VERTICALNET INC
424B3, 2000-04-12
ADVERTISING
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PROSPECTUS                                      Filed Pursuant to Rule 424(b)(3)
                                                Registration No. 333-30254

                                 $115,000,000

              5 1/4% Convertible Subordinated Debentures due 2004

     and Shares of Common Stock Issuable upon Conversion of the Debentures

                               VERTICALNET, INC.



     Holders of our 5 1/4% Convertible Subordinated Debentures due 2004 may
offer for resale through this prospectus the debentures and the shares of common
stock issuable upon conversion of the debentures at various times at market
prices prevailing at the time of sale or at privately negotiated prices.  The
selling holders may resell the debentures or the common stock to or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions.  We will pay interest on the
debentures on March 27 and September 27 of each year, beginning March 27, 2000.
We will not receive any of the proceeds from the resale of the debentures and
the common stock issuable upon conversion of the debentures offered through this
prospectus. We will bear all costs, expenses and fees in connection with the
registration of the debentures and the shares of common stock issuable upon
conversion of the debentures. The selling holders will bear all commissions and
discounts, if any, attributable to the sales of the debentures and the shares of
common stock issuable upon conversion of the debentures.

     Holders of the debentures may convert, subject to specified conditions, the
debentures into shares of our common stock at a conversion price of $20.00 per
share, subject to adjustment as set forth in this prospectus.

     The debentures will mature on September 27, 2004 unless earlier converted
or redeemed.  Prior to September 27, 2002, we may redeem all or part of the
debentures, at the redemption price specified in this prospectus under
"Description of the Debentures--Optional Redemption--Provisional Redemption"
if we have an effective shelf registration statement and the market price of our
common stock exceeds specified thresholds.  We intend to redeem all or part of
the debentures upon, or shortly after, the effectiveness of this registration
statement, as long as the market price of our common stock exceeds the
thresholds specified in this prospectus.  Upon a Change of Control (as defined)
of VerticalNet, holders of the debentures may be entitled to cause us to redeem
all or part of their debentures.  After September 27, 2002, we may redeem all or
part of the debentures at the redemption prices specified in this prospectus
under "Description of the Debentures--Optional Redemption--Subsequent Optional
Redemption."

     Shares of our common stock are quoted on the Nasdaq National Market under
the symbol "VERT." The last reported sale price of the shares on April 11, 2000
was $48.19 per share.

     VerticalNet has not applied for listing of the debentures on any securities
exchange or for the quotation through any automated quotation system.  The
debentures are eligible for trading in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") market.

     The debentures are unsecured general obligations of VerticalNet and rank
subordinate in right of payment to all of our existing and future Senior Debt
(as defined). As of April 1, 2000, we had Senior Debt, through our wholly-
owned subsidiary, NECX.com LLC, of $47.19 million.

              INVESTING IN THE DEBENTURES AND THE COMMON STOCK,
  ISSUABLE UPON CONVERSION OF THE DEBENTURES INVOLVES A HIGH DEGREE OF RISK.
                         RISK FACTORS BEGIN ON PAGE 6.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus.  Any representation to the contrary is
a criminal offense.

April 12, 2000
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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
SUMMARY.....................................................................   3
RISK FACTORS................................................................   6
FORWARD-LOOKING STATEMENTS..................................................  21
USE OF PROCEEDS.............................................................  21
RATIO OF EARNINGS TO FIXED CHARGES..........................................  21
DESCRIPTION OF THE DEBENTURES...............................................  22
SELLING HOLDERS.............................................................  35
CERTAIN FEDERAL TAX CONSEQUENCES............................................  37
PLAN OF DISTRIBUTION........................................................  41
LEGAL MATTERS...............................................................  42
EXPERTS.....................................................................  42
ABOUT THIS PROSPECTUS.......................................................  42
WHERE YOU CAN FIND MORE INFORMATION.........................................  42
</TABLE>
<PAGE>

                                    SUMMARY


     The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus or incorporated by reference
in this prospectus and may not contain all the information that is important to
you. All information in this offering prospectus reflects two separate two-for-
one splits of our common stock, the first of which was effected on August 20,
1999, and the second of which was effected on March 31, 2000.

                                  Our Company

     VerticalNet, Inc. (www.verticalnet.com) owns and operates 55 industry-
specific Web sites designed as online business-to-business communities, known as
vertical trade communities.  These vertical trade communities provide users with
comprehensive sources of information, interaction and e-commerce.  They are
grouped into the following industry sectors:


     ADVANCED TECHNOLOGIES              MANUFACTURING AND METALS
     COMMUNICATIONS                     PROCESS
     ENVIRONMENTAL                      PUBLIC SECTOR
     FOOD AND PACKAGING                 SERVICE
     FOODSERVICE AND HOSPITALITY        TEXTILES AND APPAREL
     HEALTHCARE/SCIENCE


     In December 1999, we acquired NECX.com LLC, a business-to-business market
maker for the electronic component and hardware markets.  NECX acts as a third
party intermediary, purchasing electronic hardware and components from various
vendors for resale to foreign and domestic companies.  NECX's exchange operates
to match buyers' and suppliers' needs, providing a solution to inventory
imbalances that result from over-capacity or shortages within existing
contractual relationships.  In March 2000, we completed our acquisition of R.W.
Electronics, Inc., which operates in the same business as NECX.  With these
acquisitions, management has segmented the business into two operating segments,
consisting of vertical trade communities and our exchange business.

                                   About VerticalNet

 Principal Executive Offices:      Internet Address:

 VerticalNet, Inc.                 www.verticalnet.com (Information contained on
 700 Dresher Road, Suite 100       our Web site is not a part of this
 Horsham, Pennsylvania 19044       prospectus)
 Phone: (215) 328-6100

                                       3
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                                 The Offering


Securities Offered by Holders      $115,000,000 aggregate principal amount of 5
                                   1/4% Convertible Subordinated Debentures due
                                   2004, and shares of common stock issuable
                                   upon conversion of the debentures.

Maturity                           September 27, 2004.

Interest Payment Dates             March 27 and September 27, beginning on March
                                   27, 2000. The initial interest payment
                                   included accrued interest from September 27,
                                   1999.

Interest Rate                      5 1/4% per year.

Optional Conversion by Holders     Holders may convert the debentures at any
                                   time through maturity, unless previously
                                   redeemed or repurchased, into shares of
                                   common stock initially at a conversion price
                                   of $20.00 per share (equal to a conversion
                                   rate of 50 shares per $1,000 principal amount
                                   of the debentures), subject to adjustment
                                   under certain circumstances. See
                                   "Description of the Debentures--Conversion
                                   Rights."

Provisional Redemption
by VerticalNet                     We intend to redeem some or all of the
                                   debentures upon, or shortly after, the
                                   effectiveness of this shelf registration
                                   statement. We may redeem (the "Provisional
                                   Redemption") some or all of the debentures,
                                   at any time prior to September 27, 2002 (the
                                   "Provisional Redemption Date"), at a
                                   redemption price equal to 101.3125% of the
                                   principal amount of the debentures, plus any
                                   accrued and unpaid interest to, but
                                   excluding, the Provisional Redemption Date,
                                   if (i) this shelf registration covering
                                   resales of the debentures and the common
                                   stock issuable upon conversion of the
                                   debentures is effective and available for use
                                   and is expected to remain effective and
                                   available for use for the 30 days following
                                   the Provisional Redemption Date and (ii) the
                                   Current Market Value (as defined) of our
                                   common stock equals or exceeds the following
                                   triggering percentages of the conversion
                                   price then in effect for at least 20 trading
                                   days in any consecutive 30-day trading period
                                   ending on the trading day prior to the date
                                   of mailing of the notice of the Provisional
                                   Redemption (the "Notice Date"), if redeemed
                                   in the 12-month period ending on September 26
                                   of the following years:

                                                          Trigger
                                        Year             Percentage
                                        ----             ----------
                                        2000                170%
                                        2001                160%
                                        2002                150%

                                   Upon any Provisional Redemption, we will make
                                   an additional payment (the "Interest Make-
                                   Whole Payment") with respect to the
                                   debentures called for redemption, including
                                   those debentures converted into common stock
                                   between the Notice Date and the Provisional
                                   Redemption Date, in an amount equal to the
                                   sum of (i) the present value of the aggregate
                                   amount of the interest that would otherwise
                                   have accrued from the Provisional Redemption
                                   Date through September 26, 2002 (the
                                   "Interest Make-Whole Period") and (ii) any
                                   liquidated damages to, but excluding, the
                                   Provisional Redemption Date. Such present
                                   value shall be calculated using the bond
                                   equivalent yield on U.S. Treasury notes or
                                   bills having a term nearest in length to that
                                   of the Interest Make-Whole Period as of the
                                   Notice Date. We are obligated to make the
                                   Interest Make-Whole Payment on all debentures
                                   called for Provisional Redemption, regardless
                                   of whether those debentures are converted
                                   prior to the Provisional Redemption Date.

Subsequent Optional Redemption     We may redeem some or all of the debentures,
                                   on or after September 27, 2002, at the
                                   redemption prices, plus any accrued and
                                   unpaid interest to, but excluding, the

                                       4
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                                   redemption date, as more fully described
                                   herein. We will therefore be required to make
                                   six interest payments before being able to
                                   redeem any debentures. See "Description of
                                   the Debentures--Optional Redemption--
                                   Subsequent Optional Redemption."

Repurchase Right                   Holders of the debentures may require us to
                                   repurchase all of the holder's debentures at
                                   100% of their principal amount plus any
                                   accrued and unpaid interest in certain
                                   circumstances involving a Change of Control
                                   (as defined). The repurchase price is payable
                                   in cash or, at our option, subject to the
                                   satisfaction of certain conditions, in common
                                   stock (valued at 95% of the average closing
                                   sales prices for the five consecutive trading
                                   days ending on and including the third day
                                   prior to the repurchase date). See
                                   "Description of the Debentures--Repurchase
                                   at Option of Holders Upon a Change of
                                   Control."

Subordination                      The debentures are our unsecured general
                                   obligations. They are subordinated in right
                                   of payment to all of our existing and future
                                   Senior Debt (as defined). The debentures will
                                   be, in effect, subordinated to all existing
                                   and future obligations (including trade
                                   payables) of our subsidiaries. As of April 1,
                                   2000, we had Senior Debt, through our wholly-
                                   owned subsidiary, NECX.com, LLC, of $47.19
                                   million. See "Description of the Debentures--
                                   Subordination."

Form and Denomination              The debentures were issued in fully
                                   registered form. The debentures initially
                                   were issued in minimum denominations of
                                   $1,000. The debentures offered to
                                   "accredited investors" were issued only in
                                   certificated form and in multiples of $1,000
                                   in excess of such amount. The debentures sold
                                   by the initial purchasers to "Qualified
                                   Institutional Buyers," as defined in Rule
                                   144A under the Securities Act, were
                                   represented by one or more global debentures,
                                   deposited with a trustee as custodian for The
                                   Depository Trust Company ("DTC") and
                                   registered in the name of DTC or Cede & Co.,
                                   as DTC's nominee. Beneficial interests in the
                                   global debenture were shown on, and any
                                   transfers will be effected only through,
                                   records maintained by DTC and its
                                   participants. See "Description of the
                                   Debentures--Form, Denomination and
                                   Registration."

Use of Proceeds                    We will not receive any proceeds from the
                                   sale of the debentures and the common stock
                                   into which the debentures are convertible by
                                   the selling holders.

Trading                            The debentures are eligible for trading in
                                   the PORTAL market. Our common stock is traded
                                   on the Nasdaq National Market under the
                                   symbol "VERT."

                                       5
<PAGE>

                                  RISK FACTORS

     You should carefully consider the following factors and other information
in this prospectus before deciding to purchase the debentures or shares of
common stock issuable upon conversion of the debentures.


OUR LIMITED OPERATING HISTORY AND EVOLVING REVENUE MODEL MAKES IT DIFFICULT TO
EVALUATE WHETHER WE CAN SUSTAIN AND GENERATE REVENUES.

     We launched our first vertical trade community in October 1995 and thus
have a limited operating history. In addition, our revenue model is evolving,
which, together with our limited operating history, makes evaluating our future
prospects very difficult. Currently, our Internet-based revenues are generated
primarily from the sale of advertising on our vertical trade communities. In
the future, we expect to generate a greater percentage of our revenue from
multiple sources, including e-commerce and business services. In particular, we
expect that a significant percentage of our overall revenues will come from
NECX. We may not be able to sustain our current revenues or successfully
generate e-commerce or business services revenue. We also may not be able to
integrate the revenue streams of NECX successfully into an e-commerce platform.
If we do not sustain our current revenue or generate e-commerce or business
services revenue, including revenue from exchange e-commerce applications, our
business, financial condition and operating results will suffer.

WE ANTICIPATE WE WILL INCUR CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.

     To date, we have not been profitable. We reported a net loss of $53.5
million for the year ended December 31, 1999. As of December 31, 1999, our
accumulated deficit was $72.8 million. We expect to continue to incur
significant losses in the foreseeable future. We may never be profitable or, if
we become profitable, we may be unable to sustain profitability.

WE EXPECT OUR OPERATING EXPENSES TO INCREASE.

     Our limited operating history makes predicting our future operating
results, including operating expenses, difficult. Some of our expenses are
fixed, including non-cancelable agreements, equipment leases and real estate
leases. If our revenues do not increase, we may not be able to compensate by
reducing expenses in a timely manner. Our revenues may not grow or may not even
continue at their current level. In addition, we plan to increase our operating
expenses significantly to:

     .    launch additional vertical trade communities;
     .    increase our internal sales and marketing operations;
     .    enhance our technologies;
     .    develop and deploy our e-commerce initiatives;
     .    design and integrate a scalable on-line exchange for NECX;
     .    enter into additional sponsorship agreements;
     .    broaden our customer support capabilities; and
     .    pursue marketing and distribution alliances.

     We also expect our expenses to increase significantly due to the impact of
amortization expense and other charges resulting from completed and future
acquisitions. Leading Web sites, browser providers and other Internet
distribution channels may also begin to charge us for providing access to our
products and services. If any of these expenses are not accompanied by increased
revenues, our business, financial condition and operating results would be
harmed.

FLUCTUATIONS IN OUR QUARTERLY RESULTS MAY CAUSE OUR STOCK PRICE TO DECLINE.

     We expect that our quarterly operating results will fluctuate significantly
due to many factors, including:

     .    the seasonality of our revenues;

                                       6
<PAGE>


     .  the uncertain adoption of the Internet as an e-commerce and advertising
        medium;
     .  dependence on development and adoption of the e-commerce market;
     .  the level of demand for our products and services;
     .  intense and increased competition;
     .  our ability to develop, introduce and market new products and services,
        as well as enhancements to our existing products and services, on a
        timely basis;
     .  market conditions in the electronic components industry;
     .  the amount and seasonal nature of our electronic component sales;
     .  our dependence on content providers;
     .  license fees payable to content providers;
     .  uncertain acceptance of our Internet content;
     .  management of our growth; and
     .  risks associated with past and future acquisitions.

Many of these factors are beyond our control.

     In the course of our business, we may acquire securities of privately-held
companies with whom we form strategic relationships. Our quarterly operating
results may also fluctuate significantly due to accounting rules governing the
treatment of these investments. Specifically, before the market value of these
securities become readily determinable as a result of being tradable in a public
market, they are carried on our balance sheet at cost. However, if these non-
public securities become salable in the public market as a result of a
transaction in which such securities are exchanged for public securities, the
accounting rules require us to record a non-operating gain or loss equal to the
difference between our cost and the market value of such securities, regardless
of whether we sell or retain them. Our holdings in such securities are then
marked to market at the end of each quarter. In addition, if the market value of
an equity security in which we have invested becomes readily determinable and we
sell the security, we will realize a gain or loss on the transaction. These non-
recurring gains or losses may occur from time to time and could cause
significant fluctuations in our quarterly results. There can be no assurance
that we will realize any gain from our investments. Finally, if it is determined
that a decline in the fair value of one of our investments is other than
temporary, the investment may be deemed impaired and we would be required to
write-down or write-off the carrying value of our investment. Such a result may
be outside of our control and could adversely affect our stock price and
business.

