HARVARDNET INC
S-1/A, 1999-08-12
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1999

                                                      REGISTRATION NO. 333-80529
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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


                                AMENDMENT NO. 5
                                       TO
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

                                HARVARDNET INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

<TABLE>
<S>                                   <C>                                   <C>
              DELAWARE                                4813                               04-3194739
  (State or other jurisdiction of         (Primary Standard Industrial                (I.R.S. Employer
   incorporation or organization)         Classification Code Number)              Identification Number)
</TABLE>

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

                             500 RUTHERFORD AVENUE
                                BOSTON, MA 02129
                                 (617) 242-1700
     (Address Including Zip Code, and Telephone Number Including Area Code,
                  of Registrant's Principal Executive Offices)

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

                                MARK M. WASHBURN
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                HARVARDNET INC.
                             500 RUTHERFORD AVENUE
                                BOSTON, MA 02129
                                 (617) 242-1700
                (Name, Address Including Zip Code and Telephone
               Number Including Area Code, of Agent for Service)

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

                                   Copies to:

<TABLE>
<S>                                                      <C>
                 THOMAS S. WARD, ESQ.                                   ANDREW R. SCHLEIDER, ESQ.
                   HALE AND DORR LLP                                       SHEARMAN & STERLING
                    60 State Street                                       599 Lexington Avenue
              Boston, Massachusetts 02109                                  New York, NY 10022
               Telephone: (617) 526-6000                                Telephone: (212) 848-4000
               Telecopy: (617) 526-5000                                 Telecopy: (212) 848-7179
</TABLE>

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

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof. If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, check the following box. / /

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

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration 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 SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
                                EXPLANATORY NOTE

    This registration statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada and one to be
used in a concurrent offering outside the United States and Canada. The
prospectuses are identical in all material respects except for the front cover
page. The U.S. prospectus is included herein and is followed by the alternate
front cover page to be used in the international prospectus. The alternate page
for the international prospectus included herein is labeled "Alternate Page for
International Prospectus." Final forms of each prospectus will be filed with the
Securities and Exchange Commission under Rule 424(b).
<PAGE>
THE INFORMATION IN THIS 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 PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED AUGUST   , 1999

                                8,900,000 SHARES

                                     [LOGO]

                                  COMMON STOCK
                               -----------------

HARVARDNET INC. IS OFFERING SHARES OF ITS COMMON STOCK. THIS IS OUR INITIAL
PUBLIC OFFERING AND NO PUBLIC MARKET CURRENTLY EXISTS FOR OUR SHARES. WE
ANTICIPATE THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN $13 AND $15
PER SHARE.

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

THE COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET
UNDER THE SYMBOL "HVNT."
                              -------------------

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
                               -----------------

                              PRICE $      A SHARE

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

<TABLE>
<CAPTION>
                                                                            UNDERWRITING
                                                          PRICE TO         DISCOUNTS AND        PROCEEDS TO
                                                           PUBLIC           COMMISSIONS          HARVARDNET
                                                     ------------------  ------------------  ------------------
<S>                                                  <C>                 <C>                 <C>
PER SHARE..........................................          $                   $                   $
TOTAL..............................................          $                   $                   $
</TABLE>

HARVARDNET INC. HAS GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP TO AN
ADDITIONAL 1,335,000 SHARES TO COVER OVER-ALLOTMENTS.

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE SHARES TO PURCHASERS ON
      , 1999.

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

MORGAN STANLEY DEAN WITTER
            MERRILL LYNCH & CO.
                         SALOMON SMITH BARNEY

           , 1999
<PAGE>


HARVARDNET WEB OPERATIONS CENTER


[Graphical depiction of HarvardNET's Web Operations Center. The page contains
a graphic of the operations center with lines pointing to the following
labeled areas: "Private Suites," "Transport Room" "Network Operations
Center," "Security Access Control," "Rack Collocation Area," "Air
Conditioning," "Staging and Receiving," "Electrical Vault," "15KV Switches,"
"(2) 1500 KW Generators," and "Future 800 KW Generator."]

<PAGE>
THE MAP

    [Graphical depiction of HarvardNET'S Fiber optic network. In the upper left
corner, the page contains a rectangular box labeled "HarvardNET." Below this is
a box labeled "Network Under Development" that contains subheadings "Fiber
optic network," "Regional Operations Center," "Web hosting facility," "Public
network interconnection point" and "Internet transit."

    The center graphic is a map of New England and the Mid-Atlantic states
stretching from Maine to Virginia with lines on the map connecting major
metropolitan areas among those states. The map identifies HarvardNET's points
of presence, public network interconnection points and target DSL coverage
areas.

In the bottom right hand corner is a graphical depiction of the HarvardNET
network. Centered at the top of the box is the phrase "Our Local Network."
Beneath this phrase are the headings "End Users"; "Central Office";
"HarvardNet Regional Operations Center"; and "Internet." Underneath the
heading "End Users" are three separate images labeled "Small and Medium Sized
Businesses," "Telecommuter" and "Branch Office." Lines labeled "Leased
Copper Wire" link these images to two additional images, each labeled "DSL
Transmission Equipment." Lines labeled "Leased Fiber Cable" link these images
to an image labeled "Switching and Routing Equipment." From this image one
line labeled "HarvardNet Fiber Optic Network" leads to an image labeled
"Internet," and another line labeled "Leased Fiber Cable" leads to a circle
labeled "Wholesale to Internet Service Provider," which then leads to a
circle labeled "Internet."]

<PAGE>
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                    PAGE
                                                    -----
<S>                                              <C>
Prospectus Summary.............................           1
Risk Factors...................................           5
Use of Proceeds................................          17
Dividend Policy................................          17
Capitalization.................................          18
Dilution.......................................          19
Selected Financial Data........................          20
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations...................................          22
Business.......................................          31
Management.....................................          52

<CAPTION>
                                                    PAGE
                                                    -----
<S>                                              <C>

Transactions with Affiliates...................          59
Principal Stockholders.........................          60
Description of Capital Stock...................          62
Shares Eligible for Future Sale................          65
United States Federal Tax Consequences to
  Non-U.S. Holders of Common Stock.............          67
Underwriters...................................          70
Legal Matters..................................          75
Experts........................................          75
Where You May Find Additional Information......          76
General Information............................          76
Index to Financial Statements..................         F-1
</TABLE>

    Until       , 1999, all dealers that buy, sell or trade common stock,
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.
<PAGE>
                               PROSPECTUS SUMMARY

    YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING US AND OUR COMMON STOCK AND OUR FINANCIAL STATEMENTS
APPEARING ELSEWHERE IN THIS PROSPECTUS. ALL INFORMATION IN THIS PROSPECTUS
RELATING TO THE NUMBER OF SHARES OF OUR COMMON STOCK, OPTIONS OR WARRANTS IS
BASED UPON INFORMATION AS OF JUNE 30, 1999, ASSUMING A 1.3546862-FOR-1 SPLIT OF
OUR COMMON STOCK AND CLASS B STOCK BEFORE THE OFFERING, AND THE CONVERSION OF
ALL SHARES OF CONVERTIBLE PREFERRED STOCK AND CLASS B STOCK OUTSTANDING AS OF
JUNE 30, 1999 INTO AN AGGREGATE OF 22,803,017 SHARES OF COMMON STOCK ON
COMPLETION OF THIS OFFERING. UNLESS OTHERWISE SPECIFICALLY STATED, THE
INFORMATION THROUGHOUT THIS PROSPECTUS DOES NOT TAKE INTO ACCOUNT THE POSSIBLE
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK TO THE U.S. UNDERWRITERS PURSUANT
TO THEIR RIGHTS TO PURCHASE ADDITIONAL SHARES TO COVER OVER-ALLOTMENTS.

                                   HARVARDNET

    We provide high-speed Internet access, data transport and telecommuting
network services to businesses located in the Northeast and Mid-Atlantic regions
of the United States. We provide these services using digital subscriber line,
or DSL, technology, which enables data transport over copper telephone lines,
and leased lines which connect customers to our high capacity fiber optic
network. We also offer these businesses a variety of Web site hosting services
that allow customers to store their Web sites and data on servers housed in our
data centers.

    Our fiber optic network connects markets from Maine to Virginia by
transporting the large volumes of data collected locally from customer DSL and
leased lines to their destination, either exclusively over our network or by
exchanging traffic with other networks. The network primarily operates at the
155 megabit per second capacity level.

    We have entered into agreements with Bell Atlantic to lease the copper
telephone lines that we will use to carry data for our customers using DSL
technology. As of July 26, 1999, we offered service at 51 central office
locations and had installed equipment in 20 additional central office locations
in eastern Massachusetts, southern Maine and southern New Hampshire. We expect
to install equipment in approximately 140 Bell Atlantic central office locations
in the Northeast region by the end of 1999 and in more than 600 central offices
in the Northeast and Mid-Atlantic regions by the middle of 2001.

    We market our services through our direct sales force. As of June 30, 1999,
we had approximately 540 DSL and leased lines in service and more than 1,100
business customers for whom we provide Web site hosting services.

THE MARKET OPPORTUNITY

    Data communications is the fastest growing segment of the telecommunications
market. Today, many enterprises find their existing data communications
solutions too expensive, too slow or both. Small- and medium-sized businesses
are seeking cost-effective high-speed Internet access and data transport to
eliminate delays and improve productivity. Over the past ten years, high-speed
local area networks have become increasingly important to enterprises,
permitting employees to share information, send e-mail, search databases and
conduct business. Businesses are seeking to equip many of their employees with
the ability to work at home and in other remote locations, such as branch
offices, to improve employee productivity and reduce operating costs. In
addition, many small- and medium-sized businesses increasingly are starting to
realize the potential of the Internet by establishing an Internet presence. Many
of these businesses want to create a Web site on which they can sell, market and
brand their products and services, execute electronic transactions and provide
information to their customers, suppliers, business partners and employees.

                                       1
<PAGE>
THE HARVARDNET SOLUTION

    We provide a full range of services to allow businesses to effectively
outsource their Internet access, data transport and Web site hosting needs. Our
service offerings include:

    - high-speed Internet access for small- and medium-sized businesses using
      DSL technology;

    - telecommuting network services, which provide telecommuters and
      work-at-home professionals of large enterprises with high-speed, secure
      remote access to corporate networks and the Internet;

    - Web site hosting, which provides customers a secure location, controlled
      environment, active monitoring and high-speed connections to the Internet
      via our fiber optic network for their Web sites;

    - leased lines for Internet-dependent businesses; and

    - e-commerce solutions and other enhanced services, including outsourced
      e-mail administration and Web-based credit card transaction processing.

    We also bundle a number of our service offerings to encourage customers to
purchase multiple services. We believe that the suite of services marketed by
our direct sales force is especially attractive to small- and medium-sized
businesses that typically do not have the information technology personnel or
infrastructure necessary to manage their data transport, networking and
Internet-related needs. We have designed our network and service offerings to
enable customers to purchase the level of service and transmission speed that
meets their existing requirements and to easily upgrade as their needs change.

    Our principal executive offices are located at 500 Rutherford Avenue,
Boston, Massachusetts 02129, and our telephone number is (617) 242-1700. Our
World Wide Web site address is www.harvard.net. The information on our Web site
is not incorporated by reference into this prospectus. We are not affiliated
with Harvard University.

                                       2
<PAGE>
                                  THE OFFERING

    We are offering 7,120,000 shares of common stock initially in the United
States and Canada and 1,780,000 shares of common stock initially outside the
United States and Canada. The closing of each of these offerings is conditioned
on the closing of the other.

<TABLE>
<S>                                                    <C>
Common stock offered:

    U.S. offering....................................  7,120,000 shares

    International offering...........................  1,780,000 shares

      Total..........................................  8,900,000 shares

Common stock to be outstanding after this offering...  36,981,263 shares(1)

Over-allotment option................................  1,335,000 shares

Use of proceeds......................................  We will receive net proceeds from
                                                       this offering of approximately
                                                       $114.5 million, assuming a per share
                                                       price of $14.00. We intend to use
                                                       the net proceeds to repay amounts
                                                       owed under our credit facility, for
                                                       capital expenditures relating to our
                                                       planned geographic expansion,
                                                       potential acquisitions, working
                                                       capital and other general corporate
                                                       purposes.

Dividend policy......................................  We do not intend to pay dividends on
                                                       our common stock. We plan to retain
                                                       any earnings for use in the
                                                       operation of our business and to
                                                       fund future growth.

Nasdaq National Market symbol........................  HVNT
</TABLE>

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

(1) Based on 5,278,246 shares of common stock outstanding as of June 30, 1999,
    plus 22,803,017 shares of common stock issuable upon conversion of
    outstanding convertible preferred stock and Class B stock as of that date.
    Excludes 1,494,135 shares issuable upon the exercise of outstanding stock
    options as of June 30, 1999 at a weighted average exercise price of $1.56
    per share and 859,091 shares of common stock issuable upon the exercise of
    outstanding warrants at a weighted average exercise price of $3.33 per
    share.

                                       3
<PAGE>
                             SUMMARY FINANCIAL DATA

    The financial data set forth below should be read together with "Selected
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our financial statements included elsewhere in
this prospectus.

    The following statement of operations data for the years ended December 31,
1996, 1997 and 1998 are derived from our audited financial statements included
elsewhere in this prospectus. The statement of operations data for the three
month periods ended March 31, 1998 and 1999 and the balance sheet data as of
March 31, 1999 are derived from our unaudited financial statements and reflect
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of our results of operations and financial position. Results
for the three months ended March 31, 1999 are not necessarily indicative of
results that may be expected for the year.

    EBITDA consists of net loss excluding interest, taxes, depreciation and
amortization. We have provided EBITDA because it is a measure of financial
performance commonly used in the telecommunications industry, but other
companies may calculate it differently from us. We have presented EBITDA to
enhance your understanding of our operating results. You should not construe it
as an alternative to operating income as an indicator of our operating
performance or as an alternative to cash flows from operating activities as a
measure of liquidity.

    Pro forma as adjusted balance sheet data reflects our receipt of the
estimated net proceeds from the sale of 8,900,000 shares of common stock offered
by us in this offering at an assumed initial public offering price of $14.00 per
share, after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by us and the conversion of all outstanding
shares of convertible preferred stock and Class B stock as of March 31, 1999
into an aggregate of 22,320,351 shares of common stock.
<TABLE>
<CAPTION>
                                                                                                     THREE MONTHS ENDED
                                                                       YEAR ENDED DECEMBER 31,           MARCH 31,
                                                                   -------------------------------  --------------------
<S>                                                                <C>        <C>        <C>        <C>        <C>
                                                                     1996       1997       1998       1998       1999
                                                                   ---------  ---------  ---------  ---------  ---------

<CAPTION>
                                                                                      (IN THOUSANDS)
<S>                                                                <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues.........................................................  $     720  $   1,381  $   4,282  $     954  $   1,600
Operating income (loss)..........................................         37       (181)    (1,750)      (183)    (1,494)
Net income (loss)................................................         27       (139)    (1,260)      (136)    (1,390)

OTHER DATA:
EBITDA...........................................................  $      43  $       6  $    (411) $     135  $    (993)
Capital expenditures.............................................         --         19      1,010         36        627
Net cash provided by (used in) operating activities..............         96        (44)       (93)       428     (1,417)
Net cash used in investing activities............................         --        (19)    (1,010)       (36)    (3,450)
Net cash provided by (used in) financing activities..............         (6)       340      5,916        (10)     8,603
</TABLE>

<TABLE>
<CAPTION>
                                                                                             AS OF MARCH 31, 1999
                                                                                            ----------------------
                                                                                                        PRO FORMA
                                                                                             ACTUAL    AS ADJUSTED
                                                                                            ---------  -----------
<S>                                                                                         <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................................................  $   8,975   $ 123,503
Working capital...........................................................................      9,141     123,669
Property and equipment, net...............................................................      1,704       1,704
Total assets..............................................................................     16,049     130,577
Long-term debt, net of current portion....................................................         50          50
Redeemable convertible preferred stock....................................................     18,011          --
Total stockholders' equity (deficit)......................................................     (3,245)    129,294
</TABLE>

                                       4
<PAGE>
                                  RISK FACTORS

    AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE RISKS DESCRIBED BELOW, TOGETHER WITH ALL OTHER
INFORMATION INCLUDED IN THIS PROSPECTUS, BEFORE YOU DECIDE TO BUY OUR COMMON
STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. IN SUCH CASE, THE
TRADING PRICE OF OUR COMMON STOCK COULD FALL, AND YOU MAY LOSE ALL OR PART OF
THE MONEY YOU PAID TO BUY OUR COMMON STOCK.

WE HAVE PROVIDED OUR FULL SUITE OF DATA TRANSPORT AND NETWORKING SERVICES FOR A
  LIMITED TIME, SO YOU HAVE LIMITED INFORMATION ON WHICH TO EVALUATE OUR
  BUSINESS

    Since September 1998, we have recruited a new senior management team and
changed the focus of our business from providing largely dial-up and leased-line
Internet access to providing a suite of high-speed Internet access, data
transport and networking services and Web site hosting services. Because of our
limited operating history in providing all of our current services, you have
limited operating and financial data about our business upon which to base an
evaluation of our performance and an investment in our common stock. In
particular, we have focused on installing equipment in Bell Atlantic central
offices for the provision of digital subscriber lines, and building our fiber
optic network.

WE ARE AN EARLY STAGE COMPANY IN A NEW AND RAPIDLY EVOLVING MARKET, SUBJECT TO A
  NUMBER OF RISKS WHICH MAY LIMIT OUR REVENUE GROWTH

    You should consider the risks, expenses and difficulties we may encounter as
an early stage company in a new and rapidly evolving market. If we fail to
deploy our network infrastructure and manage our operations successfully, it
would materially adversely affect our business, financial condition and results
of operations. Our success will depend on our ability to:

    - deploy an effective network infrastructure to serve our target markets
      from Maine to Virginia;

    - establish arrangements with Bell Atlantic to install our equipment in Bell
      Atlantic's central offices;

    - obtain access to Bell Atlantic's facilities and copper telephone lines at
      wholesale prices;

    - develop our billing and operational support systems;

    - raise additional capital;

    - rapidly expand DSL service within the Northeast and Mid-Atlantic regions
      of the United States;

    - expand our direct sales force;

    - attract and retain customers which have to choose from several competing
      transport technologies;

    - attract and retain qualified personnel; and

    - expand our Web site hosting facilities.

BECAUSE DSL SERVICES ARE NEW AND EVOLVING, WE CANNOT PREDICT WHETHER THEY WILL
  BE ACCEPTED BY BUSINESSES AT PROFITABLE PRICES

    To be successful, we must develop and market services that are widely
accepted by businesses at profitable prices. If the market for our DSL services
fails to develop, grows more slowly than anticipated or becomes saturated with
competitors, these events could materially adversely affect our business,
financial condition and results of operations. The market for high-speed
Internet access, data transport and networking services using copper telephone
lines is in the early stages of development. We cannot accurately predict the
rate at which this market will grow, if at all, or whether new or increased
competition will result in market saturation. The security, reliability, ease,
cost of access and quality of service relating to the use of DSL technology for
Internet and local area network access are unresolved and may impact the growth
of these services.

                                       5
<PAGE>
THE QUALITY AND CONDITION OF AVAILABLE COPPER TELEPHONE LINES MAY IMPAIR OUR
  ABILITY TO PROVIDE DSL SERVICES

    We significantly depend on the quality and maintenance of the copper
telephone lines we obtain from Bell Atlantic to provide DSL services. We may not
be able to obtain the copper telephone lines and the services we require on a
timely basis or at quality levels, prices, terms and conditions satisfactory to
us. Bell Atlantic may not maintain the lines in a manner satisfactory to us. In
the event that the prices, quality or condition of Bell Atlantic's lines or
services is not acceptable, we may incur expenses which we cannot recover or
suffer damage to our reputation. If we decide to expand our operations into
geographic areas outside of the Northeast and Mid-Atlantic regions of the United
States, we will be similarly dependent on the quality, physical condition,
availability and maintenance of telephone lines within the control of the
incumbent local exchange carriers in such areas.

OUR DSL SERVICES MAY INTERFERE WITH OR BE AFFECTED BY OTHER TRANSPORT
  TECHNOLOGIES

    All transport technologies using copper telephone lines have the potential
to interfere with, or to be interfered with by, other traffic on adjacent copper
telephone lines. Such interference could degrade the performance of our services
or make us unable to provide service on selected lines. Interference, or claims
of interference, if widespread, would adversely affect our speed of deployment,
reputation, brand image, service quality and customer retention and
satisfaction. In addition, incumbent carriers may claim that the potential for
interference by DSL technology permits them to restrict or delay our deployment
of DSL services. The telecommunications industry and regulatory agencies are
still developing procedures to resolve interference issues between competitive
carriers and incumbent carriers, and these procedures may not be effective. We
may be unable to successfully negotiate interference resolution procedures with
incumbent carriers.

SOME OF OUR SERVICES ARE SUBJECT TO REGULATORY REVIEW AND LICENSING
  REQUIREMENTS, WHICH COULD RESTRICT OUR ABILITY TO OFFER AND PROVIDE THESE
  SERVICES

    To the extent that we offer services that are regulated by federal, state
and local regulatory authorities, those authorities may impose requirements or
restrictions on us that could affect our ability to offer and provide those
services. Those authorities can revoke or limit our authority to provide
services to customers or impose requirements that would increase our cost of
providing services or delay provision of services. Likewise, our authority to
provide services in some states is limited. If we wanted to expand our services,
we would have to seek additional authorization from the states. Our business
plan is premised on our ability to be classified as a competitive local exchange
carrier under applicable federal and state laws and regulations, which requires
us to obtain requisite regulatory authorizations, offer specified classes of
telecommunications services and establish tarriffs for these services. If we
fail to maintain this status, our cost of providing services would increase,
which would have a material adverse effect on our business, financial condition
and results of operations.

OUR USE OF PARTICULAR COPPER TELEPHONE LINES IS DEPENDENT ON THE INTERFERENCE
  POLICIES OF BELL ATLANTIC AND REGULATORY AUTHORITIES

    Under current practice, Bell Atlantic unilaterally sets the policies that
determine whether our service can be provided over a particular copper telephone
line without creating interference with other services and the measures we would
be required to take in order to solve any interference problems. The FCC or
other regulatory authorities may adopt interference rules that could impact our
ability to use technology we are deploying or plan to deploy. If we decide to
expand our operations into geographic areas outside of the Northeast and
Mid-Atlantic regions of the United States, we could face similar difficulties in
such areas.

                                       6
<PAGE>
THE DATA TRANSPORT AND NETWORKING INDUSTRY IS UNDERGOING RAPID TECHNOLOGICAL
  CHANGES, AND NEW TECHNOLOGIES MAY BE SUPERIOR TO THE TECHNOLOGY WE USE

    The data transport and networking industry is subject to rapid and
significant technological change, including continuing developments in DSL
technology, which does not presently have widely accepted standards, and
alternative technologies for providing high speed data transport and networking.
If we fail to adapt successfully to technological changes or obsolescence, fail
to adopt technology that becomes an industry standard or fail to obtain access
to important technologies, our business, financial condition and results of
operations could be materially adversely affected. As a consequence of this
technological change and the range of technologies available:

    - our potential customers have a number of choices for meeting their data
      transport and networking needs, including wireless data systems, cable
      modems and integrated services digital network technologies;

    - our success will depend on our ability to anticipate or adapt to new
      technology on a timely basis; and

    - new products and technologies may emerge that may be superior to, or may
      not be compatible with, our products and technologies.

WE EXPECT TO CONTINUE TO INCUR SUBSTANTIAL LOSSES AND NEGATIVE OPERATING CASH
  FLOW

    We intend to rapidly and substantially increase our capital expenditures and
operating expenses in an effort to expand our operations, including:

    - the expansion of our network in the Northeast and Mid-Atlantic regions of
      the United States;

    - the installation of our equipment in central offices throughout the major
      metropolitan areas of these regions;

    - the expansion of our DSL operations; and

    - the establishment of additional Web site hosting facilities.

We expect to incur substantial operating and net losses, as well as negative
operating cash flow, for the foreseeable future as we expand our operations. We
will need to obtain additional financing to complete our expansion into the
Northeast and Mid-Atlantic regions. We may not have sufficient revenues to
satisfy our financing requirements and may not ever achieve operating income and
positive operating cash flow or become profitable. The amount and timing of our
capital requirements will vary depending upon the timing and extent of our
rollout, regulatory, technological and competitive developments and the demand
for our services.

WE EXPECT TO INCUR SIGNIFICANT OPERATING LOSSES WHICH WILL REQUIRE US TO SEEK
  ADDITIONAL FINANCING, WHICH COULD BE DIFFICULT TO OBTAIN

    We intend to grow our business rapidly and expect to incur significant
operating losses and negative cash flow for the foreseeable future. Therefore,
we will require additional external financing in the future. If we are unable to
raise capital to fund our growth on a timely basis and on acceptable terms, our
business, financial condition and results of operations would be materially and
adversely affected. Obtaining additional financing will be subject to a number
of factors, including:

    - market conditions;

    - our operating performance; and

    - investor sentiment, particularly for DSL and Internet-related companies.

    These factors may make the timing, amount, terms and conditions of
additional financing unattractive for us.

                                       7
<PAGE>
OUR FAILURE TO ACHIEVE OR SUSTAIN MARKET ACCEPTANCE AT DESIRED PRICING LEVELS
  COULD IMPAIR OUR ABILITY TO ACHIEVE PROFITABILITY OR POSITIVE CASH FLOW

    We are expanding our operations based upon our prediction of future prices
that we will attain for our services. Our failure to achieve or sustain market
acceptance at desired pricing levels could impair our ability to achieve
profitability or positive cash flow, which would have a material adverse effect
on our business, financial condition and results of operations. Prices for
high-speed Internet access and other data transport and networking services have
fallen historically; a trend we expect will continue. Accordingly, we cannot
predict to what extent we may need to reduce our prices to remain competitive or
whether we will be able to sustain future pricing levels as our competitors
introduce competing services or similar services at lower prices.

WE ARE DEPENDENT ON BELL ATLANTIC FOR COPPER TELEPHONE LINES, CENTRAL OFFICE
  SPACE AND TRANSMISSION FACILITIES, AND BELL ATLANTIC'S RELUCTANCE TO COOPERATE
  WITH US OR INABILITY TO PROVIDE THE SERVICES OR FACILITIES WE NEED COULD
  ADVERSELY AFFECT OUR BUSINESS

    Bell Atlantic is currently our sole supplier of copper telephone lines and
space in central offices in our targeted markets and is often the vendor of
choice for transmission between the central offices in which we have installed
our equipment and our regional operations centers. Because our services compete
with Bell Atlantic's existing data services and services that Bell Atlantic may
be permitted to offer in the future, Bell Atlantic may be reluctant to make
capital expenditures to purchase and install additional equipment or cooperate
with us in meeting our supply needs. The FCC's rules give Bell Atlantic
flexibility regarding the timing, technical standards and charges for
conditioning telephone lines, or loops, to enable us to offer our DSL services,
which Bell Atlantic may use to delay performance of loop conditioning that we
may need to provide service or to impose excess charges for such conditions.

    In addition, we currently plan to install equipment in approximately 600
Bell Atlantic central offices in the Northeast and Mid-Atlantic regions of the
United States. Space may be exhausted in particular central offices, and we may
face competition from other competitive telecommunication companies to obtain
available space. Bell Atlantic may seek to impose excessive charges for use of
its central office space, or it may reject some of our applications to install
equipment, and we may experience delays between the time we apply for space and
the time that Bell Atlantic actually permits us to place our equipment in this
space. We also rely on Bell Atlantic to provide transmission facilities to our
regional operating centers. If Bell Atlantic does not provide us with
transmission facilities on a timely basis and we are unable to obtain
transmission facilities from other providers, the rollout of our network may be
delayed, which could have a material adverse effect on our business, financial
condition and results of operations. In the event that we decide to expand our
operations into geographic areas outside of the Northeast and Mid-Atlantic
regions of the United States, we will face similar risks from the incumbent
local carriers in such areas.

WE DO NOT CONTROL OUR ACCESS TO BELL ATLANTIC'S CENTRAL OFFICES AND TRANSMISSION
  FACILITIES WHICH ARE ESSENTIAL FOR PROVIDING OUR SERVICES

    We cannot unilaterally control the terms under which we install our
equipment in Bell Atlantic's central offices, connect to copper telephone lines
or gain the use of Bell Atlantic's transmission facilities. State and federal
tariffs, state public utility commissions, the FCC and interconnection
agreements with Bell Atlantic determine the price, terms and conditions under
which space is made available, as well as the terms and conditions of access to
copper telephone lines and other components of Bell Atlantic's network. In
addition, if we decide to expand our operations into geographic areas outside of
the Northeast and Mid-Atlantic regions of the United States, we will face
similar difficulties with the incumbent local carriers in such areas.

                                       8
<PAGE>
OUR SUCCESS DEPENDS ON MAINTAINING, RENEWING OR RENEGOTIATING ON COMMERCIALLY
  REASONABLE TERMS THE AGREEMENTS WITH BELL ATLANTIC THAT ALLOW US TO LEASE THE
  TELEPHONE LINES WHICH ARE NECESSARY TO CARRY DATA TO OUR CUSTOMERS

    Our access to Bell Atlantic's central offices, transmission facilities and
copper telephone lines depends on our ability to maintain, renew or renegotiate
on commercially reasonable terms the interconnection agreements with Bell
Atlantic that allow us to lease the copper telephone lines that we will use to
carry data for our customers using DSL technology. Our Bell Atlantic
interconnection agreements have initial terms that expire from August 1999 to
March 2001. Any delay in maintaining, renewing or renegotiating on commercially
reasonable terms interconnection agreements could materially adversely affect
our business, financial condition and results of operations. Some of our
interconnection agreements provide that, if the term expires before we have a
replacement interconnection agreement, Bell Atlantic must continue to provide
services under the rates, terms and conditions of the original interconnection
agreement until a new interconnection agreement is executed, unless the parties
mutually agree to renegotiate the rates, fees and charges. Some of our other
interconnection agreements provide that, if the term expires before we have a
replacement interconnection agreement, the rates, terms and conditions of the
original interconnection agreement may be superseded by more generic and,
potentially less favorable, rates, terms and conditions, in which case our
business, financial condition and results of operations could be materially
adversely affected. In addition, we may not be able to negotiate new agreements
on terms favorable to us, and the cost of these negotiations could be
significant.

