AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 1999

REGISTRATION NO. 333-74273
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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ZIPLINK, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE 4813 04-3457219
(State or other jurisdiction of (Primary Standard Identification (I.R.S. Employer Identification Number)
incorporation or organization) Classification Code Number)

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

900 CHELMSFORD STREET
TOWER ONE, FIFTH FLOOR
LOWELL MASSACHUSETTS 01851
(978) 551-8100
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------

HENRY M. ZACHS
CO-CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
ZIPLINK, INC.
900 CHELMSFORD STREET
TOWER ONE, FIFTH FLOOR
LOWELL MASSACHUSETTS 01851
(978) 551-8100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------

COPIES TO:

WAYNE A. MARTINO, ESQ. PAUL JACOBS, ESQ.
GEORGE BRENCHER IV, ESQ. MARA H. ROGERS, ESQ.
BRENNER, SALTZMAN & WALLMAN, LLP FULBRIGHT & JAWORSKI L.L.P.
271 WHITNEY AVENUE 666 FIFTH AVENUE
NEW HAVEN, CONNECTICUT 06511 NEW YORK, NEW YORK 10103
(203) 772-2600 (212) 318-3000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

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

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

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

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

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------

CALCULATION OF REGISTRATION FEE

AMOUNT OF
PROPOSED MAXIMUM AGGREGATE REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE (1) FEE(2)

Common stock, par value $.001 per share.................................. $56,350,000.00 $15,665.30

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

(2) $13,427.40 of the Registration Fee was previously paid.

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

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

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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.

SUBJECT TO COMPLETION, DATED APRIL 16, 1999

PROSPECTUS

3,500,000 SHARES

[LOGO]

ZIPLINK, INC.

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

This is the initial public offering of ZipLink, Inc. and we are offering
3,500,000 shares of our common stock. We anticipate that the initial public
offering price will be between $12.00 and $14.00 per share.

We intend to apply to list our common stock on the Nasdaq National Market under
the symbol "ZIPL."

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 9.

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

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

PER SHARE TOTAL
--------------------- ---------------------

Initial public offering price........................... $ $
Underwriting discount................................... $ $
Proceeds, before expenses, to ZipLink................... $ $

ZipLink has granted the underwriters a 30-day option to purchase up to an
additional 525,000 shares of common stock at the initial public offering price
less the underwriting discount to cover any over-allotments.

Jefferies & Company, Inc. FAC/EQUITIES

The date of this prospectus is , 1999

THE ZIPLINK NETWORK

[ZIPLINK NETWORK MAP APPEARS HERE]
COURTESY OF BOARDWATCH MAGAZINE, 1999

ZIPLINK'S NETWORK OFFERS LOCAL DIAL-UP AND OTHER FORMS OF INTERNET ACCESS IN 16
OF THE 20 LARGEST METROPOLITAN AREAS IN THE UNITED STATES. ONCE CONNECTED,
TRAFFIC IS ROUTED TO THE DESIRED INTERNET LOCATION ON OUR HIGH-SPEED, QUALITY
NETWORK. USERS CAN CONNECT TO THE NETWORK AT A VARIETY OF SPEEDS USING A RANGE
OF ACCESS METHODS.

WHOLESALE INTERNET ACCESS SOLUTIONS FOR
INTERNET APPLIANCES AND LOCAL, REGIONAL AND NATIONAL
INTERNET SERVICE PROVIDERS

PROSPECTUS SUMMARY

YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING OUR COMPANY AND THE COMMON STOCK BEING SOLD IN THIS
OFFERING AND OUR FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS
(I) ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT WILL NOT BE EXERCISED, (II)
GIVES EFFECT TO CONVERSION OF OUR BUSINESS FORM FROM A LIMITED LIABILITY COMPANY
TO A CORPORATION AND THE CONVERSION OF OUR MEMBERSHIP UNITS INTO COMMON STOCK,
WHICH REORGANIZATION WILL OCCUR PRIOR TO THE CLOSING OF THIS OFFERING, AND (III)
GIVES EFFECT TO THE CONVERSION OF $7.5 MILLION OF INDEBTEDNESS INTO 834,615
SHARES OF COMMON STOCK, BASED UPON AN ASSUMED INITIAL PUBLIC OFFERING PRICE OF
$13.00 PER SHARE, WHICH CONVERSION WILL OCCUR CONCURRENTLY WITH THE CLOSING OF
THIS OFFERING.

ZIPLINK

OUR BUSINESS

ZipLink is a national provider of wholesale Internet access services to
developers and vendors of Internet appliances and local, regional and national
Internet service providers. Internet access services represent the means by
which users connect to the Internet allowing them to access the World Wide Web,
e-mail and other resources. Internet appliances are electronic devices, other
than personal computers, which connect users to the Internet. Internet service
providers offer Internet access to their subscribers either by developing a
proprietary network infrastructure or by purchasing Internet access services
from wholesale providers such as ZipLink, or through a combination of both.

ZipLink offers a range of Internet access solutions for Internet appliances,
such as TV set-top boxes, which are devices that enable a user to access the
Internet using an ordinary television. Our Internet access solutions include:

- Providing a connection between an Internet appliance and the Internet, or
Internet connectivity;

- Ensuring that users of Internet appliances attempting to access the
Internet (or a customer's network) are authorized subscribers, a function
known in our industry as "subscriber authentication;" and

- Selective, or filtered, forwarding of e-mail to mobile Internet appliances
such as some specially-designed pagers.

We also provide wholesale national Internet access services under the name
ZipDial to Internet service providers which, in turn, offer Internet access to
their subscribers using our network infrastructure. Our ZipDial service features
an array of access options including modem, or dial-up, access and enhanced
services, such as high-speed access using digital subscriber line technology
(which is known in our industry as "DSL"). DSL technology makes possible data
transmission speeds historically associated with private or "dedicated" lines at
comparatively low cost using ordinary telephone lines.

We are a leading provider of Internet connectivity to subscribers of
Microsoft's-Registered Trademark- WebTV Network-TM- service. WebTV subscribers
receive this service through a TV set-top box. We provide a dial-up connection
over our network between WebTV subscribers and the Internet access facilities of
WebTV Networks, Inc. ("WebTV"). We have provided Internet connectivity to WebTV
since its product introduction in late 1996. This customer relationship has
helped us to more efficiently develop our Internet access network, allowing us
to add "points-of-presence" where we believed our investment would be
substantially supported by traffic from WebTV's subscriber base. A "point of
presence" is a facility that allows users to access our network with a local
telephone call.

We provide wholesale Internet access services using our high-speed national
network. Our network features 19 efficient, broad-coverage points of presence of
a type known in our industry as "super points of presence" or "SuperPOPs." We
have SuperPOPs in 16 of the 20 largest metropolitan areas in

the United States and offer dial-up access at connection speeds of up to 56
kilobits per second (the speed of the fastest dial-up modems).

We facilitated our network buildout and upgrade through a strategic alliance
with Bay Networks, Inc., a subsidiary of Northern Telecom Limited ("Nortel
Networks"). As a part of this strategic alliance, Nortel Networks has invested
$10.0 million in ZipLink, consisting of $2.5 million of equity and $7.5 million
of convertible debt. Concurrently with the closing of this offering, $2.5
million of this debt will convert into common stock at the rate of $5.56 per
share and $5.0 million of this debt will convert into common stock at the
initial public offering price. We have purchased approximately $7.1 million of
network equipment and services from Nortel Networks at preferred pricing to
upgrade our dial-up network to its current connection speed. In addition, we
have served as a testing facility, or "beta site," for new Nortel Networks
product offerings, and have performed field testing for, and have received
pre-released versions of, their equipment and software. As an outgrowth of this
alliance, we recently commenced a joint nationwide marketing campaign for our
ZipDial service with Nortel Networks.

OUR MARKET OPPORTUNITY

We believe the Internet appliance market is poised to grow rapidly. As this
market grows, we anticipate that there will be an increasing demand for
cost-effective, high-quality access services connecting these devices to the
Internet.

- Industry analyst International Data Corporation, or IDC, estimates that
there will be 12.8 million Internet appliances in use in 1999, of which
4.1 million will be televisions which can access the Internet.

- Industry analyst Forrester Research, Inc. predicts that 20 million
Internet appliances will be installed in U.S. homes by 2002.

- IDC projects that Internet appliances (other than personal computers)
shipped will grow from 9% of all Internet access devices (including
personal computers) in 1998 to 43% of the market by 2002.

The Internet service provider market is highly fragmented with approximately
4,800 Internet service providers in the United States. As demand for Internet
access grows and the market for access matures, we believe that Internet service
providers will face pressure to lower prices, increase services, expand
infrastructure and concentrate on customer service and marketing. We believe
these factors create a significant outsourcing opportunity for wholesale
providers of Internet access services.

- Forrester Research predicts that the Internet access market will reach $50
billion in 2002.

- Forrester Research estimates that there will be 60 million Internet access
dial-up accounts in 2002, constituting 77% of the Internet access market.

ZIPLINK'S SOLUTION

Our wholesale Internet access solutions are designed to meet the needs of
the emerging Internet appliance market and to provide a network outsourcing
opportunity for Internet service providers. We offer a range of wholesale
Internet access services to developers and vendors of Internet appliances in
need of an Internet access provider for their products, including Internet
connectivity, subscriber authentication and e-mail filtering and forwarding. Our
ZipDial service features a selection of wholesale Internet access services for
Internet service providers, available on an outsourced basis. This service
includes dial-up access, DSL, and streaming audio and video (the simultaneous
transmission and

playback of continuous streams of audio and visual content over the Internet).
We believe that the success of our wholesale Internet access solutions is based
on the following elements:

- OUTSOURCING SOLUTION. We provide outsourced Internet access for our
customers, allowing them to focus on their core competency of marketing
their products and services;

- REDUCED TIME TO MARKET. Our services allow customers to quickly offer
Internet access to their subscribers, significantly reducing their time to
market;

- NATIONAL ACCESS. Our network covers 16 of the 20 largest metropolitan
areas in the United States, thereby lowering the barriers to entry into
new geographic markets for our customers;

- CAPITAL EXPENDITURE SAVINGS. Our service provides our customers with a
cost-effective alternative to a self-funded network upgrade or buildout;
and

- EXPANDED SERVICE OPTIONS. Our services allow our customers to offer a
broad range of services to their subscribers, including DSL and streaming
audio and video.

OUR BUSINESS STRATEGY

Our objective is to become the leading wholesale provider of Internet access
services for developers and vendors of Internet appliances and Internet service
providers in the United States. We intend to achieve this objective by
implementing the following key strategies:

- identify, develop and sustain relationships with key innovators and early
marketers of Internet appliances in order to increase our market
visibility;

- capitalize on our network infrastructure and expertise to make ZipDial the
leading high-quality, cost-effective wholesale access solution for
Internet service providers;

- expand, enhance and maintain a reliable network infrastructure with
high-quality performance;

- establish and sustain strategic alliances with key customers and suppliers
to create and exploit early access to new markets and new technologies;
and

- capitalize on our relationship with WebTV, a leading Internet appliance
company, by continuing to expand our network where it is likely to be
supported by WebTV traffic and by using this relationship to boost our
marketing efforts with developers and vendors of other Internet
appliances.

OUR HISTORY

ZipLink is presently organized as a Delaware limited liability company known
as "ZipLink, LLC." Prior to the closing of this offering, ZipLink, LLC will
merge with and into ZipLink, Inc., a newly-formed Delaware corporation. Except
as otherwise required by the context, references in this prospectus to "we,"
"our," "us" and "ZipLink" mean ZipLink, Inc. and its predecessors.

We began revenue generating operations in June, 1996. Although we had
revenue of $7.1 million in 1998, 68% of that revenue was from one customer,
WebTV. We have a history of operating losses and, as of December 31, 1998, had
incurred a cumulative net loss from operations of $24.0 million. Our industry is
new and characterized by significant capital investment, intense competition and
low barriers to entry.

Our principal executive offices are located at 900 Chelmsford Street, Tower
One, Fifth Floor, Lowell, Massachusetts 01851, and our telephone number at that
address is (978) 551-8100. We maintain a website at http://www.ziplink.net.
Information contained in our website does not constitute a part of this
prospectus.

ZipLink is a trademark owned by us and ZipDial is subject to a trademark
application made by us. Any other trademark, trade name or service mark of any
other entity appearing in this prospectus belongs to its holder.

THE OFFERING

Common stock offered by us................... 3,500,000 shares

Common stock outstanding after the 12,500,000 shares
offering...................................

Use of proceeds.............................. To repay approximately $20.0 million of
indebtedness, expand our network
infrastructure, increase sales and marketing
and for other working capital and general
corporate purposes. See "Use of Proceeds."

Proposed Nasdaq National Market symbol....... ZIPL

Closing...................................... New York, New York, , 1999

The outstanding share information is based on our shares outstanding as of
December 31, 1998 and includes 834,615 shares of common stock to be issued upon
conversion of convertible debt concurrently with the closing of this offering,
based upon an assumed initial public offering price of $13.00 per share. The
shares of common stock outstanding excludes:

- 1,500,000 shares reserved for issuance under our 1999 Stock Option Plan
(after giving effect to the conversion of our outstanding options under
our Unit Option Plan), of which options to purchase 366,200 shares,
exerciseable at a weighted average price of $2.68 per share, have been
granted and options to purchase 360,250 shares, exerciseable at a weighted
average price of $12.78 per share, based upon an assumed initial public
offering price of $13.00 per share, will be granted concurrently with the
closing of this offering; and

- 58,324 shares reserved for issuance upon the exercise of an outstanding
warrant, at a price of $1.71 per share.

SUMMARY FINANCIAL DATA

The following table summarizes the statement of operations data for our
business. The pro forma data reflects the net loss, net loss per common share
and the weighted average common shares outstanding for each period presented,
assuming the ZipLink, LLC membership units had been converted into common stock,
pursuant to the Reorganization, at the beginning of each respective period. You
should read the following summary financial data together with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our financial statements and notes thereto included elsewhere in this
prospectus.

PERIOD FROM
NOVEMBER 21,
1995 (DATE OF
INCEPTION) TO YEAR ENDED DECEMBER 31,
DECEMBER 31, -------------------------------
1995 1996 1997 1998
------------- --------- --------- ---------
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues.............................................. $ -- $ 756 $ 5,236 $ 7,088
Cost of revenues...................................... -- 1,782 3,187 6,271
Selling, general and administrative................... 25 7,373 6,507 5,174
Depreciation and amortization......................... 1 384 1,084 2,637
Loss from operations.................................. (26) (8,783) (5,543) (6,994)
Net loss.............................................. (26) (8,802) (6,709) (8,446)

PRO FORMA DATA:
Pro forma net loss.................................... $ (26) (8,802) (6,709) (8,446)
Pro forma net loss per common share--basic and
diluted............................................. (.00) (1.20) (.91) (1.03)
Weighted average common shares outstanding--basic and
diluted............................................. 7,341 7,341 7,408 8,165

OTHER FINANCIAL DATA:
Capital expenditures.................................. $ 79 $ 4,219 $ 8,516 $ 1,313
EBITDA(1)............................................. (25) (8,399) (4,527) (4,502)

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(1) EBITDA consists of net loss excluding net interest, taxes, depreciation and
amortization. EBITDA is provided because we believe that investors find it
to be a useful tool for approximating our cash flow. EBITDA is presented to
enhance an understanding of our operating results and should not be
construed (i) as an alternative to operating income (as determined in
accordance with GAAP) as an indicator of our operating performance, or (ii)
as an alternative to cash flows from operating activities (as determined in
accordance with GAAP) as a measure of liquidity. Our methodology for
calculating EBITDA may be different from that used by other companies. See
the financial statements and notes thereto contained elsewhere in this
prospectus for more detailed information.

The following table summarizes our balance sheet as of December 31, 1998.
The pro forma as adjusted balance sheet data as of December 31, 1998 gives
effect to (i) the Reorganization, (ii) the conversion of all outstanding
convertible debt into common stock concurrently with the closing of this
offering, based upon an assumed initial public offering price of $13.00 per
share, (iii) the sale of 3,500,000 shares of common stock in this offering at an
assumed initial public offering price of $13.00 per share, after deducting the
underwriting discount and estimated offering expenses, and (iv) the application
of the estimated net proceeds of the offering, including the repayment of
indebtedness to Fleet Bank N.A. in the amount of $17.6 million. See "Use of
Proceeds" and "Capitalization."

AS OF DECEMBER 31,
1998
----------------------
ACTUAL PRO FORMA
--------- AS ADJUSTED
-----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents.............................................. $ 512 $ 24,412
Working capital (deficit).............................................. (3,062) 21,338
Total assets........................................................... 11,174 35,074
Long-term debt......................................................... 17,939 339
Convertible debt, net of current portion............................... 7,000 --
Members'/Stockholders' equity (deficit)................................ (18,089) 30,911

RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW
AND THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE MAKING AN INVESTMENT
DECISION. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE THE MATERIAL RISKS
PRESENTLY KNOWN TO US. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO
US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR OPERATIONS. IF ANY
OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED. IN SUCH CASE, THE
MARKET PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF
YOUR INVESTMENT.

WE ARE DEPENDENT ON WEBTV.

We have in the past derived, and we expect in the future to continue to
derive, a significant portion of our revenues from WebTV. Revenue from WebTV
accounted for $2.5 million, or 48%, of our revenues for the year ended December
31, 1997, and $4.8 million, or 68%, of our revenues for the year ended December
31, 1998. Our revenues from WebTV are dependent on the number of WebTV
subscribers who make use of our network for connectivity to WebTV. The market
for WebTV's products and services is at an early stage of development and,
accordingly, we cannot assure you that products such as those offered by WebTV
will achieve or sustain market acceptance.

Our ability to maintain and grow our revenue from WebTV depends upon a
variety of factors, many of which are beyond our control. Those factors include
the following:

- WebTV could quickly and significantly reduce the amount of monthly revenue
we receive from WebTV. The minimum monthly revenue amount that must be
paid to us by WebTV under our agreement is significantly below the actual
monthly revenue we have received from WebTV since July, 1998. The amount
of revenue we have received per month from WebTV commencing in August 1998
has exceeded the minimum monthly amount WebTV is required to pay to us
under our agreement by an average of 36% per month.

- Our agreement with WebTV expires in December, 2000, subject to earlier
termination by either party at will with a pro-rata monthly reduction of
subscriber traffic over time.

- We do not control or influence WebTV's ability to succeed in the
marketplace or its ability to obtain or retain subscribers.

- Our agreement with WebTV is not exclusive. WebTV obtains services such as
those we provide from a number of our competitors, including PSINet, Inc.,
UUNet Technologies, Inc. (an MCI WorldCom company) and Concentric Network
Corporation. Many of such competitors are substantially larger than we are
and have more extensive networks and other resources.

- WebTV reallocates its subscriber traffic to us monthly based in part on
our quality of service. In late 1997 and the first half of 1998, during
the course of a network upgrade, WebTV subscribers experienced difficulty
in establishing a connection to our network. As a result, WebTV reduced
the amount of subscriber traffic on our network. If we experience service
quality problems of this or any nature in the future, WebTV may reduce our
allocation of subscriber traffic.

- Our business concentrates on delivering Internet connectivity primarily
using dial-up access over telephone lines. WebTV set-top boxes currently
rely upon this method of connectivity; however, these devices may, in the
future, be configured to use a cable modem as an alternative to dial-up
access. As the Internet becomes more readily accessible over the cable
network, we may experience an erosion in WebTV subscriber traffic. See
"--We face risks from new access technologies such as cable modems."

Because of these and other factors, we cannot assure you that revenue from
WebTV will continue or that such revenue will reach or exceed historical levels
in any future period.

We cannot assure you that our efforts to develop other sources of revenue,
whether from the provision of services for other Internet appliances or through
our ZipDial program, will be successful or that alternative sources of revenue
will develop as anticipated. As a result, the loss or reduction of WebTV's
business would have a material adverse effect on our business, financial
condition and results of operations.

WE CANNOT PREDICT OUR SUCCESS BECAUSE WE HAVE A LIMITED OPERATING HISTORY.

We commenced revenue generating operations in June, 1996 and significantly
upgraded and altered our network infrastructure in 1997 and 1998. Our ZipDial
service has only been offered since November, 1998. Accordingly, we have a
limited operating history upon which an evaluation of our business and prospects
can be based. Our prospects must be considered in light of the risks, expenses
and difficulties frequently encountered by companies in new and rapidly evolving
markets. We cannot assure you that we will be successful in addressing the risks
we face. The failure to do so would have a material adverse effect on our
business, financial condition and results of operations.

WE EXPECT OUR LOSSES AND NEGATIVE CASH FLOW TO CONTINUE.

Since our inception, we have incurred net losses and experienced negative
cash flow from operations. Our cumulative net loss from operations as of
December 31, 1998 was $24.0 million. We expect to continue to operate at a net
loss and experience negative cash flow for the foreseeable future given the
level of planned operating and capital expenditures. Our ability to achieve
profitability and positive cash flow from operations is dependent upon our
ability to substantially grow our revenue base through expansion of our ZipDial
program and an increase in sales of access services for Internet appliances and
to achieve operating efficiencies. We plan to make significant capital
expenditures to expand our network and to increase our operating expenses
relating principally to our network infrastructure, based in large part on our
estimates of potential future revenues. If our future revenues fall short of our
estimates or if our operating expenses exceed our expectations, then we may
never obtain or sustain profitability.

WE WILL NEED SIGNIFICANT ADDITIONAL CAPITAL, WHICH WE MAY BE UNABLE TO OBTAIN.

We will require significant capital to build out our network and fund our
growth and operating losses. Since our inception, our capital needs have
primarily been satisfied by equity investments by, and loans from or guaranteed
by, significant stockholders. We do not anticipate that these sources of
financing will be available to us after the consummation of the offering.

We anticipate that our available cash from operations, combined with the net
proceeds from this offering (after repayment of $20.0 million of indebtedness)
will be sufficient to meet our anticipated working capital and capital
expenditure requirements for at least the next 12 months. We are presently
seeking one or more debt financings aggregating approximately $15.0 million to
be used for capital expenditures, working capital and other general corporate
purposes. Even if we obtain such financing, we anticipate that we will need to
raise significant additional capital for the period after the next 12 months
through public or private debt or equity financings or other sources.

We cannot assure you that we will be able to raise any additional capital on
terms favorable to us, or at all. If adequate capital is not available or is not
available on acceptable terms, we may not be able to expand, enhance and
maintain our network infrastructure according to our current business plan,
develop new products or services, or otherwise respond to unanticipated
competitive pressures and we may be prevented from taking advantage of
unanticipated opportunities. In such case, our business, financial condition and
results of operations could be materially adversely affected.

WE MAY INCUR INDEBTEDNESS WHICH MAY CREATE FINANCIAL AND OPERATING RISK.

We are currently seeking one or more debt financings aggregating
approximately $15.0 million. If we obtain any debt financing in the future, we
do not anticipate that the terms of such indebtedness will be as favorable to us
as the financing we have previously obtained because our prior source of
financing has consisted of equity investments by, and loans from or guaranteed
by, significant stockholders, at rates and terms favorable to us. The amount and
terms of any new financing we may obtain will have important consequences for
our company, including the following:

- a significant portion of our cash flow from operations may be dedicated to
the payment of interest or principal on our debt, which reduces the funds
available to us for other purposes;

- financial covenants may be imposed, such as ratios to measure performance,
limitations on incurring additional indebtedness, capital expenditures,
payment of dividends or the use of proceeds from the sale of assets, which
may limit our flexibility in operating our business and in planning for,
or reacting to, changes in market conditions; and

- we may be more vulnerable in the event of a downturn in our business or
the economy generally.

Our ability to comply with the terms of such financing will depend on a
number of factors, including our future operating performance and financial
results, as well as factors beyond our control. If we are unable to comply with
such terms, then we may be required to, among other things, seek additional
financing in the debt or equity markets, refinance or restructure all or a
portion of our then-existing debt, sell selected assets or reduce or delay
capital expenditures.

OUR OPERATING RESULTS IN ONE OR MORE FUTURE PERIODS ARE LIKELY TO FLUCTUATE AND
MAY FAIL TO MEET THE EXPECTATIONS OF SECURITIES ANALYSTS OR INVESTORS.

Our annual and quarterly operating results have fluctuated in the past and
may fluctuate significantly in the future. Those results fluctuate due to a
variety of factors, including the following:

- timely deployment and expansion of our network;

- the timing and amount of capital costs related to our planned network
expansion;

- the timing and amount of bandwidth acquisitions;

- the degree and success of promotional activity undertaken by WebTV and our
other customers and changes in their number of subscribers;

- the degree and speed of market acceptance and commercial success of
Internet appliances;

- our customer enrollment and retention rate;

- user demand for Internet access services and the success of our ZipDial
Internet service provider customers; and

- continued need for dial-up access and connectivity and our ability to
respond to technological change.

As a result of these or other factors, our operating results may, in some
future period, fall below the expectations of securities analysts and investors.
In such event, the market price of our securities will likely fall. Moreover,
fluctuations in our operating results may also result in volatility in the
market price of our securities.

WE DEPEND UPON NEW AND UNCERTAIN MARKETS.

We provide wholesale Internet access services to the Internet appliance and
Internet service provider markets. These markets are in the early stages of
development. The Internet appliance market, in particular, is new and rapidly
evolving. It is difficult to predict the rate at which these markets will
develop and grow and whether demand can be sustained. These markets are subject
to numerous uncertainties, some of which are discussed below. In general,
certain critical issues concerning the use of the Internet itself remain
unresolved and may impact the growth of the Internet appliance and Internet
service provider markets and the corresponding demand for our wholesale Internet
access services. These issues include, among others, security, reliability, ease
and cost of access, and quality of service. Further, although the Internet
appliance market and the Internet service provider market are related because
both are dependent upon the general growth and acceptance of the Internet, we
believe they are to a degree independent of one another. Accordingly, conditions
which favor the success of our wholesale access services in one market may be
either neutral or even unfavorable for our prospects in the other.

We believe that the market for providing wholesale Internet access services
for Internet appliances is subject to the following specific risks and
uncertainties:

- Internet appliances which make use of our Internet access services may not
be developed or, if developed, may not gain market acceptance as quickly
as we anticipate, if at all;

- we could fail to correctly identify and successfully form relationships
with developers and vendors of Internet appliances whose products enjoy
commercial success and acceptance; and

- developments in Internet access technology, such as alternative access
devices, could occur which render our network less competitive or less
marketable for providing wholesale Internet access services for Internet
appliances.

We believe that the market for providing our wholesale Internet access
services to Internet service providers is subject to one or more of the
following specific risks and uncertainties:

- consolidation among Internet service providers could result in increasing
price pressure on us and in a reduction in the number of Internet service
providers with a need for our wholesale service offerings;

- changes in technology or in the price of equipment or network
infrastructure could make it cost-effective for Internet service providers
to construct their own network infrastructure rather than outsourcing
Internet access to us;

- government regulation could have a material adverse effect on our ability
to offer wholesale Internet access solutions at a price which is
attractive to Internet service providers; and

- emerging access technologies such as cable modems or wireless devices may
eliminate or decrease the need for dial-up access.

In the event that either the Internet appliance market or the Internet
service provider market fails to develop or fails to develop as quickly as we
have anticipated, our business, financial condition and results of operations
would be materially adversely affected.

WE ARE DEPENDENT ON OUR ZIPDIAL CUSTOMERS.

We earn revenue from our ZipDial Internet service provider customers largely
on the basis of the number of their subscribers who use our network. Our
agreements with these Internet service provider customers do not require them to
outsource any or all of their Internet access needs to us. The extent to which
an Internet service provider chooses to outsource these services to us for some
or all of its

subscribers is wholly within the discretion of the Internet service provider.
Traffic allocation decisions may be made by Internet service providers on a
subscriber-by-subscriber or on an aggregate basis at any time, or from time to
time.

Our business, financial condition and results of operations could be
materially adversely affected if, for any reason:

- our ZipDial customers do not expend efforts to enroll large numbers of
subscribers or otherwise succeed in growing their subscriber base; or

- our ZipDial customers do not allocate large numbers of subscribers to our
network.

We initiated the ZipDial program in November, 1998. Accordingly, we have a
limited history upon which to base an evaluation of whether, or under what
terms, large numbers of Internet service providers will join our ZipDial
program, at what rate, if at all, they will acquire subscribers, or the extent
to which they will cause their subscribers to use our network. Our agreements
with ZipDial customers are generally for a term of one year. None of these
agreements has reached the end of its initial term and we cannot assure you that
any of these agreements will be renewed upon expiration. Nor can we assure you
as to the levels of resources or effort, if any, that will be devoted by ZipDial
customers to marketing Internet access using our network services, or the extent
to which these customers will outsource Internet access services to us.

WE MUST EXPAND AND ADAPT OUR NETWORK.

