From
April 1984 to February 1999, Mr. Miranzadeh held various management positions
with Lucent Technologies, including Director of Business Development and
Strategy in the United Kingdom, where he was responsible for the
commercialization and introduction of third generation wireless technologies.
Mr. Miranzadeh also held the position of Director of Sales and Business
Development for GSM and CDMA network technologies for the Asia Pacific region.
Mr. Miranzadeh holds a B.S. degree in Electrical Engineering from the
University of Illinois and an M.S. degree in Electrical and Computer
Engineering from the Illinois Institute of Technology.

Malcolm Bird. Prior to joining Phone.com as Vice President of Europe in
September 1997, Mr. Bird worked at Acorn Computer Group, Plc., a computer
company, from November 1989 to

53
<PAGE>

April 1997, serving most recently as divisional chief executive for the network
computing and online media divisions. While at Acorn, Mr. Bird directed the
design of Oracle's Network Computer, launched Acorn's entry into the emerging
interactive television market and co-founded Advanced RISC Machines, Ltd.
(ARM), a joint venture between Acorn, Apple Computer and VLSI Technology.
Before working at Acorn, Mr. Bird worked with the PA Consulting Group, a
consulting company. Mr. Bird holds a B.S. degree in Mechanical Engineering from
Imperial College, London University.

Roger Evans. Mr. Evans has been a director of Phone.com since September
1995. Mr. Evans has been associated with Greylock Management Corporation, a
Boston-based venture capital firm, since 1989, serving as a general partner
since January 1991. From 1985 to 1988, he served as President and Chief
Executive Officer of Micom Systems, Inc., a data communications equipment
manufacturer, which he co-founded in 1976. He also serves as a director of
Ascend Communications, Inc., a wide area networking company, Copper Mountain
Networks, a communications equipment company, Maker Communications, Inc., a
communications semiconductor company, and several other privately-held
companies. Mr. Evans holds a Master of Arts degree in Economics from Cambridge
University, England.

Reed Hundt. Mr. Hundt has been a director of Phone.com since April 1999.
Since November 1998, Mr. Hundt has been a senior advisor on information
industries to McKinsey & Company, a worldwide management consulting firm. He
has also been a principal of Charles Ross Partners, LLC, a Bethesda, Maryland
firm that provides consulting and investment advice on telecommunications,
since November 1997. From November 1993 to November 1997, Mr. Hundt was
Chairman of the Federal Communications Commission. Prior to joining the FCC,
Mr. Hundt was a partner at the law firm of Latham & Watkins. Mr. Hundt serves
on the boards of directors of Allegiance Telecom, Inc., Ascend Communications,
Inc., NorthPoint Communications, Inc., and Novell, Inc.

David Kronfeld. Mr. Kronfeld has been a director of Phone.com since February
1998. Mr. Kronfeld founded JK&B Capital in January 1996 and is the managing
member. Mr. Kronfeld is also a general partner at Boston Capital Ventures,
where he specializes in the telecommunications and software industries. Before
joining Boston Capital Ventures in October 1989, Mr. Kronfeld was the Vice
President of Acquisitions and Venture Investments at Ameritech, a
telecommunications company, from October 1984 to October 1989. Prior to working
for Ameritech, Mr. Kronfeld was a Senior Manager at Booz Allen & Hamilton, an
international management consulting firm, from 1977 to 1981. Mr. Kronfeld is a
director of SCC Communications, Inc., a 911 service provider, MGC
Communications, Inc., a local exchange carrier, and 21st Century Telecom Group,
a telecommunications company. He holds a B.S. degree in Electrical Engineering
and an M.S. degree in Computer Science from Stevens Institute of Technology and
an M.B.A. degree from The Wharton School of Business.

Andrew Verhalen. Mr. Verhalen has been a director of Phone.com since
September 1995. Mr. Verhalen is a general partner of Matrix Partners, a venture
capital firm, which he joined in 1992. From 1986 to 1991, Mr. Verhalen worked
at 3Com Corporation, a network equipment manufacturer, initially as a Vice
President of Marketing, then as Vice President and General Manager of the
Network Adapter Division. Prior to joining 3Com, he worked for five years in
the Microprocessor Group at Intel Corporation, in various marketing, management
and strategic planning roles. He currently is a director of Copper Mountain
Networks, a network equipment manufacturer, WatchGuard Technologies, a network
security company, and several private technology companies. Mr. Verhalen holds
a B.S. degree in Electrical Engineering, an M. Eng. degree in Electrical
Engineering and an M.B.A. degree from Cornell University.

54
<PAGE>

Board Composition

Our bylaws currently provide for a board of directors consisting of six
members. The term of each of our current directors will expire at the next
annual meeting of stockholders. Commencing at the first annual meeting of
stockholders following the annual meeting of stockholders when we shall have
had at least 800 stockholders, the board of directors will be divided into
three classes, each serving staggered three-year terms: Class I, whose term
will expire at the first annual meeting of stockholders following the annual
meeting of stockholders when we shall have had at least 800 stockholders; Class
II, whose term will expire at the second annual meeting of stockholders
following the annual meeting of stockholders when we shall have had at least
800 stockholders; and Class III, whose term will expire at the third annual
meeting of stockholders following the annual meeting of stockholders when we
shall have had at least 800 stockholders. As a result, only one class of
directors will be elected at each annual meeting of stockholders of Phone.com,
with the other classes continuing for the remainder of their respective terms.
Messrs. Rossmann, Parrish, Evans, Verhalen and Kronfeld were elected to the
board of directors pursuant to a voting agreement by and among Phone.com and
some of its principal stockholders. This voting agreement will terminate upon
completion of this offering. Each of our current directors will continue to
serve on the board of directors upon completion of this offering.

Board Compensation

Except for reimbursement for reasonable travel expenses relating to
attendance at board meetings and the grant of stock options, directors are not
compensated for their services as directors. Directors who are employees of
Phone.com are eligible to participate in our 1995 and 1996 stock plans and will
be eligible to participate in our employee stock purchase plan. Directors who
are not employees of Phone.com are eligible to participate in our 1996 stock
plan and will be eligible to participate in our directors' stock option plan.

1999 Directors' Stock Option Plan. The directors' stock option plan was
adopted by the board of directors in March 1999 and was approved by our
stockholders in May 1999. A total of 600,000 shares of common stock has been
reserved for issuance under the directors' stock option plan, all of which
remain available for future grants. The directors' stock option plan provides
for the grant of nonstatutory stock options to nonemployee directors of
Phone.com. The directors' stock option plan is designed to work automatically
without administration; however, to the extent administration is necessary, it
will be performed by the board of directors. To the extent they arise, it is
expected that conflicts of interest will be addressed by abstention of any
interested director from both deliberations and voting regarding matters in
which a director has a personal interest.

The directors' stock option plan provides that each person who becomes a
nonemployee director of Phone.com after the completion of this offering will be
granted a nonstatutory stock option to purchase 33,333 shares of common stock
on the date on which the individual first becomes a nonemployee director of
Phone.com. Thereafter, on the first board of directors meeting date of each
calendar quarter beginning on or after October 1, 2000, each nonemployee
director who was a member of the board of directors prior to the completion of
the offering will be granted an option to purchase 2,500 shares of common
stock. In addition, on the first board of directors meeting date of each
calendar quarter that begins at least one year following the initial option
grant to a nonemployee director who becomes a director after the completion of
this offering, but in no event earlier than October 1, 2000, the director will
be granted an option to purchase 2,500 shares of common stock.

55
<PAGE>

The directors' stock option plan sets neither a maximum nor a minimum
number of shares for which options may be granted to any one nonemployee
director, but does specify the number of shares that may be included in any
grant and the method of making a grant. No option granted under the directors'
stock option plan is transferable by the optionee other than by will or the
laws of descent or distribution or pursuant to a qualified domestic relations
order, and each option is exercisable, during the lifetime of the optionee,
only by the optionee. All options granted under the directors' stock option
plan shall vest in full immediately upon grant of the option. If a nonemployee
director ceases to serve as a director for any reason other than death or
disability, he or she may, but only within 90 days after the date he or she
ceases to be a director of Phone.com, exercise options granted under the
directors' stock option plan. If he or she does not exercise the option within
the 90-day period, the option shall terminate. The exercise price of all stock
options granted under the directors' stock option plan shall be equal to the
fair market value of a share of our common stock on the date of grant of the
option. Options granted under the directors' stock option plan have a term of
five years.

In the event of a sale of all or substantially all of our assets, our
merger with or into another corporation or any other reorganization of
Phone.com in which more than 50% of the shares of Phone.com entitled to vote
are exchanged, each nonemployee director shall have either (i) a reasonable
time within which to exercise the option prior to the effectiveness of the
dissolution, liquidation, sale, merger or reorganization, at the end of which
time the option shall terminate, or (ii) the right to exercise the option or
receive a substitute option with comparable terms, as to an equivalent number
of shares of stock of the corporation succeeding Phone.com or acquiring its
business. Our board of directors may amend or terminate the directors' stock
option plan as long as this action does not adversely affect any outstanding
option and we shall obtain stockholder approval for any amendment to the
extent required by applicable law.

Board Committees

The compensation committee currently consists of Messrs. Evans and
Verhalen. The compensation committee:

. reviews and approves the compensation and benefits for our executive
officers and grants stock options under our stock option plans; and
. makes recommendations to the board of directors regarding executive
compensation matters.

The audit committee currently consists of Messrs. Kronfeld and Evans. The
audit committee:

. makes recommendations to the board of directors regarding the selection
of independent auditors.
. reviews the results and scope of the audit and other services provided by
our independent auditors; and
. reviews and evaluates our audit and control functions.

Compensation Committee Interlocks and Insider Participation

The members of the compensation committee of Phone.com's board of directors
are currently Messrs. Evans and Verhalen, neither of whom has at any time been
an officer or employee of Phone.com. We have issued and sold in private
placement transactions shares of preferred stock to Greylock Equity Limited
Partnership and to Matrix Partners IV, L.P. and Matrix IV Entrepreneurs

56
<PAGE>

Fund. Mr. Evans is a general partner of Greylock Equity GP Limited Partnership,
the general partner of Greylock Equity Limited Partnership, and Mr. Verhalen is
a general partner of Matrix Partners, the general partner of Matrix Partners
IV, L.P. and of Matrix IV Entrepreneurs Fund. The following summarizes these
transactions:

Greylock Equity Limited Partnership

. June 1995: 1,999,999 shares of Series A preferred stock at $0.50 per
share.
. January 1996: 786,566 shares of Series B preferred stock at $1.68 per
share.
. October 1996: 78,718 shares of Series C preferred stock at $3.81 per
share.
. January 1998: 78,716 shares of Series D preferred stock at $5.08 per
share.

Entities affiliated with Matrix Partners

. June 1995: 1,999,998 shares of Series A preferred stock at $0.50 per
share.
. January 1996: 786,565 shares of Series B preferred stock at $1.68 per
share.
. October 1996: 78,718 shares of Series C preferred stock at $3.81 per
share.
. January 1998: 78,715 shares of Series D preferred stock at $5.08 per
share.

Each of the share and per share amounts assume our two-for-three reverse stock
split prior to the completion of this offering.

Executive Compensation

Summary Compensation. The following table sets forth compensation awarded
to, earned by, or paid to our Chief Executive Officer and the four other most
highly compensated executive officers whose total cash compensation exceeded
$100,000 during the year ended June 30, 1998 (collectively, the "named
executive officers").

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
--------------------- ------------
Securities
Name and Principal Underlying All Other
Position Salary($) Bonus($) Options(#) Compensation($)
- ------------------ --------- -------- ------------ ---------------
<S> <C> <C> <C> <C>
Alain Rossmann
Chairman and Chief
Executive Officer...... $ 157,500 $ -- -- $ 806(1)

Charles Parrish
Executive Vice
President.............. 167,500 107,352(2) 106,667 935(1)

Maurice Jeffery
Vice President, North
America Sales.......... 118,508 56,667(3) 55,000 600(1)

Malcolm Bird
Managing Director,
Phone.com (Europe)
Ltd.................... 103,000(4) 137,224(3) 120,000 15,000(5)

Michael Matthys
former Vice President,
Asia Sales(6).......... 84,615 69,444 -- 497(1)
</TABLE>
- ---------------------
(1) Consists of life insurance premiums paid by Phone.com.
(2) Consists of sales commissions, payments for moving and relocation costs and
monthly payments for housing expenses pursuant to relocation agreement.

57
<PAGE>

(3) Consists of sales commissions.
(4) Includes auto allowance of approximately $3,000.
(5) Consists of contribution to pension plan.
(6) Mr. Matthys resigned from Phone.com in February 1999.

Option Grants. The following table shows information regarding stock options
granted to the Named Executive Officers during the fiscal year ended June 30,
1998. No stock appreciation rights were granted to these individuals during the
year.

Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates Of
Number of Percentage Stock Price
Shares of Total Appreciation for
Underlying Options Exercise Option Term(1)
Options Granted to Price per Expiration --------------------
Name Granted Employees Share Date 5% 10%
- ---- ---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Alain Rossmann.......... -- -- -- -- -- --
Charles Parrish......... 106,667 8.6% $2.48 6/24/2008 $1,647,252 2,779,333
Maurice Jeffery......... 35,000(2) 2.8 0.60 2/18/2008 606,124 977,591
20,000(3) 1.6 2.48 6/24/2008 308,857 521,123
Malcolm Bird............ 100,000(2) 8.1 0.39 9/24/2007 1,752,784 2,814,117
20,000(3) 1.6 2.48 6/24/2008 308,857 521,123
Michael Matthys(4)...... -- -- -- -- -- --
</TABLE>
- ---------------------
(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the Securities and Exchange Commission and are based on the
assumption that the assumed initial public offering price of $11.00 per
share was the fair market value of the common stock on the date of grant.
There is no assurance provided to any executive officer or any other holder
of our securities that the actual stock price appreciation over the 10-year
option term will be at the assumed 5% and 10% levels or at any other
defined level.
(2) These stock options, which were granted under the 1996 stock plan, become
exercisable at a rate of 1/4 of the total number of shares of common stock
subject to the option on the first anniversary of the date of grant, and
1/48 of the total number of shares monthly thereafter, as long as the
optionee remains an employee with, consultant to, or director of Phone.com.
(3) These options, which were granted under the 1996 Stock Plan, become
exercisable at a rate of 1/10 of the total number of shares of common stock
subject to the option on the second anniversary of the date of grant, 2/10
on the third anniversary, 3/10 on the fourth anniversary and 4/10 on the
fourth anniversary, as long as the optionee remains an employee with,
consultant to, or director of Phone.com.
(4) Mr. Matthys resigned from Phone.com in February 1999.

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<PAGE>

Aggregate Option Exercises and Holdings. The following table provides
certain summary information concerning the shares of common stock represented
by outstanding stock options held by each of the Named Executive Officers as of
June 30, 1998.

Fiscal Year-End Option Values

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Number of Options at June 30, In-the-Money Options at
Shares 1998(#) June 30, 1998($)(1)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alain Rossmann.......... -- -- -- -- -- --
Charles Parrish......... -- -- -- 106,667 -- $ 909,336
Maurice Jeffrey......... 14,581 $157,037 731 74,687 $7,873 746,529
Malcolm Bird............ -- -- -- 120,000 -- 1,231,489
Michael Matthys(2)...... -- -- -- -- -- --
</TABLE>
- ---------------------
(1) The amount set forth represents the difference between the fair market
value of the underlying common stock at June 30, 1998 (using an assumed
initial public offering price of $11.00 per share as the fair market value)
and the exercise price of the option.
(2) Mr. Matthys resigned from Phone.com in February 1999.

We have entered into agreements with each of our executive officers which
provide that if the officer's employment is terminated involuntarily other than
for cause within 18 months following a change of control transaction, then
subject to limitations, the vesting of any stock option or restricted stock
held by the officer shall be automatically accelerated so that the option or
restricted stock becomes completely vested.

Stock Plans

1995 Stock Plan. Our 1995 stock plan provides for the grant of incentive
stock options to employees and nonstatutory stock options and stock purchase
rights to employees, directors and consultants. The purposes of the 1995 stock
plan are to attract and retain the best available personnel, to provide
additional incentives to our employees and consultants and to promote the
success of our business. The 1995 stock plan was originally adopted by our
board of directors in October 1995 and approved by our stockholders in October
1995. Unless terminated earlier by the board of directors, the 1995 stock plan
shall terminate in October 2005. A total of 1,649,462 shares of common stock
have been reserved for issuance under the 1995 stock plan. As of March 31,
1999, options to purchase 445,166 shares of common stock were outstanding at a
weighted average exercise price of $0.16, 1,204,296 shares had been issued upon
exercise of outstanding options or pursuant to restricted stock purchase
agreements, and no shares remained available for future grant.

The administrator of the 1995 stock plan may be either the board of
directors or a committee of the board. The administrator determines the terms
of options granted under the 1995 stock plan, including the number of shares
subject to the option, exercise price, term and exercisability. Incentive stock
options granted under the 1995 stock plan must have an exercise price of at
least 100% of the fair market value of the common stock on the date of grant
and at least 110% of the fair market value in the case of an optionee who holds
more than 10% of the total voting power of all classes of our stock.
Nonstatutory stock options granted under the 1995 stock plan must have an
exercise price of at least 85% of the fair market value of the common stock on
the date of grant (or at least 110% of the fair market value in the case of an
optionee who holds more than 10% of the total voting

59
<PAGE>

power of all classes of our stock). Payment of the exercise price may be made
in cash or other consideration as determined by the administrator.

The administrator determines the term of options, which may not exceed 10
years (or five years in the case of an option granted to a holder of more than
10% of the total voting power of all classes of our stock). No option may be
transferred by the optionee other than by will or the laws of descent or
distribution. Each option may be exercised during the lifetime of the optionee
only by the optionee. The administrator determines when options become
exercisable. Options granted under the 1995 stock plan generally must be
exercised within 60 days after the termination of the optionee's status as an
employee, director or consultant of Phone.com, or within 12 months if
termination is due to the death or disability of the optionee, but in no event
later than the expiration of the option's term. Options granted under the 1995
stock plan generally vest at the rate of 1/4 of the total number of shares
subject to the option 12 months after the date of grant, and 1/48 of the total
number of shares subject to the option each month thereafter.

In the event of our merger with or into another corporation, each option may
be assumed or an equivalent option substituted by the successor corporation.
The administrator has the authority to amend or terminate the 1995 stock plan
provided that no action that impairs the rights of any holder of an outstanding
option may be taken without the holder's consent. In addition, stockholder
approval will be obtained for any amendment to the extent required by
applicable law.

In addition to stock options, the administrator may issue stock purchase
rights under the 1995 stock plan to employees, directors and consultants. The
administrator determines the number of shares, price, terms, conditions and
restrictions related to a grant of stock purchase rights. The purchase price of
a stock purchase right granted under the 1995 stock plan must be at least 85%
of the fair market value of the shares as of the date of the offer. The period
during which the stock purchase right is held open is determined by the
administrator, but in no case shall this period exceed 30 days. Unless the
administrator determines otherwise, the recipient of a stock purchase right
must execute a restricted stock purchase agreement granting Phone.com an option
to repurchase unvested shares at cost upon termination of the recipient's
relationship with us.