     Due to the limited history of businesses relying on the Internet as an
advertising and commercial medium, we believe that period-to-period comparisons
of our operating results are not meaningful, and that such comparisons may not
be accurate indicators of future performance. Additionally, if our operating
results in one or more quarters do not meet the securities analysts' or our
shareholders' expectations, the price of our common stock may fall. In addition,
after our acquisition of NECX, quarterly fluctuations in exchange revenues may
disproportionately affect our revenues, due to their substantial contribution to
our overall revenues.

MARKETING AND DISTRIBUTION ALLIANCES MAY NOT GENERATE THE EXPECTED NUMBER OF NEW
CUSTOMERS OR MAY BE TERMINATED.

     We use marketing and distribution alliances with other Internet companies
to create traffic on our vertical trade communities and consequently, to
generate revenues. These marketing and distribution alliances allow us to link
our vertical trade communities to search engines such as those offered by Lycos.
The success of these relationships depends on the amount of increased traffic we
receive from the alliance partners' Web sites. These arrangements may not
generate the expected number of new customers. We also may be unable to renew
these marketing and distribution alliance agreements. If any of these agreements
are terminated, the traffic on our vertical trade communities could decrease and
cause revenues derived from our sales of advertising on co-branded pages to
decrease.

     In June 1999, as part of our overall reconsideration of our portal
alliances, we terminated a three-year sponsorship agreement with Excite, Inc.
Additionally, in October 1999, we terminated our sponsorship agreement with Alta
Vista. We are interested in entering into additional alliances with search
engine providers to increase traffic to our vertical trade communities, but we
cannot assure you that we will be able to enter into any new alliances. If we
are unable to enter into new arrangements, the traffic on our vertical trade
communities may not increase. Additionally, even if we are able to enter into
additional alliances with search engines, these alliances may not necessarily
increase the traffic on our vertical trade communities.


                                       7
<PAGE>


WE MAY ULTIMATELY BE UNABLE TO COMPETE IN THE MARKET FOR INTERNET PRODUCTS AND
SERVICES, ADVERTISING AND E-COMMERCE.

     The market for Internet products and services, advertising and e-commerce
is intensely competitive, evolving and subject to rapid technological change. We
expect competition to intensify as current competitors expand their product and
service offerings and new competitors enter the market. Barriers to entry are
minimal, and competitors can launch new Web sites at a relatively low cost. We
compete for a share of a customer's advertising budget with on-line services and
traditional off-line media, such as print publications and trade associations.
Several companies offer competitive vertical trade communities. We expect that
additional companies will offer competing vertical trade communities on a
standalone or portfolio basis.

     The market for e-commerce solutions in the electronic components industry,
although at an early stage of development, is also intensely competitive,
evolving and subject to rapid technological and other change.

     Our competitors in the electronic components industry vary in size and in
the scope and breadth of the services and features offered and include:

     .  component manufacturers;
     .  franchised and independent distributors;
     .  other market makers;
     .  electronic components brokers;
     .  on-line catalog aggregators;
     .  on-line excess surplus auction companies;
     .  enterprise software companies;
     .  e-procurement providers; and
     .  vertical content providers.

We expect the intensity of competition to increase in the future as the amount
of e-commerce transacted over the Internet grows. Increased competition may
result in reduced margins and loss of market share, either of which could
seriously harm our business.

     Many of our competitors have longer operating histories, greater brand
recognition and greater financial, technical, marketing and other resources than
we do, and may have well-established relationships with our existing and
prospective customers. This may place us at a disadvantage in responding to our
competitors' pricing strategies, technological advances, advertising campaigns,
strategic partnerships and other initiatives.  Our competitors may also develop
Internet products or services that are superior to, or have greater market
acceptance than, ours. If we are unable to compete successfully against our
competitors, our business, financial condition and operating results may be
negatively impacted.

WE MAY NOT REALIZE ANY RETURN ON OUR INVESTMENTS, AND MAY EVEN LOSE ENTIRE
INVESTMENTS UNDERTAKEN IN CONNECTION WITH STRATEGIC RELATIONSHIPS.

     In connection with strategic relationships that we enter, we are
increasingly asked to make equity investments in the companies with whom we form
relationships. We may never realize any return on these investments, which
generally exceed $1.0 million in each such instance. In fact, we may lose our
entire investment, which would materially and adversely affect our business and
financial condition. The success of any such investment is far from certain,
given that our partners have limited financial and other resources, yet are
subject to many of the same risks and uncertainties that we face in our
business, including limited operating histories, evolving revenue models and
uncertain market acceptance of their products and services. Moreover, we are
often unable to require terms and conditions of the investment (e.g., board
membership or observer rights) that are particularly favorable to us vis-a-vis
other investors. Allocating our financial resources to these types of
investments, rather than reinvesting those funds in our own business, may
ultimately cause our business to suffer.


                                       8
<PAGE>


ACQUISITIONS MAY DISRUPT OR OTHERWISE HAVE A NEGATIVE IMPACT ON OUR BUSINESS.

     We have made, and plan to continue to make, significant investments in
complementary Internet and non-Internet traditional companies, technologies and
assets. Acquisitions are subject to numerous risks including, without
limitation, the following:

     .  acquisitions may cause a disruption in our ongoing business, distract
        our management and other resources and make it difficult to maintain our
        standards, controls and procedures;
     .  we may acquire companies in markets in which we have little experience;
     .  we may not be able to retain key employees from acquired companies;
     .  we may not be able to integrate the services, products and personnel of
        any acquisition successfully into our operations;
     .  we may be required to incur debt or issue equity securities, which may
        be dilutive to existing shareholders, to pay for acquisitions;
     .  we may not realize any return on our investment and may even lose our
        entire investment and incur significant additional losses;
     .  our share price could decline following the market's reaction to our
        acquisitions;
     .  our amortization expense will increase as a result of acquisitions; and
     .  our interest deductions may be disallowed for federal income tax
        purposes.

THE INTEGRATION OF THE EXCHANGES INTO OUR OPERATIONS MAY NOT RESULT IN
ADDITIONAL REVENUES.

     We believe our acquisition of NECX and other exchanges could result in
substantially higher revenues for us. However, our ability to generate
substantially higher revenues is dependent on our ability to integrate off-line
exchange business with an on-line business. In the two-week period beginning
with our December 16, 1999 acquisition of NECX and ending on December 31, 1999,
NECX generated net revenues of approximately $2.3 million, all of which were
attributable to its off-line market-making business. By comparison, VerticalNet
generated net revenues of approximately $18.4 million in 1999, all of which were
derived from on-line advertising and e-commerce arrangements.

     To integrate the exchange into our vertical trade communities, we have
retained Computer Sciences Corporation to help design and build a new on-line
exchange for NECX. We expect this project to be expensive and time-consuming.
Customers who currently use NECX may no longer do so after the transition. There
can be no assurance that this project will be completed at the cost and on the
timeline that we currently contemplate. If we cannot integrate NECX's
traditional off-line business effectively into our on-line solution, whether due
to time, monetary or other limitations, or if we cannot retain existing
customers and attract new ones, the potential to generate additional revenues
through our exchange business may never be realized, which could adversely
affect our business, financial condition and operating results.

OUR ON-LINE EXCHANGE MAY NOT BE SUCCESSFUL IF IT IS NOT ADOPTED BY A SIGNIFICANT
NUMBER OF BUYERS AND SUPPLIERS.

     We are attempting to transition the off-line market-making business of NECX
into an on-line exchange. If we do not successfully transition those buyers and
suppliers who use NECX's off-line market-making business to an on-line exchange
and attract a significant number of additional buyers and suppliers to an on-
line exchange, our on-line exchange will not be widely accepted, which in turn
would limit the growth of our e-commerce revenues and could adversely affect our
business, financial condition and operating results.  Whether we can retain and
attract buyers and suppliers will depend in large part on our ability to design,
develop and implement a secure, user-friendly application with features and
functionality that buyers and suppliers find attractive in an e-commerce
solution and that provides substantial value to its users over their traditional
procurement methods.  Even if and after we launch our on-line exchange, buyers
and suppliers may continue purchasing and selling products through traditional
procurement methods, rather than adopting an Internet-based solution.  Buyers
and suppliers also may not use our on-line exchange if they do not perceive it
as a neutral marketplace that does not favor one participant over another.


                                       9
<PAGE>


THE ELECTRONICS INDUSTRY HAS HISTORICALLY EXPERIENCED CYCLES AND DOWNTURNS THAT
COULD ADVERSELY AFFECT OUR BUSINESS.

     General economic downturns and business cycles have historically had an
adverse economic effect upon participants in the electronics industry, including
hardware and component manufacturers, distributors and market makers such as
NECX and RW Electronics. In addition, lengthier life-cycles for existing
electronic products and delays in new product development and introduction can
affect demand for electronic hardware and components.  If economic downturns or
the cyclical nature of the electronic industry causes a reduction in the amount
of electronic components bought and sold, our business, financial condition and
operating results will be adversely affected.

IF WE ARE UNABLE TO MAINTAIN GROSS PROFIT MARGINS IN OUR EXCHANGE BUSINESS, OUR
OPERATING RESULTS WILL SUFFER.

     Gross profit margins in our exchange business are affected by numerous
factors, including the following:

     . component supply;
     . demand for components;
     . inventory levels held by electronic manufacturers and distributors;
     . component lead times;
     . product sales mix; and
     . our ability to purchase components at favorable prices.

     Many of these factors are beyond our control. To the extent any decrease in
our gross profit margins is not accompanied by either a proportional increase in
transaction volume or a proportional decrease in our operating expenses, our
operating results, and thus our business, will suffer.

IF OUR ADVERTISING REVENUES DECLINE, OUR BUSINESS WOULD SUFFER.

     We currently rely on revenues generated from the sale of advertising on our
vertical trade communities for a significant majority of our revenues.  If we do
not continue to increase advertising revenues and develop other sources of
revenues, our business may suffer. Our ability to increase our advertising
revenues depends on many factors, including without limitation:

     . advertisers' acceptance of the Internet as a legitimate advertising
       medium;
     . the development of a large base of users on our vertical trade
       communities who possess demographic characteristics attractive to
       advertisers; and
     . the expansion of our sales force.

Other factors could also affect our advertising revenues. For example,
widespread use of "filter" software programs that limit access to storefront
advertising from the Internet user's browser could reduce advertising on the
Internet, which would impair our business, financial condition and operating
results.

     Additionally, to some of our advertising customers, we provide extended
payment terms over the customer's advertising contract. To the extent that these
amounts are not collected, our advertising revenues, bad debt expense and
cashflows may be negatively impacted. We also have barter arrangements where we
provide banner advertisements and storefronts to some of our customers in
exchange for advertising on their Web sites or in their publications. If our
barter arrangements do not continue, our advertising revenues may decline. For
the year ended December 31, 1999, approximately $3.8 million, or 18.1%, of our
reported revenue was generated by barter advertising arrangements.

THE SEASONALITY OF OUR ADVERTISING REVENUES AND USAGE CAUSES OUR OVERALL
REVENUES TO FLUCTUATE.

     Some of our revenue is seasonal, which causes our revenues to be lower in
the second and third quarters of each calendar year. As a result, after the
announcement of our results for the second and third quarters of each calendar
year, our stock price may be lower than at other times of the year. We
experience seasonality in our advertising revenue because advertising and media
buying tends to be highest in the first and fourth quarters of each


                                      10
<PAGE>


calendar year. We also experience seasonality in our traffic. User traffic on
our vertical trade communities and the Web sites of our partners is lower during
the summer and year-end vacation and holiday periods, when business usage of the
Web and our services typically declines. In addition, we anticipate seasonality
in our exchange business, as sales of electronic components and hardware have
historically been highest in the last quarter of the calendar year. Thus,
quarterly fluctuations in exchange revenues may disproportionately affect our
revenues because of their substantial contribution to our overall revenues.

CHANGES IN INDUSTRY ADVERTISING RATES COULD NEGATIVELY IMPACT OUR REVENUES.

     Changes in industry pricing practices for advertising rates could
negatively impact our revenues in the future. Currently, we base our storefront
advertising rates on a variety of factors, including:

     .  the maturity of the particular vertical trade community;
     .  the number of storefronts;
     .  the amount of other advertising purchased; and
     .  the length of the advertising contract.

     In the future, advertising rates may be based on different criteria
matrices such as the number of sales inquiries generated or visitors sent from
our vertical trade communities to advertisers' Web sites. These changes could
negatively impact our revenues.

OUR INTERNET CONTENT MAY NOT ATTRACT USERS WITH DEMOGRAPHIC CHARACTERISTICS
VALUABLE TO OUR ADVERTISERS.

     Our future success depends in part upon our ability to deliver compelling
Internet content about various industries that will attract users with
demographic characteristics valuable to our advertising customers. If we are
unable to develop Internet content that attracts a loyal user base possessing
demographic characteristics attractive to advertisers, it could impair our
business, financial condition and operating results. In addition, we may be
unable to anticipate or respond to rapidly changing buyer preferences to attract
enough users to our vertical trade communities. Internet users can freely
navigate and instantly switch among a large number of Web sites. Many of these
Internet sites offer original content. It may therefore be difficult for us to
distinguish our content and attract users.

     We rely on third parties, such as trade publications and news wires, to
provide some of the content for our vertical trade communities. It is critical
to our business that we maintain and build our existing relationships with
content providers. We may not be able to maintain relationships with the third
parties we depend upon to provide the content for our vertical trade
communities, which could result in decreased traffic on our vertical trade
communities and decreased advertising revenue. Many of our agreements with
content providers are for initial terms of one to two years. The content
providers may choose not to renew the agreements or may terminate the agreements
early if we do not fulfill our contractual obligations, including our payment
obligations. If a significant number of content providers terminate our
agreements with them, it could result in decreased traffic on our vertical trade
communities and decreased advertising revenue. Because our agreements with
certain of our content providers are nonexclusive, a competitor could offer
content similar to or the same as ours.

THE LICENSE FEES WE PAY TO CONTENT PROVIDERS MAY INCREASE.

     If licensing fees to content providers increase, our business, financial
condition and operating results may be negatively impacted. These license fees
may increase as competition for such content increases. Our content providers
may not enter into new agreements with us on terms similar to those in as our
current agreements.

IF WE DO NOT DEVELOP THE "VERTICALNET" BRAND AND OUR VERTICAL TRADE COMMUNITY
AND OTHER BRANDS, OUR ADVERTISING REVENUES COULD DECREASE.

     To be successful, we must establish and strengthen the brand awareness of
the "VerticalNet" brand, as well as the brands associated with each individual
vertical trade community (e.g. wateronline.com) and our recent acquisitions,
including NECX. If our brand awareness is weakened, it could decrease the
attractiveness of our


                                      11
<PAGE>


audiences to advertisers, which could result in decreasing advertising revenues.
We believe that brand recognition will become more important in the future with
the growing number of Internet sites. Our brand awareness could be diluted,
which could impair our business, financial condition and operating results if
users do not perceive our products and services to be of high quality.

WE MAY NOT DEVELOP SIGNIFICANT REVENUES FROM E-COMMERCE, WHICH COULD ADVERSELY
AFFECT OUR FUTURE GROWTH.

     For the year ended December 31, 1999, approximately 6% of our revenues,
including exchange revenues, were generated from e-commerce. If we do not
generate increased revenue from e-commerce, our business, financial condition
and operating results could be impaired. To generate significant e-commerce
revenues, we will have to continue to build and acquire significant e-commerce
capabilities.

