During the second phase, kernel functionalities grows rapidly. As the Gnu cc compiler were improved and merged with the official GNU cc and a new loader, LILO's loader like, named PALO was under development, some critical drivers have been implemented:
More over, syscalls were added and first applications on userland were executed. There were no Init, but only an sash shell and some applications to test drivers, like the networking capabilities. These drivers opened the possibility to use PA/Linux with an NFSroot instead of a RAMdisk. Root FS on disk was possible too, but due to lack of applications to transfer files on it, the NFSroot was the most practical.