<PAGE>

      As filed with the Securities and Exchange Commission on June  , 1999
                                                        Registration No. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  ------------
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     Under
                           THE SECURITIES ACT OF 1933

                                  ------------
                                 DSL.net, Inc.
             (Exact name of registrant as specified in its charter)

                                  ------------
        Delaware                      4813                     06-1510312
    (State or other            (Primary Standard            (I.R.S. Employer
      jurisdiction                 Industrial            Identification Number)
  of incorporation or     Classification Code Number)
     organization)

                                  ------------
                                 DSL.net, Inc.
                              545 Long Wharf Drive
                              New Haven, CT 06511
                                 (203) 772-1000
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                                  ------------
              David Struwas, President and Chief Executive Officer
                                 DSL.net, Inc.
                              545 Long Wharf Drive
                              New Haven, CT 06511
                                 (203) 772-1000
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                  ------------
                                   Copies to:

  Mark H. Burnett, Esq.      Stephen Zamansky, Esq.    Ellen B. Corenswet, Esq.
     Testa, Hurwitz &            DSL.net, Inc.           Babak Yaghmaie, Esq.
      Thibeault, LLP          545 Long Wharf Drive        Brobeck, Phleger &
     125 High Street         New Haven, Connecticut          Harrison LLP
  Boston, Massachusetts              06511            1633 Broadway, 47th Floor
          02110                  (203) 772-1000        New York, New York 10019
      (617) 248-7000                                        (212) 581-1600

                                  ------------
   Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.

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

   If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

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

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

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

   If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [X]

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

                        CALCULATION OF REGISTRATION FEE
<TABLE>
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
<CAPTION>
    Title of each class of           Proposed maximum               Amount of
 securities to be registered    aggregate offering price(1)      registration fee
---------------------------------------------------------------------------------
 <S>                           <C>                           <C>
 Common Stock...............           $115,000,000                 $31,970.00
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
</TABLE>
(1) In accordance with Rule 457(o) under the Securities Act of 1933, the number
    of shares of common stock being registered and the proposed maximum
    offering price per share are not included in this table. Estimated solely
    for the purpose of calculating the registration fee in accordance with Rule
    457(a) under the Securities Act of 1933.

                                  ------------
   The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+We will amend and complete the information in this prospectus. Although we    +
+are permitted by U.S. federal securities laws to offer these securities using +
+this prospectus, we may not sell them or accept your offer to buy them until  +
+the documentation filed with the SEC relating to these securities has been    +
+declared effective by the SEC. This prospectus is not an offer to sell these  +
+securities or our solicitation of your offer to buy these securities in any   +
+jurisdiction where that would not be permitted or legal.                      +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

                     SUBJECT TO COMPLETION -- June 7, 1999

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

Prospectus
     , 1999

                                     [LOGO]

                                 DSL.net, Inc.

                                       Shares

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

    DSL.net, Inc.:            The Offering:


    . We provide high-        . We are offering
      speed data                shares of our common
      communications            stock.
      services and
      Internet access         . The underwriters
      using digital             have an option to
      subscriber line           purchase up to an
      technology to small       additional    shares
      and medium sized          to cover over-
      businesses in select      allotments.
      second and third
      tier cities.            . This is the initial
                                public offering of
    . DSL.net, Inc.             our common stock,
      545 Long Wharf Drive      and no public market
      New Haven, Connecticut    currently exists for
      06511                     our shares. We
      (203) 772-1000            anticipate that the
                                initial public
    Proposed Symbol &           offering price will
    Market:                     be between $  and $
                                per share.
     . DSLN
                              . We plan to use the
     . Nasdaq National Market   proceeds from this
                                offering to continue
                                building our network
                                and for working
                                capital and other
                                general corporate
                                purposes. We may
                                also use a portion
                                of the proceeds to
                                acquire
                                complementary
                                businesses.

    -------------------------------------------------
<TABLE>
<CAPTION>
                             Per Share Total
    ----------------------------------------
     <S>                     <C>       <C>
     Public offering price:    $       $

     Underwriting fees:

     Proceeds to DSL.net:

    ----------------------------------------
</TABLE>
    This investment involves risk. See "Risk
    Factors" beginning on page 6.

--------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.

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

Donaldson, Lufkin & Jenrette
                   Deutsche Banc Alex. Brown

             The undersigned is facilitating Internet distribution.

                                 DLJdirect Inc.



                              . Closing:      , 1999.

    -------------------------------------------------
<TABLE>
<CAPTION>
                             Per Share Total
    -------------------------------------------------
     <S>                     <C>       <C>
     Public offering price:    $       $

     Underwriting fees:

     Proceeds to DSL.net:

    -------------------------------------------------
</TABLE>
    This investment involves risk. See "Risk
    Factors" beginning on page 6.

--------------------------------------------------------------------------------
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.

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

Donaldson, Lufkin & Jenrette
                   Deutsche Banc Alex.Brown

             The undersigned is facilitating Internet distribution.

                                 DLJdirect Inc.
<PAGE>



                 [Map indicating current and planned locations]


<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                      Page
<S>                                   <C>
Prospectus Summary..................    4
Risk Factors........................    8
Use of Proceeds.....................   15
Dividend Policy.....................   15
Capitalization......................   16
Dilution............................   17
Selected Financial and Other Data...   18
Management's Discussion and Analysis
 of Financial Condition and Results
 of Operations......................   20
Business............................   25
</TABLE>
<TABLE>
<CAPTION>
                                   Page
<S>                                <C>
Management.......................   38
Certain Transactions.............   42
Principal Stockholders...........   44
Description of Capital Stock.....   46
Shares Eligible for Future Sale..   51
Underwriting.....................   53
Legal Matters....................   55
Experts..........................   55
Additional Information...........   55
Index to Financial Statements....  F-1
</TABLE>

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

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

   We own applications for federal registration and claim rights in the name
DSL.NET.

   This prospectus also refers to trade names and trademarks of other
companies.

                                       i
<PAGE>

                               PROSPECTUS SUMMARY

   This summary highlights certain important information regarding our business
and this offering. You should read this entire prospectus, including the "Risk
Factors" and the financial statements and all related notes, before deciding to
purchase our common stock. All share information reflects all stock splits
effected prior to the date of this prospectus. Except as otherwise indicated,
the information in this prospectus assumes that:

  . our common stock will be sold at $  per share, which is the mid-point of
    the range shown on the cover page of this prospectus;

  . the underwriters will not exercise their over-allotment option; and

  . all outstanding shares of our preferred stock will be converted into
          shares of our common stock.

                                    DSL.net

   Our Business

   We provide high-speed data communications and Internet access services
utilizing digital subscriber line, or DSL, technology to small and medium sized
businesses. We target select second and third tier cities, generally with
populations of less than 900,000. Our networks enable data transport over
existing copper telephone lines at speeds of up to 1.2 megabits per second. Our
services, marketed under the NetGAIN brand name, offer customers high-speed
digital connections at prices that are attractive compared to the cost and
performance of alternative data communications services, such as dial-up, T1,
integrated services digital network, or ISDN, and frame relay.

   We offer our customers a single point of contact for a complete business
solution that includes all of the necessary equipment and services for high-
speed data communications. Our primary services include Internet access, e-
mail, Internet protocol addressing and Web site hosting. We support both local
area and virtual private networks. In addition, through our service partners,
we intend to offer Web site design and development and applications enabling
customers to engage in electronic commerce. Key elements of our services
include:

  . high-speed digital connections at prices that are attractive compared to
    the cost and performance of alternative data communications services;

  . symmetric connections, allowing for data transmission to and from the
    customer at the same high speed;

  . always-on connections to the Internet, eliminating the need to dial into
    the network for each use;

  . network architecture designed to reduce the possibility of unauthorized
    access and to permit the secure transmission of sensitive information and
    applications; and

  . high quality customer support 24 hours a day, seven days a week, with
    continuous network and customer connections monitoring.

   We install our equipment in and provide our services from collocation space
in the central offices of incumbent telecommunications carriers, such as the
Regional Bell Operating Companies. Our network design allows us to monitor
network components and customer traffic from our network operations center, or
NOC, located in New Haven, Connecticut. This enables us to identify and enhance
network quality, service and performance and address network problems promptly.
We have designed our network so that new capacity is added automatically as
each new customer receives a line.

   We established our first point of presence, or POP, in Stamford, Connecticut
in May 1998. As of May 31, 1999, we provided service or had installed equipment
in 22 cities. We intend to continue our network

                                       4
<PAGE>

expansion into a total of more than 60 cities by the end of 1999. We market
our services through our direct sales organization and through local channel
partners, such as network and systems integrators and consultants.

   Our Market Opportunity

   We believe that a substantial business opportunity has been created by the
convergence of several factors:

   . growth in demand for high-speed data communications;

   . increased demand for Internet access by small and medium sized
businesses;

   .limitations of existing telecommunications services to meet these demands;
and

   .emergence of low-cost, DSL-based solutions.

   Data communications is the fastest growing segment of the
telecommunications industry. Forrester Research, Inc. projects that the total
market for data networking services and Internet access will grow from $6.2
billion in 1997 to approximately $49.7 billion by 2002, with approximately
$27.9 billion to come from services to businesses. Small and medium sized
businesses are increasingly using the Internet to compete more effectively
with larger organizations. This increasing demand for high-speed Internet
access and data communications services is straining the capacity of existing
telecommunications networks. These limitations principally relate to the local
access portion of the network, also known as the last mile. The last mile
typically consists of copper telephone lines originally designed for the
transmission of low-speed, analog voice signals. As a result of technological
developments and regulatory changes, DSL technology has emerged as a
commercially available, cost-effective means of providing high-speed digital
transmission using existing copper telephone lines in the local access portion
of the network. Several DSL service providers have taken advantage of this
opportunity in large metropolitan areas. However, the limited availability of
these services outside of large cities has created an opportunity to provide
DSL-based services to a significant, underserved market--small and medium
sized businesses in second and third tier cities.

   Our Strategy

   Our objective is to become the leading provider of DSL-based services to
small and medium sized businesses in second and third tier cities throughout
the United States. Key elements of our strategy are to:

  .  be the first DSL-based service provider in select second and third tier
     cities throughout the United States;

  . utilize our rapid deployment model and leverage our centralized network
    management to implement our rollout plan quickly and cost effectively;

  . establish relationships in each local market with select local and
    regional network and systems integrators and consultants who can help
    market our services and provide us with customer referrals;

  . develop direct relationships with customers in order to better understand
    and serve their needs; and

  . leverage our scaleable systems and network architecture to capitalize on
    the cost efficiencies of DSL technology.

   Our History

   We were incorporated in Delaware on March 3, 1998. Our principal executive
offices are located at 545 Long Wharf Drive, New Haven, Connecticut 06511, and
our telephone number is (203) 772-1000. We maintain a corporate Web site at
www.dsl.net. The contents of our website are not part of this prospectus.

                                       5
<PAGE>

                                  The Offering

Common stock offered........        shares

Common stock to be
 outstanding after the
 offering...................
                                    shares

Use of proceeds.............  To continue building our network and for working
                              capital and other general corporate purposes. We
                              may also use a portion of the proceeds to acquire
                              complementary businesses.

Proposed Nasdaq National
 Market symbol..............
                              DSLN

   The shares of common stock to be outstanding after the offering exclude, as
of June  , 1999:

  .      shares of common stock reserved for issuance under our stock option
    plans, of which     shares with a weighted average exercise price of $
    were subject to outstanding options;

  .      shares of common stock issuable upon exercise of outstanding
    warrants with a weighted average exercise price of $  .

                                       6
<PAGE>

                             Summary Financial Data

   You should read the following summary financial data together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and the related notes included
elsewhere in this prospectus. EBITDA, shown below under "Other Data," consists
of net loss excluding net interest, taxes, depreciation of capital assets,
amortization of deferred compensation and other noncash compensation expense.
We have provided EBITDA because it is a measure of financial performance
commonly used in the telecommunications industry, but other companies may
calculate it differently from us. We have presented EBITDA to enhance your
understanding of our operating results. You should not construe it as an
alternative to operating loss, as an indicator of our operating performance or
as an alternative to cash flows from operating activities as a measure of
liquidity.

   The pro forma balance sheet information below reflects each of the following
items, all of which occurred after March 31, 1999:

  . the issuance of 2,785,516 shares of Series C and 2,868,069 shares of
    Series D preferred stock;
  . the exchange of 3,500,000 outstanding warrants and 3,500,000 shares of
    preferred stock for 6,500,000 shares of Series B preferred stock and
    related reduction of approximately $8,500,000 to additional paid-in
    capital;
  . the surrender of 2,327,274 shares of common stock and the acceleration of
    vesting on certain restricted stock; and
  . the borrowing of $463,841 under our secured credit facility.

   The pro forma as adjusted information adjusts the pro forma information to
give effect to the conversion of all outstanding preferred stock into common
stock and the sale of    shares of common stock offered by us at an assumed
initial public offering price of $  per share, after deducting estimated
underwriting discounts and commissions and offering expenses. See "Use of
Proceeds."

<TABLE>
<CAPTION>
                                                                       Period
                          Period from Inception                    from Inception
                             (March 3, 1998)                       (March 3, 1998)
                                 through        Three Months Ended     through
                            December 31, 1998     March 31, 1999   March 31, 1999
<S>                       <C>                   <C>                <C>
Statement of Operations
 Data:
Total revenue...........       $    31,533         $    48,188       $    79,721
Operating loss..........        (2,785,026)         (1,693,088)       (4,478,114)
Net loss................        (2,789,637)         (1,686,614)       (4,476,251)
Net loss per common
 share..................       $     (0.73)        $     (0.24)      $     (0.98)
Pro forma net loss per
 common share...........             (0.73)              (0.17)            (0.84)
Other Data:
EBITDA..................       $  (356,010)        $  (822,663)      $(1,178,673)
Capital expenditures....           290,082           1,509,826         1,799,908
Cash Flow Data:
Used in operating activ-
 ities..................       $  (153,505)        $  (543,308)      $  (696,813)
Used in investing activ-
 ities..................          (290,082)         (1,509,826)       (1,799,908)
Provided by financing
 activities.............           483,066           3,332,093         3,815,159
</TABLE>

<TABLE>
<CAPTION>
                                                   As of March 31, 1999
                                            ----------------------------------
                                                                    Pro Forma
                                              Actual    Pro Forma  As Adjusted
<S>                                         <C>        <C>         <C>
Balance Sheet Data:
Cash and cash equivalents.................. $1,318,438 $41,233,404  $
Fixed assets, net..........................  1,745,999   2,209,840
Total assets...............................  3,552,990  43,931,797
Long-term obligations (including current
 portion)..................................    106,168     570,009
Total stockholders' equity ................  2,590,272  42,505,238
</TABLE>

                                       7
<PAGE>

                                  RISK FACTORS

   You should consider carefully the following risks, together with all other
information included in this prospectus before you decide to buy our common
stock. Please keep these risks in mind when reading this prospectus, including
any forward-looking statements appearing in this prospectus. If any of the
following risks actually occurs, our business, financial condition or results
of operations would likely suffer materially. As a result, the trading price of
our common stock may decline, and you could lose all or part of the money you
paid to buy our common stock.

Risks relating to our business

 Our extremely limited operating history makes it difficult to evaluate our
business and prospects

   We commenced operations in March 1998 and only recently began to market and
sell our services. We began offering commercial service from our first point of
presence, or POP, in Stamford, Connecticut in May 1998. Several members of our
senior management team and other employees have only recently joined us and
therefore have worked together for only a short period of time. Accordingly,
you have limited information about our company with which to evaluate our
business, strategies and performance and an investment in our common stock.

 Because the high-speed data communications industry is new and rapidly
evolving, we cannot predict its future growth or ultimate size

   The high-speed data communications industry is in the early stages of
development and is subject to rapid and significant technological change. Since
this industry is new and because the technologies available for high-speed data
communications services are rapidly evolving, we cannot accurately predict the
rate at which the market for our services will grow, if at all, or whether
emerging technologies will render our services less competitive or obsolete. If
the market for our services fails to develop or grows more slowly than
anticipated, our business, prospects, financial condition and results of
operations could be materially adversely affected. Many providers of high-speed
data communication services are testing products from numerous suppliers for
various applications, and these suppliers have not broadly adopted an industry
standard. In addition, certain industry groups are in the process of trying to
establish standards which could limit the types of technologies we could use.
Certain critical issues concerning commercial use of DSL technology for
Internet access, including security, reliability, ease and cost of access and
quality of service, remain unresolved and may impact the growth of these
services.

 We have incurred losses and have experienced negative operating cash flow to
date and expect this to continue and to increase

   We have incurred significant losses and experienced negative operating cash
flow for each month since our formation. We expect to continue to incur
significant losses for the foreseeable future. If our revenue does not grow as
expected or capital and operating expenditures exceed our plans, our business,
prospects, financial condition and results of operations will be materially
adversely affected. As of March 31, 1999, we had an accumulated deficit of
$4,476,251. We cannot be certain if or when we will be profitable or if or when
we will generate positive operating cash flow. We expect our operating expenses
to increase significantly as we expand our business. In addition, we expect to
make significant additional capital expenditures during the remainder of 1999
and in subsequent years. In addition, we expect to substantially increase our
operating expenditures, particularly network and operations and sales and
marketing expenditures, as we implement our business plan. However, our revenue
may not increase despite this increased spending.

                                       8
<PAGE>

 Our business model is unproven, and may not be successful

   We do not know whether our business model and strategy will be successful.
If the assumptions underlying our business model are not valid or we are unable
to implement our business plan, achieve the predicted level of market
penetration or obtain the desired level of pricing of our services for
sustained periods, our business, prospects, financial condition and results of
operations could be materially adversely affected. We have adopted a different
strategy than other DSL providers. We focus on selling directly to small and
medium sized businesses outside of large metropolitan areas. In contrast, other
DSL providers sell services primarily to Internet service providers and others
who, in turn, resell these services to end users through their sales forces. In
addition, many other DSL providers are currently focused primarily on offering
their services in large cities. Our unproven business model makes it difficult
to predict the extent to which our services will achieve market acceptance. To
be successful, we must deploy our network in a significant number of our
selected markets and convince our target customers to utilize our service. As
of May 31, 1999, we provided service or had installed equipment in only 22
cities. It is possible that we may never be able to deploy our network as
planned, achieve significant market acceptance, favorable operating results or
profitability.

 If we fail to recruit qualified personnel in a timely manner and retain our
employees, we will not be able to execute our business plan

   To meet our business plan, we need to hire a substantial number of qualified
personnel, particularly sales and marketing personnel. If we are unable to
recruit qualified personnel in a timely manner or to retain our employees, we
will not be able to execute our business plan. Our industry is characterized by
intense competition for, and aggressive recruiting of, skilled personnel, as
well as a high level of employee mobility. Many of our future employees must be
recruited to work locally in the new markets where we intend to establish a
presence. The combination of our local sales and marketing strategy and the
competitive nature of our industry may make it difficult to hire qualified
personnel on a timely basis and to retain our employees.

 Our failure to establish the necessary infrastructure to support our business
and to manage our growth could strain our resources and adversely affect our
financial condition

   Our business plan anticipates that we will have established a significant
number of new POPs and added a significant number of new employees in
geographically-dispersed areas by the end of 1999. This rapid growth will
continue to place a significant strain on our management, financial controls,
operations, personnel and other resources. Our failure to manage our rapid
growth could have a material adverse effect on our ability to integrate
expanding operations, the quality of our services and our ability to recruit,
manage and retain key personnel. If we do not institute adequate financial and
reporting systems, managerial controls, and procedures to manage and operate
from multiple geographically-dispersed locations, our operations will be
materially and adversely affected. We are currently implementing an operations
support system to help manage customer service, bill customers, process
customer orders and coordinate with vendors and contractors. Implementation of
this system, which we expect to be completed by late 1999, could be delayed or,
when implemented, could cause disruptions in service or billing. In addition,
we are currently implementing a new financial and reporting system which will
interact with our operations support system. To manage our growth effectively,
we must successfully implement these systems on a timely basis, and continually
expand and upgrade these systems as our operations expand.

 Disappointing quarterly revenue or operating results could cause the price of
our common stock to fall

   Our quarterly revenue and operating results are difficult to predict and may
fluctuate significantly from quarter to quarter. If our quarterly revenue or
operating results fall below the expectations of investors or

                                       9
<PAGE>

security analysts, the price of our common stock could fall substantially. Our
quarterly revenue and operating results may fluctuate as a result of a variety
of factors, many of which are outside our control, including:

  . amount and timing of expenditures relating to the rollout of our
    infrastructure and services;

  . ability to obtain and the timing of necessary regulatory approvals;

  . rate at which we are able to attract customers within our target markets
    and our ability to retain these customers at sufficient aggregate revenue
    levels;

  . ability to deploy our network on a timely basis;

  . availability of financing to continue our expansion;

  . technical difficulties or network downtime;

  . availability of incumbent carrier collocation facilities and timing of
    the installation of our equipment in those facilities; and

  . introduction of new services or technologies by our competitors and
    resulting pressures on the pricing of our service.

 The failure of our customers to pay their bills on a timely basis could
adversely affect our cash flow

   Our target customers consist of small and medium sized businesses. We
anticipate having to bill and collect numerous relatively small customer
accounts. We may experience difficulty in collecting amounts due on a timely
basis. Our failure to collect accounts receivable owed to us by our customers
on a timely basis could have a material adverse effect on our business,
financial condition, results of operations and cash flow.

 Failure to develop relationships with local channel partners could adversely
affect our penetration of local markets

   In addition to marketing through our direct sales force, we rely on
relationships with local channel partners, such as systems and network
integrators and consultants. These partners recommend our services to their
clients, provide us with referrals and help us build a local presence in each
market. We may not be able to identify and maintain quality channel partners or
assure you that they will recommend our services rather than our competitors'
services to their customers. Our failure to identify and maintain quality
channel partners could have a material adverse effect on our business,
prospects, financial condition and operating results.

 Our success depends on negotiating and entering into interconnection
agreements with incumbent local exchange carriers

   Our strategy requires that we enter into and renew interconnection
agreements with incumbent carriers in each of our markets on a timely basis. To
date, we have only entered into agreements with Bell Atlantic, BellSouth and
SNET. Delays in obtaining interconnection agreements would delay our entrance
into target markets and could have a material adverse effect on our business,
prospects, financial condition and results of operations. Our interconnection
agreements have limited terms of one to two years and we cannot assure you that
new agreements will be negotiated or that existing agreements will be extended
on terms favorable to us.

 Failure to obtain collocation space in the central offices in our target
markets could adversely affect our business

   Our strategy requires us to obtain collocation space for our DSL equipment
in those central offices that already serve a large number of our target
customers. Failure to obtain required collocation space on a timely basis could
have a material adverse effect on our business. In addition to negotiating and
entering into interconnection agreements with incumbent carriers, we must
negotiate and enter into collocation agreements for each central office in
which we collocate equipment. We cannot assure you that we will be able to
secure collocation space in the central offices of our choice on a timely
basis. We expect that central office space will

                                       10
<PAGE>

become increasingly scarce as demand increases. In addition, the terms of our
collocation agreements are one to two years and are subject to certain
renegotiation, renewal and termination provisions.

 Our success depends on incumbent carriers providing acceptable transmission
facilities and copper telephone lines

   We interconnect with and use the networks of incumbent carriers to provide
our services to our customers. We cannot assure you that these networks will be
able to meet the telecommunications needs of our customers or maintain our
service standards. We also depend on the incumbent carriers to provide and
maintain their transmission facilities and the copper telephone lines between
our network and our customers' premises. Our dependence on incumbent carriers
could cause delays in establishing our network and providing our services. Any
such delays could have a material adverse effect on our business. We lease
copper telephone lines running from the central office of the incumbent carrier
to each customer's location. In many cases, the copper telephone lines must be
specially conditioned by the incumbent carrier to carry digital signals. We may
not be able to lease a sufficient number of acceptable telephone lines on
acceptable terms, if at all. Incumbent carriers often rely on unionized labor
and labor-related issues have in the past, and may in the future, adversely
affect the incumbent carriers' provision of services.

