<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                           _________________________

                                   FORM 10-K

                       FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

              [X] ANNUAL REPORT PURSUANT TO SECTION l3 OR l5(d) OF
                      THE SECURITIES EXCHANGE ACT OF l934

                  For the fiscal year ended December 31, 1998

                                       OR

                [   ]  TRANSITION REPORT PURSUANT TO SECTION 13
                OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 0-25107

                                 EarthWeb Inc.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                     <C>
            Delaware                                  13-3899472
(State or other jurisdiction of         (I.R.S. Employer Identification No.) 
 incorporation or organization)
 
</TABLE>

                    3 Park Avenue, New York, New York 10016
                   (Address of principal executive offices,
                              including zip code)

      Registrant's telephone number, including area code:  (212) 725-6550

       Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section l2(g) of the Act:
                    Common Stock, par value $.01 per share
                               (Title of class)

                        ______________________________

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange Act of
l934 during the preceding l2 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X   No
                                               ---     ---    

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [  ]

     The aggregate market value of voting stock held by nonaffiliates of the
registrant, based on the closing price of the common stock on March 1, 1999 of
$37.75, as reported on the NASDAQ National Market was approximately
$158,228,219.  Shares of common stock held by each officer and director and by
each person who owns 5% or more of the outstanding common stock have been
excluded in that such persons may be deemed to be affiliates.  This
determination of affiliate status is not necessarily a conclusive determination
for any other purpose.

     As of March 1, 1999, the registrant had outstanding 8,509,862 shares of
common stock, $.01 par value.

                      DOCUMENTS INCORPORATED BY REFERENCE:

The following documents (or parts thereof) are incorporated by reference into
the following parts of this Form 10-K:

(1)  1998 Annual Report to Stockholders - Items 5, 6, 7, 8 and 14(a).  With the
     exception of those portions that are incorporated by reference, the
     Registrant's 1998 Annual Report is not deemed filed as part of this Report.
(2)  Proxy Statement for the 1999 Annual Meeting of Stockholders - Items 10, 11,
     12 and 13.
<PAGE>
 
                                     PART I

ITEM 1.  BUSINESS

Except for the historical information contained herein, the matters discussed in
this Annual Report on Form 10-K, and specifically in this Item or otherwise
incorporated by reference into this Annual Report on Form 10-K are "forward-
looking statements" (as such term is defined in the Private Securities
Litigation Reform Act of 1995).  These statements can be identified by the use
of forward-looking terminology such as "believes," "expects," "may", "will",
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties.  The safe harbor provisions of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended, apply to forward-looking statements made by EarthWeb.  These
forward-looking statements involve risks and uncertainties, including those
identified within "Risk Factors" and elsewhere in, or incorporated by reference
into, this Annual Report on Form 10-K.  The actual results that EarthWeb
achieves may differ materially from forward-looking projections due to such
risks and uncertainties. These forward-looking statements are based on current
expectations, and EarthWeb assumes no obligation to update this information.
Readers are urged to carefully review and consider the various disclosures made
by EarthWeb in this Annual Report on Form 10-K and in EarthWeb's other reports
filed with the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect EarthWeb's business.

EarthWeb is the leading provider of Internet-based online services to the
information technology ("IT") industry worldwide. Our integrated business-to-
business online services address the needs of the various sectors of the IT
marketplace for content, community and commerce. EarthWeb's content offerings
include a wide range of technical materials, such as resource directories,
tutorials and a reference library.  These materials enhance the ability of IT
professionals to perform their job functions. Our community areas, such as
bulletin boards and question and answer services, allow users to help one
another solve technical problems and share information. Our commerce services
provide a single online source for IT vendors to target an audience of IT
professionals who come to EarthWeb to purchase specialized software and other
products. Our recruitment services enable technical recruiters and IT managers
to locate skilled IT professionals. As a global intermediary for IT
professionals, advertisers and vendors, EarthWeb is positioned as a trusted
third party that offers an integrated environment where these constituencies can
share information, interact with one another and transact business. We believe
that none of the companies, that we consider our competitors offer the depth and
range of online services that we provide.

EarthWeb's flagship service, developer.com, focuses primarily on the software
development and Internet segments. Developer.com features a vast collection of
online resources, including the full text of more than 150 technical books, over
300 exclusive technical articles, over 375 proprietary tutorials, and access to
over 150,000 technical resources. Datamation.com is a leading resource for IT
enterprise managers providing case studies, technical articles and technology
assessment tools, substantially all of which are our proprietary assets.
EarthWeb offers additional proprietary resources for IT managers through its
Intranet Journal and Y2Kinfo sites.  EarthWeb's subscription service,
ITKnowledge, offers subscribers the full text of 400 technical books from
leading publishers. EarthWeb's online services also include javascripts.com, a
resource for JavaScript developers, and jars.com, a site providing ratings and
reviews of Java and other code. Our unique blend of online services currently
attracts an average of over 1.4 million users a month and the email version of
EarthWeb's Journal, featuring highlights from our online services, currently has
over  375,000 subscribers.  In February 1999 EarthWeb acquired Dice.com, a
leading resource of IT job listings currently containing more than 83,000 jobs
and go certify.com which provides users with information on technical
certification programs, a very active and growing market.  In March 1999,
EarthWeb acquired The Perl Journal, a leading technical publication for
developers using the Perl programming language and the related website TPJ.com.

EarthWeb was incorporated in New York in April 1996, commenced operations in
October 1996 and was reincorporated in Delaware in June 1997.  EarthWeb LLC
transferred substantially all of its assets and liabilities to EarthWeb in
October 1996 in exchange for 2,925,000 shares of common stock, which at such
time represented all of the issued and outstanding common stock. From inception
in 1994 until mid-1997, we primarily developed and maintained Web sites and
online commerce infrastructures for our customers.

References to "EarthWeb" "we"', "our" and "us" in this Form 10-K that refer to
the period prior to October 25, 1996 are to the EarthWeb's predecessors, and for
the later period refer to EarthWeb.

                                       1
<PAGE>
 
Our principal executive office is located at 3 Park Avenue, New York, New York
10016, and our telephone number at such location is (212) 725-6550. Our
corporate Web site address is http://www.earthweb.com. Information contained on
our Web site is not part of this Form 10-K .

Industry Overview

IT Industry

Professionals in the IT industry have become more specialized and have grown in
number as the pace and complexity of technological change has increased. IT
professionals today play a central role in many organizations because their
ability to deploy and integrate new information technologies is essential to
executing business strategy and maintaining competitiveness. Organizations are
increasingly adopting technologies such as:

 .  client/server architectures
 .  data warehousing
 .  Internet/intranet applications
 .  object-oriented software development

These and other technologies have continued to fuel the growth in the worldwide
market for IT products and services, which is forecasted to grow from an
estimated $834 billion in 1998 to $1.1 trillion in 2001, according to
International Data Corporation ("IDC"). IT spending in 1998 in North America,
Western Europe and Japan is estimated by IDC to have been 41%, 28% and 14%,
respectively, of total global IT spending.

With the increasing complexity of information technology, professionals tend to
develop specialized knowledge and skill bases relevant to a particular segment
or sub-segment of the IT industry. These segments can be categorized into six
broad areas, each with major sub-segments:

<TABLE>
<CAPTION>
           Segment                                 Description                                 Major Sub-segments
------------------------------     -----------------------------------------     --------------------------------------------
<S>                                  <C>                                           <C>
Software Development                 Creation of software applications             C/C++, Java, Visual Basic and other
                                     using various programming languages,          programming languages, object-oriented
                                     tools and environments                        technology and visual development
                                                                                    environments

Internet Technologies and Web        Use of technologies based on Internet         Internet, intranet, extranet, Web sites,
Development                          protocols for communication and               Internet commerce, Internet security and
                                     commerce both within and between              Internet protocols
                                     organizations

Enterprise Management                Deployment of sophisticated,                  Systems management software, financial
                                     large-scale software applications and         management systems, enterprise resource
                                     systems to manage and support                 planning, Year 2000, middleware, field
                                     functions within businesses and other         sales automation, data warehousing and
                                     organizations                                 supply chain management

Networking and                       Design, installation and management of        Network and directory services, data and
Telecommunications                   infrastructure for data and voice             voice communications technologies,
                                     communications                                wireless and mobile communications and
                                                                                   Internet service provider network
                                                                                   infrastructure

Hardware                             Design, manufacture, purchase and             Personal, midrange and mainframe systems;
                                     maintenance of hardware components and        computer chip, PC display, multimedia and
                                     peripherals                                   disk storage technologies

</TABLE> 

                                       2
<PAGE>
 
<TABLE>
<CAPTION>
<S>                                  <C>                                           <C>
Services, Support and                Services that support the development,        Systems integration, outsourced custom
Consulting                           implementation and maintenance of             development, systems design and
                                     enterprise computing systems                  maintenance, outsourced network
                                                                                   management and technical support
</TABLE>

IT professionals need to stay abreast of rapid technological developments in a
marketplace where vendors continually introduce new products with a variety of
standards and short life cycles. They have historically relied on resources
provided by IT publishers, software and hardware vendors, training service
providers and fellow professionals to follow the latest trends in the industry.
IDC forecasts that the IT education and training market alone will grow from an
estimated $16.7 billion in 1998 to $25.8 billion in 2001. Due to the fast rate
of change, however, technical information, training materials, and software
tools become quickly dated and obsolete. This environment creates the following
common needs among IT professionals:

  .  Content. IT professionals require a wide range of independent, in-depth and
     up-to-date content including technical resources, such as source code,
     technical articles and white papers; market information about emerging
     products and technologies; expert technical advice; training and skills
     development; IT related research; and specialized reference materials.