     Recent acquisitions to enhance our e-commerce capabilities include NECX,
Tradeum, Isadra, LabX, CertiSource and RW Electronics. These acquisitions may
not meet our expectations.

IF WE ARE UNABLE TO PROVIDE OUR CUSTOMERS AND USERS WITH REAL-TIME ACCURATE
PRODUCT INFORMATION, OUR E-COMMERCE STRATEGY WILL NOT SUCCEED.

     Currently, we are responsible for loading supplier product information into
our database and categorizing the information for search purposes. This process
entails a number of risks, including dependence on our suppliers to provide us
in a timely manner with accurate, complete and current information about their
products, and to promptly update this information when it changes. We will not
derive revenue from these products until this data is loaded in our database.
Timely loading of these products in our database depends upon a number of
factors, including the file formats of the data provided to us by suppliers and
our ability to further automate and expand our operations to load this data
accurately in our product database, any of which could delay the actual loading
of these products.

     In addition, we are generally obligated under our supplier agreements to
load updated product data onto our database within a specified period of time
following its delivery from the supplier. While we intend to further automate
the loading and updating of supplier data on our system, we may not be able to
do so in a timely manner, in part because achieving the highest level of this
automation is dependent upon our suppliers' automating their delivery of product
data to us. If our suppliers do not provide us in a timely manner with accurate,
complete and current information about the products we offer, our database may
be less useful to our customers and users and may expose us to liability.
Although we screen our suppliers' information before we make it available to our
customers and users, we cannot guarantee that the product information available
in our database will always be accurate, complete and current, or comply with
governmental regulations. This could expose us to liability or result in
decreased adoption and use of our vertical trade communities, which could reduce
our revenues and therefore have a negative effect on our business, results of
operations and financial condition.

IF OUR SUPPLIERS DO NOT PROVIDE TIMELY AND PROFESSIONAL DELIVERY OF PRODUCTS TO
OUR CUSTOMERS, OUR BUSINESS WILL BE HARMED.

     We rely on our suppliers and manufacturers to deliver products to our
customers in a professional, safe and timely manner. If our suppliers do not
deliver the products to our customers in a professional, safe and timely manner,
then our service will not meet customer expectations and our reputation and
brand will be damaged. In addition, deliveries that are nonconforming, late or
are not accompanied by information required by applicable law or regulations
could expose us to liability or result in decreased adoption and use of our
vertical trade communities, which could have a negative effect on our business,
results of operations and financial condition. In some instances, we bear the
responsibility for product refunds and returns and the risk of non-
collectibility of accounts receivable from our customers.

WE MAY NOT BE ABLE TO EFFECT OUR GROWTH STRATEGY IF WE ARE UNABLE TO COMPLETE
FUTURE ACQUISITIONS.

     We have been growing, and plan to continue to grow, our business through
acquisitions.  We may not be able to identify additional suitable acquisition
candidates available for sale at reasonable prices or on reasonable terms. Even
if we are able to identify an appropriate acquisition candidate, we may not be
able to negotiate the terms of the


                                      12
<PAGE>


acquisition successfully, finance the acquisition or integrate the acquired
business, products or technologies into our existing business operation. If we
are unable to complete future acquisitions, our business, financial condition
and operating results could be negatively impacted.

OUR RAPID GROWTH MAKES MANAGING OUR GROWTH EFFECTIVELY DIFFICULT.

     We have rapidly and significantly expanded our operations and expect to
continue to do so by adding new products, hiring new employees and acquiring new
businesses. This growth has placed, and is expected to continue to place, a
significant strain on our resources and systems. To manage our growth, we must
implement systems and train and manage our employees. If we fail to implement
systems, train and manage our employees or integrate our recent and future
acquisitions successfully, our business, financial condition and operating
results could be negatively impacted.

OUR BUSINESS IS SUSCEPTIBLE TO NUMEROUS RISKS ASSOCIATED WITH INTERNATIONAL
OPERATIONS.

     A substantial portion of our current business is based upon international
sales. We believe that our international sales will increase in the future. In
addition, we purchase a substantial amount of components from entities based in
foreign countries. We are subject to a number of risks and uncertainties
associated with these international business activities. These risks and
uncertainties generally include:

     .  difficulties in the enforcement of contractual obligations and
        intellectual property rights, including licensing rights;
     .  currency exchange rate fluctuations and higher duty rates;
     .  unexpected changes in regulatory requirements;
     .  tariffs, import and export controls and regulations and other trade
        barriers;
     .  longer accounts receivable payment cycles and difficulties in collecting
        accounts receivable;
     .  increased costs and difficulties in managing and staffing international
        operations;
     .  compliance with applicable United States and foreign laws, especially
        import/export requirements;
     .  potentially adverse tax consequences, including restrictions on the
        repatriation of earnings;
     .  the costs and burdens of complying with a wide variety of foreign laws
        and differing trade customs and practices;
     .  political instability; and
     .  potential transportation delays.

These factors may have a negative effect on current and future international
operations and, consequently, on our business, results of operations and
financial condition.

OUR INTERNATIONAL EXPANSION MAY MAKE IT MORE DIFFICULT TO MANAGE OUR BUSINESS.

     In February 2000, we announced the formation of VerticalNet Europe, a joint
venture with British Telecommunications, plc and Internet Capital Group and the
formation of VerticalNet Japan, a joint venture with Softbank Commerce Corp. We
intend to establish and promote European and Japanese business-to-business trade
communities through these new joint ventures. In June 1999, we entered into a
co-branding agreement with Metropolis Transactive (Proprietary) Limited, a South
African company creating on-line marketplaces focused on the African market. We
expect to further expand in international markets. To do so, we plan to
establish international operations, hire additional personnel and establish
relationships with additional suppliers and strategic partners. This expansion
will require significant management attention and financial resources and could
have a negative effect on our business, revenues, financial condition and
results of operations. We may not be able to create or sustain international
demand for our Internet-based, e-commerce business model and services. Even if
we are able to identify appropriate international joint venture partners, we may
not be able to negotiate the terms of the venture successfully, finance the
venture or integrate the venture partner's business, products or technology into
our existing business operation, or we may become dependent on our joint venture
partners.


                                      13
<PAGE>


RISK OF FAILURE OF OUR COMPUTER AND COMMUNICATIONS HARDWARE SYSTEMS INCREASES
WITHOUT BACK-UP FACILITIES.

     The performance of our computer and communications hardware systems is
critical to our business and reputation and our ability to process transactions,
provide high quality customer service and attract and retain customers,
suppliers, users and strategic partners. Any system interruptions that cause our
vertical trade communities to be unavailable to users may reduce the
attractiveness of our vertical trade communities to advertisers, buyers and
suppliers and could impair our business, financial condition and operating
results. We maintain most of our computer systems in two Web-hosting facilities
in New Jersey. We do not currently have back-up or redundant facilities for our
computer systems.  Interruptions could result from natural disasters as well as
power loss, telecommunications failure and similar events.

CAPACITY LIMITS ON OUR TECHNOLOGY, TRANSACTION PROCESSING SYSTEM AND NETWORK
HARDWARE AND SOFTWARE MAY BE DIFFICULT TO PROJECT AND WE MAY NOT BE ABLE TO
EXPAND AND UPGRADE OUR SYSTEMS TO MEET INCREASED USE.

     As traffic in our vertical trade communities continues to increase, we must
expand and upgrade our technology, transaction processing systems and network
hardware and software. We may not be able to accurately project the rate of
increase in our vertical trade communities. In addition, we may not be able to
expand and upgrade our systems and network hardware and software capabilities to
accommodate increased use of our vertical trade communities. If we do not
appropriately upgrade our systems and network hardware and software, our
business, financial condition and operating results will suffer.

     Our acquisitions of Isadra and Tradeum, and their respective technologies,
may not be successfully integrated into our existing technology. Additionally,
we may be unsuccessful in utilizing Tradeum's technology to build the on-line
platform for NECX.

OUR MARKET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE, WHICH WE MAY NOT BE
ABLE TO KEEP UP WITH IN A COST-EFFECTIVE WAY.

     Our market is characterized by rapid technological change and frequent new
product announcements. Significant technological changes could render our
existing vertical trade community technology obsolete. If we are unable to
respond to these developments successfully or do not respond in a cost-effective
way, our business, financial condition and operating results will suffer. To be
successful, we must adapt to our rapidly changing market by continually
improving the responsiveness, services and features of our vertical trade
communities, by developing new features to meet customer needs and by
successfully developing and introducing new versions of our Internet-based e-
commerce business model on a timely basis. Our success will depend, in part, on
our ability to acquire or license leading technologies useful in our business,
enhance our existing services and develop new services and technology that
address the needs of our customers. We will also need to respond to
technological advances and emerging industry standards in a cost-effective and
timely basis.

WE MAY NOT BE ABLE TO ACQUIRE OR MAINTAIN EASILY IDENTIFIABLE WEB ADDRESSES OR
PREVENT THIRD PARTIES FROM ACQUIRING WEB ADDRESSES SIMILAR TO OURS.

     We currently hold various Internet Web addresses relating to our brands.
These Web addresses include wateronline.com, wirelessdesignonline.com,
pollutiononline.com and other Web addresses. We may not be able to prevent third
parties from acquiring Web addresses that are similar to our addresses, which
could impair our business, financial condition and operating results. The
acquisition and maintenance of Web addresses generally is regulated by
governmental agencies and their designees. For example, in the United States,
the National Science Foundation has appointed Network Solutions, Inc. as the
exclusive registrar for the ".com," ".net" and ".org" generic top-level
addresses. The regulation of Web addresses in the United States and in foreign
countries is subject to change. We may not be able to acquire or maintain
relevant Web addresses in all countries where we conduct business. Furthermore,
the relationship between regulations governing such addresses and laws
protecting trademarks is unclear.


                                      14
<PAGE>


OUR INTERESTS MAY CONFLICT WITH THOSE OF INTERNET CAPITAL GROUP, OUR LARGEST
SHAREHOLDER, WHICH MAY AFFECT OUR BUSINESS STRATEGY AND OPERATIONS NEGATIVELY.

     As a result of its stock ownership and board representation, Internet
Capital Group, Inc. is in a position to significantly affect our business
strategy and operations, including corporate actions such as mergers or takeover
attempts, in a manner that could conflict with the interests of our public
shareholders. At March 15, 2000, Internet Capital Group beneficially owned
24,590,020 shares, or 33.5%, of our common stock. In addition, at March 15,
2000, Internet Capital Group owned warrants to purchase an additional 478,624
shares of our common stock and $5.0 million of our convertible subordinated
debentures, convertible into 250,000 shares of our common stock. Two
representatives of Internet Capital Group remain on our board of directors. We
may compete with Internet Capital Group for Internet-related opportunities.
Internet Capital Group seeks to expand its number of business-to-business
assets, in part through acquisitions and investments. Internet Capital Group,
therefore, may seek to acquire or invest in companies that we would find
attractive. While we may partner with Internet Capital Group on future
acquisitions or investments, we have no current contractual obligations to do
so. We do not have any contracts or other understandings that would govern
resolution of this potential conflict. This competition, and the potential
conflict posed by the designated directors, may deter companies from partnering
with us and may limit our business opportunities.

     Additionally, in order to avoid registration under the Investment Company
Act of 1940, Internet Capital Group may need to own more than 25% of our voting
securities. If its ownership interest falls below 25%, Internet Capital Group
may need to either liquidate its position entirely or purchase additional voting
securities to return to an ownership interest of at least 25% in order to avoid
having to register as an investment company. The possible need of Internet
Capital Group to maintain a 25% ownership position could influence its decisions
regarding actions that may otherwise be in the best interest of our public
shareholders.

OUR SUCCESS DEPENDS ON OUR KEY PERSONNEL WHO WE MAY NOT BE ABLE TO RETAIN, AND
WE MAY NOT BE ABLE TO HIRE ENOUGH ADDITIONAL PERSONNEL TO MEET OUR HIRING NEEDS.

     We believe that our success depends on continued employment of our senior
management team. If one or more members of our senior management team were
unable or unwilling to continue in their present positions, our business,
financial condition and operating results could be materially adversely
affected. Only one member of our senior management has an employment agreement.
We carry key person life insurance on certain, but not on all, of our senior
management personnel.

     Our success also depends on having a highly trained technical staff, sales
force and telesales group. Our telesales group was formed recently. We will need
to continue to hire additional personnel as our business grows. A shortage in
the number of trained technical salespeople could limit our ability to design,
develop and implement our e-commerce solutions and other technology, increase
sales in our existing vertical trade communities and sell as we launch new
vertical trade communities.

     We plan to expand our employee base to manage our anticipated growth.
Competition for personnel, particularly for employees with technical expertise,
is intense. Our business, financial condition and operating results will be
impaired if we cannot hire and retain suitable personnel.

OUR SUCCESS DEPENDS ON THE DEVELOPMENT OF THE E-COMMERCE MARKET, WHICH IS
UNCERTAIN.

     Business-to-business e-commerce is a new and emerging business practice
that remains largely untested in the marketplace and depends on the increased
acceptance and use of the Internet as a medium of commerce. If e-commerce does
not grow or grows more slowly than expected, our business will suffer. Our long-
term success depends on widespread market acceptance of e-commerce.

     A number of factors could prevent such acceptance, including the following:

     .  buyers may be unwilling to shift their purchasing from traditional
        vendors to online vendors;
     .  the necessary network infrastructure for substantial growth in usage of
        the Internet may not be adequately developed;


                                      15
<PAGE>


     .  customers and suppliers may be unwilling use online vendors due to
        security and confidentiality concerns;
     .  increased government regulation or taxation may adversely affect the
        viability of e-commerce;
     .  insufficient availability of telecommunication services or changes in
        telecommunication services could result in slower response times or
        inconsistent service quality;
     .  adverse publicity and concerns about the security and confidentiality of
        e-commerce transactions could discourage its acceptance and growth;
     .  lack of human contact that current traditional suppliers provide; and
     .  lack of availability of cost-effective, high-speed Internet service.

ADOPTION OF THE INTERNET AS AN ADVERTISING MEDIUM IS UNCERTAIN.

     The growth of Internet advertising requires validation of the Internet as
an effective advertising medium. This validation has not yet fully occurred.
Acceptance of the Internet among advertisers will also depend on growth in the
commercial use of the Internet. If widespread commercial use of the Internet
does not develop, or if the Internet does not develop as an effective and
measurable medium for advertising, our business, financial condition and
operating results could suffer. No standards have been widely accepted to
measure the effectiveness of Internet advertising. If such standards do not
develop, existing advertisers may not continue their current levels of Internet
advertising and advertisers who are not currently advertising on the Internet
may be reluctant to do so. Our business, financial condition and operating
results would suffer if the market for Internet advertising fails to develop or
develops slower than expected.

SECURITY RISKS AND CONCERNS MAY DETER THE USE OF THE INTERNET FOR CONDUCTING E-
COMMERCE.

     The secure transmission of confidential information over the Internet is
essential to maintaining customer and supplier confidence. Concerns regarding
security of transactions and transmitting confidential information over the
Internet may negatively impact our e-commerce business. We believe that concern
regarding the security of confidential information transmitted over the
Internet, such as credit card numbers, prevents many potential customers from
engaging in on-line transactions. If we do not add sufficient security features
to future product releases, our products may not gain market acceptance or we
may incur additional legal exposure. We have included basic security features in
some of our products to protect the privacy and integrity of customer data, such
as password requirements for access to portions of our vertical trade
communities. We currently use authentication technology, which requires
passwords and other information to prevent unauthorized persons from accessing a
customer's information. We also use encryption technology, which transforms
information into a "code" designed to be unreadable by third parties, to protect
confidential information such as credit card numbers in commerce transactions.