OUR SERVICES AND INTERCONNECTION AGREEMENTS ARE SUBJECT TO UNCERTAIN GOVERNMENT
  REGULATIONS THAT MAY BE INTERPRETED IN WAYS THAT WOULD HARM OUR BUSINESS

    State regulatory commissions, the FCC and the courts oversee, in varying
degrees, our interconnection agreements, as well as the terms and conditions
under which we gain access to incumbent local carrier copper telephone lines,
transmission facilities and ordering and operations systems. These government
entities may modify the terms or prices applicable to our interconnection
agreements and the terms governing our access to Bell Atlantic's copper
telephone lines and transmission facilities in ways that would be adverse to our
business. State regulatory commissions have authority to establish the rates for
DSL-capable copper telephone lines consistent with FCC pricing standards, as
well as other rates, terms and conditions of our dealings with Bell Atlantic in
ongoing public proceedings. In some states, these prices have yet to be set by
the regulatory body.

    Recently, the FCC issued a decision that an incumbent local carrier's data
services are subject to unbundling and some resale requirements and is further
considering other resale requirements. Although the FCC recently adopted new
rules designed to provide greater access to central office space at less cost,
these new rules potentially could benefit our competitors to a greater extent
than they benefit us, which could harm our competitiveness. These decisions are
the subject of court appeals and petitions for reconsideration filed with the
FCC. Any reversal or revision of these decisions could have a material adverse
effect on our business, financial condition and results of operations. The FCC
is still considering alternative corporate structures for the incumbent local
carriers that would allow them to compete more directly with DSL providers like
us on an unregulated basis. This issue is still pending before the FCC. An FCC
decision in favor of the incumbent local carriers could have a material adverse
effect on our business, financial condition and results of operations.

THE COURTS MAY REQUIRE THAT THE FCC REVERSE ITS INTERCONNECTION RULES RELATING
  TO USE AND PRICING WHICH MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR USE OF
  TRANSMISSION FACILITIES AND THE PRICES WE PAY FOR THEM

    Several parties have brought court challenges to the FCC's interconnection
rules, including the rules that establish the terms under which a competitive
telecommunications company may use portions of an incumbent local carrier's
network and that define the particular network elements to which we are
entitled. In January 1999, the Supreme Court invalidated an FCC rule which
defines the particular elements of an

                                       9
<PAGE>
incumbent local carrier's network that must be provided to competitors like us.
The FCC is conducting a proceeding to again define those elements and may not
require the continued availability of elements we need. In addition, the courts
have not yet resolved the lawfulness of the methodology that the FCC established
to determine the price that competitive telecommunications companies would have
to pay incumbent local carriers for use of the incumbent local carriers'
networks. The courts may determine that the FCC's pricing rules are unlawful,
which would require the FCC to establish a new pricing methodology. If this
occurs, the new pricing methodology that the FCC adopts may result in our having
to pay a higher price to incumbent local carriers to use a portion of their
networks in providing our services, and this could have a material adverse
effect on our business, financial condition and results of operations.

OUR FAILURE TO UPGRADE OUR NETWORK TO SERVICE A LARGE NUMBER OF END USERS AT
  HIGH PERFORMANCE LEVELS MAY REQUIRE US TO PURCHASE SERVICES FROM THIRD PARTIES
  WHICH WOULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS

    We are in the process of upgrading our fiber optic network that connects
markets from Maine to Virginia. If we are unable to successfully upgrade our
network in a timely fashion or are unable to maintain the network as planned, we
may be required to purchase bandwidth from third party providers, which would
result in a significant increase in our operating expenses and could materially
adversely affect our business, financial condition and results of operations.
This upgrade includes the installation of high speed switching equipment and the
leasing of additional transport bandwidth. We may be unable to upgrade our
network to service substantially increased numbers of end users at high
performance levels. In addition, any upgrade of our network may be delayed or
otherwise adversely affected if we are unable to lease or obtain sufficient
additional capacity.

OUR NETWORK MUST BE ABLE TO MANAGE A LARGE NUMBER OF USERS AT HIGH TRANSMISSION
  SPEEDS IN ORDER FOR OUR SERVICES TO BE ATTRACTIVE TO OUR CUSTOMERS

    Due to the limited deployment of our services, our network may not be able
to connect and manage a substantial number of end users at high transmission
speeds. Further, our network may be unable to achieve and maintain competitive
digital transmission speeds. Actual transmission speeds on our network will
depend on a variety of factors and many of these factors are beyond our control,
including the type of DSL technology deployed, the distance an end user is
located from a central office, the quality of the telephone lines, the presence
of interfering transmissions on nearby lines and other factors. As a result, we
may not be able to achieve and maintain digital transmission speeds that are
attractive in the market.

OUR ABILITY TO PROVIDE SERVICES OVER OUR NETWORK IS DEPENDENT ON OUR ABILITY TO
  CONNECT WITH OTHER NETWORKS FOR THE EXCHANGE OF DATA TRAFFIC

    We rely on a number of public and private network interconnections, commonly
referred to as peering relationships, to connect our network with other networks
for the exchange of data traffic. If we were unable to access other networks to
exchange our customers' traffic on a cost-effective basis, or if we were unable
to pass through to our customers any costs of utilizing these or our existing
networks, our business, financial condition and results of operations could be
materially adversely affected. Currently, all of these relationships in which we
participate provide for interconnections at nominal cost to either party. Many
of these relationships are informal and may be discontinued on short, or in some
cases no, notice. If our peering partners were to discontinue their support for
these relationships or commence charging for these interconnections, our ability
to exchange traffic at current price levels would be significantly constrained.
Furthermore, our business will be adversely affected if these peering partners
do not add more bandwidth to accommodate increased traffic. Many of the
companies with which we maintain private peering interconnections are our
competitors. There is nothing to prevent any peering partner, many of which are
significantly larger than us, from charging high usage fees, establishing new
and more restrictive criteria for use or denying access. In the future, private
peering partners could refuse to continue to interconnect directly with us,
might impose significant costs on us or limit our customers' access to their
networks.

                                       10
<PAGE>
A FAILURE TO MANAGE FUTURE GROWTH COULD STRAIN OUR RESOURCES AND COULD IMPAIR
  THE EXPANSION OF OUR BUSINESS

    We plan to rapidly and significantly expand our operations, which will place
a significant strain on our management, financial controls, operations systems,
personnel and other resources. If we fail to manage our growth effectively, it
could adversely affect the expansion of our customer base and service offerings
and would have a material adverse effect on our business, financial condition
and results of operations. We may be unable to meet our customers' need for
services and technical support or provide our customers the service they expect.
To manage our growth effectively, we must:

    - improve existing and implement new operational, financial and management
      information controls, reporting systems and procedures;

    - hire, train and manage sufficient additional qualified personnel;

    - expand and upgrade our technologies; and

    - manage multiple relationships with our customers, vendors and other third
      parties.

WE MAY ENCOUNTER DIFFICULTY IN UPGRADING OUR BILLING AND OPERATIONAL SUPPORT
  SYSTEMS

    We plan to upgrade our billing and operational support systems to
accommodate our planned expansion and to achieve operating efficiencies.
Although we have selected vendors with established software packages for these
upgrades, the installation and implementation of the new billing and operational
support systems involve a significant commitment of resources. This upgrade
could result in the incurrence of substantial third-party consulting costs,
delays in implementation, undetected software errors, protracted implementation
times, conflicts with our other hardware or software systems and difficulties
arising from continuing business operations during implementation. The failure
to successfully install and implement new billing and operational support
systems in a timely fashion could materially adversely affect our business,
financial condition and results of operations.

WE RELY ON A DIRECT SALES METHOD WHICH MAY NOT BE COST-EFFECTIVE

    We market and sell our products through our own dedicated marketing staff
and sales force. The DSL market is new, and our direct marketing efforts may not
be an effective means of selling DSL services to businesses. Many of our
competitors are selling their services indirectly through Internet service
providers, carriers, resellers and integrators. Our direct method may prove to
be a more costly approach. Although we believe that our success depends in
significant part on maintaining a dedicated marketing staff and sales force, we
may not achieve a level of sales sufficient to justify maintaining our own
marketing staff and sales force.

THE MARKET FOR INTERNET ACCESS, DATA TRANSPORT AND NETWORKING SERVICES IS HIGHLY
  COMPETITIVE, AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY

    The market for Internet access, data transport and networking services is
rapidly evolving and intensely competitive, and we may not be able to compete
effectively. Many of our current competitors, as well as a number of our
potential new competitors, have longer operating histories, greater name
recognition and substantially greater financial, technical and marketing
resources. Some of our competitors or potential competitors may have the
financial resources to withstand substantial price competition. Moreover, our
competitors may be able to negotiate contracts with suppliers of
telecommunications products and services which are more favorable than contracts
negotiated by us.

    Many of our competitors are offering, or may soon offer, technologies and
services that will directly compete with some or all of our service offerings.
Our competitors use technologies for local access connections that include DSL,
wireless data systems, cable modems and integrated services digital network
technologies. Some of these technologies may provide performance advantages in
some respects over DSL and other technologies using existing copper telephone
wires.

                                       11
<PAGE>
    We expect to face competition for our DSL and leased line services from Bell
Atlantic, alternative DSL providers, competitive local exchange carriers,
Internet service providers, wireless and cable companies. In the Boston, New
York, Philadelphia and Washington, D.C. metropolitan areas, we expect to compete
directly against other DSL providers such as Covad Communications Group, Inc.,
Network Access Solutions Corporation, NorthPoint Communications Group Inc. and
Rhythms NetConnections, Inc. We also expect to compete with cable companies in
the New England area for telecommuting and work at home applications.

WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY AGAINST BELL ATLANTIC

    Bell Atlantic, as the incumbent local carrier operating in the Northeast and
Mid-Atlantic regions of the United States, our initial target market, is both an
essential supplier of facilities and services for DSL and other Internet
connectivity services and a significant competitor. Bell Atlantic has existing
networks in local areas and across the major metropolitan areas in our target
market, currently provides basic telephony service to substantially all of the
customers that we hope to serve and has its own Internet service provider
businesses. Absent oversight by federal and state regulators, Bell Atlantic has
the ability to benefit its own DSL operations by providing them with essential
service inputs, such as copper telephone lines, transmission facilities and
collocation on more favorable terms than those provided to us. Bell Atlantic is
deploying DSL services in selected markets and has recently announced that it
intends to accelerate the deployment of its DSL Internet service through the end
of the first quarter of 2000. Deployment by Bell Atlantic of its DSL services on
a widespread basis could have a material adverse effect on our business,
financial condition and results of operations.

THE MARKET FOR WEB SITE HOSTING SERVICES IS HIGHLY COMPETITIVE, AND WE MAY NOT
  BE ABLE TO COMPETE EFFECTIVELY

    The market for Web site hosting services is rapidly evolving and intensely
competitive, and we may not be able to compete effectively. Many of our current
competitors, as well as a number of potential new competitors, have longer
operating histories, greater name recognition and substantially greater
financial, technical and marketing resources. Some of our competitors or
potential competitors may have the financial resources to withstand substantial
price competition. We compete in this market against a variety of companies,
including AboveNet Communications Inc., Concentric Network Corporation, Digex
Incorporated, Exodus Communications, Inc., GTE Internetworking, Level 3
Communications, Inc. and NaviSite, Inc.

A SYSTEM FAILURE COULD CAUSE DELAYS OR INTERRUPTIONS OF SERVICE TO OUR CUSTOMERS

    Our network infrastructure and customers' equipment located in our Web site
hosting facilities could be damaged by human error, physical or electronic
security breaches, power loss and other facility failures, fire, earthquake,
flood, telecommunications failure, sabotage, vandalism and similar events. Any
damage to or failure of our systems or network, or the systems or networks of
our service providers, could result in reductions in, or terminations of,
services supplied to our customers, which could have a material adverse effect
on our business, financial condition and results of operations. Despite
precautions we have taken and plan to take with future Web site hosting
facilities, a natural disaster or other unanticipated problems at one or more of
our Web site hosting facilities could result in interruptions in our services or
significant damage to customer equipment. In addition, the failure of Bell
Atlantic to provide consistent data communications capacity could result in
interruptions in our services.

                                       12
<PAGE>
A BREACH OF SECURITY OF OUR SYSTEMS COULD CAUSE DELAYS OR INTERRUPTIONS OF
  SERVICE TO OUR CUSTOMERS

    Our network may be vulnerable to unauthorized access, computer viruses and
other disruptive problems. Unauthorized access could also potentially jeopardize
the security of confidential information stored in the computer systems of our
customers, which might cause us to be liable to our customers, and might deter
potential customers. Eliminating computer viruses and alleviating other security
problems may require interruptions, delays or cessation of service to our
customers and our customers' end users. Any of these factors relating to network
security could have a material adverse effect on our business, financial
condition and results of operations.

OUR OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY, CAUSING OUR STOCK
  PRICE TO BE VOLATILE OR TO DECLINE

    Our operating results may vary significantly from quarter to quarter due to
a number of factors, not all of which are in our control. Many of our expenses,
particularly personnel costs, central office rental fees and other facility
rental expenses, are relatively fixed and are incurred in part based on
expectations of future revenue. We may be unable to adjust spending quickly
enough to offset any unexpected revenue shortfall. Accordingly, any shortfall in
revenue may cause significant variation in operating results in any quarter.
These variations or any shortfalls could cause the trading price of our common
stock to decline. Future revenue is difficult to forecast and for the
foreseeable future will be influenced by:

    - the timing and amount of sales to new customers;

    - our planned upgrade to our network infrastructure;

    - the installation of our equipment in Bell Atlantic central offices
      throughout our target markets;

    - our access to copper telephone lines and transmission facilities
      controlled by Bell Atlantic;

    - the establishment of our regional operating centers;

    - our ability to increase awareness of DSL; and

    - the success of DSL in general.

    Because of these factors, you should not rely on quarter-to-quarter
comparisons of our results of operations as an indication of our future
performance.

IF SALES FORECASTED FOR A PARTICULAR PERIOD ARE NOT REALIZED IN THAT PERIOD DUE
  TO THE LENGTHY SALES CYCLE OF OUR TELECOMMUTING NETWORK SERVICES, OUR
  OPERATING RESULTS FOR THAT PERIOD WILL BE HARMED

    We offer our telecommuting network services to large enterprises, and the
sales cycle can be very lengthy. If sales that we forecast for a particular
period do not occur because of the lengthy sales cycle, it could materially and
adversely affect our business, financial condition and results of operations.
The sales cycle for such large enterprises may last six months or more and
typically involves:

    - a significant technical evaluation;

    - an initial trial rollout to a relatively small number of end users;

    - a commitment of capital and other resources by the customer;

    - delays associated with the customer's internal procedures to approve
      expenditures;

    - time required to engineer the deployment of our services;

    - coordination of the activation of copper telephone lines with incumbent
      carriers; and

    - testing and acceptance of our services.

    During this lengthy sales cycle, we may incur significant expenses in
advance of the receipt of revenues.

                                       13
<PAGE>
THE FAILURE OF ONE OF OUR SUPPLIERS TO CONTINUE TO PROVIDE US DSL EQUIPMENT
  COULD REQUIRE US TO MAKE SIGNIFICANT CAPITAL EXPENDITURES TO REPLACE EXISTING
  EQUIPMENT

    Currently, the DSL modem and other equipment used for a single connection
over a copper telephone line must come from the same vendor because there are no
existing interoperability standards for the equipment used in our services. If
one of our suppliers stopped providing DSL equipment to us for any reason, or
was unable to manufacture and deliver the amount or quality of equipment we
order, we would need to make significant capital expenditures to replace this
equipment, which could have a material adverse effect on our business, financial
condition and results of operations.

OUR SERVICES ARE SUBJECT TO UNCERTAIN GOVERNMENT REGULATION AND CHANGES IN LAWS
  OR REGULATIONS COULD RESTRICT THE WAY WE OPERATE OUR BUSINESS

    Because many of the facilities and services we need in order to provide DSL
are subject to regulation at the federal, state and local levels, changes in
applicable laws or regulations could have an adverse impact on our business. For
example, the FCC and state telecommunications regulators help determine the
terms under which collocation space is provided to us. They also oversee the
terms under which we gain access to an incumbent local carrier's copper
telephone lines and transport facilities that we need in order to provide DSL
services. We expect incumbent local carriers like Bell Atlantic to pursue
litigation in courts, institute administrative proceedings with the FCC and
state telecommunications regulators and lobby the U.S. Congress in an effort to
affect the applicable laws and regulations in a manner that would be more
favorable to them and may be against our interests. The U.S. Congress, the FCC,
state telecommunications regulators and local governments could impose new fees
or funding obligations on telecommunications and information service providers
like us. Any changes in our regulatory environment could create greater
competitive advantages for all or some of our competitors or could make it
easier for additional parties to provide DSL services. In addition, we may
choose to expend significant resources to participate in regulatory proceedings
at the federal or state level without achieving favorable results.

THE ADOPTION OR MODIFICATION OF LAWS OR REGULATIONS RELATING TO THE INTERNET
  COULD ADVERSELY AFFECT OUR BUSINESS

    The adoption or modification of laws or regulations relating to the Internet
could adversely affect our business. The U.S. Congress has recently considered
Internet laws regarding children's privacy, copyrights, taxation and the
transmission of sexually explicit material. The European Union also recently
enacted its own privacy regulations. The law of the Internet, however, remains
largely unsettled, even in areas where there has been some legislative action.
It may take years to determine whether and how existing laws, such as those
governing intellectual property, privacy, libel and taxation, apply to the
Internet. In addition, the growth and development of the market for online
commerce may prompt calls for more stringent consumer protection laws, both in
the United States and abroad, that may impose additional burdens on companies
conducting business online.

WE MAY BE SUBJECT TO REGULATION, TAXATION, ENFORCEMENT OR OTHER LIABILITIES IN
  UNEXPECTED JURISDICTIONS, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR BUSINESS

    We provide Internet access and Web site hosting services to customers
located throughout the United States and in several foreign countries. As a
result, we may be required to qualify to do business, or be subject to tax or
other laws and regulations, in these jurisdictions even if we do not have a
physical presence or employees or property in these jurisdictions. The
application of these multiple sets of laws and regulations is uncertain, but we
could find we are subject to regulation, taxation, enforcement or other
liability in unexpected ways, which could materially adversely affect our
business, financial condition and results of operations.

                                       14
<PAGE>
OUR SENIOR MANAGEMENT TEAM HAS WORKED TOGETHER FOR ONLY A SHORT PERIOD OF TIME,
  SO YOU HAVE LIMITED INFORMATION ON WHICH TO EVALUATE THEIR ABILITY TO WORK
  TOGETHER EFFECTIVELY

    Our success depends on Mark Washburn, our President and Chief Executive
Officer, and our other executive officers and key employees. Mr. Washburn joined
HarvardNET in September 1998, and our senior management team has worked together
for only a short period of time. There is therefore only a limited period of
time on which you can judge their ability to operate as a group.

IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL, OUR BUSINESS WILL SUFFER

    We may be unable to continue to employ our key personnel or to attract and
retain qualified personnel in the future. Our future success depends on our
continuing ability to identify, hire, train and retain highly qualified
technical, sales, marketing and customer service personnel. The industry in
which we compete has a high level of employee mobility and aggressive recruiting
of skilled personnel. In particular, we face intense competition for qualified
personnel, particularly in software development, network engineering and product
management.

WE MAY BE SUBJECT TO INFRINGEMENT CLAIMS WHICH COULD MATERIALLY ADVERSELY AFFECT
  OUR BUSINESS

    Third parties, including our competitors, may assert infringement claims
against us and, in the event of an unfavorable ruling on any claim, we may be
unable to obtain a license or similar agreement to use technology we need to
conduct our business. Our management personnel were previously employees of
other telecommunications companies. In many cases, these individuals are
conducting activities for us in areas similar to those in which they were
involved prior to joining us. As a result, we or our employees could be subject
to allegations of violation of trade secrets and other similar claims. If such
claims materialize, it could materially adversely affect our business, financial
condition and results of operations.

OUR PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWN A SIGNIFICANT PERCENTAGE OF
  HARVARDNET AND WILL BE ABLE TO EXERCISE SIGNIFICANT INFLUENCE OVER HARVARDNET,
  WHICH COULD HAVE A MATERIAL AND ADVERSE EFFECT ON THE MARKET PRICE OF OUR
  COMMON STOCK

    Our executive officers, directors and principal stockholders together will
beneficially own 54.7% of our common stock after this offering, or 52.8% if the
underwriters exercise their over-allotment option in full. These stockholders
will be able to determine the composition of our board of directors, will retain
the voting power to approve all matters requiring stockholder approval,
including any merger, and will continue to have significant influence over our
affairs. This concentration of ownership could have the effect of delaying or
preventing a change in our control or otherwise discouraging a potential
acquiror from attempting to obtain control of us, which in turn could have a
material and adverse effect on the market price of our common stock or prevent
you from realizing a premium over the market price for your shares of common
stock.

WE HAVE BEEN UNABLE TO CONFIRM YEAR 2000 COMPLIANCE BY OUR EXTERNAL SERVICE
  PROVIDERS, AND THEIR FAILURE TO BE YEAR 2000 COMPLIANT COULD NEGATIVELY IMPACT
  OUR BUSINESS

    We have to date been unable to confirm that our external service providers,
including Bell Atlantic, will not be negatively impacted by the inability of
computer programs upon which they rely to correctly recognize dates after
December 31, 1999. To the extent that Bell Atlantic or other third parties
experience Year 2000 problems, our network and services could be adversely
affected.

YEAR 2000 ISSUES COULD NEGATIVELY IMPACT OUR CUSTOMERS, WHICH COULD MATERIALLY
  ADVERSELY AFFECT OUR BUSINESS

    The purchasing patterns of our customers may be affected by Year 2000 issues
as they expend significant resources to correct their current systems for Year
2000 compliance or if such issues have an adverse effect on their business
operations. These expenditures may result in reduced funds available to

                                       15
<PAGE>
purchase our services. Any of these developments could have a material and
adverse effect on our business, financial condition and results of operations.

THE FAILURE OF AN ACTIVE TRADING MARKET TO DEVELOP FOR OUR COMMON STOCK COULD
  MATERIALLY ADVERSELY AFFECT YOUR INVESTMENT IN OUR COMMON STOCK

    Our common stock has not been traded in the public market before this
offering, and an active trading in our common stock may not develop or continue
after this offering. We will determine the price you will pay for our common
stock through negotiations with the underwriters. You may not be able to resell
your shares at or above the price you will pay for our common stock. The
estimated initial public offering price range set forth on the cover page of
this preliminary prospectus is subject to change as a result of market
conditions and other factors.

THE HOLDERS OF A SIGNIFICANT NUMBER OF SHARES OF OUR COMMON STOCK HAVE THE RIGHT
  TO REQUIRE US TO REGISTER THE SALE OF THEIR SHARES, AND FUTURE SALES OF OUR
  COMMON STOCK IN THE PUBLIC MARKET COULD DEPRESS OUR STOCK PRICE

    Sales of substantial amounts of common stock in the public market following
this offering, or the appearance that a large number of shares is available for
sale, could adversely affect the market price for our common stock. After this
offering, the holders of 28,080,260 outstanding shares of common stock and
1,172,376 shares of common stock issuable upon the exercise of outstanding
options and warrants will have the right to require us to register the sale of
their shares, subject to limitations and to the lock-up agreements with the
underwriters, and to require us to include their shares in any future public
offerings of our equity securities. On the date of this offering, we intend to
file a registration statement under the Securities Act to register 1,355,000
shares of common stock issuable under our stock purchase plan. Within
approximately 180 days after this offering, we intend to file a registration
statement under the Securities Act to register 6,125,405 shares of common stock
subject to outstanding stock options or reserved for issuance under our stock
incentive plans. The sale of these additional shares into the public market may
further adversely affect the market price of our common stock. In addition to
the adverse effect a price decline could have on holders of common stock, that
decline would likely impede our ability to raise capital through the issuance of
additional shares of common stock or other equity securities.

OUR CERTIFICATE OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS THAT COULD DELAY
  OR PREVENT A CHANGE IN CONTROL AND THEREFORE COULD HURT OUR STOCKHOLDERS

    Provisions of our certificate of incorporation and bylaws could make it more
difficult for a third party to acquire control of HarvardNET, even if a change
in control would be beneficial to stockholders. Our certificate of incorporation
will provide for a classified board of directors and will allow our board of
directors to issue, without stockholder approval, preferred stock with terms set
by the board of directors. The preferred stock could be issued quickly with
terms that delay or prevent the change in control of HarvardNET or make removal
of management more difficult. Also, the issuance of preferred stock may cause
the market price of our common stock to decrease.

THIS PROSPECTUS CONTAINS FORWARD LOOKING STATEMENTS WHICH MAY NOT PROVE TO BE
  ACCURATE AND SUCH INACCURACY COULD MATERIALLY AND ADVERSELY AFFECT THE MARKET
  PRICE OF OUR COMMON STOCK

    This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ significantly from those
anticipated in these forward-looking statements as a result of the risks
described above and elsewhere in this prospectus.

                                       16
<PAGE>
                                USE OF PROCEEDS

    We estimate that our net proceeds from the sale of the 8,900,000 shares of
common stock will be approximately $114.5 million, or $131.9 million if the
underwriters exercise their over-allotment option in full, assuming an initial
public offering price of $14.00 per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses of
$1,350,000 payable by us.

    We will use a portion of the net proceeds to repay any outstanding amounts
under our credit facility. We anticipate that the outstanding indebtedness under
this credit facility will be approximately $6.0 million upon the closing of this
offering. This facility has a maturity date in May 2004. The facility bears
interest at an annual rate equal to the London inter bank offer rate plus 4.5%,
which was approximately 9.6% as of July 26, 1999. We expect to use the remainder
of the net proceeds for capital expenditures relating to our planned geographic
expansion, potential acquisitions and working capital and other general
corporate purposes. Although we may use a portion of the net proceeds to acquire
businesses, products or technologies that are complementary to our business, we
have no specific acquisitions planned. Pending such uses, we plan to invest the
net proceeds in investment grade, interest-bearing securities.

                                DIVIDEND POLICY

    We have never paid or declared any cash dividends on common stock or other
securities and do not anticipate paying cash dividends in the foreseeable
future. We currently intend to retain all future earnings, if any, for use in
the operation of our business.

                                       17
<PAGE>
                                 CAPITALIZATION

    The following table sets forth our capitalization as of March 31, 1999:

    - on an actual basis after giving effect to the 1.3546862-for-1 split of our
      common stock and Class B stock;

    - on a pro forma basis to reflect the conversion of all shares of Class B
      stock and convertible preferred stock outstanding as of March 31, 1999
      into common stock; and

    - on a pro forma as adjusted basis to reflect the conversion of all shares
      of Class B stock and convertible preferred stock outstanding as of March
      31, 1999 into common stock, and the sale of common stock in this offering,
      assuming an initial public offering price of $14.00 per share, after
      deducting the underwriting discounts and commissions and estimated
      offering expenses payable by HarvardNET.

    The outstanding share information excludes 93,121 shares of common stock
issuable upon exercise of warrants outstanding as of March 31, 1999 at an
exercise price of $.99 per share and 1,163,052 shares of common stock issuable
upon exercise of options outstanding as of March 31, 1999 with a weighted
average exercise price of $.87 per share.
<TABLE>
<CAPTION>
                                                                                      AS OF MARCH 31, 1999
                                                                               -----------------------------------
<S>                                                                            <C>        <C>          <C>
                                                                                                        PRO FORMA
                                                                                ACTUAL     PRO FORMA   AS ADJUSTED
                                                                               ---------  -----------  -----------

<CAPTION>
                                                                                   (IN THOUSANDS, EXCEPT SHARE
                                                                                       AND PER SHARE DATA)
<S>                                                                            <C>        <C>          <C>
Long term debt, less current portion.........................................  $      50   $      50    $      50

Redeemable convertible Series A preferred stock; $0.01 par value; 13,749,440
  shares authorized, 13,749,440 issued and outstanding; none issued and
  outstanding pro forma and pro forma as adjusted basis......................     18,011          --           --

Stockholders' equity (deficit):

Preferred stock, $.01 par value; 5,000,000 shares authorized and unissued,
  pro forma as adjusted......................................................         --          --           --
Common stock, $0.01 par value; 34,237,000 shares authorized, 8,655,939 shares
  issued and 5,278,246 outstanding; 34,237,000 shares authorized and
  30,976,290 shares issued and 27,598,597 outstanding, pro forma; 100,000,000
  shares authorized and 39,876,290 shares issued and 36,498,597 shares
  outstanding, pro forma as adjusted.........................................         87         310          399
Class B stock, $.01 par value; 4,486,250 shares authorized, 3,976,381 issued
  and outstanding; none issued and outstanding, pro forma and pro forma as
  adjusted basis.............................................................         28          --           --
Additional paid-in capital...................................................     10,883      29,312      143,751
Accumulated dividends on preferred stock.....................................        613          --           --
Deferred compensation........................................................     (8,690)     (8,690)      (8,690)
Accumulated deficit..........................................................     (2,810)     (2,810)      (2,810)
Treasury stock, at cost......................................................     (3,356)     (3,356)      (3,356)
                                                                               ---------  -----------  -----------
Total stockholders' equity (deficit).........................................     (3,245)     14,766      129,294
                                                                               ---------  -----------  -----------
Total capitalization.........................................................  $  14,816   $  14,816    $ 129,344
                                                                               ---------  -----------  -----------
                                                                               ---------  -----------  -----------
</TABLE>

                                       18
<PAGE>
                                    DILUTION

    Our pro forma net tangible book value as of March 31, 1999 was approximately
$10.8 million or approximately $.39 per share of common stock. Pro forma net
tangible book value per share represents the amount of our total tangible assets
less total tangible liabilities, divided by 27,598,597 shares of common stock
outstanding, after giving effect to the conversion of all shares of Class B
stock and convertible preferred stock outstanding as of March 31, 1999. After
giving effect to the sale of the common stock offered in this offering at an
assumed initial public offering price of $14.00 per share and after deducting
the estimated underwriting discounts and commissions and offering expenses
payable by us, our pro forma net tangible book value as of March 31, 1999 would
have been approximately $125.3 million, or $3.43 per share of common stock. This
represents an immediate increase in pro forma net tangible book value of $3.04
per share to existing stockholders and an immediate dilution of $10.57 per share
to new investors. The following table illustrates this per share dilution:

<TABLE>
<S>                                                                           <C>        <C>
Assumed initial public offering price per share.............................             $   14.00
  Pro forma net tangible book value per share before this offering..........  $     .39
  Increase in pro forma net tangible book value per share attributable to
    new investors...........................................................       3.04
                                                                              ---------
Pro forma net tangible book value per share after this offering.............                  3.43
                                                                                         ---------
Dilution per share to new investors.........................................             $   10.57
                                                                                         ---------
                                                                                         ---------
</TABLE>

    The following table summarizes on a pro forma basis as of March 31, 1999,
the difference between the number of shares of common stock purchased from
HarvardNET, the total consideration paid to HarvardNET and the average price per
share paid by existing stockholders and by new investors at an assumed initial
public offering price of $14.00 per share, before deducting estimated
underwriting discounts and commissions and offering expenses payable by
HarvardNET:

<TABLE>
<CAPTION>
                                                             SHARES PURCHASED          TOTAL CONSIDERATION        AVERAGE
                                                         -------------------------  --------------------------   PRICE PER
                                                            NUMBER       PERCENT       AMOUNT        PERCENT       SHARE
                                                         ------------  -----------  -------------  -----------  -----------
<S>                                                      <C>           <C>          <C>            <C>          <C>
Existing stockholders..................................    27,598,597        75.6%     20,868,000        14.3%   $     .76
New investors..........................................     8,900,000        24.4     124,600,000        85.7    $   14.00
                                                         ------------       -----   -------------       -----
  Total................................................    36,498,597       100.0%    145,468,000       100.0%
                                                         ------------       -----   -------------       -----
                                                         ------------       -----   -------------       -----
</TABLE>

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

The table above assumes no exercise of warrants and stock options outstanding at
March 31, 1999. As of March 31, 1999, there were warrants outstanding to
purchase a total of 93,121 shares of common stock at an exercise price of $.99
per share and options outstanding to purchase a total of 1,163,052 shares of
common stock at a weighted average exercise price of $.87 per share. To the
extent any of these options or warrants are exercised, there will be further
dilution to new investors.