 Our success depends on contractors who install the equipment and wiring
necessary to utilize our service in the central offices of incumbent carriers
and at our customers' premises

   We primarily utilize contractors to install necessary equipment and wiring
in the central offices of incumbent carriers and at our customers' premises.
These installations must be completed on a timely basis and in a cost-efficient
manner. Failure to retain experienced contractors to install the equipment and
wiring or failure to complete these installations on a timely, cost-efficient
basis could materially adversely affect our business, prospects, financial
condition and results of operations. If we are unable to retain contractors to
provide these services, we will have to complete these installations ourselves,
probably at a greater cost and with delay. We may be required to utilize
numerous contractors as we expand our operations, which may divert management
attention and result in delays in installations, increased costs and lower
quality.

 Intense competition in the high-speed data communication services market may
negatively affect the number of our customers and the pricing of our services

   The high-speed data communication services market is intensely competitive.
If we are unable to compete effectively, our business, prospects, financial
condition and results of operations would be adversely affected. We expect the
level of competition to intensify in the future, due, in part, to increasing
consolidation in our industry. Our competitors use various technologies for
local access connections, that include alternatives to traditional dial-up
modems, such as integrated services digital network, or ISDN, frame relay, T1
and DSL, and alternatives to traditional telecommunications networks such as
wireless, satellite-based and cable networks. We expect significant competition
from incumbent local exchange carriers, national long distance carriers,
Internet service providers, providers of DSL service and other providers of
alternative technologies. Many of our current and potential competitors have
longer operating histories, greater brand name recognition, larger customer
bases and substantially greater financial, technical, marketing, management,
service support and other resources than we do. Therefore, they may be able to
respond more quickly than we can to new or changing opportunities,
technologies, standards or customer requirements. See "Business --Competition."

 We may not be able to continue to grow our business if we do not obtain
significant additional funds on acceptable terms by 2001

   We believe that our current capital resources, including existing equipment
lease and credit facilities, together with the proceeds of this offering, will
be sufficient to fund our operating losses, capital expenditures and working
capital requirements through 2000. The actual amount and timing of our future
capital requirements will depend on the demand for our services and regulatory,
technological and competitive developments which could differ materially from
our estimates. We may not be able to raise sufficient debt or

                                       11
<PAGE>

equity capital on terms that we consider acceptable, if at all. If we are
unable to obtain adequate funds on acceptable terms, our ability to deploy and
operate our network, fund our expansion or respond to competitive pressures
would be significantly impaired.

 We may incur significant amounts of debt in the future to implement our
business plan and, if incurred, this indebtedness will create greater financial
and operating risk and limit our flexibility

   We intend to seek additional debt financing in the future. We are not
generating sufficient revenue or operating cash flow to fund our operations or
to repay existing or expected debt. We may not be able to repay our current
debt or any future debt. In addition, the terms of any future debt would likely
contain additional restrictive covenants that would limit our ability to incur
additional indebtedness and place other operating restrictions on our business.
If we incur additional debt, we will be required to devote increased amounts of
our cash flow to service indebtedness. This could require us to modify, delay
or abandon the capital expenditures and other investments necessary to
implement our business plan.

 We may be subject to risks associated with future acquisitions

   We may acquire complementary businesses. At present, we have no agreements
or other arrangements with respect to any acquisition. An acquisition may not
produce the revenue, earnings or business synergies that we anticipate, and an
acquired business might not perform as we expect. If we pursue any acquisition,
our management could spend a significant amount of time and effort in
identifying and completing the acquisition and may be distracted from the
operation of our business. If we complete an acquisition, we would probably
have to devote a significant amount of management resources to integrating the
acquired business with our existing operations, and that integration may not be
successful.

 Our services are subject to federal, state and local regulation and changes in
laws or regulations could adversely affect the way we operate our business

   The facilities we use and the services we offer are subject to varying
degrees of regulation at the federal, state and/or local levels. Changes in
applicable laws or regulations could adversely affect our business, prospects,
financial condition and results of operations. For example, the 1996
Telecommunications Act, which, among other things, requires incumbent carriers
to unbundle network elements and to collocate competitors' equipment in their
central offices, is the subject of ongoing administrative proceedings at the
federal and state levels, litigation in federal and state courts, and
legislation in federal and state legislatures. We cannot predict the outcome of
the various proceedings, litigation and legislation or whether or to what
extent these proceedings, litigation and legislation may adversely affect our
business and operations. In addition, decisions by the FCC and state
telecommunications regulators will determine some of the terms of our
relationships with incumbent local exchange carriers, including the terms and
prices of interconnection agreements, and access fees and surcharges on gross
revenue from interstate and intrastate services. State telecommunications
regulators determine whether and on what terms we will be authorized to operate
as a competitive local exchange carrier in their state. Future federal and
state regulations and legislation may be less favorable to us than current
regulations and legislation and may adversely affect our businesses and
operations. See "Business -- Governmental Regulation."

 Our management team has little experience working together, and the loss of
key personnel could adversely affect our business

   We depend on a small number of executive officers and other members of
senior management to work effectively as a team, to execute our business
strategy and business plan, and to manage employees who will be located in
select markets throughout the United States. The loss of key personnel or their
failure to work effectively as a team could have a material adverse effect on
our business, prospects, financial condition and results of operations. Our
senior management has worked together for only a short period of time and may
not work well together as a management team. Competition for qualified
executives in the data communication services industry is intense and there are
a limited number of persons with comparable experience. We do not have
employment agreements with any of our executive officers, so any of these
individuals may terminate his employment at any time.

                                       12
<PAGE>

 A breach of our network security could cause delays or interrupt service to
our customers

   Our network may be vulnerable to unauthorized access, computer viruses and
other disruptive problems. Any of the foregoing problems could result in
liability to us and deter customers from utilizing our service. Unauthorized
access could jeopardize the security of confidential information stored in the
computer systems of our customers. Eliminating computer viruses and alleviating
other security problems may require interruptions, delays or cessation of
service to our customers, cause us to incur significant costs to remedy the
problem, and divert management attention. We can provide no assurance that the
security measures we have implemented will not be circumvented or that any
failure of these measures will not have a material adverse effect on our
business, prospects, financial condition and results of operations.

 Our failure to adequately protect our proprietary rights may adversely affect
our business

   We rely on unpatented trade secrets and know-how to maintain our competitive
position. Our inability to protect these secrets and know-how could have a
material adverse effect on our business, prospects, financial condition and
results of operations. We protect our proprietary information by entering into
confidentiality agreements with employees and consultants and potential
business partners. These agreements may be breached or terminated. In addition,
third parties, including our competitors, may assert infringement claims
against us. Any such claims, could result in costly litigation, divert
management's attention and resources, require us to pay damages and/or to enter
into license or similar agreements under which we would be required to pay
license fees or royalties.

 We may be affected by unexpected Year 2000 technology problems

   Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field. The use of software and
computer systems that are not Year 2000 compliant could result in system
failures or miscalculations and may result in disruptions of operations
including, among other things, a temporary inability to process transactions,
send invoices or engage in normal business activities. We are subject to
potential Year 2000 problems affecting our services and our business systems,
the systems of the incumbent local exchange carriers and other vendors, and our
customers' systems. Any of these Year 2000 problems could have a material
adverse effect on our business, financial condition and results of operations.
Year 2000 errors or defects may be discovered in our internal software or other
systems and, if such errors or defects are discovered, the costs of making
those systems Year 2000 compliant may be material. Year 2000 errors or defects
in the internal systems maintained by the incumbent carriers and other vendors,
could require us to incur significant unanticipated expenses to remedy any
problems or, if possible, replace affected vendors. Furthermore, Year 2000
problems of our target customers could negatively impact their decision to buy
our services. See "Management's Discussion and Analysis and Results of
Operations--Impact of Year 2000."

Risks relating to ownership of our common stock

 The price of our common stock after this offering may be lower than the price
you pay

   Prior to this offering, there has been no public market for our common
stock. After this offering, an active trading market in our stock might not
develop or continue. If you purchase shares of our common stock in this
offering, you will pay a price that was not established in a competitive
market. Rather, you will pay a price that we negotiated with the
representatives of the underwriters. The price of our common stock that will
prevail in the market after this offering may be higher or lower than the price
you pay.

 Our executive officers and directors will exercise significant control over
stockholder voting matters

   After this offering, our executive officers and directors and their
affiliates will together control approximately  % of our outstanding common
stock. As a result, these stockholders, if they act together, will be able to
control all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. This
concentration of ownership may have the effect of delaying, preventing or
deterring a change in control, could deprive our stockholders of an opportunity
to receive a premium for their common stock as part of a sale and might affect
the market price of our common stock.

                                       13
<PAGE>

 Certain provisions of our charter, by-laws and Delaware law make a takeover
difficult

   Our corporate documents and Delaware law contain provisions that might
enable our management to resist a takeover. These provisions include
limitations on persons authorized to call a special meeting of stockholders and
advance notice procedures required for stockholders to make nominations of
candidates for election as directors or to bring matters before an annual
meeting of stockholders. These provisions might discourage, delay or prevent a
change of control or a change in our management. These provisions could also
discourage proxy contests and make it more difficult for you and other
stockholders to elect directors and take other corporate actions. The existence
of these provisions could limit the price that investors might be willing to
pay in the future for shares of common stock and could deprive you of an
opportunity to receive a premium for your common stock as part of a sale.

 Future sales by existing security holders could depress the market price of
our common stock

   If our existing stockholders sell a large number of shares of our common
stock, the market price of the common stock could decline significantly.
Moreover, the perception in the public market that our existing stockholders
might sell shares of common stock could depress the market price of our common
stock. These sales also may make it difficult for us to sell equity securities
in the future at a time and price that we deem appropriate. See "Shares
Eligible for Future Sale."

 We will have discretion as to the use of the proceeds of this offering, which
we may not use effectively

   We have not committed the net proceeds of this offering to any particular
purpose. As a result, our management will have significant flexibility in
applying the net proceeds of this offering and could apply them in ways with
which stockholders may disagree. If we do not apply the funds we receive
effectively, our accumulated deficit will increase and we may lose significant
business opportunities. See "Use of Proceeds."

 Investors will experience immediate and substantial dilution in the book value
of their investment

   If you purchase shares of our common stock in this offering, you will
experience immediate and substantial dilution because the price you pay will be
substantially greater than the net tangible book value per share of the shares
you acquire. This dilution is due, in large part, to the fact that our current
investors paid substantially less than the public offering price when they
purchased their shares of common stock. You will experience additional dilution
upon the exercise of outstanding stock options and warrants to purchase common
stock.

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

   Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus constitute forward-
looking statements. These statements relate to future events or our future
financial performance, and are identified by terminology such as "may,"
"might," "will," "should," "expect," "scheduled," "plan," "intend,"
"anticipate," "believe," "estimate," "potential," or "continue" or the negative
of such terms or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially. In evaluating
these statements, you should specifically consider various factors, including
the risks outlined under "Risk Factors." These factors, among others, may cause
our actual results to differ materially from any forward-looking statement.

   Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of such
statements. We are under no duty to update any of the forward-looking
statements, whether as a result of new information, further events or
otherwise.

                                       14
<PAGE>

                                USE OF PROCEEDS

   We estimate that the net proceeds from the sale of common stock in this
offering will be approximately $     million, based upon an assumed offering
price per share of $   and after deducting estimated underwriting discounts and
commissions and estimated offering expenses. If the underwriters' over-
allotment option is exercised in full, we estimate that such net proceeds will
be approximately $     million. See "Underwriting."

   We intend to use the net proceeds from this offering to continue building
our network and for working capital and other general corporate purposes. We
may also use a portion of the net proceeds to acquire complementary businesses,
although we have no specific understandings, commitments or agreements to do so
at this time. The amounts actually expended for these purposes will vary
significantly depending on a number of factors, including revenue growth, if
any, planned capital expenditures, and the extent and timing of our entry into
target markets. In addition to the intended uses of the net proceeds, the
principal purposes of the offering are to create a public market for our common
stock, enhance our ability to use our common stock as a means of attracting,
motivating and retaining key employees, and facilitate our future access to
public equity markets.

   Prior to the application of the net proceeds from the offering as described
above, these proceeds will be invested in marketable, investment-grade
securities.

                                DIVIDEND POLICY

   We have never declared or paid cash dividends. We do not anticipate
declaring or paying cash dividends for the foreseeable future. Instead, for the
foreseeable future, we will retain our earnings, if any, for the future
operation and expansion of our business.

                                       15
<PAGE>

                                 CAPITALIZATION

   The following table shows our capitalization at March 31, 1999 on an actual
basis, a pro forma basis and a pro forma as adjusted basis.

   The pro forma balance sheet information below reflects each of the following
items, all of which occurred after March 31, 1999:

  . the issuance of 2,785,516 shares of Series C and 2,868,069 shares of
    Series D preferred stock;

  . the exchange of 3,500,000 outstanding warrants and 3,500,000 shares of
    preferred stock for 6,500,000 shares of Series B preferred stock and
    related reduction of approximately $8,500,000 to additional paid-in
    capital;

  . the surrender of 2,327,274 shares of common stock and the acceleration of
    vesting on certain restricted stock; and

  . the borrowing of $463,841 under our secured credit facility.

   The pro forma as adjusted information adjusts the pro forma information to
give effect to the conversion of all outstanding preferred stock into common
stock and the sale of    shares of common stock offered by us at an assumed
initial public offering price of $  per share, after deducting estimated
underwriting discounts and commissions and offering expenses. See "Use of
Proceeds."

<TABLE>
<CAPTION>
                                                 As of March 31, 1999
                                          -------------------------------------
                                                                     Pro Forma
                                            Actual      Pro Forma   As Adjusted
<S>                                       <C>          <C>          <C>
Cash and cash equivalents................ $ 1,318,438  $41,233,404
                                          ===========  ===========
Long-term debt, including current por-
 tion....................................     106,168      570,009
                                          -----------  -----------
Stockholders' equity:
  Convertible preferred stock, $.001 par
   value; 16,826,500 shares authorized;
   Series A -- 3,725,000 shares issued
    and outstanding; 225,000 issued and
    outstanding pro forma and none
    issued and outstanding pro forma as
    adjusted.............................   2,497,244      225,000
   Series B -- none issued and outstand-
    ing; 6,500,000 issued and outstanding
    pro forma; none issued and outstand-
    ing pro forma as adjusted............         --    11,925,000
   Series C -- none issued and outstand-
    ing; 2,785,516 issued and outstanding
    pro forma; none issued and outstand-
    ing pro forma as adjusted............         --     9,941,104
   Series D -- none issued and outstand-
    ing; 2,868,069 issued and outstanding
    pro forma; none issued and outstand-
    ing pro forma as adjusted............         --    29,973,862
  Common stock, $.0005 par value;
   51,725,000 shares
   authorized;       shares issued and
   outstanding;       issued and out-
   standing pro forma;   shares
   issued and outstanding pro forma as
   adjusted..............................       6,464        5,882
  Additional paid-in capital.............  10,752,909    1,551,468
  Deferred compensation..................  (6,190,094)  (5,410,464)
  Accumulated deficit....................  (4,476,251)  (5,706,614)
                                          -----------  -----------
    Total stockholders' equity........... $ 2,590,272  $42,505,238
                                          -----------  -----------      ---
    Total capitalization................. $ 2,696,440  $43,075,247
                                          ===========  ===========      ===
</TABLE>

                                       16
<PAGE>

                                    DILUTION

   As of March 31, 1999, our pro forma net tangible book value was $  , or $
per share of common stock. Pro forma net tangible book value is the amount of
total tangible assets less total liabilities. Pro forma net tangible book value
per common share is pro forma net tangible book value divided by the number of
shares of common stock outstanding, assuming the issuances and exchanges of our
preferred stock and the surrender of certain shares of common stock which
occurred after March 31, 1999 and the conversion of all shares of preferred
stock into common stock.

   After giving effect to the sale of the common stock offered by us at an
assumed initial public offering price of $   per share, after deducting
estimated underwriting discounts and commissions and offering expenses payable
by us, our pro forma net tangible book value at March 31, 1999 would have been
$  , or $   per share of common stock. This represents an immediate increase in
pro forma net tangible book value of $  per share of common stock to existing
stockholders, and an immediate dilution in pro forma net tangible book value of
$  per share of common stock to new investors purchasing our common stock in
this offering. The following table illustrates this per share dilution.

<TABLE>
   <S>                                                                <C>  <C>
   Assumed initial public offering price per common share...........       $
                                                                           ----
     Pro forma net tangible book value per share at March 31, 1999..  $
     Increase in pro forma net tangible book value per share
      attributable to new investors.................................
                                                                      ----
   Pro forma net tangible book value per share after this offering..
                                                                           ----
   Dilution per share to new investors..............................       $
                                                                           ====
</TABLE>

   The following table summarizes on a pro forma basis as of March 31, 1999:

  . the number of shares of our common stock purchased by existing
    stockholders, the total consideration and the average price per share
    paid to us for these shares;

  . the number of shares of our common stock purchased by new investors, the
    total consideration and the price per share paid for these shares,
    valuing them at an assumed initial public offering price of $   per
    share; and

  . the percentage of shares of our common stock purchased by the existing
    stockholders and new investors and the percentage of consideration paid
    to us for these shares.


<TABLE>
<CAPTION>
                                                         Total
                               Shares Purchased      Consideration
                               -------------------   -------------- Average Price
                               Number    Percent     Amount Percent   Per Share
<S>                            <C>       <C>         <C>    <C>     <C>
Existing stockholders.........                     %              %     $
New investors.................
                                -------   ---------   ---    -----
  Total.......................                100.0%         100.0%
                                =======   =========   ===    =====
</TABLE>

   This table assumes that none of the warrants or the stock options
outstanding upon the closing of this offering will be exercised, which as of
June  , 1999 include:

  .     shares of common stock issuable upon exercise of outstanding stock
    options at a weighted average exercise price of $   per share; and

  .     shares of common stock issuable upon exercise of outstanding warrants
    at a weighted average exercise price of $   per share.

   To the extent any of these stock options or warrants are exercised, new
investors will experience further dilution.

                                       17
<PAGE>

                       SELECTED FINANCIAL AND OTHER DATA

   We were incorporated on March 3, 1998 and commenced operations on March 28,
1998. We present below summary financial and other data for our company. The
following data at December 31, 1998 and for the period from inception (March 3,
1998) through December 31, 1998, except for other data, has been derived from
our financial statements audited by PricewaterhouseCoopers LLP, independent
accountants. The balance sheet at December 31, 1998 and the related statements
of operations, changes in stockholders' equity and cash flows for the period
from inception (March 31, 1998) to December 31, 1998 and notes thereto appear
elsewhere in this prospectus. The balance sheet data as of March 31, 1999 and
the statement of operations and other data for the three months ended March 31,
1999 have been derived from our unaudited financial statements that are
included elsewhere in this prospectus. The unaudited financial statements
include, in the opinion of our management, all adjustments, consisting of
normal, recurring adjustments, necessary for a fair presentation of the
information set forth. EBITDA, shown below under "Other Data," consists of net
loss excluding net interest, taxes, depreciation of capital assets, and
amortization of deferred compensation and other noncash compensation expense.

   The pro forma information gives effect to each of the following items, all
of which occurred after March 31, 1999:

  . the issuance of 2,785,516 shares of Series C preferred stock and
    2,868,069 shares of Series D preferred stock;
  . the exchange of 3,500,000 outstanding warrants and 3,500,000 shares of
    preferred stock for 6,500,000 shares of Series B preferred stock and
    related reduction of approximately $8,500,000 to additional paid-in
    capital;
  . the surrender of 2,327,274 shares of common stock and the acceleration of
    vesting on certain restricted stock; and
  .the borrowing of $463,841 under our secured credit facility,

   The pro forma as adjusted information adjusts the pro forma information to
give effect to the conversion of all outstanding preferred stock into common
stock and the sale of    shares of common stock offered by us at an assumed
initial public offering price of $  per share, after deducting estimated
underwriting discounts and commissions and offering expenses. See "Use of
Proceeds."

   You should refer to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the more complete financial
information included elsewhere in this prospectus. The results for the three
months ended March 31, 1999 are not necessarily indicative of the results that
may be expected for the full year.

<TABLE>
<CAPTION>
                                                                      Period
                         Period from Inception                    from Inception
                            (March 3, 1998)                       (March 3, 1998)
                                through        Three Months Ended     through
                           December 31, 1998     March 31, 1999   March 31, 1999
                                                  (unaudited)       (unaudited)
<S>                      <C>                   <C>                <C>
Statement of Operations
 Data:
Revenue.................      $    31,533         $    48,188       $    79,721
Operating expenses:
  Network and
   operations...........          127,054             264,457           391,511
  General and
   administrative.......          230,272             525,184           755,456
  Sales and marketing...           35,961             129,375           165,336
  Stock compensation....        2,423,272             822,260         3,245,532
                              -----------         -----------       -----------
    Total operating
     expenses...........        2,816,559           1,741,276         4,557,835
                              -----------         -----------       -----------
Operating loss..........       (2,785,026)         (1,693,088)       (4,478,114)
Interest expense (in-
 come) .................            4,611              (6,474)           (1,863)
                              -----------         -----------       -----------
Net loss................      $(2,789,637)        $(1,686,614)      $(4,476,251)
                              ===========         ===========       ===========
</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                       Period
                          Period from Inception                    from Inception
                             (March 3, 1998)                       (March 3, 1998)
                                 through        Three Months Ended     through
                            December 31, 1998     March 31, 1999   March 31, 1999
                                                   (unaudited)       (unaudited)
<S>                       <C>                   <C>                <C>
Net Loss per Common
 Share Data:
Net loss per common
 share..................       $    (0.73)          $    (0.24)      $     (0.98)
                               ==========           ==========       ===========
Shares used in computing
 net loss per share.....        3,839,716            7,030,719         4,579,897
Pro forma net loss per
 common share...........
Shares used in computing
 pro forma net loss per
 share..................
Other Data:
EBITDA..................       $ (356,010)          $ (822,663)      $(1,178,673)
Capital expenditures....          290,082            1,509,826         1,799,908
Cash Flow Data:
Used in operating activ-
 ities..................       $ (153,505)          $ (543,308)      $  (696,813)
Used in investing activ-
 ities..................         (290,082)          (1,509,826)       (1,799,908)
Provided by financing
 activities.............          483,066            3,332,093         3,815,159
</TABLE>

<TABLE>
<CAPTION>
                                                    As of March 31, 1999
                                             ----------------------------------
                                December 31,                         Pro Forma
                                    1998       Actual    Pro Forma  as Adjusted
<S>                             <C>          <C>        <C>         <C>
Balance Sheet Data:
Cash and cash equivalents.....   $  39,479   $1,318,438 $41,233,404
Fixed assets, net.............     284,338    1,745,999   2,209,840
Total assets..................     369,980    3,552,990  43,931,797
Long-term obligations, includ-
 ing current portion..........     433,161      106,168     570,009
Total stockholders' equity
 (deficit)....................    (315,865)   2,590,272  42,505,238
</TABLE>

                                       19
<PAGE>

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

   The following discussion and analysis of the financial condition and results
of operations should be read in conjunction with "Selected Financial and Other
Data" and our financial statements and related notes appearing elsewhere in
this prospectus. This discussion and analysis contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including, but not limited to, those set forth in
"Risk Factors" and elsewhere in this prospectus.

