content: <PAGE>
  
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
  
  
                                     FORM 8-K
  
  
                 Current Report Pursuant to Section 13 or 15(d) of
                        The Securities Exchange Act of 1934
  
  
        Date of Report (Date of earliest event reported):  October 26, 1999
  
                                  PHONE.COM, INC.
              (Exact name of Registrant as specified in its charter)
  
            Delaware                      000-25687                 94-3219054
  (State or other jurisdiction of   (Commission File Number)     (I.R.S. Employer
  incorporation or organization)                               Identification No.)
  
                                 800 Chesapeake Dr.
                              Redwood City, CA  94063
                (Address of principal executive offices) (Zip code)
  
                                   (650) 562-0200
                (Registrant's telephone number, including area code)
  
  
           (Former name or former address, if changed since last report)
  <PAGE>
  
  Item 2.       Acquisition or Disposition of Assets
  
            (a) On October 26, 1999, Phone.com, Inc., a Delaware corporation (the
  "Company"), completed the acquisition of the outstanding shares of capital stock
   -------
  of ApiON Telecoms Ltd, a telecommunications software company registered in
  Belfast, Northern Ireland ("APiON").  The purchase of assets was accomplished
                              -----
  pursuant to the Agreement dated as of October 11, 1999, by and among the
  Company, APiON and each of APiON's shareholders (the "Purchase Agreement").
                                                        ------------------
  
            Pursuant to the Purchase Agreement, the Company purchased all of the
  outstanding shares of capital stock of APiON in exchange for the issuance of an
  aggregate of approximately 1,196,513 shares of the Company's Common Stock. Under
  the terms of the Purchase Agreement, ten percent of the shares of the Company's
  Common Stock to be issued to the former shareholders of APiON will be held in
  escrow for the purpose of indemnifying the Company against certain liabilities
  of APiON and the stockholders of APiON.  Such escrow will expire on the first
  anniversary of the closing of the transaction.
  
            In addition, the Company also has agreed to issue cash and common
  stock to current and former employees of APiON. Current employees of APiON will
  receive cash in the aggregate amount of approximately $2.5 million, less
  applicable withholdings for taxes and insurance, upon the closing of the
  Company's proposed public offering pursuant to a registration statement on Form
  S-1 filed by the Company on October 28, 1999, and will receive shares of Common
  Stock equal in value to approximately $2.5 million, less applicable withholdings
  for taxes and insurance, on each of the first two anniversaries of the closing
  of the APiON acquisition, subject to their continued employment. Former
  employees of APiON who where engaged in APiON's services business, which was not
  acquired by Phone.com in the transaction, will receive cash in the aggregate
  amount of approximately $2.2 million, less applicable withholdings for taxes and
  insurance, upon the closing of the Company's proposed public offering, and will
  receive shares of Common Stock equal in value to approximately $4.3 million,
  less applicable withholdings for taxes and insurance, on the first anniversary
  of the closing of the APiON acquisition, subject to forfeiture upon the
  occurrence of certain events.
  
            (b)  APiON is primarily engaged in the business of providing
  telecommunications software products and services.  Prior to the closing of the
  transaction, APiON disposed of certain assets related to its services business.
  <PAGE>
  
  Item 7.  Financial Statements and Exhibits
  
       (a) Financial Statements of Business Acquired.
           -----------------------------------------
  
           Audited financial statements of of the WAP Business of APiON are
  attached hereto and filed herewith.
  
       (b) Pro Forma Financial Information.
           -------------------------------
  
           The following unaudited pro forma combined condensed financial
  statements are presented for illustrative purposes only and are not necessarily
  indicative of the combined financial position or results of operations for
  future periods or the results of operations or financial position that actually
  would have been realized had Phone.com and the WAP Business of APiON been a
  combined company during the specified periods. The unaudited pro forma combined
  condensed financial statements, including the related notes, are qualified in
  their entirety by reference to, and should be read in conjunction with, the
  historical financial statements and related notes thereto of Phone.com and the
  WAP Business of APiON, included elsewhere in this filing. The following
  unaudited pro forma combined condensed financial statements give effect to the
  acquisition of APiON by Phone.com using the purchase method of accounting. The
  pro forma combined condensed financial statements are based on the respective
  historical audited financial statements and related notes of Phone.com and the
  WAP Business of APiON.
  
           The pro forma adjustments are preliminary and based on management's
  estimates of the value of the tangible and intangible assets acquired. The
  actual adjustments may differ materially from those presented in these pro forma
  financial statements. A change in the pro forma adjustments would result in a
  reallocation of the purchase price affecting the value assigned to the long-term
  tangible and intangible assets or, in some circumstances, resulting a charge to
  the statement of operations. The effect of these changes on the statement of
  operations will depend on the nature and amounts of the assets and liabilities
  adjusted. See note 1(b) to the pro forma combined condensed financial
  statements.
  
           The unaudited pro forma combined condensed balance sheet assumes that
  the acquisition took place on June 30, 1999, and combines Phone.com's audited
  June 30, 1999 consolidated balance sheet with the WAP Business of APiON's
  audited March 31, 1999 statement of assets acquired and liabilities assumed. The
  pro forma combined condensed statement of operations assumes the acquisition
  took place on July 1, 1998, and combines Phone.com's audited consolidated
  statement of operations for the year ended June 30, 1999, with the WAP Business
  of APiON's audited statement of operations for the year ended March 31, 1999.
  
       (c)  Exhibits.
  <PAGE>
  
            2.1  Agreement dated October 11, 1999, between the Company and each of
                 the shareholders of APiON.
  
            2.2  Supplemental Agreement dated October 26, 1999, between the
                 Company and each of the shareholders of APiON.
  
            2.3  Registration Rights Agreement dated October 26, 1999, between the
                 Company and each of the shareholders of APiON.
  
            23.2  Consent of PricewaterhouseCoopers.
  <PAGE>
  
                                     SIGNATURES
  
  
       Pursuant to the requirements of the Securities Exchange Act of 1934, as
  amended, the Registrant has duly caused this report to be signed on its behalf
  by the undersigned thereunto duly authorized.
  
  
  
                                PHONE.COM, INC.
                                (Registrant)
  
  
  Date:  November 3, 1999       By:   /s/ Alan Black
         ----------------             ----------------------------------------
                                      Vice President,
                                      Finance and Administration, Chief
                                      Chief Financial Officer and Treasurer
  
  <PAGE>
  
                         REPORT OF INDEPENDENT ACCOUNTANTS
  
  The Board of Directors and Stockholders of
  Phone.com, Inc.
  
     In our opinion, the accompanying statement of assets acquired and
  liabilities assumed and the related statement of operations and of cash flows
  present fairly, in all material respects, the financial position of the WAP
  business of APiON at March 31, 1999 and the results of its operations and cash
  flows for the period from May 1, 1998 (inception) through March 31, 1999 in
  conformity with accounting principles generally accepted in the United States.
  These financial statements are the responsibility of APiON's management; our
  responsibility is to express an opinion on these financial statements based on
  our audit. We conducted our audit of these statements in accordance with
  auditing standards generally accepted in the United Kingdom, which are
  substantially consistent with auditing standards generally accepted in the
  United States, 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 audit provides a reasonable basis for the opinion expressed above.
  
  PricewaterhouseCoopers
  Belfast, United Kingdom
  26 October 1999
  
                                        F-1
  <PAGE>
  
                               WAP BUSINESS OF APiON
  
                              STATEMENT OF OPERATIONS
  
  <TABLE>
  <CAPTION>
                                                                       May 1, 1998
                                                                       (inception)
                                                                           to
                                                                        March 31,
                                                                          1999
                                                                       -----------
                                                                         $000's
  <S>                                                                  <C>
  Operating expenses:
    Salaries..........................................................      370
    Depreciation......................................................      143
    Government grants.................................................     (124)
    Other identifiable overhead costs.................................      260
    Allocated overhead costs..........................................      435
                                                                         ------
      Total operating expenses........................................    1,084
  Tax expenses........................................................      147
                                                                         ------
  Net operating expenses..............................................    1,231
                                                                         ======
  </TABLE>
  
  
      The accompanying notes are an integral part of these financial statements.
  