                                       19
<PAGE>
                            SELECTED FINANCIAL DATA

    The financial data set forth below should be read together with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and related notes included elsewhere in
this prospectus.

    The following statement of operations data for the fiscal years ended
December 31, 1996, 1997 and 1998 and the balance sheet data as of December 31,
1997 and 1998 are derived from our financial statements audited by
PricewaterhouseCoopers LLP, independent accountants. The statement of operations
data for the fiscal years ended December 31, 1994 and 1995 and the balance sheet
data as of December 31, 1994, 1995 and 1996 are derived from unaudited financial
statements of HarvardNET not included in this prospectus. The unaudited
financial statements include all adjustments, comprised only of normal recurring
adjustments, which we consider necessary for a fair presentation. In November
1995, HarvardNET entered the Internet service provider business. Prior to that
time, HarvardNET developed software products and network solutions for various
government agencies. HarvardNET believes that the selected data for 1994 and
1995 do not highlight significant trends in its financial condition or results
of operations related to its current business.

    The statement of operations data for the three month periods ended March 31,
1998 and 1999 and the balance sheet data as of March 31, 1999 are derived from
our unaudited financial statements and reflect all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of our
results of operations and financial position. Results for the three months ended
March 31, 1999 are not necessarily indicative of results that may be expected
for the year.

    EBITDA consists of net loss excluding interest, taxes, depreciation and
amortization. We have provided EBITDA because it is a measure of financial
performance commonly used in the telecommunications industry, but other
companies may calculate it differently from us. We have presented EBITDA to
enhance your understanding of our operating results. You should not construe it
as an alternative to operating income as an indicator of our operating
performance or as an alternative to cash flows from operating activities as a
measure of liquidity.

                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                                                                         THREE MONTHS ENDED
                                                                YEAR ENDED DECEMBER 31,                      MARCH 31,
                                                 -----------------------------------------------------  --------------------
                                                   1994       1995       1996       1997       1998       1998       1999
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                                                                            (UNAUDITED)
                                                     (UNAUDITED)    (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>        <C>        <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................................  $     207  $     260  $     720  $   1,381  $   4,282  $     954  $   1,600
Costs of services (exclusive of depreciation
  and amortization shown separately below).....        109        117        325        704      1,878        420        811
Selling, general and administrative............         89        132        352        671      2,815        399      1,693
Depreciation and amortization..................          2          1          6        187      1,339        318        500
Compensation charge for issuance of stock
  options......................................         --         --         --         --         --         --         90
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
Operating income (loss)........................          7         10         37       (181)    (1,750)      (183)    (1,494)
Interest income (expense) net..................         --         --         (1)        (2)        32         (3)        19
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
Income (loss) before taxes.....................          7         10         36       (183)    (1,718)      (185)    (1,475)
Benefit (provision) for income taxes...........         (1)        (7)        (9)        44        458         49         85
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net income (loss)..............................  $       6  $       3  $      27  $    (139) $  (1,260) $    (136) $  (1,390)
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
Dividends and accretion of discount on
  preferred stock..............................         --         --         --         --       (336)        --     (8,954)(1)
Net income available (loss attributable) to
  common stockholders..........................  $       6  $       3  $      27  $    (139) $  (1,596) $    (136) $ (10,344)
Net income (loss) per share--basic and
  diluted(2):
  Historical...................................  $    0.00  $    0.00  $    0.01  $   (0.03) $   (0.21) $   (0.02) $   (1.96)
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
  Pro forma(3).................................                                              $   (0.10)            $   (0.05)
                                                                                             ---------             ---------
                                                                                             ---------             ---------
Weighted average shares outstanding(2):
  Basic and diluted............................      4,064      4,064      4,064      4,840      7,526      8,655      5,278
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                 ---------  ---------  ---------  ---------  ---------  ---------  ---------
OTHER DATA:
EBITDA.........................................  $       9  $      11  $      43  $       6  $    (411) $     135  $    (904)
Capital expenditure............................          3          2         --         19      1,010         36        627
Net cash provided by (used in) operating
  activities...................................         38         20         96        (44)       (93)       428     (1,417)
Net cash used in investing activities..........          3          2         --        (19)    (1,010)       (36)    (3,450)
Net cash provided by (used in) financing
  activities...................................         --         --         (6)       340      5,916        (10)     8,603
</TABLE>

<TABLE>
<CAPTION>
                                                                AS OF DECEMBER 31,                        AS OF MARCH 31, 1999
                                             ---------------------------------------------------------  ------------------------
                                                1994         1995        1996       1997       1998     (ACTUAL)   PRO FORMA(3)
                                             -----------  -----------  ---------  ---------  ---------  ---------  -------------
                                                                                                              (UNAUDITED)
                                                   (UNAUDITED)                 (IN THOUSANDS)
<S>                                          <C>          <C>          <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................   $      38    $      58   $     148  $     426  $   5,239  $   8,975    $   8,975
Working capital............................          38           58           8        234      4,636      9,141        9,141
Total assets...............................          50           77         204      3,958      8,853     16,049       16,049
Long-term debt, net of current portion.....          --           --          --         97         67         50           50
Redeemable convertible preferred stock.....          --           --          --         --      9,365     18,011           --
Accumulated deficit........................         (51)         (47)        (20)      (159)    (1,420)    (2,719)     (29,312)
Total stockholders' equity (deficit).......         (51)         (47)         10      2,708     (1,917)    (3,245)      14,766
</TABLE>

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

(1) Includes an approximately $8.6 million non-recurring, non-cash dividend.

(2) For an explanation of the determination of the number of shares used in
    computing earnings per share, see note 3 in our financial statements.

(3) Pro forma to reflect the conversion of shares of redeemable convertible
    preferred stock and Class B stock outstanding as of March 31, 1999 into an
    aggregate of 22,320,351 shares of common stock.

                                       21
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

    We began operations in May 1993 as a software and consulting company. In
November 1995, we entered the Internet business focusing on providing high
performance Web site hosting services as well as leased line Internet access to
business customers in the Boston market. In mid-1996, we began to commercially
deploy digital subscriber line, or DSL, technology, focusing on business
customers in the Northeast. On November 12, 1997, we expanded our operations
into Maine and New Hampshire by acquiring all of the common stock of Internet
Northeast, an Internet service provider based in Maine, with approximately 4,000
local dial-up Internet access subscribers.

    In September 1998, we received an $18.5 million equity commitment from M/C
Venture Partners, Fidelity Ventures and several other individual investors.
Since that time we have shifted the focus of our efforts from dial-up Internet
access to our DSL and leased line services, Web site hosting and other services.
As of June 30, 1999, our monthly recurring services were comprised of:

    - DSL services -- 22%;

    - leased line services -- 35%;

    - Web site hosting -- 14%; and

    - dial-up Internet access -- 29%.

We expect the percentage of our monthly recurring revenues from our dial-up
services to decline over time.

    In order to implement our strategy, we have increased our overall operating
expenses and capital expenditures to facilitate the development and deployment
of our DSL, telecommuting network and Web site hosting services. In addition, we
have increased these expenses in connection with the expansion of the geographic
area in which we provide our services. As a result, since our September 1998
equity funding, our primary activities have consisted of:

    - executing additional interconnection agreements with Bell Atlantic;

    - obtaining additional governmental authorizations;

    - identifying additional central office space in existing and new markets in
      which to install our equipment;

    - acquiring and deploying additional equipment and facilities;

    - hiring additional management, sales and other personnel;

    - upgrading our operations and support systems;

    - acquiring substantially all of the assets of the Network Services Division
      of Comstor Corporation; and

    - raising additional capital.

    Currently, we provide DSL service to customers in eastern Massachusetts,
southern Maine and southern New Hampshire. As of July 26, 1999, we offered
service at 51 central office locations and had installed equipment at 20
additional locations. By the middle of 2001, we intend to expand our DSL
coverage to more than 600 central offices throughout the Northeast and
Mid-Atlantic regions, including markets in Rhode Island, New York, New Jersey,
Pennsylvania, Maryland, Washington, D.C. and Virginia. As of July 26, 1999, we
operated regional operations centers in Boston, Massachusetts, Portland, Maine,
Manchester, New Hampshire and McLean, Virginia, at which we aggregate and route
data traffic for each market. We plan to increase the number of these centers in
conjunction with our roll-out of DSL services.


    On January 11, 1999, we acquired substantially all of the assets of the
Network Services Division of Comstor Corporation for approximately $3.6 million
in cash and assumed liabilities, which consisted


                                       22
<PAGE>
principally of its East Coast network for the transport of Internet
protocol-based traffic, as well as a number of private and public network
interconnection arrangements. We plan to upgrade this network as necessary to
support the traffic requirements and needs of our customers. We have a new,
approximately 20,000 square foot, Web operations center in Boston. We intend to
establish additional Web operations centers in New York, Philadelphia and
Washington, D.C. in conjunction with our roll-out of DSL services in these
metropolitan areas.

    We expect to incur operations, sales and market development expenses as we
enter new markets and further penetrate existing ones. Once we have deployed our
network in a market, the majority of our additional capital expenditures will be
to connect new customers. In addition, we will be required to fund each market's
cash flow deficit as we build our customer base. We expect that our financial
performance will vary from market to market, depending on factors such as:

    - the size of the addressable market;

    - the level of sale and marketing expenses;

    - the number and timing of central offices built out;

    - the timing of market entry;

    - the length of the sales cycle; and

    - the acceptance of our services.

    We have received the entire $18.5 million in equity financing under a
funding agreement executed in September 1998. In conjunction with the final
installment on March 23, 1999 under the funding agreement, we allocated the
entire proceeds to a non-detachable beneficial conversion feature, which was
recorded as additional paid in capital. A non-recurring, non-cash dividend of
$8,621,000 was recorded to reflect the immediate convertibility of the shares
issued in this installment.

    On May 28, 1999 we entered into a $30.0 million senior secured credit
facility to fund our continued expansion. We expect to incur operating losses,
net losses and negative cash flow for the next several years.

    We will amortize deferred compensation of approximately $8.7 million in the
aggregate relating to options granted in the quarter ended March 31, 1999 that
will vest over the next four years, and which will be charged ratably over that
period. For the period from April 1, 1999 through June 10, 1999, we granted
options for the purchase of 282,043 shares of common stock to employees at
exercise prices ranging from $1.00 to $2.21 per share. We recorded deferred
compensation of approximately $3.0 million relating to these grants which will
be amortized as a compensation charge for issuance of stock options, over the
four-year vesting period. For the period from April 1, 1999 through June 10,
1999 we cancelled options for the purchase of 29,126 shares of common stock
previously issued to employees at exercise prices, in each case, of $1.00 per
share. For the period from June 11, 1999 through July 13, 1999, we granted
options to purchase 93,774 shares of our common stock to employees at an
exercise price in each case of $11.81 per share. We recorded deferred
compensation relating to these grants of approximately $174,000, which will be
amortized ratably as a compensation charge for issuance of stock options over
the four year vesting period of such options.

    We will record deferred debt issuance costs of approximately $4.4 million in
the quarter ended June 30, 1999 relating to our credit facility which will be
charged to interest expense over the term of the facility using the effective
interest method. As this facility will terminate upon the closing of this
offering, we expect to recognize approximately $4.4 million of this expense in
the quarter ending September 30, 1999.

    We will recognize a non-recurring, non-cash preferred stock dividend of
approximately $1.5 million in the quarter ended June 30, 1999 relating to the
allocation of the proceeds from the issuance of 356,294 shares of Series A-2
preferred stock in May 1999 to a non-detachable beneficial conversion feature of
these shares.

                                       23
<PAGE>
    We are subject to state telecommunications commission, FCC and court
decisions that interpret and implement the 1996 Telecommunications Act, various
telecommunications statutes and regulations and various contractual arrangements
involving incumbent carriers. We are unable to estimate the likelihood that any
future rulings or regulations would result in a material impact on our financial
condition or results of operations. However, one or more of these rulings or
regulations could have a material effect on our business prospects, operating
results and financial condition in the future.

REVENUES

    We derive the majority of our revenues from customers who purchase Internet
access, Web site hosting and other data transport and networking services. We
typically bill our customers for monthly recurring charges based on the type and
level of service provided, including the data transfer speed and bandwidth
selected by the customer. In addition to the monthly service fees, we bill users
for nonrecurring activation and installation service related to Internet access,
Web site hosting and other data transport and networking services. These
nonrecurring revenues are recorded when performed.

    Recurring revenues consist of monthly service fees for the following
services:

    - BusinessSPEED DSL high speed digital leased line;

    - RemoteCONNECT telecommuting network services;

    - Web site hosting;

    - E-commerce and other enhanced services, including outsourced e-mail
      administration; and

    - Dial-up Internet access.

    Service revenues related to Internet access, Web site hosting and enhanced
services are recognized as the services are provided. Advance collections
relating to future services are recorded as deferred revenue and recognized as
revenue when earned.

    During the past several years, market prices for many telecommunications and
Web site hosting services have been declining, which is a trend we believe will
continue. As prices decline for any given speed, bandwidth or level of service,
we expect that the total number of end users and the proportion of end users
purchasing higher-level, higher-priced services will increase. The cost of these
upgrades are generally minimal.

COSTS OF SERVICES, EXCLUDING DEPRECIATION AND AMORTIZATION

    Our costs of services, excluding depreciation and amortization, represent
network expenses related to providing service to our customers, including the
transport between the end user and central office, between central office and
regional operations center, and between the regional operations center and the
Internet. As our customer and end user base grows, we expect these costs to
increase, depending upon the amount of end users added and their bandwidth and
level of service requirements. Costs of services, excluding depreciation and
amortization, are generally comprised of the following:

    - Intra-region costs consist of monthly service fees to Bell Atlantic to
      install our equipment in its central offices, connect to copper telephone
      lines and use its transmission facilities, as well as for leased transport
      from the incumbent and other carriers. In addition, we pay nonrecurring
      installation charges for these lines and other related services.

    - Inter-region costs consist of leased transport and other operating costs
      associated with our fiber optic network.

SELLING, GENERAL AND ADMINISTRATIVE

    Sales and marketing costs consist mainly of salaries and benefits for our
direct sales force and marketing personnel and include advertising and new
market launch expenses.

                                       24
<PAGE>
    General and administrative costs consist mainly of salaries and benefits for
our administrative, regulatory, provisioning, technical support, network
engineering, customer care and management personnel, as well as fees paid for
professional services.

DEPRECIATION AND AMORTIZATION

    Depreciation includes depreciation of furniture and fixtures, computer and,
network infrastructure equipment. Depreciation is computed on a straight-line
basis over estimated useful lives of three to ten years.

    Amortization includes the amortization of capital leased equipment as well
as the amortization of intangible assets associated with our acquisitions of
Internet Northeast and the Network Services Division of Comstor Corporation.
Amortization is computed on a straight-line basis over three to five years.

COMPENSATION CHARGE FOR ISSUANCE OF STOCK OPTIONS

    Compensation charge for issuance of stock options represents the difference
between the exercise price of stock options granted and the estimated fair
market value of the underlying common stock on the date of grant.

INTEREST INCOME (EXPENSE)

    Interest income consists of interest income from our cash and short-term
investments. Interest expense consists of interest associated with capital
leased equipment and a term loan.

RESULTS OF OPERATIONS

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

    REVENUES

    Total revenues were $1.6 million for the three months ended March 31, 1999,
as compared to $954,000 for the three months ended March 31, 1998, an increase
of $646,000 or 68%. This increase was attributable to the revenue base of the
Network Services Division of Comstor Corporation which was acquired on January
11, 1999, as well as the addition of new customers and with a higher average
monthly revenue per customer.

    COSTS OF SERVICES, EXCLUDING DEPRECIATION AND AMORTIZATION

    Costs of services, excluding depreciation and amortization, were $811,000
for the three months ended March 31, 1999, as compared to $420,000 for the three
months ended March 31, 1998, an increase of $391,000 or 93%. The increase was
primarily attributable to the network costs associated with the acquisition of
substantially all of the assets of the Network Services Division of Comstor
Corporation in 1999, as well as an increase in network costs associated with
higher customer counts. Costs of services, excluding depreciation and
amortization, as a percentage of revenues was 51% for the three months ended
March 31, 1999, compared to 44% for the three months ended March 31, 1998. The
increase as a percentage of revenues is due to higher costs associated with
additional fixed transport capacity between our regional operations centers and
the Internet that we acquired in the first quarter of 1999. We expect that our
transport costs will decrease as a percentage of revenue in the future as
increased traffic can more fully utilize this existing transport capacity.

    SELLING, GENERAL AND ADMINISTRATIVE

    Selling, general and administrative expenses were $1.7 million for the three
months ended March 31, 1999, compared to $399,000 for the three months ended
March 31, 1998, an increase of $1.3 million or 324%. This increase consisted
primarily of increased salary expenses associated with increases in management,
sales and other personnel and increased fees paid for professional services. The
total number of

                                       25
<PAGE>
employees at March 31, 1999 was 98 as compared to 37 at March 31, 1998. We
expect selling, general and administrative expenses to increase as we expand our
operations and expand our infrastructure to support future growth which will
reduce cash flow and net income.

    DEPRECIATION AND AMORTIZATION

    Depreciation and amortization expense was $500,000 for the three months
ended March 31, 1999, as compared to $318,000 for the three months ended March
31, 1998, an increase of $182,000. The increase was attributed to the
depreciation associated with the expansion of our network and the amortization
of the intangible asset associated with the acquisition of Comstor. We expect
depreciation and amortization expense to increase as we make investments in our
network and operational infrastructure and if we acquire additional assets or
businesses. Increases in depreciation and amortization expense will reduce net
income.

    COMPENSATION CHARGE FOR ISSUANCE OF STOCK OPTIONS

    We incurred a charge of $90,000 for the three months ended March 31, 1999
related to the issuance of stock options with exercise prices below fair market
value on the date of grant. Additional unvested outstanding options will
continue to vest over the next four years, which will result in additional
compensation expense of approximately $8,780,000 in the aggregate in periods
subsequent to March 31, 1999 which will be charged ratably over the next four
years.

    INTEREST INCOME (EXPENSE)

    Interest income for the three months ended March 31, 1999 was $23,000
compared to $0 for the three months ended March 31, 1998. The increase was
primarily due to the interest earned on the proceeds from the redeemable
convertible Series A preferred stock issuance.

    Interest expense for the three months ended March 31, 1999 was $4,000
compared to $3,000 for the three months ended March 31, 1998. This increase was
primarily due to the interest payable on leased capital equipment.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

    REVENUES

    Total revenues were $4.3 million for the year ended December 31, 1998, as
compared to $1.4 million for the year ended December 31, 1997, an increase of
$2.9 million or 210%. This increase was attributable to a full year of dial-up
service revenue associated with the 1997 acquisition of Internet Northeast.

    COSTS OF SERVICES, EXCLUDING DEPRECIATION AND AMORTIZATION

    Costs of services, excluding depreciation and amortization, were $1.9
million for the year ended December 31, 1998, as compared to $704,000 for the
year ended December 31, 1997, an increase of $1.2 million or 167%. The increase
was primarily attributable to the inclusion of a full year of dial-up network
costs. Cost of services, excluding depreciation and amortization, as a
percentage of revenues was 44% for the year ended December 31, 1998, compared to
51% for the year ended December 31, 1997.

    SELLING, GENERAL AND ADMINISTRATIVE

    Selling, general and administrative expenses were $2.8 million for the year
ended December 31, 1998 compared to $671,000 for the year ended December 31,
1997, an increase of $2.1 million or 319%. Sales and marketing expenses
increased approximately $435,000. General and administrative expenses increased
$1.7 million. The increases were due to the inclusion of a full year of
operations of Internet Northeast and the establishment of the Boston corporate
office. The total number of employees at December 31, 1998 was 56 as compared to
31 at December 31, 1997. We expect selling, general and administrative expenses
to

                                       26
<PAGE>
increase as we expand our operations and expand our infrastructure to support
future growth which will reduce cash flow and net income.

    DEPRECIATION AND AMORTIZATION

    Depreciation and amortization expense was $1.3 million for the year ended
December 31, 1998 as compared to $187,000 for the year ended December 31, 1997,
an increase of $1.1 million. The increase was attributable to the depreciation
on our expanded network and the amortization of the intangible assets and
goodwill associated with the acquisition of Internet Northeast. We expect
depreciation and amortization expense to increase as we make investments in our
network and operational infrastructure and if we acquire additional assets or
businesses. Increases in depreciation and amortization expense will reduce net
income.

    INTEREST INCOME (EXPENSE)

    Interest income for the year ended December 31, 1998 was $57,000 compared to
$0 for the year ended December 31, 1997. The increase was primarily due to the
interest earned on the proceeds of the Series A preferred stock issuance in
September 1998.

    Interest expense for the year ended December 31, 1998 was $25,000 compared
to $2,000 for the year ended December 31, 1997. This increase was primarily due
to the interest on leased capital equipment.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

    REVENUES

    Total revenues were $1.4 million for the year ended December 31, 1997, as
compared to $720,000 for the year ended December 31, 1996, an increase of
$661,000 or 92%. The increase was attributable to the addition of the dial-up
business in November 1997 from the Internet Northeast acquisition and an overall
increase in customers.

    COSTS OF SERVICES, EXCLUDING DEPRECIATION AND AMORTIZATION

    Costs of services, excluding depreciation and amortization, were $704,000
for the year ended December 31, 1997, as compared to $325,000 for the year ended
December 31, 1996, an increase of $379,000 or 116%. This increase was due in
part to the addition of Internet Northeast in November 1997. Costs of services,
excluding depreciation and amortization, as a percentage of revenues was 51% for
the year ended December 31, 1997 compared to 45% for the year ended December 31,
1996.

    SELLING, GENERAL AND ADMINISTRATIVE

    Selling, general and administrative expenses were $671,000 for the year
ended December 31, 1997 compared to $352,000 for the year ended December 31,
1996, an increase of $319,000 or 91%. Sales and marketing expenses increased
$28,000. General and administrative expenses increased $291,000. The increases
were due in part to the increase in headcount as a result of the 1997
acquisition of Internet Northeast.

                                       27
<PAGE>
    DEPRECIATION AND AMORTIZATION

    Depreciation and amortization expense was $187,000 for the year ended
December 31, 1997, as compared to $6,000 for the year ended December 31, 1996,
an increase of $181,000. This increase was attributable to the amortization of
the intangible assets and goodwill associated with the 1997 acquisition of
Internet Northeast.

    INTEREST INCOME (EXPENSE)

    Interest income and expense were nominal in both years.

QUARTERLY RESULTS

    The following table sets forth unaudited financial data of HarvardNET for
each of the quarters in 1998 and for the first quarter of 1999. This information
has been derived from our unaudited financial statements that, in our opinion,
reflect all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of this quarterly information. The operating
results for any quarter are not necessarily indicative of results to be expected
for any future period.

<TABLE>
<CAPTION>
                                                                                             QUARTER ENDED
                                                                     -------------------------------------------------------------
                                                                      MARCH 31,    JUNE 30,    SEPT. 30,   DEC. 31,     MARCH 31,
                                                                        1998         1998        1998        1998         1999
                                                                     -----------  -----------  ---------  -----------  -----------
<S>                                                                  <C>          <C>          <C>        <C>          <C>
Revenues...........................................................   $     954    $   1,041   $   1,159   $   1,128    $   1,600
Costs of services (exclusive of depreciation and amortization shown
  separately below)................................................         420          468         461         529          811
Selling, general and administrative................................         399          605         725       1,086        1,693
Depreciation and amortization......................................         318          324         332         366          500
Compensation charge for issuance of stock options..................          --           --          --          --           90
                                                                     -----------  -----------  ---------  -----------  -----------
Operating income (loss)............................................        (183)        (356)       (359)       (853)      (1,494)
Interest income (expense), net.....................................          (2)          --           2          33           19
                                                                     -----------  -----------  ---------  -----------  -----------
Net income (loss) before taxes.....................................        (185)        (356 )      (357)       (820 )     (1,475 )
Benefit (provision) for income taxes...............................          49           95          95         218           85
                                                                     -----------  -----------  ---------  -----------  -----------
Net income (loss)..................................................  $     (136 ) $     (261 ) $    (262) $     (602 ) $   (1,390 )
                                                                     -----------  -----------  ---------  -----------  -----------
                                                                     -----------  -----------  ---------  -----------  -----------
</TABLE>

    We could experience quarterly variations in revenue and operating income as
a result of many factors, including:

    - the introduction of new services by us;

    - actions taken by competitors;

    - the timing of the acquisition or loss of customers;

    - the timing of additional selling, general and administrative expenses
      incurred to acquire and support new or additional business; and

    - changes in our revenue mix among our various service offerings.

Many of the factors that could cause such variations are outside of our control.
We plan our operating expenditures based on revenue forecasts, and a revenue
shortfall below such forecasts in any quarter could adversely affect our
operating results for that quarter.

LIQUIDITY AND CAPITAL RESOURCES

    The development and expansion of our business requires significant capital
expenditures. The principal capital expenditures which we expect to incur, are:

    - the procurement, design and construction of, and the deployment of
      equipment in, over 600 Bell Atlantic central offices;

                                       28
<PAGE>
    - the design and development of, and the purchase of equipment for, our
      intra-region and inter-region networks;

    - the buildout of our Web site hosting facilities; and

    - the upgrade of our billing and operational support systems.

    Our capital expenditures were $1.0 million for 1998 and $627,000 for the
three months ended March 31, 1999. As of May 31, 1999, we had material purchase
commitments of approximately $4.0 million for 1999 for the procurement of
central offices, for the purchase of network equipment and for the purchase of
software and services. We expect our capital expenditures to be approximately
$25 million to $30 million in 1999 and approximately $50 million to $60 million
in 2000.

    We have financed operations primarily through revenues and the proceeds of
the private placement of preferred stock totaling $18.5 million since September
1998. On May 28, 1999, we obtained a $30.0 million senior credit facility. The
facility is a five-year term facility with interest only payable for the first
two years. The facility bears interest at an annual rate equal to the London
inter bank offer rate plus 4.5%. The facility is subject to availability and
covenant restrictions and is principally limited to use in our Northeast
markets. It is prepayable without penalty and requires mandatory payment from
the proceeds of an equity offering. Amounts borrowed under the facility will be
repaid with the proceeds of this offering, and the facility will subsequently
terminate. In connection with the repayment of this facility we expect to
recognize approximately $4.4 million of deferred debt issuance costs. We believe
that the term facility in conjunction with existing cash and cash equivalents
and cash flow from operations is sufficient to fund our current operations
through at least the middle of 2000.

    During 1998, net cash used in our operating activities was $93,000. Cash was
used for a variety of operating purposes, including salaries, consulting and
legal expenses, network operations and overhead expenses. Net cash provided by
financing activities for 1998 was $5.9 million and was primarily the result of
the receipt of $9.3 million as an installment of our private equity placement
offset by the redemption of common stock in the amount of $3.4 million.

    For the three months ended March 31, 1999, net cash used in our operating
activities was $1.4 million. This cash was used for a variety of operating
purposes, including salaries, regulatory, network operations and overhead
expenses. Net cash provided by financing activities for the three months ended
March 31, 1999 was $8.6 million and represented the final installment on our
$18.5 million private equity placement on March 23, 1999. Net cash used in
investing activities for the three months ended March 31, 1999 was $3.5 million
of which $2.8 million represents the purchase of substantially all of the assets
of the Network Services Division of Comstor Corporation while the remainder
represents capital expenditures of $627,000.