The execution of our business plan requires us to rapidly expand our network
infrastructure to extend and increase our service offerings, to grow our network
capacity and to modify its capabilities to match increases in the number of
users and the amount and type of information users wish to transfer. We will
also be required to respond to changes in customer requirements. For example,
WebTV may shift its subscriber traffic from one area of our network to another,
requiring a reallocation of our network capacity. Such a shift could occur
rapidly and without advance notice. In 1998, WebTV significantly reduced its
allocation of subscriber traffic to one area of our network for reasons
unrelated to our service quality. At the same time, WebTV increased subscriber
traffic to other areas of our network. While WebTV subscriber traffic on our
network as a whole remained constant after such reallocation, the increased
traffic in the affected portions of our network significantly reduced our excess
capacity in those areas. If such added traffic had exceeded the capacity of our
network in the affected areas, we would have experienced capacity constraints
that could have reduced our service quality. We currently project our network
utilization and customer requirements will necessitate a rapid expansion of our
network capacity to avoid capacity constraints that would adversely affect
system performance. We also plan to increase our area of service coverage to,
among other things, broaden the reach of our ZipDial program. The expansion and
adaptation of our network infrastructure will require substantial financial,
operational and management resources in 1999 and future periods. We cannot
assure you that we will be able to expand or adapt our network infrastructure to
facilitate our business plan or to meet additional demand or our customers'
changing requirements on a timely basis, at a commercially reasonable cost, or
at all. In addition, if demand for network usage were to increase faster than
projected by us or were to exceed our current forecasts, the network could
experience capacity constraints, which would adversely affect the performance of
the system. Our business, financial condition and results of operations could be
materially adversely affected if, for any reason, we fail to:

- expand our network infrastructure both in capacity and in geographic terms
on a timely basis; or

- adapt our network infrastructure to changing customer requirements or
evolving industry trends.

We cannot assure you that we will be able to expand our network
infrastructure or adapt our infrastructure sufficiently, or at all.

OUR GROWTH AND EXPANSION MAY STRAIN OUR RESOURCES.

If we are successful in executing our business plan, our network
infrastructure and our operations will expand rapidly. If we fail to manage this
growth effectively, we may suffer a reduction in service quality or other
problems which could materially and adversely affect our business, financial
condition and results of operations. Our business and our service offerings have
grown rapidly since our inception and are expected to continue to grow. This
growth and expansion have required, and are expected to require a great deal of
management time and significant financial resources. To manage our growth, we
must, among other things:

- continue to expand and upgrade our network infrastructure;

- hire, train and retain qualified personnel, especially technical
personnel; and

- continue to implement and improve our operational, financial and
management information systems, including our billing, accounts receivable
and payable tracking, fixed assets and other financial management systems.

We cannot assure you that we will be able to expand our network according to
the schedule presently planned by us, that we will be able to hire, train or
retain sufficient numbers of qualified personnel to meet our requirements or
that we will be able to implement information management systems to meet the
requirements created by our future growth.

Future expansion of our customer base (such as an increase in ZipDial
customers) or growth in our customers' subscriber bases will demand the rapid
growth of our network infrastructure, technical support resources and, in some
cases, our customer support capabilities. We may in the future experience
difficulties meeting the demand for our access services and technical and
customer support. We cannot assure you that our technical or customer support or
other resources will be sufficient to facilitate our growth.

OUR NEW OR ENHANCED SERVICES MAY HAVE ERRORS OR DEFECTS.

Our services may contain undetected errors or defects when first introduced
or upgraded. We cannot assure you that, despite testing by us or our customers
and suppliers, errors will not be found in new services or enhancements after
commencement of commercial deployment. Such errors could result in:

- additional development costs;

- loss of, or delays in, market acceptance;

- diversion of technical and other resources from our other development
efforts; or

- the loss of customers and users (for example, subscribers of a ZipDial
customer).

Any of these consequences could have a material adverse effect on our
business, financial condition and results of operations.

OUR FAILURE OR THE FAILURE OF THIRD PARTIES TO BE YEAR 2000 COMPLIANT COULD
NEGATIVELY IMPACT OUR BUSINESS.

causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.

We are currently in the process of reviewing our products and services, as
well as our internal management information systems and non-information
technology systems in order to identify and modify those products, services and
systems that are not Year 2000 compliant. In addition, we have contacted
approximately 40% of our suppliers to ascertain their Year 2000 status. During
the next 60 days we plan to contact the remainder of our suppliers, as well as
our significant customers, including WebTV, to ascertain their Year 2000 status.
At this time, we estimate that our costs associated with remediation and
verification to become Year 2000 compliant will not exceed $180,000, although
the actual cost of achieving compliance could differ materially from this
estimate.

While we expect to be Year 2000 compliant by the end of the third quarter of
1999, we cannot assure you that we will be able to timely and successfully
modify our services and systems to comply with Year 2000 requirements. Nor can
we assure you that equipment received from suppliers will comply or that any of
our suppliers, such as Nortel Networks or MCI WorldCom or our customers will be
Year 2000 compliant in a timely manner or that there will not be problems with
technology working together. Furthermore, despite testing performed by us and
our suppliers and partners, our products, services and systems may contain
undetected errors or defects associated with Year 2000 related functions. In the
event any material errors or defects are not detected and fixed, or if third
parties cannot provide products, services or systems that meet Year 2000
requirements in a timely manner, if at all, our business, financial condition
and results of operations could be adversely affected. Known or unknown errors
or defects that affect the operation of our products, services or systems could
result in delay or loss of revenue, interruption of network services,
cancellation of customer contracts, diversion of development or network
expansion resources, damage to our reputation, or litigation costs.

We believe that the worst case scenario related to our services and systems
due to Year 2000 complications would be the failure of our entire network. This
would result in users being unable to connect to the Internet using our network
until such failure was remedied. As a result of such failure our revenues would
be materially adversely affected and our customers may terminate agreements to
use our Internet access services or otherwise not utilize such services.

We do not have a contingency plan in the event our systems fail due to Year
2000 related problems. We cannot assure you that these or other factors relating
to Year 2000 compliance issues will not have a material adverse effect on our
business, financial condition or results of operations. See "Management's
Discussion and Analysis of Financial Condition--Year 2000 Issues."

WE DEPEND UPON OUR SUPPLIERS AND HAVE LIMITED SOURCES OF SUPPLY FOR KEY PRODUCTS
AND SERVICES.

We rely on other companies to supply us with telecommunications facilities,
computer hardware and software, networking equipment and related services which
are critical to the maintenance and operation of our network. We primarily buy
these products and services from MCI WorldCom, local exchange carriers,
competitive local exchange carriers, Nortel Networks and Cisco Systems, Inc.

These products and services are available in the quantity and of the quality
required by us only from limited sources. We do not carry significant
inventories of many of these products and have no guaranteed supply arrangements
for any such limited source products. We cannot assure you that we will be able
to obtain the products and services that we need on a timely basis, in
sufficient quantities or at an affordable cost. We have experienced
interruptions in some telecommunications services and delays in purchasing
products and other services from time to time in the past and may experience
similar interruptions and delays in the future. We do not currently have, and do
not expect in the future to have, a means of replacing these products or
services on a timely and cost-effective basis.

Further, all of our suppliers sell products and services to our competitors and,
in the case of telecommunications services in particular, some of our suppliers
are or may become competitors themselves. Our suppliers may enter into exclusive
relationships with our competitors or stop selling products and services to us
at commercially reasonable prices. If we are unable to obtain critical services
or products in the quantities required by us and on a timely basis, our
business, financial condition and results of operations may be materially and
adversely affected.

We also depend on our suppliers' ability to provide necessary products that
comply with various Internet and telecommunications standards. These products
must also function efficiently with products and components from other vendors.
Any failure of our suppliers to provide products or components that comply with
Internet standards or that function efficiently with other products or
components used by us in our network infrastructure could have a material
adverse effect on our business, financial condition and results of operations.

OUR SUCCESS DEPENDS ON MAINTAINING RELATIONSHIPS WITH OTHER INTERNET ACCESS
PROVIDERS.

The Internet includes a number of Internet access providers (including
Internet service providers) that operate their own networks and connect with
each other at various locations around the United States under informal
arrangements known as "peering" (where providers connect without charge) and
under written arrangements known as "transit" agreements (where there are
charges imposed). It is more costly and less efficient to operate a network
without peering or transit arrangements. Consequently, we must maintain our
peering and transit relationships to maintain high performance levels at a
reasonable cost. These arrangements are not subject to regulation and the terms,
conditions and costs can be changed by the provider at any time. Currently, we
have peering relationships with 48 Internet access providers and transit
agreements with two Internet access providers. If we fail to maintain these
relationships on a cost-effective basis, the costs of operating our network
could increase and our business, financial condition and results of operations
could be materially and adversely affected.

WE DEPEND UPON OUR NETWORK INFRASTRUCTURE FUNCTIONING WITHOUT INTERRUPTION.

Our success depends upon the reliability and security of our network
infrastructure. While we have taken precautions against system failure,
interruptions could result from natural disasters, as well as power loss,
telecommunications failure and similar events and interruptions have occurred in
the past. For example, in December, 1998, an MCI WorldCom telecommunications
cable was accidentally cut, resulting in an interruption in the functioning of
our Washington, D.C. SuperPOP and a temporary suspension of our ability to
provide service to that geographic area.

A significant portion of our computer equipment is located in Lowell,
Massachusetts, as well as at individual SuperPOPs. Although we maintain
insurance to cover loss or damage to equipment, we do not maintain any business
interruption insurance or have a formal disaster recovery plan or alternative
providers of network infrastructure. Any damage or failure that causes
interruptions in our operations could have a material adverse effect on our
business, financial condition and results of operations.

OUR MARKET IS EXTREMELY COMPETITIVE AND WE MAY NOT BE ABLE TO COMPETE
EFFECTIVELY.

We face intense competition. There are no substantial barriers to entry in
the market for our services, and we expect that competition will further
intensify in the future. In particular, because our agreements with our ZipDial
customers are not exclusive and these Internet service providers are free to
outsource any or all of their Internet access services to other providers, our
ZipDial program is vulnerable to competitive pressures. We believe that our
ability to compete successfully in the market for Internet access service
generally depends upon a number of factors, including:

- our ability to create and market wholesale Internet access solutions that
are attractive to Internet service providers in terms of price, quality
and breadth of service offerings;

- the capacity, reliability and security of our network infrastructure;

- market presence and, with respect to Internet appliances, our success at
developing relationships with innovators and early marketers of such
devices;

- technical expertise and functionality, performance and quality of services
and our ability to anticipate and meet the changing service needs of the
marketplace;

- our ability to establish and maintain successful strategic relationships
with key customers and suppliers and to gain early access to new markets
and new technologies; and

- our ability to support industry standards.

Our competitors may be divided into two groups: those with whom we presently
compete and those who may, in the future, compete with us. Our present
competitors with respect to the WebTV relationship consist of the other current
providers to WebTV: PSINet, UUNet, Concentric, and a number of other, smaller
Internet service providers. Our present competitors with respect to ZipDial
consist of a variety of companies who are, in some form or another, offering
wholesale Internet access services. This group includes Internet service
providers such as GTE Internetworking, Concentric, PSINet, UUNet, IDT Corp.,
Splitrock Services, Inc. and Epoch Internet, Inc., as well as competitive local
exchange carriers in selected markets, such as XCOM Technologies, Inc. in
Boston, Massachusetts, Intermedia Communications, Inc. in Vienna, Virginia and
ICG Communications, Inc. in Englewood, Colorado. Our potential future
competitors include all of our present competitors as well as telecommunications
companies, such as AT&T Corporation, Williams Communications, a division of The
Williams Companies, Inc., Qwest Communications International, Inc. and Level 3
Communications, Inc., and other Internet service providers. Many of our present
and potential competitors have greater market presence, engineering and
marketing capabilities, and larger financial, technological and personnel
resources than those available to us. They may also enjoy certain price
advantages with respect to the purchase of bandwidth from telecommunications
carriers if, for example, they are a carrier themselves, or if they are
affiliated with a carrier, or if their usage enables them to secure volume
discounts. As a result, these present and future competitors may be able to
develop and expand their communications and network infrastructures more
quickly, adapt more swiftly to new or emerging technologies and changes in
customer requirements, take advantage of acquisition and other opportunities
more readily, and devote greater resources to the marketing and sale of their
products and services than we can.

In addition to possessing greater financial, technological and personnel
resources, a number of our present and future competitors have the ability to
bundle other services and products with Internet access services which could
place us at a competitive disadvantage. Certain companies are also exploring the
possibility of providing or are currently providing Internet access services
using alternative delivery methods, such as over the cable television
infrastructure, through direct broadcast satellites and over wireless cable. See
"--We face risks from new access technologies such as cable modems."

We also anticipate increasing vertical and horizontal integration in our
industry. As a result of increased competition and this integration in the
industry, we could encounter significant pricing pressure both from our Internet
appliance and our ZipDial customers. This pricing pressure could result in
significant reductions in the average selling price of our services. For
example, telecommunications companies that compete with us may be able to
provide customers with reduced communications costs in connection with their
Internet access services, reducing the overall cost of their solutions and
significantly increasing price pressures on us. We cannot assure you that we
will be able to offset the effects of any such price reductions with an increase
in the number of our customers, higher revenue from enhanced services, cost
reductions or otherwise.

INDUSTRY CONSOLIDATION COULD ADVERSELY AFFECT US.

The Internet access industry is experiencing consolidation and we believe
the pace of this consolidation will increase in the near future. We cannot
predict with any certainty how such consolidation will affect us or our
competitors. Consolidation among Internet access providers could result in
increased price and other competition in the market for wholesale Internet
access services and we cannot assure you that we will be able to compete
successfully in an increasingly consolidated industry. Any heightened
competitive pressures may have a material adverse effect on our business,
financial condition and results of operations. In addition, consolidation in the
Internet service provider market could result in a reduced number of actual and
potential customers for our ZipDial service as local and regional Internet
service providers are absorbed by larger, national providers or as Internet
service providers combine into entities with greater resources and purchasing
power. A reduction in our potential customer base for ZipDial service could have
a material adverse effect on our business, financial condition and results of
operations.

WE MUST KEEP UP WITH RAPID TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY STANDARDS.

The markets for our services are characterized by rapidly changing
technology, evolving industry standards. Our future success will depend, in
part, on our ability to:

- effectively identify and implement leading technologies;

- develop our technical expertise;

- enhance our current Internet access services; and

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

All this must be accomplished in a timely and cost-effective manner. We
cannot assure you that we will be successful in effectively identifying or
implementing new technologies, identifying or developing new services or
enhancing our existing services on a timely basis, if at all. We cannot assure
you that those technologies or enhancements we do identify and develop will
achieve market acceptance. Our pursuit of necessary technological advances may
require substantial time and expense. We cannot assure you that we will succeed
in adapting our Internet access services business to alternate technologies as
they emerge. If we fail to identify and implement new technologies or services,
our business, financial condition and results of operations could be materially
adversely affected.

Our success is also dependent upon the continued compatibility of our
services with products and architectures offered by various vendors. Although we
intend to support emerging standards in the market for Internet access products,
we cannot assure you that industry standards will be established. If industry
standards are established, we cannot assure you that we will be able to conform
to these new standards in a timely fashion and maintain a competitive position
in the market. Specifically, our services rely on the continued widespread
commercial use of a group of network standards, or protocols, known in our
industry as "TCP/IP." Alternative standards have been or are being developed. If
any of these alternative protocols become widely adopted, there may be a
reduction in the use of TCP/

IP, which could render our services obsolete, unmarketable or subject to
substantial modification and upgrades. In addition, we cannot assure you that
services or technologies developed by others will not render our services or
technology uncompetitive or obsolete.

An integral part of our strategy is to design our network to meet the
requirements of emerging standards. However, we have, from time to time in the
past, experienced difficulties in adapting to new standards and will likely
experience similar difficulties in the future. Difficulties experienced while
adapting to new standards may have a material adverse effect on our business,
financial condition and results of operations. For example:

- We initially experienced temporary service quality problems when enhancing
our network to make use of new Nortel Networks equipment. The reduced
service quality resulted in a temporary reduction in WebTV subscriber
traffic and a corresponding reduction in revenue from WebTV.

- We are currently upgrading our network to the most current modem standard,
known as "V.90 56 kilobits per second." We initially had to delay our
implementation of this upgrade due to compatibility issues between WebTV's
devices and our Nortel Networks software. We cannot assure you that our
ongoing deployment of this network upgrade will be completed on a timely
basis, if at all, or whether such deployment will be successful.

If we fail, for technological or other reasons, to implement emerging
standards or to develop and introduce other new or enhanced services that are
compatible with industry standards, then our business, financial condition and
results of operations would be materially adversely affected.

WE FACE RISKS FROM NEW ACCESS TECHNOLOGIES SUCH AS CABLE MODEMS.

We face the risk of fundamental changes in the way Internet access is
delivered. Internet services are currently accessed primarily over telephone
lines by computers and substantially all of our business concentrates on
providing connectivity to the Internet over telephone lines, particularly
dial-up connectivity. Several companies are providing Internet access on a
limited basis via cable modems, wireless cable modems, satellite modems and
other access devices that do not use telephone lines. According to Forrester
Research, Internet access other than over telephone lines will constitute 23% of
the Internet access market by 2002. Advantages of these alternative access
devices include the ability to operate at substantially faster speeds than the
modems we and our customers and their subscribers currently use and, in some
cases, with reduced network costs. In addition, some Internet appliances are
presently configured to make use of these and other new access technologies if
and when they become available. As the Internet becomes accessible through
alternative access devices, we may experience an erosion in our customer base
and in the number of their subscribers making use of our system as our customers
allocate subscriber traffic away from our network to the newer, faster
technologies. For example, if WebTV set-top boxes were configured to use cable
modems and if Internet access using the cable network becomes widely available
to WebTV subscribers, the number of WebTV subscribers using our network through
a dial-up connection could fall significantly. In such event, we will be
required to identify and develop alternative markets that can use the dial-up
capabilities of our network or to embrace and incorporate such new access
technologies. If we fail to either identify and successfully develop alternative
services or otherwise to adapt to new access methods or other new technologies,
our business, financial condition and results of operations would be materially
adversely affected.

OUR SYSTEM MAY EXPERIENCE SECURITY BREACHES.

Despite the implementation of network security and user authentication
measures, the core of our network infrastructure is vulnerable to computer
viruses, break-ins and similar disruptive problems caused by our customers,
Internet users, our current or former employees or others. Computer viruses,
break-ins or other problems caused by third parties could lead to significant
interruptions or delays in

service to our customers and their subscribers. Furthermore, inappropriate use
of the network by third parties could also potentially jeopardize the security
of confidential information stored in our computer systems and our customers'
computer systems. We may face liability and may lose potential customers or our
customers may lose subscribers as a result. We have no insurance covering such
liabilities. Although we intend to continue to implement industry-standard
security and authentication measures, our protective measures have been
circumvented in the past. Moreover, we have in the past and expect in the future
to experience security threats which we believe are typical to the business of
providing Internet access. We cannot assure you that our security measures will
prevent security breaches. The costs and resources required to eliminate
computer viruses and alleviate other security problems could be prohibitively
expensive and efforts to address such problems may result in interruptions,
delays or cessation of service to our customers that could have a material
adverse effect on our business, financial condition and results of operations.

WE DEPEND UPON KEY PERSONNEL AND MAY BE UNABLE TO HIRE AND RETAIN SUFFICIENT
NUMBERS OF QUALIFIED PERSONNEL.

Our success depends to a significant degree upon the continued contributions
of Henry Zachs, our Co-Chairman and Chief Executive Officer, Christopher
Jenkins, our President, and James Cocks, our Director of Networking. Mr. Zachs
will devote approximately 50% of his time to our business following the
consummation of the offering. The loss of the services of any of these employees
could have a material adverse effect on us. We have an employment agreement with
Mr. Jenkins, which expires in December, 2001, but do not have any employment
agreements with Messrs. Zachs or Cocks or any other employee. Further, we do not
carry key man life insurance on the life of any employee. Our success will also
depend upon the continued service of the other members of our senior management
team and our technical and marketing personnel. Competition in our industry for
qualified employees, especially technical personnel, is intense. Our employees
may voluntarily terminate their employment with us at any time. Our success also
depends upon our ability to attract and retain additional highly qualified
management, technical and marketing personnel. Locating personnel with the
combination of skills and attributes required to carry out our strategy is often
a lengthy process. The loss of key personnel, or the inability to attract
additional, qualified personnel, could have a material adverse effect upon our
results of operations, service development efforts and ability to complete the
expansion of our network infrastructure.

GOVERNMENT REGULATION COULD NEGATIVELY IMPACT OUR BUSINESS.

Regulation of the telecommunications industry is in a state of rapid and
uncertain change. We cannot predict the direction or scope of these regulatory
changes or the impact such changes may have on our business, financial condition
or results of operations. Government regulation could negatively impact our
business in a number of ways:

- we may become subject to direct government regulation;

- regulatory regimes governing our actual and future competitors could
change in ways which enhance their ability to compete with us; and

- our suppliers may be subject to regulation which has the effect of
increasing our cost of doing business.

Our activities are not presently subject to direct government regulation.
The Federal Communications Commission, or FCC, currently does not regulate
either value-added network software or computer equipment related services that
transport data or voice messages based on Internet protocol over
telecommunication facilities as telecommunications services. We provide
value-added Internet protocol-based network services, in part, through data
transmissions over public telephone lines. Operators of these types of
value-added networks that provide access to regulated transmission facilities
only as part

of a data services package are classified for regulatory purposes as providers
of "information services" and are currently excluded from regulations that apply
to "telecommunications carriers." As such, we are not currently subject to
direct regulation by the FCC or any other governmental agency, other than
regulations applicable to businesses generally. However, future changes in law
or regulation could result in some aspects of our current operations becoming
subject to regulation by the FCC or another regulatory agency.

State public utility commissions generally have declined to regulate
enhanced or information services. Some states, however, have continued to
regulate particular aspects of enhanced services in limited circumstances, such
as where they are provided by incumbent local exchange carriers that operate
telecommunications networks. Moreover, the public service commissions of some
states continue to review potential regulation of such services. We cannot
assure you that regulatory authorities of states where we provide Internet
access services will not seek to regulate aspects of this activity as
telecommunications services.

If we become subject to direct government regulation, our business,
financial condition and results of operations could be adversely affected.

Our actual and potential future competitors include incumbent local exchange
carriers, such as Southern New England Telecommunications Corporation, or SNET
(a subsidiary of SBC Communications Inc.), and Bell Atlantic Corporation, which
are presently subject to extensive government regulation. Changes in the
regulations affecting these competitors could have the effect of enhancing their
ability to compete with us, which could, in turn, have a material adverse effect
on our business, financial condition and results of operations.

In addition, we purchase significant services from entities which are
subject to government regulation, including competitive local exchange carriers
which provide key enabling components of our SuperPOP architecture. Competitive
local exchange carriers are subject to extensive regulation by the FCC. This
includes rules governing so-called "reciprocal compensation," the compensation
of competitive local exchange carriers by incumbent local exchange carriers, for
telephone calls from incumbent local exchange carrier customers which are
terminated on the competitive local exchange carrier's system. This regulation
applies to dial-up calls to ZipLink's network which originate on an incumbent
local exchange carrier's telephone line and pass through competitive local
exchange carrier facilities used in our SuperPOPs. The FCC has recently
considered the issue of reciprocal compensation and may, in the future, alter
existing reciprocal compensation rules in ways which negatively affect
competitive local exchange carriers. We cannot predict any future changes in
reciprocal compensation or other rules governing competitive local exchange
carriers or the impact any such regulatory changes may have on their businesses.
If competitive local exchange carriers are adversely affected by regulatory
changes, they may raise the price or otherwise modify the terms applicable to
services they provide to ZipLink which are important to our SuperPOP
architecture. Such modifications could increase our cost of doing business and,
as a result, negatively affect our ability to compete, reduce our gross margin
on some services or otherwise have a material adverse effect on our business,
financial condition and results of operations.

We cannot predict the impact, if any, that future regulation or regulatory
changes may have on our business and we cannot assure you that future regulation
or regulatory changes will not have a material adverse effect on our business,
financial condition and results of operations.

WE DEPEND ON OUR PROPRIETARY TECHNOLOGY AND TECHNOLOGICAL EXPERTISE.

measures have been, or will be, adequate to prevent misappropriation of our
proprietary technology or know-how. Our competitors may also independently
develop technologies that are substantially equivalent or superior to our
technology.

THIRD PARTIES MAY CLAIM WE INFRINGE THEIR PROPRIETARY RIGHTS.

We have applied for or received certain trademarks for use in the United
States. None of our technology is patented by us. We use certain "open source"
and "shareware" software in our business, such as Linux and MRTG. We believe
that such software is in the public domain and that its use by ZipLink and
others is not subject to any charge or licensing fee, although we may, on a
voluntary basis, make contributions to developers or, in some cases, incur
charges for support materials or services relating to such software. However, we
have not investigated our use of any open source or shareware software to
determine whether it constitutes infringement of any third party proprietary
rights. Although we do not believe our trademarks or use of technology infringe
the proprietary rights of any third parties, we cannot assure you that third
parties will not assert such claims against us in the future or that such claims
will not be successful. We could incur substantial costs and diversion of
management resources to defend any claims relating to proprietary rights, which
could have a material adverse effect on our business, financial condition and
results of operations. Furthermore, parties making such claims could secure a
judgment awarding substantial damages, as well as injunctive or other equitable
relief that could effectively block our ability to use such trademarks or
technology. Such a judgment would have a material adverse effect on our
business, financial condition and results of operations. If someone asserts a
claim relating to proprietary technology or information against us, we may seek
licenses to such intellectual property. We cannot assure you, however, that we
could obtain licenses on commercially reasonable terms, if at all. The failure
to obtain the necessary licenses or other rights could have a material adverse
effect on our business, financial condition and results of operations.

WE ARE AT RISK FROM INAPPROPRIATE USE OF OUR NETWORK.

We could face liability for the use of our network to carry or disseminate
inappropriate information. The law relating to the liability of online service
providers, private network operators and Internet service providers for
information carried on or disseminated through the facilities of their networks
is continuing to evolve and remains unsettled. Several private lawsuits seeking
to impose such liability are currently pending. In the past, at least one court
has ruled that Internet service providers could be found liable for copyright
infringement as a result of information disseminated through their networks.
Although no such claim has been asserted against us to date, we cannot assure
you that such claims will not be asserted in the future. Further, while we have
attempted to limit our liability in this respect through various contractual
means, we cannot assure you that our liability will be so limited in the event
of any litigation or other claim against us. We do not have any insurance
covering liabilities or claims relating to the use of our network or to
materials disseminated using our network. Federal laws have been enacted,
however, which, under certain circumstances, may provide Internet service
providers with immunity from liability for information that is disseminated
through their networks when they are acting as mere conduits of information. A
Federal Court of Appeals has recently held that the Telecommunications Act of
1996 creates immunity from liability for Internet service providers for libel
claims arising out of information disseminated over their services by third
party content providers. In addition, the Digital Millennium Copyright Act of
1998, creates a safe harbor from copyright infringement liability for Internet
service providers that meet certain requirements. We have complied with these
requirements by instituting certain technical measures and by registering with
the Copyright Office. We cannot assure you, however, that the Digital Millennium
Copyright Act or any other legislation will protect us from copyright
infringement liability.

The Child Online Protection Act of 1998 prohibits and imposes criminal
penalties and civil liability on anyone engaged in the business of selling or
transferring, by means of the World Wide Web,

material that is harmful to minors without restricting access to such material
by persons under seventeen years of age. Numerous states have adopted or are
currently considering similar types of legislation. The imposition upon us as an
Internet service provider of potential liability for such materials carried on
or disseminated through our system could require us to implement measures to
reduce our exposure to such liability. Such measures may require the expenditure
of substantial resources or the discontinuation of certain service offerings.
Further, the costs of defending against any such claims and potential adverse
outcomes of such claims could have a material adverse effect on our business,
financial condition and results of operations. The Child Online Protection Act
of 1998 has been challenged by civil rights organizations in part on the grounds
that it violates the First Amendment. A similar statute was held
unconstitutional by the United States Supreme Court in 1997. A United States
District Court has temporarily enjoined enforcement of the law pending final
resolution of the case. We do not carry any insurance against any claims related
to the use of our network by third parties.