                                        F-2
  <PAGE>
  
                               WAP BUSINESS OF APiON
  
                STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
  
  <TABLE>
  <CAPTION>
                                                                           As at
                                                                         March 31,
                                                                           1999
                                                                         ---------
                                                                          $000's
  <S>                                                                    <C>
                                  ASSETS
  Cash..................................................................   1,414
  Accounts receivable...................................................   3,062
  Capitalised software development costs................................     180
  Plant and equipment, net..............................................     321
                                                                           -----
                                                                           4,977
                                                                           =====
                               LIABILITIES
  Current liabilities:
    Accounts payable....................................................   1,431
    Amounts due under capital leases....................................      31
    Bank loans..........................................................      53
                                                                           -----
      Total current liabilities.........................................   1,515
                                                                           -----
  Non current liabilities:
    Amounts due under capital leases....................................       3
    Bank loans..........................................................      78
    Deferred government grants..........................................      96
    Deferred taxation...................................................     147
                                                                           -----
      Total non current liabilities.....................................     324
                                                                           -----
      Total liabilities.................................................   1,839
                                                                           -----
      Net assets acquired...............................................   3,138
                                                                           =====
  </TABLE>
  
  
      The accompanying notes are an integral part of these financial statements.
  
                                        F-3
  <PAGE>
  
                               WAP BUSINESS OF APiON
  
                                CASH FLOW STATEMENT
  
  <TABLE>
  <CAPTION>
                                                                    May 1, 1998
                                                                  (inception)  to
                                                                     March 31,
                                                                        1999
                                                                  ---------------
                                                                      $000's
  <S>                                                             <C>
  Operating activities:
    Net operating expenses.......................................     (1,231)
    Depreciation.................................................        143
    Amortization of government grants............................        (35)
    Changes in WAP operating assets and liabilities:
      Increase in accounts payable...............................        197
      Increase in deferred tax liabilities.......................        147
                                                                      ------
        Net cash outflow from operating activities...............       (779)
                                                                      ------
  Investing activities:
    Capitalised software development costs.......................       (180)
    Purchase of plant and equipment..............................       (401)
    Government grants received...................................        131
                                                                      ------
        Net cash outflow from investing activities...............       (450)
                                                                      ------
  Financing activities:
    Cash proceeds from bank loans................................        220
    Cash repaid against bank loans...............................        (89)
    Cash repaid against capital leases...........................        (29)
    Contribution of cash from the Services business..............      2,541
                                                                      ------
        Net cash provided by financing activities................      2,643
                                                                      ------
  Net increase in cash...........................................      1,414
  Balance at May 1, 1998.........................................         --
                                                                      ------
  Balance at March 31, 1999......................................      1,414
                                                                      ======
  
  Supplemental cash flow disclosures:
    Contribution of accounts receivable by the Services business
     to WAP......................................................      3,062
    Accounts payable transferred to WAP..........................     (1,234)
    Fixed assets acquired under capital leases...................        (63)
    Interest paid................................................          8
  </TABLE>
  
  
  
     The accompanying notes are an integral part of these financial statements.
  
                                        F-4
  <PAGE>
  
                               WAP BUSINESS OF APiON
  
                         NOTES TO THE FINANCIAL STATEMENTS
  
  
  1. Description of business
  
     APiON was incorporated in the United Kingdom in May 1995 to provide computer
  software consulting services. Its WAP business was established in May 1998 to
  develop wireless Internet products for sale to world wide telecommunications
  service providers.
  
  2. Accounting policies
  
     Basis of Presentation
  
     The activities referred to above were carried out jointly by APiON Limited
  and by its related company, incorporated in the Republic of Ireland, APiON
  Telecoms Limited (jointly referred to as "APiON").
  
     The operations of APiON consisted of the WAP business ("WAP"), and other
  trading activities (the "Services business"). In conjunction with the
  acquisition of WAP the trading activities associated with the Services business
  have been spun off to the common shareholders of APiON. Please refer to the
  Subsequent Events note for a discussion of the impact of this on WAP.
  
     Although APiON began research and development on WAP in 1998 it did not
  commence commercial marketing of it until after March 31, 1999. As a result
  there were no WAP revenues in the period to that date.
  
     The Statement of Operations reflects the direct operating expenses for WAP,
  for which APiON maintained separate accounting information. Of APiON's total
  operating costs of $8,852,000, $6,688,000 can be specifically identified with
  the respective businesses. Of the residual total overhead costs, mainly
  consisting of management and administration salaries, and property and
  recruitment costs, $435,000 has been allocated to the WAP business on the basis
  of the respective head counts of each business. Management believes that the
  allocations described above provide a reasonable basis of allocating corporate
  overhead costs.
  
     The Statement of Assets Acquired and Liabilities Assumed of WAP as at March
  31, 1999 reflects the assets acquired and liabilities acquired assumed by
  Phone.com in the transaction discussed in note 8. Since WAP had no revenue-
  generating activities prior to March 31, 1999, the accounts receivable and
  certain trade payables shown in the Statement of Assets Acquired and
  Liabilities Assumed relate to the Services business, but have been included
  since they were acquired by Phone.com in conjunction with its acquisition of
  WAP.
  
     Development Stage Enterprise
  
     Since WAP has not commenced commercial operations, WAP is considered a
  development stage enterprise as defined by Financial Accounting Standards Board
  Opinion No. 7, Accounting and Reporting by Development Stage Enterprises. The
  deficit accumulated in the development stage from May 1998 to March 31, 1999 is
  $1,231,000.
  
     Financial Instruments and Concentration of Credit Risk
  
     The carrying value of WAP's financial instruments, including cash, accounts
  receivable, bank loans and amounts due under capital leases, approximates fair
  value. Financial instruments that subject WAP to concentrations of credit risk
  consist primarily of trade accounts receivable.
  
     The receivables relate to the sale of services by the Services business,
  principally to leading mobile telephone operators and manufacturers. Credit
  risk is concentrated in the United Kingdom. As part of the ordinary course of
  its business, the management of APiON performed credit evaluations of its
  customers' financial condition and did not require collateral from its
  customers. APiON has had no write-offs of accounts receivable and, based on its
  evaluation of its accounts receivable collectibility and customer
  creditworthiness, has recorded no allowance for doubtful accounts receivable.
  
  
                                        F-5
  <PAGE>
  
                               WAP BUSINESS OF APiON
  
                   NOTES TO THE FINANCIAL STATEMENTS--(Continued)
  
  
     Research and Development
  
     Research and development costs are expensed as incurred until technological
  feasibility has been established. Until January 1999, WAP's software was under
  development and had not yet achieved technological feasibility and,
  accordingly, only development costs incurred subsequent to that date have been
  capitalised.
  
     Income taxes
  
     Income taxes are accounted for under the asset and liability method as if
  WAP was filing a separate return. Deferred tax assets and liabilities are
  recognised for the future tax consequences attributable to differences between
  the financial statement carrying amounts of existing assets and liabilities and
  their respective tax bases and operating loss and tax credit carryforwards.
  Deferred tax assets and liabilities are measured using enacted tax rates
  expected to apply to taxable income in the years in which those temporary
  differences are expected to be recovered or settled. The effect on deferred tax
  assets and liabilities of a change in tax rates is recognised in income in the
  period that includes the enactment date. Valuation allowances are established
  when necessary to reduce deferred tax assets to the amounts expected to be
  recovered.
  
     Tangible fixed assets
  
     The cost of tangible fixed assets is their purchase cost, together with any
  incidental costs of acquisition. Depreciation is calculated so as to write off
  the cost of tangible fixed assets, less their estimated residual values, on a
  straight-line basis over the expected useful economic lives of the assets
  concerned. The annual rate used for this purpose is 33% per annum.
  
     Capital leases
  
     Leasing agreements, which transfer to WAP substantially all the benefits and
  risks of ownership of an asset are treated as if the asset had been purchased
  outright. The assets are included in fixed assets and the capital element of
  the leasing commitments is shown as obligations under capital leases. Assets
  held under capital leases are depreciated over the shorter of the lease terms
  and the useful lives of equivalent owned assets.
  
     Government grants
  
     Revenue grants against revenue expenditure are credited to profit and loss
  in the same period as the related expenditure is incurred.
  
     Grants against capital expenditure are taken to deferred income and credited
  to profit and loss on the same basis as depreciation is charged on the related
  assets. These grants are repayable to the government agency concerned in the
  event that the relevant assets are disposed of, or cease to be used for the
  purpose of the trade, within four years of the receipt of the grant. In light
  of the carve-out of certain fixed assets as described in the Subsequent Event
  note, management of APiON and Phone.com have met with the government agency
  concerned. Agreement has been reached that the related grants will not be
  repayable, and that the shareholders of APiON rather than WAP will assume the
  liability to repay the grants relating to the carve-out fixed assets in the
  circumstances of any subsequent disposal or failure to use them for the purpose
  intended.
  
     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.
  