1996 Stock Plan. Our 1996 stock plan provides for the grant of incentive
stock options to employees and nonstatutory stock options and stock purchase
rights to employees, directors and consultants. The purposes of the 1996 stock
plan are to attract and retain the best available personnel, to provide
additional incentives to our employees and consultants and to promote the
success of our business. The 1996 stock plan was originally adopted by our
board of directors in September 1996 and approved by our stockholders in
October 1996. The 1996 stock plan was amended by our board of directors in
March 1999 to increase the total number of shares reserved for issuance by
4,250,000 shares and to incorporate other changes. This amendment to the 1996
stock plan was approved by our stockholders in May 1999. Unless terminated
earlier by the board of directors, the 1996 stock plan shall terminate in
September 2006. A total of 7,734,425 shares of common stock have been reserved
for issuance under the 1996 stock plan. In addition, the number of shares
reserved under the plan will automatically be increased each year, beginning on
July 1, 2000 in an amount equal to the lesser of (a) 1,500,000 shares, (b) four
percent of the shares outstanding on the last day of the preceding fiscal year
or (c) a lesser number of shares as is determined by the board of directors. As
of March 31, 1999, options to purchase 2,876,180 shares of common stock were
outstanding at a weighted average exercise price of $2.13, 385,438 shares had
been issued upon exercise of outstanding options or pursuant to restricted
stock purchase agreements, and 4,472,807 shares remained available for future
grant.

60
<PAGE>

The administrator of the 1996 stock plan may be either the board of
directors or a committee of the board. The administrator determines the terms
of options granted under the 1996 stock plan, including the number of shares
subject to the option, exercise price, term and exercisability. In no event,
however, may an individual receive option grants for more than 1,000,000 shares
under the 1996 plan in any fiscal year. Incentive stock options granted under
the 1996 stock plan must have an exercise price of at least 100% of the fair
market value of the common stock on the date of grant and at least 110% of the
fair market value in the case of an optionee who holds more than 10% of the
total voting power of all classes of our stock. Nonstatutory stock options
granted under the 1996 stock plan must have an exercise price of at least 85%
of the fair market value of the common stock on the date of grant. Payment of
the exercise price may be made in cash or other consideration as determined by
the administrator.

The administrator determines the term of options, which may not exceed 10
years (or five years in the case of an option granted to a holder of more than
10% of the total voting power of all classes of our stock). No option may be
transferred by the optionee other than by will or the laws of descent or
distribution provided, however, that the administrator may in its discretion
provide for the transferability of nonstatutory stock options granted under the
1996 stock plan. Each option may be exercised during the lifetime of the
optionee only by the optionee or permitted transferee. The administrator
determines when options become exercisable. Options granted under the 1996
stock plan generally must be exercised within 30 to 90 days, as determined by
the administrator, after the termination of the optionee's status as an
employee, director or consultant of Phone.com, or within 12 months if
termination is due to the death or disability of the optionee, but in no event
later than the expiration of the option's term. Options granted under the 1996
stock plan generally vest over a period of four or five years.

In the event of our merger with or into another corporation, each option may
be assumed or an equivalent option substituted by the successor corporation.
However, if the successor corporation does not agree to assume or substitute
the option, the option will terminate. The administrator has the authority to
amend or terminate the 1996 stock plan provided that no action that impairs the
rights of any holder of an outstanding option may be taken without the holder's
consent. In addition, stockholder approval is required to increase the number
of shares subject to the 1996 stock plan, to change the designation of the
class of persons eligible to be granted options or to increase the individual
grant limitation.

In addition to stock options, the administrator may issue stock purchase
rights under the 1996 stock plan to employees, directors and consultants. The
administrator determines the number of shares, price, terms, conditions and
restrictions related to a grant of stock purchase rights. The purchase price of
a stock purchase right granted under the 1996 stock plan must be at least 85%
of the fair market value of the shares as of the date of the offer. The period
during which the stock purchase right is held open is determined by the
administrator, but in no case shall this period exceed 30 days. Unless the
administrator determines otherwise, the recipient of a stock purchase right
must execute a restricted stock purchase agreement granting Phone.com an option
to repurchase the unvested shares at cost upon termination of the recipient's
relationship with us.

1999 Employee Stock Purchase Plan. Our employee stock purchase plan was
adopted by the board of directors in March 1999 and was approved by our
stockholders in May 1999. A total of 600,000 shares of common stock has been
reserved for issuance under the employee stock purchase plan, plus an automatic
annual increase on the first day of each of our fiscal years beginning in 2000,
2001, 2002, 2003 and 2004 equal to the lesser of 500,000 shares or 1% of our
outstanding common

61
<PAGE>

stock on the last day of the immediately preceding fiscal year. The employee
stock purchase plan becomes effective upon the date of this offering. Unless
terminated earlier by the board of directors, the employee stock purchase plan
shall terminate in March 2019.

The employee stock purchase plan, which is intended to qualify under Section
423 of the Code, will be implemented by a series of overlapping offering
periods of approximately 24 months' duration, with new offering periods (other
than the first offering period) commencing on May 1 and November 1 of each
year. Each offering period will generally consist of four consecutive purchase
periods of six months' duration, at the end of which an automatic purchase will
be made for participants. The initial offering period is expected to commence
on the date of this offering and end on April 30, 2001; the initial purchase
period is expected to begin on the date of this offering and end on January 31,
2000, with subsequent purchase periods ending on April 30, 2000, October 31,
2000 and April 30, 2001. The employee stock purchase plan will be administered
by the board of directors or by a committee appointed by the board. Our
employees (including officers and employee directors), or of any majority-owned
subsidiary designated by the board, are eligible to participate in the employee
stock purchase plan if they are employed by us or a subsidiary of ours for at
least 20 hours per week and more than five months per year. The employee stock
purchase plan permits eligible employees to purchase common stock through
payroll deductions, which in any event may not exceed 20% of an employee's base
salary. The purchase price is equal to the lower of 85% of the fair market
value of the common stock at the beginning of each offering period or at the
end of each purchase period. Employees may end their participation in the
employee stock purchase plan at any time during an offering period, and
participation ends automatically on termination of employment.

An employee cannot be granted an option under the employee stock purchase
plan if immediately after the grant the employee would own stock and/or hold
outstanding options to purchase stock equaling 5% or more of the total voting
power or value of all classes of our stock or stock of our subsidiaries, or if
the option would permit an employee to purchase stock under the employee stock
purchase plan at a rate that exceeds $25,000 of fair market value of stock for
each calendar year in which the option is outstanding. In addition, no employee
may purchase more than 2,500 shares of common stock under the employee stock
purchase plan in any one purchase period. If the fair market value of the
common stock on a purchase date is less than the fair market value at the
beginning of the offering period, each participant in that offering period
shall automatically be withdrawn from the offering period as of the end of the
purchase date and re-enrolled in the new twenty-four month offering period
beginning on the first business day following the purchase date.

If we merge or consolidate with or into another corporation or sell all or
substantially all of our assets, each right to purchase stock under the
employee stock purchase plan will be assumed or an equivalent right substituted
by the successor corporation. However, the board of directors will shorten any
ongoing offering period so that employees' rights to purchase stock under the
employee stock purchase plan are exercised prior to the transaction in the
event that the successor corporation refuses to assume each purchase right or
to substitute an equivalent right of the acquiring corporation. The board of
directors has the power to amend or terminate the employee stock purchase plan
and to change or terminate offering periods as long as this action does not
adversely affect any outstanding rights to purchase stock thereunder. However,
the board of directors may amend or terminate the employee stock purchase plan
or an offering period even if it would adversely affect outstanding options in
order to avoid our incurring adverse accounting charges.

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<PAGE>

Limitation of Liability and Indemnification Matters

Our certificate of incorporation limits the liability of directors to the
maximum extent permitted by Delaware law. Delaware law provides that a director
of a corporation will not be personally liable for monetary damages for breach
of an individual's fiduciary duties as a director except for liability:

. for any breach of a director's duty of loyalty to Phone.com or to its
stockholders,
. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law,
. for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law or
. for any transaction from which a director derives an improper personal
benefit.

Our bylaws provide that Phone.com shall indemnify its directors and
executive officers and may indemnify its officers, employees and other agents
to the full extent permitted by law. We believe that indemnification under our
bylaws covers at least negligence and gross negligence on the part of an
indemnified party. Our bylaws also permit us to advance expenses incurred by an
indemnified party in connection with the defense of any action or proceeding
arising out of a party's status or service as a director, officer, employee or
other agent of Phone.com upon an undertaking by the party to repay the advances
if it is ultimately determined that he or she is not entitled to
indemnification.

We have entered into separate indemnification agreements with each of our
directors and officers. These agreements require us to, among other things,
indemnify the director or officer against expenses (including attorney's fees),
judgments, fines and settlements paid by the individual in connection with any
action, suit or proceeding arising out of the individual's status or service as
a director or officer of Phone.com (other than liabilities arising from willful
misconduct or conduct that is knowingly fraudulent or deliberately dishonest)
and to advance expenses incurred by the individual in connection with any
proceeding against the individual with respect to which he or she may be
entitled to indemnification by us. We believe that our certificate of
incorporation and bylaw provisions and indemnification agreements are necessary
to attract and retain qualified persons as directors and officers. Following
completion of this offering, we also will maintain directors' and officers'
liability insurance.

At present we are not aware of any pending litigation or proceeding
involving any director, officer, employee or agent of Phone.com where
indemnification will be required or permitted. Furthermore, we are not aware of
any threatened litigation or proceeding that might result in a claim for
indemnification.

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<PAGE>

CERTAIN TRANSACTIONS

Some stock option grants to directors and executive officers of Phone.com
are described herein under the caption "Management--Executive Compensation."

Since our inception, we have issued, in private placement transactions,
shares of preferred stock as follows: an aggregate of 4,731,997 shares of
Series A Preferred Stock at $0.50 per share in June 1995, an aggregate of
3,999,987 shares of Series B Preferred Stock at $1.68 per share in December
1995, January 1996 and February 1996, an aggregate of 2,538,766 shares of
Series C Preferred Stock at $3.81 per share in October 1996, an aggregate of
6,444,877 shares of Series D Preferred Stock at $5.08 per share in January and
February 1998 and an aggregate of 2,458,543 shares of Series E Preferred Stock
at $7.24 per share in March 1999. The share and per share data set forth herein
and in the table below assume our two-for-three reverse split and the automatic
conversion of our outstanding preferred stock into common stock upon the
completion of this offering. The following table summarizes the shares of
preferred stock purchased by named executive officers, directors and 5%
stockholders of Phone.com and persons and entities associated with them in the
private placement transactions:

<TABLE>
<CAPTION>
Series A Series B Series C Series D
Preferred Preferred Preferred Preferred
Investor Stock Stock Stock Stock
- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Alain Rossmann........................ 132,000 -- -- --
Greylock Equity Limited Partnership
(Roger Evans)........................ 1,999,999 786,566 78,718 78,716
Entities Affiliated with Matrix
Partners (Andrew Verhalen)........... 1,999,998 786,565 78,718 78,715
Entities Affiliated with JK&B Capital,
L.P. (David Kronfeld)................ -- -- -- 590,370
</TABLE>

Shares held by affiliated persons and entities have been aggregated. See
"Principal Stockholders."

The following officers and one director issued full recourse promissory
notes to Phone.com to purchase restricted stock under the 1995 stock plan and
the 1996 stock plan. The full principal amount and accrued interest under each
note remain outstanding. The terms of the notes are summarized below:

<TABLE>
<CAPTION>
Principal
Name Date of Note Amount Date Due Interest Rate
---- ---------------- --------- ---------------- -------------
<S> <C> <C> <C> <C>
Alan Black.............. October 31, 1997 $ 52,000 October 31, 2001 6.24%
July 20, 1998 $123,750 July 20, 2002 5.49%
Andrew Laursen.......... July 11, 1996 $ 85,000 July 11, 2000 6.48%
Benjamin Linder......... July 11, 1996 $ 23,800 July 11, 2000 6.48%
Reed Hundt.............. April 16, 1999 $200,000 April 16, 2004 5.28%
</TABLE>

We have entered into indemnification agreements with our officers and
directors containing provisions requiring us to, among other things, indemnify
our officers and directors against liabilities that may arise by reason of our
status or service as officers or directors (other than liabilities arising from
willful misconduct of a culpable nature) and to advance their expenses incurred
as a result of any proceeding against them as to which they could be
indemnified.

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<PAGE>

stock held by the officer shall be automatically accelerated so that the option
or restricted stock becomes completely vested.

We entered into a relocation agreement with Charles Parrish on December 23,
1996 pursuant to which we have agreed to pay Mr. Parrish a housing allowance of
$3,570 per month starting in September 1996 through the earlier of August 2003
or the date that Mr. Parrish's terminates employment with Phone.com. We have
also entered into a loan agreement with Mr. Parrish on December 23, 1996, under
which we have agreed to lend Mr. Parrish $300,000 less the aggregate amount of
all payments made to him under the relocation agreement upon Mr. Parrish's
request before August 1, 2003 in order to assist him in purchasing a residence.
In addition, we have agreed to pay Mr. Parrish a severance payment equal to six
months of his base salary if Mr. Parrish's employment with us is involuntarily
terminated. We have entered into a letter agreement with Malcolm Bird on August
18, 1997, which provides that if Mr. Bird's employment with us is involuntarily
terminated by us other than for cause, he will receive a severance payment
equal to six months of his base salary and continue to receive his medical
insurance benefits for a period of six months following his termination.

In connection with Mr. Hundt's appointment as a director in April 1999, he
received a stock option to purchase 33,333 shares of common stock at an
exercise price of $12.00 per share under our 1996 stock plan. This option is
fully exercisable as of the date of grant. In addition, in April 1999, we
issued and sold 16,667 shares of common stock to Mr. Hundt at a purchase price
of $12.00 shares under our 1996 stock plan. The aggregate purchase price of
$200,000 was paid by Mr. Hundt through the issuance of a full recourse
promissory note, which bears interest at the rate of 5.28% per annum. The
principal and interest under this note become due and payable on the earlier of
April 16, 2004 or the date of termination of Mr. Hundt's employment or
consulting relationship with Phone.com.

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<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of our common stock as of April 16, 1999, and as adjusted
to reflect the sale of 4,000,000 shares of common stock offered in this
offering, as to:

. each person (or group of affiliated persons) known by us to own
beneficially more than 5% of our outstanding common stock,
. each of our directors,
. each of the executive officers named in the summary compensation table,
and
. all directors and executive officers of Phone.com as a group.

Except as indicated in the footnotes to this table and under applicable
community property laws, to our knowledge, the persons named in the table have
sole voting and investment power with respect to all shares of common stock.
Options exercisable on or before June 15, 1999, are included as shares
beneficially owned. For the purposes of calculating percent ownership, as of
April 16, 1999, 26,527,267 shares were issued and outstanding, and, for any
individual who beneficially owns shares represented by options exercisable on
or before June 15, 1999, these shares are treated as if outstanding for that
person, but not for any other person. Unless otherwise indicated, the address
of each of the individuals named below is: c/o Phone.com, Inc., 800 Chesapeake
Drive, Redwood City, California 94063.

<TABLE>
<CAPTION>
Percent
Beneficially
Owned Options
----------------- Exercisable
Number of Before After On or Before
Name and Address Shares Offering Offering June 15, 1999
- ---------------- ---------- -------- -------- -------------
<S> <C> <C> <C> <C>
Alain Rossmann(1).................. 3,737,832 14.1% 12.3% --
Roger Evans(2)..................... 3,037,475 11.4% 10.0% 33,333
c/o Greylock Management
One Federal Street
Boston, MA 02110
Andrew Verhalen(3)................. 3,037,471 11.4% 10.0% 33,333
c/o Matrix Partners
Bay Colony Corporate Center
1000 Winter Street, Suite 4500
Waltham, MA 02154
Greylock Equity Limited 3,004,142 11.3% 9.8% --
Partnership.......................
c/o Greylock Management
One Federal Street
Boston, MA 02110
Entities affiliated with Matrix 3,004,138 11.3% 9.8% --
Partners(4).......................
Bay Colony Corporate Center
1000 Winter Street, Suite 4500
Waltham, MA 02154
Charles Parrish.................... 752,822 2.8% 2.5%
David Kronfeld(5).................. 635,763 2.4% 2.1% 33,333
c/o JK&B Capital
205 North Michigan Avenue, Suite
808
Chicago, IL 60601
Reed Hundt(6)...................... 50,000 * * 33,333
Malcolm Bird(7).................... 43,750 * * 43,750
Maurice Jeffery(8)................. 34,270 * * 19,689
Michael Matthys(9)................. 29,166 * *
All directors and executive
officers as a group (13 persons).. 12,374,590 46.0% 40.1% 353,289
</TABLE>
- --------
* Less than 1%.

66
<PAGE>

(1) Includes 74,832 shares held by Platane Fund. Mr. Rossmann is the manager
of Platane Fund, and disclaims beneficial ownership of these shares except
to the extent of his pecuniary interest therein.

(2) Consists of 33,333 shares issuable upon exercise of outstanding options
exercisable on or before June 15, 1999 and 3,004,142 shares held by
Greylock Equity Limited Partnership. Mr. Evans is a director of Phone.com
and a general partner of Greylock Equity GP Limited Partnership, the
general partner of Greylock Equity Limited Partnership. Mr. Evans
disclaims beneficial ownership of these shares except to the extent of his
pecuniary interest therein. The other general partners of Greylock Equity
GP Limited Partnership with whom Mr. Evans shares voting and dispositive
powers over these shares are Henry F. McCance, Howard E. Cox, Jr., David
N. Strohm, William W. Helman and William S. Kaiser.

(3) Consists of 33,333 shares issuable upon exercise of outstanding options
exercisable on or before June 15, 1999, 2,853,934 shares held by Matrix
Partners IV, L.P. and 150,204 shares held by Matrix IV Entrepreneurs Fund.
Mr. Verhalen is a director of Phone.com and a general partner of Matrix
Partners, the general partner of each of Matrix Partners IV, L.P. and
Matrix IV Entrepreneurs Fund. Mr. Verhalen disclaims beneficial ownership
of these shares except to the extent of his pecuniary interest therein.
The other general partners of Matrix Partners with whom Mr. Verhalen
shares voting and dispositive powers over these shares are Paul J. Ferri,
W. Michael Humphreys, Timothy A. Barrows and Andrew Marcuvitz.

(4) Consists of 2,853,934 shares held by Matrix Partners IV, L.P. and 150,204
shares held by Matrix IV Entrepreneurs Fund. Mr. Verhalen is a director of
Phone.com and a general partner of Matrix Partners, the general partner of
each of Matrix Partners IV, L.P. and Matrix IV Entrepreneurs Fund.
Mr. Verhalen disclaims beneficial ownership of these shares except to the
extent of his pecuniary interest therein. The other general partners of
Matrix Partners with whom Mr. Verhalen shares voting and dispositive
powers over these shares are Paul J. Ferri, W. Michael Humphreys, Timothy
A. Barrows and Andrew Marcuvitz.

(5) Consists of 33,333 shares issuable upon exercise of outstanding options
exercisable on or before June 15, 1999, 401,620 shares held by JK&B
Capital, L.P. and 200,810 shares held by JK&B Capital II, L.P. Mr.
Kronfeld is a director of Phone.com and general partner of JK&B Capital,
the general partner of JK&B Capital, L.P. and JK&B Capital II, L.P. Mr.
Kronfeld disclaims beneficial ownership of these shares except to the
extent of his pecuniary interest therein. The other general partners of
JK&B Capital with whom Mr. Kronfeld shares voting and dispositive powers
over these shares are George Spencer and Eileen Richardson.

(6) Includes 33,333 shares issuable upon exercise of outstanding options
exercisable on or before June 15, 1999.

(7) Consists of 43,750 shares issuable upon exercise of outstanding options
exercisable on or before June 15, 1999.

(8) Includes 19,689 shares issuable upon exercise of outstanding options
exercisable on or before June 15, 1999.
(9) Mr. Matthys resigned from Phone.com in February 1999.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

Following the closing of the sale of the shares offered hereby, our
authorized capital stock will consist of 100,000,000 shares of common stock,
$0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value.

Common Stock

As of March 31, 1999, there were 26,506,858 shares of common stock
outstanding that were held of record by approximately 96 stockholders after
giving effect to the conversion of our preferred stock into common stock at a
one-to-one ratio and assuming no exercise or conversion of outstanding
convertible securities after March 31, 1999. There will be 30,506,858 shares of
common stock outstanding (assuming no exercise of the underwriters' over-
allotment option and no exercise or conversion of outstanding convertible
securities after March 31, 1999) after giving effect to the sale of the shares
of common stock offered hereby.

