Filed Pursuant to Rule 424(b)4
Reg. No. 333-74273

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.

Our common stock has been approved for quotation 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.

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

Initial public offering price........................... $14.00 $49,000,000
Underwriting discount................................... $ 0.98 $ 3,430,000
Proceeds, before expenses, to ZipLink................... $13.02 $45,570,000

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 May 26, 1999

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

[ZIPLINK NETWORK MAP APPEARS HERE]

THE ZIPLINK NETWORK

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 THE 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 WAS EFFECTED ON MAY 25, 1999, (III) GIVES EFFECT TO THE
CONVERSION OF $7.5 MILLION OF INDEBTEDNESS INTO 807,143 SHARES OF COMMON STOCK,
WHICH CONVERSION WILL OCCUR CONCURRENTLY WITH THE CLOSING OF THIS OFFERING, AND
(IV) INCLUDES 216,964 SHARES OF COMMON STOCK, WHICH WILL BE ISSUED TO WILLIAMS
COMMUNICATIONS, INC. 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"). This technology makes possible data
transmission at speeds historically associated with private or "dedicated" lines
at comparatively low cost using ordinary telephone lines.

We have been a provider of Internet connectivity to subscribers of
Microsoft's-Registered Trademark- WebTV Network-TM- service since its product
introduction in late 1996. 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. Our
revenues from WebTV are dependent on the number of WebTV subscribers who make
use of our network for connectivity to WebTV. We receive a fixed price per
subscriber per month if WebTV uses us as its first choice provider of
connectivity for a WebTV subscriber. If we are not designated as the first
choice provider by WebTV, we receive an hourly rate to the extent that a WebTV
subscriber actually obtains connectivity through our network. WebTV has complete
discretion in determining whether we are designated as a first choice provider
and, accordingly, controls whether we receive revenue based on fixed or hourly
pricing. Historically, substantially all of our revenues from WebTV have been
from fixed rate pricing. 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.

Our WebTV 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 20 broad-coverage points of presence of a type
known in our industry as "super points of presence" or "SuperPOPs." We have
super point of presence coverage 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 relationship with
one of our key suppliers, Bay Networks, Inc., a subsidiary of Northern Telecom
Limited ("Nortel Networks"). As a part of this supplier relationship, 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 $7.2
million of network equipment and services from Nortel Networks 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.

In addition, we have recently entered into a relationship with Williams
Communications, Inc., a provider of telecommunications services. As a part of
our relationship with Williams, we have contractually committed to purchase $5.4
million of network services from Williams and will pay for $2.7 million of these
services, in part, by using our common stock. Concurrently with the closing of
this offering, we will issue 216,964 shares of common stock to Williams to be
applied as payment for network services we use in the future. For purposes of
purchasing such services, the shares of common stock issued to Williams will be
valued at approximately 89% of the initial public offering price. We expect to
begin using Williams network services in July, 1999. These network services will
consist principally of the provision of a system of high-speed connections
between our super points of presence, our network operations center and the
Internet and the provision of physical space for the installation of equipment
relating to our super points of presence.

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 in the U.S.,
increasing to 72.9 million in 2002.

- IDC estimates that U.S. shipments of Internet appliances will increase
from 3.0 million in 1998 to 27.8 million in 2002, representing a compound
annual growth rate of 74%.

The Internet service provider market is highly fragmented with approximately
5,000 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. Our network and Internet access
services offer our customers the following advantages:

- OUTSOURCED SOLUTION. Our services allow our customers 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 digital subscriber
line access and streaming audio and video (the simultaneous transmission
and playback of continuous streams of audio and visual content over the
Internet).

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.

ZipLink was founded by our Co-Chairman, Eric Zachs, in November, 1995. After
consummation of the offering, our Co-Chairmen, Eric Zachs and Henry Zachs, will
beneficially own, in the aggregate, 54.4% of our common stock and will be able
to control most matters requiring stockholder approval, including the election
of directors and approval of significant corporate transactions.

We began revenue generating operations from the provision of direct Internet
access to retail users in June, 1996 and from WebTV in December, 1996. We had
revenue of $7.1 million in 1998, 68% of which was from one Internet appliance
customer, WebTV, and 32% of which was from direct Internet access. We commenced
our ZipDial service in November, 1998 and revenues from this service for the
three months ended March 31, 1999 were $77,000. We have a history of operating
losses and, as of March 31, 1999, had incurred a cumulative net loss from
operations of $25.7 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 12,716,964 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."

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

Closing...................................... New York, New York, June 1, 1999

The outstanding share information is based on our shares outstanding as of
March 31, 1999 and includes (i) 807,143 shares of common stock to be issued upon
conversion of convertible debt concurrently with the closing of this offering
and (ii) 216,964 shares of common stock to be issued to Williams concurrently
with the closing of this offering. 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 364,470 shares,
exerciseable at a weighted average price of $2.67 per share, have been
granted and options to purchase 406,300 shares, exerciseable at a weighted
average price of $13.79 per share, will be granted concurrently with the
closing of this offering; and

- 58,521 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,"
"Selected Financial Data" and our financial statements and notes thereto
included elsewhere in this prospectus.

PERIOD FROM
NOVEMBER 21, THREE MONTHS ENDED
1995 (DATE OF
INCEPTION) TO YEAR ENDED DECEMBER 31, MARCH 31,
DECEMBER 31, ------------------------------- --------------------
1995 1996 1997 1998 1998 1999
------------- --------- --------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues............................ $ -- $ 756 $ 5,236 $ 7,088 $ 1,678 $ 2,745
Cost of revenues.................... -- 1,782 3,187 6,271 1,286 1,758
Selling, general and
administrative.................... 25 7,373 6,507 5,174 1,247 1,385
Depreciation and amortization....... 1 384 1,084 2,637 488 950
Loss from operations................ (26) (8,783) (5,543) (6,994) (1,342) (1,348)
Net loss............................ (26) (8,802) (6,709) (8,446) (1,609) (1,737)

PRO FORMA DATA:
Pro forma net loss.................. $ (26) $ (8,802) $ (6,709) $ (8,446) $ (1,609) $ (1,737)
Pro forma net loss per common
share-- basic and diluted......... (0.00) (1.16) (0.90) (1.03) (0.20) (0.21)
Weighted average common shares
outstanding--basic and diluted.... 7,590 7,590 7,418 8,193 8,193 8,193

OTHER FINANCIAL DATA:
Capital expenditures................ $ 79 $ 4,219 $ 8,516 $ 1,313 $ 791 $ 199
EBITDA(1)........................... (25) (8,399) (4,527) (4,502) (854) (436)

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

(1) EBITDA consists of net loss excluding net interest, taxes, and depreciation
and amortization expenses. 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 March 31, 1999. The
pro forma as adjusted balance sheet data as of March 31, 1999 gives effect to
(i) the Reorganization, (ii) the conversion of all outstanding convertible debt
into common stock concurrently with the closing of this offering, (iii) the
issuance of 216,964 shares of common stock to Williams concurrently with the
closing of this offering at an effective price of $12.44 per share, (iv) the
sale of 3,500,000 shares of common stock in this offering at the initial public
offering price of $14.00 per share, after deducting the underwriting discount
and estimated offering expenses, and (v) the application of the estimated net
proceeds of the offering, including the repayment of indebtedness to Fleet Bank
N.A. in the amount of $19.0 million. See "Use of Proceeds" and "Capitalization."