  
                                        F-6
  <PAGE>
  
                               WAP BUSINESS OF APiON
  
                   NOTES TO THE FINANCIAL STATEMENTS--(Continued)
  
     Comprehensive income
  
     WAP has no material components of other comprehensive income (loss) for all
  periods presented.
  
  3. Related party transactions
  
     During the period presented WAP purchased services from companies with
  common shareholders and directors. WAP paid $38,455 during the period for
  services rendered, at what the directors considered to be commercial market
  prices.
  
  4. Capitalised Software Development Costs
  
  <TABLE>
  <CAPTION>
                                                                            $000's
                                                                            ------
     <S>                                                                    <C>
     Cost:
       At May 1, 1998......................................................   --
       Additions...........................................................  180
                                                                             ---
       At March 31, 1999...................................................  180
                                                                             ===
  </TABLE>
  
     There was no amortisation of the capitalised software development costs in
  the period from May 1, 1998 to March 31, 1999 as no sales of WAP were made
  before March 31, 1999.
  
  5. Plant and Equipment
  
  <TABLE>
  <CAPTION>
                                                                 Fixtures &
                                                       Computers  Fittings  Total
                                                       --------- ---------- ------
                                                        $000's     $000's   $000's
     <S>                                               <C>       <C>        <C>
     Cost:
       At May 1, 1998.................................     --        --       --
       Additions......................................    392        72      464
       Disposals......................................     --       (13)     (13)
                                                          ---       ---      ---
       At March 31, 1999..............................    392        59      451
                                                          ===       ===      ===
  
     Depreciation:
       At May 1, 1998.................................     --        --       --
       Disposals......................................     --       (13)     (13)
       Charge for the period..........................    112        31      143
                                                          ---       ---      ---
       At March 31, 1999..............................    112        18      130
                                                          ---       ---      ---
     Net book value at March 31, 1999.................    280        41      321
                                                          ===       ===      ===
  </TABLE>
  
                                        F-7
  <PAGE>
  
                               WAP BUSINESS OF APiON
  
                   NOTES TO THE FINANCIAL STATEMENTS--(Continued)
  
  
  6. Bank Loans and Capital Leases
  
     WAP has a series of bank loan facilities to finance the purchase of fixed
  assets, each repayable in monthly installments over a three-year period at a
  rate of interest of UK bank base rate plus 1.5% (currently 6.75% per annum). In
  addition it has capital lease facilities, the final repayment on which falls
  due in the year to March 2001. The repayment schedule for the total bank loan
  and capital lease balances due at March 31,1999, was:
  
  <TABLE>
  <CAPTION>
                                                                     Bank  Capital
                                                                    Loans  leases
                                                                    ------ -------
                                                                    $000's $000's
     <S>                                                            <C>    <C>
     Repayable in the year to March, 31:
       2000                                                           53      34
       2001                                                           49       3
       2003                                                           29      --
                                                                     ---     ---
     Total minimum payments........................................  131      37
     Less amounts representing interest............................   --       3
                                                                     ---     ---
                                                                     131      34
                                                                     ===     ===
  </TABLE>
  
  7. Deferred taxation
  
  <TABLE>
  <CAPTION>
                                                                           As at
                                                                         March 31,
                                                                           1999
                                                                         ---------
                                                                          $000's
     <S>                                                                 <C>
     Fixed asset temporary differences..................................    147
     Net operating loss carry forwards..................................    373
     Less: Valuation allowance..........................................   (373)
                                                                           ----
     Total deferred tax liabilities, net................................    147
                                                                           ====
  </TABLE>
  
     Management has evaluated the positive and negative evidence impacting the
  realizability of the deferred tax assets that consist principally of net
  operating losses carried forward in the UK. Management has considered the short
  operating history of WAP as well as the uncertainty associated with the
  Company's future profitability and has concluded that as of March 31, 1999,
  such deferred tax assets are less likely than not to be realized in the
  foreseeable future. Therefore management has recorded a full valuation
  allowance against deferred tax assets. Management evaluates the positive and
  negative evidence on a quarterly basis.
  
  8. Subsequent events
  
     Subsequent to March 31, 1999, ownership of APiON Limited and APiON Telecoms
  Limited was consolidated under a new United Kingdom company, also called APiON
  Telecoms Limited, which was the statutory entity to be acquired by Phone.com.
  
     On October 26, 1999, all of the outstanding capital stock of APiON Telecoms
  Limited was acquired by Phone.com, Inc. in exchange for 1,196,513 shares of
  Phone.com common stock.
  
     Immediately prior to the acquisition, APiON spun off its Services business
  to the vendor shareholders. The transfer involved certain employees, and fixed
  assets employed in the Services business that had a net book value of $937,000
  at March, 31 1999, and related asset finance liabilities of $573,000. The
  Services business was transferred to the vendor shareholders for a cash payment
  of $3,254,000, made in addition to the payment made for its book value of net
  assets acquired.
  
                                        F-8
  <PAGE>
  
                                  PHONE.COM, INC.
  
            UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
  
     The following unaudited pro forma combined condensed financial statements
  are presented for illustrative purposes only and are not necessarily indicative
  of the combined financial position or results of operations for future periods
  or the results of operations or financial position that actually would have
  been realized had Phone.com and the WAP Business of APiON been a combined
  company during the specified periods. The unaudited pro forma combined
  condensed financial statements, including the related notes, are qualified in
  their entirety by reference to, and should be read in conjunction with, the
  historical financial statements and related notes thereto of Phone.com and the
  WAP Business of APiON, included elsewhere in this filing. The following
  unaudited pro forma combined condensed financial statements give effect to the
  acquisition of APiON by Phone.com using the purchase method of accounting. The
  pro forma combined condensed financial statements are based on the respective
  historical audited financial statements and related notes of Phone.com and the
  WAP Business of APiON.
  
     The pro forma adjustments are preliminary and based on management's
  estimates of the value of the tangible and intangible assets acquired. The
  actual adjustments may differ materially from those presented in these pro
  forma financial statements. A change in the pro forma adjustments would result
  in a reallocation of the purchase price affecting the value assigned to the
  long-term tangible and intangible assets or, in some circumstances, resulting a
  charge to the statement of operations. The effect of these changes on the
  statement of operations will depend on the nature and amounts of the assets and
  liabilities adjusted. See note 1(b) to the pro forma combined condensed
  financial statements.
  
     The unaudited pro forma combined condensed balance sheet assumes that the
  acquisition took place on June 30, 1999, and combines Phone.com's audited June
  30, 1999 consolidated balance sheet with the WAP Business of APiON's audited
  March 31, 1999 statement of assets acquired and liabilities assumed. The pro
  forma combined condensed statement of operations assumes the acquisition took
  place on July 1, 1998, and combines Phone.com's audited consolidated statement
  of operations for the year ended June 30, 1999, with the WAP Business of
  APiON's audited statement of operations for the year ended March 31, 1999.
  
                                        F-9
  <PAGE>
  
                                  PHONE.COM, INC.
  
                UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
                                   (In thousands)
  
  <TABLE>
  <CAPTION>
                                                  June 30, 1999
                                      -----------------------------------------
                                         Historical          Pro forma
                                      ----------------- -----------------------
                                      Phone.com  APiON  Adjustments    Combined
                                      ---------  ------ -----------    --------
  <S>                                 <C>        <C>    <C>            <C>
                ASSETS
  Current assets:
    Cash and cash equivalents........ $ 79,803   $1,414  $(11,711)(b)  $ 69,506
    Short-term investments...........   33,283       --                  33,283
    Accounts receivable..............   20,474    3,062                  23,536
    Prepaid expenses and other
     current assets..................      865      180                   1,045
                                      --------   ------  --------      --------
      Total current assets...........  134,425    4,656   (11,711)      127,370
  Property and equipment, net........    3,014      321                   3,335
  Deposits and other assets..........    1,494       --                   1,494
  Goodwill and other intangible
   assets, net.......................       --       --   244,537 (b)   244,537
                                      --------   ------  --------      --------
                                      $138,933   $4,977  $232,826      $376,736
                                      ========   ======  ========      ========
     LIABILITIES AND STOCKHOLDERS'
                 EQUITY
  Current liabilities:
    Current portion of equipment loan
     and capital lease obligations... $    424   $   84  $               $  508
    Accounts payable.................    1,749    1,431                   3,180
    Accrued expenses.................    7,173      243                   7,416
    Deferred revenue.................   36,797       --                  36,797
                                      --------   ------  --------      --------
      Total current liabilities......   46,143    1,758        --        47,901
  Equipment loans and capital lease
   obligations, less current
   portion...........................      498       81                     579
                                      --------   ------  --------      --------
      Total liabilities..............   46,641    1,839        --        48,480
                                      --------   ------  --------      --------
  Stockholders' equity:
    Common stock.....................       31                  1 (b)        32
    Additional paid-in capital.......  136,209       --     5,095 (a)
                                                          235,963 (b)   377,267
    Deferred stock compensation......   (1,318)      --    (5,095)(a)    (6,413)
    Treasury stock...................     (196)      --                    (196)
    Notes receivable from
     stockholders....................     (484)      --                    (484)
    Accumulated (deficit)/net assets
     acquired........................  (41,950)   3,138    (3,138)(b)   (41,950)
                                      --------   ------  --------      --------
      Total stockholders' equity
       (deficit).....................   92,292    3,138   232,826       328,256
                                      --------   ------  --------      --------
                                      $138,933   $4,977  $232,826      $376,736
                                      ========   ======  ========      ========
  </TABLE>
  
     See accompanying notes to unaudited pro forma combined condensed financial
                                     statements
  
                                        F-10
  <PAGE>
  
                                  PHONE.COM, INC.
  