Our network operations, like those of all Internet service providers and
on-line services, are at risk from inappropriate uses by third parties known as
"spamming." Spamming occurs when a user, which could be a subscriber of a
ZipDial customer, employs our network to rapidly distribute a large number of
unsolicited e-mails to users of other networks. The volume of unsolicited
e-mails can cause congestion on the originating network, in this case ZipLink's,
or on the networks of other providers who serve addressees of the e-mails. These
addressees may also register complaints with their host Internet service
providers. As a result, many Internet service providers react to spamming of
their users by temporarily blocking the flow of traffic from the originating
network until that network blocks access by the offending user and terminates
the flow of unwanted e-mails. Because these blockages are not specific to the
offending user, they affect all traffic emanating from the originating network
and can result in the temporary interruption of service to all users of that
network. If ZipLink's network is used by a spammer, service to our users could
be interrupted and our business, financial condition and results of operations
could be materially adversely affected. Although ZipLink attempts to prevent use
of its network for spamming through contractual means and through industry
standard network monitoring, spamming has occurred on our network in the past
and we cannot assure you that spamming will not occur in the future.

OUR CO-CHAIRMEN AND OUR CHIEF EXECUTIVE OFFICER WILL BENEFIT FROM THIS OFFERING.

Since our inception, we have relied substantially on equity contributions
and advances from Henry Zachs, our Co-Chairman and Chief Executive Officer, Eric
Zachs, our Co-Chairman, and their affiliates and, more recently, on loans from
commercial banks supported by the personal guarantee of Henry Zachs. These
recent commercial loans have been on terms and at rates that would not otherwise
have been available to us absent Henry Zachs' personal guarantee. We intend to
use a portion of the net proceeds of this offering to repay our outstanding
indebtedness to Fleet Bank, N.A. and to obtain the release of Henry Zachs'
personal guarantee of such indebtedness, resulting in a material benefit to
Henry Zachs. Further, Henry Zachs has agreed to personally guarantee an
additional $10.0 million of indebtedness to ZipLink from institutional lenders
acceptable to Henry Zachs. This guarantee will terminate upon the closing of
this offering. See "Certain Relationships and Related Transactions."
Additionally, this offering is expected to create a public market for our common
stock which may result in a substantial increase in the market value of the
initial investments of Henry and Eric Zachs and their affiliates.

OUR CO-CHAIRMEN AND OUR CHIEF EXECUTIVE OFFICER CAN EXERCISE SIGNIFICANT
INFLUENCE OVER THE COMPANY.

Henry Zachs, our Co-Chairman and Chief Executive Officer, and Eric Zachs,
our Co-Chairman, will, in the aggregate, beneficially own approximately 55.7% of
our common stock following the completion of this offering (53.5% if the
underwriters' over-allotment option is exercised in full), based upon an assumed
initial public offering price of $13.00 per share. These stockholders will be
able to

control all matters requiring approval by our stockholders, including the
election of directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying or preventing a
change in control of ZipLink, which in turn could have a material adverse effect
on the market price of our common stock or prevent our stockholders from
realizing a premium over the market price for their shares of common stock. See
"Principal Stockholders."

WE FACE RISKS FROM POTENTIAL VOLATILITY IN OUR STOCK PRICE.

Prior to this offering, there has been no public market for our common stock
and we have engaged in only limited private sales of securities. We cannot
predict the extent to which investor interest in our common stock will lead to
the development of a trading market or how liquid that market might become. The
market price for our common stock could be subject to fluctuations and it may
decline below the initial public offering price. The stock market has
experienced significant price and volume fluctuations that have affected the
market prices for the common stocks of Internet-related companies. In the past,
these broad market fluctuations have been unrelated or disproportionate to the
operating performance of these companies. Historically, following periods of
volatility in the market price of a particular company's securities, securities
class action litigation has often been brought against that company. If the
market price of our common stock experiences volatility, we may become involved
in this type of litigation in the future. Litigation is often expensive and
diverts management's attention and resources, which could have a material
adverse effect upon our business, financial condition and results of operations.
See "Underwriting."

SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING COULD ADVERSELY AFFECT OUR
STOCK PRICE.

The market price for our common stock could decline as a result of sales by
our existing stockholders of a large number of shares of our common stock in the
market after this offering, or the perception that such sales may occur. These
sales also might make it more difficult for us to sell equity or equity-related
securities in the future at a time and price that we deem appropriate. In
addition, commencing 180 days after the date of this offering, some of our
executive officers and existing stockholders, owning in the aggregate
approximately 9,000,000 shares of common stock, have the right to demand
registration of their shares or to require us to include their shares in some
registration statements relating to our securities. The existence of these
rights may increase the likelihood, or the perceived likelihood that these
stockholders will sell a large number of shares of common stock in the market
after the offering. See "Shares Eligible for Future Sale."

WE WILL HAVE BROAD DISCRETION IN USE OF THE PROCEEDS FROM THIS OFFERING.

We intend to use a substantial portion of the proceeds of this offering for
working capital and general corporate purposes. Accordingly, our management will
have broad discretion in how the proceeds from this offering are used. Investors
will be relying on the judgment of our management regarding the application of
the proceeds of this offering. See "Use of Proceeds."

YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION.

We expect the initial public offering price to be substantially higher than
the net tangible book value per share of our common stock. Therefore, investors
purchasing shares in the offering will incur immediate and substantial dilution
in net tangible book value per share. The dilution to investors in this offering
will be approximately $10.53 per share, based upon an assumed initial public
offering price of $13.00 per share. In addition, the exercise of stock options
and warrants could cause additional substantial dilution to such investors. See
"Dilution."

WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS WHICH COULD NEGATIVELY IMPACT OUR
STOCKHOLDERS.

We are subject to Delaware laws that could have the effect of delaying,
deterring or preventing a change in control of ZipLink. One of these laws
prohibits us from engaging in a business combination with any interested
stockholder for a period of three years from the date the person became an
interested stockholder, unless some conditions are met. In addition, provisions
in our Amended and Restated Certificate of Incorporation and By-Laws, and the
significant proportion of our stock held by our executive officers, directors
and affiliates, could have the effect of discouraging potential takeover
attempts or making it more difficult for stockholders to change management. One
such provision is the ability of our Board of Directors to authorize the
issuance of preferred stock with rights and privileges that might be senior to
our common stock without shareholder approval. Our Amended and Restated
Certificate of Incorporation and By-Laws also provide that stockholders may not
take action by written consent and that special meetings of the stockholders may
only be called by our Board of Directors. Our Amended and Restated Certificate
of Incorporation and By-Laws further require a supermajority vote of the
stockholders to amend certain provisions of our Amended and Restated Certificate
of Incorporation or the By-Laws. See "Description of Capital Stock--Delaware
Anti-takeover Law and Certain Charter and By-Law Provisions."

FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements that involve risks and
uncertainties. These statements refer to our future plans, objectives,
expectations and intentions. We use words such as "anticipates," "believes,"
"plans," "expects," "future," "intends," and similar expressions to identify
forward-looking statements. Our actual results could differ materially from
those anticipated in these forward-looking statements, as a result of certain
factors, as more fully described in "Risk Factors" and elsewhere in this
prospectus. We caution you that no forward-looking statement is a guarantee of
future performance and you should not place undue reliance on these
forward-looking statements which reflect our management's view only as of the
date of this prospectus. ZipLink undertakes no obligation to update publicly any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of the 3,500,000 shares of
common stock we are offering will be approximately $41,500,000 ($47,847,250 if
the underwriters' over-allotment is exercised in full), based upon an assumed
initial public offering price of $13.00 per share, and after deducting the
underwriting discount and other estimated offering expenses.

We intend to use approximately $20.0 million of the net proceeds of this
offering for repayment in full of our then-outstanding indebtedness to Fleet
Bank ($19.0 million at March 31, 1999) under a line of credit. The Fleet Bank
line of credit matures on April 1, 2001, accrues interest at a variable rate
equal to the London Interbank Offered Rate, or LIBOR, plus 0.30% and was
incurred in March 1998 to refinance advances from Henry Zachs, our Co-Chairman
and Chief Executive Officer, and Eric Zachs, our Co-Chairman, and certain of
their affiliates, to refinance indebtedness guaranteed by Henry and Eric Zachs,
as well as to provide us with general working capital. The interest rate
applicable to the Fleet Bank line of credit was 5.26% as of March 31, 1999. We
intend to use the net proceeds of this offering remaining after repayment of the
Fleet Bank indebtedness as follows: approximately $10.0 million to expand our
network infrastructure, approximately $2.3 million for sales and marketing and
the remainder for working capital and general corporate purposes. We are
presently seeking one or more debt financings aggregating approximately $15.0
million to be used for capital expenditures, working capital and other general
corporate purposes as a replacement for the Fleet Bank line of credit. We cannot
assure you that we will be able to obtain any such financing or that, if
available, it will be on terms we deem acceptable.

We will retain broad discretion in the allocation of the net proceeds from
this offering. The amounts actually expended for any such purposes may vary
significantly and will depend upon a number of factors, including the amount of
our future revenues, our ability to obtain additional financing and other
factors described under "Risk Factors" and elsewhere in this prospectus. Pending
use of the net proceeds from this offering, we intend to invest the net proceeds
in short-term, interest bearing, investment grade securities.

DIVIDEND POLICY

We have not paid and do not anticipate paying any cash dividends on our
common stock in the foreseeable future. We intend to retain our earnings, if
any, for use in our growth and ongoing operations. Any determination to declare
or pay cash dividends will be at the discretion of our Board of Directors and
will depend on our financial condition, results of operations, capital
requirements and such other factors as the Board of Directors determines are
relevant.

CAPITALIZATION

The following table sets forth the capitalization of ZipLink, as of December
31, 1998, (A) on an actual basis, (B) on a pro forma basis to give effect to (i)
the Reorganization, and (ii) the conversion of all outstanding convertible debt
into 834,615 shares of common stock concurrently with the offering, based upon
an assumed initial public offering price of $13.00 per share, and (C) on a pro
forma as adjusted basis to give effect to (i) the sale of 3,500,000 shares of
common stock in this offering, at an assumed initial public offering price of
$13.00 per share, after deducting the underwriting discount and the estimated
offering expenses, and (ii) the application of the estimated net proceeds
therefrom as described under the section "Use of Proceeds." You should read the
following table together with our financial statements and notes thereto
included elsewhere in this prospectus.

AS OF DECEMBER 31, 1998
------------------------------------
(A) (B) (C)
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ----------- -----------

(DOLLARS IN THOUSANDS)
Cash and cash equivalents................................................... $ 512 $ 512 $ 24,412
---------- ----------- -----------
---------- ----------- -----------

Long-term obligations:
Capital lease obligations................................................. $ 803 $ 803 $ 803
Note payable.............................................................. 17,600 17,600 --
Convertible debentures.................................................... 7,500 -- --
---------- ----------- -----------
Total long-term obligations (including current portion)................. 25,903 18,403 803

Members'/Stockholders' equity (deficit):
Members' equity (deficit)................................................. (18,089) -- --
Preferred stock, $.001 par value; no shares authorized, issued or
outstanding, actual; 1,000,000 shares authorized, no shares issued or
outstanding (pro forma and pro forma as adjusted)....................... -- -- --
Common stock, $.001 par value, no shares authorized, issued or
outstanding, actual; 50,000,000 shares authorized, 9,000,000 and
12,500,000 issued and outstanding (pro forma and pro forma as adjusted,
respectively)........................................................... -- 9 12
Additional paid-in capital................................................ -- 13,280 54,777
Accumulated deficit....................................................... -- (23,878) (23,878)
---------- ----------- -----------
Total members'/stockholders' equity (deficit)........................... (18,089) (10,589) 30,911
---------- ----------- -----------
Total capitalization.................................................. $ 7,814 $ 7,814 $ 31,714
---------- ----------- -----------
---------- ----------- -----------

The outstanding share information excludes:

- 58,324 shares reserved for issuance upon the exercise of an outstanding
warrant at a price of $1.71 per share.

DILUTION

After giving effect to the conversion of the $7.5 million of outstanding
convertible debt held by Nortel Networks into an aggregate of 834,615 shares of
common stock concurrently with the closing of this offering, based upon an
assumed initial public offering price of $13.00 per share, the pro forma net
tangible book value of ZipLink as of December 31, 1998 would have been $(10.6
million), or $(1.18) per share of common stock. The pro forma net tangible book
value per share is determined by dividing our pro forma tangible net worth (pro
forma tangible assets less total liabilities) by the pro forma number of shares
of common stock outstanding. Dilution per share represents the difference
between the amount per share paid by investors in this offering and the pro
forma net tangible book value per share after the offering. After giving effect
to the sale of the shares of common stock in the offering at an assumed initial
public offering price of $13.00 per share and after deducting the underwriting
discount and the other estimated offering expenses payable by us, the pro forma
net tangible book value of ZipLink as of December 31, 1998 would have been $2.47
per share. This represents an immediate accretion in the net tangible book value
of $3.65 per share to existing stockholders and an immediate dilution in net
tangible book value of $10.53 per share to new investors purchasing shares at
the assumed initial public offering price. The following table illustrates this
per share dilution.

Assumed initial public offering price per share............... $ 13.00
---------
Pro forma net tangible book value per share as at December
31, 1998.................................................. $ (1.18)
Increase per share attributable to new investors............ $ 3.65
---------
Pro forma net tangible book value per share after the
offering.................................................... 2.47
---------
Dilution per share to new investors (1)....................... $ 10.53
---------
---------

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

(1) If the underwriters' over-allotment is exercised in full, the pro forma net
tangible book value per share after the offering would be $2.86, resulting
in an immediate dilution of $10.14 per share to investors purchasing shares
in this offering.

The following table summarizes, on a pro forma basis, as of December 31,
1998, the total number of shares of common stock purchased from us, the total
consideration paid to us and the average price paid per share by (i) Nortel
Networks, (ii) other existing stockholders, and (iii) investors purchasing
shares from us in this offering at an assumed initial public offering price of
$13.00 per share (before deducting the underwriting discount and estimated
offering expenses payable by us). The information provided gives effect to the
Reorganization as if it had occurred as at the inception of ZipLink, LLC, a
Connecticut limited liability company.

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------------- -------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------- ----------- ------------- ----------- ---------

Nortel Networks(1)..................................... 1,659,478 13.3% $ 10,000,000 18.0% $ 6.03
Other existing stockholders............................ 7,340,522 58.7 9,500 -- --
New investors.......................................... 3,500,000 28.0 45,500,000 82.0 13.00
------------- --- ------------- ---
Total.............................................. 12,500,000 100% $ 55,509,500 100%
------------- --- ------------- ---
------------- --- ------------- ---

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

(1) Includes 824,863 shares purchased from us for $3.03 per share on December
23, 1997, 450,000 shares of common stock issued upon conversion of a $2.5
million convertible debenture at a conversion price of $5.56 per share, and
384,615 shares of common stock issued upon conversion of a $5.0 million
convertible debenture at a conversion price of $13.00 per share, based upon
an assumed initial public offering price of $13.00 per share, which
conversions will occur concurrently with the closing of this offering.

The foregoing table assumes that no stock options or warrants outstanding as
of December 31, 1998 have been exercised. There were, as of December 31, 1998,
outstanding options to purchase 366,200 shares of common stock, exerciseable at
a weighted average price of $2.68 per share, and an outstanding warrant to
purchase 58,324 shares of common stock, with an exercise price of $1.71 per
share. To the extent outstanding options and warrants are exercised, there will
be additional dilution to investors purchasing shares in this offering.

SELECTED FINANCIAL DATA

The following selected statement of operations data of ZipLink, for the
three years ended December 31, 1996, 1997 and 1998 and the balance sheet data as
of December 31, 1996, 1997, 1998 have been derived from our financial
statements, which have been audited by Arthur Andersen LLP, independent
accountants, whose report is included elsewhere in this prospectus. The selected
statement of operations data for the period from inception (November 21, 1995)
to December 31, 1995 and the balance sheet data as of December 31, 1995 have
been derived from unaudited financial data of ZipLink and, in our opinion, these
financial statements include all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the information. The
pro forma data reflects the net loss, net loss per common share and the weighted
average common shares outstanding for each period presented assuming for each
period presented the capital contribution of the members had been converted into
common stock, pursuant to the Reorganization, at the beginning of each
respective period. The pro forma financial data included herein is not
necessarily indicative of the results that would have been obtained had the
Reorganization been consummated on the dates indicated, nor do they purport to
indicate the results of future operations. The following selected financial data
is qualified by reference to, and should be read in conjunction with, the
financial statements of ZipLink, the notes thereto and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included
elsewhere in this prospectus.

PERIOD FROM
NOVEMBER 21,
1995 (DATE OF
INCEPTION) TO YEAR ENDED DECEMBER 31,
DECEMBER 31, -------------------------------
1995 1996 1997 1998
------------- --------- --------- ---------

(UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues.......................................................... $ -- $ 756 $ 5,236 $ 7,088
Cost of revenues.................................................. -- 1,782 3,187 6,271
Selling, general and administrative............................... 25 7,373 6,507 5,174
Depreciation and amortization..................................... 1 384 1,084 2,637
------------- --------- --------- ---------
Total costs and expenses........................................ 26 9,539 10,779 14,082
------------- --------- --------- ---------
Loss from operations.............................................. (26) (8,783) (5,543) (6,994)
Interest and other expenses, net................................ -- 19 1,167 1,452
------------- --------- --------- ---------
Net loss.......................................................... $ (26) $ (8,802) $ (6,709) $ (8,446)
------------- --------- --------- ---------
------------- --------- --------- ---------
PRO FORMA DATA:
Pro forma net loss................................................ $ (26) $ (8,802) $ (6,109) $ (8,446)
Pro forma net loss per common share--basic and diluted............ (.00) (1.20) (.91) (1.03)
Weighted average common shares outstanding--basic and diluted..... 7,341 7,341 7,408 8,165
OTHER FINANCIAL DATA:
Capital expenditures.............................................. $ 79 $ 4,219 $ 8,516 $ 1,313
EBITDA(1)......................................................... (25) (8,399) (4,527) (4,502)

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

(1) EBITDA consists of net loss excluding net interest, taxes, depreciation and
amortization. EBITDA is provided because we believe that investors find it
to be a useful tool for approximating our cash flow. EBITDA is presented to
enhance an understanding of our operating results and should not be
construed (i) as an alternative to operating income (as determined in
accordance with GAAP) as an indicator of our operating performance or (ii)
as an alternative to cash flows from operating activities (as determined in
accordance with GAAP) as a measure of liquidity. Our methodology

for calculating EBITDA may be different from that used by other companies.
See the financial statements and notes thereto contained elsewhere in this
prospectus for more detailed information.

The following pro forma as adjusted balance sheet data as of December 31,
1998 gives effect to (i) the Reorganization, (ii) the conversion of all
outstanding convertible debt into common stock concurrently with the closing of
this offering, based upon an assumed initial public offering price of $13.00 per
share, (iii) the sale of 3,500,000 shares of common stock in this offering at an
assumed initial public offering price of $13.00 per share, after deducting the
underwriting discount and estimated offering expenses, and (iv) the application
of the estimated net proceeds from the offering, including the repayment of the
note payable to Fleet Bank in the amount of $17.6 million.

AS OF DECEMBER 31,
----------------------------------------------------------

1996 1997
--------- ---------
1998
1995 -----------------------
----------- PRO FORMA
(UNAUDITED) ACTUAL AS ADJUSTED
---------- -----------

(DOLLARS IN THOUSANDS) (UNAUDITED)

BALANCE SHEET DATA:
Cash and cash equivalents............................. $ 2,074 $ 301 $ 1,082 $ 512 $ 24,412
Working capital (deficit)............................. (78) (6,841) (5,317) (3,062) 21,338
Total assets.......................................... 2,185 4,569 12,984 11,174 35,074
Long-term debt........................................ -- -- 15,803 17,939 339
Convertible debentures, net of current portion........ -- -- -- 7,000 --
Members'/Stockholders' equity (deficit)............... 1 (3,024) (9,748) (18,089) 30,911

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

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL
STATEMENTS AND NOTES THERETO AND THE OTHER INFORMATION INCLUDED ELSEWHERE IN
THIS PROSPECTUS. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS BASED ON
ZIPLINK'S CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND PROJECTIONS. THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS
AND THE TIMING OF CERTAIN EVENTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW, IN "RISK
FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

ZipLink is a national provider of wholesale Internet access services to
developers and vendors of Internet appliances and local, regional and national
Internet service providers. ZipLink was founded in November, 1995. We began
testing our Internet network in the Northeastern U.S. in April, 1996. In June,
1996, we commenced revenue generating operations. In July, 1996, we acquired the
network assets and call center of the former Delphi Internet Corporation/News
America Holdings, Incorporated joint venture ("Delphi") from iGuide, Inc, began
use of our present network architecture and commenced initial deployment of
Super POPs. During 1998, we began an upgrade of substantially all of our points
of presence and expanded our network to new geographic areas.

We derive a significant portion of our revenues from the provision of
wholesale Internet access services for Internet appliances, including Internet
connectivity, subscriber authentication, e-mail filtering and forwarding and
other specially developed services. One customer, WebTV, accounts for
substantially all of our revenues from Internet appliance services. Revenues
from the provision of wholesale Internet access to WebTV are recognized monthly
as services are performed.

We also provide wholesale national dial-up Internet access and enhanced
services, including DSL service where available, under the name ZipDial, to 69
Internet service providers (as of March 31, 1999). Our services enable Internet
service providers to quickly and inexpensively expand their existing geographic
coverage and offer national dial-up Internet access, without investing in costly
infrastructure. Revenues from our ZipDial program are recognized monthly as
services are provided.

We also provide direct Internet access under the ZipLink name to a limited
number of retail users, although we intend to devote minimal resources to
marketing in this area. Revenues from these users derives from service
subscriptions and are recognized monthly.

Since inception, we have incurred net losses and experienced negative cash
flow from operations. Our cumulative net loss from operations as of December 31,
1998 was $24.0 million. We expect to continue to operate at a net loss and
experience negative cash flow for the foreseeable future given the level of
planned operating and capital expenditures. Our ability to achieve profitability
and positive cash flow from operations is dependent upon our ability to
substantially grow our revenue base through expansion of our ZipDial program and
an increase in sales of access services for Internet appliances and to achieve
operating efficiencies. We plan to make significant capital expenditures to
expand our network and to increase our operating expenses based in large part on
our estimate of potential future revenues. If our future revenues fall short of
our estimates or if our operating expenses exceed our expectations, then we may
never obtain or sustain profitability.

RESULTS OF OPERATIONS

The following table sets forth, for the periods presented, certain data from
our statement of operations expressed as a percentage of revenues.

YEAR ENDED DECEMBER 31,
-----------------------------------

1996 1997 1998
--------- ----------- -----------
Revenues.................................................................. 100.0% 100.0% 100.0%
Cost of revenues.......................................................... 235.9 60.9 88.5
Selling, general and administrative....................................... 975.6 124.3 73.0
Depreciation and amortization............................................. 50.8 20.7 37.2
--------- ----------- -----------
Loss from operations...................................................... (1,162.3) (105.9) (98.7)
Interest and other expenses, net.......................................... (2.5) (22.2) (20.5)
--------- ----------- -----------
Net loss.................................................................. (1,164.8)% (128.1 )% (119.2 )%
--------- ----------- -----------
--------- ----------- -----------

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

REVENUES. Revenues increased 36.5% from $5.2 million for the year ended
December 31, 1997 to $7.1 million for the year ended December 31, 1998.
Substantially all of this increase resulted from WebTV revenues which increased
from $2.5 million for the year ended December 31, 1997 to $4.8 million for the
year ended December 31, 1998. During this period, revenue from direct retail
users decreased from $2.3 million for the year ended December 31, 1997 to $1.9
million for the year ended December 31, 1998. This decrease reflects our
decision to shift our business and marketing strategy from the provision of
direct retail service to wholesale service for Internet service providers. We
launched our ZipDial program in November, 1998. Revenues from ZipDial services
for the year ended December 31, 1998 were $32,000.

COST OF REVENUES. Cost of revenues consist primarily of telecommunications
costs and collocation costs for SuperPOP locations. Cost of revenues increased
96.9% from $3.2 million for the year ended December 31, 1997 to $6.3 million for
the year ended December 31, 1998. Substantially all of this increase was due to
telecommunications costs reflecting the expansion of our network infrastructure
during 1998. Costs for collocation for SuperPOP locations increased in 1998 as
the number of SuperPOPs increased from ten at December 31, 1997 to 18 at
December 31, 1998.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses consist primarily of salaries, professional services, marketing and
promotional materials to expand our revenue base and other costs related to our
sales, finance and administrative functions. These expenses decreased 20.0% from
$6.5 million for the year ended December 31, 1997 to $5.2 million for the year
ended December 31, 1998. This decrease was principally due to a substantial
reduction in employees during 1997, most of the cost savings of which were not
realized until 1998. This reduction in employees resulted from the termination
of customer support provided by ZipLink under an agreement with Delphi Internet
Services, Inc. related to the acquisition of the Delphi assets and our shift in
focus from the direct retail market to the wholesale Internet service provider
market.

DEPRECIATION AND AMORTIZATION. Substantially all of our depreciation is of
network equipment. Depreciation expense increased from $1.1 million for the year
ended December 31, 1997 to $2.6 million for the year ended December 31, 1998.
This increase was principally due to additional capital expenditures incurred in
1998 for network infrastructure and the effect of a full year of depreciation on
assets acquired during 1997.

INTEREST EXPENSE. Interest expense increased from $1.1 million for the year
ended December 31, 1997 to $1.3 million for the year ended December 31, 1998.
Substantially all of this increase was due to interest on convertible debt
funded by Nortel Networks during 1998 and increased borrowing in 1998 on our
line of credit.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1997

REVENUES. We commenced revenue generating activity from direct retail users
in June, 1996 and from WebTV in December, 1996. Revenues increased 587.8% from
$756,000 for the year ended December 31, 1996 to $5.2 million for the year ended
December 31, 1997. This increase was primarily due to an increase in our WebTV
revenues from $30,000 for the year ended December 31, 1996 to $2.5 million for
the year ended December 31, 1997. The remainder was largely due to an increase
in revenue from direct retail users from $500,000 in 1996 to $2.3 million for
the year ended December 31, 1997.

COST OF REVENUES. Cost of revenues increased 77.8% from $1.8 million for
the year ended December 31, 1996 to $3.2 million for the year ended December 31,
1997. This increase was primarily due to an increase in telecommunications costs
and, to a lesser extent an increase in collocation costs, which was offset by a
small decrease in software costs.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses decreased 12.2% from $7.4 million for the year ended December 31, 1996
to $6.5 million for the year ended December 31, 1997. This decrease was due to a
significant reduction in employees during 1997 associated with the termination
of the customer support agreement with Delphi Internet Services, Inc. and our
shift in focus from the direct retail market to the wholesale Internet service
provider market.

DEPRECIATION AND AMORTIZATION. Depreciation expense increased from $384,000
for the year ended December 31, 1996 to $1.1 million for the year ended December
31, 1997. The increase in depreciation resulted from our increased investment in
our network infrastructure, with equipment purchases of approximately $8.5
million for the year ended December 31, 1997, as well as a full year of
depreciation for the equipment purchased during 1996.

INTEREST EXPENSE. Interest expense increased from $30,000 for the year
ended December 31, 1996 to $1.1 million for the year ended December 31, 1997.
This increase resulted from increased levels of borrowing under a line of credit
to support operations.

INCOME TAXES

No benefit for federal and state income taxes is reported in the financial
statements as ZipLink has been taxed as a partnership since inception.
Therefore, for the periods presented, the federal and state tax effects of the
tax losses were recorded by the members of the limited liability company in
their respective income tax returns. Subsequent to the consummation of the
Reorganization, we will account for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). Had we applied the provisions of SFAS No. 109 for the period from
inception (November 21, 1995) through December 31, 1998, the deferred tax asset
generated, primarily from net operating loss carryforwards, would have been
offset by a full valuation allowance.

LIQUIDITY AND CAPITAL RESOURCES

Since our inception, we have financed our operations primarily from
investments and advances from Henry and Eric Zachs and their affiliates, loans
from commercial banks, including Fleet Bank, supported by Henry Zachs and/or
Eric Zachs' personal guarantee and investments of equity and debt from Nortel
Networks. The principal uses of cash have been to fund working capital
requirements and capital expenditure programs. At December 31, 1996, 1997 and
1998, we had $301,000, $1.1 million and $512,000, respectively, in cash and cash
equivalents.

Net cash used in operating activities was $6.0 million, $3.4 million and
$8.9 million for the years ended December 31, 1996, 1997 and 1998, respectively.
Net cash used in operating activities for the year ended December 31, 1996 is
primarily attributable to our net loss, partially offset by depreciation and
amortization and the increases in accounts payable and accrued expenses. Net
cash used in operating activities for the year ended December 31, 1997 is
primarily attributable to our net loss and decreases in amounts due to
affiliates, partially offset by depreciation and amortization and the increases
in accounts payable. Net cash used in operating activities for the year ended
December 31, 1998 is primarily attributable to our net loss and decreases in
accounts payable, partially offset by depreciation and amortization,
compensation expenses associated with the granting of unit options and a warrant
and the increases in accrued expenses.