Overview

   We provide high-speed data communications services and Internet access to
small and medium sized businesses in second and third tier cities. We
established our first point of presence, or POP, in May 1998 and, as of May 31,
1999, we provided service or had installed equipment in 22 cities. We intend to
continue our network expansion into a total of more than an additional 60
cities by the end of 1999.

   Since inception on March 3, 1998, our principal activities have included:

  . developing criteria for market selection and analyzing potential markets
    against these criteria;

  . obtaining required governmental authorizations;

  . negotiating and entering into interconnection agreements with incumbent
    carriers;

  . acquiring collocation space and deploying our network equipment;

  . launching service in target markets;

  . selling and marketing to customers in markets where we have established
    POPs;

  . hiring management and other personnel;

  . raising capital; and

  . developing and implementing our operations support system and other back
    office systems.

   We have incurred operating losses, net losses and negative operating cash
flow for each month since our formation. As of December 31, 1998 and March 31,
1999, we had an accumulated deficit of approximately $2,790,000 and $4,476,000,
respectively. We intend to substantially increase our operating expenses and
capital expenditures in an effort to rapidly expand our network infrastructure
and service areas. We expect to incur substantial operating losses, net losses
and negative operating cash flow during our network build-out and during the
initial penetration of each new market we enter. These losses are expected to
continue and to increase as we expand our operations.

   We incur certain network and operations expenses, sales and marketing
expenses and capital expenditures when we enter a new market. Once we have
deployed our network in a market, the majority of our additional capital
expenditures depend on orders to connect new end users. These additional
capital expenditures include DSL line cards, incremental digital subscriber
line access multiplexers, or DSLAMs, and customer premise equipment. In
addition to the capital expenditures required to enter a market, we are
required to fund each market's cash flow deficit as we build our customer base.

   Our financial performance will vary, and whether and when we achieve
profitability will depend on a number of factors, including:

  . development of the high-speed data communications industry and our
    ability to compete effectively;

                                       20
<PAGE>

  . amount and timing of customer revenue;

  . cost and timing of the deployment of our network, including installation
    of equipment in collocation facilities;

  . commercial acceptance of our service and attaining expected penetration
    levels within our target markets;

  . timely recruitment of qualified personnel, particularly sales and
    marketing personnel;

  . upfront sales and marketing expenses;

  . our ability to retain contractors to install equipment and wiring at
    customer premises on a timely and cost-effective basis;

  . our ability to establish and maintain relationships with channel
    partners;

  . successful implementation of financial and operations support systems to
    efficiently and cost-effectively manage our growth; and

  . outcome of federal and state regulatory proceedings and related judicial
    proceedings, including proceedings relating to the 1996
    Telecommunications Act.

Results of Operations

   Revenue. We derive a majority of our operating revenue from DSL access
services and bill our customers monthly based on the level of service they
purchased. In addition to monthly service fees, we bill our customers for
installation charges. In certain situations, we waive non-recurring
installation fees in order to obtain a sale. We first introduced services in
May 1998. We expect that, as a result of competitive forces, the prices for our
services will decline over time. Revenue in 1998 and for the three months ended
March 31, 1999 was approximately $32,000 and $48,000, respectively.

Network and operations. Our network and operations expenses include costs
related to personnel, monthly rental for telecommunications lines between
customers, central offices and network service providers, customer line
installation, Internet access and other costs. Network and operations expenses
in 1998 and for the three months ended March 31, 1999 were approximately
$127,000 and $264,000, respectively.

General and administrative. Our general and administrative expenses consist
primarily of costs relating to personnel, customer service, finance, billing,
administrative services, recruiting, insurance, bad debts and legal services.
General and administrative expenses in 1998 and the three months ended March
31, 1999 were approximately $230,000 and $525,000, respectively. General and
administrative expenses are expected to increase as the number of employees
increases.

Sales and marketing. Our sales and marketing expenses consist primarily of
expenses for personnel, the development of our NetGAIN brand name, promotional
materials, advertising and sales commissions. Sales and marketing expenses in
1998 and for the three months ended March 31, 1999 were approximately $36,000
and $129,000, respectively. Sales and marketing expenses are expected to
increase significantly as we continue to expand our business into new markets.

Stock compensation. We incurred stock compensation expenses of approximately
$2,423,000 and $822,000 in 1998 and for the three months ended March 31, 1999,
respectively. Expenses incurred in 1998 consist of current period charges
related to common stock issued to certain officers. The expenses incurred in
the three months ended March 31, 1999 consist of (i) amortization related to
stock options granted during the first quarter of 1999, (ii) amortization of
restricted stock to senior management during the first quarter of 1999 and
(iii) a current period charge related to common stock granted to an executive
for which there is no vesting requirement.

   The unamortized balance of $6,190,000 at March 31, 1999 will be amortized
over the vesting period of each grant which is generally 48 months. Additional
grants to management and employees in the period from April 1, 1999 through
June 1, 1999 will result in $546,000 of amortization of deferred compensation
related to employee stock options and additional compensation charges of
approximately $1,230,000 related to the acceleration of vesting on certain
restricted common stock.

                                       21
<PAGE>

   Depreciation and amortization expense. Depreciation and amortization
expense, excluding deferred compensation expense, includes:

  . depreciation of network infrastructure and customer premise equipment;

  . depreciation of information systems, computer hardware and software,
    furniture and fixtures; and

  . amortization and depreciation of collocation costs and corporate
    facilities.

   Depreciation and amortization expense, excluding amortization of deferred
compensation, in 1998 and for the three months ended March 31, 1999 were
approximately $6,000 and $48,000, respectively. We expect depreciation and
amortization expense to increase significantly as more of our network becomes
operational and as we increase capital expenditures to expand.

   Interest expense (income). Interest expense in 1998 was approximately
$5,000, and related primarily to a note payable which was paid in full in
January 1999. Net interest income for the three months ended March 31, 1999 was
approximately $6,000, and was primarily due to an increase in our cash balances
as a result of the issuance of preferred stock in January 1999.

Liquidity and Capital Resources

   The development and expansion of our business requires significant capital
expenditures. The principal capital expenditures incurred to enter each market
include the procurement, design and construction of collocation space, and the
purchase and installation of all necessary equipment.

   The number of central offices that we expect to target in a market will
vary, as will the average capital cost in a given market. Capital expenditures,
including collocation fees, were approximately $290,000 and $1,510,000 in 1998
and for the three months ended March 31, 1999, respectively. We expect to make
additional capital expenditures of approximately $20 million to $35 million for
the remainder of 1999.

   To help implement our business plan, we raised approximately $43,725,000 in
private equity financing since inception.

   In March 1999, we entered into a 36-month lease facility to finance the
purchase of up to an aggregate of $2,000,000 of equipment. Amounts financed
under this lease facility bear an interest rate of 8% or 9%, depending on the
type of equipment, and are secured by the financed equipment. There was
$106,168 outstanding on this lease facility at March 31, 1999.

   In May 1999, we established a line of credit which allows us to borrow up to
an aggregate of $5.0 million. This line of credit expires in May 2000, at which
time amounts outstanding will convert into a term loan, which will be repayable
over 36 months. Amounts borrowed under this line of credit generally bear
interest at the sum of 1% plus the higher of the bank's prime rate of interest
and the federal funds rate plus .5%. The line of credit contains certain
restrictive covenants and amounts borrowed under this line of credit are
secured by certain of our assets. As of May 31, 1999, approximately $4,500,000
was available under this line of credit.

   As of December 31, 1998 and March 31, 1999, we had an accumulated deficit of
approximately $2,790,000 and $4,476,000, and cash and cash equivalents of
approximately $39,000 and $1,318,000, respectively. In 1998 and for the three
months ended March 31, 1999, the net cash used in our operating activities was
approximately $154,000 and $543,000, respectively. This cash was used for a
variety of operating purposes, including salaries, consulting and legal
expenses, network operations and overhead expenses. The net cash used in
investing activities in 1998 and for the three months ended March 31, 1999 was
approximately $290,000 and $1,510,000, respectively, and was used primarily for
the purchase of equipment and payment of collocation costs. Net cash provided
by financing activities in 1998 and for the three months ended March 31, 1999
was approximately $483,000 and $3,332,000, respectively, and primarily resulted
from the sale of preferred stock, amounts drawn under our lease facility and
short-term bridge financings.

                                       22
<PAGE>

   We believe that the net proceeds from this offering, together with our
existing cash and short-term investments, amounts available under our equipment
lease and credit facilities, and cash generated from operations, will be
sufficient to fund our operating losses, capital expenditures, lease payments
and working capital requirements through 2000. We expect our operating losses
and capital expenditures to increase substantially as we expand our network. We
expect that additional financing will be required in the future. We may attempt
to raise financing through some combination of commercial bank borrowings,
leasing, vendor financing and the sale of equity or debt securities.

   Our capital requirements may vary based upon the timing and the success of
implementation of our business plan and as a result of regulatory,
technological and competitive developments or if:

  . demand for our services or our cash flow from operations is less than or
    more than expected;

  . our development plans or projections change or prove to be inaccurate;

  . we make any acquisitions; or

  . we accelerate deployment of our network or otherwise alter the schedule
    or targets of our business plan implementation.

   We cannot assure you that we will be able to raise sufficient debt or equity
capital, if at all, on terms that we consider acceptable. If we are unable to
obtain adequate funds on acceptable terms, our ability to deploy and operate
our network, fund our expansion or respond to competitive pressures would be
significantly impaired.

Impact of Year 2000

   Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field. In order to distinguish
21st century dates from 20th century dates, the date code field needs to be
expanded to 4 digits. As a result, many companies' software and computer
systems may need to be upgraded or replaced in order to comply with these Year
2000 requirements. The use of software and computer systems that are not Year
2000 compliant could result in system failures or miscalculations resulting in
disruptions of operations, including among other things, a temporary inability
to process transactions, send invoices, or engage in normal business
activities.

   Since we have been recently organized, we have been able to build our
business systems with Year 2000 compliance in mind. In the future, we will seek
assurance from vendors that new business systems which we purchase will be Year
2000 compliant.

   Our current service offerings are not date sensitive and do not rely on, and
do not need to process, date-related information in order to function as
designed, either prior to and after the year 2000.

   Based on the foregoing, we have no reason to believe that our current
service offerings and our business systems will not be Year 2000 compliant.
Failure of our business systems or current service offerings to operate
properly with regard to the Year 2000 and thereafter could require us to incur
significant unanticipated expenses to remedy any problems or replace affected
vendors and could have a material adverse effect on our business, operating
results and financial condition.

   We can provide no assurance that the incumbent carriers and other vendors
will be Year 2000 compliant or that Year 2000 problems among our target
customers will not negatively impact their decision to buy our service. We will
initiate a Year 2000 compliance check of incumbent carriers. Any Year 2000
related disruption of operations of the incumbent carriers or other providers
would likely have a material adverse impact on our business, operation results,
and financial condition. Furthermore, Year 2000 issues may affect the
purchasing decisions of our customers as companies expend significant resources
to correct their current systems for Year 2000 compliance.

                                       23
<PAGE>

   To date, we have not incurred significant costs in order to comply with Year
2000 requirements and we do not believe we will incur significant costs in the
foreseeable future. We plan to determine the risks associated with a reasonably
likely worse-case scenario and will formulate a contingency plan prior to
December 31, 1999 to address these risks.

Recently Issued Accounting Pronouncements

   In 1998, we adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information. SFAS No.
131 supersedes SFAS 14, Financial Reporting for Segments of a Business
Enterprise, replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of our reportable segments. We operate in one segment: high-speed
data communication services. SFAS No. 131 also requires disclosures about
products and services, geographic areas, and major customers. The adoption of
SFAS No. 131 had no impact on our financial statements for the periods
presented.

   In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. SoP 98-1 provides guidance for
determining whether computer software is internal-use software, and on
accounting for proceeds of computer software originally developed or obtained
for internal use and then subsequently sold to the public. It also provides
guidance on capitalization of the costs incurred for computer software
developed or obtained for internal use. The adoption of SoP 98-1 had no impact
on our financial statements for the periods presented.

   In April 1998, the Accounting Standards Executive Committee issued SoP 98-5,
Reporting on the Costs of Start-Up Activities, which provides guidance on the
financial reporting of start-up costs and organizational costs. It requires
costs of start-up activities and organizational costs to be expensed as
incurred. SoP 98-5 is effective for financial statements for fiscal years
beginning after December 15, 1998. As we have not capitalized such costs to
date, the adoption of SoP 98-5 is not expected to have an impact on our
financial statements.

                                       24
<PAGE>

                                   BUSINESS

Overview

   We provide high-speed data communications and Internet access services
utilizing digital subscriber line, or DSL, technology to small and medium
sized businesses. We target select second and third tier cities, which
generally have populations of less than 900,000. Our networks enable data
transport over existing copper telephone lines at speeds of up to 1.2 megabits
per second. Our services, marketed under the NetGAIN brand name, offer
customers high-speed digital connections at prices that are attractive
compared to the cost and performance of alternative data communications
services, such as dial-up, T1, integrated services digital network, or ISDN,
and frame relay.

   We offer our customers a single point of contact for a complete business
solution that includes all of the necessary equipment and services for high-
speed data communications. Our primary services include Internet access, e-
mail, Internet protocol addressing and Web site hosting. We support local area
and virtual private networks. In addition, through our service partners, we
intend to offer Web site design and development and applications enabling
customers to engage in electronic commerce. Key elements of our services
include:

  . high-speed digital connections at prices that are attractive compared to
    the cost and performance of alternative data communications services;

  . symmetric connections, allowing for data transmission to and from the
    customer at the same high speed;

  . always-on connections to the Internet, eliminating the need to dial into
    the network for each use;

  . network architecture designed to reduce the possibility of unauthorized
    access and permit the secure transmission of sensitive information and
    applications; and

  . high quality customer support 24 hours a day, seven days a week, with
    continuous network and customer connections monitoring.

Industry Background

   We believe that a substantial business opportunity has been created by the
convergence of several factors:

  . growth in demand for high-speed data communications;

  . increased demand for Internet access by small and medium sized
    businesses;

  . limitations of existing telecommunications services to meet these
    demands; and

  . emergence of low-cost, DSL-based solutions.

   Growth in High-Speed Data Communications. Data communications is the
fastest growing segment of the telecommunications industry. Forrester
Research, Inc. projects that the total market for data networking services and
Internet access will grow from $6.2 billion in 1997 to approximately $49.7
billion by 2002, with approximately $27.9 billion to come from services to
businesses. To remain competitive, companies require high-speed connections to
maintain complex Internet sites, to access critical information and business
applications, and to communicate more efficiently with employees, customers
and suppliers. In addition, businesses are increasingly using the Internet to
market and sell their products and services. International Data Corporation
estimates that the value of goods and services sold worldwide through the
Internet will increase from $12 billion in 1997 to over $400 billion in 2002.

   Increased Demand for High-Speed Internet Access by Small and Medium Sized
Businesses. Small and medium sized businesses are increasingly using the
Internet to enable them to compete more effectively with larger organizations.
According to International Data Corporation/LINK, Internet access among small

                                      25
<PAGE>

businesses--those with under 100 employees--grew from 19.7% in 1996 to 38.8% in
1997. The following table illustrates the historical and estimated growth in
Internet use by these small businesses:

<TABLE>
<CAPTION>
                                           1996  1997  1998E 1999E 2000E 2001E
   <S>                                     <C>   <C>   <C>   <C>   <C>   <C>
   Total small businesses (000s).......... 7,065 7,245 7,382 7,531 7,684 7,842
   Percentage of small businesses with
    Internet access....................... 19.7% 38.8% 43.9% 47.8% 51.3% 54.5%
   Percentage of small businesses with
    home pages............................  2.1%  7.1%  9.1% 11.7% 15.0% 16.6%
</TABLE>

  Source: International Data Corporation/LINK

   Currently, many small and medium sized businesses use the Internet to
exchange e-mails and files with customers, suppliers and other business
partners and to disseminate and obtain industry, product and market
information. Many of these businesses also have begun to use the Internet to
market and sell their products and services, to make purchases from suppliers
and for other commerce-related activities. For example, the percentage of small
businesses with home pages more than tripled from 1996 to 1997. To take full
advantage of electronic commerce applications and the Internet, these
businesses would benefit from high-speed, secure and affordable digital data
communications connections.

   Limitations of Existing Telecommunications Network. The growing demand for
high-speed Internet access and data communications services is straining the
capacity of the existing telecommunications network, particularly the local
access portion. The long distance portion of the network typically consists of
high-
speed, fiber-optic cables and high-speed switches that connect with the central
offices of incumbent local exchange carriers, such as the Regional Bell
Operating Companies. In contrast, the local access portion of the network, also
known as the last mile, typically consists of copper telephone wire that
connects end users' locations to the nearest central office. This last mile of
copper telephone wire was not originally designed for the transmission of high-
speed digital signals, but has been historically used for the transmission of
low-speed, analog voice signals. Most data transmission solutions to the last
mile problem, including dial-up modems, frame relay, ISDN and T1 lines, are
relatively slow, hard to obtain or expensive.

   Emergence of DSL-based Solutions. As a result of technological developments
and regulatory changes, DSL technology has emerged as a commercially available,
cost-effective means of providing high-speed data transmission using existing
copper telephone lines. DSL technology enables the transmission of digital
signals over existing copper telephone wires. In addition, DSL technology uses
packet-based network transmission, allowing multiple users to simultaneously
transmit and receive data over a single connection. DSL equipment, when
deployed at each end of a standard copper telephone line, increases the data
carrying capacity of the line to speeds to and from the user of up to 1.5
megabits per second, depending on the distance between the user and the central
office and the quality of the copper line.

   The deployment of DSL-based solutions by competitive local exchange carriers
has been facilitated by changes in the regulatory framework in recent years.
Under the 1996 Telecommunications Act, incumbent carriers are generally
required to lease phone lines to competitive carriers on a wholesale basis
through resale or unbundling and to allow these competitive carriers to locate
certain of their equipment in the incumbent carriers' central offices. By using
existing facilities and copper lines, DSL providers avoid the considerable up-
front fixed costs necessary to deploy alternative high-speed digital
communications technologies, such as cable, wireless and satellite networks. As
a result, a significant portion of the investment in a DSL network is incurred
only as customers order the service. In addition, we anticipate that continued
advances in DSL technologies and transmission speeds, as well as advances in
DSL equipment manufacturing efficiencies, will further reduce the cost of
deploying a DSL-based network.

Market Opportunity

   We believe that the demand for affordable high-speed Internet access and
data communications services and the limited availability of these services
outside of large cities have created an opportunity to provide DSL-

                                       26
<PAGE>

based services to a significant, underserved market -- small and medium sized
businesses located in second and third tier cities. These businesses
increasingly require high-speed data communications capabilities to compete
effectively. Incumbent carriers have generally offered ISDN, frame relay or T1
lines as high-speed alternatives in these markets, but these services are
typically at a higher cost or lower speeds than DSL-based services.

The DSL.net Solution

   Our services, marketed under the NetGAIN brand name, provide small and
medium sized businesses in second and third tier cities with high-speed
Internet access and data services using DSL technology. Key elements of our
solution are:

   High-Speed, Symmetric Connections. We offer Internet access at speeds of up
to 1.2 megabits per second. Our network architecture is designed to provide
symmetric data transmission, allowing for the same speed of data transport to
and from the customer. We believe that symmetric data transmission is best
suited for business applications, because users require fast connections to
send and receive information.

   Complete Business Solution. We offer our customers a single point of contact
for a complete solution that includes all of the necessary equipment and
services to establish and maintain digital data communications. Our primary
services include Internet access, e-mail, Internet protocol addressing, and Web
site hosting and support both local area and virtual private networks. Through
our service partners, we also will provide Web site design and development and
applications enabling electronic commerce. Our network architecture is designed
to enable us to individually configure each customer's service remotely. As a
result, our customers are able to upgrade to higher speeds without adding
networking equipment and without an on-site visit from technical personnel.

   Always-On Connections. With our service, customers are continuously
connected to the Internet without having to dial into the network for each use.
Always-on connections provide customers with the ability to readily access the
Internet and transfer information. Despite the always-on connection, we charge
our customers a flat fee per month rather than billing them based on usage.

   Attractive Value Proposition. Our NetGAIN services offer customers high-
speed digital connections at prices that are attractive compared to the cost
and performance of alternative data communications services, such as dial-up,
T1, ISDN or frame relay. We believe that our services also increase the
productivity of network users by decreasing the time they spend connecting to
the Internet and waiting for information downloads and transfers.

   Secure Connections. Our network architecture is designed to reduce the
possibility of unauthorized access to our customers' internal applications and
information and to allow them to safely transmit sensitive information and
applications.

   Customer Support. We provide customer service 24 hours a day, seven days a
week. This support is important to many of our small and medium sized business
customers because they do not typically have dedicated internal support staff.
With our remote monitoring and troubleshooting capabilities, we continuously
monitor our network and our customers' connections. This enables us to identify
and enhance network quality, service and performance and address network
problems promptly.

The DSL.net Strategy

   Our objective is to become the leading provider of DSL-based services to
small and medium sized businesses in second and third tier cities throughout
the United States. To achieve this objective, we plan to:

   Establish Service in Select Markets Throughout the United States. We seek to
be the first DSL-based service provider in select second and third tier cities
throughout the United States. Before entering a market, we

                                       27
<PAGE>

carefully analyze the competitive environment, the composition of the small and
medium sized businesses located in the market, the location, cost and
availability of collocation space in the incumbent carrier's central offices,
and the proximity of our target customers to those central offices. Our goal is
to locate our POPs in central offices with a high density of small and medium
sized businesses that we believe will use our services. We are seeking to have
regulatory approval to operate as a competitive local exchange carrier in all
50 states and the District of Columbia and to have entered into interconnection
agreements with the Regional Bell Operating Companies and certain other
incumbent carriers by the end of 1999.

   Utilize Our Rapid Deployment Model. Once we have selected a market to enter,
we deploy our network using an operating and strategic model that we believe is
replicable across the country and leverages our centralized network management
capabilities. We deploy a standard package of pre-configured equipment at each
POP. We utilize third-party field service organizations, who have the required
authorizations from incumbent carriers, as well as our own internal personnel
to install this equipment in central offices. Through centralized network
management, standardized configuration of our equipment, the assistance of
third-party service providers and on-site inspection of central office
installations, we believe we can implement our rollout plan quickly and cost
effectively.

   Establish Local Referral Networks. We seek to establish relationships in
each local market with select local and regional technology-related
professionals, such as network and systems integrators and consultants, who
market our services and provide customer referrals. These local channel
partners typically understand their clients' technology requirements and
capabilities and can provide valuable insights into customers' needs. We also
work with other local organizations which serve the business community and
refer customers to us. We use these relationships to leverage our general
advertising, direct mail and telemarketing efforts, which are directed at
decision makers in local businesses.

   Develop Relationships Directly with Customers. Our strategy emphasizes
direct relationships with our customers. These relationships enable us to learn
information from our customers about their needs and preferences and help us
expand our service offerings to include additional value-added services based
on customer demand. We believe that these customer relationships increase
customer loyalty and reduce turnover. In addition, our existing customers have
provided customer referrals and we believe strong relationships will result in
customer referrals in the future.

   Leverage our Scaleable Systems and Network Architecture. Our network and
operations support systems have been designed to leverage the economies of DSL
technology and to grow with our business. Because DSL technology uses existing
copper telephone lines, implementing a DSL-based network generally requires a
lower initial capital investment than that needed for alternative technologies.
Once we install our pre-configured equipment in a central office, our
subsequent capital investments to expand service from that location are
directly related to the number of customers who order our service, thereby
reducing our overall capital expenditures until additional paying customers
have ordered our service. In addition, the design of our network architecture
and the operations support systems that we are in the process of implementing
is intended to allow us to expand capacity as it is needed to support
additional customers and markets.