           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                       (In thousands, except per share data)
  
  <TABLE>
  <CAPTION>
                                           Year ended June 30, 1999
                                    --------------------------------------------
                                       Historical             Pro forma
                                    ------------------  ------------------------
                                    Phone.com   APiON   Adjustments    Combined
                                    ---------  -------  -----------    ---------
  <S>                               <C>        <C>      <C>            <C>
  Revenues:
    License.......................  $  5,229   $    --   $             $   5,229
    Maintenance and support
     services.....................     5,921        --                     5,921
    Consulting services...........     2,292        --                     2,292
                                    --------   -------   --------      ---------
      Total revenues..............    13,442        --         --         13,442
                                    --------   -------   --------      ---------
  Cost of revenues:
    License.......................       371        --                       371
    Maintenance and support
     services.....................     3,022        --                     3,022
    Consulting services...........     1,146        --                     1,146
                                    --------   -------   --------      ---------
      Total cost of revenues......     4,539        --         --          4,539
                                    --------   -------   --------      ---------
      Gross profit................     8,903        --         --          8,903
                                    --------   -------   --------      ---------
  Operating expenses:
    Research and development......    13,082       432                    13,514
    Sales and marketing...........    10,840       227                    11,067
    General and administrative....     4,432       425                     4,857
    Stock-based compensation......     1,011        --      3,821 (c)      4,832
    Amortization of goodwill and
     other intangible assets......        --        --     81,512 (d)     81,512
                                    --------   -------   --------      ---------
      Total operating costs.......    29,365     1,084     85,333        115,782
                                    --------   -------   --------      ---------
      Operating loss..............   (20,462)   (1,084)   (85,333)      (106,879)
  Interest income, net............     1,803        --                     1,803
                                    --------   -------   --------      ---------
      Loss before taxes...........   (18,659)   (1,084)   (85,333)      (105,076)
  Income taxes....................     2,104       147                     2,251
                                    --------   -------   --------      ---------
      Net loss....................  $(20,763)  $(1,231)  $(85,333)     $(107,327)
                                    ========   =======   ========      =========
  Basic and diluted net loss per
   share..........................  $  (2.98)                          $  (13.15)
                                    ========                           =========
  Shares used to compute basic and
   diluted net loss per share.....     6,966                1,196 (e)      8,162
                                    ========                           =========
  </TABLE>
  
     See accompanying notes to unaudited pro forma combined condensed financial
                                     statements
  
                                        F-11
  <PAGE>
  
                                  PHONE.COM, INC.
  
        NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
  
  (1) Unaudited Pro Forma Combined Condensed Balance Sheet
  
     On October 26, 1999, Phone.com acquired all of the outstanding capital stock
  of APiON in exchange for 1,196,513 shares of common stock of Phone.com. In
  addition, the Company agreed to issue cash and common stock to current and
  former employees of APiON. Former employees of APiON will receive consideration
  totaling up to approximately $6.5 million of which one third is payable in cash
  (approximately $2.2 million) upon the closing of this offering and two thirds
  is payable in common stock of the Company on the one year anniversary of the
  closing of the acquisition of APiON and is subject to forfeiture upon the
  occurrence of certain events. Current employees of APiON will receive
  consideration totaling up to approximately $7.6 million of which one third is
  payable in cash upon the closing of this offering and one third is payable in
  common stock of the Company on each of the first two anniversaries of the
  closing of the acquisition of APiON contingent upon continued employment. The
  actual number of Phone.com shares to be issued to current and former employees
  of APiON will depend upon the fair value of Phone.com common stock on the
  distribution date.
  
    Common stock issued to former shareholders and cash paid to current and
  former employees of APiON at the closing of the acquisition is included in the
  purchase price. Contingent common stock issuable in the future to former
  employees of APiON will be treated as contingent consideration. The then fair
  value of the common stock that is issued to the former employees of APiON upon
  the satisfaction of certain future events will be added to goodwill and
  amortized over the remaining useful life. Common stock issuable in the future
  to current employees of APiON is recorded as deferred stock-based compensation.
  
     The pro forma combined condensed balance sheet as of June 30, 1999 gives
  effect to the merger as if it had occurred on June 30, 1999.
  
     The following adjustment has been reflected in the unaudited pro forma
  combined condensed balance sheet:
  
       (a) To record deferred stock compensation related to common stock of the
    Company to be issued to current employees of APiON as follows (in
    thousands):
  
  <TABLE>
     <S>                                                                  <C>
     Total consideration................................................. $ 7,642
     Less: cash payable at closing.......................................  (2,547)
                                                                          -------
       Deferred stock-based compensation................................. $ 5,095
                                                                          =======
  </TABLE>
  
       The common stock payable to current employees of APiON is payable in
    equal installments on each of the first two anniversaries of the closing,
    contingent upon continued employment.
  
       (b) To record common stock issued to stockholders of APiON and record
    applicable purchase accounting entries.
  
       Under purchase accounting, the total purchase price will be allocated to
    APiON's assets and liabilities based on their relative fair values.
    Allocations are subject to valuations as of the date of the consummation of
    the acquisition. The amounts and components of the estimated purchase price
    along with the preliminary allocation of the estimated purchase price to
    assets purchased are as follows (in thousands):
  
  <TABLE>
     <S>                                                                <C>
     Cash (including $2,547 payable to current employees of APiON)..... $  4,711
     Common stock......................................................  235,964
     Estimated transaction costs.......................................    7,000
                                                                        --------
       Total purchase price............................................ $247,675
                                                                        ========
  
     Cash and cash equivalents......................................... $  1,414
     Other current assets..............................................    3,242
     Property and equipment............................................      321
     Liabilities assumed...............................................   (1,839)
                                                                        --------
       Book value of net tangible assets of APiON......................    3,138
     Goodwill and other intangible assets..............................  244,537
                                                                        --------
       Net assets acquired............................................. $247,675
                                                                        ========
  </TABLE>
  
  
                                        F-12
  <PAGE>
  
                                  PHONE.COM, INC.
  
                  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
       The actual allocation of the purchase price will depend upon the
    composition of APiON's net assets on the closing date and Phone.com's
    evaluation of the fair value of the net assets as of the date indicated.
    Consequently, the actual allocation of the purchase price could differ from
    that presented above.
  
  (2) Unaudited Pro Forma Combined Condensed Statements of Operations
  
     The pro forma combined condensed statements of operations give effect to the
  acquisition as if it had occurred at the beginning of the period presented.
  
     The following adjustments have been reflected in the unaudited pro forma
  combined condensed statement of operations:
  
       (c) To reflect the accelerated amortization of deferred stock-based
    compensation associated with common stock of the Company to be issued to
    current employees of APiON in a manner consistent with Financial Accounting
    Standards Board Interpretation No. 28. The accelerated amortization results
    in 75% of the deferred stock-based compensation being amortized in the
    first year after the closing of the acquisition of APiON.
  
       (d) Adjustment to record the amortization of goodwill and intangible
    assets resulting from the preliminary allocation of the APiON purchase
    price. The pro forma adjustment assumes goodwill and other intangible
    assets will be amortized on a straight-line basis over an estimated life of
    three years resulting in one-third of the total goodwill and intangible
    assets of $244.5 million being amortized in the first year after the
    closing of the acquisition of APiON. The ultimate lives assigned will be
    determined at the date of acquisition based on the facts and circumstances
    existing at that date.
  
       (e) To reflect the shares to be issued as consideration for the
    acquisition.
  