     Despite the measures we have taken, our infrastructure is potentially
vulnerable to physical or electronic break-ins, viruses or similar problems. If
a person circumvents our security measures, he or she could misappropriate
proprietary information or cause interruptions in our operations. Security
breaches that result in access to confidential information could damage our
reputation and expose us to a risk of loss or liability. We may be required to
make significant investments and efforts to protect against or remedy security
breaches. Additionally, as e-commerce becomes more prevalent (and consequently
becomes the focus of our development of direct marketing products), our
customers will become more concerned about security. If we do not adequately
address these concerns, this could impair our business, financial condition and
operating results.

LIMITED INTERNET INFRASTRUCTURE MAY AFFECT SERVICE.

     The accelerated growth and increasing volume of Internet traffic may cause
performance problems, which would slow the adoption of our Internet-based
purchasing solution. The growth of Internet traffic due to very high volumes of
use over a relatively short period of time has caused frequent periods of
decreased Internet performance, delays and, in some cases, system outages. This
decreased performance is caused by limitations inherent in the technology
infrastructure supporting the Internet and the internal networks of Internet
users. If Internet usage continues to grow rapidly, the infrastructure of the
Internet and its users may be unable to support the demands of growing e-
commerce usage, and the Internet's performance and reliability may decline. If
our existing or potential customers experience frequent outages or delays on the
Internet, the adoption or use of our Internet-based,


                                      16
<PAGE>


e-commerce business model may grow more slowly than we expect or even decline.
Our ability to increase the speed and reliability of our Internet-based business
model is limited by and depends upon the reliability of both the Internet and
the internal networks of our existing and potential customers. As a result, if
improvements in the infrastructure supporting both the Internet and the internal
networks of our customers and suppliers are not made in a timely fashion, we may
have difficulty obtaining new customers or maintaining our existing customers,
either of which could reduce our potential revenues and have a negative impact
on our business, results of operations and financial condition.

WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS AND MAY INFRINGE THE
PROPRIETARY RIGHTS OF OTHERS.

     Proprietary rights are important to our success and our competitive
position. As of March 20, 2000, we own and use 22 trademarks registered with the
United States Patent and Trademark Office ("PTO"). Additionally, we have 23
applications for registration of various trademarks pending with the PTO.
Outside of the United States, as of March 20, 2000, we own and use 6 trademarks
registered with various foreign patent and trademark offices and have 26
applications pending with foreign patent and trademark offices. Although we seek
to protect our proprietary rights, we may be unable to protect our trademarks
and other proprietary rights adequately or to prevent others from claiming
violations of their trademarks and other proprietary rights. Generally, our
domain names for our vertical trade communities cannot be protected as
trademarks because they are considered "generic" under applicable law. In
addition, effective copyright and trademark protection may be unavailable or
limited in certain countries, and the global nature of the Internet makes it
impossible to control the ultimate destination of our work. We also license
content from third parties, which makes it possible that we could become subject
to infringement actions based upon the content licensed from those third
parties. We generally obtain representations as to the origin and ownership of
such licensed content and indemnification from those third parties; however,
this may not adequately protect us. Any of these claims, regardless of their
merit, could subject us to costly litigation and the diversion of our technical
and management personnel.

WE MAY BE SUBJECT TO LEGAL LIABILITY FOR PUBLISHING OR DISTRIBUTING CONTENT OVER
THE INTERNET.

     We may be subject to legal claims relating to the content in our vertical
trade communities, or the downloading and distribution of such content. For
example, persons may bring claims against us if material that is inappropriate
for viewing by young children can be accessed from our vertical trade
communities. Claims could also involve matters such as defamation, invasion of
privacy and copyright infringement. Providers of Internet products and services
have been sued in the past, sometimes successfully, based on the content of
material. In addition, some of the content provided on our vertical trade
communities is drawn from data compiled by other parties, including governmental
and commercial sources, and we re-key the data. This data may have errors. If
our content is improperly used or if we supply incorrect information, it could
result in unexpected liability. Our insurance may not cover claims of this type,
or may not provide sufficient coverage.  Our business, financial condition and
operating results could suffer materially if costs resulting from these claims
are not covered by our insurance or exceed our coverage.

WE MAY BE EXPOSED TO PRODUCT LIABILITY AND OTHER COMMERCIAL CLAIMS.

     We face potential liability for claims based on the nature of the products
that we sell and distribute, including those sales utilizing the Internet,
including claims for breach of warranty, product liability, misrepresentation,
violation of governmental regulations and other commercial claims. Most of the
manufacturers whose products we distribute have warranties on those products. We
pass that warranty through to our customers whenever possible. However, in some
instances we bear the risk of loss of revenue from the product sale if a
purchaser does not pay for a defective product. Although we maintain general
liability insurance, our insurance may not cover some claims or penalties, is
subject to policy limits and exclusions and may not adequately indemnify us or
our employees from any civil, governmental or criminal liability. Furthermore,
this insurance may not be available at commercially reasonable rates in the
future. Any liability not covered by our insurance or in excess of our insurance
coverage could have a negative effect on our business, financial condition and
operating results.


                                      17
<PAGE>


WE ARE SUBJECT TO GOVERNMENT REGULATION THAT EXPOSES US TO POTENTIAL LIABILITY
AND NEGATIVE PUBLICITY.

     We currently rely upon our suppliers to meet all packaging, distribution,
labeling, hazard and health information notices to purchasers, record keeping
and licensing requirements applicable to our business during the entire
transaction. Our reliance on suppliers' regulatory due diligence assessment of
purchasers and the compliance by suppliers and purchasers with applicable
governmental regulations may not be sufficient if we are required to have our
own licenses. For example, if we are held to be a seller or a distributor of
regulated products because we took legal title, we may have inadvertently
violated some governmental regulations by not having the appropriate license or
permit and may be subject to potentially severe civil or criminal penalties and
fines for each offense. We are unable to verify that our suppliers have in the
past complied, or will in the future comply, with the applicable governmental
regulatory requirements, or that their actions are adequate or sufficient to
satisfy all governmental or other legal requirements that may be applicable to
our sales. We could be fined or exposed to civil or criminal liability,
including monetary fines and injunctions, and we could receive potential
negative publicity, if the applicable governmental regulatory requirements have
not been, or are not being, fully met by our suppliers or by us directly.
Negative publicity, fines and liabilities could also occur if an unqualified
person, or even a qualified customer, lacks the appropriate license or permits
to sell, use or ship, or improperly receives a dangerous or unlicensed product
through us. We do not maintain any reserve for potential liabilities resulting
from government regulation.

     It is also possible that a number of laws and regulations may be adopted or
interpreted in the United States and abroad with particular applicability to the
Internet. These laws and regulations may, for example, cover issues such as user
privacy, freedom of expression, pricing, content and quality of products and
services, taxation, advertising, intellectual property rights, access charges
and information security. The enactment of such laws could have a negative
effect on our business, financial condition and operating results.

WE MAY NOT HAVE SUFFICIENT CASH FLOW TO SERVICE OUR DEBT.

     As of December 31, 1999, we had approximately $118.1 million in long term
debt (including the current portion). Currently, we are not generating
sufficient cash flow to satisfy the annual debt service payments required as a
result of our September 1999 offering of convertible subordinated debentures. If
we are unable to satisfy our debt service requirements, substantial liquidity
problems could result, which would negatively impact our future prospects.

WE MAY REQUIRE ADDITIONAL CAPITAL FOR OUR OPERATIONS, WHICH COULD HAVE A
NEGATIVE EFFECT ON OUR SHAREHOLDERS.

     We currently anticipate that the net proceeds of our September 1999
offering of debentures and the pending sale of our Series A 6% convertible
redeemable preferred stock and a warrant to Microsoft, together with our
existing borrowing arrangements, current investments (including equity interests
in other entities) and other available funds, will be sufficient to meet our
anticipated needs for working capital and capital expenditures for at least the
next 12 months. We may need to raise additional funds in the future to fund
rapid expansion, pursue customer sales and implementation, develop new or
enhanced solutions and services, respond to competitive pressures or acquire
complementary businesses, technologies or services.

     If we raise additional funds through the issuance of equity or convertible
debt securities, the percentage ownership of our shareholders will be reduced,
shareholders may experience additional dilution and these securities may have
powers, preferences and rights that are senior to those of the rights of our
common stock. We cannot be certain that additional financing will be available
on terms favorable to us, if at all. If adequate funds are not available or not
available on acceptable terms, we may be unable to fund our expansion, promote
our brand identity, take advantage of acquisition opportunities, develop or
enhance services or respond to competitive pressures. Any inability to do so
could have a negative effect on our business, revenues, financial condition and
results of operations.

SHARES ELIGIBLE FOR FUTURE SALE BY OUR CURRENT SHAREHOLDERS MAY CAUSE OUR STOCK
PRICE TO DECLINE.

     If our shareholders sell substantial amounts of our common stock, including
shares issued upon the exercise of outstanding options and warrants, in the
public market, then the market price of our common stock could fall.


                                      18
<PAGE>


     As of April 10, 2000, the holders of up to approximately 38,044,920 shares
of common stock, warrants to purchase 2,290,416 shares of common stock and
Series A 6.00% convertible redeemable preferred stock convertible into 1,151,080
shares of common stock have demand or piggy-back registration rights. The
exercise of such rights could adversely affect the market price of our common
stock. We have also filed a registration statement to register shares of common
stock under our stock option and employee stock purchase plans. Shares issued
upon exercise of stock options and employee stock purchase plans will be
eligible for resale in the public market without restriction.

ANTI-TAKEOVER PROVISIONS AND OUR RIGHT TO ISSUE PREFERRED STOCK COULD MAKE A
THIRD-PARTY ACQUISITION OF US DIFFICULT.

     VerticalNet is a Pennsylvania corporation. Anti-takeover provisions of
Pennsylvania law could make it more difficult for a third party to acquire
control of us, even if such change in control would be beneficial to our
shareholders. Our articles of incorporation provide that our board of directors
may issue preferred stock without shareholder approval. In addition, our bylaws
provide for a classified board, with each board member serving a staggered
three-year term. The issuance of preferred stock and the existence of a
classified board could make it more difficult for a third party to acquire us.

OUR COMMON STOCK PRICE IS LIKELY TO REMAIN HIGHLY VOLATILE.

     The market price of our common stock has been and will likely continue to
be highly volatile as the stock market in general, and the market for Internet-
related and technology companies in particular, has been highly volatile.
Investors may not be able to resell their shares of our common stock following
periods of volatility because of the market's adverse reaction to such
volatility. The trading prices of many technology and Internet-related
companies' stocks have reached historical highs within the last 52 weeks and
have reflected relative valuations substantially above historical levels. During
the same period, such companies' stocks have also been highly volatile and have
recorded lows well below such historical highs. Our stock may not trade at the
same levels as other Internet stocks, and Internet stocks in general may not
sustain their current market prices.

     Factors that could cause such volatility may include, among other things:

     .  actual or anticipated variations in quarterly operating results;
     .  announcements of technological innovations;
     .  new sales models or new products or services;
     .  changes in financial estimates by securities analysts;
     .  conditions or trends in the Internet industry;
     .  changes in the market valuations of other Internet companies;
     .  failure to meet analysts' expectations;
     .  announcements by us or our competitors of significant acquisitions,
        strategic partnerships or joint ventures;
     .  capital commitments;
     .  additions or departures of key personnel;
     .  sales of common stock; and
     .  stock market price and volume fluctuations, which are particularly
        common among highly volatile securities of Internet companies.

     Many of these factors are beyond our control. These factors may cause the
market price of our common stock to fall, regardless of our operating
performance.

THE YEAR 2000 PROBLEM MAY STILL HAVE AN ADVERSE EFFECT ON OUR BUSINESS.

     We could possibly face problems or disruptions in our business as a result
of the Year 2000 problem and are continuing to assess potential issues. It is
possible that errors or defects remain undetected or that dates other than
January 1 or February 29 trigger Year 2000 type problems. We may realize
exposure and risk if the systems on which we are dependent to conduct our
operations are not Year 2000 compliant. Our potential areas of exposure include
products purchased from third parties, computers, software and other equipment
used internally. If our past and present efforts to address the Year 2000
compliance issues are not successful, or if distributors, suppliers and other
third parties with which we conduct business do not successfully address such
issues, our business, operating results and financial position could be harmed.
If our Web-hosting facilities are not Year 2000 compliant, our production Web
sites would be unavailable and we would not be able to deliver services to our
users. If our production and operational facilities that support our Web sites
are not Year 2000 compliant, small portions of our Web sites may become
unavailable.


                                      19
<PAGE>



THE DEBENTURES ARE SUBORDINATED TO ANY EXISTING AND FUTURE SENIOR DEBT.

     The debentures are contractually subordinated in right of payment to our
existing and future Senior Debt. As of April 1, 2000, we had Senior Debt,
through our wholly-owned subsidiary NECX.com LLC, of $47.19 million. The
indenture does not limit the creation of additional Senior Debt (or any other
indebtedness) of ours or our subsidiaries. Any significant additional
indebtedness incurred may materially adversely impact our ability to service our
then existing debt, including the debentures. Due to the subordination
provisions, in the event of our insolvency, funds which we would otherwise use
to pay the holders of the debentures will be used to pay the holders of Senior
Debt to the extent necessary to pay the Senior Debt in full. As a result of
these payments, our general creditors may recover less, ratably, than the
holders of our Senior Debt and such general creditors may recover more, ratably,
than the holders of our debentures or our other subordinated indebtedness. In
addition, the holders of our Senior Debt may, under certain circumstances,
restrict or prohibit us from making payments on the debentures. See "Description
of the Debentures--Subordination."

THERE IS A LIMIT ON THE RIGHT TO REQUIRE REPURCHASE OF THE DEBENTURES.

     If our common stock is no longer publicly traded or in certain
circumstances involving a Change of Control, the holders of the debentures may
require us to repurchase some or all of the holder's debentures. We cannot
assure you that we will have sufficient financial resources at such time or
would be able to arrange financing to pay the repurchase price of the
debentures. Our ability to repurchase the debentures in such event may be
limited by law, the indenture, by the terms of other agreements relating to our
Senior Debt and as such indebtedness and agreements may be entered into,
replaced, supplemented or amended from time to time. We may be required to
refinance our Senior Debt in order to make such payments. We may not have the
financial ability to repurchase the debentures if payment for our Senior Debt is
accelerated. See "Description of the Debentures--Repurchase at Option of
Holders Upon a Change of Control."



AN ACTIVE TRADING MARKET FOR THE DEBENTURES HAS NOT DEVELOPED.

     Our debentures are a new issue of securities for which there is currently
an insignificant trading market. Although the debentures are traded in the
PORTAL market, we cannot predict whether an active trading market for the
debentures will develop or be sustained. If an active trading market were to
develop, the debentures could trade at prices that may be lower than the initial
offering price and the resale price. Whether or not the debentures could trade
at lower prices depends on many factors, including:

     . prevailing interest rates and the markets for similar securities;

     . general economic conditions; and

     . our financial condition, historic financial performance and future
       prospects.

     If an active market for the debentures fails to develop further or be
sustained, the trading price of the debentures could fall.

                                       20
<PAGE>

                           FORWARD-LOOKING STATEMENTS

     Our disclosure and analysis in this prospectus contain some forward-looking
statements. Forward-looking statements give our current expectations or
forecasts of future events. You can identify these statements by the fact that
they do not relate strictly to historical or current facts. Such statements may
include words such as "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe" and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance. In particular,
these include among other things, statements relating to e-commerce strategy,
acquisition and expansion strategy, development of services, use of proceeds,
projected capital expenditures, liquidity, development of additional revenue
sources, development and maintenance of profitable marketing and distribution
alliances, market acceptance of the Internet, acquisition and/or development of
profitable new vertical trade communities, technological advancement, ability to
develop "brand" identification and global expansion.

     Any or all of our forward-looking statements in this prospectus may turn
out to be wrong. They can be affected by inaccurate assumptions we might make or
by known or unknown risks and uncertainties. Many factors mentioned in our
discussion in this prospectus will be important in determining future results.
Consequently, no forward-looking statement can be generated. Actual future
results may vary materially.

