AETHER SYSTEMS INC, S-1, 1999-08-20

AETHER SYSTEMS INC
S-1, 1999-08-20

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 20, 1999.

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

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------

FORM S-1

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------------------

AETHER SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 7373 52-2186634
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>

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

11460 CRONRIDGE DRIVE
OWINGS MILLS, MARYLAND 21117
(410) 654-6400
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
----------------------

DAVID S. OROS
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
11460 CRONRIDGE DRIVE
OWINGS MILLS, MARYLAND 21117
(410) 654-6400
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
----------------------

with copies to:

<TABLE>
<S> <C>
GEORGE P. STAMAS, ESQ. EVE N. HOWARD, ESQ.
ROGER J. PATTERSON, ESQ. HOGAN & HARTSON L.L.P.
WILMER, CUTLER & PICKERING 555 13TH STREET, N.W.
2445 M STREET, N.W. WASHINGTON, D.C. 20004
WASHINGTON, D.C. 20037 (202) 637-5600
(202) 663-6000
</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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE (1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, par value $.01 per share.................. $75,000,000 $20,850
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.

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

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

EXPLANATORY NOTE

This registration statement contains two separate prospectuses. The first
prospectus relates to a public offering in the United States and Canada of an
aggregate of shares of common stock. The second prospectus relates to
a concurrent offering outside the United States and Canada of an aggregate of
shares of common stock. The prospectus for each of the offerings will
be identical with the exception of the alternate front and back cover pages for
the offering outside the United States and Canada. The alternate pages appear in
this registration statement immediately following the front and back cover pages
for the offering in the United States and Canada.
<PAGE> 3

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
PRELIMINARY PROSPECTUS DATED AUGUST 20, 1999
PROSPECTUS
- ----------------

[AETHER LOGO]

COMMON STOCK
------------------------

This is Aether Systems, Inc.'s initial public offering of common stock.
The U.S. underwriters will offer shares in the United States and Canada and
the international managers will offer shares outside of the United States
and Canada.

We expect the public offering price to be between $____ and $____ per
share. Currently, no public market exists for the shares. After pricing of the
offering, we expect that the common stock will be quoted on the Nasdaq National
Market under the symbol "AETH."

INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
------------------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public
Offering
Price... $ $

Underwriting
Discount... $ $

Proceeds,
before
expenses,
to
Aether
Systems... $ $
</TABLE>

The U.S. underwriters may also purchase up to an additional shares
at the public offering price, less the underwriting discount, within 30 days
from the date of this prospectus to cover over-allotments. The international
managers may similarly purchase up to an aggregate of an additional
shares.

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

We expect that the shares of common stock will be ready for delivery in
New York, New York on or about , 1999.
------------------------
MERRILL LYNCH & CO.
BANCBOSTON ROBERTSON STEPHENS

DONALDSON, LUFKIN & JENRETTE

U.S. BANCORP PIPER JAFFRAY

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

The date of this prospectus is , 1999
<PAGE> 4

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 20, 1999
PROSPECTUS
- ----------------

[AETHER LOGO]

COMMON STOCK
----------------------

This is Aether Systems, Inc.'s initial public offering of common stock.
The international managers will offer shares outside the United States and
Canada and the U.S. underwriters will offer shares in the United States and
Canada.

INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
----------------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public Offering Price............................ $ $

Underwriting Discount............................ $ $

Proceeds, before expenses, to Aether Systems..... $ $
</TABLE>

The international managers may also purchase up to an additional
shares at the public offering price, less the underwriting discount, within 30
days from the date of this prospectus to cover over-allotments. The U.S.
underwriters may similarly purchase up to an aggregate of an additional
shares.

We expect that the shares of common stock will be ready for delivery in
New York, New York on or about , 1999.
----------------------
MERRILL LYNCH INTERNATIONAL
BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LTD.

DONALDSON, LUFKIN & JENRETTE INTERNATIONAL

U.S. BANCORP PIPER JAFFRAY INTERNATIONAL

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

The date of this prospectus is , 1999
<PAGE> 5

DESCRIPTION OF INSIDE FRONT COVER: This inside front cover contains the
Aether Systems logo and the slogan: "Real Intelligence. Real Time." Below the
logo and slogan is the following text:

"What Do We Do? We're a leading provider of wireless services and systems
connecting people to real-time data communications and transactions using
wireless handheld devices." Directly beneath this statement are the following
paragraphs of text, contained in three separate boxes with accompanying pictures
or illustrations.

[Graphics description: Photo of Palm device showing Reuters MarketClip] "We
develop and provide complete wireless trading services for online investors and
financial professionals. Our current services include the Discover Brokerage
TradeRunner, which lets users trade securities, look up quotes and get market
news and alerts on their Palm personal organizers. We also offer Reuters
MarketClip, a market quotes, alerts and news service available on Palm or
Windows CE devices. We're also in the process of acquiring Mobeo, Inc., which
provides real-time price quotes and news headlines for foreign exchange,
government securities and commodities markets on pagers."

[Graphics description: AIM logo] "We license our AIM software platform to
companies that need a low-cost, fast and secure bridge between their own
applications and wireless devices. Using AIM's software development kit, their
developers follow step-by-step guides that help them to extend their companies'
applications to multiple wireless environments, without getting tangled in the
complexities of wireless protocols."

[Graphics description: OpenSky logo] "OpenSky, our joint venture with 3Com
Corporation is developing wireless e-mail using any address, smart Web access
and e-commerce for handheld devices. OpenSky will be our conduit to the emerging
mass market for wireless data. We also plan to offer these new services in our
own products."

DESCRIPTION OF INSIDE GATEFOLD: At the top of the two-panel foldout is the
following text: "How Do We Do It? Wireless data is complex. We handle every
aspect of bringing a company's desktop applications to a variety of wireless
handheld devices."

[Graphics description: Below the text is a graphic depicting our business,
roughly portraying the flow of information from our customers' data sources,
through our software and network and customer support center, to various
wireless data networks and finally to various wireless handheld devices. From
left to right, this depiction shows:

- - Icons, with brief text labels, representing the three major business segments
Aether is targeting: Financial services, corporate industries such as health
care, transportation and field-force automation and OpenSky, a company Aether
jointly owns with 3Com that will provide wireless Internet access, e-mail and
e-commerce transactions.

- - Each of the above icons connects to a box with the Aether logo. Surrounding
the logo will be three separate boxes, each describing a different component
of our offerings: "Software Development and Engineering;" "Secure, Reliable
Network Operations Center" and "Complete Customer Support."] The text for
these components follows:

"Software Development and Engineering.

--We have a growing staff of engineers who have worked an average of ten
years in the wireless data field.

--Our AIM software platform eases the job of customizing a company's
software applications for wireless handheld devices. AIM also enhances the
speed, cost-efficiency and security of data transmissions over wireless
networks.

--We can develop systems for almost any wireless network, device or
corporate operating system--including the latest WAP mobile phone standard and
third-generation, high-speed wireless networks.
<PAGE> 6

Secure, Reliable Network Operations Center.

--Our network operations center in Owings Mills, Maryland relieves our
customers of the burden of managing a highly complex wireless data system.

--We maintain secure, redundant high-speed links to customers' data source
and various wireless networks. Our restricted-access facility also has back-up
power sources and around-the-clock monitoring.

--Our level of security and reliability has met with the approval of
Reuters, Discover Brokerage and the Chicago Board of Trade.

Complete Customer Support.

--We can handle all sales, billing and support for the wireless services we
provide to our customers and their end users.

--Our customer support staff is trained to handle inquiries about each of
our services, device features and wireless communications.

--We handle inventory, activation, shipping, warranties and repairs for the
devices we provide."

- - [Graphics description: From the Aether box, lines pointing further to the
right will connect to icons of radio antennas, depicting the various wireless
data networks through which Aether delivers its services. These antennas will
carry the text: "today's networks" and "tomorrow's networks" to convey that
Aether's technology is adaptable to future standards.]

- - [Graphics description: From the antenna icons, curved lines will depict radio
waves radiating out to photographs of the various wireless handheld devices
through which Aether delivers services. These devices will include: A generic
laptop computer of no particular brand; one or more Palm Computing devices, a
Windows CE notebook computer, a RIM 950 alphanumeric two-way pager and a
wireless phone that is compatible with the Wireless Applications Protocol. The
following text labels will accompany the photographs: "Laptop computers,"
"Palm Computing devices," "Windows CE devices," "Two-way pagers," "WAP
phones."]

[The following text will appear on the bottom of the inside front cover.]

We use market data and industry forecasts throughout this prospectus, which
we have obtained from internal surveys, market research, publicly available
information and industry publications. Industry publications generally state
that the information they provide has been obtained from sources believed to be
reliable, but that the accuracy and completeness of such information is not
guaranteed. Similarly, we believe that the surveys and market research we or
others have performed are reliable, but we have not independently verified this
information. Neither we nor any of the underwriters represents that any such
information is accurate.

We own applications for federal registration or common law rights in the
following trademarks: AirBroker(R), Aether Technologies(TM), Aether(TM) and our
logo. Reuters and Reuters MarketClip(TM) are the property of Reuters Group plc.
Discover Brokerage TradeRunner(TM) is the property of Discover Brokerage. This
prospectus also includes trade dress, trade names and trademarks of other
companies. All other brand names or trademarks appearing in this prospectus are
the property of their respective holders.
<PAGE> 7

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 7
Use of Proceeds............................................. 16
Dividend Policy............................................. 16
Capitalization.............................................. 17
Dilution.................................................... 18
Selected Consolidated Financial Data........................ 19
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Business.................................................... 29
Management.................................................. 43
Transactions Between Aether and its Officers, Directors or
Significant Stockholders.................................. 52
Principal Stockholders...................................... 56
Description of Capital Stock................................ 58
Shares Eligible for Future Sale............................. 60
Underwriting................................................ 62
Legal Matters............................................... 65
Experts..................................................... 65
Where You Can Find More Information......................... 65
Index to Consolidated Financial Statements.................. F-1
</TABLE>

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

FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements relating to, among
other things, future results of operations, our plans and expectations regarding
our future services and operations and our investment in OpenSky, and general
industry and business conditions applicable to Aether. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to a number of
risks, uncertainties and assumptions about Aether, including those we describe
in the "Risk Factors" section of this prospectus. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
prospectus might not occur. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
----------------------

You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operations and prospects may have changed since that date.

All references to "we," "us," "our" or "Aether" in this prospectus means
Aether Systems, Inc. and its subsidiaries.

2
<PAGE> 8

PROSPECTUS SUMMARY

This summary is not complete and does not contain all the information that
may be important to you. You should read the entire prospectus carefully,
including the financial data and related notes, before making an investment
decision.

Aether is presently organized as a Delaware limited liability company known
as Aether Technologies International, L.L.C. Prior to the closing of this
offering, this limited liability company will merge into Aether Systems, Inc., a
newly-formed Delaware corporation. Unless otherwise indicated, all information
in this prospectus gives effect to our conversion from a limited liability
company to a corporation through this merger and the related exchange of units
in the limited liability company into shares of common stock of the corporation.

OUR COMPANY

We are a leading provider of wireless data services and systems enabling
people to use wireless handheld devices for real-time data communications and
transactions. We design, develop, sell and support these services using our
engineering expertise, our software platform and our customer service and
network operations center. Our initial focus is on the financial services
industry, including online trading. We currently offer the Reuters MarketClip
service for financial market price quotes, alerts and information and
TradeRunner, a real-time wireless trading and financial information service
offered to the online customers of Discover Brokerage. We are developing similar
services for other major financial institutions, including Charles Schwab. We
have agreed to acquire Mobeo, Inc., a leading provider of wireless foreign
exchange information services. We are also targeting other industries, initially
by licensing our Aether Intelligent Messaging software platform, known as AIM.
Finally, OpenSky, our new venture with 3Com Corporation, will pursue the broader
consumer and business mass market for wireless Internet access, e-mail and
e-commerce transactions.

The market for wireless data applications is relatively undeveloped and has
been hindered by significant technological challenges, including incompatible
devices and networks, slow data speeds and uncertain security. These
complexities have given us the opportunity to establish a position as an early
market leader in wireless data services.

We have all the resources necessary to provide our customers with complete
wireless data systems. We have a large, experienced development team, with 27
engineers who have worked an average of ten years in the wireless data field. We
have developed the AIM software platform, which serves as a bridge to integrate
diverse corporate in-house data systems with a wide variety of wireless carrier
networks and end user devices. We operate our own high-security network
operations center, which connects customer and other data to wireless networks,
and maintain our own customer service center. We have also cultivated close
relationships with major wireless network carriers, including AT&T Wireless
Services, Bell Atlantic Mobile and BellSouth Wireless Data and mobile equipment
manufacturers such as 3Com, Ericsson LM and Novatel Wireless, Inc.

Our strategy. Our strategy is to become the dominant provider of wireless
data services and systems by using our engineering expertise, our customer
service and network operations center and our other resources to offer
businesses complete systems for wireless data communications and transactions.
We currently seek to maximize recurring revenue by extending online trading and
financial information services to personal organizers, notebook computers,
pagers and mobile phones. Our strategy includes the key elements set forth
below.

- Develop the market for existing and new products in the financial
services sector.

- Expand into new industries and international markets.

- Pursue mass-market opportunities, including wireless Internet access,
e-mail and e-commerce transactions.

3
<PAGE> 9

- Expand our customer base and strengthen the Aether brand through enhanced
sales and marketing efforts.

- Maintain and strengthen our strategic relationships with suppliers and
customers.

- Use the expertise we gain by providing engineering services to develop
new Aether products.

- Pursue selective acquisitions to expand our capabilities.

Our services. Our services currently include delivering real-time wireless
financial market information and trading capabilities, licensing the AIM
software platform to corporations seeking to add wireless data capabilities and
providing engineering services for the design, development and support of
wireless data systems. The following table summarizes the services we currently
offer or are developing and, where applicable, the date initiated.

<TABLE>
<CAPTION>
SERVICE/CUSTOMER TARGET MARKET SERVICE DESCRIPTION
- --------------------------------- -------------------------- ---------------------------------------------------
<S> <C> <C>
WIRELESS FINANCIAL INFORMATION
AND TRADING SERVICES
Reuters MarketClip Individual investors Market quotes, news and alerts
(March 1998)
Chicago Board of Trade PitViper Floor traders Trade recording, commodities quotes, news and
(Trial began July 1999) alerts
Discover Brokerage TradeRunner Individual investors Equities and options trading, market quotes, news
(August 1999) and alerts
Charles Schwab Individual investors Equities and options trading, market quotes, news
(Under development) and alerts
Bear Stearns Brokers of firms clearing Customer account access and trading, market quotes,
(Under development) through Bear Stearns news and alerts
Mobeo services Financial market Foreign exchange, commodities and other quotes,
(Pending acquisition) professionals news and alerts

AIM LICENSING
Riverbed Technologies Software developers Wireless data applications development
(August 1999)

ENGINEERING SERVICES
ORBCOMM Global L.P. Transportation industry Develop location-tracking capabilities for towing
(September 1998) firms
Ericsson Industries needing Develop financial data services using two-way
(July 1999) real-time information pagers
OpenSky Consumer and business mass Develop Internet access, e-mail and e-commerce
(August 1999) market capabilities for wireless handheld devices
</TABLE>

Our principal executive offices are located at 11460 Cronridge Drive,
Owings Mills, Maryland 21117, and our telephone number is (410) 654-6400. We
maintain a Web site at www.aethersystems.com. Information contained in our Web
site does not constitute a part of this prospectus.

4
<PAGE> 10

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by us:
U.S. offering.............................. shares
International offering..................... shares
Total.............................. shares
Total common stock to be outstanding after
the offerings.............................. shares
Use of proceeds.............................. We intend to use approximately $12.3 million
of the net proceeds to repay indebtedness we
expect to incur to purchase Mobeo, Inc. and
approximately $2.5 million of the net
proceeds to exercise a warrant to increase
our ownership in OpenSky from 26% to up to
33% on a fully diluted basis. We currently
intend to use the remaining net proceeds from
the offering for general corporate purposes,
which may include some or all of the
following:
- expand our network operations center;
- enhance our sales and marketing activities;
- fund operating losses and working capital
needs;
- enhance Mobeo service offerings;
- fund potential future acquisitions; and
- maintain our interest in OpenSky.
Risk factors................................. See "Risk Factors" for a discussion of
factors you should consider carefully before
deciding to invest in shares of our common
stock.
Proposed Nasdaq National Market symbol....... AETH
</TABLE>

5
<PAGE> 11

SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except share and per share data)

The following table summarizes our statements of operations for each of the
years ended December 31, 1996, 1997 and 1998 and for the six-month periods ended
June 30, 1998 and 1999, and our balance sheet as of June 30, 1999. The pro forma
consolidated financial information gives effect to the pending Mobeo
acquisition. The pro forma net loss per share information gives effect to our
conversion from a limited liability company to a corporation. The pro forma
consolidated as adjusted balance sheet information gives effect to the Mobeo
acquisition and the conversion to a corporation plus the offering of shares
covered by this prospectus and the application of the net proceeds as described
in "Use of Proceeds."

We have provided the pro forma consolidated financial information and the
pro forma consolidated as adjusted balance sheet for informational purposes only
and you should not assume that our results would actually have been as shown if
we had acquired Mobeo, converted to a corporation or completed the offering on
the assumed dates, or that the information projects what our results will be if
we complete the Mobeo acquisition, convert to a corporation or complete the
offering. The pro forma consolidated statement of operations information assumes
that the transactions occurred on January 1, 1998, and the pro forma
consolidated balance sheet information assumes that the transactions occurred on
June 30, 1999. See our and Mobeo's financial statements and notes to those
statements included elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------------------- --------------------------------
HISTORICAL 1998 HISTORICAL 1999
-------------------------- PRO FORMA ----------------- PRO FORMA
1996 1997 1998 CONSOLIDATED 1998 1999 CONSOLIDATED
------ ------- ------- ------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Subscriber revenue.............................. $ -- $ 161 $ 549 $ 9,130 $ 125 $ 599 $ 5,646
Engineering services revenue.................... 1,355 1,625 963 963 436 188 188
------ ------- ------- ------- ------- ------- -------
Total revenue................................... 1,355 1,786 1,512 10,093 561 787 5,834
Gross profit..................................... 348 493 411 5,951 190 136 3,426
Total operating expenses......................... 601 2,801 5,178 12,400 2,316 4,597 8,464
------ ------- ------- ------- ------- ------- -------
Operating loss................................... (253) (2,308) (4,767) (6,449) (2,126) (4,461) (5,038)
------ ------- ------- ------- ------- ------- -------
Net loss......................................... $(417) $(2,673) $(4,693) $(6,384) $(2,119) $(4,394) $(5,007)
====== ======= ======= ======= ======= ======= =======
Pro forma net loss per share--basic and
diluted.........................................
====== ======= ======= ======= ======= ======= =======
Pro forma weighted average shares used in
computing net loss per share--basic and
diluted.........................................
====== ======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------------------------
PRO FORMA
PRO FORMA CONSOLIDATED
ACTUAL CONSOLIDATED(1) AS ADJUSTED
------ --------------- ------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 841 $ 1,399
Working capital (deficit).................................. 3,674 (9,842)
Total assets............................................... 5,867 20,242
Total debt................................................. -- 12,330
Members' capital........................................... 4,841 4,841
Stockholders' equity....................................... -- --
</TABLE>

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

(1) We intend to obtain financing in the form of a senior secured credit
facility to fund the Mobeo acquisition.

6
<PAGE> 12

RISK FACTORS

Investing in our common stock involves risks. You should carefully
consider the following risks together with the other information contained in
this prospectus before deciding to buy our common stock. If any of the following
risks or uncertainties actually occur, our business could be adversely affected.
If that happens, the price of our common stock could decline, and you could lose
all or part of your investment. The risks described below are not the only ones
facing our company. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial also could harm our business, financial
condition and operating results.

OUR FUTURE PROFITABILITY IS UNCERTAIN BECAUSE WE HAVE A LIMITED OPERATING
HISTORY.

We only have a limited operating history on which you can evaluate our
business, financial condition and operating results. We commenced operations in
January 1996 and until March 1997 all of our revenue came from engineering
services and not from the wireless data services we now provide. We face a
number of risks encountered by early stage companies, including:

- our substantial dependence on services with only limited market
acceptance to date;

- our dependence on a limited number of customers and the uncertain market
for our current wireless data services;

- the uncertainty of market acceptance of the data communication products
we or our business customers may develop;

- our ability to expand our marketing, sales, engineering and support
organizations, as well as our distribution channels;

- our ability to manage expanding operations;

- our ability to attract and retain management and technical personnel; and

- our ability to anticipate and respond to market competition.

We may not be successful in addressing these risks, and if we are not successful
our business could be adversely affected.

WE HAVE HISTORICALLY INCURRED LOSSES AND THESE LOSSES MAY INCREASE IN THE
FUTURE.

We reported net losses of $416,980, $2.7 million and $4.7 million for the
years ended December 31, 1996, 1997 and 1998, respectively, and a net loss of
$4.4 million for the six months ended June 30, 1999. Because we expect to
continue to incur significant sales and marketing, systems development and
administrative expenses, we will need to generate significant revenue 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 the factors specified in "Risk Factors" as well as on a number of factors
outside of our control, including the extent to which:

- our competitors announce and develop, or lower the prices of, competing
products;

- some of the information we provide for a fee may become available free of
charge;

- wireless network carriers, data providers and manufacturers of wireless
handheld devices dedicate resources to selling our services; and

- prices for our services decrease as a result of reduced demand or
competitive pressures.

As a result, we may not be able to increase revenue or achieve profitability on
a quarterly or annual basis.

7
<PAGE> 13

THE MARKET FOR OUR SERVICES IS NEW AND HIGHLY UNCERTAIN.

The markets for wireless data services and online trading are still
emerging and continued growth in demand for and acceptance of these services
remains uncertain. Current barriers to market acceptance of these services
include cost, reliability, functionality and ease of use. We cannot be certain
that these barriers will be overcome. Our competitors may develop alternative
wireless data communications systems that gain broader market acceptance than
our systems. If the market for our services does not grow or grows more slowly
than we currently anticipate, our business, financial condition or operating
results could be materially adversely affected.

OUR PENDING ACQUISITION OF MOBEO, OUR ONLY ACQUISITION TO DATE, MAY ADVERSELY
AFFECT OUR BUSINESS IF WE DO NOT SUCCESSFULLY INTEGRATE MOBEO OR IF THE COSTS
AND MANAGEMENT RESOURCES WE EXPEND IN CONNECTION WITH THE INTEGRATION EXCEED OUR
EXPECTATIONS.

On August 19, 1999, we entered into a definitive agreement to purchase
Mobeo, Inc. We cannot complete the Mobeo acquisition unless we obtain financing.
We cannot be sure that we will satisfy this or other conditions.

Our acquisition of Mobeo is our only acquisition to date. Mobeo's revenue
was $8.6 million for the year ended December 31, 1998, which is more than five
times our revenue for that period. We expect that the Mobeo acquisition will
have a continuing, significant impact on our business, financial condition and
operating results. The value of Mobeo may be less than the amount we paid for it
as a result of the following factors:

- decline of Mobeo's position in the foreign exchange information services
market; and

- decline of the foreign exchange information services market in general.

Further, we cannot guarantee that we will realize the benefits or strategic
objectives we are seeking to obtain by acquiring Mobeo. In addition, costs
associated with this acquisition that exceed our expectations and the other
factors listed in the next risk factor could have a material adverse effect on
our business, financial condition or operating results.

WE MAY ACQUIRE OR MAKE INVESTMENTS IN TECHNOLOGIES OR COMPANIES IN THE FUTURE
AND THESE ACQUISITIONS OR INVESTMENTS COULD CAUSE LOSS OF VALUE TO OUR
STOCKHOLDERS AND DISRUPTION OF OUR BUSINESS.

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

- failure to assimilate the acquired assets with our pre-existing business;

- the price we pay may exceed the value we eventually realize;

- loss of share value to our existing stockholders as a result of issuing
equity securities as part or all of the purchase price;

- potential loss of key employees from either our pre-existing business or
the acquired business;

- entering into markets in which we have little or no prior experience;

- diversion of management's attention from other business concerns;

- assumption of unanticipated liabilities related to the acquired assets;
and

- the business or technologies we acquire or in which we invest, such as
OpenSky, may have limited operating histories and may be subject to many
of the same risks we are.

8
<PAGE> 14

OUR FUTURE BUSINESS PROSPECTS DEPEND IN PART ON OUR ABILITY TO MAINTAIN AND
IMPROVE OUR SERVICES AS WELL AS DEVELOP NEW SERVICES.

We believe that our future business prospects depend in part on our ability
to maintain and improve our current services and to develop new ones on a timely
basis. Our services will have to achieve market acceptance, maintain
technological competitiveness and meet an expanding range of customer
requirements. As a result of the complexities inherent in our service offerings,
major new wireless data services and service enhancements require long
development and testing periods. We may experience difficulties that could delay
or prevent the successful development, introduction or marketing of new services
and service enhancements. Additionally, our new services and service
enhancements may not achieve market acceptance.

OUR BUSINESS COULD SUFFER IF THERE IS A DECLINE IN SECURITIES TRADING.

We currently earn most of our revenue from services that provide financial
information and wireless trading capability. If there is a prolonged decline in
the overall level of securities trading, or online trading in particular, our
operating results may decline. A decline in securities trading may result from:

- loss of confidence in the reliability or security of online trading
systems;

- government regulation of the securities industry or online trading; or

- a downturn in the stock market.

IF WE DO NOT RESPOND EFFECTIVELY AND ON A TIMELY BASIS TO RAPID TECHNOLOGICAL
CHANGE, OUR BUSINESS COULD SUFFER.

The wireless and data communications industries are characterized by
rapidly changing technologies, industry standards, customer needs and
competition, as well as by frequent new product and service introductions. Our
services are integrated with wireless handheld devices and the computer systems
of our corporate customers. Our services must also be compatible with the data
networks of wireless carriers. We must respond to technological changes
affecting both our customers and suppliers. We may not be successful in
developing and marketing, on a timely and cost-effective basis, new services
that respond to technological changes, evolving industry standards or changing
customer requirements. Our success will depend, in part, on our ability to
accomplish all of the following in a timely and cost-effective manner:

- effectively use and integrate new technologies;

- continue to develop our technical expertise;

- enhance our wireless data, engineering and system design services;

- develop applications for new wireless networks and services;

- develop new services and services that meet changing customer needs;

- advertise and market our services; and

- influence and respond to emerging industry standards and other changes.

WE DEPEND UPON WIRELESS NETWORKS OWNED AND CONTROLLED BY OTHERS. IF WE DO NOT
HAVE CONTINUED ACCESS TO SUFFICIENT CAPACITY ON RELIABLE NETWORKS, OUR BUSINESS
WILL SUFFER.

Our success partly depends on our ability to buy sufficient capacity on the
networks of wireless carriers such as AT&T Wireless Services or Bell Atlantic
Mobile and on the reliability and security of their systems. We depend on these
companies to provide uninterrupted and "bug free" service and would be adversely
affected if they failed to provide the required capacity or needed level of
service. In addition, we could be materially adversely affected if wireless
carriers were to increase the prices of their services. Our existing agreements
with the wireless carriers generally have one-year terms. Some of these wireless
carriers are, or could become, our competitors.

9
<PAGE> 15

WE DEPEND ON THIRD PARTIES, PARTICULARLY DISCOVER BROKERAGE, FOR THE MARKETING
AND SALES OF SOME OF OUR SERVICES.

We rely substantially on the efforts of others to market and sell some of
our wireless data communications services, including wireless trading with
Discover Brokerage. We cannot control how those who sell and market our service
perform and we cannot be certain that their performance will be satisfactory. If
the number of customers we obtain through these efforts is substantially lower
than we expect for any reason, this would have a material adverse effect on our
business, prospects, operating results and financial condition.

OUR FAILURE TO DEVELOP RECOGNITION FOR THE AETHER BRAND COULD HURT OUR BUSINESS.

Our sales and marketing activities to date have been limited. Our sales and
marketing expenses were $840,455 for the year ended December 31, 1998 and
$555,428 for the six months ended June 30, 1999. We intend to increase the
market presence of our brand over time, which will require us to increase the
amount we spend on sales and marketing. After we complete the Mobeo acquisition,
we expect to market Mobeo's products under their existing brands. Our business
could be adversely affected if the Aether and Mobeo brands are not well received
by our customers, if our marketing efforts are not productive or if we are
otherwise unsuccessful in increasing our brand awareness. In addition, we do not
have any federal trademark registrations in the name "Aether" or "AIM" and we
may not be able to obtain such registrations due to conflicting marks or
otherwise.

WE MAY FAIL TO SUPPORT OUR ANTICIPATED GROWTH IN OPERATIONS.

We must continue to develop and expand our systems and operations as the
number of users and the amount of information they wish to receive, as well as
the number of services we offer, increases. The expansion and adaptation of our
customer service and network operations center requires substantial financial,
operational and management resources. We may be unable to expand our operations
for one or more of the following reasons:

- we may not be able to locate or hire at reasonable compensation rates
qualified engineers and other employees necessary to expand our capacity;

- we may not be able to obtain the hardware necessary to expand our
capacity;

- we may not be able to expand our customer service, billing and other
related support systems; and

- we may not be able to obtain sufficient additional capacity from wireless
carriers.

Due to the limited deployment of our services to date, the ability of our
systems and operations to connect and manage a substantially larger number of
customers while maintaining superior performance is unknown. Any failure on our
part to develop and maintain our wireless data services as we experience rapid
growth could significantly reduce demand for our services and materially
adversely affect our business, financial condition or results of operations.

WE DEPEND ON RECRUITING AND RETAINING KEY MANAGEMENT AND TECHNICAL PERSONNEL
WITH WIRELESS DATA AND 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. Competition for qualified personnel in the wireless data and software
industries is intense and finding qualified personnel with experience in both
industries is even more difficult. We believe there are only a limited number of
individuals with the requisite skills to serve in many of our key positions, and
it is becoming increasingly difficult to hire and retain these persons.
Competitors and others have in the past attempted, and may in the future
attempt, to recruit our employees. Each of our engineers has entered into a
non-compete agreement with us for a period of ten months if they leave Aether.

10
<PAGE> 16

We currently maintain a key person life insurance policy for David S. Oros,
our chairman, chief executive officer and president. We do not maintain
insurance policies for any of our other employees.

WE MAY NOT HAVE ADEQUATELY PROTECTED OUR INTELLECTUAL PROPERTY RIGHTS.

Our success substantially depends on our ability to sell services for which
we may have intellectual property rights. Although we are exploring the ability
to obtain a patent on our AIM software platform, we currently do not have
patents on any of our intellectual property, and we cannot assure you we will be
successful in protecting AIM through patent law. We rely primarily on trade
secret laws, copyright law and confidentiality agreements to protect our
intellectual property. If we are not adequately protected, other companies with
sufficient engineering expertise could quickly develop competing products which
could materially harm our business, financial condition or results of
operations.

WE MAY BE SUED BY THIRD PARTIES FOR INFRINGEMENT OF THEIR PROPRIETARY RIGHTS.

The telecommunications and 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 participants in our market increases, the possibility
of an intellectual property claim against us could increase. 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
business. Although we have not received any claims of infringement to date,
Mobeo has received at least one claim that it has infringed patents developed by
other parties. A third-party asserting infringement claims against us or our
customers with respect to our current or future products may materially
adversely affect us, for example, by requiring us to enter into costly royalty
arrangements or litigation.

WE MAY BE SUBJECT TO LIABILITY FOR TRANSMITTING INFORMATION, AND OUR INSURANCE
COVERAGE MAY BE INADEQUATE TO PROTECT US FROM THIS LIABILITY.

We may be subject to claims relating to information transmitted over
systems we develop or operate. These claims could take the form of lawsuits for
defamation, negligence, copyright or trademark infringement or other actions
based on the nature and content of the materials. Although we carry general
liability insurance, our insurance may not cover potential claims of this type
or may not be adequate to cover all costs incurred in defense of potential
claims or to indemnify us for all liability that may be imposed.