Our NetGAIN Services

   We utilize DSL technology to provide reliable and cost-effective service to
our customers under the NetGAIN brand. As part of our integrated service
offerings, we function as our customer's Internet service provider and deliver
a broad range of Internet-based, value-added solutions. As of May 31, 1999, we
provided service or had installed equipment in 22 cities.

   Our goal is to deliver services which:

  . provide reliable, always-on, secure, high-speed Internet connections up
    to 1.2 megabits per second;

  . are easily upgradable to higher speeds with simple software changes that
    can be affected remotely from our offices;

                                       28
<PAGE>

  . are more reliable and enable greater productivity than dial-up modems;
    and

  . are easier to provision, install and support than existing high-speed
    alternatives.

   Our NetGAIN services currently include all necessary equipment, software and
lines required to establish and maintain a digital Internet connection. Our
primary services include Internet access, e-mail, Internet protocol addressing
and Web site hosting. We support both local area and virtual private networks.
In addition, through our service partners, we intend to offer Web site design
and development, as well as a suite of applications enabling electronic
commerce.

   The following table lists our primary Internet access service offerings:

<TABLE>
<CAPTION>
                                                  Bandwidth*
                                              -------------------    Maximum
                                              Speed to Speed from Distance from
      Services                                Customer  Customer  Central Office
      <S>                                     <C>      <C>        <C>
      NetGAIN Standard....................... 384 kb/s  384 kb/s   18,000 feet
      NetGAIN Plus........................... 768 kb/s  768 kb/s   12,000 feet
      NetGAIN Pro............................ 1.2 mb/s  1.2 mb/s    6,000 feet
</TABLE>
---------------------
*  The speed and effectiveness of the DSL connection varies based on a number
   of factors, including the distance of the customer from the central office
   and the condition of the copper line that connects the customer to the
   central office.

   Customers pay an installation charge and a monthly fee for the NetGAIN
service. The monthly fee does not vary by number of users or usage, although it
does vary based on the speed of the connection. The fee includes the cost of
the modem installed at the customer's site, all phone line charges, and general
Internet access services, including e-mail, Internet protocol addressing and
domain naming services. Generally, customers subscribe to our NetGAIN services
for at least one year.

   We plan to continue expanding our network features and applications to meet
customer demand by working closely with leading hardware, software and
networking companies. We expect to focus on many applications, including
combining voice and data communications, increasing our directory and security
capabilities, and providing businesses with the ability to access their
important applications from remote locations. Using these network-enabled
features and applications, we will continue to provide a complete solution to
meet our business customers' needs.

Customers

   Our objective is to become the leading provider of DSL-based, high-speed
data communications services to small and medium sized businesses in second and
third tier cities. In particular, we believe the following are especially
attractive customers:

  . businesses currently using T1, ISDN, frame relay or analog dial-up
    Internet access;

  . professional or service-based firms that have multiple Internet service
    provider accounts and phone lines;

  . branch offices located in second and third tier cities that require
    transmission of large files between locations;

  . businesses with a substantial amount of revenue from mail order or
    Internet sales from customers outside their immediate geographic
    territory; and

  . businesses that use data-intensive applications, such as financial
    services, technology, and publishing.

Sales and Marketing

   Our marketing professionals have developed a methodology to identify the
businesses that would benefit from our services. Once we identify businesses in
a target market, we employ a targeted local marketing

                                       29
<PAGE>

strategy utilizing a variety of mediums, including direct mail, print and
radio. In addition, we sponsor local promotional events, such as information
technology or telecommunications seminars, to assist our local sales
professionals.

   Direct Sales Channels. Our direct sales efforts are centered around city
managers, who are assigned to one or more local areas. These city managers are
responsible for assessing business opportunities and identifying local channel
partners to assist us in the sale of our NetGAIN services. In addition, city
managers work with local business associations to identify potential customers
and build brand awareness.

   Our city managers and telemarketing personnel follow up on our direct mail
marketing campaigns. Unlike large corporations, decision-makers in small and
medium sized businesses generally decide over the phone whether to initiate
data communications service with us. We believe our telemarketing personnel are
effective in following up with those businesses that have received direct
mailings from us.

   Channel Partners. Our city managers identify local information technology
professionals, such as network and systems integrators and consultants, to
assist in the sale of our NetGAIN services. We select channel partners based on
several factors, including brand name, local market presence, complementary
technology or product lines, and a strong distribution channel. Our local
channel partners understand the technology needs and capabilities of their
clients and are in position to recommend us to their clients and provide us
with referrals. We believe that relationships with channel partners are
important in establishing a long-term presence in the local community and
leveraging our direct sales force.

Customer Support and Operations

   Our customer support professionals work to minimize the complexity and
inconvenience of data communications for our customers. They provide our
customers with a single point of contact for implementation, maintenance and
operations support.

Implementation. We manage the implementation of our service for each customer.
We lease the copper telephone lines from the incumbent carrier. These lines run
from our equipment located in the incumbent carrier's central office to our
customer. We test these lines to determine whether they meet our specifications
and work with the incumbent carrier to correct any problems identified by our
testing. Field service technicians, typically outside contractors, install the
modem and any necessary wiring inside our customers' offices and test the modem
and connection over our network.

   Maintenance.  Our network operations center provides network surveillance
for all equipment in our network. We are able to detect and correct many of our
customers' maintenance problems remotely, often before our customer is aware of
the problem. Customer-initiated maintenance and repair requests are managed and
resolved primarily through our help desk. Our trouble ticket management system
allows us to communicate maintenance problems from the customer service center
to our network operations center 24 hours a day, seven days a week.

   Operations Support System. We are in the process of implementing an
operations support system that will integrate many of our business systems,
including customer billing, provisioning, inventory control, customer care
reports and trouble ticket tracking. This operations support system has been
designed to provide us with accurate, up-to-date information in these areas. We
believe that our operations support system will provide us with the flexibility
to add additional services for our customers as well as to meet our expansion
goals. We expect that the operations support systems will be implemented by the
end of 1999.

Network Architecture

   Our network delivers high-speed Internet access and data communication
services. It offers scaleability, reliability, security and high performance.


                                       30
<PAGE>

 Network Design. The key design principles of our network are:

  . Intelligent End-to-End Network Management. Our network is designed to
    allow us to monitor network components and customer traffic from a
    central location. Because we control the lines to the customer, we can
    perform network diagnostics and equipment surveillance continuously. From
    our network operations center, we have visibility across our entire
    network, allowing us to identify and address network problems quickly and
    to provide quality service and performance.

  . Consistent and Scaleable Performance. We believe that packet-based
    networks such as ours will eventually replace many of the existing dial-
    up modems currently connected to circuit-switched networks. We have
    designed our network for scaleability and consistent performance. New
    capacity is added automatically as each new user receives a line. We also
    use asynchronous transfer mode, or ATM, equipment in our network, which
    implements packet switching directly in integrated circuits, in contrast
    to slower router-based designs that implement switching in router
    software.

  . Security. Our network architecture is designed to reduce the possibility
    of unauthorized access and to allow our customers to safely transmit and
    receive sensitive information and applications. We also utilize customer
    premise equipment that is designed with enhanced security features and
    works in conjunction with installed firewalls and network servers in an
    effort to provide safe connections to the Internet and a secure operating
    environment.

 Network Components. The primary components of our network are:

  . DSL Modems and On-Site Connections. We purchase DSL modems and provide
    them to our customers as part of the service contract. We configure the
    DSL modem and arrange for the installation of the modem and on-site
    wiring needed to connect the modem to the incumbent carrier's copper
    line. We contract with independent field service organizations to perform
    these services, in addition to using a small internal staff.

  .  Copper Telephone Lines. We lease the copper telephone lines running to
    the customer from our equipment in the incumbent carrier's central office
    under terms specified in our interconnection agreements with these
    carriers. The copper lines must be provisioned by the incumbent carrier
    to carry digital signals, typically for an additional charge.

  . Central Office Collocation Points. Through our interconnection
    agreements, we seek to secure collocation space in the central offices of
    incumbent carriers and offer our services from these locations. These
    collocation spaces are designed to offer the same high reliability and
    availability standards as the incumbent carriers' other central office
    space. We place our DSL line cards, digital subscriber line access
    multiplexers, or DSLAMs, and other equipment necessary to provide high-
    speed DSL signals to our customers in the collocation spaces. We have
    continuous access to these spaces to install and maintain our equipment.

  . Backbone Network. Network traffic gathered at each central office is
    routed to a regional hub and then to the Internet. In certain areas where
    we offer service from more than one central office, network traffic is
    routed from each central office to a local hub which aggregates its
    traffic and the traffic from the other central offices located in that
    area and routes this traffic to a regional hub. Our hubs are provisioned
    with redundant equipment and backup power and are actively monitored from
    our network operations center.

  . Network Operations Center. Our network is managed from our network
    operations center, or NOC, located in New Haven, Connecticut. We provide
    end-to-end network management 24 hours a day, seven days a week. This
    enhances our ability to address performance and service issues before
    they affect the customer. From the NOC, we can monitor individual
    customer lines and the equipment and circuits in each regional network
    and central office.

                                       31
<PAGE>

  . Private Regional Network. We anticipate that, at some point in the
    future, we will operate our own private regional networks in certain
    geographic areas. We believe our regional networks will consist of high-
    speed ATM communications circuits that will connect our hubs to our
    equipment in individual POPs. Private networks of this type typically
    operate at speeds of 45 to 155 megabits per second.

Competition

   We face competition from many companies with significantly greater financial
resources, well-established brand names and large installed customer bases.
Although we believe competition in many second and third tier cities is less
intense than competition in larger cities, we expect the level of competition
in our markets to intensify in the future. We expect significant competition
from:

   Other DSL Providers. Certain competitive carriers, including Covad, Network
Access Solutions, NorthPoint and Rhythms NetConnections, offer DSL-based
services. The 1996 Telecommunications Act specifically grants competitive
carriers, including other DSL providers, the right to negotiate interconnection
agreements with incumbent carriers, including interconnection agreements which
may be identical in all respects to, or more favorable than, our agreements.
Several of the large telecommunications companies and computer companies, such
as Microsoft and Intel, have made investments in DSL service providers.

   Internet Service Providers. Several national and regional Internet service
providers, including America Online, Concentric Network, Flashcom, Mindspring,
PSINet and Verio, have begun developing high-speed access capabilities to
leverage their existing products and services. These companies generally
provide Internet access to residential and business customers over the
incumbent carriers' circuit switched networks at ISDN speeds or below. However,
some Internet service providers have begun offering DSL-based access using
another carrier's DSL service or, in some cases, building their own DSL
networks. Some Internet service providers combine their significant and even
nationwide marketing presence with strategic or commercial alliances with DSL-
based competitive carriers.

   Incumbent Local Exchange Carriers. Many of the incumbent local exchange
carriers, including the Regional Bell Operating Companies, are conducting
technical or market trials or have begun deploying DSL-based services. These
incumbent carriers have established brand names and reputations for high
quality in their service areas, possess sufficient capital to deploy DSL
equipment rapidly, have their own copper telephone lines and can bundle digital
data services with their existing analog voice services to achieve a
competitive advantage in serving customers. We believe that the incumbent
carriers have the potential to quickly deploy symmetric DSL services, although
many to date have only deployed asymmetric DSL.

   National Long Distance Carriers. National long distance carriers, such as
AT&T, MCI WorldCom, Qwest and Sprint, have deployed large-scale Internet access
networks and automated ATM networks, sell connectivity to businesses and
residential customers, and have high brand recognition. They also have
interconnection agreements with many of the incumbent carriers and are
beginning to offer competitive DSL services.

   Other Fiber-Based Carriers. Companies such as Allegiance, ChoiceOne,
e.spire, Intermedia and Williams have extensive fiber networks in many
metropolitan areas, primarily providing high-speed data and voice circuits to
small and large corporations. They also have interconnection agreements with
the incumbent carriers under which they have acquired collocation space in many
large markets.

   Cable Modem Service Providers. Cable modem service providers, such as At
Home and its cable partners, are offering or preparing to offer high-speed
Internet access over hybrid fiber coaxial cable networks to consumers. @Work, a
division of At Home, has positioned itself to do the same for businesses. Where
deployed, these networks provide high-speed local access services, in some
cases at speeds higher than DSL service. They typically offer these services at
lower prices than our services, in part by sharing the bandwidth available on
their cable networks among multiple end users.


                                       32
<PAGE>

   Wireless and Satellite Data Service Providers. Several new companies,
including Advanced Radio Telecom, Teligent and WinStar Communications, are
emerging as wireless data service providers. In addition, other companies,
including Motorola Satellite Systems and Hughes Communications, are emerging as
satellite-based data service providers. These companies use a variety of new
and emerging technologies, such as terrestrial wireless services, point-to-
point and point-to-multipoint fixed wireless services and satellite-based
network services.

   We may be unable to compete successfully against these competitors. The most
significant competitive factors include: transmission speed, service
reliability, breadth of product offerings, price/performance, network security,
ease of access and use, content bundling, customer support, brand recognition,
operating experience, capital availability and exclusive contracts with
customers, including Internet service providers and businesses with multiple
offices.

Government Regulation

   A significant portion of the services that we offer will be subject to
regulation at the federal and/or state levels. The Federal Communications
Commission, or FCC, and state public utility commissions regulate
telecommunications common carriers, which are companies that offer
telecommunications services to the public or to all prospective users on
standardized rates and terms. Our data transport services are common carrier
services.

   The FCC exercises jurisdiction over common carriers, and their facilities
and services, to the extent they are providing interstate or international
communications. The various state utility commissions retain jurisdiction over
telecommunications carriers, and their facilities and services, to the extent
they are used to provide communications that originate and terminate within the
same state. The degree of regulation varies from state to state.

   In recent years, the regulation of the telecommunications industry has been
in a state of flux as the United States Congress and various state legislatures
have passed laws seeking to foster greater competition in telecommunications
markets. The FCC and state commissions have adopted many new rules to implement
those new laws and to encourage competition. These changes, which are still
incomplete, have created new opportunities and challenges for us and our
competitors. The following summary of regulatory developments does not describe
all present and proposed federal, state and local regulations and legislation
affecting the telecommunications industry. Certain of these and other existing
federal and state regulations are currently the subject of judicial
proceedings, legislative hearings and administrative proposals which could
change, in varying degrees, the manner in which this industry operates. Neither
the outcome of these proceedings nor their impact upon the telecommunications
industry or us can be predicted at this time. Indeed, future federal or state
regulations and legislation may be less favorable to us than current
regulations and legislation and therefore have a material and adverse impact on
our business and financial prospects. In addition, we may expend significant
financial and managerial resources to participate in proceedings setting rules
at either the federal or state level, without achieving a favorable result.

 Federal Regulation and Legislation

   We must comply with the requirements of a common carrier under the
Communications Act of 1934, as amended, to the extent we provide regulated
interstate services. These requirements include an obligation that our charges,
terms and conditions for communications services must be "just and reasonable"
and that we may not make any "unjust or unreasonable discrimination" in our
charges or terms and conditions. The FCC also has jurisdiction to act upon
complaints against common carriers for failure to comply with their statutory
obligations. We are not currently subject to price cap or rate of return
regulation at the federal level and are not currently required to obtain FCC
authorization for the installation, acquisition or operation of our facilities.

                                       33
<PAGE>

   The FCC has established different levels of regulation for dominant and non-
dominant carriers. Of domestic carriers, only GTE, the Regional Bell Operating
Companies, and other incumbent local exchange carriers are classified as
dominant carriers and all other providers of domestic common carrier service,
including us, are classified as non-dominant carriers. As a non-dominant
carrier, we are subject to less FCC regulation than are dominant carriers.

   In November 1998, the FCC ruled that DSL and other advanced data services
provided as dedicated access services in connection with interstate services
such as Internet access are interstate services subject to the FCC's
jurisdiction. Accordingly, we could offer DSL services without state regulatory
authority, so long as we do not also provide local or intrastate telephone
services via our network. This decision is currently subject to reconsideration
and appeal.

   Comprehensive changes to the Communications Act were made by the 1996
Telecommunications Act, enacted on February 8, 1996. It represents a
significant milestone in telecommunications policy by establishing local
exchange competition as a national policy. The 1996 Telecommunications Act
removes many state regulatory barriers to competition and forecloses state and
local governments from creating laws preempting or effectively preempting
competition in the local exchange market.

   The 1996 Telecommunications Act places substantial interconnection
requirements on the incumbent local exchange carriers. It requires the
incumbent local exchange carriers to:

  . provide physical collocation, which allows companies such as us and other
    interconnectors to install and maintain their own network termination
    equipment in the central offices of incumbent local exchange carriers,
    and virtual collocation only if requested or if physical collocation is
    demonstrated to be technically infeasible;

  . unbundle components of their local service networks so that other
    providers of local service can compete for a wide range of local service
    customers;

  . establish "wholesale" rates for their services to promote resale by
    competitive local exchange carriers and other competitors;

  . establish number portability, which allows a customer to retain its
    existing phone number if it switches from the incumbent local exchange
    carriers to a competitive local service provider;

  . establish dialing parity, which ensures that customers will not detect a
    quality difference in dialing telephone numbers or accessing operators or
    emergency services; and

  . provide nondiscriminatory access to telephone poles, ducts, conduits and
    rights-of-way. In addition, the 1996 Telecommunications Act requires
    incumbent local exchange carriers to compensate competitive carriers for
    traffic originated by them and terminated on the competitive carrier's
    network.

   The 1996 Telecommunications Act in some sections is self-executing. The FCC
issues regulations interpreting the 1996 Telecommunications Act that impose
specific requirements upon which we and our competitors rely. The outcome of
various ongoing FCC rulemaking proceedings or judicial appeals of such
proceedings could materially affect our business and financial prospects.

   The FCC prescribes rules applicable to interstate communications, including
rules implementing the 1996 Telecommunications Act, a responsibility it shares
in certain respects with the state regulatory commissions. As part of its
effort to implement the 1996 Telecommunications Act, the FCC issued an order
governing interconnection in August 1996. A federal appeals court for the
Eighth Circuit, however, reviewed the initial rules and overruled some of their
provisions, including some rules on pricing and nondiscrimination. In January
1999, the United States Supreme Court reversed elements of the Eighth Circuit's
ruling, finding that the FCC has broad authority to interpret the 1996
Telecommunications Act and issue rules for its implementation, specifically
including authority over pricing methodology. The Supreme Court upheld the
FCC's directive to the incumbent carriers to combine unbundled elements for
competitors, and to allow competitors to pick and

                                       34
<PAGE>

choose among provisions in existing interconnection agreements. The Supreme
Court also found that the FCC's interpretation of the rules for establishing
unbundled elements was not consistent with standards prescribed in the 1996
Telecommunications Act, and required the FCC to reconsider and better justify
its delineation of unbundled elements. The FCC implemented a public rulemaking
seeking comment on these issues, including particularly, which network elements
should be offered on an unbundled basis by incumbent carriers, and a decision
is expected later this year. Although the FCC has tentatively concluded that
local loops should continue to remain available as an unbundled element, there
is no certainty as to the FCC's outcome on this issue or as to other network
elements which the incumbent local exchange carriers will be required to
unbundle. Moreover, this proceeding, as well as a companion FCC rulemaking,
address related issues of significant importance to us, including:

  . the manner in which loops should be subject to sub-unbundling;

  . spectrum compatibility among DSL services and between DSL and non-DSL
    services; and

  . line or loop sharing between DSL services offered by one provider and
    analog voice services offered by another provider.

   In addition, some incumbent carriers may take the position that they have no
obligation to provide unbundled elements, including loops, until the FCC issues
new rules, which could adversely affect our business.

   In March 1998, several Regional Bell Operating Companies petitioned the FCC
to be relieved of certain regulatory requirements in connection with their own
DSL and other advanced data services, including obligations to unbundle DSL
loops and to resell DSL services. In October 1998, the FCC ruled that DSL
services are telecommunications services subject to the requirements of the
1996 Telecommunications Act and therefore, the incumbent local exchange
carriers must unbundle such services and offer them for resale. The FCC also
issued a notice of proposed rulemaking indicating its tentative conclusion to
allow incumbent carriers to create separate affiliates for their DSL businesses
that would have to operate as competitive carriers and would be permitted to
operate free of the resale and unbundling obligations of the 1996
Telecommunications Act. While there has been no final FCC decision in this
proceeding, in March 1999, the FCC announced new rules for collocation and
interconnection. These rules are subject to reconsideration and appeal. The
final outcome of these proceedings interpreting the requirements of the 1996
Telecommunications Act may adversely affect our business.

   The FCC recently adopted regulations which strengthen our leverage and that
of competitive carriers in negotiating interconnection arrangements. Most
significant for us, the FCC determined that incumbent local exchange carriers
must make shared cage and cageless collocation available to competitive local
exchange carriers, including DSL.net, and permit these competitors to collocate
any equipment used for interconnection and access to unbundled network
elements, even if the competitor's equipment includes switching or enhanced
service functions. The incumbent carriers may not require that switching
functions be disengaged. These rules are currently subject to appeal by several
incumbent carriers.

   The 1996 Telecommunications Act also directs the FCC, in cooperation with
state regulators, to establish a universal service fund that will provide
subsidies to carriers that provide service to individuals in high-cost areas. A
portion of carriers' contributions to the universal service fund also will be
used to provide telecommunications related facilities for schools, libraries
and certain rural health care providers. The FCC released its initial order in
this context in June 1997, which requires all telecommunications carriers to
contribute to the universal service fund. The FCC's implementation of universal
service requirements remains subject to judicial and additional FCC review.
Additional changes to the universal service regime, which could increase our
costs, could have an adverse affect on us.

                                       35
<PAGE>

 State Regulation

   In November 1998, the FCC deemed pure data transmission to the Internet as
interstate services subject only to federal jurisdiction. However, this
decision is currently subject to reconsideration and appeal. Also, some of our
services that are not limited to interstate access potentially may be
classified as intrastate services subject to state regulation. All of the
states where we operate, or intend to operate, require some degree of state
regulatory commission approval to provide certain intrastate services and
maintain ongoing regulatory supervision. In most states, intrastate tariffs are
also required for various intrastate services, although we are not subject to
price or rate of return regulation for tariffed intrastate services. Actions by
state public utility commissions may adversely affect our business and could
cause us to incur substantial legal and administrative expenses.

   To date, we have been able to obtain authorizations to operate as a
competitive local exchange carrier in Alabama, Colorado, Illinois, Indiana,
Kentucky, Massachusetts, Montana, New Hampshire, New York, North Carolina,
Ohio, Pennsylvania (interim authorization), Rhode Island, South Carolina,
Tennessee and Washington, and we have filed for competitive local exchange
carriers status in the remaining states and the District of Columbia. Although
we expect to obtain certifications in all states, there is no guarantee that
these certifications will be granted or obtained in a timely manner.

   Under the 1996 Telecommunications Act, incumbent carriers have a statutory
duty to negotiate in good faith with us for agreements for interconnection and
access to certain unbundled network elements. This interconnection process is
subject to review and approval by the state regulatory commissions. We have
signed interconnection agreements with Bell Atlantic, BellSouth and SNET and
are currently negotiating agreements with Ameritech, Southwestern Bell and
Pacific Bell. Future interconnection agreements may contain terms and
conditions less favorable to us than those in our current agreements and could
increase our costs of operations.

   During these interconnection negotiations, either the incumbent carrier or
we may submit disputes to the state regulatory commissions for mediation and,
after the expiration of the statutory negotiation period set forth in the 1996
Telecommunications Act, we may submit outstanding disputes to the states for
arbitration, as well as ask the state commissions to arbitrate a new agreement
or particulars thereof.

   Under the 1996 Telecommunications Act, states have begun and, in a number of
cases, completed regulatory proceedings to determine the pricing of unbundled
network elements and services, and the results of these proceedings will
determine the price we pay for, and whether it is economically attractive for
us to use, these elements and services.