Net cash used in investing activities was $4.3 million, $7.0 million and
$1.3 million for the years ended December 31, 1996, 1997 and 1998, respectively.
Principal investments were for capital expenditures which amounted to $4.2
million, $8.5 million and $1.3 million for the years ended December 31, 1996,
1997 and 1998, respectively. Significant capital expenditures for the year ended
December 31, 1996 include the acquisition of Delphi's network assets and call
center for $2.7 million, and, for the year ended December 31, 1997, $1.5 million
of network equipment and $6.1 million of other equipment acquired from Nortel
Networks to continue the expansion of our network. We purchased $1.3 million of
additional equipment in 1998.

Net cash provided by financing activities was $8.5 million, $11.1 million
and $9.7 million for the years ended December 31, 1996, 1997 and 1998,
respectively, and includes $3.3 million of net contributions from Henry and Eric
Zachs and their affiliates, as well as loans from commercial banks, such loans
being supported by Henry Zachs and/or Eric Zachs' personal guarantee. In
November, 1996, we obtained a $5.0 million line of credit from BancBoston to be
used for working capital purposes. In December, 1997, this line of credit was
increased to provide for maximum borrowings of up to $20.0 million with a
maturity date of October 1, 2000. This line of credit was refinanced in March,
1998 with the proceeds of a line of credit from Fleet Bank which provided for
maximum borrowings of $15.0 million. The Fleet Bank line of credit was increased
to $20.0 million in October, 1998 and has a maturity date of April 1, 2001. In
addition, we received a $10.0 million investment ($2.5 million equity in 1997
and $7.5 million convertible debt in 1998) from Nortel Networks for working
capital, to facilitate our network buildout and upgrade our network
infrastructure. In 1997, we also entered into a capital lease for $1.5 million
of equipment.

We intend to use approximately $20.0 million of the net proceeds from this
offering to repay the then-outstanding principal amount of our line of credit
with Fleet Bank ($19.0 million as of March 31, 1999). We are also seeking to
obtain one or more debt financings aggregating approximately $15.0 million to be
used for capital expenditures, working capital and other general corporate
purposes as a replacement for the Fleet Bank line of credit. We further intend
to make approximately $6.5 million in capital expenditures in 1999, primarily to
expand our network infrastructure and increase our area of service coverage.
Subject to our capital resources, we currently expect that our capital
expenditures will be substantially higher in future periods in connection with
the expansion of our network capacity and the increase in our area of service
coverage. Cash used to service debt associated with our capital lease

obligation is anticipated to be $528,624 for the year ended December 31, 1999
and $352,416 for the year ended December 31, 2000.

We believe that our available cash from operations, combined with the net
proceeds from this offering (after repayment of the Fleet Bank line of credit)
will be sufficient to meet our anticipated working capital and capital
expenditure requirements for at least the next 12 months. We anticipate that we
will need to raise significant additional capital for the period after the next
12 months through public or private debt or equity financings or other sources
in order to execute our business plan.

YEAR 2000 ISSUES

The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. As a result, our
computer programs that have date-sensitive software and software of companies
into which our network is interconnected may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in system failures or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities.

We rely on our computer systems for authentication of our wholesale
customers onto our network, e-mail and web services, billing and customer
support activities and network monitoring. We are currently in the process of
reviewing our products and services, as well as our internal management
information systems and non-information technology systems in order to identify
and modify those products, services and systems that are not Year 2000
compliant. In addition, we have contacted approximately 40% of our suppliers to
ascertain their Year 2000 status. During the next 60 days we plan to contact the
remainder of our suppliers, as well as our significant customers, including
WebTV, to ascertain their Year 2000 status. At this time, we estimate that our
direct costs associated with remediation and verification to become Year 2000
compliant will not exceed $180,000, although the actual cost of achieving
compliance could differ materially from this estimate.

We are currently engaged in Phase I of our Year 2000 Compliance Project and
have tested and replaced or corrected some non-compliant equipment and software.
A member of the senior management team has been identified to lead the Year 2000
Compliance Project. We define the term "Year 2000 Compliance" to mean the
assurance that our customers will not be negatively impacted, nor will there be
any disruption in service, by dates prior to, during, or after the year 2000.
Phase I of this project involves doing a full inventory of all equipment,
computer hardware, and software. Based upon this inventory, all equipment,
computer hardware, and software components will then be tested for Year 2000
Compliance. Phase II of this project involves evaluation of the results of these
tests. Any equipment, computer hardware, or software component that is found to
be non-compliant will then be upgraded, rewritten, or replaced as required to
achieve compliance.

As of December 31, 1998, we have spent approximately $50,000 correcting
incidents of noncompliance, exclusive of internal costs. We anticipate that the
direct costs associated with our Year 2000 Compliance Project will not exceed
$180,000, however, we cannot assure you that our actual costs of achieving
compliance will not exceed this amount. While we expect to be Year 2000
compliant by the end of the third quarter of 1999, we cannot assure you that we
will be able to timely and successfully modify our services and systems to
comply with Year 2000 requirements. Nor can we assure that equipment received
from suppliers will comply or that any of our suppliers or peering or transit
partners, such as Nortel Networks or MCI WorldCom, will be Year 2000 compliant
in a timely manner or that there will not be problems with technology working
together. Furthermore, despite testing performed by us and our suppliers and
partners, our products, services and systems may contain undetected errors or
defects associated with Year 2000 related functions. In the event any material

errors or defects are not detected and fixed, or if third parties cannot timely
provide us with products, services or systems that meet Year 2000 requirements,
our business, financial condition or results of operations could be adversely
affected. Known or unknown errors or defects that affect the operation of our
products, services or systems could result in delay or loss of revenue,
interruption of network services, cancellation of customer contracts, diversion
of development or network expansion resources, damage to our reputation, and
litigation costs.

BUSINESS

ZipLink is a national provider of wholesale Internet access services to
developers and vendors of Internet appliances and local, regional and national
Internet service providers. We offer a range of Internet access solutions for
Internet appliances, including Internet connectivity, subscriber authentication
and filtering and forwarding of e-mail. We also provide wholesale national
Internet access services under the name ZipDial to Internet service providers
which, in turn, offer Internet access to their subscribers using our network
infrastructure. Our ZipDial service features wholesale dial-up Internet access
and enhanced services, such as DSL access.

INDUSTRY BACKGROUND

EMERGENCE AND GROWTH OF THE INTERNET

The emergence of the Internet and the widespread adoption of Internet
protocol as a data transmission standard in the 1990s, combined with the
deregulation of the telecommunications industry and advances in
telecommunications technology have significantly increased the attractiveness of
providing data communication applications and services over the Internet. At the
same time, growth in client/ server computing, multimedia personal computers and
online computing services and the proliferation of networking technologies have
resulted in a large and growing number of people who are accustomed to using
networked computers for a variety of purposes, including e-mail, electronic file
transfers, online computing and electronic financial transactions. The
convergence of these trends has significantly accelerated the already rapid
expansion of Internet usage. According to IDC, the number of Internet users
worldwide reached 38 million in 1996 and should grow to over 173 million by the
Year 2000.

INTERNET APPLIANCES

As Internet usage grows it is also expected to expand rapidly beyond today's
paradigm of PC-based web browsing and e-mail. We believe that the ubiquitous
nature and relatively low cost of the Internet, together with rapid advances in
software, hardware and computer chip technology will usher in a new generation
of electronic devices--Internet appliances. These comparatively inexpensive
consumer and business electronics products will make more focused use of the
Internet than personal computers, employing connectivity and network computing
to accomplish limited but nonetheless valuable tasks. Internet appliances are
expected to come in a wide variety of forms, some of which will resemble
familiar consumer electronics products. There are a number of examples of
Internet appliances currently in use, including devices known as TV set-top
boxes, which enable Internet browsing and e-mail from a television, and wireless
devices which receive Internet e-mail broadcast over a paging network. Other
Internet appliances will have functionality which is more business oriented or
which is geared to mobile professionals. For example, some vending machines in
use today regularly communicate inventory status and needs to distributors via
the Internet and the use of such remote inventory management techniques is
expected to increase. Some cellular phones can now receive e-mail messages and
electronic content from the Web.

The market for these and other Internet devices is presently in its infancy,
but ZipLink and many industry analysts believe it is poised for rapid growth.
For example, IDC estimates that there will be 12.8 million Internet appliances
in use in 1999, 4.1 million of which will be Internet-enabled televisions.
Forrester Research predicts that 20 million Internet appliances will be
installed in U.S. homes by 2002. IDC projects that Internet appliances (other
than personal computers) shipped will grow from 9% of all Internet access
devices (including personal computers) in 1998 to 43% of the market by 2002.

THE INTERNET ACCESS INDUSTRY

The rapid development and growth of the Internet has resulted in a highly
fragmented industry of over 4,800 local, regional and national Internet service
providers in the United States. These companies

provide Internet access to their subscribers either by developing a proprietary
network infrastructure or by purchasing Internet access from a wholesale
provider such as ZipLink or through a combination of both. Internet service
provider revenues have grown and are expected to continue to grow at a high
rate. IDC estimates that Internet service provider revenues will increase from
$10.7 billion in 1998 to $29.7 billion in 2002. Forrester Research projects that
the Internet access market will reach $50 billion in 2002. Forrester Research
also estimates that there will be 60 million Internet access dial-up accounts in
2002 with such accounts representing 77% of the Internet access market. This
large and fragmented market includes a comparatively small number of national
Internet service providers, including regional Bell operating companies and
other telecommunications companies, as well as a much greater number of local
and regional providers who serve consumers and, to a significant degree, small
and medium sized businesses. Internet service providers in general are under
increasing price pressure as the Internet access industry matures and moves
progressively toward a commodity pricing model.

In addition, local and regional Internet service providers, in particular,
are experiencing mounting customer demands for more sophisticated and reliable
service options. We believe that the principal customer requirements are
increased bandwidth, more reliable connectivity, broader local dial-up access
coverage and enhanced services. However, we also believe that satisfying these
service needs requires significant infrastructure investments that may be beyond
the reach of local and regional providers, particularly in light of increasing
price pressure and intense competition from larger providers with greater
financial and infrastructure resources. Accordingly, we believe that many of
these local and regional Internet service providers will be driven to seek
consolidation with larger players, as well as the outsourcing of network
infrastructure to meet these market challenges. Because Internet connectivity
comprises a large portion of an Internet service provider's overhead expenses,
irrespective of the size of the provider, we believe that these services will be
among the first to be shifted to third-party providers if a reliable,
cost-effective alternative is made available to them.

THE ZIPLINK SOLUTION

Our wholesale Internet access services are designed to meet the needs of the
emerging Internet appliances market and to provide a network outsourcing
solution for Internet service providers. We presently provide Internet
connectivity, subscriber authentication, e-mail filtering and forwarding and
other specially developed services for several Internet appliances, such as the
WebTV set-top box, and have the ability to provide similar services to other
Internet appliances. We have been a provider of Internet access services to
WebTV, a widely-used Internet appliance, since its introduction in 1996. We
believe our experience with WebTV will enable us to attract other developers and
vendors of Internet appliances and assist us in quickly implementing Internet
access services for their devices. The ready availability of our existing
service offerings and our ability to quickly implement new access services will
enable developers and vendors of Internet appliances to significantly reduce
their time to market and allow them to focus their resources on their core
competencies of product development and distribution.

The network attributes and experience we have developed through our
relationship with WebTV and other Internet appliance customers also enable us to
provide high-quality wholesale Internet access services to Internet service
providers. Our network has been engineered and operated to optimize dial-up
performance in order to provide reliable, high-quality national dial-up
connectivity to WebTV. Our ZipDial service for Internet service providers
feature dial-up connectivity using this same network capability as its core
feature. By outsourcing network connectivity to ZipLink, these Internet service
providers can offer their subscribers a far wider array of access options than
their resources would otherwise permit without the need to invest in costly
infrastructure. Outsourcing further allows these Internet service providers to
concentrate on acquiring and retaining subscribers and marketing Internet access
and other complementary products rather than network management and buildout.
ZipLink's services are transparent to the Internet service provider's
subscriber, preserving the Internet service provider's own brand identity as the
service provider. For example, by using ZipLink's services an

Internet service provider can quickly, easily and inexpensively expand its
geographic coverage to cover new local dialing areas and provide its subscribers
with DSL access and streaming audio and video applications, thereby enabling the
Internet service provider to better satisfy customer demand without sacrificing
price-competitiveness.

OUR BUSINESS STRATEGY

LEVERAGE KEY INTERNET APPLIANCE RELATIONSHIPS. ZipLink actively seeks to
identify, develop and sustain relationships with key innovators and early
marketers of Internet appliances to increase our market visibility.

ESTABLISH ZIPDIAL AS A LEADING WHOLESALE SOLUTION. We intend to capitalize
on our network infrastructure and expertise to make our ZipDial service the
leading high-quality, cost-effective wholesale access solution for Internet
service providers. ZipDial is designed to allow Internet service providers
to respond to increasing price competition and service demands by quickly
expanding their capacity, coverage and product offerings without costly
infrastructure investments.

EXPAND AND ENHANCE OUR NETWORK. We intend to continue to expand, enhance
and maintain a reliable network infrastructure with high-quality
performance.

ESTABLISH STRATEGIC ALLIANCES. We seek to establish and sustain strategic
alliances with key customers and suppliers to create and exploit early
access to new markets and new technologies.

CAPITALIZE ON OUR WEBTV RELATIONSHIP. We intend to capitalize on our
relationship with WebTV by continuing to expand our network where it is
likely to be supported by WebTV traffic and by using this relationship to
boost our marketing efforts with developers and vendors of other Internet
appliances.

STRATEGIC ALLIANCE--NORTEL NETWORKS

As a key component of our strategy to become a leading provider of Internet
access services to developers and vendors of Internet appliances and Internet
service providers, we intend to identify, establish and maintain strategic
alliances with important customers and suppliers to create and exploit early
access to new markets and new technologies. Consistent with this strategy, in
1997, ZipLink entered into a strategic alliance with Bay Networks, Inc., now a
subsidiary of Northern Telecom Limited, or Nortel Networks, a major manufacturer
of telecommunications equipment. As a part of this strategic alliance Nortel
Networks has provided ZipLink with $7.5 million of convertible debt financing
and made a $2.5 million equity investment in ZipLink. Concurrently with the
closing of this offering, the outstanding $7.5 million convertible debt to
Nortel Networks will be converted into shares of common stock. We have purchased
approximately $7.1 million of telecommunications equipment and related services
from Nortel Networks to facilitate our network buildout and upgrade. In
connection with our use of Nortel Networks equipment, we have served as a beta
site for new product offerings, have performed field testing for, and have
received pre-released versions of, their equipment and software. In addition
Nortel and ZipLink are currently collaborating on a joint marketing campaign for
the ZipDial service. We believe that our strategic alliance with Nortel Networks
helps to raise our visibility in the marketplace for wholesale Internet access
and provides this important supplier with a vested interest in supporting our
success. See "Certain Relationships and Related Transactions-- Purchases from
Nortel Networks" and "--Nortel Networks Funding."

SERVICES

ZipLink provides wholesale Internet access services to developers and
vendors of Internet appliances and to local, regional and national Internet
service providers using our national network. We also provide Internet service
to a limited number of direct subscribers, although we intend to devote minimal
resources to this market segment.

INTERNET APPLIANCE SERVICES

We believe that we are one of the only national Internet access providers to
actively focus on Internet appliances as a distinct market. We believe that the
dial-up focus of our network configuration and our understanding of, and
experience with, providing Internet connectivity to WebTV and other devices have
provided us with a valuable platform for serving this rapidly emerging area of
Internet usage. We have developed the network, systems configuration and
know-how to provide Internet connectivity, subscriber authentication, e-mail
filtering and forwarding and other specially developed services to link a
diverse array of electronic devices to the Internet. While our service offerings
for Internet appliances are typically tailored to the needs of specific devices,
the solutions we offer are generally applicable to a number of categories of
appliances. The following describes the principal categories of devices for
which we have developed Internet access services and provides specific
information on our existing service relationships in these categories. We
believe that our ability to provide these services will allow us to offer
developers and vendors of Internet appliances an opportunity to reduce their
time to market and to avoid the necessity of developing the required network and
service capabilities in-house or with other less experienced providers.

TV SET-TOP BOXES. TV set-top boxes are relatively inexpensive consumer
electronic devices which enable users to access the Internet, browse the World
Wide Web and send and receive e-mail using a standard television rather than a
personal computer. ZipLink has two customers in this device category, WebTV and
WebSurfer, and believes that the market for these devices is poised to grow
rapidly. IDC forecasts that 22% of U.S. homes will have a TV set-top box
installed by the year 2002. ZipLink's customer relationships in this device
category are described below.

- WEBTV. We are a leading national provider of Internet connectivity to
WebTV, a subsidiary of Microsoft Corporation. The WebTV set-top box
provides the leading Internet-enabling solution for televisions in the
United States. We entered into an agreement with WebTV in October, 1996 to
provide dial-up connectivity between WebTV subscribers and WebTV's own
Internet access facility over the ZipLink network. Since WebTV launched
its service in December, 1996, its subscriber traffic has grown to more
than 700,000. See "Risk Factors--We are dependent on WebTV."

- WEBSURFER. We will serve as the "preferred" Internet access provider for
a TV set-top box developed and marketed by WebSurfer, Inc., a subsidiary
of The Batra Group, Inc. ("WebSurfer"). Like WebTV, the WebSurfer TV
set-top box allows for Internet access and it offers added features such
as a built-in handset for making local and long distance telephone calls
over the Internet. WebSurfer is presently marketed solely in Canada (where
we do not serve as an access provider) and is targeted for commercial
launch in the United States in May, 1999. As a "preferred" provider,
ZipLink will serve as the exclusive provider of Internet access in areas
of the United States where we have network coverage, although WebSurfer
can use other providers in such areas to the extent we are unable or
unwilling to match competing prices or services. As in the WebTV
relationship, we will provide dial-up connectivity between WebSurfer
subscribers and WebSurfer's own Internet access facility. In addition to
providing this connectivity, we will also perform user authentication and
registration of first-time users for WebSurfer, acting as a gateway to the
WebSurfer service, furnish customer and technical support to WebSurfer
subscribers and perform subscriber billing services.

PERSONAL COMMUNICATION DEVICES. Internet-enabled personal communications
devices combine existing wireless technology, typically paging, with Internet
functionality to add features such as the ability to send and receive e-mail.
According to the Multimedia Telecommunications Association, there were 54.5
million total paging subscribers in 1998 and we believe this market will move
rapidly to become Internet-enabled. ZipLink has created the tools to provide a
gateway between the Internet and wireless systems, delivering Internet
communications in a specially developed display format for transmission to
wireless devices, including pagers. We have developed two customer relationships
in this device category, each of which is discussed below, and plan to pursue
relationships with other developers.

- BEEPWEAR. We are the exclusive Internet service provider for the Beepwear
wristwatch pager, a device jointly developed by Motorola, Inc. and Timex
Corporation and marketed by Beepwear Paging Products, LLC. The Beepwear
watch is enabled to receive alphanumeric paging messages on a local or
nationwide basis under an agreement with SkyTel Communications, Inc., a
major paging company. ZipLink enhances this product by providing a
central, unified e-mail address for each watch, filtering and forwarding
received e-mail, providing instant notification on the watch that an
e-mail message has been received (including the sender's e-mail address
and the time, date and subject header of the e-mail) and by providing a
repository where the complete e-mail message text and attachments can be
accessed. The Beepwear watch was introduced in January, 1998. ZipLink and
Beepwear have engaged in a variety of co-marketing and co-branding efforts
at trade shows and other venues, including placement of co-branded
materials in a nationwide retail office supply chain and co-branded direct
mailings. We believe these joint marketing programs will increase
ZipLink's visibility within the Internet appliance industry as a provider
of Internet access services to this market. Our agreement with Beepwear
expires in December, 2002 but may be earlier terminated if certain
established targets are not met.

- CUE DATA. ZipLink has entered into a letter of intent with CUE Data
Corporation to provide full-service, nationwide Internet connectivity and
e-mail filtering, forwarding and notification to car radios that use
Microsoft's AutoPC technology. This technology allows a car radio to
receive, send and display e-mail and text pages and real-time traffic,
weather and emergency alerts. The AutoPC is expected to be released later
this year.

FUTURE APPLICATIONS OF OUR INTERNET APPLIANCE SERVICES. We have identified
three Internet appliance categories, in particular, which we believe present
particularly strong market opportunities for us: Internet telephones, online
gaming and Internet-enabled computing devices. We believe that our network
experience and specialized service offerings for Internet appliances will
position us to establish relationships in the future with developers and vendors
of Internet appliances in these and other categories.

- INTERNET TELEPHONES. Internet-enabled cellular and conventional
telephones will use the Internet to deliver and send voice and data
communications including e-mail, and to receive electronic content such as
news and stock quotes. IDC projects that there will be 6.1 million
Internet screen telephones sold in the United States in 2002. Forrester
Research estimates that the use of the Internet for local and long
distance phone calls will become an approximately $900 million market in
2002. We also believe that Internet-enabled cellular phones, sometimes
called "smart phones," will be attractive to mobile professionals because
they combine the ability to talk, send and receive e-mail and receive
content from the Web in a single portable device.

- ONLINE GAMING. Internet-enabled electronic games represent the
convergence of popular Internet games, and ubiquitous in-home gaming
platforms. Initiatives in this market have been announced by Sega
Enterprises, Ltd. and Nintendo Corporation, two leading U.S. makers of in-
home gaming platforms. These new devices will allow relatively inexpensive
in-home gaming platforms that use a standard TV set to support multiplayer
games over the Internet. We have upgraded our network to accommodate
streaming audio and video and multicasting applications

(which simultaneously transmit data in a single stream to multiple users)
and plan further upgrades of this capability in order to capitalize on
what we believe will be a significant market opportunity in this area. The
Yankee Group, an industry analyst, anticipates that online gaming of this
type will encompass more than 9 million households by the year 2000.

- INTERNET-ENABLED COMPUTING DEVICES. Computing products, such as handheld
computers and network computers, are becoming increasingly
Internet-enabled. These products include palmtop computers from 3Com
Corporation and handheld scanners from Hewlett-Packard Corporation that
use wireless technology to connect to the Internet.

ZIPDIAL WHOLESALE SERVICES FOR INTERNET SERVICE PROVIDERS

We provide an array of wholesale Internet access services under the name
ZipDial to Internet service providers which, in turn, offer Internet access to
their subscribers using ZipLink's network. The use of this service is wholly
transparent to the subscriber, preserving the Internet service provider's own
brand identity as the service provider. The ZipDial program is specifically
designed to afford Internet service providers a high quality, cost-effective
means of quickly expanding their existing network capacity, geographic reach and
product offerings without investing in a costly network infrastructure and to
allow them to focus their efforts and resources on their core competency of
marketing Internet access and other complementary products.

ZipLink's current service offerings through its ZipDial program include
local dial-up access in any area covered by our national network as well as
other Internet access options including a range of connection types and features
such as streaming audio and video and multicasting in certain areas. By
contracting with ZipLink for Internet access services, Internet service
providers can offer their subscribers a broader range of products than would
otherwise be possible, enabling local and regional Internet service providers,
in particular, to compete favorably with large national Internet service
providers possessing greater resources.

One Internet access service option which we believe will be significant to
our ZipDial customers is DSL service. DSL technology allows users to achieve
data transmission speeds over ordinary telephone lines up to 7.1 megabits per
second (or 125 times the fastest dial-up modem currently available) at a
reasonable cost. In order to support DSL technology within a given local dialing
area, however, an Internet service provider must generally incur significant
up-front costs to acquire the necessary equipment and infrastructure. By
outsourcing their Internet access services to ZipLink, Internet service
providers will be able to offer DSL to their subscribers without incurring these
substantial up-front investments.

ZipLink's ability to offer DSL access as a part of its ZipDial program is
the result of supplier relationships with two significant providers of DSL
services: Covad Communications, Inc. ("Covad") and Northpoint Communications,
Inc. ("Northpoint"). Ziplink is a master reseller of Covad's DSL services,
allowing us to market DSL access to our ZipDial customers in areas covered by
Covad's network. We are also a reseller of Northpoint's DSL service in areas
covered by its network. During the third quarter of 1999, we expect that ZipLink
will offer DSL access in 30% of its markets. ZipLink plans to use a portion of
the net proceeds of this offering to build its network infrastructure to support
DSL.

ZipLink's wholesale service offerings are priced in a manner designed to
encourage Internet service providers to enroll in the ZipDial program by
minimizing barriers to entry. Internet service providers pay a nominal
enrollment fee and are charged monthly for local dial-up access on the basis of
the number of unique subscribers who actually use the ZipLink network in that
month rather than on the gross number of subscribers capable of accessing the
network during that period. This allows Internet service providers to enter new
local calling areas without first acquiring a critical mass of subscribers to
support network expansion, a common limiting factor for local and regional
Internet Service Providers.

Furthermore, enrollment is processed very quickly, typically within 72 hours
after receipt of an enrollment form and any required fees.

Our ZipDial program was launched in November, 1998. As of December 31, 1998,
we had enrolled 17 Internet service providers and, as of March 31, 1999, had
enrolled 69 Internet service providers into our Zipdial program. One such
customer is DirectWeb, Inc. ("DirectWeb"). DirectWeb operates a
subscription-based online service and markets its service by offering
subscribers a free personal computer as part of its Internet access subscription
fee. ZipLink expects to begin providing ZipDial wholesale Internet access
service to connect these subscribers to the DirectWeb Internet access facility
during the second quarter of 1999. The DirectWeb service was launched on March
31, 1999.

DIRECT INTERNET ACCESS SERVICES

We provide direct Internet access under the ZipLink name to a limited number
of retail users. Service offerings in this area include all of our services
which are made available to wholesale customers. We regard the direct provision
of Internet access as outside of our core business focus and have expended
minimal efforts at marketing retail Internet access service since March, 1997.
Those direct users currently serviced by ZipLink consist largely of accounts
generated by our early efforts at marketing direct access or through referrals.
We are currently exploring our opportunities with respect to these direct user
accounts, but intend to devote minimal resources to marketing to this segment.

Although we do not presently contemplate marketing retail Internet access
services, there are circumstances under which we may provide such services in
conjunction with a strategic relationship. For example, under an agreement with
WebSurfer and its affiliate The Batra Group, Inc. ("Batra"), Batra and ZipLink
have agreed to jointly offer retail Internet access under the name
"WebInfinity." The WebInfinity Internet access service will be available to U.S.
purchasers of a low-cost personal computer made by Batra under the name
"Innovator." Purchasers of these personal computers will activate the
WebInfinity service by clicking on an icon installed on the start-up screen of
the new personal computer. In addition to providing Internet access to
WebInfinity subscribers, ZipLink will perform all registration and
authentication of Web Infinity subscribers, customer support services for
subscribers and billing of subscribers for Batra. Batra's Innovator personal
computers are scheduled for release in the United States in the third quarter of
1999.

CUSTOMER SERVICE AND TECHNICAL SUPPORT

We provide technical support services to our ZipDial customers from our call
center in Lowell, Massachusetts as a part of the ZipDial program. These services
assist our customers in technical aspects of using the ZipDial service. We also
provide customer support to our direct subscribers and possess the
infrastructure to provide customer or subscriber support to Internet appliance
customers and ZipDial customers as the need for such services grows with limited
additional capital expenditures. We anticipate that we will be required to
expand our customer support capabilities in the event of significant sales of
WebSurfer, or Beepwear devices or the WebInfinity service.

SALES AND MARKETING

We focus our marketing efforts and organize our marketing strategy around
our two primary service offerings: Internet appliance services and wholesale
Internet access services for Internet service providers.

INTERNET APPLIANCE SERVICES

The market for Internet appliances is at a very early stage of development.
Accordingly, most of our marketing efforts in this area are targeted toward
identifying and establishing relationships with developers and early marketers
of Internet appliances and toward raising the visibility and profile of

ZipLink as a provider of Internet access services to this market. Our methods
for identifying prospective relationships and increasing ZipLink's visibility
include attendance, presentations and joint exhibitions with existing customers
at trade shows and joint marketing efforts with these customers. For example, we
display co-branded advertising with Beepwear in nationwide locations of a retail
office supply chain. We have given presentations on Internet appliances at trade
shows and internal forums sponsored by strategic partners such as Nortel
Networks.