DISRUPTION OF OUR SERVICES DUE TO ACCIDENTAL OR INTENTIONAL SECURITY BREACHES
MAY ADVERSELY IMPACT OUR BUSINESS.

A significant barrier to the growth of e-commerce and wireless data
services has been the need for secure transmission of confidential information.
Our systems could be disrupted by unauthorized access, computer viruses and
other accidental or intentional actions. We may incur significant costs to
protect against the threat of security breaches or to alleviate problems caused
by such breaches. If a third-party were able to misappropriate our users'
personal or proprietary information or credit card information, we could be
subject to claims, litigation or other potential liabilities that could
materially adversely impact our business.

ANY TYPE OF SYSTEMS FAILURE COULD HARM OUR BUSINESS BY INJURING OUR REPUTATION
OR LEAD TO CLAIMS OF LIABILITY FOR DELAYED OR IMPROPER TRANSMISSION OF DATA.

Our existing wireless data services--TradeRunner, Reuters MarketClip and
its predecessor AirBroker--are dependent on real-time, continuous feeds from
Reuters Selectfeed Plus. The ability of our subscribers to make securities
trades through Discover Brokerage requires timely and uninterrupted connections
with our wireless network carriers. Any disruption from our satellite feeds or
backup landline feeds could result in delays in our subscribers' ability to
receive information or execute trades. There can

11
<PAGE> 17

be no assurance that our systems will operate appropriately if we experience a
hardware or software failure or if there is an earthquake, fire or other natural
disaster, a power or telecommunications failure, an act of God or an act of war.
A failure in our systems could cause delays in transmitting data, and as a
result we may lose customers or face litigation that could materially adversely
impact our business.

OUR ABILITY TO SELL NEW AND EXISTING SERVICES AT A PROFIT COULD BE IMPAIRED BY
COMPETITORS.

Intense competition could develop in the market for services we offer. We
developed our software using standard industry development tools. Many of our
agreements with wireless carriers, wireless handheld device manufacturers and
data providers are non-exclusive. Our competitors may use the same products and
services in competition with us. With time and capital, it would be possible for
competitors to replicate our services. Our competitors could include wireless
network carriers such as AT&T Wireless Services and Bell Atlantic Mobile,
software developers such as Microsoft Corporation and Phone.com and systems
integrators such as International Business Machines Corporation, which have
significantly greater resources than we do. Competition could cause us to reduce
our market share or force us to lower prices to unprofitable levels.

WE MAY LOSE THE OPPORTUNITY TO PURSUE DESIRABLE PROJECTS TO OPENSKY.

David S. Oros, our chairman, chief executive officer and president, also
serves as chairman of OpenSky and Janice M. Roberts, one of our nominees for
director, is a director of OpenSky. OpenSky is a separate business in which we
have an equity interest that is developing applications for wireless access to
the Internet and related applications such as wireless e-mail access. Mr. Oros
and Ms. Roberts may learn of business opportunities that are appropriate for
both OpenSky and us, and Mr. Oros and Ms. Roberts may not be required to make
those opportunities available to us rather than OpenSky. If OpenSky pursues
opportunities that we would have an interest in pursuing, our business may fail
to grow or our existing business may suffer. Mr. Oros and Ms. Roberts may also
have other conflicts of interest with Aether because of their positions with
OpenSky and OpenSky's contractual relationships with Aether and 3Com. We
describe those contracts in "Transactions between Aether and its Officers,
Directors or Significant Stockholders--OpenSky."

AN INTERRUPTION IN THE SUPPLY OF PRODUCTS AND SERVICES THAT WE OBTAIN FROM THIRD
PARTIES COULD CAUSE A DECLINE IN SALES OF OUR SERVICES.

In designing, developing and supporting our wireless data services, we rely
on wireless carriers, wireless handheld device manufacturers, content providers
and software providers. These suppliers may experience difficulty in supplying
us products or services sufficient to meet our needs or they may terminate or
fail to renew contracts for supplying us these products or services on terms we
find acceptable. Any significant interruption in the supply of any of these
products or services could cause a decline in sales of our services, unless and
until we are able to replace the functionality provided by these products and
services. Specifically, Novatel Wireless, Inc. and Sierra Wireless Inc. are our
only suppliers of wireless modems, which are an integral hardware component to
our services. It can be difficult to obtain these wireless modems and their
parts. We also depend on 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. In addition, we rely on the ability of our content
providers--Reuters, Bridge Information Systems America, the New York Stock
Exchange, Inc., the CBOT, the Nasdaq Stock Market, Inc. and the Options Price
Reporting Authority--to continue to provide us with uninterrupted access to the
news and financial information we provide to our customers. The failure of third
parties to meet these criteria, or their refusal or failure to deliver the
information for whatever reason, could materially harm our business.

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 the
length of time between our first contact with a business customer and the first
revenue from sales of services to that customer or
12
<PAGE> 18

end user. Because our services represent a significant investment for our
business customers, we spend a substantial amount of time educating them
regarding the use and benefits of our services and they, in turn, spend a
substantial amount of time performing internal reviews and obtaining capital
expenditure approvals before purchasing our services. As much as a year may
elapse between the time we approach a business customer and the time we begin to
deliver services to a customer or end user. Any delay in sales of our services
could cause our quarterly operating results to vary significantly from projected
results, which could cause our stock price to decline. In addition, we may spend
a significant amount of time and money on a potential customer that ultimately
does not purchase our services.

OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS. AS A
RESULT, PERIOD-TO-PERIOD COMPARISONS OF OUR RESULTS OF OPERATIONS ARE NOT
NECESSARILY MEANINGFUL AND SHOULD NOT BE RELIED UPON AS INDICATIONS OF FUTURE
PERFORMANCE.

Our quarterly operating results may fluctuate significantly in the future
as a result of a variety of factors, some of which are outside of our control.
These factors include:

- the demand for and market acceptance of our services;

- downward price adjustments by our competitors on services they offer
which are similar to ours;

- changes in the mix of services sold by our competitors;

- technical difficulties or network downtime affecting wireless
communications generally;

- the ability to meet any increased technological demands of our customers;
and

- economic conditions specific to our industry.

Therefore, our operating results for any particular quarter may differ
materially from our expectations or those of security analysts and may not be
indicative of future operating results. The failure to meet expectations may
cause the price of our common stock to decline.

OUR SOFTWARE 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 services quickly to keep pace
with the rapidly changing software and telecommunications markets. Software as
complex as ours is likely to contain undetected errors or defects, especially
when first introduced or when new versions are released. Our software may not be
free from errors or defects after delivery to customers have begun, which could
result in the rejection of our software or services, damage to our reputation,
lost revenue, diverted development resources and increased service and warranty
costs, any of which could materially harm our business or operating performance.

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 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. Our customers may also cease or delay purchase and
installation of new complex systems, such as our software products, as a result
of, and during, their own internal year 2000 testing. Similarly, our wireless
network carriers and suppliers could face similar year 2000 problems which could
result in a disruption in our ability to provide services.

13
<PAGE> 19

THE STOCKHOLDER AGREEMENT AMONG OUR MAJOR STOCKHOLDERS WILL HAVE THE EFFECT OF
ALLOWING OUR NEW INVESTORS TO VOTE FOR ONLY FOUR OF OUR TEN DIRECTORS.

NexGen Technologies, L.L.C., Telcom Ventures, L.L.C. and a subsidiary of
Telcom Ventures, Reuters MarketClip Holdings Sarl, a subsidiary of Reuters Group
plc, and 3Com Corporation--who will together hold % of the shares of common
stock outstanding after the offering--are expected to enter into a stockholder
agreement that will govern voting for our directors. The agreement will provide
that each party will vote all of its shares for two directors nominated by
NexGen, two directors nominated by Telcom Ventures and one director nominated by
each of Reuters and 3Com. As we currently have authorized only ten directors,
six directors of our board will effectively be chosen by these major
stockholders. As a result, the voting rights of our stockholders other than
these major stockholders will only effectively apply to four of our directors.
In addition to its effect on the voting rights of our new investors, the
stockholder agreement could also have the effect of delaying or preventing a
change in control.

WE MAY NEED ADDITIONAL FUNDS WHICH, IF AVAILABLE, COULD RESULT IN AN INCREASE IN
OUR INTEREST EXPENSE OR DILUTION OF YOUR STOCKHOLDINGS. IF THESE FUNDS ARE NOT
AVAILABLE, OUR BUSINESS COULD BE HURT.

We currently anticipate that our available cash resources combined with the
net proceeds from this offering will be sufficient to fund our operating needs
for at least the next 12 months, including the expansion of our sales and
marketing program and any acquisitions we may pursue in the next 12 months.
Thereafter, we expect to require additional financing. At this time, we do not
have any bank credit facility or other working capital credit line under which
we may borrow funds for working capital or other general corporate purposes. If
our plans or assumptions change or are inaccurate, we may be required to seek
additional capital or to seek capital sooner than anticipated. We may need to
raise funds through public or private debt or equity financings.

If funds are raised through the issuance of equity securities, the
percentage ownership of our then-current stockholders may be reduced and the
holders of new equity securities may have rights, preferences or privileges
senior to those of the holders of our common stock. If additional funds are
raised through a bank credit facility or the issuance of debt securities, the
holder of this indebtedness would have rights senior to the rights of the
holders of our common stock and the terms of this indebtedness could impose
restrictions on our operations. If we need to raise additional funds, we may not
be able to do so on terms favorable to us, or at all. If we cannot raise
adequate funds on acceptable terms, we may not be able to continue to fund our
operations.

NEW LAWS AND REGULATIONS THAT IMPACT OUR INDUSTRY COULD HARM OUR BUSINESS.

We are not currently subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses in general. However, in the future, we may
become subject to regulation by the FCC or another regulatory agency. In
addition, the wireless carriers who supply us airtime are subject to regulation
by the FCC and regulations that affect them could materially adversely affect
our business. Our business could suffer depending on the extent to which our
activities or those of our customers or suppliers are regulated.

MANAGEMENT HAS BROAD DISCRETION TO USE THE PROCEEDS FROM THIS OFFERING.

Our management will have broad discretion over the use of proceeds we raise
in this offering, and you must rely on the judgment of management in the
application of the proceeds. We describe the intended use of proceeds of this
offering in "Use of Proceeds."

OUR STOCK PRICE, LIKE THAT OF MANY TECHNOLOGY COMPANIES, 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

14
<PAGE> 20

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 a variety of factors, including:

- 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;

- changes in estimates of our financial performance or changes in
recommendations by securities analysts regarding us or our industry; or

- general market or economic conditions.

This risk may be heightened because our industry is new and evolving,
characterized by rapid technological change and susceptible to the introduction
of new competing technologies or competitors.

In addition, equity securities of many technology companies have
experienced significant price and volume fluctuations. These price and volume
fluctuations often have been unrelated to the operating performance of the
affected companies. Volatility in the market price of our common stock could
result in securities class action litigation. This type of litigation,
regardless of the outcome, could result in substantial costs and a diversion of
management's attention and resources.

UPON COMPLETION OF THIS OFFERING, YOU WILL EXPERIENCE DILUTION.

Our tangible assets are readily identified assets like property, equipment,
cash, securities and accounts receivable. The value of these assets on our pro
forma balance sheet minus the value of our liabilities equals $ per share,
assuming the Mobeo acquisition and the offering are completed. The offering
price exceeds this amount by $ . Therefore, you will be paying more for
a share of stock than the value reflected in our accounts of tangible assets for
that share. If we were forced to sell all our assets and distribute all the
proceeds, you would not recover the amount you paid for shares unless we can
sell the assets for more than the value we report for our tangible assets. We
also have outstanding a large number of stock options and warrants to purchase
common stock with exercise prices significantly below the price of shares in
this offering. You will experience further dilution to the extent these options
or warrants are exercised.

WE EXPECT ABOUT SHARES OF COMMON STOCK TO BECOME AVAILABLE FOR SALE
180 DAYS FROM THE DATE OF THIS PROSPECTUS, AND SALES OF THESE SHARES MAY DEPRESS
OUR SHARE PRICE.

After this offering, we will have outstanding shares of common
stock. Sales of a substantial number of our shares of common stock in the public
market following this offering--or the expectation of such sales--could cause
the market price of our common stock to drop. All the shares sold in this
offering will be freely tradable. The remaining common shares outstanding after
this offering will be available for sale in the public markets as follows:

<TABLE>
<CAPTION>
DATE OF AVAILABILITY FOR SALE NUMBER OF SHARES
----------------------------- ----------------
<S> <C>
, the date of this prospectus.................
, 2000 (180 days after the date of this
prospectus)...............................................
At various times thereafter upon the expiration of one-year
holding periods...........................................
</TABLE>

Of these shares, shares are subject to a limitation on the number of
shares that can be sold in any three-month period. We have agreed, however, to
register the resale of substantially all of these shares upon demand beginning
one year after the date of this prospectus.

We intend to file a registration statement to register all shares of common
stock that we may issue under our stock option plan. After this registration
statement is effective, shares issued upon exercise of stock options will be
eligible for resale in the public market without restriction. As of August 20,
1999, we had issued and outstanding options to purchase 856,500 units of the
limited liability company, which will be converted into options to purchase
shares of common stock when we convert from a limited liability
company to a corporation prior to completion of this offering.

15
<PAGE> 21

USE OF PROCEEDS

We expect to receive approximately $ in net proceeds from the sale
of shares of common stock in this offering, assuming an initial public
offering price of $ per common share. We estimate the net proceeds will be
approximately $ if the underwriters' over-allotment option is exercised
in full. We estimate the expenses of this offering will be approximately $
million.

The principal purposes of this offering are to obtain additional working
capital, to create a public market for our common stock and to facilitate our
future access to public equity markets. We intend to use approximately $12.3
million of the net proceeds to repay indebtedness we expect to incur to purchase
Mobeo, Inc. and approximately $2.5 million of the net proceeds to exercise a
warrant to increase our ownership in OpenSky from 26% to up to 33% on a fully
diluted basis. We currently intend to use the remaining net proceeds from the
offering for general corporate purposes, which may include some or all of the
following:

- expand our network operations center;

- enhance our sales and marketing activities;

- fund operating losses and working capital needs;

- enhance Mobeo service offerings;

- fund potential future acquisitions; and

- maintain our interest in OpenSky.

Pending these uses, the net proceeds of this offering will be invested in
short-term, investment grade, interest-bearing instruments.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock or,
when we were organized as a limited liability company, made any distributions to
our members. We currently intend to retain earnings, if any, to support the
development of our business and do not anticipate paying cash dividends for the
foreseeable future. Payment of future dividends, if any, will be at the
discretion of our board of directors after taking into account factors such as
our financial condition, operating results and current and anticipated cash
needs.

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<PAGE> 22

CAPITALIZATION

The table below sets forth the following information as of June 30, 1999:

- our actual capitalization;

- our pro forma capitalization assuming completion of the Mobeo
acquisition on June 30, 1999; and

- our capitalization adjusted to give effect to (1) the pro forma
adjustments described above, (2) the sale of shares of common
stock at an assumed initial public offering price of $ per share
in this offering after deducting the underwriting discounts and
commissions we expect to pay in connection with this offering and
estimated offering expenses payable by us and (3) our conversion
from a limited liability company to a corporation.

This table should be read in conjunction with our 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 JUNE 30, 1999
-------------------------------------------
PRO PRO FORMA
FORMA CONSOLIDATED
ACTUAL CONSOLIDATED AS ADJUSTED
---------- ------------ ---------------
<S> <C> <C> <C>
Short-term debt:(1)
Notes payable........................................ $ -- $12,330,000 $
---------- ----------- --------
Total short-term debt........................ -- 12,330,000
---------- ----------- --------
Limited liability company equity....................... 4,840,882 4,840,882
Stockholders' equity:
Common stock, $0.01 par value; shares
authorized; shares issued and
outstanding (pro forma consolidated, as
adjusted)......................................... -- --
Additional paid-in-capital........................... -- --
Accumulated deficit.................................. -- --
Note receivable-related parties...................... -- --
---------- ----------- --------
Total stockholders' equity................... -- --
---------- ----------- --------
Total capitalization......................... $4,840,882 $17,170,882 $
========== =========== ========
</TABLE>

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

(1) We intend to obtain financing in the form of a senior secured credit
facility to fund the Mobeo acquisition.

17
<PAGE> 23

DILUTION

If you invest in our shares of common stock, your interest will be diluted
by the amount of the difference between the public offering price per share of
common stock and the pro forma as adjusted net tangible book value per share of
common stock after this offering.

Our pro forma net tangible book value as of June 30, 1999 was $(8,312,116),
or $ per share of common stock, after giving effect to:

- the Mobeo acquisition; and

- the conversion of Aether from a limited liability company to a
corporation and the exchange of units of the limited liability company
into shares of common stock of the corporation.

Pro forma net tangible book value per share is equal to our total tangible
assets less total liabilities, divided by the number of outstanding shares of
common stock.

After giving effect to our sale of shares of common stock in this
offering at an assumed initial public offering price of $ per share of
common stock, and after deducting the commissions and estimated offering
expenses, our as adjusted pro forma net tangible book value as of June 30, 1999
would have been $ , or $ per share of common stock. This figure
represents an immediate increase in net tangible book value of $ per share
of common stock to existing stockholders and an immediate dilution of $ per
share of common stock to new investors. Dilution is determined by subtracting
the net tangible book value per share of common stock after the offering from
the amount of cash a new investor pays for a share of common stock. The
following table illustrates this per share dilution to new investors:

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $
Pro forma net tangible book value per share as of June 30,
1999................................................... $
Increase per share attributable to this offering..........
------
Pro forma net tangible book value per share after this
offering..................................................
------
Dilution per share to new investors in this offering........ $
======
</TABLE>

The table below shows on a pro forma basis as of June 30, 1999, after
giving effect to the acquisition of Mobeo and the conversion of Aether from a
limited liability company into a corporation, the difference between our
existing stockholders and our new investors with respect to the number of common
shares purchased, the total consideration paid and the average price per share
paid, before deducting discounts and commissions and estimated offering
expenses:

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION
---------------- ---------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........................... % $ % $
New investors...................................
----- ----- ------ -----
Total....................................
===== ===== ====== =====
</TABLE>

If the underwriters exercise their over-allotment option in full, the
number of shares of common stock held by new investors will increase to ,
or % of the total common shares outstanding after this offering.

As of June 30, 1999, we had outstanding options to purchase units under our
incentive stock option plan at a weighted average exercise price of $2.67. Each
option to purchase one unit will be converted into an option to purchase
shares of common stock when we convert from a limited liability company to a
corporation, and the exercise price will be reduced to $ per share. In
addition, we expect to have options to purchase shares available for
future grant under our option plan. If the option holders exercise these
outstanding options, or any options we grant in the future, there will be
further dilution to new investors.

18
<PAGE> 24

SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except share and per share amounts)

The table that follows presents portions of our financial statements and
are not complete. You should read the following selected consolidated financial
data together with our financial statements and related notes and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The statement of operations
data for the years ended December 31, 1996, 1997 and 1998, and the balance sheet
data as of December 31, 1997 and 1998, are derived from our financial
statements, which have been audited by KPMG LLP, independent auditors, and which
are included elsewhere in this prospectus. The balance sheet data as of December
31, 1996 are derived from audited financial statements that do not appear in
this prospectus. The statement of operations data for the six months ended June
30, 1998 and 1999 are derived from our unaudited financial statements included
elsewhere in this prospectus and include, in the opinion of our management, all
adjustments, consisting only of normal recurring adjustments, that we consider
necessary for the fair presentation of our 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."

The pro forma consolidated financial information gives effect to the
pending Mobeo acquisition. The pro forma net loss per share information gives
effect to our conversion from a limited liability company to a corporation. The
pro forma consolidated as adjusted balance sheet information gives effect to the
acquisition of Mobeo and the conversion to a corporation plus the offering of
shares covered by this prospectus and the application of the net proceeds as
described in "Use of Proceeds."

We have provided the pro forma consolidated information and the pro forma
consolidated as adjusted balance sheet for informational purposes only and you
should not assume that our results would actually have been as shown if we had
acquired Mobeo, converted to a corporation or completed the offering on the
assumed dates, or that the information projects what our results will be if we
complete the Mobeo acquisition, convert to a corporation or complete the
offering. The pro forma consolidated statement of operations information assumes
that the transactions occurred on January 1, 1998, and the pro forma
consolidated balance sheet information assumes that the transactions occurred on
June 30, 1999. See our and Mobeo's financial statements and notes to those
statements included elsewhere in this prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
HISTORICAL 1998
-------------------------------------- PRO FORMA
1996 1997 1998 CONSOLIDATED
---------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Subscriber revenue.............. $ -- $ 161 $ 549 $ 9,130
Engineering services revenue.... 1,355 1,625 963 963
---------- ----------- ----------- -----------
Total revenue............... 1,355 1,786 1,512 10,093
Cost of subscriber revenue...... -- 447 797 3,838
Cost of engineering services
revenue....................... 1,007..... 846 304 304
---------- ----------- ----------- -----------
Total cost of revenue....... 1,007 1,293 1,101 4,142
---------- ----------- ----------- -----------
Gross profit................ $ 348 $ 493 $ 411 $ 5,951

<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------------
HISTORICAL 1999
------------------------- PRO FORMA
1998 1999 CONSOLIDATED
----------- ----------- ---------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
Subscriber revenue.............. $ 125 $ 599 $ 5,646
Engineering services revenue.... 436 188 188
----------- ----------- -----------
Total revenue............... 561 787 5,834
Cost of subscriber revenue...... 200 531 2,288
Cost of engineering services
revenue....................... 171 120 120
----------- ----------- -----------
Total cost of revenue....... 371 651 2,408
----------- ----------- -----------
Gross profit................ $ 190 $ 136 $ 3,426
</TABLE>

19
<PAGE> 25
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
HISTORICAL 1998
-------------------------------------- PRO FORMA
1996 1997 1998 CONSOLIDATED
---------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Operating expenses:
Research and development........ 161 734 1,267 1,764
General and administrative...... 395 1,505 2,773 4,591
Selling and marketing........... -- 333 840 2,353
Depreciation and amortization... 45 189 265 2,256
Equity-based expenses........... -- 40 33 1,436
---------- ----------- ----------- -----------
Total operating expenses...... 601 2,801 5,178 12,400
---------- ----------- ----------- -----------
Operating loss................... (253) (2,308) (4,767) (6,449)
Interest income, net............. 8 7 74 79
Gain (loss) on disposal of
assets.......................... -- -- -- (14)
Equity in earnings (losses) of
joint venture................... (172) (70) -- --
Realized loss on sale of
investment in joint venture..... -- (302) -- --
Other............................ -- -- -- --
---------- ----------- ----------- -----------
Net loss........................ $ (417) $ (2,673) $ (4,693) $ (6,384)
---------- ----------- ----------- -----------
Pro forma net loss per
share--basic and diluted......
========== =========== =========== ===========
Pro forma weighted average
shares used in computing net
loss per share--basic and
diluted.......................
========== =========== =========== ===========

<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------------
HISTORICAL 1999
------------------------- PRO FORMA
1998 1999 CONSOLIDATED
----------- ----------- ---------------
<S> <C> <C> <C>
Operating expenses:
Research and development........ 589 1,002 1,429
General and administrative...... 1,273 1,583 2,518
Selling and marketing........... 314 555 1,359
Depreciation and amortization... 124 194 1,193
Equity-based expenses........... 16 1,263 1,965
----------- ----------- -----------
Total operating expenses...... 2,316 4,597 8,464
----------- ----------- -----------
Operating loss................... (2,126) (4,461) (5,038)
Interest income, net............. 7 141 156
Gain (loss) on disposal of
assets.......................... -- -- --
Equity in earnings (losses) of
joint venture................... -- -- --
Realized loss on sale of
investment in joint venture..... -- -- --
Other............................ -- (74) (125)
----------- ----------- -----------
Net loss........................ $ (2,119) $ (4,394) $ (5,007)
----------- ----------- -----------
Pro forma net loss per
share--basic and diluted......
=========== =========== ===========
Pro forma weighted average
shares used in computing net
loss per share--basic and
diluted.......................
=========== =========== ===========
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999,
-------------------------------------------
AS OF DECEMBER 31, PRO FORMA
----------------------------------- PRO FORMA CONSOLIDATED
1996 1997 1998 ACTUAL CONSOLIDATED(1) AS ADJUSTED
---------- --------- ---------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 51 $ 132 $ 1,755 $ 841 $ 1,399
Working capital (deficit)................... 181 (323) 7,519 3,674 (9,842)
Total assets................................ 1,269 897 8,839 5,867 20,242
Total debt.................................. -- 150 -- -- 12,330
Members' capital............................ 1,101 149 8,104 4,841 4,841
Stockholders' equity........................ -- -- -- -- --
</TABLE>

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

(1) We intend to obtain financing in the form of a senior secured credit
facility to fund the Mobeo acquisition.

20
<PAGE> 26

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

You should read the following description of our financial condition and
results of operations in conjunction with the financial statements and the notes
thereto and the unaudited pro forma condensed consolidated financial information
included elsewhere in this prospectus. This discussion includes forward-looking
statements relating to, among other things, future results of operations, our
plans and expectations regarding our future services and operations and general
industry and business conditions applicable to Aether. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to a number of
risks, uncertainties and assumptions about Aether, including those we describe
in the "Risk Factors" section of this prospectus. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed below might
not occur. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

OVERVIEW

Aether Technologies International, L.L.C. was originally formed as Aeros,
L.L.C. in January 1996. We changed our name to Aether Technologies
International, L.L.C. effective August 1996. Immediately before we complete this
offering, the limited liability company will be converted into a corporation
called Aether Systems, Inc.

From our inception until March 1997, we primarily provided wireless
engineering services, including the development of wireless software
applications for customers. In March 1997, we began offering services that
provide the users of wireless handheld devices access to real-time financial
information. During 1997, we made a strategic decision to focus a significant
portion of our engineering resources on the development of these and other
wireless data services and systems, including our AIM software platform and
other wireless data applications. This resulted in a decrease in engineering
services revenue as a percentage of total revenue and an increase in subscriber
revenue as a percentage of total revenue. We expect this trend to continue in
the foreseeable future. Subscriber revenue was $161,400 and $549,057 for the
years ended December 31, 1997 and 1998, respectively, and $598,810 for the six
months ended June 30, 1999. Engineering services revenue was $1.4 million, $1.6
million and $1.0 million for the years ended December 31, 1996, 1997 and 1998,
respectively, and $188,274 for the six months ended June 30, 1999. We incurred
net losses of approximately $416,980, $2.7 million and $4.7 million for years
ended December 31, 1996, 1997 and 1998, respectively, and $4.4 million for the
six months ended June 30, 1999.

In August 1999, we signed an agreement to acquire Mobeo, Inc. Mobeo
provides employees and customers of major banks and financial institutions with
real-time price quotes and news for foreign exchange, government securities and
commodities markets on wireless handheld devices. On a pro forma basis, giving
effect to the pending Mobeo acquisition, our revenue for the six months ended
June 30, 1999 was $5.8 million. Mobeo accounted for 87% of this revenue.

Since our inception, we have invested significant capital to build our
customer service and network operations center. Additionally, we have incurred
significant operating costs to develop AIM and other software applications and
to grow our business. As a result, we have incurred operating losses since our
inception. Part of our strategy is to continue to invest in business
development, research and development and marketing and advertising. As a
result, we expect to continue to incur operating losses for at least the next
several quarters.

21
<PAGE> 27

RESULTS OF OPERATIONS

We derive our revenue from the sale of wireless data services and by
providing wireless engineering services. After we complete the Mobeo
acquisition, we will also derive revenue from the sale of Mobeo's wireless
foreign exchange information services. Revenue from wireless data services
consists of:

- a one time non-refundable activation fee, which we recognize upon service
activation;

- monthly service fees, which we recognize as services are provided to the
subscriber; and

- monthly exchange fees for access to financial information from the
securities exchanges and markets, which we recognize as services are
provided to the subscriber. We remit these fees to the various exchanges
and markets on a regular basis.

As part of our service offerings, we also provide our subscribers with the
option to purchase wireless handheld devices from us at cost, which we bill over
the initial term of the contract.

Contracts with our wireless data subscribers are for a one-year period and
include a termination penalty if cancelled by the subscriber before the one-year
term expires. These contracts are generally renewable at the option of the
subscriber for additional one-year periods or otherwise continue on a monthly
basis until cancelled by the subscriber. Revenue from wireless engineering
services consists of amounts billed to our customers for engineering time on an
hourly basis or on a fixed per project basis. This revenue is recognized as the
work is performed.

Cost of subscriber revenue consists primarily of airtime costs, financial
data costs, wireless handheld device costs and securities exchange and market
fees. Our airtime costs are determined by agreements we have with several
wireless carriers. Typically, we have one-year contracts to buy data network
capacity either for an agreed amount of kilobytes at a flat fee or on a
cents-per-kilobyte basis. Cost of engineering services revenue consists of cash
compensation and related costs for engineers and other non-reimbursed,
project-related costs.

Research and development expenses consist primarily of cash compensation
and related costs for engineers engaged in research and development activities
and, to a lesser extent, costs of materials relating to these activities. We
expense research and development costs as we incur them. General and
administrative expenses consist primarily of cash compensation and related costs
for general corporate and business development personnel, along with rent and
other costs. Selling and marketing expenses consist primarily of advertising and
promotions, sales and marketing personnel, travel and entertainment and other
costs.

Depreciation and amortization expenses consist primarily of depreciation
expenses arising from equipment purchased for our network operations center and
other property and equipment purchases. On a pro forma basis, giving effect to
the Mobeo acquisition, depreciation and amortization expenses consist primarily
of amortization related to goodwill and other intangibles to be recognized as a
result of the Mobeo acquisition.

Equity-based expenses consist of expenses recorded to account for the
difference, on the date of grant, between the fair market value and the exercise
price of stock options issued to employees and the fair value of equity-based
awards to non-employees.

Net interest income consists primarily of interest earned on cash and cash
equivalents and short-term investments, net of fees paid to fund managers and
interest expense on monies borrowed.

SIX MONTHS ENDED JUNE 30, 1998 AND 1999

Subscriber revenue. Subscriber revenue increased from $124,576 for the six
months ended June 30, 1998 to $598,810 for the six months ended June 30, 1999.
The increase was primarily due to the launch of Reuters MarketClip.

22
<PAGE> 28

On a pro forma basis, giving effect to the Mobeo acquisition, subscriber
revenue for the six months ended June 30, 1999 was $5.6 million. Mobeo accounted
for 89% of this subscriber revenue. Subscriber revenue for Mobeo increased from
$4.5 million for the six months ended June 30, 1998 to $5.0 million for the six
months ended June 30, 1999. This increase was primarily due to price increases
for Mobeo's foreign exchange information services.

Engineering services revenue. Engineering services revenue decreased from
$436,090 for the six months ended June 30, 1998 to $188,274 for the six months
ended June 30, 1999. This decrease was primarily due to our decision to focus
our efforts on developing our AIM software platform and wireless data services.

Cost of subscriber revenue. Cost of subscriber revenue increased from
$199,559 for the six months ended June 30, 1998 to $530,823 for the six months
ended June 30, 1999. The increase was primarily due to an increase in the number
of subscribers to Reuters MarketClip, which was launched in March 1998.

On a pro forma basis, giving effect to the Mobeo acquisition, cost of
subscriber revenue for the six months ended June 30, 1999 was $2.3 million.
Mobeo accounted for 77% of this cost. Cost of subscriber revenue for Mobeo
increased from $1.5 million for the six months ended June 30, 1998 to $1.8
million for the six months ended June 30, 1999. This increase was primarily due
to an increase in airtime charges offset by cost savings relating to a change in
financial data providers.

Cost of engineering services revenue. Cost of engineering services revenue
decreased from $170,812 for the six months ended June 30, 1998 to $119,829 for
the six months ended June 30, 1999. This decrease was primarily due to a
decrease in engineering services as discussed above.

Research and development expenses. Research and development expenses
increased from $589,148 for the six months ended June 30, 1998 to $1.0 million
for the six months ended June 30, 1999. This increase was primarily due to the
hiring of additional engineers and increased research and development activities
associated with the development of our AIM software platform and wireless data
services. We expect to continue to make substantial investments in research and
development and anticipate that these expenses will continue to increase.

