BIZNESS ONLINE COM, SB-2/A, 1999-05-10

BIZNESS ONLINE COM
SB-2/A, 1999-05-10
COMPUTER INTEGRATED SYSTEMS DESIGN

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 1999

REGISTRATION NO. 333-73067
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 3 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

BIZNESSONLINE.COM, INC.
(Name of small business issuer in its charter)
------------------------------

<TABLE>
<S> <C> <C>
DELAWARE 7375 06-1519132
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

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

MARK E. MUNRO
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
BIZNESSONLINE.COM, INC.
1720 ROUTE 34
P.O. BOX 1347
WALL, NEW JERSEY 07719
(732) 280-6408
(732) 280-6409 (FAX)
(Address and telephone number of principal executive offices and principal place
of business
and name, address and telephone number of agent for service)
------------------------

COPIES TO:

<TABLE>
<S> <C> <C>
MICHAEL F. SWEENEY, ESQ. RUBI FINKELSTEIN, ESQ. WILLIAM M. PRIFTI, ESQ.
ROBERT D. EMERSON, ESQ. ORRICK, HERRINGTON & SUTCLIFFE FIVE MARKET SQUARE
DUFFY & SWEENEY, LLP LLP SUITE 109
300 TURKS HEAD BUILDING 30 ROCKEFELLER PLAZA AMESBURY, MA 01913
PROVIDENCE, RI 02903 NEW YORK, NY 10112 (978) 388-4942
(401) 455-0700 (212) 506-5000 (978) 388-4945 (FAX)
(401) 455-0701 (FAX) (212) 506-3730 (FAX)
</TABLE>

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

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

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

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

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

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

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

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

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

PROSPECTUS (SUBJECT TO COMPLETION)
DATED MAY 10, 1999

[LOGO]

2,900,000 SHARES OF COMMON STOCK

This is our initial public offering of common stock. The initial offering
price per share is $10. We have applied to list our common stock on the Nasdaq
National Market under the symbol "BIZZ". No public market currently exists for
the shares of common stock.

INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 7.

------------------------
<TABLE>
<S> <C> <C>
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<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Public offering price................................................. $ 10 $29,000,000
Underwriting discounts and commissions................................ $ $
Proceeds, before expenses, to BiznessOnline........................... $ $
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

We have granted the underwriters the right to purchase up to 435,000
additional shares to cover any over-allotments.

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

JOSEPH STEVENS & COMPANY, INC.

SCHNEIDER SECURITIES, INC.

NEIDIGER, TUCKER, BRUNER, INC.

ROYCE INVESTMENT GROUP, INC.

, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Prospectus Summary........................... 3
Risk Factors................................. 7
Forward-Looking Statements................... 8
Use of Proceeds.............................. 9
Dividend Policy.............................. 9
Capitalization............................... 10
Dilution..................................... 11
Selected Pro Forma Financial Data............ 12
Selected Historical Financial Data for
BiznessOnline and Our Internet Service
Providers.................................. 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 17

Business..................................... 28
Management................................... 37
Certain Transactions......................... 45
Principal Stockholders....................... 46
Description of Securities.................... 47
Shares Available for Future Sale............. 50
Underwriting................................. 51
Legal Matters................................ 53
Experts...................................... 53
How to Get More Information.................. 53
Index to Financial Statements................ F-1
</TABLE>

2
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PROSPECTUS SUMMARY

BIZNESSONLINE.COM, INC.

We are a new company formed to acquire and operate businesses that provide
Internet access and related services to customers outside of large metropolitan
areas in the northeastern United States. In January, 1999, we acquired Global
2000 Communications, Inc., an Internet service provider serving the greater
Albany, New York area with approximately 4,000 individual and business
subscribers. We have entered agreements to acquire, and upon the completion of
this offering we will acquire, four additional Internet service providers
serving Connecticut and northeastern New York with approximately 16,000
individual and business subscribers.

Our executive offices are located at 1720 Route 34, P.O. Box 1347, Wall, New
Jersey 07719, and our telephone number is (732) 280-6408. Our world-wide web
address is BiznessOnline.com. Information contained in our web site is not part
of this prospectus.

SUMMARY OF THE OFFERING

The share numbers in the following table assume that we have issued all the
shares of our common stock included in the purchase price for the Internet
service providers we will acquire at the closing of this offering. See
"Business--The acquisitions." Following the offering, we will also have
outstanding warrants and options to purchase 290,000 shares at $16.50 per share
and 52,500 shares at the initial public offering price. We will also have a
total of 497,500 shares of common stock reserved for issuance under our stock
option plans.

<TABLE>
<S> <C>
common stock offered by BiznessOnline.com 2,900,000 shares

common stock outstanding after this offering 6,890,436 shares, assuming the underwriters
do not exercise their over-allotment option;
or

7,325,436 shares, assuming the underwriters
exercise their over-allotment option in full

use of proceeds - $5,730,000 for payment of the cash portion
of the purchase price to the stockholders of
the former Internet service providers we
will acquire at the closing of this
offering;

- $580,000 for repayment of promissory notes
due to the former stockholders of Global 2000
Communications;

- $900,000 for costs to integrate the
operating systems of the Internet service
providers we will own at the close of this
offering;

- approximately $17,000,000 for possible
future acquisitions of Internet service
providers; and

- $790,000 for general working capital
</TABLE>

3
<PAGE>
SUMMARY PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following table provides summary pro forma consolidated financial
information for BiznessOnline, Global 2000 Communications, Inc., and the four
Internet service providers we will acquire at the consummation of the offering
based on historical data for the year ended December 31, 1998. We present the
pro forma consolidated balance sheet data as of December 31, 1998 based on
historical data, pro forma consolidated data and as adjusted for this offering.
The pro forma consolidated statement of operations data for the year ended
December 31, 1998 assume that the acquisition of the five Internet service
providers and this offering were consummated on January 1, 1998. The pro forma
consolidated balance sheet data assumes that the acquisitions of the five
Internet service providers were consummated on December 31, 1998. The summary
pro forma financial data do not necessarily indicate the operating results or
financial position which would have resulted from the operation of BiznessOnline
on a consolidated basis during the period presented, nor does this pro forma
data necessarily represent any future operating results or financial position of
BiznessOnline. In addition to this summary financial data, you should also refer
to the more complete financial information included elsewhere in this
prospectus, including more complete historical results for our Internet service
providers.

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
DECEMBER 31,
1998
----------------
<S> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues........................................................................................ $ 6,195,694
Costs and expenses
Connectivity and operations................................................................... 4,218,136
Selling, general and administrative expenses.................................................. 1,441,048
Depreciation.................................................................................. 404,444
Amortization.................................................................................. 2,703,866
----------------
Total costs and expenses.................................................................. 8,767,494
----------------
Loss from operations............................................................................ (2,571,800)
Other income (expense), net................................................................... (81,025)
Interest expense.............................................................................. (59,752)
----------------
Loss before income taxes........................................................................ (2,712,577)
Income taxes.................................................................................. --
----------------
Net loss........................................................................................ $ (2,712,577)
----------------
----------------
Net loss per share--basic and diluted........................................................... $ (.39)
Weighted average shares outstanding............................................................. 6,890,436

OTHER OPERATING DATA:
Approximate number of subscribers at year end................................................... 20,000
Earnings before interest, taxes, depreciation and amortization.................................. $ 536,510
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1998
---------------------------------------
<S> <C> <C> <C>
PRO FORMA PRO FORMA
ACTUAL CONSOLIDATED AS ADJUSTED
--------- ------------- -------------
CONSOLIDATED BALANCE SHEET DATA:
Working capital......................................................... $ 49,088 $ (6,241,018) $ 18,867,460
Total assets............................................................ 256,214 15,916,265 34,606,265
Total liabilities....................................................... 198,648 7,996,699 1,686,699
Stockholders' equity.................................................... 57,566 7,919,566 32,919,566
</TABLE>

4
<PAGE>
The consolidated statement of operations data:

- reflects an aggregate change in compensation and increases in expenses
associated with corporate management under contractual arrangements of
$368,000.

- reflects additional amortization of goodwill and other intangibles to be
recorded as a result of the acquisitions of our five Internet service
providers in the amount of $2,682,000 for the year ended December 31,
1998.

The other operating data:

- reflects earnings before interest, taxes, depreciation and amortization or
income (loss) from operations plus depreciation and amortization. Earnings
before interest, taxes, depreciation and amortization is provided because
it is a measure commonly used by investors to analyze and compare
companies in this industry on the basis of operating performance. Earnings
before interest, taxes, depreciation and amortization is not a measure of
financial performance under generally accepted accounting principles and
should not be construed as a substitute for operating income, net income
or cash flows from operating activities for purposes of analyzing our
operating performance, financial position and cash flows.

The consolidated pro forma balance sheet data reflects the use of :

- $6,310,000, including $580,000 for repayment of notes payable to the
former stockholders of Global 2000 Communications, representing the cash
or promissory note portion of the purchase prices for our Internet service
providers which will be paid on consummation of the acquisitions, and

- $7,820,000 payable in shares of our common stock, which may be adjusted
based on the financial condition of our Internet service providers as of
the closing date of this offering.

5
<PAGE>
SUMMARY HISTORICAL INDIVIDUAL INTERNET SERVICE PROVIDER DATA

The following table presents summary historical statement of operations and
other operating data for our five Internet service providers for the fiscal
years ended December 31, 1997 and December 31, 1998. The statement of operations
data has been derived from the audited financial statements of the five Internet
service providers. See "Selected Historical Financial Data for BiznessOnline and
Our Internet Service Providers" beginning on page 13 below.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
AlbanyNet, Inc.
Revenues................................................................. $ 838,807 $ 1,140,518
Operating income......................................................... 78,171 242,848
Basic and diluted net income per share................................... 422.65 1,224.73
Subscribers at end of period............................................. 2,300 3,200
Borg Internet Services, Inc.
Revenues................................................................. $ 505,970 $ 832,734
Operating income (loss).................................................. 35,422 (29,296)
Basic and diluted net income (loss) per share............................ 6,190.67 (9,652.33)
Subscribers at end of period............................................. 2,500 4,000
Caravela Software, Inc.
Revenues................................................................. $ 1,516,112 $ 1,879,410
Operating income (loss).................................................. (83,393) 85,311
Basic and diluted net income (loss) per share............................ (555.48) (23.98)
Subscribers at end of period............................................. 4,000 5,000
Global 2000 Communications, Inc.
Revenues................................................................. $ 1,108,980 $ 1,738,613
Operating income......................................................... 107,763 271,838
Basic and diluted net income per share................................... 429.43 1,198.86
Subscribers at end of period............................................. 3,300 4,000
Ulsternet, Inc.
Revenues................................................................. $ 318,630 $ 604,419
Operating income (loss).................................................. (17,816) 33,389
Basic and diluted net income (loss) per share............................ (279.74) 251.12
Subscribers at end of period............................................. 2,100 3,800
</TABLE>

6
<PAGE>
RISK FACTORS

An investment in our common stock involves a high degree of risk. In
addition to the other information contained in this prospectus, you should
carefully consider the following risk factors and other information in this
prospectus before investing in our common stock.

BECAUSE WE HAVE A LIMITED OPERATING HISTORY, WE MAY NOT BE ABLE TO SUCCESSFULLY
MANAGE OUR BUSINESS OR ACHIEVE PROFITABILITY.

We were formed in June 1998 and acquired our first Internet service provider
in January 1999. We will acquire four additional Internet service providers upon
completion of this offering. Our management team faces the challenge of
successfully implementing company-wide administrative and operating systems and
managing our newly acquired companies. We may not be able to successfully manage
our business to achieve or maintain profitability of any of our individual
Internet service providers, or overall. In addition, our pro forma financial
results cover periods when we did not control or manage our Internet service
providers and may not be indicative of our future financial results.

IF WE DO NOT COMPLETE THE ACQUISITIONS OF ALL FOUR OF THE INTERNET SERVICE
PROVIDERS WE PLAN TO ACQUIRE AT THE CLOSING OF THIS OFFERING, OUR RESULTS OF
OPERATIONS MAY SUFFER.

Although our agreements with the Internet service providers we will acquire
at the closing of this offering contain standard closing conditions which the
stockholders of the companies do not have control over, we cannot be certain
that one or more of these persons will not breach their agreements. If we are
unable to close one or more of these acquisitions, we would be forced to seek an
injunction from a court to enforce the agreement as written or negotiate a
settlement. In either case, the delay or the inability to complete the
transaction could have a negative impact on our projected results of operations.

COMPETING BIDS FOR INTERNET SERVICE PROVIDERS MAY DRIVE UP PURCHASE PRICES AND
LIMIT OUR ABILITY TO CARRY OUT OUR GROWTH STRATEGY.

Our business strategy depends largely on our ability to expand into new
markets and enhance our presence in our existing markets by acquiring additional
Internet service providers that meet our financial, geographic and other
acquisition criteria. We believe that competition from other companies which
seek to acquire and consolidate Internet service companies is significant and
that acquisition prices will rise with the growth in demand for these companies
in the future. We may not have sufficient financial resources to afford these
higher prices. The potential increase in acquisition prices could increase the
amount of goodwill and other intangibles allocated from the purchase price for
these companies which could adversely affect our financial condition and
operating results.

OUR SUCCESS DEPENDS ON OUR ABILITY TO RETAIN MARK MUNRO AND OTHER KEY PERSONNEL.

We believe that the telecommunications and related management, sales and
marketing experience of Mark E. Munro, our president and chief executive officer
is critical to our success in the Internet business and in our growth by
acquisitions strategy and the loss of his services would have a detrimental
impact on our business. Our success will also depend on our ability to hire and
retain other qualified management, including competent marketing, technical and
sales personnel. We may be unable to locate and hire these personnel. We may
also be unable to retain or integrate the personnel of acquired Internet service
providers into our operations.

BECAUSE WE WILL DEPEND ON OTHER COMPANIES FOR TELECOMMUNICATIONS PRODUCTS AND
SERVICES, WE MAY EXPERIENCE DELAYS AND INCREASED COSTS IF DEMAND FOR THESE
ITEMS CONTINUES TO INCREASE.

We will depend on major companies such as UUNET, MCI Worldcom and Sprint to
provide connectivity and equipment capacity to us. We will also depend on
third-party suppliers of hardware components. As we and other Internet service
providers grow, our suppliers will face significant

7
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demand for their products; some of these suppliers may have limited resources
and production capacity. If our suppliers fail to adjust to meet increasing
demand, they may be unable to supply components and products in the quantities,
at the quality levels and at the times required by us, or at all. In addition,
prices for these components and products may increase significantly. If our
suppliers fail to provide equipment and we are unable to develop alternative
sources of supply, we will experience delays and increased costs in expanding
our network.

THE INTERNET SERVICE MARKET CHANGES RAPIDLY AND WE MAY NOT BE SUCCESSFUL IN
ADAPTING TO NEW
TECHNOLOGIES OR ALTERNATIVE INTERNET ACCESS SYSTEMS.

Our industry is characterized by rapidly changing technology, constantly
evolving industry standards, emerging competition and frequent new service
information. We are unable to predict whether we will have the necessary
resources to adapt to this changing marketplace. For example, our Internet
service providers provide Internet access across telephone lines to computers.
If the Internet becomes easily accessible by screen-based telephones, television
or other electronic devices, or if the means of delivery changes to satellite or
other wireless technology, we may need to change our network design and develop
new technology. Our pursuit of these technological advances would require
substantial time and expense. We cannot assure you that we will be successful in
adapting our business to alternative access systems or that new technologies
will be available or affordable for us.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. We intend to identify
forward-looking statements in this prospectus using words such as "believes,"
"intends," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," or similar statements. These statements are based
on our beliefs as well as assumptions we made using information currently
available to us. Because these statements reflect our current views concerning
future events, these statements involve risks, uncertainties and assumptions.
Actual future results may differ significantly from the results discussed in the
forward-looking statements. Some, but not all, of the factors that may cause
these differences include those discussed in the Risk Factors section beginning
on page 8 of this prospectus. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.

8
<PAGE>
USE OF PROCEEDS

Our net proceeds from the sale of the 2.9 million shares of common stock
after deducting underwriting fees and our estimated offering expenses will be
approximately $25 million. If the underwriters' over allotment is exercised in
full, our net proceeds are estimated to be approximately $29 million.

We intend to use the net proceeds as described in the following table:

<TABLE>
<CAPTION>
CATEGORY AMOUNT OF NET PROCEEDS PERCENTAGE
- ------------------------------------------------------------------------------ ---------------------- -------------
<S> <C> <C>
Payment of the cash portion of the purchase price due to the stockholders of
the four Internet service providers we have contracted to acquire at the
closing of this offering.................................................... $ 5,730,000 22.9%
Repayment of promissory notes due to the stockholders of Global 2000
Communications, Inc., acquired in January, 1999............................. $ 580,000 2.3%
Costs to integrate operating systems of the Internet service providers we will
own at the closing of this offering......................................... $ 900,000 3.6%
Possible future acquisitions of Internet service providers.................... $ 17,000,000 68.0%
General working capital....................................................... $ 790,000 3.2%
------------ ---
Totals........................................................................ $ 25,000,000 100%
</TABLE>

We have complete discretion over how to use a significant portion of the net
proceeds of this offering. We cannot assure investors that our use of the net
proceeds will not vary substantially due to unforeseen factors. If we do not
complete an acquisition, the proceeds of this offering that otherwise would have
been used to complete that acquisition will be applied to working capital or
other possible acquisitions.

The assets that we acquired from the stockholders of Global 2000
Communications, Inc. and the assets that we will acquire from the four
additional Internet service providers to be acquired at the closing of this
offering, for a total purchase price of $14,130,000, include approximately:

- $1,018,000 in current assets, primarily cash and accounts receivable;

- $804,000 in property and equipment including computer equipment,
telecommunications equipment, and furniture and fixtures; and

- the remaining amount will be allocated to goodwill and other intangible
assets.

These Internet service providers were not affiliates of BiznessOnline at or
prior to entering into acquisition agreements with us.

Other than our agreements to acquire four Internet service providers at the
closing of this offering, we have no current agreements or commitments to
acquire any new companies and we are not currently negotiating with any
acquisition candidates. Prior to applying the net proceeds of this offering as
illustrated in the preceding table, the proceeds will be invested in short-term,
interest bearing, investment grade and government securities. We believe that
our cash flow from operations and the proceeds from this offering will be
sufficient to fund our operations for at least the next twelve months.

DIVIDEND POLICY

We have not paid cash dividends on our common stock since inception and we
do not anticipate paying any cash dividends on our common stock in the
foreseeable future. We intend to reinvest earnings, if any, in the development
and expansion of our business. Our board of directors will determine, in its
sole discretion, whether to declare any dividends on our common stock in the
future, based on our earnings, capital requirements, financial position, general
economic conditions, and other pertinent factors.

9
<PAGE>
CAPITALIZATION

The following table describes:

- the actual capitalization as of December 31, 1998;

- pro forma consolidated capitalization as of December 31, 1998 to reflect
the issuance and conversion of 70,000 shares of Class A preferred stock
into 61,250 shares of common stock at the consummation of this offering
and the issuance of 782,000 shares of common stock to the stockholders of
our Internet service providers as described in "Business--The
acquisitions"; and

- pro forma as adjusted capitalization as of December 31, 1998 to reflect
the issuance of 2,900,000 shares of common stock in this offering at an
initial public offering price of $10.00 per share and the application of
the estimated net proceeds from the sale of the shares.

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ACTUAL CONSOLIDATED AS ADJUSTED
----------- ------------ -------------
<S> <C> <C> <C>
Long-term debt and capital lease obligations, less current portion..... $ -- $ 211,155 $ 211,155
----------- ------------ -------------
Class A preferred stock subscriptions.................................. 100,000 -- --
----------- ------------ -------------
Stockholders' equity:
Class A preferred stock, $.01 par value, 1,000,000 shares
authorized;........................................................ -- -- --
Common stock, $.01 par value, 39,000,000 shares authorized; 3,147,186
shares outstanding, actual; 3,990,436 shares outstanding pro forma
consolidated and 6,890,436 shares outstanding, as adjusted......... 31,472 39,904 68,904
Additional paid-in capital........................................... 151,528 7,922,096 32,893,096
Accumulated deficit.................................................. (125,434) (42,434) (42,434)
----------- ------------ -------------
Total stockholders' equity............................................. 57,566 7,919,566 32,919,566
----------- ------------ -------------
Total capitalization................................................... $ 157,566 $8,130,721 $ 33,130,721
----------- ------------ -------------
----------- ------------ -------------
</TABLE>

The preceding table excludes:

- 435,000 shares issuable upon exercise of the underwriters' over allotment
option;

- 290,000 shares issuable upon exercise of the underwriters' warrants;

- 500,000 shares reserved for issuance under our 1999 stock incentive plan,
of which 30,000 shares are currently reserved for issuance under options
granted to our chief financial officer, at an exercise price equal to the
public offering price of our common stock in this offering; and

- 50,000 shares reserved for issuance under our 1999 non-employee director
stock incentive plan, of which 22,500 shares will be reserved for issuance
under options to be granted at the consummation of this offering at an
exercise price equal to the public offering price of our common stock in
this offering.

10
<PAGE>
DILUTION

At December 31, 1998, BiznessOnline had a pro forma consolidated net
tangible book value (deficit) of $(5,535,163) or $(1.39) per share based on
3,990,436 shares of common stock outstanding. Net tangible book value (deficit)
per share represents the amount of our total tangible assets less total
liabilities, divided by the number of shares of common stock outstanding.
Without taking into account any changes in the net tangible book value (deficit)
after December 31, 1998, other than to give effect to the net proceeds from the
sale of the shares in this offering at an assumed initial public offering price
of $10.00, the pro forma as adjusted net tangible book value of our common stock
at December 31, 1998 would have been $19,464,837 or $2.82 per share. This
represents an immediate increase in net tangible book value of $4.21 to existing
holders of common stock, and an immediate dilution of $7.18 per share from the
offering price of common stock on a per share basis to investors in this
offering. Dilution per share represents the difference between the offering
price per share of common stock and the pro forma tangible book value per share
of common stock immediately after the offering. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Offering price per share of common stock.................... $ 10.00
Pro forma consolidated net tangible book value (deficit) per
share before offering..................................... $ (1.39)
Increase in net tangible book value per share attributed to
the estimated net proceeds of the offering................ 4.21
---------
Pro forma as adjusted net tangible book value per share
after the offering........................................ 2.82
Dilution of net tangible book value per share of common
stock to investors in the offering........................ $ 7.18
</TABLE>

The following table summarizes on a pro forma basis as of December 31, 1998,
after giving effect to:

- the automatic conversion of 70,000 shares of preferred stock into 61,250
shares of common stock at the consummation of this offering;

- the issuance of 782,000 shares of common stock to the shareholders of our
Internet service providers; and

- the sale of common stock in this offering.

The table shows the number of shares of common stock purchased, the
percentage of common stock purchased, the total consideration paid or exchanged,
the percentage of total consideration, and the average price per share paid by
the existing stockholders and the investors in the offering.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
New investors................................. 2,900,000 42.1% $ 29,000,000 77.7% $ 10.00
Internet service providers.................... 782,000 11.3% $ 7,820,000 20.9% $ 10.00
Preferred stockholders........................ 61,250 .9% $ 350,000 .9% $ 5.71
Original investors............................ 3,147,186 45.7% $ 183,000 .5% $ .06
---------- ----------- ------------- -----------
6,890,436 100.0% $ 37,353,000 100.0%
---------- ----------- ------------- -----------
---------- ----------- ------------- -----------
</TABLE>

11
<PAGE>
SELECTED PRO FORMA FINANCIAL DATA

We present below selected pro forma consolidated financial data for
BiznessOnline based on historical data for the fiscal year ended December 31,
1998, considering the consolidated historical results for BiznessOnline and our
five Internet service providers. We present the pro forma consolidated balance
sheet data for December 31, 1998 based on historical data, pro forma
consolidated for the issuance and conversion of 70,000 shares of preferred stock
into 61,250 shares of common stock at the consummation of this offering, and the
issuance of 782,000 shares of common stock issued to the stockholders of our
Internet service providers as described in "Business--The acquisitions" and pro
forma as adjusted for this offering. The pro forma consolidated statement of
operations data for the year ended December 31, 1998 assume that the
acquisitions were consummated on January 1, 1998. The pro forma consolidated
balance sheet data assume that the acquisitions were consummated on December 31,
1998. The summary pro forma financial data do not necessarily indicate the
operating results or financial position which would have resulted from
BiznessOnline's operations on a consolidated basis during the periods presented,
nor does this pro forma data necessarily represent any future operating results
or financial position of BiznessOnline.

You should read the selected pro forma financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our unaudited pro forma financial statements and the related
notes appearing elsewhere in this prospectus.

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Revenues....................................................................................... $ 6,195,694
Costs and expenses:
Connectivity and operations.................................................................. 4,218,136
Selling, general and administrative expenses................................................. 1,441,048
Depreciation................................................................................. 404,444
Amortization of intangibles.................................................................. 2,703,866
-----------------
Total costs and expenses................................................................. 8,767,494
-----------------
Loss from operations......................................................................... (2,571,800)
Other income (expense):
Other income (expense), net.................................................................. (81,025)
Interest expense............................................................................. (59,752)
-----------------
Net loss before income taxes............................................................. (2,712,577)
Income taxes................................................................................... --
-----------------
Net loss................................................................................. $ (2,712,577)
-----------------
-----------------
Net loss per share basic and diluted..................................................... $ (.39)
Weighted average shares outstanding...................................................... 6,890,436

OTHER OPERATING DATA:
Approximate number of subscribers at year end................................................ 20,000
Earnings before interest, taxes, depreciation, and amortization.............................. $ 536,510
</TABLE>

12
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA FOR BIZNESSONLINE
AND OUR INTERNET SERVICE PROVIDERS

The selected financial data are derived in part from the more detailed
historical financial statements and accompanying explanatory notes of our
Internet service providers included elsewhere in this prospectus.

The following selected financial data of BiznessOnline and the Internet
service providers should be read in conjunction with the historical financial
statements and accompanying explanatory notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operation" included elsewhere in
this prospectus. All of the Internet service providers have fiscal years ending
December 31.

The following table presents selected historical financial data for
BiznessOnline and our Internet service providers for the stated periods.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
<S> <C> <C>
1997 1998
------------ ------------
STATEMENTS OF OPERATIONS DATA:

BIZNESSONLINE.COM, INC.

Selling, general and administrative expenses........................................ -- 125,434
------------ ------------
Total costs and expenses.......................................................... -- 125,434
------------ ------------
Loss from operations................................................................ -- (125,434)
------------ ------------
Net loss............................................................................ -- $ (125,434)
------------ ------------
------------ ------------
Net loss per share basic and diluted................................................ -- $ (.04)
Weighted average shares outstanding................................................. -- 3,147,186

ALBANYNET, INC.

Revenues............................................................................ $ 838,807 $ 1,140,518

Costs and expenses:
Connectivity and operations....................................................... 658,329 768,400
Selling, general and administrative expenses...................................... 44,441 61,456
Depreciation...................................................................... 57,866 67,814
------------ ------------
Total costs and expenses........................................................ 760,636 897,670
------------ ------------
Income from operations.............................................................. 78,171 242,848
Other income, net................................................................... 11,082 5,369
Interest expense.................................................................... (4,724) (3,272)
------------ ------------
Net income.......................................................................... $ 84,529 $ 244,945
------------ ------------
------------ ------------
Net income per share basic and diluted.............................................. $ 422.65 $ 1,224.73
Weighted average shares outstanding................................................. 200 200
------------ ------------
------------ ------------
Approximate number of subscribers at year end....................................... 2,300 3,200
</TABLE>

13
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1997 1998
------------ ------------
<S> <C> <C>
BORG INTERNET SERVICES, INC.

Revenues............................................................................ $ 505,970 $ 832,734

Costs and expenses:
Connectivity and operations....................................................... 319,127 601,890
Selling, general and administrative expenses...................................... 64,978 136,025
Depreciation...................................................................... 64,909 102,581
Amortization of intangibles....................................................... 21,534 21,534
------------ ------------
Total costs and expenses........................................................ 470,548 862,030
------------ ------------
Income (loss) from operations....................................................... 35,422 (29,296)
Interest expense.................................................................... (4,467) (11,717)
------------ ------------
Income (loss) before income taxes................................................... 30,955 (41,013)
Income tax provision (benefit)...................................................... 12,383 (12,056)
------------ ------------
Net income (loss)................................................................... $ 18,572 $ (28,957)
------------ ------------
------------ ------------
Net income (loss) per share basic and diluted....................................... $ 6,190.67 $ (9,652.33)
Weighted average shares outstanding................................................. 3 3
------------ ------------
------------ ------------
Approximate number of subscribers at year end....................................... 2,500 4,000

CARAVELA SOFTWARE, INC.