The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of common stock
are entitled to receive ratably any dividends that may be declared from time to
time by the board of directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of Phone.com, the holders of
common stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior rights of preferred stock, if any,
then outstanding. The common stock has no preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
available to the common stock. All outstanding shares of common stock are fully
paid and non-assessable.

Preferred Stock

Effective upon the closing of this offering, Phone.com will be authorized to
issue 5,000,000 shares of undesignated preferred stock. The board of directors
will have the authority to issue the undesignated preferred stock in one or
more series and to determine the powers, preferences and rights and the
qualifications, limitations or restrictions granted to or imposed upon any
wholly unissued series of undesignated preferred stock and to fix the number of
shares constituting any series and the designation of a series, without any
further vote or action by the stockholders. The issuance of preferred stock may
have the effect of delaying, deferring or preventing a change in control of
Phone.com without further action by the stockholders and may adversely affect
the voting and other rights of the holders of common stock. At present, we have
no plans to issue any shares of preferred stock.

Registration Rights of Stockholders

The holders of 20,174,170 shares of common stock or their transferees are
entitled to rights to register these shares, called "registrable securities,"
under the Securities Act. These rights are provided under the terms of an
agreement between Phone.com and the holders of registrable securities. Subject
to limitations in this agreement, the holders of the registrable securities may
require, on two occasions at any time after six months from the effective date
of this offering, that Phone.com use its best efforts to register the
registrable securities for public resale, provided that the proposed aggregate
offering price is in excess of $15,000,000. If we register any of our common
stock either for our own account or for the account of other security holders,
the holders of

68
<PAGE>

registrable securities are entitled to include their shares of common stock in
the registration. A holder's right to include shares in an underwritten
registration is subject to the ability of the underwriters to limit the number
of shares included in this offering. All fees, costs and expenses of these
registrations must be borne by Phone.com and all selling expenses (including
underwriting discounts, selling commissions and stock transfer taxes) relating
to registrable securities must be borne by the holders of the securities being
registered.

Anti-Takeover Provisions of Delaware Law and Charter Provisions

We are subject to the provisions of Section 203 of the Delaware Law. In
general, the statute 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 (with 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 stockholder, and an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years prior, did own) 15% or
more of the corporation's outstanding voting stock. This provision may have the
effect of delaying, deferring or preventing a change in control of Phone.com
without further action by the stockholders. In addition, upon completion of
this offering, provisions of our charter documents, including a provision
eliminating the ability of stockholders to take actions by written consent, may
have the effect of delaying or preventing changes in control or management of
Phone.com, which could have an adverse effect on the market price of our common
stock. Our stock option and purchase plans generally provide for assumption of
our plans or substitution of an equivalent option of a successor corporation
or, alternatively, at the discretion of the board of directors, exercise of
some or all of the options stock, including non-vested shares, or acceleration
of vesting of shares issued pursuant to stock grants, upon a change of control
or similar event. The board of directors has authority to issue up to 5,000,000
shares of preferred stock and to fix the rights, preferences, privileges and
restrictions, including voting rights, of these shares without any further vote
or action by the stockholders. The rights of the holders of the common stock
will be subject to, and may be adversely affected by, the rights of the holders
of any preferred stock that may be issued in the future. The issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of our
outstanding voting stock, thereby delaying, deferring or preventing a change in
control of Phone.com. Furthermore, this preferred stock may have other rights,
including economic rights senior to the common stock, and, as a result, the
issuance of preferred stock could have a material adverse effect on the market
value of the common stock. We have no present plan to issue shares of preferred
stock.

Commencing at the first annual meeting of stockholders following the date on
which we shall have had at least 800 stockholders, the board of directors will
be divided into three classes, each serving staggered three-year terms: Class
I, whose term will expire at the first annual meeting of stockholders following
the annual meeting of stockholders when we shall have had at least 800
stockholders; Class II, whose term will expire at the second annual meeting of
stockholders following the annual meeting of stockholders when we shall have at
least 800 stockholders; and Class III, whose term will expire at the third
annual meeting of stockholders following the annual meeting of stockholders
when we shall have had at least 800 stockholders. As a result, only one class
of directors will be elected at each annual meeting of stockholders of
Phone.com, with the other

69
<PAGE>

classes continuing for the remainder of their respective terms. These
provisions in our amended and restated certificate of incorporation may have
the effect of delaying or preventing changes in control or management of
Phone.com.

Warrants

As of March 31, 1999, warrants were outstanding to purchase an aggregate of
31,486 shares of common stock at a weighted average exercise price of $3.81 per
share.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is U.S. Stock Transfer
Corporation.

Listing

We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the trading symbol "PHCM."

70
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Before this offering, there has been no public market for our common stock.
A significant public market for the common stock may not develop or be
sustained after this offering. Future sales of substantial amounts of our
common stock in the public market, or the possibility of these sales occurring,
could adversely affect prevailing market prices for our common stock or our
future ability to raise capital through an offering of equity securities.

Upon completion of this offering, we will have outstanding 30,506,858 shares
of common stock. Of these shares, the 4,000,000 shares to be sold in this
offering (4,600,000 shares if the underwriters' over-allotment option is
exercised in full) will be freely tradable in the public market without
restriction under the Securities Act, unless the shares are held by
"affiliates" of Phone.com, as that term is defined in Rule 144 under the
Securities Act.

The remaining 26,506,858 shares outstanding upon completion of this offering
will be "restricted securities" as that term is defined under Rule 144. We
issued and sold these restricted securities in private transactions in reliance
on exemptions from registration under the Securities Act. Restricted securities
may be sold in the public market only if they are registered or if they qualify
for an exemption from registration under Rule 144 or Rule 701 under the
Securities Act, as summarized below.

Pursuant to "lock-up" agreements, all the executive officers, directors and
stockholders of Phone.com, who collectively hold an aggregate of 26,506,858 of
these restricted securities, have agreed not to offer, sell, contract to sell,
grant any option to purchase or otherwise dispose of any of these shares for a
period of 180 days from the date of this prospectus. We also have entered into
an agreement with the underwriters that we will not offer, sell or otherwise
dispose of common stock for a period of 180 days from the date of this
prospectus. However, Credit Suisse First Boston Corporation may in its sole
discretion, at any time without notice, release all or any portion of the
shares subject to lock-up agreements.

Taking into account the lock-up agreements, and assuming Credit Suisse First
Boston does not release stockholders from these agreements, the following
shares will be eligible for sale in the public market at the following times:

. On the date of this prospectus, the 4,000,000 shares sold in the offering
will be immediately available for sale in the public market.
. 180 days after the effective date, approximately 18,144,062 shares will
be eligible for sale, 11,768,289 of which will be subject to volume,
manner of sale and other limitations under Rule 144.
. The remaining 8,362,796 shares will be eligible for sale under Rule 144
upon the expiration of various one-year holding periods after the
expiration of the lock-up period.

Following the expiration of the lock-up period, shares issued upon exercise
of options we granted prior to the date of this prospectus will also be
available for sale in the public market pursuant to Rule 701 under the
Securities Act. Rule 701 permits resales of these shares beginning 90 days
after the date of this prospectus. In general, under Rule 144, after the
expiration of the lock-up period, a person who has beneficially owned
restricted securities 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 then-outstanding shares of common stock, or
. the average weekly trading volume of the common stock during the four
calendar weeks preceding the sale.

71
<PAGE>

Sales under Rule 144 are also subject to manner of sale and notice
requirements and to the availability of current public information about
Phone.com. Under Rule 144(k), a person who has not been our affiliate at any
time during the three months before a sale and who has beneficially owned the
shares proposed to be sold for at least two years can sell these shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144.

We intend to file, after the effective date of this offering, a registration
statement on Form S-8 to register approximately 8,994,153 shares of common
stock reserved for issuance under the 1995 stock plan, the 1996 stock plan, the
employee stock purchase plan and the directors' stock option plan. The
registration statement will become effective automatically upon filing. Shares
issued under the foregoing stock and option plans, after the filing of a
registration statement on Form S-8, may be sold in the open market, subject, in
the case of some holders, to the Rule 144 limitations applicable to affiliates,
the lock-up agreements and vesting restrictions imposed by us.

In addition, following this offering, the holders of 20,174,170 shares of
outstanding common stock will, under some circumstances, have rights to require
us to register their shares for future sale. See "Description of Capital
Stock--Registration Rights of Stockholders."

72
<PAGE>

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting
agreement dated , 1999, we have agreed to sell to the underwriters named
below the following respective numbers of shares of common stock:

<TABLE>
<CAPTION>
Number of
Underwriter Shares
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation...........................
BancBoston Robertson Stephens Inc. ..............................
Hambrecht & Quist LLC............................................
U.S. Bancorp Piper Jaffray Inc. ................................
Total.......................................................... 4,000,000
=========
</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 of common stock may be terminated.

We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to 600,000 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 concession of $ per share. The
underwriters and 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 dealers may be changed by the
representatives.

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

<TABLE>
<CAPTION>
Total
-----------------------------
Per Without With
Share Over-Allotment Over-Allotment
----- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions
payable by Phone.com ................
Expenses payable by Phone.com.........
</TABLE>

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

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

The underwriters have reserved for sale, at the initial public offering
price up to 230,000 shares of the common stock for employees, directors and
other persons associated with us who have

73
<PAGE>

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 these 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.

We have applied to list our common stock on The Nasdaq Stock Market's
National Market under the symbol "PHCM."

Prior to this offering, there has been no public market for the 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 information set forth in
this prospectus and otherwise available to the underwriters; the history and
the prospects for the industry in which we will compete; the ability of our
management; the prospects for our future earnings; the present state of our
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.

The representatives on behalf of the underwriters may engage in over-
allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934. Over-allotment involves syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing transactions permit
bids to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum. 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. Penalty bids permit the
representatives to reclaim a selling concession from a syndicate member when
the common stock originally sold by the syndicate member are purchased in a
syndicate covering transaction to cover syndicate short positions. These
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the common stock to be higher than it would otherwise be in
the absence of these transactions. These transactions may be effected on The
Nasdaq Stock Market's National Market or otherwise and, if commenced, may be
discontinued at any time.

In March 1999, we issued an aggregate of 2,458,543 shares of our Series E
preferred stock at a per share price of $7.24. Credit Suisse First Boston
Corporation acted as the placement agent for this private placement of our
Series E preferred stock, for which it received a customary fee for its
services. In connection with this financing, a director of Credit Suisse First
Boston Corporation purchased 4,143 shares of Series E preferred stock in the
private placement and has agreed not to sell his shares for a one year period
after the date of this prospectus.

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<PAGE>

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 common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to 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

Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom the
purchase confirmation is received that (i) the purchaser is entitled under
applicable provincial securities laws to purchase the common stock without the
benefit of a prospectus qualified under these securities laws, (ii) where
required by law, that the purchaser is purchasing as principal and not as
agent, and (iii) 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 of rights of action under the civil liability provisions
of the U.S. federal securities laws.

Enforcement of Legal Rights

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or these persons. All or a substantial portion of the assets of
the issuer and these persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or these
persons in Canada or to enforce a judgment obtained in Canadian courts against
the 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 a 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 in this offering. This 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
in respect of 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 of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.

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<PAGE>

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for
Phone.com by Venture Law Group, A Professional Corporation, Menlo Park,
California. Some legal matters in connection with this offering will be passed
upon for the underwriters by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California. Venture Law Group attorneys and an entity
affiliated with Venture Law Group hold an aggregate of 8,954 shares of our
common stock.

EXPERTS

The consolidated balance sheets as of June 30, 1997 and 1998, and March 31,
1999, and the consolidated statements of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended June 30, 1998,
and the nine months ended March 31, 1999, have been included in the
Registration Statement in reliance upon the report of KPMG LLP, independent
auditors, and upon the authority of said firm as experts in accounting and
auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a Registration
Statement (which term shall include any amendments thereto) on Form S-1 under
the Securities Act with respect to the common stock offered hereby. This
prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, some
items of which are contained in exhibits to the Registration Statement as
permitted by the rules and regulations of the Commission. For further
information with respect to Phone.com and the common stock offered hereby,
reference is made to the Registration Statement, including the exhibits
thereto, and the financial statements and notes filed as a part thereof.
Statements made in this prospectus concerning the contents of any document
referred to herein are not necessarily complete. With respect to each document
filed with the Commission as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved. The Registration Statement, including exhibits thereto and the
financial statements and notes filed as a part thereof, as well as reports and
other information filed with the Commission, may be inspected without charge at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, NY 10048,
and the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of all or any part thereof may be obtained from
the Commission upon payment of fees prescribed by the Commission. These reports
and other information may also be inspected without charge at a Web site
maintained by the Commission. The address of the site is http://www.sec.gov.

76
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Form of Independent Auditors' Report...................................... F-2
Consolidated Balance Sheets as of June 30, 1997 and 1998, and March 31,
1999..................................................................... F-3
Consolidated Statements of Operations for the years ended June 30, 1996,
1997, and 1998, and for the nine months ended March 31, 1998 (unaudited)
and 1999................................................................. F-4
Consolidated Statements of Stockholders' Equity for the years ended June
30, 1996, 1997, and 1998, and for the nine months ended March 31, 1999... F-5
Consolidated Statements of Cash Flows for the years ended June 30, 1996,
1997, and 1998, and for the nine months ended March 31, 1998 (unaudited)
and 1999................................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

When the reverse stock split referred to in Note 5(b) to the Consolidated
Financial Statements has been consummated, we will be in a position to render
the following report.

/s/ KPMG LLP

FORM OF INDEPENDENT AUDITORS' REPORT

The Board of Directors
Phone.com, Inc.:

We have audited the accompanying consolidated balance sheets of Phone.com,
Inc. (formerly Unwired Planet, Inc.) and subsidiaries (the Company) as of June
30, 1997 and 1998, and March 31, 1999, and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of the years in
the three-year period ended June 30, 1998, and for the nine months ended March
31, 1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Phone.com,
Inc. and subsidiaries as of June 30, 1997 and 1998, and March 31, 1999, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 30, 1998, and for the nine months ended March 31,
1999, in conformity with generally accepted accounting principles.

Mountain View, California
April 12, 1999

F-2
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
June 30, March 31, 1999
------------------ ---------------------
1997 1998 Actual Pro Forma
-------- -------- -------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......... $ 4,090 $ 12,677 $ 20,230 $ 20,230
Short-term investments............. 3,924 20,787 27,601 27,601
Accounts receivable................ 126 2,724 5,461 5,461
Prepaid expenses and other current
assets............................ 128 352 833 833
-------- -------- -------- --------
Total current assets............. 8,268 36,540 54,125 54,125
Property and equipment, net.......... 1,226 1,336 1,710 1,710
Deposits and other assets............ 265 1,268 1,485 1,485
-------- -------- -------- --------
$ 9,759 $ 39,144 $ 57,320 $ 57,320
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of equipment loan
and capital lease obligations..... $ -- $ 424 $ 424 $ 424
Accounts payable................... 213 532 685 685
Accrued liabilities................ 565 1,877 4,857 4,857
Deferred revenue................... 856 7,003 18,749 18,749
-------- -------- -------- --------
Total current liabilities........ 1,634 9,836 24,715 24,715
Equipment loan and capital lease
obligations, less current portion... -- 915 607 607
-------- -------- -------- --------
Total liabilities................ 1,634 10,751 25,322 25,322
-------- -------- -------- --------
Commitments
Stockholders' equity:
Convertible preferred stock, $0.001
par value; actual-- 11,398,664,
17,843,550 and 20,329,720 shares
authorized as of June 30, 1997 and
1998, and March 31, 1999,
respectively; 11,270,750,
17,715,627 and 20,174,170 shares
issued and outstanding as of June
30, 1997 and 1998, and March 31,
1999, respectively; aggregate
liquidation preference of $18,759,
$51,299, and $69,299 as of June
30, 1997 and 1998, and March 31,
1999, respectively; pro forma--
5,000,000 shares authorized; no
shares issued and outstanding..... 12 18 20 --
Common stock, $0.001 par value;
32,000,000 shares authorized;
actual--5,712,250, 6,192,398 and
6,332,688 shares issued and
outstanding as of June 30, 1997
and 1998, and March 31, 1999,
respectively; pro forma--
100,000,000 shares authorized;
26,506,858 shares issued and
outstanding....................... 6 6 6 26
Additional paid-in capital......... 18,864 51,611 69,158 69,158
Deferred stock-based compensation.. -- (1,786) (1,545) (1,545)
Treasury stock..................... (46) (72) (196) (196)
Notes receivable from
stockholders...................... (147) (197) (285) (285)
Accumulated deficit................ (10,564) (21,187) (35,160) (35,160)
-------- -------- -------- --------
Total stockholders' equity....... 8,125 28,393 31,998 31,998
-------- -------- -------- --------
$ 9,759 $ 39,144 $ 57,320 $ 57,320
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.