                                        F-13
  <PAGE>
  
                                 INDEX TO EXHIBITS
  
  
  <TABLE>
  <CAPTION>
                                                                                 Sequentially
  Exhibit                                                                         Numbered
  Number     Description                                                            Page
  ---------  -----------                                                        ------------
  <S>        <C>                                                                <C>
  2.1        Agreement dated October 11, 1999, between the Company and
             each of the shareholders of APiON.                                    ____
  
  2.2        Supplemental Agreement dated October 26, 1999, between the
             Company and each of the shareholders of APiON.                        ____
  
  2.3        Registration Rights Agreement dated October 26, 1999,
             between the Company and each of the shareholders of APiON.            ____
  
  23.        Consent of PricewaterhouseCoopers.
  
  </TABLE>
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "FORM 8-K", "secsgml_size_bytes": 50221}]
metadata_filer: {"company-data": {"conformed-name": "PHONE COM INC", "cik": "0001082506", "assigned-sic": "7372", "irs-number": "943219054"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-25687", "film-number": "99739932"}, "business-address": {"street1": "800 CHESAPEAKE DRIVE", "city": "REDWOOD CITY", "state": "CA", "zip": "94063", "phone": "6505620200"}, "mail-address": {"street1": "800 CHESAPEAKE DRIVE", "city": "REDWOOD CITY", "state": "CA", "zip": "94063"}, "former-company": {"former-conformed-name": "UNWIRED PLANET INC", "date-changed": "19990324"}}
text: SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
  
                                     FORM 8-K
  
                 Current Report Pursuant to Section 13 or 15(d) of
                        The Securities Exchange Act of 1934
  
        Date of Report (Date of earliest event reported):  October 26, 1999
  
                                  PHONE.COM, INC.
              (Exact name of Registrant as specified in its charter)
  
            Delaware                      000-25687                 94-3219054
  (State or other jurisdiction of   (Commission File Number)     (I.R.S. Employer
  incorporation or organization)                               Identification No.)
  
                                 800 Chesapeake Dr.
                              Redwood City, CA  94063
                (Address of principal executive offices) (Zip code)
  
                                   (650) 562-0200
                (Registrant's telephone number, including area code)
  
           (Former name or former address, if changed since last report)
  Item 2.       Acquisition or Disposition of Assets
  
            (a) On October 26, 1999, Phone.com, Inc., a Delaware corporation (the
  "Company"), completed the acquisition of the outstanding shares of capital stock
   -------
  of ApiON Telecoms Ltd, a telecommunications software company registered in
  Belfast, Northern Ireland ("APiON").  The purchase of assets was accomplished
                              -----
  pursuant to the Agreement dated as of October 11, 1999, by and among the
  Company, APiON and each of APiON's shareholders (the "Purchase Agreement").
                                                        ------------------
  
            Pursuant to the Purchase Agreement, the Company purchased all of the
  outstanding shares of capital stock of APiON in exchange for the issuance of an
  aggregate of approximately 1,196,513 shares of the Company's Common Stock. Under
  the terms of the Purchase Agreement, ten percent of the shares of the Company's
  Common Stock to be issued to the former shareholders of APiON will be held in
  escrow for the purpose of indemnifying the Company against certain liabilities
  of APiON and the stockholders of APiON.  Such escrow will expire on the first
  anniversary of the closing of the transaction.
  
            In addition, the Company also has agreed to issue cash and common
  stock to current and former employees of APiON. Current employees of APiON will
  receive cash in the aggregate amount of approximately $2.5 million, less
  applicable withholdings for taxes and insurance, upon the closing of the
  Company's proposed public offering pursuant to a registration statement on Form
  S-1 filed by the Company on October 28, 1999, and will receive shares of Common
  Stock equal in value to approximately $2.5 million, less applicable withholdings
  for taxes and insurance, on each of the first two anniversaries of the closing
  of the APiON acquisition, subject to their continued employment. Former
  employees of APiON who where engaged in APiON's services business, which was not
  acquired by Phone.com in the transaction, will receive cash in the aggregate
  amount of approximately $2.2 million, less applicable withholdings for taxes and
  insurance, upon the closing of the Company's proposed public offering, and will
  receive shares of Common Stock equal in value to approximately $4.3 million,
  less applicable withholdings for taxes and insurance, on the first anniversary
  of the closing of the APiON acquisition, subject to forfeiture upon the
  occurrence of certain events.
  
            (b)  APiON is primarily engaged in the business of providing
  telecommunications software products and services.  Prior to the closing of the
  transaction, APiON disposed of certain assets related to its services business.
  Item 7.  Financial Statements and Exhibits
  
       (a) Financial Statements of Business Acquired.
           -----------------------------------------
  
           Audited financial statements of of the WAP Business of APiON are
  attached hereto and filed herewith.
  
       (b) Pro Forma Financial Information.
           -------------------------------
  
           The following unaudited pro forma combined condensed financial
  statements are presented for illustrative purposes only and are not necessarily
  indicative of the combined financial position or results of operations for
  future periods or the results of operations or financial position that actually
  would have been realized had Phone.com and the WAP Business of APiON been a
  combined company during the specified periods. The unaudited pro forma combined
  condensed financial statements, including the related notes, are qualified in
  their entirety by reference to, and should be read in conjunction with, the
  historical financial statements and related notes thereto of Phone.com and the
  WAP Business of APiON, included elsewhere in this filing. The following
  unaudited pro forma combined condensed financial statements give effect to the
  acquisition of APiON by Phone.com using the purchase method of accounting. The
  pro forma combined condensed financial statements are based on the respective
  historical audited financial statements and related notes of Phone.com and the
  WAP Business of APiON.
  
           The pro forma adjustments are preliminary and based on management's
  estimates of the value of the tangible and intangible assets acquired. The
  actual adjustments may differ materially from those presented in these pro forma
  financial statements. A change in the pro forma adjustments would result in a
  reallocation of the purchase price affecting the value assigned to the long-term
  tangible and intangible assets or, in some circumstances, resulting a charge to
  the statement of operations. The effect of these changes on the statement of
  operations will depend on the nature and amounts of the assets and liabilities
  adjusted. See note 1(b) to the pro forma combined condensed financial
  statements.
  
           The unaudited pro forma combined condensed balance sheet assumes that
  the acquisition took place on June 30, 1999, and combines Phone.com's audited
  June 30, 1999 consolidated balance sheet with the WAP Business of APiON's
  audited March 31, 1999 statement of assets acquired and liabilities assumed. The
  pro forma combined condensed statement of operations assumes the acquisition
  took place on July 1, 1998, and combines Phone.com's audited consolidated
  statement of operations for the year ended June 30, 1999, with the WAP Business
  of APiON's audited statement of operations for the year ended March 31, 1999.
  
       (c)  Exhibits.
  2.1  Agreement dated October 11, 1999, between the Company and each of
                 the shareholders of APiON.
  
            2.2  Supplemental Agreement dated October 26, 1999, between the
                 Company and each of the shareholders of APiON.
  
            2.3  Registration Rights Agreement dated October 26, 1999, between the
                 Company and each of the shareholders of APiON.
  
            23.2  Consent of PricewaterhouseCoopers.
  SIGNATURES
  
       Pursuant to the requirements of the Securities Exchange Act of 1934, as
  amended, the Registrant has duly caused this report to be signed on its behalf
  by the undersigned thereunto duly authorized.
  
                                PHONE.COM, INC.
                                (Registrant)
  
  Date:  November 3, 1999       By:   /s/ Alan Black
         ----------------             ----------------------------------------
                                      Vice President,
                                      Finance and Administration, Chief
                                      Chief Financial Officer and Treasurer
  REPORT OF INDEPENDENT ACCOUNTANTS
  
  The Board of Directors and Stockholders of
  Phone.com, Inc.
  
     In our opinion, the accompanying statement of assets acquired and
  liabilities assumed and the related statement of operations and of cash flows
  present fairly, in all material respects, the financial position of the WAP
  business of APiON at March 31, 1999 and the results of its operations and cash
  flows for the period from May 1, 1998 (inception) through March 31, 1999 in
  conformity with accounting principles generally accepted in the United States.
  These financial statements are the responsibility of APiON's management; our
  responsibility is to express an opinion on these financial statements based on
  our audit. We conducted our audit of these statements in accordance with
  auditing standards generally accepted in the United Kingdom, which are
  substantially consistent with auditing standards generally accepted in the
  United States, 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 audit provides a reasonable basis for the opinion expressed above.
  