Revenues............................................................................ $ 1,516,112 $ 1,879,410
Costs and expenses:
Connectivity and operations....................................................... 1,328,076 1,520,192
Selling, general and administrative expenses...................................... 152,944 156,761
Depreciation...................................................................... 118,485 117,146
------------ ------------
Total costs and expenses........................................................ 1,599,505 1,794,099
------------ ------------
Income (loss) from operations....................................................... (83,393) 85,311
Other income (expense), net......................................................... 267 (67,901)
Interest expense.................................................................... (9,453) (21,406)
------------ ------------
Income (loss) before income taxes................................................... (92,579) (3,996)
Income tax benefit.................................................................. (37,031) (1,598)
------------ ------------
Net loss............................................................................ $ (55,548) $ (2,398)
------------ ------------
------------ ------------
Net (loss) per share basic and diluted.............................................. $ (555.48) $ (23.98)
Weighted average shares outstanding................................................. 100 100
------------ ------------
------------ ------------
Approximate number of subscribers at year end....................................... 4,000 5,000
</TABLE>

14
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1997 1998
------------ ------------
<S> <C> <C>
GLOBAL 2000 COMMUNICATIONS, INC.

Revenues............................................................................ $ 1,108,980 $ 1,738,613
Costs and expenses:
Connectivity and operations....................................................... 809,374 927,769
Selling, general and administrative expenses...................................... 148,153 480,334
Depreciation...................................................................... 43,690 58,672
------------ ------------
Total costs and expenses........................................................ 1,001,217 1,466,775
------------ ------------
Income from operations.............................................................. 107,763 271,838
Other income, net................................................................... (7,502) (18,493)
Interest expense.................................................................... (14,375) (13,573)
------------ ------------
Net income.......................................................................... $ 85,886 $ 239,772
------------ ------------
------------ ------------
Net income per share basic and diluted.............................................. $ 429.43 $ 1,198.86
Weighted average shares outstanding................................................. 200 200
------------ ------------
------------ ------------
Approximate number of subscribers at year end....................................... 3,300 4,000

ULSTERNET, INC.

Revenues............................................................................ $ 318,630 $ 604,419
Costs and expenses:
Connectivity and operations....................................................... 290,309 491,327
Selling, general and administrative expenses...................................... 6,913 21,472
Depreciation...................................................................... 39,224 58,231
------------ ------------
Total costs and expenses........................................................ 336,446 571,030
------------ ------------
Income (loss) from operations....................................................... (17,816) 33,389
Interest expense.................................................................... (8,480) (9,784)
Net income.......................................................................... $ (26,296) $ 23,605
------------ ------------
------------ ------------
Net income per share basic and diluted.............................................. $ (279.74) $ 251.12
Weighted average shares outstanding................................................. 94 94
------------ ------------
------------ ------------
Approximate number of subscribers at year end....................................... 2,100 3,800
</TABLE>

15
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31
1998
------------
<S> <C>
BALANCE SHEET DATA:

BiznessOnline.com, Inc.
Working capital................................................................................... $ 49,088
Total assets...................................................................................... $ 256,214
Long term debt, less current portion.............................................................. $ --
Total stockholders' equity........................................................................ $ 57,566

AlbanyNet, Inc.
Working capital................................................................................... $ 142,000
Total assets...................................................................................... $ 259,894
Long term debt, less current portion.............................................................. $ 4,030
Total stockholders' equity........................................................................ $ 190,079

Borg Internet Services, Inc.
Working capital (deficit)......................................................................... $ (192,274)
Total assets...................................................................................... $ 348,614
Long term debt, less current portion.............................................................. $ 78,608
Total stockholders' equity (deficit).............................................................. $ (30,283)

Caravela Software, Inc.
Working capital (deficit)......................................................................... $ (160,143)
Total assets...................................................................................... $ 550,128
Long term debt, less current portion.............................................................. $ 6,816
Total stockholders' equity........................................................................ $ 68,021

Global 2000 Communications, Inc.
Working capital................................................................................... $ 41,066
Total assets...................................................................................... $ 622,536
Long term debt, less current portion.............................................................. $ 96,496
Total stockholders' equity........................................................................ $ 192,023

Ulsternet, Inc.
Working capital (deficit)......................................................................... $ (143,755)
Total assets...................................................................................... $ 88,217
Long term debt, less current portion.............................................................. $ 25,205
Total stockholders' equity (deficit).............................................................. $ (92,502)
</TABLE>

16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is based on the consolidated pro forma
results of BiznessOnline and the historical results for each of our Internet
service providers for which separate data has been included in this prospectus.
See "Selected Pro Forma Financial Data" on page 18 above for the basis of the
pro forma presentation for BiznessOnline.

OVERVIEW

We derive Internet access revenues primarily from subscriptions from
individuals and small to medium sized businesses for dial-up and dedicated
access to the Internet. Subscription fees vary between $9.95 and $24.95 per
month among our Internet service providers and by the billing plans for a
particular Internet service provider. The subscription rates vary among Internet
service providers due to competitive and economic factors. Most of our
subscribers pay us by credit card automatically on a monthly basis. In addition,
we host commercial and individual web sites and provide commercial web design
services, as well as e-commerce, advertising and interactive web site support.
These services are predominantly utilized by small to medium sized businesses
looking to establish a presence on the world wide web. We also earn revenue by
providing dedicated access services via telephone lines.

Our costs and expenses include connectivity and operations, sales and
marketing, general and administrative, amortization and depreciation.

Connectivity and operating expenses consist of the cost of non-capital
equipment and the recurring telecommunication costs associated with providing
services to subscribers, including the cost of local telephone lines and the
costs of leased lines connecting the Internet and our operations centers. We
expect these expenses to increase over time to support our growing subscriber
base.

Connectivity and operating expenses also include the salaries and employee
benefits of our personnel providing installation, web development and technical
services, the cost of the equipment to provide these services, rent and
utilities for our Internet service providers' offices, and customer service and
technical support personnel costs. We expect customer service and support
expenses to increase over time to support new and existing subscribers. New
subscribers tend to be particularly heavy users of customer service and
technical support.

Sales and marketing expenses include the costs associated with acquiring
subscribers, including bonuses, sales commissions and advertising. Sales and
marketing expenses are expected to increase with the expected growth of the
subscriber base. We plan to increase advertising in new markets we enter as we
acquire new Internet service providers. We also plan to hire additional sales
and marketing personnel in each market we enter.

General and administrative expenses consist primarily of administrative
staff and related benefits, as well as the cost of travel and entertainment.
General and administrative costs are expected to increase to support our growth,
particularly the implementation of a common billing and financial reporting
system.

Amortization expense primarily relates to the amortization of goodwill and
other intangibles acquired in the acquisitions and, on a pro forma basis, is
based upon the useful lives of these intangibles. Amortization expense is
expected to increase as additional acquisitions are made and will vary according
to purchase prices and intangible assets. Our policy in future acquisitions will
be to amortize the portion of the acquisition purchase price attributable to
goodwill and other intangibles over the appropriate period.

Depreciation expense primarily relates to our equipment and is based on the
estimated useful lives of the assets ranging from three to five years using the
straight-line and accelerated methods for the equipment. Depreciation expense is
expected to increase as our Internet service providers increase their

17
<PAGE>
networks to support new and existing subscribers and as we build a centralized
billing and financial reporting system.

PRO FORMA RESULTS OF OPERATIONS

The pro forma operating results include the effects of the pro forma
adjustments that are included in the unaudited pro forma consolidated financial
statements appearing on page F-3. This data may not be comparable to and may not
be indicative of our past consolidated results of operations because:

- our Internet service providers were not under common control of management
during the period presented;

- our Internet service providers used different tax structures--either s
corporations or c corporations--during the periods presented, however, we
used c corporation structure to present pro forma results; with regard to
s corporation and c corporation tax structures of our Internet service
providers, our Internet service provider Global 2000 Communications, Inc.
converted to a c corporation on January 31, 1999, the date we acquired
this company. Ulsternet, Inc. and AlbanyNet, Inc. will convert to c
corporation status when we acquire these companies at the closing of this
offering. The conversion to c corporation status of Ulsternet, Global 2000
Communications and AlbanyNet will not have a material effect on our
financial condition or pro forma results of operations;

- we will have contractual agreements to compensate new corporate
management; and

- we will use the purchase method of accounting to record the purchases,
resulting in the recording of intangibles that are expected to be
amortized over a useful life of five years.

The following table presents our unaudited pro forma consolidated statement
of operations for the year ended December 31, 1998. For a discussion of the pro
forma adjustments, see the unaudited pro forma consolidated financial statements
and the accompanying explanatory notes included elsewhere in this prospectus.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
1998
----------------------
<S> <C> <C>
$ %
----------- ---------
Revenues.................................................................................... 6,195,694 100.0
Connectivity and operations................................................................. 4,218,136 68.1
Selling, general and administrative expense................................................. 1,441,048 23.3
Depreciation................................................................................ 404,444 6.5
Amortization of intangibles................................................................. 2,703,866 43.6
----------- ---------
Total costs and expenses.................................................................... 8,767,494 141.5
----------- ---------
Loss from operations........................................................................ (2,571,800) (41.5)
Other income (expense) net.................................................................. (81,025) (1.3)
Interest expense............................................................................ (59,752) (1.0)
----------- ---------
Loss before taxes........................................................................... (2,712,577) (43.8)
----------- ---------
----------- ---------
Approximate total subscribers at year end................................................... 20,000
</TABLE>

18
<PAGE>
RESULTS OF OPERATIONS

The following tables set forth significant historical financial data and
this data as a percentage of revenues for the periods indicated.

BIZNESSONLINE.COM, INC.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
1997 1998
--------------------- ---------------------
$ % $ %
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Selling, general and administrative expense............................ -- -- 125,434 --
---------- --------- ---------- ---------
Total costs and expenses............................................... -- -- 125,434 --
---------- --------- ---------- ---------
Loss from operations................................................... -- -- (125,434) --
---------- --------- ---------- ---------
Net loss............................................................... -- -- (125,434) --
---------- --------- ---------- ---------
---------- --------- ---------- ---------
</TABLE>

GLOBAL 2000 COMMUNICATIONS, INC.

Connectivity and operations............................................ 809,374 73.0 927,769 53.4
Selling, general and administrative expense............................ 148,153 13.4 480,334 27.6
Depreciation........................................................... 43,690 3.9 58,672 3.4
---------- --------- ---------- ---------
Total costs and expenses............................................... 1,001,217 90.3 1,466,775 84.4
---------- --------- ---------- ---------
Income from operations................................................. 107,763 9.7 271,838 15.6
Other income (expense) net............................................. (7,502) (.7) (18,493) (1.1)
Interest expense....................................................... (14,375) (1.3) (13,573) (.8)
---------- --------- ---------- ---------
Net income............................................................. 85,886 7.7 239,772 13.8
---------- --------- ---------- ---------
---------- --------- ---------- ---------
Approximate total subscribers at year end.............................. 3,300 4,000
</TABLE>

GLOBAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR
ENDED DECEMBER 31, 1998.

Revenues:

Revenues increased $629,633, or 56.8% from $1,108,980 to $1,738,613,
primarily as a result of an increase in the number of subscribers and increased
revenue per subscriber. The number of subscribers increased from 3,300 at the
end of 1997 to 4,000 at the end of 1998, an increase of 21.2%.

Connectivity and operations:

Connectivity and operations expenses increased $118,395 or 14.6%, from
$809,374 to $927,769. This increase was a result of the increased subscriber
base.

19
<PAGE>
Selling, general and administrative:

Selling, general and administrative expenses increased $332,181, or 224.2%
from $148,153 to $480,334 primarily as a result of an increase in advertising
expenses.

Depreciation:

Depreciation expenses increased $14,982, or 34.3%, from $43,690 to $58,672
as a result of the acquisition of fixed assets during 1998 of approximately
$103,000.

Other (expense) net:

Other (expense) net increased $(10,991) from $(7,502) to $(18,493). This
change was a result of losses on disposal of fixed assets.

Interest expense:

Interest expense decreased $802, from $14,375 to $13,573, primarily as a
result of the decrease in average principal outstanding of debt and capitalized
leases.

CARAVELA SOFTWARE, INC. D/B/A CONNIX

Connectivity and operations............................................ 1,328,076 87.6 1,520,192 81.0
Selling, general and administrative expense............................ 152,944 10.1 156,761 8.3
Depreciation........................................................... 118,485 7.8 117,146 6.2
---------- --------- ---------- ---------
Total costs and expenses............................................... 1,599,505 105.5 1,794,099 95.5
---------- --------- ---------- ---------
Income (loss) from operations.......................................... (83,393) (5.5) 85,311 4.5
Other income (expense) net............................................. 267 .0 (67,901) (3.6)
Interest expense....................................................... (9,453) (.6) (21,406) (1.1)
---------- --------- ---------- ---------
Income (loss) before taxes............................................. (92,579) (6.1) (3,996) (.2)
Income tax benefit..................................................... (37,031) (2.4) (1,598) (.1)
---------- --------- ---------- ---------
Net loss............................................................... (55,548) (3.7) (2,398) (.1)
---------- --------- ---------- ---------
---------- --------- ---------- ---------
Approximate total subscribers at year end.............................. 4,000 5,000
</TABLE>

CONNIX' RESULTS FOR THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR
ENDED DECEMBER 31, 1998.

Revenues:

Revenues increased $363,298, or 24.0%, from $1,516,112 to $1,879,410
primarily as a result of an increase in subscribers. The number of subscribers
increased from 4,000 at December 31, 1997 to 5,000 at December 31, 1998, an
increase of 25.0%.

Connectivity and operations:

Connectivity and operations expenses increased $192,116, or 14.5%, from
1,328,076 to 1,520,192. The increase was primarily a result of the increase in
the number of subscribers.

20
<PAGE>
Selling, general and administrative expense:

Selling, general and administrative expenses increased $3,817, or 2.5%, from
$152,944, to $156,761. The slight increase in these expenses was a result of an
increase in advertising expenses, which was offset by a decrease in bad debt
expenses.

Depreciation:

Depreciation expenses decreased $1,339, or 1.1%, from $118,485, to $117,146,
primarily as a result of disposals of fixed assets offset by new assets
acquired.

Other income (expense) net:

Other income (expense), net changed from other income, net of $267, to other
expense, net of $(67,901). This change was a result of losses on disposal of
fixed assets in 1998.

Interest expense:

Interest expense increased $11,953, from $9,453 to $21,406, primarily as a
result of the increase in average principal outstanding of debt.

Income tax benefit:

Income tax benefit decreased from $37,031 to $1,598. The decrease was a
result of the smaller loss before income taxes during 1998. The effective rate
remained 40% for both years.

ULSTERNET, INC.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
1997 1998
-------------------- --------------------
$ % $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues................................................................... 318,630 100.0 604,419 100.0

Connectivity and operations................................................ 290,309 91.1 491,327 81.3
Selling, general and administrative expense................................ 6,913 2.2 21,472 3.6
Depreciation............................................................... 39,224 12.3 58,231 9.6
--------- --------- --------- ---------
Total costs and expenses................................................... 336,446 105.6 571,030 94.5
--------- --------- --------- ---------
Income (loss) from operations.............................................. (17,816) (5.6) 33,389 5.5
Interest expense........................................................... (8,480) (2.7) (9,784) (1.6)
--------- --------- --------- ---------
Net income (loss).......................................................... (26,296) (8.3) 23,605 3.9
--------- --------- --------- ---------
--------- --------- --------- ---------
Approximate total subscribers at year end.................................. 2,100 3,800
</TABLE>

ULSTERNET RESULTS FOR THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR
ENDED DECEMBER 31, 1998.

Revenues:

Revenues increased $285,789, or 89.7%, from $318,630 to $604,419 primarily
as a result of an increase in subscribers. The number of subscribers increased
from 2,100 at December 31, 1997 to 3,800 at December 31, 1998, an increase of
81.0%.

21
<PAGE>
Costs and expenses:

Total costs and expenses increased $234,584, or 69.7% from $336,446 to
$571,030, primarily as a result of the increase in the number of subscribers.

Connectivity and operations:

Connectivity and operations expenses increased $201,018, or 69.2%, from
$290,309 to $491,327. The increase was primarily a result of the increased
number of subscribers.

Selling, general and administrative expense:

Selling, general and administrative expenses increased $14,559, from $6,913,
to $21,472.

Depreciation:

Depreciation expenses increased $19,007, or 48.5%, from $39,224 to $58,231,
primarily as a result of capital equipment spending.

Interest expense:

Interest expense increased $1,304, from $8,480 to $9,784, primarily as a
result of the increase in average principal outstanding of debt and capitalized
leases.

BORG INTERNET SERVICES, INC.

Connectivity and operations................................................ 319,127 63.1 601,890 72.3
Selling, general and administrative expense................................ 64,978 12.8 136,025 16.3
Depreciation............................................................... 64,909 12.8 102,581 12.3
Amortization of intangibles................................................ 21,534 4.3 21,534 2.6
--------- --------- --------- ---------
Total costs and expenses................................................... 470,548 93.0 862,030 103.5
--------- --------- --------- ---------
Income (loss) from operations.............................................. 35,422 7.0 (29,296) (3.5)
Interest expense........................................................... (4,467) (.9) (11,717) (1.4)
--------- --------- --------- ---------
Income (loss) before taxes................................................. 30,955 6.1 (41,013) (4.9)
Income tax provision (benefit)............................................. 12,383 2.4 (12,056) (1.4)
--------- --------- --------- ---------
Net income (loss).......................................................... 18,572 3.7 (28,957) (3.5)
--------- --------- --------- ---------
--------- --------- --------- ---------
Approximate total subscribers at year end.................................. 2,500 4,000
</TABLE>

BORG RESULTS FOR THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED
DECEMBER 31, 1998.

Revenues:

Revenues increased $326,764 or 64.6%, from $505,970 to $832,734, primarily
as a result of an increase in subscribers. The number of subscribers increased
from 2,500 at December 31, 1997 to 4,000 at December 31, 1998, an increase of
60.0%.

22
<PAGE>
Connectivity and operations:

Connectivity and operations expenses increased $282,763, or 88.6%, from
$319,127 to $601,890. The increase was primarily a result of the increase in the
number of subscribers.

Selling, general and administrative expense:

Selling, general and administrative expenses increased $71,047, or 109.3%,
from $64,978 to $136,025. The increase was a result of increased advertising
expenses.

Depreciation:

Depreciation expenses increased $37,672 or 58.0%, from $64,909 to $102,581,
primarily as a result of increased capital equipment spending.

Interest expense:

Interest expense increased $7,250, from $4,467 to $11,717, primarily as a
result of the increase in average principal outstanding of debt and capitalized
leases.

Income tax provision (benefit):

Income tax provision during 1998 of $12,383 changed to an income tax
(benefit) of $(12,056). The change was a result of a loss before taxes in 1998.

ALBANYNET, INC.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31
1997 1998
-------------------- ---------------------
$ % $ %
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues................................................................. 838,807 100.0 1,140,518 100.0

Connectivity and operations.............................................. 658,329 78.5 768,400 67.4
Selling, general and administrative expense.............................. 44,441 5.3 61,456 5.4
Depreciation............................................................. 57,866 6.9 67,814 5.9
--------- --------- ---------- ---------
Total costs and expenses................................................. 760,636 90.7 897,670 78.7
--------- --------- ---------- ---------
Income from operations................................................... 78,171 9.3 242,848 21.3
Other income, net........................................................ 11,082 1.3 5,369 .5
Interest expense......................................................... (4,724) (.6) (3,272) (.3)
--------- --------- ---------- ---------
Net Income............................................................... 84,529 10.0 244,945 21.5
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Approximate total subscribers at year end................................ 2,300 3,200
</TABLE>

ALBANYNET'S RESULTS FOR THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE
YEAR ENDED DECEMBER 31, 1998.

Revenues:

Revenues increased $301,711 or 36.0%, from $838,807 to $1,140,518 primarily
as a result of an increase in subscribers. The number of subscribers increased
from 2,300 at December 31, 1997 to 3,200 at December 31, 1998, an increase of
39.1%.

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Connectivity and operations:

Connectivity and operations expenses increased $110,071 or 16.7% from
$658,329 to $768,400. The increase was primarily a result of the increased
number of subscribers.

Selling, general and administrative expense:

Selling, general and administrative expenses increased $17,015, or 38.3%,
from $44,441 to $61,456.

Depreciation:

Depreciation expenses increased $9,948, from $57,866 to $67,814, primarily
as a result of capital equipment purchases.

Interest expense:

Interest expense decreased $1,452, from $4,724 to $3,272. The decrease was a
result of lower outstanding capital leases during 1998.

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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The Internet service providers we will acquire are corporations that are
thinly capitalized. These Internet service providers have been financed
primarily through cash flow from operations. As a result, due to the net
proceeds from this offering, we expect our liquidity on a consolidated basis to
be substantially different from that of the individual companies.

We currently have commitments under employment agreements for our executive
officers and the managers of Global 2000 Communications, Inc. in the aggregate
amount of $540,000 per year.

PRO FORMA COMBINED LIQUIDITY AND CAPITAL RESOURCES

We will conduct all operations through our Internet service providers.
Following completion of this offering, we expect to provide growth capital to
our Internet service providers to allow each company to build its network
infrastructure and increase its sales and marketing staff. Upon completion of
the offering and after funding the acquisitions of the four additional Internet
service providers and repayment of the promissory notes in the aggregate amount
of $580,000 issued to the stockholders of Global 2000 Communications, Inc., we
will have approximately $19 million of cash on hand, $300,000 of short-term
indebtedness and $200,000 of long-term debt. If the underwriters' over-allotment
is exercised, we will have approximately $23 million of cash on hand. After
completing the four acquisitions of our Internet service providers at the
closing of this offering, our commitments under employment agreements with our
executive officers and the managers of our Internet service providers we will
own after the closing of the offering will increase to $1,055,000 per year in
the aggregate for the next three years.

On a pro forma combined basis, we generated cash flow from operations of
$677,726 during the year ended December 31, 1997, and $944,797 during the year
ended December 31, 1998. In addition, we utilized cash flow in investing
activities of $445,283 during the year ended December 31, 1997, and $349,384
during the year ended December 31, 1998 and used $156,544 from financing
activities during the year ended December 31, 1997 and $207,326 during 1998.

We believe that our cash flow from operations and proceeds from this
offering will provide the cash required to fund existing operations for at least
twelve months following the consummation of the offering. Thus, we intend to
pursue our strategy of acquiring additional Internet service providers, web
hosts and e-commerce service companies through the use of remaining cash on hand
as a result of this offering and the issuance of additional common stock, notes
payable and cash flow from operations.

YEAR 2000 DISCLOSURE

With the new millennium approaching, many businesses and institutions are
reviewing and modifying their computer systems to ensure they accurately process
transactions relating to the Year 2000 and beyond. This effort is necessary
because many existing computer systems and microprocessors with data functions,
including those in non-information technology equipment and systems, use only
two digits to identify a year in the date field and assume that the first two
digits of the year are always "19." Consequently, on January 1, 2000, computers
that are not Year 2000 compliant may read the year of 1900. Computer systems
that calculate, compare or sort using the incorrect date may malfunction causing
disruptions of operations, including, a temporary inability to process
transactions, send invoices or engage in other normal business activities. Our
failure to address potential Year 2000 malfunctions in our computer and
non-information technology equipment and systems could result in our suffering
business interruption, financial loss, reputational harm and legal liability.

We do not have any significant non-information technology equipment or
systems. As a result, our Year 2000 readiness efforts have primarily addressed
computer hardware and software performance.

We have received representations from the former owners of our Internet
service providers that they have taken all necessary action to assess, evaluate,
test and correct all of the hardware, software, microchips and other processing
capabilities of the computer and telecommunications systems they use

25
<PAGE>
in their businesses to be Year 2000 compliant. They have also verbally advised
us that they do not expect any significant Year 2000 problems in their networks.
Additionally, some of our Internet service providers have contacted their major
vendors to assess their Year 2000 readiness. We have not conducted our own audit
of our Internet service providers to confirm that these representations are
true. To the extent these representations are breached and we suffer damages
relating to Year 2000 malfunctions, our operating results and financial
conditions may be adversely affected.

We are continuing to assess Year 2000 risks related to our external vendors
and third-party network service providers. To the extent that we rely on
external vendors or third-party network service providers with Year 2000
exposures, any failure by these vendors or third-party network service providers
to resolve any Year 2000 issues on a timely basis or in a manner that is
compatible with our systems could also have a material adverse effect on our
financial condition.

Based upon the information currently available to us, we do not anticipate
costs associated with the Year 2000 issue to have a material financial impact on
us. However, we may experience interruptions or other limitations of the
functioning of our financial and operating systems, and we may incur additional
costs to avoid these interruptions or limitations should they occur. Our
expectations about future costs associated with the Year 2000 issue are limited
by uncertainties that could cause actual results to have a greater financial
impact than currently anticipated. Factors that could influence the amount and
timing of future costs include:

- our success in identifying systems and programs that contain two-digit
year codes;

- the nature and amount of programming required to upgrade or replace each
of the affected programs;

- the rate and magnitude of related labor and consulting costs; and

- our success in addressing Year 2000 issues with third-parties with which
we do business.

We have not developed a contingency plan to address situations that may
result if we are unable to achieve Year 2000 compliance. If we believe it
becomes necessary, we will develop a contingency plan. The costs of developing
and implementing a contingency plan, if necessary, could be material.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the Accounting Standards Executive Committee issued AICPA
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." Statement 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for internal
use and assists in determining when computer software is for internal use.
Statement 98-1 is effective for fiscal years beginning after December 15, 1998,
with earlier application permitted. We have not determined the impact of the
adoption of Statement 98-1 as this is highly dependent upon the nature, timing
and extent of future internal use software development.

In March 1998, the Accounting Standards Executive Committee issued AICPA
Statement of Position 98-5, "Reporting on the Costs of Start-up Activities."
Statement 98-5 provides guidance on the financial reporting of start up costs
and organization costs. It requires start up and organization costs to be
expensed as incurred. Statement 98-5 is effective for financial statements for
fiscal years beginning after December 15, 1998. We have implemented Statement
98-5 during 1998 and do not expect it to have a material impact on our financial
position or results of operations.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 "Disclosure About Segments of an
Enterprise and Related Information." Statement 131 supersedes Statement 14,
"Financial Reporting for Segments of a Business Enterprise", and is effective
for years beginning after December 31, 1997. Statement 131 establishes standards
for the way that public business enterprises report selected information about
operating segments in financial reports. Statement 131 also establishes
standards for related disclosures about products and services,

26
<PAGE>
geographic areas, and major customers. We have not yet determined the impact of
the adoption of Statement 131.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." Statement 133 changes the previous accounting
definition of "derivative" which focused on freestanding contracts like options
and forwards, including futures and swaps, expanding it to include embedded
derivatives and many commodity contracts. Under Statement 133, every derivative
is recorded in the balance sheet as either an asset or liability measured at its
fair value. Statement 133 requires that changes in the derivative fair value be
recognized currently in earnings unless specified hedge accounting criteria are
met. Statement 133 is effective for fiscal years beginning after June 15, 1999.
Earlier application is allowed as of the beginning of any quarter beginning
after issuance. We do not anticipate that Statement 133 will have a material
impact on our financial position or results of operations.

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<PAGE>
BUSINESS

INTRODUCTION

We were formed as a Delaware corporation on June 11, 1998 using the name
InSite Telecom, Inc. We subsequently changed our name to InSite Internet, Inc.
on December 4, 1998 and again to BiznessOnline.com, Inc. on February 10, 1999.

In this section of the prospectus regarding our business, when we use the
terms "BiznessOnline," "we," and "our", we are referring to BiznessOnline.com,
Inc., Global 2000 Communications, and the four additional Internet service
providers we will acquire at the consummation of this offering. All references
to historical activities of BiznessOnline refer to historical activities of our
five Internet service providers.

OUR OPERATIONS

We provide dial-up and private Internet access, design customized web sites,
host customer web sites on our computer networks, and offer related e-commerce
services to individual and business subscribers outside of large metropolitan
areas in the northeastern United States. We offer subscribers comprehensive
technical assistance, large modem banks providing rapid access to the Internet,
and high speed connectivity. In addition, our home page web sites serve as
regional portals, offering local and national news and weather, community
resources, advertising, and links to other local and national content providers.

INDUSTRY BACKGROUND

The Internet has grown rapidly since its introduction to the public in the
early 1990s allowing millions of people worldwide to obtain and share
information, communicate and conduct business electronically. In June, 1998,
eMarketer reported that the United States market in 1998 contained 47 million
Internet users, and projected this market to grow to 85 million Internet users
by 2002. eMarketer also estimated that the worldwide market would grow to 228
million Internet users by the end of 2002. eMarketer is an industry group
dedicated to producing research and related reports on the Internet industry.
The growth in the number of Internet users is being fueled by a number of
factors, including the large and growing base of installed personal computers,
the speed and reduction in cost of modem and personal computers, and the
increasing importance of the Internet as a means of communication and as a sales
and distribution channel.

OUR MARKET

We market our Internet service providers as premium Internet access
providers, particularly to small to medium sized businesses. In the eMarketer
report cited above, eMarketer notes that only 9% of small companies have web
sites, as compared to 86% of large companies. They also reported that only 4% of
small companies are engaged in online sales as compared to 33% of large
companies. eMarketer expects these differences between small and large companies
to narrow rapidly as the Internet allows small firms to compete less expensively
and more efficiently with large firms. We believe that the northeastern United
States will participate in the growth of this market niche and that we are well
positioned to take advantage of this growth.

OUR STRATEGY

Our strategy is to rapidly build a base of Internet subscribers through
acquisitions and internal growth. The following are the key elements of our
acquisition strategy and the steps we will take to integrate the businesses into
a regionally focused Internet company servicing the northeastern United States.