F-3
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

<TABLE>
<CAPTION>
Nine months ended
Year ended June 30, March 31,
-------------------------- --------------------
1996 1997 1998 1998 1999
------- ------- -------- ----------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
License................... $ -- $ 80 $ 522 $ 289 $ 1,530
Maintenance and support
services................. -- 212 1,683 635 3,786
Consulting services....... -- -- -- -- 1,401
------- ------- -------- ------- --------
Total revenues.......... -- 292 2,205 924 6,717
------- ------- -------- ------- --------
Cost of revenues:
License................... -- 87 95 59 172
Maintenance and support
services................. -- 266 1,063 715 1,876
Consulting services....... -- -- -- -- 646
------- ------- -------- ------- --------
Total cost of revenues.. -- 353 1,158 774 2,694
------- ------- -------- ------- --------
Gross profit (loss)..... -- (61) 1,047 150 4,023
------- ------- -------- ------- --------
Operating expenses:
Research and development.. 1,387 3,959 5,732 3,871 8,406
Sales and marketing....... 757 3,198 5,011 3,307 6,504
General and
administrative........... 522 1,237 1,801 1,185 2,731
Stock-based compensation.. -- -- 108 45 784
------- ------- -------- ------- --------
Total operating
expenses............... 2,666 8,394 12,652 8,408 18,425
------- ------- -------- ------- --------
Operating loss.......... (2,666) (8,455) (11,605) (8,258) (14,402)
Interest income, net........ 196 464 982 528 1,139
------- ------- -------- ------- --------
Loss before income
taxes.................. (2,470) (7,991) (10,623) (7,730) (13,263)
Income taxes................ -- -- -- -- 710
------- ------- -------- ------- --------
Net loss................ $(2,470) $(7,991) $(10,623) $(7,730) $(13,973)
------- ------- -------- ------- --------
Basic and diluted net loss
per share.................. $ (0.53) $ (1.67) $ (2.03) $ (1.50) $ (2.49)
======= ======= ======== ======= ========
Shares used in computing
basic and diluted net loss
per share.................. 4,704 4,776 5,221 5,142 5,618
======= ======= ======== ======= ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)

<TABLE>
<CAPTION>
Convertible Notes
preferred stock Common stock Additional Deferred receivable Total
----------------- ----------------- paid-in stock-based Treasury from Accumulated stockholders'
Shares Amount Shares Amount capital compensation stock stockholders deficit equity
---------- ------ --------- ------ ---------- ------------ -------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances as of
June 30, 1995... 4,731,997 $ 5 4,671,000 $ 5 $ 2,340 $ -- $ -- $ (4) $ (103) $ 2,243
Issuance of
common stock to
employees for
cash........... -- -- 72,806 -- 3 -- -- -- -- 3
Issuance of
Series B
convertible
preferred
stock, net of
$36 of issuance
costs.......... 3,999,987 4 -- -- 6,680 -- -- -- -- 6,684
Payment on notes
receivable from
stockholders... -- -- -- -- -- -- -- 4 -- 4
Net loss........ -- -- -- -- -- -- -- -- (2,470) (2,470)
---------- --- --------- --- ------- ------- ----- ----- -------- -------
Balances as of
June 30, 1996... 8,731,984 9 4,743,806 5 9,023 -- -- -- (2,573) 6,464
Issuance of
common stock to
officers and
employees for
notes
receivable..... -- -- 1,065,000 1 192 -- -- (193) -- --
Issuance of
common stock to
consultant..... -- -- 10,360 -- 2 -- -- -- -- 2
Stock options
exercised...... -- -- 93,084 -- 9 -- -- -- -- 9
Issuance of
Series C
convertible
preferred
stock, net of
$32 issuance
costs.......... 2,538,766 3 -- -- 9,638 -- -- -- -- 9,641
Repurchase of
common stock in
settlement of
notes
receivable from
stockholders... -- -- (200,000) -- -- -- (46) 46 -- --
Net loss........ -- -- -- -- -- -- -- -- (7,991) (7,991)
---------- --- --------- --- ------- ------- ----- ----- -------- -------
Balances as of
June 30, 1997... 11,270,750 12 5,712,250 6 18,864 -- (46) (147) (10,564) 8,125
Issuance of
common stock to
officers and
employees for
notes
receivable..... -- -- 226,667 -- 88 -- -- (88) -- --
Repayment of
notes
receivable from
stockholders... -- -- -- -- -- -- -- 12 -- 12
Stock options
exercised...... -- -- 403,481 -- 87 -- -- -- -- 87
Issuance of
Series D
convertible
preferred
stock, net of
$2,056 issuance
costs.......... 6,444,877 6 -- -- 30,678 -- -- -- -- 30,684
Repurchase of
common stock in
settlement of
notes
receivable from
stockholders... -- -- (150,000) -- -- -- (26) 26 -- --
Deferred
compensation
related to
stock option
grants......... -- -- -- -- 1,894 (1,894) -- -- -- --
Amortization of
stock-based
compensation... -- -- -- -- -- 108 -- -- -- 108
Net loss........ -- -- -- -- -- -- -- -- (10,623) (10,623)
---------- --- --------- --- ------- ------- ----- ----- -------- -------
Balances as of
June 30, 1998... 17,715,627 18 6,192,398 6 51,611 (1,786) (72) (197) (21,187) 28,393
Issuance of
common stock to
officers and
employees for
notes
receivables.... -- -- 90,000 -- 223 -- -- (223) -- --
Stock options
exercised...... -- -- 154,457 -- 83 -- -- -- -- 83
Issuance of
Series E
convertible
preferred
stock, net of
$1,100 issuance
costs.......... 2,458,543 2 -- -- 16,698 -- -- -- -- 16,700
Repurchase of
common stock in
settlement of
notes
receivable from
stockholders... -- -- (104,167) -- -- -- (124) 124 -- --
Repayment of
notes
receivable from
stockholders... -- -- -- -- -- -- -- 11 -- 11
Deferred
compensation
related to
stock option
grants......... -- -- -- -- 543 (543) -- -- -- --
Amortization of
stock-based
compensation... -- -- -- -- -- 784 -- -- -- 784
Net loss........ -- -- -- -- -- -- -- -- (13,973) (13,973)
---------- --- --------- --- ------- ------- ----- ----- -------- -------
Balances as of
March 31, 1999.. 20,174,170 $20 6,332,688 $ 6 $69,158 $(1,545) $(196) $(285) $(35,160) $31,998
========== === ========= === ======= ======= ===== ===== ======== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
Nine months ended
Year ended June 30, March 31,
-------------------------- --------------------
1996 1997 1998 1998 1999
------- ------- -------- ----------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss.................... $(2,470) $(7,991) $(10,623) $ (7,730) $(13,973)
Adjustments to reconcile net
loss to net cash used for
operating activities:
Depreciation and
amortization.............. 108 447 630 442 699
Amortization of deferred
stock-based compensation.. -- -- 108 45 784
Changes in operating assets
and liabilities:
Accounts receivable....... -- (126) (2,598) (988) (2,737)
Prepaid expenses and other
assets................... (156) (233) (427) (107) (698)
Accounts payable.......... 175 38 319 166 153
Accrued liabilities....... 31 462 1,312 798 2,980
Deferred revenue.......... 25 831 6,147 5,050 11,746
------- ------- -------- -------- --------
Net cash used for
operating activities.... (2,287) (6,572) (5,132) (2,324) (1,046)
------- ------- -------- -------- --------
Cash flows from investing
activities:
Purchases of property and
equipment, net............. (852) (914) (367) (41) (1,073)
Purchases of short-term
investments................ -- (3,924) (32,338) (21,912) (30,735)
Proceeds from sales and
maturities of short-term
investments................ -- -- 15,475 7,552 23,921
Other assets................ -- -- (800) -- --
------- ------- -------- -------- --------
Net cash used for
investing activities..... (852) (4,838) (18,030) (14,401) (7,887)
------- ------- -------- -------- --------
Cash flows from financing
activities:
Net proceeds from sale of
convertible preferred
stock...................... 6,680 9,641 30,684 30,684 16,700
Issuance of common stock.... 3 11 87 48 83
Repayment of notes
receivable from
stockholders............... 4 -- 12 12 11
Proceeds from equipment
loan....................... -- -- 1,300 1,300 --
Repayment of equipment loan
and capital lease
obligations................ -- -- (334) (239) (308)
------- ------- -------- -------- --------
Net cash provided by
financing activities..... 6,687 9,652 31,749 31,805 16,486
------- ------- -------- -------- --------
Net increase (decrease) in
cash and cash equivalents... 3,548 (1,758) 8,587 15,080 7,553
Cash and cash equivalents at
beginning of period......... 2,300 5,848 4,090 4,090 12,677
------- ------- -------- -------- --------
Cash and cash equivalents at
end of period............... $ 5,848 $ 4,090 $ 12,677 $ 19,170 $ 20,230
======= ======= ======== ======== ========
Supplemental disclosures of
cash flow information:
Property and equipment
acquired under capital
lease obligations.......... $ -- $ -- $ 373 $ 162 $ --
======= ======= ======== ======== ========
Common stock issued to
officers and employees for
notes receivable........... $ -- $ 193 $ 88 $ 88 $ 223
======= ======= ======== ======== ========
Repurchase of common stock
in settlement of notes
receivable from
stockholders............... $ -- $ 46 $ 26 $ 26 $ 124
======= ======= ======== ======== ========
Deferred stock-based
compensation............... $ -- $ -- $ 1,894 $ 431 $ 543
======= ======= ======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996, 1997, and 1998, and March 31, 1999

(Information for the nine months ended
March 31, 1998, is unaudited.)

1. Organization and Significant Accounting Policies

(a) Organization

Phone.com, Inc. (the Company) was incorporated in Delaware in 1994 to
develop and market software that enables the delivery of Internet-based
services to mass-market wireless telephones. The Company was formerly known as
Unwired Planet, Inc., but changed its name to Phone.com, Inc. effective April
1999.

(b) Basis of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, Phone.com Japan, K.K. and
Phone.com (Europe) Limited. All significant intercompany accounts and
transactions have been eliminated in consolidation.

For agreements entered into prior to July 1, 1998, the Company recognized
revenues in accordance with the provisions of the American Institute of
Certified Public Accountants' Statement of Position ("SOP") No. 91-1, Software
Revenue Recognition. Effective July 1, 1998, the Company adopted SOP 97-2,
Software Revenue Recognition, as amended by SOP 98-4 and SOP 98-9. SOP 97-2, as
amended, generally requires revenue earned on software arrangements involving
multiple elements to be allocated to each element based on the relative fair
value of the elements. The adoption of SOP 97-2, as amended, did not have a
significant impact on the Company's accounting for revenues.

The Company licenses its UP.Link Server Suite products to network operators
through its direct sales force and indirectly through its channel partners. The
Company's license agreements do not provide for a right of return. Allowances
for future estimated warranty costs are provided at the time revenue is
recognized. Licenses can be purchased on an as-deployed basis or on a prepaid
basis. For licenses purchased on an as-deployed basis, license revenue is
recognized as subscribers are activated to use the services that are based on
the Company's UP.Link Server Suite Products. The Company has no obligation to
provide standards-compliant products once a subscriber has been activated. For
licenses purchased on a prepaid basis, prepaid license fees are recognized
under subscription accounting due to the Company's commitment to provide
standards-compliant products for each license covered by the prepaid
arrangement. This subscription revenue is recognized ratably over the
contractual term of the prepaid arrangement (i.e., the date the prepaid
licenses expire if not used), beginning after delivery and acceptance have
occurred. The prepaid license period is generally twelve to thirty months.
Licenses expire if not activated prior to the end of the prepaid license term.
The Company recognizes revenues from maintenance and support services provided
to network operators ratably over the term of the agreement, generally one
year, and recognizes revenues from consulting services provided to network
operators as the services are performed.

The Company recognizes revenues from UP.Browser agreements with wireless
telephone manufacturers ratably over the period during which the services are
performed, generally one year. The Company provides its wireless telephone
manufacturer customers with support associated with their efforts to port its
UP.Browser software to their wireless telephones, software error corrections
and new releases as they become available commercially.

(d) Initial Public Offering and Unaudited Pro Forma Balance Sheet

In March 1999, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission ("SEC") that
would permit the Company to sell shares of the Company's common

F-7
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

stock in connection with a proposed initial public offering ("IPO"). Following
the closing of the Company's IPO, the number of authorized shares of
convertible preferred stock and common stock will be 5,000,000 and 100,000,000,
respectively. If the offering is consummated under the terms presently
anticipated, all the then outstanding shares of the Company's convertible
preferred stock will automatically convert into shares of common stock on a
one-for-one basis upon the closing of the proposed IPO. The conversion of all
of the convertible preferred stock has been reflected in the accompanying
unaudited pro forma consolidated balance sheet as if it had occurred on March
31, 1999.

(e) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments with
remaining maturities of less than 90 days at the date of purchase. The Company
is exposed to credit risk in the event of default by the financial institutions
or the issuers of these investments to the extent of the amounts recorded on
the balance sheet in excess of amounts that are insured by the FDIC. As of June
30, 1997 and 1998, and March 31, 1999 cash equivalents consisted principally of
money market funds and commercial paper.

(f) Accounting for Certain Investments in Debt and Equity Securities

The Company classifies its investments in debt securities as available-for-
sale. Available-for-sale securities are carried at fair market value, which
approximates amortized cost.

(g) Financial Instruments and Concentration of Credit Risk

The carrying value of the Company's financial instruments, including cash
and cash equivalents, short-term investments, accounts receivable, and
equipment loans approximates fair market value. Financial instruments that
subject the Company to concentrations of credit risk consist primarily of cash
and cash equivalents and trade accounts receivable.

The Company sells its products and services principally to leading wireless
network operators and prominent wireless telephone manufacturers. Credit risk
is concentrated in North America and Japan. The Company performs ongoing credit
evaluations of its customers' financial condition and, generally, requires no
collateral from its customers. The Company has had no write-offs of accounts
receivable and, based on an ongoing evaluation of its accounts receivable
collectibility and customer creditworthiness, has recorded no allowance for
doubtful accounts receivable to date.

(h) Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation
and amortization. Depreciation is calculated using the straight-line method
over the estimated useful lives of the respective assets, generally three to
five years. Leasehold improvements are amortized over the shorter of the
estimated useful lives of the assets or the lease term.

(i) Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of such assets
may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of any asset to future net cash
flows expected to be generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceeds the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell.

F-8
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(j) Research and Development

Research and development costs are expensed as incurred until technological
feasibility has been established. To date, the Company's software has been
available for general release concurrent with the establishment of
technological feasibility and, accordingly, no development costs have been
capitalized.

(k) Use of Estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

(l) Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to reduce
deferred tax assets to the amounts to be recovered.

(m) Accounting for Stock-Based Compensation Plans

The Company uses the intrinsic-value method to account for all of its
employee stock-based compensation plans. Expense associated with stock-based
compensation is being amortized on an accelerated basis over the vesting
period of the individual award consistent with the method described in
Financial Accounting Standards Board ("FASB") Interpretation No. 28.

(n) Foreign Currency Transactions

The functional currency for the Company's foreign subsidiaries is the U.S.
dollar. Accordingly, such entities remeasure monetary assets and liabilities
at exchange rates in effect as of each reporting date while nonmonetary items
are remeasured at historical rates. Income and expense accounts are remeasured
at the average rates in effect during each such period, except for
depreciation which is remeasured at historical rates. Remeasurement
adjustments and transaction gains and losses are recognized in income in the
period of occurrence and have not been significant to date.

(o) Comprehensive Income

The Company has no material components of other comprehensive income (loss)
for all periods presented.

(p) Unaudited Interim Consolidated Financial Statements

The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, the accompanying
unaudited consolidated financial statements have been prepared on the same
basis as the audited consolidated financial statements and include all
adjustments, consisting only of normal recurring

F-9
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

adjustments, necessary for the fair statement of the Company's results of
operations and its cash flows for the nine months ended March 31, 1998.

(q) Net Loss Per Share

Basic net loss per share is computed using the weighted-average number of
outstanding shares of common stock excluding shares of restricted stock subject
to repurchase summarized below. Diluted net loss per share is computed using
the weighted-average number of shares of common stock outstanding and, when
dilutive, potential common shares from options and warrants to purchase common
stock using the treasury stock method and from convertible securities using the
if-converted basis. The following potential common shares have been excluded
from the computation of diluted net loss per share for all periods presented
because the effect would have been antidilutive (in thousands):

<TABLE>
<CAPTION>
Nine months ended
Year ended June 30, March 31,
------------------- -----------------
1996 1997 1998 1998 1999
----- ------ ------ -------- --------
<S> <C> <C> <C> <C> <C>
Shares issuable under stock options.. 646 2,071 2,877 2,224 3,321
Shares of restricted stock subject to
repurchase.......................... -- 715 670 680 547
Shares issuable pursuant to warrants
to purchase convertible preferred
stock............................... -- -- 31 31 31
Shares of convertible preferred stock
on an "as if converted basis........ 8,732 11,271 17,716 17,716 20,174
</TABLE>

The weighted-average exercise price of stock options was $0.11, $0.28 and
$1.00 for the years ended June 30, 1996, 1997 and 1998, respectively, and
$0.34 and $1.87 for the nine months ended March 31, 1998 and 1999,
respectively. The weighted-average purchase price of restricted stock was $0.26
and $0.30 for the years ended June 30, 1997 and 1998, respectively, and $0.30
and $0.48 for the nine months ended March 31, 1998 and 1999, respectively. The
weighted-average exercise price of warrants was $3.81 for both the fiscal year
ended June 30, 1998 and the nine months ended March 31, 1999.

(r) Recent Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative financial instruments and hedging activities
related to those instruments, as well as other hedging activities. Because the
Company does not currently hold any derivative instruments and does not engage
in hedging activities, the Company expects that the adoption of SFAS No. 133
will not have a material impact on its consolidated financial position, results
of operations, or cash flows. The Company will be required to adopt SFAS No.
133 in fiscal 2000.

2. Balance Sheet Components

(a) Short-Term Investments

All of the Company's investments are considered available-for-sale
securities and consisted of the following (in thousands):

<TABLE>
<CAPTION>
June 30,
-------------- March 31,
1997 1998 1999
------ ------- ---------
<S> <C> <C> <C>
Commercial paper.................................. $3,148 $13,594 $16,304
Corporate bonds................................... 3,006 9,213 22,380
Certificates of deposit........................... -- 7,238 --
------ ------- -------
$6,154 $30,045 $38,684
====== ======= =======
</TABLE>

F-10
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of June 30, 1997 and 1998 and March 31, 1999, $2,230,000, $9,258,000,
and $11,083,000, respectively, of the Company's investments are included in
cash and cash equivalents.

The contractual maturity for short-term investments as of March 31, 1999,
is as follows (in thousands):

<TABLE>
<S> <C>
Due within one year.............................................. $28,120
Due between one and two years.................................... 10,564
-------
$38,684
=======
</TABLE>

(b) Property and Equipment

Property and equipment, consisted of the following (in thousands):

<TABLE>
<CAPTION>
June 30
-------------- March 31,
1997 1998 1999
------ ------ ---------
<S> <C> <C> <C>
Computer equipment and software................. $1,615 $2,214 $ 3,244
Furniture and equipment......................... 90 213 253
Leasehold improvements.......................... 77 95 98
------ ------ -------
1,782 2,522 3,595
Accumulated depreciation and amortization....... (556) (1,186) (1,885)
------ ------ -------
$1,226 $1,336 $ 1,710
====== ====== =======
</TABLE>

Equipment under capital leases aggregated $373,000 as of June 30, 1998 and
March 31, 1999. Accumulated amortization on the assets under capital leases
aggregated $42,000 and $136,000 as of June 30, 1998 and March 31, 1999,
respectively.

Accrued liabilities as of March 31, 1999, include approximately $1,000,000
related to the Company's issuance of its Series E convertible preferred stock.
This was payable to one of the Company's underwriters for its IPO and was paid
on April 12, 1999.

4. Equipment Loan and Capital Lease Obligations

In May 1997, the Company entered into a $2,000,000 credit facility with a
business credit corporation that consisted of a $1,300,000 equipment term loan
and a $700,000 lease line of credit. The equipment loan bears interest at
7.5%, is collateralized by equipment, and is payable in 42 monthly
installments of $35,000 through January 2001. As of June 30, 1998 and March
31, 1999, $1,000,000 and $795,000 was outstanding under the term loan,
respectively. During fiscal 1998, the Company borrowed approximately $400,000
under the lease line of credit with $339,000 and $236,000 outstanding as of
June 30, 1998 and March 31, 1999, respectively, bearing interest at an
effective interest rate of 11.8%, and payable in 42 monthly installments of
$11,000 through December 2001. The unused portion of the lease line of credit
expired in July 1998.

As of March 31, 1999, aggregate maturities for the equipment loan and
capital lease obligations for the remainder of fiscal 1999 and fiscal 2000,
2001, and 2002 are $116,000, $450,000, $455,000 and $10,000, respectively.

In conjunction with the equipment loan and lease line of credit, the
Company issued warrants to purchase 20,466 and 11,020 shares, respectively, of
the Company's Series C preferred stock at an exercise price of $3.81

F-11
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

per share. These warrants expire the earlier of May 2007, or five years after
an initial public offering of the Company's common stock. The fair value of the
warrants issued, calculated using the Black-Scholes option pricing model, using
the following assumptions: no dividends; contractual life of 10 years; risk-
free interest rate of 6.33%; expected volatility of 60%, was not material.

5. Stockholders' Equity

(a) Convertible Preferred Stock

Convertible preferred stock outstanding as of March 31, 1999, is as follows:

<TABLE>
<CAPTION>
Shares Designated Issued and Outstanding Carrying Value
----------------- ---------------------- --------------
<S> <C> <C> <C>
Series:
Series A........... 4,731,997 4,731,997 $ 2,334,000
Series B........... 4,000,000 3,999,987 6,684,000
Series C........... 2,666,667 2,538,766 9,641,000
Series D........... 6,444,886 6,444,877 30,684,000
Series E........... 2,486,170 2,458,543 16,700,000
---------- ---------- -----------
20,329,720 20,174,170 $66,043,000
========== ========== ===========
</TABLE>

The rights, preferences, and privileges of the holders of Series A, B, C, D,
and E convertible preferred stock are as follows:

. Dividends are noncumulative and payable only upon declaration by the
Company's Board of Directors at a rate of $0.05, $0.17, $0.38, $0.51,
and $0.72 per share for Series A, B, C, D, and E convertible preferred
stock, respectively.
. Holders of Series A, B, C, D, and E convertible preferred stock have a
liquidation preference of $0.50, $1.68, $3.81, $5.08, and $7.24 per
share, respectively, plus any declared but unpaid dividends over holders
of common stock.
. Each share of Series A, B, C, D, and E convertible preferred stock is
convertible at any time into one share of common stock subject to
certain antidilution provisions.
. Each holder of convertible preferred stock has voting rights equal to
the number of shares of common stock into which such shares could be
converted.