  .  Community. IT professionals need an environment in which they can share
     technical information with one another, work together to find solutions to
     common technical problems, learn about upcoming IT conferences and other
     industry events and seek employment and hire personnel.

  .  Commerce. IT professionals increasingly need a centralized channel through
     which they can purchase specialized IT products. In particular, IT
     professionals need a source for obtaining hard-to-find technologies,
     including software produced by small and mid-sized vendors that is not
     widely available through existing channels.

IT professionals devote considerable time, effort and financial resources
researching new technologies, seeking answers to technical questions and
developing and implementing IT solutions. They have had to rely on fragmented
and disparate sources, such as technical books and print magazines, training
materials provided by service providers and traditional software retailers. None
of these sources has provided a comprehensive solution for IT professionals'
need for content, community and commerce.

The Internet

The Internet enables millions of people worldwide to have access to current news
and information, create community among individuals with similar professional or
personal interests and conduct business electronically. The number of Internet
users worldwide is projected to grow from an estimated 82 million at the end of
1998 to 329 million by the year 2002, according to IDC. With this growth in the
number of Internet users, the Internet is emerging as a mass communication and
commerce medium, which offers advertisers and vendors certain advantages. The
Internet permits advertisers to target specific demographic groups, measure the
effectiveness of their advertising campaigns and revise them in response to
real-time feedback. Business-to-business Internet advertising is forecasted by
Forrester to increase from an estimated $290 million in 1998 to $2.6 billion in
2002 and consumer-oriented Internet advertising is forecasted by Jupiter
Communications to increase from an estimated $1.9 billion to $7.7 billion in the
same period. The Internet provides online merchants with the ability to reach a
global audience and to operate with minimal infrastructure, reduced overhead and
greater economies of scale, while providing customers with broad selection,
increased pricing information and unparalleled convenience. IDC forecasts that
total commerce on the Internet will grow from an estimated $12.4 billion in 1998
to $239.5 billion in 2001, with the business-to-business component growing from
an estimated $7.3 billion to $179.4 billion in the same period.

The EarthWeb Solution

EarthWeb provides online services to IT professionals in an integrated business-
to-business environment that addresses their needs for content, community and
commerce. EarthWeb provides comprehensive online services for IT professionals
and offers channels through which advertisers and IT vendors can target
potential buyers. As a global intermediary for IT professionals, advertisers and
vendors, EarthWeb is positioned as a trusted third party that offers a forum for
these constituencies to share information, interact with one another and
transact business.

                                       3
<PAGE>
 
Content. EarthWeb's online services provide access to technical resources that
enhance IT professionals' ability to perform their daily job functions. These
resources contain up-to-date information that allows IT professionals to keep
pace with the rapidly changing IT industry. EarthWeb's technical resources
include a library of full-text reference books, training materials and
tutorials, technical articles, white papers and source code libraries. IT
professionals can easily browse these technical resources using EarthWeb's
proprietary categorization system as well as search across EarthWeb's wide range
of content using a single semantic search engine.

Community. EarthWeb provides various means by which users can contribute
materials to its sites and communicate with each other. Users are encouraged to
submit source code, object code, development tools and other materials that are
then archived in EarthWeb's directories. EarthWeb's online services also include
a number of bulletin boards for technical discussion that allow users to solve
problems together, and that are managed by experienced IT professionals to
maintain the quality of content. These discussion threads are then archived
creating an online knowledge repository for future reference. EarthWeb also
provides IT professionals with a centralized calendar of upcoming conferences
and other industry events and online technical job listings via its new
acquisition, dice.com. EarthWeb believes that nurturing a sense of community
fosters loyalty and affinity among its users and increases the amount of time
they spend using its online services.

Commerce. EarthWeb provides IT professionals with a centralized online location
to purchase products, including specialized software and technical books. Many
of the products in the online store are difficult to find through existing
channels. Vendors include major software developers, such as Microsoft, Lotus
and Symantec, as well as small and mid-sized specialized software vendors.
EarthWeb also provides a classified advertising service that allows IT
professionals to buy and sell specialized hardware. EarthWeb has implemented an
electronic software delivery mechanism that enables users to download directly a
variety of software immediately after purchase.

Benefits for Advertisers and Vendors. EarthWeb provides IT advertisers and
vendors with a channel to target what it believes to be the world's largest
aggregation of IT professionals. Many of these professionals either make or
influence purchasing decisions. EarthWeb's advertisers and vendors generally can
enhance the effectiveness of their advertising or merchandising by customizing
or refining advertisements, and by placing them on either a targeted area on
EarthWeb's sites or across EarthWeb's entire network of online services.
EarthWeb also provides small to mid-size vendors with a much needed distribution
channel and the ability to focus their marketing efforts cost effectively.

Business Strategy

EarthWeb seeks to maintain and strengthen its position as the leading provider
of online services to IT professionals worldwide. EarthWeb intends to achieve
this objective by implementing the following key strategies:

Extend Online Services to Additional IT Segments. EarthWeb intends to extend its
online services model across additional segments of the IT industry.
Specifically, EarthWeb seeks to replicate, through internal development and
acquisitions, its integrated service offerings to address the needs of IT
professionals in segments of the IT industry beyond its current offerings in the
software development, Internet and enterprise management segments.
Datamation.com, for instance, provides EarthWeb with a strong service offering
for the enterprise management segment. EarthWeb also intends to continue
strengthening its existing online offerings by maintaining what it believes to
be the most in-depth, independent and up-to-date content available for IT
professionals and enhancing its interactive community building and commerce
services.

Enhance Worldwide Brand Recognition. EarthWeb will continue to promote the
EarthWeb brand as the leading integrated source of content, community, and
commerce for all segments of the IT industry. In addition, EarthWeb plans to
promote its branded online services, such as developer.com and datamation.com,
under the EarthWeb umbrella through online and offline advertising, strategic
alliances and other promotional activities. EarthWeb seeks to reinforce for
users, advertisers, and vendors that the EarthWeb brands represent technical
competence, comprehensiveness, timeliness, and neutrality. EarthWeb believes
that the extension of the EarthWeb's online services model to additional IT
segments will attract additional users and further enhance awareness of its
brands.

Cultivate Multiple Revenue Streams. EarthWeb believes its business-to-business
model has strongly positioned it to grow its existing revenue streams and
develop new sources of revenue. EarthWeb currently derives substantially all of
its revenues from advertising and sponsorships. With regard to advertising
revenue, EarthWeb will seek to maintain or increase the premium CPM rates it
commands for its targeted user base and to attract non-technology advertisers by
marketing the attractive demographics of its IT professional user base. With
regard to EarthWeb's other current revenue streams, EarthWeb 

                                       4
<PAGE>
 
seeks to attract more merchandisers to its online store and enter into
additional brand licensing arrangements. Sources of revenue include the sale of
subscriptions to premium services. EarthWeb launched its first subscription
service, ITknowledge.com, in October 1998. EarthWeb has the rights to the
content used in ITknowledge.com. Although EarthWeb has migrated some content
from its existing sites, EarthWeb expects that most of the content in the
subscription service will be content that does not exist on its other sites.
EarthWeb believes that many IT professionals or their employers will be willing
to pay for access to an increased volume of enhanced content. EarthWeb believes
it can grow its current and future revenue streams with minimal incremental
costs by leveraging its existing sales, marketing and technology infrastructure.

Grow Through Targeted Acquisitions. EarthWeb will continue to pursue
acquisitions to fulfill a number of objectives. The first, and most important,
is to strengthen EarthWeb's existing online services and extend its offerings
into additional IT industry segments. The second is to obtain valuable brands,
expertise and access to new advertisers and users. The third is to increase
traffic on EarthWeb's online services. Based on EarthWeb's eight acquisitions
since August 1997, EarthWeb has found that the addition of new sites generally
increases traffic on its existing sites as well as on the acquired sites.
EarthWeb believes it will continue to be able to find attractive candidates for
acquisition.

Expand Internationally. Many IT professionals reside outside the United States
and approximately one-third of EarthWeb's traffic originates internationally.
EarthWeb believes that the number of IT professionals worldwide will grow
significantly in the future. EarthWeb intends to capitalize on these
international market opportunities through localization and translation of
selected content into foreign languages and the creation of regional business
ventures to increase EarthWeb's audience worldwide. EarthWeb has successfully
localized and translated portions of its content for the Japanese market and has
other language translation efforts underway.