PRO FORMA
AS ADJUSTED
ACTUAL -----------
---------
(UNAUDITED)
(DOLLARS IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents.............................................. $ 303 $ 25,473
Working capital (deficit).............................................. (2,927) 25,818
Total assets........................................................... 10,781 38,651
Long-term debt, net of current portion................................. 19,214 214
Convertible debt, net of current portion............................... 6,625 --
Members'/Stockholders' equity (deficit)................................ (19,643) 34,727

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, $4.8 million, or 68%, of our revenues for the year ended December 31,
1998 and $2.2 million, or 80%, of our revenues for the three months ended March
31, 1999. 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 40% per month. If WebTV were to
reduce the amount of monthly revenue we receive to the minimum amount
specified in our agreement, we would be unable to execute our business
plan and our business, financial condition and results of operations would
be materially adversely affected.

- 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 from the provision of direct
Internet access to retail users in June, 1996 and from WebTV in December, 1996.
Our ZipDial service has only been offered since November, 1998 and our revenues
for the three months ended March 31, 1999 were $77,000. As a result, we have a
limited operating history upon which to base an evaluation of the future success
of our business, particularly our ZipDial program. In addition, because our
agreements with ZipDial customers are generally for one year and none of these
agreements has reached the end of its initial term, we cannot predict the rates
at which our ZipDial subscribers will renew their agreements with ZipLink. 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 March
31, 1999 was $25.7 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 telecommunications costs related 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.

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. A large percentage of our expenses
are for equipment and telecommunications services and are generally incurred in
advance of revenues from use of these network components. The timing and amount
of purchases of network equipment and telecommunications services is influenced
by, among other things, the availability of such network components at
attractive prices. Our quarterly operating results could fluctuate due to a
number of factors, including the timing and amount of network equipment
purchases or purchases of telecommunications services and the relative timing
and amount of revenues from customers using these or other network components.

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 THE GROWTH AND ACCEPTANCE OF INTERNET APPLIANCES.

We provide wholesale Internet access services to the Internet appliance
market. This market is in the early stages of development and is rapidly
evolving. It is difficult to predict the rate at which the Internet appliance
market will develop and grow and whether demand for our services in this market
can be sustained.

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; and

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

The growth of the Internet appliance market and the acceptance of Internet
appliances could fail to occur, even as the Internet access market grows because
Internet users may not adopt Internet appliances as a means of connecting to the
Internet, electing instead to rely on access via a personal computer. In the
event that the Internet appliance market fails to develop as quickly as we have
anticipated, our business, financial condition and results of operations would
be materially adversely affected.

WE DEPEND ON THE GROWTH OF THE INTERNET.

Demand for all our services will depend, in large part, on growth in the use
of the Internet. The growth of the Internet is highly uncertain and the Internet
may fail to grow due to a variety of factors, including:

- actual or perceived lack of security of information, such as credit card
numbers;

- traffic congestion or other usage delays on the Internet;

- high cost or lack of access availability; and

- governmental regulation

In addition, broad adoption of the Internet for most business applications
will require the acceptance of a new medium of conducting business and
exchanging information. If the Internet fails to grow, or fails to grow 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.

Because we initiated the ZipDial program in November, 1998, it is difficult
to predict 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. 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.

Our business has grown rapidly since our inception and is 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, 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 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.

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.

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 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
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 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. super point of presence 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 super points of presence. 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 Williams, AT&T Corporation, 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 and 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 have recently upgraded 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.

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. Forrester Research predicts that cable modem
connections, in particular, will gain market share from dial-up connections
because cable modems offer the ability to operate at substantially higher data
transmission speeds at attractive pricing, pervasive connectivity and ease of
installation. 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 super points of presence.
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 super points of presence. 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 super point of
presence 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.

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 access 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 WILL, IN THE AGGREGATE,
BENEFICALLY OWN 54.4% OF OUR COMMON STOCK AND, AS A RESULT, CAN EXERCISE
SIGNIFICANT INFLUENCE OVER OUR COMPANY.

Henry Zachs, our Co-Chairman and Chief Executive Officer, and Eric Zachs,
our Co-Chairman, will, in the aggregate, beneficially own approximately 54.4% of
our common stock following the completion of this offering (52.2% if the
underwriters' over-allotment option is exercised in full). These

stockholders will be able to control most 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.

Currently, there is no public market for our common stock. 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 recently
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. If there are similar industry-wide
fluctuations in the future, the price of our common stock could drop suddenly
and significantly, even if there has been no adverse change in our business,
financial condition or results of operations.

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, existing stockholders and Williams, have the right to demand
registration or to require us to include approximately 9,072,321 of 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 $11.27 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 stockholder 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.

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 $44,170,000 ($51,005,500 if
the underwriters' over-allotment is exercised in full) after deducting the
underwriting discount and other estimated offering expenses.

The following table sets forth our estimated use of the net proceeds of the
offering:

Repayment of outstanding indebtedness under line of credit(1)............................. $20,000,000
Expansion of network infrastructure....................................................... 10,000,000
Sales and marketing....................................................................... 2,300,000
Working capital and general corporate purposes............................................ 11,870,000
-----------
Total............................................................................. $44,170,000
-----------
-----------

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

(1) 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 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 March
31, 1999, (A) on an actual basis, (B) on a pro forma basis to give effect to (i)
the Reorganization, (ii) the conversion of all outstanding convertible debt into
807,143 shares of common stock concurrently with closing of this offering, 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 the initial public offering price of
$14.00 per share, after deducting the underwriting discount and the estimated
offering expenses, (ii) the issuance of 216,964 shares of common stock to
Williams concurrently with the closing of this offering, and (iii) 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.

(A) (B) (C)
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ----------- -----------

(DOLLARS IN THOUSANDS)
Cash and cash equivalents................................................... $ 303 $ 303 $ 25,473
---------- ----------- -----------
---------- ----------- -----------

Long-term obligations:
Capital lease obligations................................................. $ 692 $ 692 $ 692
Note payable.............................................................. 19,000 19,000 --
Convertible debentures.................................................... 7,500 -- --
---------- ----------- -----------
Total long-term obligations (including current portion)................. 27,192 19,692 692

Members'/Stockholders' equity (deficit):
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
12,716,964 issued and outstanding (pro forma and pro forma as adjusted,
respectively)........................................................... -- 9 13
Additional paid-in capital................................................ -- 13,568 60,434
Accumulated deficit....................................................... -- (25,720) (25,720)
---------- ----------- -----------
Total members'/stockholders' equity (deficit)........................... (19,643) (12,143) 34,727
---------- ----------- -----------
Total capitalization.................................................. $ 7,549 $ 7,549 $ 35,419
---------- ----------- -----------
---------- ----------- -----------

The outstanding share information excludes:

- 58,521 shares reserved for issuance upon the exercise of an outstanding
warrant at a price of $1.71 per share.

DILUTION

After giving effect to (i) the conversion of the $7.5 million of outstanding
convertible debt held by Nortel Networks into an aggregate of 807,143 shares of
common stock concurrently with the closing of this offering and (ii) 216,964
shares of common stock issuable to Williams concurrently with the closing of
this offering the pro forma net tangible book value of ZipLink as of March 31,
1999 would have been $(9.4 million), or $(1.02) 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
the initial public offering price of $14.00 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 March 31, 1999 would have
been $2.73 per share. This represents an immediate accretion in the net tangible
book value of $3.75 per share to existing stockholders and an immediate dilution
in net tangible book value of $11.27 per share to new investors purchasing
shares at the assumed initial public offering price. The following table
illustrates this per share dilution.