28
<PAGE>
- ACQUIRE ADDITIONAL INTERNET SERVICE PROVIDERS. We will use our newly
acquired management teams to assist us in identifying local competitors
and other Internet companies as potential acquisitions.

- INCREASE OUR CUSTOMER SUPPORT. We plan to implement a new customer billing
and technical support system. This new system will allow us to more
efficiently monitor customer financial data by eliminating redundant
operations and to better service our customer technical support needs. We
also plan to establish a service management team that will be responsible
for reassuring customer satisfaction levels.

- EXPAND INTERNET CONNECTIVITY CAPACITY. We will set up a regional data
center in Albany, New York over the next three to six months. We estimate
the cost of setting up this data center and integrating the Internet
service providers will be approximately $900,000. We will connect our
Internet service providers to the new data center with high speed private
access lines. We will then eliminate the individual Internet service
providers' connections to the Internet and connect them all through this
data center instead. Our new data center will have upgraded hardware and
software capabilities and will have greater overall Internet capacity than
the individual Internet service providers had previously.

- UTILIZE A NEW FINANCIAL SYSTEM. We plan to implement a new financial
reporting system which will allow us to collect, analyze and report our
financial results in a more timely and cost efficient manner.

- CREATE A STRONG REGIONAL BRAND. Our Internet service providers will
eventually adopt our corporate name which will be a first step towards
developing a distinctive regional brand image. We plan to enhance this
image with print, radio and television advertising.

- EXPAND E-COMMERCE SERVICES. Small to medium sized businesses are focusing
on the development of e-commerce as a way to expand their revenues. We
intend to establish an e-commerce sales and design team to focus on this
rapidly expanding Internet service.

- INCREASE SALES AND MARKETING STAFF. It is our belief that one of the
fastest growing segments of the Internet access market is small to
medium-sized businesses based on the eMarketer report of June 1998
mentioned above. Each business represents an opportunity to sell private
rapid Internet access, to design and host customer web sites on our
computers and to expand e-commerce activities. We intend to hire
knowledgeable sales personnel to market our products and services to this
target market.

Our success as an Internet service provider in the northeastern United
States will depend on our ability to integrate the operations and management of
the four Internet service providers we will acquire at the closing of this
offering and the additional Internet service providers we may acquire in the
future. If we are unable to efficiently transition the operations of these
companies into our system, our financial condition and operating results will
suffer. The factors which may hinder the integration process include:

- loss of subscribers as a result of ownership or management changes;

- poor performance or failure of acquired businesses to achieve expected
results;

- diversion of management's attention from existing operations;

- possible acquisition of substantial contingent or undisclosed liabilities;

- risks of entering markets in which we have little or no direct prior
experience; and

- possible accumulation of substantial debt.

Our strategy is also to continue to focus our efforts on building a larger
base of both individual subscribers and business customers through internal
growth.

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<PAGE>
We will continue to target individual customers by continuing to provide the
following:

- prompt and courteous customer service;

- large modem banks providing rapid access to the Internet;

- on-site service;

- competitive pricing packages;

- access to local and national content; and

- reliability.

We believe that business accounts provide our Internet service providers
with additional growth opportunities for several reasons:

- As residential dial-up users' demands for local content and e-commerce
increases, regional businesses must respond by providing access to their
products and services through the Internet, or risk losing sales and
market share to national and international business competitors.

- The types of services needed by commercial subscribers, including
dedicated access lines, web design and hosting services, and other
business related Internet services, have the potential to produce high
profit margins.

- Commercial subscribers expect high levels of technical support services
which can be best served by a local Internet service provider.

- We believe small and middle market businesses maintain small information
technology departments and do not have the resources to internally develop
and manage all the components of their Internet strategies.

The small to medium sized businesses that we expect to serve may be
reluctant to purchase Internet access and related services for a variety of
reasons, including:

- inconsistent quality of services;

- capacity constraints;

- lack of availability of cost-effective, high speed connectivity options;

- limited number of local access points;

- inability to protect confidential information, including credit card
numbers;

- liability for release of confidential/proprietary information;

- reluctance to accept new ways of doing business; and

- costs of investing in new technology.

If the demand for Internet services by our target market fails to grow, we
will not be able to fully implement our plans for internal growth and our
business, financial condition and results of operations will suffer.

THE ACQUISITIONS

BACKGROUND. The following is a chronological outline of the steps that led
to our acquisitions.

- We developed our Internet service provider acquisition plan.

- We established our acquisition criteria which included a geographic
location in the northeastern United States, an established subscriber
base, annual revenue growth, and experienced management.

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<PAGE>
- We identified potential acquisition candidates through various means,
contacted the owners and made an initial assessment as to their
suitability.

- We established working relationships with our acquisition candidates.

- Our management performed business, legal, and accounting due diligence on
the candidates.

- The candidates performed business, legal, and accounting due diligence on
us.

- Based on our due diligence results, we negotiated a purchase price with
the owners of the acquisition candidates which satisfied our acquisition
criteria.

- We signed letters of intent to purchase our candidates.

- We negotiated definitive merger or stock purchase agreements with each
candidate.

- We completed the acquisition of Global 2000 on January 31, 1999.

- We executed definitive agreements with AlbanyNet, Borg, Caravela Software
and Ulsternet by the beginning of February 1999.

We formed the following acquisition companies to acquire the Internet
service providers we will own at the completion of this offering, except for
AlbanyNet, Inc., in which BiznessOnline will directly acquire the outstanding
stock:

<TABLE>
<CAPTION>
INTERNET SERVICE PROVIDER TO BE
STATE AND DATE OF ACQUIRED BY THE INDICATED
NAME OF ACQUISITION COMPANY INCORPORATION ACQUISITION COMPANY
- ------------------------------------- ---------------------------- --------------------------------------------
<S> <C> <C>
Insite Internet I Acquisition Co., New York; 1/19/99 Global 2000 Communications, Inc., which we
Inc. (now known as Global 2000 acquired on January 31, 1999.
Communications, Inc.)
Insite Internet II Acquisition Co., New York; 1/26/99 Borg Internet Services, Inc.
Inc.
Insite Internet III Acquisition Co., New York; 1/27/99 We originally formed this company to acquire
Inc. AlbanyNet and we may use it for future
acquisitions.
Insite Internet IV Acquisition Co., New York; 1/27/99 Ulsternet, Inc.
Inc.
Insite Internet V Acquisition Co., Connecticut; 2/1/99 Caravela Software, Inc.
Inc.
</TABLE>

SUMMARY OF THE ACQUISITION AGREEMENTS. The table below summarizes
significant purchase price, subscriber and revenue information for our five
Internet service providers. We negotiated the purchase price for each Internet
service provider at arm's length based on a number of factors including their
1998 revenues, cash flows, historical operating results, growth rates, number of
subscribers, management and business prospects. The number of shares of our
common stock that we will issue to the owners of these companies is based on the
price of common stock offered to the public in this offering. We will adjust
each purchase price after the closing of this offering based on the
stockholders' equity of each Internet service provider as of the closing date.
We will retain common stock valued between $50,000 and $200,000 from the
purchase price, except in the case of AlbanyNet, Inc. where we will retain cash,
in escrow for one year after the closings to fund a portion of any potential
indemnity obligations of the stockholders of our Internet service providers
under our merger or stock purchase agreements. Whenever we provide information
relating to our outstanding shares of common stock in

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<PAGE>
this prospectus after this offering, we assume that 782,000 shares of common
stock have been issued to the shareholders of our Internet service providers as
summarized below.

<TABLE>
<CAPTION>
PURCHASE
1998 1998 PURCHASE PRICE: TOTAL SHARES TOTAL
INTERNET SERVICE PROVIDERS SUBSCRIBERS REVENUES PRICE: CASH STOCK @$10/SHARE PRICE
- --------------------------------------------- ------------- --------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Global 2000 Communications, Inc.............. 4,000 $1,738,613 $ 580,000 $2,720,000 272,000 $3,300,000
Albanynet, Inc............................... 3,200 $1,140,518 $2,400,000 0 0 $2,400,000
Borg Internet Services, Inc.................. 4,000 $ 832,734 $ 500,000 $1,500,000 150,000 $2,000,000
Caravela Software, Inc....................... 5,000 $1,879,410 $2,180,000 $2,800,000 280,000 $4,980,000
Ulsternet, Inc............................... 3,800 $ 604,419 $ 650,000 800,000 80,000 $1,450,000
------ --------- ----------- ----------- ------------- ----------
Totals....................................... 20,000 $6,195,694 $6,310,000 $7,820,000 782,000 $14,130,000
------ --------- ----------- ----------- ------------- ----------
------ --------- ----------- ----------- ------------- ----------
</TABLE>

We have accounted for the acquisition of Global 2000 Communications and we
will account for the additional four Internet service providers to be acquired
at the consummation of this offering as purchases for financial reporting
purposes. As with Global 2000 Communications, we will allocate the excess of the
purchase price for each company over the fair value of that company's net
tangible assets--approximately $13,411,000 in the aggregate including Global
2000 Communications--primarily to goodwill and subscriber lists. We plan to
amortize amounts allocated to intangibles over an average life of five years
from the closing of this offering. As a result, we will record annual additional
amortization expense for the intangible assets acquired from these companies of
approximately $2,682,000 for each year during the five years following
consummation of this offering.

PURCHASE PRICES NOT BASED ON APPRAISALS. We did not establish the purchase
prices of our Internet service providers by independent appraisals. We
negotiated the purchase price for each Internet service provider at arm's length
based on a number of factors including 1998 revenues, cash flows, historical
operating results, growth rates, number of subscribers, management and business
prospects. The purchase price paid for each Internet service provider does not
necessarily bear any relationship to the net book value of the acquired assets
or to any other recognized indicators of value. For example, appraisals of the
assets of our Internet service providers could be substantially less than the
purchase prices we are paying for each Internet service provider. As a result,
we may be unable to sell or liquidate our Internet service providers at the
purchase prices we paid for these companies.

GLOBAL 2000 COMMUNICATIONS, INC. We acquired all of the outstanding stock
of Global 2000 Communications under an agreement and plan of merger and
reorganization on January 31, 1999 for $2,720,000 in shares of our common stock
valued at the initial public offering price in this offering and $580,000 in
promissory notes payable at the consummation of this offering. We issued 272,000
shares of our common stock to the Global stockholders on January 31, 1999. We
will adjust the purchase price on or before May 31, 1999 based on Global's
shareholders' equity on January 31, 1999. For example, if the shareholders'
equity amount is $100,000 less than we expect under our merger agreement
covenants, we are entitled to reduce the purchase price by $100,000, and we
would allocate 82% of this adjustment to the stock portion of the purchase price
and 18% to the cash portion. Global 2000 Communications commenced operations as
an Internet service provider in the greater Albany, New York area in 1994, and
in 1998 served approximately 4,000 subscribers and had revenues of $1,738,613.
The three principal stockholders of Global 2000 Communications entered into
three year employment agreements as described in the "Management" section of
this prospectus at the merger closing and will continue to manage the business
of this subsidiary.

ALBANYNET, INC. We will acquire all of the outstanding stock of AlbanyNet
under a stock purchase agreement dated February 8, 1999 for $2,400,000 in cash
at the consummation of this offering. We negotiated an all-cash purchase price
for AlbanyNet, in contrast to a combination of cash and stock as the
shareholders of AlbanyNet were unwilling to negotiate a transaction which
included restricted stock or any consideration other than all cash. We may
adjust the purchase price within 45 days after consummation of this offering
based on AlbanyNet's shareholders' equity on the closing date in the

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<PAGE>
same way as described above for Global 2000 Communications. AlbanyNet commenced
operations as an Internet service provider in the greater Albany, New York area
in 1996, and in 1998 served approximately 3,200 subscribers and had revenues of
$1,140,518. One of the four principal stockholders of AlbanyNet will enter into
a three year employment agreement at the consummation of this offering and will
continue to manage the business of this subsidiary.

BORG INTERNET SERVICES, INC. We will acquire all of the outstanding stock
of Borg Internet Services, Inc. under an agreement and plan of merger and
reorganization dated January 28, 1999 for shares of our common stock equal to
$1,500,000, valued at the initial public offering price per share of our common
stock in this offering, and $500,000 in cash payable at the consummation of this
offering. We may adjust the purchase price within 45 days after consummation of
this offering based on Borg's shareholders' equity on the closing date in the
same way as described above for Global 2000 Communications using a 75% to 25%
stock to cash ratio. Borg commenced operations as an Internet service provider
in the Utica, New York area in 1995, and in 1998 served approximately 4,000
subscribers and had revenues of $832,734. The three principal stockholders of
Borg will each enter into a three year employment agreement at the consummation
of this offering and will continue to manage the business of this subsidiary.

CARAVELA SOFTWARE, INC. We will acquire all of the outstanding stock of
Caravela Software under an agreement and plan of merger and reorganization dated
February 8, 1999 for shares of our common stock equal to $2,800,000, valued at
the initial public offering price per share of our common stock in this
offering, and $2,180,000 in cash at the consummation of this offering. We may
adjust the purchase price within 45 days after consummation of this offering
based on Caravela's shareholders' equity on the closing date in the same way as
described above for Global 2000 Communications using a 60% to 40% stock to cash
ratio. Caravela commenced operations as an Internet service provider in
Connecticut in 1996, and in 1998 served approximately 5,000 subscribers and had
revenues of $1,879,410. The two principal stockholders of Caravela will each
enter into a three year employment agreement at the consummation of this
offering and will continue to manage the business of this subsidiary.

ULSTERNET, INC. We will acquire all of the outstanding stock of Ulsternet
under an agreement and plan of merger and reorganization dated February 3, 1999
for shares of our common stock equal to $800,000, valued at the initial public
offering price per share of our common stock in this offering, and $650,000 in
cash at the consummation of this offering. We may adjust the purchase price
within 45 days after consummation of this offering based on Ulsternet's
shareholders' equity on the closing date in the same way as described above for
Global 2000 Communications using a 55% to 45% stock to cash ratio. Ulsternet
commenced operations as an Internet service provider in the Kingston, New York
area in 1996, and in 1998 served approximately 3,800 subscribers and had
revenues of $604,419. The principal stockholder of Ulsternet will enter into a
three year employment agreement at the consummation of this offering and will
continue to manage the business of this subsidiary.

COMPETITION

The market for Internet access and related services is extremely
competitive. We expect competition to increase as Internet use grows and
established national Internet service providers, telecommunications and computer
related vendors expand their traditional products and services and new start ups
emerge. The significant financial resources of many of our competitors could
lead to severe price cutting in an effort to secure market share, which could
have a negative effect on our revenues and results of operations. We cannot
assure you of our survival in this intensely competitive and rapidly evolving
Internet services market. Our competitors in the markets in which we operate
include:

- national and regional commercial Internet service providers such as Verio,
Earthlink and Mindspring;

- established on-line commercial information providers such as AOL, Prodigy
and MSN;

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<PAGE>
- local Internet service providers in Connecticut and northeastern New York
state who provide products and services that are similar to ours to small
to medium sized businesses;

- cable television operators such as Time Warner and Tele-Communications,
Inc;

- national long distance telecommunications carriers such as AT&T, MCI
Worldcom, and Sprint;

- computer hardware and software companies, such as IBM and Compaq; and

- regional telephone operating companies such as Bell Atlantic, SBC and
Citizens Telephone Company.

We also believe that new competitors will continue to enter the Internet
access market, such as large computer hardware and software companies, media and
telecommunications entities, and companies that provide direct service to
residential customers, including cable television operators, wireless
communication companies, local and long distance telephone companies and
electric utility companies.

Many of our competitors are larger and have greater financial, technical,
and operating resources than we do. We cannot assure you of our survival in this
intensely competitive environment. We will need to distinguish ourselves by our
product and service knowledge, our responsiveness to our targeted market of
small to medium sized businesses, our ability to market and sell customized
combinations of products and services within our market, and our capacity to
offer a diverse Internet product line. We also believe that our ability to be
flexible and to respond quickly in providing solutions to our customer's
Internet needs will be an advantage over some of our competitors.

GOVERNMENT REGULATION AND POTENTIAL LIABILITY

OVERVIEW. The telecommunication industry is highly regulated by both
federal and state government. Internet access generally occurs through
transmission over public telephone lines. These transmissions are governed by
regulatory policies establishing charges and terms for communication. Currently,
as an Internet access provider, we are not subject to direct regulation by the
Federal Communications Commission or any other agency, other than regulations
applicable to businesses generally. However, the government may elect in the
future to regulate Internet service providers as basic providers of
telecommunication services. These regulations could change how we pay to connect
to the local telephone network.

ACCESS CHARGES. Access charges are assessed by local telephone companies to
long distance companies for the use of the local telephone network to originate
and terminate long distance calls generally on a per minute basis. Access
charges have long been a source of dispute, with long distance companies arguing
that the access rates are substantially in excess of cost and local telephone
companies arguing that access rates are needed to subsidize lower local rates
for end user and other purposes. The Federal Communications Commission currently
is considering whether subscriber calls to Internet service providers should be
classified as "local" or "interstate" calls. Although the Commission to date has
determined that Internet service providers should not be required to pay
interstate access charges to local telephone companies for each minute that
dial-up users spend connected to Internet service providers through telephone
company switches, this decision may be reconsidered in the future if the
Commission finds these calls to be "interstate." Our costs for doing business
would increase if we are required to pay interstate access charges.

UNIVERSAL SERVICE FUND. The Federal Communications Commission has to date
determined that Internet access providers should not be required to contribute
local rate subsidies and to meet with public policy objectives, such as enhanced
communications systems for schools, libraries and other health care providers.
As a result, unlike telecommunications providers, Internet access providers do
not have to contribute a percentage of their revenues to the federal universal
fund and are not likely to be required to contribute to similar funds being
established at the state level. However, an April 1998 report to Congress by the
Commission suggested that Internet companies that provide "telephone"

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service through computers connected by the Internet may need to comply with the
same regulations that long distance carriers must comply with, including the
payment of access fees to local exchange carriers and contributions to universal
service subsidies as "telephone" service through computers begins to compete
with traditional telephone service, the chances of the Commission reversing its
previous decision increase. We would be adversely affected if in the future our
Internet service providers were required to contribute to the universal service
fund.

POTENTIAL LIABILITY. The law relating to liability of Internet service
providers for information carried on or disseminated through their network is
unsettled. Companies like ours face potential liability for the actions of
subscribers and others using our systems, including liability for infringement
of intellectual property rights, rights of publicity, defamation, libel and
criminal activity including transmission of obscene materials. As the law in
this area develops, our potential liability for information carried on or
disseminated through our network could require us to implement measures to
reduce our exposure to this liability, which may require the expenditure of
substantial resources or the discontinuation of some product or service
offerings, any of which could be detrimental to our business, financial
condition and results of operation. The following examples illustrate the
unsettled law in these areas:

- - Internet service providers are subject to new federal requirements that they
report the presence of child pornography, when made aware of it, although
the law does not require these companies to monitor information distributed
through their systems.

- - A growing number of courts have ruled that the 1996 Telecommunications Act
immunizes Internet service providers from liability for defamatory material
carried on their facilities. However, we cannot assure investors that other
courts will take a similar approach.

- - Some courts have held that Internet service providers may be subject to
damages for copying, distributing, or displaying copyrighted materials,
although the recently enacted Digital Millennium Copyright Act establishes
"safe harbor" procedures that enable these companies to avoid monetary
liability for copyright infringement.

- - The United States Congress has enacted laws to regulate the content of the
Internet. In 1996, Congress passed the Communications Decency Act of 1996
which attempted to regulate the access of minors to "indecent" and "patently
offensive" speech on the Internet. The United States Supreme Court declared
the Communications Decency Act unconstitutional because it violated the
First Amendment right to free speech. In response, Congress passed the Child
Online Protection Act which provides criminal penalties for the commercial
distribution of material on the world wide web considered to be "harmful to
minors." A federal district court has preliminarily enjoined enforcement of
the Act pending a full trial in the case.

NEW AND EVOLVING LAWS. Due to the increasing popularity and use of the
Internet, a number of laws and regulations have been adopted in recent months,
and it is possible that additional laws and regulations may be adopted with
respect to the Internet, covering issues such as content, user privacy, pricing
and copyright infringement. These laws and regulations potentially affecting us
have been adopted, and may be adopted in the future, by federal and state
governments. We cannot predict the impact, if any, that recent and future
regulatory changes or developments may have on our business, financial condition
and results of operation. Changes in the regulatory environment relating to the
Internet access industry or telecommunication services, including regulatory
changes that directly or indirectly affect telecommunication costs or increase
the likelihood or scope of competition from regional bell operating companies,
or others, could have a material adverse effect or our business, financial
condition and results of operations.

SECURITY RISKS

Our systems will be vulnerable to computer viruses, sabotage, unauthorized
access and other intentional or accidental actions of Internet users,
subscribers, employees or others which could result in

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temporary or prolonged delays in providing Internet-related service.
Unauthorized access could also jeopardize confidential information of our
customers stored in our, or our customers computer systems, which may deter
potential subscribers and result in liability claims against us. Fixing problems
caused by computer viruses or other inappropriate uses or security breaches may
require interruptions, delays, or stops in service to our subscribers. Until
more comprehensive and cost-effective security technologies are developed, the
security and privacy concerns of existing and potential customers may inhibit
the growth of the Internet service industry in general, and our customer base
and revenues in particular.

SYSTEM FAILURE

Our business depends on our ability to deliver high quality uninterrupted
access to the Internet. However, there is a risk that our services will be
interrupted as a result of:

- network equipment damage caused by natural disasters like earthquakes and
fires;

- hardware failures at our operational centers;

- increased stress on network hardware and traffic management systems;

- local power losses or other telecommunications systems failures; and

- capacity constraints either at a particular telecommunications facility or
systemwide.

Any system failure that causes interruption in our service, particularly
during our early stages of development, could have a negative effect on our
business, financial condition and results of operations.

PERSONNEL

As of December 31, 1998, on a pro forma basis, we employed 61 persons,
including:

- 8 sales and marketing personnel;

- 42 connectivity and operations employees; and

- 11 administrative personnel.

The following table illustrates the breakdown of our employees by employer:

<TABLE>
<CAPTION>
NAME OF EMPLOYER NUMBER OF EMPLOYEES
- --------------------------------------------------------------------------------------------- -------------------------
<S> <C>
BiznessOnline.com, Inc....................................................................... 3
AlbanyNet, Inc............................................................................... 10
Borg Internet Services, Inc.................................................................. 13
Caravela Software, Inc....................................................................... 14
Global 2000 Communications, Inc.............................................................. 15
Ulsternet, Inc............................................................................... 6
</TABLE>

None of our employees is represented by a labor union, and we are not
governed by any collective bargaining agreement. We have a satisfactory
relationship with our employees.

PROPERTIES

We lease approximately 2,800 square feet of office space for our executive
offices in Wall, New Jersey at approximately $11 per square foot under a lease
expiring December 31, 2001. Our Internet service providers also lease space in
their markets for their administrative offices and equipment. We anticipate that
we will require additional space as we expand. We believe we will be able to
obtain suitable space when required.

LEGAL PROCEEDINGS

We are not a party to any material legal proceeding.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Our directors and executive officers, all of whom will serve in such
capacities until their successors are duly elected and qualified in accordance
with our bylaws, are:

<TABLE>
<CAPTION>
NAME AGE POSITION PERIOD OF SERVICE
- ------------------------------------ --- --------------------------------- ---------------------------------
<S> <C> <C> <C>
Mark E. Munro....................... 36 Chairman of the Board, President, since July 1, 1998
Chief Executive Officer,
Treasurer and Director
S. Keith London..................... 32 Executive Vice President and since July 1, 1998
Director
Robert A. Byrne..................... 71 Director Nominee
David Conboy........................ 42 Director since February 24, 1999
John B. Fraser...................... 64 Director Nominee --
Joseph Luciano...................... 51 Director Nominee --
Daniel J. Sullivan.................. 41 Chief Financial Officer and Vice since January 25, 1999
President
</TABLE>

MARK E. MUNRO, chairman of the board, president, chief executive officer and
treasurer, founded BiznessOnline in June, 1998. From October, 1996 until
September, 1997, Mr. Munro served as president of sales, marketing and
distribution, and director of VSI Enterprises, Inc., a video conferencing
equipment manufacturer. In August 1990, Mr. Munro founded Eastern Telecom, Inc.,
a company involved in the marketing and sales of telecommunications services and
products for NYNEX, Bell Atlantic and The Southern New England Telephone
Company. Mr. Munro served as chief executive officer, treasurer and director of
Eastern Telecom from 1990 until 1996, when VSI Enterprises, Inc. acquired all of
the outstanding stock of Eastern Telecom. From September, 1997 to June, 1998,
Mr. Munro was not employed and concentrated on the management of his personal
investments.

S. KEITH LONDON, executive vice president and director, has been employed by
BiznessOnline since June, 1998. From October, 1996 until August, 1997, Mr.
London was director of business development for Eastern Telecom, Inc. From
March, 1994 until October, 1996, Mr. London served as an associate director at
Geneva Corporate Finance, Inc., an investment banking firm in New York City.
From May, 1992 until December, 1993, Mr. London attended Columbia University
Graduate School of Business. From August, 1997 to June, 1998, Mr. London was not
employed and assisted Mr. Munro in reviewing prospective investment
opportunities.

ROBERT A. BYRNE, director nominee, was senior vice president of the
corporate trust division of Manufacturers Hanover Trust Company, now known as
Chase Manhattan Bank, from 1975 until his retirement in 1990. Mr. Byrne served
on the board of directors of Manufacturers Hanover Trust Company of California
and Atlantic Gulf and Petroleum Company, an oil company which has since been
acquired by Mobil Corporation, from 1980 until 1990, and on the board of
directors of Manufacturers Hanover Trust Company of Florida from 1975 until
1990. Mr. Byrne also served as treasurer of the American Society of Corporate
Secretaries from 1980 until 1990.

DAVID CONBOY, a director, is also the chief executive officer of Global 2000
Communications which he founded in June 1994. From September, 1991 through June,
1994, Mr. Conboy served as national marketing director for New Wave Products, a
distributor of health care products.

JOHN B. FRASER, director nominee, is currently a self-employed business
consultant. He was president of Geneva Financial Corporation, an investment
banking firm from July, 1994 to January, 1999. Prior to joining Geneva, from
July, 1987 to June, 1994, Mr. Fraser was a managing director for

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Citibank. From February, 1981 to January, 1998, Mr. Fraser was president and
director of Morgan Grenfell, Inc., a British investment bank. Mr. Fraser
received his M.B.A. from Harvard Business School. He serves as a director of
Worldtex, Inc., a company which manufactures elastic yarn for hosiery.

JOSEPH LUCIANO, director nominee, has served as chief operating officer of
Program Planning Professionals, an international technologies project management
consulting company, since September, 1998. Prior to joining Program Planning
Professionals, he served as chief information officer at Mars, Inc., a national
candy maker, from 1983 through August, 1998.

DANIEL J. SULLIVAN has served as our chief financial officer and vice
president since January, 1999. From December, 1997 through January, 1999, Mr.
Sullivan served as controller of the Vitronics-Soltec division of a subsidiary
of Dover Corporation. Vitronics-Soltec manufactures capital equipment for the
electronics industry. From April, 1994 until December, 1997, he was vice
president and controller of Vitronics Corporation, a manufacturer of capital
equipment for the electronics industry which traded on the American Stock
Exchange prior to its acquisition by Dover Corporation in 1997.

COMPENSATION OF DIRECTORS

Directors who are also our employees receive no additional compensation for
attendance at board meetings. Non-employee directors will receive $500 per board
meeting and options for the purchase of common stock from our 1999 non-employee
director stock incentive plan as described below. They will also be reimbursed
for their travel, lodging, and other out-of-pocket expenses incurred in
attending board meetings.

BOARD COMMITTEES

We intend to appoint both a compensation committee and an audit committee
composed of members of our board of directors after the consummation of this
offering. We have not determined who will serve as the members of these
committees, although we expect to appoint non-employee directors to serve as
members of the compensation committee which will administer our stock option
plans.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth the compensation we paid to our chief
executive officer for services rendered in all capacities during the fiscal year
ended December 31, 1998. No other executive officers earned in excess of
$100,000 of salary and bonus for the periods indicated.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-------------
<S> <C> <C>
NAME AND PRINCIPAL POSITION YEAR SALARY
- ----------------------------------------------------------------------- --------- -------------
Mark E. Munro.......................................................... 1998 $ 7,692
Chairman, President, Treasurer and
Chief Executive Officer
</TABLE>

EMPLOYMENT AGREEMENTS

We have entered into an employment agreement with Mr. Munro which provides
for an initial term of three years commencing January 1, 1999 at an initial
annual base salary of $125,000 plus an annual performance bonus to be determined
by the our compensation committee. Mr. Munro's employment agreement also
contains termination provisions that require us to pay Mr. Munro 1.5 times his
annual base salary in the event he is terminated without cause during the term
of the agreement, or

38
<PAGE>
two times his annual base salary in the event he is terminated in connection
with a change-of-control during the term of the agreement. Mr. Munro's agreement
also provides for health insurance benefits and contains non-competition
provisions that prohibit him from competing with us. The period covered by the
non-competition provisions will end either one year after the expiration of the
agreement or one year after Mr. Munro's resignation or termination.