Online Services

EarthWeb offers a broad range of online services to meet IT professionals' needs
for content, community and commerce.

Content.  The content on EarthWeb's sites includes technical resources,
reference materials, decision support tools, training materials and tutorials,
technical news, articles and information.

Technical Resources. EarthWeb's online services provide IT professionals with
access to over 150,000 resources and examples for use in their work, including
reusable source code and software interface components. EarthWeb also provides
online decision support tools, including a regular technology survey of more
than 1,000 IT professionals and online assessment tools enabling IT managers to
evaluate their technology infrastructure. EarthWeb further provides extensive
technical resource directories that are categorized using its proprietary
categorization system and contain links to over 17,000 technical resources
related to topics such as:

  .  Active Server Pages          .  Middleware
  .  ActiveX                      .  Perl
  .  C/C++                        .  push technology
  .  CGI                          .  Visual Basic
  .  Cold Fusion                  .  XML
  .  databases                    .  VRML
  .  distributed objects          .  databases
  .  HTML/DHTML                   .  networks
  .  intranets                    .  Year 2000
  .  Java
  .  JavaScript

Most of these technical resources are submitted by users and include links to
Web sites that contain technical articles, training materials and source code.
Most of the interface components are provided through licenses with various
aggregators of content. EarthWeb has expended considerable time and effort in
developing its proprietary categorization system, which enables users to quickly
identify and locate relevant technical resources, and has received industry
recognition for this system.

                                       5
<PAGE>
 
Reference Materials. EarthWeb believes its reference library is the largest
online library of technical books for IT professionals. Its more than 150
technical reference, how-to and training books for IT professionals are provided
in full text in HTML and address areas such as:

  .  ActiveX                    .  middleware
  .  APIs                       .  office suites
  .  browsers                   .  operating systems and utilities
  .  C/C++                      .  push technologies
  .  CGI                        .  servers and networks
  .  Perl                       .  SQL
  .  databases                  .  TCP/IP
  .  HTML                       .  Unix
  .  Intranets                  .  Visual Basic
  .  Java                       .  Visual InterDev
  .  Java Beans                 .  VRML
  .  JavaScript                 .  Web graphics
  .  Linux                      .  Web site management

EarthWeb is in the process of adding more than 3,000 additional books to its
online reference library, which will comprise over 1.5 million pages of text.
These books are provided by leading publishers, such as Macmillan Computer
Publishing and the Coriolis Group, a division of International Thompson
Publishing as well as others. EarthWeb also provides in-depth product analysis,
benchmarks and other product reference information that facilitate product
evaluation. Reference materials can be browsed by their table of contents or
searched using a semantic search engine. Most of the online books can also be
purchased in physical form through EarthWeb's online store.

Training Materials and Tutorials. EarthWeb features over 375 original,
proprietary, in-depth technical tutorials for IT professionals on subjects such
as:

  .  Active Server Pages             .  Java
  .  ActiveX                         .  JavaScript
  .  CGI                             .  multimedia
  .  databases                       .  Perl
  .  distributed objects             .  general programming
  .  emerging technologies           .  Visual Basic
  .  Internet                        .  VRML
  .  HTML/DHTML                      .  XML
  .  intranets

The tutorials include workshops on specific technical issues, online textbooks,
source code, tests and quizzes. The vast majority of these tutorials are owned
exclusively by EarthWeb, and the balance comes from a variety of third-party
publishers. EarthWeb believes it offers one of the largest collections of
training materials and tutorials for IT professionals on the Web, and adds new
training materials on a weekly basis.

Technical News, Articles and Information. EarthWeb provides a range of original
articles, aggregated news and case studies. EarthWeb provides a vast collection
of articles on various technical subjects, including software development,
Internet technologies and Web development and enterprise management. EarthWeb
owns the articles that it has commissioned to be written. EarthWeb's online
Journal features highlights from EarthWeb's online services as well as original
news, research, analysis and feature articles. The Journal is published in HTML
and email formats. Currently, the email version has over 305,000 subscribers and
is growing at an average rate of more than 3,000 new subscribers each week.
EarthWeb also provides news of most interest to IT professionals, which is
aggregated daily from various media sources, including CMP and Ziff-Davis.

Community. EarthWeb provides useful interactive forums for IT professionals,
such as technical bulletin boards, question and answer services and job
listings.

                                       6
<PAGE>
Technical Bulletin Boards. EarthWeb's online services include more than 20
technical bulletin boards containing more than 3,000 interactive technical
discussion threads, which are focused and managed by experienced IT
professionals. There are currently over 15,000 postings on EarthWeb's Web sites.
These online bulletin boards enable users to help each other solve technical
problems. These bulletin boards are then archived, creating an online knowledge
repository for future reference. EarthWeb enables users to locate relevant
discussion threads through its search engine.

Technical Question and Answer Services. EarthWeb encourages users to submit
questions or problems that are answered by EarthWeb's network of experienced IT
professionals. Detailed answers are published online in a searchable format.

Technical Job Listings; Other Services. EarthWeb also provides a comprehensive
calendar of upcoming IT conferences and other industry events, and hosts online
conference proceedings.  Dice.com lists thousands of high-tech permanent ,
contract, and consulting jobs nationwide for programmers, software engineers,
system administrators, web developers, hardware engineers and others, and
provides services exclusively to recruiting companies that place high-tech
candidates at client sites. Currently, advertisers on dice.com include Manpower
Technical Services, Volt Services Group and Modis Professional Services.

Commerce. EarthWeb provides a channel for IT professionals to shop online for
specialized IT products.

Online Shopping. EarthWeb's online store provides IT professionals access to
over 33,000 products from over 350 vendors, including Microsoft, Lotus, Symantec
and other leading IT vendors. EarthWeb provides a browsable online catalog,
secure transactions and physical or secure electronic delivery of software
products.

Classified Ads. EarthWeb provides technical classified advertising services for
the IT professional through a contractual arrangement with Classifieds2000. The
classified advertising section includes listings for technical equipment ranging
from desktop computers, modems and printers to hubs/repeaters, routers, servers
and switches.

Marketing and Sales

Marketing

EarthWeb employs a combination of online and offline advertising and promotional
campaigns to promote use of its online services by users, advertisers and
vendors. EarthWeb purchases advertising on selected technical Web sites such as
Infoworld Electric and ZDNet and in IT industry newsletters such as
Informationweek Daily and ZDNet. Utilizing search engines such as Excite and
Lycos, EarthWeb buys advertising that appears when certain keywords or topics
are entered. EarthWeb is promoted by over 30,000 links from other Web sites and
links on major distribution portals and search engines. Additionally, EarthWeb's
Java directory has a permanent bookmark on Netscape's Communicator 4.0, and
EarthWeb's developer.com was chosen as one of 21 "gold channels" in the
channel directory of Microsoft Internet Explorer 4.0. EarthWeb further markets
its online services through its Journal, which is currently emailed to more than
375,000 subscribers. EarthWeb also promotes its online services through
traditional print media. EarthWeb has an ongoing public relations program,
participates in tradeshows, conferences, speaking engagements and promotional
contests and publishes articles in technical publications.

EarthWeb pursues strategic relationships with key marketing partners to enhance
brand awareness. Developer.com's Gamelan directory has been exclusively
designated by Sun Microsystems as "The Official Directory for Java" since
1996. Developer.com was also designated by Apple as the exclusive online
location for the proceedings of the 1998 Apple Worldwide Developers Conference.
EarthWeb also licenses its brands to strategic third parties such as Macmillan
Computer Publishing, which established the EarthWeb Press to publish books and
software for IT professionals.

Advertising Sales

EarthWeb historically has derived substantially all of its revenues from the
sale of advertisements. EarthWeb believes it has been able to achieve its
advertising revenues to date primarily through its ability to enable advertisers
to efficiently and effectively reach targeted segments of the IT community.
Based on independent research commissioned by EarthWeb, 81% of EarthWeb's users
are the primary or co-primary decision-makers for purchases of Internet and Web
applications in their enterprises. EarthWeb believes that targeting this
audience has enabled it since the beginning of 1997 to sell advertising space at
rates that are higher than the average rates charged by online services aimed at
more general audiences. Based upon publicly available banner advertisement rate
cards, EarthWeb's rates are approximately 2.5 to 4.0 times higher than the rates

                                       7
<PAGE>
 
of Lycos, Excite, and Yahoo! and Infoseek, which EarthWeb believes to be a
representative group of online services aimed at more general audiences.
Independent research has also shown that 89% of users have some college
education, 30% have at least some graduate level education and 62% are between
18 and 34 years old. EarthWeb believes these demographics will be attractive to
non-technology advertisers.