Initial public offering price per share....................... $ 14.00
---------
Pro forma net tangible book value per share as at March 31,
1999...................................................... $ (1.02)
Increase per share attributable to new investors............ $ 3.75
---------
Pro forma net tangible book value per share after the
offering.................................................... 2.73
---------
Dilution per share to new investors (1)....................... $ 11.27
---------
---------

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

(1) If the underwriters' over-allotment is exercised in full, the pro forma net
tangible book value per share after the offering would be $3.14, resulting
in an immediate dilution of $10.86 per share to investors purchasing shares
in this offering.

The following table summarizes, on a pro forma basis, as of March 31, 1999,
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, (iii) Williams, and (iv) investors
purchasing shares from us in this offering at the initial public offering price
of $14.00 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, our predecessor in interest.

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

Nortel Networks(1)..................................... 1,634,781 12.9% $ 10,000,000 16.2% $ 6.12
Other existing stockholders............................ 7,365,219 57.9 9,500 -- --
Williams............................................... 216,964 1.7 2,700,000 4.4 12.44
New investors.......................................... 3,500,000 27.5 49,000,000 79.4 14.00
------------- --- ------------- ---
Total.............................................. 12,716,964 100% $ 61,709,500 100%
------------- --- ------------- ---
------------- --- ------------- ---

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

(1) Includes 827,638 shares purchased from us for $3.02 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
357,143 shares of common stock issued upon conversion of a $5.0 million
convertible debenture at a conversion price of $14.00 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 March 31, 1999 have been exercised. There were, as of March 31, 1999,
outstanding options to purchase 364,470 shares of common stock, exerciseable at
a weighted average price of $2.67 per share, and an outstanding warrant to
purchase 58,521 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 November 21, 1995 (date of
inception) to December 31, 1995 and the balance sheet data as of December 31,
1995 have been derived from unaudited financial statements 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 selected statement of operations data for the three months
ended March 31, 1998 and 1999 and the balance sheet data as of March 31, 1999
have been derived from our unaudited financial statements which are included
elsewhere in this prospectus and which include, in our opinion, all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of our financial position and the results of our operations for
those periods. Operating results for the three months ended March 31, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. 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.

(UNAUDITED) (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Revenues..................................... $ -- $ 756 $ 5,236 $ 7,088 $ 1,678 $ 2,745
Cost of revenues............................. -- 1,782 3,187 6,271 1,286 1,758
Selling, general and administrative.......... 25 7,373 6,507 5,174 1,247 1,385
Depreciation and amortization................ 1 384 1,084 2,637 488 950
------------- --------- --------- --------- --------- ---------
Total costs and expenses................... 26 9,539 10,779 14,082 3,020 4,093
------------- --------- --------- --------- --------- ---------
Loss from operations......................... (26) (8,783) (5,543) (6,994) (1,342) (1,348)
Interest and other expenses, net........... -- 19 1,167 1,452 267 389
------------- --------- --------- --------- --------- ---------
Net loss..................................... $ (26) $ (8,802) $ (6,709) $ (8,446) $ (1,609) $ (1,737)
------------- --------- --------- --------- --------- ---------
------------- --------- --------- --------- --------- ---------
PRO FORMA DATA:
Pro forma net loss........................... $ (26) $ (8,802) $ (6,709) $ (8,446) $ (1,609) $ (1,737)
Pro forma net loss per common share-- basic
and diluted................................ (0.00) (1.16) (0.90) (1.03) (0.20) (0.21)
Weighted average common shares
outstanding--basic and diluted............. 7,590 7,590 7,418 8,193 8,193 8,193
OTHER FINANCIAL DATA:
Capital expenditures......................... $ 79 $ 4,219 $ 8,516 $ 1,313 $ 791 $ 199
EBITDA(1).................................... (25) (8,399) (4,527) (4,502) (854) (436)

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

(1) EBITDA consists of net loss excluding net interest, taxes, and depreciation
and amortization expenses. 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 March 31, 1999
gives effect to (i) the Reorganization, (ii) the conversion of all outstanding
convertible debt into common stock concurrently with the closing of this
offering, (iii) the issuance of 216,964 shares of common stock to Williams
concurrently with the closing of this offering, at an effective price of $12.44
per share, (iv) the sale of 3,500,000 shares of common stock in this offering at
the initial public offering price of $14.00 per share, after deducting the
underwriting discount and estimated offering expenses, and (v) the application
of the estimated net proceeds from the offering, including the repayment of the
note payable to Fleet Bank in the amount of $19.0 million.

AS OF MARCH 31, 1999
AS OF DECEMBER 31, -----------------------
--------------------------------------------- PRO FORMA
1995 1996 1997 1998 ACTUAL AS ADJUSTED
----------- --------- --------- ---------- ---------- -----------

(UNAUDITED) (UNAUDITED)

(DOLLARS IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents................. $ 2,074 $ 301 $ 1,082 $ 512 $ 303 $ 25,473
Working capital (deficit)................. (78) (6,841) (5,317) (3,062) (2,927) 25,818
Total assets.............................. 2,185 4,569 12,984 11,174 10,781 38,651
Long-term debt, net of current portion.... -- -- 15,803 17,939 19,214 214
Convertible debentures, net of current
portion................................. -- -- -- 7,000 6,625 --
Members'/Stockholders' equity (deficit)... 1 (3,024) (9,748) (18,089) (19,643) 34,727

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 from the provision of direct
Internet access to retail users. 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 points of
presence. We commenced revenue generating operations from WebTV in December,
1996. 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 receive a fixed price per WebTV subscriber per
month if WebTV uses us as its first choice provider of connectivity to WebTV. If
we are not designated as the first choice provider by WebTV, we receive an
hourly rate to the extent that a WebTV subscriber actually obtains connectivity
through our network.

We also provide wholesale national dial-up Internet access and enhanced
services, including digital subscriber line service where available, under the
name ZipDial, to 85 Internet service providers (as of April 30, 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 are derived 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 March 31,
1999 was $25.7 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.

THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------- -----------------

1996 1997 1998 1998 1999
-------- ------- ------- ------- -------
Revenues.............................................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues...................................................... 235.9 60.9 88.5 76.6 64.0
Selling, general and administrative................................... 975.6 124.3 73.0 74.3 50.4
Depreciation and amortization......................................... 50.8 20.7 37.2 29.1 34.6
-------- ------- ------- ------- -------
Loss from operations.................................................. (1,162.3) (105.9) (98.7) (80.0) (49.0)
Interest and other expenses, net...................................... (2.5) (22.2) (20.5) (15.9) (14.2)
-------- ------- ------- ------- -------
Net loss.............................................................. (1,164.8)% (128.1)% (119.2)% (95.9)% (63.2)%
-------- ------- ------- ------- -------
-------- ------- ------- ------- -------

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

REVENUES. Revenues increased 58.8% from $1.7 million for the three months
ended March 31, 1998 to $2.7 million for the three months ended March 31, 1999.
This increase was due to WebTV revenues, which increased from $1.0 million for
the three months ended March 31, 1998 to $2.2 million for the three months ended
March 31, 1999. During this period, revenue from direct retail users decreased
from $526,000 for the three months ended March 31, 1998 to $390,000 for the
three months ended March 31, 1999. Revenues from ZipDial services for the three
months ended March 31, 1999 were $77,000.

COST OF REVENUES. Cost of revenues consist primarily of telecommunications
costs and collocation costs for super points of presence. Cost of revenues
increased 38.5% from $1.3 million for the three months ended March 31, 1998 to
$1.8 million for the three months ended March 31, 1999. This increase was
primarily due to an increase in telecommunication costs and, to a lesser extent
an increase in collocation costs.

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. Selling, general and administrative
expenses increased 16.7% from $1.2 million for the three months ended March 31,
1998 to $1.4 million for the three months ended March 31, 1999. This increase
was primarily due to salaries, marketing and administrative expenses associated
with the growth in our ZipDial program and business strategies, partially offset
by a reduction in professional services.