  PricewaterhouseCoopers
  Belfast, United Kingdom
  26 October 1999
  
                                        F-1
  WAP BUSINESS OF APiON
  
                              STATEMENT OF OPERATIONS
  May 1, 1998
                                                                       (inception)
                                                                           to
                                                                        March 31,
                                                                          1999
                                                                       -----------
                                                                         $000's
  Operating expenses:
    Salaries..........................................................      370
    Depreciation......................................................      143
    Government grants.................................................     (124)
    Other identifiable overhead costs.................................      260
    Allocated overhead costs..........................................      435
                                                                         ------
      Total operating expenses........................................    1,084
  Tax expenses........................................................      147
                                                                         ------
  Net operating expenses..............................................    1,231
                                                                         ======
  The accompanying notes are an integral part of these financial statements.
  
                                        F-2
  WAP BUSINESS OF APiON
  
                STATEMENT OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
  As at
                                                                         March 31,
                                                                           1999
                                                                         ---------
                                                                          $000's
  ASSETS
  Cash..................................................................   1,414
  Accounts receivable...................................................   3,062
  Capitalised software development costs................................     180
  Plant and equipment, net..............................................     321
                                                                           -----
                                                                           4,977
                                                                           =====
                               LIABILITIES
  Current liabilities:
    Accounts payable....................................................   1,431
    Amounts due under capital leases....................................      31
    Bank loans..........................................................      53
                                                                           -----
      Total current liabilities.........................................   1,515
                                                                           -----
  Non current liabilities:
    Amounts due under capital leases....................................       3
    Bank loans..........................................................      78
    Deferred government grants..........................................      96
    Deferred taxation...................................................     147
                                                                           -----
      Total non current liabilities.....................................     324
                                                                           -----
      Total liabilities.................................................   1,839
                                                                           -----
      Net assets acquired...............................................   3,138
                                                                           =====
  The accompanying notes are an integral part of these financial statements.
  
                                        F-3
  WAP BUSINESS OF APiON
  
                                CASH FLOW STATEMENT
  May 1, 1998
                                                                  (inception)  to
                                                                     March 31,
                                                                        1999
                                                                  ---------------
                                                                      $000's
  Operating activities:
    Net operating expenses.......................................     (1,231)
    Depreciation.................................................        143
    Amortization of government grants............................        (35)
    Changes in WAP operating assets and liabilities:
      Increase in accounts payable...............................        197
      Increase in deferred tax liabilities.......................        147
                                                                      ------
        Net cash outflow from operating activities...............       (779)
                                                                      ------
  Investing activities:
    Capitalised software development costs.......................       (180)
    Purchase of plant and equipment..............................       (401)
    Government grants received...................................        131
                                                                      ------
        Net cash outflow from investing activities...............       (450)
                                                                      ------
  Financing activities:
    Cash proceeds from bank loans................................        220
    Cash repaid against bank loans...............................        (89)
    Cash repaid against capital leases...........................        (29)
    Contribution of cash from the Services business..............      2,541
                                                                      ------
        Net cash provided by financing activities................      2,643
                                                                      ------
  Net increase in cash...........................................      1,414
  Balance at May 1, 1998.........................................         --
                                                                      ------
  Balance at March 31, 1999......................................      1,414
                                                                      ======
  
  Supplemental cash flow disclosures:
    Contribution of accounts receivable by the Services business
     to WAP......................................................      3,062
    Accounts payable transferred to WAP..........................     (1,234)
    Fixed assets acquired under capital leases...................        (63)
    Interest paid................................................          8
  The accompanying notes are an integral part of these financial statements.
  
                                        F-4
  WAP BUSINESS OF APiON
  
                         NOTES TO THE FINANCIAL STATEMENTS
  
  1. Description of business
  
     APiON was incorporated in the United Kingdom in May 1995 to provide computer
  software consulting services. Its WAP business was established in May 1998 to
  develop wireless Internet products for sale to world wide telecommunications
  service providers.
  
  2. Accounting policies
  
     Basis of Presentation
  
     The activities referred to above were carried out jointly by APiON Limited
  and by its related company, incorporated in the Republic of Ireland, APiON
  Telecoms Limited (jointly referred to as "APiON").
  
     The operations of APiON consisted of the WAP business ("WAP"), and other
  trading activities (the "Services business"). In conjunction with the
  acquisition of WAP the trading activities associated with the Services business
  have been spun off to the common shareholders of APiON. Please refer to the
  Subsequent Events note for a discussion of the impact of this on WAP.
  
     Although APiON began research and development on WAP in 1998 it did not
  commence commercial marketing of it until after March 31, 1999. As a result
  there were no WAP revenues in the period to that date.
  
     The Statement of Operations reflects the direct operating expenses for WAP,
  for which APiON maintained separate accounting information. Of APiON's total
  operating costs of $8,852,000, $6,688,000 can be specifically identified with
  the respective businesses. Of the residual total overhead costs, mainly
  consisting of management and administration salaries, and property and
  recruitment costs, $435,000 has been allocated to the WAP business on the basis
  of the respective head counts of each business. Management believes that the
  allocations described above provide a reasonable basis of allocating corporate
  overhead costs.
  
     The Statement of Assets Acquired and Liabilities Assumed of WAP as at March
  31, 1999 reflects the assets acquired and liabilities acquired assumed by
  Phone.com in the transaction discussed in note 8. Since WAP had no revenue-
  generating activities prior to March 31, 1999, the accounts receivable and
  certain trade payables shown in the Statement of Assets Acquired and
  Liabilities Assumed relate to the Services business, but have been included
  since they were acquired by Phone.com in conjunction with its acquisition of
  WAP.
  
     Development Stage Enterprise
  
     Since WAP has not commenced commercial operations, WAP is considered a
  development stage enterprise as defined by Financial Accounting Standards Board
  Opinion No. 7, Accounting and Reporting by Development Stage Enterprises. The
  deficit accumulated in the development stage from May 1998 to March 31, 1999 is
  $1,231,000.
  
     Financial Instruments and Concentration of Credit Risk
  
     The carrying value of WAP's financial instruments, including cash, accounts
  receivable, bank loans and amounts due under capital leases, approximates fair
  value. Financial instruments that subject WAP to concentrations of credit risk
  consist primarily of trade accounts receivable.
  
     The receivables relate to the sale of services by the Services business,
  principally to leading mobile telephone operators and manufacturers. Credit
  risk is concentrated in the United Kingdom. As part of the ordinary course of
  its business, the management of APiON performed credit evaluations of its
  customers' financial condition and did not require collateral from its
  customers. APiON has had no write-offs of accounts receivable and, based on its
  evaluation of its accounts receivable collectibility and customer
  creditworthiness, has recorded no allowance for doubtful accounts receivable.
  
                                        F-5
  WAP BUSINESS OF APiON
  
                   NOTES TO THE FINANCIAL STATEMENTS--(Continued)
  
     Research and Development
  
     Research and development costs are expensed as incurred until technological
  feasibility has been established. Until January 1999, WAP's software was under
  development and had not yet achieved technological feasibility and,
  accordingly, only development costs incurred subsequent to that date have been
  capitalised.
  
     Income taxes
  
     Income taxes are accounted for under the asset and liability method as if
  WAP was filing a separate return. Deferred tax assets and liabilities are
  recognised for the future tax consequences attributable to differences between
  the financial statement carrying amounts of existing assets and liabilities and
  their respective tax bases and operating loss and tax credit carryforwards.
  Deferred tax assets and liabilities are measured using enacted tax rates
  expected to apply to taxable income in the years in which those temporary
  differences are expected to be recovered or settled. The effect on deferred tax
  assets and liabilities of a change in tax rates is recognised in income in the
  period that includes the enactment date. Valuation allowances are established
  when necessary to reduce deferred tax assets to the amounts expected to be
  recovered.
  
     Tangible fixed assets
  
     The cost of tangible fixed assets is their purchase cost, together with any
  incidental costs of acquisition. Depreciation is calculated so as to write off
  the cost of tangible fixed assets, less their estimated residual values, on a
  straight-line basis over the expected useful economic lives of the assets
  concerned. The annual rate used for this purpose is 33% per annum.
  
     Capital leases
  
     Leasing agreements, which transfer to WAP substantially all the benefits and
  risks of ownership of an asset are treated as if the asset had been purchased
  outright. The assets are included in fixed assets and the capital element of
  the leasing commitments is shown as obligations under capital leases. Assets
  held under capital leases are depreciated over the shorter of the lease terms
  and the useful lives of equivalent owned assets.
  
     Government grants
  
     Revenue grants against revenue expenditure are credited to profit and loss
  in the same period as the related expenditure is incurred.
  