ZIPDIAL WHOLESALE INTERNET ACCESS SERVICES

Our marketing efforts for the ZipDial program are organized into four tiers:
joint marketing, direct mail campaigns, proactive telemarketing and attendance
at trade shows. We are developing joint marketing programs for ZipDial with our
suppliers. ZipLink and Nortel Networks have announced a co-marketing campaign
for our ZipDial service which will feature co-branded print advertising and
direct mail solicitations, to approximately 4,800 Internet service providers
nationwide. In addition, we are planning joint marketing efforts focusing on our
DSL service offering with Covad and Northpoint. Each of these suppliers has
agreed to make funding available to ZipLink for approved co-marketing programs.
In addition, both Covad and Northpoint have committed to market our ZipDial
service to Internet service providers in conjunction with their direct offerings
of DSL services and may refer smaller Internet service providers seeking such
service to ZipLink for integration into our ZipDial program. We will also market
ZipDial through our internal sales force, which was comprised of six sales
representatives as of February 28, 1999. Our internal sales force operates out
of our Lowell offices. This sales force is dedicated to generating leads,
executing direct mail and proactive telemarketing campaigns and handling
inquiries prompted by any of our sales channels. In connection with ZipDial, we
intend to attend and exhibit at trade shows as a way of raising our visibility
and building our brand.

THE ZIPLINK NETWORK

The ZipLink network is comprised of 19 "super points of presence" or
"SuperPOPs" covering 16 of the 20 largest metropolitan areas in the United
States. Once connected, traffic is routed using primarily Nortel Networks
equipment through the network to the desired Internet location via a system of
high-speed network connections (known as a "backbone" in our industry) provided
to ZipLink by MCI WorldCom. Our network backbone operates at a speed of 45
megabits per second using Asynchronous Transfer Mode, an information transfer
standard that, among other things, allows for a transmission of data, voice, and
video. Users connect to the network at a variety of speeds using a range of
access methods.

Our network is engineered to provide superior quality of service, including
high connection success rates, low latency (response time), fast download times
and reliability.

SUPERPOP ARCHITECTURE

ZipLink's network architecture features 19 SuperPOPs. A SuperPOP is created
by using products provided by competitive local exchange carriers which
aggregate local telephone calls from a broad geographic area and deliver them to
a single network access point. This allows equipment installed at this single
network point of presence to cover a larger calling area than would be possible
with conventional point of presence configurations, significantly reducing the
number of points of presence required to cover a given geographical area and the
corresponding investment required to expand the network. The SuperPOP
architecture also enhances economies of scale from larger equipment
installations, lowers maintenance costs and allows for easier, more efficient
capacity upgrades since equipment is located centrally within a given region.
The resulting cost savings and efficiencies contribute to our ability to offer
Internet appliance and ZipDial customers low-priced Internet connectivity.

SCALEABLE INFRASTRUCTURE

We believe that our existing network can accommodate more users without any
resulting loss of functionality, which in our industry is know as scaleability.
Some expansion in network capacity can be achieved without significant capital
expenditures by increasing the number of telephone lines delivered to existing
hardware which currently has excess capacity. In the past, our strategy for
network expansion has been to add points of presence where we believed our
investment would be substantially supported by traffic from WebTV's subscriber
base. We plan to continue this approach, to the extent possible, with other
customers and generally to target areas served by a competitive local exchange
carrier in order to implement a SuperPOP architecture.

NETWORK INTEGRITY

The integrity of our network is monitored by on-line software and hardware
tools at ZipLink's network operations center located at our executive offices in
Lowell, Massachusetts. Anomalies in the function of the various network elements
are displayed on computer screens and the pertinent information sent to text
pagers carried by members of the engineering staff. The network operations
center is staffed 24 hours per day, 7 days per week, which helps enable us to
mount a rapid response in the event of a telecommunications outage or an
equipment failure. All elements of the network, wherever located, can be
configured remotely from our network operations center and our SuperPOP
equipment is accessible remotely via a modem connection. This remote access
capability helps to support the speedy diagnosis and repair of network problems,
whether at ZipLink's main facility or at a remote network site.

Each of our SuperPOP's are connected to our network backbone by two
independent circuits. This use of back-up, or "redundant" circuits allows for
automatic and rapid re-routing of traffic in the event of a problem in either
path and provide us with flexibility in routing traffic through the network to
optimize efficiency and reduce congestion. Our network operations center is also
supported by redundant connections to the network. To date, network downtime has
been minimal. We have in the past, and intend in the future to continue to,
periodically increase network capacity consistent with our projections of
traffic flow and customer requirements. These projections are, in part, assisted
by network monitoring tools which analyze traffic flow and usage patterns
helping us to place orders with telecommunications carriers sufficiently early
to add capacity before congestion occurs. Scheduled maintenance is pre-announced
and, if significant disruption to any service appears likely, is performed
during an off-hours maintenance window.

COMPETITION

We face intense competition. There are no substantial barriers to entry in
the market for our services, and we expect that competition will further
intensify in the future. We believe that our ability to compete successfully
depends upon a number of factors, including:

- our ability to create and market wholesale Internet access solutions that
are attractive to Internet service providers in terms of price, quality
and breadth of service offerings;

- the capacity, reliability and security of our network infrastructure;

- market presence and, with respect to Internet appliances, our success at
developing relationships with innovators and early marketers of such
devices;

- technical expertise and functionality, performance and quality of services
and our ability to anticipate and meet the changing service needs of the
marketplace;

- our ability to establish and maintain successful strategic relationships
with key customers and suppliers and to gain early access to new markets
and new technologies; and

- our ability to support industry standards.

Our competitors may be divided into two groups: those with whom we presently
compete and those who may, in the future, compete with us. Our present
competitors with respect to the WebTV relationship consist of the other current
providers to WebTV: PSINet, UUNet, Concentric, and a number of other, smaller
Internet service providers. Our present competitors with respect to ZipDial
consist of a variety of companies who are, in some form or another, offering
wholesale Internet access services. This group includes Internet service
providers such as GTE Internetworking, Concentric, PSINet, UUNet, IDT Corp.,
Splitrock Services, Inc. and Epoch Internet, Inc., as well as competitive local
exchange carriers in selected markets, such as XCOM Technologies, Inc. in
Boston, Massachusetts, Intermedia Communications, Inc. in Vienna, Virginia and
ICG Communications, Inc. in Englewood, Colorado. Our potential future
competitors include all of our present competitors as well as telecommunications
companies, such as AT&T Corporation, Williams Communications, Inc., Qwest
Communications International, Inc. and Level 3 Communications, Inc., and other
Internet service providers. Many of our present and potential competitors have
greater market presence, engineering and marketing capabilities, and larger
financial, technological and personnel resources than those available to us.
They may also enjoy certain price advantages with respect to the purchase of
bandwidth from telecommunications carriers if, for example, they are a carrier
themselves, or if they are affiliated with a carrier, or if their usage enables
them to secure volume discounts. As a result, these present and future
competitors may be able to develop and expand their communications and network
infrastructures more quickly, adapt more swiftly to new or emerging technologies
and changes in customer requirements, take advantage of acquisition and other
opportunities more readily, and devote greater resources to the marketing and
sale of their products and services than we can.

In addition to possessing greater financial, technological and personnel
resources, a number of our present and future competitors have the ability to
bundle other services and products with Internet access services which could
place us at a competitive disadvantage. Certain companies are also exploring the
possibility of providing or are currently providing Internet access services
using alternative delivery methods, such as over the cable television
infrastructure, through direct broadcast satellites and over wireless cable. See
"Risk Factors--We face risks from new access technologies such as cable modems."

PROPRIETARY RIGHTS

Although we believe our success is more dependent upon our technological
expertise than on our proprietary rights, our success and ability to compete is
dependent in part on our technology and know-how. We rely upon a combination of
copyright, trademark and trade secret laws and contractual restrictions to
protect our proprietary technology and know-how. It is and has been our policy
to require all employees and consultants to execute confidentiality agreements
upon commencement of their relationships with ZipLink. These agreements
generally provide that confidential information developed or made known during
the course of a relationship with us is to be kept confidential and not
disclosed except in specific circumstances. We cannot assure you that such
measures have been, or will be, adequate to prevent misappropriation of our
proprietary technology or know-how. Our competitors may also independently
develop technologies that are substantially equivalent or superior to our
technology.

EMPLOYEES

As of December 31, 1998, we had 49 full-time and five part-time employees.
Our employees are not covered by a collective bargaining agreement. We have
never experienced an employment-related work stoppage and consider our employee
relations to be good.

FACILITIES

ZipLink's headquarters are located in Lowell, Massachusetts, where we
currently lease an approximately 50,000 square foot facility and a 1,000 square
foot data center. The Lowell facility contains our call center, data center,
network operations center, marketing department and most administrative
personnel.

We lease the bulk of our Lowell facility from iGuide, Inc. under a sublease
which expires on May 14, 2010 and sublet 25,000 square feet of presently unused
space to a third party under a sublease which expires on December 31, 1999.

We also lease approximately 3,500 square feet of office and collocation
space in Hartford, Connecticut from Henry Zachs, our Co-Chairman and Chief
Executive Officer, under a lease that expires in December, 2000. See "Certain
Relationships and Related Transactions--Real Property Leases."

In addition, we lease space (typically less than 500 square feet) in various
locations to house the telecommunications equipment for each of our SuperPOPs.

LEGAL PROCEEDINGS

On March 10, 1999, ZipLink commenced an arbitration proceeding against a
former employee seeking a ruling that such employee has forfeited an
approximately 0.8% membership interest in ZipLink, LLC, a Connecticut limited
liability company (which would be convertible into 74,511 shares of common stock
of ZipLink) due to the violation of a restrictive covenant under the Operating
Agreement of ZipLink, LLC. The basis for such claim is a written agreement
between such employee and ZipLink which provided that the employee's membership
interest would be forfeited in the event he violated a restrictive covenant. Our
outstanding capital stock as described in this prospectus excludes this
employee's forfeited membership interest and 74,511 shares which would be
received in exchange therefor upon consummation of the Reorganization. The
arbitration has been stayed pending a hearing. Although we believe we will
prevail in this arbitration proceeding, there can be no assurance that we will
prevail and an adverse outcome may result in dilution to our stockholders.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning ZipLink's
executive officers and directors and those persons who will become directors
upon consummation of this offering:

NAME AGE POSITION
- --------------------------------------- --- ------------------------------------------------------------------

Henry M. Zachs......................... 64 Chief Executive Officer and Co-Chairman of the Board

Eric M. Zachs.......................... 39 Co-Chairman of the Board

Christopher W. Jenkins................. 40 President, and director

Gary P. Strickland..................... 35 Chief Financial Officer

Ronald C. Lipof........................ 36 Chief Marketing and Strategic Officer

James G. Cocks......................... 60 Director of Networking

Kathleen A. Stillson................... 33 Director of Operations

Russell S. Bernard..................... 41 Nominee for director

Jai P. Bhagat.......................... 52 Nominee for director

Wayne A. Martino....................... 39 Nominee for director

Alan M. Mendelson...................... 51 Nominee for director

HENRY M. ZACHS has served as Co-Chairman since our inception and is
Co-Chairman of our Board of Directors. Mr. Zachs has served as our Chief
Executive Officer since June, 1997. Mr. Zachs will devote approximately 50% of
his time to our business following the consummation of the offering. Prior to
our inception, Mr. Zachs was for 34 years the Chief Executive Officer of Message
Center USA, Inc. ("MCUSA"), a paging company he founded which had approximately
349,000 subscribers when it was sold to AirTouch Communications, Inc. in
December, 1995. Mr. Zachs also serves on the advisory board of Axiom Venture
Partners, L.P., a venture capital firm, as President of the Greater Hartford
Jewish Federation and as a Trustee of Trinity College in Hartford, Connecticut
and the Williston Northampton School. Mr. Zachs received a B.A. from Trinity
College and an M.B.A. from the Wharton School of the University of Pennsylvania.

ERIC M. ZACHS founded ZipLink in November, 1995, has served as Co-Chairman
since that time and is Co-Chairman of our Board of Directors. Mr. Zachs served
as our President and Chief Executive Officer from our inception until June,
1997. Prior to our inception, Mr. Zachs served as President and as Chief
Operating Officer at MCUSA from 1993 until the sale of MCUSA in December, 1995.
Previously, Mr. Zachs was Executive Vice President of MCUSA from 1989 to 1983.
Mr. Zachs serves as general partner of Bantry Bay Ventures, a venture capital
firm, and as a director of NetActive Internet (Pty.) Ltd., a South African
Internet service provider. Mr. Zachs received a B.A. from Tufts University and a
J.D. from Columbia University School of Law.

CHRISTOPHER W. JENKINS has served as our President since June, 1997 and,
from time to time since our inception, as our Chief Financial Officer, and is a
director. Previously, Mr. Jenkins served as our Chief Financial Officer from our
inception until June, 1997. From June, 1993 until December, 1995, Mr. Jenkins
served as Vice President of Operations at MCUSA. Mr. Jenkins also served as
acting Chief Financial Officer of MCUSA from June, 1995 to December, 1995. From
December, 1987 to June, 1993, Mr. Jenkins was President of Worcester
Communications, a regional paging company. Mr. Jenkins also served as a Vice
President at Arch Communications, and an Experienced Senior at Arthur Andersen,

LLP. Mr. Jenkins received a B.S. from Indiana University and an M.S. from the
Sloan School of Management at the Massachusetts Institute of Technology.

GARY P. STRICKLAND has been our Chief Financial Officer since April, 1999.
Prior to joining ZipLink, Mr. Strickland was Vice President, Finance &
Administration and Chief Financial Officer of GammaGraphX, Inc., a technology
company in the digital printing industry, from 1993 to 1999. From 1991 to 1993,
Mr. Strickland was Controller of Autographix, Inc. Previously, Mr. Strickland
was Director of Financial Reporting of M/A-Com, Inc. and Audit Manager at Ernst
& Young, LLP. Mr. Strickland received a B.B.A. from the University of Notre Dame
and was licensed as a C.P.A. in 1988.

RONALD C. LIPOF has been our Chief Marketing and Strategic Officer since
October, 1997. From 1993 to 1997, Mr. Lipof was the President of Arch Nationwide
Paging, a division of Arch Communications Group, Inc. Prior to joining Arch, Mr.
Lipof was the founder and managing director of RC Consultants, a
telecommunications consulting and brokerage firm. Previously, Mr. Lipof was an
asset-based and communications lender at Fleet Credit Corporation, a subsidiary
of Fleet Bank, N.A. Mr. Lipof filed for personal bankruptcy in August, 1995. Mr.
Lipof received a B.S. from Boston University.

JAMES G. COCKS has been our Director of Networking since April, 1998. Prior
to joining ZipLink, Mr. Cocks was the Director of Network Engineering at UNIFI
Communications from June, 1996 until February, 1998, and held the position of
Service Line Manager for Internet Dial-up at BBN Planet from April, 1995 to
June, 1996. Previously, Mr. Cocks held various positions at Digital Equipment
Corporation, Wang Laboratories, Incoterm Corporation and Univac (UK and USA).
Mr. Cocks received a B.Sc. from London University, UK.

KATHLEEN A. STILLSON has been our Director of Operations since December,
1996. Ms. Stillson was Manager of Operations at EDS Personal Communications, a
provider of services for the cellular telephone industry, from July, 1995 to
December, 1996 and an Operations Supervisor from June, 1994 until July, 1995.
Ms. Stillson received a B.A. from the University of Michigan.

RUSSELL S. BERNARD will become a director of ZipLink upon consummation of
this offering. Mr. Bernard has been a Principal of Oaktree Capital Management,
LLC and Portfolio Manager of its Real Estate Funds since 1995. Oaktree is an
independent investment management firm. Prior to joining Oaktree, Mr. Bernard
was a Managing Director of Trust Company of the West (TCW), a privately held
investment management firm. Previously, Mr. Bernard was a partner in Win
Properties, Inc., a national real estate investment company. Mr. Bernard is a
Director of Metropolis REIT and Jamboree Office REIT. Mr. Bernard received a
B.S. from Cornell University.

JAI P. BHAGAT will become a director of ZipLink upon consummation of this
offering. Mr. Bhagat has been the Vice Chairman and a Director of SkyTel
Communications, Inc. (formerly Mtel), a leading provider of nationwide wireless
messaging services, since 1995. From 1988 until 1995, Mr. Bhagat was an
Executive Vice President of SkyTel. Mr. Bhagat was Chairman of the Board of
Directors of the Personal Communications Industry Association (PCIA) in 1988,
has served as a member of its Board since 1985, and has served as a member of
its Paging and Messaging Alliance Council since 1997. He also served as Chairman
of the Board of Directors of American Mobile Satellite Corporation from 1988 to
1991 and as a member of its Executive Committee from 1988 to 1994. Mr. Bhagat
received a B.S. from Birla Institute of Technology and Science, Pilani, India
and an M.S. from Howard University.

WAYNE A. MARTINO will become a director of ZipLink upon consummation of this
offering. Mr. Martino has been a principal of Brenner, Saltzman & Wallman, LLP
since 1991. Mr. Martino was a director of Mecklermedia Corporation, a
publicly-held Internet media company from December, 1993 until November, 1998
when it was acquired by Penton Media, Inc. Mr. Martino received a B.A. from
American University and a J.D. from the University of Connecticut Law School.

ALAN M. MENDELSON will become a director of ZipLink upon consummation of
this offering. Mr. Mendelson has been a general partner of Axiom Venture
Partners, L.P. since April, 1994. From

November, 1969 until April, 1994, Mr. Mendelson served with Aetna Life &
Casualty in Hartford, Connecticut in various capacities, most recently as Vice
President of Investment Strategy and Policy. In 1988, Mr. Mendelson founded
Systemix, Inc., a biotechnology company, where he initially served as Chief
Executive Officer until 1991. Mr. Mendelson is also a director of Cellomics,
Inc., and Purilens, Inc., and sits on the advisory boards of Battery Ventures I,
II and III, Syncom Inc. and Connecticut Innovations, Inc. Mr. Mendelson received
a B.A. from Trinity College and a J.D. from the University of Connecticut.

BOARD COMPOSITION

Directors are elected for a period of one year at ZipLink's annual meeting
of stockholders and each serves until the next annual meeting or until his
successor has been duly elected and qualified. Officers are elected and serve at
the discretion of the Board of Directors. Eric Zachs, the Co-Chairman of the
Board of Directors is the son of Henry Zachs, the Chief Executive Officer and
Co-Chairman of the Board of Directors.

BOARD COMMITTEES

Our Board of Directors will establish an Audit Committee and a Compensation
Committee promptly following the closing of the offering. The Audit Committee
will review ZipLink's annual audit and meet with our independent auditors to
review our internal controls and financial management practices. The
Compensation Committee will determine compensation for certain of ZipLink's
personnel and may administer our 1999 Stock Option Plan.

DIRECTOR COMPENSATION

Directors who are employees of ZipLink do not receive additional
compensation for serving as directors. Each director who is not an employee of
ZipLink will receive $1,000 for attendance at each Board of Directors and
Committee meeting. Pursuant to our 1999 Stock Option Plan, each non-employee
director will automatically receive a non-discretionary grant of options to
purchase 10,000 shares of common stock upon first becoming a director. At each
annual meeting of our stockholders, each director who is re-elected and has
served continuously as a director for at least six months prior to such meeting
will be automatically granted an option to purchase 2,000 shares of common
stock. The exercise price of all options granted to directors will be equal to
the fair market value of the common stock on the date of the grant. Directors
are also reimbursed for their out-of-pocket expenses in attending board and
committee meetings in accordance with ZipLink's expense reimbursement policies.
To date, no director has received any cash payments or been granted stock
options as compensation for service as a director. See "--Employee Benefit
Plans--Stock Option Plan."

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning all cash and
non-cash compensation awarded to, earned by, or paid to, our Chief Executive
Officer and to all other executive officers whose total cash consideration
exceeded $100,000 for services rendered to ZipLink during the fiscal year ended
December 31, 1998 (collectively, with the Chief Executive Officer, the "Named
Executives").

SUMMARY COMPENSATION TABLE

LONG-TERM COMPENSATION
ANNUAL COMPENSATION --------------------------
------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS(1) COMPENSATION
- -------------------------------------------- ---------- --------- ------------- ----------- -------------

Henry Zachs................................. $ --(2) $ -- $ -- -- $ --
Co-Chairman and Chief
Executive Officer

Christopher Jenkins......................... $ 135,000 $ 25,000 $ 6,000(3) 52,369 $ 1,685(4)
President and Director

Ronald Lipof................................ $ 97,692 $ 13,500 $ -- 81,216 $ --
Chief Marketing and
Strategic Officer

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

(1) All option grants were initially grants of options to purchase membership
interests in ZipLink, LLC. Information with regard to securities underlying
options gives effect to the Reorganization as if it had occurred prior to
January 1, 1998.

(2) Mr. Zachs served as an employee and a director without compensation during
1998. Upon the closing of this offering, Mr. Zachs' salary will be $100,000
per year.

(3) Represents a car allowance.

(4) Represents matching contributions under a 401(k) plan.

STOCK OPTION GRANTS

The following table sets forth certain information regarding stock options
granted to the Named Executives during the fiscal year ended December 31, 1998.
The exercise price of all such options was not less than the fair market value
on the date of the grant.

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
----------------------------------------------------------------- VALUE AT ASSUMED
PERCENT OF ANNUAL RATES
NUMBER OF TOTAL OF STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (2)
OPTIONS EMPLOYEES PRICE PER EXPIRATION --------------------
NAME GRANTED IN 1998 SHARE DATE 5% 10%
- ---------------------------- ----------- --------------- ----------- ---------------------- --------- ---------

Henry Zachs................. -- -- $ -- -- $ -- $ --

Christopher Jenkins......... 52,369 14% 3.08 November 20, 2008 8,065 16,130

Ronald Lipof................ 81,216 22 2.22 February 15, 2008 9,015 18,030

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

(1) All of the options reflected in this table were granted pursuant to our Unit
Option Plan and in connection with the Reorganization will be converted to
options under our 1999 Stock Option Plan. Options granted under such plan
prior to the completion of this offering are subject to vesting as follows:
50% of all then-unvested options vest upon the completion of this offering,
40% of all then-unvested options vest on the date which is two years after
the date of the option grant, and the remaining unvested options vest
ratably on the third, fourth and fifth anniversary of the date of the grant.
See "--Employee Benefit Plans."

(2) These amounts represent assumed rates of appreciation in the price of our
common stock during the terms of the options in accordance with rates
specified in applicable federal securities regulations. Actual gains, if
any, on stock option exercises will depend on the future price of the common
stock and overall stock market conditions. There is no representation that
the rates of appreciation reflected in the table will be achieved.

AGGREGATED YEAR-END OPTION VALUES

The following table sets forth information concerning the number and value
of exerciseable and unexerciseable stock options held by each of the Named
Executives at December 31, 1998. No options were exercised by any of the Named
Executives during the fiscal year ended December 31, 1998.

FISCAL YEAR-END OPTION VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END (1)
---------------------------- --------------------------
NAME EXERCISEABLE UNEXERCISEABLE EXERCISEABLE UNEXERCISEABLE
- ------------------------------------------------------- ------------- ------------- ----------- -------------

Henry Zachs............................................ -- -- $ -- $ --

Christopher Jenkins.................................... -- 52,369 $ -- $ 519,500

Ronald Lipof........................................... -- 81,216 $ -- $ 875,508

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

(1) The dollar values have been calculated by determining the difference between
the fair market value of the securities underlying the options at December
31, 1998 and the exercise prices of the options. Solely for purposes of
determining the value of options at December 31, 1998, we have assumed that
the fair market value of shares of common stock issuable upon exercise of
options was $13.00 per share, the assumed initial public offering price,
since the common stock was not traded in an established market prior to this
offering.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

We intend to establish a Compensation Committee promptly following the
closing of this offering. All matters concerning executive officer compensation
have historically been addressed by Henry Zachs, our Co-Chairman of the Board
and Chief Executive Officer, and Eric Zachs, our Co-Chairman and former Chief
Executive Officer, because we did not have a compensation committee.

EMPLOYMENT AGREEMENTS

Christopher Jenkins, our President, is employed under an Employment
Agreement that expires in December, 2001, unless earlier terminated by either
party. The Agreement provides for a compensation package consisting of a base
salary equal to $150,000 per year and an annual performance bonus in an amount
to be determined by ZipLink. Mr. Jenkins is also eligible to participate in all
of our fringe benefit programs. In the event that we terminate Mr. Jenkins'
employment without cause, Mr. Jenkins will receive severance compensation equal
to his base salary for the one-year period following termination. The Agreement
contains non-competition and non-solicitation covenants which restricts Mr.
Jenkins during and after his employment.

EMPLOYEE BENEFIT PLANS

Since 1995, we have issued options to purchase membership interests in
ZipLink, LLC, a Connecticut limited liability company, under the ZipLink, LLC
Unit Option Plan. In connection with the merger of ZipLink, LLC, a Connecticut
limited liability company, into ZipLink, LLC, a Delaware limited liability
company, in March, 1999, all outstanding options issued to purchase membership
interests under the ZipLink, LLC Unit Option Plan were assumed by ZipLink, LLC,
a Delaware limited liability company and converted into options to purchase
membership interests in that limited liability company. In connection with the
Reorganization, all outstanding options to purchase membership interests in
ZipLink, LLC, a Delaware limited liability company, will be assumed by ZipLink,
Inc. and will be converted into options to purchase shares of common stock under
the 1999 Stock Option Plan described below. Each such option will be converted
into an option to purchase common stock based upon a ratio of approximately .81
shares of common stock for each membership interest. The options outstanding to
purchase membership interests in ZipLink, LLC, a Delaware limited liability
company, on December 31, 1998 will be converted into options to purchase 366,200
shares of common stock, at a weighted average exercise price of $2.68 per share
(assuming the Reorganization occurred as of such date). Upon the completion of
this offering, under most option agreements 50% of the then-unvested options
will become vested.

STOCK OPTION PLAN

In April 1999, we adopted a stock option plan designated the ZipLink, Inc.
1999 Stock Option Plan (the "Stock Option Plan"). The total number of shares of
common stock reserved for issuance under our Stock Option Plan is 1,500,000. The
total number of shares authorized, as well as shares subject to outstanding
options, will be adjusted in the event of changes to our capital structure, such
as stock dividends, stock splits or other recapitalizations. If any shares
subject to an award are forfeited, canceled, exchanged, or surrendered, or if an
award otherwise terminates or expires without a distribution of shares to the
holder of such award, the shares of common stock with respect to such award
will, to the extent of any such forfeiture, cancellation, exchange, surrender,
termination, or expiration, again be available for awards under the Stock Option
Plan.

The Stock Option Plan provides for the granting of awards to such officers,
other employees, consultants, and directors of ZipLink and its affiliates as our
Board may select from time to time. The Stock Option Plan provides that no
person may be granted options to purchase more than 500,000 shares of common
stock during any one calendar year.

Our Board has the authority to administer the Stock Option Plan and to
exercise all the powers and authorities either specifically granted to it under,
or necessary or advisable in the administration of, the Stock Option Plan,
including, without limitation, the authority to grant awards; to determine the
persons to whom and the time or times at which awards shall be granted; to
determine the type and number of awards to be granted, the number of shares of
common stock to which an award may relate and the terms, conditions,
restrictions and performance goals relating to any award; to determine whether,
to what extent, and under what circumstances an award may be settled, canceled,
forfeited, exchanged, or surrendered; to construe and interpret the Stock Option
Plan and any award; to prescribe, amend and rescind rules and regulations
relating to the Stock Option Plan; to determine the terms and provisions of
agreements evidencing awards; and to make all other determinations deemed
necessary or advisable for the administration of the Stock Option Plan. Our
Board may appoint a committee to administer the Stock Option Plan.

The purchase price per share payable upon the exercise of an option will be
established by the Board, provided, however, that incentive stock options within
the meaning of Section 422 of the Internal Revenue Code (the "Code") may not
have an exercise price less than the fair market value of a share of common
stock on the date of grant. The option exercise price is payable by any one of
the following methods or a combination thereof, to the extent permitted by the
Board: (i) in cash or by personal check, certified check, bank cashier's check
or wire transfer and/or (ii) subject to the approval of the Board, in common
stock owned by the participant.

Options granted under the Stock Option Plan will have a maximum term of ten
years. Options will generally vest in equal installments over a five-year
period, but in no event will an option be exerciseable more than ten years
following the date of its grant, subject to acceleration in the event of certain
transactions involving ZipLink.

Options granted under the Stock Option Plan will generally expire three
months after the termination of the optionee's service, except in the case of
death or disability, in which case the options generally will be exerciseable up
to 12 months following the date of death or termination of service. Options will
generally terminate immediately upon termination for cause. In the event of a
sale of all or substantially all of ZipLink's assets, a merger, consolidation,
or other capital reorganization of ZipLink with or into another corporation, or
a dissolution or liquidation of ZipLink, the vesting of the options will be
accelerated, unless the Board determines otherwise.