DEPRECIATION AND AMORTIZATION. Depreciation expense increased from $488,000
for the three months ended March 31, 1998 to $950,000 for the three months ended
March 31, 1999. Substantially all of this increase resulted from the effect of
additional capital assets purchased and placed in service during 1998.

INTEREST EXPENSE. Interest expense increased from $277,000 for the three
months ended March 31, 1998 to $356,000 for the three months ended March 31,
1999. This increase was due to interest on an additional $7.0 million of
convertible debt from Nortel Networks and increased borrowings on our line of
credit.

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 $2.1 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 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 super points of presence increased in 1998 as the number of
super points of presence increased from ten at December 31, 1997 to 18 at
December 31, 1998.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
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 was 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 access market.

DEPRECIATION AND AMORTIZATION. 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 $600,000 in 1996 to $2.1 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 access 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 March 31, 1999, 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 and March 31, 1999, we had $301,000, $1.1 million, $512,000 and $303,000,
respectively, in cash and cash equivalents.

Net cash used in operating activities was $6.0 million, $3.4 million, $8.9
million and $1.3 million for the years ended December 31, 1996, 1997 and 1998,
and for the three months ended March 31, 1999, 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 operating activities for the
three months ended March 31, 1999 is primarily attributable to our net loss,
increases in accounts receivable and prepaid expenses and decreases in amounts
due to affiliates partially offset by depreciation and amortization and the
increases in accounts payable and deferred revenue.

Net cash used in investing activities was $4.3 million, $7.0 million, $1.3
million and $199,000 for the years ended December 31, 1996, 1997 and 1998, and
for the three months ended March 31, 1999, respectively. Principal investments
were for capital expenditures which amounted to $4.2 million, $7.0 million, $1.3
million and $199,000 for the years ended December 31, 1996, 1997 and 1998, and
the three months ended March 31, 1999, 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,
$9.7 million and $1.3 million for the years ended December 31, 1996, 1997 and
1998, and the three months ended March 31, 1999, respectively. Net cash provided
by financing activities includes approximately $5.8 million of net contributions
from Henry and Eric Zachs and their affiliates in 1996 and approximately $2.5
million of net distributions to Henry and Eric Zachs and their affiliates in
1997, 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 to $25.0 million in April, 1999 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 intend to terminate
this facility after the closing of this offering. 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

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
additional 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 e-mail filtering and forwarding (user managed, selective e-mail forwarding).
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 digital
subscriber line 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.

One such Internet access device is the WebTV set-top box from WebTV Networks
which allows users to access the Internet through a television. WebTV's
subscribers pay a monthly fee of $19.95 to receive the WebTV service. WebTV
launched its service in late 1996 and was acquired in 1997 by Microsoft for
approximately $425.0 million. WebTV reports its current subscribers as 700,000.

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 in the U.S., increasing to 72.9 million in 2002. IDC also
estimates that U.S. shipments of Internet appliances will increase from 3.0
million in 1998 to 27.8 million in 2002, representing a compound annual growth
rate of 74%.

THE INTERNET ACCESS INDUSTRY

The rapid development and growth of the Internet has resulted in a highly
fragmented industry of over 5,000 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.

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 digital
subscriber line 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

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 goal by implementing
the following key strategies:

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 CLOSE RELATIONSHIPS WITH KEY CUSTOMERS AND SUPPLIERS. We seek to
establish and sustain close relationships 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.

KEY SUPPLIER RELATIONSHIPS

As an important 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 close
relationships 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 series of agreements with Bay Networks, Inc., now a
subsidiary of Northern Telecom Limited, or Nortel Networks, a major manufacturer
of telecommunications equipment. As a part of these agreements, 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 our common stock. Following this offering, Nortel
Networks will own approximately 12.9% of our outstanding common stock. We agreed
to purchase network services from Nortel Networks and, to date, have purchased
approximately $7.2 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
testing facility or "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 featuring co-branded print
advertising and direct mail solicitations. We believe that

our relationship 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."

We have also recently entered into a relationship with Williams, a major
telecommunications carrier. As a part of this supplier relationship, we have
committed to purchase $5.4 million of network services from Williams over the
next three years and will pay for these services, in part, by using our common
stock. These network services will substitute for those services we presently
purchase from MCIWorldCom, including the provision of a system of high-speed
network connections between our super points of presence, our network operations
center and the Internet (known in our industry as a "backbone"). Concurrently
with the closing of this offering, we will issue 216,964 shares of common stock
to Williams to be applied as partial payment for these network services we use
in the future. For purposes of purchasing such services, the shares of common
stock to be issued to Williams will be valued at $2.7 million, or the equivalent
of $12.44 per share, which is equal to approximately 89% of the initial public
offering price at the initial public offering price of $14.00 per share. The
Company believes this discount from the initial public offering price is
principally warranted by the limited marketability of the shares to be issued to
Williams inasmuch as such shares may not be sold by Williams for a period of
between 180 days and three years after the consumation of this offering due to
legal and contractual restrictions. The eligibility for future sale of the
shares issued to Williams is discussed in greater detail under the heading
"Shares Eligible for Future Sale." We expect to begin using Williams network
services in July, 1999 and to gradually migrate our network backbone from
MCIWorldCom to Williams. We believe that our relationship with Williams will,
among other things, help assure us of access to backbone capacity in the future,
an important consideration for Internet access providers.

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 (TV set-top boxes and personal
computers) 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. Prices of such devices generally range from $99.95

to $199.95. 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 national provider of Internet connectivity to WebTV. 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. We receive a fixed price per subscriber per
month if WebTV uses us as its first choice provider of connectivity for a
WebTV subscriber. If we are not designated as the first choice provider by
WebTV, we receive an hourly rate to the extent that a WebTV subscriber
actually obtains connectivity through our network. WebTV has complete
discretion in determining whether we are designated as a first choice
provider and, accordingly, controls whether we receive revenue based on
fixed or hourly pricing. Since August 1998, 90.0% of our revenues from
WebTV have been from fixed price billing. 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 June, 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. Our agreement with
WebSurfer provides for a fixed monthly charge per WebSurfer customer that
uses our network.

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 contractually-established targets are not met. To
date, the Beepwear watch has been sold in limited quantities.

- 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 has been marketed only on a
limited basis and 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 digital subscriber line service. Digital subscriber
line 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 digital
subscriber line 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 digital subscriber line access to their subscribers without incurring
these substantial up-front investments.

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

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 of $100.00 and are charged monthly for local dial-up access on
the basis of the number of 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, although customers who accrue less than $500.00
per month of charges, after an introductory period, are charged an additional
$100.00 as a maintenance fee for such month plus actual accrued usage. 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. ZipDial
customers have a choice of two pricing plans. Under one plan, our customers pay
$8.00 per subscriber per month for unlimited access during off peak hours and up
to 30 hours per subscriber per month during peak hours. Under this plan, hours
can be aggregated among all subscribers covered by such plan. For example, if a
customer has 1,000 subscribers under the plan, the customer's subscribers may
use, in the aggregate, up to 30,000 hours of peak usage in such month before the
customer incurs additional charges. Under an alternate plan, our customers pay
$8.00 per subscriber per month for up to 150 hours of use by such subscriber
(whether during peak or off-peak hours). This latter plan does not allow for
aggregation of hours among subscribers covered by this plan. In the event a
customer's subscribers exceed the usage limitations under either plan, a charge
of $.65 per hour is imposed. 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 April 30, 1999, had
enrolled 85 Internet service providers into our ZipDial program. One such
customer is DirectWeb, Inc. 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 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 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 Innovator 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 key suppliers 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 5,000 Internet service providers
nationwide. In addition, we are planning joint marketing efforts focusing on our
digital subscriber line 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 digital subscriber line 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 eight sales representatives as of April 30, 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 20 "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 our network
backbone which is currently 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. We anticipate gradually
migrating our network backbone from MCI WorldCom to Williams commencing in July,
1999.