    We intend to rapidly and substantially increase our capital expenditures and
operating expenses in an effort to expand our operations, including the
expansion of our network in the Northeast and Mid-Atlantic regions of the United
States. As a result of these factors, we expect to incur operating and net
losses and negative operating cash flow which will require us to obtain
additional financing to fully fund this expansion. We believe that the proceeds
of this offering, our existing cash and cash equivalents and future revenue
generated from operations will be sufficient to fund planned expansion and
operating deficits through at least the next 12 months. We will attempt to
finance our expansion beyond this time period through a combination of
commercial borrowings, leasing, vendor financing, the private or public sale of
debt or equity securities or by other available means. However, additional
financing may not be available to us on favorable terms or at all. We may decide
to seek additional capital earlier than the middle of 2000.

    Our capital requirements may vary based upon the timing and success of our
rollout, as a result of regulatory, technological and competitive developments,
demand for our services, cash flow from operations, our development plans or
projections, or the timing of the deployment of our network services.

                                       29
<PAGE>
    As of May 31, 1999 we had not entered into any financial instruments that
expose us to material market risk.

IMPACT OF THE YEAR 2000

    Many computer programs have been written using two digits rather than four
digits to define the applicable year. This poses a problem at the end of the
century because these computer programs would not properly recognize a year that
begins with "20" instead of "19." This, in turn, could result in major system
failures or miscalculations, and is generally referred to as the Year 2000
issue. We have formulated and are effecting a Year 2000 plan to identify and
address any Year 2000 issues. Our Year 2000 plan addresses the areas of external
suppliers of equipment or software, internal business systems, and external
suppliers or services.

    We have substantially completed a compliance check of the equipment and
related software that comprise our network and customer premise equipment. We
have selected vendors whose products are Year 2000 certified to supply software
to support our major internal business processes such as ordering, billing and
provisioning. The implementation is scheduled for completion prior to the end of
1999 at which point our major internal business systems will be Year 2000
compliant. This fact coupled with the fact that our existing internal systems
have been developed within the last few years leads us to believe that our Year
2000 issues are minimal. We have conducted Year 2000 tests on all internal
systems. Upgrades for these systems are scheduled for completion prior to the
end of 1999.

    We have substantially completed compliance checks of many of our external
service providers. We have, however, been unable to complete compliance checks
of some of our external service providers, including electric and utility
companies and Bell Atlantic. Because our systems will be interconnected with
those of Bell Atlantic and other service providers, any disruption of operations
in the computer programs of these service providers would likely have an impact
on our systems. We cannot be assured that this impact will not have an adverse
effect on our operations as well.

    We have not fully determined the risks associated with the reasonably
worst-case scenario. However, our risk assessment activities assign risk ratings
to our vendors and business partners based upon the impact each would have on
our operations should they experience Year 2000 related failures. We plan to
develop contingency procedures that would go into effect if any of our vendors
or business partners experience Year 2000 failures. These would include manual
back-up processes for all critical interconnections and business functions. To
date, we have expended immaterial resources to address the Year 2000 issue and
we expect future expenditures to be immaterial to our operations and financial
position.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. To
date, we have not engaged in derivative and hedging activities and accordingly
do not believe that the adoption of SFAS No. 133 will have a material impact on
our financial reporting and related disclosures. We will adopt SFAS No. 133 as
required for our first quarterly filing of fiscal year 2001.

    In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." SOP 98-1 requires computer software
costs associated with internal use software to be charged to operations as
incurred until certain capitalization criteria are met. SOP 98-1 became
effective beginning January 1, 1999. To date, we have not capitalized any
internally developed software.

                                       30
<PAGE>
                                    BUSINESS

    HarvardNET provides high-speed Internet access, data transport and
telecommuting network services to businesses located in the Northeast and
Mid-Atlantic regions of the United States. HarvardNET also offers these
businesses a variety of Web site hosting services that allow customers to store
their Web sites and data on servers housed in HarvardNET's data centers.
HarvardNET markets its services through its direct sales force. HarvardNET's
service offerings include:

    - high-speed Internet access for small- and medium-sized businesses using
      digital subscriber line, or DSL, technology, which enables data transport
      over telephone company copper lines, at data transfer speeds ranging from
      144 kilobits per second to 7 megabits per second;

    - telecommuting network services, which provide telecommuters and
      work-at-home professionals of large enterprises with high-speed secure
      remote access to corporate networks and the Internet;

    - Web site hosting solutions, which provide customers with a secure
      location, controlled environment, active monitoring and high-speed
      connections to the Internet via HarvardNET's fiber optic network for their
      Web sites;

    - leased lines for Internet-dependent businesses; and

    - e-commerce solutions and other enhanced services, including outsourced
      e-mail administration and Web-based credit card transaction processing.

    HarvardNET delivers its services over its own advanced fiber optic network
that connects markets from Maine to Virginia. This East Coast network uses
technology that transmits data in small bundles, or packets, of information from
multiple users over the same line using Internet protocol, a standard for the
transmission of digital data. HarvardNET's packet-based network is designed for
reliable, secure, high performance transport and delivery of traffic. The
network primarily operates at a 155 megabit per second capacity level and
contains fiber optic connections to major Internet exchange points. In addition,
HarvardNET has public and private network interconnection arrangements, commonly
referred to as peering relationships, with over 90 Internet service providers to
facilitate the efficient and cost-effective exchange of customer traffic.

    HarvardNET has entered into agreements with Bell Atlantic to lease the
copper telephone lines that it will use to carry data for its customers using
high-speed DSL technology. As of July 26, 1999, HarvardNET offered service at 51
central office locations and had installed equipment in 20 additional central
office locations in eastern Massachusetts, southern Maine and southern New
Hampshire. HarvardNET expects to install equipment in approximately 140 central
office locations in the Northeast region by the end of 1999 and in more than 600
central offices in the Northeast and Mid-Atlantic regions by the middle of 2001.

    As of June 30, 1999, HarvardNET had approximately 540 DSL and leased lines
in service and more than 1,100 business customers for its Web site hosting
services. None of our customers accounted for more than 3% of our revenues for
the year ended December 31, 1998 or the three months ended March 31, 1999. Some
of our representative customers include the Atlantic Monthly, the Boston Museum
of Fine Arts, Fidelity Capital, KPMG Peat Marwick, Nantucket Nectars, Sage
Networks and Staples.

MARKET OPPORTUNITY

    GROWING MARKET DEMAND FOR HIGH-SPEED DIGITAL COMMUNICATIONS BANDWIDTH

    Data communications is the fastest growing segment of the telecommunications
market. The Gartner Group has estimated that data traffic is growing five times
faster than voice traffic. In addition, International Data Corporation has
estimated that Internet users worldwide will increase from approximately 100
million at the end of 1998 to approximately 320 million by 2002. International
Data Corporation also has estimated that the value of goods and services sold
worldwide through the Internet will increase from

                                       31
<PAGE>
approximately $32 billion in 1998 to over $400 billion in 2002. Accordingly, to
remain competitive, small-and medium-sized businesses increasingly will need
high-speed Internet connections to maintain complex Web sites, access critical
business information, execute electronic business transactions and communicate
more efficiently with employees, customers and business partners. High-speed
digital connections will also become increasingly important to businesses as
Internet usage increases and complex and multimedia content and applications
become more available on the Internet.

    The demand for high-speed digital communications services for remote local
area network access is also growing rapidly. Over the past ten years, high-speed
local area networks have become increasingly important to enterprises,
permitting employees to share information, send e-mail, search databases and
conduct business. Businesses are now seeking to extend this same high-speed
connectivity to employees accessing their local area networks from home to
improve employee productivity and reduce operating costs. Forrester Research,
Inc. has estimated that the total market for data communications services and
Internet access will grow from $6.2 billion in 1997 to approximately $49.7
billion by 2002, with approximately $27.9 billion to come from services to
businesses.

    EMERGENCE OF DIGITAL SUBSCRIBER LINE TECHNOLOGY

    DSL technology has emerged as a cost-effective means of providing high-speed
digital communication capabilities. DSL equipment, when deployed at each end of
standard copper telephone lines, dramatically increases the data carrying
capacity of these lines from analog modem speeds of 56.6 kilobits per second to
DSL speeds of up to 7 megabits per second or more depending on the length and
condition of the copper telephone line. Recent advances in semiconductor
technology and digital signal processing algorithms have made the deployment of
DSL technology on a widespread basis more economical, with equipment prices
falling substantially over the last two years. In addition, because DSL
technology uses existing copper telephone lines, it is significantly less
expensive to deploy on a broad scale than some existing alternative high-speed
digital communication technologies, such as cable modems and wireless data
systems. Moreover, the ability of DSL technology to use existing copper
telephone lines enables DSL service providers to provide more secure networks
for sensitive corporate data than those available to providers employing
technologies which require users to share bandwidth, such as cable modems.

    The 1996 Telecommunications Act permits competitive carriers to locate
equipment in the central offices of the incumbent local carriers. The 1996
Telecommunications Act allows competitive carriers to access users through the
existing copper telephone lines. The implementation of the 1996
Telecommunications Act varies among different incumbent local carriers. In many
regions, competitive carriers seeking to offer DSL service have been required to
install their equipment in central offices using a cage that is a minimum of 100
square feet. As part of its implementation of the collocation requirements of
the 1996 Telecommunications Act, Bell Atlantic has given competitive carriers
the option of installing their equipment at Bell Atlantic central offices using
an arrangement that Bell Atlantic has named SCOPE. SCOPE is a form of equipment
installation physically located within a Bell Atlantic central office in which a
competitive carrier's equipment is placed in a locked cabinet that is much
smaller than a standard cage. In addition, SCOPE can be installed for
approximately 75% less capital expense than a standard cage configuration. By
reducing the cost of installing DSL equipment in central offices, SCOPE has
facilitated the delivery of DSL service to customers in a wider geographical
footprint. In addition, the decreased space requirements of a SCOPE installation
may permit a DSL service provider to install their equipment in an otherwise
space-constrained central office.

    THE NEED OF SMALL- AND MEDIUM-SIZED BUSINESSES FOR COST-EFFECTIVE HIGH-SPEED
     INTERNET ACCESS AND DATA TRANSPORT SOLUTIONS

    The full potential of Internet and local area network applications cannot be
realized without removing the performance bottlenecks of the existing public
switched telephone network. The fastest commercially

                                       32
<PAGE>
available modem that dials directly into the public telephone network is only
56.6 kilobits per second. Other high speed connections are also available,
including:

    - Integrated services digital network--Commonly known as ISDN, an integrated
      services digital network line provides standard interfaces for digital
      communication networks and is capable of carrying data, voice, and video
      over digital circuits.

    - T-1 line and fractional T-1--A digital transmission link with a capacity
      of 1.54 megabits per second or a portion of this capacity.

    - T-3 line and fractional T-3--A digital transmission link with a capacity
      of 45 megabits per second or a portion of this capacity.

    - Frame relay--A high-speed packet-switched data communications protocol.

    The capacity offered by integrated services digital network lines is
improved relative to standard modems, but is still only 128 kilobits per second,
and the cost of an integrated services digital network line is often very
expensive for small- and medium-sized businesses due to the metered usage
pricing of this service. In addition, integrated services digital network lines
require users to establish a connection to the telephone network at the
beginning of each session thereby precluding "always on" access to the Internet.
Alternative data transport technologies like T-1 lines, T-3 lines and frame
relay services are often uneconomical for small- and medium-sized businesses.
With no cost-effective alternative to standard modems or integrated services
digital network lines to connect to the Internet or remotely access the
corporate local area network, workers at a significant number of small- and
medium-sized businesses have been forced to endure delays and productivity
limitations. In addition, some small- and medium-sized businesses perceive that
incumbent local carriers are insufficiently focused on their needs. As a result,
small- and medium-sized businesses are seeking cost-effective high-speed
networking solutions to allow them to take advantage of Internet and local area
network applications to the same extent as large enterprises.

    THE NEED OF LARGE ENTERPRISES FOR COST-EFFECTIVE REMOTE ACCESS TO THEIR
     CORPORATE NETWORKS

    A significant number of large enterprises are similarly demanding increased
speed as their Internet usage increases. Moreover, these businesses are being
driven by competitive, technological and societal forces to equip many of their
employees with the ability to work at home and in other remote locations, such
as branch offices. International Data Corporation has estimated that the number
of residences with computers in their home offices in the United States will
increase from approximately 26 million in 1998 to 37.8 million by 2002.
Telecommuters and other remote users need fast, reliable and secure access to
the Internet and corporate local area networks. Since T-1 lines are too
expensive for these users, corporations are seeking alternatives that can
increase transmission speeds from those provided by standard modems and
integrated services digital network lines and improve productivity at a
reasonable cost.

    THE GROWING DEMAND FOR OUTSOURCED WEB SITE HOSTING

    Small- and medium-sized businesses increasingly are seeking to realize the
potential of the Internet by establishing an Internet presence. In addition to
obtaining Internet access, many of these businesses want to create a Web site on
which they can sell their products and services, market their company and brand,
execute electronic transactions and provide information to their customers,
suppliers, business partners and employees. At the same time, these operations
and applications are becoming more complex and challenging to manage. Ensuring
the quality, reliability and availability of these Internet operations typically
requires substantial investments in developing Internet expertise and operating
infrastructures. However, such a significant investment is often an inefficient
use of the typically limited resources of these businesses. As a result, small-
and medium-sized businesses are increasingly seeking outsourcing arrangements
that can increase performance, provide continuous operation of their Web sites,
reduce Internet

                                       33
<PAGE>
operating expenses and eliminate the need for a dedicated information technology
staff. These businesses are also seeking service providers who can store their
Web sites in a secure location with a controlled environment and active
monitoring 24 hours per day, seven days a week. International Data Corporation
has estimated that the demand for these Web site hosting services in the United
States was approximately $770 million in 1998 and is expected to grow to
approximately $12 billion by 2002.

    THE CONCENTRATION OF TELECOMMUNICATIONS USERS IN THE NORTHEAST AND
     MID-ATLANTIC REGIONS

    The Northeast and Mid-Atlantic regions of the United States are among the
most densely populated in the United States and The Yankee Group has estimated
that these regions account for approximately 28% of the total United States
telecommunications market based on the number of telephone access lines. These
regions also have a significant concentration of high technology and
Internet-related businesses. HarvardNET believes that the demographic
characteristics of this region make it among the most attractive markets for
high-speed networking solutions in the country. In particular, the Northeast
region includes more than six million local lines and approximately 300,000
businesses. The Mid-Atlantic region includes more than 23 million local access
lines and approximately one million businesses. Moreover, these regions both
have a high density of central offices. As the availability and speed of DSL
service depends on the distance of the end-user from the nearest central office,
this high central office density permits DSL service providers to offer more
comprehensive coverage and faster transmission speeds than is possible in
geographic regions with a lower density of central offices.

THE HARVARDNET SOLUTION

    We provide high-speed Internet access and other data transport and
networking solutions to businesses in the Northeast and Mid-Atlantic regions of
the United States. We also offer these businesses a variety of Web site hosting
services to store their Web sites and data on servers housed in our data
centers. We market and sell our solutions directly to customers, allowing us to
create a close relationship with end-users and providing us information and
feedback that we can use in developing and refining our products and services.
By organizing our sales and service organizations around customers and focusing
on the needs of end-users, we believe we can provide a high level of service and
improve customer satisfaction and loyalty.

    We offer our services as a bundled package for small- and medium-sized
businesses seeking to outsource their data transport and networking and Web site
management needs to a single provider. We also allow customers to choose from
among the many types of services we offer to select the most appropriate
solution for their specific business. Our suite of offerings include:

    - high-speed DSL Internet access;

    - telecommuting network services;

    - a variety of Web site hosting solutions;

    - leased lines for Internet connectivity; and

    - e-commerce and other enhanced services, such as outsourced e-mail services
      and Web-based credit card transaction processing.

In addition to these services, we also sell wholesale transit capacity to
Internet service providers and network service providers over our East Coast
packet-based network.

    By providing a range of data transport and networking services and
e-commerce solutions, we can offer a number of benefits to our customers
including:

    - SINGLE SOURCE SOLUTION. We provide a full range of services to allow
      businesses to effectively outsource their Internet access and electronic
      business needs. Customers can obtain DSL and

                                       34
<PAGE>
      leased line Internet access, Web site hosting and other e-commerce
      services, such as e-mail and credit card transaction processing, through a
      single provider. We also bundle a number of our service offerings to
      encourage customers to purchase multiple service offerings. We believe
      that a full suite of services is especially attractive to small- and
      medium-sized businesses which typically do not have the information
      technology personnel or infrastructure necessary to manage their data
      communications needs.

    - HIGH-SPEED ACCESS AT REASONABLE PRICES. Our BusinessSPEED DSL service is
      capable of delivering data transfer rates at speeds ranging from 144
      kilobits per second to 7 megabits per second. Our DSL service costs
      significantly less per month than high-speed leased lines, such as T-1 or
      frame relay, and also includes Internet access, typically resulting in
      cost savings of 50-75% over traditional leased line and frame relay
      Internet access services. For those customers unable to use DSL or that
      need greater bandwidth, we offer our leased line services at a discount to
      the rates charged by the incumbent carrier.

    - ALWAYS ON SECURE CONNECTIONS. We provide always on access to the Internet;
      a user does not a need to dial up the public telephone network to
      establish an Internet connection. In addition, since our network access
      services use dedicated copper telephone lines, our telecommuting network
      offerings protect data on its path to and from the end-user.

    - FLEXIBILITY AND SCALEABILITY. We have designed our network and service
      offerings to enable customers to purchase the level of service and
      transmission speed that meets their existing requirements and to easily
      upgrade as their use of the Internet grows. We can effect upgrades
      remotely, without the need to add additional hardware or to deploy a
      technician to the customer's premises.

STRATEGY

    Our goal is to become the leading provider of high-speed Internet access,
data transport and networking services for businesses in the Northeast and
Mid-Atlantic regions, as well as the leading provider of Web site hosting
services to this market. In order to achieve this goal we intend to:

    FOCUS ON THE HIGH-SPEED DATA TRANSPORT AND NETWORKING NEEDS OF BUSINESS
     CUSTOMERS IN THE NORTHEAST AND MID-ATLANTIC REGIONS

    We focus on the needs of businesses that require high-speed Internet access,
data transport and networking services in the Northeast and Mid-Atlantic
regions. These regions have a significant number of access lines and a
significant concentration of high technology and Internet-related businesses. We
believe that much of these regions' data traffic is transported within the
region, which enables us to carry this traffic on our network, thereby avoiding
the transit costs associated with using third party networks for data transport.
Because we are deploying our DSL services solely within the footprint of Bell
Atlantic, we believe we can install our equipment at central offices more
efficiently, with fewer regulatory hurdles and without as many protracted
negotiations than would be possible with multiple incumbent carriers. We also
believe that the density of central office locations in these regions presents
the opportunity to realize efficiencies in marketing, installation and
deployment. In addition, we believe our regional focus will enable us to better
analyze the market opportunities in these regions and develop products and
services that better meet our customer's needs.

                                       35
<PAGE>
    We were among the first companies to commercially deploy DSL service in New
England. As of July 26, 1999, we offered service at 51 central office locations
and had installed equipment in 20 additional central office locations in eastern
Massachusetts, southern Maine and southern New Hampshire. We expect to install
equipment in approximately 140 central office locations in the Northeast region
by the end of 1999 and in more than 600 central offices in the Northeast and
Mid-Atlantic regions by the middle of 2001. Installation on this scale requires
significant time and resources, which we believe provides us with a significant
time-to-market advantage over our potential competitors in our target markets.

    OFFER FULL SUITE OF DATA TRANSPORT AND NETWORKING AND INTERNET-RELATED
     SOLUTIONS

    We offer a suite of services to businesses, including high-speed DSL,
high-speed leased line Internet access, telecommuting network services, Web site
hosting and enhanced services such as e-mail and credit card transaction
processing. By offering a range of DSL and leased line service offerings, we
allow each customer to select the package of speed, services and price that is
most appropriate for its individual business. Large enterprises typically
purchase our telecommuting network services and our Web site hosting offering
that provides Web site hosting services on servers that are owned by our
customers but which are managed and housed by us. Small- and medium-sized
business customers typically purchase our DSL and leased line offerings for
their Internet access needs. In addition, our ability to provide Web site
hosting and enhanced services allows small- and medium-sized businesses to
outsource their key data communications and Internet-related needs to a single
provider. By providing a comprehensive suite of services and bundled service
offerings, we seek to more rapidly penetrate our targeted markets, increase the
revenue we derive from each customer, reduce customer turnover and provide more
sophisticated product offerings and better meet the needs of our customers than
those companies that only provide DSL transport services.

    SELL DIRECTLY TO CUSTOMERS

    We market our services directly to customers. We believe a direct sales
force enables us to develop close relationships with our customers and manage
the service and sales process more effectively. We have developed a commercial
sales organization focused on small- and medium-sized customers and a corporate
sales organization focused on the needs of large enterprise organizations. Both
sales organizations sell our entire product line and are organized around
customers rather than products. We intend to expand our sales force as we
continue to roll-out our DSL service within our targeted region.

    PROVIDE COST-EFFECTIVE, COMPREHENSIVE COVERAGE

    We plan to offer DSL and leased line services in targeted markets from Maine
to Virginia and intend to install equipment in a substantial number of central
offices throughout these markets. We plan to use SCOPE installations to lower
the level of capital expenditures that we would otherwise incur upon activating
a central office. In addition, SCOPE installations may also allow us to enter
central offices that would otherwise be closed to us due to space constraints.
For those customers unable to use DSL services due to distance from the central
office or the condition of the copper telephone line or that need greater
bandwidth, we will offer lease lines, frame relay services or dial-up services
as necessary in order to meet their needs. By developing cost-effective,
comprehensive coverage, we can offer large enterprises the ability to provide
remote access to substantially all of their end-users.

    PROVIDE SERVICE OVER OUR EAST COAST NETWORK INFRASTRUCTURE

    We have established a high capacity fiber optic network that connects
markets between Maine and Virginia. This packet-based network transmits data
using the Internet protocol standard. The network primarily operates at the 155
megabits per second capacity level and can be easily upgraded to higher data
speeds based upon our success in adding customers. We are in the process of
installing approximately 20 asynchronous transfer mode switches in our targeted
markets in the Northeast and Mid-Atlantic regions.

                                       36
<PAGE>
Asynchronous transfer mode switches control the routing of packets of data in
our network. Our objective is to build a fault-tolerant East Coast network that
can be easily upgraded as needed to support the traffic requirements and needs
of our customers as they grow. By building our network, we have more control
over the delivery and quality of our services. For example, we have end-to-end
visibility of the entire network directly to the customer's equipment, allowing
us to actively monitor performance and connection issues before they can affect
the end-user's experience. We can also control and optimize the routing of
traffic on the network. Our network contains advanced features, including the
use of sophisticated routing protocols such as tag switching, which provide more
efficient traffic management. We believe that the open, non-proprietary
architecture characteristic of a network that transmits data using the Internet
protocol standard affords greater flexibility for new and emerging applications.

    We have public and private network interconnection arrangements with over 90
other Internet service providers which allow for the direct exchange of traffic
with other Internet service providers and facilitate the efficient delivery of
our customer's traffic and reduce our transit costs. We own and operate the
Boston metropolitan exchange point, a key regional public interconnection point
in the Northeast region where Internet service providers exchange their traffic.
We have interconnection arrangements with six of the top regional Internet
service providers at the Boston metropolitan exchange point.

    PROVIDE SUPERIOR CUSTOMER SERVICE

    We believe that many small- and medium-sized businesses perceive that the
incumbent local carrier in our targeted markets does not adequately address
their needs because these businesses generally must deal with multiple contacts,
often including representatives of resellers and other indirect sales channels,
preventing them from developing satisfactory relationships with the incumbent
local carrier and its key personnel. By organizing a direct sales organization
around customers and focusing on end-users' needs, we seek to provide superior
service and customer care to attain a high level of customer satisfaction,
achieve customer loyalty and accelerate the adoption of our services. In
addition, we have established a network operations center in Portland, Maine.
Our network operations center performs active network monitoring and management,
24 hours per day, 7 days per week.

PRODUCTS AND SERVICES

    We currently offer the following products and services:

    - DSL and leased line services marketed under the BusinessSPEED tradename;

    - telecommuting network solutions marketed under the RemoteCONNECT
      tradename;

    - Web site hosting services; and

    - e-commerce and other enhanced network services.

    DSL AND LEASED LINE SERVICES

    We offer high-speed data transport and Internet access marketed under the
BusinessSPEED tradename at bandwidth options ranging from DSL data transfer
rates of between 144 kilobits per second and 7 megabits per second to T-1 data
transfer rates of 1.54 megabits per second through T-3 data transfer rates up to
45 megabits per second.

    DSL SERVICES.  Our BusinessSPEED DSL service offers enhanced performance for
small- and medium-sized businesses currently accessing the Internet with
standard modems or integrated services digital network connections.
BusinessSPEED DSL delivers high-speed Internet connections through existing
copper telephone lines. DSL provides greater speed, reliability and flexibility
than a standard modem or integrated services digital network connection. DSL is
also more cost-effective for many small- and medium-sized businesses than other
common high-speed leased line services. Our BusinessSPEED service comes in a

                                       37
<PAGE>
variety of bandwidth options and provides unlimited access to the Internet for
one flat monthly fee. Our DSL services have been designed to enable us to
upgrade customers to faster speeds without the need to add additional hardware
or deploy a technician to the customer's premises. As part of our direct sales
strategy, our sales representatives assist customers in analyzing their access,
hardware and installation
requirements in order to identify the service that will most effectively meet
their needs.

    We provide all our DSL services using rate adaptive asymmetric digital
subscriber line technology. This technology permits us to adjust the
transmission rates of data both downstream to the end-user and upstream from the
end-user. Using this technology, we offer users the ability to both receive and
transmit data at rates up to 768 kilobits per second. This technology also
allows us to optimize the data transmission rates to and from the end user to
account for the quality of the copper telephone line.

    LEASED LINE AND FRAME RELAY SERVICES.  Our BusinessSPEED leased line service
provides large and Internet-dependent businesses with high-capacity links to the
Internet and between multiple locations at a discount to the price offered by
the incumbent carrier. We offer T-1 service in several speeds, with data
transfer rates ranging from 128 kilobits per second to up to 1.54 megabits per
second. Our T-3 service is designed for large corporations that have needs
greater than T-1 service or that want to consolidate several leased lines. T-3
lines provide speeds from three megabits per second to up to 45 megabits per
second.

    Our frame relay service enables large corporations to connect branch offices
cost effectively. It also provides a flexible, high-speed connection for small-
and medium-sized businesses that cannot currently receive DSL-based access due
to an end-user's distance from a central office or the quality of the end-user's
telephone line.

    We believe that substantially all potential end-users in our target markets
can be served with one of our services. The particular BusinessSPEED DSL service
available to an end-user depends on the user's distance to the nearest central
office and the quality of the end user's telephone line. We estimate that
approximately 75% of our potential end-users are within 18,000 feet of a central
office and can be served by at least our basic DSL service.

                                       38
<PAGE>
    The chart below sets forth information relating to each of our BusinessSPEED
service offerings as of June 30, 1999. The column labelled Speed to end user
sets forth the data transfer rates for information transmitted to the end user,
and the column labelled Speed from end user sets forth the data transfer rates
for information transmitted from the end user to the Internet or corporate
network. The term Kbps in the chart means kilobits per second and the term Mbps
means megabits per second.

<TABLE>
<CAPTION>
                      SPEED TO   SPEED FROM
SERVICES OFFERED      END USER    END USER          BEST SUITED FOR COMPANIES OR OFFICES THAT:
<S>                  <C>         <C>         <C>
EmergingPOWER DSL    144 Kbps    144 Kbps    - Have up to 25 employees
                     or          or          - Access the Web occasionally
                     256 Kbps    256 Kbps    - E-mail or transfer few large files and documents

GrowthPOWER DSL      384 Kbps    384 Kbps    - Have up to 75 employees
                     or          or          - Have many simultaneous Web users
                     512 Kbps    512 Kbps    - E-mail or transfer few large files and documents

Mission-             768 Kbps    768 Kbps    - Have up to 150 employees
CriticalPOWER DSL    or          or          - Rely on the Internet to conduct business
                     1.54 Mbps   1.0 Mbps    - Have many simultaneous Web users
                     or          or          - E-mail or transfer large files and documents
                     7.0 Mbps    1.0 Mbps

Frame Relay          56 Kbps     56 Kbps     - Have up to 150 employees
                     or          or          - Need to connect branch offices
                     384 Kbps    384 Kbps    - Cannot receive DSL service
                     or          or
                     1.54 Mbps   1.54 Mbps

Fractional T-1 to    128 Kbps    128 Kbps    - Have up to 250 employees
T-1                  to 1.54     to 1.54     - Have many simultaneous Web users
                     Mbps        Mbps        - E-mail or transfer large files and documents
                                             - Support remote users using standard modem and DSL
                                               connections

Fractional T-3 to    3 Mbps to   3 Mbps to   - Support several branch offices
T-3                  45 Mbps     45 Mbps     - Support remote users using standard modem and DSL
                                               connections
                                             - Transfer large files, including graphics, audio, and
                                               video files
                                             - Host multiple Web and file servers
</TABLE>

    TELECOMMUTING NETWORK SERVICES

    We market our telecommuting network services under the RemoteCONNECT
tradename. Our RemoteCONNECT solutions combine our BusinessSPEED DSL services
with our networking equipment to provide high-speed and secure connections to
the corporate local area network and the Internet. This flexible and
cost-effective solution supports both telecommuters and site-to-site
connections. Our RemoteCONNECT services provide employees with the simplicity of
an always on connection and the increased speed and performance of DSL
technology.

                                       39
<PAGE>
    The diagram below illustrates the uses for which our telecommuting network
is typically employed:

[Graphical depiction of HarvardNet's Remote Connect Private Network. At the
center of the page is an image labeled "HarvardNet Managed Backbone and
Internet" with lines radiating to images labeled "Mobil Employee,"
"Telecommuter," "Branch Office," and "Corporate."]

    WEB SITE HOSTING

    We offer a variety of Web site hosting services. Our solutions can be used
by a range of businesses, from an emerging company launching a Web site for the
first time to an Internet-dependent organization running a heavily utilized
site. We currently have a Web operations center in Boston, Massachusetts and an
approximately 4,700 square foot facility in McLean, Virginia. We have a new,
approximately 20,000 square foot Web operations center in Boston, and intend to
establish similar Web operations centers in New York, Philadelphia and
Washington, D.C. in conjunction with our roll-out of DSL services in these
metropolitan areas.