     We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
reports to the SEC on Forms 10-K, 10-Q and 8-K. Also note that we provide a
cautionary discussion of risks and uncertainties under "Risk Factors" on page
6 of this prospectus. These are factors that we think could cause our actual
results to differ materially from expected results. Other factors besides those
listed here could also adversely affect us. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.


                                USE OF PROCEEDS

     We will not receive any proceeds from the resale of the debentures and the
common stock issuable upon conversion of the debentures offered through this
prospectus.


                       RATIO OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
                                           Year Ended December 31,
                                  --------------------------------------

                                  1996      1997     1998       1999
                                  -----    ------   -------    ---------
                                             (in thousands)
        <S>                       <C>      <C>      <C>        <C>
        Deficiency of
         earnings to cover
           fixed charges(1)....   $ 709    $4,779  $13,594     $53,480
</TABLE>

________________

(1)  For the periods indicated, earnings were inadequate to cover fixed charges.
For purposes of determining the deficiency of earnings to fixed charges, loss is
defined as losses from continuing operations.


                                      21
<PAGE>

                         DESCRIPTION OF THE DEBENTURES

     The debentures were issued under an indenture between us and the Trustee,
Bankers Trust Company. The terms of the debentures include those provided in the
indenture and those provided in the registration rights agreement that we
executed with the initial purchasers.

     The following description of provisions of the debentures is not complete
and is subject to, and qualified in its entirety, by reference to the
debentures, the indenture and the registration rights agreement.

General

     The debentures are general unsecured obligations of VerticalNet and are
subordinated to all of our existing and future Senior Debt and convertible into
our common stock as described below under "--Conversion Rights." As of April 1,
2000, we had Senior Debt, through our wholly-owned subsidiary, NECX.com LLC, of
$47.19 million. The debentures have an aggregate principal amount of
$115,000,000, and will mature on September 27, 2004, unless redeemed earlier by
us or repurchased by us at the option of the holder upon the occurrence of a
Change of Control (as defined below).

     The interest on the debentures accrues from September 27, 1999 at a rate of
5 1/4% per year, subject to adjustments upon a Reset Transaction. Interest is
payable semi-annually on March 27 and September 27 of each year to holders of
record at the close of business on the preceding March 13 and September 13,
respectively, commencing on March 27, 2000. We pay interest on the debentures by
check mailed to the holders. However, a holder of the debentures with an
aggregate principal amount in excess of $5,000,000 may be paid by wire transfer
in immediately available funds at the election of the holder. Interest is
computed on the basis of a 360-day year comprised of twelve 30-day months.

     The principal may be paid, and the debentures may be converted or
registered for transfer and exchange, without charge, at our office or agency in
New York City, which will initially be an office or agency of the Trustee in New
York City. See "--Form, Denomination and Registration" for information as to any
debentures held by Qualified Institutional Buyers.

     The Indenture does not contain any financial covenants or restrictions on
the payment of dividends, the repurchase of our securities or the incurrence of
any other indebtedness by us. The Indenture does not contain any protection to
holders of the debentures in the event of a highly leveraged transaction or a
Change of Control of VerticalNet except to the extent described under "--
Repurchase at Option of Holders upon Change of Control" below.

     The debentures and the common stock issuable upon conversion of the
debentures may not be sold or otherwise transferred except in compliance with
the provisions set forth below under Transfer Restrictions.


Interest Rate Adjustments

     If a Reset Transaction occurs, the interest rate will be adjusted to the
Adjusted Interest Rate (as defined below) beginning the date of such Reset
Transaction to the day before any subsequent Reset Transaction.

     A "Reset Transaction" means:

     .    a merger, consolidation or statutory share exchange involving our
          shares of common stock into which the debentures are convertible at
          the time;

     .    a sale of all or substantially all of our assets; or

     .    a recapitalization of our common stock or a distribution in which the
          debentures would be convertible into (1) shares of an entity whose
          common shares had a Dividend Yield for the four fiscal quarters before
          the public announcement of such transaction that was more than 2.5%
          higher than the Dividend Yield on our common stock (or other common
          stock issuable upon conversion of the debentures) for the same period,

                                       22
<PAGE>

          or (2) shares of an entity announcing a dividend policy prior to the
          effective date of a transaction which, if implemented, would result in
          at least a 2.5% increase in the Dividend Yield of such entity's common
          stock for the next four fiscal quarters.

     The "Adjusted Interest Rate" for any Reset Transaction will be the annual
rate that is the average between the rates quoted by two dealers engaged in the
trading of convertible securities selected by us or our successor as the rate at
which the interest rate should accrue so that the fair market value, expressed
in dollars, of a debenture immediately following (1) the public announcement of
such Reset Transaction or (2) the public announcement of a change in dividend
policy in connection with such Reset Transaction, whichever is later, will equal
the average Trading Price (as defined below) of a debenture for the 20 trading
days preceding the public announcement of such Reset Transaction.  Such Adjusted
Interest Rate will not be less than 5 1/4% per year.

     The "Dividend Yield" of a security will be the dividends paid or proposed
to be paid pursuant to an announced dividend policy divided by, if with respect
to dividends paid on such security, the average Closing Price (as defined in the
debenture) of such security during such period and, if with respect to dividends
proposed to be paid on such security, the Closing Price of such security on the
date of the related Reset Transaction.

     The "Trading Price" of a security is:

     .    the closing sale price (or, if none are reported, the last reported
          sale price) of a security (regular way) on the New York Stock Exchange
          on such date;

     .    if the security is not listed on the New York Stock Exchange, the
          closing sale price as reported in the composite transactions for the
          principal United States securities exchange on which that security is
          listed;

     .    if the security is not listed on a United States national or regional
          securities exchange, the closing sale price as reported by the Nasdaq
          Stock Market, Inc.;

     .    if the security is not so reported, the price quoted by Interactive
          Data Corporation or, if Interactive Data Corporation is not quoting
          such price, a similar quotation service selected by us;

     .    if the security is not so quoted, the average of the mid-point of the
          last bid and ask prices for that security from at least two dealers
          recognized as market-makers for that security; or

     .    if that security is not so quoted, the average of the last bid and ask
          prices for that security from a dealer engaged in the trading of
          convertible securities.


Conversion Rights

     The holders of the debentures may, at any time prior to the final maturity
date of the debentures, convert any remaining debentures or any portion (in
multiples of $1,000) into our common stock, initially at a conversion price of
$20, subject to adjustments as described below. Except as described below, no
adjustment will be made on the conversion of any debenture for any accrued
interest or dividends paid on any common stock.

     If the debentures are converted after a record date for an interest payment
but before the next interest payment date, the debentures, other than those
called for redemption, must be accompanied by a payment equal to the interest
payable on the next interest payment date on the principal amount of the
debentures. No such payment will be required if we exercise our right to redeem
such debentures on a redemption date that is an interest payment date. We are
not required to issue fractional shares of common stock upon conversion of the
debentures and instead will pay a cash adjustment based upon the market price of
our common stock on the last business day before the date of such conversion. In
the case of the debentures called for redemption, the conversion rights will
expire at the close of business on the second business day preceding the
redemption date, unless we default in the payment of the redemption price.

                                       23
<PAGE>

     A holder may exercise the right of conversion of any debenture by
delivering the debenture to the specified office of a conversion agent, with a
completed notice of conversion, together with any funds that may be required.
The conversion date will be the date on which the debentures, the notice of
conversion and any required funds have been so delivered. A holder delivering a
debenture for conversion will not be required to pay any taxes or duties
relating to the issuance or delivery of the common stock for such conversion,
but will be required to pay any tax or duty which may be payable relating to any
transfer involved in the issuance or delivery of the common stock in a name
other than the holder of the debenture. Certificates representing shares of
common stock will be issued or delivered only after all applicable taxes and
duties payable by the holder have been paid. If any debenture is converted
within two years after its original issuance, the common stock will not be
issued or delivered in a name other than that of the holder of such debenture
unless the applicable restrictions on transfer have been satisfied. See
"Transfer Restrictions."

     The initial conversion price will be adjusted for events, including:

     .    the issuance of common stock as a dividend or distribution on our
          common stock;

     .    certain subdivisions and combinations of our common stock;

     .    the issuance to all holders of our common stock, certain rights or
          warrants to purchase our common stock below the current market price;

     .    the dividend or other distribution to all holders of our common stock
          or shares of our capital stock (other than common stock) or evidences
          of our indebtedness or our assets (including securities, but excluding
          those rights, warrants, dividends and distributions referred to above
          and dividends and distributions in connection with a reclassification,
          change, consolidation, merger, combination, sale or conveyance
          resulting in a change in the conversion consideration or dividends or
          distributions paid exclusively in cash);

     .    dividends or other distributions consisting exclusively of cash to all
          holders of our common stock to the extent that such distributions,
          combined together with (1) all other such all-cash distributions made
          within the preceding 12 months for which no adjustment has been made
          plus (2) any cash and the fair market value of other consideration
          paid for any tender offers by us or any of our subsidiaries for our
          common stock completed within the preceding 12 months for which no
          adjustment has been made, exceeds 10% of our market capitalization
          (being the product of the then current market price of our common
          stock times the number of shares of our common stock then outstanding)
          on the record date for such distribution; and

     .    the purchase of our common stock pursuant to a tender offer made by us
          or any of our subsidiaries to the extent that it involves an aggregate
          consideration that, together with (1) any cash and the fair market
          value of any other consideration paid in any other tender offer by us
          or any of our subsidiaries for our common stock expiring within the 12
          months preceding such tender offer for which no adjustment has been
          made plus (2) the aggregate amount of any such all-cash distributions
          referred to in the clause above to all holders of our common stock
          within 12 months preceding the expiration of such tender offer in
          respect of which no adjustments have been made, exceeds 10% of our
          market capitalization on the expiration of the tender offer.

     No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the conversion price in
effect at such time. Any adjustment that would otherwise be required will be
carried forward and taken into account in any subsequent adjustment. Except as
stated above, the conversion price will not be adjusted for the issuance of our
common stock or any securities convertible into or exchangeable for our common
stock or carrying the right to purchase any of the foregoing.

     In the case of (1) a dividend or other distribution to all holders of our
common stock, of shares of our capital stock (other than common stock),
evidences of our indebtedness, cash or other assets; or (2) dividends or other
distributions consisting exclusively of cash to all holders of our common stock,
we do not have to adjust the conversion price. Instead, we can reserve cash for
distribution upon conversion. The holder will receive the full

                                       24
<PAGE>

amount of cash it would have received if the holder had, immediately prior to
the record date for the cash distribution, converted the debentures into common
stock.

     In the case of (1) any reclassification or change of our common stock
(other than changes resulting from a subdivision or combination) or (2) a
consolidation, merger or combination involving us or a sale or conveyance to
another corporation of all or substantially all of our property and assets, in
each case as a result of which holders of our common stock shall be entitled to
receive stock, other securities, other property or assets (including cash or any
combination of the foregoing) in exchange for such common stock, the holders of
the outstanding debentures will be entitled to convert such debentures into the
kind and amount of shares of stock, other securities, other property or assets
(including cash or any combination of the foregoing) which they would have owned
or been entitled to receive upon such reclassification, change, consolidation,
merger, combination, sale or conveyance had such debentures been converted into
common stock immediately before such reclassification, change, consolidation,
merger, combination, sale or conveyance. We may not become a party to any such
transaction unless the terms thereof are consistent with the above.

     In the event of a taxable distribution to holders of our common stock (or
other transaction) resulting in any adjustment of the conversion price, the
holders of the debentures may, in certain circumstances, be deemed to have
received a distribution subject to United States income tax as a dividend; and
in certain other circumstances, the absence of such an adjustment may result in
a taxable dividend to the holders of common stock. See "Certain United States
Federal Income Tax Considerations."

     We may from time to time reduce the conversion price of the debentures by
any amount for any period of at least 20 days, as permitted by law, in which
case we will give at least 15 days' notice of such decrease. We may make such
reductions in the conversion price, in addition to those set forth above, as our
board of directors deems advisable to avoid or diminish any income tax to
holders of our common stock resulting from any dividend or distribution of stock
(or rights to acquire stock) or from any event treated as such for income tax
purposes.


Optional Redemption

     Provisional Redemption.  We may redeem (the "Provisional Redemption") some
or all of the debentures, at any time prior to September 27, 2002 (the
"Provisional Redemption Date"), at a redemption price equal to 101.3125% of
the principal amount of debentures, plus any accrued and unpaid interest
(including liquidated damages) to, but excluding, the Provisional Redemption
Date, if (1) the shelf registration covering resales of the debentures and the
common stock issuable upon conversion of the debentures is effective and
available for use and is expected to remain effective and available for use for
the 30 days following the Provisional Redemption Date and (2) the Current Market
Value (as defined) of our common stock equals or exceeds the following
triggering percentages of the conversion price then in effect for at least 20
trading days in any consecutive 30-day trading period ending on the trading day
prior to the date of mailing of the notice of the Provisional Redemption (the
"Notice Date"), if redeemed in the 12-month period ending on September 26 of
the following years:


                             Trigger
                             -------
          Year              Percentage
          ----              ----------

          2000...........         170%
          2001...........         160%
          2002...........         150%


     We intend to redeem all or part of the debentures upon, or shortly after,
the effectiveness of this registration statement as long as the market price of
our common stock exceeds the above thresholds. Upon any Provisional Redemption,
we will make an additional payment (the "Interest Make-Whole Payment") with
respect to the debentures called for redemption, including those debentures
converted into common stock between the Notice Date and the Provisional
Redemption Date, in an amount equal to the sum of (1) the present value of the
aggregate amount of the interest that would otherwise have accrued from the
Provisional Redemption Date through September 26, 2002 (the "Interest Make-
Whole Period") and (2) liquidated damages, if any, to the Provisional
Redemption Date. Such present value shall be calculated using the bond
equivalent yield on U.S. Treasury notes or bills having a term nearest in length
to that of the Interest Make-Whole Period as of the Notice Date. We are
obligated to make the

                                       25
<PAGE>

Interest Make-Whole Payment on all debentures called for Provisional Redemption,
regardless of whether those debentures are converted prior to the Provisional
Redemption Date.

     The "Current Market Value" means the average of the high and low sale
prices of our common stock, as reported on the Nasdaq National Market or any
national securities exchange on which our common stock is then listed, on such
trading day.

     Subsequent Optional Redemption. At any time on or after September 27, 2002,
we may redeem some or all of the debentures on at least 20 but not more than 60
days' notice, at the following prices, together with accrued and unpaid interest
to, but excluding, the date fixed for redemption. If a redemption date is an
interest payment date, the semi-annual payment of interest becoming due on such
date will be payable to the holder of record as of the applicable record date
and the redemption price will not include such interest payment.

     If redeemed during the period beginning on September 27 and ending on
September 26 of the following year:



               Year                   Redemption Price
               ----                   ----------------
      2002..........................      101.3125%
      2003 and thereafter...........         100.0%


     If we do not redeem all of the debentures at one time, the Trustee will
select the debentures to be redeemed in principal amounts of $1,000, or its
integral multiples, by lot or on a pro rata basis. If any debentures are to be
redeemed in part only, a new debenture or debentures in principal amount equal
to the unredeemed principal portion will be issued. If a portion of a holder's
debentures is selected for partial redemption and such holder converts a portion
of such debentures, such converted portion shall be deemed to be taken from the
portion selected for redemption.

     No sinking fund is provided for the debentures.

Repurchase at Option of Holders Upon a Change of Control

     If a Change of Control occurs, each holder of the debentures shall have the
right to require us to repurchase all of such holder's debentures not yet called
for redemption or any portion of the remaining principal amount that is equal to
$1,000, or its integral multiple, not less than 30 nor more than 45 days after
the date of the company notice, at a repurchase price equal to 100% of the
principal amount of the debentures to be repurchased, together with interest
accrued and unpaid to but excluding the date of such repurchase.