EarthWeb offers advertisers two main advertising options: run-of-site and
premium placement. Run-of-site advertisements rotate on a random basis
throughout EarthWeb's online services, offering advertisers the broadest reach
of EarthWeb users. Run-of-site advertisements are typically sold in blocks of
50,000 impressions, currently at a CPM of $68, before volume discounts and
advertising agency commissions, for banner advertising. Advertisements can also
be displayed in specific sections in EarthWeb's service, which target specific
IT professional subsegments, at a CPM of $78, before volume discounts and
advertising agency commissions, for banner advertising. EarthWeb also offers
advertisers the opportunity to sponsor its weekly electronic newsletter, which
reaches over 375,000 users, at a CPM of $100.

EarthWeb organizes its sales force by geographic regions as follows: New
England/Eastern Canada; Mid-Atlantic; Southeast/Midwest; Southwest and two
territories within the Northwest.

During the year ended December 31 1998, 168 individual advertisers, an increase
of 630% over the prior year, placed advertisements on EarthWeb's online
services. IBM and Microsoft accounted for approximately 11% and 10%,
respectively, of EarthWeb's revenues for the year ended December 31,1998. The
following is a partial list of EarthWeb's significant advertisers:

  .  Allaire                     .  Novell
  .  Apple Computer              .  Object Design
  .  CyberCash                   .  Oracle
  .  IBM                         .  O'Reilly Software
  .  Intel                       .  Seagate
  .  Lotus                       .  Silicon Graphics
  .  Microsoft                   .  Stingray
  .  Miller Freeman              .  Sun Microsystems
  .  Net Objects                 .  Tandem
  .  Netscape                    .  ZD Expo/JavaOne

Competition

EarthWeb believes it competes on the basis of brand recognition, exclusivity of
content and services, quality and quantity of content, product and resource
selection, convenience, reliability and speed of fulfillment. EarthWeb believes
that it is differentiated and well positioned against its competitors because of
its unique focus on providing a combination of content, community and commerce,
including training materials, technical directories, a reference library, a
knowledge repository of technical questions and answers and specialized
technical products, for its users.

The market for Internet-based online services is relatively new, intensely
competitive and rapidly changing. Since the advent of commercial services on the
Internet, the number of online services competing for users' attention and
spending has proliferated because of, among other reasons, the absence of
substantial barriers to entry, and EarthWeb expects that competition will
continue to intensify. EarthWeb competes with other companies who have
particular sections of their Web sites directed at certain segments or sub-
segments of the professional community, such as Ziff-Davis (InternetUser), CNET
(builder.com and activex.com), CMP (TechWeb), Mecklermedia (webdeveloper.com),
Wired Digital (Webmonkey) and IDG (Javaworld). EarthWeb also competes for
circulation and advertising impressions with general interest portal and
destination sites as well as traditional media. With respect to sales of
products, EarthWeb competes with traditional retailers of such products, such as
book, software and online retail stores.

Many of EarthWeb's current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than EarthWeb. These
competitors may be able to respond more quickly to new or emerging technologies
and changes in customer requirements and to devote greater resources to the
development, promotion and sale of their products and services than EarthWeb.
There can be no assurance that EarthWeb will be able to compete successfully
against its current or future competitors.

                                       8
<PAGE>
 
Infrastructure, Operations and Technology

EarthWeb makes its Web sites available using multiple Sun Microsystems and
Wintel-based servers that run on Sun Solaris and Microsoft NT operating systems.
For disk storage, EarthWeb partially relies on a high performance and fully
redundant central storage system from EMC. The full implementation of this
central storage system will significantly enhance the scalability of EarthWeb's
online services. EarthWeb licenses software from the following vendors: Apache
and Netscape (Web servers); Accipiter (advertising management system);
BroadVision (commerce system); Netscape (subscriptions system) and CyberSource
(secure credit card capture and billing).

EarthWeb maintains two data centers, one for production and one for development
and staging. In the event of an outage at the production facility, the systems
in the development and staging center are capable of supporting EarthWeb's
online services. EarthWeb's Internet connections are fully redundant, so that if
a failure in the network or equipment of one service provider occurs, traffic is
automatically routed through the other provider. All of EarthWeb's production
servers are powered by an uninterruptible power supply with a diesel generator
designed to provide back-up power to the power supply at the production facility
within seconds of a power outage. In addition, all of EarthWeb's production
systems are copied to backup tapes each night and regularly stored at an off-
site storage facility. EarthWeb maintains a quality assurance process to
constantly monitor its servers, processes and network connectivity. EarthWeb has
implemented these various redundancies and backup systems in order to minimize
the risk associated with damage from fire, power loss, telecommunications
failure, break-ins, computer viruses and other events beyond EarthWeb's control.
See "Risk Factors--Risk of capacity constraints and system failures."

Intellectual Property

EarthWeb protects its intellectual property through a combination of license
agreements, service mark, copyright, trade secret laws and other methods of
restricting disclosure and transferring title. EarthWeb obtains the majority of
its content under license agreements with publishers, through work for hire
arrangements with third parties and from internal staff development. EarthWeb
has no patents or patents pending for its current online services and does not
anticipate that patents will become a significant part of EarthWeb's
intellectual property in the foreseeable future. EarthWeb also enters into
confidentiality agreements with its employees, consultants, vendors and
customers, license agreements with third parties and generally seeks to control
access to and distribution of its technology, documentation and other
proprietary information. EarthWeb pursues the registration of its service marks
in the United States and internationally, and has obtained United States service
mark registration for its EarthWeb service mark and the Fang Logo Design, has
been assigned Plugin Datamation and Datamation and has applied for registration
of certain of its other servicemarks, such as developer.com and developer
direct. The legal status of intellectual property on the Internet is currently
subject to various uncertainties. See "Risk Factors--Intellectual property."

Employees

As of March 1, 1999 EarthWeb and its wholly-owned subsidiary, EW Career
Solutions, Inc., which operates dice.com, had 121 full time employees, including
40 in sales and marketing. EarthWeb's future success, depends in large part on
its ability to attract and retain highly qualified employees. Competition for
such personnel is intense and there can be no assurance that EarthWeb will be
able to retain its senior management or other key personnel in the future.
EarthWeb's employees are not represented by any union, and EarthWeb considers
its relations with its employees to be good.

                                  Risk Factors

Uncertainties associated with limited operating history

Although EarthWeb commenced operations in October 1994, EarthWeb did not begin
operating our current business of providing online services to IT professionals
until October 1995 and did not begin generating advertising revenues until June
1996. Accordingly, we have a limited operating history upon which you can
evaluate our business.  EarthWeb competes in the relatively new markets for
Internet services and products.  You should evaluate our chances of financial
and operational success in light of the risks, uncertainties, expenses, delays
and difficulties associated with operating a business in a relatively new and
unproven market, many of which may be beyond our control.  Some of the risks
that we face include:

  . our failure to continue to develop and extend our online service brands;

                                       9
<PAGE>
 
  . the rejection of our services by Internet users, vendors or advertisers;
  . our inability to maintain and increase the levels of traffic on our online
    services;
  . the development of similar or superior services or products by competitors;
  . the failure of the market to adopt the Internet as an advertising medium;
  . the failure to successfully sell Internet advertising through our internal
  . sales force;
  . reductions in market prices for Internet advertising as a result of
    competition or other factors;
  . our inability to integrate effectively the technology and operations of any
    acquired businesses or technologies with our operations; and
  . the inability to identify, attract, retain and motivate qualified personnel.

Our failure to address these risks could have a material adverse effect on our
business, results of operations and financial condition.

Operating losses and potential need for additional funds

EarthWeb had an accumulated deficit of $17.3 million at December 31, 1998.  We
have also experienced operating losses as well as net losses for all of the
fiscal years during which we have operated.  We expect that we will continue to
operate at a loss for the foreseeable future.  Although our revenues have grown
in recent quarters, we cannot assure you that such growth will be maintained or
increased in the future.  You should not rely on EarthWeb's recent revenue
growth as indicative of our future results of operations.  We cannot predict
with accuracy our future results of operations and believe that any period-to-
period comparisons of EarthWeb's results of operations are not meaningful.

We expect to increase our operating expenses significantly, expand our sales and
marketing operations and continue to develop and extend our online services.  In
the future, we may not generate sufficient revenues to pay for all of these
operating or other expenses.  If we fail to generate sufficient cash to pay
these expenses, we will need to identify other sources of financing.  We may not
be able to borrow money or issue more shares of common stock or other securities
to meet our cash needs, and even if we can complete such transactions, the terms
may be unfavorable or otherwise seem unreasonable to us.

Unproven acceptance of EarthWeb's online services in a developing market

The market for EarthWeb's online services has only recently begun to develop, is
rapidly evolving and is characterized by an increasing number of market
entrants. As is typical of a new and rapidly evolving industry, demand and
market acceptance for recently introduced services is uncertain and we cannot
predict the future growth, if any, and size of this market. The market for
EarthWeb's online services may not continue to develop or become sustainable. If
use of our online services fails to grow, our ability to establish other online
services would be materially adversely affected. In addition, we may not be
successful in our business strategy of extending our online services model to
additional segments of the IT industry.