We have entered into an employment agreement with Mr. London which provides
for an initial term of one year commencing December 1, 1998 at an initial annual
base salary of $80,000. Mr. London's employment agreement contains termination
provisions that require us to pay Mr. London an amount equal to his annual base
salary in the event he is terminated without cause during the term of the
agreement, or 1.5 times his annual base salary in the event he is terminated in
connection with a change-of-control during the term of the agreement. Mr.
London's employment agreement also contains health insurance benefits and a
non-competition covenant that runs for a one year period following termination.

We have entered into an employment agreement with Mr. Sullivan which
provides for a term of one year commencing January 25, 1999 at an initial annual
base salary of $125,000. Mr. Sullivan is also entitled to receive an option to
purchase 30,000 shares of common stock at an exercise price equal to the price
per share of the common stock offered to the public in this offering, vesting
10,000 shares per year over a three-year period. In the event we terminate Mr.
Sullivan without cause, Mr. Sullivan will receive his base salary and health
benefits for the greater of six months or the remainder of his initial one-year
employment term. Mr. Sullivan's employment agreement also contains health
insurance benefits and a non-competition covenant that runs for a two year
period following termination.

We have also entered into employment agreements with three employees of
Global 2000 Communications, Inc. and we will enter into employment agreements
with eight employees of the four Internet service providers we will acquire upon
consummation of this offering. In general, these agreements:

- are for terms of three years;

- provide for annual salaries of up to $70,000;

- provide for bonuses in the aggregate between 5% and 7.5% of each
respective Internet service provider's annual revenue growth, excluding
revenues generated as a result of mergers or acquisitions;

- provide for bonuses in the aggregate between 15% and 20% of each
respective Internet service provider's annual earnings before interest,
taxes, depreciation and amortization growth, after allocation of corporate
overhead expenses and excluding revenues generated as a result of mergers
or acquisitions; and

- provide for bonuses for successfully integrating additional newly acquired
Internet service providers into our consolidated operations.

These agreements contain customary non-competition provisions which
generally prohibit the employees from competing with us in the northeastern
United States for two years following termination of employment.

We cannot guarantee that any of the non-competition provisions contained in
the employment agreements discussed in this section will be enforced by a state
court. However, these persons must also comply with non-competition provisions
in their acquisition agreements which generally prohibit them from competing
with us in the northeastern United States for a period of two years after the
closing of this offering. We believe that in the context of a sale of a
business, there is a good chance that the non-competition provisions in the
acquisition agreements will be enforced by a state court.

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<PAGE>
1999 STOCK INCENTIVE PLAN

PURPOSE. We believe it is in our best interest to provide incentives for
the continued services of key and valuable employees, directors and
non-employees who perform services for us. Our 1999 stock incentive plan allows
us to award both incentive and non-qualified stock options to these persons.

AWARDS AND ELIGIBILITY. The compensation committee of our board of
directors that will administer the stock incentive plan may award:

- incentive stock options within the meaning of Section 422 of the Internal
Revenue Code; or

- non-qualified stock options.

Only employees are eligible to receive incentive stock options. We have
reserved 500,000 shares of our common stock for issuance under the stock
incentive plan, all or any portion of which may be granted in the form of
incentive stock options. Shares of common stock covered by expired or terminated
options generally will be available for subsequent awards.

EXERCISE PRICE. The option price per share for any option granted under the
plan will be determined by the committee. In the case of an incentive stock
option, the option price per share will not be less than 100% of the fair market
value of our common stock at the time of the grant. In the case of a
non-qualified option, the option price per share will not be less than 85% of
the fair market value of our common stock at the time of the grant. In the case
of any option granted prior to the effective date of this offering, the option
price per share will equal the initial public offering price.

OPTION TERM. The committee determines the term of each option. No incentive
stock option may be exercised after the expiration of ten years from the date
the option is granted. The committee may determine that all or a stated
percentage of the shares covered by these options will become exercisable or
"vest" in installments after the completion of a specified service requirement
by the holder.

SPECIAL RULES FOR 10% STOCKHOLDER. The option price per share of an
incentive stock option granted to an employee who owns more than 10% of the
total combined voting power of all classes of our stock will be at least 110% of
the fair market value of our stock at the time of the grant. In addition,
incentive stock options to 10% stockholders may not be exercised after five
years from the date of the grant.

GRANT LIMITATION. The aggregate fair market value of common stock covered
by incentive stock options that are exercisable for the first time by any
employee during any calendar year is determined at the time the incentive stock
option is granted and will not exceed $100,000.

TERMINATION OF OPTION BY REASON OF TERMINATION OF EMPLOYMENT. Unless the
committee determines otherwise, if an option holder's employment terminates, all
options that are not exercisable on the date of termination of employment will
immediately terminate. Any remaining options will terminate if not exercised
before the earlier of the expiration of the option term or the following
periods:

- thirty days following termination of employment, if termination was not a
result of retirement on or after age 55, or of death, or of disability
within the meaning of Section 22(e)(3) of the Internal Revenue Code;

- three months following termination of employment because of retirement on
or after age 55;

- one year following date of death or commencement of disability, if the
option holder was employed at the time of death or the commencement of
disability; or

- immediately upon a "for cause" termination.

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<PAGE>
DISPOSITION OF SHARES. Shares of common stock acquired upon exercise of
incentive stock options may not be transferred, other than by will or by the
laws of descent and distribution, within two years of the date the option was
granted or within one year after the receipt of the shares upon exercise of the
option in order for these options to qualify as incentive stock options under
the Internal Revenue Code.

1999 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PLAN

PURPOSE. We believe it is in our best interest to provide compensation and
other incentives for the continued services of our non-employee directors and
for attracting able individuals to directorships with us.

ELIGIBILITY. A non-employee director will automatically participate in the
non-employee director stock incentive plan as of the later of:

- the closing date of this offering of common stock; or

- the date of his or her initial election to our board of directors.

A director who is a regular employee or officer is not eligible to
participate in the non-employee director stock incentive plan. A director will
cease to participate in this plan as of the date he or she fails to be
re-elected to our board, or becomes a regular employee of BiznessOnline.

AWARDS. Our non-employee directors will initially be granted a
non-qualified option to purchase 7,500 shares of our common stock upon election
to our board. These shares shall vest on the following schedule:

- 33 1/3% on the grant date;

- 33 1/3% on the first anniversary of the grant date; and

- 33 1/3% on the second anniversary of the grant date.

If a director continues to serve on the board after the first anniversary
date of his or her election, he or she shall be granted an additional
non-qualified option to purchase 2,500 shares of our common stock for each
additional year, vesting twelve months after the grant date of the additional
option.

We have reserved 50,000 shares of our common stock for issuance under the
non-employee director stock incentive plan. Shares of common stock covered by
expired or terminated options generally will be available for subsequent awards.

EXERCISE PRICE. In each case, the exercise price per share of an option
granted under this plan will be equal to 100% of the fair market value of our
common stock on the date of the grant.

OPTION TERM. All options under this plan will have an eight year term and
will vest as set forth above.

TERMINATION OF OPTION. In the event of termination for reason other than
disability or death, the director may, for a period of 3 months after the date
of termination but in no event later than the expiration date of the option,
exercise his option to the extent that the director was entitled to exercise it
at the date of the termination or as may be determined by the administering
committee.

GENERAL TERMS APPLICABLE TO 1999 STOCK INCENTIVE PLAN AND 1999 NON-EMPLOYEE
DIRECTOR STOCK INCENTIVE PLAN

ADMINISTRATION. A disinterested committee of our board will administer each
of our stock plans.

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<PAGE>
METHOD OF EXERCISE. An option granted under either plan may be exercised by
written notice to the committee, stating the number of shares of common stock
being exercised under the option. The notice shall either be accompanied by the
payment of the full option price for the shares or it will fix a date, of not
more than 10 business days from the date of the notice, for payment of the
purchase price. The purchase price may be paid:

- in cash, including personal check;

- by the delivery of common stock already owned by the option holder;

- with the prior approval of the committee and if permitted by applicable
law, by delivery of a promissory note of the option holder; or

- by any combination of the above.

We will issue a certificate or certificates for the shares of our common
stock purchased through the exercise of an option after we receive notice of and
payment for the exercised option. During the option period no person entitled to
exercise any option granted under either plan shall have any of the rights or
privileges of a stockholder with respect to any shares issuable upon exercise of
the option until certificates representing the shares shall have been issued and
delivered.

MODIFICATION OR CANCELLATION OF OPTION. The administering committee may
amend the terms of any option with the consent of the option holder, including
the acceleration of any vesting schedule in connection with a change in control
or ownership, or the outright cancellation of any outstanding options. In
substitution for canceled options, the committee may grant new options, under
the plan, covering the same or different numbers of shares of common stock at an
option price per share in all events not less than fair market value on the date
of the new grant.

CHANGES IN OUR CAPITAL STRUCTURE. The existence of outstanding options will
not prevent us from changing our capital structure, merging or consolidating our
operations with another company, issuing additional preferred stock with rights
senior to our common stock, selling substantially all of our assets, selling
additional securities, dissolving or liquidating our business, or carrying out
any other act authorized under Delaware law, our charter or our bylaws.

If we subdivide, consolidate, reclassify or carry out any other capital
readjustment or recapitalization, pay a stock dividend, or otherwise increase or
reduce the number of shares of our common stock outstanding without receiving
compensation in money, services or property, then the number, class, and per
share price of our common stock will be adjusted so that an option holder will
receive, upon exercise of an option, for the same aggregate consideration, the
same total number and class of shares as he or she would have received as a
result of the event requiring the adjustment.

If we merge or consolidate with another corporation, if we are liquidated,
or if we sell or otherwise dispose of substantially all of our assets or
substantially all of our stock while this option remains outstanding, unless our
board determines otherwise, all outstanding options will expire as of the
effective date of the merger, consolidation, liquidation, sale, or other
disposition. In these situations:

- we must provide notice of the merger, consolidation, liquidation, sale or
other disposition event at least 30 days prior to the effective date of
the event; and

- an option holder will have the right to exercise his or her option during
the 30 day period preceding the effective date of the merger,
consolidation, liquidation, sale or other disposition event.

In general, our issuance of shares of stock of any class, for cash,
property, labor or services, either upon direct sale or upon the exercise of
rights or warrants or upon conversion of convertible securities, will not result
in an adjustment to the number of shares or the price of our common stock
covered by outstanding options at that time.

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<PAGE>
AMENDMENT OR TERMINATION. The administering committee may amend, suspend or
terminate either plan. We will obtain stockholder approval of any amendment if
necessary to comply with applicable laws, including federal securities laws,
state corporate and securities laws, the Internal Revenue Code and any stock
exchange regulations. If either plan is terminated, any unexercised option shall
continue to be exercisable according to its terms except as provided above with
respect to changes in our capital structure.

DURATION OF PLANS. Each of our stock plans will terminate in the year 2009.

COMPLIANCE WITH SECURITIES LAWS. Options granted and shares issued by us
upon exercise of the options will be granted and issued only in full compliance
with all applicable securities laws, including laws, rules and regulations of
the Securities and Exchange Commission and applicable state Blue Sky Laws. As a
result, the committee may impose such conditions on transfer, restrictions and
limitations as it may deem necessary and appropriate to assure compliance with
these securities laws. If either plan is terminated, any unexercised option
shall continue to be exercisable according to its terms except as provided above
with respect to changes in our capital structure.

NON-TRANSFERABILITY. Except in limited circumstances, each option shall be
exercisable during the option holder's lifetime only by him and may not be
assigned or transferred except by his will or by the laws of descent and
distribution.

LIMITATION ON LIABILITY OF AND INDEMNIFICATION OF DIRECTORS AND OFFICERS.

OVERVIEW. Under our charter and Delaware law, our directors are not liable
for monetary damages for breach of fiduciary duties except in special situations
as described below. In addition, under our charter and Delaware law, we are
required to indemnify our directors and officers against all losses to the
fullest extent permitted by Delaware law under a variety of situations as
described below. Finally, under Delaware law, we are entitled to obtain
insurance on behalf of our directors and officers to protect them against
liabilities they may occur in their official capacities even in situations where
we may not have the power to indemnify these individuals, and we intend to
obtain such insurance at the closing of this offering, as described below.

LIMITATIONS ON LIABILITY OF DIRECTORS. Under Delaware law, a corporation
may adopt a charter provision eliminating or limiting the personal liability of
its directors to the corporation or its stockholders for breach of fiduciary
duties except for:

- any breach of the director's duty of loyalty to the corporation or its
stockholders;

- any acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- any payment of a dividend or approval of a stock purchase that is illegal
under Section 174 of the Delaware General Corporation Law, or

- any transaction from which the director derived an improper personal
benefit.

We have adopted a charter provision eliminating the personal liability of
our directors to the fullest extent permitted under Delaware law except under
the four provisions noted above. We have also included a provision in our
charter which would extend the benefits of any change in Delaware law that
further limits the personal liability of directors to a corporation or its
stockholders.

INDEMNIFICATION FOR DIRECTORS AND OFFICERS. Under Delaware law, a
corporation may indemnify its present and former directors and officers in a
variety of court or administrative proceedings. We have adopted a charter
provision which requires us to indemnify and hold harmless any person involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative, because that person is or was a director or officer of
BiznessOnline, against all expense, liability and loss. This

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charter provision does not, however, require us to indemnify an officer or
director in a proceeding they initiate without the authorization of our
directors. This indemnification right includes the right to be paid expenses
incurred in defending any proceeding in advance of its final disposition, but
only if the indemnified person agrees to repay all amounts advanced if required
under Delaware law and if it shall be ultimately determined that the director or
officer is not entitled to be indemnified under our charter or Delaware law.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
BiznessOnline pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission
indemnification for liabilities is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.

INSURANCE FOR DIRECTORS AND OFFICERS. Under Delaware law, a corporation may
obtain insurance on behalf of its directors and officers against liabilities
incurred by them in those capacities. We have adopted a charter provision which
permits us to maintain insurance to protect us and our directors and officers
against expenses, liabilities and losses whether or not we would have the power
to indemnify these persons against their expenses, liabilities or losses under
Delaware law. We have consulted with several insurance providers and we intend
to have in place at or promptly after the closing of this offering a directors'
and officers' liability and company reimbursement liability insurance policy
that will:

- insure directors and officers against losses, above a deductible amount,
arising from claims made against them resulting from their actions as
directors or officers;

- insure us against losses, above a deductible amount, arising from claims
against our officers and directors for their actions in their official
capacities, but only if we are required or permitted to indemnify these
directors or officers for their losses under Delaware law or under our
charter or bylaws.

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CERTAIN TRANSACTIONS

In connection with our organization and initial capitalization, on July 1,
1998 Mark E. Munro, our president, chairman of the board and chief executive
officer, and his wife Susan Munro each contributed $42.50 for 42.5 shares of our
common stock, which, as a result of a subsequent 10,000 for one stock split and
the 3.147186 for one stock split that we intend to effect prior to the closing
of this offering, will represent a total of 2,675,108 shares in the aggregate or
38.8% of our outstanding common stock after this offering. Mr. Munro also
contributed an additional $142,900 during 1998 to fund operating expenses and
deferred offering costs.

In connection with our organization and initial capitalization, on July 1,
1998, S. Keith London, our executive vice president and a director, contributed
$13.00 for 13 shares of our common stock, which, as a result of a subsequent
10,000 for one stock split and the 3.147186 for one stock split that we intend
to effect prior to the closing of this offering, will represent a total of
409,134 shares in the aggregate or 5.9% of our outstanding common stock after
this offering. Mr. London also contributed an additional $40,000 during 1998 to
fund operating expenses and deferred offering costs.

In connection with our acquisition of Global 2000 Communications on January
31, 1999, we issued a total of 204,000 shares of common stock to David Conboy, a
director, and his wife Lorin Beller, and promissory notes in the aggregate
principal amount of $435,000. Their notes will be repaid at the closing of this
offering.

On February 1, 1999, our Global 2000 Communications, Inc. subsidiary entered
into a lease with David Conboy, a director, and his wife Lorin Beller for
approximately 2,000 square feet of office space with a monthly rent of $2,000
plus utilities. The term of the lease is five years although we may terminate
this lease at any time upon thirty days prior notice without further liability.

On March 31, 1999, we established a $100,000 revolving line of credit
facility with BankBoston. Mr. Munro personally guaranteed this loan. After the
closing of the offering, we intend to repay any outstanding balance on this
loan, and Mr. Munro's personal guarantee will be released.

All future transactions with our officers, directors or stockholders owning
5% or more of our outstanding common stock, and their respective affiliates,
will be on terms no less favorable than could be obtained from unaffiliated
third parties and will be approved by a majority of our independent,
disinterested directors with access to independent counsel.

45
<PAGE>
PRINCIPAL STOCKHOLDERS

The following stockholder information about the beneficial ownership of our
common stock, as of the date of this prospectus assumes:

- the acquisitions of our Internet service providers have been completed;

- an initial public offering price of $10.00 per share;

- the conversion of 70,000 shares of preferred stock into 61,250 shares of
common stock; and

- the completion of a 3.147186 for 1 stock split.

The information in this table below provides the ownership information for:

- each person known by BiznessOnline to beneficially own more than 5% of
the common stock;

- each of our directors and director nominees;

- each of our executive officers named in the summary compensation
table; and

- our current executive officers, directors and director nominees as a
group.

The common stock is the only class of our equity securities which will be
outstanding after the offering. We currently have 29 stockholders.

<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS TITLE SHARES OWNED BEFORE THE OFFERING AFTER THE OFFERING
- ------------------------------------ --------------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Mark E. Munro....................... CEO, President, 2,675,108 67.0% 38.8%
1720 Route 34 Treasurer &
P.O. Box 1347 Director
Wall, NJ 07719
S. Keith London..................... Executive Vice 409,134 10.3% 5.9%
1720 Route 34 President &
P.O. Box 1347 Director
Wall, NJ 07719
Susan Munro......................... -- 2,675,108 67.0% 38.8%
1720 Route 34
P.O. Box 1347
Wall, NJ 07719
David Conboy........................ Director 204,000 5.1% 3.0%
1840 Western Avenue
Albany, NY 12203
Lorin Beller........................ -- 204,000 5.1% 3.0%
1840 Western Avenue
Albany, NY 12203
Joseph Luciano...................... Director Nominee 2,500 0 Less than 1%
548 West Shore Trail
Sparta, NJ 07871
John Fraser......................... Director Nominee 2,500 0 Less than 1%
1172 Park Avenue
New York, NY 10128
Robert Byrne........................ Director Nominee 2,500 0 Less than 1%
3810 Quail Ridge Drive
Boynton Beach, FL 33436
All current directors, director 3,295,742 82.6% 47.8%
nominees and executive officers 7
persons)............................
</TABLE>

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

In the preceding table:

- Mr. Munro's shares include 1,337,554 shares of common stock owned by Mr.
Munro's wife, Susan Munro, as to which Mr. Munro disclaims beneficial
ownership.

- Mrs. Munro's shares include 1,337,554 shares of common stock owned by Mrs.
Munro's husband, Mark Munro, as to which Mrs. Munro disclaims beneficial
ownership.

- Mr. Conboy's shares include 102,000 shares of common stock owned by Mr.
Conboy's wife, Lorin Beller, as to which Mr. Conboy disclaims beneficial
ownership.

- Ms. Beller's shares include 102,000 shares of common stock owned by Ms.
Beller's husband, David Conboy, as to which Ms. Beller disclaims
beneficial ownership.

- The shares owned by the director nominees represent shares acquirable upon
exercise of stock options to be granted at the closing of this offering
which are exercisable within 60 days of the effective date of this
prospectus.

46
<PAGE>
DESCRIPTION OF SECURITIES

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 39,000,000 shares of common stock,
par value $0.01 per share, and 1,000,000 shares of preferred stock, par value
$0.01 per share. The following is a description of our capital stock.

COMMON STOCK

Each stockholder of record is entitled to one vote for each outstanding
share of our common stock owned by that stockholder on every matter properly
submitted to the stockholders for their vote. Holders of common stock
participate with the holders of preferred stock in any dividend declared by our
board of directors out of funds legally available for this purpose. After the
payment of liquidation preferences to all holders of preferred stock, holders of
common stock will receive on a pro rata basis all our remaining assets available
for distribution to the stockholders in the event of our liquidation,
dissolution or winding up. Holders of common stock do not have any preemptive
right to become subscribers or purchasers of additional shares of any class of
our capital stock. The outstanding shares of common stock are, and the shares of
common stock offered in this offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
common stock may be adversely affected by the rights of the holders of shares of
any series of preferred stock that we may designate and issue in the future.
Whenever we provide information relating to our outstanding shares of common
stock in this prospectus, we assume that we have completed a 3.147186 for 1
stock split that we intend to effect prior to the closing of this offering.

Prior to this offering there has been no public market for our common stock.
There is no guaranty that an active trading market will develop or be sustained
upon completion of this offering, or that the market price of our common stock
will not decline below the initial public offering price. We negotiated the
initial public offering price of our common stock with representatives of our
underwriters, and the initial offering price may not be indicative of the prices
that will prevail in the public market in the future. In addition, the stock
market has experienced extreme price and volume fluctuations which have
particularly affected the market prices of many Internet related companies and
which have often been unrelated to the operating performance of these companies.
Because we are an Internet company, our common stock may be particularly
vulnerable to fluctuations in the future. Also, the operating results for our
Internet service providers have fluctuated in the past, and our operating
results may change materially in the future. Fluctuations could affect the
market price of our common stock.

PREFERRED STOCK

Our board of directors is authorized, without further stockholder approval,
to issue up to 1,000,000 shares of preferred stock in one or more series and to
fix the rights, preferences, privileges and restrictions of these shares,
including dividend rights, conversion rights, voting rights, terms of redemption
and liquidation preferences, and to fix the number of shares constituting any
series and the designations of these series. These shares may have rights senior
to our common stock. The issuance of preferred stock may have the effect of
delaying or preventing a change in control of BiznessOnline. The issuance of
preferred stock could decrease the amount of earnings and assets available for
distribution to the holders of common stock or could adversely affect the rights
and powers, including voting rights, of the holders of the common stock.

On February 15, 1999, we issued 70,000 shares of Class A preferred stock in
connection with the closing of a private offering of preferred stock. These
shares have no voting rights; a liquidation preference of $5.00 per share, and
are entitled to dividends if we pay dividends to our common stockholders as if
each share of preferred stock had been converted to common on a one-for-one
basis.

47
<PAGE>
Upon consummation of this offering, these shares automatically convert to common
stock at the conversion rate of $8.75 per preferred share divided by the price
per share of the common stock being sold in this offering. The conversion of
preferred stock to common stock is mandatory and automatic on the date of
completion of this offering. Whenever we provide information relating to our
outstanding shares of common stock in this prospectus, we assume that the 70,000
shares of preferred stock currently outstanding have already been converted to
61,250 shares of common stock.

At present, we have no plans to issue any additional shares of preferred
stock.

COMMON STOCK OPTIONS.

Our 1999 stock incentive plan enables us to issue incentive and
non-qualified stock options to deserving employees, directors and non-employees
who perform services for BiznessOnline. Under this plan, we have reserved
500,000 shares of our authorized common stock for option grants. We believe that
our stock incentive plan will enhance our ability to attract and retain key
employees and other persons who are in a position to make significant
contributions to our success.

We have agreed to issue incentive stock options under our stock incentive
plan to purchase 30,000 shares of common stock to our chief financial officer
pursuant to his employment agreement. The options vest over a three year period
commencing on January 25, 2000 and are exercisable at the price per share of our
common stock offered to the public in this offering.

Our 1999 non-employee director stock incentive plan enables us to issue
non-qualified stock options to non-employee directors. Under this plan, we have
reserved 50,000 shares of our authorized common stock for option grants. We
believe that our non-employee director stock incentive plan will provide
incentives for the continued service of these directors and for attracting new
directors to our board.

We have agreed to issue non-qualified stock options under our non-employee
director stock incentive plan to purchase a total of 22,500 shares of common
stock to the three director nominees identified in the "Management" section of
this prospectus exercisable at the initial public offering price promptly after
the closing of this offering.

UNDERWRITERS' WARRANTS

In connection with this offering, we have agreed to sell to representatives
of the underwriters, for nominal consideration, warrants for the purchase of
that number of shares of our common stock equal to 10% of the total number of
shares sold in this offering exercisable at a price per share equal to 165% of
the initial public offering price.

ANTI-TAKEOVER PROVISIONS UNDER DELAWARE LAW, OUR CHARTER AND OUR BYLAWS.

OVERVIEW. Under our charter and our bylaws, we have included specific
anti-takeover provisions which may deprive our stockholders of some
opportunities to sell their shares at above-market prices to persons attempting
to acquire our company and which may discourage potential acquirers from
attempting to change our board of directors or our management. These provisions
include the following:

- We have elected to be governed by Section 203 of the Delaware General
Corporation Law in our charter. Section 203 is an anti-takeover law which,
in general, restricts the ability of a publicly held Delaware corporation
from engaging in a "business combination" with an "interested stockholder"
for a period of three years after the date of the transaction in which the
person became an interested stockholder. An "interested stockholder" is
defined as a person owning 15% or more of our outstanding voting stock,
and a "business combination" is defined

48
<PAGE>
to include a variety of transactions including a merger, a consolidation
or sale of 10% or more of our assets.

- We have also included a provision in our charter which authorizes our
board of directors to issue preferred stock in one or more series and to
fix the rights, preferences, privileges and restrictions of these shares,
including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, liquidation preferences and the number of
shares constituting any series or designation of a series, without further
vote or action by stockholders.

- Finally, our by-laws require advance notice for nominations of directors
and any other matters to be brought before an annual meeting of
stockholders other than by our board of directors.

SECTION 203. Section 203 prevents an interested stockholder from engaging
in a business combination with a publicly-held Delaware corporation for three
years following the date the person became an interested stockholder unless:

- before the person became an interested stockholder, the board of directors
of the corporation approved the transaction in which the interested
stockholder became an interested stockholder or approved the business
combination;

- upon consummation of the transaction that resulted in the interested
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding stock held by directors who
are also officers of the corporation and by employee stock plans that do
not provide employees with the right to determine confidentially whether
shares held under the plan will be tendered in a tender or exchange offer;
or

- following the transaction in which the person became an interested
stockholder, the business combination is approved by the board of
directors and authorized at a meeting of the stockholders by affirmative
vote, and not by written consent, of the holders of two-thirds of the
outstanding voting stock not owned by the interested stockholder.

ADVANCE NOTICE FOR STOCKHOLDER PROPOSALS AND NOMINATIONS OF
DIRECTORS. Under our bylaws, we have established an advance notice procedure
for nomination, other than by our directors, of candidates for election as
directors and for other specific matters to be brought before an annual meeting
of our stockholders. This nomination procedure requires a stockholder to provide
our corporate secretary with prior written notice, in proper form as detailed in
the bylaws, of a planned nomination for our board of directors. If the annual
meeting election inspectors determine that a person was not nominated in
accordance with this nomination procedure, the person will not be eligible for
election as a director. With regard to other business to be brought before a
stockholders meeting, a stockholder seeking to have any business conducted at an
annual meeting must give prior written notice, in proper form as detailed in the
bylaws, to our corporate secretary. If the chairman or other officer presiding
at a meeting determines that other business was not properly brought before the
meeting in accordance with this procedure, the business will not be conducted at
that meeting. Although our bylaws do not give our board of directors any power
to approve or disapprove stockholder nominations for the election of directors
or of any other business desired by stockholders to be conducted at an annual or
any other meeting, the bylaws:

- may have the effect of precluding a nomination for the election of
directors or precluding the conduct of business at a particular annual
meeting if the proper procedures are not followed; or

- may discourage or deter a third party from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to
obtain control of us, even if the solicitation or the attempt to obtain
control might be beneficial to us and our stockholders.

49
<PAGE>
TRANSFER AGENT. We have appointed Continental Stock Transfer & Trust
Company as the transfer agent for our common stock.

SHARES AVAILABLE FOR FUTURE SALE

Upon completion of this offering and issuance of the shares representing the
stock portion of the purchase prices of our Internet service provider
acquisitions, we will have 7,325,436 shares of common stock outstanding assuming
the initial public offering price of $10.00 per share and assuming the
underwriters' over-allotment option is exercised in full. The 3,335,000 shares
sold in this offering will be freely tradable in the United States if a market
for our stock develops by persons other than our officers, directors or other
affiliated parties. All of the remaining 3,990,436 shares are "restricted
securities" under Rule 144 of the Securities Act of 1933. Ordinarily, under Rule
144, a person holding restricted securities for a period of one year may, every
three months, sell in ordinary brokerage transactions an amount equal to the
greater of one percent of a company's then outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the
person's sales. Rule 144 also permits sales by a person who is not an affiliate
of the company and who has held the shares for two years without any quantity
limitation.

Of the 3,990,436 restricted securities

- the holders of 3,145,492 shares, represented by the the principal founders
of BiznessOnline, and the investors in our private offering of preferred
stock from December 10, 1998 through February 12, 1999 which automatically
converts to common stock at the closing of this offering, have agreed not
to sell any of their shares for a period of 14 months from the date of our
final prospectus for this offering without the prior written consent of
the underwriters. After this 14 month period, these holders would be
eligible to resell their shares if they comply with the volume limitations
and other conditions of Rule 144.