    By using our Web site hosting services or installing their own Web server in
one of our controlled facilities, a customer has the ability to deploy a high
quality, highly reliable Internet presence without investing capital in data
center space, multiple high speed connections or other capital intensive
infrastructure. Our Web operations centers provide customers with:

    - monitoring 24 hours per day, 7 days per week;

    - redundant AC/DC power;

    - emergency back-up generator power, heating, ventilation and air
      conditioning systems;

                                       40
<PAGE>
    - redundant communications feeds;

    - fire suppression; and

    - a direct connection to HarvardNET's high-speed fiber optic network.

    We generally offer Web site hosting options on a flat fee basis, based on
the options and features chosen by the customer. We are a preferred Microsoft
BackOffice Small Business Server provider in our region.

    SHARED WEB SITE HOSTING SERVICE.  Our shared hosting solution provides Web
site hosting on a server that is owned, managed and housed by us for multiple
customers. These shared Web site hosting solutions that allow companies to
establish a sophisticated presence on the Internet at a reasonable cost,
leveraging the expertise and infrastructure of HarvardNET to deploy an effective
Web site. HarvardNET shared Web site hosting services give companies the
flexibility to grow their Internet business with options such as additional disk
space, bandwidth and Web-based credit card processing.

    Our shared Web site hosting service includes the following features:

    - disk storage space on a HarvardNET server;

    - domain name registration;

    - rapid set up and deployment; and

    - flexible design, allowing additional options such as additional disk
      space, traffic throughput and e-commerce transaction processing.

    We offer our shared Web site hosting services on both Windows NT and UNIX
platforms. To protect customer files, all shared servers have regular back-up
procedures. Our shared server offering includes support for Microsoft FrontPage
extensions, detailed site analysis reports and a variety of proprietary Web site
development tools. Through a relationship with CyberCash, a leading provider of
Web-based credit card transaction processing, we offer customers credit card
transaction processing services.

    DEDICATED WEB SITE HOSTING SERVICE.  Our dedicated hosting solution provides
Web site hosting on a server that is owned, managed and housed by us for a
single customer. We offer dedicated Web site hosting solutions for larger
customers with more complex requirements. Our Web site hosting service provides
customers with substantially more server and network resources than available
under our shared server plans. Our dedicated Web site hosting solutions include
a Windows NT or UNIX-based server that is owned and maintained by HarvardNET in
one of our Web operations centers. Our dedicated Web site hosting solutions
allow customers to run complex applications without the need for the significant
investment of capital and expert personnel that an internally located Web site
would require. We maintain spare equipment and use regular back-up procedures to
protect customer files.

    COLLOCATION SERVICE.  Our collocation service provides Web site hosting
services on servers that are owned by our customers but which are managed and
housed by us. We provide these services to customers that require the resources
of a server that is reserved solely for their use, prefer to retain physical
access to and ownership of their server and have the expertise to maintain the
Web site and the server. Our Web operations centers offer customers a secure
location, controlled environment, monitoring and high-speed connections to the
Internet via our fiber optic network.

    ENHANCED NETWORK ENABLED SERVICES

    We currently offer e-mail administration services and plan to offer private
branch exchange telephone extension and remote backup services. In the future we
plan to expand our portfolio of enhanced network enabled services.

    E-MAIL ADMINISTRATION.  We offer outsourced e-mail administration branded
under the service name HarvardNET Post Office. HarvardNET Post Office enables
users to access their messages from a Web browser anywhere in the world, giving
them immediate, local access to important information. The service

                                       41
<PAGE>
also eliminates the need for maintaining an on-site e-mail server or adding
information technology staff, because we maintain customer e-mail accounts on a
HarvardNET managed server.

    HarvardNET Post Office allows a small business to establish a unique Web
presence through an Internet address dedicated to their company. Remote
management tools are available within a password-protected postmaster account,
so a customer's e-mail administrator has easy access to user account
information. HarvardNET Post Office gives customers the ability to increase
productivity through global user access to e-mail and reduce expenses by
eliminating the need for on-site servers and sophisticated e-mail software.

    PRIVATE BRANCH EXCHANGE TELEPHONE EXTENSION SERVICE.  HarvardNET private
branch exchange telephone extension service will extend the functionality of a
private branch exchange telephone handset directly into a telecommuter's home or
a company's branch location. This service will support common private branch
exchange functions such as four digit dialing, conference calling, voice mail,
message indicators and speed dialing and will permit users to simultaneously
transmit voice and data communications over the same line. Customers will have
the ability to increase worker productivity, reduce second line expenses for
voice service and aggregate and control long distance charges. We are currently
developing the private branch exchange telephone extension service and selecting
a third party technology provider. We expect to commercially market this service
in the second half of 1999.

    REMOTE BACKUP AND DISASTER RECOVERY SERVICE.  HarvardNET remote backup and
disaster recovery service will allow end-users to automatically backup data to a
secure remote site. Computer backup can be more cost-effective than substitutes,
such as tape drives and disk cartridge drives. Storing backup data will provide
added protection in the case of a disaster at a customer's main site. We expect
to select a third party to offer the remote backup and disaster service and
expect to commercially market this service in the second half of 1999.

CUSTOMERS

    We offer our services directly to small- and medium-sized businesses and
large enterprise organizations. To a lesser extent, we provide wholesale
services to Internet service providers and network service providers. As of June
30, 1999, we had approximately 540 DSL and leased lines in service and more than
1,100 business customers for whom we provide Web site hosting services. We have
a diversified customer base and none of our customers accounted for more than
approximately 3% of our revenues in the year ended December 31, 1998 or the
three months ended March 31, 1999. Some of our representative customers include
the Atlantic Monthly, the Boston Museum of Fine Arts, Fidelity Capital, KPMG
Peat Marwick, Nantucket Nectars, Sage Networks and Staples.

SALES AND MARKETING

    We primarily market our services to customers through our direct sales
force. We believe that establishing a direct relationship with the customer will
provide a competitive advantage by allowing us to develop close relationships
with our customers and manage the sales and service process more effectively.
Unlike large-scale enterprises, small- and medium-sized businesses often do not
have a dedicated communications manager and seek a complete suite of high-speed
data communications solutions and Web site management services from a single
provider. We believe that a direct sales approach to small- and medium-sized
businesses for Internet and data services is a significant shift from the way
these organizations have previously acquired these types of services and better
addresses the needs of these businesses. Although most of our sales force is
focused primarily on selling our bundled services to small- and medium-sized
businesses, our sales force also sells specific solutions, including our
telecommuting networking products and high-speed leased line services, to large
enterprises. We also provide wholesale services to Internet service providers
and network service providers. To best meet the needs of our customers, we have
organized our sales organization as follows:

    - SMALL- AND MEDIUM-SIZED BUSINESSES--direct commercial account managers;

                                       42
<PAGE>
    - LARGE ENTERPRISES--account teams consisting of corporate account managers
      and systems engineers; and

    - INTERNET SERVICE PROVIDERS AND NETWORK SERVICE PROVIDERS--wholesale
      account managers.

    DIRECT SALES CHANNELS

    As of June 30, 1999, we had 41 sales and technical personnel and four sales
offices supporting our direct sales efforts. We intend to increase the size of
our sales and technical support force to sell and support businesses and open
additional sales sales offices as we enter new geographic markets. We plan to
expand this direct organization to a total of approximately 200 sales and
technical personnel by the end of 2000.

    Our commercial account managers are organized into teams, including a sales
manager and a sales engineer. These teams utilize telemarketing and cold calling
to qualify leads and set up initial appointments. Sales territories are
organized around central offices where we have deployed our DSL service with the
goal of calling on every prospective business served by a given central office.
Our commercial organization is highly focused on individual activity and
productivity, and we have developed a sales methodology that is taught to each
new hire through an intensive training program. We believe this methodology to
be a key ingredient in our ability to successfully compete for the data
communications requirements of small- and medium-sized businesses. Commercial
account managers are supported by sales managers and regional sales directors
who provide local sales leadership to the account teams in each market.

    Corporate account managers are assigned to specific accounts and recruitment
focuses on finding managers who have experience with large enterprise accounts.
Our target enterprise account profile is a large, information-intensive business
with multiple locations and large numbers of distributed workers. Our corporate
account managers seek to deal directly with the chief information officer and
the telecommunications manager responsible for data communications and Web site
management in the target account. Corporate account managers are supported by
regional sales directors who provide local leadership and sales strategy for
these large complex accounts.

    INDIRECT SALES CHANNELS

    As of June 30, 1999, we had five sales and technical personnel supporting
our indirect sales efforts. We also market our services to end-users through
indirect channels, including Internet service providers, network service
providers, agents and value-added resellers. We offer each service provider the
ability to select those services that it would like to bundle with its own
service offerings to offer a total solution to its customers. For example,
Internet service providers typically combine our high-speed connections with
their Internet access services and resell the combination to their existing and
new customers. We address these markets through wholesale account managers
dedicated to each of these indirect channels. We plan to expand our indirect
sales organization to approximately 20 sales and technical personnel by the end
of 2000.

    MARKETING

    Our marketing team is focused on developing and implementing our
positioning, branding, product, pricing and promotional strategies. We have
formulated detailed criteria for identifying target customers for each of our
services and have created a bundle of services to be offered to each segment of
our potential customer base. In particular, we are focused on building our brand
identification as we roll out our service offerings. We are rolling out our high
speed data transport and Internet access services under the tradename
BusinessSPEED, our telecommuting network services under the tradename
RemoteCONNECT and our outsourced e-mail administration services under the
tradename HarvardNET Post Office. We are promoting our brands through direct
mail to targeted accounts, outdoor advertising, radio advertisements and print
advertisements and public relations.

                                       43
<PAGE>
CUSTOMER CARE

    We offer our business and Internet service provider customers a single point
of contact for implementation, maintenance and billing. We have established a
network operations center in Portland, Maine. Our network operations center
provides both active and customer requested maintenance services 24 hours a day,
7 days a week. We also provide a broad range of customer service and network
operations center services through our Web interface. Because we have complete
end-to-end visibility of our network, we are able to actively detect and correct
the majority of our customer's maintenance problems remotely. Customer requested
maintenance and repair requests are managed and resolved primarily through the
network operations center. We use a trouble ticket management system to
communicate customer maintenance problems from the network operations center to
the field service organization. Because our network operations center is fully
staffed 24 hours a day, 7 days a week, we believe our ability to provide
superior active maintenance is significantly enhanced.

NETWORK ARCHITECTURE AND TECHNOLOGY

    HarvardNET delivers its services over its advanced East Coast fiber optic
network that connects markets from Maine to Virginia. The network uses
packet-based technologies to transfer data using the Internet protocol standard.
The network includes advanced routers which will be integrated with high-speed
asynchronous transfer mode switching equipment and can be managed remotely from
HarvardNET's network operations center. HarvardNET has designed the network to
be flexible and to facilitate upgrades as needed to support increased traffic
requirements. The network also includes redundancies designed to make it fault
tolerant.

    INTRA-REGION NETWORK ARCHITECTURE

    HarvardNET establishes each of its regional markets by installing digital
communications equipment in the incumbent telephone company's central offices.
DSL technology provides for high speed transmission of information over existing
copper telephone lines by encoding the information in a digital format.
HarvardNET's equipment uses this technology to transmit high-speed data over
copper lines between its customer and the central office. HarvardNET installs an
endpoint device at the customer's premise to manage the transmission of data
from the customer's internal information technology system to the central
office. HarvardNET connects its equipment in each central office to its regional
operations center using leased fiber optic transport. The regional operations
center is where data is collected in each market. HarvardNET will install
asynchronous transfer mode switches into each of its regional operations centers
to more efficiently aggregate and consolidate data in the region. From the
regional operations center, data is transported on HarvardNET's network to major
Internet traffic exchange points for connection with other networks. Leasing
existing transport services from other carriers, including the copper wire to
the customer's premises, wherever possible, allows HarvardNET to focus its
capital outlay on the value-added elements of the network, including digital
communications equipment, asynchronous transfer mode switches, routers and Web
site hosting centers.

                                       44
<PAGE>
    The following is a diagram illustrating the architecture of our intra-region
network:

[Graphical depiction of HarvardNET network. Centered at the top of the paragraph
is the phrase "The HarvardNet Network." Beneath this phrase across the page are
the headings "End Users"; "Central Office"; "HarvardNet Regional Operations
Center"; and "Internet." Underneath the heading "End Users" are three separate
images labeled "Small and Medium Sized Businesses," "Telecommuter" and "Branch
Office." Lines labeled "Leased Copper Wire" link these images to two additional
images, each labeled "DSL Transmission Equipment." Lines labeled "Leased Fiber
Cable" link these images to an image labeled "Switching and Routing Equipment."
From this image one line labeled "HarvardNet Fiber Optic Network" leads to an
image labeled "Internet," and another line labeled "Leased Fiber Cable" leads to
a circle labeled "Wholesale to Internet Service Provider," which then leads to a
circle labeled "Internet."]

    INTER-REGION NETWORK ARCHITECTURE

    FIBER OPTIC NETWORK.  HarvardNET has established an advanced East Coast
fiber optic network that connects markets from Maine to Virginia using
packet-based technology. HarvardNET's inter-region network uses Cisco core
routing equipment and employs self-healing protection switching to provide high
quality reliable transmission of Internet protocol data. We have entered into
long term leases for transport facilities in the Portland, Maine to New York
City corridor and operate our network from New York City to Washington, D.C. Our
network primarily operates at a 155 megabit per second capacity level and
includes fiber optic connections to major Internet exchange points.

    NETWORK INTERCONNECTION.  HarvardNET relies on a number of public and
private network interconnections, commonly referred to as peering relationships,
to connect its network with other networks for the exchange of data traffic.
HarvardNET maintains relationships with over 90 national, regional and local
Internet service providers by either private interconnections with the Internet
service providers or by participation in various public network interconnection
locations, known as network access points. Peering arrangements allow HarvardNET
to exchange traffic with other carrier's networks at nominal transit costs.
Recently, a number of service providers that have previously offered these
arrangements have cut back or eliminated them and are establishing new, more
restrictive criteria for these arrangements. HarvardNET believes that its direct
network interconnection relationships with a large number of Internet service

                                       45
<PAGE>
providers, enable HarvardNET to provide better service and higher quality
network performance to its business customers.

    WEB OPERATIONS CENTERS

    HarvardNET provides its Web site hosting services through Web operations
centers located in Boston, Massachusetts and McLean, Virginia. HarvardNET
expects to build additional Web operations centers in New York, Philadelphia and
Washington, D.C. in conjunction with its DSL deployment in these locations.
HarvardNET's Web operations centers include 24 hours per day, 7 days per week
monitoring, redundant AC/DC power, emergency back-up generator power, heating,
ventilation and air conditioning systems, redundant communications feeds, fire
suppression and direct connectivity to HarvardNET's network.

    NETWORK OPERATIONS CENTER

    HarvardNET's network is managed from a network operations center located in
Portland, Maine, which was staffed with approximately 32 personnel as of June
30, 1999. From this center, HarvardNET provides end-to-end network monitoring
and management using advanced network management tools 24 hours a day, 7 days a
week. This enhances HarvardNET's ability to address performance or connection
issues before they affect the end-user's experience. From the network operations
center, HarvardNET monitors the equipment and circuits in each regional
operations center, individual end-user lines and customer endpoint devices.
HarvardNET also actively assesses developing technologies with a view to
improving network performance. HarvardNET's engineering efforts focus on the
design and development of new technologies and services to increase the speed,
efficiency, reliability and security of its network and to enable network
features and applications.

INFORMATION SYSTEMS

    We are currently upgrading our information systems and procedures for
operations support and other back-office systems in order to improve the
processing of large volumes of orders, enhance customer care and reduce costs.
These systems will enter, schedule and track a customer's order from the point
of sale to the installation, provisioning and testing of service and also
include an interface with trouble management, inventory, billing, collection and
customer service systems.

    PROVISIONING MANAGEMENT

    Our order management software supports the design and management of the
provisioning process, including circuit design and work-flow management. We are
implementing MetaSolv's Telecom Business Solution package to support our
provisioning requirements. We expect this package will be installed and
operational in the second half of 1999. The system has been designed to permit
programming into the system of a standard schedule of tasks that must be
accomplished in order to initiate service to a customer, as well as the standard
time intervals during which each task must be completed. As a result, once a
standard order is selected in the system, each required task in the service
initiation process can be efficiently managed in its assigned time interval.

    BILLING

    Customer billing inquiries are currently managed by our customer service
center. We are implementing Saville's Convergent Billing Platform on an
outsourced basis to support our billing requirements. We expect this platform to
be operational in the second half of 1999. We selected our information systems
based in part on the integration that exists between our billing vendor and
provisioning management vendor. Customer information will be electronically
interfaced between these two systems via a gateway, thereby integrating all
information into one database record.

                                       46
<PAGE>
    EXTERNAL INTERFACES

    We plan to implement an external interface that supports electronic bonding
between our operational support systems and those of Bell Atlantic. Electronic
bonding will allow us to access data from Bell Atlantic, submit service requests
electronically and more quickly attend to errors in the local service request
form. We expect that the interface will help us reduce the time required from
the date of order entry to the date of DSL installation from approximately 25
business days to under 10 business days. Electronic bonding should also enable
us to provide better customer care because we will more readily be able to
determine where any problems may have occurred with a customer's order. We
expect that the interface will be operational by the first half of 2000.

COMPETITION

    The market for our products and services is rapidly evolving and intensely
competitive. Many of our current competitors, as well as a number of our
potential new competitors, have longer operating histories, greater name
recognition and substantially greater financial, technical and marketing
resources than we have.

    Many of our competitors are offering, or may soon offer, technologies or
services that directly compete with our Internet access offerings. These
competitive offerings may include technologies, such as wireless data systems,
cable modems or satellite communication systems, that provide performance
advantages in some respects over DSL and other technologies using existing
copper telephone wires. If a substantial portion of our potential customers
prefer services using these alternative technologies, our business, financial
condition and results of operations would be materially and adversely affected.

    We expect to face competition from Bell Atlantic, alternative DSL providers,
competitive local exchange carriers, Internet service providers and cable
companies. We expect that Bell Atlantic will be a key competitor in the delivery
of high speed Internet access to end users in the Northeast and Mid-Atlantic
regions. Bell Atlantic has existing networks in local areas and across major
metropolitan areas in our targeted markets, currently serves substantially all
of the customers we hope to serve and has established its own Internet service
provider business. We expect to compete with Bell Atlantic on the basis of price
and our ability to service small- and medium-sized business customers.

    In the Boston, New York, Philadelphia and Washington, D.C. metropolitan
areas, we expect to compete directly against other DSL providers. We expect to
compete with these DSL providers based on our direct sales approach, the depth
of our coverage in our targeted markets and our ability to provide additional
services. These additional services include:

    - Web site hosting services;

    - leased line data transport;

    - value-added Internet services such as telecommuting network solutions,
      e-commerce and e-mail solutions;

    - dial-up Internet access; and

    - wholesale transport.

    In addition, by offering bundled services, we can provide our customers with
comprehensive data transport and networking solutions.

    Most cable companies in the New England area are targeting the residential
market with their own brand of high speed Internet access over the cable
network, using cable modem technology. We are focusing on marketing to
businesses in the region, and will only compete against the cable companies for
telecommuting and work-at-home applications. We expect to compete with cable
companies based on the technical advantages of DSL technology compared with
cable modems, service and reliability.

                                       47
<PAGE>
    We compete in the Web site hosting segment of our business with a variety of
companies. We seek to compete with these companies for small and medium
businesses by bundling hosting services with DSL and Internet access solutions.

INTERCONNECTION AGREEMENTS WITH BELL ATLANTIC

    We have entered into agreements with Bell Atlantic to lease the copper
telephone lines that we will use to carry data using DSL technology. These
interconnection agreements cover Massachusetts, Maine, New Hampshire, Rhode
Island, New York, New Jersey, Pennsylvania, Maryland, Washington, D.C. and
Virginia. These interconnection agreements with Bell Atlantic form a critical
part of our business. These agreements generally cover a number of aspects
including:

    - the price we pay to lease access to Bell Atlantic's copper lines;

    - the provision by Bell Atlantic of copper telephone lines that have been
      conditioned to enable the transmission of DSL signals for
      telecommunications services;

    - the price and terms for many aspects of the collocation of our equipment
      in Bell Atlantic's central offices and interconnection of that equipment
      with Bell Atlantic's network;

    - the price paid by us and access we have to Bell Atlantic's transport
      facilities;

    - the operating support systems, service quality parameters and interfaces
      that we can use to place orders and trouble reports and monitor Bell
      Atlantic's response to our requests;

    - the dispute resolution process used to resolve disagreements with Bell
      Atlantic on the terms of the interconnection contracts; and

    - the term of the interconnection agreements, its transferability to
      successors, its liability limits and other general aspects of our
      relationship with Bell Atlantic.

    Our interconnection agreements with Bell Atlantic typically have terms of
approximately three years, requiring us to renegotiate each of these agreements
in the future. We expect to be able to enter into or renew our interconnection
agreements and believe the 1996 Telecommunications Act limits Bell Atlantic's
ability to refuse to enter into such agreements. Interconnection agreements must
be submitted and approved by the states, and while such agreements are generally
approved, in some states our agreements have not yet been approved.

GOVERNMENT REGULATION

    A significant portion of the services that we offer may be subject to
regulation at the federal, state and/or local levels. Future federal or state
regulations and legislation may be less favorable to us than current regulation
and legislation and therefore may have a material and adverse impact on our
business, financial condition and results of operations. In addition, we may
expend significant financial and managerial resources to participate in
proceedings setting rules at either the federal or state level, without
achieving a favorable result.

    FEDERAL LEGISLATION AND REGULATION

    The 1996 Telecommunications Act establishes local telecommunications
competition as a national policy. This statute directs the Federal
Communications Commission to eliminate barriers to competition that result from
state or federal requirements and to preempt laws restricting competition in the
local exchange market.

    The local competition provisions of the 1996 Telecommunications Act empower
the FCC to adopt regulations to implement these statutory provisions. The
outcome of various ongoing FCC rulemaking proceedings and/or judicial appeals of
such proceedings could materially affect our business, financial

                                       48
<PAGE>
condition and results of operations. These proceedings include proceedings that
relate to the degree of pricing flexibility afforded incumbent local carriers
for DSL and other services, the possible relaxation or elimination of the
regulations that govern the manner in which other incumbent local carriers offer
and provide data transmission and other services and potential modification of
pricing rules that would impact the interstate rates charged by incumbent local
carriers.

    One of the FCC's major rules interpreting the local competition provisions
of the 1996 Telecommunications Act was rejected by the United States Supreme
Court in January 1999. Specifically, the Supreme Court found that the FCC's
interpretation of the statutory standard for establishing the network elements,
including copper loops, that incumbent carriers make available to competitive
carriers was not consistent with the 1996 Telecommunications Act. The Supreme
Court ordered the FCC to reexamine which unbundled network elements must be made
available. The future FCC decision on unbundled network elements may adversely
affect our business if the FCC abandons its previous requirement that incumbent
local carriers provide copper loops on an unbundled basis.

    In the spring of 1998, four incumbent local carriers petitioned the FCC to
be relieved of various regulatory requirements in connection with their own DSL
services, including obligations to offer as an unbundled network element the end
office electronics used to provide DSL loops, but not the obligation to unbundle
the loops we purchase for our DSL services. In the summer of 1998, the FCC
denied the petitions and ruled that DSL services are telecommunications services
subject to regulation under the 1996 Telecommunications Act. Incumbent local
carriers have challenged this ruling in a petition filed with the FCC and in an
appeal pending before the U.S. Court of Appeals for the D.C. Circuit. The FCC
recently requested that the court remand the appeal to the FCC for further
proceedings. In addition, several bills recently introduced in the U.S. Congress
would relieve incumbent carriers of their unbundling obligations for DSL
service. If the FCC decision is overturned or any of the pending bills is
enacted, incumbent local carriers would be freed of many of their regulatory
constraints in competing with us.

    The FCC currently is considering various other issues of consequence to
competitive carriers deploying DSL services, including whether to allow
incumbent local carriers to create separate affiliates for their DSL businesses
that could operate as competitive carriers free of the resale and unbundling
obligations of the 1996 Telecommunications Act. The FCC has not yet issued a
decision on these issues. Any such decision could give Bell Atlantic additional
flexibility to compete more effectively with us.

    In March 1999, an FCC ruling expanded the rights of competitive carriers,
like HarvardNET, to install their equipment in incumbent local carriers' central
offices. While this ruling was favorable to competitive carriers, it is
currently subject to reconsideration and appeal. The outcome of these
proceedings could affect our ability to offer DSL service on competitive terms.

    Bell Atlantic has filed a tariff with the FCC establishing term and volume
discounts for Internet service providers who order DSL service from Bell
Atlantic for the loops serving the Internet service provider's subscribers. In
June 1999, the FCC allowed most of the tariff to take effect and initiated a
formal investigation regarding the 1996 Telecommunications Act's wholesale
discount requirements that may apply to the offering. The discounts established
by the tariff may enhance Bell Atlantic's ability to compete with us for
Internet service provider business and the ability of other Internet service
providers to offer competitive DSL services.

    STATE REGULATION

    While the FCC has broad authority to implement provisions of the 1996
Telecommunications Act, state public utilities commissions also have substantial
authority in this area. For example, although the Supreme Court's decision
validated the FCC's authority to prescribe some pricing methodology incumbent
carriers must use in setting the price of local loops and other network
elements, that same rule gives state public utility commissions authority to
apply that methodology in order to establish actual prices. Many states have set
only temporary prices for some network elements that are critical to the
provision of DSL

                                       49
<PAGE>
services because they have not yet completed the regulatory proceedings
necessary to determine permanent prices. The results of those proceedings may
determine the price we pay for these network elements and services. In addition,
the outcome of various proceedings before state public utility commissions could
have a material adverse effect on our business, financial condition and results
of operations. These proceedings include the terms and conditions governing
collocation, the terms and conditions under which Bell Atlantic must provide
combined network elements, the flexibility allowed incumbent local carriers to
provide and offer competitive services and the compliance requirements imposed
on competitive carriers.

    The 1996 Telecommunications Act also gives state public utility commissions
authority to approve or reject interconnection agreements that competitive local
carriers enter into with incumbent local carriers and broad authority to resolve
disputes that arise under these interconnection agreements. Under the 1996
Telecommunications Act, incumbent local carriers have a statutory duty to
negotiate in good faith with us for agreements for interconnection and access to
unbundled network elements. A separate agreement is signed for each of the
states in which we operate. During these negotiations either we or the incumbent
local carrier may submit disputes to the state regulatory commission for
mediation. After the expiration of a statutory period, either party may petition
the state public utility commission for arbitration. The 1996 Telecommunications
Act also allows state public utility commissions to supplement FCC regulations
as long as the state regulations are not inconsistent with the FCC's
requirements. Adverse state resolution of any of these proceedings could affect
our ability to offer services and to obtain services and elements at competitive
rates.

    In addition, HarvardNET offerings may, as to some future customers, be
classified as intrastate services subject to state regulation. All of the states
where we operate, or will operate, require state regulatory approval to provide
intrastate services. We have obtained state authorizations to provide all
relevant types of intrastate services in Bell Atlantic's service territory in
Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and
Washington D.C., and final approval is pending in Pennsylvania. In Maine, our
authorizations are to provide services over lines dedicated to specific
customers in Bell Atlantic's territory and exclude local dial-tone services. In
New York, our authorizations exclude local dial-tone or emergency operator
services. Our applications for certificates to provide service in New Jersey and
Virginia have been filed and are being considered for approval by the
appropriate state public utility commissions. In most states, intrastate tariffs
also are required for various intrastate services and must be filed and approved
before offering telecommunications service, although we are not typically
subject to price or rate of return regulation for tariffed intrastate services.
We have not yet filed all of these intrastate tarriffs. Actions by state public
utility commissions could cause us to incur substantial legal and administrative
expenses.

    State laws and regulations and state public utility commission decisions
could be adopted or changed which address matters that affect our business. We
are unable to predict what laws or regulations may be adopted in the future, to
what extent existing laws and regulations may be found applicable to our
business, or the impact such new or existing laws, proceedings or regulations
may have on our business. In addition, laws or regulations could be adopted in
the future that may decrease the growth and expansion of Internet use, which may
decrease demand for our services.

    LOCAL GOVERNMENT REGULATION

    We rely primarily on unbundled network elements of incumbent local carriers
and leased transport capacity to provide our services. If we decide instead to
construct and operate our own facilities, we may be required to obtain various
permits and authorizations from municipalities which may involve significant
costs or delays to our operations.

                                       50
<PAGE>
INTELLECTUAL PROPERTY

    We regard our products, services and technology as proprietary and attempt
to protect them with copyrights, trademarks, trade secret laws, restrictions on
disclosure and other methods. We cannot be certain that these methods will be
sufficient protection. We also generally enter into confidentiality or license
agreements with our employees and consultants, and generally control access to
and distribution of our documentation and other proprietary information. Despite
these precautions, it may be possible for a third party to copy or otherwise
obtain and use our products, services or technology without authorization, or to
develop similar technology independently. Currently we have two servicemark
applications pending. In addition, effective intellectual property protection
may be unavailable or limited in some foreign countries. Despite our precautions
we may not be able to prevent misappropriation or infringement of our products,
services, and technology. In addition, in the future we may have to litigate to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others. Such
litigation could result in substantial costs and diversion of resources and
could have a material adverse effect on our business, prospects, operating
results and financial condition.

    Our logo and some titles and logos of our services mentioned in this
prospectus are either our service marks or service marks that have been licensed
to us. Each trademark, trade name or service mark of any other company appearing
in this prospectus belongs to its holder.

EMPLOYEES

    As of June 30, 1999, we had 135 employees, employed in engineering, sales,
marketing, customer support and related activities, and general and
administrative functions. These employees do not include temporary personnel and
consultants who we retain from time to time. None of our employees is
represented by a labor union, and we consider our relations with our employees
to be good. We believe that our future success will depend in part on our
continued ability to attract, hire and retain qualified personnel. Competition
for such personnel is intense, and we may be unable to identify, attract and
retain such personnel in the future.