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

NETWORK ARCHITECTURE

ZipLink's network architecture features 20 super points of presence. A super
point of presence 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 super point of presence 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, a quality known in our industry 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
super point of presence 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 super point of
presence 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 super points of presence is 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 provides 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 relationships with key
customers and suppliers and to gain early access to new markets and new
technologies; and

- our ability to support industry standards.

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 Williams, AT&T Corporation, 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.

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.

EMPLOYEES

As of March 31, 1999, 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 super points
of presence.

LEGAL PROCEEDINGS

ZipLink has commenced a legal 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 74,845 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 74,845 shares which would be received in exchange
therefor upon consummation of the Reorganization. Although we believe we will
prevail in this legal 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

Russel S. Bernard...................... 41 Nominee for director

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

Wayne A. Martino....................... 40 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 1993.
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 listed on the Johannesburg Stock Exchange. 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.

RUSSEL 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 upon consummation of 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

ANNUAL COMPENSATION LONG-TERM 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) 52,606 $1,685(4)
President and Director

Ronald Lipof....................... $ 98,461 $ 13,500 $ -- 81,585 $ --
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......... 52,606 14% 3.06 November 20, 2008 8,049 16,097

Ronald Lipof................ 81,585 22 2.21 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.................................... -- 52,606 $ -- $ 575,510

Ronald Lipof........................................... -- 81,585 $ -- $ 961,887

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

(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 $14.00 per share, the 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 upon consummation
of 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 .82
shares of common stock for each membership interest. The options outstanding to
purchase membership interests in ZipLink, LLC, a Delaware limited liability
company, on March 31, 1999 will be converted into options to purchase 364,470
shares of common stock, at a weighted average exercise price of $2.67 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 406,300 shares of common stock under the Stock Option Plan
to certain of its directors and employees at a weighted average exercise price
of $13.79 per share.

401(K) PLAN. Prior to the closing of the offering, we intend to adopt a
defined contribution plan intended to qualify under Section 401 of the Code to
be designated the ZipLink, Inc. Employees' 401(k) Profit Sharing Plan. We intend
that such plan will be the successor to a 401(k) Plan adopted by ZipLink, LLC.
All personnel who have completed 90 days of service with ZipLink will be
eligible to participate and enter the plan as of the earlier of the first day of
January, April, July or October 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, and may make discretionary contributions in
proportion to such participant's earnings. Each participant will be fully vested
in his or her contributions and the investment earnings thereon. After five
years of service, participants will become fully vested in the matching
contributions and discretionary contributions, if any, made by ZipLink.
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. On May 25, 1999, we converted 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.

On May 25, 1999, all of the membership units in the Delaware LLC were
transferred to a newly-formed Delaware corporation known as ZipLink, Inc.
Immediately following such transfer, the Delaware LLC merged with and into
ZipLink, Inc., as a result of which all of the assets and liabilities of the
Delaware LLC were transferred to ZipLink, Inc. In connection with such transfer
of membership units and merger, each membership unit in the Delaware LLC (other
than membership units held by Nortel Networks and the Zachs Partnership) was
exchanged into approximately .82 shares of common stock of ZipLink, Inc., each
option and warrant to acquire a membership unit in the Delaware LLC was
exchanged for an option or warrant, as applicable, to purchase approximately .82
shares of our common stock, each membership unit in the Delaware LLC held by
Nortel Networks was exchanged into approximately .83 shares of common stock,
each membership unit in the Delaware LLC held by the Zachs Partnership was
exchanged into approximately .82 shares of common stock, and the additional
capital contributions provided by the Zachs Founders were exchanged into 104,977
shares of common stock. After such exchange, Henry Zachs, Eric Zachs, and the
Zachs Partnership, will own, 75,989, 75,989, and 6,839,002 shares of our common
stock, respectively. Christopher Jenkins owns 374,239 shares of our common stock
and Nortel Networks owns 1,634,781 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 357,143 shares of common stock at the initial public
offering price.

PURCHASES FROM NORTEL NETWORKS. We purchased equipment and services from
Nortel Networks, in the aggregate amounts of $6.1 million in 1997, $1.0 million
in 1998 and $102,000 during the three months ended March 31, 1999. Commencing
100 days after the installation of our fifteenth super point of presence 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 and to $25.0 million in April, 1999. 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 and to terminate that facility after the closing of
this offering. 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
and purchased long distance telephone service under a reseller agreement dated
February 15, 1996 with ZipCall Long Distance. The total amounts paid to ZipCall
Long Distance in 1996, 1997, 1998 and for the three months ended March 31, 1999
were $88,000, $233,000, $83,000 and $10,000, 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. ZipLink terminated its purchase of long distance telephone service from
ZipCall Long Distance in April, 1999.

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
$156,000, $170,000 and $63,000, 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 4,080
shares of common stock at an exercise price of $3.06 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 March 31, 1999 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 March 31, 1999 and includes (i) 807,143 shares issuable upon
the conversion of convertible debt, which conversion will occur concurrently
with the closing of this offering and (ii) 216,964 shares issued to Williams
concurrently with the closing of this offering. There were, as of March 31,
1999, outstanding options to purchase 364,470 shares of common stock,
exerciseable at a weighted average price of $2.67 per share, and an outstanding
warrant to purchase 58,521 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)........................ 6,839,002 74.2% 53.8%
Henry M. Zachs(1)(2).................................................. 6,914,991 75.0 54.4
Eric M. Zachs(1)(2)................................................... 6,914,991 75.0 54.4
Northern Telecom Limited(3)........................................... 1,634,781 17.7 12.9
Christopher W. Jenkins(4)............................................. 400,542 4.1 3.1
Ronald C. Lipof(5).................................................... 40,793 -- *
Gary P. Strickland.................................................... -- -- --
Russel S. Bernard..................................................... -- -- --
Jai P. Baghat......................................................... -- -- --
Wayne A. Martino(6)................................................... 4,080 * *
Alan M. Mendelson..................................................... -- -- --
----------- -------------- -------------
All executive officers, directors and director nominees as a group (11
persons)............................................................ 7,477,188 79.9% 58.3%

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

* 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 6,839,002 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 827,638 shares owned by Bay Networks, Inc., a subsidiary of
Northern Telecom Limited, and 807,143 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) Includes 26,303 shares issuable upon exercise of options exerciseable upon
the closing of this offering.

(5) Represents 40,793 shares issuable upon exercise of options exercisable upon
the closing of this offering.

(6) Represents 4,080 shares issuable upon exercise of options exercisable 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, the conversion of all convertible debt into shares of
common stock and the issuance of 216,964 shares to Williams, there will be
outstanding 12,716,964 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 58,521 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 770,770 shares of common stock at a weighted average
exercise price of $8.53 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--Registration Rights."

Williams is also entitled to registration rights with respect to the 216,964
shares of common stock to be issued to it concurrently with this offering. 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 Williams, 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 Williams may include in the
registration. The registration rights granted to Williams will terminate at such
time as Williams is 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 Williams, except any
underwriting discounts and commissions.

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
12,716,964 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 9,216,964 shares of common stock held by
existing stockholders, Nortel Networks and Williams, 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.