- the holders of 782,000 shares--the former stockholders of the five
Internet service providers we will own as of the closing of this
offering--have agreed not to sell 391,000 shares for a period of two years
from the date of our final prospectus for this offering, after which these
shares could be resold under Rule 144 by non-affiliates without any volume
limitations. Of the remaining 391,000 shares owned by these stockholders,
255,000 shares would be available for resale under Rule 144 commencing one
year from the closing date of this offering, and 136,000 would be
available for resale under Rule 144 commencing January 31, 2000.

- the holders of 62,944 shares may sell their shares commencing 90 days
after the date of this prospectus if they comply with the volume
limitations and other conditions of Rule 144.

Any substantial future sales of our common stock under Rule 144 or any other
applicable exemption under the Securities Act of 1933 could have a depressive
effect on the market price of our stock and could impair our ability to raise
additional capital through the sale of our equity securities.

50
<PAGE>
UNDERWRITING

Each of the underwriters named below through their representatives, Joseph
Stevens & Company, Inc., Schneider Securities, Inc., Neidiger, Tucker, Bruner,
Inc. and Royce Investment Group, Inc. has agreed to purchase from us on a firm
commitment basis the following respective shares of common stock at the initial
public offering price less the underwriting discounts set forth on the cover
page of this prospectus and less a non-accountable expense allowance. Delivery
of the shares will be made on [ ] in New York, New York against payment in
immediately available funds.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Joseph Stevens & Company, Inc.................................................... --
Schneider Securities, Inc........................................................ --
Neidiger, Tucker, Bruner, Inc.................................................... --
Royce Investment Group, Inc......................................................
----------
Total...................................................................... 2,900,000
</TABLE>

The underwriting agreement provides that the obligations of the underwriters
depend on various conditions. The underwriters are obligated to purchase all of
the shares, if they purchase any.

The underwriters have advised us that they propose to offer the shares of
common stock to the public at the initial public offering price set forth on the
cover of this prospectus. The underwriters have also advised us that they may
allow to some dealers concessions of not in excess of $[ ] per share of common
stock, of which a sum not in excess of $[ ] per share of common stock may in
turn be reallowed by those dealers to other dealers. After the initial offering
has been completed, the public offering price and other selling terms may be
changed by the underwriters. The underwriters have further advised us that they
do not expect sales to discretionary accounts to exceed five percent of the
total number of shares of common stock included in this offering.

We have agreed to pay to Joseph Stevens & Company and Schneider Securities a
non-accountable expense allowance equal to three percent of the total proceeds
of the offering of which we have already paid $50,000 to Schneider Securities.

We have granted an option to the underwriters, exercisable during the 45-day
period following the final date of the prospectus, to purchase up to 435,000
shares of common stock at the offering price less underwriting discounts and
commissions set forth on the cover page of this prospectus and the
non-accountable expense allowance. The underwriters may exercise this option
only to satisfy over-allotments in the sale of the shares. If the underwriters
exercise this option, each of the underwriters will become obligated to purchase
approximately the same percentage of additional shares of common stock as the
number of shares of common stock to be purchased by it in the above table bears
to the total amount offered. We will become obligated to sell these shares to
the underwriters to the extent the option is exercised. If any additional shares
of common stock are purchased, the underwriters will offer these additional
shares on the same terms.

The following tables show the per share and total underwriting discounts and
commissions to be paid to the underwriters by BiznessOnline. Such amounts are
shown assuming both no exercise and full exercise of the underwriters'
over-allotment option to purchase additional shares.

<TABLE>
<CAPTION>
PAID BY BIZNESSONLINE
-------------------------
<S> <C> <C>
FULL
NO EXERCISE EXERCISE
----------- ------------
per share.............................................................................. $ $
total.................................................................................. $ $
</TABLE>

51
<PAGE>
We have also agreed to sell to the representatives of the underwriters, for
nominal consideration, warrants to purchase the number of shares of our common
stock equal to 10% of the total number of shares of common stock sold in this
offering at a price per share equal to 165% of the initial public offering price
of the common stock. The underwriters' warrants will be exercisable for a period
of four years commencing one year from the effective date of this offering and
will contain demand and "piggyback" registration rights with respect to the
common stock issuable upon the exercise of the underwriters' warrants. The
underwriters' warrants will be restricted from sale, transfer, assignment, or
hypothecation for a period of one year from the effective date of the offering
except to officers or partners of the underwriters and members of the selling
group and/or their officers or partners. The exercise price and the number of
shares issuable upon exercise may, under some circumstances, be adjusted to
prevent dilution.

Our principal stockholders and BiznessOnline have agreed with the
underwriters that, for a period of 14 months from the date of this prospectus,
without the consent of Joseph Stevens & Company and Schneider Securities, they
will not sell any securities of BiznessOnline. We may, however, issue securities
without consent of the underwriters:

- upon the exercise of any outstanding stock options or warrants granted and
issued on or prior to the date of this prospectus;

- upon the exercise of stock options that may be granted under our 1999
stock incentive plan and our 1999 non-employee director stock incentive
plan so long as these stock options were issued at a price equal to or
greater than the fair market value at time of grant; and

- in connection with acquisitions so long as the price is equal to or
greater than the fair market value per share of our common stock on the
date of issuance or sale.

The underwriting agreement provides for reciprocal indemnification between
us and the underwriters against liabilities in connection with the registration
statement, including liabilities under the Securities Act.

Schneider Securities received a $7,500 commission in connection with our
private offering of preferred stock which closed in February, 1999.

In connection with this offering, some underwriters may engage in passive
market making transactions in the shares in accordance with Rule 103 of
Regulation M. Further, the underwriters' selling group members and their
respective affiliates may engage in transactions that stabilize, maintain or
otherwise affect the market price of our shares. These transactions may include
stabilization transactions permitted by Rule 104 of Regulation M, under which
persons may bid for or purchase shares to stabilize the market price. The
underwriters may also create a "short position" for their own account by selling
more shares in the offering than they are committed to purchase, and in that
case they may purchase shares in the open market after this offering is
completed to cover all or a part of their short position. The underwriters may
also cover all or a portion of their short position, up to 435,000 shares, by
exercising their over-allotment option described above and on the cover of this
prospectus.

The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.

These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
underwriters at any time.

52
<PAGE>
Prior to the offering, there has been no public market for any of our
securities. The initial public offering price of the shares of common stock we
are offering was determined by negotiations between us and the representatives
of the underwriters and is not necessarily related to our assets, earnings, or
book value or any other established criteria of value. Among the factors
considered in determining the public offering price are the following:

- the history and prospects of our business and the industry in which we
compete;

- an assessment of our management and the present state of our development
and business operations;

- prevailing market conditions in the U.S. economy and the industry in which
we compete;

- our revenues, operating cash flow and earnings in recent periods;

- the market capitalizations and stages of development of other companies
which the representatives of the underwriters believe to be comparable to
us; and

- estimates of our business potential.

LEGAL MATTERS

The validity of the common stock we are offering will be passed upon for
BiznessOnline by Duffy & Sweeney, LLP, 300 Turks Head Building, Providence,
Rhode Island 02903. Michael F. Sweeney, Esq., a partner in the law firm of Duffy
& Sweeney, LLP, serves as our assistant secretary and is a partner in a general
partnership which owns 62,944 shares of our common stock. Orrick, Herrington &
Sutcliffe LLP is acting as counsel for the underwriters in connection with the
offering.

EXPERTS

The financial statements of BiznessOnline as of December 31, 1998 and for
the period from July 1, 1998, the date of inception, through December 31, 1998
have been included in this prospectus in reliance upon the report of KPMG LLP,
independent certified public accountants, appearing elsewhere in this
prospectus, and upon the authority of KPMG LLP as experts in accounting and
auditing.

The financial statements of Global 2000 Communications, Inc., AlbanyNet,
Inc., Borg Internet Services, Inc., Caravela Software, Inc., and Ulsternet,
Inc., as of December 31, 1998 and for each of the years in the two-year period
then ended have been included in this prospectus in reliance upon the reports of
KPMG LLP, independent certified public accountants, appearing elsewhere in this
prospectus, and upon the authority of KPMG LLP as experts in accounting and
auditing.

HOW TO GET MORE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act with respect to this offering.
This prospectus does not contain all the information set forth in the
registration statement and the exhibits and schedules thereto, as permitted by
the rules and regulations of the Commission. For further information about us
and the securities offered hereby, reference is made to the registration
statement including the accompanying exhibits and schedules. Statements
contained in this prospectus as to the contents of any contract or other
document summarize only the material provisions of such document and are not
necessarily complete, and in each instance reference is made to the copy of the
contract or other document filed as an exhibit to the registration statement,
with each statement being qualified in all respects by their reference. The
registration statement and accompanying exhibits and schedules may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's Regional Offices located at 7 World Trade Center, Suite
1300, New York, New York 10048 and at 500 West Madison Street, Suite 1400,

53
<PAGE>
Chicago, Illinois 60661. Copies of these materials may be obtained at prescribed
rates by writing to the Commission's Public Reference Section, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549.

Our registration statement as well as any reports to be filed under the
Exchange Act can also be obtained electronically after we have filed these
documents with the Commission through a variety of databases, including among
others, the Commission's Electronic Data Gathering, Analysis and Retrieval
program, Knight-Ridder Information, Inc., Federal Filing/Dow Jones, Lexis/Nexis
and the Commission's web site. (http://www.sec.gov).

Prior to this offering, we have not been a reporting company under the
Securities Exchange Act of 1934. After this offering, we intend to furnish to
our stockholders annual reports, which will include financial statements audited
by independent accountants, and other periodic reports as we may determine to
provide or as may be required by law.

54
<PAGE>
BIZNESSONLINE.COM, INC.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
BIZNESSONLINE.COM, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Introduction to Unaudited Pro Forma Consolidated Financial Statements............ F-3
Unaudited Pro Forma Consolidated Balance Sheet................................... F-4
Unaudited Pro Forma Consolidated Statement of Operations......................... F-5
Notes to Unaudited Pro Forma Consolidated Financial Statements................... F-6

BIZNESSONLINE.COM, INC.
Report of KPMG LLP, Independent Auditors......................................... F-9
Balance Sheet.................................................................... F-10
Statement of Operations.......................................................... F-11
Statement of Stockholders' Equity................................................ F-12
Statement of Cash Flows.......................................................... F-13
Notes to Financial Statements.................................................... F-14

ALBANYNET, INC.
Report of KPMG LLP, Independent Auditors......................................... F-17
Balance Sheet.................................................................... F-18
Statements of Income............................................................. F-19
Statements of Stockholders' Equity............................................... F-20
Statements of Cash Flows......................................................... F-21
Notes to Financial Statements.................................................... F-22

BORG INTERNET SERVICES, INC.
Report of KPMG LLP, Independent Auditors......................................... F-25
Balance Sheet.................................................................... F-26
Statements of Operations......................................................... F-27
Statements of Stockholders' Equity (Deficit)..................................... F-28
Statements of Cash Flows......................................................... F-29
Notes to Financial Statements.................................................... F-30

CARAVELA SOFTWARE, INC.
Report of KPMG LLP, Independent Auditors......................................... F-34
Balance Sheet.................................................................... F-35
Statements of Operations......................................................... F-36
Statements of Stockholders' Equity............................................... F-37
Statements of Cash Flows......................................................... F-38
Notes to Financial Statements.................................................... F-39

GLOBAL 2000 COMMUNICATIONS, INC.
Report of KPMG LLP, Independent Auditors......................................... F-43
Balance Sheet.................................................................... F-44
Statements of Income............................................................. F-45
Statements of Stockholders' Equity............................................... F-46
Statements of Cash Flows......................................................... F-47
Notes to Financial Statements.................................................... F-48
</TABLE>

F-1
<PAGE>
<TABLE>
<S> <C>
ULSTERNET, INC.
Report of KPMG LLP, Independent Auditors......................................... F-51
Balance Sheet.................................................................... F-52
Statements of Operations......................................................... F-53
Statements of Stockholders' Equity (Deficit)..................................... F-54
Statements of Cash Flows......................................................... F-55
Notes to Financial Statements.................................................... F-56
</TABLE>

F-2
<PAGE>
BIZNESSONLINE.COM, INC.

INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated financial statements give
effect to the acquisitions by BiznessOnline.com, Inc. (the "Company") of the
outstanding capital stock of Albanynet, Inc. ("Albanynet"), Borg Internet
Services, Inc. ("Borg"), Caravela Software, Inc. ("Connix"), Global 2000
Communications, Inc. ("Global"), and Ulsternet, Inc. ("Ulsternet") (the
"Internet service providers") or (the "Acquisitions"). With the exception of
Global, which was acquired on January 31, 1999, the remaining acquisitions will
occur simultaneously with the closing of the initial public offering (the "IPO")
and will be accounted for using the purchase method of accounting. The Company
is deemed to be the accounting acquirer.

The unaudited pro forma consolidated balance sheet gives effect to the
Acquisitions and the IPO as if they had occurred on December 31, 1998. The
unaudited pro forma consolidated statement of operations reflects the operating
results of the Internet service providers for the year ended December 31, 1998,
and gives effect to the Acquisitions as if they had occurred on January 1, 1998.
The Company, which was incorporated in June 1998, conducted limited operations
during the year ended December 31, 1998. The Company and the Internet service
providers have fiscal years ending December 31.

The Company has preliminarily analyzed the additional expense that it
expects to incur as a result of the Acquisitions and has reflected these amounts
in the pro forma consolidated statement of operations. The pro forma
consolidated results of operations give effect to the anticipated compensation
of the Company's new corporate management under contractual arrangements. The
Company has also included the compensation differential between the historical
compensation paid to the former owners of the Internet service providers and the
contractual compensation limits as a result of the Acquisitions. With respect to
other potential cost savings, the Company has not, and can not quantify these
savings until completion of the combination of the Internet service providers.

The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The pro forma financial data do not purport to represent what the
Company's financial position or results of operations would actually have been
if such acquisitions in fact had occurred on those dates and are not necessarily
representative of the Company's financial position or results of operations for
any future period. Since the Internet service providers were not under common
control or management, historical consolidated results may not be comparable to,
or indicative of, future performance. The pro forma consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto included elsewhere in this Prospectus. See "Risk Factors" included
elsewhere herein.

F-3
<PAGE>
BIZNESSONLINE.COM, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
BIZNESS ALBANYNET BORG CONNIX GLOBAL ULSTERNET
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 147,736 $ 149,779 $ 25,189 $ 30,760 $ 260,131 $ 1,258
Accounts receivable, net.......................... 58,006 65,819 189,643 114,952 5,530
Other current assets.............................. 3,349 4,971
Deferred tax asset................................ 13,658 94,745
--------- ----------- --------- --------- --------- ---------
Total current assets................................ 147,736 207,785 108,015 315,148 375,083 11,759
Property and equipment, net....................... 52,109 197,532 234,923 243,035 76,458
Goodwill and intangibles, net..................... 43,067
Deferred costs.................................... 108,478
Other assets...................................... 57 4,418
--------- ----------- --------- --------- --------- ---------
Total assets.................................... $ 256,214 $ 259,894 $ 348,614 $ 550,128 $ 622,536 $ 88,217
--------- ----------- --------- --------- --------- ---------
--------- ----------- --------- --------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current portion of long term debt................. 37,581 129,978 7,288 8,905
Current portion of capital lease obligations...... 14,735 48,004 3,846 27,698
Line of credit.................................... 50,000
Accounts payable.................................. 98,648 2,184 13,156 55,133 12,843
Income taxes payable.............................. 24,799 7,925
Accrued expenses.................................. 57,654 23,657 64,615 710
Due to affiliates/stockholders....................
Deferred taxes.................................... 93,162
Deferred revenue.................................. 48,866 119,095 115,436 258,268 105,358
--------- ----------- --------- --------- --------- ---------
Total current liabilities........................... 98,648 65,785 300,289 475,291 334,017 155,514
Long term debt, net of current portion............ 6,816 96,496 11,271
Capital lease obligations, net of current
portion......................................... 4,030 78,608 13,934
Preferred stock subscriptions..................... 100,000
Stockholders' equity (deficit)
Preferred stock -- -- -- -- -- --
Common stock...................................... 31,472 200 1 1,000 27,500 10,200
Additional paid in capital........................ 151,528 299
Retained earnings (deficit)....................... (125,434) 189,879 (30,583) 67,021 164,523 (102,702)
--------- ----------- --------- --------- --------- ---------
Total stockholders' equity (deficit)................ 57,566 190,079 (30,283) 68,021 192,023 (92,502)
--------- ----------- --------- --------- --------- ---------
Total liabilities and stockholders' equity
(deficit)....................................... $ 256,214 $ 259,894 $ 348,614 $ 550,128 $ 622,536 $ 88,217
--------- ----------- --------- --------- --------- ---------
--------- ----------- --------- --------- --------- ---------

<CAPTION>
ACQUISITION PRO FORMA IPO PRO FORMA
ADJUSTMENTS CONSOLIDATED ADJUSTMENTS AS ADJUSTED
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 250,000 $ 864,853 1$8,798,478 1$9,663,331
Accounts receivable, net.......................... 433,950 433,950
Other current assets.............................. 8,320 8,320
Deferred tax asset................................ 129,000 237,403 237,403
----------- ------------ ----------- -----------
Total current assets................................ 379,000 1,544,526 18,798,478 20,343,004
Property and equipment, net....................... 804,057 804,057
Goodwill and intangibles, net..................... 13,411,662 13,454,729 13,454,729
Deferred costs.................................... 108,478 (108,478) --
Other assets...................................... 4,475 4,475
----------- ------------ ----------- -----------
Total assets.................................... 1$3,790,662 $15,916,265 1$8,690,000 3$4,606,265
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current portion of long term debt................. 183,752 183,752
Current portion of capital lease obligations...... 94,283 94,283
Line of credit.................................... 50,000 50,000
Accounts payable.................................. 181,964 181,964
Income taxes payable.............................. 32,724 32,724
Accrued expenses.................................. 146,636 146,636
Due to affiliates/stockholders.................... 6,310,000 6,310,000 (6,310,000) --
Deferred taxes.................................... 46,000 139,162 139,162
Deferred revenue.................................. 647,023 647,023
----------- ------------ ----------- -----------
Total current liabilities........................... 6,356,000 7,785,544 (6,310,000) 1,475,544
Long term debt, net of current portion............ 114,583 114,583
Capital lease obligations, net of current
portion......................................... 96,572 96,572
Preferred stock subscriptions..................... (100,000) -- --
Stockholders' equity (deficit)
Preferred stock -- -- -- --
Common stock...................................... (30,469) 39,904 29,000 68,904
Additional paid in capital........................ 7,770,269 7,922,096 24,971,000 32,893,096
Retained earnings (deficit)....................... (205,138) (42,434) (42,434)
----------- ------------ ----------- -----------
Total stockholders' equity (deficit)................ 7,534,662 7,919,566 25,000,000 32,919,566
----------- ------------ ----------- -----------
Total liabilities and stockholders' equity
(deficit)....................................... 1$3,790,662 $15,916,265 1$8,690,000 3$4,606,265
----------- ------------ ----------- -----------
----------- ------------ ----------- -----------
</TABLE>

See notes to the Unaudited Pro Forma Consolidated Financial Statements.

F-4
<PAGE>
BIZNESSONLINE.COM, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BIZNESS ALBANYNET BORG CONNIX GLOBAL ULSTERNET
----------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues................................... $ 1,140,518 $ 832,734 $ 1,879,410 $ 1,738,613 $ 604,419
Costs and expenses:
Connectivity and operations.............. 768,400 601,890 1,520,192 927,769 491,327
Selling, general and administrative...... 125,434 61,456 136,025 156,761 480,334 21,472
Depreciation............................. 67,814 102,581 117,146 58,672 58,231
Amortization of intangibles.............. -- 21,534 -- -- --
----------- ------------ ---------- ------------ ------------ ----------
Total costs and expenses................... 125,434 897,670 862,030 1,794,099 1,466,775 571,030
----------- ------------ ---------- ------------ ------------ ----------
Income (loss) from operations.............. (125,434) 242,848 (29,296) 85,311 271,838 33,389
Other income (expense)
Other income (expense), net.............. 5,369 (67,901) (18,493)
Interest expense......................... (3,272) (11,717) (21,406) (13,573) (9,784)
----------- ------------ ---------- ------------ ------------ ----------
Income before income tax provision......... (125,434) 244,945 (41,013) (3,996) 239,772 23,605
Income tax provision (benefit)............. (12,056) (1,598)
----------- ------------ ---------- ------------ ------------ ----------
Net income (loss).......................... $ (125,434) $ 244,945 $ (28,957) $ (2,398) $ 239,772 $ 23,605
----------- ------------ ---------- ------------ ------------ ----------
----------- ------------ ---------- ------------ ------------ ----------
Net loss per share, basic and diluted......
Weighted average shares outstanding........

<CAPTION>
PRO FORMA AS
ADJUSTMENTS ADJUSTED
------------- -------------
<S> <C> <C>
Revenues................................... $ 6,195,694
Costs and expenses:
Connectivity and operations.............. (91,442) 4,218,136
Selling, general and administrative...... 459,566 1,441,048
Depreciation............................. 404,444
Amortization of intangibles.............. (2,682,332) 2,703,866
------------- -------------
Total costs and expenses................... 3,050,456 8,767,494
------------- -------------
Income (loss) from operations.............. (3,050,456) (2,571,800)
Other income (expense)
Other income (expense), net.............. (81,025)
Interest expense......................... (59,752)
------------- -------------
Income before income tax provision......... (3,050,456) (2,712,577)
Income tax provision (benefit)............. 13,654 --
------------- -------------
Net income (loss).......................... $ (3,064,110) $ (2,712,577)
------------- -------------
------------- -------------
Net loss per share, basic and diluted...... $ (.39)
Weighted average shares outstanding........ 6,890,436
</TABLE>

See notes to the Unaudited Pro Forma Consolidated Financial Statements.

F-5
<PAGE>
BIZNESSONLINE.COM, INC.

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--GENERAL

BiznessOnline.com, Inc. (the "Company") was founded in June 1998 for the
purpose of acquiring existing Internet Service Providers servicing the
northeastern United States. The company will provide Internet access and the
related services to individuals and small to mid-sized businesses located in the
northeastern United States.

The historical financial statements reflect the financial position and
results of operations of the Company and the Internet service providers and were
derived from the Company and the respective Internet service providers'
financial statements as indicated. The unaudited pro forma consolidated
financial statements include the results of operations for the Internet service
providers as of and for the year ended December 31, 1998.

NOTE 2--ACQUISITION OF INTERNET SERVICE PROVIDERS

Concurrent with this IPO, the Company will acquire all the outstanding
capital stock of the Internet service providers. On January 31, 1999, the
Company completed the acquisition of Global for a combination of stock and a
note payable, which is to be paid concurrently with this IPO. The acquisitions
will be paid for with a combination of the common stock of the Company and cash.
The acquisitions will be accounted for the using the purchase method of
accounting with the Company being considered as the accounting acquirer.

The following table sets forth the consideration to be paid (the "Purchase
Consideration"), (a) in cash, and (b) in shares of common stock to the owners of
each of the Internet service providers.

The purchase price has been allocated to the Company's historical assets and
liabilities based on their respective carrying values, as these carrying values
are deemed to represent the fair market values of these assets and liabilities.
Additionally, adjustments have been made for the establishment of deferred
income tax liabilities and assets related to the transaction for purposes of
determining the excess of the purchase price over the fair value of the net
assets acquired. The allocation of the purchase price is considered preliminary
until such time as the consummation of the Transactions. The Company does not
anticipate that the final allocation of purchase price will differ significantly
from that presented herein.

The following table reflects the consideration to be paid in cash and shares
of common stock as of December 31, 1998, assuming an initial public offering
price of $10.00 per share.

<TABLE>
<CAPTION>
SHARES OF VALUE OF TOTAL
CASH COMMON STOCK SHARES CONSIDERATION
------------ -------------- ---------- -------------
<S> <C> <C> <C> <C>
Albanynet............................................... $ 2,400,000 -- $ -- $ 2,400,000
Borg.................................................... 500,000 150,000 1,500,000 2,000,000
Connix.................................................. 2,180,000 280,000 2,800,000 4,980,000
Global.................................................. 580,000 272,000 2,720,000 3,300,000
Ulsternet............................................... 650,000 80,000 800,000 1,450,000
</TABLE>

F-6
<PAGE>
NOTE 3--UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS

The following table summarizes the unaudited pro forma consolidated balance
sheet adjustments
<TABLE>
<CAPTION>
PRO FORMA
OFFERING
ACQUISITION ADJUSTMENTS ADJUSTMENTS
----------------------------------------------- TOTAL ----------
(A) (B) (C) (D) PRE OFFERING (E)
----------- --------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................... $ -- $ -- $ -- $ 250,000 $ 250,000 $25,108,478
Accounts receivable, net.......................
Other current assets...........................
Deferred tax asset............................. 129,000 129,000
----------- --------- ---------- ----------- ------------ ----------
Total current assets............................. -- 129,000 -- 250,000 379,000 25,108,478
Property and equipment, net....................
Goodwill and intangibles, net.................. 13,411,662 13,411,662
Deferred costs................................. (108,478)
Other assets
----------- --------- ---------- ----------- ------------ ----------
Total assets................................... $ -- $ 129,000 $13,411,662 $ 250,000 $13,790,662 $25,000,000
----------- --------- ---------- ----------- ------------ ----------
----------- --------- ---------- ----------- ------------ ----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current portion of long term debt.............. $ -- $ -- $ -- $ -- $ -- $ --
Current portion of capital lease obligations...
Line of credit.................................
Accounts payable............................... --
Income taxes payable...........................
Accrued expenses...............................
Due to affiliates/stockholders................. 6,310,000 6,310,000
Deferred taxes................................. 46,000 46,000
Deferred revenue...............................
----------- --------- ---------- ----------- ------------ ----------
Total current liabilities........................ 6,310,000 46,000 -- -- 6,356,000 --
Preferred stock subscription................... (100,000) (100,000)
Long term debt, net of current portion.........
Capital lease obligations, net of current
portion......................................
Stockholders' equity (deficit)
Preferred stock................................
Common stock................................... (31,082) 613 (30,469) 29,000
Additional paid in capital..................... (6,310,000) 13,730,882 349,387 7,770,269 24,971,000
Retained earnings (deficit).................... 83,000 (288,138) (205,138) --
----------- --------- ---------- ----------- ------------ ----------
Total stockholders' equity (deficit)............. (6,310,000) 83,000 13,411,662 350,000 7,534,662 25,000,000
----------- --------- ---------- ----------- ------------ ----------
Total liabilities and Stockholders' equity
(deficit).................................. $ -- $ 129,000 $13,411,662 $ 250,000 $13,790,662 $25,000,000
----------- --------- ---------- ----------- ------------ ----------
----------- --------- ---------- ----------- ------------ ----------

(F) ADJUSTMENTS
---------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................... $(6,310,000) 1$8,798,478
Accounts receivable, net.......................
Other current assets...........................
Deferred tax asset.............................
---------- -----------
Total current assets............................. (6,310,000) 18,798,478
Property and equipment, net....................
Goodwill and intangibles, net..................
Deferred costs................................. (108,478)
Other assets
---------- -----------
Total assets................................... $(6,310,000) 1$8,690,000
---------- -----------
---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current portion of long term debt.............. $ -- $ --
Current portion of capital lease obligations...
Line of credit.................................
Accounts payable............................... --
Income taxes payable...........................
Accrued expenses...............................
Due to affiliates/stockholders................. (6,310,000) (6,310,000)
Deferred taxes.................................
Deferred revenue...............................
---------- -----------
Total current liabilities........................ (6,310,000) (6,310,000)
Preferred stock subscription...................
Long term debt, net of current portion.........
Capital lease obligations, net of current
portion......................................
Stockholders' equity (deficit)
Preferred stock................................
Common stock................................... 29,000
Additional paid in capital..................... 24,971,000
Retained earnings (deficit).................... --
---------- -----------
Total stockholders' equity (deficit)............. -- 25,000,000
---------- -----------
Total liabilities and Stockholders' equity
(deficit).................................. $(6,310,000) 1$8,690,000
---------- -----------
---------- -----------
</TABLE>

- ------------------------
(a) Records the liability for the cash portion of the consideration to be paid
to the owners of the ISPs in connection with the Acquisitions.

(b) Records the deferred tax asset and deferred tax liability attributable to
the temporary differences between the financial reporting and tax basis of
assets and liabilities held in S corporations, consisting of deferred tax
assets of $129,000 and deferred tax liabilities of $46,000.

(c) Records the purchase of the Internet service providers by the Company for
$6,310,000 payable in cash and 782,000 shares of common stock. For purposes
of computing the estimated purchase price for accounting purposes the value
of the shares is determined using an estimated fair value of $9.50 per
share, which represents a discount of 5% from the assumed initial public
offering price of $10.00 per share, due to restrictions on the sale and
transferability of the shares issued.

(d) Records the issuance and conversion of 70,000 shares of Series A Preferred
Stock into 61,250 shares of common stock.

(e) Records the cash proceeds from the issuance of shares of the Company's
common stock net of estimated offering costs. IPO costs primarily consist of
underwriting discounts and commissions, accounting fees, legal fees and
printing expenses.