     Grants against capital expenditure are taken to deferred income and credited
  to profit and loss on the same basis as depreciation is charged on the related
  assets. These grants are repayable to the government agency concerned in the
  event that the relevant assets are disposed of, or cease to be used for the
  purpose of the trade, within four years of the receipt of the grant. In light
  of the carve-out of certain fixed assets as described in the Subsequent Event
  note, management of APiON and Phone.com have met with the government agency
  concerned. Agreement has been reached that the related grants will not be
  repayable, and that the shareholders of APiON rather than WAP will assume the
  liability to repay the grants relating to the carve-out fixed assets in the
  circumstances of any subsequent disposal or failure to use them for the purpose
  intended.
  
     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.
  
                                        F-6
  WAP BUSINESS OF APiON
  
                   NOTES TO THE FINANCIAL STATEMENTS--(Continued)
  
     Comprehensive income
  
     WAP has no material components of other comprehensive income (loss) for all
  periods presented.
  
  3. Related party transactions
  
     During the period presented WAP purchased services from companies with
  common shareholders and directors. WAP paid $38,455 during the period for
  services rendered, at what the directors considered to be commercial market
  prices.
  
  4. Capitalised Software Development Costs
  $000's
                                                                            ------
  Cost:
       At May 1, 1998......................................................   --
       Additions...........................................................  180
                                                                             ---
       At March 31, 1999...................................................  180
                                                                             ===
  There was no amortisation of the capitalised software development costs in
  the period from May 1, 1998 to March 31, 1999 as no sales of WAP were made
  before March 31, 1999.
  
  5. Plant and Equipment
  Fixtures &
                                                       Computers  Fittings  Total
                                                       --------- ---------- ------
                                                        $000's     $000's   $000's
  Cost:
       At May 1, 1998.................................     --        --       --
       Additions......................................    392        72      464
       Disposals......................................     --       (13)     (13)
                                                          ---       ---      ---
       At March 31, 1999..............................    392        59      451
                                                          ===       ===      ===
  
     Depreciation:
       At May 1, 1998.................................     --        --       --
       Disposals......................................     --       (13)     (13)
       Charge for the period..........................    112        31      143
                                                          ---       ---      ---
       At March 31, 1999..............................    112        18      130
                                                          ---       ---      ---
     Net book value at March 31, 1999.................    280        41      321
                                                          ===       ===      ===
  F-7
  WAP BUSINESS OF APiON
  
                   NOTES TO THE FINANCIAL STATEMENTS--(Continued)
  
  6. Bank Loans and Capital Leases
  
     WAP has a series of bank loan facilities to finance the purchase of fixed
  assets, each repayable in monthly installments over a three-year period at a
  rate of interest of UK bank base rate plus 1.5% (currently 6.75% per annum). In
  addition it has capital lease facilities, the final repayment on which falls
  due in the year to March 2001. The repayment schedule for the total bank loan
  and capital lease balances due at March 31,1999, was:
  Bank  Capital
                                                                    Loans  leases
                                                                    ------ -------
                                                                    $000's $000's
  Repayable in the year to March, 31:
       2000                                                           53      34
       2001                                                           49       3
       2003                                                           29      --
                                                                     ---     ---
     Total minimum payments........................................  131      37
     Less amounts representing interest............................   --       3
                                                                     ---     ---
                                                                     131      34
                                                                     ===     ===
  7. Deferred taxation
  As at
                                                                         March 31,
                                                                           1999
                                                                         ---------
                                                                          $000's
  Fixed asset temporary differences..................................    147
     Net operating loss carry forwards..................................    373
     Less: Valuation allowance..........................................   (373)
                                                                           ----
     Total deferred tax liabilities, net................................    147
                                                                           ====
  Management has evaluated the positive and negative evidence impacting the
  realizability of the deferred tax assets that consist principally of net
  operating losses carried forward in the UK. Management has considered the short
  operating history of WAP as well as the uncertainty associated with the
  Company's future profitability and has concluded that as of March 31, 1999,
  such deferred tax assets are less likely than not to be realized in the
  foreseeable future. Therefore management has recorded a full valuation
  allowance against deferred tax assets. Management evaluates the positive and
  negative evidence on a quarterly basis.
  
  8. Subsequent events
  
     Subsequent to March 31, 1999, ownership of APiON Limited and APiON Telecoms
  Limited was consolidated under a new United Kingdom company, also called APiON
  Telecoms Limited, which was the statutory entity to be acquired by Phone.com.
  
     On October 26, 1999, all of the outstanding capital stock of APiON Telecoms
  Limited was acquired by Phone.com, Inc. in exchange for 1,196,513 shares of
  Phone.com common stock.
  
     Immediately prior to the acquisition, APiON spun off its Services business
  to the vendor shareholders. The transfer involved certain employees, and fixed
  assets employed in the Services business that had a net book value of $937,000
  at March, 31 1999, and related asset finance liabilities of $573,000. The
  Services business was transferred to the vendor shareholders for a cash payment
  of $3,254,000, made in addition to the payment made for its book value of net
  assets acquired.
  
                                        F-8
  PHONE.COM, INC.
  
            UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
  
     The following unaudited pro forma combined condensed financial statements
  are presented for illustrative purposes only and are not necessarily indicative
  of the combined financial position or results of operations for future periods
  or the results of operations or financial position that actually would have
  been realized had Phone.com and the WAP Business of APiON been a combined
  company during the specified periods. The unaudited pro forma combined
  condensed financial statements, including the related notes, are qualified in
  their entirety by reference to, and should be read in conjunction with, the
  historical financial statements and related notes thereto of Phone.com and the
  WAP Business of APiON, included elsewhere in this filing. The following
  unaudited pro forma combined condensed financial statements give effect to the
  acquisition of APiON by Phone.com using the purchase method of accounting. The
  pro forma combined condensed financial statements are based on the respective
  historical audited financial statements and related notes of Phone.com and the
  WAP Business of APiON.
  
     The pro forma adjustments are preliminary and based on management's
  estimates of the value of the tangible and intangible assets acquired. The
  actual adjustments may differ materially from those presented in these pro
  forma financial statements. A change in the pro forma adjustments would result
  in a reallocation of the purchase price affecting the value assigned to the
  long-term tangible and intangible assets or, in some circumstances, resulting a
  charge to the statement of operations. The effect of these changes on the
  statement of operations will depend on the nature and amounts of the assets and
  liabilities adjusted. See note 1(b) to the pro forma combined condensed
  financial statements.
  
     The unaudited pro forma combined condensed balance sheet assumes that the
  acquisition took place on June 30, 1999, and combines Phone.com's audited June
  30, 1999 consolidated balance sheet with the WAP Business of APiON's audited
  March 31, 1999 statement of assets acquired and liabilities assumed. The pro
  forma combined condensed statement of operations assumes the acquisition took
  place on July 1, 1998, and combines Phone.com's audited consolidated statement
  of operations for the year ended June 30, 1999, with the WAP Business of
  APiON's audited statement of operations for the year ended March 31, 1999.
  
                                        F-9
  PHONE.COM, INC.
  
                UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
                                   (In thousands)
  June 30, 1999
                                      -----------------------------------------
                                         Historical          Pro forma
                                      ----------------- -----------------------
                                      Phone.com  APiON  Adjustments    Combined
                                      ---------  ------ -----------    --------
  ASSETS
  Current assets:
    Cash and cash equivalents........ $ 79,803   $1,414  $(11,711)(b)  $ 69,506
    Short-term investments...........   33,283       --                  33,283
    Accounts receivable..............   20,474    3,062                  23,536
    Prepaid expenses and other
     current assets..................      865      180                   1,045
                                      --------   ------  --------      --------
      Total current assets...........  134,425    4,656   (11,711)      127,370
  Property and equipment, net........    3,014      321                   3,335
  Deposits and other assets..........    1,494       --                   1,494
  Goodwill and other intangible
   assets, net.......................       --       --   244,537 (b)   244,537
                                      --------   ------  --------      --------
                                      $138,933   $4,977  $232,826      $376,736
                                      ========   ======  ========      ========
     LIABILITIES AND STOCKHOLDERS'
                 EQUITY
  Current liabilities:
    Current portion of equipment loan
     and capital lease obligations... $    424   $   84  $               $  508
    Accounts payable.................    1,749    1,431                   3,180
    Accrued expenses.................    7,173      243                   7,416
    Deferred revenue.................   36,797       --                  36,797
                                      --------   ------  --------      --------
      Total current liabilities......   46,143    1,758        --        47,901
  Equipment loans and capital lease
   obligations, less current
   portion...........................      498       81                     579
                                      --------   ------  --------      --------
      Total liabilities..............   46,641    1,839        --        48,480
                                      --------   ------  --------      --------
  Stockholders' equity:
    Common stock.....................       31                  1 (b)        32
    Additional paid-in capital.......  136,209       --     5,095 (a)
                                                          235,963 (b)   377,267
    Deferred stock compensation......   (1,318)      --    (5,095)(a)    (6,413)
    Treasury stock...................     (196)      --                    (196)
    Notes receivable from
     stockholders....................     (484)      --                    (484)
    Accumulated (deficit)/net assets
     acquired........................  (41,950)   3,138    (3,138)(b)   (41,950)
                                      --------   ------  --------      --------
      Total stockholders' equity
       (deficit).....................   92,292    3,138   232,826       328,256
                                      --------   ------  --------      --------
                                      $138,933   $4,977  $232,826      $376,736
                                      ========   ======  ========      ========
  See accompanying notes to unaudited pro forma combined condensed financial
                                     statements
  
                                        F-10
  PHONE.COM, INC.
  