 Local Government Regulation

   In certain instances, we may be required to obtain various permits and
authorizations from municipalities, such as for use of rights-of-way, in which
we operate our own local distribution facilities. Whether various actions of
local governments over the activities of telecommunications carriers such as
ours, including requiring payment of franchise fees or other surcharges, pose
barriers to entry for competitive local exchange carriers which violate the
1996 Telecommunications Act or may be preempted by the FCC is the subject of
litigation. If municipal governments impose conditions on granting permits or
other authorizations or if they fail to act in granting such permits or other
authorizations, our business could be adversely affected.

Employees

   As of June 1, 1999, we had approximately 67 employees. We believe that our
future success will depend in part on our continued ability to attract, hire
and retain qualified personnel. Competition for such personnel is intense, and
we may be unable to identify, attract and retain such personnel in the future.
None of our employees are represented by a labor union or are the subject of a
collective bargaining agreement. We have never experienced a work stoppage and
believe that our employee relations are good.


                                       36
<PAGE>

Properties

   Our headquarters consists of 12,000 square feet in an office building in New
Haven, Connecticut, which we occupy under a lease that expires in May 2005.
This lease may be extended for two additional five-year periods. In addition,
we have a right of first refusal for additional space in the office building
under certain circumstances. We also lease office space for local sales
personnel and space for network equipment installations in a number of other
locations.

Legal Proceedings

   We are not a party to any legal proceedings, other than those related to
regulatory approvals. We are, however, subject to state commission, FCC and
court decisions as they relate to the interpretation and implementation of the
1996 Telecommunications Act, the interpretation of competitive carrier
interconnection agreements in general and our interconnection agreements in
particular. In some cases, we may be deemed to be bound by the results of
ongoing proceedings of these bodies. We therefore may participate in
proceedings before these regulatory agencies or judicial bodies that affect,
and allow us to advance, our business plans.

                                       37
<PAGE>

                                   MANAGEMENT

Directors and Executive Officers

   The directors and executive officers of DSL.net are as follows:

<TABLE>
<CAPTION>
Name                     Age                      Position
<S>                      <C> <C>
Paul K. Sun.............  39 Chairman of the Board and Chief Technology Officer
David F. Struwas........  51 President, Chief Executive Officer and Director
Raymond C. Allieri......  39 Senior Vice President, Sales and Marketing
Robert Q. Berlin........  33 Vice President, Strategic Planning
Alan A. Bolduc..........  44 Vice President, Operations
John M. Jaser...........  40 Vice President, Technology
Stephen Zamansky........  29 Vice President and General Counsel
Robert Gilbertson.......  58 Director
William J. Marshall.....  43 Director
James D. Marver.........  49 Director
William Seifert.........  49 Director
</TABLE>
---------------------
(1) Member of the compensation committee
(2) Member of the audit committee

 Directors and Executive Officers

   Paul K. Sun has served as a director since January 1999 and Chairman of the
Board of Directors since February 1999. In addition, he has also served as
Chief Technology Officer since December 1999. From February 1997 to December
1998, Mr. Sun was a Director at PairGain Technologies, Inc. From December 1995
to February 1997, he was President and Chief Executive Officer of Avidia
Systems, Inc., an ATM switch vendor, which was acquired by PairGain
Technologies, Inc. in February 1997. From 1989 to 1995, Mr. Sun held various
positions at TranSwitch Corporation, a now-public telecommunications-oriented
semiconductor company, most recently as Manager of ATM Development.

   David F. Struwas joined DSL.net in August 1998 and has served as our
President and Chief Executive Officer since November 1998 and as a director
since January 1999. From January 1997 to August 1998, Mr. Struwas was a General
Manager for Brooks Fiber-Worldcom. From May 1980 to January 1997, Mr. Struwas
held various positions at Southern New England Telephone, most recently as
Director of Marketing.

   Raymond C. Allieri has served as Senior Vice President, Sales and Marketing
since June 1999. From 1988 to 1999, Mr. Allieri held various positions at MCI
WorldCom Communications Corporation, most recently as Senior Vice President,
Local Market Strategy and Development.

   Robert Q. Berlin has served as Vice President, Strategic Planning since May
1999 and as Executive Director, Strategic Planning from January 1999 to May
1999. From December 1997 to January 1999, Mr. Berlin was Managing Director of
Rice Sangalis Toole & Wilson, a private investment firm. From August 1994 to
December 1997, he held various positions, including Managing Director at GE
Capital Corporation. From June 1991 to August 1994, Mr. Berlin was a principal
at CHF Capital Partners, a private investment firm.

   Alan A. Bolduc has served as Vice President, Operations since November 1998.
From June 1998 to November 1998, Mr. Bolduc was Managing Director of
Cablevision Lightpath of CT, Inc., a competitive carrier subsidiary of
Cablevision. From January 1995 to May 1998, he was a General Manager at Brooks
Fiber Communications of CT, Inc. From April 1992 to January 1995, Mr. Bolduc
held various positions at Sprint Communications, most recently as National
Account Manager.

                                       38
<PAGE>

   John M. Jaser has served as Vice President, Technology since May 1999. Mr.
Jaser served as our President from March 1998 to November 1998 and was
responsible for business development from November 1998 to May 1999. From
January 1992 to March 1998, Mr. Jaser was the President and Chief Executive
Officer of FutureComm, Inc., a consulting firm specializing in network
planning, architecture and design.

   Stephen Zamansky has served as Vice President and General Counsel since May
1999. From August 1997 to May 1999, Mr. Zamansky was an associate at Day, Berry
& Howard LLP. From October 1995 to August 1997, he was an associate at Sullivan
& Cromwell. From August 1994 to August 1995, Mr. Zamansky was a legal clerk for
a justice at the Supreme Judicial Court of Massachusetts.

   Robert Gilbertson has served as a director since January 1999. Mr.
Gilbertson has been the President and Chief Executive Officer of Network
Computing Devices, Inc. since May 1997. From April 1996 to April 1997, Mr.
Gilbertson served as Chairman of Avidia Systems Inc. From January 1992 to May
1996, Mr. Gilbertson served as President and a director of CMX Systems, Inc., a
manufacturer of precision measurement and positioning products.

   William J. Marshall has served as a director since January 1999. Mr.
Marshall has been a Managing Partner at VantagePoint Venture Partners since
1998 and served as Senior Advisor from 1996 to 1998. From 1985 to 1996, Mr.
Marshall was the Senior Managing Director and Chief Technology Officer of the
Communications Technologies Group at Bear Stearns & Co. Inc. Mr. Marshall is a
Co-Founder of the ATM Forum and was also a Board member of the Securities
Industry Association Technology Committee.

   James D. Marver has served as a director since April 1999. Mr. Marver has
been a Managing Partner at VantagePoint Venture Partners since co-founding the
firm in 1996. From 1988 to 1996, Mr. Marver was Senior Managing Director and
Head of the Global Technology Group at Bear Stearns & Co. Inc., as well as Head
of the San Francisco Investment Banking office.

   William Seifert has served as a director since April 1999. Mr. Seifert has
been a General Partner of Prism Ventures Partners II, L.P. since October 1998.
From November 1997 to October 1998, Mr. Seifert was a consultant and private
investor. Mr. Seifert founded Agile Networks, Inc. in November 1991 and served
as its Chief Executive Officer until November 1997. Mr. Seifert is a director
of Digital Lightwave, Inc.

Committees of the Board of Directors

   Our compensation committee consists of Messrs.      and     . Our
compensation committee has the power to create the executive compensation
policy of DSL.net and must report to the board of directors when asked to do
so. It also reviews and evaluates the salaries and incentive compensation of
our management and key employees and makes recommendations concerning these
matters to the board of directors. Our compensation committee also administers
our 1999 Stock Plan.

   Our audit committee consists of Messrs.      and     . It is responsible for
reviewing the scope of annual audits, considering specific problems and
questions that arise during the course of audits, monitoring the adequacy of
accounting and audit controls, and such other functions as the board of
directors may from time to time delegate to it. Our audit committee must report
to the board of directors when asked to do so.

Director Compensation

   In February 1999, our board of directors approved the grant of non-qualified
stock options to purchase     shares of our common stock to each of Mr.
Gilbertson and Mr. Marshall for their services as directors and     shares to
Mr. Marver for his service on our advisory board, in each case at an exercise
price of $   per share. Each of these options provides that 25% of the shares
subject to the option will become exercisable one year after the date of grant
with the remaining amount becoming exercisable equally over the next 36 months.
The board of directors has also provided that all options granted under the
1999 Stock Plan to

                                       39
<PAGE>

a member of our board of directors or a member of the advisory board will vest
immediately upon a change of control. In addition, the option granted to
Mr. Gilbertson provides that his option will become immediately exercisable in
full in the event he is removed as a director for any reason other than in
connection with a change of control of DSL.net. See "Management -- Stock Plan."

Executive Compensation

   The following summary compensation table sets forth the total compensation
paid or accrued for the period from our inception on March 3, 1998 through
December 31, 1998 for David Struwas, our Chief Executive Officer at December
31, 1998, and John M. Jaser, our Vice President, Technology, who served as our
chief executive officer from March 1998 to November 1998 (the "named executive
officers"). No other executive officer or employee had compensation in excess
of $100,000 during the year ended December 31, 1998.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                        Annual Compensation
                                                    ----------------------------
                                                                     All Other
Name and Principal Position                         Salary   Bonus  Compensation
<S>                                                 <C>     <C>     <C>
David Struwas...................................... $34,867 $30,000    $6,682
 President and Chief Executive Officer
John M. Jaser......................................  20,975     --        955
 Vice President, Technology*
</TABLE>
---------------------
* Mr. Jaser served as President from March 1998 to November 1998.

   All other compensation includes an amount equal to the fair market value of
common stock, as determined by the Company's board of directors, purchased in
December 1998 by each named executive officer in exchange for a promissory
note. The notes were subsequently forgiven. Based on the issuance of the Series
A preferred stock and our intention to proceed with this offering, we have
recorded aggregate stock compensation of $1,023,272 relating to these shares of
common stock. See "Certain Transactions."

Option Grants

   No stock options or appreciation rights were granted during the year ended
December 31, 1998 to Mr. Struwas or Mr. Jaser.

Stock Plan

   1999 Stock Plan. Our 1999 Stock Plan was adopted by the board of directors
in February 1999 and approved by the stockholders in March 1999. A total of
       shares of common stock have been authorized and reserved for issuance
under the 1999 Stock Plan. Under the terms of the 1999 Stock Plan, we are
authorized to grant incentive stock options as defined under the Internal
Revenue Code, non-qualified options, stock appreciation rights, stock awards or
opportunities to make direct purchases of common stock to officers, directors,
consultants and other employees of ours and our subsidiaries.

   The 1999 Stock Plan is administered by our compensation committee. Our
compensation committee selects the individuals to whom options or other awards
will be granted and determines the option exercise price and other terms of
each award, subject to the provisions of the 1999 Stock Plan. Options generally
provide that 25% of the shares exercisable under each option will vest one year
following either the date of grant or the optionee's date of employment and
thereafter vest in equal monthly installments over the next 36 months. The
option exercise price may be paid in cash or in shares of common stock valued
at fair market value on the exercise date. We may also allow the option to be
exercised through a same-day sale program without any cash outlay by the
optionee. The 1999 Stock Plan also provides that, if at any time following a

                                       40
<PAGE>

change in control we terminate an optionee's business relationship with DSL.net
or any of our subsidiaries without cause or the optionee terminates his or her
business relationship with us for good reason, all options and other awards
held by that optionee will immediately vest and become exercisable. In
addition, the board of directors has provided that all options granted under
the 1999 Stock Plan to any person serving as president, chief executive
officer, vice president, chief financial officer, chief technology officer,
chairman of our board of directors, a member of our board of directors or a
member of our advisory board will vest immediately upon a change in control. An
option is not transferable by the recipient except by will or by the laws of
descent and distribution, or, in the case of non-qualified stock options, is
only transferable to the extent set forth in the agreement relating to the non-
qualified stock option or pursuant to a valid domestic relations order. The
term of the 1999 Stock Plan is ten years, unless sooner terminated by vote of
our board of directors.

Compensation Committee Interlocks and Insider Participation

   Prior to February 1999, we did not have a separate compensation committee or
other board committee performing equivalent functions and these functions were
performed by our board of directors. In February 1999, we established a
compensation committee. Our compensation committee makes recommendations
concerning salaries and incentive compensation for our employees and
consultants and administers and grants stock options pursuant to the 1999 Stock
Plan. Other than John Jaser, none of our executive officers has served as a
director or member of the compensation committee, or other committee serving an
equivalent function, of any other entity, whose executive officers served as a
director or member of our compensation committee. Mr. Jaser was our sole
director and president for a portion of 1998 and also a director and executive
officer of FutureComm, Inc.

                                       41
<PAGE>

                              CERTAIN TRANSACTIONS

Organization of DSL.net

   In connection with our formation in 1998, we issued and sold     shares of
common stock for an aggregate of $500 to our founders, John Jaser and Felix
Tang, and 20,000 shares of a prior series A preferred stock for an aggregate of
$50,000 to another founder, Paul Sun. Mr. Jaser is our Vice President,
Technology, Mr. Tang is our Director of Network Engineering and Mr. Sun is the
chairman of the board of directors and chief technology officer.

Sales of Stock, Notes and Warrants

   In November 1998, we issued five convertible promissory notes in the
aggregate principal amount of $350,000, two warrants to purchase an aggregate
of 31,250 shares of Series A preferred stock at an exercise price of $1.00 per
share and rights to warrants to purchase an aggregate of 56,250 shares of
Series A preferred stock at an exercise price of $1.00 per share. Of that
amount, we issued one secured convertible promissory note in the principal
amount of $41,667 and one warrant to purchase 10,416 shares of Series A
preferred stock at an exercise price of $1.00 per share to VantagePoint Venture
Partners, 1996, L.P. In addition, we issued one secured convertible promissory
note in the principal amount of $83,333 and one warrant to purchase 20,834
shares of Series A preferred stock to VantagePoint Communications Partners,
L.P. Each of the convertible promissory notes payable to each of the
VantagePoint entities provided for interest at 6.0% and was repayable on demand
beginning on January 17, 1999. Upon completion of this offering, these warrants
will be exercisable for an aggregate of     shares of common stock at an
exercise price of $   per share. We also issued one convertible demand note in
the principal amount of $100,000 and the right to a warrant to purchase 25,000
shares of Series A preferred stock to Robert Gilbertson, one of our directors.
This warrant will expire and no longer be exercisable upon the completion of
this offering. The convertible promissory note issued to Mr. Gilbertson
provided for interest at 5.56% and was repayable on demand if we failed to
complete a qualified financing, as defined therein, on or before September 30,
2000.

   In December 1998, we exchanged and cancelled 20,000 shares of a prior series
A preferred stock and issued      shares of our common stock to Mr. Sun. In
addition, we issued      shares of common stock to Mr. Jaser in exchange for
his promissory note in the principal amount of $   and      shares of common
stock to David Struwas in exchange for his promissory note in the principal
amount of $   . Simultaneously with the issuance of the common stock in
exchange for promissory notes from each of Mr. Jaser and Mr. Struwas, we
entered into agreements with each that provided for additional compensation in
the amount of $    and $   , respectively. The promissory notes of each of Mr.
Jaser and Mr. Struwas were forgiven in January 1999 in satisfaction of our
obligations under each of these agreements.

   In January 1999, we issued 1,166,667 shares of Series A preferred stock and
a warrant to purchase 1,166,667 shares of a prior series B preferred stock to
VantagePoint Venture Partners 1996, L.P. for aggregate consideration of
$1,166,667. In addition, we issued 2,333,333 shares of Series A preferred stock
and a warrant to purchase 2,333,333 shares of a prior series B preferred stock
to VantagePoint Communications Partners, L.P. for aggregate consideration of
$2,333,333. A portion of the aggregate consideration paid by VantagePoint
Venture Partners 1996, L.P. and VantagePoint Communications Partners, L.P. was
in the form of the cancellation of convertible promissory notes from DSL.net to
them in the aggregate principal amount of $125,000. We also issued an aggregate
of 225,000 shares of Series A preferred stock in conversion of three
convertible promissory notes in an aggregate principal amount of $225,000. Of
that amount, 100,000 shares of Series A preferred stock were issued to Mr.
Gilbertson. In addition, we issued one warrant to purchase 25,000 shares of
Series A preferred stock at an exercise price of $1.00 per share to Mr.
Gilbertson. Finally, we issued     shares of common stock to Mr. Tang for
aggregate consideration of $   .

   In March 1999, we issued      shares of common stock having a value of $
to Mr. Struwas as a bonus.

                                       42
<PAGE>

   In April 1999, we issued 2,166,667 shares of Series B preferred stock to
VantagePoint Venture Partners 1996, L.P. in exchange for 1,666,667 shares of
Series A preferred stock and the cancellation of warrants to purchase 1,666,667
shares of a prior series B preferred stock. We also issued 4,333,333 shares of
Series B preferred stock to VantagePoint Communications Partners, L.P. in
exchange for 2,333,333 shares of Series A preferred stock and the cancellation
of warrants to purchase 2,333,333 shares of a prior series B preferred stock.

   In addition, in April 1999, Mr. Jaser surrendered     shares of common
stock, Mr. Tang surrendered     shares of common stock and Mr. Sun surrendered
    shares of common stock to DSL.net.

   In April 1999, we issued an aggregate of 2,785,516 shares of Series C
preferred stock at a price of $3.59 per share, for aggregate consideration of
$10,000,002. Of that amount, we issued 185,701 shares to VantagePoint Venture
Partners 1996, L.P., 371,402 shares to VantagePoint Communications Partners,
L.P. and 1,392,758 shares to Prism Venture Partners II, L.P. We also issued
819,778 shares to Oak Investment Partners VIII, L.P. and 15,877 shares to Oak
VIII Affiliates Fund L.P.

   In May 1999, we issued an aggregate of 2,868,069 shares of Series D
preferred stock at a purchase price of $10.46 per share, for aggregate
consideration of $30,000,000, including a secured promissory note of
VantagePoint Venture Partners III, L.P. in an aggregate principal amount of
$5,999,429. Of that amount, we issued 191,204 shares to VantagePoint Venture
Partners, 1996, L.P., 382,410 shares to VantagePoint Communications Partners,
L.P., 573,614 shares to VantagePoint Venture Partners III, L.P. and 95,602
shares to Prism Venture Partners II, L.P. We also issued 515,823 shares of
Series D preferred stock to Oak Investment Partners VIII, L.P. and 9,990 shares
of Series D preferred stock to Oak VIII Affiliates Fund, L.P. VantagePoint
Venture Partners III, L.P. paid the secured promissory note in full on May 28,
1999.

   In June 1999, we issued an aggregate of 95,603 shares of Series D preferred
stock to Raymond C. Allieri, our Senior Vice President, Sales and Marketing, at
a purchase price of $10.46 per share, for aggregate consideration of
$1,000,007, including a secured promissory note in an aggegate principal amount
of $999,912. The promissory note matures on July 6, 1999 and provides for
interest at 6.00% per annum.

   In connection with the preferred stock financings, we granted demand
registration rights to certain holders of preferred stock and common stock. See
"Description of Capital Stock--Registration Rights."

Issuance of Options

   In February 1999, we issued options to purchase     shares of our common
stock to each of Messrs. Gilbertson and Marshall and options to purchase
shares of our common stock to Mr. Marver.

Other

   In January 1999, we entered into an agreement with FutureComm, Inc., a
Connecticut corporation, under which FutureComm, Inc. transferred and assigned
all of its interest in certain equipment, agreements, licenses and intellectual
property in return for payment of approximately $28,000. Mr. Jaser is the sole
stockholder and director of FutureComm, Inc. and Mr. Jaser and Mr. Tang are
officers of FutureComm, Inc.

   We are party to an agreement, dated as of April 1, 1999, with DMW Worldwide,
Inc. under which we license software for use in connection with our operations
support system. In addition, DMW will install and modify the software, and
provide training, maintenance and support services in connection with the
software. Two of our stockholders, VantagePoint Venture Parners 1996, L.P. and
VantagePoint Communications Partners, L.P., in the aggregate, own in excess of
5% of the capital stock of DMW. Mr. Marshall and Mr. Marver, affiliates of
VantagePoint Venture Partners 1996, L.P. and VantagePoint Communications
Partners, L.P., are also members of our board of directors. In addition Mr.
Marver is a director of DMW.

                                       43
<PAGE>

                             PRINCIPAL STOCKHOLDERS

   The following table sets forth certain information regarding beneficial
ownership of our common stock as of June  , 1999, and as adjusted to reflect
the sale of the shares of common stock offered hereby, by: (1) each person
known by us to be the beneficial owner of more than 5% of our common stock; (2)
each named executive officer; (3) each of our directors; and (4) all named
executive officers and directors as a group. Unless otherwise noted below, the
address of each person listed on the table is c/o DSL.net, Inc., 545 Long Wharf
Drive, New Haven, CT 06511, and each person has sole voting and investment
power over the shares shown as beneficially owned except to the extent
authority is shared by spouses under applicable law and except as set forth in
the footnotes to the table.

   Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Shares of common stock issuable by us to
that person pursuant to options or warrants which may be exercised within 60
days after June  , 1999 are deemed to be beneficially owned and outstanding for
purposes of calculating the number of shares and the percentage beneficially
owned by that person or entity. However, these shares are not deemed to be
beneficially owned and outstanding for purposes of computing the percentage
beneficially owned by any other person or entity.

   For purposes of calculating the percentage beneficially owned by any person,
the number of shares deemed outstanding before the offering includes:

  . shares of common stock outstanding as of June  , 1999;

  . shares of common stock issuable upon the conversion of preferred stock
    outstanding as of June  , 1999; and

  . shares of common stock issuable upon the exercise of options and warrants
    which may be exercised by that person within 60 days of June   , 1999.

   For purposes of calculating the percentage beneficially owned by any person,
the number of shares deemed outstanding after the offering includes:

  . all shares deemed to be outstanding before the offering and

  . shares being sold in this offering, assuming no exercise of the
    underwriters' over-allotment option.

                                       44
<PAGE>

<TABLE>
<CAPTION>
                                                       Percent of Common
                                       Shares          Stock Outstanding
                                    Beneficially ------------------------------
                                       Owned     Before Offering After Offering
<S>                                 <C>          <C>             <C>
David Struwas......................                    8.44%

John Jaser.........................                    4.61


Robert Gilbertson(1)...............                       *

James D. Marver(2).................                   46.25

William J. Marshall(2).............                   46.25

William Seifert(3).................                    8.37

Paul Sun...........................                    6.54

The VantagePoint Entities(2).......                   46.25
 1001 Bayhill Drive
 Suite 100
 San Bruno, CA 94066

Prism Venture Partners II,                             8.37
 L.P.(3)...........................
 100 Lowder Brook Drive
 Suite 2500
 Westwood, MA 02090

The Oak Entities(4)................                    7.66
 One Gorham Island
 Westport, CT 06830

Stephen K. Gellman and Cecila S.                       6.40
 Wu(5).............................