     We may, instead of paying the repurchase price in cash, pay the repurchase
price in common stock if we satisfy the following conditions: (1) our common
stock has a fair market value greater than or equal to the repurchase price; (2)
a registration statement covering the common stock is effective; (3) blue sky or
state securities laws are satisfied; (4) the common stock is listed for trading
on a U.S. national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States immediately prior
to such repurchase date; and (5) the shares of common stock are issued out of
our authorized but unissued common stock and are free of any preemptive rights.
The fair market value shall be determined by us and be equal to 95% of the
average of the closing prices of our common stock for the five consecutive
trading days ending on and including the third trading day immediately preceding
the repurchase dates.

     Within 30 days after the occurrence of a Change of Control, we must give
notice to all holders of the debentures, as provided in the indenture, of the
occurrence of such Change of Control and of the repurchase right arising as a
result. We must also deliver a copy of the notice sent to the holders of the
debentures to the Trustee and cause such notice, or a summary of the information
in the notice, to be published in a newspaper of general circulation in the City
of New York. To exercise the repurchase right, a holder of the debentures must
deliver on or before the 30th day after the date of the company notice a written
notice to the Trustee of the exercise of such right, together with the
debentures with respect to which the right is being exercised.

     A Change of Control will be deemed to have occurred when the following has
occurred:

                                       26
<PAGE>

     .    the direct or indirect acquisition by any person, including any
          syndicate or group deemed to be a "person" under Section 13(d)(3) of
          the Exchange Act, of beneficial ownership through a purchase, merger
          or other acquisition transaction or series of transactions of shares
          of our capital stock entitling the person to exercise 50% or more of
          the combined voting power of all of the then outstanding shares of our
          capital stock entitled to vote generally in elections of directors,
          other than any acquisition by us, any of our subsidiaries or any of
          our employee benefit plans; or

     .    any consolidation or merger of us with or into any other person, any
          merger of another person into us or any conveyance, transfer, sale,
          lease or other disposition of all or substantially all of our
          properties and assets to another person, other than (a) any such
          transaction (x) that does not result in any reclassification,
          conversion, exchange or cancellation of outstanding shares of our
          capital stock and (y) pursuant to which holders of our capital stock
          immediately prior to such transaction have the right to exercise,
          directly or indirectly, 50% or more of the total voting power of all
          shares of the capital stock entitled to vote generally in the election
          of directors of the continuing or surviving entity immediately after
          such transaction and (b) any merger solely for the purpose of changing
          our jurisdiction of incorporation and results in a reclassification,
          conversion or exchange of outstanding shares of our common stock
          solely into shares of common stock of the surviving entity.

     However, a Change of Control will not be deemed to have occurred if the
closing sales price per share of our common stock for any five trading days
within the period of ten consecutive trading days ending immediately after the
later of the Change of Control or the public announcement of the Change of
Control, in the case of a Change of Control under the first clause above, or the
period of ten consecutive trading days ending immediately before the Change of
Control, in the case of a Change of Control under the second clause above,
equals or exceeds 110% of the conversion price of the debentures in effect on
each such trading day. The beneficial owner will be determined in accordance
with Rule 13d-3 of the Exchange Act. The term person includes any syndicate or
group which would be deemed to be a person under Section 13(d)(3) of the
Exchange Act.

     Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to holders of
the debentures. We will comply with this rule to the extent applicable at that
time.

     We may, to the extent permitted by applicable law, purchase the debentures
in the open market or by tender at any price or by private agreement. Any
debenture so purchased may, to the extent permitted by applicable law, be
reissued or resold, or be surrendered to the Trustee for cancellation. Any
debentures surrendered to the Trustee may not be reissued or resold and will be
canceled promptly.

     The foregoing provisions do not necessarily afford holders of the
debentures protection in the event of highly leveraged or other transactions
involving us that may adversely affect such holders.

     Our ability to repurchase the debentures upon the occurrence of a Change of
Control is subject to important limitations. We cannot assure you that we will
have the financial resources, or would be able to arrange financing, to pay the
repurchase price for all the debentures that might be delivered by holders of
the debentures seeking to exercise the repurchase right. Our failure to
repurchase the debentures when required following a Change of Control would
result in an event of default under the indenture whether or not such repurchase
is permitted by the subordination provisions of the indenture. Any such default
may, in turn, cause a default under our Senior Debt. See "--Subordination."


Subordination

     The debentures are subordinated in right of payment, as set forth in the
indenture, to the prior payment in full of all our existing and future Senior
Debt. The indenture provides that in the event of any distribution of our assets
upon our dissolution, winding up, liquidation or reorganization, the holders of
Senior Debt shall first be paid in respect of all such Senior Debt in full in
cash or other payment satisfactory to the holders of Senior Debt before we make
any payments of principal, or any premium, and interest (including liquidated
damages) on the debentures In

                                       27
<PAGE>

addition, in the event the debentures are accelerated because of an event of
default, the holders of our Senior Debt then outstanding would be entitled to
payment in full in cash or other payment satisfactory to the holders of Senior
Debt of all obligations in respect of such Senior Debt before the holders of the
debentures are entitled to receive any payment or distribution. The indenture
requires that we promptly notify holders of Senior Debt if payment of the
debentures is accelerated because of an event of default.

     Thus, in the event of our insolvency, funds which we would otherwise use to
pay the holders of the debentures will be used to pay the holders of Senior Debt
to the extent necessary to pay Senior Debt in full in cash or other payment
satisfactory to the holders of the Senior Debt. As a result of these payments,
our general creditors may recover less, ratably, than holders of Senior Debt and
such general creditors may recover more, ratably, than holders of the
debentures.

     The term "Senior Debt" means the principal of, premium, if any, interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
termination payment with respect to, and all fees, costs, expenses and other
amounts accrued or due on or in connection with, our Indebtedness (as defined
below), whether outstanding on the date of the indenture or subsequently
created, incurred, assumed, guaranteed or in effect guaranteed by us (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing), unless in the case of any
particular Indebtedness, the instrument creating or evidencing such Indebtedness
or its assumption or guarantee expressly provides that such Indebtedness shall
not be senior in right of payment to the debentures or expressly provides that
such Indebtedness is pari passu or junior to the debentures. Notwithstanding the
foregoing, the term Senior Debt shall not include our Indebtedness to any of our
subsidiaries for which we own, directly or indirectly, a majority of its voting
stock.

 The term "Indebtedness" means, with respect to any person:

     .    all indebtedness, obligations and other liabilities (contingent or
          not) of such person for borrowed money (including our obligations in
          respect of overdrafts, and any loans or advances from banks, whether
          or not evidenced by notes or similar instruments) or evidenced by
          bonds, debentures, notes or other instruments for the payment of
          money, or incurred in connection with the acquisition of any property,
          services or assets (whether or not the recourse of the lender is to
          the whole of the assets of such person or to only a portion), other
          than any account payable or other accrued current liability or
          obligation to trade creditors incurred in the ordinary course of
          business in connection with the obtaining of materials or services;

     .    all reimbursement obligations and other liabilities (contingent or
          not) of such person with respect to letters of credit, bank
          guarantees, bankers' acceptances, surety bonds, performance bonds or
          other guaranty of contractual performance;

     .    all obligations and liabilities (contingent or not) in respect of (y)
          leases of such person required, in conformity with generally accepted
          accounting principles, to be accounted for as capitalized lease
          obligations on the balance sheet of such person, and (z) any lease or
          related documents (including a purchase agreement) in connection with
          the lease of real property which provides that such person is
          contractually obligated to purchase or cause a third party to purchase
          the leased property and thereby guarantee a minimum residual value of
          the leased property to the landlord and the obligations of such person
          under such lease or related document to purchase or to cause a third
          party to purchase the leased property;

     .    all obligations of such person (contingent or not) with respect to an
          interest rate or other swap, cap or collar agreement or other similar
          instrument or agreement or foreign currency hedge, exchange, purchase
          or similar instrument or agreement (including any foreign exchange
          contract, currency exchange agreements and interest rate protection
          agreements);

     .    all direct or indirect guaranties or similar agreements by such person
          in respect of, and obligations or liabilities (contingent or not) of
          such person to purchase, acquire or assure a creditor against loss in

                                       28
<PAGE>

          respect of, indebtedness, obligations or liabilities of another person
          of the kind described in the above clauses;

     .    any indebtedness or other obligations described in the first four
          clauses above secured by any mortgage, pledge, lien or other
          encumbrance existing on property which is owned or held by such
          person, regardless of whether the indebtedness or other obligation
          secured thereby shall have been assumed by such person; and

     .    any and all deferrals, renewals, extensions and refundings of, or
          amendments, modifications or supplements to, any indebtedness,
          obligation or liability of the kind described in the above clauses.

     The debentures are our obligations exclusively and are subordinated to all
future and existing Indebtedness (including trade payables) of our subsidiaries.
The indenture does not limit the amount of Indebtedness or other liabilities our
subsidiaries may incur. Our ability to make required interest, principal,
repurchase, cash conversion or redemption payments on the debentures may be
impaired as a result of the obligations of our subsidiaries. Our subsidiaries
are separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the debentures or to make any
funds available for such payments, whether by dividends, loans or other
payments. Any right of ours to receive assets of any of our subsidiaries upon
the latter's liquidation or reorganization (and the consequent right of the
holders of the debentures to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors, except to the extent
that we are ourselves recognized as a creditor of the subsidiary, in which case
our claims would still be subordinate to any security interests in the assets of
the subsidiary and any indebtedness of such subsidiary senior to that held by
us. At April 1, 2000, we had Senior Debt, through our wholly-owned subsidiary,
NECX.com LLC, of $47.19 million.

     We are obligated to pay reasonable compensation to the Trustee and to
indemnify the Trustee against any losses, liabilities or expenses incurred by it
in connection with its duties relating to the debentures. The Trustee's claims
for such payments are senior to those of holders of the debentures in respect of
all funds collected or held by the Trustee.


Events of Default

     Each of the following constitutes an event of default:

     .    if we fail to pay when due the principal of or premium, if any, on any
          of the debentures at maturity, upon redemption or exercise of a
          redemption at the option of a holder of debentures upon a Change of
          Control or otherwise, whether or not such payment is prohibited by the
          subordination provisions of the indenture;

     .    if we fail to pay an installment of interest (including any liquidated
          damages, if any) on any of the debentures for 30 days after the date
          when such interest is due, whether or not such payment is prohibited
          by the subordination provisions of the indenture;

     .    if we fail to perform or observe any other term, covenant or agreement
          contained in the debentures or the indenture for a period of 60 days
          after written notice of such failure, requiring us to remedy such
          failure, and such notice has been given to us by the Trustee or to us
          and the Trustee by the holders of 25% in aggregate principal amount of
          the debentures then outstanding;

     .    (1) if we fail to make any payment by the end of any applicable grace
          period, after the maturity of any Indebtedness for borrowed money in
          an amount in excess of $1,000,000, or (2) if any Indebtedness for
          borrowed money in an amount in excess of $1,000,000 is accelerated
          because of a default with respect to the Indebtedness without such
          Indebtedness having been discharged or such acceleration having been
          cured, waived, rescinded or annulled, in both cases for a period of 30
          days after written notice to us by the Trustee or to us and the
          Trustee by holders of not less than 25% in aggregate principal amount
          of the debentures then outstanding; and

     .    if certain events of bankruptcy, insolvency or reorganization with
          respect to us have occurred.

                                      29
<PAGE>

     The indenture provides that the Trustee will, within 90 days of the
occurrence of a default, give to the registered holders of the debentures notice
of all uncured defaults known to it, but the Trustee will be protected in
withholding such notice if it, in good faith, determines that the withholding of
such notice is in the best interest of such registered holders, except in the
case of a default in the payment of the principal of, or premium, if any, or
interest on, any of the debentures when due or in the payment of any redemption
or repurchase obligation.

     If an event of default has occurred and is continuing, the Trustee or the
holders of 25% in aggregate principal amount of the debentures then outstanding
may declare the debentures due and payable at their principal amount together
with accrued interest, and thereupon the Trustee may, at its discretion, proceed
to protect and enforce the rights of the holders of the debentures by
appropriate judicial proceedings. Such declaration may be rescinded or annulled
either with the written consent of the holders of a majority in aggregate
principal amount of the debentures then outstanding or a majority in aggregate
principal amount of the debentures represented at a meeting at which a quorum
(as specified under "--Meetings, Modifications and Waiver") is present, in each
case upon the conditions provided in the indenture.

     The indenture entitles the Trustee, subject to the duty of the Trustee
during the default to act with the required standard of care, to be indemnified
by the holders of the debentures before proceeding to exercise any right or
power under the indenture at the request of such holders. The indenture provides
that the holders of a majority in aggregate principal amount of the debentures
then outstanding through their written consent, or the holders of a majority in
aggregate principal amount of the debentures represented at a meeting at which a
quorum is present by a written resolution, may direct the time, method and place
of conduct any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred upon the Trustee.

     We are required to furnish annually to the Trustee a statement as to the
fulfillment of our obligations under the indenture.

Consolidation, Merger or Assumption

     We may, without the consent of the holders of the debentures, consolidate
with, merge into or transfer all or substantially all of our assets to any other
corporation organized under the laws of the United States or any of its
political subdivisions, provided that (1) the surviving corporation assumes all
of our obligations under the indenture and the debentures, (2) at the time of
such transaction, no event of default, and no event which, after notice or lapse
of time, would become an event of default, has happened and is continuing and
(3) certain other conditions are met.

Meetings, Modifications and Waiver

     The indenture contains provisions for convening meetings of the holders of
the debentures to consider matters affecting their interests.

     The indenture (including the terms and conditions of the debentures) may be
modified or amended by us and the Trustee, without the consent of the holder of
any debenture, for the purposes of, among other things:

     .    adding to our covenants for the benefit of the holders of debentures;

     .    surrendering any right or power conferred upon us;

     .    providing for conversion rights of holders of the debentures in the
          event of any reclassification or change of our common stock or any
          consolidation, merger or sale of all or substantially all of our
          assets;

     .    evidencing the succession of another corporation to VerticalNet and
          the assumption by such successor of our covenants and obligations
          under the indenture and in the debentures;

                                       30
<PAGE>

     .    reducing the conversion price, provided that the reduction does not
          adversely affect the interests of holders of the debentures in any
          material respect;

     .    complying with the requirements of the Securities and Exchange
          Commission in order to effect or maintain the qualification of the
          indenture under the Trust Indenture Act of 1939, as amended;

     .    curing any ambiguity or correcting or supplementing any defective
          provision contained in the indenture, provided that such modification
          or amendment does not, in the good faith opinion of our Board of
          Directors and the Trustee, adversely affect the interests of the
          holders of the debentures in any material respect; or

     .    making any other provisions which we and the Trustee may deem
          necessary or desirable and which will not adversely affect the
          interests of the holders of the debentures in any material respect.

     Modifications and amendments to the indenture or to the terms and
conditions of the debentures may also be made, and any past default by us may be
waived, either (1) with the written consent of the holders of at least a
majority in aggregate principal amount of the debentures at the time outstanding
or (2) by the adoption of a resolution at a meeting by at least a majority in
aggregate principal amount of the debentures represented at such meeting.
However, no such modification, amendment or waiver may, without the written
consent or the affirmative vote of the holder of each debenture so affected:

     .    change the maturity of the principal of or any installment of interest
          on any such debenture (including any payment of liquidated damages);

     .    reduce the principal amount of, or any premium or interest on
          (including any payment of liquidated damages) any such debenture;

     .    change the currency of payment of such debenture or its interest;

     .    impair the right to sue for the enforcement of any payment on or with
          respect to any such debenture;

     .    modify our obligations to maintain an office or agency in New York
          City;

     .    except as otherwise permitted or contemplated by provisions concerning
          corporate reorganizations, adversely affect the repurchase option of
          holders upon a Change of Control or the conversion rights of holders
          of the debentures;

     .    modify the subordination provisions of the debentures in a manner
          adverse to the holders of debentures;

     .    reduce the percentage in aggregate principal amount of debentures
          outstanding necessary to modify or amend the indenture or to waive any
          past default; or

     .    reduce the percentage in aggregate principal amount of debentures
          outstanding required for the adoption of a resolution or the quorum
          required at any meeting of holders of debentures at which a resolution
          is adopted.