On a pro forma basis, giving effect to the Mobeo acquisition, research and
development expenses for the six months ended June 30, 1999 were $1.4 million.
Mobeo accounted for 30% of these expenses. Research and development expenses for
Mobeo increased from $168,355 for the six months ended June 30, 1998 to $427,210
for the six months ended June 30, 1999. This increase was primarily due to
additional expenses associated with the development of wireless software
applications.

General and administrative expenses. General and administrative expenses
increased from $1.3 million for the six months ended June 30, 1998 to $1.6
million for the six months ended June 30, 1999. This increase was primarily due
to the addition of personnel performing general corporate and business
development activities. We expect general and administrative expenses to
increase as we add personnel and incur additional expenses related to the
anticipated growth of our business and our operation as a public company.

On a pro forma basis, giving effect to the Mobeo acquisition, general and
administrative expenses for the six months ended June 30, 1999 were $2.5
million. Mobeo accounted for 37% of these expenses. General and administrative
expenses for Mobeo increased from $1.2 million for the six months ended June 30,
1998 to $1.5 million for the six months ended June 30, 1999, before pro forma
adjustment. This increase was primarily due to increased personnel and related
costs.

Selling and marketing expenses. Selling and marketing expenses increased
from $313,775 for the six months ended June 30, 1998 to $555,428 for the six
months ended June 30, 1999. This increase was primarily due to an increase in
advertising and promotion costs related to the launch of Reuters MarketClip in
March 1998 and to an increase in personnel and selling and marketing expenses.
We expect selling and marketing expenses to increase significantly as we incur
additional expenses to increase brand awareness and add personnel.

23
<PAGE> 29

On a pro forma basis, giving effect to the Mobeo acquisition, selling and
marketing expenses for the six months ended June 30, 1999 were $1.4 million.
Mobeo accounted for 59% of these expenses. Selling and marketing expenses for
Mobeo increased from $1.0 million for the six months ended June 30, 1998 to $1.3
million for the six months ended June 30, 1999, before pro forma adjustment.
This increase was primarily due to increased personnel and overhead costs.

Depreciation and amortization. Depreciation and amortization expenses
increased from $123,820 for the six months ended June 30, 1998 to $193,523 for
the six months ended June 30, 1999. This increase was primarily due to an
increase in the purchase of property and equipment related to our network
operations center and the expansion of our corporate offices.

On a pro forma basis, giving effect to the Mobeo acquisition, depreciation
and amortization expenses for the six months ended June 30, 1999 were $1.2
million. This amount primarily reflects amortization related to goodwill and
other intangibles to be recognized as a result of the Mobeo acquisition.

Equity-based expenses. Equity-based expenses increased from $16,290 for the
six months ended June 30, 1998 to $1.3 million for the six months ended June 30,
1999. This increase was primarily due to the fact that warrants held by 3Com to
acquire 57,466 units became exercisable in the six months ended June 30, 1999
and an increase in the number of options that vested during the period with
exercise prices less than the fair value on the date of grant.

On a pro forma basis, giving effect to the Mobeo acquisition, equity-based
expenses for the six months ended June 30, 1999 were $2.0 million. The increase
from Aether's historical amount is primarily due to expenses associated with
options expected to be granted to the selling stockholders of Mobeo for
consulting and employee services.

Interest income, net. Net interest income increased from $7,035 for the six
months ended June 30, 1998 to $140,753 for the six months ended June 30, 1999.
The increase was primarily due to increased cash balances as a result of our
private placement financings completed in August 1998 and October 1998.

FISCAL YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

Subscriber revenue. There was no subscriber revenue recognized for the year
ended December 31, 1996. Subscriber revenue increased from $161,400 to $549,057
for the years ended December 31, 1997 and December 31, 1998, respectively. The
increase in subscriber revenue was primarily due to the launch of Reuters
MarketClip in March 1998.

On a pro forma basis, giving effect to the Mobeo acquisition, subscriber
revenue for the year ended December 31, 1998 was $9.1 million. Mobeo accounted
for 94% of this subscriber revenue. Subscriber revenue for Mobeo increased from
$7.1 million to $8.6 million for the years ended December 31, 1997 and December
31, 1998, respectively. This increase was primarily due to price increases for
Mobeo's foreign exchange information services.

Engineering services revenue. Engineering services revenue increased from
$1.4 million to $1.6 million for the years ended December 31, 1996 and December
31, 1997, respectively, and decreased to $1.0 million for the year ended
December 31, 1998. The increase in engineering services revenue from 1996 to
1997, was primarily due to increased engineering services activities. One of our
investors accounted for approximately 83% and 37% of engineering services
revenue for 1996 and 1997, respectively. The decrease in engineering services
revenue from 1997 to 1998 was primarily due to our decision to focus our efforts
on developing our AIM software platform and wireless data services.

Cost of subscriber revenue. There was no cost of subscriber revenue for the
year ended December 31, 1996. Cost of subscriber revenue increased from $447,480
to $797,165 for the years ended December 31, 1997 and December 31, 1998,
respectively. The increase in the cost of subscriber revenue was primarily due
to an increase in the number of subscribers to Reuters MarketClip, which was
launched in March 1998.

24
<PAGE> 30

On a pro forma basis, giving effect to the Mobeo acquisition, cost of
subscriber revenue for the year ended December 31, 1998 was $3.8 million. Mobeo
accounted for 79% of these costs. Cost of subscriber revenue for Mobeo decreased
from $3.1 million to $3.0 million for the years ended December 31, 1997 and
December 31, 1998, respectively. This decrease was primarily due to cost savings
related to a change in financial data providers.

Cost of engineering services revenue. Cost of engineering services revenue
decreased from $1.0 million to $846,140 for the years ended December 31, 1996
and December 31, 1997, respectively, and decreased to $304,137 for the year
ended December 31, 1998. These decreases were primarily due to our decision to
focus our efforts on developing our AIM software platform and wireless data
services.

Research and development expenses. Research and development expenses
increased from $160,597 to $733,630 for the years ended December 31, 1996 and
December 31, 1997, respectively, and increased to $1.3 million for the year
ended December 31, 1998. These increases in research and development expenses
were primarily due to the hiring of additional engineers and increased research
and development activities associated with the development of our AIM software
platform and wireless data services.

On a pro forma basis, giving effect to the Mobeo acquisition, research and
development expenses for the year ended December 31, 1998 were $1.8 million.
Mobeo accounted for 28% of these expenses. Research and development expenses for
Mobeo increased from $174,867 to $496,570 for the years ended December 31, 1997
and December 31, 1998, respectively. This increase was primarily due to
additional expenses associated with the development of wireless software
applications.

General and administrative expenses. General and administrative expenses
increased from $395,209 to $1.5 million for the years ended December 31, 1996
and December 31, 1997, respectively and increased to $2.8 million for the year
ended December 31, 1998. These increases were primarily due to the addition of
personnel performing general corporate and business development functions.

On a pro forma basis, giving effect to the Mobeo acquisition, general and
administrative expenses for the year ended December 31, 1998 were $4.6 million.
Mobeo accounted for 40% of these expenses. General and administrative expenses
for Mobeo increased from $1.9 million to $2.7 million for the years ended
December 31, 1997 and December 31, 1998, respectively, before pro forma
adjustment. This increase was primarily due to increased personnel and related
costs.

Selling and marketing expenses. There were no selling and marketing
expenses for the year ended December 31, 1996. Selling and marketing expenses
increased from $333,191 to $840,455 for the years ended December 31, 1997 and
December 31, 1998, respectively. The increase was primarily due to an increase
in advertising and promotion costs related to the launch of Reuters MarketClip
in March 1998 and to an increase in personnel and costs associated with sales
and marketing.

On a pro forma basis, giving effect to the Mobeo acquisition, selling and
marketing expenses for the year ended December 31, 1998 were $2.4 million. Mobeo
accounted for 64% of these expenses. Selling and marketing expenses for Mobeo
increased from $1.8 million to $2.3 million for the years ended December 31,
1997 and December 31, 1998, respectively, before pro forma adjustment. This
increase was primarily due to increased personnel overhead costs.

Depreciation and amortization expenses. Depreciation and amortization
expenses increased from $45,245 to $189,160 for the years ended December 31,
1996 and December 31, 1997, respectively, and increased to $264,685 for the year
ended December 31, 1998. These increases were primarily due to additional
capital expenditures.

On a pro forma basis, giving effect to the Mobeo acquisition, depreciation
and amortization expenses for the year ended December 31, 1998 were $2.3
million. This amount primarily reflects amortization related to goodwill and
other intangibles to be recognized as a result of the Mobeo acquisition.

Equity-based expenses. There were no equity-based expenses for the year
ended December 31, 1996. Equity-based expenses decreased from $40,277 to $32,580
for the years ended December 31, 1997 and December 31, 1998, respectively. The
increase in equity-based expenses for 1997 and the decrease for
25
<PAGE> 31

1998 reflect changes in the extent to which options vested during the period
with exercise prices less than the fair value on the date of grant.

On a pro forma basis, giving effect to the Mobeo acquisition, equity-based
expenses for the year ended December 31, 1998 were $1.4 million. The increase
from Aether's historical amount is primarily due to expenses associated with
options expected to be granted to the selling stockholders of Mobeo for
consulting and employee services.

Interest income, net. Net interest income decreased from $8,491 to $7,788
for the years ended December 31, 1996 and December 31, 1997, respectively, and
increased to $74,180 for the year ended December 31, 1998. The increase for 1998
was primarily due to increased cash balances as a result of our private
placement financings completed in August 1998 and October 1998.

Equity in losses of joint venture. Our equity in the loss of Real World
Solutions, a joint venture, was $172,487 and $70,368 for the years ended
December 31, 1996 and December 31, 1997, respectively. These amounts related to
losses of Real World Solutions recorded by us under the equity method of
accounting.

Realized loss on sale of investment in joint venture. In the year ended
December 31, 1997, we sold our interest in Real World Solutions and recorded a
loss of $302,145.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily through
private placements of our equity securities, which have resulted in net proceeds
of $15.7 million through June 30, 1999. As of June 30, 1999, we had $4.4 million
in cash and short-term investments and $3.7 million of working capital.

Net cash used in operating activities was $346,200, $1.5 million and $4.4
million for the years ended December 31, 1996, 1997 and 1998, respectively, and
$2.5 million for the six months ended June 30, 1999. The principal use of cash
in each of these periods was to fund our losses from operations.

Net cash used in investing activities was $1.2 million, $209,723, and $6.5
million for the years ended December 31, 1996, 1997 and 1998, respectively, and
cash provided from investing activities was $1.6 million for the six months
ended June 30, 1999. Cash used in investing activities for the year ended
December 31, 1996 was primarily for the purchase of a joint venture interest in
Real World Solutions and for purchases of property and equipment. Cash used in
investing activities for the year ended December 31, 1997 was primarily for the
purchase of property and equipment offset in part by proceeds from the sale of
our joint venture interest in Real World Solutions. Cash used in investing
activities for the year ended December 31, 1998 was primarily for the purchase
of short-term investments. For the six months ended June 30, 1999 we generated
cash from investment activities from the sale of short-term investments offset
in part by the purchase of property and equipment.

Net cash provided by financing activities was $1.6 million, $1.8 million
and $12.5 million for the years ended December 31, 1996, 1997 and 1998,
respectively. Cash provided by financing activities in each of these periods was
primarily attributable to proceeds from additional private sales of our equity
securities. There was no financing activity in the six months ended June 30,
1999.

For the remainder of 1999, we expect to have the following expenditures and
requirements:

- $12.3 million for the Mobeo acquisition;

- $2.5 million to exercise a warrant to increase our interest in OpenSky;

- expansion of our network operations center;

- enhancement of Mobeo's service offerings;

- increases in sales and marketing expenditures;

- research and development; and

- other working capital needs to grow our business.
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<PAGE> 32

\We may also need funds to complete any acquisitions we may decide to pursue.

We intend to fund the Mobeo acquisition with a senior secured credit
facility to be repaid from the proceeds of this offering. We believe that the
net proceeds from this offering, together with our current cash and short-term
investments, will be sufficient to repay borrowings for the Mobeo acquisition
and to meet our other anticipated cash needs for at least the next 12 months. If
cash generated from these sources is insufficient to satisfy our need for cash,
we may seek to sell additional equity securities or obtain a credit facility. If
our plans or assumptions change or are inaccurate, we may be required to seek
additional capital or seek capital sooner than anticipated.

YEAR 2000 READINESS

Many currently installed computer systems and software products are coded
to accept or recognize only two digits rather four digits to define the year in
the date code field. These systems and software products will need to accept
four digit year entries to distinguish 21st century dates from 20th century
dates. Systems and products that are not corrected to do this could cause a
disruption of operations including a temporary inability to process
transactions, send invoices or engage in other normal business activities. We
maintain a significant number of computer software systems and operating systems
across our entire organization which are potentially subject to year 2000
problems.

We have taken several steps to prepare for the year 2000 transition. We
developed all our in-house software, including our AIM software platform, using
four digit date codes. We run all these applications on hardware and operating
systems that we have determined are year 2000 compliant. All our computer
hardware has been inventoried and checked against the manufacturers' year 2000
compliance declarations. All non-compliant hardware has been upgraded if
possible, or replaced. All third-party software, including operating systems and
applications, have been inventoried and checked against the manufacturers'
compliance statements. We have upgraded and fixed software as recommended by the
manufacturers.

We are actively seeking assurances from external entities that could affect
our business. We have been advised by our data providers, landline and wireless
network carriers, device manufacturers and current corporate customers that
their systems that might impact our own systems are year 2000 compliant. We are
currently seeking year 2000 compliance statements from the network carriers
whose networks we use. We have asked these carriers to provide us with responses
by September 1, 1999.

We are developing a contingency plan to deal with failures that may occur
during the year 2000 transition. By the end of October 1999, we expect to finish
our contingency plan which will involve developing alternate methods to provide
mission-critical functions if they fail.

The most likely worst case scenario would be the failure of the landline or
wireless networks that carry data to us or from us to our customers. If this
happened, we would not be able to deliver our services to our customers and we
may lose revenue.

If we complete the Mobeo acquisition, any failure on the part of Mobeo or
its data providers or network carriers to maintain computer hardware and
software that is year 2000 compliant could adversely impact our business after
the acquisition. In connection with the Mobeo acquisition, Mobeo has represented
to us that its computer hardware and software are year 2000 compliant.

Although we have taken the steps described above to make our systems year
2000 compliant, we may experience material problems and expenses associated with
year 2000 compliance that could adversely affect our business, results of
operations and financial condition. If the assurances we have received from
third parties or Mobeo regarding their compliance are inaccurate we may
experience disruption resulting in additional expense and loss of revenue. We
are also subject to outside forces that might generally affect industry and
commerce, such as year 2000 compliance failures by utility or transportation
companies. If our customers experience disruptions related to our services and
software systems, they may begin litigation against us even if the disruptions
were caused by their own systems or software provided by others.

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<PAGE> 33

We have purchased most of our equipment within the last four years, which
has kept the costs of year 2000 compliance efforts to a minimum. All
non-compliant software and equipment has been upgraded or replaced at a cost
that is not material to us. Based on our review of compliance to date, we do not
expect any future costs related to year 2000 compliance to be material.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. The new standard establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. The
statement, as amended, is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The statement is not expected to affect us as we
currently do not engage or plan to hold derivative instruments or engage in
hedging activities.

QUALITATIVE AND QUANTITATIVE DISCLOSURE REGARDING MARKET RISK

We have limited exposure to financial market risks, including changes in
interest rates. At June 30, 1999, we had short-term investments of approximately
$3.6 million. These short-term investments consisted of highly liquid
investments in debt obligations of the U.S. Government and other highly-rated
entities with maturities of up to 30 years. These investments are classified as
available-for-sale and are considered short-term, because we expect to sell them
within 12 months. These investments are subject to interest rate risk and will
fall in value if market interest rates increase. At June 30, 1999, the value of
our short-term investments was approximately $190,000 less than our cost. If
market interest rates continue to rise, the value of our short-term investments
will continue to decrease. We expect to sell these investments prior to
maturity, and therefore we may not realize the full value of these investments.
We currently have no indebtedness, hold no derivative instruments and do not
earn foreign-source income.

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BUSINESS

OVERVIEW

We are a leading provider of wireless data services and systems enabling
people to use wireless handheld devices for real-time data communications and
transactions. We design, develop, sell and support these services using our
engineering expertise, our software platform and our customer service and
network operations center. Our initial focus is on the financial services
industry, including online trading. We currently offer the Reuters MarketClip
service for financial market price quotes, alerts and information and
TradeRunner, a real-time wireless trading and financial information service
offered to the online customers of Discover Brokerage. We are developing similar
services for other major financial institutions, including Charles Schwab. We
have agreed to acquire Mobeo, Inc., a leading provider of wireless foreign
exchange information services. We are also targeting other industries, initially
by licensing our Aether Intelligent Messaging software platform, known as AIM.
Finally, OpenSky, our new venture with 3Com, will pursue the broader consumer
and business mass market for wireless Internet access, e-mail and e-commerce
transactions.

We have all the resources necessary to provide our customers with complete
wireless data systems. We have a large, experienced development team, with 27
engineers who have worked an average of ten years in the wireless data field. We
have developed the AIM software platform, which serves as a bridge to integrate
diverse corporate in-house data systems with a wide variety of wireless carrier
networks and end user devices. We operate our own high-security network
operations center, which connects customer and other data to wireless networks,
and maintain our own customer service center. We have also cultivated close
relationships with major wireless network carriers, including AT&T Wireless
Services, Bell Atlantic Mobile and BellSouth Wireless Data, and mobile equipment
manufacturers such as 3Com, Ericsson and Novatel Wireless.

MARKET OPPORTUNITY

Growth of the Internet, Intranets and Extranets

The Internet and businesses' internal data networks, or intranets, have
emerged as global communications channels that allow users to share information
and conduct real-time business electronically. Technology and communications
research firm International Data Corporation, or IDC, estimates there were
approximately 159 million users of the Internet at the end of 1998 and that this
number of users will increase to 410 million by the end of 2002. IDC also
estimates that in 1998 there were 31 million intranet users at 513,000
businesses and organizations. Businesses are also increasingly employing
extranets, which allow them to communicate and conduct transactions
electronically with their customers and suppliers. IDC estimates that the
worldwide volume of commerce conducted over the Internet was $50.4 billion in
1998 and will grow to $1,300 billion in 2003.

Growth of Mobile Communications

Individuals are increasingly using mobile devices for convenience and
enhanced productivity when away from their home or office. Dataquest, a
technology and communications market research firm, estimates there were
approximately 187 million digital wireless subscribers worldwide at the end of
1998 and that there will be 590 million by the end of 2002. Worldwide use of
wireless telecommunications has grown rapidly as cellular, paging and PCS have
become more widely available and affordable for both the business and mass
consumer markets. Advances in technology, regulatory changes, the introduction
of new service providers and price reductions have contributed to this growth.

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Growth of Wireless Data Applications and Communications

We believe an increasing number of people will carry wireless devices for
data communications rather than for voice communications alone. The latest
wireless communications devices in the United States, including handheld
personal organizers, notebook computers, pagers and mobile phones, are smaller,
less expensive, have longer battery life and more features than earlier devices.
Ovum Ltd., a technology and communications research firm, projects that 30% of
wireless users will be accessing data by 2007 compared with less than 4%
currently.

The market for wireless data applications is driven by the increased
reliance on the Internet, intranets and extranets and the emergence of a mobile
workforce. IDC forecasts that the remote and mobile workforce in the United
States, defined as employees spending more than 20% of their time away from the
office, will grow from 34 million individuals at the end of 1998 to 47 million
at the end of 2001. Having grown accustomed to and dependent on the information
and applications available on their personal computers, we believe workers and
consumers want access to similar information when away from their office or
home. Dataquest estimates that the U.S. wireless data market will grow from 3
million subscribers in 1999 to 36 million subscribers in 2003.

Attractiveness of Financial Market Applications

The availability of real-time information, price quotes and trading
capabilities is critical to financial market participants, both professionals
and individuals. We believe that news, stock prices and other financial
information are among the most accessed content on the Internet. The Internet
has also enabled the growth of online trading activity. According to IDC, the
number of online brokerage accounts is expected to continue its rapid growth,
from 6 million in 1998 to 24 million in 2002.

Increased Outsourcing Trends

As information technology, or IT, systems have become more complex,
companies have increasingly outsourced many of their IT requirements. According
to Forrester Research, Inc., U.S. firms are now spending 25% of their IT budgets
on outsourcing services. These include packaged application software
implementation and support, customer support and network development and
maintenance. Companies are choosing to focus on their core businesses and
seeking to reduce costs associated with developing and maintaining IT networks
and software applications. In addition, by outsourcing, companies avoid major
challenges faced in hiring and retaining qualified IT employees and realize
increased time-to-market benefits.

THE AETHER SOLUTION

Through our engineering staff, our AIM software platform and our customer
service and network operations center, we provide the services and resources
necessary to deliver wireless data systems. Our capabilities address most of the
common issues companies face when building wireless data systems.

Issue: Wireless data communications systems are complex.

Many information technology managers lack the engineers and system
resources to design, develop, install and maintain new software and
systems that give their companies' workforces and customers mobile
access to internal desktop applications.

Solution: We provide comprehensive wireless communications services.

We have all the resources necessary to design, develop, install and
maintain wireless data communications systems for customers. We have 27
engineers who have on average more than ten years of wireless data
experience. Our engineers use our AIM software platform to extend
corporate applications to almost any wireless environment. We have
established relationships with the leading wireless network carriers,
including AT&T Wireless Services, Bell Atlantic Mobile, BellSouth
Wireless Data and Ameritech Corp. We have negotiated favorable airtime
agreements

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with these carriers, allowing us to offer our end users flat-rate
pricing no matter how much data is transmitted or where a device is
used. Our network operations center offers a secure gateway to wireless
networks for data delivered to us by our customers, and our customer
service center provides devices and call center support to end users. We
provide as many, or as few, of these elements as customers require to
develop their systems.

Issue: There is a wide variety of incompatible standards.

To build a wireless data system, a business must integrate incompatible
networks, devices and operating systems. Companies often require
multiple networks to meet the needs of their workers and customers,
based on their geographic location and preferred devices, which may use
different communications protocols. This can involve complex
negotiations with several wireless carriers. Additionally, companies
typically use a variety of operating systems for their internal data
applications.

Solution: Our software and systems can integrate a wide variety of
networks, devices and operating systems.

We give our customers a high degree of flexibility and choice, freeing
them from the need to integrate technologies from a variety of parties
to develop their systems. Our AIM software platform interacts with the
most widely used data network protocols, CDPD and Mobitex--used by
BellSouth Wireless Data--as well as with dial-up circuit connections. As
a result, our customers' end users can choose the devices they prefer,
including Palm, Windows CE and other personal organizers, notebook
computers, pagers and mobile phones. We support and develop applications
for the Wireless Application Protocol, known as WAP, a series of
specifications that allow mobile phones to display Internet information.
We also are planning to extend AIM's capabilities to the Microsoft
micro-browser and the EPOC operating system for handheld devices
developed by Symbian Ltd. (a wireless software company jointly owned by
Ericsson, Matsushita Communication Industrial Co., Ltd., Motorola, Nokia
and Psion plc). AIM can interact with the major operating systems on
which most corporate applications run, including Windows NT, UNIX, Linux
and most mainframe operating systems. As connections to new systems have
become needed, our engineers have adapted AIM to meet the needs of those
systems. We believe that as the wireless data market evolves there will
continue to be a multitude of protocols for networks, devices and
operating systems. We plan to update AIM continually to address the
ongoing need to integrate these protocols. We believe we are the only
firm that currently provides this level of service to companies seeking
to develop wireless data systems.

Issue: Wireless data transmissions are slow and expensive.

Most of today's wireless data networks operate at less than half the
speed of telephone dial-up connections, limiting the delivery of useful
data to only small amounts of text and few graphics. Data feeds
typically include large amounts of unnecessary data, including message
headers and routing information. Because wireless carriers typically
charge by the kilobyte of data transmitted, extraneous data add
unnecessary cost.

Solution: Our systems optimize data transmissions for wireless networks.

Our AIM software platform optimizes data transmission by employing
compression and data-thinning techniques. As a result, users get
information faster when they send queries from their devices, and they
get more useful information for the price. AIM reduces the number of
data packets required in a typical TCP/IP wireless transmission by as
much as 66%. We ensure reliable message delivery through measures that
confirm data have arrived properly and resend data if no acknowledgement
has been received.

Over the next several years, wireless carriers and equipment vendors are
planning to build so-called third generation, or 3G, networks, which
promise to transmit data at much higher speeds and offer more
compatibility among devices. No matter how fast networks become, the
need for

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low cost, secure and reliable data transmission will continue. We have
designed AIM to grow with the capabilities of wireless networks. For
example, we are currently working with U.S. and European wireless
network carriers to develop our financial trading services to operate
over networks using General Packet Radio Services, known as GPRS, a new
high-speed wireless network standard being deployed in some U.S. markets
and abroad.

Issue: Corporate managers require rigorous security standards when
entrusting their data to third parties.

Solution: We provide a secure network operations center.

Our network operations center is a highly redundant, high-security
physical link between data feeds from our business customers' and
others' data systems and wireless carrier networks. This relieves
corporations from the burden of constructing similar facilities. We
believe our network operations center is capable of meeting the security
standards for services we developed or are developing for Reuters,
Discover Brokerage, the CBOT and Charles Schwab. We believe that our
network operations center is a vital component of our wireless data
service offerings and differentiates us from our competitors.

Issue: Corporate information technology managers are reluctant to
configure and maintain inventories of wireless devices and provide
ongoing customer support.

Solution: We provide product fulfillment and customer service.

We send end users fully functioning mobile devices configured for the
wireless data networks and applications they will use. We also have a
customer service center providing ongoing end user support. Companies do
not have to worry about configuring devices for use by their employees
and customers, fixing broken units, handling warranties or answering
questions from users.

THE AETHER STRATEGY

Our strategy is to become the dominant provider of wireless data services
and systems by using our engineering expertise, our customer service and network
operations center and our other resources to offer businesses complete systems
for wireless data communications and transactions. We currently seek to maximize
recurring revenue by extending online trading and financial information services
to wireless handheld devices. We also plan to enter new markets by licensing our
AIM software platform to other industries and by developing broader mass-market
applications and services through our OpenSky joint venture with 3Com. Our
strategy includes the following key elements:

Develop the market for existing and new products in the financial services
sector. Our initial strategy is to tap into major segments of the financial
services industry, whose participants we believe are among the earliest adopters
of wireless data services. We focus on two types of financial services
subscribers, individual investors and market professionals, who understand the
value of receiving real-time information and trading capabilities. We believe
the same factors that fuel interest in online trading--easy access to accounts
and real-time market information and do-it-yourself buying and selling--will
lead investors to want wireless access to the same capabilities. In addition, we
plan to enhance the services offered by Mobeo by integrating Mobeo's software
with AIM. This will provide Mobeo subscribers with two-way capabilities and
access to additional financial information.

Expand into new industries and international markets. We believe that we
can apply our wireless experience and resources to other industries. For
example, transportation, health care and mobile sales and repair forces could
realize cost benefits and productivity gains through wireless access to in-house
data, e-mail and the Internet. Initially, we will target new industries by
licensing our AIM software platform to software developers that want to
integrate AIM with their software products and to companies with extensive data
needs and mobile workforces. We are also in discussions with potential partners
to expand into international markets.

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Pursue mass-market opportunities, including wireless Internet access,
e-mail and e-commerce transactions. OpenSky, our joint venture with 3Com, is
developing wireless Internet access, e-mail and e-commerce services that address
opportunities in the emerging consumer and business mass markets. We have a 26%
equity interest in OpenSky on a fully diluted basis. We have a letter agreement
with OpenSky to provide engineering services for the design and development of
OpenSky's proposed systems and services, and OpenSky has a royalty-free license
to use our AIM software platform. Additionally, we have a two-year right of
first refusal to design and develop custom systems and applications for all
services relating to investment banking and brokerage activities. We also have
the right to bundle OpenSky services for a period of five years, as an added
feature to the other services we offer.

Expand our customer base and strengthen the Aether brand through enhanced
sales and marketing efforts. We intend to increase our sales and marketing
expenditures significantly to both increase our direct sales force and promote
the Aether brand. To build on our early success in the financial services
industry, we intend to build our sales force focused on financial institutions.
We are also starting up a sales effort to market AIM by targeting large
corporations in other industries that both invest heavily in technology and have
significant numbers of mobile customers or employees. In addition, we will
continue to build relationships with third party software developers who wish to
use AIM to provide their applications with wireless capabilities. Our branding
efforts will include advertising, public relations, speaking engagements and
sponsorship of major conferences.

Maintain and strengthen our strategic relationships with suppliers and
customers. A key to our ability to provide complete wireless data services to
our customers is our relationships with wireless network carriers and
manufacturers of wireless devices. These relationships take time to develop,
providing us with a time-to-market advantage. We intend to maintain and
strengthen these relationships, by negotiating more cost-effective rate plans
with existing wireless network carriers, testing our wireless services with
providers of next-generation high-speed wireless networks and working with
manufacturers and industry forums to guide development of new devices and
applications.

Use the expertise we gain by providing engineering services to develop new
Aether products. The engineering services we provide our customers play an
important role in our product development strategy. While we no longer provide
engineering services strictly to generate revenue, we do take on engineering
assignments that might allow us to expand into new geographical markets or
industry sectors or to provide new services, in particular by introducing us to
new technologies. Examples of new services might include enhanced e-mail and
Web-browsing, wireless database search and retrieval, event-driven alerts,
instant messaging and electronic gaming.

Pursue selective acquisitions to expand our capabilities. We intend to
pursue acquisitions that we believe would allow us to increase quickly the scale
and scope of our resources, such as expanding our engineering force, to expand
into new geographical markets or industry sectors or to provide new services.

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SERVICES

Our services currently include delivering real-time wireless financial
market information and trading capabilities, licensing the AIM software platform
to corporations seeking to add wireless data capabilities and providing
engineering services for the design, development and support of wireless data
systems. The following table summarizes the services we currently offer or are
developing.

<TABLE>
<CAPTION>
SERVICE/CUSTOMER DATE INTRODUCED TARGET MARKET REVENUE TYPE SERVICE DESCRIPTION
- ----------------------- ------------------- -------------------- ----------------- ------------------------------
<S> <C> <C> <C> <C>
WIRELESS FINANCIAL INFORMATION
AND TRADING SERVICES
Reuters MarketClip March 1998 Individual investors Monthly recurring Market quotes, news and alerts
Chicago Board of July 1999 (Trial Floor traders Monthly recurring Trade recording, commodities
Trade PitViper began) quotes, news and alerts
Discover Brokerage August 1999 Individual investors Monthly recurring Equities and options trading,
TradeRunner market quotes, news and alerts
Charles Schwab Under development Individual investors Monthly recurring Equities and options trading,
market quotes, news and alerts
Bear Stearns Under development Brokers of firms Monthly recurring Customer account access and
clearing through trading, market quotes, news
Bear Stearns and alerts
Mobeo services Pending acquisition Financial market Monthly recurring Foreign exchange, commodities
professionals and other quotes, news and
alerts

AIM LICENSING
Riverbed Technologies August 1999 Software developers Licensing fees, Wireless data applications
monthly recurring development

ENGINEERING SERVICES
ORBCOMM September 1998 Transportation Engineering fees Develop location-tracking
industry capabilities for towing firms
Ericsson July 1999 Industries needing Engineering fees Develop financial data
real-time services using two-way pagers
information
OpenSky August 1999 Consumer and Engineering fees Develop Internet access,
business mass market e-mail and e-commerce
capabilities for wireless
handheld devices
</TABLE>

Wireless Financial Information and Trading Services

Our wireless financial information and trading services and customers are
described below.