(f) Records the use of the IPO proceeds to pay the cash portion of consideration
due to the owners of the ISPs in connection with the Acquisitions.

F-7
<PAGE>
NOTE 4--ADJUSTMENTS TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF
OPERATIONS

The following table summarizes unaudited pro forma consolidated statement of
operations adjustments.

<TABLE>
<CAPTION>
ACQUISITION ADJUSTMENTS
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
(A) (B) (C) (D) TOTAL
---------- ----------- ------------- ---------- -------------
Revenues..................................... $ -- $ -- $ -- $ -- $ --
Costs and Expenses:

Connectivity and operations................ (91,442) (91,442)
Selling, general and administrative........ 459,566 459,556
Depreciation...............................
Amortization............................... 2,682,332 2,682,332
---------- ----------- ------------- ---------- -------------
Total costs and expenses..................... (91,442) 459,566 2,682,332 -- 3,050,456
---------- ----------- ------------- ---------- -------------
Income (loss) from operations................ 91,442 (459,566) (2,682,332) -- (3,050,456)
Other Income (expense).......................
Other income (expense), net................
Interest expense...........................
---------- ----------- ------------- ---------- -------------
Income before income tax provision........... 91,442 (459,566) (2,682,332) -- (3,050,456)
Income tax provision......................... 13,654 13,654
---------- ----------- ------------- ---------- -------------
Net income (loss)............................ $ 91,442 $ (459,566) $ (2,682,332) $ (13,654) $ (3,064,110)
---------- ----------- ------------- ---------- -------------
---------- ----------- ------------- ---------- -------------
</TABLE>

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

(a) Reflects the compensation differential between the historical compensation
paid to the former owners of the ISPs and the contractual compensation
limits as a result of the Acquisitions.

(b) Reflects an increase in compensation expense to reflect the Company's new
corporate management under contractual arrangements.

(c) Reflects the amortization of goodwill and other intangibles to be recorded
as a result of the Acquisitions over a 5 year estimated life for goodwill
and other intangibles related to the Internet service providers.

(d) Reflects the incremental provision for federal and state income taxes
assuming all entities were subject to federal and state income tax and
relating, to the other statements of operations adjustments and for income
taxes on S Corporation income, assuming a corporate income tax rate of 40%
and the non-deductibility of goodwill. The Company has not recorded an
income tax benefit for the period.

F-8
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors
BiznessOnline.com, Inc.:

We have audited the accompanying balance sheet of BiznessOnline.com, Inc. as
of December 31, 1998, and the related statements of operations, stockholders'
equity and cash flows for the period from July 1, 1998 (date of inception)
through December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of BiznessOnline.com, Inc. as
of December 31, 1998, and the results of its operations and its cash flows for
the period from July 1, 1998 (date of inception) through December 31, 1998 in
conformity with generally accepted accounting principles.

/s/ KPMG LLP

Providence, Rhode Island
February 12, 1999

F-9
<PAGE>
BIZNESSONLINE.COM, INC.

BALANCE SHEET

DECEMBER 31, 1998

<TABLE>
<S> <C>
ASSETS

Current assets:
Cash........................................................................... $ 147,736
---------
Total current assets......................................................... 147,736
---------
Deferred costs................................................................. 108,478
---------
Total assets................................................................. $ 256,214
---------
---------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable............................................................... $ 98,648
---------
Total current liabilities.................................................... 98,648
---------
Preferred stock subscriptions (note 4)........................................... 100,000
---------
Stockholders' equity (notes 4 and 7):
Class A preferred stock; $.01 par value; 1,000,000 shares authorized, none
issued....................................................................... --
Common stock, $.01 par value; 39,000,000 shares authorized, 3,147,186 shares
issued and outstanding....................................................... 31,472
Additional paid-in capital..................................................... 151,528
Accumulated deficit............................................................ (125,434)
---------
Total stockholders' equity................................................... 57,566
---------
Total liabilities and stockholders' equity................................... $ 256,214
---------
---------
</TABLE>

See accompanying notes to financial statements

F-10
<PAGE>
BIZNESSONLINE.COM, INC.

STATEMENT OF OPERATIONS

PERIOD FROM JULY 1, 1998 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1998

<TABLE>
<S> <C>
Operating expenses:
General and administrative..................................................... $ 125,434
---------
Total operating expenses..................................................... 125,434
---------
Operating and net loss....................................................... $(125,434)
---------
---------
Net loss per share--basic and diluted............................................ $ (.04)
---------
---------
Weighted average shares outstanding--basic and diluted........................... 3,147,186
---------
---------
</TABLE>

See accompanying notes to financial statements.

F-11
<PAGE>
BIZNESSONLINE.COM, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

PERIOD FROM JULY 1, 1998 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1998

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
PREFERRED COMMON PAID-IN ACCUMULATED STOCKHOLDERS'
STOCK STOCK CAPITAL DEFICIT EQUITY
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Initial capitalization............................. $ -- 1 99 -- 100
Additional capital contributions................... -- -- 182,900 -- 182,900
Effect of 10,000 for 1 stock split (note 4)........ -- 9,999 (9,999) -- --
Effect of 3.147186 for 1 stock split (note 7)...... -- 21,472 (21,472) -- --
Net loss........................................... -- -- -- (125,434) (125,434)
----- ----------- ----------- ------------ ------------
Balance at December 31, 1998....................... $ -- 31,472 151,528 (125,434) 57,566
----- ----------- ----------- ------------ ------------
----- ----------- ----------- ------------ ------------
</TABLE>

See accompanying notes to financial statements.

F-12
<PAGE>
BIZNESSONLINE.COM, INC.

STATEMENT OF CASH FLOWS

PERIOD FROM JULY 1, 1998 (DATE OF INCEPTION) THROUGH DECEMBER 31, 1998

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss....................................................................... $(125,434)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in net assets and liabilities:
Increase in accounts payable............................................... 98,648
---------
Net cash used in operating activities.................................... (26,786)
---------
Cash flows from financing activities:
Capital contributions.......................................................... 183,000
Proceeds from preferred stock subscriptions.................................... 100,000
Increase in deferred costs..................................................... (108,478)
---------
Net cash provided by financing activities................................ 174,522
---------
Net increase in cash............................................................. 147,736
Cash at beginning of period...................................................... --
---------
Cash at end of period............................................................ $ 147,736
---------
---------
</TABLE>

See accompanying notes to financial statements.

F-13
<PAGE>
BIZNESSONLINE.COM, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1998

(1) NATURE OF OPERATIONS

BiznessOnline.com, Inc. (the"Company"), a Delaware Corporation, was
incorporated on June 11, 1998 for the purpose of acquiring Internet service
providers ("ISPs") serving individuals and small to medium-sized businesses. The
Company has acquired all of the stock of Global 2000 Communications, Inc., an
ISP, as of January 31, 1999 and intends to acquire the stock of 4 more ISPs (the
"Acquisitions") simultaneously upon the closing of an initial public offering
(the "IPO") of its common stock.

The Company plans to consummate the Acquisitions in accordance with
acquisition agreements negotiated with the current owners of each of the ISPs.
The Acquisitions will be financed through the issuance of shares of common stock
and the cash proceeds from the IPO.

The Company has conducted activities to date which have related to the
Acquisitions and developing its management team and corporate structure.
Expenses subsequent to inception consist primarily of the salary and related
travel costs of the Company's two employees, which costs have been charged to
expense. The Company is dependent upon the IPO to close the pending
Acquisitions. There is no assurance that the IPO and pending Acquisitions
discussed will be completed or that the Company will be able to generate future
operating revenues.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.

(b) EARNINGS PER SHARE

BiznessOnline.com, Inc. adopted the provisions of SFAS No. 128, "Earnings
per Share," at inception. This statement requires the presentation of basic and
diluted earnings per share for all periods presented. There were no common stock
equivalents outstanding for the period presented; accordingly, basic and fully
diluted earnings per share are the same.

(3) OPERATING LEASE

The Company has one operating lease for office space entered into during
January 1999 which expires December 2001. The minimum lease payment for the
three years subsequent to December 31, 1998 are as follows:

<TABLE>
<S> <C>
1999............................................................... $ 30,140
2000............................................................... 30,140
2001............................................................... 30,140
---------
Total.......................................................... $ 90,420
---------
---------
</TABLE>

F-14
<PAGE>
(4) STOCKHOLDERS' EQUITY

(a) COMMON STOCK

In connection with the organization and initial capitalization of the
Company on July 1, 1998 (date of inception), the Company's founding stockholders
contributed an aggregate of $100 for 100 shares of common stock, $.01 par value
("Common Stock"), which the Company believes approximated the fair market value
of the Company's Common Stock at that time.

In addition, certain of the founding stockholders subsequently contributed
$182,900 during 1998 to fund operating expenses and deferred offering costs.

On December 20, 1998, the Company effected a 10,000 for one stock split of
its issued and outstanding common stock to 1,000,000 shares. In February 1999,
the Company increased the number of authorized common shares from 9,000,000 to
39,000,000 shares. All share data presented in the accompanying financial
statements has been restated to reflect the increased number of authorized and
outstanding shares of common stock. (See also Note 7.)

(b) PREFERRED STOCK

In December 1998, the Company received $100,000 in Preferred Stock
subscriptions for its Class A Preferred Stock. In February 1999, the Company
closed a private offering of the Class A Preferred Stock for a total of $350,000
(including the $100,000 previously subscribed) at an aggregate $5.00 per share.
The Preferred Stock is automatically convertible into common stock at the
conversion rate of $8.75 per preferred share divided by the IPO price at the
time of the IPO.

(5) INCOME TAXES

The tax effects of temporary differences that give rise to significant
portions of potential deferred tax assets and deferred tax liabilities are
presented below as of December 31, 1998:

<TABLE>
<S> <C>
Net operating loss................................................ $ 50,174
Total deferred tax assets......................................... 50,174
Valuation allowance............................................... (50,174)
Net deferred tax asset............................................ --
</TABLE>

The Company is in a net deferred tax asset position at December 31, 1998.
However, as a newly formed organization, future profits are not certain. As
such, the Company has established a valuation reserve for the entire amount of
the net deferred tax asset.

(6) ACQUISITION

On January 31, 1999 the Company acquired all of the shares of Global 2000
Communications, Inc. in exchange for a $580,000 note payable at the IPO and
$2,720,000 payable in shares of common stock. The Company issued 272,000 shares
of common stock. The number of shares of common stock issued is subject to
adjustment based on the initial public offering price per share. The total
purchase price is $3,300,000.

(7) SUBSEQUENT EVENT

(a) In connection with the proposed IPO, the Company effected a 3.147186 for
one stock split of its issued and outstanding common stock. All share and per
share data presented in the accompanying financial statements has been restated
to reflect the increased number of outstanding shares of common stock.

F-15
<PAGE>
(7) SUBSEQUENT EVENT (CONTINUED)
(b) STOCK OPTION PLANS

The Company has adopted a 1999 Stock Incentive Plan and a 1999 Non-Employee
Director Stock Incentive Plan. The Stock Incentive Plan has reserved 500,000
shares of common stock for option grants, of which the Company has agreed to
issue options to purchase 30,000 shares of common stock to the Company's chief
financial officer at the initial public offering price. The Non-Employee
Director Stock Incentive Plan has reserved 50,000 shares of common stock for
option grants, of which the Company has agreed to issue options to purchase
22,500 shares of common stock to director nominees at the initial public
offering price.

F-16
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Stockholders
AlbanyNet, Inc.:

We have audited the accompanying balance sheet of AlbanyNet Inc.
("AlbanyNet") as of December 31, 1998, and the related statements of income,
stockholders' equity and cash flows for each of the years in the two-year period
then ended. These financial statements are the responsibility of AlbanyNet's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AlbanyNet Inc. as of
December 31, 1998, and the results of its operations and its cash flows for each
of the years in the two-year period then ended in conformity with generally
accepted accounting principles.

/s/ KPMG LLP

Providence, Rhode Island
January 29, 1999

F-17
<PAGE>
ALBANYNET, INC.

BALANCE SHEET

DECEMBER 31, 1998

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 149,779
Accounts receivable, net of allowance for doubtful accounts of $5,000........... 58,006
---------
Total current assets........................................................ 207,785
---------
Property and equipment (note 3):
Computer and telecommunications equipment....................................... 214,788
Less accumulated depreciation................................................... 162,679
---------
Net property and equipment.................................................. 52,109
---------
Total assets................................................................ $ 259,894
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of obligations under capital leases (note 3)............... $ 14,735
Accounts payable................................................................ 2,184
Deferred revenue................................................................ 48,866
---------
Total current liabilities................................................... 65,785
Long-term liabilities:
Obligations under capital leases, excluding current installments (note 3)....... 4,030
---------
Total liabilities........................................................... 69,815
---------
Stockholders' equity:
Common stock, $1 par value; 200 shares authorized, issued and outstanding....... 200
Retained earnings............................................................... 189,879
---------
Total stockholders' equity.................................................. 190,079
---------
Total liabilities and stockholders' equity.................................. $ 259,894
---------
---------
</TABLE>

See accompanying notes to financial statements

F-18
<PAGE>
ALBANYNET, INC.

STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Revenues................................................................................. $ 838,807 1,140,518
---------- ----------
Operating expenses:
Connectivity and operations............................................................ 658,329 768,400
Sales and marketing.................................................................... 37,285 35,820
General and administrative............................................................. 7,156 25,636
Depreciation and amortization.......................................................... 57,866 67,814
---------- ----------
Total operating expenses........................................................... 760,636 897,670
---------- ----------
Operating income................................................................... 78,171 242,848
Other income (expense):
Interest expense....................................................................... (4,724) (3,272)
Interest income........................................................................ 2,507 5,369
Other income........................................................................... 8,575 --
---------- ----------
Total other income................................................................. 6,358 2,097
---------- ----------
Net income......................................................................... $ 84,529 244,945
---------- ----------
---------- ----------
Net income per share--basic and diluted.................................................. $ 422.65 1,224.73
---------- ----------
---------- ----------
Weighted average shares outstanding--basic and diluted................................... 200 200
---------- ----------
---------- ----------
</TABLE>

See accompanying notes to financial statements.

F-19
<PAGE>
ALBANYNET, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
RETAINED TOTAL
EARNINGS STOCKHOLDERS'
COMMON (ACCUMULATED EQUITY
STOCK DEFICIT) (DEFICIT)
----------- ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1996.............................................. $ 200 (39,629) (39,429)
Net income.............................................................. -- 84,529 84,529
----- ------------ ------------
Balance at December 31, 1997.............................................. 200 44,900 45,100
Distributions to stockholders........................................... -- (99,966) (99,966)
Net income.............................................................. -- 244,945 244,945
----- ------------ ------------
Balance at December 31, 1998.............................................. $ 200 189,879 190,079
----- ------------ ------------
----- ------------ ------------
</TABLE>

See accompanying notes to financial statements.

F-20
<PAGE>
ALBANYNET, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................................................. $ 84,529 244,945
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization......................................................... 57,866 67,814
Changes in net assets and liabilities:
Increase in accounts receivable--trade.............................................. (29,795) (28,211)
Decrease in accounts payable........................................................ (3,168) (7,236)
Increase (decrease) in deferred revenue............................................. 24,931 (11,666)
---------- ----------
Net cash provided by operating activities......................................... 134,363 265,646
---------- ----------
Cash flows from investing activities:
Capital expenditures.................................................................... (55,413) (30,014)
---------- ----------
Net cash used in investing activities............................................. (55,413) (30,014)
---------- ----------
Cash flows from financing activities:
Principal payments under capital lease obligations...................................... (25,355) (30,859)
Distribution to stockholders............................................................ -- (99,966)
Repayments of long-term debt............................................................ (24,033) (38,149)
---------- ----------
Net cash used in financing activities............................................. (49,388) (168,974)
---------- ----------
Net increase in cash and cash equivalents......................................... 29,562 66,658
Cash and cash equivalents at beginning of year............................................ 53,559 83,121
---------- ----------
Cash and cash equivalents at end of year.................................................. $ 83,121 149,779
---------- ----------
---------- ----------
Supplemental cash flow information:
Non-cash financing activities:
Capital lease obligations of $35,808 and $13,829 were incurred in 1997 and 1998, respectively.

Interest paid was $4,724 and $3,272 in 1997 and 1998, respectively.
</TABLE>

See accompanying notes to financial statements.

F-21
<PAGE>
ALBANYNET, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997 AND 1998

(1) NATURE OF OPERATIONS

AlbanyNet, Inc. ("AlbanyNet") was incorporated in 1996. AlbanyNet is a
provider of Internet access and offers a broad spectrum of Internet access
services to both individual and business customers ranging from dial-up services
to continuous access services using dedicated telephone connections and Web
hosting services.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions, including estimates of the allowance for doubtful accounts and
provisions for sales credits, that affect the amounts reported in the financial
statements. Actual results may differ from those estimates.

(b) REVENUE RECOGNITION

AlbanyNet recognizes revenue when services are provided. Services are
generally billed in advance. Advance billings are recorded as deferred revenue
and recognized as revenue when earned over the period of service.

For purposes of the statement of cash flows, AlbanyNet considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.

(d) PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided using
an accelerated method over the estimated useful lives of the assets for property
and equipment. The estimated useful lives of the assets range from three to five
years. AlbanyNet leases certain of its data communications and other equipment
under capital lease agreements. The assets and liabilities under capital leases
are recorded at the lesser of the present value of aggregate future minimum
lease payments or the fair value of the assets under the lease. Assets under
capital lease are depreciated over the shorter of their estimated useful lives
or the lease term.

(e) INCOME TAXES

As a subchapter S corporation, AlbanyNet's income is taxed at the
stockholder level, therefore except for certain local business income taxes, no
income tax provision has been included in the financial statements.

(f) ADVERTISING COSTS

AlbanyNet incurs advertising costs associated with the marketing of its
services. These costs of advertising are expensed as incurred. Advertising
expense totaled $36,635 and $28,894 for the years ended December 31, 1997 and
1998, respectively.

F-22
<PAGE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets.

(h) EARNINGS PER SHARE

AlbanyNet adopted the provisions of SFAS No. 128, "Earnings per Share," on
December 31, 1997. This statement requires the presentation of basic and diluted
earnings per share for all periods presented. There were no common stock
equivalents outstanding for any of the periods presented; accordingly, basic and
fully diluted earnings per share are the same.

(3) LEASES

AlbanyNet leases certain equipment under capital lease agreements that
expire at various dates through August 2000. At December 31, 1998, the gross
amount of equipment and related accumulated amortization recorded under capital
leases were as follows:

<TABLE>
<S> <C>
Computer and telecommunications equipment.......................................... $ 77,062
Less accumulated amortization...................................................... 57,832
---------
$ 19,230
---------
---------
</TABLE>

AlbanyNet has several operating leases for office space and office
equipment, with expiration dates through July 2000. Rental expense for operating
leases during 1997 and 1998 was $7,200 and $10,225, respectively.

Future minimum lease payments under capital and operating leases as of
December 31, 1998 are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDED DECEMBER 31: LEASES LEASES
- ------------------------------------------------------------------------ --------- -----------
<S> <C> <C>
1999............................................................ $ 15,753 17,506
2000............................................................ 4,183 5,253
--------- -----------
Total minimum lease payment..................................... 19,936 22,759
-----------
-----------
Less amount representing interest (at 10%)...................... 1,171
---------
Present value of minimum capital lease payments................. 18,765
Less current installments of obligations under capital leases... 14,735
---------
Obligations under capital leases, excluding current
installments.................................................. $ 4,030
---------
---------
</TABLE>

F-23
<PAGE>
(4) COMMITMENTS

AlbanyNet has entered into several contracts with vendors that provide
certain telephone related line access services and advertising. Following are
the commitments for each of the five years subsequent to December 31, 1998:

<TABLE>
<S> <C>
1999...................................................................... $ 72,161
2000...................................................................... 71,160
2001...................................................................... 71,160
2002...................................................................... 5,160
2003...................................................................... 5,160
Thereafter................................................................ 6,020
---------
Total................................................................... $ 230,821
---------
---------
</TABLE>

(5) SUBSEQUENT EVENT (UNAUDITED)

AlbanyNet's stockholders have entered into a merger and stock purchase
agreement whereby they will sell all of the shares in the Company to
BiznessOnline.com, Inc. (the acquirer) for cash concurrent with the consummation
of the initial public offering ("IPO") of the common stock of the acquirer. Upon
consummation of the offering, the acquirer will become the sole stockholder of
AlbanyNet. Subsequent to the acquisition, AlbanyNet will be merged into a
subsidiary of the acquirer.

F-24
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Stockholders
Borg Internet Services, Inc.:

We have audited the accompanying balance sheet of Borg Internet Services,
Inc. (Borg) as of December 31, 1998, and the related statements of operations,
stockholders' equity (deficit) and cash flows for each of the years in the
two-year period then ended. These financial statements are the responsibility of
Borg's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Borg Internet Services, Inc.
as of December 31, 1998, and the results of its operations and its cash flows
for each of the years in the two-year period then ended in conformity with
generally accepted accounting principles.

/s/ KPMG LLP

Providence, Rhode Island
January 22, 1999

F-25
<PAGE>
BORG INTERNET SERVICES, INC.

BALANCE SHEET

DECEMBER 31, 1998

<TABLE>
<S> <C>
ASSETS

Current assets:
Cash............................................................................ $ 25,189
Accounts receivable, net of allowance for doubtful accounts of $20,000.......... 65,819
Deferred tax asset.............................................................. 13,658
Other current assets............................................................ 3,349
---------
Total current assets........................................................ 108,015
---------
Property and equipment, net (notes 3 and 4)....................................... 197,532
Goodwill, net of amortization of $64,601.......................................... 43,067
---------
Total assets................................................................ $ 348,614
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Notes payable (note 5).......................................................... $ 37,581
Current installments of obligations under capital leases (note 4)............... 48,004
Accounts payable................................................................ 13,156
Income taxes payable............................................................ 24,799
Accrued expenses................................................................ 57,654
Deferred revenue................................................................ 119,095
---------
Total current liabilities................................................... 300,289

Long-term liabilities:
Obligations under capital leases, excluding current installments (note 4)....... 78,608
---------
Total liabilities........................................................... 378,897
---------
Stockholders' equity (deficit):
Common stock, $.01 par value; 25,000 shares authorized, 3 shares issued and
outstanding................................................................... 1
Additional paid-in capital...................................................... 299
Accumulated deficit............................................................. (30,583)
---------
Total stockholders' equity (deficit)........................................ (30,283)
---------
Total liabilities and stockholders' equity (deficit)........................ $ 348,614
---------
---------
</TABLE>

See accompanying notes to financial statements.

F-26
<PAGE>
BORG INTERNET SERVICES, INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
Revenues................................................................................. $ 505,970 832,734
---------- ----------
Operating expenses:
Connectivity and operations............................................................ 319,127 601,890
Sales and marketing.................................................................... 35,046 90,687
General and administrative............................................................. 29,932 45,338
Depreciation and amortization.......................................................... 86,443 124,115
---------- ----------
Total operating expenses........................................................... 470,548 862,030
---------- ----------
Operating income (loss)............................................................ 35,422 (29,296)
Interest expense......................................................................... (4,467) (11,717)
---------- ----------
Income (loss) before taxes......................................................... 30,955 (41,013)
Income taxes (benefit) (note 6).......................................................... 12,383 (12,056)
---------- ----------
Net income (loss).................................................................. $ 18,572 (28,957)
---------- ----------
---------- ----------
Net income (loss) per share--basic and diluted........................................... $ 6,190.67 (9,652.33)
---------- ----------
---------- ----------
Weighted average shares outstanding--basic and diluted................................... 3 3
---------- ----------
---------- ----------
</TABLE>

See accompanying notes to financial statements.

F-27
<PAGE>
BORG INTERNET SERVICES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
RETAINED TOTAL
ADDITIONAL EARNINGS STOCKHOLDERS'
COMMON PAID-IN (ACCUMULATED EQUITY
STOCK CAPITAL DEFICIT) (DEFICIT)
----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1996.................................. $ 1 299 (20,198) (19,898)
Net income.................................................. -- -- 18,572 18,572
----- --- ------------- ------------
Balance at December 31, 1997.................................. 1 299 (1,626) (1,326)
Net loss.................................................... -- -- (28,957) (28,957)
----- --- ------------- ------------
Balance at December 31, 1998.................................. $ 1 299 (30,583) (30,283)
----- --- ------------- ------------
----- --- ------------- ------------
</TABLE>

See accompanying notes to financial statements.

F-28
<PAGE>
BORG INTERNET SERVICES, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
----------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)....................................................................... $ 18,572 (28,957)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization......................................................... 86,443 124,115
Changes in net assets and liabilities:
Decrease (increase) in accounts receivable--trade................................... (60,930) 8,916
Decrease (increase) in other current assets......................................... (4,264) 917
Increase (decrease) in accounts payable............................................. 34,646 (37,053)
Increase (decrease) in income taxes payable......................................... 23,090 (1,349)
Increase in deferred taxes, net..................................................... (10,707) (10,707)
Increase (decrease) in accrued expenses............................................. 11,517 (18,745)
Increase in deferred revenue........................................................ 22,174 57,968
----------- ---------
Net cash provided by operating activities......................................... 120,541 95,105
----------- ---------
Cash flows from investing activities:
Capital expenditures.................................................................... (111,652) (53,553)
----------- ---------
Net cash used in investing activities............................................. (111,652) (53,553)
----------- ---------
Cash flows from financing activities:
Principal payments under capital lease obligations...................................... -- (15,727)
Repayments of long-term debt............................................................ (12,000) (12,000)
----------- ---------
Net cash used in financing activities............................................. (12,000) (27,727)
----------- ---------
Net increase (decrease) in cash................................................... (3,111) 13,825
Cash at beginning of year................................................................. 14,475 11,364
----------- ---------
Cash at end of year....................................................................... $ 11,364 25,189
----------- ---------
----------- ---------
Supplemental cash flow information:
Non-cash financing activities:
Capital lease obligations of $142,339 were incurred in 1998.

Interest paid was $0 in 1997 and $4,039 in 1998.
</TABLE>

See accompanying notes to financial statements.

F-29
<PAGE>
BORG INTERNET SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997 AND 1998

(1) NATURE OF OPERATIONS

Borg Internet Services, Inc. ("Borg") was incorporated in 1995. Borg is a
provider of Internet access and offers a broad spectrum of Internet access
services to both individual and business customers ranging from dial-up services
to continuous access services using dedicated telephone connections and Web
hosting services.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) USE OF ESTIMATES

(b) REVENUE RECOGNITION

Borg recognizes revenue when services are provided. Services are generally
billed in advance. Advance billings are recorded as deferred revenue and
recognized as revenue when earned over the period of service.

For purposes of the statement of cash flows, Borg considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.

(d) PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided using
an accelerated method over the estimated useful lives of the assets for property
and equipment. The estimated useful lives of the assets range from three to five
years. Borg leases certain of its data communications and other equipment under
capital lease agreements. The assets and liabilities under capital leases are
recorded at the lesser of the present value of aggregate future minimum lease
payments or the fair value of the assets under the lease. Assets under capital
lease are depreciated over the shorter of their estimated useful lives or the
lease term.

(e) GOODWILL

Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight-line basis over the expected
periods to be benefited, which is five years. Borg assesses the recoverability
of this intangible asset by determining whether the amortization of the goodwill
balance over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future operating
cash flows using a discount rate reflecting Borg's average cost of funds. The
assessment of the recoverability of goodwill will be impacted if estimated
future operating cash flows are not achieved.

F-30
<PAGE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(g) ADVERTISING COSTS

Borg incurs advertising costs associated with the marketing of its services.
These costs of advertising are expensed as incurred. Advertising expense totaled
$21,641 and $49,559 for the years ended December 31, 1997 and 1998,
respectively.

(h) IMPAIRMENT OF LONG-LIVED ASSETS

(i) EARNINGS PER SHARE

Borg adopted the provisions of SFAS No. 128, "Earnings per Share," on
December 31, 1997. This statement requires the presentation of basic and diluted
earnings per share for all periods presented. There were no common stock
equivalents outstanding for any of the periods presented; accordingly, basic and
fully diluted earnings per share are the same.

(3) PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1998:

<TABLE>
<S> <C>
Computer and telecommunications equipment......................... $ 394,082
Office equipment.................................................. 2,824
---------
Property and equipment............................................ 396,906
Less accumulated depreciation and amortization.................... 199,374
---------
Net property and equipment........................................ $ 197,532
---------
---------
</TABLE>

F-31
<PAGE>
(4) LEASES

Borg leases certain equipment under capital lease agreements that expire at
various dates through August 2001. At December 31, 1998, the gross amount of
equipment and related accumulated amortization recorded under capital leases
were as follows:

<TABLE>
<S> <C>
Computer and telecommunications equipment......................... $ 142,339
Less accumulated amortization..................................... 17,726
---------
$ 124,613
---------
---------
</TABLE>

Borg has one operating lease for office space and office equipment on a
month to month basis. Rental expense for operating leases during 1997 and 1998
was $9,954 and $12,974, respectively.