Dependence on continued growth in the use of the Internet; dependence on
Internet infrastructure

Our future success is substantially dependent upon continued growth in the use
of the Internet. The number of users and advertisers on the Internet may not
increase and commerce over the Internet may not become more accepted and
widespread for a number of reasons, including:

  .  actual or perceived lack of security of information, such as credit card
     numbers;
  .  lack of access and ease of use;
  .  congestion of traffic on the Internet;
  .  inconsistent quality of service and lack of availability of cost-effective,
     high speed service;
  .  possible outages due to Year 2000 difficulties or other damage to the
     Internet;
  .  excessive governmental regulation;
  .  uncertainty regarding intellectual property ownership; and
  .  lack of high-speed modems and other communications equipment.

Published reports have also indicated that growth in the use of the Internet has
resulted in users experiencing delays, transmission errors and other
difficulties.  As currently configured, the Internet may not support an increase
in the number or requirements of our users.  In addition, there have been
certain outages and delays on the Internet as a result of damage to the 

                                       10
<PAGE>
 
current infrastructure. The amount of traffic on EarthWeb's online services
could be materially affected if there are outages or delays in the future. The
use of the Internet may also decline if there are delays in the development or
adoption of modifications by third parties that are required to support
increased levels of activity on the Internet. If none of the foregoing changes
occur, or if the Internet does not become a viable commercial medium, our
business, results of operations and financial condition could be materially
adversely affected. In addition, even if those changes occur, we may be required
to spend significant amounts to adapt our online services to any new or emerging
technologies relating to the Internet.

Reliance on advertising revenues and uncertain adoption of the Internet as an
advertising medium

Our future success is highly dependent on an increase in the use of the Internet
as an advertising medium.  The Internet advertising market is new and rapidly
evolving, and it cannot yet be compared with traditional advertising media to
gauge its effectiveness.  As a result, demand and market acceptance for Internet
advertising solutions is uncertain.  Most of our current or potential
advertising customers have little or no experience using the Internet for
advertising purposes and they have allocated only a limited portion of their
advertising budgets to Internet advertising.  The adoption of Internet
advertising, particularly by those entities that have historically relied upon
traditional media for advertising, requires the acceptance of a new way of
conducting business, exchanging information and advertising products and
services.  Such customers may find Internet advertising to be less effective for
promoting their products and services relative to traditional advertising media.
If the market for Internet advertising fails to develop or develops more slowly
than we expect, then our business, results of operations and financial condition
could be materially adversely affected.

There are currently no standards for the measurement of the effectiveness of
Internet advertising and standard measurements may need to be developed to
support and promote Internet advertising as a significant advertising medium.
Our advertising customers may challenge or refuse to accept our or third-party
measurements of advertisement delivery requests from the Web sites of Web
publishers using our solutions, and our customers may not accept any errors in
such measurements.  In addition, the accuracy of database information used to
target advertisements is essential to the effectiveness of Internet advertising
that may be developed in the future.  The information in our database, like any
database, may contain inaccuracies that our customers may not accept.

Substantially all of our revenues are derived from banner advertisements.  If
advertisers determine that banner advertising is an ineffective or unattractive
advertising medium, we may not be able to effectively make the transition to any
other form of Internet advertising.  Also, there are "filter" software programs
that limit or prevent advertising from being delivered to a user's computer.
The commercial viability of Internet advertising, and our business, results of
operations and financial condition, would be materially adversely affected by
Web users' widespread adoption of such software.

We rely primarily on our in-house advertising sales force for domestic
advertising sales.  EarthWeb's success depends, in part, on hiring, retaining,
managing, training and motivating its sales force.  If a significant portion of
our advertising sales force leaves, we may not be able to compete for or retain
advertisers and we may not be able to sustain or increase our current
advertising sales level.  The reduction in the amount of revenue from
advertising sales could have a material adverse effect on EarthWeb's business,
results of operations and financial condition.

In addition, the competition in the sale of advertising on the Internet,
including competition from Internet portals and other high-traffic sites is
intense.  This competition has resulted in a wide range of rates quoted by
different vendors for a variety of advertising services. As a result, we cannot
accurately predict the future levels of Internet advertising revenues that we
will realize. The prices for Internet advertising may also be affected by
competition among current and future suppliers of Internet navigational services
or Web sites and advertising network.  This, together with competition with
other traditional media for advertising placements, could result in significant
price competition, reduced pricing for Internet advertising and reductions in
EarthWeb's advertising revenues.

Dependence on a limited number of advertisers

Our revenues to date have been derived from a limited number of customers and we
expect that a limited number of advertisers will continue to account for a
significant portion of our revenues. In particular, IBM and Microsoft accounted
for approximately 11% and 10%, respectively, of EarthWeb's revenues for the year
ended December 31, 1998 and our top 20 advertisers accounted for an aggregate of
approximately 52% of EarthWeb's revenues during 1998. Both Microsoft and IBM
advertised on EarthWeb's online services during the year ended December 31,
1997, but revenues from each accounted for less than 10% of EarthWeb's revenues
during 1997.  Moreover, EarthWeb typically sells pursuant to purchase order

                                       11
<PAGE>
 
agreements, which are subject to cancellation.  Current advertisers may not
continue to purchase advertising from us or we may not be able to attract
additional advertisers.  The loss of one or more of the advertisers that
represent a material portion of our revenues could have a material adverse
effect on our business, results of operations and financial condition. In
addition, the non-payment or late payment of amounts due by a significant
advertiser could have a material adverse effect on our business, results of
operations and financial condition.

New and highly competitive market; low barriers to entry

EarthWeb competes in the IT services market, which is relatively new and
intensely competitive. Since the advent of commercial services on the Internet,
the number of online services competing for users' attention and spending has
proliferated because of, among other reasons, the absence of substantial
barriers to entry. We expect competition to intensify as the market evolves.
EarthWeb competes with other companies that direct portions of their Web sites
towards certain segments or sub-segments of the IT professional community.  Some
of EarthWeb's competitors include:

  .  Ziff-Davis (InternetUser)
  .  CNET (builder.com and activex.com)
  .  CMP (TechWeb)
  .  Planet IT
  .  IDG (Javaworld)

In addition, our competitors for advertising are general interest portal and
destination sites, as well as traditional media. Our competitors for sales of
products are book, software and online retailers that sell products similar to
ours.  Many of our competitors have longer operating histories, larger client
bases, longer relationships with clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than we do.  As a result, they may be in a position to respond more
quickly to new or emerging technologies and changes in customer requirements and
to develop and promote their products and services more effectively.  We may not
be able to compete successfully against present or future competitors.

There are relatively low barriers to entry in the IT services market.  As a
result, new market entrants pose a threat to EarthWeb's business.  EarthWeb does
not own any patent technology that precludes or inhibits competitors from
entering the IT services market.  Existing or future competitors may develop or
offer services that are comparable or superior to ours at a lower price, which
could have a material adverse effect on our business, results of operations and
financial condition.

Variations in quarterly results of operations; seasonality

Because of our limited operating history, we cannot plan operating expenses
based solely on historical financial data. We plan our expenses based in part
upon our expectations concerning future revenue. Our expenses, to a large
extent, are fixed. Our quarterly revenues and operating results depend
substantially upon the advertising revenues we receive within that quarter,
which are difficult to forecast accurately. The cancellation or deferral of a
small number of advertising contracts could have a material adverse effect on
our business, results of operations and financial condition. We may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall, and any significant shortfall could have a material adverse effect on
our business, results of operation and financial condition.

Our quarterly results have historically been affected by variations in the
following:

  .  the level of usage of the Internet;
  .  demand for Internet advertising;
  .  the addition or loss of advertisers;
  .  the level of user traffic on EarthWeb's online services;
  .  economic conditions specific to the Internet industry; and
  .  online media and economic conditions generally.

We also believe that our  revenues are subject to seasonal fluctuations because
advertisers generally place fewer advertisements during the first and third
calendar quarter of each year. As a strategic response to this, we have and may
continue to make certain pricing, service or marketing decisions.  We also may
consummate business combinations to reduce 

                                       12
<PAGE>
 
our exposure to seasonality. Any failure of one or more of these strategies
could have a material adverse effect on our business, results of operations and
financial condition.

Need to develop and maintain brand recognition

We believe that establishing and maintaining the identity of our several brands
is critical in attracting and expanding our audience, and that the importance of
brand recognition will increase due to the growing number of Internet online
services.  Promotion and enhancement of EarthWeb's brands will depend largely on
our success in continuing to provide high quality online services.  If users do
not perceive EarthWeb's existing online services to be of high quality, or if we
introduce new online services or enter into new business ventures that are not
favorably received by users, the uniqueness of our brands could be diminished
and the attractiveness of our audiences to advertisers could be reduced.  We may
also find it necessary to increase substantially our financial commitment to
creating and maintaining a distinct brand loyalty among users. If we (1) cannot
provide high quality online services,  (2) fail to promote and maintain our
brands, or (3) incur excessive expenses in an attempt to improve our online
services or promote and maintain our brands, our business, results of operations
and financial condition could be materially adversely affected.