- Reuters MarketClip. In March 1998, we introduced the Reuters MarketClip
service, which delivers news stories, real-time financial market price
quotes, historical graphs and stock alerts from Reuters to Palm and
Windows CE devices. We charge individual subscribers a flat monthly fee
for unlimited usage of this service in addition to the fees charged by
the securities exchanges and markets for the right to view real-time
price quotes. Based on our records, each MarketClip customer sends an
average of 110 queries per day. The service operates using CDPD or
Mobitex networks. These networks cover geographic areas that enable us to
provide service to more than 90% of the U.S. population. We also continue
to support AirBroker, a predecessor to MarketClip that provides market
information using mobile phones.

- Chicago Board of Trade. In June 1999, we began a limited trial of a
wireless trade recording system, PitViper, for the Chicago Board of
Trade, or CBOT. This trial allows up to 15 users of Palm devices to track
and record trades executed on the floor. Once a trade is entered on
PitViper, the terms of the trade are transmitted to CBOT's trade
confirmation system. Traders can also

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access real-time price quotes for commodities and futures as well as news
stories. We expect that the CBOT will make PitViper available to the
approximately 3,500 CBOT floor traders if the trial succeeds. We intend
to charge individual subscribers a flat monthly fee for the service.

- Discover Brokerage TradeRunner. In August 1999, we launched TradeRunner,
a new service that allows Discover Brokerage's online customers to trade
stocks, mutual funds and options using Palm devices. In addition,
subscribers receive news stories, real-time financial market price
quotes, historical graphs and stock alerts from Reuters. We charge
Discover Brokerage account holders who subscribe to this service a flat
monthly fee for unlimited usage, in addition to the fees charged by the
securities exchanges and markets for the right to view real-time price
quotes. Users pay Discover Brokerage's regular commission fees for any
trades. Discover Brokerage is marketing and advertising TradeRunner
through radio, print media and its Web site, and we are marketing the
service through our Web site as well. We support TradeRunner through our
customer service and network operations center. The service operates
using CDPD or Mobitex networks. We are currently developing a market
trial for a similar service with Charles Schwab and are in discussions
with other brokerage firms to develop similar services.

- Bear Stearns. We are working with Bear Stearns to develop wireless
trading applications for the brokers and other market professionals of
firms that clear their trades through Bear Stearns. Using handheld
devices, subscribers will be able to access information and capabilities
similar to the Bear Stearns applications that reside on their desktop
computers. Firms who clear trades through Bear Stearns or their market
professionals will pay us a flat monthly per user fee for unlimited
usage.

- Mobeo services. After we complete the Mobeo acquisition, we will offer
and plan to enhance Mobeo's financial information services. These
services will supplement our own by providing additional data relating
primarily to the foreign exchange and selected commodities markets. Mobeo
delivers time-sensitive financial information from Bridge Information
Systems America, Inc. and its subsidiary Telerate, Inc. over wireless
networks that reach the largest 100 metropolitan markets in the United
States. Mobeo currently offers five services, each operating on pagers.
Its flagship service is F/X Alert, a real-time price quote, news and
alert service tracking more than 150 financial instruments including
foreign exchange, fixed income, futures/derivatives and commodities.
Other services called Scrappy, Energy and Pocket Futures track the scrap
metals, energy and futures markets, respectively. Early in 1999, Mobeo
began marketing Mobeo 1.0, a two-way financial market price quotes and
information service, similar to MarketClip, that operates using the RIM
950 two-way pager.

AIM Licensing

Aether Intelligent Messaging, or AIM, is a software platform that
facilitates the development of wireless data systems. We developed AIM in 1997
to improve the performance of data delivery over wireless networks and to
provide a development kit to speed the software development process. We use AIM
internally to develop and support wireless data services, such as TradeRunner
and PitViper. We recently launched a program to license AIM to both software
developers and large corporations. Software developers can integrate AIM with
their applications to provide those applications with a wireless capability.
When the AIM-based application is sold, we can then earn one-time revenue from
per-user license fees or recurring revenue if the application is run from our
network operations center. Similarly, corporate customers who develop AIM-based
applications for their own use can pay us license fees per user or recurring
services fees if we host the application.

How AIM Works. The diagram below illustrates how AIM works to integrate
sources of data with wireless networks and devices. Data and applications come
from internal corporate systems, such as those at Discover Brokerage, from
public data sources via the Internet or from proprietary systems such as Reuters
Selectfeed Plus. AIM then takes the data, replaces unnecessary or repetitive
message-header information with more streamlined tags, compresses and encrypts
it so the data can move quickly and securely outside the source's firewall and
then sends it over the airwaves using any of a number of wireless

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<PAGE> 41

networks to the intended device. Not all devices will work on all wireless
carrier networks. AIM can be configured to support other networks as they are
developed and as customer needs require.

[HOW AIM WORKS FLOW CHART]

AIM has the following features and benefits.

- AIM enhances the speed, efficiency and security of data transmission over
wireless networks. AIM trims unnecessary electronic message tags and
compresses data, with no loss in the reliability of message delivery. As
a result, users get data quickly and at low cost. AIM uses a
sophisticated encryption technology known as elliptic curve cryptography,
or ECC, developed by Certicom Corp.

- AIM simplifies programming required to convert data into a form that can
be transmitted over wireless networks. AIM uses industry-standard
programming languages and includes application program interfaces. AIM
comes with a software development kit that provides programmers step-
by-step guides and automatically generates code for major system
components based on the options selected. As a result, programmers can
focus on the business objectives the system is designed to meet, rather
than becoming immersed in unfamiliar and complex software and wireless
network protocols.

- AIM facilitates the interaction of major operating systems on which most
corporate applications run with the most widely used wireless data
networks and devices. To date, AIM is compatible with the

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following wireless network carrier protocols, mobile device operating systems
and corporate operating systems:

- wireless network carrier protocols: CDPD, Mobitex and ReFlex, a
two-way paging technology developed by Motorola;

- mobile device operating systems: Palm computing platform, Windows CE,
two-way pagers, mobile phones and Windows 95/98/NT and their
corresponding modems; and

- corporate operating systems: Windows NT, UNIX, Linux and most
mainframe operating systems.

As a result, our business customers can offer a wide variety of
applications for wireless transmission, and end users can similarly
choose from a number of devices. Our engineers continually develop the
capabilities of AIM as new systems, protocols and devices emerge.

Engineering Services

We began operations in 1996 by providing engineering services to businesses
seeking to develop wireless data systems. Our customers have included the U.S.
Postal Service and Reuters Group Overseas Holding(UK) Limited. Our engineers
have experience in developing wireless applications for a variety of businesses.

Since 1998, we have focused our efforts more on developing wireless data
services--such as MarketClip and TradeRunner--that will result in recurring
subscription revenue to us. While we therefore no longer provide engineering
services strictly to generate revenue, we do take on assignments that might
allow us to expand into new geographical markets or industry sectors or to
provide new services, in particular by introducing us to new technologies. In
addition to our contract with OpenSky, our current engineering services clients
include a subsidiary of Ericsson and ORBCOMM. The work we will do for Ericsson
will help us to enhance two-way paging services for the financial services
industry. Through our work with ORBCOMM, we hope to develop new services for the
transportation industry. We generally charge our clients for engineering time on
an hourly basis or a per project flat fee.

OPERATIONS

Engineering and Project Implementation

Our most important operational resource is our engineering staff. This
staff includes wireless systems engineers, software engineers who specialize in
developing applications for handheld devices and engineers who specialize in
systems integration and testing. We have steadily built our engineering ranks,
more than doubling the number from ten in 1998 to 27 in August 1999. Our
engineers have, on average, more than ten years of experience in the wireless
data industry. Many come from engineering departments at established companies,
including IBM, Westinghouse Electric Corporation and UPS/Roadnet. Mobeo
currently has one engineer and outsourcing relationships with several
engineering firms. We do not currently outsource any engineering projects.

Project implementation is critical to the effective delivery of services to
our customers. Projects generally consist of the following phases: project
definition, development, pilot testing, quality assurance and launch. Each
project has a project manager who works closely with the customer and
coordinates our engineers and our operations and marketing personnel through all
phases of the project. Our operations staff prepares documentation and training
manuals. During the product launch phase, we send operations teams to train
customer personnel on product use and support. Our marketing department works
closely with customers before commercial launch to coordinate advertising and
publicity.

Technology and Network Operations

We operate a secure network operations center at our headquarters in Owings
Mills, Maryland. We believe that this center is a vital component of our
wireless data service offerings and differentiates us from

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our competitors. By outsourcing to us, our customers are relieved of the
technology and operations burden of managing a highly complex wireless data
system. From our network operations center, we maintain T1 connections (with T1
or ISDN backup) both to our customers' data sources and to the wireless data
networks we use. The center is equipped with Cisco and Hewlett-Packard
networking equipment, Sun Sparc UNIX services and high-end clustered NT servers.
In the event of a catastrophic power failure, there is a diesel-powered
generator that is maintained on a weekly basis. We believe our network
operations center is capable of meeting the security standards for services we
developed or are developing for Reuters, Discover Brokerage, the CBOT and
Charles Schwab. We are planning to establish a remote backup facility in early
2000 to provide additional redundancy. The center is staffed from 8:00 a.m. to
8:00 p.m. Eastern time on weekdays and is monitored 24 hours a day, seven days a
week.

Sales and Marketing

We currently market our products and services to the following customer
types: individual investors, financial market professionals and corporations.
For our financial market services, we seek to involve other parties, including
our corporate customers, in our marketing activities, as has been the case with
Reuters, AT&T Wireless Services and Discover Brokerage. As of July 31, 1999, we
had five sales and marketing professionals. We intend to grow this number
significantly in the next 12 months. Our business development personnel and
senior executives, particularly our chief executive officer and chief operating
officer, also spend a considerable amount of time developing potential customer
relationships and selling and promoting our services. With the proceeds from
this offering, we are planning to make a significant investment in building the
Aether brand. Our target customer segments, the services we sell to them and how
we reach them are described below.

- Individual investors. We believe individual investors are the primary
subscribers to our wireless financial information and trading services,
such as MarketClip and TradeRunner. As of July 31, 1999, we had 926
subscribers to MarketClip and an additional 50 subscribers to its
predecessor, AirBroker. Print advertising in finance-related publications
is our primary means of marketing these services. Our strategy is to
share marketing and advertising costs with our strategic partners and
corporate customers associated with particular services. For example,
AT&T Wireless Services, which benefits from increased usage of its
wireless data network, has shared with Aether the cost of advertising for
MarketClip. Ericsson has agreed to join the marketing campaign for
MarketClip beginning in the fall of 1999. Discover Brokerage, which
benefits from an enhanced service offering and increased customer trading
activity, pays for all of the advertising of TradeRunner. Our wireless
financial information and trading services are also marketed to
individual investors at financial services industry trade shows and on
the Web sites of Aether, Discover Brokerage and Reuters. Our customer
service center handles in-bound calls generated from these marketing
efforts and signs up new subscribers.

- Financial market professionals. We seek to develop relationships with
financial institutions, whose market professionals become the end users
of our services. We are currently developing wireless trade recording
applications for CBOT floor traders and wireless trading applications for
Bear Stearns's trade clearing clients. After we complete the Mobeo
acquisition, we will also provide Mobeo's wireless foreign exchange
information services, which are primarily used by financial market
professionals. As of July 1999, Mobeo had more than 3,400 subscribers for
its services. Mobeo markets its products through four direct sales
executives in New York and Chicago and through occasional advertising in
financial trade publications.

- AIM licensees. We are accelerating our efforts to market AIM to new
industries. To date, we have licensed AIM to Riverbed Technologies, a
leading developer of software tools for wireless handheld devices. We
have also established relationships with Microsoft, Oracle Corporation,
Sybase Inc. and Lotus Development Corporation to integrate AIM with their
software products and will work to develop similar relationships with
other software developers. We are targeting our direct sales effort at
large corporations with a significant mobile workforce who wish to
develop their own wireless applications.
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- Engineering services clients. As part of our business development
effort, we seek out engineering assignments that might allow us to expand
into new geographical markets or industry sectors or to provide new
services, in particular by introducing us to new technologies.

Product Fulfillment, Customer Service and Billing

We provide product fulfillment, customer service and billing at our
customer service center, located at our headquarters. We maintain a modest
inventory of mobile devices and wireless modems, which we buy in bulk from
manufacturers and resellers. Our customer service representatives first verify
that a potential subscriber will have wireless network coverage where they plan
to use the service. For qualified subscribers, we load and configure custom
software on mobile devices, activate wireless modems and perform quality
assurance checks. We then pack, ship and track the product until the subscriber
receives it. For end users who already own a device, we provide only the modem
and software application. We handle all repair and warranty issues for devices
we provide to our subscribers.

We employ nine permanent and three temporary customer service
representatives, most of whom are college educated. We train our customer
service representatives to handle inquiries about our services, device features
and wireless communications. Our customer service personnel are available from
8:30 a.m. until 8:00 p.m. Eastern time. We plan to expand our customer service
center during the fourth quarter of 1999.

We handle customer billing for all subscription fees, devices and modems,
securities exchange and market charges and other fees. We bill monthly for
subscriber services, which subscribers must pay by credit card. As a result, our
billing system can support increases in our subscriber base. We intend to
enhance our billing capabilities as our needs grow.

STRATEGIC RELATIONSHIPS

A key to our ability to provide complete wireless data services to our
customers is our relationships with wireless network carriers and manufacturers
of mobile devices. These relationships take time to develop, and we therefore
believe they provide us with a time-to-market advantage. We maintain the
strategic relationships described below.

Wireless Network Carriers

We believe our relationships with wireless network carriers are mutually
beneficial. We believe we are among the largest buyers of wireless data network
capacity for many of the carriers we use. As a result, we are able to negotiate
favorable rates. Typically, we have one-year contracts to buy data network
capacity either for an agreed amount of kilobytes at a flat fee or on a
cents-per-kilobyte basis. We have contracts with AT&T Wireless Services, Bell
Atlantic Mobile, BellSouth Wireless Data and Ameritech. As a result, we can give
our customers a wide variety of wireless carrier choices.

Mobile Device Manufacturers

Our services increase the usefulness of wireless handheld devices, and we
believe our services will increase sales of these devices. Mobile device
manufacturers have therefore assisted us in various projects we have undertaken.
We have worked closely with 3Com, an Aether investor, on the development of our
wireless applications for the Palm personal organizer. In late 1998, 3Com's
investment helped us fund construction of our customer service and network
operations center. In August 1999, a subsidiary of Ericsson, one of the largest
manufacturers of wireless phones, agreed to assist us in marketing MarketClip
and in developing and marketing other financial information services. Ericsson
is also assisting us in developing services using WAP phones and next-generation
high-speed GPRS data networks. We participate in industry development groups
dedicated to bringing new applications to wireless data, such as the Palm
developers group, the WAP Forum and the Windows CE developers forum.

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<PAGE> 45

Financial Content Providers

Financial content providers supply Aether with real-time financial
information, which we provide to our wireless data subscribers. Reuters which is
an Aether investor, is our primary provider of financial information and market
data for MarketClip and TradeRunner. After we complete the Mobeo acquisition, we
expect to continue Mobeo's relationship with Bridge Information Systems America,
Inc., another financial content provider, and its subsidiary Telerate, Inc. We
have agreements with the New York Stock Exchange, the Nasdaq Stock Market, Inc.,
the CBOT and the Options Price Reporting Authority that authorize us to provide
real-time price quotes.

OPENSKY

In August 1999, we entered into a joint venture called OpenSky with 3Com.
We formed OpenSky to pursue opportunities in the emerging consumer and business
mass markets for wireless Internet access, e-mail and e-commerce applications.
OpenSky's main business objectives and strategies include those set forth below.

- OpenSky will seek to develop a package of applications and services that
includes a selection of Web sites that have been customized for access
via wireless handheld devices, general Web browsing, access to a user's
existing e-mail account and selected e-commerce services.

- OpenSky intends to co-market this package with wireless network carriers
and Internet content providers in order to benefit from their brand
recognition and marketing channels. OpenSky may also seek to bundle its
service package with devices that are distributed by major national
computer retailers.

- OpenSky will seek to develop services that can access all platforms and
devices, rather than committing to a single device or network protocol.

We have a 26% equity interest in OpenSky on a fully diluted basis in the
form of 7,000,000 shares of preferred stock. We also have a warrant to buy up to
an additional 3,000,000 shares of preferred stock for an aggregate exercise
price of $2.5 million, which would give us up to a 33% interest in OpenSky on a
fully diluted basis. We have a letter agreement with OpenSky to provide
engineering services for the design and development of OpenSky's proposed system
and services, and OpenSky has a royalty-free license to use our AIM software
platform. Additionally, we have a two-year right of first refusal to design and
develop custom systems and applications for all services relating to investment
banking and brokerage activities. We also have the right to bundle OpenSky
services for a period of five years as an added feature to the other services we
offer. We describe the details of our interest in OpenSky in "Transactions
Between Aether and Its Officers, Directors and Significant
Shareholders--OpenSky."

Our chairman, chief executive officer and president, David S. Oros, serves
as chairman of the OpenSky board of directors. Patrick McVeigh, former president
of the Palm Computing division of 3Com, serves as president and chief executive
officer of OpenSky and also serves on the OpenSky board of directors. OpenSky is
based in Palo Alto, California.

MOBEO ACQUISITION

On August 19, 1999, we entered into an agreement to purchase all of the
common stock of Mobeo, Inc. for a purchase price of $12.2 million in cash, which
does not include our transaction costs of approximately $150,000. At closing, we
will pay the selling stockholders of Mobeo the purchase price minus the cash
deposit of $50,000 previously paid and broker's fees and commissions set forth
in the agreement. All options to acquire shares of Mobeo's common stock will be
exercised or cancelled prior to closing. We expect to complete the transaction
by October 3, 1999, subject to customary closing conditions and our ability to
obtain financing. If we fail to close by October 3, 1999, we may be obligated to
pay Mobeo $200,000, which would be credited against the purchase price should
the acquisition eventually close. We are in the process of evaluating various
financing options, including a possible senior secured credit facility.
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After we complete the Mobeo acquisition, we will gain 19 additional
employees. All three of the selling stockholders will enter into non-compete
agreements as a condition to closing. Additionally, two of the selling
stockholders will enter into advisory services agreements in return for an
aggregate of 125,000 Aether options, and one of the selling stockholders will
enter into an employment agreement in return for 26,000 Aether options. All
three of the selling stockholders have agreed to indemnify and hold Aether
(including without limitation its officers, directors, stockholders and
affiliates) harmless for all liabilities, losses and claims (including third
party claims) resulting from a breach of the representations, warranties and
covenants contained in the definitive agreement. Additionally, the three selling
stockholders have agreed to waive any right of contribution or indemnification
against Mobeo.

COMPETITION

The market for our services is becoming increasingly competitive. The
widespread adoption of industry standards may make it easier for new market
entrants and existing competitors to introduce services that compete against
ours. We expect that we will compete primarily on the basis of the
functionality, breadth, quality and price of our services. Our current and
potential competitors include:

- Wireless financial services providers, including W-Trade and EmailPager,
Inc.;

- Wireless data services providers, such as Wireless Knowledge, a joint
venture of Microsoft and Qualcomm Incorporated, Go America and
Saraide.com;

- Wireless communications software companies, including Phone.com, Nettech
Systems Inc., Dynamic Mobile Data and 724 Solutions Inc.;

- Wireless systems integrators, such as IBM, ApiON Ltd., and GTE
Corporation; and

- Wireless network carriers, such as AT&T Wireless Services, Bell Atlantic
Mobile, Sprint PCS, Nextel Communications, Inc. and Metricom, Inc.

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

Notwithstanding the increasing competitiveness of our market, we believe
that our potential competitors face substantial barriers to market entry.
Development of wireless data systems comparable to those we have already
developed is time consuming and costly. Moreover, the engineering talent
necessary to develop such systems is scarce.

INTELLECTUAL PROPERTY RIGHTS

We rely on a combination of copyright, trademark, service mark, trade
secret laws and contractual restrictions to establish and protect certain
proprietary rights in our services. We have no patented technology that would
preclude or inhibit competitors from entering our market, though Mobeo has
applied for two patents in its technology and we will acquire the rights to
those patents if we complete that acquisition. In addition, we do not have any
federal trademark registrations in the name "Aether" or "AIM" and we may not be
able to obtain such registrations due to conflicting marks or otherwise. The
steps taken by us to protect our intellectual property may not prove sufficient
to prevent misappropriation of our technology or to deter independent
third-party development of similar technologies. The laws of certain foreign
countries may not protect our services or intellectual property rights to the
same extent, as do the laws of the United States. We also rely on certain
technologies that we license from third parties. These third-party technology
licenses may not continue to be available to us on commercially attractive
terms. The loss of the ability to use such technology could require us to obtain
the rights to use substitute technology, which could be more expensive or offer
lower quality or performance, and therefore have a material adverse effect on
our business, financial condition or results of operations.

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To date, we have not been notified that our services infringe on the
proprietary rights of third parties, but third parties could claim infringement
by us with respect to current or future services. We expect that participants in
our markets will be increasingly subject to infringement claims as the number of
services and competitors in our industry segment grows. Any such claim, whether
meritorious or not, could be time-consuming, result in costly litigation, cause
service installation delays or require us to enter into royalty or licensing
agreements. Such royalty or licensing agreements might not be available on terms
acceptable to us or at all. As a result, any such claim could have a material
adverse effect upon our business, financial condition or results of operations.

GOVERNMENT REGULATION

We are not currently subject to direct federal, state or local government
regulation, other than regulations that apply to businesses generally. The
wireless network carriers we contract with to provide airtime are subject to
regulation by the Federal Communications Commission. Changes in FCC regulations
could affect the availability of wireless coverage these carriers are willing or
able to sell to us. We or OpenSky could also be adversely affected by
developments in regulations that govern or may in the future govern the
Internet, the allocation of radio frequencies or the placement of cellular
towers. Regulations of the SEC governing online trading could reduce the level
of online trading or the demand for wireless financial information. Also,
changes in these regulations could create uncertainty in the marketplace that
could reduce demand for our services or increase the cost of doing business as a
result of costs of litigation or increased service delivery cost or could in
some other manner have a material adverse effect on our business, financial
condition or results of operations.

We currently do not collect sales or other taxes with respect to the sale
of services or products in states and countries where we believe we are not
required to do so. We do collect sales and other taxes in the states we have
offices and are required by law to do so. One or more jurisdictions have sought
to impose sales or other tax obligations on companies that engage in online
commerce within their jurisdictions. A successful assertion by one or more
jurisdictions that we should collect sales or other taxes on our products and
services, or remit payment of sales or other taxes for prior periods, could have
a material adverse effect on our business, financial condition or results of
operations.

Any new legislation or regulation, or the application of laws or
regulations from jurisdictions whose laws do not currently apply to our
business, could have an adverse effect on our business.

FACILITIES

Our principal offices are located in Owings Mills, Maryland in a 15,436
square foot facility under a lease expiring in February 2004, with no renewal
option. We also lease space for our offices in Boca Raton, Florida and New York,
New York.

After we complete the Mobeo acquisition, we will have an additional 6,000
square feet of office space in Bethesda, Maryland, New York, New York and Chevy
Chase, Maryland. These leases expire at different times ranging from November
30, 1999 to December 31, 2004. We will also have month-to-month leases for
executive apartments in Chicago, Illinois and in Bethesda, Maryland.

EMPLOYEES

As of August 1999, we had a total of 56 employees, 27 of whom were
engineers. None of our employees is covered by a collective bargaining
agreement. We believe that our relations with our employees are good.

After we complete the Mobeo acquisition, we will have an additional 19
employees. None of these employees is covered by a collective bargaining
agreement. We believe that Mobeo's relations with its employees are good.

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.

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MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

Our executive officers, directors and nominees for director, and key
employees and their ages and position with us as of August 20, 1999 are as
follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS:
David S. Oros........................ 39 Chairman, Chief Executive Officer and President
George M. Davis...................... 43 Chief Operating Officer
David C. Reymann..................... 40 Chief Financial Officer
Brian W. Keane....................... 41 Senior Vice President, Strategic Development
Dale R. Shelton...................... 38 Senior Vice President, Engineering
J. Carter Beese, Jr. ................ 43 Director
Frank A. Bonsal, Jr. ................ 62 Director
Mark D. Ein.......................... 34 Director
Rahul C. Prakash..................... 38 Director
Janice M. Roberts.................... 43 Director
Dr. Rajendra Singh................... 43 Director
George P. Stamas..................... 48 Director
Devin N. Wenig....................... 32 Director
Thomas E. Wheeler.................... 53 Director
KEY EMPLOYEES:
David J. Bressler.................... 31 Vice President, AIM Sales and Marketing
Calvin A. Cassidy.................... 42 Vice President, Enterprise Systems and
Solutions
John Clarke.......................... 36 Vice President, Operations
Andrew S. Meister.................... 36 Vice President, Technical Sales
Gregory S. Milbank................... 40 Senior Vice President, Sales
Michael B. Mills..................... 38 Vice President, Business Development
</TABLE>

Messrs. Beese, Bonsal, Ein, Prakash, Wenig and Wheeler and Dr. Singh are
currently managers of Aether Technologies International, L.L.C., and they, Ms.
Roberts and Mr. Stamas are expected to be elected directors of Aether Systems,
Inc. immediately prior to the offering.

David S. Oros founded Aether in 1996 and has been our chairman, chief
executive officer and president since Aether's inception. Mr. Oros also serves
as chairman of the board of directors of OpenSky. From 1994 until 1996, Mr. Oros
was president of NexGen Technologies, L.L.C., a wireless software development
company that contributed all of its assets to Aether. From 1992 until 1994, he
was president of the Wireless Data Group at Westinghouse Electric. Prior to
that, Mr. Oros spent from 1982 until 1992 at Westinghouse Electric directing
internal research and managing large programs in advanced airborne radar design
and development. Mr. Oros received a B.S. in mathematics and physics from the
University of Maryland and holds a U.S. patent for a multi-function radar
system.

George M. Davis has served as our chief operating officer since September
1997. He joined us in September 1996 as vice president, business development to
lead initiatives required to launch, maintain and develop business opportunities
for our services. From September 1994 until September 1996, Mr. Davis was
director, enterprise management systems at Northrop Grumman Corp. Prior to that
time, Mr. Davis spent more than 14 years at Westinghouse Electric where he
managed advanced military

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electronic development and production projects. He received a B.S. in business
and economics from Bethany College.

David C. Reymann has served as our chief financial officer since joining us
in June 1998. Mr. Reymann is also responsible for our treasury management
services and human resources. Before joining us, Mr. Reymann was director of
finance and accounting for The Sweetheart Cup Company from June 1996 until May
1998, where he managed the financial analysis department and the accounting
operations for 11 North American manufacturing plants. Prior to that, Mr.
Reymann spent 12 years with Procter & Gamble serving in several key finance,
accounting and operations positions. Prior to that, Mr. Reymann spent five years
at Ernst & Young where he most recently specialized in emerging growth
companies. Mr. Reymann received a B.S. in accounting from the University of
Baltimore and is a certified public accountant.

Brian W. Keane has served as senior vice president, strategic development
since joining us in August 1999. Mr. Keane is responsible for our mergers and
acquisitions activities as well as the development of strategic relationships
and partnerships. From February 1998 until August 1999, Mr. Keane was chief
financial officer for Management Information Consulting, Inc., a technology
consulting company. Prior to that, Mr. Keane spent ten years as an investment
banker with Smith Barney Inc. Mr. Keane received an A.B. in history and
mathematics from Cornell University and an M.B.A. from Harvard Business School.

Dale R. Shelton has served as our senior vice president, engineering since
he joined us in June 1996 to direct the development of AIM and our wireless data
services. From January 1994 until June 1996, Mr. Shelton served as the systems
development leader for flash-flood prediction systems at the National Weather
Service. From June 1992 until January 1994, Mr. Shelton was principal engineer
for ARINC, Inc., where he led the development of aviation tracking and
maintenance systems. He received a B.S. in computer science from the University
of Maryland.

J. Carter Beese, Jr., has been a manager of our limited liability company
since June 1997 and is expected to be elected a director of Aether prior to
closing the offering. Since July 1998, Mr. Beese has served as president of
Riggs Capital Partners, a division of Riggs National Corp., where he oversees a
$100 million venture capital fund. From September 1997 until July 1998, he
served as vice chairman of the Global Banking Group of BT Alex. Brown. Prior to
the merger of Bankers Trust and Alex. Brown, Mr. Beese was chairman of Alex.
Brown International from November 1994 until September 1997. From February 1992
until November 1994, Mr. Beese served as a commissioner of the U.S. Securities
and Exchange Commission. Mr. Beese serves as a senior advisor to the Center for
Strategic and International Studies, a non-partisan public policy think tank and
is involved in the World Economic Forum. He serves as a director on the board of
China.com. Mr. Beese received a B.S. in economics and political science from
Rollins College.

Frank A. Bonsal, Jr., has been a manager of our limited liability company
since May 1999 and is expected to be elected a director of Aether prior to
closing the offering. Since 1978, Mr. Bonsal has been a founding partner of New
Enterprise Associates, one of the largest venture capital firms in the United
States. Mr. Bonsal has focused on the development of early stage companies. He
currently serves as a director on the boards of CARS, Inc., CORVIS Corp., Entevo
Corp., Explore, Inc., GeneScreen, Inc. and Healthy Pet Inc. In addition, he is a
special limited partner of Amadeus Capital Partners, Boulder Venture, Novak
Biddle, Trellis Ventures and Windward Ventures. Mr. Bonsal received a B.A. in
economics from Princeton University.

Mark D. Ein is a co-founder of Aether, has been a manager of our limited
liability company since October 1996 and is expected to be elected a director of
Aether prior to closing the offering. Since September 1992, Mr. Ein has been a
principal with The Carlyle Group, where he has been responsible for many of its
telecommunications investment activities. Prior to joining Carlyle, Mr. Ein was
an associate with Brentwood Associates, where he worked on leveraged buyout and
venture capital investments. Prior to joining Brentwood Associates, he was an
analyst in the real estate department of Goldman, Sachs and Company. Mr. Ein
currently serves as a director on the boards of LCC International, Inc. and
several
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private companies. Mr. Ein received a B.S. in economics from the University of
Pennsylvania and an M.B.A. from Harvard Business School.

Rahul C. Prakash has been a manager of our limited liability company since
January 1996 and is expected to be elected a director of Aether prior to closing
the offering. Since January 1997, Mr. Prakash has served as president of Telcom
Ventures, L.L.C., a wireless communications investment company. From January
1994 until December 1996, Mr. Prakash served as vice president, business
development of Telcom Ventures. Prior to that time, he served as a director of
business development at LCC International, Inc. From 1993 until 1994, Mr.
Prakash was the director of business development for Telemate, a joint venture
he helped establish between LCC and France Telecom. Mr. Prakash is a director on
the board of Infonet Redes de Informacion, C.A., a Venezuelan GSM cellular
operator controlled by Telcom Ventures. He received a B.A. in international
finance from American University and an M.B.A. from the University of New Delhi,
Faculty of Management Studies.

Janice M. Roberts is expected to be elected a director of Aether prior to
closing the offering. Since September 1992, Ms. Roberts has served as senior
vice president of global marketing and business development for 3Com. She is
also president of 3Com Ventures, a corporate investment fund, and a director of
OpenSky. From January 1992 until September 1992, Ms. Roberts served as vice
president and general manager for 3Com's enterprise networking division. From
1989 until January 1992, Ms. Roberts was with BICC Communications where she held
several positions, including most recently, president and managing director of
its worldwide data networking business. Previously, she held a number of senior
international marketing, sales and business development positions in
engineering, electronics and communications-based companies. She holds an Honors
degree in economics and business from the University of Birmingham in the United
Kingdom and is a member of the Chartered Institute of Marketing.

Dr. Rajendra Singh has been a manager of our limited liability company
since January 1996 and is expected to be elected a director of Aether prior to
closing the offering. Since December 1993, Dr. Singh has served as chairman of
the board of directors and chief executive officer of Telcom Ventures, L.L.C.
Since 1983, Dr. Singh has served as chairman of the board of directors of LCC
International, Inc., a worldwide provider of wireless engineering and design
services, which he co-founded with his wife in 1983. Dr. Singh has played an
instrumental role in the cellular industry by developing key standards used
today in wireless system design and methodology. Dr. Singh is a member of the
board of directors of Teligent, Inc. and XM Satellite Radio Holdings, Inc. He
received a Ph.D. in electrical engineering from Southern Methodist University.