WILLIAMS TRANSFER RESTRICTION

In connection with the issuance of 216,964 shares of common stock to
Williams, Williams has agreed that the maximum number of such shares which it
may sell during each one-year period following the offering shall be the greater
of (a) the number of shares having a value (based on approximately 89% of the
initial public offering price per share) equal to one half of the charges for
telecommunication services used by ZipLink as of the date of any proposed sale,
or (b) one third of the total number of shares issued to Williams. This
contractual restriction terminates on the third anniversary of the delivery of
the shares to Williams.

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 127,170 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, holders of shares of our common stock, or
their transferees, will be entitled to certain rights with respect to the
registration of 9,072,321 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 March 31,
1999, options to purchase 364,470 shares of common stock were issued and
outstanding. Upon the expiration of the lock-up agreements described above, at
least 193,863 shares of common stock will be subject to vested options (based on
options outstanding as of March 31, 1999). 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............................................................................ 1,210,000
First Albany Corporation............................................................................ 1,210,000
Bear, Stearns & Co. Inc............................................................................. 80,000
Credit Lyonnais Securities (USA) Inc................................................................ 80,000
A.G. Edwards & Sons, Inc............................................................................ 80,000
Hambrecht & Quist LLC............................................................................... 80,000
Lazard Freres & Co. LLC............................................................................. 80,000
Morgan Stanley & Co. Incorporated................................................................... 80,000
Salomon Smith Barney Inc............................................................................ 80,000
Wasserstein Perella Securities, Inc................................................................. 80,000
William Blair & Company, L.L.C...................................................................... 40,000
Dain Rauscher Wessels, a division of Dain Rauscher Incorporated..................................... 40,000
Hoak Breedlove Wesneski & Co........................................................................ 40,000
Kaufman Bros., L.P.................................................................................. 40,000
Ladenburg Thalmann & Co. Inc........................................................................ 40,000
Morgan Keegan & Company, Inc........................................................................ 40,000
U.S. Bancorp Piper Jaffray Inc...................................................................... 40,000
Raymond James & Associates, Inc..................................................................... 40,000
Tucker Anthony Cleary Gull.......................................................................... 40,000
C.E. Unterberg, Towbin.............................................................................. 40,000
First Security Van Kasper........................................................................... 40,000
------------
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 $0.58 per share. The underwriters may allow, and such dealers may re-allow, a
discount not in excess of $0.10 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......................................................... $ 0.98 $ 0.98
Total............................................................. $ 3,430,000 $3,944,500

Other expenses of this offering payable by ZipLink are estimated to be
$1,400,000.

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 underwriters, at our request, have reserved for sale at the initial
public offering price up to six percent (6%) of the shares of common stock to be
sold in this offering for sale to our employees and other persons designated by
us. The number of shares available for sale to the general public will be
reduced to the extent that any reserved shares are purchased. Any reserved
shares not so purchased will be offered by the underwriters on the same basis as
the other shares offered hereby.

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 has been determined by negotiation among ZipLink and the representatives
of the underwriters. The factors considered in determining the initial public
offering price included 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 9,384 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-18

Balance Sheet...................................................................................................... F-19

Statement of Cash Flows............................................................................................ F-20

Notes to Financial Statements...................................................................................... F-21

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.

/s/ Arthur Andersen LLP

Boston, Massachusetts
March 10, 1999

(except with respect to the matter
discussed in Note 7 for which the
date is April 16, 1999)

F-2

ZIPLINK, LLC

BALANCE SHEETS

DECEMBER 31, MARCH 31, 1999
--------------------------- ----------------------------
PRO FORMA
1997 1998 ACTUAL (NOTE 3)
------------ ------------- ------------- -------------
(UNAUDITED)

ASSETS
Current Assets:
Cash and cash equivalents............................ $ 1,081,505 $ 512,055 $ 303,060 $ 303,060
Accounts receivable, less allowance for doubtful
accounts of approximately $153,000, $68,000 and
$40,000 at December 31, 1997, 1998, and at March
31, 1999, respectively............................. 474,780 678,683 895,908 895,908
Prepaid expenses and other current assets............ 56,224 70,964 459,399 459,399
------------ ------------- ------------- -------------
Total current assets............................. 1,612,509 1,261,702 1,658,367 1,658,367
------------ ------------- ------------- -------------
Property and Equipment, at cost:
Network equipment.................................... 11,719,967 12,659,088 12,700,674 12,700,674
Computer equipment and software...................... 289,973 356,789 369,485 369,485
Leasehold improvements............................... 595,706 756,901 756,901 756,901
Furniture, fixtures and equipment.................... 105,948 107,764 107,764 107,764
Vehicles............................................. 20,416 20,416 20,416 20,416
------------ ------------- ------------- -------------
12,732,010 13,900,958 13,955,240 13,955,240
Less--Accumulated depreciation and amortization...... 1,460,805 4,097,553 4,941,173 4,941,173
------------ ------------- ------------- -------------
11,271,205 9,803,405 9,014,067 9,014,067
Other Assets........................................... 100,772 108,772 108,772 108,772
------------ ------------- ------------- -------------
Total assets..................................... $ 12,984,486 $ 11,173,879 $ 10,781,206 $ 10,781,206
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------

LIABILITIES AND MEMBERS'/STOCKHOLDERS' DEFICIT
Current Liabilities:
Current portion of convertible debentures............ $ -- $ 500,000 $ 875,000 $ --
Current portion of capital lease obligation.......... 410,029 464,531 477,169 477,169
Accounts payable..................................... 4,840,141 881,199 1,007,983 1,007,983
Accrued expenses..................................... 971,051 1,882,424 1,932,087 1,932,087
Deferred revenue..................................... 228,921 119,672 292,864 292,864
Amounts due to affiliates, net....................... 479,561 476,140 -- --
------------ ------------- ------------- -------------
Total current liabilities........................ 6,929,703 4,323,966 4,585,103 3,710,103
Note Payable To a Bank................................. 15,000,000 17,600,000 19,000,000 19,000,000
Capital Lease Obligation, less current portion......... 803,112 338,580 214,443 214,443
Convertible Debentures................................. -- 7,000,000 6,625,000 --
------------ ------------- ------------- -------------
Total liabilities................................ 22,732,815 29,262,546 30,424,546 22,924,546
------------ ------------- ------------- -------------
Commitments and Contingencies (Notes 13, 15 and 17)
Members'/Stockholders' Deficit:
Common Stock, $.001 par value, 50,000,000 shares
authorized, 9,000,000 shares issued and outstanding
at March 31, 1999 on a pro forma basis............... -- -- -- 9,000
Additional paid in capital............................. -- -- -- 13,568,395
Accumulated deficit.................................... -- -- -- (25,720,735)
------------ ------------- ------------- -------------
Total members'/stockholders' deficit................... (9,748,329) (18,088,667) (19,643,340) (12,143,340)
------------ ------------- ------------- -------------
Total liabilities and members'/stockholders'
deficit........................................ $ 12,984,486 $ 11,173,879 $ 10,781,206 $ 10,781,206
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------

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

F-3

ZIPLINK, LLC

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS
ENDED
FOR THE YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- ----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
(UNAUDITED)