     The quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the
debentures at the time outstanding and, at any reconvened meeting adjourned for
lack of a quorum, 25% of such aggregate principal amount.

Satisfaction and Discharge

     We may discharge our obligations under the indenture while the debentures
remain outstanding if (1) all outstanding debentures will become due and payable
at their scheduled maturity within one year or (2) all outstanding debentures
are scheduled for redemption within one year, and, in either case, we have
deposited with the

                                       31
<PAGE>

Trustee an amount sufficient to pay and discharge all outstanding debentures on
the date of their scheduled maturity or the scheduled date of redemption.

Form, Denomination and Registration

     The debentures were issued in fully registered form, without coupons, in
multiples of $1,000 of principal.

     Global Debentures; Book-Entry Form. Except as provided below, the
debentures sold to Qualified Institutional Buyers, as defined in Rule 144A under
the Securities Act ("QIBs"), were evidenced by one or more global debentures
which were deposited with the Trustee as custodian for The Depository Trust
Company in New York City ("DTC") and registered in the name of DTC or Cede &
Co. ("Cede"), as DTC's nominee. The global debentures (and any debentures
issued in exchange for them) are subject to certain transfer restrictions and
bear a legend regarding such restrictions as described below in "Transfer
Restrictions." Record ownership of the global debentures may only be
transferred, in whole or in part, to another nominee of DTC or to a successor of
DTC or its nominee, except as set forth below.

     A QIB may hold its interests in the global debentures directly through DTC
if such QIB is a participant in DTC, or indirectly through organizations which
are participants in DTC. Transfers between participants are made according to
DTC rules and are settled in same-day funds. Since the laws of some states
require physical delivery of securities, the ability to transfer a beneficial
interest in the global debentures may be limited.

     Any beneficial interest in a global debenture that is transferred in the
form of an interest in other global debentures, upon transfer, ceases to be an
interest in such global debenture and becomes an interest in such other global
debenture. It is then subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other global debenture while it
remains such an interest. All interests in the global debentures are subject to
the procedures and requirements of DTC.

     QIBs may beneficially own interests in the global debentures held by DTC
only through participants, or banks, brokers, dealers, trust companies and other
parties that directly or indirectly clear through or maintain a custodial
relationship with a participant. As long as Cede remains the registered owner of
the global debentures, Cede will be considered the sole holder of the global
debentures. Except as provided below, owners of beneficial interests in the
global debentures are not entitled to have certificates registered in their
names, have not received physical delivery of certificates and are not
considered holders of such global debentures.

     We wire principal and interest payments on the debentures to Cede. We and
the Trustee treat Cede as the owner of the global debentures for all purposes.
Accordingly, we, the Trustee and any paying agent have no direct responsibility
or liability to pay amounts due on the global debentures to owners of beneficial
interests in the global debentures.

     It is DTC's current practice, upon receipt of any payment of principal and
interest, to credit the participants' accounts on the payment date in amounts
proportionate to their respective beneficial interests in the debentures
represented by the global debentures, as shown on the records of DTC, unless DTC
believes it will not receive payment. Payments by participants to owners of
beneficial interests in the debentures represented by the global debentures held
through such participants is the responsibility of such participants, as is now
the case with securities held for the accounts of customers registered in street
name.

     If you would like to convert your debentures into common stock pursuant to
the terms of the debentures, you should contact your broker or other participant
or indirect participant to obtain information on procedures, including proper
forms and cut-off times, for submitting such requests.

     Because DTC can only act on behalf of the participants, who in turn act on
behalf of indirect participants and other banks, your ability to pledge your
interest in the debentures represented by global debentures to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such interest, may be limited by the lack of a physical certificate.

                                       32
<PAGE>

     Neither we nor the Trustee (nor any registrar, paying agent or conversion
agent under the indenture) has any responsibility for the performance by DTC or
its participants or indirect participants of their respective obligations under
the rules and procedures governing their operations. DTC has advised us that it
will take any action permitted by a holder of the debentures (including, the
presentation of the debentures for conversion as described below) only at the
direction of a participant to whose account the interests in the global
debentures are credited and only for the principal amount of such debentures.

     DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was
created to hold securities for its participants and to facilitate the clearance
and settlement of securities transactions between the participants through
electronic book-entry charges to their participants' accounts, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations such as the initial purchasers.
Certain participants (or their representatives) may own interests in DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that directly or indirectly clear through, or
maintain a custodial relationship with, a participant.

     Although DTC has agreed to these procedures in order to facilitate
transfers of interests in the global debentures among the participants of DTC,
it is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. If DTC is at any time unwilling
or unable to continue as depositary and a successor depositary is not appointed
by us within 90 days, we will cause the debentures to be issued in definitive
form in exchange for the global debentures. None of us, the Trustee or any of
their respective agents has any responsibility for the performance by DTC, its
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations, including maintaining,
supervising or reviewing the records relating to, or payments made on account
of, beneficial ownership interests in global debentures.

     DTC management is aware that some computer applications, systems and the
like for processing data that are dependent upon calendar dates, including dates
before, on and after January 1, 2000, may encounter "Year 2000 problems." DTC
has informed its participants and other members of the financial community that
it has developed and is implementing a program so that its systems, as the same
relates to the timely payment of distributions (including principal and interest
payments) to securityholders, book-entry deliveries and settlement of trades
within DTC, continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.

     However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has informed its participants and other members of the
financial community that it is contacting (and will continue to contact) third-
party vendors from whom DTC acquires services to: (i) impress upon them the
importance of such services being Year 2000 compliant and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.

     According to DTC, the foregoing information with respect to DTC has been
provided to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty or contract modification of any kind.

     Certificated Debentures. Debentures sold to a limited number of "accredited
investors" as defined in Rule 501(a)(1), (2), (3), (5), (6) or (7) under the
Securities Act who are not QIBs were issued in certificated, fully registered
form and may not be represented as a global debenture. QIBs could request that
its debenture be issued in certificated form and may request at any time that
its interest in a global debenture be exchanged for a debenture in certificated
form. Certificated debentures may also be issued in exchange for debentures
represented by the global

                                       33
<PAGE>

debentures if no successor depositary is appointed by us as described above or
in certain other circumstances set forth in the indenture.

     Restrictions on Transfer; Legends. The debentures are subject to certain
transfer restrictions as described above under "Transfer Restrictions" and
certificates evidencing the debentures bear a legend to that effect.


Governing Law

     The indenture and the debentures and the rights and duties of the parties
under each are governed by, and construed in accordance with, the law of the
State of New York.


Information Concerning the Trustee

     We have appointed Bankers Trust Company, as Trustee under the indenture, as
paying agent, conversion agent, registrar and custodian with regard to the
debentures. American Stock Transfer & Trust Company is the transfer agent for
our common stock. The Trustee or its affiliates may in the future provide
banking and other services to us in the ordinary course of their business.


Registration Rights

     The Registration Rights Agreement entered into upon the initial closing of
the offering of the debentures required us to register the debentures and the
common stock issuable upon conversion of the debentures, at our expense, with
the SEC no later than February 19, 2000. However, if VerticalNet suspends the
use of this prospectus (which is part of this registration statement) for a
period in excess of 45 days (60 days under certain circumstances relating to
pending corporate developments, public filings with the Commission and similar
events), in any three-month period, or in excess of 90 days in any 12-month
period, additional interest as liquidated damages will accrue on the debentures.
The liquidated damages will accrue at a rate per year of one quarter of one
percent (.25%) of the principal amount, to and including the 90th day following
the occurrence of such events and at a rate of one half of one percent (.5%) of
the principal amount from and after the 91st day following the occurrence of
such event.

                                       34
<PAGE>

                                SELLING HOLDERS

     The debentures were originally issued by VerticalNet and sold by the
initial purchasers in a transaction exempt from the registration requirements of
the Securities Act of 1933 to persons reasonably believed by such initial
purchasers to be qualified institutional buyers or other institutional
accredited investors. Selling holders, which term includes their transferees,
pledgees or donees or their successors, may from time to time offer and sell
pursuant to this prospectus any or all of the debentures and common stock into
which the debentures are convertible.

     The following table sets forth information, as of April 11, 2000, with
respect to the selling holders and the respective principal amounts of
debentures beneficially owned by each selling holder that may be offered
pursuant to this prospectus.  The information is based on information provided
by or on behalf of the selling holders.  The selling holders may offer all, some
or none of the debentures or common stock into which the debentures are
convertible.  Because the selling holders may offer all or some portion of the
debentures or the common stock, no estimate can be given as to the amount of the
debentures or the common stock that will be held by the selling holders upon
termination of any such sales.  In addition, the selling holders identified
below may have sold, transferred or otherwise disposed of all or a portion of
their debentures since the date on which they provided the information regarding
their debentures in transactions exempt from the registration requirements of
the Securities Act.


<TABLE>
<CAPTION>

                                                 Principal Amount of
                                                 Notes Beneficially
                                                  Owned and Offered      Common Stock Owned Prior              Common Stock
Name                                             Hereby (1) // (2) /     to the Offering / (1) //(2)/      Offered Hereby /(2)/
- ----                                             -------------------     -----------------------------     --------------------
<S>                                              <C>                     <C>                               <C>
Lehman Brothers, Inc.                                 $29,623,000                 1,481,150                      1,481,150
AIG SoundShore Holdings Ltd.                          $23,483,000                 3,592,150                      1,174,150
JMG Triton Offshore Fund Ltd.                           6,150,000                   307,500                        307,500
Forest Global Convertible Fund Series A-5               5,390,000                   269,500                        269,500
AIG SoundShore Strategic Holding Fund Ltd.              5,304,000                 1,003,200                        265,200
Guardian Life Insurance Co.                             4,500,000                   225,000                        225,000
JMG Capital Partners, LP                                3,750,000                   187,500                        187,500
J.P. Morgan Securities Inc.                             3,750,000                   187,500                        187,500
Nomura Securities International Inc.                    2,600,000                   159,920                        130,000
AIG SoundShore Opportunity Holding
Fund Ltd.                                               2,233,000                   955,650                        111,650
BancBoston Robertson Stephens                           1,900,000                    95,000                         95,000
Alexandra Global Investment Fund 1 Ltd.                 1,500,000                    75,000                         75,000
RCG Multi-Strategy Account, L.P.                        1,500,000                    75,000                         75,000
Forest Fulcrum Fund LP                                  1,212,000                    60,600                         60,600
Coastal Convertibles Ltd.                               1,000,000                    50,000                         50,000
MichaelAngelo, L.P.                                     1,000,000                    50,000                         50,000
New York Life Insurance Company                         1,000,000                    50,000                         50,000
Associated Electric & Gas Insurance
Services Limited                                          350,000                    17,500                         17,500
Starvest Combined Portfolio                               310,000                    15,500                         15,500
Family Service Life Insurance Co.                         300,000                    15,000                         15,000
American Masters Fund "AG Absolute
Return Series" Limited                                    250,000                    12,500                         12,500
Raphael II, Ltd.                                          250,000                    12,500                         12,500
AIG / National Union Fire Insurance                       240,000                    12,000                         12,000
Guardian Pension Trust                                    200,000                    10,000                         10,000
Value Line Convertible Fund, Inc.                         150,000                     7,500                          7,500
LLT Limited                                               100,000                     5,000                          5,000
Sylvan IMA Ltd. c/o Forest Investment
Management LLC                                            100,000                     5,000                          5,000
BNP Arbitrage SNC                                          50,000                     2,500                          2,500
Forest Alternative Strategies Fund II LP
Series A 5M                                                50,000                     2,500                          2,500
Merrill Lynch, Pierce, Fenner and Smith Inc.               50,000                     2,500                          2,500
ABN AMRO Incorporated                                      11,625                       581                            581
Island Holdings                                            10,000                       500                            500
Any other holder of debentures or future
transferee from any such holder (3) (4)                16,683,375                   834,168                        834,168
                                                     ------------                 ---------                      ---------

                 TOTAL                               $115,000,000                 9,779,919                      5,749,999
                                                     ------------                 ---------                      ---------
</TABLE>

                                      35
<PAGE>


(1)  Includes common stock into which the debentures are convertible.

(2)  Reflects a conversion price of $20.00 per share and a cash payment in lieu
     of any fractional interest.
(3)  Information concerning other selling holders of debentures will be set
     forth in prospectus supplements from time to time, if required.

(4)  Assumes that any other holders of debentures or any future transferee from
     any such holder does not beneficially own any common stock other than
     common stock into which the debentures are convertible at the conversion
     price of $20.00 per share.

          None of the selling holders has had any material relationship with
VerticalNet or its affiliates within the past three years.  The selling holders
purchased all of the shares from VerticalNet in private transactions on
September 27 and October 12, 1999. All of the shares were "restricted
securities" under the Securities Act prior to this registration.

          The selling holders have represented to us that they purchased the
shares for their own account for investment only and not with a view toward
selling or distributing them, except pursuant to sales registered under the
Securities Act or exemptions. VerticalNet agreed with the selling holders to
file the registration statement to register the resale of the shares.
VerticalNet agreed to prepare and file all necessary amendments and supplements
to the registration statement to keep it effective until the earlier of (1)
September 27, 2001 and (2) the date on which the debentures and the common stock
into which the notes are convertible no longer qualify as "Registrable
Securities" under the Registration Rights Agreement.

          Information concerning the selling holders may change from time to
time and any such changed information will be set forth in supplements to this
prospectus if and when necessary. In addition, the per share conversion price,
and therefore the number of shares of common stock issuable upon conversion of
the notes, is subject to adjustment under certain circumstances. Accordingly,
the aggregate principal amount of debentures and the number of shares of common
stock into which the notes are convertible may increase or decrease.

                                      36
<PAGE>

                       CERTAIN FEDERAL TAX CONSEQUENCES


     The following is a general discussion of certain anticipated U.S. federal
income tax consequences to a U.S. holder of the purchase, ownership and
disposition of the debentures (or our common stock acquired upon conversion of a
debenture) as of the date hereof. This summary is generally limited to U.S.
holders (as defined below) who will hold the debentures and the shares of common
stock into which the debentures are convertible as "capital assets" within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code") and who acquire the debentures in this offering at the initial offering
price, and does not deal with special situations including those that may apply
to particular holders such as exempt organizations, dealers in securities or
commodities, financial institutions, insurance companies, regulated investment
companies and holders whose "functional currency" is not the U.S. dollar. This
discussion does not address the tax consequences to non-U.S. holders, nor does
it discuss tax consequences arising under any state, local or foreign law. The
federal income tax considerations set forth below are based upon the Internal
Revenue Code of 1986, as amended (the "Code") and Treasury Regulations, court
decisions, and Internal Revenue Service ("IRS") rulings now in effect, all of
which are subject to change. Prospective investors should particularly note that
any such change could have retroactive application so as to result in federal
income tax consequences different from those discussed below. As used herein,
the term "U.S. holder" means a beneficial owner of a debenture (or our common
stock acquired upon conversion of a debenture) that is for U.S. federal income
tax purposes (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity (other than a trust) created or organized in or
under the laws of the United States or of any political subdivision thereof
(other than a partnership that is not treated as a U.S. person under any
applicable Treasury Regulations), (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its source; or (iv) a trust, if a
court within the United States is able to exercise primary jurisdiction over its
administration and one or more U.S. persons have authority to control all of its
substantial decisions. Prospective investors are urged to consult their tax
advisors regarding the tax consequences, in their particular circumstances, of
purchasing, holding and disposing of the debentures or our common stock,
including the tax consequences arising under any state, local or foreign laws.
We have been advised by our counsel, Morgan, Lewis & Bockius LLP, that, while
the following does not purport to discuss all tax matters relating to the
debentures or the common stock acquired upon conversion of a debenture, the
following are the material tax consequences of the debentures and common stock
acquired upon conversion of a debenture, subject to the qualifications set forth
below.