George P. Stamas is expected to be elected a director of Aether prior to
closing the offering. Since April 1996, Mr. Stamas has been a partner with the
law firm of Wilmer, Cutler & Pickering and since June 1996 he has been
co-chairman of that firm's corporate department. From 1983 until April 1996, Mr.
Stamas was a partner at Piper & Marbury L.L.P. Mr. Stamas is counsel to, and a
limited partner of, the Washington Capitals hockey team and the Baltimore
Orioles baseball team. Mr. Stamas also serves on the board of directors of FTI
Consulting, Inc., a provider of litigation support services. He received a B.S.
in economics from the Wharton School of the University of Pennsylvania and a
J.D. from University of Maryland Law School.

Devin N. Wenig has been a manager of our limited liability company since
August 1998 and is expected to be elected a director of Aether prior to closing
the offering. In April 1994, Mr. Wenig joined Reuters America, Inc. and was
promoted to executive vice president of marketing in August 1998, where he is
responsible for marketing and business development for Reuters's information
businesses in the Americas. Mr. Wenig serves as a director on the boards of Loan
Pricing Corp., Intralinks, Inc., FreeEdgar.com and Nastech Pharmaceutical
Company, Inc. He received a B.S. from Union College and a J.D. from Columbia
University.

Thomas E. Wheeler has been a manager of our limited liability company since
May 1999 and is expected to be elected a director of Aether prior to closing the
offering. Since 1992, Mr. Wheeler has served as president and chief executive
officer of the Cellular Telecommunications Industry Association. In
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<PAGE> 51

1994, Mr. Wheeler was appointed by President Clinton to a six-year term as a
member of the board of trustees of the John F. Kennedy Center for the Performing
Arts. Mr. Wheeler is a director on the boards of the Public Broadcasting System
and the U.S. Capitol Historical Society. He received a B.S. in business
administration from Ohio State University.

David J. Bressler joined us in June 1999 as vice president, AIM sales and
marketing. From June 1995 until April 1999, Mr. Bressler worked at TIBCO
Software, Inc., where he was director of enterprise network solutions. From
April 1994 until May 1995, he was a network design engineer for the network
integration unit of Bell Atlantic Corporation. Mr. Bressler received a B.A. in
mathematics from the City University of New York and an M.B.A. in international
business and information technology from New York University.

Calvin A. Cassidy joined us in November 1998 as vice president, enterprise
systems and solutions to oversee project development and implementation. From
October 1997 until November 1998, Mr. Cassidy handled project development for
transportation management systems at Lockheed Martin Corp. From January 1995
until October 1997, Mr. Cassidy managed business development for transportation
systems at Tenera, Inc. From July 1980 until January 1995, Mr. Cassidy also
developed and delivered advanced defense and commercial systems at Westinghouse
Electric. Mr. Cassidy received a B.S. in computer science from Virginia Tech, an
M.S. from George Washington University and an M.B.A. from Loyola College in
Baltimore.

John Clarke joined us in January 1996 as vice president, operations and
oversees our customer service and network operations center. From June 1986
until January 1996, Mr. Clarke developed advanced microwave systems at
Westinghouse Corp. He received a B.S. in engineering from Clarkson University
and an M.B.A. from Loyola College in Baltimore.

Andrew S. Meister is a co-founder of Aether and serves as vice president,
technical sales. Prior to joining us, he was a vice president, engineering at
NexGen from August 1995 until January 1996. From August 1993 until August 1995,
Mr. Meister was the engineering manager at Mobile Solutions Inc. From January
1987 until August 1993, Mr. Meister was a senior software engineer at United
Parcel Service. Mr. Meister received a B.S. in computer science from
Northeastern University and an M.S. in computer science from Johns Hopkins
University.

Gregory S. Milbank joined us in June 1998 and serves as senior vice
president, sales. From 1997 until June 1998, Mr. Milbank was with Reuters
America, Inc. where he held a position in new business development. His duties
at Reuters included development of The Open Systems Group, created to support
trading room system and data feed sales and support, and he was also a member of
the management team that oversaw the acquisition of Quotron from Citibank. Mr.
Milbank began his career in financial information technology in 1983 with Market
Information, Inc., a subsidiary of U.S. Sprint, where he was western regional
manager.

Michael B. Mills joined us in April 1999 as vice president, business
development. His primary role is to lead initiatives required to launch,
maintain and develop business opportunities and to guide corporate strategy and
alliances. Prior to joining us, Mr. Mills worked for 10 years as a
telecommunications and technology writer. From April 1994 until April 1999, Mr.
Mills wrote for the Washington Post, and from 1987 until April 1994 he wrote for
Congressional Quarterly and other publications. Mr. Mills received a B.A. from
Michigan State University and an M.A. in public affairs journalism from American
University.

At the time of closing of this offering, our board will have ten directors.
The agreement governing our limited liability company requires the seats on the
board of managers of the limited liability company to be allocated to specific
members identified in the agreement. This agreement will end when we convert to
a corporation before completion of the offering. We expect that five of the
members who will become stockholders of the corporation will enter into a
stockholder agreement that will govern voting for our directors. We expect that
NexGen, Telcom Ventures and a subsidiary of Telcom Ventures, Reuters, and
3Com--who will together hold % of the shares of common stock outstanding
after the offering--will be parties to this agreement. We expect the agreement
to require each party to vote all its shares for two

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<PAGE> 52

directors named by NexGen, two directors named by Telcom Ventures and one
director named by each of Reuters and 3Com. We expect that Messrs. Oros and Ein
will be named by NexGen, Dr. Singh and Mr. Prakash will be named by Telcom
Ventures, Mr. Wenig will be named by Reuters and Ms. Roberts will be named by
3Com as directors under the stockholder agreement. The terms of the limited
liability company agreement and the expected terms of the stockholder agreement
are further described in "Transactions Between Aether and its Officers,
Directors and Significant Stockholders."

Directors will be elected for a term of one year.

Our executive officers will be appointed by, and serve at the discretion
of, our board of directors. We expect that each of our officers will devote
substantially full time to our affairs. We expect that our non-employee
directors will devote such time to our affairs as is necessary to discharge
their duties. There are no family relationships among any of our executive
officers, directors or key employees.

COMMITTEES OF THE BOARD OF DIRECTORS

Immediately after the offering, the compensation committee will consist of
Messrs. and Wheeler. The compensation committee:

- reviews and approves the compensation and benefits for our executive
officers and grants stock options under stock option plans that we may
have from time to time; and

- makes recommendations to the board of directors regarding executive
compensation matters.

Immediately after the offering, the audit committee will consist of Messrs.
and Wheeler. 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.

DIRECTOR COMPENSATION

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

We have granted options to acquire units in our limited liability company
to managers of the limited liability company from time to time. The following
table identifies options that have been granted to non-employee director
nominees since January 1, 1996. Upon the conversion of our limited liability
company into a corporation before the offering, each option to acquire one unit
will be converted into an option to acquire shares of our common
stock. The exercise price of each option to acquire one unit will be divided by
when that option is converted into an option to receive shares of common
stock.

<TABLE>
<CAPTION>
NUMBER OF
UNITS UNDERLYING EXERCISE
NON-EMPLOYEE DIRECTOR OPTIONS(#) PRICE($)
- ------------------------------ ---------------- --------
<S> <C> <C>
J. Carter Beese, Jr. ......... 30,000 $1.00
Frank A. Bonsal, Jr. ......... 15,000 4.42
Mark D. Ein................... 40,000 1.00
Thomas E. Wheeler............. 15,000 4.42
</TABLE>

EXECUTIVE COMPENSATION

Summary Compensation. The following table sets forth compensation awarded
to, earned by or paid to our chief executive officer and the other executive
officers whose total cash compensation exceeded $100,000 during the year ended
December 31, 1998. We refer to these three officers as the "named

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<PAGE> 53

executive officers." Information regarding options shows the number of units of
our limited liability company for which the options are exercisable. Upon the
conversion of our limited liability company into a corporation before the
offering, each option to acquire one unit will be converted into an option to
acquire shares of our common stock.

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- --------------------------
UNITS
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION SALARY ($) BONUS ($) ($) (#) ($)
--------------------------- ---------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
David S. Oros...................... $200,000 $150,000 -- -- $ --
Chairman, Chief Executive Officer
and President
George M. Davis.................... 133,333 52,895 $ 2,420 30,000 --
Chief Operating Officer
Dale R. Shelton.................... 109,200 4,000 -- 20,000 --
Senior Vice President,
Engineering
</TABLE>

In addition to the named executive officers, Mr. Reymann, our chief
financial officer, joined us in June 1998 and Mr. Keane, our senior vice
president, strategic development, joined us in August 1999. Mr. Reymann's
employment contract, which is described under "Employment Agreements with
Executive Officers" below, provides for an annual salary of $127,500 and an
award, granted at the time Mr. Reymann joined us, of options to receive 25,000
units with an exercise price of $3.73 per unit. Mr. Keane receives an annual
salary of $150,000 and was awarded options to receive 50,000 units with an
exercise price of $12.00 per unit granted at the time he joined us.

Option Grants. The following table shows information regarding stock
options granted to the named executive officers during the year ended December
31, 1998. Each of the options was for units in the limited liability company.
Upon the conversion of our limited liability company into a corporation before
the offering, each option to acquire one unit will be converted into an option
to acquire shares of our common stock. The exercise price of each
option to acquire one unit will be divided by when that option is
converted into an option to receive shares of common stock. No stock
appreciation rights were granted to these individuals during the year.

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENTAGE VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF UNIT
OPTIONS PRICE APPRECIATION FOR
NUMBER OF UNITS GRANTED EXERCISE OPTION TERM($)(2)
UNDERLYING OPTIONS TO PRICE PER EXPIRATION ----------------------
NAME GRANTED(#)(1) EMPLOYEES UNIT($) DATE 5% 10%
---- ------------------ ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
David S. Oros............................... -- -- -- -- -- --
George M. Davis............................. 30,000 12.4% $3.73 July 2008 $70,373 $178,340
Dale R. Shelton............................. 20,000 8.3% $3.73 July 2008 $46,916 $118,893
</TABLE>

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

(1) The options will vest in their entirety on July 21, 2001 and none of them
vest prior to that date unless there is a change of control of Aether, which
includes a sale of all our assets or the sale of at least 80% of the equity
of our company. Stock options issued before July 21, 1998 expire on the
fifth anniversary of the date of grant, regardless of whether the option
holder's employment with us has been terminated. Options to purchase units
issued on or after July 21, 1998 expire 90 days after the termination of
employment of the option holder.

(2) The 5% and 10% assumed annual rates of compounded unit price appreciation
are mandated by the SEC and are based on the assumption that the exercise
price was the fair market value of the units on the date of grant. There is
no assurance provided to any executive officer or any other holder of our
securities that the actual price appreciation over the 10-year option term
will be at the assumed 5% and 10% levels or at any other defined level.

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<PAGE> 54

Aggregate Option Exercises and Holdings. No options were exercised by the
named executive officers during the year ended December 31, 1998. The following
table provides information concerning the units represented by outstanding
options held by each of the named executive officers as of December 31, 1998.
The table shows the number of units for which the options are exercisable. Upon
the conversion of our limited liability company into a corporation before the
offering, each option to acquire one unit will be converted into an option to
acquire shares of common stock.

<TABLE>
<CAPTION>
NUMBER OF UNITS VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DEC. 31, 1998(#) DEC. 31, 1998($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David S. Oros............................................ -- -- $ $
George M. Davis.......................................... 48,500 31,500 $242,500 $ 75,600
Dale R. Shelton.......................................... 37,500 32,500 $187,500 $107,900
</TABLE>

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

(1) The amount set forth represents the difference between the fair market value
of the underlying units on December 31, 1998 ($6.00 per unit) and the
exercise price of the option.

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

We have entered into employment contracts with Messrs. Oros and Reymann.
Mr. Oros' contract became effective June 22, 1999 and provides for a salary of
$200,000 per year, a performance bonus of up to $100,000 per year and additional
bonuses based on annual revenue targets and proceeds raised from private
placements of our equity securities in 1999. The contract has an initial term
expiring in June 2001 and automatically extends for additional one month
increments until terminated by Aether or Mr. Oros on 15 days notice. Pursuant to
the contract, we granted Mr. Oros a warrant to acquire 350,000 units in our
limited liability company, which will convert into a warrant to acquire
shares of our common stock when we convert into a corporation before
this offering is completed. The warrant currently has an exercise price of $4.00
per unit (which will become $ per share of common stock). We also gave Mr.
Oros the right to allocate to key employees of his choosing warrants to acquire
50,000 units in our limited liability company having the same terms and
conditions. Mr. Oros has awarded 20,000 of these warrants to Mr. Davis, 15,000
warrants to Mr. Shelton and 7,500 warrants to Mr. Reymann. If we terminate Mr.
Oros without cause, he is entitled to receive from us an amount equal to the
salary he would have received during the balance of the term of the employment
contract, and his warrant will fully vest immediately. Under the contract,
"cause" means committing an act of gross negligence or other willful act which
materially adversely affects Aether, refusing to comply in any respect with
specific directions of the managers of our limited liability company, or being
convicted or pleading no contest to any felony or any misdemeanor involving
fraud, breach of trust or misappropriation.

Mr. Reymann's contract was entered into June 1, 1999 and provides for a
minimum salary of $127,500 per year. The contract has an initial term expiring
on June 1, 2001. We and Mr. Reymann have agreed that if we terminate him without
cause, he is entitled to receive from us an amount equal to the salary he would
have received during the balance of the term of the employment contract.

1999 STOCK OPTION PLAN

We intend to adopt and to submit to our stockholders prior to the offering
a stock option plan to promote our growth and profitability, improve stockholder
value, and attract, retain and reward highly motivated and qualified employees
and directors. The compensation committee of our board of directors will
administer the stock option plan unless the board of directors specifies another
committee of the board of directors or chooses to act itself as administrator.
Options for units issued while we were a limited liability company will be
converted into options for shares under the plan when we convert to a
corporation before completion of the offering.

Under a stock option plan, we can grant options for approximately
shares of common stock, which number will adjust automatically to be
of our outstanding common stock from time to time.

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<PAGE> 55

We can grant options to employees in the form of equity options for up to
shares, but may choose not to do so.

All of our employees, directors and certain service providers are eligible
to receive options under a stock option plan. For tax reasons, the stock option
plan limits the number of shares covered by options that an individual can
receive in a calendar year to 50% of the total initial pool. The administrator
will determine the prices, exercise schedules, expiration dates and other
material conditions under which optionees other than non-employee directors may
exercise their options. Except with respect to replacement options, which we
grant to replace options at companies we acquire, the exercise price of these
options may not be less than the fair market value of the common stock on the
date of grant.

The stock option plan limits the time during which an optionee can exercise
an option to no more than 10 years. In addition, an optionee who leaves
employment will generally have no more than ninety days to exercise an option,
reduced to zero days after employment in terminations for cause, and certain
additional rules apply to death and disability. The compensation committee may,
however, override the plan's rules, other than the 10 year limit. We cannot
grant additional options under the long-term incentive plan after the tenth
anniversary of its adoption.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the members of our compensation committee is an officer or employee
of Aether. Other than Mr. Oros, who is an executive officer of Aether and
OpenSky and who serves on the boards of directors of Aether and OpenSky, none of
our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving on our board of directors or compensation committee.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

Our certificate of incorporation will limit 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 Aether 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 will provide that Aether will 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 will cover at least negligence and gross negligence on the part of an
indemnified party. Our bylaws also will 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 Aether 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 will enter into separate indemnification agreements with each of our
directors and officers. These agreements will 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 Aether (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.

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<PAGE> 56

We believe that our proposed 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 Aether 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.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling our company
pursuant to the foregoing provisions, we have been informed that, in the opinion
of the SEC, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.

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<PAGE> 57

TRANSACTIONS BETWEEN AETHER AND ITS
OFFICERS, DIRECTORS OR SIGNIFICANT STOCKHOLDERS

Since our inception, we have engaged in the following transactions with
executive officers, directors and owners of 5% or more of our equity, or
entities related to them.

EQUITY INVESTMENTS

The following discussion describes the issuance of units of our limited
liability company in connection with its initial capitalization and subsequent
financings. Immediately before we complete this offering, our limited liability
company will be converted into a corporation and each unit in the limited
liability company will be converted into shares of our common stock
and each option or warrant for one unit will be converted into an option or
warrant for shares of our common stock.

Aeros L.L.C., our predecessor, was formed in January 1996 by NexGen
Technologies, L.L.C. and a predecessor to Transettlements, Inc. At the time
Aeros was formed, NexGen contributed assets in the wireless data field in
exchange for 3,000,000 units and Transettlements contributed $1,000,000 in cash
in exchange for 1,000,000 units. In May 1996, Transettlements contributed an
additional $500,000 in exchange for an additional 500,000 units. In August 1996,
we changed our name to Aether Technologies International, L.L.C.

In February 1997, a subsidiary of Telcom Ventures, L.L.C. acquired 290,000
units from Transettlements and 43,000 units from NexGen and contributed
$1,000,000 to Aether in exchange for 625,000 units. Additionally, Telcom
Ventures was granted an option to purchase 710,000 units from Transettlements
and two options to purchase a total of 867,000 units from NexGen. In December
1997, Telcom Ventures and its subsidiary contributed an additional $690,369 to
Aether in exchange for an additional 230,123 units. In June 1999, Telcom
Ventures exercised its option with Transettlements and one of its options with
NexGen to purchase 710,000 and 157,000 units, respectively. Aether did not
receive any proceeds from the exercise of these options.

In October 1997, we borrowed $100,000 from Reuters Group Overseas Holdings
(UK) Limited pursuant to a demand note that accrued interest at 7% per year. In
January 1998, we borrowed an additional $100,000 from Reuters at an accrued
interest rate of 7% per year pursuant to a second demand note. In March 1998, as
part of the consideration paid by Reuters for Aether's development of
MarketClip, Reuters cancelled both of these notes.

In January 1998, Pyramid Ventures, Inc., then a subsidiary of BT Alex.
Brown, acquired 333,333 units at $3.00 per unit and 401,961 units at $3.73 per
unit for total proceeds to Aether of approximately $2.5 million. At that time,
Aether redeemed 83,333 units held by NexGen for $249,999 and 250,000 units held
by Transettlements for $750,000. As part of the financing arrangement, Pyramid
agreed to use reasonable efforts (1) to cause BT Alex. Brown to purchase 100
subscriptions to MarketClip for a 12-month period or (2) to refer affiliates of
BT Alex. Brown or third parties to Aether for the purpose of entering into
development contracts with an aggregate price of $300,000 over a two-year
period.

In June 1998, Telcom Ventures and Pyramid each loaned us $250,000. The
notes accrued interest at 8% per year and were due on demand with a stated
maturity date of the earlier of December 31, 1998 or the closing of an
anticipated private placement of units. The notes were convertible into units at
the option of the holder at the rate of $250,000 divided by the per unit price
to be paid in the anticipated private placements. In connection with the
issuance of these notes, we also issued 5,656 warrants with an exercise price of
$0.01 per unit to each of Telcom Ventures and Pyramid. Pyramid converted its
$250,000 loan plus accrued interest in August 1998 into 57,180 units at a per
unit price of $4.42 and exercised its warrant and acquired 5,656 units. In
August 1998, we repaid the amount owed Telcom Ventures, including $2,520 in
interest. In August 1999, Telcom Ventures exercised its warrant and acquired
5,656 units at a per unit price of $0.01.

In August 1998, Reuters received 1,131,222 units in exchange for $4,735,020
in cash and forgiveness of $530,980 we owed Reuters for hardware and other
inventory, offset by $266,000 Reuters owed us under
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<PAGE> 58

a license agreement we previously entered into with Reuters relating to sales of
MarketClip and related fees.

In October 1998, 3Com Corp. contributed $6,000,000, in exchange for
1,000,000 units. At the same time we issued 3Com a conditional warrant to
purchase 357,466 units exercisable at $0.01 per unit if the milestones described
below are achieved before October 29, 2001. 3Com achieved the first milestone
entitling it to exercise 57,466 units as a result of having completed a joint
sales and marketing plan. 3Com may exercise an additional 150,000 units when we
receive $6 million in engineering services revenue from business opportunities
introduced by 3Com. 3Com may exercise an additional 150,000 units if we attain
6,000 wireless service subscribers as a result of business opportunities
introduced to us by 3Com. 3Com has not attained either of these last two
milestones and has not exercised any of its warrants.

LIMITED LIABILITY COMPANY AGREEMENT

NexGen, Transettlements, Telcom Ventures, Pyramid, Reuters, 3Com and Mr.
Ein are members in our limited liability company and parties to a limited
liability company agreement. All members own units of the same class. The
members have the right to participate in any additional equity financings in
order to maintain their current percentage ownership interest. We expect that
these rights will be extinguished in connection with our conversion into a
corporation. The members authorized a group of nine managers to manage and
direct our business and affairs. Under the agreement, NexGen appoints four
managers, Telcom Ventures appoints two managers and each of the other members,
other than Transettlements and Mr. Ein, appoints one manager. The agreement
allows members to conduct business with us so long as the terms are fair and
reasonable to us and have been approved by the managers. Extraordinary
transactions such as the issuance of additional securities, a sale or merger,
the acquisition of substantial assets or the removal of Mr. Oros require the
vote of 60% of all units held by the members other than Mr. Ein. Each member
must approve any change to the agreement if the change would have a materially
adverse effect on the member's rights and obligations. The members have granted
each other rights of first refusal, rights to join with another member selling
its units to a third party and rights to require other members to sell their
units to a third party.

The limited liability company agreement gives members the right to have
sales of some of their interests registered under the Securities Act in
connection with this offering, but we expect all members to waive this right.

The limited liability company agreement will terminate when the limited
liability company is converted into a corporation immediately prior to the
completion of this offering. We expect that we and some of the members of the
limited liability company will enter into a stockholder agreement before
completion of the offering. We expect the stockholder agreement will require
five stockholders--NexGen, Telcom Ventures and a subsidiary of Telcom Ventures,
Reuters and 3Com--to vote to elect to the board of directors two persons named
by each of NexGen and Telcom Ventures and one person named by each of Reuters
and 3Com. We expect the right to name directors will end when these stockholders
reduce their share ownership below levels set forth in the agreement.

We expect the stockholder agreement will require us to file a registration
statement relating to the sale of shares of parties to the stockholder agreement
on demand of each stockholder at any time after the first anniversary of this
offering, with each stockholder entitled to one demand, and at the request of
these parties, include in any registration statement for our own account or the
account of any other stockholder, the shares of common stock held by those
parties, subject to limitations set forth in the stockholder agreement. We also
expect the agreement will require us to file a short form registration statement
on Form S-3 registering the sale of all shares held by parties to the
stockholder agreement when we are eligible to use that form, which would be at
least one year from the closing of this offering.

LOAN TO NEXGEN

In September 1998, we loaned NexGen $155,000 at an interest rate of 7.5%
per year pursuant to two notes. One note for $95,000 was due in December 1998
and one note for $60,000 was due in October
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1998. In August 1999 both notes were amended to be due upon 30 days notice. On
December 24, 1998, NexGen made a payment of $19,346 with respect to these notes.

REUTERS LICENSE AGREEMENT

In August 1998, we entered into an amended license, marketing and
distribution agreement with Reuters, which continues through August 11, 2001 and
renews automatically for successive one-year terms unless either party provides
180 days prior written notice. Reuters granted us a non-exclusive license to use
the information supplied by Reuters Selectfeed Plus for distribution to
subscribers of MarketClip, AirBroker and for development purposes. In August
1999, Reuters granted us permission to use Selectfeed Plus information for the
TradeRunner service developed for Discover Brokerage and the services we are
developing with Charles Schwab and Bear Stearns. Pursuant to the agreement,
Aether granted Reuters an exclusive license to use the systems developed by
Aether to transmit Reuters information to wireless handheld devices and a
license to use the MarketClip software for purposes of supplying subscribers
with MarketClip. The geographic scope of all of the licenses under the agreement
is limited to the United States. Under the agreement, Reuters has a right of
first refusal to purchase units of Aether if Aether or any unit holder sells
units and, as a result, a competitor of Reuters holds 50% or more of our units,
or if we sell all or substantially all of our assets to a competitor of Reuters.
Under the terms of the license, we pay Reuters a monthly fee for each subscriber
to our services that use information provided by Reuters. During 1998 we paid
Reuters $40,300 under this contract and during the first six months of 1999 we
paid Reuters $58,606 under this contract.

OPENSKY

On August 9, 1999, we formed a joint venture with 3Com in which we acquired
an interest in AirWeb Corporation, a new company doing business as OpenSky. We
contributed a perpetual, non-exclusive, non-assignable, royalty-free worldwide
license to our AIM software platform in exchange for 7,000,000 shares of Series
A Preferred Stock--which represents a 26% equity interest in OpenSky on a fully
diluted basis--and an option to buy up to an additional 3,000,000 shares of
Series A Preferred Stock for an aggregate exercise price of $2.5 million. If we
exercise our option, we will own up to approximately 33% of the equity of
OpenSky on a fully diluted basis. Our option to acquire these additional shares
expires at the earlier of January 31, 2000 or 15 days after we close our initial
public offering. We intend to exercise this option in full upon completion of
this offering. In connection with the formation of the joint venture, 3Com paid
$7.0 million in cash and agreed to contribute to OpenSky a perpetual,
non-exclusive, non-assignable license to 3Com's Web Clipping technology
(including rights to derivative works) and Palm OS software in exchange for
10,000,000 shares of Series A Preferred Stock, representing a 33% equity
interest in OpenSky on a fully diluted basis. The management team of OpenSky
will acquire in the aggregate 4.2 million shares of common stock and options to
acquire an additional 5.8 million shares, which together represent a 33% equity
interest in OpenSky on a fully diluted basis.

As part of our investment with 3Com in OpenSky, we each received
registration rights, including two demand registration rights that we can use
after the earlier of the completion of OpenSky's initial public offering and
August 9, 2004. We also entered into a right of first refusal and co-sale
agreement, which, among other things, requires the management team to first
offer any OpenSky securities to OpenSky and then to us and 3Com before selling
the securities to a third party. This agreement also allows us and 3Com to sell
a pro rata portion of our stock to a third party along with the management team
if the right of first refusal is not exercised. We and 3Com have also agreed
that before either of us sells any shares of Series A Preferred Stock to an
unrelated third party, we would first offer the other (or any other holders of
Series A Preferred Stock) those shares on a pro rata basis and then to OpenSky.

Aether, 3Com and OpenSky's management are each entitled to appoint one
director to OpenSky's board of directors. OpenSky's board of directors currently
consists of three members: David S. Oros, our chairman, chief executive officer
and president and the chairman of OpenSky; Janice M. Roberts, who is expected to
be one of our directors, is the senior vice president, marketing and business
development of 3Com; and Patrick McVeigh, OpenSky's president and chief
executive officer (and former president of the
54
<PAGE> 60

Palm Computing division of 3Com). We have entered into a voting agreement with
3Com and OpenSky's management in which each of the parties has agreed to vote in
favor of each of the directors named by Aether, 3Com and OpenSky's management
until the earliest of (1) OpenSky's completion of an initial public offering of
at least $15 million, (2) OpenSky's completion of a sale of substantially all of
the assets of OpenSky or the transfer of more than 50% of the voting power of
OpenSky or (3) the parties' termination of the agreement. OpenSky cannot take
certain major corporate actions, such as selling the company or issuing
securities with rights and preferences senior to the Series A Preferred Stock,
without the approval of holders of two-thirds of the Series A Preferred Stock.

On August 9, 1999, we entered into a letter agreement with OpenSky under
which we have agreed to provide OpenSky, for a period of ten months from the
date of the letter agreement, engineering services for the design and
development of its proposed systems and services. The letter agreement provides
that OpenSky will pay us $250,000 per month for these services, in addition to
$500,000 they paid us for work performed prior to the date of the letter
agreement. Additionally, for a period of five years from the date of the letter
agreement, OpenSky has agreed to provide us the right to resell OpenSky's basic
package of services. We also have a right of first refusal for development of
all investment banking and brokerage applications for OpenSky for a period of
two years from the date of the letter agreement, subject to approval of the
company for whom the service is developed.

55
<PAGE> 61

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of our common stock as of , and as
adjusted to reflect the sale of 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 our directors and executive officers as a group.

The table reflects the expected conversion of Aether from a limited
liability company to a corporation and the exchange of units in the limited
liability company into shares of common stock.

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 October 31, 1999, are included as shares
beneficially owned. For the purposes of calculating percent ownership as of
, shares were issued and outstanding, and, for any
individual who beneficially owns shares represented by options exercisable on or
before October 31, 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 and entities named below is: c/o Aether Systems, Inc.,
11460 Cronridge Drive, Owings Mills, Maryland 21117.

<TABLE>
<CAPTION>
PERCENT
BENEFICIALLY OWNED
-------------------
NUMBER BEFORE AFTER
NAME AND ADDRESS OF SHARES OFFERING OFFERING
---------------- --------- -------- --------
<S> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
David S. Oros (1)........................................... 36.7%
George M. Davis (2)......................................... *
Dale R. Shelton (3)......................................... *
J. Carter Beese (4)......................................... *
Frank A. Bonsal, Jr......................................... *
1119 St. Paul Street
Baltimore, MD 21202
Mark D. Ein................................................. *
Rahul C. Prakash (5)........................................ *
c/o Telcom Ventures, L.L.C.
211 N. Union St., Suite 300
Alexandria, VA 22314
Janice M. Roberts (6)....................................... *
c/o 3Com Corporation
5400 Bayfront Plaza
Santa Clara, CA 95952
Dr. Rajendra Singh (7)...................................... 25.8%
c/o Telcom Ventures, L.L.C.
211 N. Union St., Suite 300
Alexandria, VA 22314
George P. Stamas(8)......................................... *
c/o Wilmer, Cutler & Pickering
100 Light Street
Baltimore, MD 21202
Devin N. Wenig.............................................. *
c/o Reuters America, Inc.
1700 Broadway, 2nd Floor
New York, NY 10019
</TABLE>

56
<PAGE> 62

<TABLE>
<CAPTION>
PERCENT
BENEFICIALLY OWNED
-------------------
NUMBER BEFORE AFTER
NAME AND ADDRESS OF SHARES OFFERING OFFERING
---------------- --------- -------- --------
<S> <C> <C> <C>
Thomas E. Wheeler (9) *
All directors and executive officers as a group (10 persons) 63.4%
(10)......................................................
5% STOCKHOLDERS:
3Com Corporation (11)....................................... 13.1%
5400 Bayfront Plaza
Santa Clara, CA 95052
NexGen Technologies, L.L.C.................................. 34.0%
Pyramid Ventures, Inc....................................... 10.0%
One Bankers Trust Plaza
130 Liberty Street
New York, NY 10006
Reuters MarketClip Holdings Sarl............................ 14.1%
c/o Reuters America, Inc.
1700 Broadway, 2nd Floor
New York, NY 10019
Telcom Ventures, L.L.C...................................... 25.7%
211 N. Union St., Suite 300
Alexandria, VA 22314
</TABLE>

- ---------------
* Less than 1%.

(1) Includes shares owned by NexGen Technologies, L.L.C. over which
Mr. Oros exercises voting and investment control by virtue of his position
as Managing Member of NexGen. Also includes warrants to purchase
shares of common stock that will be immediately exercisable when this
offering closes, assuming that the offering price is $15 per unit or
greater.

(2) Includes vested options to purchase shares of common stock and
warrants to purchase shares of common stock when this offering
closes, assuming that the offering price is $15 per unit or greater.

(3) Includes vested options to purchase shares of common stock and
warrants to purchase shares of common stock when this offering
closes, assuming that the offering price is $15 per unit or greater.

(4) Includes vested options to purchase shares of common stock.

(5) Mr. Prakash, the president of Telcom Ventures, disclaims beneficial
ownership of the shares owned by Telcom Ventures or which Telcom
Ventures has the right to acquire.