Revenues.......................... $ 755,655 $5,235,830 $7,088,200 $1,678,262 $2,745,324
---------- ---------- ---------- ---------- ----------
Costs and Expenses:
Cost of revenues................ 1,782,430 3,186,777 6,271,169 1,285,809 1,758,390
Selling, general and
administrative................ 7,372,740 6,507,490 5,174,370 1,246,769 1,384,828
Depreciation and amortization... 383,965 1,084,393 2,636,748 488,044 950,037
---------- ---------- ---------- ---------- ----------
Total costs and expenses.... 9,539,135 10,778,660 14,082,287 3,020,622 4,093,255
---------- ---------- ---------- ---------- ----------
Loss from operations........ (8,783,480) (5,542,830) (6,994,087) (1,342,360) (1,347,931)
---------- ---------- ---------- ---------- ----------
Other Expenses:
Interest expense................ (30,492) (1,098,119) (1,344,285) (276,675) (355,816)
Interest income................. 11,217 426 37,029 9,886 4,845
Other income (expense).......... 630 (68,902) (144,514) -- (37,969)
---------- ---------- ---------- ---------- ----------
(18,645) (1,166,595) (1,451,770) (266,789) (388,940)
---------- ---------- ---------- ---------- ----------
Net loss.................... $(8,802,125) $(6,709,425) $(8,445,857) $(1,609,149) $(1,736,871)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net Loss per Unit (Note 2(n)):
Net loss per unit--
basic and diluted............. $ (0.96) $ (0.75) $ (0.85) $ (0.16) $ (0.18)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Weighted average units--
basic and diluted............. 9,174,312 8,963,982 9,899,083 9,899,083 9,899,083
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Pro Forma Net Loss per Share
(Note 2(n)):
Pro forma net loss per share--
basic and diluted............. $ (1.16) $ (0.90) $ (1.03) $ (0.20) $ (0.21)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Pro forma weighted average
shares--basic and diluted..... 7,589,763 7,418,425 8,192,857 8,192,857 8,192,857
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------

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

F-4

ZIPLINK, LLC

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

AND THE THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)

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)
Net loss......................................................... (1,563,184) (173,687) (1,736,871)
Members' contributions........................................... 180,000 -- 180,000
Compensation associated with the issuance of unit options........ 1,978 220 2,198
-------------- ------------ --------------
Members' Equity (Deficit), March 31, 1999 (unaudited).............. $ (21,121,133) $ 1,477,793 $ (19,643,340)
-------------- ------------ --------------
-------------- ------------ --------------

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

F-5

ZIPLINK, LLC

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------- ------------------------
1996 1997 1998 1998 1999
----------- ----------- ----------- ----------- -----------
(UNAUDITED)

Cash Flows from Operating Activities:
Net loss..................................... $(8,802,125) $(6,709,425) $(8,445,857) $(1,609,149) $(1,736,871)
Adjustments to reconcile net loss to net cash
used in operating activities--
Depreciation and amortization.............. 383,965 1,084,393 2,636,748 488,044 950,037
Loss on disposal of property and
equipment................................ -- 53,053 143,844 -- 37,969
Compensation expense associated with the
issuance of unit options and warrants.... -- -- 105,519 96,730 2,198
Changes in operating assets and
liabilities--
Accounts receivable, net................. (159,940) (314,840) (203,903) (342,617) (217,225)
Prepaid expenses and other current
assets................................. (81,603) 57,221 (14,740) (21,381) (388,435)
Accounts payable......................... 1,292,629 3,476,809 (3,958,942) 199,275 126,784
Accrued expenses......................... 1,444,417 (473,366) 911,373 704,511 229,663
Deferred revenue......................... 177,136 51,785 (109,250) (18,095) 173,192
Due to affiliates........................ (206,101) (578,276) (3,421) (2,588) (476,140)
----------- ----------- ----------- ----------- -----------
Net cash used in operating
activities........................... (5,951,622) (3,352,646) (8,938,629) (505,270) (1,298,828)
----------- ----------- ----------- ----------- -----------
Cash Flows from Investing Activities:
Purchases of property and equipment.......... (4,218,716) (6,969,558) (1,312,792) (790,703) (198,668)
Proceeds from sale of property and
equipment.................................. -- 20,765 -- -- --
Increase in other assets..................... (80,772) (20,000) (8,000) (18,000) --
----------- ----------- ----------- ----------- -----------
Net cash used in investing
activities........................... (4,299,488) (6,968,793) (1,320,792) (808,703) (198,668)
----------- ----------- ----------- ----------- -----------
Cash Flows from Financing Activities:
Proceeds from convertible debentures......... -- -- 7,500,000 500,000 --
Proceeds from borrowings under notes
payable.................................... 2,700,970 11,450,000 2,600,000 -- 1,400,000
Payments of principal made on capital lease
obligations................................ -- (333,388) (410,029) (92,936) (111,499)
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 9,689,971 407,064 1,288,501
----------- ----------- ----------- ----------- -----------
Net (Decrease) Increase in Cash and Cash
Equivalents.................................. (1,773,146) 780,411 (569,450) (906,909) (208,995)

Cash and Cash Equivalents, beginning of
period....................................... 2,074,240 301,094 1,081,505 1,081,505 512,055
----------- ----------- ----------- ----------- -----------
Cash and Cash Equivalents, end of period....... $ 301,094 $ 1,081,505 $ 512,055 $ 174,596 $ 303,060
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Supplemental Disclosure of Cash Flow
Information:
Cash paid for interest....................... $ 30,402 $ 1,034,506 $ 1,242,138 $ 207,182 $ 382,759
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Supplemental Disclosure of Non-Cash Financing
and Investing Activities:
Acquisition of equipment pursuant to capital
lease obligation........................... $ -- $ 1,546,529 $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Forgiveness of accrued compensation by
Capital Member............................. $ -- $ -- $ -- $ -- $ 180,000
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------

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

F-6

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(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). 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 $25.7
million since inception and has funded these losses principally through the
issuance of debt and equity securities. The Company has a members' deficit of
$19.6 million as of March 31, 1999 and is dependent on raising additional
capital in the short term to satisfy ongoing capital needs. As discussed in Note
7, a 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) INTERIM FINANCIAL STATEMENTS

The accompanying balance sheet as of March 31, 1999 and the statements
of operations and cash flows for the three months ended March 31, 1998 and
1999, and the statement of members' equity (deficit) for the three months
ended March 31, 1999 are unaudited, but in the opinion of the management,
include all adjustments, consisting only of normal recurring adjustments
necessary for a fair presentation of results for these interim periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted, although the Company believes that the
disclosures included are adequate to make the information presented not
misleading. The results of operations for the three months ended March 31,
1999 are not necessarily indicative of the results to be expected for the
entire fiscal year.

(B) 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.

F-7

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

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.

(D) REVENUE RECOGNITION

The Company recognizes revenue over the period in which the services are
performed. Deferred revenue relates to advanced service billings and are
$228,921, $119,672 and $292,864 at December 31, 1997 and 1998 and March 31,
1999, respectively.

(E) 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....................... 3-5 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.

(F) 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. In March, 1999, the Company repaid all
outstanding amounts due to affiliates.

(G) OTHER ASSETS

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

(H) 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.

F-8

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(I) 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%, 85% and 87% of accounts receivable at December 31, 1997 and 1998 and
March 31, 1999, respectively.

(J) 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.

(K) STOCK-BASED COMPENSATION

The Company adopted SFAS No. 123 ACCOUNTING FOR STOCK-BASED COMPENSATION
in 1996. 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.

(L) 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.

(M) POSTRETIREMENT BENEFITS

The Company has no obligations for postretirement benefits.