FACILITIES

    We are headquartered in Boston, Massachusetts in facilities consisting of
approximately 22,000 square feet of office space and approximately 20,000 square
feet of space used as a Web operations center. We occupy these facilities under
a lease which expires in 2003. We also lease a 4,700 square foot Web operations
center in McLean, Virginia under a lease expiring in 2002. We consider these
spaces adequate for our current operations. We also lease space in a number of
Bell Atlantic central offices. While the terms of these leases are perpetual,
the productive use of our central office facilities will be subject to the terms
of federal and state tariffs, regulatory decisions and our interconnection
agreements with Bell Atlantic. We will increase our central office space as we
expand our network. We also maintain offices in Portland, Maine and Portsmouth,
New Hampshire.

LEGAL PROCEEDINGS

    We are not currently engaged in any material legal proceedings.

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<PAGE>
                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

    Our executive officers and directors, and their ages and positions as of
June 30, 1999 are as follows:

<TABLE>
<CAPTION>
NAME                                                     AGE      POSITION
- ---------------------------------------------------      ---      ---------------------------------------------------
<S>                                                  <C>          <C>
Mark M. Washburn...................................          36   President, Chief Executive Officer and Director
Todd C. DeSisto....................................          41   Chief Financial Officer and Treasurer
Eric D. Peterson...................................          35   Vice President, Sales
James M. Newman....................................          44   Vice President, Operations
Roger W. Ach III...................................          25   Chief Technical Officer
Melanie Haratunian.................................          39   General Counsel, Director of Regulatory Affairs,
                                                                  and Secretary
Joseph Bartlett....................................          35   Director of Marketing
William H. Southworth(1)...........................          53   Chairman of the Board of Directors and Director
Peter H.O. Claudy(2)...............................          37   Director
Leo J. Esposito....................................          53   Director
Robert C. Ketterson(1)(2)..........................          36   Director
Jeffrey Osborn(2)..................................          40   Director
Matthew J. Rubins(1)...............................          31   Director
</TABLE>

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

(1) Member of the audit committee

(2) Member of the compensation committee

    MARK M. WASHBURN joined HarvardNET in September 1998 as Chief Operating
Officer and a Director and was promoted to President and Chief Executive Officer
in February 1999. From April 1998 to September 1998, Mr. Washburn served as Vice
President of Sales, Central Region for Level 3 Communications. From June 1997 to
April 1998, Mr. Washburn served as Vice President of Sales and Marketing for
XCOM Technologies, Inc., a competitive local exchange carrier specializing in
data communications. From February 1989 to June 1997, Mr. Washburn held a number
of sales and general management positions with MFS Communications, Inc., a
competitive local exchange carrier, including Vice President of Sales for the
Northeast region. Mr. Washburn previously held positions in sales and marketing
with AT&T/Paradyne and Terminal Networks.

    TODD C. DESISTO joined HarvardNET in December 1998 as Chief Financial
Officer and was also elected Treasurer. From October 1993 to December 1998, Mr.
DeSisto served as Vice President and Chief Financial Officer of Atlantic
Cellular Company, a wireless telecommunications provider. Prior to his tenure at
Atlantic Cellular Company, Mr. DeSisto served in various finance and related
positions, including senior management consultant with Deloitte & Touche and
Vice President of Tanner Capital Corporation, an investment banking firm
providing growth capital for early stage businesses.

    ERIC D. PETERSON joined HarvardNET in January 1999 as Vice President of
Sales. From May 1996 to January 1999, Mr. Peterson served as Vice President of
Sales and Marketing for FaxNet. From April 1991 to May 1996, he held various
executive sales positions at Allnet Communications, most recently as National
Account Manager--Wholesale. He was previously Director of Sales at First Phone.

    JAMES M. NEWMAN joined HarvardNET in January 1999 as Vice President of
Operations. From March 1991 to January 1999, Mr. Newman served as Northeast
Regional Director of Operations for MFS Communications/WorldCom. From April 1988
to March 1991 he was a Network Manager for Raytheon Corp.

                                       52
<PAGE>
    ROGER W. ACH III joined HarvardNET in June 1996 as Chief Technical Officer.
From January 1993 to May 1996, Mr. Ach served as a technical computing assistant
for the University of Chicago.

    MELANIE HARATUNIAN joined HarvardNET in December 1998 as General Counsel and
Director of Regulatory Affairs and was also elected Secretary in February 1999.
From December 1993 to November 1998, Ms. Haratunian was a partner in the law
firm of Halprin, Temple, Goodman & Sugrue, specializing in domestic and
international telecommunications law, and was an associate at this firm from
April 1992 to December 1993. Prior to April 1992, Ms. Haratunian served as an
associate with the law firm of Ginsburg, Feldman & Bress and with the Federal
Communications Commission as a legal assistant to the Common Carrier Bureau
Chief and an Attorney-Advisor in the Policy and Program Planning Division.

    JOSEPH BARTLETT joined HarvardNET in March 1999 as Director of Marketing.
From February 1997 to March 1999, Mr. Bartlett served as the Director of
Internet Market Strategies practice at The Yankee Group. From November 1994 to
February 1997, he was a management consultant for COBA--Boston, a consulting
company.

    WILLIAM H. SOUTHWORTH founded HarvardNET in 1992 and has served as Chairman
of the Board of Directors since inception. Mr. Southworth served as Chief
Executive Officer of HarvardNET from November 1992 to February 1999 and as
President from November 1992 to November 1997 and again from September 1998 to
February 1999. Prior to founding HarvardNET, Mr. Southworth held various
positions in the electronics industry, including co-founding Cadmus Computer,
serving as Vice President of International Sales and Vice President of
Engineering for Infoton Inc., and serving in engineering and general management
positions with Digital Equipment Corporation, Data General Corporation,
Massachusetts Institute of Technology and Instrumentation Laboratory.

    PETER H.O. CLAUDY has served as a Director of HarvardNET since September
1998. Since December 1997, Mr. Claudy has served as a general partner of
Media/Communications Partners III L.P. and since December 1998, he has served as
a general partner of M/C Venture Partners IV L.P., each of which is a
communications-focused private equity fund. From January 1994 to December 1997,
Mr. Claudy served as a Vice President of Media/Communications Partners, prior to
which he had served as an associate of this investment fund manager since August
1991. Mr. Claudy serves on the Board of Directors of McLeodUSA Inc., a publicly
traded integrated communications provider.

    LEO J. ESPOSITO has served as a Director of HarvardNET since May 1999. Mr.
Esposito has served as a Senior Vice President of Fidelity Ventures
Telecommunications and Technology Group since July 1998. From April 1995 to June
1998, Mr. Esposito served as President of Fidelity Telecommunications Company.
From September 1988 to March 1995, Mr. Esposito served as a Vice President of
Goldman Sachs & Company, where he was the senior executive responsible for
global telecommunications network and trading technologies. Mr. Esposito
previously held various positions with IBM Corporation.

    ROBERT C. KETTERSON has served as a Director of HarvardNET since September
1998. Mr. Ketterson has served as a Vice President of Fidelity Ventures
Telecommunications and Technology Group since July 1996. From September 1993 to
July 1996, Mr. Ketterson served as a principal of Fidelity Ventures. From
September 1990 to August 1993, Mr. Ketterson served as a manager in the
high-technology practice of The Boston Consulting Group, Inc.

    JEFFREY OSBORN has served as a Director of HarvardNET since November 1997.
Mr. Osborn has served as the Principal of Osborn Capital LLC, an investment
company, since January 1999. From February 1997 to December 1998, Mr. Osborn
managed personal investments and participated as a member of the boards of
directors of several of his portfolio companies. From November 1993 to February
1997, Mr. Osborn served in a variety of sales positions with UUNET Technologies,
Inc., an Internet service provider, including Director of Sales and Marketing
and Vice President of Sales.

    MATTHEW J. RUBINS has served as a Director of HarvardNET since September
1998. Since December 1998, Mr. Rubins has served as a Principal of M/C Venture
Partners, a communications-focused private equity firm. From July 1997 to
December 1998, Mr. Rubins served as a senior associate with Media/

                                       53
<PAGE>
Communications Partners, an investment firm and predecessor of M/C Venture
Partners. From August 1996 to June 1997, Mr. Rubins served as an Assistant Vice
President in the telecommunications and data communications areas of the
Deutsche Morgan Grenfell Technology Group. Mr. Rubins served as an Associate
with Donaldson, Lufkin & Jenrette in the communications and high yield groups
from August 1995 to July 1996.

    We intend to elect one additional independent director within 90 days after
the date of this prospectus to comply with the listing requirements of the
Nasdaq National Market.

BOARD OF DIRECTORS

    Our board of directors is currently fixed at seven members. Upon the
completion of this offering, we will divide our board of directors into the
following three classes:

<TABLE>
<CAPTION>
                                                                                                   TERM EXPIRES AT
                                                                              INITIAL             ANNUAL MEETING OF
CLASS                                                                        DIRECTORS             STOCKHOLDERS IN
- ------------------------------------------------------------------  ---------------------------  -------------------
<S>                                                                 <C>                          <C>

Class I...........................................................  Leo J. Esposito                        2000
                                                                    Matthew J. Rubins

Class II..........................................................  Peter H.O. Claudy                      2001
                                                                    Robert C. Ketterson
                                                                    William H. Southworth

Class III.........................................................  Mark M. Washburn                       2002
                                                                    Jeffrey Osborn
</TABLE>

    At each annual meeting of stockholders after the initial classification, the
successors to directors whose term is then expiring will be elected to serve
from the time of election and qualification until the third annual meeting
following their election. This classification of our board of directors may have
the effect of delaying or preventing changes in control or management of
HarvardNET. Each officer serves at the discretion of our board of directors.
There are no family relationships among any of our directors.

    COMPENSATION OF DIRECTORS.  Directors currently do not receive any cash
compensation from HarvardNET for their services as members of our board of
directors, although we reimburse non-employee directors for reasonable
out-of-pocket expenses incurred in attending meetings of our board of directors.
We intend to grant stock options and other equity awards on an annual basis to
our non-employee directors from time to time pursuant to our 1999 director stock
option plan. We have not yet determined the amount and timing of such grants or
awards. No director who is an employee of HarvardNET receives separate
compensation for services rendered as a director.

    BOARD COMMITTEES.  Our board of directors has established a compensation
committee and an audit committee. The compensation committee, which consists of
Messrs. Claudy, Ketterson and Osborn, reviews executive salaries, administers
our bonus, incentive compensation and stock options plans, and approves the
salaries and other benefits of our executive officers. In addition, the
compensation committee consults with our management regarding our pension and
other benefit plans and compensation policies and practices. The audit
committee, which consists of Messrs. Ketterson, Southworth and Rubins, reviews
the professional services provided by our independent accountants, the
independence of such accountants from our management, our annual financial
statements and our system of internal accounting controls. The audit committee
also reviews such other matters with respect to our accounting, auditing and
financial reporting practices and procedures as it may find appropriate or may
be brought to its attention.

                                       54
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    None of the members of the compensation committee is currently or has been,
at any time since the formation of HarvardNET, an officer or employee of
HarvardNET. No member of the compensation committee serves as a member of our
board of directors or compensation committee of any entity that has one or more
executive officers serving as a member of our board of directors or compensation
committee.

EXECUTIVE COMPENSATION

    The following table sets forth, for the year ended December 31, 1998, the
cash compensation paid and shares underlying options granted to:

    - our current Chief Executive Officer;

    - our former Chief Executive Officer;

    - our current Chief Financial Officer and Treasurer; and

    - our other most highly compensated executive officer during fiscal 1998 who
      received annual compensation during such year in excess of $100,000.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                             ANNUAL COMPENSATION
                                                                                            ----------------------
NAME AND PRINCIPAL POSITION                                                                   SALARY       BONUS
- ------------------------------------------------------------------------------------------  -----------  ---------
<S>                                                                                         <C>          <C>
Mark M. Washburn, President and Chief Executive Officer(1)................................  $    37,293         --
William H. Southworth(2)..................................................................      123,868  $  45,230
Todd C. DeSisto, Chief Financial Officer and Treasurer(3).................................       10,400         --
Brent Paine(4)............................................................................       68,600     49,734
</TABLE>

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

(1) Mark M. Washburn began his employment with us on September 29, 1998 as Chief
    Operating Officer. Mr. Washburn became our President and Chief Executive
    Officer on February 18, 1999. Mr. Washburn's current annual salary is
    $220,000.

(2) William H. Southworth served as Chief Executive Officer during the fiscal
    year ended December 31, 1998 and resigned as Chief Executive Officer
    effective February 18, 1999. Mr. Southworth serves as Chairman of the Board
    of Directors.

(3) Todd C. DeSisto became our Chief Financial Officer and Treasurer in December
    1998. Mr. DeSisto's current annual salary is $200,000.

(4) Brent Paine resigned as President of HarvardNET on September 1, 1998.

STOCK OPTIONS AND FISCAL YEAR-END OPTION VALUES

    None of the officers listed in the Summary Compensation Table was granted
options to purchase common stock in the year ended December 31, 1998, and none
of these officers has any options to purchase common stock.

EMPLOYMENT AND SEVERANCE AGREEMENTS

    We have a severance and non-competition agreement with William H.
Southworth, our Chairman of the Board of Directors, which terminates on the
second anniversary of the date that Mr. Southworth ceases to be employed by us.
As long as he is not terminated for cause, we will pay Mr. Southworth a
severance payment in the amount of $120,000. For Mr. Southworth, cause means:

    - the conviction for various crimes;

                                       55
<PAGE>
    - a material violation of any policy of HarvardNET relating to ethical
      business conduct, fiduciary duties or conflicts of interest;

    - mental incompetence;

    - any conduct that would cause the suspension or revocation of any license,
      permit, authorization or right material to HarvardNET;

    - gross and habitual neglect of duty;

    - prolonged absence; or

    - material breach of this agreement.

    This severance payment is subject to Mr. Southworth's compliance with the
terms of this agreement. Mr. Southworth has agreed not to compete with us during
the term of this agreement.

    We have an employment agreement with Mark M. Washburn, our President and
Chief Executive Officer. This agreement establishes a base salary, subject to
increase by the board of directors. Mr. Washburn's base salary is $220,000.
Under the agreement, Mr. Washburn is eligible for a bonus of up to $40,000 for
1999. Upon execution of his employment agreement, we issued Mr. Washburn
2,430,984 shares of Class B stock, at an aggregate purchase price of $1,794.50.
Of these shares, 486,183 shares are vested but can be repurchased by HarvardNET
if Mr. Washburn voluntarily terminates his employment prior to September 30,
1999; 648,271 shares vest on September 29, 1999; 648,271 shares vest on
September 29, 2000; and 648,259 shares vest on September 29, 2001. We have the
right to repurchase the unvested shares if Mr. Washburn ceases to be employed by
us for any reason. Upon the completion of this offering, any unvested shares
will vest in full. Mr. Washburn has agreed not to compete with us during the
term of the agreement and for one year following the termination of his
employment. As long as he is not terminated for cause, we will pay Mr.
Washburn's salary in effect at the time of termination and his medical benefits
during this one-year non-competition period. For Mr. Washburn, cause means:

    - breach of his fiduciary duty to HarvardNET;

    - commission of dishonest acts relating to HarvardNET;

    - conviction of various crimes;

    - mental incompetence;

    - failure to perform his duties;

    - prolonged absence; or

    - material breach of his employment agreement.

    However, if Mr. Washburn obtains subsequent employment with a non-competing
business during this period, any amount we owe Mr. Washburn will be offset by
Mr. Washburn's compensation from his subsequent employment, and we will not be
required to provide Mr. Washburn with medical benefits if he is able to receive
substantially similar benefits.

    We have an employment agreement with Todd C. DeSisto, our Chief Financial
Officer and Treasurer. This agreement establishes a base salary, subject to
increase by the board of directors. Mr. DeSisto's base salary is $200,000. Under
the agreement, Mr. DeSisto is eligible for a bonus of up to $40,000 for 1999.
Upon execution of his employment agreement, we issued Mr. DeSisto 759,680 shares
of Class B stock, at an aggregate purchase price of $5,608. These shares vest in
four equal annual installments, and we have the right to repurchase the unvested
shares if Mr. DeSisto ceases to be employed by us for any reason. Upon the
completion of this offering, any unvested shares will vest in full. Mr. DeSisto
has agreed not to compete with us during the term of the agreement and for one
year following the termination of his employment. As long as he is not
terminated for cause, we will pay Mr. DeSisto's salary in effect at the time of
termination and his medical benefits during this one-year non-competition
period. For Mr. DeSisto, cause

                                       56
<PAGE>
has the same meaning as for Mr. Washburn. However, if Mr. DeSisto obtains
subsequent employment with a non-competing business during this period, any
amount we owe Mr. DeSisto will be offset by Mr. DeSisto's compensation from his
subsequent employment, and we will not be required to provide Mr. DeSisto with
medical benefits if he is able to receive substantially similar benefits.

BENEFIT PLANS

    1997 STOCK INCENTIVE PLAN

    The 1997 stock incentive plan provides for the grant of restricted stock and
other stock-based awards and stock options. A maximum of 406,406 shares of
common stock are authorized to be issued pursuant to the 1997 stock incentive
plan. As of June 30, 1999, options to purchase an aggregate of 406,406 shares of
common stock at an exercise price of $0.62 were outstanding under the 1997 stock
incentive plan. No additional grants will be made under the 1997 Stock Incentive
Plan.

    1999 STOCK INCENTIVE PLAN

    The 1999 stock incentive plan provides for the grant of stock options,
restricted stock and other stock-based awards for up to a maximum of 5,419,000
shares of common stock. As of June 30, 1999, options to purchase an aggregate of
1,087,729 shares of common stock at a weighted average exercise price of $1.92
were outstanding under the 1999 stock incentive plan. Our officers, employees,
directors, consultants and advisors are eligible to receive awards under the
1999 stock incentive plan; however, incentive stock options may be granted only
to employees.

    The 1999 stock incentive plan is administered by our board of directors. Our
board of directors has the authority to adopt, amend and repeal the
administrative rules, guidelines and practices relating to the plan and to
interpret its provisions. Under the terms of the 1999 Stock Incentive Plan, our
board of directors may delegate authority under the plan to one or more
committees of the board of directors and, subject to various limitations, to one
or more of our executive officers. Subject to any applicable limitations
contained in the plan, the board of directors or any committee or executive
officer to whom the board of directors delegates authority, as the case may be,
selects the recipients of awards and determines:

    - the number of shares of common stock covered by options and the dates upon
      which such options become exercisable,

    - the exercise price of options,

    - the duration of options, and

    - the number of shares of common stock subject to any restricted stock or
      other stock-based awards and the terms and conditions of such awards,
      including the conditions for repurchase, issue price and repurchase price.

    In the event of a merger resulting in a change in control of HarvardNET, a
sale of substantially all of HavardNET's assets or the liquidation of
HarvardNET, our board of directors is authorized to provide for outstanding
options or other stock-based awards to be assumed or substituted for by the
acquiror. If the acquiror does not assume the options and awards, our board of
directors may provide that all unexercised options will become exercisable in
full prior to the completion of such event and that these options will terminate
upon the completion of the event if not previously exercised. In addition,
immediately prior to the consummation of such an event, each outstanding option
will become exercisable for one-half of the shares subject to each such option
with the remaining half vesting in accordance with the original vesting
schedule, and restrictions on one-half of each other outstanding stock-based
award will lapse.

    1999 EMPLOYEE STOCK PURCHASE PLAN

    The 1999 employee stock purchase plan was adopted by our board of directors
in June 1999 and approved by our stockholders in August 1999. The 1999 employee
stock purchase plan provides for the

                                       57
<PAGE>
issuance of a maximum of 1,355,000 shares of common stock. The 1999 employee
stock purchase plan will be administered by the compensation committee. With
some exceptions, all eligible employees, including directors and officers,
regularly employed by HarvardNET for at least one month on the applicable
offering commencement date are eligible to participate in the plan. We will make
one or more offerings to employees to purchase common stock under the 1999
employee stock purchase plan. During each offering, a participating employee may
purchase a maximum number of shares equal to 85% of the market value of a share
of common stock on the first day of the offering period divided by 10% of the
employee's annualized compensation, or a lower percentage if established by the
compensation committee, for the immediately preceding six-month period. The
exercise price for the option granted in each payment period will be 85% of the
lesser of the last reported sales price of HarvardNET common stock on the first
or last business day of the plan period. An employee may elect to have up to 10%
deducted from his or her regular salary, or such lower percentage as may be
established by the compensation committee, for this purpose. The price at which
an employee's option is exercised is the lesser of the last reported sale on the
first or last business day of the offering period. The first offering under this
plan will begin on the effective date of this offering and will end on February
29, 2000.

    1999 DIRECTOR STOCK OPTION PLAN

    The 1999 director stock option plan was adopted by our board of directors in
July 1999 and approved by our stockholders in August 1999. The 1999 director
stock option plan provides for the issuance of a maximum 300,000 shares of
common stock to non-employee directors of HarvardNET. Under the 1999 director
stock option plan, HarvardNET will grant an option to purchase 10,000 shares of
common stock to each non-employee director on the date on which the initial
public offering price of the common stock is determined with an exercise price
equal to the initial public offering price and an option to purchase 10,000
shares of common stock on each of August 1, 2000 and August 1, 2001, each with
an exercise price equal to the fair market value on the date of grant. Each such
option will have an exercise price equal to the initial public offering price.
In addition, HarvardNET will grant each new non-employee director an option to
purchase 10,000 shares of common stock upon election to our board of directors
and an option to purchase 10,000 shares of common stock on August 1 of each of
the next two years following his or her election to the board of directors, each
with an exercise price equal to the fair market value on the date of grant.
HarvardNET will also grant annual options to purchase 3,333 shares of common
stock to each non-employee director on August 1 of each year commencing in the
year following the initial three option grants to such director described above,
each with an exercise price equal to the fair market value on the date of grant.
Each option granted to the directors under the plan is fully vested and
exercisable on the date of grant.

                                       58
<PAGE>
                          TRANSACTIONS WITH AFFILIATES

    Since January 1, 1996, HarvardNET has engaged in the following transactions
with the following directors, executive officers and stockholders who
beneficially own more than 5% of the outstanding capital stock of HarvardNET,
and affiliates of such directors, officers and 5% stockholders.

    On August 15, 1997, HarvardNET issued and sold an aggregate of 609,608
shares of its common stock at a purchase price of $.62 per share to five
individuals. Jeffrey Osborn, a director of HarvardNET, purchased 162,562 of
these shares.

    On September 1, 1998, December 7, 1998 and March 23, 1999, HarvardNET issued
and sold an aggregate of 13,749,440 shares of its Series A convertible preferred
stock at a purchase price of $1.34551 per share to ten purchasers. FTT Ventures
Limited purchased an aggregate of 2,972,850 of these shares and Fidelity
Investors II Limited Partnership purchased an aggregate of 2,972,850 of these
shares. In addition, funds affiliated with M/C Partners purchased an aggregate
of 7,432,130 of these shares, and Jeffrey Osborn purchased an aggregate of
74,320 of these shares.

    On September 1, 1998, HarvardNET redeemed 3,377,693 shares of common stock
for a purchase price of $.99 per share; 1,016,014 of these shares were jointly
held by William Southworth, Chairman of the board of directors of HarvardNET,
who was also then Chief Executive Officer, and his wife; and 1,556,683 of these
shares were held by Brent Paine, who was then President of HarvardNET.

    HarvardNET believes that the securities issued in the transactions described
above were sold at their then fair market value and that the terms of the
transactions described above were no less favorable than HarvardNET could have
obtained from unaffiliated third parties.

                                       59
<PAGE>
                             PRINCIPAL STOCKHOLDERS

    The following table sets forth information regarding beneficial ownership of
our common stock as of June 30, 1999 and as adjusted to reflect the sale of the
shares in this offering and the conversion of all outstanding shares of
convertible preferred stock and Class B stock into shares of common stock held
by:

    - each person whom we know to own beneficially more than 5% of the
      outstanding shares of common stock,

    - each of our directors,

    - each of our executive officers named in the Summary Compensation Table
      under "Management-- Executive Compensation," and

    - all our directors and executive officers as a group.

Unless otherwise indicated, the address for each listed stockholder is: c/o
HarvardNET Inc., 500 Rutherford Avenue, Boston, Massachusetts 02129. The persons
named in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them, subject to community
property laws where applicable and the information contained in this table and
the notes that follow.

<TABLE>
<CAPTION>
                                                                                                    % OF TOTAL
                                                                                           ----------------------------
<S>                                                                          <C>           <C>          <C>
                                                                                SHARES
                                                                             BENEFICIALLY    BEFORE          AFTER
NAME                                                                            OWNED       OFFERING       OFFERING
- ---------------------------------------------------------------------------  ------------  -----------  ---------------
Media/Communications Partners (1)..........................................    10,068,203        35.9%          27.2%
  75 State Street
  Boston, MA 02110
Fidelity Investors II Limited Partnership..................................     4,027,278        14.3%          10.9%
  82 Devonshire Street
  Boston, MA 02109
FTT Ventures Limited.......................................................     4,027,278        14.3%          10.9%
  82 Devonshire Street
  Boston, MA 02109
William H. Southworth (2)..................................................     2,565,377         9.1%           6.9%
Mark M. Washburn...........................................................     2,258,457         8.0%           6.1%
Morgan Stanley Senior Funding, Inc. (3)....................................     1,547,470         5.4%           4.1%
  1585 Broadway
  New York, NY 10036
Todd C. DeSisto............................................................       705,766         2.5%           1.9%
Brent Paine................................................................       274,703           *              *
Peter H.O. Claudy (4)......................................................     9,220,789        32.8%          24.9%
Leo J. Esposito............................................................            --          --
Robert C. Ketterson (5)....................................................     4,027,278        14.3%          10.9%
Jeffrey Osborn.............................................................       263,242           *              *
Matthew J. Rubins..........................................................            --          --
All executive officers and directors as a group (13 people) (6)............    20,451,973        71.8%          54.7%
</TABLE>

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

*   Less than 1% of the outstanding common stock.

(1) Consists of shares beneficially owned by Media/Communications Partners III
    L.P., M/C Venture Partners IV, L.P., M/C Investors LLC and Chestnut Street
    Partners, Inc. The address for the M/C entities is 75 State Street, Boston,
    MA 02110.

                                       60
<PAGE>
(2) Consists of shares held jointly by Mr. Southworth and Barbara Southworth,
    his wife.

(3) Includes 582,138 shares issuable upon the exercise of warrants within 60
    days of June 30, 1999.

(4) Consists of shares beneficially owned by Media/Communications Partners III
    L.P. and M/C Venture Partners IV, L.P. Mr. Claudy is a Manager of M/C III
    L.L.C., which is the General Partner of Media/ Communications Partners III
    L.P. Mr. Claudy is also a Manager of M/C VP IV LLC, which is the General
    Partner of M/C Venture Partners IV L.P. Mr. Claudy may be considered the
    beneficial owner of these shares. Mr. Claudy disclaims beneficial ownership
    of these shares, except as to his direct pecuniary interest in such shares.

(5) Consists of shares beneficially owned by FTT Ventures Limited. Mr. Ketterson
    is an executive officer and director of FTT Ventures Limited and may be
    considered the beneficial owner of these shares. Mr. Ketterson disclaims
    beneficial ownership of these shares, except as to his direct pecuniary
    interest in such shares.

(6) Includes 406,406 shares issuable upon the exercise of options exercisable
    within 60 days of June 30, 1999.

                                       61
<PAGE>
                          DESCRIPTION OF CAPITAL STOCK

    Effective upon the closing of this offering, our authorized capital stock
will consist of 100,000,000 shares of common stock, $.01 par value per share,
and 5,000,000 shares of preferred stock, $.01 par value per share. We also have
issued the warrants described below.

    The following summary describes the material terms of our capital stock as
of the closing this offering. However, you should refer to the actual terms of
the capital stock contained in our restated certificate of incorporation and
other agreements referenced below which are filed as exhibits to the
registration statement of which this prospectus is part. The following summary
gives effect to the conversion of all outstanding shares of convertible
preferred stock and Class B stock into common stock upon the completion of this
offering.

COMMON STOCK

    As of June 30, 1999, there were 5,278,246 shares of common stock outstanding
held by 14 stockholders of record. Based upon the number of shares outstanding
as of June 30, 1999, and giving effect to the conversion of shares of Class B
stock and preferred stock outstanding as of that date into an aggregate of
22,803,017 shares of common stock upon the closing of this offering and to the
issuance of the 8,900,000 shares of common stock offered by us in this offering,
there will be 36,981,263 shares of common stock outstanding upon the closing of
this offering. In addition, as of June 30, 1999, there were outstanding stock
options for the purchase of a total of 1,494,135 shares of common stock at a
weighted average exercise price of $1.56 per share.

    Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Directors are elected by a plurality of the votes of the shares present
in person or by proxy at the meeting and entitled to vote in such election.
Holders of common stock are entitled to receive ratably such dividends, if any,
as may be declared by our board of directors out of funds legally available
therefor, subject to any preferential dividend rights of outstanding preferred
stock. Upon the liquidation or dissolution of HarvardNET, the holders of common
stock are entitled to receive ratably our net assets available after the payment
of all our debts and other liabilities, subject to the prior rights of any
outstanding preferred stock. Holders of the common stock have no preemptive,
subscription, redemption or conversion rights, nor are they entitled to the
benefit of any sinking fund. The rights, powers, preferences and privileges of
holders of common stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of preferred stock which we may
designate and issue in the future.

WARRANTS

    As of June 30, 1999, a total of 859,091 shares of common stock were issuable
upon the exercise of outstanding warrants at a weighted average exercise price
of $3.33 per share. These warrants will remain outstanding after the closing of
this offering. These warrants contain a cashless exercise feature which could
result in the issuance of shares of common stock with no additional proceeds to
HarvardNET.

PREFERRED STOCK

    Following the closing of this offering, our board of directors will be
authorized, subject to any limitations prescribed by law, without further
stockholder approval, to issue from time to time up to an aggregate of 5,000,000
shares of preferred stock, in one or more series. Each series of preferred stock
will have the number of shares, designations, preferences, voting powers,
qualifications and special or relative rights or privileges as are determined by
our board of directors, which may include, among others, dividend rights, voting
rights, redemption provisions, liquidation preferences, conversion rights and
preemptive rights.