(b) Reverse Stock Split

On March 26, 1999, the Board of Directors approved a two-for-three reverse
stock split of the Company's convertible preferred stock and common stock to be
completed prior to the effectiveness of the Company's IPO. The accompanying
consolidated financial statements have been retroactively restated to give
effect to the reverse stock split.

The Company is authorized to issue up to 9,383,887 shares of common stock in
connection with its 1995 and 1996 stock option plans (the Plans) to directors,
employees, and consultants. The Plans provide for the issuance of stock
purchase rights, incentive stock options, or nonstatutory stock options.

The stock purchase rights are subject to a restricted stock purchase
agreement whereby the Company has the right to repurchase the stock upon the
voluntary or involuntary termination of the purchaser's employment

F-12
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

with the Company at the original issuance cost. The Company's repurchase right
lapses at a rate determined by the stock plan administrator, but at a minimum
rate of 20% per year. Through March 31, 1999, the Company has issued 1,381,667
shares under restricted stock purchase agreements, of which 454,167 shares have
been repurchased and 546,665 are subject to repurchase at a weighted-average
price of $0.48 per share. Certain of these restricted shares were issued to
officers of the Company for full recourse promissory notes with interest rates
ranging from 5.49% to 6.48% and terms of four to five years.

Under the Plans, the exercise price for incentive stock options is at least
100% of the stock's fair market value on the date of grant for employees owning
less than 10% of the voting power of all classes of stock, and at least 110% of
the fair market value on the date of grant for employees owning more than 10%
of the voting power of all classes of stock. For nonstatutory stock options,
the exercise price is also at least 110% of the fair market value on the date
of grant for employees owning more than 10% of the voting power of all classes
of stock and no less than 85% for employees owning less than 10% of the voting
power of all classes of stock.

Under the Plans, options generally expire in 10 years. However, the term of
the options may be limited to 5 years if the optionee owns stock representing
more than 10% of the voting power of all classes of stock. Vesting periods are
determined by the Company's Board of Directors and generally provide for shares
to vest ratably over a 4- to 5-year period.

As of March 31, 1999, there were -0- and 4,472,807 additional shares
available for grant under the 1995 and 1996 stock option plans, respectively.

On March 26, 1999, the Company adopted the 1999 Employee Stock Purchase Plan
(the "Purchase Plan") and reserved a total of 600,000 shares of the Company's
common stock for issuance thereunder plus an automatic annual increase for
fiscal year 2000 through 2004 equal to the lesser of 500,000 shares or 1% of
the Company's outstanding common stock on the last day of the immediately
preceding fiscal year. The Purchase Plan permits eligible employees to purchase
common stock through payroll deductions at a purchase price of 85% of the lower
of the fair market value of the common stock at the beginning or end of each
offering period, generally 24 months in length.

On March 26, 1999, the Company adopted the 1999 Directors Stock Option Plan
(the "Directors Plan") and reserved a total of 600,000 shares of the Company's
common stock for issuance thereunder. Each non-employee director who becomes a
member of the Board of Directors will initially be granted an option for 33,333
shares of the Company's common stock and, thereafter, an option to purchase an
additional 2,500 shares of the Company's common stock quarterly commencing in
the fiscal quarter ending September 30, 2000. Options granted under the
Directors Plan vest immediately. The exercise price of the options granted
under the Directors Plan will be at the fair value of the Company's common
stock on the date of grant.

(d) Stock-Based Compensation

The Company uses the intrinsic-value method in accounting for its employee
stock-based compensation plans. Accordingly, no compensation cost has been
recognized for any of its stock options granted or restricted stock sold
because the exercise price of each option or purchase price of each share of
restricted stock equaled or exceeded the fair value of the underlying common
stock as of the grant date for each stock option or purchase date of each
restricted stock share, except for stock options granted and restricted stock
sold from October 1997 through March 1999. With respect to the stock options
granted and restricted stock sold from October 1997 to March 1999, the Company
recorded deferred stock compensation of $2,437,000 for the difference at the
grant or issuance date between the exercise price of each stock option granted
or purchase price of each restricted share sold and the fair value of the
underlying common stock. This amount is being

F-13
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

amortized on an accelerated basis over the vesting period, generally four to
five years, consistent with the method described in FASB Interpretation No. 28.
Had compensation costs been determined in accordance with SFAS No. 123 for all
of the Company's stock-based compensation plans, net loss and basic and diluted
net loss per share would have been as follows:

<TABLE>
<CAPTION>
Year ended June 31, Nine months
-------------------------- ended March
1996 1997 1998 31, 1999
------- ------- -------- -----------
<S> <C> <C> <C> <C>
Net loss:
As reported...................... $(2,470) $(7,991) $(10,623) $(13,973)
======= ======= ======== ========
Pro forma........................ $(2,471) $(8,003) $(10,656) $(14,133)
======= ======= ======== ========
Basic and diluted net loss per
share:
As reported...................... $ (0.53) $ (1.67) $ (2.03) $ (2.49)
======= ======= ======== ========
Pro forma........................ $ (0.53) $ (1.68) $ (2.04) $ (2.52)
======= ======= ======== ========
</TABLE>

The fair value of each option was estimated on the date of grant using the
minimum value method with the following weighted-average assumptions: no
dividends; risk-free interest rate of 5.75%, 6.50%, 5.55% and 4.78% for the
year ended June 30, 1996, 1997 and 1998, and the nine months ended March 31,
1999, respectively; and expected life of 4.40, 3.84, 3.23 and 2.49 years for
the year ended June 30, 1996, 1997 and 1998, and the nine months ended March
31, 1999, respectively.

A summary of the status of the Company's options under the Plans, is as
follows (in thousands, except per share data):

<TABLE>
<CAPTION>
Year ended June 30, Nine months
---------------------------------------------------- ended
1996 1997 1998 March 31, 1999
---------------- ----------------- ----------------- -----------------
Weighted- Weighted- Weighted- Weighted-
average average average average
exercise exercise exercise exercise
Shares price Shares price Shares price Shares price
------ --------- ------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period.............. -- $ -- 646 $0.11 2,071 $0.28 2,877 $1.00
Granted................. 684 0.11 1,630 0.34 1,422 1.73 762 4.72
Forfeited............... (38) 0.17 (112) 0.26 (213) 0.30 (164) 0.28
Exercised............... -- -- (93) 0.13 (403) 0.22 (154) 1.35
--- ----- ----- -----
Outstanding at end of
period................. 646 $0.11 2,071 $0.28 2,877 $1.00 3,321 $1.86
=== ===== ===== =====
Options exercisable at
end of period.......... 11 $0.11 235 $0.15 385 $0.28 885 $1.24
=== ===== ===== =====
Weighted-average fair
value of options
granted during the
period with exercise
prices equal to fair
value at date of
grant.................. $0.03 $0.07 $0.06 $0.87
Weighted-average fair
value of options
granted during the
period with exercise
prices less than fair
value at date of
grant.................. -- -- $1.82 $1.55
</TABLE>

F-14
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of March 31, 1999, the range of exercise prices and weighted-average
remaining contractual life of outstanding options were as follows (number of
options in thousands):

<TABLE>
<CAPTION>
Options outstanding Options exercisable
--------------------------------- ---------------------
Weighted-
average
remaining Weighted- Weighted-
contractual average average
Range of exercise Number life exercise Number exercise
prices outstanding (years) price exercisable price
----------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$0.05 -- $0.39........ 1,666 7.91 $0.32 713 $0.31
$2.30 -- $3.38........ 1,373 9.35 2.51 72 2.07
$7.25................. 247 9.93 7.25 100 7.25
$12.00................ 35 9.99 12.00 -- --
----- ---
3,321 8.68 1.86 885 1.24
===== ===
</TABLE>

6. Leases

In fiscal 1998, the Company entered into a new noncancelable operating lease
for its facilities expiring in June 2005. As of March 31, 1999, the Company has
a letter of credit collateralized by a certificate of deposit in the amount of
$800,000, included in deposits and other assets in the accompanying
consolidated balance sheet as of March 31, 1999, related to the new facility
lease. The Company has an additional noncancelable operating lease for its
previous facility, which expires in April 2001. However, the Company has
entered into a sublease for this facility, which also expires in April 2001.

Future minimum lease payments under noncancelable operating leases, net of
sublease payments, as of March 31, 1999, are as follows (in thousands):

<TABLE>
<CAPTION>
Net
Minimum Minimum minimum
lease sublease lease
Year ending June 30, payments payments payments
-------------------- -------- -------- --------
<S> <C> <C> <C>
1999 (three months).............................. $ 542 $ (261) $ 281
2000............................................. 2,062 (722) 1,340
2001............................................. 2,014 (402) 1,612
2002............................................. 1,678 -- 1,678
2003............................................. 1,727 -- 1,727
Thereafter....................................... 3,445 -- 3,445
------- ------- -------
$11,468 $(1,385) $10,083
======= ======= =======
</TABLE>

Rent expense for the years ended June 30, 1996, 1997 and 1998, and for the
nine months ended March 31, 1998 and 1999, was approximately $105,000,
$451,000, $307,000, $246,000, and $1,328,000, respectively.

F-15
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. Income Taxes

The differences between the income tax expense (benefit) computed at the
federal statutory rate and the Company's tax provision for all periods
presented primarily relate to net operating losses not benefited. Income tax
expense for the nine months ended March 31, 1999 relates to foreign taxes.

The individual components of the Company's deferred tax assets are as
follows (in thousands):

<TABLE>
<CAPTION>
June 30,
---------------- March 31,
1997 1998 1999
------- ------- ---------
<S> <C> <C> <C>
Accruals and reserves not deductible for tax
purposes...................................... $ 83 $ 146 $ 352
Property and equipment......................... 58 15 91
Capitalized start-up expenditures.............. 583 406 307
Net operating loss carryovers.................. 3,761 7,600 12,565
Research and development credit carryforwards.. 169 666 646
Foreign tax credit carryforward................ -- -- 670
------- ------- --------
Total deferred tax assets.................... 4,654 8,833 14,631
Valuation allowance............................ (4,654) (8,833) (14,631)
------- ------- --------
Net deferred tax assets...................... $ -- $ -- $ --
======= ======= ========
</TABLE>

In light of the Company's recent history of operating losses, the Company
has provided a valuation allowance for all of its deferred tax assets as it is
presently unable to conclude that it is more likely than not that the deferred
tax assets will be realized.

As of March 31, 1999, the Company has a net operating loss carryover for
federal and California income tax purposes of approximately $31,000,000. In
addition, the Company had federal and California research and development
credit carryforwards of approximately $367,000 and $279,000, respectively. The
Company's federal net operating loss and research and development credit
carryforwards will expire in the year 2011 through 2019 if not utilized. The
Company's California net operating loss carryforwards will expire in the year
2004. The state research and development credit can be carried forward
indefinitely. The Company also has a foreign tax credit carryforward of
$670,000 which expires in the year 2004.

Federal and California tax laws impose substantial restrictions on the
utilization of net operating loss and tax credit carryforwards in the event of
an "ownership change" as defined in Internal Revenue Code Section 382. If the
Company has an ownership change, the Company's ability to utilize the above
mentioned carryforwards could be significantly reduced.

8. Geographic, Segment and Significant Customer Information

During 1999 the Company adopted the provision of SFAS No. 131, Disclosure
about Segments of an Enterprise and Related Information. SFAS No. 131
establishes standards for the reporting by public business enterprises of
information about operating segments, products and services, geographic areas,
and major customers. The method for determining what information to report is
based on the way that management organizes the operating segments within the
Company for making operational decisions and assessments of financial
performance.

The Company's chief operating decision maker is considered to be the
Company's Chief Executive Officer ("CEO"). The CEO reviews financial
information presented on a consolidated basis accompanied by disaggregated
information about revenues by geographic region and by product for purposes of
making

F-16
<PAGE>

PHONE.COM, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

operating decisions and assessing financial performance. Therefore, the Company
operates in a single operating segment: Software that enables the delivery of
Internet-based services to mass-market wireless telephones and related
services. The disaggregated information reviewed on a product basis by the CEO
is as follows (in thousands):

<TABLE>
<CAPTION>
Nine months
Year ended June ended
30, March 31,
----------------- -----------
1996 1997 1998 1998 1999
----- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C>
Revenue:
UP.Link Server Suite........................... $ -- $187 $1,335 $718 $2,382
UP.Browser..................................... -- 105 870 206 2,934
Consulting services............................ -- -- -- -- 1,401
----- ---- ------ ---- ------
$ -- $292 $2,205 $924 $6,717
===== ==== ====== ==== ======
</TABLE>

The Company markets its products primarily from its operations in the United
States. International sales are primarily to customers in Asia Pacific and
Europe. Information regarding the Company's revenues in different geographic
regions is as follows (in thousands):

<TABLE>
<CAPTION>
Nine months
Year Ended June Ended
30, March 31,
----------------- -----------
1996 1997 1998 1998 1999
----- ---- ------ ---- ------
<S> <C> <C> <C> <C> <C>
North America.................................. $ -- $272 $1,220 $811 $2,425
Europe......................................... -- 20 513 80 2,221
Asia Pacific................................... -- -- 472 33 2,071
----- ---- ------ ---- ------
$ -- $292 $2,205 $924 $6,717
===== ==== ====== ==== ======
</TABLE>

Significant customer information is as follows:
<TABLE>
<CAPTION>
% of Total
Accounts
% of Total Revenue Receivable
----------------------------- --------------
Nine months
Year ended ended
June 30, March 31,
------------- -------------
1997 1998 1998 1999 March 31, 1999
----- ----- ----- ----- --------------
<S> <C> <C> <C> <C> <C>
Customer A......................... 20% 22% 44% 14% 7%
Customer B......................... -- 18% 1% 8% 12%
Customer C......................... 30% -- -- -- --
Customer D......................... 19% 1% 3% -- --
Customer E......................... 10% 2% -- -- --
Customer F......................... -- 2% -- 11% 3%
Customer G......................... -- -- -- 13% --
</TABLE>

Revenues aggregating 41%, 37%, 64%, and 32% of total revenues for the years
ended June 30, 1997 and 1998, and the nine months ended March 31, 1998 and
1999, respectively, were generated from customers who are also stockholders of
the Company, and whose ownership percentages ranged from 0.3% to 3.9% as of
March 31, 1999.

F-17
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------

<C> <S>
1.1 Form of Underwriting Agreement (Subject to Negotiation).
3.1+ Amended and Restated Certificate of Incorporation of the Registrant.
3.2+ Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be filed and effective upon completion of this
offering.
3.3+ Amended and Restated Bylaws of the Registrant.
3.4+ Certificate of Amendment of Certification of Incorporation of
Registrant.
3.5+ Form of Amended and Restated Certificate of Incorporation of
Registrant to be filed prior to the completion of this offering.
4.1 Form of the Registrant's Common Stock Certificate.
5.1*** Opinion of Venture Law Group, a Professional Corporation.
10.1+ Form of Indemnification Agreement.
10.2+ 1995 Stock Plan, as amended, and form of stock option agreement and
restricted stock purchase agreement.
10.3+ 1996 Stock Plan and form of stock option agreement and restricted
stock purchase agreement.
10.4++ 1999 Employee Stock Purchase Plan and form of subscription agreement.
10.5+ 1999 Directors' Stock Option Plan and form of stock option agreement.
10.6+ Fourth Amended and Restated Investor Rights Agreement dated March 12,
1999.
10.7+ Voting Agreement dated January 23, 1998 and amendment thereto.
10.8+ Lease Agreement dated March 10, 1998 for offices at 800 Chesapeake by
and between Registrant and Seaport Centre Associates, LLC.
10.9+ Form of Change of Control Severance Agreement between the Registrant
and the Registrant's Named Executive Officers.
10.10+ Relocation Agreement dated December 23, 1996 between the Registrant
and Charles Parrish.
10.11+ Warrant Agreements to Purchase Series C Preferred Stock dated May 29,
1997 and July 17, 1997 by and between the Registrant and Comdisco,
Inc.
10.12+ Letter Agreement dated August 18, 1997 with Malcolm Bird.
10.13+ Incentive Compensation Plan for Malcolm Bird dated January 27, 1999.
10.14**+ OEM Master License Agreement with RSA Data Security dated December 2,
1996.
10.15+ Incentive Compensation Plan for Maurice Jeffery dated March 19, 1999.
10.16**+ Software License and Support Agreement dated as of May 1, 1996, with
AT&T Wireless Services, Inc., as amended.
10.17**+ Client License Agreement dated as of January 1, 1999, with Matsushita
Communication Industrial Co., Ltd.
21++ Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants.
23.2*** Consent of Counsel (included in Exhibit 5.1).
24.1+ Power of Attorney.
27.1+ Financial Data Schedule.
99.1+ Letter dated April 30, 1999 from Dataquest, a division of Gartner
Group, Inc.
99.2+ Letter dated May 3, 1999 from International Data Corporation.
</TABLE>
- --------
+ Previously filed.
++ Supersedes previously filed exhibit.

* To be supplied by amendment.

** Confidential treatment has been requested with respect to this exhibit.

*** Exhibit 5.1 has been withdrawn and will be refiled by amendment after we
have filed our Amended and Restated Certificate of Incorporation effecting
our reverse stock split.
<PAGE>

[Description of graphics and text on inside back cover page:]

Unwired Planet works with technology providers, wireless telephone
manufacturers, Internet content providers, corporate application developers and
value added resellers.

[Unwired Planet logo in the center of concentric circles. The concentric circles
are labeled "Value Added Resellers," "Technology Providers," "Wireless Telephone
Manufacturers," "Internet Content Providers" and "Corporate Application
Developers." Each circle contains the logos of companies in the labeled
category.]
<PAGE>

[LOGO OF PHONE.COM APPEARS HERE]
<PAGE>

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........................................... $ 15,346
NASD filing fee................................................ 6,020
Nasdaq National Market listing fee............................. 95,000
Printing and engraving expenses................................ 200,000
Legal fees and expenses........................................ 375,000
Accounting fees and expenses................................... 350,000
Blue Sky qualification fees and expenses....................... 5,000
Transfer Agent and Registrar fees.............................. 15,000
Miscellaneous fees and expenses................................ 38,634
----------
Total........................................................ $1,100,000
==========
</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, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities, including reimbursement for expenses
incurred, arising under the Securities Act of 1933, as amended. Our amended and
restated certificate of incorporation provides for indemnification of its
directors and officers to the maximum extent permitted by the Delaware General
Corporation Law, and our bylaws provide for indemnification of our directors,
officers, employees and other agents to the maximum extent permitted by the
Delaware General Corporation Law. In addition, we have entered into
indemnification agreements with our directors and officers containing
provisions which are in some respects broader than the specific indemnification
provisions contained in the Delaware General Corporation Law. The
indemnification agreements may require us, among other things, to indemnify our
directors against certain liabilities that may arise by reason of their status
or service as directors, other than liabilities arising from willful misconduct
of culpable nature, to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' insurance if available on reasonable terms. Reference is also made
to Section 7 of the underwriting agreement contained in Exhibit 1.1 hereto,
indemnifying our officers and directors against certain liabilities.

Item 15. Recent Sales of Unregistered Securities

(a) Since January 1, 1996, we have issued and sold, without payment of any
selling commission to any person, except as noted below, the following
unregistered securities:

(1) Prior to completion of this offering, we intend to effect a two-for-
three stock split of our outstanding common stock in which each three
outstanding shares of common stock will be split into two shares of
common stock.

(2) In October 1996, we issued and sold shares of Series C preferred stock
convertible into an aggregate of 2,538,766 shares of common stock to
six venture capital funds and three strategic partners for an aggregate
purchase price of $9,674,983.