The Stock Option Plan provides for certain automatic and non-discretionary
grants of options to members of our Board who are not employees of ZipLink or of
any affiliated company. The exercise price of such options will be the fair
market value of the common stock on the date of grant. The Stock Option Plan
provides that each eligible director will be granted an option to purchase
10,000 shares of common stock upon first becoming a member of the Board, which
options will vest as to 33.3% of such shares on each anniversary of the option
grant date. At each annual meeting of stockholders, upon re-election each
eligible director will automatically be granted an additional option to purchase
2,000 shares if he or she has served continuously as a member of the Board for
at least six months, which options will vest on the first anniversary of such
grant provided such director served continuously as a director for such period.
The options granted to Board members will have ten year terms. Options granted
under these provisions will generally expire seven months after the date the
director ceases to be a director of ZipLink, except in the case of death or
disability. In the event of a sale of all or substantially all of our assets, a
merger, consolidation, or other capital reorganization of ZipLink with or into
another corporation, or a dissolution or liquidation of ZipLink, the vesting of
the options will be accelerated.

Our Board may suspend, revise, terminate, or amend the Stock Option Plan at
any time, provided, however, that: (i) stockholder approval will be sought if
and to the extent required under Rule 16b-3 promulgated under the Exchange Act
or if and to the extent the Board determines that such approval

is required for purposes of satisfying Section 162(m) or Section 422 of the Code
and (ii) no such suspension, revision, termination or amendment may, without the
consent of a participant, reduce the participant's rights under any outstanding
option.

The Stock Option Plan will terminate ten years after its adoption, unless
sooner terminated in accordance with its terms.

Concurrently with the consummation of this offering, ZipLink will grant
options to purchase 360,250 shares of common stock under the Stock Option Plan
to certain of its directors and employees at a weighted average exercise price
of $12.78 per share, based upon an assumed initial public offering price of
$13.00 per share.

401(K) PLAN. We intend to adopt a defined contribution plan intended to
qualify under Section 401 of the Code to be designated the ZipLink, Inc. 401(k)
Savings Plan. We intend that such plan will be the successor to a 401(k) Plan
adopted by ZipLink, LLC. All personnel who have completed one year of service
with ZipLink and have attained the age of 21 will be eligible to participate and
enter the plan as of the earlier of the first day of January or the first day of
July coinciding with or next following the date the participant satisfies the
eligibility requirements. Participants will be entitled to make pre-tax
contributions to the plan of up to 15% of their eligible earnings, subject to a
statutorily prescribed annual limit. The 401(k) plan will provide that ZipLink
will make matching contributions equal to 25% of the participant's contribution.
Each participant will be fully vested in his or her contributions and the
investment earnings thereon. Participants will become fully vested in the
matching contributions made by ZipLink after five years of service.
Contributions by the participants or ZipLink, and the income earned on such
contributions, will generally not be taxable to the participants until
withdrawn. Contributions by ZipLink will generally be deductible by ZipLink when
made. Contributions will be held in trust as required by law. Individual
participants will be entitled to direct the trustee to invest their accounts in
authorized investment alternatives.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

FORMATION TRANSACTIONS. ZipLink was originally organized as a Connecticut
limited liability company (the "Connecticut LLC") in November, 1995 by our
founder Eric Zachs. In connection with the formation of the Connecticut LLC,
Henry Zachs, our Co-Chairman and Chief Executive Officer, and Eric Zachs, our
Co-Chairman, each received a 1% membership interest in the Connecticut LLC in
exchange for a capital contribution of $100, the Zachs Family Limited
Partnership Number One (the "Zachs Partnership"), an affiliate of Henry and Eric
Zachs, received a 90% membership interest in the Connecticut LLC in exchange for
a capital contribution of $9,300, and Christopher Jenkins, our President and a
director, received a 5% membership interest as an incentive to join the company.
The Operating Agreement of the Connecticut LLC contemplated that Henry and Eric
Zachs and the Zachs Partnership (collectively, the "Zachs Founders") would make
additional capital contributions without an increase in their percentage
ownership of the Connecticut LLC, but that, in exchange, they would receive a
preferential return of capital contributions over certain members of the
Connecticut LLC (including Mr. Jenkins) to the extent that such capital
contributions exceeded $2.0 million. During 1996, Henry and Eric Zachs and their
affiliates made net capital contributions to the Connecticut LLC of $5.8
million. During 1997, the Connecticut LLC made net capital distributions to
Henry and Eric Zachs and their affiliates of $2.5 million. No contributions or
distributions were made in 1998.

REORGANIZATION OF LLC. We intend to convert our company's business form
from a limited liability company to a corporation in order to have a business
organization that is more typical of other publicly-traded entities in our
market. In March, 1999, in order to facilitate our ultimate conversion to a
Delaware corporation, the Connecticut LLC was merged with and into a
newly-formed Delaware limited liability company (the "Delaware LLC"), retaining
the name ZipLink, LLC. As a result of such merger, all of the assets and
liabilities of the Connecticut LLC were acquired by the Delaware LLC and all
membership interests and options and warrants to acquire membership interests in
the Connecticut LLC were exchanged for economically equivalent interests in the
Delaware LLC.

Prior to the closing of this offering, the Delaware LLC will merge with and
into a newly-formed Delaware corporation known as ZipLink, Inc., as a result of
which all of the assets and liabilities of the Delaware LLC will be transferred
to ZipLink, Inc. In connection with such merger, each membership unit in the
Delaware LLC (other than membership units held by Nortel Networks) will be
exchanged into approximately .82 shares of common stock of ZipLink, Inc. and
each option and warrant to acquire a membership unit in the Delaware LLC will be
exchanged for an option or warrant, as the case may be, to purchase .81 shares
of our common stock and each membership unit in the Delaware LLC held by Nortel
Networks will be exchanged into .82 shares of common stock. After such exchange,
Henry Zachs, Eric Zachs, and the Zachs Partnership, will own, 75,739, 75,739,
and 6,816,494 shares of our common stock, respectively. Christopher Jenkins will
own 372,550 shares of our common stock and Nortel Networks will own 824,863
shares of our common stock.

NORTEL NETWORKS FUNDING. In December, 1997 Nortel Networks, a holder of
more than 5% of our common stock, acquired $2.5 million of equity and $7.5
million of debt convertible into additional equity. Interest on such convertible
debt has been accruing at a floating rate equal to LIBOR plus .80% and has been
paid currently. Concurrently with the closing of this offering, $2.5 million of
the convertible debt will be converted into 450,000 shares of common stock at a
conversion price of $5.56 per share, and $5.0 million of the convertible debt
will be converted into 384,615 shares of common stock at the initial public
offering price, based upon an assumed initial public offering price of $13.00
per share.

PURCHASES FROM NORTEL NETWORKS. We purchased equipment and services from
Nortel Networks, in the aggregate amounts of $6.1 million in 1997 and $1.0
million in 1998. Commencing 100 days after the installation of our fifteenth
SuperPOP using Nortel Networks equipment, we will obtain hardware maintenance
and software subscription services from Nortel Networks at the rate of $423,000
per

annum and intend to continue to obtain such services and purchase additional
equipment from Nortel Networks on terms no less favorable than those which could
be obtained from an independent third party.

ZACHS FOUNDERS ADVANCES. During the period from 1996 through December 1997,
ZipLink acted as a collection and dispersal agent for other companies controlled
by the Zachs Founders which did not then have full-time accounting and cash
management personnel. Some of the proceeds collected by ZipLink were retained by
ZipLink and recorded as non-interest bearing advances. The principal amount of
such advances at the end of 1997 was $479,600 and at the end of 1998 was
$476,100. Such advances were repaid in March, 1999. ZipLink ceased to act as a
collection or dispersal agent for affiliates of the Zachs Founders in January,
1999 and does not intend to reinstitute such arrangement in the future.

HENRY AND ERIC ZACHS GUARANTEES. During the period 1996 through 1998,
BancBoston Connecticut, N.A. made loans to ZipLink under a $20.0 million line of
credit which was personally guaranteed by Henry and Eric Zachs. Henry and Eric
Zachs received an aggregate of $175,000 in compensation for providing such
guarantees through 1997. The principal amount outstanding under the BancBoston
line of credit was $3.5 million at the end of 1996, $15.0 million at the end of
1997, and $15.0 million upon repayment at March, 1998. Such outstanding balance
bore interest at a floating rate equal to the LIBOR plus 0.50%. The BancBoston
loans were repaid in March, 1998 with the proceeds of a $15.0 million line of
credit to ZipLink from Fleet Bank, which amount was increased to $20.0 million
in October, 1998. The Fleet Bank line of credit is secured by a pledge of all of
ZipLink's assets and supported by a personal guarantee from Henry Zachs. Henry
Zachs did not receive any compensation for providing such personal guarantee of
the Fleet Bank Line of Credit. The Fleet Bank loan bears interest at a floating
rate equal to LIBOR plus 0.30% (which was equal to 5.26% per annum as of March
31, 1999). ZipLink believes that the loans from both BancBoston and Fleet Bank
were at interest rates, in amounts and on other terms which were more favorable
to ZipLink than those which we could have obtained without the guarantee of
Henry Zachs or Eric Zachs. As of March 31, 1999, the outstanding balance under
the Fleet Bank line of credit was $19.0 million and we anticipate that such
balance will increase prior to closing of this offering. We intend to use
approximately $20.0 million of the net proceeds of this offering to repay the
entire outstanding indebtedness to Fleet Bank. Henry Zachs has agreed to
guarantee up to $10.0 million of additional indebtedness to ZipLink from
institutional lenders acceptable to Mr. Zachs. We do not intend to incur any
such indebtedness which is guaranteed by Mr. Zachs prior to the consummation of
this offering and Mr. Zachs' agreement to provide such guaranty will terminate
upon the closing of this offering. After the closing of this offering, we do not
believe that any further loans to ZipLink will be supported by a guarantee from
either Henry or Eric Zachs. See "Risk Factors--Our Co-Chairmen and our Chief
Executive Officer will benefit from this offering."

HENRY ZACHS' CONVERSION OPTION. In connection with the issuance of the
convertible debt to Nortel Networks, Henry Zachs received an option to convert
any loans to ZipLink which were guaranteed by Mr. Zachs into additional equity
of ZipLink if Nortel Networks elected, or was required to, convert the $5.0
million convertible debenture into equity of ZipLink. Mr. Zachs is further
obligated to convert up to $7.5 million of such indebtedness into additional
equity of ZipLink if ZipLink requires Nortel to convert any of the $5.0 million
debenture into equity of ZipLink. Mr. Zachs' obligation to convert indebtedness
and acquire additional equity will not be triggered by the conversion of the
convertible debt in connection with this offering. Conditioned upon the closing
of this offering, Mr. Zachs' option to acquire additional membership interests
will terminate.

REAL PROPERTY LEASES. We have leased certain office and co-location space
in Hartford, Connecticut from Henry Zachs. Our rental expenses to Mr. Zachs were
$64,000 during 1996, $45,000 during 1997 and $39,000 during 1998. In January,
1999 we terminated our then-existing lease with Mr. Zachs

and entered into a two year lease with him for approximately 3,500 square feet
of office and co-location space in Hartford, Connecticut. Rent payable under
such lease is $39,000 per annum, including taxes, insurance, and certain
utilities.

SALARY ACCRUALS. ZipLink accrued, but did not pay, salary to Henry Zachs of
$90,000 per year for each of 1996 and 1997, a salary to Christopher Jenkins of
$50,000 for 1997 and bonus of $25,000 to Christopher Jenkins for 1998. In March,
1999 Mr. Zachs' agreed to forgive ZipLink's obligation to pay his accrued
salary. Mr. Jenkins' accrued salary and bonus were paid in March, 1999.

TRADEMARK LICENSE. Under an oral royalty-free license, ZipLink has used
certain trademarks owned by Henry Zachs or subject to pending applications made
by him. In March, 1999, Mr. Zachs granted ZipLink a royalty-free, perpetual
non-exclusive license to use all such trademarks and trademark applications for
Internet related applications. Mr. Zachs will not grant any further licenses to
any of such trademarks or trademark applications without the consent of ZipLink.
Under certain circumstances, ZipLink has an option to purchase all of such
trademarks and trademark applications for nominal consideration. Mr. Zachs
received no payment or other consideration for granting such license.

OTHER ZACHS FAMILY TRANSACTIONS. ZipLink provided administrative and
accounting services to other companies controlled by the Zachs Founders,
including ZipCall Long Distance, Inc., Message Center Management, Inc. and
Brainbug, LLC during 1996, 1997 and 1998. Such services were provided without
charge in 1996 and 1997, and ZipLink accrued $24,000 in 1998 for reimbursement
for such services. We engaged in the resale of long distance telephone services
under a reseller agreement dated February 15, 1996 with ZipCall Long Distance.
The total amounts paid to ZipCall Long Distance in 1996, 1997 and 1998 were
$88,000, $233,000 and $83,000 respectively. ZipLink terminated the provision of
administrative and accounting services and the resale of long distance telephone
services in 1997 and will not provide such services in the future.

STOCK OPTIONS. We have granted certain stock options to Christopher Jenkins
and Ronald Lipof, as well as certain other employees. See "Management--Stock
Option Grants." Concurrently with the closing of this offering, ZipLink will
grant 100,000 and 10,000 options to purchase shares of common stock to
Christopher Jenkins and Ronald Lipof, respectively.

REGISTRATION RIGHTS.

FOUNDERS' REGISTRATION RIGHTS. Henry Zachs, Eric M. Zachs, the Zachs
Partnership, and Christopher Jenkins (the "Founding Stockholders"), are
entitled to registration rights with respect to shares of common stock held
by them under the terms of a registration rights agreement dated as of
December 23, 1997. In the event that we elect to register any of our common
stock under the Securities Act (other than in connection with this
offering), either for our own account or for the account of any other
stockholder, we are required to include in such registration the shares of
common stock held by such Founding Stockholders as request registration,
subject to conditions and limitations, among them being the right of an
underwriter of an offering to limit the number of shares of common stock
they may include in the registration. The Founding Stockholders also have
the right on two occasions to require us to register their shares of common
stock. This right may be exercised at any time after the date which is six
months from the closing of this offering by the holders of not less than 20%
of the aggregate shares of common stock held by the Founding Stockholders
(or a lesser percentage if the anticipated aggregate net offering price of
the common stock to be registered would exceed $5.0 million, net of standard
underwriting discounts). The registration rights granted to the Founding
Stockholders will terminate as to any of them who can sell an unlimited
number of shares under Rule 144. ZipLink is required to bear the expenses of
the registration of its common stock for the Founding Stockholders, except
any underwriting discounts and commissions.

NORTEL NETWORKS REGISTRATION RIGHTS. Pursuant to an agreement dated as
of December 23, 1997, Nortel Networks is entitled to registration rights
with respect to shares of common stock owned by Nortel Networks. In the
event that we elect to register any of our common stock under the Securities
Act (other than in connection with this offering), either for our own
account or for the account of any other stockholder, we are required to
include in such registration shares of common stock held by Nortel Networks
to the extent requested by Nortel Networks to do so, subject to conditions
and limitations, among them being the right of an underwriter of an offering
to limit the number of shares of common stock they may include in the
registration. Nortel Networks also has the right on two occasions to require
us to register their shares of common stock. This right may be exercised at
any time after the date which is six months from the closing of this
offering by the holders of not less than 20% of the aggregate shares of
common stock covered by Nortel Networks' registration rights (or a lesser
percentage if the anticipated aggregate net offering price of the common
stock to be registered would exceed $5.0 million, net of standard
underwriting discounts). Nortel Networks' registration rights terminate on
the earlier of (i) three years from the closing of this offering, or (ii) at
such time as Nortel Networks has been entitled to sell, during any
three-month period, all of its common stock subject to registration rights.
ZipLink is required to bear the expenses of the registration of its common
stock for Nortel Networks, except any underwriting discounts and
commissions.

OTHER TRANSACTIONS. For the past several years, Wayne A. Martino, a
director nominee of ZipLink, has performed legal services on our behalf in his
capacity as a principal of the New Haven, Connecticut law firm of Brenner,
Saltzman & Wallman, LLP, as have other principals and employees of such firm.
The fees paid by ZipLink to such law firm during 1996, 1997 and 1998 were
$55,000, $106,000 and $26,000, respectively. However, at no time were the fees
paid by ZipLink to such law firm in excess of 5% of the law firm's gross
revenues. In addition, Mr. Martino has received options to purchase membership
interests in ZipLink, LLC which will be converted into options to purchase 4,061
shares of common stock at an exercise price of $3.08 per share.

We believe that all of the related party transactions described above (other
than the provision of administrative and accounting services) were on terms no
less favorable than terms we could have obtained from independent third parties.
All future transactions with our officers, directors and principal stockholders
and their affiliates will be on terms no less favorable than terms we could
obtain from independent third parties and will be approved by a majority of the
Board of Directors, including a majority of the independent and disinterested
outside directors.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 31, 1998 and as adjusted to reflect
the sale of the shares of common stock offered hereby and the conversion of
convertible debt concurrently with the closing of this offering by (i) each
person who we know owns beneficially more than 5% of our outstanding common
stock, (ii) each of our directors and director nominees, (iii) each of the Named
Executives, and (iv) all of our executives officers, directors and director
nominees as a group.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock issuable pursuant to
options, to the extent those options are currently exercisable or convertible
within 60 days as of the date hereof, are treated as outstanding for computing
the percentage securities held by a person but are not treated as outstanding
for computing the percentage of any other person. Unless otherwise noted, each
person or group identified possesses sole voting and investment power with
respect to shares, subject to applicable community property laws.

The information in the table below gives effect to the Reorganization as if
it had occurred on December 31, 1998 and includes 834,615 shares issuable upon
the conversion of convertible debt, based upon an assumed initial public
offering price of $13.00 per share, which conversion will occur concurrently
with the closing of this offering. There were, as of December 31, 1998,
outstanding options to purchase 366,200 shares of common stock, exerciseable at
a weighted average price of $2.68 per share, and an outstanding warrant to
purchase 58,324 shares of common stock, with an exercise price of $1.71 per
share.

PERCENTAGE OF COMMON STOCK
NUMBER OF BENEFICIALLY OWNED
SHARES -----------------------------
BENEFICIALLY BEFORE AFTER
BENEFICIAL OWNER OWNED OFFERING OFFERING
- ---------------------------------------------------------------------- ----------- -------------- -------------

Zachs Family Limited Partnership Number One(1)........................ 6,816,494 75.7% 54.5%
Henry M. Zachs(1)(2).................................................. 6,892,233 76.6 55.1
Eric M. Zachs(1)(2)................................................... 6,892,233 76.6 55.1
Northern Telecom Limited(3)........................................... 1,659,478 18.4 13.3
Christopher W. Jenkins(4)............................................. 398,735 4.4 3.2
Ronald C. Lipof....................................................... -- *
Gary P. Strickland.................................................... -- * --
Russell S. Bernard.................................................... -- * --
Jai P. Baghat......................................................... -- * --
Wayne A. Martino(5)................................................... 4,061 * --
Alan M. Mendelson..................................................... -- * --
----------- ------- -------------
All executive officers, directors and director nominees as a group (11
persons)............................................................ 7,451,984 82.8% 59.1

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

* less than 1 percent

(1) The address for the Zachs Family Limited Partnership Number One, Henry M.
Zachs and Eric M. Zachs is 40 Woodland Street, Hartford, Connecticut 06105.

(2) Includes 6,816,494 shares owned by Zachs Family Limited Partnership Number
One. Henry M. and Eric M. Zachs are each general partners of the Zachs
Family Limited Partnership Number One.

(3) Consists of 824,863 shares owned by Bay Networks, Inc., a subsidiary of
Northern Telecom Limited, and 834,615 shares issuable upon the conversion of
convertible debt held by Bay Networks, Inc. The address for Northern Telecom
Limited is 8200 Dixie Road, Suite 100, Brampton, Ontario, Canada L6T 5P6.

(4) Represents 26,185 shares issuable upon exercise of options exerciseable upon
the closing of this offering.

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $.001 per share, and 1,000,000 shares of undesignated preferred stock,
par value $.001 per share. Immediately after this offering, after giving effect
to the Reorganization and the conversion of all convertible debt into shares of
common stock, there will be outstanding 12,500,000 shares of common stock, and
no shares of preferred stock.

The following description of our capital stock and selected provisions of
our Amended and Restated Certificate of Incorporation and By-Laws is a summary
and is qualified in its entirety by reference to our Amended and Restated
Certificate of Incorporation and By-Laws, copies of which are filed as exhibits
to the registration statement of which this prospectus is a part.

COMMON STOCK

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to
preferences that may be applicable to any outstanding preferred stock, holders
of common stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of ZipLink holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preferences of any outstanding shares of
preferred stock. Holders of common stock have no preemptive rights and no right
to convert their common stock into any other securities. There are no redemption
or sinking fund provisions applicable to common stock. Each outstanding share of
common stock is, and all shares of common stock to be outstanding upon
completion of this offering will be upon payment therefor, duly and validly
issued, fully paid and non-assessable. As of the date of this prospectus, there
were five holders of record of our common stock.

PREFERRED STOCK

ZipLink's Amended and Restated Certificate of Incorporation provides that we
may issue up to 1,000,000 shares of preferred stock in one or more series and as
may be determined by our Board of Directors, who may establish from time to time
the number of shares to be included in each series, and who may fix the
designations, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereon, including the
dividend rights, voting rights, redemption and sinking fund provisions,
liquidation preferences, conversion rights and preemptive rights, and the number
of shares constituting any series. The Board of Directors may authorize, without
stockholder approval, the issuance of preferred stock with voting and conversion
rights that could adversely affect the voting power and other rights of holders
of common stock and, under certain circumstances, make it more difficult or
costly for a third party to acquire, or discourage a third party from attempting
to acquire, control of ZipLink. See "Risk Factors--We are subject to
anti-takeover provisions which could negatively impact our stockholders." In
certain circumstances, this could have the effect of decreasing the market price
of the common stock. We do not have any present plans to issue any shares of
preferred stock.

WARRANTS

As of the date of this prospectus, we had outstanding one warrant to
purchase 58,324 shares of common stock at an exercise price of $1.71. This
warrant expires on September 2, 2002.

OPTIONS

Immediately after the closing of the offering, after giving effect to the
options being granted to certain directors and employees concurrently with the
closing of this offering, there will be outstanding

options to purchase 724,956 shares of common stock at a weighted average
exercise price of $7.70 per share, based upon an assumed initial public offering
price of $13.00 per share.

REGISTRATION RIGHTS

Henry Zachs, Eric Zachs, the Zachs Family Limited Partnership Number One,
Christopher Jenkins and Nortel Networks have been granted registration rights
with respect to shares of common stock held by them. See "Certain Relationships
and Related Transactions--Registrations Rights."

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

Delaware law and provisions of ZipLink's charter documents could make the
acquisition of ZipLink and the removal of incumbent officers and directors more
difficult. These provisions are expected to discourage coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of ZipLink to negotiate with us first. We believe that the
benefits of increased protection of the potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure
ZipLink outweigh the disadvantages of discouraging such proposals because, among
other things, negotiation of such proposals could result in an improvement of
their terms.

ZipLink is subject to the provisions of Section 203 of the Delaware General
Corporation Law. In general, the statute prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date that the person became
an interested stockholder unless (with certain exceptions): the business
combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. The term "business combination"
is defined generally to include a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior did own) 15% or more of the
corporation's voting stock. These provisions may have the effect of delaying,
deferring or preventing a change in control of ZipLink.

ZipLink's Amended and Restated Certificate of Incorporation provides for
authorized but unissued shares of preferred and common stock. Such shares are
available for issuance without stockholder approval and may be used by us for a
variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. This
could make it more difficult or discourage any attempt to take control of us by
means of a proxy contests, tender offer, merger or otherwise.

Our Amended and Restated Certificate of Incorporation further provides that
stockholder action can be taken only at an annual or special meeting of
stockholders and may not be taken by written consent. The Amended and Restated
Certificate of Incorporation and By-Laws provide that special meetings of
stockholders can be called only by the Board. Moreover, the business permitted
to be conducted at any special meeting of stockholders is limited to the
business brought before the meeting by the Board. The By-Laws also set forth an
advance notice procedure with regard to the nomination, other than by or at the
direction of the Board, of candidates for election as directors and with regard
to business to be brought before a meeting of stockholders. The Amended and
Restated Certificate of Incorporation further provides that the provisions
respecting the powers, number and election of directors, stockholder action by
written consent, special meetings of stockholders and the By-Laws may only be
amended by a supermajority vote of the stockholders.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

To the extent permitted by the Delaware General Corporation Law, ZipLink has
included in its Amended and Restated Certificate of Incorporation a provision to
eliminate the personal liability of its

directors for monetary damages for breach or alleged breach of their fiduciary
duties as directors, subject to certain exceptions. In addition, our Amended and
Restated Certificate of Incorporation requires us to indemnify our officers and
directors under certain circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and is required to advance
expenses to its officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. Prior to the
consummation of this offering, we also intend to enter into indemnity agreements
with our directors and executive officers. We are seeking to obtain directors'
and officers' liability insurance.

We believe that our charter provisions and indemnity agreements are
necessary to attract and retain qualified persons as directors and officers.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the common stock is American Stock
Transfer and Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

If our stockholders sell substantial amounts of common stock, including
shares issued upon the exercise of outstanding options or warrants, in the
public market following this offering, the market price of our common stock
could fall. These sales might adversely affect the prevailing market price and
our ability to raise equity capital in the future.

Upon completion of this offering, we will have outstanding an aggregate of
12,500,000 shares of our common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants. Of
these shares, all of the shares sold in this offering will be freely tradable
without restriction or further registration under the Securities Act, unless
such shares are purchased by "affiliates" as that term is defined in Rule 144
under the Securities Act. The remaining 9,000,000 shares of common stock held by
existing stockholders are "restricted securities" as that term is defined in
Rule 144 under the Securities Act. Restricted securities may be sold in the
public market only if registered or if they qualify for an exemption from
registration under Rule 144 or 701 promulgated under the Securities Act, which
rules are summarized below.

As a result of the contractual restrictions described below and the
provisions of Rule 144 and 701, the restricted securities will become eligible
for sale in the public market not earlier than 180 days after the date of this
prospectus.

LOCK-UP AGREEMENTS

All of our officers, directors and stockholders will sign lock-up agreements
under which they will agree not to transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible into or
exercisable or exchangeable for shares of common stock, for a period of 180 days
after the date of this prospectus. Transfers or dispositions can be made sooner
with the prior written consent of Jefferies & Company, Inc.

RULE 144

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

- 1% of the number of shares of common stock then outstanding, which will
equal approximately 125,000 shares immediately after this offering; or

- the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain manner of sale provisions
and notice requirements and to the availability of current public information
about us.

RULE 144(K)

Under Rule 144(k), a person who is not deemed to have been one of our
affiliates at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an affiliate, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering.

RULE 701

In general, under Rule 701 of the Securities Act as currently in effect, any
of our employees, consultants or advisors who purchases shares of our common
stock from us in connection with a compensatory stock or option plan or other
written agreement is eligible to resell such shares 90 days after the effective
date of this offering in reliance on Rule 144, but without compliance with
certain restrictions, including the holding period, contained in Rule 144.

REGISTRATION RIGHTS

Upon completion of this offering, the holders of 9,000,000 shares of our
common stock, or their transferees, will be entitled to certain rights with
respect to the registration of such shares under the Securities Act. See
"Description of Capital Stock--Registration Rights." After such a registration
and the expiration of any applicable contractual restrictions, these shares
becoming freely tradable without restriction under the Securities Act. These
sales of securities could have a material adverse effect on the market price of
our common stock.

STOCK OPTIONS

We intend to file a registration statement on Form S-8 under the Securities
Act no earlier than 180 days after this offering covering 1,500,000 shares of
common stock reserved for issuance under our Stock Option Plan. As of December
31, 1998, options to purchase 366,200 shares of common stock were issued and
outstanding. Upon the expiration of the lock-up agreements described above, at
least 193,928 shares of common stock will be subject to vested options (based on
options outstanding as of December 31, 1998). Shares of our common stock
registered under the S-8 registration statement will, subject to vesting
provisions and Rule 144 volume limitations applicable to our affiliates, be
available for sale immediately in the open market.

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement dated the
date hereof, the underwriters named below, through their representatives,
Jefferies & Company, Inc. and FAC/Equities (a division of First Albany
Corporation), have severally agreed to purchase from ZipLink the number of
shares of common stock set forth opposite their respective names in the table
below at the public offering price less the underwriting discount set forth on
the cover page of this prospectus.

NUMBER
UNDERWRITERS OF SHARES
- ---------------------------------------------------------------------------------------------------- ------------

Jefferies & Company, Inc............................................................................
FAC/Equities........................................................................................

------------
Total........................................................................................... 3,500,000
------------
------------

The underwriting agreement provides that the obligations of the underwriters
to purchase the shares of common stock offered hereby are subject to certain
conditions. The underwriters are obligated to purchase all of the shares of
common stock offered hereby (other than those covered by the over-allotment
option described below), if any of such shares are purchased.