(6) Ms. Roberts is senior vice president global marketing and business
development of 3Com Corp. and president of 3Com Ventures. Ms. Roberts
disclaims beneficial ownership of shares held by 3Com Corp.

(7) Includes shares owned by Telcom Ventures and entitles it controls
and shares they have the right to acquire, over which Mr. Singh
exercises voting and investment control by virtue of his position as
chairman and chief executive officer of Telcom Ventures.

(8) Includes vested options to purchase 4,500 units which will convert into
options for shares of common stock.

(9) Includes vested options to purchase shares of common stock.

(10) Includes all the shares and options identified above plus options to
acquire shares of common stock.

(11) Includes vested options to purchase shares of common stock.

57
<PAGE> 63

DESCRIPTION OF CAPITAL STOCK

Following the closing of the sale of the shares offered hereby, our
authorized capital stock will consist of shares of common stock, $.01
par value, and shares of preferred stock, $.01 par value.

COMMON STOCK

As of , 1999, there were shares of common stock
outstanding that were held of record by approximately stockholders
after giving effect to the conversion of Aether from a limited liability company
and the exchange of each limited liability company unit into shares of
common stock. There will be shares of common stock outstanding
(assuming no exercise of the underwriters' over-allotment option) after giving
effect to the sale of the shares of common stock offered by this prospectus.

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 Aether, the holders of common
stock are entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior rights of holders 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, Aether will be authorized to
issue 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
Aether 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

Pursuant to the terms of the agreement governing our limited liability
company, the members of the limited liability company have registration rights
with respect to the units of the limited liability company or any common stock
received upon conversion of the limited liability company into a corporation. We
expect each member of the limited liability company to waive its registration
rights in connection with this offering and the agreement will end when the
limited liability company converts to a corporation before we complete this
offering. We expect that members of the limited liability company will enter
into a stockholders agreement governing their relationship as stockholders of
Aether following the offering, and that this agreement will include registration
rights requiring us to register their shares on demand beginning one year after
the date of the offering. We describe the expected terms of this agreement in
further detail in "Transactions Between Aether and its Officers, Directors or
Significant Stockholders."

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND CHARTER PROVISIONS

We are subject to the provisions of Section 203 of the Delaware General
Corporation 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
58
<PAGE> 64

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 Aether without further
action by the stockholders. Our stock option plan generally provides for
assumption of our plan 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
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 Aether. 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.

WARRANTS

As of the date of this prospectus, there were five warrants outstanding,
which were held by officers to purchase a total of 400,000 units at an exercise
price of $4.00 per unit. Mr. Oros holds 350,000 warrants and he granted an
additional 50,000 warrants to key employees pursuant to authority granted to him
under his employment agreement. Following our conversion into a corporation each
warrant will convert into the right to purchase shares of common stock
and the exercise price of the warrants will be reduced to $ per share. In
addition, 3Com holds a conditional warrant to acquire up to 357,466 units at
$0.01 per unit. Following our conversion into a corporation, this warrant will
convert into the right to purchase and shares, respectively.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is .

LISTING

We expect our shares of common stock to be quoted on the Nasdaq National
Market, subject to official notice of issuance, under the trading symbol "AETH."

59
<PAGE> 65

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 shares
of common stock. Of these shares, the shares to be sold in this
offering ( 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 Aether, as that term is defined in Rule 144 under the Securities Act.

The remaining 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 Aether, who collectively hold an aggregate of of these
restricted securities, have agreed with the underwriters 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, Merrill Lynch & Co. may in its sole discretion, at
any time without notice, consent to the release all or any portion of the shares
subject to lock-up agreements.

Taking into account the lock-up agreements, and assuming Merrill Lynch &
Co. 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 shares sold in the offering
will be immediately available for sale in the public market;

- 180 days after the date of the prospectus, approximately
shares will be eligible for sale, of which will be subject to
volume, manner of sale and other limitations under Rule 144; and

- the remaining shares will be eligible for sale under Rule 144
from time to time upon the expiration of various one-year holding periods
after the expiration of the lock-up period applicable to those shares.

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 by persons other than affiliates. 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.

Sales under Rule 144 are also subject to manner of sale and notice
requirements and to the availability of current public information about Aether.
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
60
<PAGE> 66

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.

Through August 20, 1999, we have granted options to purchase 856,500 units
of common stock to specified persons pursuant to the option plan of our limited
liability company. Upon the conversion of our limited liability company into a
corporation before the offering, each option to acquire one unit will be
converted into an option to acquire shares of common stock. We intend to
file, after the effective date of this offering, a registration statement on
Form S-8 to register approximately shares of common stock reserved for
issuance under the stock option plan we intend to adopt before completion of the
offering. See "Management--Executive Compensation." The registration statement
will become effective automatically upon filing. Shares issued under the
foregoing plan, 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 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."

61
<PAGE> 67

UNDERWRITING

GENERAL

We intend to offer our common stock in the United States and Canada through
a number of U.S. underwriters as well as elsewhere through international
managers. Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancBoston
Robertson Stephens Inc., Donaldson, Lufkin & Jenrette Securities Corporation and
U.S. Bancorp Piper Jaffray Inc. are acting as U.S. representatives of each of
the U.S. underwriters named below. Subject to the terms and conditions set forth
in a U.S. purchase agreement among our company and the U.S. underwriters, and
concurrently with the sale of shares of common stock to the
international managers, we have agreed to sell to the U.S. underwriters, and
each of the U.S. underwriters severally and not jointly has agreed to purchase
from our company, the number of shares of common stock set forth opposite its
name below.

<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITER OF SHARES
---------------- ---------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................
BancBoston Robertson Stephens Inc..........................................
Donaldson, Lufkin & Jenrette Securities Corporation........................
U.S. Bancorp Piper Jaffray Inc.............................................
--------
Total.......................................................
========
</TABLE>

We have also entered into an international purchase agreement with certain
international managers outside the United States and Canada for whom Merrill
Lynch International, BancBoston Robertson Stephens International Ltd.,
Donaldson, Lufkin & Jenrette International and U.S. Bancorp Piper Jaffray
International Inc. are acting as lead managers. Subject to the terms and
conditions set forth in the international purchase agreement, and concurrently
with the sale of shares of common stock to the U.S. underwriters
pursuant to the U.S. purchase agreement, we have agreed to sell to the
international managers, and the international managers severally have agreed to
purchase from us, an aggregate of shares of common stock. The initial
public offering price per share and the total underwriting discount per share of
common stock are identical under the U.S. purchase agreement and the
international purchase agreement.

In the U.S. purchase agreement and the international purchase agreement,
the several U.S. underwriters and the several international managers,
respectively, have agreed, subject to the terms and conditions set forth in
those agreements, to purchase all of the shares of common stock being sold under
the terms of each such agreement if any of the shares of common stock being sold
under the terms of that agreement are purchased. In the event of a default by an
underwriter, the U.S. purchase agreement and the international purchase
agreement provide that, in certain circumstances, the purchase commitments of
the nondefaulting underwriters may be increased or the purchase agreements may
be terminated. The closings with respect to the sale of shares of common stock
to be purchased by the U.S. underwriters and the international managers are
conditioned upon one another.

We have agreed to indemnify the U.S. underwriters and the international
managers against some liabilities, including some liabilities under the
Securities Act, or to contribute to payments the U.S. underwriters and
international managers may be required to make in respect of those liabilities.

The shares of common stock are being offered by the several underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the underwriters and certain
other conditions. The underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part.

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<PAGE> 68

COMMISSIONS AND DISCOUNTS

The U.S. representatives have advised us that the U.S. underwriters propose
initially to offer the shares of common stock to the public at the initial
public price set forth on the cover page of this prospectus, and to certain
dealers at such price less a concession not in excess of $ per share of
common stock. The U.S. underwriters may allow, and such dealers may reallow, a
discount not in excess of $ per share of common stock to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may change.

The following table shows the per share and the total public offering
price, underwriting discount to be paid by us to the U.S. underwriters and the
international managers and the proceeds before expenses to us. This information
is presented assuming either no exercise or full exercise by the U.S.
underwriters and the international managers of their over-allotment options.

<TABLE>
<CAPTION>
PER SHARE WITHOUT OPTION WITH OPTION
--------- -------------- -----------
<S> <C> <C> <C>
Public Offering Price..................................... $ $ $
Underwriting Discount..................................... $ $ $
Proceeds, before expenses, to Aether Systems.............. $ $ $
</TABLE>

The expenses of the offering, exclusive of the underwriting discount, are
estimated at $ and are payable by us.

INTERSYNDICATE AGREEMENT

The U.S. underwriters and the international managers have entered into an
intersyndicate agreement that provides for the coordination of their activities.
Under the terms of the intersyndicate agreement, the U.S. underwriters and the
international managers are permitted to sell shares of our common stock to each
other for purposes of resale at the initial public offering price, less an
amount not greater than the selling concession. Under the terms of the
intersyndicate agreement, the U.S. underwriters and any dealer to whom they sell
shares of our common stock will not offer to sell or sell shares of our common
stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the international managers and any dealer to whom they sell shares of common
stock will not offer to sell or sell shares of common stock to U.S. persons or
to Canadian persons or to persons they believe intend to resell to U.S. or
Canadian persons, except in the case of transactions under the terms of the
intersyndicate agreement.

OVER-ALLOTMENT OPTION

We have granted an option to the U.S. underwriters, exercisable for 30 days
after the date of this prospectus, to purchase up to an aggregate of
additional shares of our common stock at the public offering price set forth on
the cover page of this prospectus, less the underwriting discount. The U.S.
underwriters may exercise this option solely to cover over-allotments, if any,
made on the sale of our common stock offered hereby. To the extent that the U.S.
underwriters exercise this option, each U.S. underwriter will be obligated,
subject to certain conditions, to purchase a number of additional shares of our
common stock proportionate to such U.S. underwriter's initial amount reflected
in the foregoing table.

We also have granted an option to the international managers, exercisable
for 30 days after the date of this prospectus, to purchase up to an aggregate of
additional shares of common stock to cover over-allotments, if any, on
terms similar to those granted to the U.S. underwriters.

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<PAGE> 69

NO SALES OF SIMILAR SECURITIES

We and our executive officers and directors and all existing stockholders
have agreed, with certain exceptions, without the prior written consent of
Merrill Lynch on behalf of the underwriters for a period of 180 days after the
date of this prospectus, not to directly or indirectly

- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of, lend or otherwise dispose of or
transfer any shares of our common stock or securities convertible into or
exchangeable or exercisable for or repayable with our common stock,
whether now owned or later acquired by the person executing the agreement
or with respect to which the person executing the agreement later
acquires the power of disposition, or file a registration statement under
the Securities Act relating to any shares of our common stock or

- enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of our common stock whether
any such swap or transaction is to be settled by delivery of our common
stock or other securities, in cash or otherwise.

QUOTATION ON THE NASDAQ NATIONAL MARKET

We expect our common stock to be approved for quotation on the Nasdaq
National Market, subject to official notice of issuance, under the symbol
"AETH."

Before this offering, there has been no public market for our common stock.
The initial public offering price will be determined through negotiations
between us and the U.S. representatives and the lead managers. The factors to be
considered in determining the initial public offering price, in addition to
prevailing market conditions, are the valuation multiples of publicly traded
companies that the U.S. representatives and the lead managers believe to be
comparable to us, certain of our financial information, the history of, and the
prospects for, our company and the industry in which we compete, and an
assessment of our management, our past and present operations, the prospects
for, and timing of, future revenue of our company, the present state of our
development, and the above factors in relation to market values and various
valuation measures of other companies engaged in activities similar to ours.
There can be no assurance that an active trading market will develop for our
common stock or that our common stock will trade in the public market subsequent
to the offering at or above the initial public offering price.

The underwriters have advised us that they do not expect sales of the
common stock to any accounts over which they exercise discretionary authority to
exceed 5% of the number of shares being offered in this offering.

PRICE STABILIZATION, SHORT POSITIONS AND PENALTY BIDS

Until the distribution of our common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
certain selling group members to bid for and purchase our common stock. As an
exception to these rules, the U.S. representatives are permitted to engage in
transactions that stabilize the price of our common stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of our common stock.

If the underwriters create a short position in our common stock in
connection with the offering, i.e., if they sell more shares of our common stock
than are set forth on the cover page of this prospectus, the U.S.
representatives may reduce that short position by purchasing our common stock in
the open market. The U.S. representatives may also elect to reduce any short
position by exercising all or part of the over-allotment option described above.

The U.S. representatives may also impose a penalty bid on underwriters and
selling group members. This means that if the U.S. representatives purchase
shares of our common stock in the open market to reduce the underwriters' short
position or to stabilize the price of our common stock, they may reclaim the
amount of the selling concession from the underwriters and selling group members
who sold those shares.

64
<PAGE> 70

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of our common stock to the extent that it
discourages resales of our common stock.

Neither our company nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of our common stock. In addition, neither
our company nor any of the underwriters makes any representation that the U.S.
representatives or the lead managers will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for
Aether by Wilmer, Cutler & Pickering, Washington, D.C. George P. Stamas, a
partner at Wilmer, Cutler & Pickering, is expected to be elected a director of
Aether. Mr. Stamas owns options to purchase 4,500 units which will convert into
options for shares of common stock when we convert into a corporation,
and he holds a non-voting interest in a subsidiary of Telcom Ventures. Certain
legal matters in connection with this offering will be passed upon for the
underwriters by Hogan & Hartson L.L.P., Washington, D.C.

EXPERTS

The financial statements of Aether Technologies International, L.L.C. as of
December 31, 1997 and 1998, and for each of the years in three-year period ended
December 31, 1998 have been included herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.

The financial statements of Mobeo, Inc. as of December 31, 1997 and 1998
and for each of the three years in the period ended December 31, 1998, included
in this prospectus, have been included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the common stock offered by this prospectus. This
prospectus does not contain all of the information contained in the registration
statement, and the exhibits and schedules to the registration statement portions
of which are omitted as permitted by the rules and regulations of the SEC. For
further information with respect to us and our common stock, we refer you to the
registration statement, and the exhibits and schedules filed as part of the
registration statement. Statements in this prospectus concerning the contents of
any contract or any other document are not necessarily complete. If a contract
or document has been filed as an exhibit to the registration statement, we refer
you to that exhibit. Each statement in this prospectus relating to a contract or
document filed as an exhibit to the registration statement is qualified by the
filed exhibits.

In addition, after the offering, we will file reports, proxy statements and
other information with the SEC. You may read and copy any document we file,
including the registration statement, at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public on the SEC's website at
http://www.sec.gov.

65
<PAGE> 71

INDEX TO FINANCIAL STATEMENTS

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheets as of December 31, 1997 and 1998 and June 30,
1999 (unaudited).......................................... F-3
Statements of Operations and Other Comprehensive Loss for
the years ended December 31, 1996, 1997 and 1998, and for
the six months ended June 30, 1998 and 1999 (unaudited)... F-4
Statements of Members' Capital for the years ended December
31, 1996, 1997 and 1998, and for the six months ended June
30, 1999 (unaudited)...................................... F-5
Statements of Cash Flows for the years ended December 31,
1996, 1997 and 1998 and for the six months ended June 30,
1998 and 1999 (unaudited)................................. F-6
Notes to Financial Statements............................... F-7
</TABLE>

MOBEO, INC.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-16
Balance Sheets as of December 31, 1997 and 1998 and June 30,
1999 (unaudited).......................................... F-17
Statements of Operations for the years ended December 31,
1996, 1997 and 1998 and for the six months ended June 30,
1998 and June 30, 1999 (unaudited)........................ F-18
Statements of Changes in Stockholders' Equity (Deficit) for
the years ended December 31, 1996, 1997 and 1998 and for
the six months ended June 30, 1999 (unaudited)............ F-19
Statements of Cash Flows for the years ended December 31,
1996, 1997 and 1998 and for the six months ended June 30,
1998 and June 30, 1999 (unaudited)........................ F-20
Notes to Financial Statements............................... F-21
</TABLE>

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of Unaudited Pro Forma Condensed Consolidated
Financial Information..................................... F-28
Unaudited Pro Forma Condensed Consolidated Balance Sheet as
of June 30, 1999.......................................... F-29
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the six months ended
June 30, 1999............................................. F-31
Unaudited Pro Forma Condensed Consolidated Statement of
Operations for the year ended
December 31, 1998......................................... F-32
</TABLE>

F-1
<PAGE> 72

INDEPENDENT AUDITORS' REPORT

The Members' Committee
Aether Technologies International, L.L.C.:

We have audited the accompanying balance sheets of Aether Technologies
International, L.L.C. as of December 31, 1997 and 1998, and the related
statements of operations and other comprehensive loss, members' capital and cash
flows for each of the years in the three-year period ended December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with 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 financial statements referred to above present fairly,
in all material respects, the financial position of Aether Technologies
International, L.L.C. as of December 31, 1997 and 1998, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.

/s/ KPMG LLP

Washington, D.C.
February 25, 1999

F-2
<PAGE> 73

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1997 1998 1999
-------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents................................ $132,262 $1,755,350 $ 840,583
Short-term investments................................... 5,852 6,191,287 3,574,324
Trade accounts receivable, net of allowance for doubtful
accounts of $0, $157,061 and $72,006 at December 31,
1997 and 1998 and June 30, 1999 (unaudited),
respectively.......................................... 122,133 118,489 124,873
Inventory, net of allowance for obsolescence of $0,
$169,630 and $85,846 at December 31, 1997 and 1998 and
June 30, 1999 (unaudited), respectively............... -- 143,617 88,368
Prepaid expenses and other current assets................ 15,117 45,646 71,816
-------- ---------- ----------
Total current assets............................. 275,364 8,254,389 4,699,964
Furniture, computers, and equipment, net................... 546,848 510,437 1,166,849
Investment, at cost........................................ 74,457 74,457 --
-------- ---------- ----------
$896,669 $8,839,283 $5,866,813
======== ========== ==========

LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Accounts payable......................................... $112,509 $ 195,930 $ 347,919
Accrued expenses......................................... 260,590 288,350 525,973
Accrued employee compensation and benefits............... 62,278 250,975 127,039
Deferred revenue......................................... 162,500 -- 25,000
-------- ---------- ----------
Total current liabilities........................ 597,877 735,255 1,025,931
Note payable to member..................................... 150,000 -- --
Members' capital........................................... 148,792 8,104,028 4,840,882
-------- ---------- ----------
Commitments and contingencies (notes 1, 7 and 9)
$896,669 $8,839,283 $5,866,813
======== ========== ==========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE> 74

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------- -------------------------
1996 1997 1998 1998 1999
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Subscriber revenue............. $ -- $ 161,400 $ 549,057 $ 124,576 $ 598,810
Engineering services revenue... 1,355,011 1,624,733 963,165 436,090 188,274
---------- ----------- ----------- ----------- -----------
Total revenue........ 1,355,011 1,786,133 1,512,222 560,666 787,084
Cost of subscriber revenue..... -- 447,480 797,165 199,559 530,823
Cost of engineering services
revenue...................... 1,006,944 846,140 304,137 170,812 119,829
---------- ----------- ----------- ----------- -----------
Total cost of
revenue............ 1,006,944 1,293,620 1,101,302 370,371 650,652
---------- ----------- ----------- ----------- -----------
Gross profit......... 348,067 492,513 410,920 190,295 136,432
---------- ----------- ----------- ----------- -----------
Operating expenses:
Research and development..... 160,597 733,630 1,267,320 589,148 1,002,107
General and administrative... 395,209 1,504,250 2,773,332 1,273,189 1,582,600
Selling and marketing........ -- 333,191 840,455 313,775 555,428
Depreciation and
amortization.............. 45,245 189,160 264,685 123,820 193,523
Equity-based expenses........ -- 40,277 32,580 16,290 1,263,150
---------- ----------- ----------- ----------- -----------
601,051 2,800,508 5,178,372 2,316,222 4,596,808
---------- ----------- ----------- ----------- -----------
Operating loss....... (252,984) (2,307,995) (4,767,452) (2,125,927) (4,460,376)
Other income (expense):
Interest income (expense),
net....................... 8,491 7,788 74,180 7,035 140,753
Equity in losses of joint
venture................... (172,487) (70,368) -- -- --
Realized loss on sale of
investment in joint
venture................... -- (302,145) -- -- --
Other........................ -- -- -- -- (74,457)
---------- ----------- ----------- ----------- -----------
Net loss............. $ (416,980) $(2,672,720) $(4,693,272) $(2,118,892) $(4,394,080)
---------- ----------- ----------- ----------- -----------
Other comprehensive
loss--unrealized holding loss
on investments available for
sale......................... -- -- (58,030) -- (132,216)
---------- ----------- ----------- ----------- -----------
Comprehensive loss............. $ (416,980) $(2,672,720) $(4,751,302) $(2,118,892) $(4,526,296)
========== =========== =========== =========== ===========
Pro forma statement of
operations data (unaudited):
Loss before income taxes, as
reported.................. $ (416,980) $(2,672,720) $(4,693,272) $(2,118,892) $(4,394,080)
Pro forma income tax
provision (benefit)....... -- -- -- -- --
---------- ----------- ----------- ----------- -----------
Pro forma net loss........... $ (416,980) $(2,672,720) $(4,693,272) $(2,118,892) $(4,394,080)
========== =========== =========== =========== ===========
Pro forma net loss per
share--basic and
diluted................... $
========== =========== =========== =========== ===========
Pro forma weighted average
shares outstanding--basic
and diluted............... $
========== =========== =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE> 75

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

STATEMENTS OF MEMBERS' CAPITAL

<TABLE>
<S> <C>
Balance at January 1, 1996.................................. $ --
Capital contributions..................................... 1,517,846
Net loss.................................................. (416,980)
-----------
Balance at December 31, 1996................................ 1,100,866
Capital contributions..................................... 1,690,369
Equity-based expenses..................................... 40,277
Note receivable from member............................... (10,000)
Net loss.................................................. (2,672,720)
-----------
Balance at December 31, 1997................................ 148,792
Capital contributions..................................... 12,501,781
Issuance of warrants...................................... 50,000
Conversion of note payable................................ 250,000
Exercise of warrants...................................... 56
Equity-based expenses..................................... 32,580
Unrealized loss on investment available for sale.......... (58,030)
Note receivable from member............................... (127,879)
Net loss.................................................. (4,693,272)
-----------
Balance at December 31, 1998................................ 8,104,028
Unrealized loss on investment available for sale
(unaudited)............................................ (132,216)
Equity-based expenses (unaudited)......................... 1,263,150
Net loss (unaudited)...................................... (4,394,080)
-----------
Balance at June 30, 1999 (unaudited)........................ $ 4,840,882
===========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE> 76

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------- -------------------------
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................ $ (416,980) $(2,672,720) $(4,693,272) $(2,118,892) $(4,394,080)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization................. 45,245 189,160 264,685 123,820 193,523
Provision (recovery) for doubtful accounts.... -- -- 157,061 25,394 (85,055)
Provision for inventory obsolescence.......... -- -- 169,630 -- --
Realized (gain) loss on sale of short-term
investments................................. -- -- (3,872) -- 11,882
Equity in losses of joint venture............. 172,487 70,368 -- -- --
Realized loss on sale of investment in joint
venture..................................... -- 302,145 -- -- --
Other......................................... -- -- -- -- 74,457
Issuance of warrants.......................... -- -- 50,000 8,693 --
Equity-based expenses......................... -- 40,277 32,580 16,290 1,263,150
Changes in assets and liabilities:
(Increase) decrease in trade accounts
receivable............................... (223,402) 74,812 (153,417) (48,953) 78,671
(Increase) decrease in inventory............ -- -- (313,247) -- 55,249
(Increase) decrease in prepaid expenses and
other current assets..................... (18,945) 3,828 (30,529) (8,694) (26,170)
Increase in accounts payable................ 45,149 67,360 83,421 160,854 151,989
Increase in accrued expenses and employee
compensation and benefits................ 50,246 272,622 216,457 137,349 113,687
Increase (decrease) in deferred revenue..... -- 162,500 (162,500) (162,500) 25,000
----------- ----------- ----------- ----------- -----------
Net cash used by operating activities.... (346,200) (1,489,648) (4,383,003) (1,866,639) (2,537,697)
----------- ----------- ----------- ----------- -----------
Cash flows (used) by investing activities:
Sales of short-term investments................. -- 49,977 1,295,525 (99) 7,028,317
Purchases of short-term investments............. (55,829) -- (7,535,118) -- (4,555,452)
Purchases of property and equipment............. (321,707) (441,700) (228,274) (63,444) (849,935)
Long-term investments........................... (775,000) (23,000) -- -- --
Proceeds from sale of investment in joint
venture....................................... -- 205,000 -- -- --
----------- ----------- ----------- ----------- -----------
Net cash (used) provided in investing
activities............................. (1,152,536) (209,723) (6,467,867) (63,543) 1,622,930
----------- ----------- ----------- ----------- -----------
Cash flows provided by financing activities:
Members' capital contributions.................. 1,500,000 1,690,369 12,501,781 1,499,315 --
Advances (repayments) from member............... 50,000 (50,000) -- -- --
Proceeds from note payable...................... -- 150,000 500,000 500,000 --
Due to related parties.......................... -- -- -- 224,371 --
Repayments on notes payable..................... -- -- (400,000) -- --
Issuance of notes receivable to member.......... -- (10,000) (127,879) -- --
Exercise of warrants............................ -- -- 56 -- --
----------- ----------- ----------- ----------- -----------
Net cash provided by financing
activities............................. 1,550,000 1,780,369 12,473,958 2,223,686 --
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ 51,264 80,998 1,623,088 293,504 (914,767)
Cash and cash equivalents, at beginning of
period.......................................... -- 51,264 132,262 132,262 1,755,350
=========== =========== =========== =========== ===========
Cash and cash equivalents, at end of period....... $ 51,264 $ 132,262 $ 1,755,350 $ 425,766 $ 840,583
=========== =========== =========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.......... $ -- $ 3,894 $ 20,171 $ -- $ --
=========== =========== =========== =========== ===========
</TABLE>

- ---------------
Supplemental disclosure of noncash investing and financing activities:
In 1996, a member contributed equipment with an estimated fair value of
$17,846 to the Company.
In 1996, the Company made a $48,000 investment in Navox, Inc. of which
$23,000 was not paid until January 1997.
In 1997, the Company made an additional $26,457 investment in Navox, Inc. by
forgiving a trade account receivable of an equal amount.
In 1998, a member converted a $250,000 promissory note payable into
membership units.
At December 31, 1998 and June 30, 1999 (unaudited), the Company incurred an
unrealized holding loss associated with its investment available for sale
totaling $58,030 and $132,216 (unaudited). These amounts have been reported
as a reduction in members' capital.

See accompanying notes to financial statements.

F-6
<PAGE> 77

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS

Aether Technologies International, L.L.C. (the Company), a Delaware limited
liability company, was originally formed as Aeros, L.L.C. pursuant to the terms
of the Limited Liability Company Agreement of Aeros, L.L.C. (the Agreement) in
January 1996. The Company changed its name to Aether Technologies International,
L.L.C. in August 1996.

Pursuant to the terms of the Agreement, no member shall be personally
liable for any debt, obligation, or liability of the Company, whether that
liability or obligation arises in contract, tort, or otherwise. Additionally,
the Agreement shall terminate on December 31, 2035 unless extended or sooner
terminated.

The Company designs, develops, sells and supports wireless data services
and systems enabling people to use wireless handheld devices for data
communications and transactions. The Company operates in a highly competitive
environment subject to rapid technological change and emergence of new
technology. Although management believes its services are transferable to
emerging technologies, rapid changes in technology could have an adverse
financial impact on the Company.

The Company expects to expand its operations through continued capital
investment in new systems and services. The Company is not currently generating
sufficient cash flows from operations to support its current operating and
capital requirements. The Company has and will continue to be dependent upon its
members and other financing sources to fund these requirements.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Revenue Recognition

The Company derives subscriber revenue from the provision of real-time
access to information from selected financial markets integrated into existing
wireless communication platforms. Subscriber revenue consists of monthly fixed
charges for usage and equipment and is recognized as the service is provided on
a monthly basis. Engineering services revenue is derived from the provision of
wireless integration consulting under time-and-materials and fixed-fee
contracts. Revenue on time-and-materials contracts is recognized as services are
performed. Revenue on fixed-fee contracts is recognized on the percentage-of-
completion method based on costs incurred in relation to total estimated costs.
Anticipated contract losses are recognized as soon as they become known and
estimable.

(b) Cost of Revenues

Cost of subscriber revenue consists primarily of airtime costs, financial
data costs, wireless handheld device costs, and securities and market exchange
fees. Cost of engineering services revenue consists of cash compensation and
related costs for engineering personnel and materials.

Cash equivalents include all highly liquid investments purchased with
original maturities of three months or less. Cash equivalents consist of
approximately $132,000 and $1,755,000 in overnight repurchase agreements and
money market accounts, at December 31, 1997 and 1998, respectively.

(d) Short-term Investments

Short-term investments consist of highly liquid investments with original
maturities greater than three months and less than one year and those
longer-term investments that the Company expects to liquidate within twelve
months. The Company has classified its short-term investments as "available for
sale" and carries such investments at fair value. Unrealized gains (losses) are
excluded from earnings and are

F-7
<PAGE> 78
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

reported as a separate component of other comprehensive income until realized.
Realized gains and losses from the sale of these investments are determined on a
specific identification basis.

(e) Fair Value of Financial Instruments

The carrying amounts of the Company's financial instruments, which include
cash equivalents, accounts receivable, accounts payable and accrued expenses
approximate their fair values.

(f) Concentration of Credit Risk

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of accounts receivable. The Company extends
credit to its customers on an unsecured basis in the normal course of business.

(g) Inventory

Inventory, net of allowance for obsolete and slow-moving inventory,
consists primarily of handheld and laptop computers, wireless modems, and
accessories and is stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. The inventory of the Company is
subject to rapid technological changes which could have an adverse impact on its
realization in future periods. In addition, there are a limited number of
suppliers of the Company's inventory.

(h) Furniture, Computers and Equipment

Furniture, computers, and equipment are stated at cost. Depreciation is
calculated using the straight-line method over the estimated useful lives of the
assets, which range from three to seven years. The costs of leasehold
improvements are capitalized and amortized using the straight-line method over
the lesser of the lease term or the estimated useful life of the asset.

(i) Investment in Joint Venture

The Company uses the equity method of accounting for its investments in,
advances to and earnings and losses of its joint venture.

(j) Recovery of Long-Lived Assets

The Company's policy is to review its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. The Company recognizes an impairment loss when the sum
of the expected future cash flows is less than the carrying amount of the asset.
The measurement of the impairment losses to be recognized is based upon the
difference between the fair value and the carrying amount of the assets.

(k) Unit Options and Warrants

The Company accounts for equity-based compensation arrangements in
accordance with the provisions of Accounting Principle Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees," and related interpretations, and
complies with the disclosure provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation." Under APB
No. 25, compensation expense is based upon the difference, if any, on the date
of grant, between the fair value of the Company's stock and the exercise price.
All equity-based awards to non-employees are accounted for at their fair value
in accordance with SFAS No. 123.

F-8
<PAGE> 79
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(l) Pro Forma Statements of Operations Data and Net Loss Per Share (Unaudited)

Prior to the closing of the Company's proposed initial public offering, the
Company will terminate its status as an limited liability company and will be
subject to Federal and state taxes at prevailing corporate rates. Accordingly,
pro forma statements of operations data is based on the assumption that the
Company's limited liability company status was terminated at the beginning of
each period. The Company has provided no income taxes on a pro forma basis due
to the losses incurred in all periods.

The Company computes net income (loss) per share in accordance with SFAS
No. 128, "Earnings Per Share," and SEC Staff Accounting Bulletin No. 98 ("SAB
98"). Under the provisions of SFAS No. 128 and SAB 98, basic net income (loss)
per share is computed by the dividing the net income (loss) available to common
stockholders for the period by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share is computed
by dividing the net income (loss) for the period by the weighted average number
of common and dilutive common equivalent shares outstanding during the period.
Pro forma basic and diluted net loss per share has been calculated assuming that
the capital structure established at the date of the proposed initial public
offering was in effect during the periods presented. As the Company had a net
loss in each of the periods presented, pro forma basic and diluted net loss per
share are the same.