(N) NET LOSS PER UNIT AND PRO FORMA NET LOSS PER SHARE

The Company has adopted SFAS No. 128, EARNINGS PER SHARE. Basic net loss
per common share/unit is computed using the weighted average number of
shares of common stock/units outstanding during the period. Diluted net loss
per common share/unit is the same as basic net loss per common share/unit
since the effects of the Company's potential common stock/unit equivalents
are antidilutive. In accordance with Staff Accounting Bulletin No. 98, the
Company has determined that there were no nominal issuances of common
stock/units or potential common stock/units in the period prior to the
Company's planned IPO. Pro forma net loss per common share assumes

F-9

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

the Company's conversion into a Delaware corporation (see Note 17) and the
conversion of the members' equity into capital stock. Antidilutive
securities, which consist of unit options and convertible debentures that
are not included in diluted net loss per unit were 55,044, 9,170, 574,459,
15,052 and 570,299 for the year ended December 31, 1996, 1997 and 1998 and
for the three months ended March 31, 1998 and 1999, respectively.
Antidilutive securities, which consist of stock options and convertible
debentures that are not included in pro forma diluted net loss per common
share were 44,907, 7,481, 1,174,977, 97,481 and 1,171,583 for the years
December 31, 1996, 1997 and 1998, and for the three months ended March 31,
1998 and 1999, respectively.

(O) 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 effective beginning January 1, 1999. The adoption of this statement
did not have a material impact on the Company's financial position or
results of operations.

(3) PRO FORMA PRESENTATION (UNAUDITED)

The pro forma balance sheet as of March 31, 1999 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 $14.00 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 and for
the three months ended March 31, 1999, WebTV represented approximately 4%, 48%,
68% and 80%, 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, 1998 and
for the three months ended March 31, 1998 and 1999. 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.

F-10

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(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 0.3%. On April 16, 1999 the Financing Agreement was modified to
provide for borrowings up to $25 million.

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 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.

F-11

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

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).

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

F-12

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

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.

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
Canceled......................................................... (128,440) 0.93
---------- -----
Outstanding at December 31, 1997................................... 9,170 1.46
Granted.......................................................... 452,369 2.18
Canceled......................................................... (10,675) 1.61
---------- -----
Outstanding at December 31, 1998................................... 450,864 $ 2.20
---------- -----
---------- -----

There were no options granted during the three month period ended March 31,
1999 and 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 pricing
model 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 and for the three months ended March 31, 1999, the Company recognized
$8,789 and $2,198, respectively, of compensation expense associated with these
options.

The Company has computed the pro forma disclosures required under SFAS No.
123 for options granted using the Black-Scholes pricing model prescribed by SFAS
No. 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%

F-13

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

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)
Net loss per unit--basic and diluted--as
reported....................................... $(0.96) $(0.75) $(0.85)
Net loss per unit--basic and diluted--pro
forma.......................................... $(0.96) $(0.75) $(0.86)

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 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's 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, $17,000, $3,000 and $5,000 for
the years ended December 31, 1996, 1997 and 1998 and for the three months ended
March 31, 1998 and 1999, respectively.

(12) ACCRUED EXPENSES

Accrued expenses at December 31, 1997 and 1998 and March 31, 1999 consisted
of the following:

1997 1998 MARCH 31, 1999
---------- ------------ --------------

(UNAUDITED)
Accrued payroll and related........................ $ 608,512 $ 407,994 $ 134,793
Accrued installation costs......................... -- 566,000 566,000
Accrued telecommunications expenses................ 62,581 215,003 291,960
Accrued professional fees.......................... 177,210 228,546 448,936
Accrued other...................................... 122,748 464,881 490,398
---------- ------------ --------------
$ 971,051 $ 1,882,424 $ 1,932,087
---------- ------------ --------------
---------- ------------ --------------

(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

F-14

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

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
and during the three months ended March 31, 1999, the Company purchased
approximately $1 million and $102,000, respectively, of equipment and services
from Nortel Networks. In addition, Nortel has agreed to provide certain services
to the Company, as defined (see Note 15(c)).

The Company rents office space from a related party. Rent expense related to
this office space was approximately $64,000, $45,000, $39,000, $10,000 and
$10,000 for the years ended December 31, 1996, 1997 and 1998 and for the three
months ended March 31, 1998 and 1999, 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, $83,000, $21,000 and $10,000 of expense paid to ZipCall Long Distance
for the years ended December 31, 1996, 1997 and 1998 and for the three months
ended March 31, 1998 and 1999, 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, a Capital Member agreed to forgive $180,000 of the
accrued compensation and therefore, this amount has been recorded as a capital
contribution during the three months ended March 31, 1999.

(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 addition, the Company subleases office space to a third party.
As of December 31, 1998, future minimum

F-15

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

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, $198,000, $53,000 and $53,000 for the years ending
December 31, 1996, 1997 and 1998 and for the three months ended March 31,
1998 and 1999, respectively.

(B) CAPITAL LEASE OBLIGATION

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.

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 $866,000. The fees are payable at various times
during 1998 and 1999 depending on the respective service. During 1998 and
the three months ended March 31, 1999, the Company purchased approximately
$807,000 and $33,000, respectively, 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.

F-16

ZIPLINK, LLC

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)

(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 pricing model and has
recorded an expense of approximately $97,000. This warrant terminates on
September 2, 2002.

(17) REORGANIZATION

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, all of the membership units in the Delaware LLC will be transferred to
ZipLink, Inc. Following such transfer of membership units 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 transfer of membership units and merger, each membership unit in the
Company (other than membership units held by Nortel Networks and the Zachs
Family Limited Partnership Number One) will be exchanged into approximately 0.8
shares of common stock of ZipLink, Inc., each option and warrant to acquire a
membership unit in the Company will be exchanged for an option or warrant, as
the case may be, to purchase approximately 0.8 common shares of ZipLink, Inc.,
each membership unit in the Company held by Nortel Networks will be exchanged
into approximately 0.8 shares of common stock of ZipLink, Inc., each membership
unit in the Delaware LLC held by The Zachs Family Limited Partnership Number One
will be exchanged into approximately 0.8 shares of common stock. 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.

In April, 1999, ZipLink, Inc. 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 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. as of 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.

/s/ 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, all of the
membership units in ZipLink, LLC will be transferred to the Company. Following
such transfer of membership units 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 the Reorganization, each membership unit in ZipLink, LLC (other
than membership units held by Nortel Networks and the Zachs Family Limited
Partnership Number One) will be exchanged into approximately 0.8 shares of
common stock of the Company, 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 0.8 common shares of the Company, each membership
unit in ZipLink, LLC held by Nortel Networks will be exchanged into
approximately 0.8 shares of common stock of the Company, each membership unit in
ZipLink, LLC held by Zachs Family Limited Partnership Number One will be
exchanged into approximately 0.8 shares of common 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

WHOLESALE INTERNET ACCESS SERVICES

[ILLUSTRATION OF ZIPLINK SERVICES FOR INTERNET APPLIANCES]

ZIPDIAL PROGRAM

[ILLUSTRATION OF ZIPDIAL NETWORK FOR INTERNET SERVICE PROVIDERS]

ZIPLINK WHOLESALE DSL SERVICE

[ILLUSTRATION OF ZIPLINK NETWORK FOR DSL SERVICE]

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

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...................... 24
Use of Proceeds................................. 25
Dividend Policy................................. 25
Capitalization.................................. 26
Dilution........................................ 27
Selected Financial Data......................... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 31
Business........................................ 37
Management...................................... 49
Certain Relationships and Related
Transactions.................................. 57
Principal Stockholders.......................... 61
Description of Capital Stock.................... 62
Shares Eligible for Future Sale................. 65
Underwriting.................................... 67
Legal Matters................................... 69
Experts......................................... 69
Where You Can Find Additional Information....... 69
Index to Financial Statements................... F-1

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

UNTIL JUNE 20, 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]

ZIPLINK, INC.

COMMON STOCK

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

PROSPECTUS

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

Jefferies & Company, Inc.

FAC/Equities

MAY 26, 1999

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