           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                       (In thousands, except per share data)
  Year ended June 30, 1999
                                    --------------------------------------------
                                       Historical             Pro forma
                                    ------------------  ------------------------
                                    Phone.com   APiON   Adjustments    Combined
                                    ---------  -------  -----------    ---------
  Revenues:
    License.......................  $  5,229   $    --   $             $   5,229
    Maintenance and support
     services.....................     5,921        --                     5,921
    Consulting services...........     2,292        --                     2,292
                                    --------   -------   --------      ---------
      Total revenues..............    13,442        --         --         13,442
                                    --------   -------   --------      ---------
  Cost of revenues:
    License.......................       371        --                       371
    Maintenance and support
     services.....................     3,022        --                     3,022
    Consulting services...........     1,146        --                     1,146
                                    --------   -------   --------      ---------
      Total cost of revenues......     4,539        --         --          4,539
                                    --------   -------   --------      ---------
      Gross profit................     8,903        --         --          8,903
                                    --------   -------   --------      ---------
  Operating expenses:
    Research and development......    13,082       432                    13,514
    Sales and marketing...........    10,840       227                    11,067
    General and administrative....     4,432       425                     4,857
    Stock-based compensation......     1,011        --      3,821 (c)      4,832
    Amortization of goodwill and
     other intangible assets......        --        --     81,512 (d)     81,512
                                    --------   -------   --------      ---------
      Total operating costs.......    29,365     1,084     85,333        115,782
                                    --------   -------   --------      ---------
      Operating loss..............   (20,462)   (1,084)   (85,333)      (106,879)
  Interest income, net............     1,803        --                     1,803
                                    --------   -------   --------      ---------
      Loss before taxes...........   (18,659)   (1,084)   (85,333)      (105,076)
  Income taxes....................     2,104       147                     2,251
                                    --------   -------   --------      ---------
      Net loss....................  $(20,763)  $(1,231)  $(85,333)     $(107,327)
                                    ========   =======   ========      =========
  Basic and diluted net loss per
   share..........................  $  (2.98)                          $  (13.15)
                                    ========                           =========
  Shares used to compute basic and
   diluted net loss per share.....     6,966                1,196 (e)      8,162
                                    ========                           =========
  See accompanying notes to unaudited pro forma combined condensed financial
                                     statements
  
                                        F-11
  PHONE.COM, INC.
  
        NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
  
  (1) Unaudited Pro Forma Combined Condensed Balance Sheet
  
     On October 26, 1999, Phone.com acquired all of the outstanding capital stock
  of APiON in exchange for 1,196,513 shares of common stock of Phone.com. In
  addition, the Company agreed to issue cash and common stock to current and
  former employees of APiON. Former employees of APiON will receive consideration
  totaling up to approximately $6.5 million of which one third is payable in cash
  (approximately $2.2 million) upon the closing of this offering and two thirds
  is payable in common stock of the Company on the one year anniversary of the
  closing of the acquisition of APiON and is subject to forfeiture upon the
  occurrence of certain events. Current employees of APiON will receive
  consideration totaling up to approximately $7.6 million of which one third is
  payable in cash upon the closing of this offering and one third is payable in
  common stock of the Company on each of the first two anniversaries of the
  closing of the acquisition of APiON contingent upon continued employment. The
  actual number of Phone.com shares to be issued to current and former employees
  of APiON will depend upon the fair value of Phone.com common stock on the
  distribution date.
  
    Common stock issued to former shareholders and cash paid to current and
  former employees of APiON at the closing of the acquisition is included in the
  purchase price. Contingent common stock issuable in the future to former
  employees of APiON will be treated as contingent consideration. The then fair
  value of the common stock that is issued to the former employees of APiON upon
  the satisfaction of certain future events will be added to goodwill and
  amortized over the remaining useful life. Common stock issuable in the future
  to current employees of APiON is recorded as deferred stock-based compensation.
  
     The pro forma combined condensed balance sheet as of June 30, 1999 gives
  effect to the merger as if it had occurred on June 30, 1999.
  
     The following adjustment has been reflected in the unaudited pro forma
  combined condensed balance sheet:
  
       (a) To record deferred stock compensation related to common stock of the
    Company to be issued to current employees of APiON as follows (in
    thousands):
  Total consideration................................................. $ 7,642
     Less: cash payable at closing.......................................  (2,547)
                                                                          -------
       Deferred stock-based compensation................................. $ 5,095
                                                                          =======
  The common stock payable to current employees of APiON is payable in
    equal installments on each of the first two anniversaries of the closing,
    contingent upon continued employment.
  
       (b) To record common stock issued to stockholders of APiON and record
    applicable purchase accounting entries.
  
       Under purchase accounting, the total purchase price will be allocated to
    APiON's assets and liabilities based on their relative fair values.
    Allocations are subject to valuations as of the date of the consummation of
    the acquisition. The amounts and components of the estimated purchase price
    along with the preliminary allocation of the estimated purchase price to
    assets purchased are as follows (in thousands):
  Cash (including $2,547 payable to current employees of APiON)..... $  4,711
     Common stock......................................................  235,964
     Estimated transaction costs.......................................    7,000
                                                                        --------
       Total purchase price............................................ $247,675
                                                                        ========
  
     Cash and cash equivalents......................................... $  1,414
     Other current assets..............................................    3,242
     Property and equipment............................................      321
     Liabilities assumed...............................................   (1,839)
                                                                        --------
       Book value of net tangible assets of APiON......................    3,138
     Goodwill and other intangible assets..............................  244,537
                                                                        --------
       Net assets acquired............................................. $247,675
                                                                        ========
  F-12
  PHONE.COM, INC.
  
                  NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
                         FINANCIAL STATEMENTS--(Continued)
  
       The actual allocation of the purchase price will depend upon the
    composition of APiON's net assets on the closing date and Phone.com's
    evaluation of the fair value of the net assets as of the date indicated.
    Consequently, the actual allocation of the purchase price could differ from
    that presented above.
  
  (2) Unaudited Pro Forma Combined Condensed Statements of Operations
  
     The pro forma combined condensed statements of operations give effect to the
  acquisition as if it had occurred at the beginning of the period presented.
  
     The following adjustments have been reflected in the unaudited pro forma
  combined condensed statement of operations:
  
       (c) To reflect the accelerated amortization of deferred stock-based
    compensation associated with common stock of the Company to be issued to
    current employees of APiON in a manner consistent with Financial Accounting
    Standards Board Interpretation No. 28. The accelerated amortization results
    in 75% of the deferred stock-based compensation being amortized in the
    first year after the closing of the acquisition of APiON.
  
       (d) Adjustment to record the amortization of goodwill and intangible
    assets resulting from the preliminary allocation of the APiON purchase
    price. The pro forma adjustment assumes goodwill and other intangible
    assets will be amortized on a straight-line basis over an estimated life of
    three years resulting in one-third of the total goodwill and intangible
    assets of $244.5 million being amortized in the first year after the
    closing of the acquisition of APiON. The ultimate lives assigned will be
    determined at the date of acquisition based on the facts and circumstances
    existing at that date.
  
       (e) To reflect the shares to be issued as consideration for the
    acquisition.
  
                                        F-13
  INDEX TO EXHIBITS
  Sequentially
  Exhibit                                                                         Numbered
  Number     Description                                                            Page
  ---------  -----------                                                        ------------
  2.1        Agreement dated October 11, 1999, between the Company and
             each of the shareholders of APiON.                                    ____
  
  2.2        Supplemental Agreement dated October 26, 1999, between the
             Company and each of the shareholders of APiON.                        ____
  
  2.3        Registration Rights Agreement dated October 26, 1999,
             between the Company and each of the shareholders of APiON.            ____
  
  23.        Consent of PricewaterhouseCoopers.