     Based on currently applicable authorities, we will treat the debentures as
indebtedness for U.S. federal income tax purposes. However, since the debentures
have certain equity characteristics, it is possible that the IRS will contend
that the debentures should be treated as an equity interest in, rather than
indebtedness of VerticalNet. In the event the debentures are treated as equity,
distributions received on a debenture would first be taxable to the holder as
dividend income to the extent of our accumulated earnings and profits, and next
would be treated as a return of capital to the extent of the U.S. holder's tax
basis in the debenture, with any remaining amount treated as gain from the sale
of a debenture. Moreover, in the event of equity treatment, we would not be
entitled to deduct interest on such debentures for U.S. federal income tax
purposes. Additionally, in the event of equity treatment, a distribution to a
corporate U.S. holder may qualify for a dividends received deduction. Except as
otherwise noted, the remainder of this discussion assumes that the debentures
will constitute indebtedness for U.S. tax purposes.

                                      37
<PAGE>

STATED INTEREST

  Interest paid on a debenture will be includable in the income of a U.S. holder
as ordinary income at the time it accrues or is received in accordance with such
holder's method of accounting for U.S. federal income tax purposes. The interest
rate on the debentures is subject to increase in certain circumstances,
including if the debentures are not registered with the Commission within
prescribed time periods. We intend to treat the possibility that we will pay
such additional interest as subject to a remote contingency, within the meaning
of applicable Treasury Regulations and, therefore, we believe that any such
additional interest will not affect the yield to maturity on the debentures and
therefore will be taxable to U.S. holders at the time it accrues or is received
in accordance with each such holder's method of accounting. Similarly, we intend
to take the position that the likelihood of a redemption or repurchase upon a
change of control is remote or incidental within the meaning of the Treasury
Regulations, and likewise does not affect the yield to maturity on the
debentures.


CONVERSION OR REPURCHASE FOR COMMON STOCK

  A U.S. holder will not recognize income, gain or loss upon conversion of the
debentures solely into our common stock or a repurchase for common stock of a
debenture pursuant to exercise of the repurchase right (except with respect to
any amounts attributable to accrued interest on the debentures not previously
included in income, which will be treated as interest for federal income tax
purposes, and except with respect to cash received in lieu of fractional
shares). The U.S. holder's basis in the common stock received on conversion or
repurchase of a debenture for common stock pursuant to the repurchase right will
be the same as the U.S. holder's adjusted tax basis in the debentures at the
time of conversion or repurchase (reduced by any basis allocable to a fractional
share), and the holding period for the common stock received on conversion or
repurchase will include the holding period of the debentures that were converted
or repurchased.

  Cash received in lieu of a fractional share of common stock upon conversion of
the debentures into common stock or upon a repurchase for common stock of a
debenture pursuant to exercise of the repurchase right will be treated as a
payment in exchange for the fractional share of common stock. Accordingly, the
receipt of cash in lieu of a fractional share of common stock generally will
result in capital gain or loss (measured by the difference between the cash
received for the fractional share and the U.S. holder's adjusted tax basis in
the fractional share).


DIVIDENDS ON COMMON STOCK

  Generally, distributions will be treated as a dividend, subject to tax as
ordinary income, to the extent of our current or accumulated earnings or
profits, then as a tax-free return of capital to the extent of such U.S.
holder's adjusted tax basis in the common stock and thereafter as gain from the
sale or exchange of such common stock. Additionally, a dividend distribution to
a corporate U.S. holder may qualify for a dividends received deduction.


DISPOSITION, REDEMPTION OR REPURCHASE FOR CASH

  Except as set forth above under ''Conversion or Repurchase for Common Stock,''
U.S. holders generally will recognize gain or loss upon the sale, redemption
(including a repurchase for cash pursuant to the repurchase right) or other
taxable disposition of the debentures or common stock in an amount equal to the
difference between (1) the U.S. holder's adjusted tax basis in the debentures or
common stock (as the case may be) and (2) the amount of cash and fair market
value of any property received from such

                                      38
<PAGE>

disposition (other than amounts attributable to accrued interest on the
debentures not previously included in income, which will be treated as interest
for federal income tax purposes). A U.S. holder's adjusted tax basis in a
debenture generally will equal the cost of the debenture to such U.S. holder,
less any principal payments received by such U.S. holder.

  Such gain or loss from the taxable disposition of the debentures or common
stock generally will be long-term capital gain or loss if the debentures were
held for more than one year at the time of the disposition and, in the case of
an individual holder, will be taxed at a maximum rate of 20%. Short-term capital
gains realized by individual U.S. holders are taxed at a maximum rate of 39.6%.
Corporate U.S. holders are subject to a maximum regular income tax rate of 35%
on all capital gains and ordinary income. The deductibility of capital losses is
subject to limitations.


ADJUSTMENT OF CONVERSION PRICE

  The Conversion Price of the debentures is subject to adjustment under certain
circumstances. Under Section 305 of the Code and the Treasury Regulations issued
thereunder, adjustments or the failure to make such adjustments to the
Conversion Price of the debentures may result in a taxable constructive
distribution to the U.S. Holders of debentures if, and to the extent that,
certain adjustments in the Conversion Price that may occur in limited
circumstances (particularly an adjustment to reflect a taxable dividend to
holders of our common stock) increase the proportionate interest of a U.S.
holder in our assets or earnings and profits whether or not the U.S. holders
ever convert the debentures. Such constructive distribution will be treated as a
dividend, resulting in ordinary income (and a possible dividends received
deduction in the case of corporate holders) to the extent of our current and
accumulated earnings and profits, with any excess treated first as a tax-free
return of capital which reduces such U.S. holder's tax basis in the debentures
to the extent thereof and thereafter as gain from the sale or exchange of the
debentures. Generally, a U.S. holder's tax basis in a debenture will be
increased to the extent any such constructive distribution is treated as
dividend. Moreover, if there is not a full adjustment to the Conversion Price of
the debentures to reflect a stock dividend or other event increasing the
proportionate interest of the holders of outstanding common stock in our assets
or earnings and profits, then such increase in the proportionate interest of the
holders of the common stock generally will be treated as a constructive
distribution to such holders, taxable as described above. As a result, U.S.
holders of debentures could have taxable income as a result of an event pursuant
to which they receive no cash or property.


DEDUCTIBILITY OF INTEREST

  Generally, under Section 279 of the Code, an interest deduction in excess of
$5 million is not permitted with respect to certain ''corporate acquisition
indebtedness.'' Corporate acquisition indebtedness includes any indebtedness
that is (1) issued to provide consideration for the direct or indirect
acquisition of stock or assets of another corporation; (2) subordinated; (3)
convertible directly or indirectly into the stock of the issuing corporation;
and (4) issued by a corporation that has a debt to equity ratio that exceeds 2
to 1. Our ability to deduct all of the interest payable on the debentures will
depend on the application of the foregoing tests to us. The availability of an
interest deduction with respect to the debentures was not determinative in our
issuance of the debentures pursuant to this offering.


BACKUP WITHHOLDING AND INFORMATION REPORTING

  We or our designated paying agent will, where required, report to U.S. holders
of debentures (or common stock) and the IRS the amount of any interest paid on
the debentures (or dividends paid with respect to the common stock or other
reportable payments) in each calendar year and the amount of tax, if any,
withheld with respect to such payments.

  Under the backup withholding provisions of the Code and the applicable
Treasury Regulations, a U.S. holder of debentures (or our common stock acquired
upon the conversion of a debenture) may be subject to

                                       39
<PAGE>

backup withholding at the rate of 31% with respect to dividends or interest paid
on, or the proceeds of a sale, exchange or redemption of, debentures or common
stock, unless (a) such holder is a corporation or comes within certain other
exempt categories and when required demonstrates this fact, or (b) provides a
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. The amount of any backup withholding from a payment to a U.S.
holder will be allowed as a credit against the U.S. holder's federal income tax
liability and may entitle such holder to a refund, provided that the required
information is furnished to the IRS.

  Treasury Regulations (the ''New Withholding Regulations''), generally
effective January 1, 2001, subject to certain transition rules, modify the
currently effective information withholding and backup withholding procedures
and requirements. Prospective investors should consult their own tax advisors
concerning the application of the New Withholding Regulations.

  The preceding discussion of certain U.S. federal income tax consequences is
for general information only and is not tax advice. Accordingly, you should
consult your own tax adviser as to particular tax consequences to you of
purchasing, holding and disposing of the debentures and our common stock,
including the applicability and effect of any state, local or foreign tax laws,
and of any proposed changes in applicable laws.

                                       40
<PAGE>

                             PLAN OF DISTRIBUTION


          The selling holders and their successors, transferees, pledgees or
donees may sell the debentures and the shares of common stock issuable upon
conversion of the debentures directly to purchasers or through underwriters,
broker-dealers or agents. Such underwriters, broker-dealers or agents may
receive compensation in the form of discounts, concessions or commissions from
the selling holders or the purchasers, which discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary to the types of transactions involved.


          The debentures and the shares of common stock issuable upon
conversion of the debentures may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at prices related to
such prevailing market prices, at varying prices determined at the time of sale,
or at negotiated prices. Such sales may be effected in transactions, which may
involve crosses or block transactions:

     .   on any national securities exchange or quotation service on which the
         debentures or the common stock may be listed or quoted at the time of
         sale;

     .   in the over-the-counter market;

     .   in transactions otherwise than on such exchanges or services or in the
         over-the-counter market;

     .   through the writing of options, whether such options are listed on an
         options exchange or otherwise; or

     .   through the settlement of short sales. In connection with the sale of
         the debentures and the common stock into which the debentures are
         convertible or otherwise, the selling holders may enter into hedging
         transactions with broker-dealers or other financial institutions which
         may in turn engage in short sales of the debentures or the common stock
         into which the debentures are convertible and deliver these securities
         to close out such short positions, or loan or pledge the debentures or
         the common stock into which the debentures are convertible to broker-
         dealers that in turn may sell these securities.


     The aggregate proceeds to the selling holders from the sale of the
debentures or the shares of common stock issuable upon conversion of the
debentures offered by them hereby will be the purchase price of such debentures
or common stock less discounts and commissions, if any. Each of the selling
holders reserves the right to accept and, together with their agents from time
to time, to reject, in whole or in part, any proposed purchase of debentures or
common stock to be made directly or through agents. We will not receive any of
the proceeds from this offering.

     Our outstanding common stock is listed for trading on the Nasdaq National
Market. We do not intend to list the debentures for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the debentures.


     In order to comply with the securities laws of some states, if applicable,
the debentures and the shares of common stock issuable upon conversion of the
debentures may be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in some states the debentures and the shares of
common stock issuable upon conversion of the debentures may not be sold unless
they have been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied with.


     The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the debentures and the shares of common stock
issuable upon conversion of the debentures may be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any discounts,
commissions, concessions or profit they earn on any resale of the securities may
be underwriting discounts and commissions under the Securities Act of 1933.
Selling holders who are "underwriters" within the meaning of Section 2(11) of
the Securities Act of 1933 will be subject to the prospectus delivery
requirements of the Securities Act of 1933. The selling holders have
acknowledged that they understand their obligations to comply with the
provisions of the Securities Exchange Act of 1934 and the rules thereunder
relating to stock manipulation, particularly Regulation M, and have agreed that
they will not engage in any transaction in violation of such provision.

     In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act of 1933 may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling
holder may not sell any debentures or common stock described herein and may not
transfer devise or gift such securities by other means not described in this
prospectus.

     To the extent required, the specific debentures or common stock to be sold,
the names of the selling holders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any

                                      41
<PAGE>

applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a post-
effective amendment to the registration statement of which this prospectus is a
part.

     We entered into a Registration Rights Agreement for the benefit of holders
of the debentures to register their debentures and common stock under applicable
federal and state securities laws under certain circumstances and at certain
times. The Registration Rights Agreement provides for cross-indemnification of
the selling holders and VerticalNet and their respective directors, officers and
controlling persons against certain liabilities in connection with the offer and
sale of the debentures and the common stock including liabilities under the
Securities Act of 1933. We will pay all of our expenses and substantially all of
the expenses incurred by the selling holders incident to the offering and sale
of the debentures and the common stock, provided that each selling holder will
responsible for payment of commissions, concessions and discounts of
underwriters, broker-dealers or agents.


                                 LEGAL MATTERS

     The validity of the securities offered by this prospectus will be passed
upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.


                                    EXPERTS

     The consolidated financial statements and schedules of VerticalNet, Inc. as
of December 31, 1998 and 1999, and for each of the years in the three-year
period ended December 31, 1999, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.


     The financial statements of NECX Exchange, LLC incorporated by reference in
this prospectus and elsewhere in the registration statement, to the extent and
for the periods indicated in their report, have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in reliance upon
the authority of said firm as experts in giving said report.


                           ABOUT THIS PROSPECTUS

     No person has been authorized to give any information or to make any
representations other than those contained in this prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by
VerticalNet, Inc., any selling holder or by any other person. Neither the
delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is correct as of
any time subsequent to the date hereof. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any security other than the
securities covered by this prospectus, nor does it constitute an offer to or
solicitation of any person in any jurisdiction in which such offer or
solicitation may not lawfully be made.

                      WHERE YOU CAN FIND MORE INFORMATION

     The SEC permits us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file with the
Commission after the date of this prospectus will automatically update and
supersede this information. However, any information contained herein shall
modify or supersede information contained in documents we filed with the
Commission before the date of this prospectus.


     We incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the offering is completed.

     (a) Annual Report on Form 10-K for the year ended December 31, 1999.

     (b) Our Current Report on Form 8-K filed on December 29, 1999, as amended
by the Current Report on Form 8-K/A filed on February 1, 2000.

     (c) Our Current Reports on Form 8-K filed February 11, 2000, February 22,
2000, April 6, 2000 and April 11, 2000.

     (d)  The description of our common stock contained in a registration
statement on Form 8-A filed January 19, 1999.

     If you request a copy of any or all of the documents incorporated by
reference by written or oral request, then we will send to you the copies you
requested at no charge. However, we will not send exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents. You should direct requests for such copies to VerticalNet, Inc., 700
Dresher Road, Suite 100, Horsham, Pennsylvania 19044, Attention: James W.
McKenzie, Jr., (215) 315-3592.

                                      42
<PAGE>


     In addition, we file reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934. You may read and copy this
information at the following locations of the Commission: (1) Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, (2) Midwest Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and (3) Northeast
Regional Office, Seven World Trade Center, New York, New York 10048.

     You may also obtain copies of this information by mail from the Public
Reference Section of the Commission at 450 Fifth Street, NW, Washington, D.C.
20549, at prescribed rates. Further information on the operation of the
Commission's Public Reference Room in Washington, D.C. can be obtained by
calling the Commission at 1-800-SEC-0330.

     Our common stock is quoted on The Nasdaq National Market. Reports, proxy
statements and other information concerning VerticalNet can be inspected at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.  The Commission maintains a Web site that contains all
information filed electronically by us. The address of the Commission's Web site
is (http://www.sec.gov.).

                                      43
<PAGE>


WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM WHAT IS
IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS FROM WHAT
IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS NOT AN
OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY STATE
IN WHICH THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS
IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY CHANGE AFTER
THAT DATE.


                               VERTICALNET, INC.


                                 $115,000,000



              5 1/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004

                 AND THE SHARES OF COMMON STOCK ISSUABLE UPON

                         CONVERSION OF THE DEBENTURES





                                  PROSPECTUS





                                APRIL 12, 2000


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