II-1
<PAGE>

(3) In January and February 1998, we issued and sold shares of Series D
preferred stock convertible into an aggregate of 6,444,877 shares of
common stock to 19 venture capital funds, five strategic partners and
two individuals for an aggregate purchase price of $32,748,354.
Deutsche Morgan Grenfell acted as placement agent in connection with
this sale, for which it received usual and customary placement agent
fees.

(4) In March 1999, we issued and sold shares of Series E preferred stock
convertible into an aggregate of 2,458,543 shares of common stock to a
total of one venture capital fund, five strategic partners and one
individual investor for an aggregate purchase price of $17,799,114.
Credit Suisse First Boston Corporation acted as placement agent in
connection with this sale, for which it received usual and customary
placement agent fees.

(5) As of March 15, 1999, 1,589,734 shares of common stock had been issued
to our employees and consultants upon exercise of options or pursuant
to restricted stock purchase agreements and 3,321,346 shares of common
stock were issuable upon exercise of outstanding options under our 1995
and 1996 stock plans.

(b) There were no underwritten offerings employed in connection with any of
the transactions set forth in Item 15(a).

The issuance described in Item 15(a)(1) was or will be exempt from
registration under Section 2(3) of the Securities Act on the basis that such
transaction did not involve a "sale" of securities. The issuances described in
Items 15(a)(2) through 15(a)(4) were deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) thereof as transactions
by an issuer not involving any public offering. The issuances described in
Items 15(a)(5) were deemed to be exempt from registration under the Securities
Act in reliance upon Rule 701 promulgated thereunder in that they were offered
and sold either pursuant to written compensatory benefit plans or pursuant to a
written contract relating to compensation, as provided by Rule 701. In
addition, such issuances were deemed to be exempt from registration under
Section 4(2) of the Securities Act as transactions by an issuer not involving
any public offering. The recipients of securities in each such transaction
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends where affixed to the securities issued in such
transactions. All recipients had adequate access, through their relationships
with us, to information about Phone.com.

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

<TABLE>
<CAPTION>
Number Exhibit Title
------ -------------
<C> <S>
1.1 Form of Underwriting Agreement (Subject to Negotiation).
3.1+ Amended and Restated Certificate of Incorporation of the Registrant.
3.2+ Form of Amended and Restated Certificate of Incorporation of the
Registrant, to be filed and effective upon completion of this
offering.
3.3+ Amended and Restated Bylaws of the Registrant.
Certificate of Amendment of Certification of Incorporation of
3.4+ Registrant.
3.5+ Form of Amended and Restated Certificate of Incorporation of
Registrant to be filed prior to the completion of this offering.
4.1 Form of the Registrant's Common Stock Certificate.
5.1*** Opinion of Venture Law Group, a Professional Corporation.
10.1+ Form of Indemnification Agreement.
10.2+ 1995 Stock Plan, as amended, and form of stock option agreement and
restricted stock purchase agreement.
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
Number Exhibit Title
------ -------------
<C> <S>
1996 Stock Plan and form of stock option agreement and restricted
10.3+ stock purchase agreement.
10.4++ 1999 Employee Stock Purchase Plan and form of subscription agreement.
10.5+ 1999 Directors' Stock Option Plan and form of stock option agreement.
Fourth Amended and Restated Investor Rights Agreement dated March 12,
10.6+ 1999.
10.7+ Voting Agreement dated January 23, 1998 and amendment thereto.
10.8+ Lease Agreement dated March 10, 1998 for offices at 800 Chesapeake by
and between Registrant and Seaport Centre Associates, LLC.
10.9+ Form of Change of Control Severance Agreement between the Registrant
and the Registrant's Named Executive Officers.
10.10+ Relocation Agreement dated December 23, 1996 between the Registrant
and Charles Parrish.
10.11+ Warrant Agreements to Purchase Series C Preferred Stock dated May 29,
1997 and July 17, 1997 by and between the Registrant and Comdisco,
Inc.
10.12+ Letter Agreement dated August 18, 1997 with Malcolm Bird.
10.13+ Incentive Compensation Plan for Malcolm Bird dated January 27, 1999.
10.14**+ OEM Master License Agreement with RSA Data Security dated December 2,
1996.
10.15+ Incentive Compensation Plan for Maurice Jeffery dated March 19, 1999.
10.16**+ Software License and Support Agreement dated as of May 1, 1996, with
AT&T Wireless Services, Inc., as amended.
10.17**+ Client License Agreement dated as of January 1, 1999, with Matsushita
Communication Industrial Co., Ltd.
21++ Subsidiaries of the Registrant.
23.1 Consent of Independent Accountants.
23.2*** Consent of Counsel (included in Exhibit 5.1).
24.1+ Power of Attorney.
27.1+ Financial Data Schedule.
99.1+ Letter dated April 30, 1999 from Dataquest, a division of Gartner
Group, Inc.
99.2+ Letter dated May 3, 1999 from International Data Corporation.
</TABLE>
- ---------------------
+ Previously filed.
++ Supersedes previously filed exhibit.

* To be supplied by amendment.

** Confidential treatment has been requested with respect to this exhibit.

*** Exhibit 5.1 has been withdrawn and will be refiled by amendment after we
have filed our Amended and Restated Certificate of Incorporation effecting
our reverse stock split.

(b) Financial Statement Schedules

Financial statement schedules are omitted because the information called for
is not required or is shown either in the consolidated financial statements or
the notes thereto.

Item 17. Undertakings

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

II-3
<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1), or (4),
or 497(h) under the Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the 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 this offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant has duly caused this Amendment to the Registration Statement on Form
S-1 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Redwood City, State of California, on May 24, 1999.

PHONE.COM, INC.

/s/ Alan Black
By: _________________________________
Alan Black
Chief Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----

<S> <C> <C>
* Chief Executive Officer May 24, 1999
______________________________________ and Chairman (Principal
(Alain Rossmann) Executive Officer)

/s/ Alan Black Vice President, Finance May 24, 1999
______________________________________ and Administration, Chief
(Alan Black) Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)

* Director May 24, 1999
______________________________________
(Roger Evans)

* Executive Vice President May 24, 1999
______________________________________ and Director
(Charles Parrish)

* Director May 24, 1999
______________________________________
(David Kronfeld)

* Director May 24, 1999
______________________________________
(Andrew Verhalen)

* Director May 24, 1999
______________________________________
(Reed Hundt)
</TABLE>

/s/ Alan Black
*By: ____________________________
Alan Black
(Attorney-in-Fact)

II-5

<PAGE>

Exhibit 1.1

_____________ Shares

PHONE.COM, INC.

Common Stock, par value $0.001 per share

UNDERWRITING AGREEMENT
----------------------

_________, 1999

Credit Suisse First Boston Corporation
BancBoston Robertson Stephens Inc.
Hambrecht & Quist LLC
U.S. Bancorp Piper Jaffray Inc.,
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629

Dear Sirs:

1. Introductory. Phone.com, Inc., a Delaware corporation ("Company"),
proposes to issue and sell ______ shares ("Firm Securities") of its common
stock ("Securities") and also proposes to issue and sell to the Underwriters,
at the option of the Underwriters, an aggregate of not more than ______
additional shares ("Optional Securities") of its Securities as set forth
below. The Firm Securities and the Optional Securities are herein collectively
called the "Offered Securities". The Company hereby agrees with the several
Underwriters named in Schedule A hereto ("Underwriters") as follows:

2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters that:

(a) A registration statement (No. 333-75219) relating to the Offered
Securities, including a form of prospectus, has been filed with the Securities
and Exchange Commission ("Commission") and either (i) has been declared
effective under the Securities Act of 1933 ("Act") and is not proposed to be
amended or (ii) is proposed to be amended by amendment or post-effective
amendment. If such registration statement ("initial registration statement")
has been declared effective, either (i) an additional registration statement
("additional registration statement") relating to the Offered Securities may
have been filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)")
under the Act and, if so filed, has become effective upon filing pursuant to
such Rule and the Offered Securities all have been duly registered under the
Act pursuant to the initial registration statement and, if applicable, the
additional registration statement or (ii) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule 462(b)
and will become effective upon filing pursuant to such Rule and upon such
filing the Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement has been
filed and the Company does not propose to amend it, and if any post-effective
amendment to either such registration statement has been filed with the
Commission prior to the execution and delivery of this Agreement, the most
recent amendment (if any) to each such registration statement has been
declared effective by the Commission
<PAGE>

or has become effective upon filing pursuant to Rule 462(c) ("Rule 462(c)")
under the Act or, in the case of the additional registration statement, Rule
462(b). For purposes of this Agreement, "Effective Time" with respect to the
initial registration statement or, if filed prior to the execution and
delivery of this Agreement, the additional registration statement means (i) if
the Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such registration
statement, or the most recent post-effective amendment thereto (if any) filed
prior to the execution and delivery of this Agreement, was declared effective
by the Commission or has become effective upon filing pursuant to Rule 462(c),
or (ii) if the Company has advised the Representatives that it proposes to
file an amendment or post-effective amendment to such registration statement,
the date and time as of which such registration statement, as amended by such
amendment or post-effective amendment, as the case may be, is declared
effective by the Commission. If an additional registration statement has not
been filed prior to the execution and delivery of this Agreement but the
Company has advised the Representatives that it proposes to file one,
"Effective Time" with respect to such additional registration statement means
the date and time as of which such registration statement is filed and becomes
effective pursuant to Rule 462(b). "Effective Date" with respect to the
initial registration statement or the additional registration statement (if
any) means the date of the Effective Time thereof. The initial registration
statement, as amended at its Effective Time, including all information
contained in the additional registration statement (if any) and deemed to be a
part of the initial registration statement as of the Effective Time of the
additional registration statement pursuant to the General Instructions of the
Form on which it is filed and including all information (if any) deemed to be
a part of the initial registration statement as of its Effective Time pursuant
to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter referred to as
the "Initial Registration Statement". The additional registration statement,
as amended at its Effective Time, including the contents of the initial
registration statement incorporated by reference therein and including all
information (if any) deemed to be a part of the additional registration
statement as of its Effective Time pursuant to Rule 430A(b), is hereinafter
referred to as the "Additional Registration Statement". The Initial
Registration Statement and the Additional Registration Statement are herein
referred to collectively as the "Registration Statements" and individually as
a "Registration Statement". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter referred to
as the "Prospectus". No document has been or will be prepared or distributed
in reliance on Rule 434 under the Act.

(b) If the Effective Time of the Initial Registration Statement is prior
to the execution and delivery of this Agreement: (i) on the Effective Date of
the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement conformed, or will conform, in
all respects to the requirements of the Act and the Rules and Regulations and
did not include, or will not include, any untrue statement of a material fact
and did not omit, or will not omit, to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) on the date of this Agreement, the Initial Registration Statement and,
if the Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each conforms, and at the time of filing of the Prospectus pursuant
to Rule 424(b) or (if no such filing is required) at the Effective Date of the
Additional Registration Statement in which the Prospectus is included, each
Registration Statement and the Prospectus will conform, in all respects to the
requirements of the Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a material fact
or omits, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. If the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the Prospectus
will conform in all respects to the requirements of the Act and the Rules and
Regulations, neither of such documents will include any untrue statement of a
material fact or will omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and no
Additional Registration Statement has been or will be filed. The two preceding
sentences do not apply to statements in or omissions from a Registration
Statement or the Prospectus based upon written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information is that
described as such in Section 7(b) hereof.

-2-
<PAGE>

(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of
its business requires such qualification.

(d) Each subsidiary of the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction of
its incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and each
subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification; all of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued and is
fully paid and nonassessable; and the capital stock of each subsidiary owned
by the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.

(e) The Offered Securities and all other outstanding shares of capital
stock of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Offered Securities have been
delivered and paid for in accordance with this Agreement on each Closing Date
(as defined below), such Offered Securities will have been, validly issued,
fully paid and nonassessable and will conform to the description thereof
contained in the Prospectus; and the stockholders of the Company have no
preemptive rights with respect to the Securities.

(f) The Offered Securities have been approved for listing on The Nasdaq
Stock Market's National Market, subject to notice of issuance.

(g) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with
this offering.

(h) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to a Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Act which have not been fully satisfied or waived.

(i) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the consummation
of the transactions contemplated by this Agreement in connection with the
issuance and sale of the Offered Securities by the Company, except such as
have been obtained and made under the Act and such as may be required under
state securities laws.

(j) The execution, delivery and performance of this Agreement, and the
issuance and sale of the Offered Securities will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, any rule, regulation or order of any governmental agency
or body or any court, domestic or foreign, having jurisdiction over the
Company or any subsidiary of the Company or any of their properties, or any
agreement or instrument to which the Company or any such subsidiary is a party
or by which the Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or the charter or
by-laws of the Company or any such subsidiary, and the Company has full power
and authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement.

(k) This Agreement has been duly authorized, executed and delivered by
the Company.

-3-
<PAGE>

(l) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and its subsidiaries hold
any leased real or personal property under valid and enforceable leases with
no exceptions that would materially interfere with the use made or to be made
thereof by them.

(m) The Company and its subsidiaries possess all material certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received
any notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect").

(n) No labor dispute with the employees of the Company or any subsidiary
exists or, to the knowledge of the Company, is imminent that might have a
Material Adverse Effect.

(o) The Company and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property, including applications licensed directly from third
parties (collectively, "intellectual property rights") necessary to conduct
the business now operated by them, or presently employed by them, and have not
received any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect. The discoveries, inventions,
products or processes of the Company referred to in the Prospectus do not, to
the Company's knowledge, infringe or conflict with any intellectual property
right of any third party, where such infringement or conflict could have a
Material Adverse Effect.

(p) Except as disclosed in the Prospectus, neither the Company nor any
of its subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site disposal
or contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation, contamination,
liability or claim would individually or in the aggregate have a Material
Adverse Effect; and the Company is not aware of any pending investigation
which might lead to such a claim.

(q) Except as disclosed in the Prospectus, there are no pending actions,
suits or proceedings against or affecting the Company, any of its subsidiaries
or any of their respective properties that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect, or would materially and adversely affect the
ability of the Company to perform its obligations under this Agreement, or
which are otherwise material in the context of the sale of the Offered
Securities; and no such actions, suits or proceedings are threatened or, to
the Company's knowledge, contemplated.

(r) The financial statements included in each Registration Statement and
the Prospectus present fairly the financial position of the Company and its
consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and, except as otherwise
disclosed in the Prospectus, such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States applied on a consistent basis and the schedule included in each
Registration Statement presents fairly the information required to be stated
therein; and the assumptions used in preparing the pro forma financial
statements included in each Registration Statement and the Prospectus provide
a reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the related pro
forma adjustments give appropriate effect to

-4-
<PAGE>

those assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical financial
statement amounts.

(s) Except as disclosed in the Prospectus, since the date of the latest
audited financial statements included in the Prospectus there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken
as a whole, and, except as disclosed in or contemplated by the Prospectus,
there has been no dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock.

(t) The Company is not and, after giving effect to the offering and sale
of the Offered Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.

(u) The Company (i) has notified each holder of a currently outstanding
option issued under the 1995 Stock Plan, 1996 Stock Plan, 1999 Directors'
Stock Option Plan and the 1999 Employee Stock Purchase Plan (collectively, the
"Plans") and each person who has acquired Securities pursuant to the exercise
of any option or other rights granted under such Plans that pursuant to the
terms of such Plans, none of such options or shares may be sold or otherwise
transferred or disposed of for a period of 180 days after the date of the
initial public offering of the Offered Securities and (ii) has imposed a stop-
transfer instruction with the Company's transfer agent in order to enforce the
foregoing lock-up provision imposed pursuant to the Plans.

(v) Except as disclosed in the Prospectus, all outstanding Securities,
and all securities convertible into or exercisable or exchangeable for
Securities, are subject to valid and binding agreements (collectively, "Lock-
up Agreements") that restrict the holders thereof from selling, making any
short sale of, granting any option for the purchase of, or otherwise
transferring or disposing of, any of such Securities, or any such securities
convertible into or exercisable or exchangeable for Securities, for a period
of 180 days after the date of the Prospectus without the prior written consent
of Credit Suisse First Boston Corporation ("CSFBC").

(w) The Company (i) has notified each stockholder who is party to the
Fourth Amended and Restated Investor Rights Agreement dated March 12, 1999
(the "Rights Agreement"), that pursuant to the terms of the Rights Agreement,
none of the shares of the Company's capital stock held by such stockholder may
be sold or otherwise transferred or disposed of for a period of 180 days after
the date of the initial public offering of the Offered Securities and (ii) has
imposed a stop-transfer instruction with the Company's transfer agent in order
to enforce the foregoing lock-up provision imposed pursuant to the Rights
Agreement.

(x) The Company's sale of its Series E Preferred Stock was a
"transaction by an issuer not involving any public offering" as provided in
Section 4(2) of the Act and, therefore, meets the requirements of Rule 152 of
the Act.

3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $ per share, the respective
numbers of shares of Firm Securities set forth opposite the names of the
Underwriters in Schedule A hereto.
----------

The Company will deliver the Firm Securities to the Representatives for the
accounts of the Underwriters, at the office of CSFBC, Eleven Madison Avenue, New
York, New York 10010-3629, against payment of the purchase price in Federal
(same day) funds by official bank check or checks or wire transfer to an account
at a bank acceptable to CSFBC drawn to the order of the Company at the office of
Venture Law Group, a Professional Corporation, 2800 Sand Hill Road, Menlo Park,
California 94025 at A.M., New York time, on ,1999, or
at such other time not later than seven full business days thereafter as CSFBC
and the Company determine, such time being herein referred to as the "First
Closing Date". For purposes of Rule 15c6-1 under the Securities Exchange Act of
1934, the First Closing Date (if

-5-
<PAGE>

later than the otherwise applicable settlement date) shall be the settlement
date for payment of funds and delivery of securities for all the Offered
Securities sold pursuant to the offering. The certificates for the Firm
Securities so to be delivered will be in definitive form, in such
denominations and registered in such names as CSFBC requests and will be made
available for checking and packaging at the above office of CSFBC in New York
at least 24 hours prior to the First Closing Date.

In addition, upon written notice from CSFBC given to the Company from time
to time not more than 30 days subsequent to the date of the Prospectus, the
Underwriters may purchase all or less than all of the Optional Securities at the
purchase price per Security to be paid for the Firm Securities. The Company
agrees to sell to the Underwriters the number of shares of Optional Securities
specified in such notice and the Underwriters agree, severally and not jointly,
to purchase such Optional Securities. Such Optional Securities shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Securities set forth opposite such Underwriter's name
bears to the total number of shares of Firm Securities (subject to adjustment by
CSFBC to eliminate fractions) and may be purchased by the Underwriters only for
the purpose of covering over-allotments made in connection with the sale of the
Firm Securities. No Optional Securities shall be sold or delivered unless the
Firm Securities previously have been, or simultaneously are, sold and delivered.
The right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the Company.

Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, at the above
office of CSFBC in New York ,against payment of the purchase price therefor in
Federal (same day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to CSFBC drawn to the order of the Company, at the
above office of Venture Law Group, a Professional Corporation. The
certificates for the Optional Securities being purchased on each Optional
Closing Date will be in definitive form, in such denominations and registered in
such names as CSFBC requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the above
office of CSFBC in New York at a reasonable time in advance of such Optional
Closing Date.

4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.

5. Certain Agreements of the Company. The Company agrees with the several
Underwriters that:

(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will file
the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC, subparagraph
(4)) of Rule 424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration Statement.

The Company will advise CSFBC promptly of any such filing pursuant to Rule
424(b). If the Effective Time of the Initial Registration Statement is prior to
the execution and delivery of this Agreement and an additional registration
statement is necessary to register a portion of the Offered Securities under the
Act but the Effective Time thereof has not occurred as of such execution and
delivery, the Company will file the additional registration statement or, if
filed, will file a post-effective amendment thereto with the Commission pursuant
to and in accordance with Rule 462(b) on or prior to 10:00 P.M., New York time,
on the date of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or will make such
filing at such later date as shall have been consented to by CSFBC.