(m) Research and Development

Research and development costs are expensed as incurred.

(n) Advertising Expense

Advertising costs are expensed as incurred. Advertising expense was
approximately $0, $248,000, and $504,000 for the years ended December 31, 1996,
1997 and 1998, respectively.

(o) Income Taxes

The Company has elected limited liability company status and, as such, is
not directly subject to federal and state income taxes. Instead, the members are
responsible for income taxes on their proportionate share of taxable income.
Members are also entitled to a proportionate share of tax deductions and
credits.

(p) Use of Estimates

The preparation of 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 dates of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

(q) Other Comprehensive Loss

Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income", which established standards for reporting and displaying
comprehensive income and its components in financial statements. Comprehensive
income, as defined, includes changes in equity of a business enterprise during a
period from transactions and other events and circumstances from non-owner
sources. Other comprehensive income refers to revenue, expenses, gains and
losses that under generally accepted accounting principles are included in
comprehensive income, but excluded from net income.

F-9
<PAGE> 80
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

During 1998 and for the six months ended June 30, 1999 (unaudited), other
comprehensive income (loss) consists of unrealized losses on investments
available for sale.

(r) Unaudited Interim Financial Information

The unaudited interim financial information as of June 30, 1999 and for the
six months ended June 30, 1998 and June 30, 1999, have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with instructions to Article 10 of Regulation S-X. In the
opinion of management, such information contains all adjustments, consisting of
only normal recurring adjustments, considered necessary for a fair presentation
of such periods. The operating results for any interim period are not
necessarily indicative of results for any future periods.

(s) Recent Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities. The new standard establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. This
statement, as amended, is effective for all fiscal quarters beginning after June
15, 2000. The Company does not expect SFAS No. 133 to have a material affect on
its financial position or results of operations.

(3) SHORT-TERM INVESTMENTS

As of December 31, 1998, short-term available-for-sale investments
consisted of:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST HOLDING GAINS HOLDING LOSSES VALUE
---------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities......... $1,929,810 $ -- $(21,677) $1,908,133
Corporate debt securities........ 4,319,507 11,881 (48,234) 4,283,154
---------- ------- -------- ----------
$6,249,317 $11,881 $(69,911) $6,191,287
========== ======= ======== ==========
</TABLE>

Maturities of debt securities classified as available-for-sale were as
follows at December 31, 1998:

<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
---------- ----------
<S> <C> <C>
Due within one year......................................... $2,124,838 $2,129,084
Due after one year through five years....................... 1,184,890 1,157,964
Due after five years through ten years...................... 1,435,695 1,412,043
Due after ten years......................................... 1,503,894 1,492,196
---------- ----------
$6,249,317 $6,191,287
========== ==========
</TABLE>

F-10
<PAGE> 81
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(4) FURNITURE, COMPUTERS AND EQUIPMENT

Furniture, computers and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1997 1998
--------- ---------
<S> <C> <C>
Furniture and fixtures...................................... $ 88,670 $ 102,345
Computer and equipment...................................... 477,306 684,328
Software.................................................... 175,000 175,000
Leasehold improvements...................................... 40,277 47,854
--------- ---------
781,253 1,009,527
Less depreciation and amortization.......................... (234,405) (499,090)
--------- ---------
$ 546,848 $ 510,437
========= =========
</TABLE>

(5) NOTES PAYABLE TO MEMBER

The Company had an unsecured note payable of $150,000 as of December 31,
1997 due to one of its members. The note carried interest at a rate of 7.5
percent and all principal and accrued interest was due in January 1999, or
earlier upon the occurrence of specified criteria. The note payable, plus
accrued interest, was repaid in 1998.

In June 1998, the Company borrowed $250,000 from one of its members under a
convertible promissory note. The note was unsecured, bore interest at 8 percent
per annum, and was convertible into membership units at the option of the
member. In August 1998, the member elected to convert the note into membership
units in accordance with its terms.

In June 1998, the Company borrowed $250,000 from another one of its members
under a similar convertible promissory note. All principal and accrued interest
was paid by the Company in August 1998.

In connection with the convertible promissory notes, the Company granted
warrants to purchase 5,656 member units at an exercise price of $0.01 per unit
to each member (see note 9). The estimated value of the warrants on the grant
date of $50,000 has been recognized in interest expense in 1998. One of the
members exercised their warrants to purchase 5,656 member units in August 1998.

(6) MEMBERS' CAPITAL

Pursuant to the Agreement, the Company was formed with an initial
capitalization of 4,000,000 units. As of December 31, 1998, the Agreement was
modified to increase the capitalization of the Company to 10,000,000 units.

There were, 5,355,123, 7,951,142 and 7,991,142 (unaudited) units issued and
outstanding as of December 31, 1997, 1998, and June 30, 1999 (unaudited),
respectively. An additional 685,000 units were reserved for issuance under the
Company's unit option plan as of December 31, 1998 (see note 9).

F-11
<PAGE> 82
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(7) LEASES

The Company is obligated under three noncancelable operating leases for
office space, that expire at various dates through 2003. Future minimum lease
payments under noncancelable operating leases are approximately as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1999........................................................ $163,000
2000........................................................ 154,000
2001........................................................ 164,000
2002........................................................ 163,000
2003........................................................ 167,000
--------
Total minimum lease payments................................ $811,000
========
</TABLE>

Rent expense under operating leases was approximately $49,000, $84,000, and
$91,000 for the years ended December 31, 1996, 1997 and 1998, respectively.

(8) PENSION PLAN

The Company has a defined contribution plan under Section 401(k) of the
Internal Revenue Code that provides for voluntary employee contributions of 1 to
15 percent of compensation for substantially all employees. The Company does not
contribute to the plan.

(9) UNIT OPTIONS AND WARRANTS

(a) Unit Options

In 1996, the Company adopted a Unit Option Plan (the Plan). As of December
31, 1998, the Plan provides for the issuance of a maximum of 685,000 units by
the Company to its employees. Options under the Plan generally expire after ten
years and normally vest over a period of up to three years. Options are
generally granted at an exercise price equal to the fair value on the grant
date, as determined by the members.

The Company recorded equity-based expenses of $0, $40,277, and $32,580 in
1996, 1997, and 1998, respectively, to reflect the difference between the
exercise price and the fair market value of the units at the date of grant (note
13).

The Company applies APB 25 and related interpretations in accounting for
its unit option plan. Had compensation cost been recognized consistent with SFAS
123, the Company's net loss would have increased by $21,000, $24,000, and
$41,000 for 1996, 1997, and 1998, respectively.

The per share weighted-average value of unit options issued by the Company
during 1996, 1997, and 1998 was $0.17, $0.16, and $0.55, respectively, on the
date of grant using the Black-Scholes option-pricing model. These amounts were
calculated using an expected option life of 3 years and volatility of zero. In
addition, the calculations assumed a risk-free interest rate of 6.22 percent in
1996, 5.77 percent to 6.25 percent in 1997, and 4.55 percent to 5.51 percent in
1998.

F-12
<PAGE> 83
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

A summary of the unit option activity is as follows:

<TABLE>
<CAPTION>
1996 1997 1998
--------------------- --------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
NUMBER PRICE NUMBER PRICE NUMBER PRICE
OF UNITS (PER UNIT) OF UNITS (PER UNIT) OF UNITS (PER UNIT)
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.... -- -- 277,375 $1.00 400,000 $1.00
Options granted..................... 277,375 $1.00 122,625 $1.00 241,875 $3.86
Options exercised................... -- -- -- -- -- --
Options canceled.................... -- -- -- -- (23,875) $1.00
------- ----- ------- ----- ------- -----
Outstanding at end of year.......... 277,375 $1.00 400,000 $1.00 618,000 $1.00
======= ===== ======= ===== ======= =====
Options exercisable at year-end..... 105,000 $1.00 238,688 $1.00 396,437 $1.25
======= ===== ======= ===== ======= =====
Units available for future grant.... 67,000
=======
</TABLE>

At December 31, 1998, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $1.00-$4.42, and 7.2
years, respectively.

(b) Warrants

The Company granted warrants to purchase an aggregate 11,312 member units
at an exercise price of $0.01 per unit to two of its members as consideration
for obtaining short-term loans. As of December 31, 1998, warrants to purchase
5,656 member units had not been exercised (see note 5).

In October 1998, the Company granted warrants to purchase 357,466
membership units at an exercise price of $0.01 per unit in connection with the
sale of membership units to a new member. The warrants vest in certain amounts
upon the performance of various sales and marketing services and the attainment
of specified milestones by the member on behalf of the Company. If and when it
becomes probable that the member will attain the specified milestones necessary
for the warrants to vest, the Company will begin to record an expense reflecting
the fair value of the warrant, which will be determined in part based on the
then market price of the common stock. The Company would begin to recognize this
expense based on the determination of probability that the milestones would be
achieved, continuing through the actual vesting date. The Company would
initially estimate the amount of the expense at the time of the determination
that achievement is probable, based in part on the market price of the common
stock at that time. At the time of the actual vesting, the fair value of the
warrant would be remeasured and, if different from the value used in initially
estimating the expense, the difference would be reflected as an additional
charge or credit at that time. As of December 31, 1998, the Company believes it
is not yet probable that the member will attain the specified milestones and,
accordingly, no such expense has been recorded (see note 13).

(10) RELATED-PARTY TRANSACTIONS

(a) Notes Receivable from Member

As of December 31, 1997 and 1998, the Company had amounts due from a member
under short-term promissory notes of $10,000 and $137,879, respectively. The
Company classified the notes as a reduction of members' capital in the
accompanying statements of members' capital. The notes are callable by the
Company at any time and bear interest at a rate of 7.5 percent per annum.

F-13
<PAGE> 84
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(b) Consulting Agreements

The Company derived approximately 83 percent, 34 percent, and 39 percent of
its revenue for 1996, 1997, and 1998, respectively, from consulting arrangements
with one, one and two of its members, respectively. The Company had no trade
accounts receivable due from these members as of December 31, 1997 and 1998.

As of December 31, 1997, the Company had received an advance of $162,500
from two of its members under consulting arrangements. This amount was recorded
as deferred revenue in the accompanying 1997 balance sheet, and was subsequently
recognized as revenue in 1998, when the related consulting services were
performed.

In 1998, the Company purchased approximately $560,000 of equipment and
inventory from a member.

(11) INVESTMENT

The Company has an investment in Navox, Inc., a privately-held Delaware
company which provides wireless communication, location and security system
development services. The Company's investment of $74,457 as of December 31,
1997 and 1998, is carried at cost which the Company believes approximates fair
value. The Company's investment represents an approximate 5.5 percent interest
in Navox, and includes representation on Navox's board of directors. However,
the Company believes it does not exercise significant influence over Navox. The
Company derived approximately 8 percent, 50 percent and 2 percent of its revenue
for 1996, 1997 and 1998, respectively, under consulting arrangements with Navox.
The Company had trade accounts receivables of approximately $82,000 and $0 due
from Navox as of December 31, 1997 and 1998, respectively. The Company does not
anticipate significant revenue from Navox in the future.

(12) INVESTMENT IN JOINT VENTURE

In February 1996, the Company made an investment of $750,000 to acquire a
20 percent interest in Real World Solutions, Inc. (RWS), a California company,
which was in the business of developing wireless middleware. The Company
accounted for its investment in RWS under the equity method and recorded its
proportionate share of operating losses generated by RWS. In July 1997, the
Company sold its interest in RWS to Puma Technology, Inc. (Puma), a Delaware
company for $205,000. The Company's carrying value of the investment in RWS as
of the date of sale was approximately $507,000 resulting in a realized loss on
the sale of the investment of approximately $302,000.

Concurrently with the sale of the Company's investment in RWS to Puma, the
Company entered into an agreement with Puma for $175,000 to obtain perpetual
license rights for certain wireless middleware software. This amount has been
capitalized and is being amortized over a three-year period.

(13) SUBSEQUENT EVENTS (UNAUDITED)

(a) Unit Options

The Company recorded equity-based expenses of approximately $401,000 for
the six month period ended June 30, 1999, to reflect the difference between the
exercise price and the fair market value of the units at the date of grant over
the vesting period.

F-14
<PAGE> 85
AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(b) Warrants

In June 1999, the member achieved certain milestones specified in the
agreement (see note 9) related to warrants granted in October 1998 and was
vested in 57,466 warrants. As a result, the Company recorded equity-based
expenses of approximately $862,000. The Company believes that it is not yet
probable that the member will attain the specified milestones relating to the
remaining 300,000 warrants and, accordingly, no expense relating to these
warrants has been recorded.

In June 1999, the Company entered into an employment agreement with its
Chief Executive Officer ("Executive"). As part of this agreement, the Executive
was granted 350,000 unit options at an exercise price of $4.00 per unit and the
right to grant an additional 50,000 unit options at an exercise price of $4.00
per unit to other key executives. These options vest only upon completion of an
initial public offering of the Company or sale of the Company at a price greater
than $15.00 per membership unit and expire in June 2009. Upon vesting of the
options, the Company will record an equity-based expense equal to the difference
between the fair value of the unit and the exercise price measured at the date
of the initial public offering or sale of Company times the number of unit
options.

(d) OpenSky Venture

On August 9, 1999, the Company entered into a new venture with a member,
forming a new Company called OpenSky. OpenSky was formed to develop wireless
Internet access, e-mail and electronic commerce services that address
opportunities in the emerging consumer and business mass markets. The Company
contributed a perpetual, non-exclusive, non-assignable, worldwide license to
certain proprietary software in exchange for a 26% equity interest in OpenSky in
the form of 7,000,000 shares of Series A Preferred Stock and an option to
purchase an additional 3,000,000 shares of Series A Preferred Stock for an
additional $2.5 million. Upon exercising the option, the Company would increase
their ownership in OpenSky to 33%. The option to acquire these additional shares
expires at the earlier of January 31, 2000 or 15 days after the close of an
initial public offering by the Company. Additionally, the Chief Executive
Officer of Company serves as Chairman of the OpenSky board of directors. The
Company will provide engineering services to OpenSky.

(e) Pending Acquisition of Mobeo, Inc.

On August 19, 1999, the Company entered into a purchase agreement to
acquire all the outstanding common stock of Mobeo, Inc. ("Mobeo") for an
aggregate purchase price of $12.3 million, including estimated costs of the
acquisition. Mobeo provides employees and customers at major banks and financial
institutions with continuous pricing information and news headlines for foreign
exchange, government securities, and commodity markets on wireless handheld
devices. Additionally, the Company entered into two-year advisory service
agreements with two former owners of Mobeo which provide for the grant of an
aggregate 125,000 unit options with an exercise price of $15.00 per unit in the
Company. The acquisition is expected to close in September 1999 and the Company
plans to obtain short-term financing to fund the acquisition.

F-15
<PAGE> 86

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Mobeo, Inc.

In our opinion, the accompanying balance sheets and the related statements
of operations, changes in stockholders' equity (deficit) and cash flows, present
fairly, in all material respects, the financial position of Mobeo, Inc. at
December 31, 1997 and 1998, and the results of its operations and its cash flows
for the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

PricewaterhouseCoopers LLP
McLean, Virginia
March 10, 1999

F-16
<PAGE> 87

MOBEO, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
1997 1998 1999
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 125,446 $ 193,913 $ 558,732
Accounts receivable, net............................... 278,620 293,895 276,263
Prepaid expenses and other............................. 37,032 28,724 23,464
Income tax refund receivable........................... 20,756 20,756 --
Deferred income tax.................................... 142,365 186,549 465,417
---------- ---------- ----------
Total current assets........................... 604,219 723,837 1,323,876
Property and equipment, net.............................. 321,876 405,148 335,703
Patents, net............................................. -- 30,307 29,411
Deposits................................................. 24,475 23,609 27,609
Deferred income tax...................................... 71,476 14,542 17,938
---------- ---------- ----------
Total assets................................... $1,022,046 $1,197,443 $1,734,537
========== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable....................................... $ 989,316 $1,130,184 $ 406,550
Accrued expenses....................................... 275,541 390,172 811,431
Income tax payable..................................... -- -- 54,154
Capital lease obligations.............................. 12,159 -- --
Deferred revenue....................................... 71,220 104,170 826,788
---------- ---------- ----------
Total current liabilities...................... 1,348,236 1,624,526 2,098,923
---------- ---------- ----------
Commitments and contingencies
Stockholders' equity (deficit):
Common stock; no par value, 10,000 shares authorized,
1,171 shares issued and outstanding................. -- -- --
Additional paid-in capital............................. 172,625 172,625 172,625
Accumulated deficit.................................... (455,795) (556,688) (537,011)
Notes receivable--related parties...................... (43,020) (43,020) --
---------- ---------- ----------
Total stockholders' deficit.................... (326,190) (427,083) (364,386)
---------- ---------- ----------
Total liabilities and stockholders' deficit.... $1,022,046 $1,197,443 $1,734,537
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-17
<PAGE> 88

MOBEO, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------ -------------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Service revenue.................... $6,484,864 $7,088,993 $8,580,786 $4,462,584 $5,047,195
Cost of services................... 2,947,185 3,148,051 3,040,743 1,518,457 1,757,188
---------- ---------- ---------- ---------- ----------
Gross profit....................... 3,537,679 3,940,942 5,540,043 2,944,127 3,290,007
---------- ---------- ---------- ---------- ----------
Selling, general and administrative
expenses:
Sales and marketing.............. 1,641,502 1,812,696 2,302,360 1,037,897 1,250,230
General and administrative....... 1,149,218 1,937,829 2,706,544 1,208,391 1,451,285
Research and development......... 94,609 174,867 496,570 168,355 427,210
Depreciation and amortization.... 355,276 464,419 112,903 48,237 60,405
---------- ---------- ---------- ---------- ----------
3,240,605 4,389,811 5,618,377 2,462,880 3,189,130
---------- ---------- ---------- ---------- ----------
Other expense (income):
Interest expense (income)........ -- 2,628 (4,969) (2,489) (15,559)
Loss on disposal of assets....... -- 148,000 14,778 1,187 50,569
---------- ---------- ---------- ---------- ----------
Total other expenses
(income)............... -- 150,628 9,809 (1,302) 35,010
---------- ---------- ---------- ---------- ----------
Income (loss) before income
taxes............................ 297,074 (599,497) (88,143) 482,549 65,867
Provision for (benefit from) income
taxes............................ 120,150 (211,841) 12,750 203,679 46,190
---------- ---------- ---------- ---------- ----------
Net income (loss).................. $ 176,924 $ (387,656) $ (100,893) $ 278,870 $ 19,677
========== ========== ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-18
<PAGE> 89

MOBEO, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
NOTES
ADDITIONAL RECEIVABLE
PAID-IN ACCUMULATED RELATED
SHARES AMOUNT CAPITAL DEFICIT PARTIES TOTAL
------ ------ ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995............... 1,171 $-- $172,625 $(245,063) $ -- $ (72,438)
Issuance of notes receivable--related
parties................................ -- -- -- -- (171,250) (171,250)
Net income............................... -- -- -- 176,924 -- 176,924
----- --- -------- --------- --------- ---------
Balance at December 31, 1996............... 1,171 $-- $172,625 $ (68,139) $(171,250) $ (66,764)
Issuance of notes receivable--related
parties................................ -- -- -- -- (65,603) (65,603)
Collections on notes receivable--related
parties................................ -- -- -- -- 71,250 71,250
Allowance for notes receivable--related
parties................................ -- -- -- -- 122,583 122,583
Net loss................................. -- -- -- (387,656) -- (387,656)
----- --- -------- --------- --------- ---------
Balance at December 31, 1997............... 1,171 -- 172,625 (455,795) (43,020) (326,190)
Net loss................................. -- -- -- (100,893) -- (100,893)
----- --- -------- --------- --------- ---------
Balance at December 31, 1998............... 1,171 $-- $172,625 $(556,688) $ (43,020) $(427,083)
----- --- -------- --------- --------- ---------
Allowance for notes receivable--related
parties................................ -- -- -- -- 43,020 43,020
Net income............................... -- -- -- 19,677 -- 19,677
----- --- -------- --------- --------- ---------
Balance at June 30, 1999 (unaudited)....... 1,171 $-- $172,625 $(537,011) $ -- $(364,386)
===== === ======== ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-19
<PAGE> 90

MOBEO, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FOR THE YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------- ---------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................... $ 176,924 $(387,656) $(100,893) $ 278,870 $ 19,677
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Bad debt expense..................... 23,976 62,956 51,620 -- 23,697
Deferred income taxes................ 62,200 (211,841) 12,750 -- (282,264)
Depreciation and amortization........ 355,276 464,419 112,903 48,237 60,405
Loss on disposal of assets........... 57,472 148,009 14,778 -- 50,569
Allowance for notes
receivable--related parties....... -- 122,583 -- -- 43,020
Changes in assets and liabilities:
Accounts receivable............... 74,989 (181,580) (66,895) (125,801) (6,065)
Income tax refund receivable...... 6,414 (16,259) -- (33,770) 20,756
Restricted cash................... 15,000 -- -- -- --
Deposits, prepaid expenses and
other........................... 24,353 (30,990) 9,174 (16,822) 1,260
Accounts payable and accrued
expenses........................ (66,407) 179,434 255,499 (346,545) (302,375)
Income tax payable................ (60,940) (49,560) -- -- 54,154
Deferred revenue.................. (127,115) 4,114 32,950 315,986 722,618
--------- --------- --------- --------- ---------
Net cash provided by operating
activities.................... 542,142 103,629 321,886 120,155 405,452
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment..... (347,526) (68,558) (210,804) (106,020) (40,633)
Payments to acquire patent............. -- -- (30,456) -- --
Advances of notes receivable--related
parties.............................. (171,250) (78,103) -- -- --
Collections on notes
receivable--related parties.......... -- 83,750 -- -- --
--------- --------- --------- --------- ---------
Net cash used in investing
activities.................... (518,776) (62,911) (241,260) (106,020) (40,633)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Principal payments on capital leases... (42,268) (48,414) (12,159) (12,159) --
--------- --------- --------- --------- ---------
Net cash used in financing
activities.................... (42,268) (48,414) (12,159) -- --
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and cash
equivalents............................ (18,902) (7,696) 68,467 1,976 364,819
Cash and cash equivalents at beginning of
the year............................... 152,044 133,142 125,446 125,446 193,913
--------- --------- --------- --------- ---------
Cash and cash equivalents at end of the
year................................... $ 133,142 $ 125,446 $ 193,913 $ 127,422 $ 558,732
========= ========= ========= ========= =========
Supplemental disclosure of cash flow
information:
Cash paid for interest................. $ 20,360 $ 13,428 $ 1,378 $ 1,378 $ 152
========= ========= ========= ========= =========
Cash paid for income taxes............. $ 112,476 $ 65,819 $ -- $ -- $ --
========= ========= ========= ========= =========
Supplemental disclosure of non-cash
investing and financing activities:
Allowance for notes
receivable--related parties....... $ -- $ 122,583 $ -- $ -- $ 43,020
========= ========= ========= ========= =========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-20
<PAGE> 91

MOBEO, INC.
NOTES TO FINANCIAL STATEMENTS

INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED

1. ORGANIZATION

DocuPro, Inc. was incorporated in the District of Columbia and commenced
operations in January 1989. In June 1998, DocuPro reincorporated in the state of
Delaware and in September 1998 changed its name to Mobeo, Inc. (the Company).
The Company is an electronic publisher specializing in providing financial
information over wireless networks. The Company's F/X Alert(R) service provides
major banks and financial institutions with continuous pricing and news
headlines of foreign exchange, government securities, and commodity markets on a
palm sized data terminal. The Company's PocketFutures(R) product provides the
individual futures trader with continuous pricing and news headlines of future
markets. Subsequent to December 31, 1998, the Company launched the Mobeo1.0(R)
product, designed for the individual equities trader.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unaudited interim financial statements

The unaudited balance sheet as of June 30, 1999, the unaudited statements
of operations and cash flows for the six months ended June 30, 1998 and 1999 and
the statement of changes in stockholders equity (deficit) for the six months
ended June 30, 1999, have been prepared in accordance with generally accepted
accounting principles for interim financial information and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles. In the opinion
of management, all adjustments (consisting of only normal remaining accruals)
considered necessary for a fair presentation have been included. Operating
results for the six months ended June 30, 1999 are not necessarily indicative of
results that may be expected for the year ending December 31, 1999.

Use of estimates

The preparation of 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 financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Cash and cash equivalents

All highly liquid instruments with original maturities of three months or
less are considered to be cash equivalents. The Company invests its cash
balances in repurchase accounts with a large financial institution.

Revenue recognition

The Company enters into one year service contracts for providing financial
information over wireless networks. For substantially all its customers, the
Company bills on a monthly cycle and recognizes revenue monthly. Certain of the
Company's customers are billed in advance annually with revenue deferred and
recognized on a monthly basis over the life of the agreement. Non-refundable
activation fees are billed and recognized at the time of initial subscription.

F-21
<PAGE> 92
MOBEO, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED--CONTINUED

Concentration of credit risk

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash equivalents
and accounts receivable. The Company maintains its cash and cash equivalents in
bank accounts which, at times, may exceed federally insured limits. The Company
has not experienced any losses in such bank accounts. The Company believes it is
not exposed to any significant credit risk on cash and cash equivalents. The
Company regularly monitors all outstanding accounts receivable balances to
assess collectibility. Accounts receivable as of December 31, 1997 and 1998 and
June 30, 1999, are net of an allowance for doubtful accounts of $30,000, $32,700
and $32,700 (unaudited), respectively. The accounts receivable, which are not
collateralized, are due mainly from banks and financial institutions.

Although the Company has sales on a national basis, 75% of their revenue
were derived in the New York City area. No individual accounts receivable were
greater than 10% of total accounts receivable as of December 31, 1997 and 1998,
and June 30, 1999 (unaudited).

Property and equipment

Property and equipment are recorded at cost. Property and equipment under
capital leases are recorded at the lower of their fair market value or the
present value of future minimum lease payments determined at the inception of
the lease.

Amortization of leasehold improvements is recorded on a straight-line basis
over the shorter of the estimated useful life of the improvement or the term of
the lease. Amortization of property and equipment under capital leases is
recorded on a straight-line basis over the lease term. Property and equipment
under capital leases for which title passes to the Company at the conclusion of
the lease term is amortized on a straight line basis over the estimated useful
life of the related asset. Depreciation of other property and equipment is
recorded on a straight-line basis over expected useful lives of 3 to 10 years.

When property and equipment is retired or otherwise disposed, the related
cost and accumulated depreciation are removed from the accounts and any
resulting gain or loss is reflected in income. Costs associated with repairs and
maintenance are expensed as incurred.

Patents

The cost of acquiring patents was approximately $30,000 as of December 31,
1998. Upon approval, the patents are to be amortized on a straight-line basis
over their estimated economic life, which is less than the statutory life of the
patents.

Income taxes

The Company accounts for income taxes in accordance with the liability
method. Deferred tax assets and liabilities are recognized for tax consequences
in future years for differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. The
provision for income taxes includes the current tax provision and the change
during the year in the net deferred tax liability or asset. A valuation
allowance is provided to reduce the deferred tax asset to a level which, more
likely than not, will be realized.

F-22
<PAGE> 93
MOBEO, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED--CONTINUED

Recent accounting pronouncements

In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB No.
133 an amendment of FASB Statement No. 133, which defers the effective date of
SFAS No. 133 to all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company will adopt SFAS No. 133 for the year ending December 31, 2000.
SFAS No. 133 requires that all derivative instruments be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each period in current earnings or other comprehensive income, depending on
whether a derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction. Currently, the Company does not utilize
derivative instruments, therefore the adoption of SFAS No. 133 is not expected
to have a significant effect on the Company's results of operations or its
financial position.

Reclassifications

Certain amounts in the 1997 financial statements have been reclassified to
conform with the 1998 presentation.

3. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1997 1998 1999
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
System hardware and software....................... $ 278,202 $ 196,038 $ 205,195
Office furniture and equipment..................... 216,158 454,817 381,889
Leasehold improvements............................. 44,106 44,106 44,106
--------- --------- ---------
538,466 694,961 631,190
Less accumulated depreciation and amortization..... (216,590) (289,813) (295,487)
--------- --------- ---------
$ 321,876 $ 405,148 $ 335,703
========= ========= =========
</TABLE>

During 1997, the Company leased certain office equipment under capital
leases. As of December 31, 1997, the cost of the office equipment related to
these capital leases was $44,035, and the accumulated amortization was $27,684.
These leases were fully amortized in 1998. The Company did not enter into any
new capital leases in 1998 or as of June 30, 1999.

During 1997, the Company reassessed the useful life of their pagers, which
are provided to customers upon activation of services at no fee. Since the
Company's service agreements are for a one-year period and subject to
cancellation, non-payment and non-return risk, management changed the estimated
useful life from three years to immediate expense recognition when the pagers
are acquired. As a result, the remaining net book value of pagers acquired prior
to 1997 of $228,000 was charged to depreciation expense for the year ended
December 31, 1997, while pagers purchased for the years ended December 31, 1997
and 1998 totaled $138,000 and $281,000, respectively, and 114,000 (unaudited)
and $165,000 (unaudited) for the six months ended June 30, 1998 and 1999
respectively, were expensed as incurred.

During 1997 and 1998, the Company disposed of certain system hardware and
software equipment with an original cost of $435,000 and $54,310, respectively,
and accumulated amortization of $287,000 and

F-23
<PAGE> 94
MOBEO, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED--CONTINUED

$35,675, respectively. The resulting losses on disposals are included as a
separate component on the statement of operations.

4. INCOME TAXES

The components of the provision for (benefit from) income taxes consisted
of the following:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------- -------------------
1997 1998 1998 1999
--------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current provision (benefit):
Federal..................................... $ -- $ -- $199,383 $263,090
State and local............................. -- -- 49,536 65,364
--------- ------- -------- --------
-- -- 248,919 328,454
--------- ------- -------- --------
Deferred provision (benefit):
Federal..................................... (169,073) 10,200 (39,388) (255,775)
State and local............................. (42,768) 2,550 (5,582) (26,489)
--------- ------- -------- --------
(211,841) 12,750 (45,240) (282,264)
--------- ------- -------- --------
Total provision for (benefit from) income
taxes..................................... $(211,841) $12,750 $203,679 $ 46,190
========= ======= ======== ========
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Components of the
Company's net deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1997 1998 1999
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current deferred tax assets
Allowance for doubtful accounts....................... $ 64,848 $ 65,995 $ 79,718
Deferred revenue...................................... 30,264 36,611 325,122
Other................................................. 10,714 3,163 4,564
Net operating loss carryback.......................... 36,539 80,780 56,013
-------- -------- --------
Total current deferred tax assets..................... $142,365 $186,549 $465,417
-------- -------- --------
Noncurrent deferred tax assets
Accumulated depreciation.............................. 71,476 14,542 17,938
-------- -------- --------
Total noncurrent deferred tax assets.................. 71,476 14,542 17,938
-------- -------- --------
Total deferred tax assets............................. $213,841 $201,091 $483,355
======== ======== ========
</TABLE>

The change in the deferred tax assets in 1998 primarily represents the
effect of changes in the amounts of temporary differences. The Company's 1998
provision for income taxes differs from the provision that would have resulted
from applying the federal statutory rates to net loss before taxes due to
permanent differences primarily attributable to deductible business meals and
entertainment and other permanent differences of 48%. The Company believes it is
more likely than not to realize the net deferred

F-24
<PAGE> 95
MOBEO, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED--CONTINUED

tax asset and accordingly no valuation allowance has been provided as of
December 31, 1997 and 1998. This conclusion is based on, (i) the Company's
ability to carryback net operating losses to offset taxable income from previous
years and (ii) the Company's expected future profitability.

5. PROFIT SHARING AND 401(K) PLANS

The Company has a discretionary profit sharing plan and a self-directed
401(k) plan which cover all employees employed more than six months. Employees
become fully vested after three years of service. Employer contributions to the
profit sharing plan were $102,172 and $94,664 and contributions to the 401(k)
plan were $44,040 and $60,490 for the years ended December 31, 1997 and 1998,
respectively.