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

ZipLink has granted to the underwriters an option, exercisable not later
than 30 days after the date of this prospectus, to purchase, from time to time,
in whole or in part, up to 525,000 additional shares of common stock at the
public offering price less the underwriting discount set forth on the cover page
of this prospectus. The underwriters may exercise such option only to cover
over-allotments, if any, made in connection with the sale of the common stock
offered hereby. To the extent that the underwriters exercise such option, each
of the underwriters will become obligated, subject to certain conditions, to
purchase additional shares of common stock proportionate to such underwriter's
initial commitment as indicated in the table above.

The following table shows the underwriting fees to be paid to the
underwriters by ZipLink in connection with this offering. The amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares of common stock.

FULL
NO EXERCISE EXERCISE
----------- ------------

Per share.......................................................... $ $
Total.............................................................. $ $

Other expenses of this offering payable by ZipLink are estimated to be
$815,000.

ZipLink has agreed to indemnify the underwriters against certain
liabilities, including civil liabilities under the Securities Act, or will
contribute to payments the underwriters may be required to make in respect
thereof.

Each of ZipLink, its executive officers and directors and stockholders has
agreed, subject to certain exceptions, not to offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock for a period of
180 days after the date of this prospectus without the prior written consent of
Jefferies & Company, Inc. Such consent may be given at any time without public
notice.

The representatives of the underwriters have advised ZipLink that the
underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

The representatives of the underwriters have advised ZipLink that, pursuant
to Regulation M under the Securities Act, certain persons participating in this
offering may engage in transactions that stabilize, maintain or otherwise affect
the market price of the common stock. Specifically, the underwriters may
over-allot shares of the common stock in connection with this offering, thereby
creating a short position in the common stock for their own account.
Additionally, to cover such over-allotments or to stabilize the market price of
the common stock, the underwriters may bid for, and purchase, shares of the
common stock in the open market. Finally, the representatives, on behalf of the
underwriters, also may reclaim selling concessions allowed to an underwriter or
dealer if the underwriting syndicate repurchases shares distributed by that
underwriter or dealer. Any of these activities may maintain the market price of
the common stock at a level above that which might otherwise prevail in the open
market. The underwriters are not required to engage in these activities and, if
commenced, may end any of these activities at any time. These transactions may
be effected on the Nasdaq National Market, the over-the-counter market or
otherwise.

Prior to this offering, there has been no public market for ZipLink's common
stock. Consequently, the initial public offering price for ZipLink's common
stock will be determined by negotiation among ZipLink and the representatives of
the underwriters. The factors to be considered in determining the initial public
offering price will include the history of and the prospects for the industry in
which ZipLink competes, an assessment of ZipLink's management, the past and
present operations of ZipLink, the historical results of operations of ZipLink,
the recent market prices of securities of companies that ZipLink and the
representatives of the underwriters believe to be comparable to ZipLink and the
general condition of the securities markets at the time of this offering.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon for
ZipLink by Brenner, Saltzman & Wallman LLP, New Haven, Connecticut. As of the
date of this prospectus, attorneys at Brenner, Saltzman & Wallman, LLP,
including Wayne A. Martino, a director nominee of ZipLink and a principal of
such firm, own options to purchase an aggregate of 9,341 shares of our common
stock. Certain legal matters in connection with this offering will be passed
upon for the underwriters by Fulbright & Jaworski L.L.P., New York, New York.

EXPERTS

The financial statements and schedule included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission ("SEC") a
registration statement, of which this prospectus constitutes a part, on Form S-1
under the Securities Act with respect to the common stock offered hereby. This
prospectus does not contain all of the information set forth in the registration
statement and the exhibits and schedules thereto. For further information with
respect to ZipLink and the common stock offered hereby, reference is made to the
registration statement and to the exhibits and schedules thereto. Statements
made in this prospectus concerning the contents of any document referred to
herein are not necessarily complete. With respect to each such document filed as
an exhibit to the registration statement, reference is made to the exhibit for a
more complete description of the matter involved. The registration statement and
the exhibits and schedules thereto may be inspected without charge at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC located at Seven
World Trade Center, 13(th) Floor, New York, New York 10048, and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or
any part of the registration statement may be obtained from the SEC's offices
upon payment of certain fees prescribed by the SEC. The SEC maintains a World
Wide Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. The
address of the site is http://www.sec.gov.

We intend to furnish our stockholders with annual reports containing
financial statements audited by our independent auditors and quarterly reports
containing unaudited financial information.

INDEX TO FINANCIAL STATEMENTS
ZIPLINK, LLC

PAGE
-----

Report of Independent Public Accountants................................................................... F-2

Balance Sheets............................................................................................. F-3

Statements of Operations................................................................................... F-4

Statements of Changes In Members' Equity (Deficit)......................................................... F-5

Statements of Cash Flows................................................................................... F-6

Notes to Financial Statements.............................................................................. F-7

ZIPLINK, INC.

Report of Independent Public Accountants............................................. F-17

Balance Sheet........................................................................ F-18

Statement of Cash Flows.............................................................. F-19

Notes to Financial Statements........................................................ F-20

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ZipLink, LLC:

We have audited the accompanying balance sheets of ZipLink, LLC (a Delaware
limited liability company, formerly a Connecticut limited liability company) as
of December 31, 1997 and 1998, and the related statements of operations, changes
in members' deficit and cash flows for the three years ended December 31, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ZipLink, LLC as of December
31, 1997 and 1998, and the results of its operations and its cash flows for the
three years ended December 31, 1998, in conformity with generally accepted
accounting principles.

Arthur Andersen LLP

Boston, Massachusetts
March 10, 1999

F-2

ZIPLINK, LLC

BALANCE SHEETS

DECEMBER 31,
1998
DECEMBER 31, PRO FORMA
----------------------------- (NOTE 3)
1997 1998 (UNAUDITED)
------------- -------------- --------------

ASSETS
Current Assets:
Cash and cash equivalents....................................... $ 1,081,505 $ 512,055 $ 512,055
Accounts receivable, less allowance for doubtful accounts of
approximately $153,000 and $68,000 in 1997 and 1998,
respectively.................................................. 474,780 678,683 678,683
Prepaid expenses and other current assets....................... 56,224 70,964 70,964
------------- -------------- --------------
Total current assets........................................ 1,612,509 1,261,702 1,261,702
------------- -------------- --------------
Property and Equipment, at cost:
Network equipment............................................... 11,719,967 12,659,088 12,659,088
Computer equipment and software................................. 289,973 356,789 356,789
Leasehold improvements.......................................... 595,706 756,901 756,901
Furniture, fixtures and equipment............................... 105,948 107,764 107,764
Vehicles........................................................ 20,416 20,416 20,416
------------- -------------- --------------
12,732,010 13,900,958 13,900,958
Less--Accumulated depreciation and amortization................. 1,460,805 4,097,553 4,097,553
------------- -------------- --------------
11,271,205 9,803,405 9,803,405
Other Assets...................................................... 100,772 108,772 108,772
------------- -------------- --------------
Total assets................................................ $ 12,984,486 $ 11,173,879 $ 11,173,879
------------- -------------- --------------
------------- -------------- --------------

LIABILITIES AND MEMBERS' DEFICIT
Current Liabilities:
Current portion of convertible debentures....................... $ -- $ 500,000 $ --
Current portion of capital lease obligation..................... 410,029 464,531 464,531
Accounts payable................................................ 4,840,141 881,199 881,199
Accrued expenses................................................ 971,051 1,882,424 1,882,424
Deferred revenue................................................ 228,921 119,672 119,672
Amounts due to affiliates, net.................................. 479,561 476,140 476,140
------------- -------------- --------------
Total current liabilities................................... 6,929,703 4,323,966 3,823,966
Note Payable To a Bank............................................ 15,000,000 17,600,000 17,600,000
Capital Lease Obligation, less current portion.................... 803,112 338,580 338,580
Convertible Debentures............................................ -- 7,000,000 --
------------- -------------- --------------
Total liabilities........................................... 22,732,815 29,262,546 21,762,546
------------- -------------- --------------
Commitments and Contingencies (Notes 13, 15 and 17)
Stockholders' Equity (Deficit):
Common Stock, $.001 par value, 50,000,000 shares authorized,
9,000,000 shares issued and outstanding at December 31, 1998 on
a pro forma basis............................................... -- -- 9,000
------------- -------------- --------------
Additional paid in capital........................................ -- -- 13,280,678
------------- -------------- --------------
Accumulated deficit............................................... -- -- (23,878,345)
------------- -------------- --------------
Members' deficit/Stockholders' deficit............................ (9,748,329) (18,088,667) (10,588,667)
------------- -------------- --------------
Total liabilities and members' deficit...................... $ 12,984,486 $ 11,173,879 $ 11,173,879
------------- -------------- --------------
------------- -------------- --------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

F-3

ZIPLINK, LLC

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1996 1997 1998
---------- ---------- ----------

Revenues............................................... $ 755,655 $5,235,830 $7,088,200
---------- ---------- ----------
Costs and Expenses:
Cost of revenues..................................... 1,782,430 3,186,777 6,271,169
Selling, general and administrative.................. 7,372,740 6,507,490 5,174,370
Depreciation and amortization........................ 383,965 1,084,393 2,636,748
---------- ---------- ----------
Total costs and expenses......................... 9,539,135 10,778,660 14,082,287
---------- ---------- ----------
Loss from operations............................. (8,783,480) (5,542,830) (6,994,087)
---------- ---------- ----------
Other Expenses:
Interest expense..................................... (30,492) (1,098,119) (1,344,285)
Interest income...................................... 11,217 426 37,029
Other (expense) income............................... 630 (68,902) (144,514)
---------- ---------- ----------
(18,645) (1,166,595) (1,451,770)
---------- ---------- ----------
Net loss......................................... $(8,802,125) $(6,709,425) $(8,445,857)
---------- ---------- ----------
---------- ---------- ----------
Pro forma net loss per share (Note 2(m)):
Pro forma net loss per share--basic and diluted...... $ (1.20) $ (.91) $ (1.03)
---------- ---------- ----------
---------- ---------- ----------
Pro forma weighted average shares--basic and
diluted............................................ 7,340,522 7,408,298 8,165,137
---------- ---------- ----------
---------- ---------- ----------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

F-4

ZIPLINK, LLC

STATEMENTS OF CHANGES IN MEMBERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

ZACHS
(INDIVIDUALS NORTEL
AND LIMITED NETWORKS,
PARTNERSHIP) INC. TOTAL
-------------- ------------ --------------

Members' Equity, December 31, 1995 (unaudited)..................... $ 989 $ -- $ 989
Net loss......................................................... (8,802,125) -- (8,802,125)
Members' contributions, net of distributions..................... 5,776,994 -- 5,776,994
-------------- ------------ --------------
Members' Equity (Deficit), December 31, 1996....................... (3,024,142) -- (3,024,142)
Net loss......................................................... (6,694,719) (14,706) (6,709,425)
Members' contributions, net of distributions..................... (2,514,762) 2,500,000 (14,762)
-------------- ------------ --------------
Members' Equity (Deficit), December 31, 1997....................... (12,233,623) 2,485,294 (9,748,329)
Net loss......................................................... (7,601,271) (844,586) (8,445,857)
Compensation associated with the issuance of unit options and
warrants......................................................... 94,967 10,552 105,519
-------------- ------------ --------------
Members' Equity (Deficit), December 31, 1998....................... $ (19,739,927) $ 1,651,260 $ (18,088,667)
-------------- ------------ --------------
-------------- ------------ --------------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

F-5

ZIPLINK, LLC

STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
----------------------------------
1996 1997 1998
---------- ---------- ----------

Cash Flows from Operating Activities:
Net loss............................................. $(8,802,125) $(6,709,425) $(8,445,857)
Adjustments to reconcile net loss to net cash used in
operating activities--
Depreciation and amortization...................... 383,965 1,084,393 2,636,748
Loss on disposal of property and equipment......... -- 53,053 143,844
Compensation expense associated with the granting
of unit options and warrants..................... -- -- 105,519
Changes in operating assets and liabilities--
Accounts receivable, net......................... (159,940) (314,840) (203,903)
Prepaid expenses and other current assets........ (81,603) 57,221 (14,740)
Accounts payable................................. 1,292,629 3,476,809 (3,958,942)
Accrued expenses................................. 1,444,417 (473,366) 911,373
Deferred revenue................................. 177,136 51,785 (109,250)
Due to affiliates................................ (206,101) (578,276) (3,421)
---------- ---------- ----------
Net cash used in operating activities.......... (5,951,622) (3,352,646) (8,938,629)
---------- ---------- ----------
Cash Flows from Investing Activities:
Purchases of property and equipment.................. (4,218,716) (6,969,558) (1,312,792)
Proceeds from sale of property and equipment......... -- 20,765 --
Increase in other assets............................. (80,772) (20,000) (8,000)
---------- ---------- ----------
Net cash used in investing activities.......... (4,299,488) (6,968,793) (1,320,792)
---------- ---------- ----------
Cash Flows from Financing Activities:
Proceeds from convertible debentures................. -- -- 7,500,000
Net proceeds from borrowings under notes payable..... 2,700,970 11,450,000 2,600,000
Payments of principal made on capital lease
obligations........................................ -- (333,388) (410,029)
Members' contributions............................... 5,776,994 2,500,000 --
Members' distributions............................... -- (2,514,762) --
---------- ---------- ----------
Net cash provided by financing activities...... 8,477,964 11,101,850 9,689,971
---------- ---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents... (1,773,146) 780,411 (569,450)

Cash and Cash Equivalents, beginning of period......... 2,074,240 301,094 1,081,505
---------- ---------- ----------
Cash and Cash Equivalents, end of period............... $ 301,094 $1,081,505 $ 512,055
---------- ---------- ----------
---------- ---------- ----------
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest............................... $ 30,402 $1,034,506 $1,242,138
---------- ---------- ----------
---------- ---------- ----------
Supplemental Disclosure of Non-Cash Financing and
Investing Activities:
Acquisition of equipment pursuant to capital lease
obligation......................................... $ -- $1,546,529 $ --
---------- ---------- ----------
---------- ---------- ----------

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

F-6

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1998

(1) ORGANIZATION

ZipLink, LLC (the Company) was organized as a Connecticut limited liability
company (LLC) on November 21, 1995. The Company had no significant operations
prior to January 1, 1996. On March 9, 1999, the Company was merged into a
Delaware LLC and will be subsequently merged into a Delaware corporation upon
the closing of the Company's proposed initial public offering (IPO). The Company
intends to file for an IPO. See Note 17.

The Company has operations in Lowell, Massachusetts and Hartford,
Connecticut and is a national provider offering wholesale Internet access
services in the United States to two distinct target markets: Internet
appliances and local, regional and national Internet service providers.

The Company is subject to a number of risks common to companies in similar
stages of development, including dependence on key personnel, customers and
suppliers, competition from substitute services and larger companies, the need
for adequate financing to fund future operations, the continued successful
development and marketing of its services and the attainment of profitable
operations. See "Risk Factors" included elsewhere in this prospectus for
additional discussion.

The Company has incurred a cumulative net loss from operations of $24
million since inception and has funded these losses principally through the
issuance of debt and equity securities. The Company has a members' deficit of
$18 million as of December 31, 1998 and is dependent on raising additional
capital in the short term to satisfy ongoing capital needs. As discussed in Note
7, the Capital Member has agreed to personally guarantee an additional $10
million of borrowings. These additional proceeds should be sufficient to
continue operations through 1999.

(2) SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements reflect the application of certain
significant accounting policies as described in this note and elsewhere in the
accompanying notes to financial statements.

(A) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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

(B) CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash and cash
equivalents are stated at cost, which approximates market, and include
overnight investments in U.S. Treasury securities.

The Company recognizes revenue over the period in which the services are
performed. Deferred revenue relates to advanced service billings and are
$228,921 and $119,672 at December 31, 1997 and 1998, respectively.

F-7

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

(D) DEPRECIATION AND AMORTIZATION

Depreciation and amortization is provided using the straight-line method
over the following estimated useful lives of the assets:

Network equipment..................................... 3-5 years
Computer equipment and software....................... 5 years
Leasehold improvements................................ Life of the lease
Furniture, fixtures and equipment..................... 5 years
Vehicles.............................................. 5 years

Expenditures for major renewals and betterments are capitalized.
Expenditures for maintenance and repairs that do not improve or extend the
life of the respective assets are expensed as incurred.

(E) TRANSACTIONS WITH AFFILIATES

The Company collects and disburses funds on behalf of other entities
owned by some of the Company's members. The amount of non-interest bearing
advances due these entities is $479,561 and $476,140 at December 31, 1997
and 1998, respectively, and is therefore reflected as a liability on the
accompanying balance sheets. Any unpaid balances will be paid in 1999.

(F) OTHER ASSETS

Other assets consist primarily of security deposits on the Company's
leased facilities.

(G) LONG-LIVED ASSETS

The Company follows Statement of Financial Accounting Standards (SFAS)
No. 121, ACCOUNTING FOR LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF. SFAS No. 121 requires that long-lived assets be reviewed for
impairment by comparing the fair value of the assets with their carrying
amount. Any write-downs are to be treated as permanent reductions in the
carrying amount of the assets. Accordingly, the Company evaluates the
possible impairment of long-lived assets at each reporting period based on
the undiscounted projected cash flows of the related asset. Should there be
impairment, the cash flow estimates that will be used will contain
management's best estimates, using appropriate and customary assumptions and
projections at the time. To date, the Company does not believe that an
impairment exists.

(H) CONCENTRATIONS OF CREDIT RISK

Financial instruments that subject the Company to significant
concentrations of credit risk consist primarily of cash and cash equivalents
and accounts receivable. The Company's cash equivalents are invested in
financial instruments with high credit ratings. Concentration of credit risk
with respect to accounts receivable is limited to customers to whom the
Company makes significant sales. To control credit risk, the Company
performs periodic credit evaluations of its customers and has recorded
allowances for estimated losses. One customer accounted for approximately
80% and 85% of accounts receivable at December 31, 1997 and 1998,
respectively.

F-8

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

(I) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's cash and cash equivalents,
accounts receivable, accounts payable, amounts due to affiliates, notes
payable, and convertible debentures approximates their fair value.

(J) STOCK-BASED COMPENSATION

The Company adopted SFAS No. 123 ACCOUNTING FOR STOCK-BASED COMPENSATION
in 1997. SFAS No. 123 defines a fair-value-based method of accounting for
employee stock options and other stock-based compensation. The compensation
expense arising from this method of accounting can be reflected in the
financial statements or alternatively, pro forma net income and earnings per
share effect of the fair-value-based accounting can be disclosed in the
financial footnotes. The Company has adopted the disclosure-only
alternative.

(K) SIGNIFICANT VENDORS

The Company relies on other companies to supply certain key components
of their network infrastructure. These components include critical
telecommunications services and networking equipment, which, are available
only from sole-or limited-sources. Six companies provide the backbone data
communications facilities and capacity for the Company. The Company is also
dependent upon local exchange carriers to provide telecommunications
services to the Company and its customers. One company is the sole supplier
of the servers primarily used in the Company's network infrastructure.

(L) POSTRETIREMENT BENEFITS

The Company has no obligations for postretirement benefits.

(M) PRO FORMA NET LOSS PER SHARE

The Company applies SFAS No. 128, EARNINGS PER SHARE. Pro forma net loss
per share assumes the Company's conversion into a Delaware corporation (see
Note 17) and the conversion of the members equity to capital stock. Under
SFAS No. 128, basic net loss per common share is computed using the weighted
average number of shares of common stock outstanding during the period.
Diluted net loss per common share is the same as basic net loss per common
share since the effects of the Company's potential common stock equivalents
are antidilutive. In accordance with Staff Accounting Bulletin No. 98, the
Company has determined that there were no nominal issuances of common stock
or potential common stock in the period prior to the Company's planned IPO.
Antidilutive securities, which consist of stock options and convertible
debentures that are not included in diluted net loss per common share were
44,707, 7,448 and 1,200,807 for 1996, 1997 and 1998, respectively.

(N) NEW ACCOUNTING STANDARDS

In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-1, ACCOUNTING FOR THE COSTS OF
COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE. SOP 98-1 requires
computer software costs associated with internal use software to be charged
to operations as incurred until certain capitalization criteria are met. SOP
98-1 is

F-9

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

effective beginning January 1, 1999. The Company does not expect adoption of
this statement to have a material impact on its financial position or
results of operations.

(3) PRO FORMA PRESENTATION (UNAUDITED)

The pro forma balance sheet as of December 31, 1998 gives effect to the
Company's merger with ZipLink, Inc. (see Note 17) and the conversion of the
convertible debentures into common stock upon the closing of the IPO at an
assumed offering price of $13.00 per share.

(4) SIGNIFICANT CUSTOMER

In October 1996, the Company entered into a wholesale network services
agreement with WebTV Networks, Inc. (WebTV). Under the terms of this agreement,
the Company provides dial-up connectivity between WebTV subscribers and WebTV's
own internet access facility over the ZipLink network. The agreement expires in
December 2000. During the years ended December 31, 1996, 1997 and 1998, WebTV
represented approximately 4%, 48% and 68%, respectively, of the Company's
revenues.

(5) SEGMENT DISCLOSURE

In July 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 requires certain financial and
supplementary information to be disclosed on an annual and interim basis for
each reportable segment of an enterprise. The Company has determined that it
only operates in one segment.

(6) INCOME TAXES

As a result of the Company's organization as an LLC, taxation does not occur
at the Company level, but is shared individually by the members. Accordingly, no
provision for federal or state income taxes is required in the accompanying
statements of operations for the years ended December 31, 1996, 1997 and 1998.
Upon the consummation of the reorganization discussed in Note 17, the Company
will be subject to federal and state income tax based upon the taxable income
generated after the date of the reorganization and will begin accounting for
income taxes in accordance with SFAS No. 109 ACCOUNTING FOR INCOME TAXES.

(7) NOTE PAYABLE

On March 31, 1998, the Company entered into a revolving credit agreement, as
amended on October 15, 1998 (the Financing Agreement) that provides for
borrowings up to $20.0 million and matures on April 1, 2001. Borrowings under
the Financing Agreement are for working capital purposes and are secured by a
pledge of certain collateral owned by a Capital Member of the Company and
substantially all the assets of the Company. Borrowings are limited to the
lesser of 60% of the current market value of certain collateral, subject to
adjustment, or $20 million and bear interest at LIBOR (5.066 % at December 31,
1998) plus .3%.

In March 1999, the Capital Member agreed to personally guarantee an
additional $10 million of borrowings from an institutional lender (Additional
Guarantee). The Additional Guarantee will expire, upon the earlier of the
closing of the IPO, as long as the net proceeds from the offering exceed $30
million or, January 1, 2000. Although the Company has not arranged additional
financing with an

F-10

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

institutional lender as of the date of this report, the Capital Member has the
ability to make this guarantee.

On December 24, 1997, the Company amended its existing revolving credit
agreement to allow for borrowing up to $20 million. Borrowings were secured by
certain collateral of a Capital Member and bore interest at LIBOR plus 0.5%. At
December 31, 1997, the Company had borrowings of $15 million outstanding under
this agreement. The Company refinanced these borrowings in 1998 with the above
described Financing Agreement.

(8) CONVERTIBLE DEBENTURES

In December 1997, the Company entered into two unsecured convertible
debenture agreements (the Debenture Agreements) with a Senior Member (Nortel
Networks) for $2.5 million and $5 million, Debenture One and Debenture Two,
respectively. In 1998, the Company received proceeds of $7.5 million under these
Debenture Agreements. The Debenture Agreements both bear interest at the six
month LIBOR rate (5.066 % at December 31, 1998) plus 0.8%. The Debenture
Agreements are payable in 60 equal monthly installments of principal of
$125,000, commencing on September 15, 1999.

Both Debenture Agreements contain automatic and voluntary conversion rights.
Debenture One and Debenture Two each convert into a number of units, as defined
in the Debenture Agreements. The Debenture Agreements cannot be converted prior
to June 30, 1999 unless certain events occur causing an automatic conversion, as
defined in the Debenture Agreements, including but not limited to an initial
public offering. The Senior Member and the Company each have voluntary
conversion rights after June 30, 1999 into units at the defined conversion
prices. In the event the Company voluntarily elects to convert Debenture Two
into units of the Company, the Company must cause a Capital Member to repay a
certain amount of the Company's borrowings and convert that amount into
additional units of the Company. The amount which must be repaid and converted
into units of the Company is equal to the lesser of (i) $7.5 million or (ii)
150% of the outstanding principal balance of Debenture Two. The indebtedness
under both Debenture Agreements is subordinate to the Financing Agreement.

The future principal payments in accordance with the Debenture Agreements
are as follows:

YEAR ENDED DECEMBER 31, AMOUNT
- -------------------------------------------------------------------------------- ------------

1999............................................................................ $ 500,000
2000............................................................................ 1,500,000
2001............................................................................ 1,500,000
2002............................................................................ 1,500,000
2003............................................................................ 1,500,000
Thereafter...................................................................... 1,000,000
------------
$ 7,500,000
------------
------------

(9) MEMBERS' EQUITY

At December 31, 1998, the Company's membership was comprised of the three
Capital Members--85.4% (all Zachs family members and/or partnerships), one
Senior Member--10% (Nortel Networks) and one Service Member--4.6% (the Company's
president).

F-11

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

The Capital Members contributed an aggregate of $9,500 for their initial
interests, Nortel Networks contributed $2.5 million for its interest and the
Service Member received his interest for no consideration. The estimated fair
market value of the Service Member's interest was not material at the date of
grant.

Income of the Company shall be allocated first, to members with senior units
based on their percentage interest; second to Capital Members until the
cumulative amount of income equals the Cumulative Preferred Distributions made
to the Capital Members; third, until the cumulative amount of income allocated
equals the cumulative amount of loss previously allocated to the Members in the
same proportions in which such losses were allocated; and fourth, the balance,
if any, to all Members in proportion to their percentage interests.

Losses of the Company shall be allocated first, to members with senior units
based on their percentage interest, second, until the cumulative amount of
losses equals the cumulative amount of income previously allocated to the
Members in the same proportions in which such income was allocated and the
balance, if any, to all Capital Members in proportion to their percentage
interests. No allocation shall be made to the Service Member.

On January 1, 1998, the Company effected a ten-for-one unit split. The
accompanying financial statements have been retroactively restated to reflect
this unit split.

In December 1997, the Company entered into a securities purchase agreement
(the Securities Agreement) with Nortel Networks for the purchase of a 10%
interest in the Company for an aggregate investment of $2.5 million. In
connection with the Securities Agreement, the Company also entered into two
unsecured convertible debentures (see Note 8).

(10) UNIT OPTION PLAN

In September, 1996, the Company adopted the ZipLink, LLC Unit Option Plan
(the Unit Plan). Pursuant to the Unit Plan, unit options may be granted to
certain employees of the Company at no less than fair market value on the date
of grant. Options granted under the Unit Plan expire 10 years subsequent to the
date of grant. In addition, option vesting is determined by the Company, however
options generally vest over a five year period, except that 50% of the unvested
portion of any option outstanding prior to the completion of an initial public
offering shall become vested upon completion of such offering.

F-12

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

Unit option activity from the Unit Plan's inception is as follows:

WEIGHTED
AVERAGE
OPTIONS EXERCISE PRICE
---------- ---------------

Outstanding at December 31, 1995................................... -- --
Granted.......................................................... 55,044 $ 0.22
---------- -----
Outstanding at December 31, 1996................................... 55,044 0.22
Granted.......................................................... 82,566 1.46
Cancelled........................................................ (128,440) 0.93
---------- -----
Outstanding at December 31, 1997................................... 9,170 1.46
Granted.......................................................... 452,369 2.18
Cancelled........................................................ (10,675) 1.61
---------- -----
Outstanding at December 31, 1998................................... 450,864 $ 2.20
---------- -----
---------- -----

There were no options exercisable at December 31, 1996, 1997 and 1998. The
weighted average grant date value of options granted during 1996, 1997 and 1998
are $0.16, $1.08, and $1.72, respectively. As of December 31, 1998 the weighted
average remaining contractual life of options outstanding under the Unit Plan is
9.8 years.

In 1998, the Company granted 24,500 unit options to non-employees. The
Company has valued these options at $43,945 using the Black-Scholes method as
prescribed in SFAS No. 123. The Company is amortizing the expense associated
with these options over the vesting period of the options. During 1998, the
Company recognized $8,789 of compensation expense associated with these options.