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<PAGE>

(b) The Company will advise CSFBC promptly of any proposal to amend or
supplement the initial or any additional registration statement as filed or
the related prospectus or the Initial Registration Statement, the Additional
Registration Statement (if any) or the Prospectus and will not effect such
amendment or supplementation without CSFBC's consent; and the Company will
also advise CSFBC promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration Statement
or the Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best
efforts to prevent the issuance of any such stop order and to obtain as soon
as possible its lifting, if issued.

(c) If, at any time when a prospectus relating to the Offered Securities
is required to be delivered under the Act in connection with sales by any
Underwriter or dealer, any event occurs as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to
comply with the Act, the Company will promptly notify CSFBC of such event and
will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. Neither CSFBC's consent to, nor
the Underwriters' delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.

(d) As soon as practicable, but not later than the Availability Date (as
defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12 months
beginning after the Effective Date of the Initial Registration Statement (or,
if later, the Effective Date of the Additional Registration Statement) which
will satisfy the provisions of Section 11(a) of the Act. For the purpose of
the preceding sentence, "Availability Date" means the 45th day after the end
of the fourth fiscal quarter following the fiscal quarter that includes such
Effective Date, except that, if such fourth fiscal quarter is the last quarter
of the Company's fiscal year, "Availability Date" means the 90th day after the
end of such fourth fiscal quarter.

(e) The Company will furnish to the Representatives copies of each
Registration Statement (which will be signed and will include all exhibits),
each related preliminary prospectus, and, so long as a prospectus relating to
the Offered Securities is required to be delivered under the Act in connection
with sales by any Underwriter or dealer, the Prospectus and all amendments and
supplements to such documents, in each case in such quantities as CSFBC
requests. The Prospectus shall be so furnished on or prior to 3:00 P.M., New
York time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial Registration
Statement. All other documents shall be so furnished as soon as available. The
Company will pay the expenses of printing and distributing to the Underwriters
all such documents.

(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates
and will continue such qualifications in effect so long as required for the
distribution.

(g) During the period of five years hereafter, the Company will furnish
to the Representatives and, upon request, to each of the other Underwriters,
as soon as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year; and the Company will furnish to the
Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Securities Exchange Act of 1934 or mailed to stockholders, and (ii) from time
to time, such other information concerning the Company as CSFBC may reasonably
request.

(h) The Company will pay all expenses incident to the performance of its
obligations under this Agreement, for any filing fees and other expenses
(including fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions as CSFBC designates and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. of the

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<PAGE>

Offered Securities, for any travel expenses of the Company's officers and
employees and any other expenses of the Company in connection with attending
or hosting meetings with prospective purchasers of the Offered Securities and
for expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.

(i) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, or file with
the Commission a registration statement under the Act relating to, any
additional shares of its Securities or securities convertible into or
exchangeable or exercisable for any shares of its Securities, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of CSFBC, except issuances of
Securities pursuant to the conversion or exchange of convertible or
exchangeable securities or the exercise of warrants or options, in each case
outstanding on the date hereof, grants of employee stock options or the
issuance of other Securities pursuant to the terms of a Plan in effect on the
date hereof, or issuances of Securities pursuant to the exercise of such
options.

(j) The Company agrees to use its best efforts to cause (i) each of its
directors, officers and shareholders and (ii) each person who acquires
Securities of the Company pursuant to the exercise of any option or other
rights granted under the Plans to sign an agreement that restricts such person
from selling, making any short sale of, granting any option for the purchase
of, or otherwise transferring or disposing of, any of such Securities, or any
such securities convertible into or exercisable or exchangeable for
Securities, for a period of 180 days after the date of the Prospectus without
the prior written consent of CSFBC; and the Company will issue and impose a
stop-transfer instruction with the Company's transfer agent in order to
enforce the foregoing lock-up agreements.

(k) The Company will (i) enforce the terms of each Lock-up Agreement,
and (ii) issue stop-transfer instructions to the transfer agent for the
Securities with respect to any transaction or contemplated transaction that
would constitute a breach of or default under the applicable Lock-up
Agreement. In addition, except with the prior written consent of CSFBC, the
Company agrees (i) not to amend or terminate, or waive any right under, any
Lock-up Agreement, or take any other action that would directly or indirectly
have the same effect as an amendment or termination, or waiver of any right
under any Lock-up Agreement, that would permit any holder of Securities, or
any securities convertible into, or exercisable or exchangeable for,
Securities, to make any short sale of, grant any option for the purchase of,
or otherwise transfer or dispose of, any such Securities or other securities,
prior to the expiration of the 180 days after the date of the Prospectus and
(ii) not to consent to any sale, short sale, grant of an option for the
purchase of, or other disposition or transfer of shares of Securities, or
securities convertible into or exercisable or exchangeable for Securities,
subject to a Lock-up Agreement.

6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each
Optional Closing Date will be subject to the accuracy of the representations
and warranties on the part of the Company herein, to the accuracy of the
statements of Company officers made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:

(a) The Representatives shall have received a letter, dated the date of
delivery thereof (which, if the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, shall be
on or prior to the date of this Agreement (but in no event earlier than the
Effective Time) or, if the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this Agreement, shall
be prior to the filing of the amendment or post-effective amendment to the
registration statement to be filed shortly prior to such Effective Time), of
KPMG LLP confirming that they are independent public accountants within the
meaning of the Act and the applicable published Rules and Regulations
thereunder and stating to the effect that:

(i) in their opinion the financial statements examined by them and
included in the Registration Statements comply as to form in all material
respects with the applicable accounting requirements of the Act and the
related published Rules and Regulations;

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<PAGE>

(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in Statement of Auditing Standards No. 71, Interim
Financial Information, on the unaudited financial statements (including each
of the quarters presented) included in the Registration Statements;

(iii) on the basis of the review referred to in clause (ii) above, a
reading of the latest available interim financial statements of the Company,
inquiries of officials of the Company who have responsibility for financial and
accounting matters and other specified procedures, nothing came to their
attention that caused them to believe that:

(A) the unaudited financial statements included in the Registration
Statements do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published Rules and
Regulations or any material modifications should be made to such unaudited
financial statements for them to be in conformity with generally accepted
accounting principles;

(B) the unaudited consolidated total revenues, operating loss, net
loss and net loss per share amounts for the three-month periods ended September
30, 1997, December 31, 1997, March 31, 1998, June 30, 1998, September 30, 1998,
December 31, 1998 and March 31, 1999 included in the Prospectus do not agree
with the amounts set forth in the unaudited consolidated financial statements
for those same periods or were not determined on a basis substantially
consistent with that of the corresponding amounts in the audited statements of
income;

(C) at the date of the latest available balance sheet read by such
accountants, or at a subsequent specified date not more than three business days
prior to the date of such letter, there was any change in the capital stock or
any increase in short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest available balance sheet
read by such accountants, there was any decrease in consolidated total current
assets, total assets, or total stockholders' equity, as compared with amounts
shown on the latest balance sheet included in the Prospectus;

(D) for the period from the closing date of the latest income
statement included in the Prospectus to the closing date of the latest available
income statement read by such accountants there were any decreases, as compared
with the corresponding period of the previous year and with the corresponding
period of the prior quarter, in consolidated total revenues or increases, as
compared with the corresponding period of the previous year and with the
corresponding period of the prior quarter, in consolidated net operating loss,
or in the total or per share amounts of consolidated net loss;

(E) at a date not more than three business days prior to the date of
such letter, there was any change in the capital stock or any increase in short-
term indebtedness or long-term debt of the Company and its consolidated
subsidiaries or, at such date, there was any decrease in consolidated total
current assets, total assets or total stockholders' equity, as compared with
amounts shown on the latest balance sheet included in the Prospectus; or

(F) for the period from the date after the closing date of the latest
available income statement read by such accountants to a date not more than
three business days prior to the date of such letter, there were any decreases,
as compared with the corresponding period of the previous year and with the
corresponding period of the prior quarter in consolidated total revenues or
increases, as compared with the corresponding period of the previous year and
with the corresponding period of the prior quarter, in consolidated net
operating loss, or in the total or per share amounts of consolidated net loss,

except in all cases set forth in clauses (C), (D), (E) and (F) above
for changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and

(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Registration Statements (in each case to the extent that

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<PAGE>

such dollar amounts, percentages and other financial and statistical
information are derived from the general accounting records of the Company and
its subsidiaries subject to the internal controls of the Company's accounting
system or are derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have found such
dollar amounts, percentages and other financial and statistical information to
be in agreement with such results, except as otherwise specified in such
letter.

For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration is
subsequent to such execution and delivery, "Registration Statements" shall mean
the Initial Registration Statement and the additional registration statement as
proposed to be filed or as proposed to be amended by the post-effective
amendment to be filed shortly prior to its Effective Time, and (iii)
"Prospectus" shall mean the prospectus included in the Registration Statements.

(b) If the Effective Time of the Initial Registration Statement is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or such later date as shall have been consented to by CSFBC. If
the Effective Time of the Additional Registration Statement (if any) is not
prior to the execution and delivery of this Agreement, such Effective Time
shall have occurred not later than 10:00 P.M., New York time, on the date of
this Agreement or, if earlier, the time the Prospectus is printed and
distributed to any Underwriter, or shall have occurred at such later date as
shall have been consented to by CSFBC. If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, the Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this Agreement.
Prior to such Closing Date, no stop order suspending the effectiveness of a
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission.

(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving
a prospective change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken
as one enterprise which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and makes
it impractical or inadvisable to proceed with completion of the public
offering or the sale of and payment for the Offered Securities; (ii) any
downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any material suspension or material
limitation of trading in securities generally on the New York Stock Exchange,
or any setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company on any exchange or in
the over-the-counter market; (iv) any banking moratorium declared by U.S.
Federal or New York authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
including the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Offered Securities.

(d) The Representatives shall have received an opinion, dated such
Closing Date, of Venture Law Group, a Professional Corporation, counsel for
the Company, to the effect that:

(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business
as described in the Prospectus; and the Company is duly qualified to do
business as a foreign corporation in

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<PAGE>

good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification;

(ii) Each subsidiary of the Company has been duly incorporated and
is an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus; and
each subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such
qualification; all of the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued and is
fully paid and nonassessable, and the capital stock of each subsidiary owned
by the Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects;

(iii) The Offered Securities delivered on such Closing Date and all
other outstanding shares of the capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and conform to
the description thereof contained in the Prospectus; and the stockholders of
the Company have no preemptive rights with respect to the Securities;

(iv) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings known to such counsel between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Act;

(v) The Company is not and, after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as defined in
the Investment Company Act of 1940.

(vi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance or sale of the Offered Securities by the Company, except
such as have been obtained and made under the Act and such as may be required
under state securities laws;

(vii) The execution, delivery and performance of this Agreement and
the issuance and sale of the Offered Securities will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under, any statute, any rule, regulation or order of any governmental agency
or body or any court having jurisdiction over the Company or any subsidiary of
the Company or any of their properties, or any agreement or instrument to
which the Company or any such subsidiary is a party or by which the Company or
any such subsidiary is bound or to which any of the properties of the Company
or any such subsidiary is subject, or the charter or by-laws of the Company or
any such subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement;

(viii) The Company's sale of its Series E Preferred Stock was a
"transaction by an issuer not involving any public offering" as provided in
Section 4(2) of the Act and, therefore, meets the requirements of Rule 152 of
the Act.

(ix) The Initial Registration Statement was declared effective under
the Act as of the date and time specified in such opinion, the Additional
Registration Statement (if any) was filed and became effective under the Act
as of the date and time (if determinable) specified in such opinion, the
Prospectus either was filed with the Commission pursuant to the subparagraph
of Rule 424(b) specified in such opinion on the date specified therein or was
included in the Initial Registration Statement or the Additional Registration
Statement (as the case may be), and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of a Registration
Statement or any part thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated

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<PAGE>

under the Act, and each Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or issue
dates, complied as to form in all material respects with the requirements of
the Act and the Rules and Regulations; such counsel have no reason to believe
that any part of a Registration Statement or any amendment thereto, as of its
effective date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto, as of its issue date or as
of such Closing Date, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; the descriptions in the Registration Statements and Prospectus of
statutes, legal and governmental proceedings and contracts and other documents
are accurate and fairly present the information required to be shown; and such
counsel do not know of any legal or governmental proceedings required to be
described in a Registration Statement or the Prospectus which are not
described as required or of any contracts or documents of a character required
to be described in a Registration Statement or the Prospectus or to be filed
as exhibits to a Registration Statement which are not described and filed as
required; it being understood that such counsel need express no opinion as to
the financial statements or other financial data contained in the Registration
Statements or the Prospectus; and

(x) This Agreement has been duly authorized, executed and delivered
by the Company.

(e) The Representatives shall have received from Wilson Sonsini
Goodrich & Rosati, Professional Corporation, counsel for the Underwriters,
such opinion or opinions, dated such Closing Date, with respect to the
incorporation of the Company, the validity of the Offered Securities delivered
on such Closing Date, the Registration Statements, the Prospectus and other
related matters as the Representatives may require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.

(f) The Representatives shall have received a certificate, dated such
Closing Date, of the President or any Vice President and a principal financial
or accounting officer of the Company in which such officers, to the best of
their knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this Agreement are true and
correct; the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs
(1) and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including
payment of the applicable filing fee in accordance with Rule 111(a) or (b)
under the Act, prior to the time the Prospectus was printed and distributed to
any Underwriter; and, subsequent to the date of the most recent financial
statements in the Prospectus, there has been no material adverse change, nor
any development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as set
forth in or contemplated by the Prospectus or as described in such
certificate.

(g) The Representatives shall have received a letter, dated such
Closing Date, of KPMG LLP which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection
will be a date not more than three days prior to such Closing Date for the
purposes of this subsection.

The Company will furnish the Representatives with such conformed copies of
such opinions, certificates, letters and documents as the Representatives
reasonably request. CSFBC may in its sole discretion waive on behalf of the
Underwriters compliance with any conditions to the obligations of the
Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.

7. Indemnification and Contribution.

(a) The Company will indemnify and hold harmless each Underwriter, its
partners, directors and officers and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Act, against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter
may become subject, under the Act or

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<PAGE>

otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through
the Representatives specifically for use therein, it being understood and
agreed that the only such information furnished by any Underwriter consists of
the information described as such in subsection (b) below.

(b) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company, its directors and officers and each person, if any who
controls the Company within the meaning of Section 15 of the Act, against any
losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action
as such expenses are incurred, it being understood and agreed that the only
such information furnished by any Underwriter consists of the following
information in the Prospectus furnished on behalf of each Underwriter: the
concession and reallowance figures appearing in the fourth paragraph under the
caption "Underwriting" and the information contained in the sixth and twelfth
paragraphs under the caption "Underwriting."

(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under subsection (a) or (b) above. In case any such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action and does not include
a statement as to, or an admission of fault, culpability or a failure to act
by or on behalf of an indeminified party.

(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one

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<PAGE>

hand and the Underwriters on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which
is the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.

(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Company, to each
officer of the Company who has signed a Registration Statement and to each
person, if any, who controls the Company within the meaning of the Act.

8. Default of Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder on either the First
or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of shares of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to CSFBC and the
Company for the purchase of such Offered Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
as provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.

9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered

-14-
<PAGE>

Securities. If this Agreement is terminated pursuant to Section 8 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid
or reimbursed by it pursuant to Section 5 and the respective obligations of
the Company and the Underwriters pursuant to Section 7 shall remain in effect,
and if any Offered Securities have been purchased hereunder the
representations and warranties in Section 2 and all obligations under Section
5 shall also remain in effect. If the purchase of the Offered Securities by
the Underwriters is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8 or the occurrence
of any event specified in clause (iii), (iv) or (v) of Section 6(c), the
Company will reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Offered Securities.

10. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department--
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 800 Chesapeake Drive, Redwood
City, California 94063, Attention: Alain Rossmann; provided, however, that any
notice to an Underwriter pursuant to Section 7 will be mailed, delivered or
telegraphed and confirmed to such Underwriter.

11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 7, and no other person
will have any right or obligation hereunder.

12. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly or by CSFBC on behalf of the
Representatives will be binding upon all the Underwriters.

13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.

The Company hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any suit
or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

[Remainder of page intentionally left blank]

-15-
<PAGE>

If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement between the Company and the
several Underwriters in accordance with its terms.

Very truly yours,

PHONE.COM, Inc.

By:______________________________________
Alain Rossmann
Chairman of the Board of Directors
and Chief Executive Officer

The foregoing Underwriting Agreement is hereby
Confirmed and accepted as of the date first written
Above.
Credit Suisse First Boston Corporation
BancBoston Robertson Stephens Inc.
Hambrecht & Quist LLC
U.S. Bancorp Piper Jaffray Inc.

Acting on behalf of themselves and as the
Representatives of the several Underwriters

By Credit Suisse First Boston Corporation

By:____________________________________________
William J. Brady
Managing Director

[Signature Page to Underwriting Agreement]

-16-
<PAGE>

SCHEDULE A
----------

Number of
Underwriter Firm Securities
----------- ---------------
Credit Suisse First Boston Corporation.................
BancBoston Robertson Stephens Inc......................
Hambrecht & Quist LLC..................................
U.S. Bancorp Piper Jaffray Inc.........................

Total......................................

-17-

<PAGE>
EXHIBIT 4.1

===============================================================================
COMMON STOCK [LOGO OF PHONE.COM, INC.] COMMON STOCK

NUMBER SHARES
Phone.com, Inc. CUSIP 71920Q 10 0
PH SEE REVERSE FOR
DEFINITIONS

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK,
$0.001 PAR VALUE, OF

PHONE.COM

CERTIFICATE OF STOCK

Transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this certificate
properly endorsed. This certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

/s/ [CORPORATE SEAL /s/
OF PHONE.COM, INC.]

CHIEF FINANCIAL OFFICER AND TREASURER CHAIRMAN AND CHIEF EXECUTIVE OFFICER

COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER CORPORATION
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE

================================================================================

<PAGE>

================================================================================

Phone.com, Inc.

The Corporation will furnish without charge to each stockholder who so requests
a copy of the powers, designations, preferences and relative, participating,
optional or other special rights to each class of stock or series thereof and
the qualifications, limitations, or restrictions of such preferences and/or
rights.

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM - as tenants in common UNIF GIFT MIN ACT-.........Custodian.........
TEN ENT - as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to
JT TEN - as joint tenants with Minors Act..................
right of survivorship (State)
and not as tenants in
common

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, _____________________________ hereby sell(s), assign(s)
and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

_____________________________

________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

_________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute
and appoint

________________________________________________________________________Attorney
to transfer the said shares on the books of the within named
Corporation with full power of substitution in the premises.

Dated ____________________________

NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT X_______________________________
MUST CORRESPOND WITH THE NAME(S) AS (SIGNATURE)
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, X_______________________________
WITHOUT ALTERATION OR ENLARGEMENT OR (SIGNATURE)
ANY CHANGE WHATEVER.

---------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS
WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
---------------------------------------
SIGNATURE(S) GUARANTEED BY:

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

<PAGE>

EXHIBIT 10.4

PHONE.COM, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

The following constitute the provisions of the 1999 Employee Stock
Purchase Plan of Phone.com, Inc.

1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code. The
provisions of the Plan shall, accordingly, be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

2. DEFINITIONS.

(a) "BOARD" means the Board of Directors of the Company.

(b) "CODE" means the Internal Revenue Code of 1986, as amended.

(d) "COMPANY" means Phone.com, Inc., a Delaware corporation.

(e) "COMPENSATION" means all regular straight time gross earnings and
shall not include commissions or payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation.