Dependence on Jack Hidary and William Gollan: shortage of qualified IT personnel

Our performance is substantially dependent on the performance of our senior
management and key technical personnel. In particular, our success depends
substantially on the continued efforts of Jack D. Hidary and William Gollan.
EarthWeb has employment agreements with Messrs. Hidary and Gollan.  However,
these key personnel may leave EarthWeb or compete with us.  In addition, we have
key person life insurance on only certain members of our senior management. The
loss of Messrs. Hidary or Gollan or one or more of EarthWeb's other key
employees could have a material adverse effect on our business, results of
operations and financial condition.

Our future success also depends upon our continuing ability to identify,
attract, hire and retain highly qualified technical, managerial, creative,
marketing, sales, product development and other specialized training, personnel.
There is currently a shortage of qualified personnel in the IT services market,
and this shortage is likely to continue.  We compete intensely for qualified
personnel with other companies. If we cannot attract, motivate and retain
qualified professionals, our business and results of operations could be
materially adversely affected.

Strain on our resources due to continued growth

Our recent growth has strained our managerial, operational and financial
resources.  A key part of our strategy is to grow, both by hiring more personnel
and through acquisitions, which will continue to strain our resources.  In
addition, we currently intend to establish or acquire additional services that
will increase the strain on our managerial, operational and financial resources.
To manage future growth, our management must continue to improve our operational
and financial systems and expand, train, retain and manage our employee base.
Our management may not be successful in managing EarthWeb's growth effectively.
If our systems, procedures and controls are inadequate to support our
operations, our expansion would be halted and we could lose our opportunity to
gain significant market share.  Any inability to manage growth effectively could
have a material adverse effect on our business, results of operations and
financial condition.

Inability to identify potential acquisitions and to integrate operations

Our strategy includes the acquisition of assets of Internet-based content
providers that enhance our current online services.  Our continued growth will
depend in part on our ability to identify suitable acquisition candidates and to
acquire them on appropriate terms. In addition, the anticipated results of any
acquisitions may not be realized.  Some of the risks that EarthWeb may encounter
in acquiring other companies include the following:

  .  expenses, delays and difficulties of integrating the acquired company into
     EarthWeb's existing organization;
  .  potential disruption of our ongoing business;
  .  diversion of management's attention;
  .  expenses of amortizing the acquired company's intangible assets;
  .  impact on our financial condition due to the timing of the acquisition;
  .  failure to retain key personnel;
  .  difficulties of integrating the personnel and cultures of the acquired
     company into the existing organization; and

                                       13
<PAGE>
 
  .  potential legal liabilities.

If any of these risks materialize, they could have a material adverse effect on
our business, results of operations and financial condition.

Inability to expand and manage international operations

A key part of our strategy is to develop our online service brands in
international markets. To date, we have had only limited experience in
developing localized versions of our online services and in marketing and
operating our online services internationally. We intend to enter into
relationships with foreign business partners. If the international revenues are
not adequate to offset our investments in international activities, our
business, results of operations and financial condition could be materially and
adversely affected. We may experience difficulty in managing international
operations because of distance, as well as language and cultural differences.
We and any of our future foreign business associates may not be able to
successfully market and operate our online services in foreign markets.
Furthermore, in light of substantial anticipated competition, we believe that it
will be necessary to implement our business strategy quickly in international
markets to obtain a significant share of the market.  We cannot give you any
assurance that we will be able to do so. Other risks that could affect
EarthWeb's operations include:

  .  fluctuations in currency exchange rates;
  .  conversion to the "Euro" by several members of the European Union;
  .  difficulties arising from staffing and managing foreign operations;
  .  unexpected changes in the legal and regulatory requirements of different
     countries;
  .  potential political and economic instability; and
  .  overlapping or differing tax laws.

If any of these risks materialize, EarthWeb's domestic and international
businesses, results of operations and financial condition could be materially
adversely affected.

Dependence on content providers

Our success depends upon our ability to provide a wide range of in-depth
content. The markets for our online services are characterized by rapidly
changing technology, emerging industry standards and the rapidly changing needs
of our audience. We rely on a number of publishers of technical materials, our
vendors and the users of our online services for the continuing provision of up-
to-date content. No single content provider is material to EarthWeb's
operations. However, publishers of technical materials with which we currently
have a relationship, EarthWeb's current vendors or the current users of
EarthWeb's online services may not continue to provide us with a similar flow of
content or that may not continue to do so on the same terms and conditions. If
the flow of content for our online services decreases either in terms of quality
or quantity, or ceases completely, our business, results of operations and
financial condition could be materially adversely affected.

Dependence on strategic alliances

We rely on strategic alliances with Sun Microsystems, IBM, Microsoft, CMP, Ziff-
Davis, MacMillan and Netscape, among others, to attract users and paid
advertising to our online services.  These relationships may not continue or we
may not be able to develop any additional third party alliances on acceptable
commercial terms. No one of these strategic alliances is individually material
to our operations. However, our inability to maintain current strategic
relationships generally or develop new strategic relationships could have a
material adverse affect on our business, results of operation and financial
condition.

Risk of capacity constraints and systems failures

The performance of our online services is critical to (1) our reputation, (2)
our ability to attract advertisers to our services and (3) achieving market
acceptance of our online services. Any system failure, including network,
software or hardware failure, that causes interruption or an increase in
response time of our online services could result in decreased usage of our
services. If such failures are sustained or repeated, they could reduce the
attractiveness of our online services to our users, vendors and advertisers. An
increase in the volume of queries conducted through our online services could
strain the capacity of the

                                       14
<PAGE>
 
software or hardware we employ, which could lead to slower response time or
system failures, and, thereby, adversely affect EarthWeb's advertising revenues.
We also face technical challenges associated with higher levels of
personalization and localization of content delivered to users of our online
services.

The process of managing advertising within our large, high traffic Internet
online service is an increasingly important and complex task. EarthWeb relies on
both internal and licensed third party advertising inventory management and
analysis systems.  We could incur so-called "make good" obligations to our
advertising customers if an extended failure of our advertising system results
in incorrect advertising insertions. By displacing advertising inventory, such
obligations could defer advertising revenues and thereby have a material adverse
effect on our business, results of operations and financial condition.

Our operations are dependent in part upon our ability to protect our operating
systems against (1) physical damage from acts of God, (2) power loss, (3)
telecommunications failures, (4) physical break-ins and (5) similar events. The
occurrence of any of these events could result in interruptions, delays or
cessations in service to users of our online services, which could have a
material adverse effect on our business, results of operations and financial
condition.

Online security risks

EarthWeb is potentially vulnerable to attempts by unauthorized computer users
("hackers") to penetrate our network security. If successful, such individuals
could misappropriate proprietary information or cause interruptions in our
online services. We may be required to expend significant capital and resources
to protect against the threat of such security breaches or to alleviate problems
caused by such breaches. In addition to security breaches, our inadvertent
transmission of computer viruses could expose us to risk of loss or litigation
and possible liability. Continued concerns over the security of Internet
transactions and the privacy of the users may also inhibit the growth of the
Internet generally as a means of conducting commercial transactions.

Inability to protect intellectual property

We believe that our service marks and other proprietary rights are important to
our success and competitive position.  We have registered certain of our service
marks in the United States and abroad.  We also limit access to and distribution
of our proprietary information, as well as proprietary information licensed from
third parties.  Our management cannot ensure that these strategies will be
adequate to deter misappropriation of our proprietary information and material.

Despite our efforts to protect our intellectual property, we also face the
following risks:

  .  non-recognition or inadequate protection of our proprietary rights in
     certain foreign countries;
  .  undetected misappropriation of our proprietary information or  materials;
  .  development of similar technologies by competitors;
  .  unenforceablity of the non-competition agreements entered into by our
     employees; and
  .  infringement claims, even if not meritorious.

If any of these risks materialize, we could be required to pay significant
amounts to defend our rights and our managerial resources could be diverted.

Legal standards relating to the validity, enforceability and scope of protection
of certain intellectual property rights in Internet-related industries are
uncertain and still evolving, and no assurance can be given as to the future
viability or value of any intellectual property rights of EarthWeb or other
companies within the IT industry. We generally enter into confidentiality
agreements with its employees, consultants, vendors and customers, license
agreements with third parties and generally seek to control access to and
distribution of its technology, documentation and other proprietary information.
EarthWeb pursues the registration of its service marks in the United States and
internationally, and has obtained United States service mark registrations for
EarthWeb and its related logo (the "Fang Logo Design"), has been assigned
Plugin Datamation and Datamation and has applied for the registration of certain
additional service marks, including developer.com and developer direct.
Effective trademark, copyright and trade secret protection may not be available
in every country in which EarthWeb's online services are distributed or made
available through the Internet. The steps we have taken to protect our
proprietary rights may not be adequate, and third parties could infringe or
misappropriate our copyrights, service marks, trade dress and similar
proprietary rights.