The Company has computed the pro forma disclosures required under SFAS 123
for options granted using the Black-Scholes pricing model prescribed by SFAS
123. The weighted average assumptions used are as follows:

1996 1997 1998
--------- --------- ---------

Risk free interest rate........................................ 5.94% 5.71% 4.62%
Expected dividend yield........................................ -- -- --
Expected lives................................................. 5 years 5 years 5 years
Expected volatility............................................ 65% 65% 65%

Had compensation cost for the Company's unit option plan been determined
based on the fair value at the grant dates of awards under the plan consistent
with the method of SFAS 123, net loss would have been as follows:

1996 1997 1998
------------- ------------- -------------

Net loss--as reported............................ $ (8,802,125) $ (6,709,425) $ (8,445,857)
Net loss--pro forma.............................. (8,803,910) (6,711,403) (8,473,744)
Pro forma net loss per share--basic and
diluted........................................ $(1.20) $(0.91) $(1.04)

The Black-Scholes option-pricing model was developed for use in estimating
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option-pricing models

F-13

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

require the input of highly subjective assumptions included expected stock price
volatility. Because the Company's employee unit options have characteristics
significantly different from those of traded options, and because changes in the
subjective imputed assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its unit options.

(11) BENEFIT PLAN

Substantially all full-time employees of the Company who have met certain
age and service requirements, are eligible to participate in a 401(k) savings
plan sponsored by the Company. The Company is required to make a matching
contribution equal to 25% of the amount that the participant has elected to
contribute. The Company match is limited to employee contributions up to 5% of
the employee's annual compensation. The Company's expense for matching
contributions was approximately $16,000, $8,000 and $17,000 for the years ended
December 31, 1996, 1997 and 1998, respectively.

(12) ACCRUED EXPENSES

Accrued expenses at December 31, 1997 and 1998 consist of the following:

1997 1998
---------- ------------

Accrued payroll and related......................................... $ 608,512 $ 407,994
Accrued installation costs.......................................... -- 566,000
Accrued professional fees........................................... 177,210 228,546
Accrued other....................................................... 185,329 679,884
---------- ------------
$ 971,051 $ 1,882,424
---------- ------------
---------- ------------

(13) RELATED PARTY TRANSACTIONS

In December 1997, the Company entered into a purchase and license agreement
with Nortel. Pursuant to this agreement, the Company purchased certain network
equipment from Nortel for approximately $6.1 million in 1997 (of which $2
million was paid during December 1997 and $4.1 million is included in accounts
payable in the accompanying balance sheet at December 31, 1997 which was
subsequently paid in 1998). In 1998, the Company purchased approximately $1
million of equipment and services from Nortel Networks. In addition, Nortel has
agreed to provide certain services to the Company, as defined (see Note 15).

The Company rents office space from a related party. Rent expense related to
this office space was approximately $64,000, $45,000 and $39,000 for the years
ended December 31, 1996, 1997 and 1998, respectively. In January 1999, the
Company entered into a two year lease with the related party with annual
payments of $39,000.

The Company was engaged in the resale of long distance telephone services
pursuant to the terms of a Reseller Agreement dated February 15, 1996 with
ZipCall Long Distance, Inc., a company controlled by two of the Capital Members
of the Company. The Company paid ZipCall Long Distance its long distance carrier
cost plus 5%. The accompanying statements of operations reflects $88,000,
$233,000 and $83,000 of expense paid to ZipCall Long Distance for the years
ended December 31,

F-14

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

1996, 1997 and 1998, respectively. During October 1997, the Company sold its
long distance telephone services to a third party.

At December 31, 1997 and 1998, the Company had $230,000 and $255,000 of
accrued compensation payable to the Capital and Service Members which is
included in the accompanying balance sheet. In addition, there is $280,000,
$192,000 and $25,000 of compensation expense which is included in the statement
of operations for the years ended December 31, 1996, 1997 and 1998,
respectively. In March 1999, the Capital member agreed to forgive $180,000 of
the accrued compensation.

(14) ACQUISITION

In July 1996, the Company acquired certain property and equipment from
iGuide, Inc. (iGuide) for approximately $2.7 million. The Company also assumed
certain contracts related to the operation of the equipment from iGuide. The
purchase price was allocated to property and equipment based on the estimated
fair value of the assets acquired. No allocation was made to the contracts as
they were deemed to have only a nominal value.

(15) COMMITMENTS AND CONTINGENCIES

(A) OPERATING LEASES

The Company has various leasing arrangements for real estate and
equipment. In most cases, the Company expects that in the normal course of
business, leases will be renewed or replaced by other leases. In addition,
the Company subleases office space to a third party. As of December 31,
1998, future minimum lease payments required under operating leases that
have initial or remaining noncancellable lease terms in excess of one year,
net of any subleases, are as follows:

1999............................................................ $ 121,000
2000............................................................ 359,000
2001............................................................ 323,000
2002............................................................ 323,000
2003............................................................ 323,000
Thereafter...................................................... 2,684,000
---------
Total....................................................... $4,133,000
---------
---------

Net rental expense relating to these operating leases was approximately
$325,000, $425,000 and $198,000 for the years ending December 31, 1996, 1997
and 1998, respectively.

(B) CAPITAL LEASES

In June 1997, the Company entered into a capital lease for network
equipment. The lease is payable in an initial installment of $233,491, made
in June 1997 and 36 monthly installments of $44,052, including interest at
10.78%, commencing in September 1997. The outstanding capital lease
obligation as of December 31, 1998 is $803,111.

F-15

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

Repayments required under this capital lease agreement are as follows:

YEAR AMOUNT
- ---------------------------------------------------------------------------------- ----------

1999.............................................................................. $ 528,624
2000.............................................................................. 352,416
----------
881,040
Less--Amount representing interest................................................ (77,929)
----------
Present value of future minimum payments.......................................... 803,111
Less--Current portion............................................................. 464,531
----------
$ 338,580
----------
----------

Pursuant to the Company's purchase and license agreement with Nortel,
Nortel is committed to provide and the Company may purchase certain services
for annual fees aggregating $666,000. The fees are payable at various times
during 1998 and 1999 depending on the respective service. During 1998, the
Company purchased approximately $566,000 of services pursuant to this
arrangement. Upon the installation of certain equipment, as defined, the
Company will be required to enter into hardware and software maintenance
agreement with Nortel for $423,000 per annum.

(D) EMPLOYMENT AGREEMENTS

The Company has an employment agreement with an employee, which provides
for an aggregate base salary of approximately $150,000 per annum through
2001.

(16) ADVISORY AGREEMENT

In May 1997, as amended in January 1998, the Company entered into an
agreement with a financial advisor (the Advisor) for the purpose of obtaining
further sources of equity related financing. Under the terms of the agreement
the Advisor obtained a cash fee in connection with the Nortel transaction and is
entitled to 1% of the gross proceeds received by the Company from the future
conversion of the Nortel debentures. However, the aggregate amount of the
additional payment shall not exceed $25,000. In addition, on March 23, 1998, for
further consideration of advisory services performed on behalf of the Company,
the Company issued a warrant to the Advisor to purchase up to .7142% of the
Company's units, or part there of, for an exercise price of $100,000. The
Company valued this warrant using the Black-Scholes model and has recorded an
expense of approximately $97,000. This warrant terminates on September 2, 2002.

(17) REORGANIZATION, UNAUDITED

The Company has formed a wholly-owned subsidiary, ZipLink, Inc., a Delaware
corporation that has no operations. In March 1999, ZipLink, Inc., plans to file
for an initial public offering of its common stock. Prior to the closing of the
IPO, the Company will merge with and into ZipLink, Inc. as a result of which all
of the assets and liabilities of the Company will be transferred to ZipLink,
Inc. In connection with such merger, each membership unit in the Company (other
than membership units held by Nortel Networks) will be exchanged into
approximately .82 shares of common stock of ZipLink, Inc. and each option and
warrant to acquire a membership unit in the Company will be exchanged for

F-16

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1998

an option or warrant, as the case may be, to purchase approximately .81 common
shares of ZipLink, Inc. and each membership unit in the Company held by Nortel
Networks will be exchanged into approximately .82 shares of common stock of
ZipLink, Inc. As these entities are under common control, the merger transaction
will be accounted for as a reorganization of entities under common control
similar to a pooling of interest.

ZipLink, Inc. has authorized capital stock consisting of 50,000,000 shares
of common stock, par value $.001 per share and 1,000,000 shares of undesignated
preferred stock, par value $.001 per share.

Prior to the completion of the Reorganization, ZipLink, Inc. will adopt the
1999 Stock Option Plan (the 1999 Plan) which provides for the granting of common
stock options to officers, employees, consultants and directors of the Company.
The 1999 Plan will be administered by the Company's board of directors. The
total number of shares of common stock reserved for the 1999 Plan is 1,500,000.
Options granted under the 1999 Plan will generally vest in equal installments
over a five-year period and are subject to acceleration in certain events, as
defined. The options will expire ten years from the date of grant, and the plan
terminates ten years from the date of adoption. The options issued under the
Company's Unit Plan will be converted to the 1999 Plan upon the completion of
the Reorganization. In addition, upon the completion of the Reorganization, the
convertible debentures will be converted to common stock.

F-17

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ZipLink, Inc.

We have audited the accompanying balance sheet of ZipLink, Inc. as of April
14, 1999 and the related statement of cash flows for the period from inception
(March 9, 1999) to April 14, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of ZipLink, Inc. at April 14,
1999, and its cash flows for the period from inception (March 9, 1999) to April
14, 1999, in conformity with generally accepted accounting principles.

Arthur Andersen, LLP

Boston, Massachusetts
April 14, 1999

F-18

ZIPLINK, INC.

BALANCE SHEET
AS OF APRIL 14, 1999

Current Assets:
Cash.............................................................................. $ 1,000
---------
Total assets.................................................................. $ 1,000
---------
---------

Stockholder's Equity:
Common stock, $.001 par value,
Authorized 50,000,000 shares
Issued and outstanding--1,000 shares............................................ $ 1
Additional paid-in capital........................................................ 999
---------
Total stockholder's equity.................................................... $ 1,000
---------
---------

The accompanying notes are an integral part of these financial statements.

F-19

ZIPLINK, INC.

STATEMENT OF CASH FLOWS

FOR THE PERIOD FROM INCEPTION (MARCH 9, 1999) TO APRIL 14, 1999

Cash Flows from Operating Activities:
Net income........................................................................ $ --
Cash Flows from Financing Activities:
Issuance of common stock.......................................................... 1,000
---------
Net cash provided by financing activities....................................... 1,000
---------
Net Increase in Cash ............................................................... 1,000
Cash, Beginning of Period........................................................... --
---------
Cash, End of Period................................................................. $ 1,000
---------
---------

The accompanying notes are an integral part of these financial statements.

F-20

ZIPLINK, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 14, 1999

1. OPERATIONS AND REORGANIZATION

ZipLink, Inc. (the Company), a Delaware corporation, was formed as a
wholly-owned subsidiary of ZipLink, LLC on March 9, 1999. The Company currently
has no operations. The Company has the authorization to issue 50,000,000 shares
of common stock, par value $.001 per share and 1,000,000 shares of undesignated
preferred stock, par value $.001 per share. On April 14, 1999, the Company
issued 1,000 shares, par value $.001 per share, for $1,000.

On March 11, 1999, the Company filed for an initial public offering of its
common stock. Prior to the closing of such initial public offering, ZipLink, LLC
will be merged with, and into, the Company (the Reorganization). As a result of
the Reorganization, all of the assets and liabilities of ZipLink, LLC will be
transferred to the Company. In connection with such merger, each membership unit
in ZipLink, LLC (other than membership units held by Nortel Networks) will be
exchanged into approximately .82 shares of common stock of the Company and each
option and warrant to acquire a membership unit in ZipLink, LLC will be
exchanged for an option or warrant, as the case may be, to purchase
approximately .81 common shares of the Company and each membership unit in
ZipLink, LLC held by Nortel Networks will be exchanged into approximately .82
shares of common stock of the Company. As these entities are under common
control, the merger transaction will be accounted for as a reorganization of
entities under common control similar to a pooling of interest.

The Company has adopted the 1999 Stock Option Plan (the 1999 Plan) which
provides for the granting of common stock options to officers, employees,
consultants and directors of the Company. The total number of shares of common
stock reserved for the 1999 Plan is 1,500,000. Options granted under the 1999
Plan will generally vest in equal installments over a five-year period and are
subject to acceleration in certain events, as defined. The options will expire
ten years from the date of grant, and the plan terminates ten years from the
date of adoption. The options issued under ZipLink, LLC's Unit Plan will be
converted to the 1999 Plan upon the completion of the Reorganization. In
addition, upon the completion of the Reorganization, the convertible debentures
will be converted to common stock. As of April 14, 1999, there were no options
granted by the Company.

F-21

ZIPLINK WHOLESALE INTERNET ACCESS SERVICES
INTERNET ACCESS SOLUTIONS FOR INTERNET APPLIANCES

ZIPLINE ENHANCES CONSUMER ELECTRONICS DEVICES BY PROVIDING
INTERNET CONNECTIVITY AND SPECIALLY DEVELOPED SERVICES

[ILLUSTRATION OF ZIPLINK NETWORK APPLIANCES]

ZIPDIAL PROGRAM

[ILLUSTRATION OF ZIPDIAL NETWORK FOR INTERNET SERVICE PROVIDERS]

ZIPLINK WHOLESALE DSL SERVICE

[ILLUSTRATION OF ZIPLINK NETWORK FOR DSL SERVICE]

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SHARES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES
AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.

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

TABLE OF CONTENTS

PAGE
---------

Prospectus Summary.............................. 3
Risk Factors.................................... 9
Forward Looking Statements...................... 25
Use of Proceeds................................. 26
Dividend Policy................................. 26
Capitalization.................................. 27
Dilution........................................ 28
Selected Financial Data......................... 30
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 32
Business........................................ 38
Management...................................... 50
Certain Relationships and Related
Transactions.................................. 58
Principal Stockholders.......................... 62
Description of Capital Stock.................... 63
Shares Eligible for Future Sale................. 66
Underwriting.................................... 68
Legal Matters................................... 69
Experts......................................... 69
Where You Can Find Additional Information....... 70
Index to Financial Statements................... F-1

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

UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS THAT
EFFECT TRANSACTIONS IN SHARES OF COMMON STOCK, WHETHER OR NOT PARTICIPATING IN
THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO A
DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND
WITH RESPECT TO AN UNSOLD ALLOTMENT OR SUBSCRIPTION.

3,500,000 SHARES

[LOGO OF ZIPLINK, INC.]

ZIPLINK, INC.

COMMON STOCK

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

PROSPECTUS

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

Jef
feries & Company, Inc.

FAC/EQUITIES

, 1999

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

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses, all of which will be
borne by the Registrant, in connection with the sale and distribution of the
securities being registered, other than the underwriting discount. All amounts
shown are estimates except for the Securities and Exchange Commission
registration fee, the NASD filing fee and the Nasdaq National Market listing
fee.

SEC registration fee.................................................... $ 15,665
NASD filing fee......................................................... 6,135
Nasdaq National Market listing fee...................................... 87,000
Accounting fees and expenses............................................ 150,000
Legal fees and expenses................................................. 250,000
Printing and mailing expenses........................................... 160,000
Blue Sky fees and expenses.............................................. 5,000
Transfer Agent and Registrar fees....................................... 10,000
Miscellaneous........................................................... 131,200
---------
Total............................................................... $ 815,000
---------
---------

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

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of directors
to the corporation or its stockholders for monetary damages for breaches of
fiduciary duty, except for liability (a) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the DGCL, or (d) for any transaction from which
the director derived an improper personal benefit. Article VII B of the
Registrant's Amended and Restated Certificate of Incorporation provides that the
personal liability of directors of the Registrant is eliminated to the fullest
extent permitted by Section 102(b)(7) of the DGCL.

Under Section 145 of the DGCL, a corporation has the power to indemnify
directors and officers under certain prescribed circumstances, and subject to
certain limitations, against certain costs and expenses, including attorneys'
fees actually and reasonably incurred in connection with any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
any of them is a party by reason of being a director or officer of the
corporation if it is determined that the director or officer acted in accordance
with the applicable standard of conduct set forth in such statutory provision.
Article VII A of the Registrant's Amended and Restated Certificate of
Incorporation provides that the Registrant will indemnify any director and any
officer, employee or agent of the Registrant selected by its Board of Directors
for indemnification, such selection to be evidenced by an indemnification
agreement, who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he is or was a director, officer, employee or agent of the Registrant,
or is or was serving at the request of the Registrant as a director, officer,
employee or agent of another entity, against certain liabilities, costs and
expenses. Article VII A further permits the Registrant to maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Registrant, or is or was serving at the request of the Registrant as a director,
officer, employee or agent of another entity, against any liability asserted
against such person

II-1

and incurred by such person in any such capacity or arising out of his status as
such, whether or not the Registrant would have the power to indemnify such
person against such liability under the DGCL. The Registrant intends to enter
into indemnification agreements with its officers and directors and to obtain
directors' and officers' liability insurance.

Under Section 6(b) of the Underwriting Agreement, the Underwriters are
obligated, under certain circumstances, to indemnify directors and officers of
the Registrant against certain liabilities, including liabilities under the
Securities Act of 1933. Reference is made to the form of Underwriting Agreement
filed as Exhibit 1.1 hereto.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since April, 1996, the Registrant, or its predecessors, ZipLink, LLC, a
Connecticut limited liability company (the "Connecticut LLC") and ZipLink, LLC,
a Delaware limited liability company (the "Delaware LLC"), issued and sold
unregistered securities as follows:

On December 23, 1997, the Connecticut LLC issued to Bay Networks, Inc., an
indirect wholly-owned subsidiary of Northern Telecom Limited ("Nortel"), (i) a
10% membership interest in the Connecticut LLC for $2.5 million in cash, and
(ii) a $5.0 million convertible debenture and a $2.5 million convertible
debenture, both convertible into membership units of the Connecticut LLC at
defined conversion prices, as described below, in consideration for $7.5 million
in cash. Upon an initial public offering of the securities of the Connecticut
LLC, the $5.0 million debenture is automatically convertible into membership
units of the Connecticut LLC at a price per unit of membership interest of equal
to the effective per unit price in the initial public offering and the $2.5
million debenture is automatically convertible into membership units of the
Connecticut LLC at a price per unit of membership interest of $37.87.

From prior to April, 1996 through April, 1999, the Connecticut LLC granted
options to purchase, an aggregate of 449,024 units of membership interests in
the Connecticut LLC to certain employees and consultants.

On January 1, 1998, the Connecticut LLC effected a 10 for 1 unit split on
its outstanding membership interest, options and warrants.

On March 23, 1998, the Connecticut LLC issued warrants to purchase up to
.7142% of the membership interests in the Connecticut LLC, for $100,000, to an
investment banker, Jonathan Greenwald, in consideration of investment banking
services performed.

On March 9, 1999, the Connecticut LLC merged with and into the Delaware LLC.
In connection with the merger, all outstanding membership interests in, and
convertible debt of, the Connecticut LLC were converted into economically
equivalent membership interests in, and convertible debt of, the Delaware LLC.
In connection with the merger, all outstanding options and warrants to purchase
membership interests in the Connecticut LLC were converted into a like number of
options and warrants to acquire membership interests in the Delaware LLC.

Prior to the closing of this offering, the Delaware LLC will merge with and
into a newly-formed Delaware corporation known as ZipLink, Inc., as a result of
which all of the assets and liabilities of the Delaware LLC will be transferred
to ZipLink, Inc. In connection with such merger, each membership unit in the
Delaware LLC (other than membership units held by Nortel Networks) will be
exchanged into approximately .82 shares of common stock of ZipLink, Inc. and
each option and warrant to acquire a membership unit in the Delaware LLC will be
exchanged for an option or warrant, as the case may be, to purchase .81 shares
of common stock of ZipLink, Inc. and each membership unit in the Delaware LLC
held by Nortel Networks will be exchanged into .82 shares of common stock of
ZipLink, Inc.

II-2

Concurrently with the closing of this offering, the $5.0 million convertible
debenture held by Nortel will be converted into 384,615 shares of common stock
of ZipLink, Inc. at the initial public offering price and the $2.5 million
convertible debenture will convert into 450,000 shares of common stock of
ZipLink, Inc. at a price per share of $5.56.

No underwriters were engaged in connection with the foregoing sales of
securities. The sales of membership interests and warrants described above were
made in reliance upon the exemption from registration set forth in Section 4(2)
of the Securities Act of 1933 (the "Act") for transactions not involving a
public offering. Issuances of options to employees and consultants of the
Connecticut LLC were made pursuant to Rule 701 promulgated under the Act. The
issuances of membership interests, convertible debentures, options and warrants
of the Delaware LLC pursuant to the merger with the Connecticut LLC described
above were exempt from the registration requirements of the Act pursuant to
Section 3(a)(9) thereof because a security was exchanged by the issuer thereof
with existing security holders exclusively and no commission or other
renumeration was paid or given directly or indirectly for soliciting such
exchange.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------

1.1 Form of Underwriting Agreement

2.1** Plan of Merger between ZipLink, LLC, a Connecticut limited liability company, and ZipLink, LLC, a
Delaware limited liability company

2.2 Form of Agreement and Plan of Merger between the Registrant and ZipLink, LLC, a Delaware limited
liability company, to be filed and become effective prior to the effective date of the offering

3.1 Amended and Restated Certificate of Incorporation of the Registrant

3.2 Amended and Restated Bylaws of the Registrant

4.1* Form of Specimen Stock Certificate for the Registrant's Common Stock

4.2** Registration Rights Agreement dated as of December 23, 1997 between ZipLink, LLC and Henry M. Zachs,
Eric M. Zachs, Zachs Family Limited Partnership Number One and Christopher Jenkins

5.1* Opinion of Brenner, Saltzman & Wallman, LLP regarding legality of the securities being registered

10.1** Securities Purchase Agreement made as of December 23, 1997 between ZipLink, LLC and Bay Networks, Inc.

10.2** Convertible Debenture dated December 23, 1997 made by ZipLink, LLC in favor of Bay Networks, Inc. in
the amount of $5,000,000

10.3** Convertible Debenture dated December 23, 1997 made by ZipLink, LLC in favor of Bay Networks, Inc. in
the amount of $2,500,000

10.4* Agreement for Purchase and License of Bay Networks Products and Services effective as of December 10,
1997 between ZipLink, LLC and Bay Networks, USA, Inc.

10.5 Form of Indemnification Agreement between the Registrant and its Directors and Officers

II-3

EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------

10.6* "ZipLink-WebTV" Network Services Agreement made and entered into on October 23, 1996 between ZipLink,
LLC and WebTV Networks, Inc. as amended by Amendment No. 1 thereto effective as of May 13, 1997,
Amendment No. 2 thereto effective as of February 1, 1998 and Amendment No. 3 thereto effective as of
March 9, 1999.

10.7* WorldCom Data Services (Revenue Plan) Agreement dated January 1, 1997 between ZipLink, LLC and
WorldCom, Inc., as amended by an Amendment thereto dated March 6, 1997.

10.8** Lease dated as of January 1, 1999 between ZipLink, LLC and Henry M. Zachs

10.9** Agreement of Sublease and License Agreement made and entered into as of July 1, 1996 between ZipLink,
LLC and iGuide, Inc.

10.10 ZipLink, Inc. 1999 Stock Option Plan

10.11 Revolving Loan Agreement dated March 31, 1998 between the Registrant and Fleet National Bank as amended
by a modification agreement dated October 15, 1998

10.12 Employment Agreement dated as of March 4, 1999 between the Registrant and Christopher Jenkins

10.13 License Agreement dated as of March 11, 1999 between the Registrant and Henry M. Zachs

10.14 Letter of Henry M. Zachs dated March 10, 1999 to the Registrant respecting Guarantee

23.1* Consent of Brenner, Saltzman & Wallman, LLP (included in Exhibit 5.1)

23.2 Consent of Arthur Andersen LLP

24.1** Power of Attorney (included in signature page to the Registration Statement)

27.1** Financial Data Schedule

99.1** Consent of Jai P. Bhagat to use his name as a director nominee

99.2** Consent of Alan M. Mendelson to use his name as a director nominee

99.3** Consent of Wayne A. Martino to use his name as a director nominee

99.4 Consent of Russell S. Bernard to use his name as a director nominee

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

* To be filed by amendment.

** Previously filed.

(b) Financial Statement Schedules.

Schedule II: Valuation and qualifying accounts.

All other schedules are omitted because they are not required or are not
applicable or the information is included in the financial statements and notes
thereto.

ITEM 17. UNDERTAKINGS

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

II-4

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

The undersigned Registrant hereby undertakes that:

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

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

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to its Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Hartford, State of Connecticut on the 16th day of April, 1999.

ZIPLINK, INC.

By:
-----------------------------------------
Henry Zachs
CO-CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Chief Executive Officer and
Co-Chairman of the Board
- ------------------------------ (Principal Executive April 16, 1999
Henry M. Zachs Officer)
Co-Chairman of the Board
- ------------------------------ April 16, 1999
Eric M. Zachs
Chief Financial Officer
- ------------------------------ (Principal Financial and April 16, 1999
Gary P. Strickland Accounting Officer)

II-6

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ZipLink, LLC:

We have audited, in accordance with generally accepted auditing standards,
the financial statements included in this registration statement and have issued
our report thereon dated March 10, 1999. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in
Item 14(a)(2) is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
March 10, 1999

S-1

ZIPLINK, LLC

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

BALANCE AT BALANCE AT
BEGINNING END OF
OF PERIOD ADDITIONS DEDUCTIONS PERIOD
------------ ---------- ----------- ----------

Allowance for Doubtful Accounts:
1997........................................................... $ 20,000 $ 133,390 $ -- $ 153,390
1998........................................................... $ 153,390 $ 66,320 $ 151,973 $ 67,737

S-2

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------

1.1 Form of Underwriting Agreement
2.1** Plan of Merger between ZipLink, LLC, a Connecticut limited liability company and ZipLink, LLC, a
Delaware limited liability company
2.2 Form of Agreement and Plan of Merger between the Registrant and ZipLink, LLC, a Delaware limited
liability company to be filed and become effective prior to the effective date of the offering
3.1 Amended and Restated Certificate of Incorporation of the Registrant
3.2 Bylaws of the Registrant
4.1* Form of Specimen Stock Certificate for the Registrant's Common Stock
4.2** Registration Rights Agreement dated as of December 23, 1997 between ZipLink, LLC and Henry M. Zachs,
Eric M. Zachs, Zachs Family Limited Partnership Number One and Christopher Jenkins
5.1* Opinion of Brenner, Saltzman & Wallman, LLP regarding legality of the securities being registered
10.1** Securities Purchase Agreement made as of December 23, 1997 between ZipLink, LLC and Bay Networks Inc.
10.2** Convertible Debenture dated December 23, 1997 made by ZipLink, LLC in favor of Bay Networks Inc. in the
amount of $5,000,000
10.3** Convertible Debenture dated December 23, 1997 made by ZipLink, LLC in favor of Bay Networks Inc. in the
amount of $2,500,000
10.4* Agreement for Purchase and License of Bay Networks Products and Services effective as of December 10,
1997 between ZipLink, LLC and Bay Networks, USA, Inc.
10.5 Form of Indemnification Agreement between Registrant and its Directors and Officers
10.6* "ZipLink-WebTV" Network Services Agreement made and entered into on October 23, 1996 between ZipLink,
LLC and WebTV Networks, Inc. as amended by Amendment No. 1 thereto effective as of May 13, 1997 and
Amendment No. 2 thereto effective as of February 1, 1998 and Amendment No. 3 thereto effective March 9,
1999
10.7* WorldCom Data Services (Revenue Plan) Agreement dated January 1, 1997 between ZipLink, LLC and
WorldCom, Inc., as amended by an Amendment thereto dated March 6, 1997
10.8** Lease dated as of January 1, 1999 between ZipLink, LLC and Henry M. Zachs
10.9** Agreement of Sublease and License Agreement made and entered into as of July 1, 1996 between ZipLink,
LLC and iGuide, Inc.
10.10 ZipLink, Inc. 1999 Stock Option Plan
10.11 Revolving Loan Agreement dated March 31, 1998 between the Registrant and Fleet National Bank as amended
by a modification agreement dated October 15, 1998
10.12 Employment Agreement dated as of March 4, 1999 between the Registrant and Christopher Jenkins
10.13 License Agreement dated as of March 11, 1999 between the Registrant and Henry M. Zachs
10.14 Letter from Henry M. Zachs dated March 10, 1999 to the Registrant respecting Guarantee
23.1* Consent of Brenner, Saltzman & Wallman, LLP (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (included as signature page to the Registration Statement)
27.1** Financial Data Schedule
99.1** Consent of Jai P. Bhagat to use his name as a director nominee
99.2** Consent of Alan M. Mendelson to use his name as a director nominee
99.3** Consent of Wayne A. Martino to use his name as a director nominee
99.4 Consent of Russell S. Bernard to use his name as director nominee

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

* To be filed by amendment.

** Previously filed.