(f) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of (i) sick leave; (ii)
military leave; (iii) any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy adopted from
time to time; or (iv) in the case of transfers between locations of the Company
or between the Company and its Designated Subsidiaries.

(g) "CONTRIBUTIONS" means all amounts credited to the account of a
participant pursuant to the Plan.

(h) "CORPORATE TRANSACTION" means a sale of all or substantially all
of the Company's assets, or a merger, consolidation or other capital
reorganization of the Company with or into another corporation, or any other
transaction or series of related transactions in which the Company's
stockholders immediately prior thereto own less than 50% of the voting stock of
the Company (or its successor or parent) immediately thereafter.
<PAGE>

(i) "DESIGNATED SUBSIDIARIES" means the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan; provided however that the Board shall only have the
discretion to designate Subsidiaries if the issuance of options to such
Subsidiary's Employees pursuant to the Plan would not cause the Company to incur
adverse accounting charges.

(j) "EMPLOYEE" means any person, including an Officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.

(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

(l) "OFFERING DATE" means the first business day of each Offering
Period of the Plan.

(m) "OFFERING PERIOD" means a period of twenty-four (24) months
commencing on November 1 and May 1 of each year, except for the first Offering
Period as set forth in Section 4(a).

(n) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

(o) "PLAN" means this Employee Stock Purchase Plan.

(p) "PURCHASE DATE" means the last day of each Purchase Period of the
Plan.

(q) "PURCHASE PERIOD" means a period of six (6) months within an
Offering Period, except for the Purchase Periods in the first Offering Period as
set forth in Section 4(b).

(r) "PURCHASE PRICE" means with respect to a Purchase Period an
amount equal to 85% of the Fair Market Value (as defined in Section 7(b) below)
of a Share of Common Stock on the Offering Date or on the Purchase Date,
whichever is lower; provided, however, that in the event (i) of any increase in
the number of Shares available for issuance under the Plan as a result of a
stockholder-approved amendment to the Plan, and (ii) all or a portion of such
additional Shares are to be issued with respect to one or more Offering Periods
that are underway at the time of such increase ("Additional Shares"), and (iii)
the Fair Market Value of a Share of Common Stock on the date of such increase
(the "Approval Date Fair Market Value") is higher than the Fair Market Value on
the Offering Date for any such Offering Period, then in such instance the
Purchase Price with respect to Additional Shares shall be 85% of the Approval
Date Fair Market Value or the Fair Market Value of a Share of Common Stock on
the Purchase Date, whichever is lower.

(s) "SHARE" means a share of Common Stock, as adjusted in accordance
with Section 19 of the Plan.

-2-
<PAGE>

(t) "SUBSIDIARY" means a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.

3. ELIGIBILITY.

(a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a) and the limitations
imposed by Section 423(b) of the Code; provided however that eligible Employees
may not participate in more than one Offering Period at a time.

(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company or of any subsidiary of the Company, or (ii) if such
option would permit his or her rights to purchase stock under all employee stock
purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of the Fair Market Value (as defined in Section 7(b) below) of such
stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.

4. OFFERING PERIODS AND PURCHASE PERIODS.

(a) OFFERING PERIODS. The Plan shall be generally implemented by a
series of Offering Periods of twenty-four (24) months' duration, with new
Offering Periods (other than the first Offering Period) commencing on or about
November 1 and May 1 of each year (or at such other time or times as may be
determined by the Board of Directors). The first Offering Period shall commence
on the beginning of the effective date of the Registration Statement on Form S-1
for the initial public offering of the Company's Common Stock (the "IPO Date")
and continue until April 30, 2001. The Plan shall continue until terminated in
accordance with Section 19 hereof. The Board of Directors of the Company shall
have the power to change the duration and/or the frequency of Offering Periods
with respect to future offerings without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Offering Period to be affected.

(b) PURCHASE PERIODS. Each Offering Period shall generally consist of
four (4) consecutive purchase periods of six (6) months' duration. The last day
of each Purchase Period shall be the "Purchase Date" for such Purchase Period. A
Purchase Period commencing on November 1 shall end on the next April 30. A
Purchase Period commencing on May 1 shall end on the next October 31. The first
Purchase Period of the first Offering Period shall commence on the IPO Date and
shall end on January 31, 2000 with subsequent Purchase Periods ending on April
30, 2000, October 31, 2000 and April 30, 2001. The Board of Directors of the
Company shall have the power to change the duration and/or frequency of Purchase
Periods with

-3-
<PAGE>

respect to future purchases without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Purchase Period to be affected.

5. PARTICIPATION.

(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given Offering Period. The
subscription agreement shall set forth the percentage of the participant's
Compensation (subject to Section 6(a) below) to be paid as Contributions
pursuant to the Plan.

(b) Payroll deductions shall commence on the first payroll following
the Offering Date and shall end on the last payroll paid on or prior to the last
Purchase Period of the Offering Period to which the subscription agreement is
applicable, unless sooner terminated by the participant as provided in Section
10.

6. METHOD OF PAYMENT OF CONTRIBUTIONS.

(a) A participant shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent (1%)
and not more than twenty percent (20%) (or such other percentage as the Board
may establish from time to time before an Offering Date) of such participant's
Compensation on each payday during the Offering Period. All payroll deductions
made by a participant shall be credited to his or her account under the Plan. A
participant may not make any additional payments into such account.

(b) A participant may discontinue his or her participation in the
Plan as provided in Section 10, or, on one occasion only during each Purchase
Period may either increase or decrease the rate of his or her Contributions with
respect to the Offering Period by completing and filing with the Company a new
subscription agreement authorizing a change in the payroll deduction rate. The
change in rate shall be effective as of the beginning of the next calendar month
following the date of filing of the new subscription agreement, if the agreement
is filed at least ten (10) business days prior to such date and, if not, as of
the beginning of the next succeeding calendar month.

(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a participant's
payroll deductions may be decreased during any Offering Period scheduled to end
during the current calendar year to 0%. Payroll deductions shall re-commence at
the rate provided in such participant's subscription agreement at the beginning
of the first Offering Period which is scheduled to end in the following calendar
year, unless terminated by the participant as provided in Section 10.

7. GRANT OF OPTION.

(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on each Purchase

-4-
<PAGE>

Date a number of Shares of the Company's Common Stock determined by dividing
such Employee's Contributions accumulated prior to such Purchase Date and
retained in the participant's account as of the Purchase Date by the applicable
Purchase Price; provided however that the maximum number of Shares an Employee
may purchase during each Purchase Period shall be 2,500 Shares (subject to any
adjustment pursuant to Section 19 below), and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 13.

(b) The fair market value of the Company's Common Stock on a given
date (the "Fair Market Value") shall be determined by the Board in its
discretion based on the closing sales price of the Common Stock for such date
(or, in the event that the Common Stock is not traded on such date, on the
immediately preceding trading date), as reported by the National Association of
Securities Dealers Automated Quotation (Nasdaq) National Market or, if such
price is not reported, the mean of the bid and asked prices per share of the
Common Stock as reported by Nasdaq or, in the event the Common Stock is listed
on a stock exchange, the Fair Market Value per share shall be the closing sales
price on such exchange on such date (or, in the event that the Common Stock is
not traded on such date, on the immediately preceding trading date), as reported
in The Wall Street Journal. For purposes of the Offering Date under the first
Offering Period under the Plan, the Fair Market Value of a share of the Common
Stock of the Company shall be the Price to Public as set forth in the final
prospectus filed with the Securities and Exchange Commission pursuant to Rule
424 under the Securities Act of 1933, as amended.

8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in Section 10, his or her option for the purchase of Shares will be
exercised automatically on each Purchase Date of an Offering Period, and the
maximum number of full Shares subject to the option will be purchased at the
applicable Purchase Price with the accumulated Contributions in his or her
account. No fractional Shares shall be issued. The Shares purchased upon
exercise of an option hereunder shall be deemed to be transferred to the
participant on the Purchase Date. During his or her lifetime, a participant's
option to purchase Shares hereunder is exercisable only by him or her.

9. DELIVERY. As promptly as practicable after each Purchase Date of each
Offering Period, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the Shares purchased upon exercise of
his or her option. Any payroll deductions accumulated in a participant's account
which are not sufficient to purchase a full Share shall be retained in the
participant's account for the subsequent Purchase Period or Offering Period,
subject to earlier withdrawal by the participant as provided in Section 10
below. Any other amounts left over in a participant's account after a Purchase
Date shall be returned to the participant.

10. VOLUNTARY WITHDRAWAL; TERMINATION OF EMPLOYMENT.

(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
each Purchase Date by giving written notice to the Company. All of the
participant's Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and

-5-
<PAGE>

his or her option for the current period will be automatically terminated, and
no further Contributions for the purchase of Shares will be made during the
Offering Period.

(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Purchase Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.

(c) In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.

(d) A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.

11. AUTOMATIC WITHDRAWAL. If the Fair Market Value of the Shares on any
Purchase Date of an Offering Period is less than the Fair Market Value of the
Shares on the Offering Date for such Offering Period, then every participant
shall automatically (i) be withdrawn from such Offering Period at the close of
such Purchase Date and after the acquisition of Shares for such Purchase Period,
and (ii) be enrolled in the Offering Period commencing on the first business day
subsequent to such Purchase Period. Participants shall automatically be
withdrawn as of October 31, 1999 from the Offering Period beginning on the IPO
Date and re-enrolled in the Offering Period beginning on November 1, 1999 if the
Fair Market Value of the Shares on the IPO Date is greater than the Fair Market
Value of the Shares on October 31, 1999, unless a participant notifies the
Administrator prior to October 31, 1999 that he or she does not wish to be
withdrawn and re-enrolled.

12. INTEREST. No interest shall accrue on the Contributions of a
participant in the Plan.

13. STOCK.

(a) Subject to adjustment as provided in Section 19, the maximum
number of Shares which shall be made available for sale under the Plan shall be
600,000 Shares, plus an automatic annual increase on the first day of each of
the Company's fiscal years beginning in 2000, 2001, 2002, 2003 and 2004 equal to
the lesser of (i) 500,000 Shares, or (ii) one percent (1%) of the Shares
outstanding on the last day of the immediately preceding fiscal year. If the
Board determines that, on a given Purchase Date, the number of shares with
respect to which options are to be exercised may exceed (i) the number of shares
of Common Stock that were available for sale under the Plan on the Offering Date
of the applicable Offering Period, or (ii) the number of shares available for
sale under the Plan on such Purchase Date, the Board may in its sole discretion
provide (x) that the Company shall make a pro rata allocation of the Shares

-6-
<PAGE>

of Common Stock available for purchase on such Offering Date or Purchase Date,
as applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Purchase Date, and continue
all Offering Periods then in effect, or (y) that the Company shall make a pro
rata allocation of the shares available for purchase on such Offering Date or
Purchase Date, as applicable, in as uniform a manner as shall be practicable and
as it shall determine in its sole discretion to be equitable among all
participants exercising options to purchase Common Stock on such Purchase Date,
and terminate any or all Offering Periods then in effect pursuant to Section 20
below. The Company may make pro rata allocation of the Shares available on the
Offering Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional Shares for issuance
under the Plan by the Company's stockholders subsequent to such Offering Date.

(b) The participant shall have no interest or voting right in Shares
covered by his or her option until such option has been exercised.

(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.

14. ADMINISTRATION. The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan.

15. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a beneficiary who
is to receive any Shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of a
Purchase Period but prior to delivery to him or her of such Shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Purchase Date of an Offering Period. If
a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.

(b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such Shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such Shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.

-7-
<PAGE>

16. TRANSFERABILITY. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 15) by the participant. Any such attempt
at assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.

17. USE OF FUNDS. All Contributions received or held by the Company under
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.

18. REPORTS. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of Contributions,
the per Share Purchase Price, the number of Shares purchased and the remaining
cash balance, if any.

19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.

(a) ADJUSTMENT. Subject to any required action by the stockholders of
the Company, the number of Shares covered by each option under the Plan which
has not yet been exercised and the number of Shares which have been authorized
for issuance under the Plan but have not yet been placed under option
(collectively, the "Reserves"), as well as the maximum number of shares of
Common Stock which may be purchased by a participant in a Purchase Period, the
number of shares of Common Stock set forth in Section 13(a)(i) above, and the
price per Share of Common Stock covered by each option under the Plan which has
not yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common Stock
(including any such change in the number of Shares of Common Stock effected in
connection with a change in domicile of the Company), or any other increase or
decrease in the number of Shares effected without receipt of consideration by
the Company; provided however that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to an option.

(b) CORPORATE TRANSACTIONS. In the event of a dissolution or
liquidation of the Company, any Purchase Period and Offering Period then in
progress will terminate immediately prior to the consummation of such action,
unless otherwise provided by the Board. In the event of a Corporate Transaction,
each option outstanding under the Plan shall be assumed or an equivalent option
shall be substituted by the successor corporation or a parent or Subsidiary of
such successor corporation. In the event that the successor corporation refuses
to assume or substitute for outstanding options, each Purchase Period and
Offering Period then in progress shall be shortened and a new Purchase Date
shall be set (the "New Purchase Date"), as of which

-8-
<PAGE>

date any Purchase Period and Offering Period then in progress will terminate.
The New Purchase Date shall be on or before the date of consummation of the
transaction and the Board shall notify each participant in writing, at least ten
(10) days prior to the New Purchase Date, that the Purchase Date for his or her
option has been changed to the New Purchase Date and that his or her option will
be exercised automatically on the New Purchase Date, unless prior to such date
he or she has withdrawn from the Offering Period as provided in Section 10. For
purposes of this Section 19, an option granted under the Plan shall be deemed to
be assumed, without limitation, if, at the time of issuance of the stock or
other consideration upon a Corporate Transaction, each holder of an option under
the Plan would be entitled to receive upon exercise of the option the same
number and kind of shares of stock or the same amount of property, cash or
securities as such holder would have been entitled to receive upon the
occurrence of the transaction if the holder had been, immediately prior to the
transaction, the holder of the number of Shares of Common Stock covered by the
option at such time (after giving effect to any adjustments in the number of
Shares covered by the option as provided for in this Section 19); provided
however that if the consideration received in the transaction is not solely
common stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the
option to be solely common stock of the successor corporation or its parent
equal in Fair Market Value to the per Share consideration received by holders of
Common Stock in the transaction.

The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per Share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of Shares of its outstanding Common
Stock, and in the event of the Company's being consolidated with or merged into
any other corporation.

20. AMENDMENT OR TERMINATION.

(a) The Board may at any time and for any reason terminate or amend
the Plan. Except as provided in Section 19, no such termination of the Plan may
affect options previously granted, provided that the Plan or an Offering Period
may be terminated by the Board on a Purchase Date or by the Board's setting a
new Purchase Date with respect to an Offering Period and Purchase Period then in
progress if the Board determines that termination of the Plan and/or the
Offering Period is in the best interests of the Company and the stockholders or
if continuation of the Plan and/or the Offering Period would cause the Company
to incur adverse accounting charges as a result of a change after the effective
date of the Plan in the generally accepted accounting rules applicable to the
Plan. Except as provided in Section 19 and in this Section 20, no amendment to
the Plan shall make any change in any option previously granted which adversely
affects the rights of any participant. In addition, to the extent necessary to
comply with Rule 16b-3 under the Exchange Act, or under Section 423 of the Code
(or any successor rule or provision or any applicable law or regulation), the
Company shall obtain stockholder approval in such a manner and to such a degree
as so required.

-9-
<PAGE>

(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods and Purchase
Periods, limit the frequency and/or number of changes in the amount withheld
during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from
the participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.

21. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

22. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, applicable state securities laws and the requirements of
any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

23. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective upon the
IPO Date. It shall continue in effect for a term of twenty (20) years unless
sooner terminated under Section 20.

24. ADDITIONAL RESTRICTIONS OF RULE 16B-3. The terms and conditions of
options granted hereunder to, and the purchase of Shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the Shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.

-10-
<PAGE>

PHONE.COM, INC.

1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT

New Election ______
Change of Election ______

1. I, ________________________, hereby elect to participate in the
Phone.com, Inc. 1999 Employee Stock Purchase Plan (the "Plan") for the
Offering Period ______________, ____ to _______________, ____, and subscribe to
purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.

2. I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 20% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).

3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan. I further understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Purchase
Date of each Offering Period unless I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose.

4. I understand that I may discontinue at any time prior to the Purchase
Date my participation in the Plan as provided in Section 10 of the Plan. I also
understand that I can increase or decrease the rate of my Contributions on one
occasion only with respect to either an increase or decrease during any
Purchase Period by completing and filing a new Subscription Agreement with such
increase or decrease taking effect as of the beginning of the calendar month
following the date of filing of the new Subscription Agreement, if filed at
least ten (10) business days prior to the beginning of such month. Further, I
may change the rate of deductions for future Offering Periods by filing a new
Subscription Agreement, and any such change will be effective as of the
beginning of the next Offering Period. In addition, I acknowledge that, unless I
discontinue my participation in the Plan as provided in Section 10 of the Plan,
my election will continue to be effective for each successive Offering Period.
<PAGE>

5. I have received a copy of the Company's most recent description of the
Plan and a copy of the complete "Phone.com, Inc. 1999 Employee Stock
Purchase Plan." I understand that my participation in the Plan is in all
respects subject to the terms of the Plan.

6. Shares purchased for me under the Plan should be issued in the name(s)
of (name of employee or employee and spouse only):

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

7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:

NAME: (Please print)
------------------------------------
(First) (Middle) (Last)

- -------------------- ------------------------------------
(Relationship) (Address)

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

8. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Offering Date (the first day of the
Offering Period during which I purchased such shares) or within 1 year after the
Purchase Date, I will be treated for federal income tax purposes as having
received ordinary compensation income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares on the
Purchase Date over the price which I paid for the shares, regardless of whether
I disposed of the shares at a price less than their fair market value at the
Purchase Date. The remainder of the gain or loss, if any, recognized on such
disposition will be treated as capital gain or loss.

I hereby agree to notify the Company in writing within 30 days after
the date of any such disposition, and I will make adequate provision for
federal, state or other tax withholding obligations, if any, which arise upon
the disposition of the Common Stock. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to the sale or early
disposition of Common Stock by me.

9. If I dispose of such shares at any time after expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received compensation income only to the extent of
an amount equal to the lesser of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I paid for
the shares under the option, or (2) 15% of the fair market value of the

-2-
<PAGE>

shares on the Offering Date. The remainder of the gain or loss, if any,
recognized on such disposition will be treated as capital gain or loss.

I understand that this tax summary is only a summary and is subject to
change. I further understand that I should consult a tax advisor concerning the
tax implications of the purchase and sale of stock under the Plan.

10. I hereby agree to be bound by the terms of the Plan. The effectiveness
of this Subscription Agreement is dependent upon my eligibility to participate
in the Plan.

SIGNATURE:
------------------------------------

SOCIAL SECURITY #:
----------------------------

DATE:
-----------------------------------------

SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):

- ----------------------------------------------
(Signature)

- ----------------------------------------------
(Print name)

-3-
<PAGE>

PHONE.COM INC.

1999 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

I, __________________________, hereby elect to withdraw my participation in
the Phone.com, Inc. 1999 Employee Stock Purchase Plan (the "Plan") for the
Offering Period that began on _________ ___, _____. This withdrawal covers all
Contributions credited to my account and is effective on the date designated
below.

I understand that all Contributions credited to my account will be paid to
me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.

The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.

Dated:
---------------------- ----------------------------------------
Signature of Employee

----------------------------------------
Social Security Number

<PAGE>

Exhibit 21

SUBSIDIARIES

Name Jurisdiction
- ---- ------------
<S> <C>
Phone.com (Europe) Ltd. United Kingdom

Phone.com Japan K.K. Japan

</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use of our form of report included herein and to the
references to our firm under the headings "Experts" and "Selected Consolidated
Financial Data" in the Prospectus.

/s/ KPMG LLP

Mountain View, California

May 21, 1999