                                       15
<PAGE>
 
We have licensed in the past, and expect to license in the future, certain
elements of our distinctive trademarks, service marks, trade dress, trade
secrets and similar proprietary rights to third parties. While we attempt to
ensure that the quality of our several brands is maintained by such licensees,
no assurance can be given that such licensees will not take actions that could
materially and adversely affect the value of proprietary rights or the
reputation of our online services, either of which could have a material adverse
effect on business, results of operation and financial condition. Also, we are
aware that third parties have from time to time copied significant portions of
developer.com directory listings for use in competitive Internet navigational
tools and services, and we cannot guaranty that the distinctive elements of
developer.com can be protected under copyright law.

Liability for information services

Because content made available by third parties may be downloaded by the online
services operated or facilitated by us and may be subsequently distributed to
others, there is a potential that claims will be asserted against EarthWeb for
defamation, negligence or personal injury, or based on other theories due to the
nature of such content. Such claims have been brought, and sometimes
successfully asserted, against other online service providers. In addition, we
could be exposed to liability with respect to the selection of listings that may
be accessible through our online services or through content and materials that
may be posted by users in our classifieds, bulletin board or chat room services.
By providing hypertext links to Internet sites operated by third parties, we may
be exposed to claims or liability for wrongful actions by such third parties
through such Internet sites. It is also possible that users could claim that we
were responsible for losses incurred in reliance on information provided on
EarthWeb's online services. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or may not be adequate to
provide full indemnification. Any imposition of liability or legal defense
expenses that are not covered by insurance or are in excess of insurance
coverage could have a material adverse effect on our business, results of
operations and financial condition.

U.S. and foreign government regulation and legal uncertainties

Congress has recently passed legislation that regulates certain aspects of the
Internet, including on-line content, copyright infringement, user privacy,
taxation, access charges, liability for third-party activities and jurisdiction.
In addition, federal, state, local and foreign governmental organizations are
also considering  legislative and regulatory proposals that would regulate the
Internet.  Areas of potential regulation include libel, pricing, quality of
products and services and intellectual property ownership.

The European Union has also recently enacted several directives relating to the
Internet.  In order to safeguard against the spread of certain illegal and
socially harmful materials on the Internet, the European Commission has drafted
the "Action Plan on Promoting the Safe Use of the Internet," which seeks to
promote the safe use of the Internet.  Other European Commission directives
address the regulation of privacy, e-commerce, security, commercial piracy,
consumer protection and taxation of transactions completed over the Internet.

It is not known how courts will interpret both existing and new laws.
Therefore, EarthWeb's management is uncertain as to how new laws or the
application of existing laws will affect our business.  Increased regulation of
the Internet may reduce the use of the Internet, which could decrease the demand
for our services, increase our cost of doing business or otherwise have a
material adverse effect on our business, results of operations and financial
condition.

Concentration of stock ownership

As of March 1, 1999, the stockholders set forth below (and their affiliates)
collectively owned approximately 77% of the outstanding shares of common stock
and owned individually the percentage set forth opposite their respective names:

    Directors                         27%
    Executive officers                24%
    Warburg, Pincus Ventures, L.P.    26%

If the stockholders listed above choose to act or vote in concert, they will
have the power to influence the election of EarthWeb's directors, the
appointment of new management and the approval of any other action requiring the
approval of EarthWeb's stockholders, including any amendments to our Amended and
Restated Certificate of Incorporation and mergers or sales of all of its assets.
In addition, without the consent of these stockholders, EarthWeb could be
prevented from 

                                       16
<PAGE>
 
entering into certain potentially beneficial transactions.
Conversely, third parties could be discouraged from making a tender offer or bid
to acquire EarthWeb at a price per share that is above the price at which the
common stock trades on Nasdaq.

Anti-Takeover provisions of the Delaware General Corporation Law and EarthWeb's
amended and restated certificate of incorporation

Certain provisions of the Delaware General Corporation Law (the "DGCL") and
EarthWeb's Amended and Restated Certificate of Incorporation and Amended and
Restated By-Laws may discourage or prevent a third party from acquiring control
of EarthWeb.  Such provisions may discourage bids for common stock at a premium
over the market price and may adversely affect the market price and the voting
and other rights of the holders of common stock.  Our Amended and Restated By-
laws include certain restrictions on who may call a special meeting of
stockholders, and either a majority of the board of directors or the holders of
66.66% of the outstanding capital stock of EarthWeb, which are entitled to vote
in the elections of the board of directors, must approve all amendments to
EarthWeb's Amended and Restated By-Laws.

EarthWeb's Amended and Restated Certificate of Incorporation authorizes the
board of directors to issue up to 2,000,000 shares of "blank check" preferred
stock.  The board of directors will have the authority without action by
EarthWeb's stockholders to fix the rights, privileges and preferences of, and to
issue shares of, such preferred stock.  The issuance of preferred stock could
make it more difficult for a third party to acquire EarthWeb.  In addition,
EarthWeb's Amended and Restated Certificate of Incorporation provides that the
board of directors will be divided into three classes with the directors serving
staggered three-year terms.  Only the holders of 66.66% of the outstanding
capital stock of EarthWeb that are entitled to vote in the elections of the
board of directors can amend this provision.  This classification could
discourage a third party from attempting to gain control of EarthWeb.

Volatility of stock prices for Internet-related companies

EarthWeb's common stock began trading on the Nasdaq on November 11, 1998 and its
market price has been highly volatile.  In addition, the overall market for
internet-related companies has been volatile.  This volatility may continue.
Factors that may materially adversely affect the market price of our common
stock include:

  .  variations in our financial results and earnings;
  .  failure to meet or exceed estimates by securities analysts;
  .  fluctuations in the stock prices of EarthWeb's competitors;
  .  any loss of key management;
  .  adverse regulatory actions or decisions;
  .  announcements of extraordinary events such as litigation or acquisitions or
     changes in pricing policies by EarthWeb or its competitors;
  .  changes in the market for EarthWeb's online services; and
  .  general economic, political and  market conditions.

Reliance on independent market data

EarthWeb has included information in this Form 10-K relating to (1) the number
of Internet users, (2) the size of Internet commerce, (3) the worldwide market
for information technology products and services, (4) the size of business-to-
business Internet advertising and (5) the size of the consumer related Internet
advertising.  This information is based on studies prepared by the Internet
market research firms International Data Corporation, Forrester Research and
Jupiter Communications. These studies include projections that are based on a
number of assumptions including:

  .  no catastrophic failure of the Internet;
  .  the worldwide economy will resume its expansion;
  .  Internet security will be adequately addressed;
  .  the number of people online and the total number of hours spent online will
     increase significantly over the next five years;
  .  the use of the Internet will increase significantly in major foreign
     countries and some of such countries will adopt the U.S. style of 
     advertising on the Internet;
  .  media advertising will continue to grow in all categories and online
     advertising will comprise an increased percentage of all media advertising;
  

                                       17
<PAGE>
 
  .  the value of online advertising dollars spent per online user hour will
     increase;
  .  non-technology industry Internet advertising will increase;
  .  the download speed of content will increase dramatically; and
  .  a proliferation of Internet access devices other than the PC (for example,
     PC/television sets).

If any one or more of these assumptions turns out to be incorrect, the
projections based on such assumptions may be materially different from actual
results. Internet-related markets and products may not grow over the next three
to four years at the rates projected by International Data Corporation,
Forrester Research or Jupiter Communications, or at all, and if those markets or
products do not grow at such projected rates, there could be a material adverse
effect on EarthWeb's business, results of operations and financial condition.

ITEM 2.  PROPERTIES

EarthWeb's headquarters are currently located in a leased facility in New York
City consisting of a total of approximately 33,500 square feet of office space,
the majority of which is under a ten year lease.  EarthWeb believes that its
existing facilities are adequate to meet current requirements, and that suitable
additional or substitute space will be available as needed.

ITEM 3.  Legal Proceedings

EarthWeb is not a party to any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On November 9, 1998, stockholders holding a majority of the shares of each class
of EarthWeb's outstanding voting stock executed two written consents in lieu of
special meeting, in which such stockholders (1) approved an Amendment to
EarthWeb's Certificate of Incorporation to effect a .65 -for-one reverse stock
split and to create a staggered Board of Directors, (2) approved the adoption of
EarthWeb's 1998 Stock Incentive Plan, (3) approved the adoption of EarthWeb's
1998 Employee Stock Purchase Plan, and (4) approved an Amended and Restated
Certificate of Incorporation to consolidate certain prior amendments to the
Certificate of Incorporation into one document.


                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information required by this Item is incorporated by reference to the
section entitled  "Shareholder Information" on page 31 of the Company's 1998
Annual Report to Stockholders.

ITEM 6.  SELECTED FINANCIAL DATA

The information required by this Item is incorporated by reference to the
section entitled  "Selected Financial Data" on page 10 of the Company's 1998
Annual Report to Stockholders.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this Item is incorporated by reference to the
section entitled  "Management's Discussion and Analysis of Financial Condition
and Results of Operations" on pages 11-15 of the Company's 1998 Annual Report
to Stockholders.