 Shipman & Goodwin L.L.P.
 One American Row
 Hartford, CT 06103
All executive officers and
 directors as a group
 (7 persons)(6)....................                   74.77%
</TABLE>
---------------------
 * Less than 1%
(1) Includes 100,000 shares held by Mr. Gilbertson. Also includes     shares of
    common stock issuable upon exercise of a warrant held by Mr. Gilbertson.
(2) Includes 2,574,822 shares and warrants to purchase 10,416 shares held by
    VantagePoint Venture Partners 1996, L.P., of which VantagePoint Associates,
    LLC is the general partner. Also includes 5,087,145 shares and warrants to
    purchase 20,834 shares held by VantagePoint Communications Partners, L.P.,
    of which VantagePoint Communications Associates, LLC is the general partner
    and 573,614 shares held by VantagePoint Venture Partners III, L.P., of
    which VantagePoint Ventures Associates III, LLC is the general partner.
    Messrs Marver and Marshall are members of the general partner of each of
    the VantagePoint entities. Each of Mr. Marver and Mr. Marshall may be
    deemed to share voting and investment power with respect to such shares and
    each disclaims beneficial ownership of such shares.
(3) Includes 1,488,360 shares held by Prism Venture Partners II, L.P., of which
    Prism Investment Partners II, L.P. is the general partner, of which Prism
    Venture Partners II, L.L.C. is the general partner. Mr. Seifert is a
    managing director of Prism Venture Partners II, L.L.C. Mr. Seifert may be
    deemed to share voting and investment power with respect to such shares and
    disclaims beneficial ownership of such shares.
(4) Includes 1,335,601 shares held by Oak Investment Partners VIII, L.P., of
    which Oak Associates VIII, LLC is the general partner. Also inlcudes 25,867
    shares held by Oak VIII Affiliates Fund, L.P., of which Oak VIII Affiliates
    Fund, LLC is the general partner.
(5) Includes an aggregate of     shares held in trust for Mr. Sun's children,
    of which Mr. Gellman and Ms. Wu are co-trustees, and     shares held in
    trust for Mr. Sun, of which Mr. Gellman and Ms. Wu are co-trustees. Each of
    Mr. Gellman and Ms. Wu may be deemed to share voting and investment power
    with respect to such shares and each disclaims beneficial ownership of such
    shares.
(6) See Notes 1 through 3.

                                       45
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

   Effective upon the closing of this offering, our authorized capital stock
will consist of     shares of common stock, with a par value of $   per share,
and    shares of preferred stock, with a par value of $   per share.

Common Stock

   As of June  , 1999 there were     shares of common stock outstanding and
held of record by 22 stockholders, after giving effect to the conversion of all
outstanding shares of preferred stock upon the closing of this offering.

   Based upon the number of shares outstanding as of June  , 1999 and giving
effect to the issuance of the shares of common stock offered by us hereby,
there will be     shares of common stock outstanding upon the closing of this
offering. In addition, as of June  , 1999, there were outstanding stock options
for the purchase of a total of     shares of common stock, and outstanding
warrants for the purchase of a total of 129,226 shares of Series A preferred
stock. Upon completion of this offering, the warrants will be exercisable for
    shares of common stock.

   Holders of common stock are entitled to one vote per share for each share
held of record on all matters submitted to a vote of stockholders. The holders
of common stock are entitled to receive ratably such lawful dividends as may be
declared by our board of directors. However, these dividends are subject to
preferences that may be applicable to the holders of any outstanding shares of
preferred stock. In the event of a liquidation, dissolution or winding up of
the affairs of DSL.net, whether voluntary or involuntary, the holders of common
stock will be entitled to receive pro rata all of our remaining assets
available for distribution to our stockholders. Any such pro rata distribution
would be subject to the rights of the holders of any outstanding shares of
preferred stock. The common stock has no preemptive, redemption, conversion or
subscription rights. The rights, powers, preferences and privileges of holders
of common stock are subject to, and may be adversely affected by, the rights of
the holders of shares of any series of preferred stock which we may designate
and issue in the future.

Preferred Stock

   A new certificate of incorporation will be filed immediately after the
closing of this offering and will delete all references to the Series A, B, C
and D preferred stock.

   Our board of directors will be authorized, subject to any limitations
prescribed by Delaware law, without further stockholder approval, to issue from
time to time up to     shares of preferred stock, in one or more series. Our
board of directors will be also authorized, subject to the limitations
prescribed by Delaware law, to establish the number of shares to be included in
each series and to fix the voting powers, preferences, qualifications and
special or relative rights or privileges of each series. Our board of directors
will be authorized to issue preferred stock with voting, conversion and other
rights and preferences that could adversely affect the voting power or other
rights of the holders of common stock.

   We have no current plans to issue any preferred stock following this
offering. However, the issuance of preferred stock or of rights to purchase
preferred stock could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
a majority of our outstanding voting stock.

                                       46
<PAGE>

Warrants

   As of June 3, 1999, we had outstanding six warrants to purchase an aggregate
of 129,226 shares of Series A preferred stock. Two warrants provide for the
purchase of an aggregate of 31,250 shares of Series A stock at an exercise
price of $1.00 per share, and are exercisable, in whole or in part, at any time
or from time to time, until November 18, 2003. Upon completion of this
offering, these warrants will be exercisable for an aggregate of    shares of
common stock at an exercise price of $   per share. Three warrants are to
purchase an aggregate of 56,250 shares of Series A stock at an exercise price
of $1.00 per share and are exercisable, in whole or in part, at any time or
from time to time, until the date on which we complete our initial public
offering. The sixth warrant is to purchase an aggregate of 41,726 shares of
Series A preferred stock at an exercise price of $2.40 per share and is
exercisable, in whole or in part, at any time or from time to time until three
years following the date on which we complete our initial public offering. Upon
completion of this offering, this warrant will be exercisable for    shares of
common stock at an exercise price of $   per share. All of the outstanding
warrants contain certain protections against dilution resulting from stock
splits, stock dividends and similar events.

Registration Rights

   Under the terms of the investors' rights agreement dated as of May 12, 1999,
the holders of an aggregate of shares of    common stock, including shares
issuable upon conversion of the outstanding preferred stock, are entitled to
certain rights with respect to the registration of these shares under the
Securities Act.

   If we propose to register any of our securities under the Securities Act,
either for our own account or for the account of other security holders, the
holders of registration rights are entitled to notice of such registration.
These holders are also entitled to include their shares of common stock in such
registration. However, in the event of a registration pursuant to an
underwritten public offering of common stock, the underwriters have the right,
subject to certain conditions, to limit the number of shares included in such
registration.

   The holders of at least 40% of the then-outstanding shares of common stock
held by all of the holders of registration rights are entitled, at any time
following 180 days after the effective date of this prospectus, to request that
we file a registration statement under the Securities Act covering the sale of
the shares held by the requesting holders of registration rights. Upon the
receipt of such a request, we must use commercially reasonable efforts to
effect such registration. We are not required to effect more than two such
demand registrations.

   Once we have qualified to use Form S-3 to register securities under the
Securities Act, the holders of registration rights have the right to request
that we file a registration statement on Form S-3 or any successor thereto for
a public offering of all or any portion of their shares, provided that the
reasonably anticipated aggregate price to the public of such offering would not
be less than $1,000,000. We are not required to effect a registration in this
manner more than once in any six-month period.

   In general, all fees, costs and expenses of such registrations will be borne
by us. We have agreed to indemnify the holders of registration rights against,
and provide contribution with respect to, certain liabilities relating to any
registration in which any shares of these holders are sold under the Securities
Act.

Anti-Takeover Effects of Provisions of our Certificate of Incorporation and By-
Laws and Delaware General Corporation Law

   Our certificate of incorporation and by-laws and the Delaware General
Corporation Law contain certain provisions that could be deemed to have anti-
takeover effects. These provisions could discourage, delay or prevent a change
in control of DSL.net or an acquisition of DSL.net at a price which many
stockholders may find attractive. The existence of these provisions could limit
the price that investors might be willing to pay in the future for shares of
our common stock.

                                       47
<PAGE>

 Certificate of Incorporation and By-Laws

   Our new certificate of incorporation will be filed immediately after the
closing of this offering and our by-laws will be amended prior to the offering.
The following description relates to the new certificate of incorporation and
the amended by-laws. Our certificate of incorporation provides that any
director may be removed without cause only by the vote of at least 75% of the
shares entitled to vote for the election of directors or with cause by the vote
of at least a majority of such shares. This provision could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, control of DSL.net.

   Our by-laws provide that, except as otherwise provided by law or our
certificate of incorporation, newly created directorships resulting from an
increase in the authorized number of directors or vacancies on our board of
directors may be filled only by:

  . a majority of the directors then in office, though less than a quorum is
    then in office; or

  . the sole remaining director.

   These provisions prevent a stockholder from enlarging our board of directors
and filling the new directorships with such stockholder's own nominees without
board of directors approval.

   These provisions of our certificate of incorporation and by-laws may have
the effect of discouraging a third party from initiating a proxy contest,
making a tender offer or otherwise attempting to gain control of DSL.net, or of
attempting to change the composition or policies of the Board, even though such
attempts might be beneficial to DSL.net or its stockholders.

   Our by-laws provide that, unless otherwise prescribed by law or the
certificate of incorporation, only a majority of our board of directors, the
Chairman of the board of directors or the President is able to call a special
meeting of stockholders. Our certificate of incorporation and by-laws also
provide that, unless otherwise prescribed by law or our certificate of
incorporation, stockholder action may be taken only at a duly called and
convened annual or special meeting of stockholders and may not be taken by
written consent. These provisions, taken together, prevent stockholders from
forcing consideration by the stockholders of stockholder proposals over the
opposition of our board of directors, except at an annual meeting.

   Our by-laws also establish an advance notice procedure for stockholders to
make nominations of candidates for election as director, or to bring other
business before an annual meeting of our stockholders. Under the notice
procedure, notice of stockholder nominations or proposals to be made at an
annual meeting or a special meeting in lieu of an annual meeting generally must
be received by us not less than 120 days nor more than 150 days prior to the
first anniversary of the date of the proxy statement delivered to the
stockholders in connection with the preceding year's annual meeting. However,
if the number of directors to be elected to our board of directors is increased
and there is no public announcement by us naming all of the nominees for
director or specifying the size of the increased board of directors at least 70
days prior to the first anniversary of the preceding year's annual meeting,
then notice must be received not later than the 10th day following the earlier
of the day such notice was mailed or the day such public disclosure was made.
The notice will be timely only with respect to any director nominees for any
position caused by the increase in our board of directors. Notice of
stockholder nominations or proposals to be made at a special meeting called by
our board of directors for the purpose of electing one or more directors (other
than a special meeting in lieu of an annual meeting), must be received not
earlier than the 90th day prior to such special meeting nor later than the
close of business on the 60th day prior to such special meeting or the 10th day
following the earlier of the day such notice was mailed or the day such public
disclosure was made. These notices must contain certain prescribed information.

   The notice procedure affords our board of directors an opportunity to
consider the qualifications of proposed director nominees or the merit of
stockholder proposals, and, to the extent deemed appropriate by our

                                       48
<PAGE>

board of directors, to inform stockholders about such matters. The notice
procedure also provides a more orderly procedure for conducting annual meetings
of stockholders. Our by-laws do not give our board of directors any power to
approve or disapprove stockholder nominations for the election of directors or
proposals for action. However, the notice procedure may prevent a contest for
the election of directors or the consideration of stockholder proposals. This
could deter a third party from soliciting proxies to elect its own slate of
directors or to approve its own proposal if the proper advance notice
procedures are not followed, without regard to whether consideration of such
nominees or proposals might be harmful or beneficial to DSL.net and its
stockholders.

 Delaware General Corporation Law

   As provided in Section 203 of the Delaware General Corporation Law, our
certificate of incorporation authorizes the board of directors, when
considering a tender offer or merger or acquisition proposal, to take into
account factors in addition to potential economic benefits to stockholders.
Such factors may include:

  . the interests of our stockholders, including the possibility that these
    interests might be best served by the continued independence of DSL.net;

  . whether the proposed transaction might violate Federal or state laws;

  . the consideration being offered in the proposed transaction in relation
    to the then current market price for our outstanding capital stock, as
    well as in relation to the market price for our capital stock over a
    period of years, the estimated price that might be achieved in a
    negotiated sale of DSL.net as a whole or in part or through orderly
    liquidation, the premiums over a market price for the securities of other
    corporations in similar transactions, current political, economic and
    other factors bearing on securities prices and our financial condition
    and future prospects; and

  . the social, legal and economic effects upon employees, suppliers,
    customers, creditors and others having similar relationships with
    DSL.net, upon the communities in which we conduct our business and upon
    the economy of the state, region and nation.

   The foregoing provisions could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party acquiring,
control of DSL.net. We are subject to Section 203 of the Delaware General
Corporation Law which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such
stockholder became an interested stockholder.

   Section 203 does not apply if:

  . prior to such time, the board of directors of the corporation approved
    either the business combination or the transaction which resulted in the
    stockholder becoming an interested stockholder;

  . upon consummation of the transaction which resulted in the stockholder
    becoming an interested stockholder, the interested stockholder owned at
    least 85% of the voting stock of the corporation outstanding at the time
    the transaction commenced, excluding for purposes of determining the
    number of shares outstanding those shares owned by persons who are
    directors and also officers and by employee stock plans in which employee
    participants do not have the right to determine confidentially whether
    shares held subject to the plan will be tendered in a tender or exchange
    offer; or

  . at or subsequent to such time, the business combination is approved by
    the board of directors and authorized at an annual or special meeting of
    stockholders, and not by written consent, by the affirmative vote of at
    least two-thirds of the outstanding voting stock which is not owned by
    the interested stockholder.

   The application of Section 203 may limit the ability of stockholders to
approve a transaction that they may deem to be in their best interests.


                                       49
<PAGE>

   Section 203 defines "business combination" to include:

  . any merger or consolidation involving the corporation and the interested
    stockholder;

  . any sale, transfer, pledge or other disposition of 10% or more of the
    assets of the corporation to or with the interested stockholder;

  . subject to certain exceptions, any transaction which results in the
    issuance or transfer by the corporation of any stock of the corporation
    to the interested stockholder;

  . any transaction involving the corporation which has the effect of
    increasing the proportionate share of the stock of any class or series of
    the corporation beneficially owned by the interested stockholder; or

  . the receipt by the interested stockholder of the benefit of any loans,
    advances, guarantees, pledges or other financial benefits provided by or
    through the corporation.

   In general, Section 203 defines an "interested stockholder" as any entity or
person who beneficially owns 15% or more of the outstanding voting stock of the
corporation or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within the past three years, and any entity or person associated with,
affiliated with or controlling or controlled by such entity or person.

 Limitation of Liability

   Our certificate of incorporation provides that no director or officer of
DSL.net shall be personally liable to us or to our stockholders for monetary
damages for breach of fiduciary duty as a director or officer, except that the
limitation shall not eliminate or limit liability to the extent that the
elimination or limitation of such liability is not permitted by the Delaware
General Corporation Law as the same exists or may hereafter be amended.

   Our certificate of incorporation further provides for the indemnification
of, and advancement of expenses to, our directors and officers to the fullest
extent permitted by Section 145 of the Delaware General Corporation Law,
including circumstances in which indemnification is otherwise discretionary. A
principal effect of these provisions is to limit or eliminate the potential
liability of our directors and officers for monetary damages arising from
breaches of their duty of care, subject to certain exceptions. These provisions
may also shield directors and officers from liability under federal and state
securities laws.

Stock Transfer Agent
   The transfer agent and registrar for the common stock is                .

                                       50
<PAGE>

                        SHARES ELIGIBLE FOR FUTURE SALE

   If our stockholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options, in the public market
following this offering, the market price of our common stock could fall. 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.

   Upon completion of this offering, we will have outstanding an aggregate of
     shares of our common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options or warrants. As of
June   , 1999, we had approximately     holders of our common stock. Of these
shares, all of the shares sold in this offering will be freely tradeable
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. This leaves      shares eligible for sale in the
public market as follows:

<TABLE>
<CAPTION>
       Number of Shares               Date
      ------------------- ---------------------------------
      <C>                 <S>
                          After the date of this
                          prospectus.
                          After 180 days from the date of
                          this prospectus (subject, in some
                          cases, to volume limitations).
                          At various times after 180 days
                          from the date of this prospectus.
</TABLE>

   Lock-Up Agreements. All of our officers and directors and substantially all
of our stockholders have signed lock-up agreements under which they agreed not
to transfer or dispose of, directly or indirectly, any shares of our common
stock or any securities convertible into or exerciseable or exchangeable for
shares of our 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 Donaldson, Lufkin & Jenrette Securities
    Corporation;

  . in the case of gifts or estate planning transfers where the donee signs a
    lock-up agreement; or

  . in the case of distributions to stockholders or affiliates of the
    stockholders where the recipient signs a lock-up agreement.

   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 our common stock then outstanding, which
    will equal approximately shares immediately after this offering; or

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

   Sales under Rule 144 are also subject to 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 three months 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 those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, Rule 144(k) shares may be sold immediately upon
the completion of this offering. None of the shares of common stock that will
be outstanding after completion of this offering will be eligible to be sold
under Rule 144(k) until at least March   , 2000.


   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

                                       51
<PAGE>

stock or option plan or other written agreement is eligible to resell those
shares 90 days after the effective date of this offering in reliance on Rule
144, but without compliance with some of the restrictions, including the
holding period, contained in Rule 144.

   Following this offering, we intend to file registration statements under the
Securities Act covering approximately     shares of common stock issued upon
the exercise of stock options, subject to outstanding options or reserved for
issuance under the 1999 Stock Plan. Accordingly, shares registered under such
registration statements will, subject to Rule 144 provisions applicable to
affiliates, be available for sale in the open market, except to the extent that
such shares are subject to vesting restrictions or the contractual restrictions
described above. See "Management -- Stock Plan."

                                       52
<PAGE>

                                  UNDERWRITING

   Subject to the terms and conditions contained in an underwriting agreement
dated     , 1999, the underwriters named below, who are represented by
Donaldson, Lufkin & Jenrette Securities Corporation and BT Alex. Brown
Incorporated have severally agreed to purchase from us the number of shares
opposite their names below:

<TABLE>
<CAPTION>
                                                                        Number
      Underwriters:                                                    of Shares
      <S>                                                              <C>
      Donaldson, Lufkin & Jenrette Securities Corporation.............
      Deutsche Bank Securities Inc....................................
                                                                          ---
        Total.........................................................
                                                                          ===
</TABLE>

   The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of certain legal matters and to certain other
conditions. The underwriters are obligated to purchase and accept delivery of
all the shares, other than those shares covered by the over-allotment option
described below, if they purchase any of the shares.

   The underwriters propose to initially offer some of the shares directly to
the public at the initial public offering price on the cover page of this
prospectus and some of the shares to certain dealers at the initial public
offering price less a concession not in excess of $    per share. The
underwriters may allow, and such dealers may re-allow, a concession not in
excess of $    per share on sales to other dealers. After the initial offering
of the shares to the public, the representatives may change the public offering
price and such concessions. The underwriters do not intend to confirm sales to
any accounts over which they exercise discretionary authority.

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

<TABLE>
<CAPTION>
                                                                  Paid by Us
                                                               -----------------
                                                                  No      Full
                                                               Exercise Exercise
<S>                                                            <C>      <C>
Per share.....................................................   $        $
Total.........................................................
</TABLE>

   We will pay the offering expenses, estimated to be $    million.

   DLJdirect Inc., an affiliate of Donaldson, Lufkin & Jenrette Securities
Corporation and a member of the selling group, is facilitating the distribution
of the shares sold in the offering over the Internet. The underwriters have
agreed to allocate a limited number of shares to DLJdirect Inc. for sale to its
brokerage account holders.

   We have granted to the underwriters an option, exercisable for 30 days after
the date of this prospectus, to purchase up to     additional shares at the
initial public offering price minus the underwriting fees. The underwriters may
exercise this option solely to cover over-allotments, if any, made in
connection with this offering. To the extent that the underwriters exercise
this option, each underwriter will become obligated, subject to certain
conditions, to purchase a number of additional shares approximately
proportionate to that underwriter's initial purchase commitments.

                                       53
<PAGE>

   We have agreed to indemnify the underwriters against certain civil
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the underwriters may be required to make in respect any of
those liabilities.

   We, our executive officers and directors, and substantially all of our
stockholders have agreed, for a period of 180 days from the date of this
prospectus, not to, without the prior written consent of Donaldson, Lufkin &
Jenrette: (1) 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 our common stock or any securities
convertible into or exercisable or exchangeable for our common stock; or (2)
enter into any swap or other arrangement that transfer all or a portion of the
economic consequences associated with the ownership of any common stock,
regardless of whether any of the transactions described in clause (1) or (2) is
to be settled by the delivery of common stock, or such other securities, in
cash or otherwise.

   However, we may:

  . grant stock options or stock awards under the 1999 Stock Plan;

  . issue shares of our stock upon the exercise of options, warrants or
    rights or the conversion of currently outstanding securities; and

  . issue, offer and sell shares of our common stock or securities
    convertible, exercisable or exchangeable for common stock in transactions
    not involving a public offering, as long as each recipient of the
    securities agrees in writing to be bound by the restrictions in this
    paragraph.

   In addition, during this period, we have agreed not to file any registration
statement with respect to, and each of our executive officers and directors and
a significant majority of our stockholders have agreed not to make any demand
for, or exercise any right with respect to, the registration of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock, without the prior written consent of Donaldson, Lufkin &
Jenrette.

   Prior to this offering, there was no established trading market for our
common stock. The initial public offering price for the common stock in this
offering will be determined by negotiation among us and the representatives of
the underwriters. The factors to be considered in determining the initial
public offering price include the history of and the prospects for the industry
in which we compete, the ability of our management, our past and present
operations, our prospects for future earnings, the general condition of the
securities markets at the time of this offering and the recent market prices of
securities of generally comparable companies.

   We have applied for quotation of our common stock on the Nasdaq National
Market under the symbol "DSLN."

   Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of our common
stock included in this offering in any jurisdiction where action for that
purpose is required. The shares included in this offering may not be offered or
sold, directly or indirectly, nor may this prospectus or any other offering
material or advertisement in connection with the offer and sale of any these
shares be distributed or published in any jurisdiction, except under
circumstances that will result in compliance with the applicable rules and
regulations of that jurisdiction. Persons who receive this prospectus are
advised to inform themselves about and to observe any restrictions relating to
the offering of our common stock and the distribution of this prospectus. This
prospectus is not an offer to sell or a solicitation of an offer to buy any
shares of our common stock included in this offering in any jurisdiction where
that would not be permitted or legal.

   In connection with this offering, certain underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of our
common stock. Specifically, the underwriters may overallot this offering,
creating a syndicate short position. In addition, the underwriters may bid for
and purchase shares of our

                                       54
<PAGE>

common stock in the open market to cover syndicate short positions or to
stabilize the price of our common stock. These activities may stabilize or
maintain the market price of our common stock above independent market levels.
The underwriters are not required to engage in these activities and may end any
of these activities at any time.

   Prior to this offering, there has been no established public market for our
common stock. The initial public offering price for the shares of our common
stock offered by this prospectus will be determined by negotiation between us
and the representatives of the underwriters. The factors to be considered in
determining the initial public offering price include:

  . our history and the prospects for the industry in which we compete;

  . our past and present operations;

  . our historical results of operations;

  . our prospects for future earnings;

  . the recent market prices of securities of generally comparable companies;
    and

  . the general conditions of the securities market at the time of the
    offering.

                                 LEGAL MATTERS

   The validity of the shares of common stock offered hereby will be passed
upon for us by Testa, Hurwitz & Thibeault, LLP, Boston Massachusetts. Certain
legal matters will be passed upon for the underwriters by Brobeck, Phleger &
Harrison LLP.

                                    EXPERTS

   The financial statements as of December 31, 1998 and for the period from
inception (March 3, 1998) through December 31, 1998 included in this prospectus
have been so included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

                             ADDITIONAL INFORMATION

   We have filed with the SEC a registration statement, including exhibits,
schedules and amendments. This prospectus is a part of the registration
statement and includes all of the information which we believe is material to
an investor considering whether to make an investment in our common stock. We
refer you to the registration statement for additional information about us,
our common stock and this offering, including the full texts of the exhibits,
some of which have been summarized in this prospectus. After this offering, we
will be subject to the informational requirements of the Securities Exchange
Act. We will be required to file annual and quarterly reports, proxy statements
and other information with the SEC.