Future minimum lease payments under capital leases as of December 31, 1998
are as follows:

<TABLE>
<CAPTION>
CAPITAL
YEAR ENDED DECEMBER 31: LEASES
- ----------------------------------------------------------------------------------- ---------
<S> <C>
1999....................................................................... $ 58,504
2000....................................................................... 53,883
2001....................................................................... 31,488
---------
Total minimum lease payments............................................... 143,875
Less amounts representing interest (at 10%)................................ 17,263
---------
Present value of minimum capital lease payments............................ 126,612
Less current installments of obligations under capital leases.............. 48,004
---------
Obligations under capital leases, excluding current installments........... $ 78,608
---------
---------
</TABLE>

(5) NOTES PAYABLE

The notes payable are due to related parties. The notes bear interest at 10%
and are due and payable.

(6) INCOME TAXES

Income tax expense (benefit) for the years ended December 31, 1997 and 1998,
consists of the following:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
--------- --------- ---------
<S> <C> <C> <C>
1997:
Federal..................................................... $ 17,287 (8,000) 9,287
State....................................................... 5,803 (2,707) 3,096
--------- --------- ---------
$ 23,090 (10,707) 12,383
--------- --------- ---------
--------- --------- ---------
1998:
Federal..................................................... $ (1,000) (8,000) (9,000)
State....................................................... (349) (2,707) (3,056)
--------- --------- ---------
$ (1,349) (10,707) (12,056)
--------- --------- ---------
--------- --------- ---------
</TABLE>

Income tax expense (benefit) amounted to $12,383 for 1997 (an effective rate
of 40%) and $(12,056) for 1998 (an effective rate of 29%). The actual expense
(benefit) for both 1997 and 1998

F-32
<PAGE>
(6) INCOME TAXES (CONTINUED)
differs from the "expected" tax expense (benefit) for those years (computed by
applying the U.S. federal corporate income tax rate of 34% to income (loss)
before income taxes) as follows:

<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Computed "expected" tax expense (benefit)................................ $ 10,525 (13,944)
Increase in income taxes resulting from:
State income taxes, net of federal income tax benefit................ 2,403 (2,017)
Other................................................................ (185) 3,905
--------- ---------
$ 12,383 (12,056)
--------- ---------
--------- ---------
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1998 are presented below:

<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Goodwill............................................................... $ -- 5,658
Bad debt reserve....................................................... 4,000 8,000
--------- ---------
Gross deferred tax asset........................................... 4,000 13,658
--------- ---------
Deferred tax liability:
Goodwill............................................................... (1,049) --
--------- ---------
Gross deferred tax liabilities..................................... (1,049) --
--------- ---------
Net deferred tax asset............................................. $ 2,951 13,658
--------- ---------
--------- ---------
</TABLE>

Management has concluded that it is more likely than not that Borg will have
sufficient taxable income of an appropriate character within the carryback and
carryforward period permitted by current tax law to allow for the utilization of
the deductible amounts generating the deferred tax asset.

(7) COMMITMENTS

Borg has entered into contracts with two vendors who provide certain
telephone related line access services. The contracts expire in April 1999, the
commitment for 1999 is $14,419.

(8) SUBSEQUENT EVENT (UNAUDITED)

Borg's stockholders have entered into a merger agreement whereby they will
exchange all of the shares in the Company to BiznessOnline. Com, Inc. (acquirer)
in exchange for cash and shares of common stock of the acquirer concurrent with
the consummation of the initial public offering ("IPO") of the common stock of
the acquirer. Upon consummation of the offering, the acquirer will become the
sole stockholder of Borg. Subsequent to the acquisition, Borg will merge into a
subsidiary of the acquirer.

F-33
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Stockholders
Caravela Software, Inc.:

We have audited the accompanying balance sheet of Caravela Software, Inc.
(Caravela) as of December 31, 1998 and the related statements of operations,
stockholders' equity and cash flows for each of the years in the two-year period
then ended. These financial statements are the responsibility of Caravela's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Caravela Software, Inc. as
of December 31, 1998, and the results of its operations and its cash flows for
each of the years in the two-year period then ended in conformity with generally
accepted accounting principles.

/s/ KPMG LLP

Providence, Rhode Island
February 2, 1999

F-34
<PAGE>
CARAVELA SOFTWARE, INC.

BALANCE SHEET

DECEMBER 31, 1998

<TABLE>
<S> <C>
ASSETS

Current assets:
Cash............................................................................ $ 30,760
Accounts receivable, net of allowance for doubtful accounts of $43,259.......... 189,643
Deferred tax asset.............................................................. 94,745
---------
Total current assets........................................................ 315,148
---------
Property and equipment, net (note 3).............................................. 234,923
Organizational costs, net of amortization of $611................................. 57
---------
Total assets................................................................ $ 550,128
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Note payable to stockholders (note 7)........................................... $ 58,969
Current portion of long-term debt (note 6)...................................... 71,009
Line of credit (note 5)......................................................... 50,000
Accounts payable................................................................ 55,133
Accrued expenses................................................................ 23,657
Income tax payable.............................................................. 7,925
Deferred taxes (note 8)......................................................... 93,162
Deferred revenue................................................................ 115,436
---------
Total current liabilities................................................... 475,291

Long-term liabilities:
Long-term debt (note 6)......................................................... 6,816
---------
Total liabilities........................................................... 482,107
---------
Stockholders' equity:
Common stock, $10 par value; 5,000 shares authorized, 100 shares issued and
outstanding................................................................... 1,000
Retained earnings............................................................... 67,021
---------
Total stockholders' equity.................................................. 68,021
---------
Total liabilities and stockholders' equity.................................. $ 550,128
---------
---------
</TABLE>

See accompanying notes to financial statements.

F-35
<PAGE>
CARAVELA SOFTWARE, INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
------------ ----------
<S> <C> <C>
Revenues............................................................................... $ 1,516,112 1,879,410
------------ ----------
Operating expenses:
Connectivity and operations.......................................................... 1,328,076 1,520,192
Sales and marketing.................................................................. 73,455 151,261
General and administrative........................................................... 79,489 5,500
Depreciation and amortization........................................................ 118,485 117,146
------------ ----------
Total operating expenses......................................................... 1,599,505 1,794,099
------------ ----------
Operating income (loss).......................................................... (83,393) 85,311
------------ ----------
Other income (expense):
Loss on disposal of equipment........................................................ -- (78,993)
Interest expense..................................................................... (9,453) (21,406)
Other income......................................................................... 267 11,092
------------ ----------
Total other income (expense)..................................................... (9,186) (89,307)
------------ ----------
Loss before income taxes......................................................... (92,579) (3,996)
Income tax benefit (note 8)............................................................ 37,031 1,598
------------ ----------
Net income (loss)................................................................ $ (55,548) (2,398)
------------ ----------
------------ ----------
Net income (loss) per share--basic and diluted......................................... $ (555.48) (23.98)
------------ ----------
------------ ----------
Weighted average shares outstanding--basic and diluted................................. 100 100
------------ ----------
------------ ----------
</TABLE>

See accompanying notes to financial statements.

F-36
<PAGE>
CARAVELA SOFTWARE, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
----------- --------- ------------
<S> <C> <C> <C>
Balance at December 31, 1996.................................................. $ 1,000 124,967 125,967
Net loss.................................................................... -- (55,548) (55,548)
----------- --------- ------------
Balance at December 31, 1997.................................................. 1,000 69,419 70,419
Net loss.................................................................... -- (2,398) (2,398)
----------- --------- ------------
Balance at December 31, 1998.................................................. $ 1,000 67,021 68,021
----------- --------- ------------
----------- --------- ------------
</TABLE>

See accompanying notes to financial statements.

F-37
<PAGE>
CARAVELA SOFTWARE, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................................................... $ (55,548) (2,398)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization........................................................ 118,485 117,146
Loss on disposal of equipment........................................................ -- 78,993
Changes in net assets and liabilities:
Decrease (increase) in accounts receivable--trade.................................. 81,230 (52,390)
Decrease in other current assets................................................... -- 1,000
Increase (decrease) in accounts payable............................................ 79,278 (31,019)
Increase (decrease) in income tax payable.......................................... 26,103 (18,178)
Increase (decrease) in deferred taxes.............................................. (76,782) 15,897
Decrease in accrued expenses....................................................... (49,085) (6,658)
Increase in deferred revenue....................................................... 27,954 34,491
----------- ----------
Net cash provided by operating activities........................................ 151,635 136,884
----------- ----------
Cash flows from investing activities:
Proceeds from disposal of equipment.................................................... -- 6,952
Capital expenditures................................................................... (182,737) (151,929)
----------- ----------
Net cash used in investing activities............................................ (182,737) (144,977)
----------- ----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt............................................... 85,009 107,430
Principal payments under capital lease obligations..................................... (13,365) (14,555)
Repayments of long-term debt........................................................... (19,605) (75,000)
----------- ----------
Net cash provided by financing activities........................................ 52,039 17,875
----------- ----------
Net increase in cash............................................................. 20,937 9,782
Cash at beginning of year................................................................ 41 20,978
----------- ----------
Cash at end of year...................................................................... $ 20,978 30,760
----------- ----------
----------- ----------
Supplemental cash flow information:
Interest of $9,722 and $20,415 was paid in 1997 and 1998, respectively.
Income taxes of $8,000 and $0 were paid in 1997 and 1998, respectively.
</TABLE>

See accompanying notes to financial statements.

F-38
<PAGE>
CARAVELA SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997 AND 1998

(1) NATURE OF OPERATIONS

Caravela Software, Inc. ("Caravela") was incorporated in 1994 and operates
under the name Connix. Caravela is a provider of Internet access and offers a
broad spectrum of Internet access services to both individual and business
customers ranging from dial-up services to continuous access services using
dedicated telephone connections and Web hosting services.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) USE OF ESTIMATES

(b) REVENUE RECOGNITION

Caravela recognizes revenue when services are provided. Services are
generally billed in advance. Advance billings are recorded as deferred revenue
and recognized as revenue when earned over the period of service.

For purposes of the statement of cash flows, Caravela considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.

(d) PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided using
an accelerated method over the estimated useful lives of the assets for property
and equipment. The estimated useful lives of the assets range from three to five
years. Caravela leases certain of its data communications and other equipment
under capital lease agreements. The assets and liabilities under capital leases
are recorded at the lesser of the present value of aggregate future minimum
lease payments or the fair value of the assets under the lease. Assets under
capital lease are depreciated over the shorter of their estimated useful lives
or the lease term.

(e) INCOME TAXES

F-39
<PAGE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) ADVERTISING COSTS

Caravela incurs advertising costs associated with the marketing of its
services. These costs of advertising are expensed as incurred. Advertising
expense totaled $49,416 and $96,804 for the years ended December 31, 1997 and
1998, respectively.

(g) IMPAIRMENT OF LONG-LIVED ASSETS

(h) EARNINGS PER SHARE

Caravela adopted the provisions of SFAS No. 128, "Earnings per Share," on
December 31, 1997. This statement requires the presentation of basic and diluted
earnings per share for all periods presented. There were no common stock
equivalents outstanding for any of the periods presented; accordingly, basic and
fully diluted earnings per share are the same.

(3) PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1998:

<TABLE>
<S> <C>
Computer, telecommunications and office equipment................. $ 450,692
Less accumulated depreciation..................................... 215,769
---------
Net property and equipment........................................ $ 234,923
---------
---------
</TABLE>

(4) LEASES

Caravela has two operating leases for office space on a month-to-month
basis. Caravela also had three capital leases for office equipment which were
paid in full during 1998. Rental expense for operating leases during 1997 and
1998 was $39,154 and $32,280, respectively.

(5) LINE OF CREDIT

At December 31, 1998, Caravela maintained a $50,000 Revolving Line of Credit
with a bank. The Revolving Line of Credit bears interest at prime plus 2% (prime
rate was 7.75% at December 31, 1998) and is payable on demand.

F-40
<PAGE>
(6) LONG-TERM DEBT

Long-term debt at December 31, 1998 consists of the following:

<TABLE>
<S> <C>
9% note payable to bank in monthly installments of $3,426, including
interest, due February 2000, secured by the personal guarantee of the
stockholders and certain property and equipment owned by Caravela........ $ 45,415
9.25% note payable to bank in monthly installments of $3,435 per month,
including interest, due November 1999 secured by the personal guarantee
of the stockholders and certain property and equipment owned by
Caravela................................................................. 32,410
---------
77,825
Less current portion....................................................... 71,009
---------
Long-term debt, excluding current portion.................................. $ 6,816
---------
---------
</TABLE>

The aggregate maturities of long-term debt for each of the two years
subsequent to December 31, 1998 are as follows: 1999, $71,009 and 2000, $6,816.

(7) NOTE PAYABLE TO STOCKHOLDERS

The note payable is due to the stockholders of Caravela and bears interest
at 10%. The note payable will mature in 1999.

(8) INCOME TAXES

Income tax expense (benefit) for the years ended December 31, 1997 and 1998,
consists of the following:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
---------- --------- ---------
<S> <C> <C> <C>
1997:
Federal.................................................... $ 29,813 (57,587) (27,774)
State...................................................... 9,938 (19,195) (9,257)
---------- --------- ---------
$ 39,751 (76,782) (37,031)
---------- --------- ---------
---------- --------- ---------
1998:
Federal.................................................... $ (13,121) 11,923 (1,198)
State...................................................... (4,374) 3,974 (400)
---------- --------- ---------
$ (17,495) 15,897 (1,598)
---------- --------- ---------
---------- --------- ---------
</TABLE>

Income tax expense (benefit) amounted to $(37,031) for 1997 (an effective
rate of 40%) and $(1,598) for 1998 (an effective rate of 40%). The actual
expense (benefit) for both 1997 and 1998 differs from the "expected" tax expense
(benefit) for those years (computed by applying the U.S. federal corporate
income tax rate of 34% to income (loss) before income taxes) as follows:

<TABLE>
<CAPTION>
1997 1998
---------- ---------
<S> <C> <C>
Computed "expected" tax expense (benefit)................................ $ (31,477) (1,359)
Increase in income taxes resulting from:
State income taxes, net of federal income tax benefit.................. (5,554) (239)
---------- ---------
$ (37,031) (1,598)
---------- ---------
---------- ---------
</TABLE>

F-41
<PAGE>
(8) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1998 are presented below:

<TABLE>
<CAPTION>
1997 1998
---------- ---------
<S> <C> <C>
Deferred tax assets:
Accounts payable...................................................... $ 34,460 22,053
Accrued expenses...................................................... 5,544 9,214
Bad debt reserve...................................................... 24,000 17,304
Deferred revenue...................................................... 32,378 46,174
---------- ---------
Gross deferred tax asset.......................................... 96,382 94,745
---------- ---------
Deferred tax liability:
Accounts receivable................................................... (78,902) (93,162)
---------- ---------
Gross deferred tax liabilities.................................... (78,902) (93,162)
---------- ---------
Net deferred tax asset............................................ $ 17,480 1,583
---------- ---------
---------- ---------
</TABLE>

Management has concluded that it is more likely than not that Caravela will
have sufficient taxable income of an appropriate character within the carryback
and carryforward period permitted by current tax law to allow for the
utilization of the deductible amounts generating the deferred tax asset.

(9) DEFINED CONTRIBUTION PLAN

Caravela sponsors a 401(k) Plan for all employees meeting certain
eligibility requirements. Caravela contributes 35% of the employees'
contribution, up to 6% of each employee's eligible compensation. The employer
matching contribution was $5,436 and $9,487 in 1997 and 1998, respectively. In
addition the plan provides for a voluntary annual profit sharing contribution.
Caravela contributed $12,798 in 1997 and $0 in 1998.

(10) COMMITMENTS

Caravela has entered into several contracts with vendors that provide
certain telephone related line access services with various expiration dates.
Following are the commitments for each of the two years subsequent to December
31, 1998:

<TABLE>
<S> <C>
1999............................................................... $ 32,840
2000............................................................... 23,200
---------
Total.......................................................... $ 56,040
---------
---------
</TABLE>

(11) SUBSEQUENT EVENT (UNAUDITED)

Caravela's stockholders have entered into a merger agreement whereby they
will exchange all of the shares in the Company to BiznessOnline.com, Inc. (the
acquirer) in exchange for cash and shares of common stock of the acquirer
concurrent with the consummation of the initial public offering ("IPO") of the
common stock of the acquirer. Upon consummation of the offering, the acquirer
will become the sole stockholder of Caravela. Subsequent to the acquisition,
Caravela will merge into a subsidiary of the acquirer.

F-42
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Stockholders and Board of Directors
Global 2000 Communications, Inc.:

We have audited the accompanying balance sheet of Global 2000
Communications, Inc. (Global 2000) as of December 31, 1998, and the related
statements of income, stockholders' equity and cash flows for each of the years
in the two-year period then ended. These financial statements are the
responsibility of Global 2000 management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Global 2000 Communications,
Inc. as of December 31, 1998, and the results of its operations and its cash
flows for each of the years in the two-year period then ended in conformity with
generally accepted accounting principles.

/s/ KPMG LLP

Providence, Rhode Island
January 31, 1999

F-43
<PAGE>
GLOBAL 2000 COMMUNICATIONS, INC.

BALANCE SHEET

DECEMBER 31, 1998

<TABLE>
<S> <C>
ASSETS

Current assets:
Cash and cash equivalents....................................................... $ 260,131
Accounts receivable--trade, net of allowance for doubtful accounts of $18,000... 114,952
---------
Total current assets........................................................ 375,083
---------
Property and equipment, net (note 3).............................................. 243,035
Other assets, net................................................................. 4,418
---------
Total assets................................................................ $ 622,536
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt (note 6)................................... $ 7,288
Obligations under capital lease (note 4)........................................ 3,846
Accrued expenses................................................................ 64,615
Deferred revenue................................................................ 258,268
---------
Total current liabilities................................................... 334,017

Long-term liabilities:
Long-term debt, excluding current maturities (note 6)........................... 96,496
---------
Total liabilities........................................................... 430,513
---------
Stockholders' equity:
Common stock, no par value; 200 shares authorized, issued and outstanding 27,500
Retained earnings............................................................... 164,523
---------
Total stockholders' equity.................................................. 192,023
---------
Total liabilities and stockholders' equity.................................. $ 622,536
---------
---------
</TABLE>

See accompanying notes to financial statements.

F-44
<PAGE>
GLOBAL 2000 COMMUNICATIONS, INC.

STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
------------ ----------
<S> <C> <C>
Revenues............................................................................... $ 1,108,980 1,738,613
------------ ----------
Operating expenses:
Connectivity and operations (note 5)................................................. 809,374 927,769
Sales and marketing.................................................................. 71,513 366,229
General and administrative (note 7).................................................. 76,640 114,105
Depreciation and amortization........................................................ 43,690 58,672
------------ ----------
Total operating expenses......................................................... 1,001,217 1,466,775
------------ ----------
Operating income................................................................. 107,763 271,838
Other income (expense), net:
Interest and other income............................................................ 2,836 2,938
Loss on disposal of equipment........................................................ (10,338) (21,431)
Interest expense..................................................................... (14,375) (13,573)
------------ ----------
Total other income (expense), net................................................ (21,877) (32,066)
------------ ----------
Net income....................................................................... $ 85,886 239,772
------------ ----------
------------ ----------
Net income per share--basic and diluted................................................ $ 429.43 1,198.86
------------ ----------
------------ ----------
Weighted average shares outstanding--basic and diluted................................. 200 200
------------ ----------
------------ ----------
</TABLE>

See accompanying notes to financial statements.

F-45
<PAGE>
GLOBAL 2000 COMMUNICATIONS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
--------- ---------- ------------
<S> <C> <C> <C>
Balance at December 31, 1996................................................. $ 27,500 25,865 53,365
Distributions to shareholders.............................................. -- (81,000) (81,000)
Net income................................................................. -- 85,886 85,886
--------- ---------- ------------
Balance at December 31, 1997................................................. 27,500 30,751 58,251
Distributions to shareholders.............................................. -- (106,000) (106,000)
Net income................................................................. -- 239,772 239,772
--------- ---------- ------------
Balance at December 31, 1998................................................. $ 27,500 164,523 192,023
--------- ---------- ------------
--------- ---------- ------------
</TABLE>

See accompanying notes to financial statements.

F-46
<PAGE>
GLOBAL 2000 COMMUNICATIONS, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................................. $ 85,886 239,772
----------- ----------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization........................................................ 43,690 58,672
Net realized loss (gain) on investment............................................... (694) 1,535
Loss on disposal of property and equipment........................................... 10,338 21,431
Changes in net assets and liabilities:
Decrease (increase) in accounts receivable--trade.................................. (64,271) 12,488
Increase in other assets........................................................... (1,360) (1,988)
Decrease in trade accounts payable................................................. (9,964) (75)
Increase (decrease) in accrued expenses............................................ 39,807 (5,110)
Increase in deferred revenue....................................................... 70,790 41,014
----------- ----------
Net cash provided by operating activities........................................ 174,222 367,739
----------- ----------
Cash flows from investing activities:
Proceeds from sale of investments...................................................... 36,384 25,614
Acquisition of property and equipment.................................................. (38,147) (103,938)
Proceeds from disposal of fixed assets................................................. 13,800 --
Purchases of investments............................................................... (52,174) (10,656)
----------- ----------
Net cash used in investing activities.............................................. (40,137) (88,980)
----------- ----------
Cash flows from financing activities:
Principal payments under capital lease obligations..................................... (8,049) (10,090)
Distributions to shareholders.......................................................... (81,000) (106,000)
Repayments of long-term debt........................................................... (23,078) (7,288)
----------- ----------
Net cash used in financing activities............................................ (112,127) (123,378)
----------- ----------
Net increase in cash and cash equivalents........................................ 21,958 155,381
Cash and cash equivalents at beginning of year........................................... 82,792 104,750
----------- ----------
Cash and cash equivalents at end of year................................................. $ 104,750 260,131
----------- ----------
----------- ----------
Supplemental disclosures of cash flow information:
Interest of $14,375 and $13,573 was paid in 1997 and 1998, respectively.
Global 2000 incurred a capital lease obligation of $17,000 in connection with an
acquisition of equipment in 1997.
</TABLE>

See accompanying notes to financial statements.

F-47
<PAGE>
GLOBAL 2000 COMMUNICATIONS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997 AND 1998

(1) NATURE OF OPERATIONS

Global 2000 Communications, Inc. ("Global 2000") was incorporated in New
York State in 1994. Global 2000 is a regional provider of Internet access and
offers a broad spectrum of Internet access services to both individual and
business customers ranging from dial-up services to continuous access services
using dedicated telephone connections and Web hosting services.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions, including estimates of the allowance for doubtful accounts, that
affect the amounts reported in the financial statements. Actual results may
differ from those estimates.

(b) REVENUE RECOGNITION

Global 2000 recognizes revenue when services are provided. Services are
generally billed in advance. Advance billings are recorded as deferred revenue
and recognized as revenue when earned over the period of service.

For purposes of the statement of cash flows, Global 2000 considers all
highly liquid investments purchased with original maturity of three months or
less to be cash equivalents.

(d) PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided for
using the straight line method over the estimated useful lives of the assets.
The estimated useful lives of the assets range from three to forty years. Global
2000 leases certain of its computer and telecommunications equipment under
capital lease agreements. The assets and liabilities under capital leases are
recorded at the lesser of the present value of aggregate future minimum lease
payments or the fair value of the assets under the lease. Assets under capital
lease are depreciated over shorter of their useful life or the lease term.

(e) INCOME TAXES

As a subchapter S corporation, Global 2000's income is taxed at the
stockholder level, except for certain business income taxes, therefore, no
income tax provision has been included in the financial statements.

(f) ADVERTISING COSTS

Global 2000 incurs advertising costs associated with the marketing of its
services. These costs of advertising are expensed as incurred. Advertising
expense totaled $71,513 and $366,229 for the years ended December 31, 1997 and
1998, respectively.

F-48
<PAGE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets.

(h) EARNINGS PER SHARE

Global 2000 adopted the provisions of SFAS No. 128, "Earnings per Share," on
January 1, 1998. This statement requires the presentation of basic and diluted
earnings per share for all periods presented. There were no common stock
equivalents outstanding for any of the periods presented; accordingly, basic and
fully diluted earnings per share are the same.

(3) PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1998

<TABLE>
<S> <C>
Computer, telecommunications and office equipment................. $ 238,153
Software.......................................................... 9,730
Leasehold Improvements............................................ 100,361
---------
348,244
Less accumulated depreciation..................................... 105,209
---------
Property and equipment, net....................................... $ 243,035
---------
---------
</TABLE>

Depreciation expense for the years ended December 31, 1997 and 1998 was
$43,650 and $58,672, respectively. Estimated useful lives used in the
calculation of depreciation by major category of property and equipment are as
follows:

<TABLE>
<S> <C>
Computer, telecommunications and office equipment............... 3-7 years
Software........................................................ 3 years
30-40
Leasehold improvements.......................................... years
</TABLE>

(4) LEASES

Global 2000 leases computer and telecommunications equipment under a capital
lease agreement that is due to expire on May 1, 1999. At December 31, 1998, the
gross amount of equipment under capital leases was $17,000 with accumulated
amortization of $13,460. Amortization of assets held under capital lease is
included with depreciation expense.

Global 2000 also has several operating leases, primarily for office
equipment, with expiration dates through July 1, 2000. See note 5 for
information regarding rental of office space.

F-49
<PAGE>
(4) LEASES (CONTINUED)
Future minimum lease payments under operating leases with initial or
remaining noncancellable lease terms in excess of one year as of December 31,
1998 are as follows:

<TABLE>
<CAPTION>
OPERATING
YEAR ENDED DECEMBER 31: LEASES
- ----------------------------------------------------------------------------------- -----------
<S> <C>
1999....................................................................... $ 30,150
2000....................................................................... 8,775
-----------
Total minimum lease payments............................................... $ 38,925
-----------
-----------
</TABLE>

(5) RELATED PARTY TRANSACTIONS

Global 2000 rents office space from two of its primary shareholders on a
month-to-month basis. Rent expense in 1997 and 1998 was $6,000 and $21,000,
respectively.

(6) NOTE PAYABLE

The note payable is owed to a financial institution. The note bears interest
equal to the financial institution's base rate plus 2% per annum and is payable
in monthly installments of $1,483, including interest through June 1, 2001, when
payment will be made for the entire unpaid principal balance and any accrued
interest. Maturities for the next three years are as follows: 1999--$7,288;
2000--$8,050 and 2001--$88,446.

(7) RETIREMENT PLAN

Employees of Global 2000 with at least three years of service are included,
on a voluntary basis, in a contributory defined contribution pension plan
administered by Global 2000. The plan is a single-employer pension plan.
Contributions by Global 2000 totaled $39,648 and $53,535 for 1997 and 1998,
respectively.

(8) COMMITMENTS

Global 2000 has entered into several contracts with vendors that provide
certain telephone related line access services with various expiration dates.
Following are the commitments for each of the two years subsequent to December
31, 1998:

<TABLE>
<S> <C>
1999.............................................................. $ 68,632
2000.............................................................. 64,632
---------
Total......................................................... $ 133,264
---------
---------
</TABLE>

(9) SUBSEQUENT EVENT

Global 2000 was acquired by BiznessOnline.com, Inc. (the acquirer) on
January 31, 1999 in exchange for a note of $580,000 payable at the Initial
Public Offering (IPO) of the acquirer and $2,720,000 payable in shares of common
stock of the acquirer subject to adjustment at the IPO closing based on the IPO
price per share. Upon consummation of the agreement, the acquirer became the
sole stockholder of Global 2000. Subsequent to the acquisition, Global 2000 was
merged into a subsidiary of the acquirer.

F-50
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Stockholders
Ulsternet, Inc.:

We have audited the accompanying balance sheet of Ulsternet, Inc.
(Ulsternet) as of December 31, 1998, and the related statements of operations,
stockholders' equity (deficit) and cash flows for each of the years in the
two-year period then ended. These financial statements are the responsibility of
Ulsternet's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ulsternet, Inc. as of
December 31, 1998, and the results of its operations and its cash flows for each
of the years in the two-year period then ended in conformity with generally
accepted accounting principles.

/s/ KPMG LLP

Providence, Rhode Island
January 25, 1999

F-51
<PAGE>
ULSTERNET, INC.

BALANCE SHEET

DECEMBER 31, 1998

<TABLE>
<S> <C>
ASSETS

Current assets:
Cash............................................................................ $ 1,258
Accounts receivable, net of allowance for doubtful accounts of $3,000........... 5,530
Prepaid expenses................................................................ 4,971
---------
Total current assets........................................................ 11,759
---------
Property and equipment, net (note 3)
Computer and telecommunications equipment....................................... 220,984
Less accumulated depreciation................................................... 144,526
---------
Net property and equipment.................................................. 76,458
---------
Total assets................................................................ $ 88,217
---------
---------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
Current maturities of long-term debt (note 4)................................... $ 8,905
Current installments of obligations under capital leases (note 3)............... 27,698
Accounts payable................................................................ 12,843
Accrued expenses................................................................ 710
Deferred revenue................................................................ 105,358
---------
Total current liabilities................................................... 155,514

Long-term liabilities:
Long-term debt, excluding current maturities (note 4)........................... 11,271
Obligations under capital leases, excluding current installments (note 3)....... 13,934
---------
Total liabilities........................................................... 180,719
---------
Stockholders' equity (deficit) (note 5):
Common stock, no par value; 200 shares authorized, 94 shares issued and
outstanding................................................................... 10,200
Accumulated deficit............................................................. (102,702)
---------
Total stockholders' deficit................................................. (92,502)
---------
Total liabilities and stockholders' deficit................................. $ 88,217
---------
---------
</TABLE>

See accompanying notes to financial statements

F-52
<PAGE>
ULSTERNET, INC.

STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
---------- ---------
<S> <C> <C>
Revenues................................................................................... $ 318,630 604,419
---------- ---------
Operating expenses:
Connectivity and operations.............................................................. 290,309 491,327
Sales and marketing...................................................................... 4,377 6,136
General and administrative............................................................... 2,536 15,336
Depreciation and amortization............................................................ 39,224 58,231
---------- ---------
Total operating expenses............................................................. 336,446 571,030
---------- ---------
Operating income (loss).............................................................. (17,816) 33,389
Interest expense........................................................................... (8,480) (9,784)
---------- ---------
Net income (loss).................................................................... $ (26,296) 23,605
---------- ---------
---------- ---------
Net income (loss) per share--basic and diluted............................................. $ (279.74) 251.12
---------- ---------
---------- ---------
Weighted average shares outstanding--basic and diluted..................................... 94 94
---------- ---------
---------- ---------
</TABLE>

See accompanying notes to financial statements.

F-53
<PAGE>
ULSTERNET, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
TOTAL
STOCKHOLDERS'
COMMON ACCUMULATED EQUITY
STOCK DEFICIT (DEFICIT)
--------- ------------ ------------
<S> <C> <C> <C>
Balance at December 31, 1996.............................................. $ -- -- --
Capital Contributions................................................... 10,200 -- 10,200
Distributions........................................................... -- (54,688) (54,688)
Net loss................................................................ -- (26,296) (26,296)
--------- ------------ ------------
Balance at December 31, 1997.............................................. 10,200 (80,984) (70,784)
Distributions........................................................... -- (45,323) (45,323)
Net income.............................................................. -- 23,605 23,605
--------- ------------ ------------
Balance at December 31, 1998.............................................. $ 10,200 (102,702) (92,502)
--------- ------------ ------------
--------- ------------ ------------
</TABLE>

See accompanying notes to financial statements.

F-54
<PAGE>
ULSTERNET, INC.

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
1997 1998
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................................................ $ (26,296) 23,605
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization.......................................................... 39,224 58,231
Changes in net assets and liabilities:
Decrease (increase) in accounts receivable........................................... (6,645) 1,115
Increase in prepaid expenses......................................................... -- (4,971)
Increase in accounts payable......................................................... 7,413 5,430
Increase in accrued expenses......................................................... 325 385
Increase in deferred revenue......................................................... 82,944 22,414
---------- ---------
Net cash provided by operating activities.......................................... 96,965 106,209
---------- ---------
Cash flows from investing activities:
Capital expenditures..................................................................... (55,344) (31,860)
---------- ---------
Net cash used in investing activities.............................................. (55,344) (31,860)
---------- ---------
Cash flows from financing activities:
Capital contributions.................................................................... 10,200 --
Proceeds from long-term debt............................................................. 40,524 --
Distributions to stockholders............................................................ (54,688) (45,323)
Principal payments under capital lease obligations....................................... (18,806) (26,271)
Repayments of long-term debt............................................................. (12,298) (8,050)
---------- ---------
Net cash used in financing activities.............................................. (35,068) (79,644)
---------- ---------
Net increase (decrease) in cash.................................................... 6,553 (5,295)
Cash at beginning of year.................................................................. -- 6,553
---------- ---------
Cash at end of year........................................................................ $ 6,553 1,258
---------- ---------
---------- ---------
Supplemental cash flow information:
Ulsternet paid $8,480 and $9,784 in interest in 1997 and 1998, respectively.
Non-cash financing activities:
Capital lease obligations of $49,703 and $21,883 were incurred in 1997 and 1998, respectively.
</TABLE>

See accompanying notes to financial statements.

F-55
<PAGE>
ULSTERNET, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997 AND 1998

(1) NATURE OF OPERATIONS

Ulsternet, Inc. ("Ulsternet") was incorporated on November 7, 1996.
Ulsternet is a provider of Internet access and offers a broad spectrum of
Internet access services to both individual and business customers ranging from
dial-up services to continuous access services using dedicated telephone
connections and Web hosting services.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) USE OF ESTIMATES

(b) REVENUE RECOGNITION

Ulsternet recognizes revenue when services are provided. Services are
generally billed in advance. Advance billings are recorded as deferred revenue
and recognized as revenue when earned over the service period.

For purposes of the statement of cash flows, Ulsternet considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.

(d) PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided using
an accelerated method over the estimated useful lives of the assets for property
and equipment. The estimated useful lives of the assets range from three to five
years. Ulsternet leases certain of its data communications and other equipment
under capital lease agreements. The assets and liabilities under capital leases
are recorded at the lesser of the present value of aggregate future minimum
lease payments or the fair value of the assets under the lease. Assets under
capital lease are depreciated over the shorter of their estimated useful lives
or the lease term.

(e) INCOME TAXES

As a subchapter S corporation, Ulsternet's income is taxed at the
stockholder level, therefore except for certain local business income taxes, no
income tax provision has been included in the financial statements.

(f) ADVERTISING COSTS

Ulsternet incurs advertising costs associated with the marketing of its
services. These costs of advertising are expensed as incurred. Advertising
expense totaled $1,387 and $1,016 for the years ended December 31, 1997 and
1998, respectively.

F-56
<PAGE>
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) IMPAIRMENT OF LONG-LIVED ASSETS

(h) EARNINGS PER SHARE

Ulsternet adopted the provisions of SFAS No. 128, "Earnings per Share," on
December 31, 1997. This statement requires the presentation of basic and diluted
earnings per share for all periods presented. There were no common stock
equivalents outstanding for any of the periods presented; accordingly, basic and
fully diluted earnings per share are the same.

(3) LEASES

Ulsternet leases certain equipment under capital lease agreements that
expire at various dates through July 2001. At December 31, 1998, the gross
amount of equipment and related accumulated amortization recorded under capital
leases were as follows:

<TABLE>
<S> <C>
Computer and telecommunications equipment.......................... $ 91,930
Less accumulated amortization...................................... 43,577
---------
$ 48,353
---------
---------
</TABLE>

Ulsternet has one operating lease for office space on a month-to-month
basis. Rental expense for the operating lease during 1997 and 1998 was $3,600
and $5,100, respectively.

Future minimum lease payments under capital and operating leases as of
December 31, 1998 are as follows:

<TABLE>
<CAPTION>
CAPITAL
YEAR ENDED DECEMBER 31: LEASES
- ----------------------------------------------------------------------------------- ---------
<S> <C>
1999....................................................................... $ 30,554
2000....................................................................... 12,974
2001....................................................................... 1,647
---------
Total minimum lease payment................................................ 45,175
Less amount representing interest (at 10%)................................. 3,543
---------
Present value of minimum capital lease payments............................ 41,632
Less current installments of obligations under capital leases.............. 27,698
---------
Obligations under capital leases, excluding current installments........... $ 13,934
---------
---------
</TABLE>

F-57
<PAGE>
(4) LONG-TERM DEBT

Long-term debt consists of the following at December 31, 1998:

<TABLE>
<S> <C>
Note payable to a bank in monthly installments of $430, including
interest at 10.5%, due January 2002, secured by equipment........ $ 13,417
Note payable to a bank in monthly installments of $476, including
interest at 11%, due May 2000, secured by personal property...... 6,759
---------
Total long-term debt............................................. 20,176
Less current maturities.......................................... 8,905
---------
Long-term debt, excluding current maturities..................... $ 11,271
---------
---------
</TABLE>

Maturities for the next three years are as follows: 1999--$8,905;
2000--$6,569 and 2001--$4,702.

(5) DISTRIBUTIONS TO STOCKHOLDERS

Ulsternet is a cash-basis, subchapter S corporation for federal income tax
purposes. As such, income or loss is measured on the cash basis of accounting
for tax purposes and distributions are made based on those results. (For
financial statement purposes, Ulsternet is on the accrual method of accounting.)
The distributions made to date do not exceed Ulsternet's income tax basis and
therefore have been reflected as charges to accumulated deficit for financial
statement purposes rather than as returns of capital stock.

(6) COMMITMENTS

Ulsternet has entered into several contracts with vendors that provide
certain telephone related line access services. The contracts have various
expiration dates, through 2002. Following are the commitments for each of the
four years subsequent to December 31, 1998:

<TABLE>
<S> <C>
1999.............................................................. $ 104,625
2000.............................................................. 34,985
2001.............................................................. 33,078
2002.............................................................. 11,026
---------
Total......................................................... $ 183,714
---------
---------
</TABLE>

(7) SUBSEQUENT EVENT (UNAUDITED)

Ulsternet's stockholders have entered into a merger agreement whereby they
will exchange their shares in the Company to BiznessOnline.Com, Inc. (acquirer)
in exchange for cash and shares of common stock of the acquirer concurrent with
the consummation of the initial public offering ("IPO") of the common stock of
the acquirer. Upon consummation of the offering, the acquirer will become the
sole stockholder of Ulsternet. Subsequent to the acquisition, Ulsternet will
merge into a subsidiary of the acquirer.

F-58
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO PROVIDE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS ABOUT BIZNESSONLINE EXCEPT THE
INFORMATION OR REPRESENTATIONS CONTAINED IN THIS PROSPECTUS. YOU SHOULD NOT RELY
ON ANY ADDITIONAL INFORMATION OR REPRESENTATIONS IF MADE.

This prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy any securities:

- except the common stock offered by this prospectus;

- in any jurisdiction in which the offer or solicitation is not authorized;

- in any jurisdiction where the dealer or other salesperson is not qualified
to make the offer or solicitation;

- to any person to whom it is unlawful to make the offer or solicitation; or

- to any person who is not a United States resident or who is outside the
jurisdiction of the United States.

The delivery of this prospectus or any accompanying sale does not imply
that:

- there have been no changes in the affairs of BiznessOnline after the date
of this prospectus; or

- the information contained in this prospectus is correct after the date of
this prospectus.

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

Until , 1999, 25 calendar days after the date of this
prospectus, all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealers' obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.

2,900,000 SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS

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

JOSEPH STEVENS & COMPANY, INC.
SCHNEIDER SECURITIES, INC.

NEIDIGER, TUCKER, BRUNER, INC.

ROYCE INVESTMENT GROUP, INC.

, 1999

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law allows a Delaware
corporation to indemnify its present and former directors and officers under
certain conditions. Article Twelve of our Certificate of Incorporation provides
that any person made a party to or otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter, a "proceeding"), by reason of the fact that such person is or was
a director or officer of BiznessOnline, or is or was serving at our request as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified and held harmless by us
to the fullest extent authorized by the Delaware General Corporation Law against
all expense, liability and loss, PROVIDED, HOWEVER, that we shall only indemnify
such person in a proceeding initiated by such person only if such proceeding was
authorized by our directors. The right of indemnification described herein
includes the right to be paid expenses incurred in defending any proceeding in
advance of its final disposition, provided that such person, if required by the
Delaware General Corporation Law, undertakes to repay all amounts advanced if it
shall be ultimately determined that such director or officer is not entitled to
be indemnified under Article Twelve or otherwise.

Section 102(b)(7) of the Delaware General Corporation Law gives a Delaware
corporation the power to adopt a charter provision eliminating or limiting the
personal liability of directors to the corporation or its stockholders for
breach of fiduciary duty as directors, provided that such provision may not
eliminate or limit the liability of directors for:

- any breach of the director's duty of loyalty to the corporation or its
stockholders;

- any acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- any payment of a dividend or approval of a stock purchase that is illegal
under Section 174 of the Delaware General Corporation Law, or

- any transaction from which the director derived an improper personal
benefit.

Article Twelve of our Certificate of Incorporation states that to the
maximum extent permitted by Section 102(b)(7) of the Delaware General
Corporation Law, our directors shall not be personally liable to us or our
stockholders for monetary damages resulting from such director's breach of
fiduciary duty as a director, except for liability involving one of the four
exceptions described above. In addition, our Certificate of Incorporation
provides that if the Delaware General Corporation Law is amended to authorize
the further limitation or elimination of the liability of a director, then the
liability of the directors shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.

Section 145 of the Delaware General Corporation Law allows a corporation to
obtain insurance on behalf of its directors and officers against liabilities
incurred by them in those capacities. Article Twelve of our Certificate of
Incorporation provides that we may maintain insurance to protect us and our
directors and officers against expenses, liabilities and losses whether or not
we would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law. We intend to procure a
directors' and officers' liability and company reimbursement liability insurance
policy that will (a) insure directors and officers against losses (above a
deductible amount) arising from certain claims made against them by reason of
certain acts done or attempted by such directors or officers and (b) insure us
against losses (above a deductible amount) arising from any such claims, but
only if we are required or permitted to indemnify such directors or officers for
such losses under statutory or common law or under provisions of our Certificate
of Incorporation or By-Laws.

II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of BiznessOnline pursuant to the foregoing
provisions, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission indemnification for liabilities is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.

Reference is also made to Section 7 of the Underwriting Agreement between us
and the Underwriters, filed as Exhibit 1 to this Registration Statement, for a
description of indemnification arrangements between us and the Underwriters.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered other than the
underwriting discounts and commissions. All amounts shown are estimates except
the Securities and Exchange Commission registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
ITEM AMOUNT
- -------------------------------------------------------------------------------- ------------
<S> <C>
SEC registration fee............................................................ $ 10,602
NASD filing fee................................................................. $ 4,314
NASDAQ National Market System listing application fee........................... $ 66,875
Blue Sky fees and expenses...................................................... $ 35,000
Printing and engraving expenses (including Edgar filing service charges)........ $ 100,000
Accounting fees and expenses.................................................... $ 350,000
Legal fees and expenses......................................................... $ 450,000
Transfer agent and registrar fee................................................ $ 5,000
Miscellaneous................................................................... $ 78,209
Total..................................................................... $ 1,100,000
</TABLE>

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The following gives effect to a 10,000 for one stock split in the nature of
a dividend on December 20, 1998 and a 3.147186 for one stock split which we
intend to effect prior to the effective date of this Registration Statement.

(a) On July 1, 1998, in connection with our formation, we issued (1)
1,337,554 shares of our common stock $.01 par value per share, to Mark E. Munro,
(2) 1,337,554 shares of our common stock to Susan Munro, (3) 409,134 shares of
our common stock to S. Keith London, and (4) 62,944 shares of our common stock
to S&D Enterprises, a Rhode Island partnership, in each case for cash at a price
per share (pre split) of $1 for an aggregate consideration of $100 and pursuant
to an organizational subscription agreement. These issuances were effected
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon the exemption from registration contained in
Section 4(2) of the Securities Act.

(b) On January 31, 1999, we issued a total of 272,000 shares of our common
stock to the six stockholders of Global 2000 Communications, Inc., a New York
corporation, comprising a portion of the merger consideration paid to such
persons, pursuant to an Agreement and Plan of Merger and Reorganization by which
Global 2000 Communications was merged with and into our wholly-owned subsidiary.
These issuances were effected without registration and the Securities Act in
reliance upon the exemption for registration set forth in Section 4(2) of the
Securities Act.

(c) On February 15, 1999, we issued shares of our Class A Preferred Stock -
First Series (the "First Series") to 7 accredited investors in private
transactions. We issued a total of 70,000 shares of the First Series for an
aggregate purchase price of $350,000. Except for a commission of $7,500 on

II-2
<PAGE>
aggregate sales of $75,000 paid to Schneider Securities, Inc. (one of our
Underwriters in this offering), no commissions were paid. These sales were
effected without registration under the Securities Act in reliance upon the
exemptions from registration set forth in Section 4(2) of the Securities Act and
Rule 506 of Regulation D thereunder, relating to the sale of securities by an
issuer not involving a public offering.

(d) Prior to filing this Registration Statement, on several dates in late
January and early February, 1999, we agreed to issue a total of 782,000 shares
(assuming a $10.00 per share price in this offering) of our common stock to the
stockholders of our Internet service providers we will own at the consummation
of this offering (including 272,000 shares issued to the stockholders of Global
2000 Communications on January 31, 1999) as a portion of the aggregate
consideration to be paid to such persons under definitive acquisition
agreements. These transactions were effected without registration under the
Securities Act in reliance upon the exemption for registration set forth in
Section 4(2) of the Securities Act.

The issuances of common stock described in paragraphs (b) and (d) above were
or will be made in connection with acquisition transactions not involving a
public offering to an aggregate of thirteen sophisticated and/or accredited
individuals who were stockholders of Global 2000 Communications and three of the
four internet service providers we will acquire upon completion of this
offering. All thirteen individuals received copies of the Company's business
plan and financial projections and had numerous meetings and discussions with
management. Each individual acknowledged and represented to the Company in
writing that he or she understands and agrees that the shares of common stock
issued or to be issued have not been registered under the Securities Act of
1933; are being acquired solely for their own account without any present
intention for resale or distribution; will not be resold without registration
under the Securities Act of 1933 or in compliance with an available exemption
from registration; that such individual was able to bear the economic risk of an
investment in the common stock and afford a complete loss of such investment;
and that such individual had the opportunity to ask questions of and receive
answers from the Company's management concerning any and all matters related to
the acquisition of the common stock.

Further, each individual has agreed to lock up 50% of the shares received
for a period of two years following the date of issuance. Each certificate
representing the above shares contains a legend indicating that such shares are
restricted and may not be sold without registration under the Securities Act of
1933 or pursuant to an available exemption from such registration requirements
and are subject to the lock up agreement described above.

ITEM 27. EXHIBITS

The following exhibits are filed as part of this Registration Statement with
the Securities and Exchange Commission, pursuant to Item 601 of Regulation S-B.
All exhibits refer to BiznessOnline.com, Inc. unless otherwise indicated.

<TABLE>
<C> <S>
+1.1 Form of Amended Underwriting Agreement
+1.2 Form of Underwriters' Warrant, as amended

+3.1 Certificate of Incorporation, filed with the Delaware Secretary of State on June
11, 1998

+3.2 Certificate of Amendment to Certificate of Incorporation, filed with the Delaware
Secretary of State on December 9, 1998

+3.3 Certificate of Designation, filed with the Delaware Secretary of State on February
1, 1999

+3.4 Certificate of Amendment to Certificate of Incorporation, filed with the Delaware
Secretary of State on February 4, 1999

+3.5 Certificate of Amendment to Certificate of Incorporation, filed with the Delaware
Secretary of State on February 10, 1999
</TABLE>

II-3
<PAGE>

<TABLE>
<C> <S>
+3.6 By-Laws

+4.1 Specimen Common Stock Certificate

4.6 Relevant portion of Article II and VII of By-Laws (included in Exhibit 3.2)

+5.1 Opinion of Duffy & Sweeney, LLP regarding the legality of the securities offered

+10.1 Merger Agreement among the Company, InSite Internet I Acquisition Co., Inc., Global
2000 Communications, Inc. ("Global") and the shareholders of Global

+10.2 Merger Agreement among the Company, InSite Internet II Acquisition Co., Inc., Borg
Internet Services, Inc. ("Borg") and the shareholders of Borg

+10.3 Merger Agreement among the Company, InSite Internet IV Acquisition Co., Inc.,
Ulsternet, Inc. ("Ulsternet") and the shareholders of Ulsternet

+10.4 Merger Agreement among the Company, InSite Internet V Acquisition Co., Inc.,
Caravela Software, Inc. ("Caravela") and the shareholders of Caravela

+10.5 Stock Purchase Agreement among the Company, and the shareholders of AlbanyNet, Inc.

+10.6 Employment Agreement with Mark E. Munro

+10.7 Employment Agreement with S. Keith London

+10.8 Employment Agreement with Daniel J. Sullivan

+10.9 1999 Stock Incentive Plan

+10.10 Form of Incentive Stock Option Agreement for 1999 Stock Incentive Plan

+10.11 Form of Non-Qualified Stock Option Agreement for 1999 Stock Incentive Plan

+10.12 1999 Non-Employee Director Stock Incentive Plan

+10.13 Form of Non-Qualified Stock Option Agreement for 1999 Non-Employee Director Stock
Incentive Plan

+11.1 Computation of Per Share Earnings

+21.1 Subsidiaries of the registrant

23.1 Consent of KPMG LLP, Independent Auditors (BiznessOnline.com, Inc.)

23.2 Consent of KPMG LLP, Independent Auditors (AlbanyNet, Inc.)

23.3 Consent of KPMG LLP, Independent Auditors (Borg Internet Services, Inc.)

23.4 Consent of KPMG LLP, Independent Auditors (Caravela Software, Inc.)

23.5 Consent of KPMG LLP, Independent Auditors (Global 2000, Inc.)

23.6 Consent of KPMG LLP, Independent Auditors (Ulsternet, Inc.)

23.7 Consent of Duffy & Sweeney, LLP (included in Exhibit 5.1 to this Registration
Statement)

+23.8 Consent of John B. Fraser (Director Nominee)

+23.9 Consent of Joseph Luciano (Director Nominee)

+23.10 Consent of Robert A. Byrne (Director Nominee)

+27 Financial Data Schedules
</TABLE>

+ Previously filed

II-4
<PAGE>
ITEM 28. UNDERTAKINGS.

The Company will provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriters to permit prompt delivery to each
purchaser.

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

The Company hereby undertakes that, if relying on Rule 430A under the
Securities Act:

(1) for determining any liability under the Securities Act, the information
omitted from the form of Prospectus filed as a part of this Registration
Statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the Company under Rule 424(b)(1) or (4), or 497(h) under the
Securities Act shall be treated as part of this Registration Statement as of
the time the Commission declared it effective.

(2) for determining any liability under the Securities Act, each post-effective
amendment that contains a form of prospectus shall be treated as a new
registration statement for the securities offered in this Registration
Statement and that offering of the securities at that time shall be treated
as the initial bona fide offering of those securities.

II-5
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned in the City
of Providence, Rhode Island on May 10, 1999.

BiznessOnline.com, inc.

By: /s/ MARK E. MUNRO
-----------------------------------------
Mark E. Munro, Chairman of
the Board, Chief Executive Officer,
President and Director

In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.

Dated: May 10, 1999 By: /s/ S. KEITH LONDON
-----------------------------------------
Executive Vice President
and Director

Dated: May 10, 1999 By: /s/ DANIEL J. SULLIVAN
-----------------------------------------
Chief Financial and Principal Accounting
Officer

Dated: May 10, 1999 By: /s/ DAVID CONBOY
-----------------------------------------
Director

II-6
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBITS
- ---------
<C> <S>
+1.1 Form of amended Underwriting Agreement

+1.2 Form of Underwriters' Warrant, as amended

+3.1 Certificate of Incorporation, filed with the Delaware Secretary of State on June 11, 1998

+3.2 Certificate of Amendment to Certificate of Incorporation, filed with the Delaware Secretary of State on
December 9, 1998

+3.3 Certificate of Designation, filed with the Delaware Secretary of State on February 1, 1999

+3.4 Certificate of Amendment to Certificate of Incorporation, filed with the Delaware Secretary of State on
February 4, 1999

+3.5 Certificate of Amendment to Certificate of Incorporation, filed with the Delaware Secretary of State on
February 10, 1999

+3.6 By-Laws

+4.1 Specimen Common Stock Certificate

4.6 Relevant portion of Article II and VII of By-Laws (included in Exhibit 3.2)

+5.1 Opinion of Duffy & Sweeney, LLP regarding the legality of the securities offered

+10.1 Merger Agreement among the Company, InSite Internet I Acquisition Co., Inc., Global 2000
Communications, Inc. ("Global") and the shareholders of Global

+10.2 Merger Agreement among the Company, InSite Internet II Acquisition Co., Inc., Borg Internet Services,
Inc. ("Borg") and the shareholders of Borg

+10.3 Merger Agreement among the Company, InSite Internet IV Acquisition Co., Inc., Ulsternet, Inc.
("Ulsternet") and the shareholders of Ulsternet

+10.4 Merger Agreement among the Company, InSite Internet V Acquisition Co., Inc., Caravela Software, Inc.
("Caravela") and the shareholders of Caravela

+10.5 Stock Purchase Agreement among the Company, and the shareholders of AlbanyNet, Inc.

+10.6 Employment Agreement with Mark E. Munro

+10.7 Employment Agreement with S. Keith London

+10.8 Employment Agreement with Daniel J. Sullivan

+10.9 1999 Stock Incentive Plan

+10.10 Form of Incentive Stock Option Agreement for 1999 Stock Incentive Plan

+10.11 Form of Non-Qualified Stock Option Agreement for 1999 Stock Incentive Plan

+10.12 1999 Non-Employee Director Stock Incentive Plan

+10.13 Form of Non-Qualified Stock Option Agreement for 1999 Non-Employee Director Stock Incentive Plan

+11.1 Computation of Per Share Earnings

+21.1 Subsidiaries of the registrant

23.1 Consent of KPMG LLP, Independent Auditors (BiznessOnline.com, Inc.)

23.2 Consent of KPMG LLP, Independent Auditors (AlbanyNet, Inc.)

23.3 Consent of KPMG LLP, Independent Auditors (Borg Internet Services, Inc.)

23.4 Consent of KPMG LLP, Independent Auditors (Caravela Software, Inc.)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBITS
- ---------
<C> <S>
23.5 Consent of KPMG LLP, Independent Auditors (Global 2000, Inc.)

23.6 Consent of KPMG LLP, Independent Auditors (Ulsternet, Inc.)

23.7 Consent of Duffy & Sweeney, LLP (included in Exhibit 5.1 to this Registration Statement)

+23.8 Consent of John B. Fraser (Director Nominee)

+23.9 Consent of Joseph Luciano (Director Nominee)

+23.10 Consent of Robert A. Byrne (Director Nominee)

+27 Financial Data Schedules
</TABLE>

+ Previously filed

<PAGE>
EXHIBIT 23.1

ACCOUNTANTS' CONSENT

The Board of Directors
BiznessOnline.com, Inc.:

We consent to the inclusion of our report dated February 12, 1999, with
respect to the balance sheet of BiznessOnline.com, Inc. as of December 31, 1998
and the related statements of operations, stockholders' equity, and cash flows
for the period from July 1, 1998 (date of inception) through December 31, 1998
included herein and to the reference to our firm under the heading "Experts".

/s/ KPMG LLP

Providence, Rhode Island
May 10, 1999

<PAGE>
EXHIBIT 23.2

ACCOUNTANTS' CONSENT

The Board of Directors
AlbanyNet, Inc.:

We consent to the inclusion of our report dated January 29, 1999, with
respect to the balance sheet of AlbanyNet, Inc. as of December 31, 1998 and the
related statements of income, stockholders' equity, and cash flows for each of
the years in the two-year period ended December 31, 1998 included herein and to
the reference to our firm under the heading "Experts" included in the
Registration Statement (Form SB-2) and related prospectus of BiznessOnline.com,
Inc.

/s/ KPMG LLP

Providence, Rhode Island
May 10, 1999

<PAGE>
EXHIBIT 23.3

ACCOUNTANTS' CONSENT

The Board of Directors
Borg Internet Services, Inc.:

We consent to the inclusion of our report dated January 22, 1999, with
respect to the balance sheet of Borg Internet Services, Inc. as of December 31,
1998 and the related statements of operations, stockholders' equity (deficit),
and cash flows for each of the years in the two-year period ended December 31,
1998 included herein and to the reference to our firm under the heading
"Experts" included in the Registration Statement (Form SB-2) and related
prospectus of BiznessOnline.com, Inc.

/s/ KPMG LLP

Providence, Rhode Island
May 10, 1999

<PAGE>
EXHIBIT 23.4

ACCOUNTANTS' CONSENT

The Board of Directors
Caravela Software, Inc.:

We consent to the inclusion of our report dated February 2, 1999, with
respect to the balance sheet of Caravela Software, Inc. as of December 31, 1998
and the related statements of operations, stockholders' equity, and cash flows
for each of the years in the two-year period ended December 31, 1998 included
herein and to the reference to our firm under the heading "Experts" included in
the Registration Statement (Form SB-2) and related prospectus of
BiznessOnline.com, Inc.

/s/ KPMG LLP

Providence, Rhode Island
May 10, 1999

<PAGE>
EXHIBIT 23.5

ACCOUNTANTS' CONSENT

The Board of Directors
Global 2000 Communications, Inc.:

We consent to the inclusion of our report dated January 31, 1999, with
respect to the balance sheet of Global 2000 Communications, Inc. as of December
31, 1998 and the related statements of income, stockholders' equity, and cash
flows for each of the years in the two-year period ended December 31, 1998
included herein and to the reference to our firm under the heading "Experts"
included in the Registration Statement (Form SB-2) and related prospectus of
BiznessOnline.com, Inc.

/s/ KPMG LLP

Providence, Rhode Island
May 10, 1999

<PAGE>
EXHIBIT 23.6

ACCOUNTANTS' CONSENT

The Board of Directors
Ulsternet, Inc.:

We consent to the inclusion of our report dated January 25, 1999, with
respect to the balance sheet of Ulsternet, Inc. as of December 31, 1998 and the
related statements of operations, stockholders' equity (deficit), and cash flows
for each of the years in the two-year period ended December 31, 1998 included
herein and to the reference to our firm under the heading "Experts" included in
the Registration Statement (Form SB-2) and related prospectus of
BiznessOnline.com, Inc.

/s/ KPMG LLP

Providence, Rhode Island
May 10, 1999