                                       62
<PAGE>
    Our stockholders have granted our board of directors authority to issue the
preferred stock and to determine its rights and preferences in order to
eliminate delays associated with a stockholder vote on specific issuances. The
rights of the holders of common stock will be subject to the rights of holders
of any preferred stock issued in the future. The issuance of preferred stock,
while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could adversely affect the voting power or other
rights of the holders of common stock, and could make it more difficult for a
third party to acquire, or discourage a third party from attempting to acquire,
a majority of our outstanding voting stock.

DELAWARE LAW AND CHARTER AND BY-LAW PROVISIONS; ANTI-TAKEOVER EFFECTS

    We are subject to the provisions of Section 203 of the General Corporation
Law of Delaware. Section 203 prohibits a publicly-held Delaware corporation from
engaging in a business combination involving an interested stockholder or their
affiliates 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 for purposes of Section 203 as any person or entity that is the
beneficial owner of at least 15% of a corporation's voting stock or is an
affiliate of the corporation or the owner of 15% or more of the outstanding
voting stock of the corporation at any time in the past three years.

    Effective upon the closing of this offering, our restated certificate of
incorporation and restated by-laws will provide for the division of our board of
directors into three classes, as nearly equal in size as possible, with
staggered three-year terms. In addition, our restated certificate of
incorporation and restated by-laws will provide that directors may be removed
only for cause by the affirmative vote of the holders of at least 75% of the
shares of our capital stock entitled to vote. Under our restated certificate of
incorporation and restated by-laws any vacancy on our board of directors,
however occurring, including a vacancy resulting from an enlargement of the
board, will only be filled by vote of a majority of the directors then in
office. The classification of our board of directors and the limitations on the
removal of directors and filling of vacancies could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring, control.

    Our restated certificate of incorporation and restated by-laws will also
provide that, after the closing of this offering, any action required or
permitted to be taken by our stockholders at an annual meeting or special
meeting of stockholders may only be taken if it is properly brought before such
meeting and may not be taken by written action in lieu of a meeting. The
restated certificate of incorporation and restated by-laws will further provide
that special meetings of the stockholders may only be called by our President or
our board of directors. Under the restated by-laws, in order for any matter to
be considered properly brought before a meeting, a stockholder will have to
comply with various requirements regarding advance notice to us. The foregoing
provisions could have the effect of delaying until the next stockholders'
meeting stockholder actions which are favored by the holders of a majority of
our outstanding voting securities. These provisions may also discourage another
person or entity from making a tender offer for our common stock, because such
person or entity, even if it acquired a majority of our outstanding voting
securities, would be able to take action as a stockholder, such as electing new
directors or approving a merger, only at a duly called stockholders meeting, and
not by written consent.

    The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. Effective upon the closing of this offering,
our restated certificate of incorporation will require the affirmative vote of
the holders of at least 75% of the shares of our capital stock issued and
outstanding and entitled to vote to amend or repeal any of the foregoing
restated certificate of incorporation provisions. The restated by-laws will also
require a majority vote of our board of directors or the holders of at least 75%
of the shares of our capital stock issued and outstanding and entitled to vote
to amend or repeal any of its provisions, subject to any limitations set forth
in the restated by-laws. The stockholder vote would be in addition to any
separate class vote that might in the future be required

                                       63
<PAGE>
pursuant to the terms of any series preferred stock that might be outstanding at
the time any such amendments are submitted to stockholders.

LIMITATION OF LIABILITY AND INDEMNIFICATION

    Our restated certificate of incorporation provides that we will indemnify
our directors and officers to the fullest extent authorized by Delaware law, as
it now exists or may in the future be amended, against all expenses and
liabilities reasonably incurred in connection with the service for us or on our
behalf. The restated certificate of incorporation further provides that our
directors will not be personally liable for monetary damages to HarvardNET for
breaches of their fiduciary duty as directors, unless they acted in bad faith or
knowingly or intentionally violated the law. In addition, HarvardNET plans to
enter into indemnification agreements with its directors containing provisions
which may require HarvardNET, among other things, to indemnify its directors
against liabilities that may arise by virtue of their status or service as
directors, and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified.

TRANSFER AGENT AND REGISTRAR

    The transfer agent and registrar for the common stock is EquiServe L.P.

                                       64
<PAGE>
                        SHARES ELIGIBLE FOR FUTURE SALE

    Upon completion of this offering, we will have 36,981,263 shares of common
stock outstanding, 38,316,263 shares if the U.S. underwriters exercise their
over-allotment option in full, assuming no exercise of outstanding options or
warrants. Of these shares, the 8,900,000 shares, 10,235,000 shares if the
over-allotment option is exercised in full, to be sold in this offering will be
freely tradable without restriction or further registration under the Securities
Act of 1933, as amended, except that any shares purchased by our affiliates, as
that term is defined in Rule 144 under the Securities Act, may generally only be
sold in compliance with the limitations of Rule 144 described below.

SALES OF RESTRICTED SHARES

    The remaining 28,081,263 shares of common stock outstanding upon completion
of this offering are deemed restricted securities under Rule 144 or Rule 701
under the Securities Act. Subject to the lock-up agreements described below,
none of these restricted shares will be eligible for sale in the public market
under Rule 144(k) on the date of this prospectus. Subject to the lock-up
agreements described below, approximately 419,952 of these restricted shares
will be eligible for sale in the public market under Rule 144(k) 90 days after
the date of this prospectus. Upon expiration of lock-up agreements, 180 days
after the date of this prospectus, approximately 18,018,074 additional shares of
common stock will be eligible for sale in the public market under Rule 144 under
the Securities Act.

    In general, under Rule 144, a person, including an affiliate of HarvardNET,
who has beneficially owned restricted shares for at least one year is entitled
to sell, within any three-month period, a number of such shares that does not
exceed the greater of,

    - one percent of the then outstanding shares of common stock, which will
      equal approximately 369,813 shares immediately after this offering; or

    - the average weekly trading volume in the common stock on the Nasdaq
      National Market during the four calendar weeks preceding the date on which
      notice of such sale is filed.

    Sales under Rule 144 are also subject to requirements concerning
availability of public information, manner of sale and notice of sale. In
addition, affiliates of HarvardNET must comply with the restrictions and
requirements of Rule 144, other than the one-year holding period requirement, in
order to sell shares of common stock which are not restricted securities. Under
Rule 144(k), a person who is not an affiliate of HarvardNET and has not been an
affiliate of HarvardNET for at least three months prior to the sale and who has
beneficially owned restricted shares for at least two years may resell such
shares without compliance with the foregoing requirements. In meeting the one-
and two-year holding periods described above, a holder of restricted shares can
include the holding periods of a prior owner who was not an affiliate of
HarvardNET. The one- and two-year holding periods described above do not begin
to run until the full purchase price or other consideration is paid by the
person acquiring the restricted shares from the issuer or an affiliate of
HarvardNET.

    Rule 701 provides that currently outstanding shares of common stock acquired
under our employee compensation plans may be resold beginning 90 days after the
date of this prospectus by persons, other than affiliates of HarvardNET, subject
only to the manner of sale provisions of Rule 144, and by affiliates of
HarvardNET under Rule 144 without compliance with its one-year minimum holding
period, subject to limitations.

OPTIONS

    Rule 701 also provides that the shares of common stock acquired upon the
exercise of currently outstanding options or pursuant to other rights granted
under our 1997 stock incentive plan or our 1999 stock incentive plan may be
resold beginning 90 days after the date of this prospectus

                                       65
<PAGE>
    - by persons, other than affiliates of HarvardNET, subject only to the
      manner of sale provisions of Rule 144; and

    - by affiliates of HarvardNET under Rule 144, without compliance with its
      one-year minimum holding period, subject to limitations.

    At June 30, 1999, 406,406 shares of common stock were issuable upon exercise
of vested options under our 1997 stock incentive plan. All of these shares are
subject to lock-up agreements with the underwriters. None of the options granted
under the 1999 stock incentive plan had vested as of June 30, 1999.

    We intend to file one or more registration statements on Form S-8 under the
Securities Act to register up to 7,480,405 shares of common stock subject to
outstanding stock options or other rights granted under our 1997 stock incentive
plan, 1999 stock incentive plan, 1999 director stock option plan and 1999
employee stock purchase plan. These registration statements are expected to
become effective upon filing. Subject to lock-up agreements with the
underwriters, vested options covered by these registration statements will be
eligible for sale in the public market upon the exercise of underlying options
to the extent not previously sold pursuant to Rule 701.

LOCK-UP AGREEMENTS

    HarvardNET and its executive officers, directors and specified
securityholders have agreed that, without the prior written consent of Morgan
Stanley & Co. Incorporated, that they will not during the period ending 180 days
after the date of this prospectus:

    - offer, pledge, sell, contract to sell, sell any option or contract to
      purchase, purchase any option or contract to sell, grant any option, right
      or warrant to purchase, lend, or otherwise transfer or dispose of,
      directly or indirectly, any shares of common stock or any securities
      convertible into or exercisable or exchangeable for common stock; or

    - enter into any swap or other arrangement that transfers to another, in
      whole or in part, any of the economic consequences of ownership of the
      common stock,

regardless of whether any such transactions described above are to be settled by
delivery of such common stock or such other securities, in cash or otherwise. In
addition, stockholders that are parties to a registration rights agreement with
HarvardNET have agreed not to engage in any of the transactions described above
for a period of 180 days from the date of this prospectus. HarvardNET has agreed
not to waive these restrictions without the consent of Morgan Stanley & Co.
Incorporated.

REGISTRATION RIGHTS

    HarvardNET and stockholders of HarvardNET holding an aggregate of 28,080,260
outstanding shares of common stock and 1,172,376 shares of common stock issuable
upon the exercise of outstanding options and warrants are parties to a
registration rights agreement. Under the terms of this agreement, these
stockholders are entitled to demand that HarvardNET register their shares under
the Securities Act after the closing of this offering. We are not required to
effect a registration within six months after the closing of this offering. We
are generally required to bear all of the expenses of all registrations, other
than underwriting discounts and commissions. Registration of any of the shares
of common stock would result in such shares becoming freely tradable without
restriction under the Securities Act upon effectiveness of the registration
statement.

                                       66
<PAGE>
                     UNITED STATES FEDERAL TAX CONSEQUENCES
                      TO NON-U.S. HOLDERS OF COMMON STOCK

GENERAL

    The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of our
common stock that may be relevant to you if you are a non-U.S. holder under U.S.
federal income tax laws. A non-U.S. holder is a beneficial owner of our common
stock that is, for United States federal income tax purposes:

    - a nonresident alien individual;

    - a foreign corporation;

    - a foreign estate or trust; or

    - a foreign partnership.

    This discussion does not address all aspects of United States federal income
and estate taxation that may be relevant to you in light of your particular
circumstance. It also does not address any foreign, state or local tax
consequences. Furthermore, this discussion is based on provisions of the
Internal Revenue Code, Treasury regulations and administrative and judicial
interpretations as of the date hereof. All of these are subject to change,
possibly with retroactive effect, or different interpretations. If you are
considering buying our common stock, you should consult your own tax advisor
about current and possible future tax consequences of holding and disposing of
our common stock in your particular situation.

DISTRIBUTIONS

    As noted elsewhere in this prospectus, we do not intend to pay dividends. In
the event that we change this policy and declare dividends on our common stock,
any such dividends paid to a non-U.S. holder may be subject to withholding. If
the dividends are not effectively connected with a United States trade or
business of the non-U.S. holder or, if a tax treaty applies, are not
attributable to a United States permanent establishment or fixed base of the
non-U.S. holder, any dividends will, to the extent paid out of earnings and
profits, be subject to United States withholding tax. The withholding tax will
be imposed at a 30 percent rate or, if a tax treaty applies, a lower rate
specified by the treaty. To receive a reduced treaty rate, a non-U.S. holder
must furnish to us or our paying agent a duly completed Form 1001 or Form
W-8BEN, or substitute form, certifying to its qualification for such rate.

    Dividends that are effectively connected with the conduct of a trade or
business within the United States of a non-U.S. holder and, if a tax treaty
applies, are attributable to a United States permanent establishment or fixed
base of the non-U.S. holder, are exempt from United States federal withholding
tax. To qualify for such exemption, the non-U.S. holder must furnish to us or
our paying agent a duly completed Form 4224 or Form W-8ECI, or substitute form,
certifying its qualification for the exemption. However, dividends exempt from
United States withholding because they are effectively connected or they are
attributable to a United States permanent establishment or fixed base are
subject to United States federal income tax on a net income basis at the regular
graduated United States federal income tax rates. Any such effectively connected
dividends received by a foreign corporation may, under some circumstances, be
subject to an additional branch profits tax at a 30 percent rate or a lower rate
specified by an applicable income tax treaty.

    Under current United States Treasury regulations, dividends paid before
January 1, 2001 to an address outside the United States are presumed to be paid
to a resident of the country of address for purposes of the withholding
discussed above and for purposes of determining the applicability of a tax
treaty rate. However, United States Treasury regulations applicable to dividends
paid after December 31, 2000 eliminate this presumption, subject to various
transition rules.

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<PAGE>
    For dividends paid after December 31, 2000, a non-U.S. holder generally will
be subject to United States backup withholding tax at a 31 percent rate under
the backup withholding rules described below, rather than at a 30 percent rate
or a reduced rate under an income tax treaty, as described above, unless the
non-U.S. holder complies with certain Internal Revenue Service certification
procedures or, in the case of payments made outside the United States with
respect to an offshore account, certain IRS documentary evidence procedures.
Further, to claim the benefit of a reduced rate of withholding under a tax
treaty for dividends paid after December 31, 2000, a non-U.S. holder must comply
with certain modified IRS certification requirements. Special rules also apply
to dividend payments made after December 31, 2000 to foreign intermediaries,
United States or foreign wholly owned entities that are disregarded for United
States federal income tax purposes and entities that are treated as fiscally
transparent in the United States, the applicable income tax treaty jurisdiction,
or both. You should consult your own tax advisor concerning the effect, if any,
of the rules affecting post-December 31, 2000 dividends on your possible
investment in our common stock.

    A non-U.S. holder may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund along with the required information with
the IRS.

GAIN ON DISPOSITION OF COMMON STOCK

    A non-U.S. holder generally will not be subject to United States federal
income tax with respect to gain recognized on a sale or other disposition of our
common stock unless one of the following applies:

    - The gain is effectively connected with a trade or business of the non-U.S.
      holder in the United States and, if a tax treaty applies, the gain is
      attributable to a United States permanent establishment or fixed base
      maintained by the non-U.S. holder. In this case, the non-U.S. holder will,
      unless an applicable treaty provides otherwise, be taxed on its net gain
      derived from the sale at regular graduated United States federal income
      tax rates. If the non-U.S. holder is a foreign corporation, it may be
      subject to an additional branch profits tax equal to 30 percent of its
      effectively connected earnings and profits within the meaning of the
      Internal Revenue Code for the taxable year, as adjusted for certain items,
      unless it qualifies for a lower rate under an applicable income tax treaty
      and duly demonstrates such qualification.

    - The non-U.S. holder is an individual, holds our common stock as a capital
      asset, is present in the United States for 183 or more days in the taxable
      year of the disposition, and certain other conditions are met. In this
      case, the non-United States holder will be subject to a flat 30 percent
      tax on the gain derived from the sale, which may be offset by certain
      United States capital losses.

    - We are or have been a United States real property holding corporation for
      United States federal income tax purposes at any time during the shorter
      of the five-year period ending on the date of the disposition or the
      period during which the non-U.S. holder held our common stock. We believe
      that we never have been and are not currently a United States real
      property holding corporation for United States federal income tax
      purposes. Although we consider it unlikely based on our current business
      plans and operations, we may become a United States real property holding
      corporation in the future. Even if we were to become a United States real
      property holding corporation, any gain realized by a non-U.S. holder would
      not be subject to United States federal income tax as described in this
      paragraph if our common stock were considered to be "regularly traded on
      an established securities market" and the non-U.S. holder did not own,
      actually or constructively, at any time during the shorter of the periods
      described above, more than five percent of our common stock.

FEDERAL ESTATE TAX

    Common stock owned or treated as owned by an individual non-U.S. holder at
the time of death, or common stock as to which the non-U.S. holder made certain
lifetime transfers, will be included in such

                                       68
<PAGE>
holder's gross estate for United States federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

    Under United States Treasury regulations, we must report annually to the IRS
and to each non-U.S. holder the amount of dividends paid to such holder and the
tax withheld with respect to such dividends. These information reporting
requirements apply even if withholding was not required because the dividends
were effectively connected dividends or withholding was reduced by an applicable
income tax treaty. Pursuant to an applicable tax treaty, information may also be
made available to the tax authorities in the country in which the non-U.S.
holder resides.

    United States federal backup withholding generally is a withholding tax
imposed at the rate of 31 percent on certain payments to persons that fail to
furnish certain required information. Backup withholding generally will not
apply to dividends paid before January 1, 2001 to non-U.S. holders. See the
discussion under "Distributions" above for rules regarding reporting
requirements to avoid backup withholding on dividends paid after December 31,
2000.

    As a general matter, information reporting and backup withholding will not
apply to a payment by or through a foreign office of a foreign broker of the
proceeds of a sale of our common stock effected outside the United States.
However, information reporting requirements, but not backup withholding, will
apply to a payment by or through a foreign office of a broker of the proceeds of
a sale of our common stock effected outside the United States if that broker:

    - is a United States person for United States federal income tax purposes,

    - is a foreign person that derives 50 percent or more of its gross income
      for certain periods from the conduct of a trade or business in the United
      States,

    - is a controlled foreign corporation as defined in the Internal Revenue
      Code, or

    - is a foreign partnership with certain United States connections for
      payments made after December 31, 2000.

    Information reporting requirements will not apply in the above cases if the
broker has documentary evidence in its records that the holder is a non-U.S.
holder and certain conditions are met or the holder otherwise establishes an
exemption.

    Payment by or through a United States office of a broker of the proceeds of
a sale of our common stock is subject to both backup withholding and information
reporting unless the holder certifies to the payor as to its status as a
non-U.S. holder on a duly completed Form W-8BEN, or substitute form, under
penalties of perjury or otherwise establishes an exemption.

    Amounts withheld under the backup withholding rules do not constitute a
separate United States federal income tax. Rather, any amounts withheld under
the backup withholding rules will be refunded or allowed as a credit against the
holder's United States federal income tax liability, if any, provided the
required information or appropriate claim for refund is filed with the IRS.

    THE FOREGOING DISCUSSION IS A SUMMARY OF CERTAIN UNITED STATES FEDERAL
INCOME AND ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER DISPOSITION
OF OUR COMMON STOCK BY NON-U.S. HOLDERS. YOU ARE URGED TO CONSULT YOUR OWN TAX
ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF OWNERSHIP AND
DISPOSITION OF OUR COMMON STOCK, INCLUDING THE EFFECT OF ANY STATE, LOCAL,
FOREIGN OR OTHER TAX LAWS.

                                       69
<PAGE>
                                  UNDERWRITERS

    Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus, the U.S. underwriters named below,
for whom Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Salomon Smith Barney Inc. are acting as U.S.
representatives, and the international underwriters named below for whom Morgan
Stanley & Co. International Limited, Merrill Lynch International and Salomon
Brothers International Limited are acting as international representatives, have
severally agreed to purchase, and we have agreed to sell to them, severally, the
respective number of shares of common stock set forth opposite the names of such
underwriters below:

<TABLE>
<CAPTION>
                                                                                                         NUMBER
NAME                                                                                                   OF SHARES
- -----------------------------------------------------------------------------------------------------  ----------
<S>                                                                                                    <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated....................................................................
Merrill Lynch, Pierce, Fenner & Smith
          Incorporated...............................................................................
Salomon Smith Barney Inc.............................................................................

Subtotal.............................................................................................   7,120,000
                                                                                                       ----------
International Underwriters:
Morgan Stanley & Co. International Limited...........................................................
Merrill Lynch International..........................................................................
Salomon Brothers International Limited...............................................................

Subtotal.............................................................................................   1,780,000
                                                                                                       ----------
  Total..............................................................................................   8,900,000
                                                                                                       ----------
                                                                                                       ----------
</TABLE>

    The U.S. underwriters and the international underwriters are collectively
referred to as the underwriters, and the U.S. representatives and the
international representatives are collectively referred to as the
representatives. The underwriters are offering the shares of common stock
subject to their acceptance of the shares from us and subject to prior sale. The
underwriting agreement provides that the obligations of the several underwriters
to pay for and accept delivery of the shares of common stock offered hereby are
subject to the approval of various legal matters by their counsel and to several
other conditions. The underwriters are obligated to take and pay for all of the
shares of common stock offered hereby, other than those covered by the U.S.
underwriters' over-allotment option described below, if any such shares are
taken.

    Under the agreement between U.S. and international underwriters, each U.S.
underwriter has represented and agreed that, with some exceptions:

    - it is not purchasing any shares for the account of anyone other than a
      United States or Canadian person; and

                                       70
<PAGE>
    - it has not offered or sold, and will not offer or sell, directly or
      indirectly, any shares or distribute any prospectus relating to the shares
      outside the United States or Canada or to anyone other than a United
      States or Canadian person.

    Under the agreement between U.S. and international underwriters, each
international underwriter has represented and agreed that, with some exceptions:

    - it is not purchasing any shares for the account of any United States or
      Canadian person; and

    - it has not offered or sold, and will not offer or sell, directly or
      indirectly, any shares or distribute any prospectus relating to the shares
      in the United States or Canada or to any United States or Canadian person.

    With respect to any underwriter that is a U.S. underwriter and an
international underwriter, the foregoing representations and agreements made by
it in its capacity as a U.S. underwriter apply only to it in its capacity as a
U.S. underwriter and made by it in its capacity as an international underwriter
apply only to it in its capacity as an international underwriter. The foregoing
limitations do not apply to stabilization transactions or to other transactions
specified in the agreement between U.S. and international underwriters. As used
herein, United States or Canadian person means any national or resident of the
United States or Canada, or any corporation, pension, profit-sharing or other
trust or other entity organized under the laws of the United States or Canada or
of any political subdivision thereof, other than a branch located outside the
United States and Canada of any United States or Canadian person, and includes
any United States or Canadian branch of a person who is otherwise not a United
States or Canadian person.

    Under the agreement between U.S. and international underwriters, sales may
be made between the U.S. underwriters and international underwriters of any
number of shares as may be mutually agreed. The per share price of any shares
sold shall be the public offering price set forth on the cover page hereof, in
United States dollars, less an amount not greater than the per share amount of
the concession to dealers set forth below.

    Under the agreement between U.S. and international underwriters, each U.S.
underwriter has represented that it has not offered or sold, and has agreed not
to offer or sell, any shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made. Each U.S.
underwriter has further agreed to send to any dealer who purchases from it any
of the shares a notice stating in substance that, by purchasing such shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer or sale is made, and that such dealer will deliver to any
other dealer to whom it sells any of such shares a notice containing
substantially the same statement as is contained in this sentence.

    Under the agreement between U.S. and international underwriters, each
international underwriter has represented and agreed that:

    - it has not offered or sold and, prior to the date six months after the
      closing date for the sale of the shares to the international underwriters,
      will not offer or sell, any shares to persons in the United Kingdom except
      to persons whose ordinary activities involve them in acquiring, holding,
      managing or disposing of investments as principal or agent for the
      purposes of their businesses or otherwise in

                                       71
<PAGE>
      circumstances which have not resulted and will not result in an offer to
      the public in the United Kingdom within the meaning of the Public Offers
      of Securities Regulations 1995;

    - it has complied and will comply with all applicable provisions of the
      Financial Services Act 1986 with respect to anything done by it in
      relation to the shares in, from or otherwise involving the United Kingdom;
      and

    - it has only issued or passed on and will only issue or pass on in the
      United Kingdom any document received by it in connection with the offering
      of the shares to a person who is of a kind described in Article 11(3) of
      the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
      Order 1996, as amended, or is a person to whom such document may otherwise
      lawfully be issued or passed on.

    Under the agreement between U.S. and international underwriters, each
international underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the shares acquired in
connection with the distribution contemplated hereby, except for offers or sales
to Japanese international underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law. Each
international underwriter has further agreed to send to any dealer who purchases
from it any of the shares a notice stating in substance that, by purchasing such
shares, such dealer represents and agrees that it has not offered or sold, and
will not offer or sell, any of such shares, directly or indirectly, in Japan or
to or for the account of any resident thereof except for offers or sales to
Japanese international underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law, and that
such dealer will send to any other dealer to whom it sells any of such shares a
notice containing substantially the same statement as is contained in this
sentence.

    The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price set forth on the cover
page hereof and part to various dealers at a price that represents a concession
not in excess of $           a share under the public offering price. Any
underwriter may allow, and such dealers may reallow, a concession not in excess
of $           a share to other underwriters or to various dealers. After the
initial offering of the shares of common stock, the offering price and other
selling terms may from time to time be varied by the representatives.

    HarvardNET has granted to the U.S. underwriters an option, exercisable for
30 days from the date of this prospectus, to purchase up to an aggregate of
1,335,000 additional shares of common stock at the public offering price set
forth on the cover page hereof, less underwriting discounts and commissions. The
U.S. underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, made in connection with the offering of the shares of
common stock offered hereby. To the extent such option is exercised, each U.S.
underwriter will become obligated, subject to specified conditions, to purchase
approximately the same percentage of such additional shares of common stock as
the number set forth next to such U.S. underwriter's name in the preceding table
bears to the total number of shares of common stock set forth next to the names
of all U.S. underwriters in the preceding table. If the U.S. underwriters'
option is exercised in full, the total price to the public would be
$143,290,000, the total underwriters' discounts and commissions would be
$10,030,300 and total proceeds to HarvardNET would be $133,259,700.

    The underwriters have informed HarvardNET that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
common stock offered by them.

    At the request of HarvardNET, the underwriters will reserve up to 445,000
shares of common stock to be issued by HarvardNET and offered hereby for sale,
at the initial offering price, to directors, officers, employees and associates.
This directed share program will be administered by Morgan Stanley & Co.
Incorporated. The number of shares of common stock available for sale to the
general public will be

                                       72
<PAGE>
reduced to the extent such persons purchase such reserved shares. Any reserved
shares which are not so purchased will be offered by the underwriters to the
general public on the same basis as the other shares offered hereby.

    Affiliates of Morgan Stanley & Co. Incorporated beneficially own more than
10% of the Company's common stock. Under the rules of the National Association
of Securities Dealers, when an NASD member such as Morgan Stanley & Co.
Incorporated distributes securities of a company in which one of its affiliates
owns more than 10% of the Company's common stock, the public offering price of
the securities can be no higher than that recommended by a qualified independent
underwriter under the rules of the National Association Securities Dealers. In
accordance with such requirements, Salomon Smith Barney Inc. has agreed to serve
as a qualified independent underwriter and has conducted due diligence and has
recommended a maximum price for the common stock.

    The common stock has been approved for quotation on the Nasdaq National
Market under the symbol "HVNT".

    Each of HarvardNET and the directors, executive officers and some
stockholders of HarvardNET has agreed that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not,
during the period ending 180 days after the date of this prospectus:

    - offer, pledge, sell, contract to sell, sell any option or contract to
      purchase, purchase any option or contract to sell, grant any option, right
      or warrant to purchase, lend or otherwise transfer or dispose of, directly
      or indirectly, any shares of common stock or any securities convertible
      into or exercisable or exchangeable for common stock; or

    - enter into any swap or other arrangement that transfers to another, in
      whole or in part, any of the economic consequences of ownership of the
      common stock,

whether any such transaction described above is to be settled by delivery of
common stock or such other securities, in cash or otherwise.

    The restrictions described in the previous paragraph do not apply to:

    - the sale of shares to the underwriters;

    - the issuance by HarvardNET of shares of common stock upon the exercise of
      an option or a warrant or the conversion of a security outstanding on the
      date of this prospectus of which the underwriters have been advised in
      writing;

    - transactions by any person other than HarvardNET relating to shares of
      common stock or other securities convertible or exchangeable for shares of
      common stock acquired in open market transactions after the completion of
      the offering; or

    - transfers as bona fide gifts or to any trust for the benefit of the
      stockholder or members of the stockholder's immediate family as long as
      the stockholder notifies Morgan Stanley & Co. Incorporated prior to any
      transfer and the recipient of the shares agrees to these restrictions.

    In order to facilitate the offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may over-allot in connection with
the offering, creating a short position in the common stock for their own
account. In addition, to cover over-allotments or to stabilize the price of the
common stock, the underwriters may bid for, and purchase, shares of common stock
in the open market. Finally, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing shares of
common stock in the offering, if the syndicate repurchases previously
distributed common stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the common stock above independent market
levels. The underwriters are not required to engage in these activities, and may
end any of these activities at any time.

                                       73
<PAGE>
    HarvardNET and the underwriters have agreed to indemnify each other against
various liabilities, including liabilities under the Securities Act.

    From time to time, Morgan Stanley & Co. Incorporated has provided, and
continues to provide, investment banking services to HarvardNET for which they
have received customary fees and commissions.

    Morgan Stanley Senior Funding, Inc., an affiliate of Morgan Stanley & Co.
Incorporated, entered into a credit agreement establishing HarvardNET's $30.0
million credit facility on May 28, 1999. In connection with the credit
agreement, Morgan Stanley Senior Funding, Inc. received warrants to purchase
765,970 shares of common stock at an exercise price of $3.62 per share and is
entitled to an annual administration fee of $35,000, of which HarvardNET paid
the initial installment on May 28, 1999.

    In addition, in connection with the credit agreement, on May 28, 1999,
Morgan Stanley Senior Funding, Inc. purchased 356,294 shares of Series A-2
convertible preferred stock from HarvardNET at a purchase price of $4.21 per
share, and 482,666 shares of common stock held jointly by Barbara Southworth and
William H. Southworth, the Chairman of the Board of Directors of HarvardNET, at
a purchase price of $3.11 per share. The shares of convertible preferred stock
will automatically convert into common stock upon the closing of this offering.