   You can inspect and copy our registration statement, reports and other
information at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information about the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the
SEC maintains an Internet site that contains our registration statement,
reports and other information. The address of the SEC's Internet site is
"http://www.sec.gov."

   We intend to furnish our stockholders annual reports containing financial
statements audited by our independent accountants.

                                       55
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                        <C>
Report of Independent Accountants......................................... F-2

Balance Sheets as of December 31, 1998 and March 31, 1999 (unaudited)..... F-3

Statements of Operations for the period from inception (March 3, 1998)
 through December 31, 1998, for the three months ended March 31, 1999
 (unaudited), and for the period from inception (March 3, 1998) through
 March 31, 1999 (unaudited)............................................... F-4

Statements of Changes in Stockholders' Equity (Deficit) for the period
 from inception (March 3, 1998) through December 31, 1998 and for the
 three months ended March 31, 1999 (unaudited)............................ F-5

Statements of Cash Flows for the period from inception (March 3, 1998)
 through December 31, 1998, for the three months ended March 31, 1999
 (unaudited), and for the period from inception (March 3, 1998) through
 March 31, 1999 (unaudited)............................................... F-6

Notes to Financial Statements............................................. F-7
</TABLE>

                                      F-1
<PAGE>

                       Report of Independent Accountants

To the Board of Directors and
Stockholders of DSL.net, Inc.

In our opinion, the accompanying balance sheet and the related statements of
operations, of changes in stockholders' equity and of cash flows present
fairly, in all material respects, the financial position of DSL.net, Inc. (a
development stage company) at December 31, 1998 and the results of its
operations and its cash flows for the period from inception (March 3, 1998)
through December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.

PricewaterhouseCoopers LLP
Hartford, Connecticut
May 26, 1999

                                      F-2
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    Proforma
                                                                    March 31,
                                         December 31,  March 31,      1999
                                             1998        1999       (Note 2)
                                                      (unaudited)  (unaudited)
<S>                                      <C>          <C>          <C>
                 Assets
Current assets:
  Cash and cash equivalents.............  $   39,479  $ 1,318,438  $ 1,318,438
  Accounts receivable...................      30,597       24,997       24,997
                                          ----------  -----------  -----------
    Total current assets................      70,076    1,343,435    1,343,435
Fixed assets, net (Note 3)..............     284,338    1,745,999    1,745,999
Other assets............................      15,566      463,556      463,556
                                          ----------  -----------  -----------
    Total assets........................  $  369,980  $ 3,552,990  $ 3,552,990
                                          ==========  ===========  ===========
  Liabilities and Stockholders' Equity
                (Deficit)
Current liabilities:
  Accounts payable......................  $  231,073  $   100,119  $   100,119
  Accrued liabilities...................      16,219      745,850      745,850
  Deferred revenue......................       5,392       10,581       10,581
  Current portion of capital lease
   payable (Note 5).....................      16,494       46,202       46,202
  Current portion of notes payable (Note
   4)...................................      66,667           --           --
                                          ----------  -----------  -----------
    Total current liabilities...........     335,845      902,752      902,752
Long-term portion of capital lease
 payable (Note 5).......................          --       59,966       59,966
Notes payable (Note 4)..................     350,000           --           --
                                          ----------  -----------  -----------
Commitments and contingencies (Note 5)
    Total liabilities...................     685,845      962,718      962,718
                                          ----------  -----------  -----------

Stockholders' equity (deficit) (Notes 7
 and 9):
  Series A convertible preferred stock,
   $0.001 par value; none and 4,000,000
   (unaudited) shares authorized,
   respectively; none and 3,725,000
   (unaudited) and no shares pro forma
   issued and outstanding,
   respectively.........................          --    2,497,244           --
  Common stock, $0.0005 par value;
   381,818,000 and 40,000,000 shares
   authorized, respectively; 12,600,000
   and 12,927,274 (unaudited) and
   16,652,274 shares pro forma shares
   issued and outstanding,
   respectively.........................       6,300        6,464        8,326
Additional paid-in capital..............   2,467,472   10,752,909   13,248,291
Deferred compensation...................          --   (6,190,094)  (6,190,094)
Accumulated deficit.....................  (2,789,637)  (4,476,251)  (4,476,251)
                                          ----------  -----------  -----------
    Total stockholders' equity
     (deficit)..........................  $ (315,865) $ 2,590,272  $ 2,590,272
                                          ----------  -----------  -----------
    Total liabilities and stockholders'
     equity.............................  $  369,980  $ 3,552,990  $ 3,552,990
                                          ==========  ===========  ===========
</TABLE>

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

                                      F-3
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                  For the Period                For the Period
                                  From Inception                From Inception
                                  (March 3, 1998)    Three      (March 3, 1998)
                                      Through     Months Ended      Through
                                   December 31,    March 31,       March 31,
                                       1998           1999           1999
                                                  (unaudited)     (unaudited)
<S>                               <C>             <C>           <C>
Revenue.........................    $    31,533   $    48,188     $    79,721
                                    -----------   -----------     -----------
Operating expenses:
  Network and operations........        127,054       264,457         391,511
  General and administrative....        230,272       525,184         755,456
  Sales and marketing...........         35,961       129,375         165,336
  Stock compensation............      2,423,272       822,260       3,245,532
                                    -----------   -----------     -----------
    Total operating expenses....    $ 2,816,559   $ 1,741,276     $ 4,557,835
                                    -----------   -----------     -----------
Operating loss..................    $(2,785,026)  $(1,693,088)    $(4,478,114)
                                    -----------   -----------     -----------
Interest expense (income), net..          4,611        (6,474)         (1,863)
                                    -----------   -----------     -----------
    Net loss....................    $(2,789,637)  $(1,686,614)    $(4,476,251)
                                    ===========   ===========     ===========
Net loss per share-basic and
 diluted........................    $     (0.73)  $     (0.24)    $     (0.98)
                                    ===========   ===========     ===========
Shares used in computing net
 loss per share.................      3,839,716     7,030,719       4,579,897
                                    ===========   ===========     ===========
Pro forma net loss per common
 share..........................    $     (0.73)  $     (0.17)    $     (0.84)
                                    ===========   ===========     ===========
Pro forma shares used in
 computing net loss per common
 share..........................      3,839,716    10,219,608       5,319,588
                                    ===========   ===========     ===========
</TABLE>


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

                                      F-4
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                 STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                Deficit
                                                                                              Accumulated
                            Preferred Stock         Common Stock    Additional                During the
                          ---------------------  ------------------   Paid-in     Deferred    Development
                           Shares      Amount      Shares   Amount    Capital   Compensation     Stage        Total
<S>                       <C>        <C>         <C>        <C>     <C>         <C>           <C>          <C>
Initial capitalization,
 including retroactive
 effect of stock
 splits.................     20,000  $   50,000   3,818,180 $   500 $        -- $        --   $        --  $    50,500
Exchange of Series A
 preferred stock for
 common stock...........    (20,000)    (50,000)  5,727,270   4,273   1,445,727          --            --    1,400,000
Issuance of common
 stock..................         --          --   3,054,550   1,527   1,021,745          --            --    1,023,272
Net loss................         --          --          --      --          --          --    (2,789,637)  (2,789,637)
                          ---------  ----------  ---------- ------- ----------- -----------   -----------  -----------
Balance at December 31,
 1998...................         --  $       --  12,600,000 $ 6,300 $ 2,467,472 $        --   $(2,789,637) $  (315,865)
Deferred compensation--
 restricted stock.......         --          --          --      --   3,733,854  (3,733,854)           --           --
Issuance of preferred
 stock and warrants.....  3,500,000   2,272,244          --      --   1,155,000          --            --    3,427,244
Conversion of notes
 payable................    225,000     225,000          --      --         --           --            --      225,000
Stock compensation......         --          --     327,274     164     587,293          --            --      587,457
Deferred compensation--
 stock options..........         --          --          --      --   2,697,290  (2,697,290)           --           --
Amortization of deferred
 compensation...........         --          --          --      --          --     241,050            --      241,050
Issuance of warrants....         --          --          --      --     112,000          --            --      112,000
Net loss................         --          --          --      --          --          --    (1,686,614)  (1,686,614)
                          ---------  ----------  ---------- ------- ----------- -----------   -----------  -----------
Balance at March 31,
 1999
 (unaudited)............  3,725,000  $2,497,244  12,927,274 $ 6,464 $10,752,909 $(6,190,094)  $(4,476,251) $ 2,590,272
                          =========  ==========  ========== ======= =========== ===========   ===========  ===========
</TABLE>


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

                                      F-5
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                   For the Period                For the Period
                                   From Inception    For the     From Inception
                                   (March 3, 1998)    Three      (March 3, 1998)
                                       through     Months Ended      through
                                    December 31,    March 31,       March 31,
                                        1998           1999           1999
                                                   (unaudited)     (unaudited)
<S>                                <C>             <C>           <C>
Cash flows from operating
 activities:
 Net loss.........................   $(2,789,637)  $(1,686,614)    $(4,476,251)
 Adjustments to reconcile net loss
  to net cash used by
  operating activities:
  Depreciation and amortization...         5,744        48,165          53,909
  Noncash compensation expense....     2,423,272       822,260       3,245,532
  Changes in operating assets and
   liabilities:
   (Increase) decrease in accounts
    receivable....................       (30,597)        5,600         (24,997)
   Increase in other assets.......       (15,566)     (335,990)       (351,556)
   Increase (decrease) in accounts
    payable.......................       231,073      (130,954)        100,119
   Increase in accrued
    liabilities...................        16,814       729,036         745,850
   Increase in deferred revenue...         5,392         5,189          10,581
                                     -----------   -----------     -----------
    Net cash used in operating
     activities...................      (153,505)     (543,308)       (696,813)
                                     -----------   -----------     -----------
Cash flows from investing
 activities:
   Purchases of fixed assets......      (290,082)   (1,509,826)     (1,799,908)
                                     -----------   -----------     -----------
    Net cash used in investing
     activities...................      (290,082)   (1,509,826)     (1,799,908)
                                     -----------   -----------     -----------
Cash flows from financing
 activities:
   Initial capitalization.........        50,500            --          50,500
   Proceeds from bridge
    financing.....................       350,000            --         350,000
   Proceeds from equipment notes
    payable.......................       124,000        93,059         217,059
   Proceeds from preferred stock
    issuance......................            --     3,308,491       3,308,491
   Payments on equipment notes
    payable.......................       (41,434)      (66,667)       (108,101)
   Principal payments under
    capital lease obligation......           --         (2,790)         (2,790)
                                     -----------   -----------     -----------
    Net cash provided by financing
     activities...................       483,066     3,332,093       3,815,159
                                     -----------   -----------     -----------
Net increase in cash and cash
 equivalents......................        39,479     1,278,959       1,318,438
Cash and cash equivalents at
 beginning of period..............            --        39,479              --
                                     -----------   -----------     -----------
Cash and cash equivalents at end
 of period........................   $    39,479   $ 1,318,438     $ 1,318,438
                                     ===========   ===========     ===========
Supplemental disclosure:
 Cash paid (received):
  Interest........................   $     2,524   $    (6,474)    $    (3,950)
                                     ===========   ===========     ===========
</TABLE>

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

                                      F-6
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                         NOTES TO FINANCIAL STATEMENTS


1. Formation and Operations of the Company

   DSL.net, Inc. (the "Company") was incorporated in Delaware on March 3, 1998
and operations commenced March 28, 1998. The Company was formed to provide
dedicated high-speed digital communications services using digital subscriber
line (DSL) technology. The Company is considered a development stage company
in accordance with Statement of Financial Accounting Standards No. 7, as
planned principal operations have commenced, but there has been no significant
revenue therefrom.

2. Summary of Significant Accounting Policies

   Significant accounting policies followed in the preparation of these
financial statements are as follows:

Use of estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
markets for the Company's services are characterized by intense competition,
rapid technological development, regulatory changes, and frequent new product
introductions, all of which could impact the future value of the Company's
assets.

Unaudited interim financial statements

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

   Operations commenced March 28, 1998. Operating activity for the three
months ended March 31, 1998 was therefore immaterial.

Unaudited pro forma balance sheet

   Upon the closing of DSL's anticipated initial public offering, all of the
outstanding shares of Series A convertible preferred stock will automatically
convert into common stock. This conversion has been reflected in the unaudited
pro forma balance sheet as of March 31, 1999.

Cash and cash equivalents

   The Company considers all highly liquid investments purchased with an
initial maturity of three months or less to be cash equivalents.

Fixed assets

   Fixed assets are stated at cost and are depreciated using the straight-line
method over the estimated useful lives of the assets, which are between 3 and
5 years. Maintenance and repairs are charged to expense as

                                      F-7
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

incurred. Collocation space improvements represent payments to carriers for
infrastructure improvements within their central offices to allow the Company
to install its equipment, which allows the Company to interconnect with the
carrier's network. These payments are being amortized over their estimated
useful lives of five years.

Income taxes

   The Company uses the liability method of accounting for income taxes, as set
forth in Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Under this method, deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and liabilities and
net operating loss carryforwards, all calculated using presently enacted tax
rates.

Revenue recognition

   Revenue is recognized pursuant to the terms of each contract, generally on a
monthly service fee basis. Deferred revenue represents payments received in
advance of the services provided. Revenue related to installation fees are
recognized to the extent of direct costs incurred. Such revenue is not expected
to exceed the direct costs. In certain situations, the Company waives non-
recurring installation fees in order to obtain a sale. The Company expenses the
related costs as incurred.

Long-lived assets

   Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,
requires that long-lived assets and certain intangible assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. If undiscounted expected future cash
flows are less than the carrying value of the assets, an impairment loss is to
be recognized based on the fair value of the assets. No impairment losses have
been recognized to date.

Segment information

   In 1998, the Company adopted Statement of Financial Accounting Standards No.
131, Disclosures about Segments of an Enterprise and Related Information (SFAS
No. 131). SFAS No. 131 supersedes SFAS No. 14, Financial Reporting for Segments
of a Business Enterprise, replacing the "industry segment" approach with the
"management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments. The
Company operates in one segment: high-speed Internet access and data
communications services. SFAS No. 131 also requires disclosures about products
and services, geographic areas, and major customers. The adoption of SFAS No.
131 had no impact on the Company's financial statements for the periods
presented.

Stock compensation

   The Company applies Accounting Principles Board Opinion No. 25 (APB 25) and
related interpretations in accounting for its stock option plan and stock
awards with the disclosure provisions of Statement of Financial Accounting
Standards No. 123 (SFAS 123). Under APB 25, compensation expense is computed to
the extent that the fair market value of the underlying stock on the date of
grant exceeds the exercise price of the employee stock option or stock award.
Compensation so computed is then recognized over the vesting period. The
Company accounts for equity instruments issued to nonemployees in accordance
with SFAS 123 and Emerging Issues Task Force ("EITF") 96-18.

                                      F-8
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(Continued)


   Stock compensation expense includes amortization of deferred compensation
and charges related to stock grants which are not subject to vesting
requirements. Stock compensation expense for the period from inception (March
3, 1998) to December 31, 1998 and for the three months ended March 31, 1999
totaled $2,423,272 and $822,260, respectively.

Earnings (loss) per share

   The Company computes net loss per share pursuant to Statement of Financial
Accounting Standards No. 128, Earnings Per Share. Basic net loss per share is
computed by dividing income or loss applicable to common stockholders by the
weighted average number of shares of the Company's common stock outstanding
during the period. Diluted net loss per share is determined in the same manner
as basic net loss per share except that the number of shares is increased
assuming exercise of dilutive stock options and warrants using the treasury
stock method and dilutive conversion of the Company's preferred stock.

   The following table presents the calculation of basic and diluted net loss
per share:

<TABLE>
<CAPTION>
                                       Period from inception
                                          (March 3, 1998)    Three months ended
                                       to December 31, 1998    March 31, 1999
   <S>                                 <C>                   <C>
   Net loss..........................       $(2,789,637)        $(1,686,614)
                                            -----------         -----------
   Basic & Diluted:
    Weighted average shares of common
     stock outstanding...............         3,839,716           7,030,719
                                            -----------         -----------
    Basic and diluted net loss per
     share...........................       $     (0.73)        $     (0.24)
                                            ===========         ===========
</TABLE>

   The dilutive effect of options, warrants and convertible preferred stock has
not been considered as their effect would be antidilutive for all periods
presented.

   Pro forma basic and diluted earnings per share have been calculated assuming
the conversion of all outstanding shares of preferred stock into common stock,
as if the shares had converted immediately upon their issuance.

Comprehensive Income

   The Company has adopted the accounting treatment prescribed by Statement of
Financial Accounting Standards No. 130, Comprehensive Income. The adoption of
this statement had no impact on the Company's financial statements for the
periods presented.

Recently issued accounting pronouncements

   In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use (SoP 98-1). SoP 98-1 provides guidance
for determining whether computer software is internal-use software, and
guidance on accounting for the proceeds of computer software originally
developed or obtained for internal use and then subsequently sold to the
public. It also provides guidance on capitalization of the costs incurred for
computer software developed or obtained for internal use. The Company has not
yet determined the impact of adopting SoP 98-1, which will be effective for the
Company's year ending December 31, 1999.

   In April 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-5 (SoP 98-5), Reporting on the Costs of Start-Up Activities,
which provides guidance on the financial reporting of start-up costs and
organizational costs. It requires costs of start-up activities and
organizational costs to be expensed as incurred. SoP 98-5 is effective for
financial statements for fiscal years beginning after December 15, 1998. As the
Company has not capitalized such costs to date, the adoption of SoP 98-5 is not
expected to have an impact on the financial statements of the Company.

                                      F-9
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(Continued)


3. Fixed Assets

<TABLE>
<CAPTION>
                                                        December 31,  March 31,
                                                            1998        1999
                                                                     (unaudited)
   <S>                                                  <C>          <C>
   Network equipment..................................    $161,814   $  781,060
   Furniture, fixtures, office equipment and
    software..........................................      61,535      260,890
   Vehicles...........................................         --        45,328
   Collocation costs..................................      66,733      712,630
                                                          --------   ----------
                                                           290,082    1,799,908
     Less: accumulated depreciation and amortization..       5,744       53,909
                                                          --------   ----------
                                                          $284,338   $1,745,999
                                                          ========   ==========
</TABLE>

   As of December 31, 1998 and March 31, 1999, the recorded cost of the
equipment under capital lease was $22,699 and $115,163 (unaudited),
respectively. Accumulated amortization for this equipment under capital lease
was $1,265 and $4,704 (unaudited) as of December 31, 1998 and March 31, 1999,
respectively.

   Depreciation and amortization expense, excluding amortization of deferred
compensation, was $5,744 and $48,165 (unaudited) for the period from inception
March 3, 1998 to December 31, 1998 and for the three months ended March
31,1999, respectively.

4. Debt

Notes payable

   In August 1998, the Company issued a $100,000 demand note payable for
funding capital expenditures and operating expenses. The note was originally
payable October 1, 1998, and bore interest at 5.56% per annum. At December 31,
1998, $66,667 remained unpaid. The amount was paid in January 1999.

   In November 1998, the Company entered into a series of Note and Warrant
Purchase Agreements pursuant to which the Company received $350,000 and issued
$350,000 principal amount of secured convertible promissory notes (the "Bridge
Notes") and warrants (the "Bridge Warrants") to acquire 87,500 shares of Series
A Preferred Stock. The Notes, which expire in January 1999 or November 2003,
bear interest at 5.56% or 6.0% per annum and are convertible into preferred
shares at a rate equal to the Company's next qualified equity financing. The
Bridge Warrants are exercisable for a period of five years or until an initial
public offering of the Company's common stock.

Credit Facility

   In May 1999, the Company entered into a secured credit facility (the "Credit
Facility") with a bank which will provide up to $5.0 million for the purchase
of telecommunications and office equipment and vehicles. The Credit Facility
expires in May 2000, at which time amounts outstanding will convert to a term
loan payable over 36 months. The Credit Facility bears interest on outstanding
borrowings at 1% over the higher of the bank's prime rate or the federal funds
rate plus 0.5%. The Credit Facility is secured by a lien on certain equipment
and vehicles owned by the Company located at its principal office, and imposes
certain financial and other covenants.

5. Commitment and Contingencies

Leases

   Rent expense under operating leases was approximately $14,275 and $46,745
(unaudited), for the period from inception (March 3, 1998) through December 31,
1998 and for the three months ended March 31, 1999.

                                      F-10
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(Continued)


   The Company is obligated under a capital equipment lease expiring in May
2000.

   The present value of future minimum lease payments as of December 31, 1998
is as follows:

<TABLE>
<CAPTION>
                                                              Operating Capital
                                                               Leases   Leases
   <S>                                                        <C>       <C>
   1999...................................................... $225,318  $12,444
   2000......................................................  378,588    5,185
   2001......................................................   99,000       --
   2002......................................................   99,000       --
   2003......................................................   90,750       --
   Thereafter................................................       --       --
                                                              --------  -------
     Total................................................... $892,656   17,629
                                                              ========
   Less--Amount representing interest........................             1,135
                                                                        -------
   Present value of future minimum lease payments............           $16,494
                                                                        =======
</TABLE>

   In September 1998, the Company entered into an operating lease agreement for
office space in Norwalk, Connecticut. The table above indicates the minimum
lease payments due under that lease. In February 1999, the Company cancelled
the Norwalk lease and entered into an operating lease for office space in New
Haven, Connecticut. Annual minimum lease payments under this lease are $192,283
(unaudited) in 1999 and $745,290 (unaudited) for each of the years 2000 through
2004, and $279,484 in 2005. Costs related to exiting the Norwalk lease were
$42,900 and were expensed as incurred.

   In March 1999, the Company entered into a master lease agreement to provide
up to $2,000,000 for capital equipment purchases over an initial twelve month
period, subject to renewal options. Individual capital leases are amortized
over 30 or 36 month terms and bear interest at 8% to 9% per annum. The
outstanding balance under this agreement at March 31, 1999 was $106,168
(unaudited.)

Purchase Commitments

   In April 1999, the Company entered into a commitment to license and
implement an operations support system valued at approximately $2.0 million. In
May 1999, the Company issued purchase orders to a supplier for the purchase of
network equipment totaling $1.1 million.

Other Matters

   As part of the master lease agreement, the Company issued 41,726 warrants
(the "Lease Warrants") to the lessor to purchase Series A Preferred Stock at a
formula-based price equal to approximately $2.40 per share. The warrants are
exercisable until the earlier of March 4, 2006 or three years after an initial
public offering of the Company's common stock. The value of these warrants is
approximately $112,000 and is being amortized to interest expense over the life
of the capital lease obligation.

   The Company has entered into interconnection and collocation agreements. The
agreements have terms of one to two years and are subject to certain renewal
and termination provisions by either party generally upon 30 day notification.
The table above includes the Company's obligation under its interconnection
agreements over their initial terms. The Company anticipates that it will renew
such agreements beyond their initial terms.

6. Related Party Transactions

   In January 1999, the Company entered an Asset Transfer Agreement with
FutureComm, Inc. whose sole shareholder is an officer and founder of the
Company. The amount paid by the Company in exchange for certain equipment,
agreements, licenses and intellectual property was approximately $28,000.

                                      F-11
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(Continued)


   In May 1999, the Company entered into an agreement to license and implement
an operations support system from a software vendor. Two stockholders of the
Company, in the aggregate, own 16% of the outstanding capital stock of the
software vendor.

7. Stockholders' Equity

Capital stock transactions

   In March 1998, the Company's founding stockholders were issued 3,818,180
shares of Common Stock and 20,000 shares of a prior series A preferred stock
for $50,500.