6. STOCK-BASED COMPENSATION

On April 30, 1998, the Company adopted the Omnibus Stock Option Plan (the
Plan), under which incentive stock options, non-qualified stock options, stock
appreciation rights, restricted or unrestricted stock awards, phantom stock,
performance awards or any combination thereof may be granted to the Company's
employees and certain other persons in accordance with the Plan. The Board of
Directors, which administers the Plan, determines the number of options granted,
the vesting period and the exercise price. The Board of Directors may terminate
the Plan at any time. Options granted under the Plan generally vest over a four
year period and expire ten years after the date of grant. Prior to the common
stock becoming publicly traded, the Company retains the right of first offer to
buy the employees' shares at the offer price. At December 31, 1998, 48 shares
were reserved for issuance under the Plan.

As of December 31, 1998 and June 30, 1999, a total of 35 and 45 incentive
stock options respectively, had been granted to employees, at an exercise price
of $3,250 per share. The exercise price was established by the Board of
Directors.

<TABLE>
<CAPTION>
WEIGHTED
INCENTIVE AVERAGE
STOCK EXERCISE
OPTIONS PRICE PRICE
--------- ------ --------
<S> <C> <C> <C>
Options outstanding at December 31, 1997.................. -- -- --
Options granted........................................... 35 $3,250 $3,250
Options exercised......................................... -- --
Options canceled.......................................... -- -- --
--- ------ ------
Options outstanding at December 31, 1998.................. 35 $3,250 $3,250
--- ------ ------
Options granted........................................... 10 $3,250 $3,250
Options exercised......................................... -- --
Options canceled.......................................... -- -- --
--- ------ ------
Options outstanding at June 30, 1999 (unaudited).......... 45 $3,250 $3,250
=== ====== ======
</TABLE>

At December 31, 1998 and June 30, 1999, no options were exercisable. The
weighted-average fair value of options granted during the year ended December
31, 1998 and the six months ended June 30, 1999 was $1,125 and $1,262
(unaudited) per share respectively, based on the Black-Scholes option pricing
model.

The Company measures compensation expense for its employee stock-based
compensation using the intrinsic value method and provides pro forma disclosures
of net loss as if the fair value method had been applied in measuring
compensation expense. Under the intrinsic value method of accounting for stock-
based compensation, when the exercise price of options granted to employees is
less than the fair value of
F-25
<PAGE> 96
MOBEO, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED--CONTINUED

the underlying stock on the date of grant, compensation expense is to be
recognized over the applicable vesting period. No options granted through
December 31, 1998 and June 30, 1999, respectively, were less than fair value of
the underlying stock. Had the fair value method been applied, the Company's net
loss at December 31, 1998 would have been increased and the Company's net income
at June 30, 1999 would have been decreased to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
1998
---------------------------
DECEMBER 31, JUNE 30,
1998 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net loss as reported........................................ $(100,893) $ 19,677
Pro forma net loss.......................................... $(103,313) $ 18,275
</TABLE>

The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants during the year ended December 31, 1998 and the six
months ended June 30, 1999: dividend yield of 0%, expected volatility of 0%,
risk-free interest rate of 5.07% and 5.53%, respectively, and expected term of 9
years.

As of December 31, 1998 and June 30, 1999, the weighted average remaining
contractual life of the options is 9.7 years and 9.9 years, respectively.

7. COMMITMENTS AND CONTINGENCIES

Data services and royalty arrangement

In January 1995, the Company entered into a multi-year distribution
agreement with a provider of financial information for transmission to the
Company's customers. During 1998, the Company entered into two additional
multi-year agreements with new suppliers. Under these agreements, the Company
pays a monthly royalty to the data suppliers based on the number of wireless
units receiving data. Included in accounts payable at December 31, 1997 and 1998
and June 30, 1999, is $566,685, $200,000 and $68,923 (unaudited), respectively,
related to purchases of financial information for transmission to customers.

Paging services

In April 1994, the Company entered into a multi-year nonexclusive national
reseller agreement with a wireless messaging service provider. During 1998, the
Company entered into two additional multi-year nonexclusive national reseller
agreements with new suppliers. Under the terms of these agreements, the Company
is purchasing paging services from these providers for the purpose of marketing
and reselling such services to end users.

Vulnerabilities due to certain concentrations

The Company obtains all of its data from three sources and resells
primarily through one wireless messaging provider. Although there are a limited
number of data sources and messaging service providers, management believes that
they could obtain such services on terms comparable to the Company's existing
agreements. A change in suppliers, however, could cause delays in service, which
would adversely affect the Company's financial position, results of operations
and cash flows.

F-26
<PAGE> 97
MOBEO, INC.
NOTES TO FINANCIAL STATEMENTS
INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED--CONTINUED

Leases

The Company leases office space in Bethesda, Maryland for its corporate
headquarters under an agreement which expires in December 1999. In addition, the
Company maintains facilities in New York, N.Y., under an agreement which expires
in 1999. The lease agreement for its corporate headquarters contains provisions
allowing free rent periods and periodic rate increases during the lease terms.
The Company recognizes rent expense under operating leases ratably over the
lease terms. As of December 31, 1997 and 1998 and June 30, 1999, the Company had
$13,000 and $7,000 and $3,000 (unaudited), respectively, recorded as deferred
rent included in accrued expenses. Total rent expense was $238,783 and $239,936
for the years ended December 31, 1997 and 1998, respectively and $112,312
(unaudited) and $142,894 (unaudited) for the six months ended June 30, 1998 and
1999, respectively.

In addition to office space, the Company leases an automobile under a 36
month operating lease, which expires in 1999.

Future minimum lease payments under non-cancelable operating leases are as
follows:

8. RELATED PARTY TRANSACTIONS

In 1996, the Company advanced $171,250 to certain employees and
shareholders under notes receivable arrangements. During 1997, the Company
advanced an additional $78,103 under these arrangements, and received $83,750 in
collections on the notes receivables. There is no planned settlement of the
notes receivable balance in the foreseeable future, therefore the Company has
classified the amounts as a component of stockholders' equity (deficit). Under
these arrangements, the Company provided an allowance for doubtful accounts of
$122,583 to reflect the net realizable value of the notes at December 31, 1997
and 1998, respectively.

9. SUBSEQUENT EVENTS (UNAUDITED)

On July 14, 1999, the Company executed a Promissory Note with one of its
employees for $20,000. The Promissory Note bears interest at 7%. Principal and
interest payments are due beginning on September 1, 2002 with the final payment
due on August 1, 2006.

On June 30, 1999, the Company accrued $154,000 for a pending legal claim
filed against the Company. This accrual relates to a dispute between the Company
and its former data transmitter vendor. The vendor maintains that the Company is
liable for late fee charges, exchange fees and lost pager fees that the Company
previously deducted from a royalty payment made to the vendor. The Company is
investigating the charges and believes the charges are without merit. No
assurance can be given, however, that this matter will be resolved in the
Company's favor.

F-27
<PAGE> 98

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma condensed consolidated financial information has
been prepared by Aether's management and gives effect to the proposed Mobeo
acquisition. The pro forma condensed consolidated statements of operations for
the year ended December 31, 1998 and for the six months ended June 30, 1999 have
been prepared to give effect to the Mobeo acquisition as if it had occurred on
January 1, 1998. The pro forma condensed consolidated balance sheet as of June
30, 1999 gives effect to the Mobeo acquisition as if it had occurred on June 30,
1999.

The pro forma adjustments, which are based upon available information and
certain assumptions that Aether believes are reasonable in the circumstances,
are applied to the historical financial statements of Aether and Mobeo. The
Mobeo acquisition is accounted for under the purchase method of accounting.
Aether's allocation of the purchase price is based upon the estimated fair value
of assets acquired and liabilities assumed in accordance with Accounting
Principles Board Opinion No. 16. The purchase price allocations reflected in the
accompanying unaudited pro forma condensed consolidated financial statements may
be different from the final allocation of the purchase price and any such
differences may be material.

The accompanying unaudited pro forma condensed consolidated financial
information should be read in conjunction with the historical financial
statements and the notes thereto for both Aether and Mobeo, which are included
elsewhere in this prospectus. The unaudited pro forma condensed consolidated
financial statements are provided for informational purposes only and do not
purport to represent what Aether's financial position or results of operations
would actually have been had the Mobeo acquisition occurred on such dates or to
project Aether's results of operations or financial position for any future
period.

F-28
<PAGE> 99

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
-------------------------------------------------------------
PRO FORMA
HISTORICAL HISTORICAL ACQUISITION PRO FORMA
AETHER MOBEO ADJUSTMENTS CONSOLIDATED
---------- ---------- -------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 840,583 $ 558,732 $ 1,399,315
Short-term investments.................................... 3,574,324 -- 3,574,324
Accounts receivable, net.................................. 124,873 276,263 401,136
Inventory, net............................................ 88,368 -- 88,368
Prepaid and other current assets.......................... 71,816 23,464 95,280
Deferred income tax....................................... -- 465,417 (465,417)(A) --
---------- ---------- ----------- -----------
Total current assets.................................... 4,699,964 1,323,876 (465,417) 5,558,423
Property and equipment, net of accumulated depreciation..... 1,166,849 335,703 1,502,552
Other assets................................................ -- 27,609 27,609
Deferred income taxes....................................... -- 17,938 (17,938)(A) --
Goodwill and other intangibles.............................. -- 29,411 13,123,587(A) 13,152,998
---------- ---------- ----------- -----------
Total assets............................................ $5,866,813 $1,734,537 $12,640,232 $20,241,582
========== ========== =========== ===========

LIABILITIES, MEMBERS' CAPITAL AND STOCKHOLDERS' EQUITY
Current liabilities :
Accounts payable.......................................... $ 347,919 $ 406,550 $ 754,469
Accrued expenses.......................................... 653,012 811,431 1,464,443
Income tax payable........................................ -- 54,154 (54,154)(A) --
Deferred revenue.......................................... 25,000 826,788 851,788
Note payable.............................................. -- -- 12,330,000(A) 12,330,000
---------- ---------- ----------- -----------
Total current liabilities............................... 1,025,931 2,098,923 12,275,846 15,400,700
Members' capital............................................ 4,840,882 -- 4,840,882
Stockholders' equity (deficit):
Common stock.............................................. -- -- --
Additional paid-in-capital................................ -- 172,625 (172,625)(A)
Accumulated deficit....................................... (537,011) 537,011(A)
---------- ---------- ----------- -----------
Total stockholders' equity (deficit).................... -- (364,386) 364,386 --
---------- ---------- ----------- -----------
Total liabilities, members' capital and stockholders'
equity................................................ $5,866,813 $1,734,537 $12,640,232 $20,241,582
========== ========== =========== ===========
</TABLE>

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

(A) The Mobeo acquisition is to be accounted for as a purchase pursuant to
Accounting Principles Board Opinion No. 16. Under such purchase accounting
principles, Mobeo's assets acquired and liabilities assumed are required to
be adjusted to their estimated fair values at the date of acquisition. The
difference between the purchase cost and the fair value of Mobeo's net
tangible and identifiable intangible assets is goodwill.

The purchase price for Mobeo is as follows:

<TABLE>
<S> <C>
Cash consideration................................ $12,180,000
Estimated costs and expenses...................... 150,000
-----------
Total purchase price.......................... $12,330,000
===========
</TABLE>

The Company expects to finance the acquisition of Mobeo with a short-term
note payable. The Company expects to repay this short-term note payable with the
proceeds from its initial public offering.

F-29
<PAGE> 100

The allocation of the purchase price to the fair value of the assets
acquired and liabilities assumed is preliminary and will be finalized following
completion of the acquisition of Mobeo. The preliminary allocation of the
purchase price is as follows:

<TABLE>
<S> <C>
Current assets.................................... $ 858,459
Fixed assets, net................................. 335,703
Other assets...................................... 27,609
Current liabilities............................... (2,044,769)
Goodwill and other intangibles.................... 13,152,998
-----------
Total purchase cost........................... $12,330,000
===========
</TABLE>

F-30
<PAGE> 101

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999
-----------------------------------------------------------
PRO FORMA
HISTORICAL HISTORICAL ACQUISITION PRO FORMA
AETHER MOBEO ADJUSTMENTS CONSOLIDATED
----------- ---------- --------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Subscriber revenue........................................ $ 598,810 5,047,195 $ 5,646,005
Engineering service revenue............................... 188,274 -- 188,274
----------- ---------- -----------
Total revenue........................................... 787,084 5,047,195 5,834,279
----------- ---------- -----------
Cost of subscriber revenue.................................. 530,823 1,757,188 2,288,011
Cost of engineering service revenue......................... 119,829 -- 119,829
----------- ---------- -----------
Total cost of revenue................................... 650,652 1,757,188 2,407,840
----------- ---------- -----------
Gross profit....................................... 136,432 3,290,007 3,426,439
----------- ----------
Operating expenses:
Research and development.................................. 1,002,107 427,210 1,429,317
General and administrative................................ 1,582,600 1,451,285 (516,289)(B) 2,517,596
Selling and marketing..................................... 555,428 1,250,230 (446,405)(B) 1,359,253
Depreciation and amortization............................. 193,523 60,405 939,138(A) 1,193,066
Equity-based expenses..................................... 1,263,150 -- 701,868(C) 1,965,018
----------- ---------- --------- -----------
Total operating expenses................................ 4,596,808 3,189,130 678,312 8,464,250
----------- ---------- --------- -----------
Operating (loss) income..................................... (4,460,376) 100,877 (678,312) (5,037,811)
Interest income, net(E)..................................... 140,753 15,559 156,312
Other income (loss)......................................... (74,457) (50,569) (125,026)
----------- ---------- --------- -----------
(Loss) income before income tax provision................... (4,394,080) 65,867 (678,312) (5,006,525)
Income tax provision........................................ -- 46,190 (46,190)(D) --
----------- ---------- --------- -----------
Net (loss) income........................................... $(4,394,080) $ 19,677 $(632,122) $(5,006,525)
=========== ========== ========= ===========
Pro forma net (loss) income per share--basic and
diluted(F)................................................ $
===========
Pro forma weighted average shares used in per share
computations: basic and diluted(F)........................
===========
</TABLE>

- ---------------
(A) Reflects the amortization of intangible assets, including goodwill over a
seven year period. The estimated average period of amortization of the
intangible assets is based on preliminary allocations of values to
identifiable intangible assets of Mobeo. The final allocation of values
could result in amounts being allocated to intangible assets with useful
lives less then seven years.

(B) Reflects the elimination of compensation expense associated with certain
management employees of Mobeo who will cease employment following the
acquisition and will not be replaced.

(C) Reflects the amortization of the estimated fair value of options to be
granted to former owners of Mobeo for consulting services over the two year
life of the consulting agreement. Also reflects expenses associated with
options to be granted to Mobeo employees that vest over a two year period.

(D) Reflects the elimination of the income tax provision due to the Company's
net operating losses.

(E) The pro forma condensed consolidated statement of operations does not
reflect any interest expense associated with the short-term debt expected to
be used to finance the acquisition of Mobeo as the Company expects to repay
such short-term debt with the proceeds from its initial public offering.

(F) The pro forma loss per share information gives effect to the conversion from
a limited liability company to a corporation.

F-31
<PAGE> 102

AETHER TECHNOLOGIES INTERNATIONAL, L.L.C.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1998
-----------------------------------------------------------
PRO FORMA
HISTORICAL HISTORICAL ACQUISITION PRO FORMA
AETHER MOBEO ADJUSTMENTS CONSOLIDATED
----------- ---------- --------------- ------------
<S> <C> <C> <C> <C>
Revenues:
Subscriber revenue........................................ 549,057 8,580,786 9,129,843
Engineering service revenue............................... $ 963,165 -- $ 963,165
----------- ---------- -----------
Total revenue........................................... 1,512,222 8,580,786 10,093,008
----------- ---------- -----------
Cost of subscriber revenue.................................. 797,165 3,040,743 3,837,908
Cost of engineering service revenue......................... 304,137 -- 304,137
----------- ---------- -----------
Total cost of revenue................................... 1,101,302 3,040,743 4,142,045
----------- ---------- -----------
Gross profit....................................... 410,920 5,540,043 5,950,963
----------- ---------- -----------
Operating expenses:
Research and development.................................. 1,267,320 496,570 1,763,890
General and administrative................................ 2,773,332 2,706,544 (889,761)(B) 4,590,115
Selling and marketing................................... 840,455 2,302,360 (789,524)(B) 2,353,291
Depreciation and amortization............................. 264,685 112,903 1,878,276(A) 2,255,864
Equity-based expenses..................................... 32,580 -- 1,403,736(C) 1,436,316
----------- ---------- ----------- -----------
Total operating expenses................................ 5,178,372 5,618,377 1,602,727 12,399,476
----------- ---------- ----------- -----------
Operating loss.............................................. (4,767,452) (78,334) (1,602,727) (6,448,513)
Interest income, net(E)..................................... 74,180 4,969 79,149
Loss on disposal of assets.................................. -- (14,778) (14,778)
----------- ---------- ----------- -----------
Loss before income tax provision............................ (4,693,272) (88,143) (1,602,727) (6,384,142)
Income tax provision........................................ -- 12,750 (12,750)(D) --
----------- ---------- ----------- -----------
Net loss.................................................... $(4,693,272) $ (100,893) $(1,589,977) $(6,384,142)
=========== ========== =========== ===========
Pro forma net loss per share basic and diluted (F).......... $
===========
Pro forma weighted average shares used in per share
computations: basic and diluted(F)........................
===========
</TABLE>

(B) Reflects the elimination of compensation expense associated with certain
management employees of Mobeo who will cease employment following the
acquisition and will not be replaced.

(D) Reflects the elimination of the income tax provision due to the Company's
net operating losses.

(F) The pro forma loss per share information gives effect to the conversion from
a limited liability company to a corporation.

F-32
<PAGE> 103

[DESCRIPTION OF INSIDE BACK COVER:]

The inside back cover will contain two lists. One will include the names
and logos of our customers: Discover Brokerage, the Chicago Board of Trade, Bear
Stearns, Charles Schwab and ORBCOMM. The second list will include names and
logos of the companies with which we have key strategic relationships.
<PAGE> 104

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

Through and including , 1999 (the 25th day after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.

[AETHER LOGO]

COMMON STOCK

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

PROSPECTUS
---------------------------

MERRILL LYNCH & CO.

BANCBOSTON ROBERTSON STEPHENS

DONALDSON, LUFKIN & JENRETTE

U.S. BANCORP PIPER JAFFRAY

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 105

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

[AETHER LOGO]

COMMON STOCK

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

PROSPECTUS
---------------------------

MERRILL LYNCH INTERNATIONAL

BANCBOSTON ROBERTSON STEPHENS INTERNATIONAL LTD.

DONALDSON, LUFKIN & JENRETTE INTERNATIONAL

U.S. BANCORP PIPER JAFFRAY INTERNATIONAL

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 106

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses to be paid by Aether Systems, Inc. ("Aether" or "Aether
Systems") in connection with the distribution of the securities being
registered, other than underwriting discounts and commission, are as follows:

<TABLE>
<CAPTION>
AMOUNT(1)
---------
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 20,850
NASD Filing Fee............................................. *
Nasdaq National Market Listing Fee.......................... *
Accounting Fees and Expenses................................ 200,000
Blue Sky Fees and Expenses.................................. 10,000
Legal Fees and Expenses..................................... 250,000
Transfer Agent and Registrar Fees and Expenses.............. 25,000
Printing and Engraving Expenses............................. 250,000
Director and Officer Liability Insurance (2)................ *
Miscellaneous Fees and Expenses............................. *
--------
Total............................................. $ *
========
</TABLE>

- ---------------
(1) All amounts are estimates except the SEC filing fee, the NASD filing fee and
the Nasdaq National Market listing fee.

(2) Represents premiums paid by Aether on policies that insure Aether' directors
and officers against certain liabilities they may incur in connection with
the registration, offering and sale of the securities described herein.

* To Be Provided in Amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the General Corporate law of the State of Delaware,
Aether Systems has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Aether Systems'
bylaws (Exhibit 3.2 hereto) also provide for mandatory indemnification of its
directors and executive officers, and permissive indemnification of its
employees and agents, to the fullest extent permissible under Delaware law.

Aether's certificate of incorporation (Exhibit 3.1 hereto) provides that
the liability of its directors for monetary damages shall be eliminated to the
fullest extent permissible under Delaware law. Pursuant to Delaware law, this
includes elimination of liability for monetary damages for breach of the
directors' fiduciary duty of care to Aether and its stockholders. These
provisions do not eliminate the directors' duty of care and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of non-
monetary relief will remain available under Delaware law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to Aether, for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for any transaction from
which the director derived an improper personal benefit, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision also does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.

Prior to the effective date of the Registration Statement, Aether will have
entered into agreements with its directors and certain of its executive officers
that require Aether to indemnify such persons against

II-1
<PAGE> 107

expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of Aether or any of its affiliated enterprises, provided such person
acted in good father and in a manner such person reasonably believed to be in or
not opposed to the best interests of Aether and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The indemnification agreements also set forth certain procedures that will apply
in the event of a claim for indemnification thereunder.

Aether intends to obtain in conjunction with the effectiveness of the
Registration Statement a policy of directors' and officers' liability insurance
that insures Aether's directors and officers against the cost of defense,
settlement or payment of a judgment under certain circumstances.

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the underwriters of Aether and its
officers and directors for certain liabilities arising under the Securities Act
or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since its inception, the registrant's predecessor, Aether Technologies
International, L.L.C. ("Aether LLC") has issued and sold unregistered securities
in the transactions described below.

1) In January 1996, NexGen Technologies, L.L.C. contributed assets in the
wireless data field to Aether LLC in exchange for 3,000,000 units and
Transettlements, Inc. contributed $1,000,000 in cash in exchange for 1,000,000
units. On May 21, 1996, Transettlements contributed an additional $500,000 in
exchange for an additional 500,000 units.

2) In February 1997, a subsidiary of Telcom Ventures, L.L.C. acquired
290,000 units from Transettlements and contributed $1,000,000 to Aether LLC in
exchange for 625,000 units. In December 1997, Telcom Ventures and its subsidiary
contributed an additional $690,369 to Aether LLC in exchange for an additional
230,123 units.

3) In January 1998, Pyramid Ventures, Inc., then a subsidiary of BT Alex.
Brown, acquired 333,333 units at $3.00 per unit and 401,961 units at $3.73 per
unit for total proceeds to Aether LLC of approximately $2.5 million.

In June 1998, Telcom Ventures and Pyramid each loaned us $250,000. The
notes accrued interest at 8% per year and were due on demand with a stated
maturity date of the earlier of December 31, 1998 or the closing of an
anticipated private placement of units. The notes were convertible into units at
the option of the holder at the rate of $250,000 divided by the per unit price
to be paid in the anticipated private placements. In connection with the
issuance of these notes, we also issued 5,656 warrants with an exercise price of
$0.01 per unit to each of Telcom Ventures and Pyramid. Pyramid converted its
$250,000 loan plus accrued interest in August 1998 into 57,180 units at a per
unit price of $4.42 and exercised its warrant and acquired 5,656 units. In
August 1998, we repaid the amount owed Telcom Ventures, including $2,520 in
interest. Telcom Ventures exercised its warrant and received 5,656 units in
August 1999.

4) In August 1998, Reuters MarketClip Holdings Sarl received 1,131,222
units in exchange for $4,735,020 in cash and forgiveness of $530,980 Aether LLC
owed Reuters for hardware and other inventory, offset by $266,000 Reuters owed
us under a license agreement we previously entered into with Reuters relating to
sales of MarketClip, and related fees.

5) In October 1998, 3Com Corporation contributed $6,000,000, in exchange
for 1,000,000 units. At the same time Aether LLC issued 3Com a conditional
warrant to purchase 357,466 units exercisable at $0.01 per unit if the
milestones described below are achieved before October 29, 2001. 3Com achieved
the first milestone entitling it to exercise 57,466 units as a result of having
completed a joint sales and marketing plan. 3Com may exercise an additional
150,000 units when Aether LLC receives revenue of $6 million in engineering
services revenue from business opportunities introduced by 3Com. 3Com may
II-2
<PAGE> 108

exercise an additional 150,000 units if Aether LLC attains 6,000 wireless
service subscribers as a result of business opportunities introduced to us by
3Com. 3Com has not attained either of these last two milestones and has not
exercised any of its warrants.

Aether LLC from time to time has granted options or warrants to acquire
units to employees and members of the managing board. The following table sets
forth certain information regarding such grants:

<TABLE>
<CAPTION>
RANGE OF
NO. OF UNITS EXERCISE PRICES
------------ ---------------
<S> <C>
1996 277,375 $1.00
1997 122,625 $1.00
1998 241,875 $3.73-$4.42
1999 242,500 $4.42-$12.00
</TABLE>

The sale and issuance of securities in the transactions described above
were exempt from registration under the Securities Act in reliance on Section
4(2) of the Securities Act or Regulation D promulgated thereunder as
transactions by an issuer not involving a public offering, where the purchasers
were sophisticated investors who represented their intention to acquire
securities for investment only and not with a view to distribution and received
or had access to adequate information about the Aether LLC.

No underwriters were employed in any of the above transactions.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Exhibits

The exhibit index is incorporated by reference.

Financial Statement Schedules

None.

Schedules other than those listed above have been omitted since they are
not required or are not applicable or the required information is shown in the
financial statements or related notes. Columns omitted from schedules filed have
been omitted since the information is not applicable.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (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.

II-3
<PAGE> 109

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 110

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Owings
Mills, State of Maryland on the 20th day of August, 1999.

Aether Systems, Inc.

By: /s/ DAVID S. OROS
----------------------------------
David S. Oros
Present and Chief Executive Officer
and Chairman

POWER OF ATTORNEY

KNOW BY ALL PERSONS, that each person whose signature appears below
constitutes and appoints David S. Oros and David C. Reymann, and each of them,
as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and sign any registration statement
for the same offering covered by the Registration Statement that is to be
effective upon filing pursuant to Rule 462 promulgated under the Securities Act
of 1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>

/s/ DAVID S. OROS President, Chief Executive Officer August 20, 1999
- ----------------------------------------------------- and Chairman
David S. Oros

/s/ DAVID C. REYMANN Chief Financial Officer (Principal August 20, 1999
- ----------------------------------------------------- Financial and Accounting Officer
David C. Reymann
</TABLE>

II-5
<PAGE> 111

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT AND DESCRIPTION
------- ------------------------
<C> <S>
*1.1 -- Form of Underwriting Agreement
*2.1 -- Agreement of Merger, dated , 1999, between
Aether Technologies International, L.L.C., and Aether
Systems, Inc.
*3.1 -- Certificate of Incorporation
*3.2 -- Bylaws
*4.1 -- Specimen Certificate for Aether Technologies Common Stock
*5.1 -- Opinion of Wilmer, Cutler & Pickering as to the legality
of the shares of common Stock being registered
*10.1 -- Amended and Restated License, Marketing and Distribution
Agreement between Reuters America, Inc. and Aether
Technologies International, L.L.C. dated August 11, 1998.
*10.2 -- Contract Between Discover Brokerage Direct, Inc. and
Aether Technologies International, L.L.C. dated August 5,
1999.
*10.3 -- Options Price Reporting Authority Vendor Agreement
between Aether Technologies and the American Stock
Exchange, Inc. dated June 3, 1997.
*10.4 -- Agreement between Aether Technologies International,
L.L.C. and New York Stock Exchange dated July 19, 1999.
*10.5 -- Vendor Agreement by and between Aether Technologies
International, L.L.C. and the Nasdaq Stock Market, Inc.
dated October 4, 1996.
*10.6 -- Employment Agreement between Aether Technologies
International, L.L.C. and David Oros dated July 7, 1999.
*10.7 -- Employment Agreement between Aether Technologies
International, L.L.C. and David Reymann dated May 18,
1999.
*10.8 -- Stock Purchase Agreement by and among Aether Technologies
International, L.L.C., Mobeo, Inc. and Perter Kibler,
Winston Barrett and Edward Spear dated as of August 19,
1999.
*10.9 -- Series A Preferred Stock Purchase Agreement dated as of
August 9, 1999.
*10.10 -- Investors' Rights Agreement by and among AirWeb
Corporation and each of the holder of the Series A
Preferred Stock listed in Schedule A and Patrick McVeigh,
Barak Berkowitz, Michael Bolbec and Andrew Simms dated
August 9, 1999.
*10.11 -- Right of First Refusal and Co-Sale Agreement by and among
AirWeb Corporation, Inc., and those holders of the Common
Stock identified in Schedule A and B dated August 9,
1999.
*10.12 -- Voting Agreement by and among the holders of Common Stock
set forth in Schedule A and Purchase of the Series A
Preferred Stock dated August 9, 1999.
*10.13 -- Aether-OpenSky Side Letter regarding development and
resale services dated August 9, 1999.
*10.14 -- Software License Agreement by and between Aether
Technologies International, L.L.C. and AirWeb Corporation
dated August 9, 1999.
*11.1 -- Statement regarding computation of per share earnings.
*12 -- AirWeb Corporation Warrant to Purchase 3,000,000 Shares
of Series A Preferred Stock dated August 9, 1999.
</TABLE>
<PAGE> 112

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT AND DESCRIPTION
------- ------------------------
<C> <S>
21.1 -- Subsidiaries of Aether Systems
23.1 -- Consent of KPMG LLP
23.2 -- Consent of PricewaterhouseCoopers LLP
*23.3 -- Consent of Wilmer, Cutler & Pickering, included in
Exhibit 5.1
23.4 -- Consent of J. Carter Beese, Jr.
23.5 -- Consent of Frank A. Bonsal, Jr.
23.6 -- Consent of Mark D. Ein
23.7 -- Consent of Rahul C. Prakash
23.8 -- Consent of Janice M. Roberts
23.9 -- Consent of Dr. Rajendra Singh
23.10 -- Consent of Devin N. Wenig
23.11 -- Consent of Thomas E. Wheeler
23.12 -- Consent of George P. Stamas
24.1 -- Power of Attorney, included on the signature page hereof
</TABLE>

- ---------------
* To be filed by amendment.

<PAGE> 1

EXHIBIT 21.1

LIST OF SUBSIDIARIES

Aether OpenSky Investment, LLC

<PAGE> 1
Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

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

/s/ KPMG LLP

Washington, D.C.
August 20, 1999

<PAGE> 1
Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of our
reports dated March 10, 1999 relating to the financial statements of Mobeo,
Inc., which appear in such Registration Statement. We also consent to the
references to us under the headings "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

McLean, Virginia
August 20, 1999

<PAGE> 1
Exhibit 23.4

Consent to Be Named as a Director

I hereby consent to be named as a person who will become a director of
Aether Systems, Inc. (the "Company") in the registration statement on Form S-1
to be filed by the Company with the Securities and Exchange Commission relating
to the initial public offering by the Company of shares of common stock, par
value $.01, of the Company.

/s/ J. Carter Beese, Jr.
---------------------------
J. Carter Beese, Jr.

<PAGE> 1
Exhibit 23.5

Consent to Be Named as a Director

/s/ Frank A. Bonsal, Jr.
----------------------------------
Frank A. Bonsal, Jr.

August 12, 1999

<PAGE> 1
Exhibit 23.6

Consent to Be Named as a Director

/s/ Mark Ein
-----------------------------
Mark Ein

<PAGE> 1
Exhibit 23.7

Consent to Be Named as a Director

/s/ Rahul Prakash
--------------------
Rahul Prakash

<PAGE> 1
Exhibit 23.8

Consent to Be Named as a Director

/s/ Janice Roberts
-----------------------
Janice Roberts

<PAGE> 1
Exhibit 23.9

CONSENT TO BE NAMED AS A DIRECTOR

/s/ Rajendra Singh
-------------------------------
Rajendra Singh

<PAGE> 1
Exhibit 23.10

Consent to Be Named as a Director

/s/Devin Wenig
--------------
Devin Wenig

<PAGE> 1
Exhibit 23.11

Consent to Be Named as a Director

/s/Tom Wheeler
--------------
Tom Wheeler

<PAGE> 1
Exhibit 23.12

Consent to Be Named as a Director

/s/ George P. Stamas
--------------------
George P. Stamas