                                       18
<PAGE>
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISk

Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 14(a).

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated by reference to the
section entitled "Management" of the Company's Proxy Statement for its 1999
Annual Meeting of Stockholders, which will be filed with the Securities and
Exchange Commission within 120 days after December 31, 1998.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the
section entitled  "Compensation of Executive Officers" of the Company's Proxy
Statement for its 1999 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission within 120 days after December 31, 1998.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item is incorporated by reference to the
section entitled  "Principal Security Holders" of the Company's Proxy Statement
for its 1999 Annual Meeting of Stockholders, which will be filed with the
Securities and Exchange Commission within 120 days after December 31, 1998.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to the
section entitled  "Certain Relationships and Related Transactions" of the
Company's Proxy Statement for its 1999 Annual Meeting of Stockholders, which
will be filed with the Securities and Exchange Commission within 120 days after
December 31, 1998.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

a)  Documents filed as part of this Report:
    -------------------------------------- 

The following financial statements and the Report of the Independent Accountants
are incorporated herein by reference to the Registrant's 1998 Annual Report to
Stockholders pursuant to Item 8:

                                       19
<PAGE>
 
<TABLE>
<CAPTION>
                                                                              Page in Annual Report
                                                                             ------------------------
<S>                                                                          <C>
Balance Sheets at December 31, 1998 and 1997...............................            16
Statement of Operations for the years ended December 31, 1998, 1997 and
 1996......................................................................            17
 
Statements of Stockholders' Equity for the years ended December 31, 1998,
 1997 and 1996.............................................................            18
 
Statements of Cash Flows for the years ended December 31, 1998, 1997 and
 1996......................................................................            19
 
Notes to Financial Statements..............................................            20-28
Report of Independent Accountants..........................................            29
</TABLE>

All other financial statement schedules are omitted because they are not
required, are inapplicable or the information has been included elsewhere in the
financial statements or notes thereto.

b)    Reports on Form 8-K.
      -------------------
No Reports on Form 8-K were filed during the fourth quarter of 1998.  A Report 
on Form 8-K was filed on February 16, 1999.

c)  Exhibits.
    -------- 

<TABLE>
<CAPTION>
     Exhibit No.       Description
---------------------  -----------
<C>                    <S>
       *2.1            Agreement and Plan of Merger among Registrant, EW Career Solutions, Inc., D&L Online, Inc., Lloyd
                       Linn, and Diane Rickert; incorporated by reference to Exhibit 2.1 to the Registrant's Current Report
                       on Form 8-K dated February 2, 1999.
        3.1            Form of Amended and Restated Certificate of Incorporation; incorporated by reference to Exhibit 3.1
                       to Registrant's Registration Statement on Form S-1 (SEC File No. 333-60837).
        3.2            Form of Amended and Restated By-laws; incorporated by reference to Exhibit 3.2 to Registrant's
                       Registration Statement on Form S-1 (SEC File No. 333-60837).
        4.1            Amended and Restated Shareholders Agreement dated as of June 24, 1997 among the Registrant, EarthWeb
                       LLC, Global Network Partners LLC ("GNP"), Warburg, Pincus Ventures, L.P. ("Warburg"), Jack D. Hidary,
                       Murray Hidary and Nova Spivack; incorporated by reference to Exhibit 4.1 to Registrant's
                       Registration Statement on Form S-1 (SEC File No. 333-60837).
        4.2            Specimen Common Stock Certificate of Registrant; incorporated by reference to Exhibit 4.2 to
                       Registrant's Registration Statement on Form S-1 (SEC File No. 333-60837).
        4.3            Registration Rights Agreement dated as of October 25, 1996 by and between the Registrant, Warburg,
                       EarthWeb LLC and GNP; incorporated by reference to Exhibit 4.3 to Registrant's Registration
                       Statement on Form S-1 (SEC File No. 333-60837).
        4.4            Registration Rights Agreement between Registrant, Lloyd Linn and Diane Rickert; incorporated by
                       reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated February 2, 1999.
          9            Form of Voting Trust Agreement, as amended; incorporated by reference to Exhibit 9 to Registrant's
                       Registration Statement on Form S-1 (SEC File No. 333-60837).
       10.1            1996 Amended and Restated Stock Plan, as amended; incorporated by reference to Exhibit 10.1 to
                       Registrant's Registration Statement on Form S-1 (SEC File No. 333-60837).
       10.2            Employment Agreement dated January 1, 1995 between GNP (formerly EarthWeb Ltd.) and Jack D. Hidary;
                       incorporated by reference to Exhibit 10.2 to Registrant's Registration Statement on Form S-1 (SEC
                       File No. 333-60837).
</TABLE> 

                                       20
<PAGE>
 
<TABLE>
<CAPTION>
     Exhibit No.       Description
---------------------  -----------
<S>                    <C> 
       10.3            Employment Agreement dated January 1, 1995 between GNP (formerly EarthWeb Ltd.) and Murray Hidary;
                       incorporated by reference to Exhibit 10.3 to Registrant's Registration Statement on Form S-1 (SEC
                       File No. 333-60837).
       10.4            Employment Agreement dated November 4, 1996 between the Registrant and Irene Math; incorporated by
                       reference to Exhibit 10.4 to Registrant's Registration Statement on Form S-1 (SEC File No.
                       333-60837).
       10.5            Employment Agreement dated November 3, 1997 between the Registrant and William Gollan; incorporated
                       by reference to Exhibit 10.5 to Registrant's Registration Statement on Form S-1 (SEC File No.
                       333-60837).
       10.6            Employment Agreement dated January 12, 1998 between the Registrant and John Kleine.
       10.7            Consulting Agreement dated as of August 1, 1998 between the Registrant and Nova Spivack;
                       incorporated by reference to Exhibit 10.6 to Registrant's Registration Statement on Form S-1 (SEC
                       File No. 333-60837).
       10.8            Intercompany Services Agreement dated October 25, 1996 among the Registrant, EarthWeb LLC, GNP
                       (formerly EarthWeb Ltd.), Jack D. Hidary, Murray Hidary and Nova Spivack, as amended; incorporated
                       by reference to Exhibit 10.7 to Registrant's Registration Statement on Form S-1 (SEC File No.
                       333-60837).
       10.9            Lease Agreement dated April 28, 1995 between 3 Park Avenue Co. and MJN Enterprises, Inc., as
                       amended; incorporated by reference to Exhibit 10.8  to Registrant's Registration Statement on Form
                       S-1 (SEC File No. 333-60837).
      10.10            Form of 1998 Stock Incentive Plan; incorporated by reference to Exhibit 10.9 to Registrant's
                       Registration Statement on Form S-1 (SEC File No. 333-60837).
      10.11            Form of 1998 Employee Stock Purchase Plan; incorporated by reference to Exhibit 10.10 to
                       Registrant's Registration Statement on Form S-1 (SEC File No. 333-60837).
      10.12            Employment Agreement between Registrant and Lloyd Linn; incorporated by reference to Exhibit 10.1 to
                       the Registrant's Current Report on Form 8-K dated February 2, 1999.
       13.1            1998 Annual Report to Stockholders, portions of which are incorporated by reference herein.
       21.1            Subsidiary of Registrant.
       23.1            Consent of Independent Accountants.
         27            Financial Data Schedule.
</TABLE>

     * Confidential treatment has been requested with respect to certain
       portions of this Exhibit.  Omitted portions have been filed separately 
       with the Commission.

                                       21
<PAGE>
 
                                   SIGNATURES
                                   ----------

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on March 19, 1999.


                              EARTHWEB INC.

                              By:         /s/ Jack D. Hidary
                                  --------------------------------------
                                            Jack D. Hidary
                                  President and Chief Executive Officer

  Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities on March 19, 1999.

<TABLE>
<CAPTION>

Name and Signature                                                      Title
-----------------------------------------------------  ---------------------------------------
<S>                                                    <C>
               /s/ Jack D. Hidary                            President, Chief Executive
-----------------------------------------------------           Officer and Director
               Jack D. Hidary


               /s/ Murray Hidary                              Executive Vice President,
-----------------------------------------------------         Secretary, Treasurer and
               Murray Hidary                                          Director
 

               /s/ Nova Spivack                                       Director
-----------------------------------------------------
               Nova Spivack


               /s/ Henry Kressel                                      Director
-----------------------------------------------------
               Henry Kressel


               /s/ Cary Davis                                         Director
-----------------------------------------------------
               Carry Davis


               /s/ Irene Math                                  Vice President, Finance
-----------------------------------------------------         (Principal Financial and
               Irene Math                                        Accounting Officer)
 
</TABLE>
                                        

<PAGE>
 

                                 Exhibit Index
                                 -------------

Exhibit                           Description
-------                           -----------
 10.6            Employment Agreement dated January 12, 1998 between the 
                 Registrant and John Kleine

 13.1            1998 Annual Report to Stockholders

 21.1            Subsidiary of Registrant 

 23.1            Consent of PricewaterhouseCoopers LLP

 27              Financial Data Schedule