   In December 1998, the Company's Board of Directors declared a 50:1 reverse
stock split. The accompanying financial statements have been restated to
reflect this stock split. Concurrently, the preferred shareholder exchanged all
the then outstanding Series A Preferred Stock for 5,727,270 shares of common
stock, adjusted for stock splits.

   In December 1998, the Company issued 3,054,550 shares of common stock to two
officers in exchange for promissory notes totaling $7,637. Such notes were
subsequently forgiven by the Company. Compensation expense of $1,023,272 has
been recognized related to this issuance.

   In March 1999, the Company issued 327,274 shares of common stock to an
executive officer of the Company, adjusted for stock splits. Compensation
expense of $587,457 has been recognized related to this issuance.

   In April 1999, the Company's founding shareholders surrendered 2,327,274
shares of common stock. Such stock was previously made subject to certain
employment tenure and performance vesting criteria. In exchange, the vesting
criteria on certain other shares owned by the founders was removed. This share
surrender and acceleration of vesting resulted in a compensation charge of
approximately $1.2 million and eliminated approximately $780,000 from deferred
compensation.

   In May 1999, the Company declared a 2:1 split of its Common Stock. The
accompanying financial statements have been restated to reflect this stock
split.

Convertible voting preferred stock

   In January 1999, the Company's Board of Directors declared a stock split of
1,909.09 shares for every outstanding common share. The accompanying financial
statements have been restated to reflect this stock split. In conjunction with
this split and sale of Series A Preferred Stock described below, certain
employment tenure and performance criteria were required of management in order
to fully vest in a portion of their shares. The value attributed to these
nonvested shares is reflected in deferred compensation of approximately
$3,734,000 and is being amortized over the related employment term, which may
be accelerated based upon the likelihood of attaining certain performance of
measures.

   In January 1999, the Company issued 3,500,000 shares of convertible voting
preferred stock designated as Series A Preferred Stock, together with warrants
to purchase 3,500,000 shares of a prior Series B Preferred Stock (the "Warrant
Shares"), at an exercise price of $1.00 per share, for an aggregate of
$3,500,000.

   The Warrant Shares, which are exercisable for a period of 5 years, are
subject to a repurchase right by the Company contingent upon a specified rate
of return upon an initial public offering or acquisition of the Company. If the
Company exercises its repurchase right, it shall be obligated to pay the holder
the original exercise price plus interest from the date of exercise at 8% per
annum.

                                      F-12
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(Continued)


   In January 1999, the holders of $225,000 of Bridge Notes (Note 4) converted
$225,000 of the Bridge Notes into 225,000 shares of Series A Preferred Stock.

   In April 1999, the certain holders of the Series A Preferred Stock exchanged
3,500,000 shares of Series A Preferred Stock and warrants to purchase 3,500,000
shares of series B preferred stock, for 6,500,000 shares of Series B Preferred
Stock. This exchange, which was not contemplated in the original Series A
Preferred Stock purchase agreement, afforded the holders an exchange rate lower
than the deemed fair market value of the common stock at the time of exchange.
The difference between the exchange rate and the deemed fair market value will
be treated as an imputed non-cash dividend for purposes of calculating net loss
per common share, although no assets of the Company were expended. The imputed
dividend, which reduces additional paid-in capital and increases the carrying
value of the Series B Preferred Stock, will be approximately $8.5 million at
June 30, 1999 and for the three month period then ended. The imputed dividend
will be given no other accounting treatment in the 1999 financial statements of
the Company.

   In April 1999, the Company issued 2,785,516 shares of convertible voting
preferred stock designated as Series C Preferred Stock at $3.59 per share for
net proceeds of $9,941,104 (unaudited).

   In May 1999, the Company issued 2,868,069 shares of convertible voting
preferred stock designated as Series D Preferred Stock at $10.46 per share for
net proceeds of $29,973,862 (unaudited).

Rights and preferences

   The Series A, Series B, Series C and Series D Preferred stockholders are
entitled to receive noncumulative cash dividends of $0.08 per share, $0.04 per
share, $0.29 per share and $0.84 per share, respectively, per annum when and as
declared by the Board of Directors. In the event of any voluntary or
involuntary liquidation of the Company, the Preferred stockholders shall be
entitled to the original per share issuance price, plus any declared but unpaid
dividends. Remaining assets, if any, shall be distributed to the Preferred and
Common stockholders on a pro rata basis assuming full conversion of all such
Preferred Stock.

   At the option of the Preferred stockholders, their shares may be converted
to common stock at the rate of one share of common stock for one share of
Preferred Stock adjusted for certain dilutive issuances, stock splits or
combinations. The Preferred Stock shall automatically convert into shares of
common stock upon the sale of the Company's Common Stock in a firm commitment
public offering pursuant to which the public offering proceeds are not less
than $5 per share of common stock, and the aggregate net proceeds are not less
than $30 million.

   The Series A, Series B, Series C and Series D Preferred stockholders shall
have voting rights similar to common shareholders and other rights, including
the power to elect directors to the seven member board as follows: Series A and
B (as a class) elect two directors, Series C elects one director, and Series A,
B, C and D together with common shareholders elect two directors. In addition,
the holders of common stock elect two directors.

Common stock reserved

   The Company has reserved shares of common stock as follows:

<TABLE>
<CAPTION>
                                                        December 31,  March 31,
                                                            1998        1999
                                                                     (unaudited)
   <S>                                                  <C>          <C>
   Conversion of Series A Preferred stock..............        --     7,450,000
   1999 Stock Plan.....................................        --     7,400,000
   Conversion of promissory notes......................   700,000            --
   Stock warrants......................................   175,000     7,258,452
                                                          -------    ----------
                                                          875,000    22,108,452
                                                          =======    ==========
</TABLE>

                                      F-13
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                   NOTES TO FINANCIAL STATEMENTS--(Continued)

Stock warrants

   At December 31, 1998 and March 31, 1999 the Company had outstanding stock
purchase warrants to purchase preferred stock totaling 87,500 and 3,629,226
(unaudited), respectively, adjusted for stock splits:

<TABLE>
<CAPTION>
                                                          December 31, March 31,
                                                              1998       1999
                                                          ------------ ---------
   <S>                                                    <C>          <C>
   Warrants for Series B Preferred Stock.................        --    3,500,000
   Lease Warrants for Series A Preferred Stock...........        --       41,726
   Bridge Warrants for Series A Preferred Stock..........    87,500       87,500
                                                             ------    ---------
                                                             87,500    3,629,226
                                                             ======    =========
</TABLE>

   As discussed above, the 3,500,000 of warrants to acquire Series B Preferred
Stock were exchanged in April 1999.

8. Income Taxes

   The Company's gross deferred tax assets and liabilities were comprised of
the following:

<TABLE>
<CAPTION>
                                                                    December 31,
                                                                        1998
   <S>                                                              <C>
   Gross deferred tax asset:
     Net operating loss carryforwards..............................  $1,076,382
     Other.........................................................      53,599
                                                                     ----------
                                                                      1,129,981
   Gross deferred tax liability:
     Depreciation..................................................       8,054
                                                                     ----------
                                                                      1,121,927
   Valuation allowance.............................................  (1,121,927)
                                                                     ----------
   Net deferred taxes..............................................  $       --
                                                                     ==========
</TABLE>

   The Company has provided a valuation allowance for the full amount of the
net deferred tax asset, since management has not determined that these future
benefits will more likely than not be realized as of December 31, 1998.

   At December 31, 1998, the Company had approximately $2.7 million of federal
net operating loss carryforwards that begin to expire in 2018, and $2.7 million
of state net operating loss carryforwards that expire in 2003.

   The amount of the net operating carryforwards that may be utilized annually
to offset future taxable income and tax liability will be limited as a result
of certain ownership changes pursuant to Section 382 of the Internal Revenue
Code.

9. Incentive Stock Award Plan

   In February 1999, the Company's Board of Directors adopted the 1999 Stock
Plan (the "Plan") under which employees, directors, advisors and consultants
can be granted any or all of the following: stock options, including incentive
stock options and non-qualified stock options, stock appreciation rights, and
stock awards. A total of 7,400,000 shares were authorized under the Plan.

   Options generally vest 25% after one year, then ratably over the next
thirty-six months and are exercisable once vested for ten years from the date
of grant.

                                      F-14
<PAGE>

                                 DSL.net, Inc.
                         (a development stage company)

                  NOTES TO FINANCIAL STATEMENTS--(Continued)


   A summary of activity under the Plan as of March 31, 1999 (unaudited) is as
follows:

<TABLE>
<CAPTION>
                                                                     Weighted
                                                                     Average
                                                                  --------------
                                                        Number of Fair  Exercise
                                                         Shares   Value  Price
   <S>                                                  <C>       <C>   <C>
   Outstanding at Inception............................        -- $  --  $  --
   Granted............................................. 2,698,000  0.73   0.07
   Exercised...........................................        --    --     --
   Canceled............................................        --    --     --
                                                        --------- -----  -----
   Outstanding at March 31, 1999 (unaudited)........... 2,698,000 $0.73  $0.07
                                                        ========= =====  =====
</TABLE>

   The following summarizes the outstanding and exercisable options under the
Plan as of March 31, 1999:

<TABLE>
<CAPTION>
                               Options Outstanding         Options Exercisable
                          ----------------------------- --------------------------
   Exercise     Number     Weighted Avg   Weighted Avg    Number     Weighted Avg
    Price     Outstanding Remaining Life Exercise Price Exercisable Exercise Price
   <S>        <C>         <C>            <C>            <C>         <C>
   $0.05 -
     0.09      2,698,000    9.94 years       $0.07           --           --
</TABLE>

   If compensation expenses had been recognized based on the fair value of the
options at their grant date, in accordance with Financial Accounting Standard
No. 123 ("FAS 123"), the results of operations for the three months ended
March 31, 1999 (unaudited) would have been as follows:

<TABLE>
   <S>                                                             <C>
   Net loss:
     As reported.................................................. $(1,686,614)
     Pro forma under FAS 123......................................  (4,214,572)
   Basic and diluted net loss per share:
     As reported.................................................. $     (0.24)
     Pro forma under FAS 123...................................... $     (0.41)
</TABLE>

   The estimated fair value at date of grant for options granted for the three
months ended March 31, 1999 (unaudited) ranged from $0.16 to $1.20. The
minimum value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions (unaudited):

<TABLE>
   <S>                                                             <C>
   Risk free interest rate........................................ 4.88% - 5.10%
   Expected dividend yield........................................ None
   Expected life of option........................................ 10 years
   Expected volatility............................................ .0001%
</TABLE>

   As additional options are expected to be granted in future years and the
options vest over several years, the above pro forma results are not
necessarily indicative of future pro forma results.

   Deferred compensation of approximately $2,528,000 (unaudited) has been
attributed to those common stock options granted during the three months ended
March 31, 1999, with an exercise price below estimated fair value. Stock
compensation expense is recognized over the four year vesting period and
totaled $61,570 (unaudited) for the three months ended March 31, 1999.


                                     F-15
<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    , 1999

                                 [DSL.net LOGO]

                                 DSL.net, Inc.

                                      Shares

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


                          Donaldson, Lufkin & Jenrette

                           Deutsche Banc Alex. Brown

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

                                 DLJdirect Inc.

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


We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor
any sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of DSL.net
have not changed since the date hereof.

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

Until    , 1999 (25 days after the date of this prospectus), all dealers that
effect transactions in these shares of common stock may be required to deliver
a prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to their unsold
allotments or subscriptions.


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

                                    PART II

                   INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

   Estimated expenses (other than underwriting discounts and commissions)
payable in connection with the sale of the common stock offered hereby are as
follows:

<TABLE>
      <S>                                                               <C>
      SEC registration fee............................................. $31,970
      NASD filing fee..................................................  12,000
      Nasdaq National Market listing fee...............................    *
      Printing and engraving expenses..................................    *
      Legal fees and expenses..........................................    *
      Accounting fees and expenses.....................................    *
      Blue Sky fees and expenses (including legal fees)................    *
      Transfer agent and registrar fees and expenses...................    *
      Miscellaneous....................................................    *
                                                                        -------
        Total.......................................................... $  *
                                                                        =======
</TABLE>
---------------------
*To be filed by Amendment.

   DSL.net will bear all expenses shown above.

Item 14. Indemnification of Directors and Officers.

   The Delaware General Corporation Law and the certificate of incorporation of
DSL.net that will become effective immediately following this offering and the
by-laws as amended prior to this offering will provide for indemnification of
our directors and officers for liabilities and expenses that they may incur in
such capacities. In general, directors and officers will be indemnified with
respect to actions taken in good faith in a manner reasonably believed to be
in, or not opposed to, the best interests of DSL.net and, with respect to any
criminal action or proceeding, actions that the indemnitee had no reasonable
cause to believe were unlawful. Reference is made to our Amended and Restated
Certificate of Incorporation and Amended and Restated By-Laws filed as Exhibits
3.02 and 3.04 hereto, respectively.

   The Underwriting Agreement provides that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of DSL.net against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Reference is made to
the form of Underwriting Agreement filed as Exhibit 1.01 hereto.

   In addition, we have an existing directors and officers liability insurance
policy.

Item 15. Recent Sales of Unregistered Securities.

   In the three years preceding the filing of this registration statement, the
Company has issued the following securities that were not registered under the
Securities Act:

   (a) Issuances of Capital Stock, Notes and Warrants

   In March 1998, DSL.net issued and sold an aggregate of (i)     shares of
common stock for an aggregate of $    and (ii) 20,000 shares of a prior Series
A preferred stock for an aggregate of $50,000.

   In August 1998, DSL.net issued a promissory note in the aggregate principal
amount of $100,000.


                                      II-1
<PAGE>

   In November 1998, DSL.net issued five convertible promissory notes in the
aggregate principal amount of $350,000, two warrants to purchase an aggregate
31,250 shares of Series A preferred stock at a price of $1.00 per share and
rights to warrants to purchase 56,250 shares of old Series A preferred stock at
a price of $1.00 per share.

   In December 1998, DSL.net issued and sold an aggregate of (i)    shares of
common stock in exchange for 20,000 shares of a prior series A preferred stock
and (ii)    shares of common stock in exchange for promissory notes in an
aggregate principal amount of $  .

   In January 1999, DSL.net issued and sold 3,500,000 shares of Series A
preferred stock and warrants to purchase 3,500,000 shares of a prior series B
preferred stock for an aggregate of $3,500,000, a portion of which was paid by
the cancellation of two convertible promissory notes in the aggregate principal
amount of $125,000. In addition, DSL.net issued three warrants to purchase
56,250 shares of Series A preferred stock at a price of $1.00 per share in
exchange for the rights to warrants to purchase 56,250 warrants of Series A
preferred stock. DSL.net also issued an aggregate of 225,000 shares of Series A
preferred stock in conversion of three convertible promissory notes in the
aggregate principal amount of $225,000. Finally, DSL.net issued    shares of
common stock for aggregate consideration of $   .

   In March 1999, DSL.net issued and sold an aggregate of   shares of common
stock for services valued at $  . In addition, DSL.net issued one warrant to
purchase 41,726 shares of Series A preferred stock at an exercise price of
$2.40 per share.

   In April 1999, DSL.net issued and sold an aggregate of 6,500,000 shares of
Series B preferred stock in exchange for 3,500,000 shares of Series A preferred
stock and the cancellation of warrants to purchase 3,500,000 shares of a prior
series B preferred stock. In addition, in April 1999, DSL.net issued and sold
an aggregate of 2,785,516 shares of Series C preferred stock for aggregate
consideration of $10,000,002.

   In May 1999, DSL.net issued and sold an aggregate of 2,868,069 shares of
Series D preferred stock for an aggregate of $30,000,001, including a secured
promissory note in an aggregate principal amount of $5,999,429, which note has
since been paid in full.

   In June, DSL.net issued an aggregate of 95,603 shares of Series D preferred
stock for an aggregate consideration of $1,000,007, including a secured
promissory note in an aggregate principal amount of $999,912.

   (b) Grants and Exercises of Stock Options

   As of June  , 1999, DSL.net has granted options to purchase an aggregate of
    shares of common stock under the 1999 Stock Plan exercisable at a weighted
average exercise price of   per share. No     shares of common stock have been
issued in connection with the exercise of options.

   No underwriters were involved in the foregoing sales of securities. Such
sales were made in reliance upon an exemption from the registration provisions
of the Securities Act set forth in Section 4(2) thereof relative to sales by an
issuer not involving any public offering or the rules and regulations
thereunder, or, in the case of certain options to purchase common stock and
employee stock grants, Rule 701 under the Securities Act. All of the foregoing
securities are deemed restricted securities for purposes of the Securities Act.

                                      II-2
<PAGE>

Item 16. Exhibits and Financial Statement Schedules.

   (a) Exhibits:

<TABLE>
<CAPTION>
 Exhibit
   No.                                   Exhibit
 -------                                 -------
 <C>     <S>
  1.01*  Form of Underwriting Agreement.

  3.01*  Restated Certificate of Incorporation of DSL.net, as amended.

  3.02*  Form of Amended and Restated Certificate of Incorporation of DSL.net
         (to be filed immediately after the closing of the offering).

  3.03*  By-Laws of DSL.net.

  3.04*  Amended and Restated By-laws of DSL.net (to be effective immediately
         after the closing of the offering).

  4.01*  Specimen Certificate for shares of DSL.net's Common Stock.

  4.02*  Description of Capital Stock (contained in the Certificate of
         Incorporation filed as Exhibit 3.02).

  4.03   Form of Stock Purchase Warrant dated as of November 18, 1998 between
         DSL.net and certain investors.

  4.04   Form of Warrant Agreement dated as of January  , 1999 between DSL.net
         and certain investors.

  4.05   Stock Subscription Warrant dated as of March 4, 1999 by and between
         DSL.net and Comdisco, Inc.

  5.01*  Legal Opinion of Testa, Hurwitz & Thibeault, LLP.

 10.01** 1999 Stock Plan.

 10.02   Registration Rights Provisions contained in the Amended and Restated
         Investors' Rights Agreement dated as of May 12, 1999 between DSL.net
         and the purchasers named therein.

 10.03   Master Lease Agreement dated as of March 4, 1999 between Comdisco,
         Inc. and DSL.net, as modified by the Addendum thereto.

 10.04   Credit Agreement dated as of May 12, 1999 by and between DSL.net and
         Fleet National Bank.

 10.05   Security Agreement dated as of May 12, 1999 by and between DSL.net and
         Fleet National Bank.

 10.06   Lease Agreement dated February 5, 1999 by and between DSL.net and Long
         Wharf Drive, LLC.

 10.07*  Amended and Restated Shareholders' Agreement, as amended, by and among
         DSL.net and certain investors.

 23.01*  Consent of Testa, Hurwitz & Thibeault, LLP (contained in Exhibit
         5.01).

 23.02   Consent of PricewaterhouseCoopers, LLP.

 24.01   Power of Attorney (contained on page II-5).

 27.01   Financial Data Schedule.
</TABLE>
---------------------
*  To be filed by amendment.
** Indicates a management contract or any compensatory plan, contract or
   arrangement.

   (b) Financial Statement Schedules

   None.

   All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.

                                      II-3
<PAGE>

Item 17. Undertakings.

   Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

   The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser; (2) that for
purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of
the time it was declared effective; and (3) that for the purpose of determining
any liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

                                      II-4
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in New Haven, Connecticut
on June 7, 1999.

                                          DSL.NET, INC.

                                              /s/ David F. Struwas
                                          By: _________________________________
                                             David F. Struwas
                                             President, Chief Executive
                                             Officer and Director

                        POWER OF ATTORNEY AND SIGNATURES

   We, the undersigned officers and directors of DSL.net, Inc., hereby
severally constitute and appoint David F. Struwas, Robert Q. Berlin and Stephen
Zamarsky, and each of them singly, our true and lawful attorneys, with full
power to them and each of them singly, to sign for us in our names in the
capacities indicated below, any registration statement related to the offering
that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933 (a "462(b) Registration Statement"), any and all
amendments and exhibits to this registration statement or any 462(b)
Registration Statement, and any and all applications and other documents to be
filed with the Securities and Exchange Commission pertaining to the
registration of the securities covered hereby or thereby, and generally to do
all things in our names and on our behalf in such capacities to enable DSL.net,
Inc. to comply with the provisions of the Securities Act of 1933 and all
requirements of the Securities and Exchange Commission.

   Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
              Signature                         Title(s)                 Date
              ---------                         --------                 ----
<S>                                    <C>                        <C>
         /s/ David F. Struwas          President, Chief Executive    June 7, 1999
______________________________________  Officer and Director
           David F. Struwas             (Principal Executive
                                        Officer)

         /s/ Robert Q. Berlin          Vice President, Strategic     June 7, 1999
______________________________________  Planning (Principal
           Robert Q. Berlin             Financial and Accounting
                                        Officer)

        /s/ Robert Gilbertson          Director                      June 7, 1999
______________________________________
          Robert Gilbertson

       /s/ William J. Marshall         Director                      June 7, 1999
______________________________________
         William J. Marshall

         /s/ William Seifert           Director                      June 7, 1999
______________________________________
           William Seifert

</TABLE>

                                      II-5
<PAGE>

<TABLE>
<CAPTION>
              Signature                         Title(s)                 Date
              ---------                         --------                 ----
<S>                                    <C>                        <C>
         /s/ James D. Marver           Director                      June 7, 1999
______________________________________
           James D. Marver

           /s/ Paul K. Sun             Director                      June 7, 1999
______________________________________
</TABLE>     Paul K. Sun

                                      II-6
<PAGE>

                                 Exhibit Index

<TABLE>
<CAPTION>
 Exhibit
   No.                                   Exhibit
 -------                                 -------
 <C>     <S>
  1.01*  Form of Underwriting Agreement.

  3.01*  Restated Certificate of Incorporation of DSL.net, as amended.

  3.02*  Form of Amended and Restated Certificate of Incorporation of DSL.net
         (to be filed immediately after the closing of the offering).

  3.03*  By-Laws of DSL.net.

  3.04*  Amended and Restated By-laws of DSL.net (to be effective immediately
         after the closing of the offering).

  4.01*  Specimen Certificate for shares of DSL.net's Common Stock.

  4.02*  Description of Capital Stock (contained in the Certificate of
         Incorporation filed as Exhibit 3.02).

  4.03   Form of Stock Purchase Warrant dated as of November 18, 1998 between
         DSL.net and certain investors.

  4.04   Form of Warrant Agreement dated as of January 8, 1999 between DSL.net
         and certain investors.

  4.05   Stock Subscription Warrant dated as of March 4, 1999 by and between
         DSL.net and Comdisco, Inc.

  5.01*  Legal Opinion of Testa, Hurwitz & Thibeault, LLP.

 10.01** 1999 Stock Plan.

 10.02   Registration Rights Provisions contained in the Amended and Restated
         Investors' Rights Agreement dated as of May 12, 1999 between DSL.net
         and the purchasers named therein.

 10.03   Master Lease Agreement dated as of March 4, 1999 between Comdisco,
         Inc. and DSL.net, as modified by the Addendum thereto.

 10.04   Credit Agreement dated as of May 12, 1999 by and between DSL.net and
         Fleet National Bank.

 10.05   Security Agreement dated as of May 12, 1999 by and between DSL.net and
         Fleet National Bank.

 10.06   Lease Agreement dated February 5, 1999 by and between DSL.net and Long
         Wharf Drive, LLC.

 10.07*  Amended and Restated Shareholders' Agreement, as amended, by and among
         DSL.net and certain investors.

 23.01*  Consent of Testa, Hurwitz & Thibeault, LLP (contained in Exhibit
         5.01).

 23.02   Consent of PricewaterhouseCoopers, LLP.

 24.01   Power of Attorney (contained on page II-5).

 27.01   Financial Data Schedule.
</TABLE>
---------------------
*  To be filed by amendment.
** Indicates a management contract or any compensatory plan, contract or
   arrangement.