PRICING OF THE OFFERING

    Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiations
between HarvardNET and the U.S. representatives. Among the factors to be
considered in determining the initial public offering price will be the future
prospects of HarvardNET and its industry in general, sales, earnings and other
financial and operating information of HarvardNET in recent periods, and the
price-earnings ratios, price-sales ratios, market prices of securities and
financial and operating information of companies engaged in activities similar
to those of HarvardNET. The estimated initial public offering price range set
forth on the cover page of this preliminary prospectus is subject to change as a
result of market conditions and other factors.

                                       74
<PAGE>
                                 LEGAL MATTERS

    The validity of the shares of common stock offered hereby will be passed
upon for us by Hale and Dorr LLP, Boston, Massachusetts. Various legal matters
in connection with this offering will be passed upon for the underwriters by
Shearman & Sterling, New York, New York.

                                    EXPERTS

    The financial statements of HarvardNET Inc. as of December 31, 1997 and 1998
and for each of the three years in the period ended December 31, 1998 included
in the prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

    The financial statements of Internet Northeast as of December 31, 1996 and
October 31, 1997 and for the year ended December 31, 1996 and the ten months
ended October 31, 1997 included in this prospectus have been so included in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

    The financial statements of the Network Services Division of Comstor
Corporation as of December 31, 1998 and for the year ended December 31, 1998
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

                                       75
<PAGE>
                   WHERE YOU MAY FIND ADDITIONAL INFORMATION

    We have filed with the SEC, a registration statement on Form S-1 under the
Securities Act with respect to the common stock to be sold in this offering.
This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules to the registration
statement. For further information with respect to HarvardNET and the common
stock to be sold in this offering, we refer you to the registration statement
and the exhibits and schedules filed as a part of the registration statement.
Statements contained in this prospectus concerning the contents of any contract
or any other document are not necessarily complete. If a contract or document
has been filed as an exhibit to the registration statement, we refer you to the
copy of the contract or document that has been filed. Each statement in this
prospectus relating to a contract or document filed as an exhibit is qualified
in all respects by the filed exhibit. The registration statement, including
exhibits and schedules thereto, may be inspected without charge at the SEC's
public reference rooms at:

    - Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;

    - Seven World Trade Center, 13th Floor, New York, New York 10048; or

    - Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
      60661.

Copies of all or any part of the registration statement may be obtained from
such office after payment of fees prescribed by the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. The SEC also maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC at http://www.sec.gov.

    We intend to provide our stockholders with annual reports containing
consolidated financial statements audited by an independent public accounting
firm.

                              GENERAL INFORMATION

    You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information that is different
from that contained in this prospectus. We are offering to sell, and seeking
offers to buy, shares of common stock only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of the common stock.

    WE HAVE NOT TAKEN ANY ACTION TO PERMIT A PUBLIC OFFERING OF THE SHARES OF
COMMON STOCK OUTSIDE THE UNITED STATES OR TO PERMIT THE POSSESSION OR
DISTRIBUTION OF THIS PROSPECTUS OUTSIDE THE UNITED STATES. PERSONS OUTSIDE THE
UNITED STATES WHO COME INTO POSSESSION OF THIS PROSPECTUS MUST INFORM THEMSELVES
ABOUT AND OBSERVE ANY RESTRICTIONS RELATING TO THE OFFERING OF THE SHARES OF
COMMON STOCK AND THE DISTRIBUTION OF THIS PROSPECTUS OUTSIDE OF THE UNITED
STATES.

                                       76
<PAGE>
                                HARVARDNET INC.

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                          PAGE
                                                                                                       -----------
<S>                                                                                                    <C>
HarvardNET Inc.--Financial Statements:
  Report of Independent Accountants                                                                            F-2
  Balance Sheets as of December 31, 1997 and 1998 (audited), and as of March 31, 1999 (unaudited) and
    pro forma as of March 31, 1999 (unaudited).......................................................          F-3
  Statements of Operations for the Years Ended December 31, 1996, 1997 and 1998 (audited), and for
    the three months ended March 31, 1998 and 1999 (unaudited).......................................          F-4
  Statements of Stockholders' Equity (Deficit) for the Years Ended December 31, 1996, 1997 and 1998
    (audited), and the three months ended March 31, 1999 (unaudited).................................          F-5
  Statements of Cash Flows for the Years Ended December 31, 1996, 1997 and 1998 (audited), and the
    three months ended March 31, 1998 and 1999 (unaudited)...........................................          F-6
  Notes to Financial Statements......................................................................          F-7

Pro Forma Condensed Consolidated Financial Statement (Unaudited):
  Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1998
    (unaudited)......................................................................................         F-20

Internet Northeast--Financial Statements:
  Report of Independent Accountants..................................................................         F-22
  Balance Sheets as of December 31, 1996 and October 31, 1997........................................         F-23
  Statements of Operations for the Year Ended December 31, 1996 and for the ten months ended October
    31, 1997.........................................................................................         F-24
  Statements of Stockholders' Equity for the Year Ended December 31, 1996 and for the ten months
    ended October 31, 1997...........................................................................         F-25
  Statements of Cash Flows for the Year Ended December 31, 1996 and for the ten months ended October
    31, 1997.........................................................................................         F-26
  Notes to Financial Statements......................................................................         F-27

Network Services Division of Comstor Corporation--Financial Statements:
  Report of Independent Accountants..................................................................         F-29
  Balance Sheet as of December 31, 1998..............................................................         F-30
  Statement of Operations and Parent Company Investment for the Year Ended December 31, 1998.........         F-31
  Statement of Cash Flows for the Year Ended December 31, 1998.......................................         F-32
  Notes to Financial Statements......................................................................         F-33
</TABLE>

                                      F-1
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
HarvardNET Inc.:

    In our opinion, the accompanying balance sheets and the related statements
of operations, cash flows and stockholders' equity (deficit) present fairly, in
all material respects, the financial position of HarvardNET Inc. as of December
31, 1997 and 1998, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

June 10, 1999, except for the

information in the seventh and eighth paragraphs

of Note 16, for which

the date is July 26, 1999

                                      F-2
<PAGE>
                                HARVARDNET INC.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                               MARCH 31,
                                                                                         ----------------------
<S>                                                               <C>        <C>         <C>         <C>
                                                                      DECEMBER 31,                      1999
                                                                  ---------------------              PRO FORMA
                                                                    1997        1998        1999      (NOTE 2)
                                                                  ---------  ----------  ----------  ----------

<CAPTION>
                                                                                              (UNAUDITED)
<S>                                                               <C>        <C>         <C>         <C>
                                                    ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.....................................  $ 425,564  $5,239,100  $8,975,348  $8,975,348
  Accounts receivable, net of allowance for doubtful accounts of
    $24,717, $50,000 and $83,489................................    168,331     175,345     546,397     546,397
  Prepaid expenses and other current assets.....................      3,500     228,296     605,058     605,058
                                                                  ---------  ----------  ----------  ----------
    Total current assets........................................    597,395   5,642,741  10,126,803  10,126,803
Property and equipment, net.....................................    228,514   1,056,598   1,704,262   1,704,262
Intangible assets, net..........................................  3,132,202   2,042,740   3,998,433   3,998,433
Other assets....................................................         --     111,362     219,452     219,452
                                                                  ---------  ----------  ----------  ----------
    Total assets................................................  $3,958,111 $8,853,441  $16,048,950 $16,048,950
                                                                  ---------  ----------  ----------  ----------
                                                                  ---------  ----------  ----------  ----------

                            LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
                                        STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Accounts payable..............................................  $ 225,714  $  438,109  $  328,289  $  328,289
  Deferred revenue..............................................         --      37,071      53,052      53,052
  Accrued expenses..............................................     60,541     440,157     516,602     516,602
  Current portion of note payable...............................     18,474          --          --          --
  Current portion of obligations under capital lease............     35,759      69,840      63,506      63,506
  Current portion of note payable to stockholder................     23,016      21,454      24,007      24,007
                                                                  ---------  ----------  ----------  ----------
    Total current liabilities...................................    363,504   1,006,631     985,456     985,456
Obligations under capital leases................................     35,848      33,228      21,603      21,603
Note payable to stockholder.....................................     61,165      33,366      28,814      28,814
Deferred tax liability..........................................    789,793     332,293     247,293     247,293
                                                                  ---------  ----------  ----------  ----------
Total liabilities...............................................  1,250,310   1,405,518   1,283,166   1,283,166
Commitments and contingencies
Redeemable convertible Series A preferred stock; $0.01 par
  value; 13,749,440 shares authorized, 7,344,299 and 13,749,440
  issued and outstanding at December 31, 1998 and March 31,
  1999, respectively; none issued and outstanding on a pro forma
  basis (liquidation preference $19,119,547 at March 31,
  1999).........................................................         --   9,365,073  18,010,638          --
Stockholders' equity (deficit):
  Common stock, $0.01 par value; 34,237,000 shares authorized;
    8,654,936 issued and outstanding at December 31, 1997;
    8,655,939 issued and 5,278,246 outstanding at December 31,
    1998 and March 31, 1999; and 34,237,000 shares authorized
    30,976,290 issued and 27,598,597 outstanding on a pro forma
    basis.......................................................     86,549      86,559      86,559     309,763
  Class B stock, $0.01 par value; 4,486,250 shares authorized,
    3,190,664 and 3,976,381 issued and outstanding at December
    31, 1998 and March 31, 1999, respectively; none issued and
    outstanding on a pro forma basis............................         --      26,299      28,356          --
  Additional paid-in capital....................................  2,780,518   2,438,630  10,883,304  29,311,895
  Accumulated dividends on preferred stock......................         --     306,969     612,801          --
  Deferred compensation.........................................                         (8,689,669) (8,689,669)
  Accumulated deficit...........................................   (159,266) (1,419,585) (2,810,183) (2,810,183)
  Treasury stock, at cost, 3,377,693 shares.....................         --  (3,356,022) (3,356,022) (3,356,022)
                                                                  ---------  ----------  ----------  ----------
    Total stockholders' equity (deficit)........................  2,707,801  (1,917,150) (3,244,854) 14,765,784
                                                                  ---------  ----------  ----------  ----------
    Total liabilities, redeemable convertible preferred stock
      and stockholders' equity (deficit)........................  $3,958,111 $8,853,441  $16,048,950 $16,048,950
                                                                  ---------  ----------  ----------  ----------
                                                                  ---------  ----------  ----------  ----------
</TABLE>

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

                                      F-3
<PAGE>
                                HARVARDNET INC.

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                           THREE MONTHS
                                                  YEAR ENDED DECEMBER 31,                 ENDED MARCH 31,
                                          ---------------------------------------  -----------------------------
<S>                                       <C>         <C>           <C>            <C>            <C>
                                             1996         1997          1998           1998            1999
                                          ----------  ------------  -------------  -------------  --------------

<CAPTION>
                                                                                            (UNAUDITED)
<S>                                       <C>         <C>           <C>            <C>            <C>
Revenues................................  $  720,338  $  1,381,199  $   4,282,063  $     953,698  $    1,600,103
Operating expenses:
  Costs of services (exclusive of
    depreciation and amortization shown
    separately below)...................     325,142       703,838      1,877,827        419,608         810,834
  Selling, general and administrative...     351,893       671,116      2,814,860        399,197       1,693,203
  Depreciation and amortization.........       6,211       187,353      1,339,382        317,531         500,363
  Compensation charge for issuance of
    stock options.......................          --            --             --             --          90,204
                                          ----------  ------------  -------------  -------------  --------------
    Total operating expenses............     683,246     1,562,307      6,032,069      1,136,336       3,094,604
                                          ----------  ------------  -------------  -------------  --------------
Operating income (loss).................      37,092      (181,108)    (1,750,006)      (182,638)     (1,494,501)
Interest income (expense):
  Interest income.......................         201            20         57,075             --          23,376
  Interest expense......................      (1,535)       (2,372)       (24,888)        (2,557)         (4,473)
                                          ----------  ------------  -------------  -------------  --------------
Income (loss) before taxes..............      35,758      (183,460)    (1,717,819)      (185,195)     (1,475,598)
Benefit (provision) for income taxes....      (8,709)       44,500        457,500         49,322          85,000
                                          ----------  ------------  -------------  -------------  --------------
Net income (loss).......................      27,049      (138,960)    (1,260,319)      (135,873)     (1,390,598)
Dividends and accretion of issuance
  costs on preferred stock..............          --            --       (336,026)            --      (8,954,462)
                                          ----------  ------------  -------------  -------------  --------------
Net income available (loss attributable)
  to common stockholders................  $   27,049  $   (138,960) $  (1,596,345) $    (135,873) $  (10,345,060)
                                          ----------  ------------  -------------  -------------  --------------
                                          ----------  ------------  -------------  -------------  --------------
Net income (loss) per share:
  Basic and diluted.....................  $     0.01  $      (0.03) $       (0.21) $       (0.02) $        (1.96)
                                          ----------  ------------  -------------  -------------  --------------
                                          ----------  ------------  -------------  -------------  --------------
Weighted average number of
  shares outstanding:
  Basic and diluted.....................   4,064,059     4,839,921      7,526,019      8,654,936       5,278,246
                                          ----------  ------------  -------------  -------------  --------------
                                          ----------  ------------  -------------  -------------  --------------
</TABLE>

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

                                      F-4
<PAGE>
                                HARVARDNET INC.

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1996, 1997, 1998 AND FOR THE THREE MONTHS ENDED
                           MARCH 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                    ACCUMULATED
                                             COMMON STOCK           CLASS B STOCK       ADDITIONAL   DIVIDENDS
                                        ----------------------  ----------------------   PAID-IN    ON PREFERRED    DEFERRED
                                         SHARES      AMOUNT      SHARES      AMOUNT      CAPITAL       STOCK      COMPENSATION
                                        ---------  -----------  ---------  -----------  ----------  ------------  -------------
<S>                                     <C>        <C>          <C>        <C>          <C>         <C>           <C>
Balance at January 1, 1996............  4,064,059   $  40,641
Net income............................
                                        ---------  -----------
Balance at December 31, 1996..........  4,064,059      40,641
Issuance of common stock..............    609,609       6,096                           $  369,204
Issuance of common stock for
  acquisition of Internet Northeast...  3,981,268      39,812                            2,411,314
Net loss..............................
                                        ---------  -----------                          ----------
Balance at December 31, 1997..........  8,654,936      86,549                            2,780,518
September 1, 1998, redemption of
  3,377,693 shares of common stock at
  $0.99 per share.....................
Issuance of shares of common stock at
  $1.00 per share for consulting
  services............................       1003          10                                  990
Warrants..............................                                                      19,447
Issuance of Class B stock, net of
  subscription receivable of $5,608...                          3,190,664   $  26,299      (26,299)
Preferred stock dividend..............                                                    (306,969)  $  306,969
Accretion of preferred stock issuance
  costs...............................                                                     (29,057)
Net loss..............................
                                        ---------  -----------  ---------  -----------  ----------  ------------  -------------
Balance at December 31, 1998..........  8,655,939      86,559   3,190,664      26,299    2,438,630      306,969
Issuance of Class B stock, net of
  subscription receivable of $5,800...                            785,717       2,057       (2,057)
Deferred compensation on grant of
  stock options.......................                                                   8,779,873                  (8,779,873)
Amortization of deferred
  compensation........................                                                                                  90,204
Preferred stock dividend..............                                                    (305,832)     305,832
Accretion of preferred stock issuance
  costs...............................                                                     (27,310)
Allocation of value to beneficial
  conversion feature..................                                                   8,621,320
Dividend recorded for amortization of
  discount resulting from allocation
  of beneficial conversion feature....                                                  (8,621,320)
Net loss..............................
                                        ---------  -----------  ---------  -----------  ----------  ------------  -------------
Balance at March 31, 1999
  (unaudited).........................  8,655,939   $  86,559   3,976,381   $  28,356   $10,883,304  $  612,801    $(8,689,669)
                                        ---------  -----------  ---------  -----------  ----------  ------------  -------------
                                        ---------  -----------  ---------  -----------  ----------  ------------  -------------

<CAPTION>
                                            TREASURY STOCK
                                        -----------------------              SHAREHOLDERS'
                                        ACCUMULATED                             EQUITY
                                          DEFICIT      SHARES      AMOUNT      (DEFICIT)
                                        ------------  ---------  ----------  -------------
<S>                                     <C>           <C>        <C>         <C>
Balance at January 1, 1996............   $  (47,355)                          $    (6,714)
Net income............................       27,049                                27,049
                                        ------------                         -------------
Balance at December 31, 1996..........      (20,306)                               20,335
Issuance of common stock..............                                            375,300
Issuance of common stock for
  acquisition of Internet Northeast...                                          2,451,126
Net loss..............................     (138,960)                             (138,960)
                                        ------------                         -------------
Balance at December 31, 1997..........     (159,266)                            2,707,801
September 1, 1998, redemption of
  3,377,693 shares of common stock at
  $0.99 per share.....................                (3,377,693) $(3,356,022)   (3,356,022)
Issuance of shares of common stock at
  $1.00 per share for consulting
  services............................                                              1,000
Warrants..............................                                             19,447
Issuance of Class B stock, net of
  subscription receivable of $5,608...                                                 --
Preferred stock dividend..............                                                 --
Accretion of preferred stock issuance
  costs...............................                                            (29,057)
Net loss..............................   (1,260,319)                           (1,260,319)
                                        ------------  ---------  ----------  -------------
Balance at December 31, 1998..........   (1,419,585)  (3,377,693) (3,356,022)   (1,917,150)
Issuance of Class B stock, net of
  subscription receivable of $5,800...                                                 --
Deferred compensation on grant of
  stock options.......................                                                 --
Amortization of deferred
  compensation........................                                             90,204
Preferred stock dividend..............                                                 --
Accretion of preferred stock issuance
  costs...............................                                            (27,310)
Allocation of value to beneficial
  conversion feature..................                                          8,621,320
Dividend recorded for amortization of
  discount resulting from allocation
  of beneficial conversion feature....                                         (8,621,320)
Net loss..............................   (1,390,598)                           (1,390,598)
                                        ------------  ---------  ----------  -------------
Balance at March 31, 1999
  (unaudited).........................   $(2,810,183) (3,377,693) $(3,356,022)  $(3,244,854)
                                        ------------  ---------  ----------  -------------
                                        ------------  ---------  ----------  -------------
</TABLE>

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

                                      F-5
<PAGE>
                                HARVARDNET INC.

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                              THREE MONTHS
                                                  FOR THE YEARS ENDED DECEMBER 31,          ENDED MARCH 31,
                                               --------------------------------------  --------------------------
<S>                                            <C>         <C>          <C>            <C>          <C>
                                                  1996        1997          1998          1998          1999
                                               ----------  -----------  -------------  -----------  -------------

<CAPTION>
                                                                                              (UNAUDITED)
<S>                                            <C>         <C>          <C>            <C>          <C>
Cash flows from operating activities:
  Net income (loss)..........................  $   27,049  $  (138,960) $  (1,260,319) $  (135,873) $  (1,390,598)
  Adjustments to reconcile net income (loss)
    to net cash provided by (used in)
    operating activities:
    Deferred income taxes....................          --      (66,500)      (457,500)     (49,322)       (85,000)
    Depreciation and amortization............       6,211      187,353      1,339,382      317,531        500,363
    Provision for bad debt...................          --       24,717         25,283           --         33,489
    Compensation charge for issuance of stock
      options................................          --           --             --           --         90,204
    Changes in operating assets and
      liabilities, excluding effects of
      business combinations:
      Accounts receivable....................     (37,143)    (140,561)       (32,297)     (24,905)      (181,342)
      Prepaid expenses and other current
        assets...............................          --       (3,500)      (224,796)         119       (376,762)
      Other assets...........................          --          924       (111,362)          --          9,962
      Accounts payable.......................      77,043       60,916        212,395       24,791       (109,820)
      Deferred revenue.......................          --           --         37,071           --         15,981
      Accrued expenses.......................      22,456       31,796        379,616      295,161         76,445
                                               ----------  -----------  -------------  -----------  -------------
Net cash provided by (used in) operating
  activities.................................      95,616      (43,815)       (92,527)     427,502     (1,417,078)
                                               ----------  -----------  -------------  -----------  -------------
Cash flows from investing activities:
  Purchase of the Network Services Division
    of Comstor Corporation...................          --           --             --           --     (2,822,573)
  Purchases of property and equipment........          --      (18,762)    (1,009,810)     (36,207)      (627,398)
                                               ----------  -----------  -------------  -----------  -------------
  Net cash used in investing activities......          --      (18,762)    (1,009,810)     (36,207)    (3,449,971)
                                               ----------  -----------  -------------  -----------  -------------
Cash flows from financing activities:
  Payments on capital lease obligations......      (5,789)     (28,019)       (42,812)          --        (17,959)
  Payments on note payable...................          --       (3,831)       (18,474)      (4,401)            --
  Payments on note payable to stockholder....          --       (3,614)       (25,076)      (5,541)        (2,000)
  Redemption of common stock for treasury....          --           --     (3,356,022)          --             --
  Proceeds from issuance of redeemable
    convertible Series A preferred stock.....          --           --      9,356,463           --      8,623,256
  Proceeds from issuance of Class B stock....          --           --          1,794           --             --
  Proceeds from issuance of common stock.....          --      375,300             --           --             --
                                               ----------  -----------  -------------  -----------  -------------
Net cash provided by (used in) financing
  activities.................................      (5,789)     339,836      5,915,873       (9,942)     8,603,297
                                               ----------  -----------  -------------  -----------  -------------
Net increase in cash and equivalents.........      89,827      277,259      4,813,536      381,353      3,736,248
Cash and cash equivalents, beginning of the
  period.....................................      58,478      148,305        425,564      425,564      5,239,100
                                               ----------  -----------  -------------  -----------  -------------
Cash and cash equivalents, end of the
  period.....................................  $  148,305  $   425,564  $   5,239,100  $   806,917  $   8,975,348
                                               ----------  -----------  -------------  -----------  -------------
                                               ----------  -----------  -------------  -----------  -------------
</TABLE>

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

                                      F-6
<PAGE>
                                HARVARDNET INC.

                         NOTES TO FINANCIAL STATEMENTS

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

1. NATURE OF BUSINESS:

    HarvardNET Inc. (the "Company") a Delaware corporation, provides high-speed
data networking solutions and Web site hosting services to customers located in
the Northeast and Mid-Atlantic regions of the United States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

    CASH EQUIVALENTS

    Cash equivalents consist of short-term investments with remaining maturities
of three months or less at the date of purchase.

    PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost and depreciated on a straight-line
basis over estimated useful lives of three and ten years. Leasehold improvements
are depreciated over the shorter of related lease terms or the estimated useful
lives. Property and equipment acquired under capital leases is depreciated over
the useful life of the asset. Upon retirement or sale, the costs of the assets
disposed and the related accumulated depreciation are removed from the accounts
and any resulting gain or loss is included in the determination of income.
Repairs and maintenance costs are charged to expense as incurred.

    INTANGIBLE ASSETS

    Intangible assets consist of the cost of the acquired customer bases,
network leases, peering arrangements and goodwill resulting from business
combinations. Intangible assets are amortized using the straight-line method
over three to five years. The carrying value of the intangible assets is
reviewed on a quarterly and annual basis for the existence of facts or
circumstances both internally and externally that may suggest impairment. To
date, no such impairment has occurred. The Company determines whether an
impairment has occurred based on gross expected future cash flows and measures
the amount of the impairment based on the related future estimated discounted
cash flows. The cash flow estimates used to determine the impairment, if any,
contain management's best estimates, using appropriate and customary assumptions
and projections at that time.

    REVENUE RECOGNITION

    Revenues are principally generated from the provision of Internet access,
Web site hosting and other related data services. These revenues are recognized
at the time services are provided. Service plans range from one month to one
year. Advance collections relating to future access services are recorded as
deferred revenue and recognized as revenue when earned. Revenues related to
non-recurring installation and activation fees are recognized when the services
are provided and to the extent of the related direct costs. The Company expenses
the related direct costs as incurred. Any excess of non-recurring installation
and activation fees over direct costs are deferred and recognized to revenue
over the period of the customer service contract. To date, such excess has been
immaterial.

    COSTS OF SERVICES

    Costs of services principally include costs of data transmission and
Internet access, exclusive of depreciation and amortization.

                                      F-7
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
    INCOME TAXES

    The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". SFAS
109 is an asset and liability approach that requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of events
that have been recognized in the Company's financial statements or tax returns.
In estimating future tax consequences, SFAS 109 generally considers all expected
future events other than enactment of changes in the tax law or rates. Valuation
allowances are provided if, based upon the weight of available evidence, it is
more likely than not that some or all of the deferred tax assets will not be
realized.

    STOCK-BASED COMPENSATION

    Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation" encourages but does not require companies to record
compensation cost for stock-based employee compensation at fair value. The
Company has chosen to account for stock-based compensation granted to employees
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. Accordingly, compensation cost for stock options granted to
employees is measured as the excess, if any, of the fair value of the Company's
stock at the date of the grant over the amount that must be paid to acquire the
stock. Compensation cost to non-employees is measured using the fair value
method prescribed by SFAS No. 123.

    USE OF ESTIMATES

    The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates. Significant estimates
in these financial statements include valuation of acquired assets and
liabilities, deferred tax assets, net realizable values and useful lives of
intangible assets.

    CONCENTRATIONS OF CREDIT RISK

    Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash equivalents and
accounts receivable. At December 31, 1998, March 31, 1999 and periodically
throughout the period, the Company had cash balances at certain financial
institutions in excess of federally insured limits. However, the Company does
not believe that it is subject to any unusual credit risk beyond the normal
credit risk associated with commercial banking relationships. The Company
believes that concentration of credit risk with respect to accounts receivable
is limited due to the Company's broad customer base.

    RECENT ACCOUNTING PRONOUNCEMENTS

    In June 1998, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company, to date, has
not engaged in derivative and hedging activities, and

                                      F-8
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
accordingly does not believe that the adoption of SFAS No. 133 will have a
material impact on the financial reporting and related disclosures of the
Company. The Company will adopt SFAS No. 133 as required for its first quarterly
filing of fiscal year 2000.

    On January 1, 1999, the Company adopted the provisions of Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." Accordingly, the Company capitalizes costs
associated with the design and implementation of their operating systems,
including internally and externally developed software. Capitalized external
software include actual costs of purchasing existing software from vendors.
Capitalized internal software generally include costs of personnel incurred in
the enhancement and implementation of purchased software packages. To date,
internal costs eligible for capitalization under SOP 98-1 have been immaterial.

    INTERIM FINANCIAL INFORMATION

    The consolidated financial statements of the Company as of March 31, 1999
and for the three months ended March 31, 1998 and 1999 are unaudited. All
adjustments (consisting only of normal recurring adjustments) have been made,
which in the opinion of management, are necessary for a fair presentation.
Results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999 or for any other future period.

    PRO FORMA BALANCE SHEET (UNAUDITED)

    Upon the closing of the Company's initial public offering, all of the
outstanding shares of redeemable convertible preferred stock and Class B stock
will automatically convert into approximately 22,320,351 shares of HarvardNET
Inc. common stock assuming an offering price of $14.00. The unaudited pro forma
presentation of the balance sheet has been prepared assuming the conversion of
the redeemable convertible preferred stock and Class B stock into common stock
at March 31, 1999.

3. NET INCOME (LOSS) PER SHARE AND PRO FORMA INCOME (LOSS) PER SHARE:

    Basic income (loss) per share is computed using the weighted average number
of common shares outstanding during the period. Dilutive income (loss) per share
is computed using the weighted average number of common shares outstanding
during the period, plus the dilutive effect of common stock equivalents. Common
stock equivalent shares consist of preferred stock, stock options and warrants.
During the years ended December 31, 1997 and 1998 and the three-month period
ended March 31, 1999, options to purchase 406,406, 406,406 and 1,163,052 shares
of common stock, respectively, preferred stock convertible into 0, 9,949,221 and
18,626,173 shares of common stock, respectively, and warrants to purchase 0,
93,121 and 93,121 shares of common stock, respectively, were excluded from the
calculation of earnings per share since their inclusion would be antidilutive.
Pro forma basic and diluted income (loss) per share have been calculated
assuming the conversion of all outstanding shares of preferred stock and Class B
stock into common stock, as if the shares had converted immediately upon their
issuance. Accordingly, net income (loss) has not been adjusted for the accrued
dividends for preferred stock in the calculation of pro forma income (loss) per
share.

                                      F-9
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

3. NET INCOME (LOSS) PER SHARE AND PRO FORMA INCOME (LOSS) PER SHARE:
(CONTINUED)
    The following is a calculation of pro forma net loss per share (unaudited):

<TABLE>
<CAPTION>
                                                                                                    FOR THE THREE
                                                                                      YEAR ENDED     MONTHS ENDED
                                                                                    DECEMBER 1998   MARCH 31, 1999
                                                                                    --------------  --------------
<S>                                                                                 <C>             <C>
Basic and diluted:
Net loss..........................................................................   $ (1,260,319)   $ (1,390,598)
Weighted average number of common stock outstanding...............................      7,526,019       5,278,246
Weighted average assumed number of common shares upon conversion of preferred
  stock and Class B stock.........................................................      4,946,579      22,320,351
                                                                                    --------------  --------------
Total weighted average number of shares used in computing pro forma net loss per
  share...........................................................................     12,472,598      27,598,597

Basic and diluted pro forma net loss per common share.............................   $      (0.10)   $      (0.05)
                                                                                    --------------  --------------
                                                                                    --------------  --------------
</TABLE>

4. ACQUISITIONS:


    On November 12, 1997, the Company acquired all of the common stock of
Internet Northeast in exchange for 3,981,268 shares of common stock of the
Company. The transaction was accounted for using the purchase method. The
purchase price was estimated to be approximately $3,306,000 based on the value
at which the Company's common stock had recently been sold to third party
investors, and assumed liabilities. The fair value of the net tangible assets
acquired approximated $39,000, which consisted primarily of computer, network
and communications equipment. The remaining purchase price was allocated to the
acquired customer base and goodwill, which is being amortized over three years.
No patents, material non-competition agreements, or operating know-how was
acquired. No value was ascribed to the employee base.



    On January 11, 1999, the Company acquired certain assets of the Internet
service provider business of Comstor Corporation ("Network Services Division of
Comstor Corporation") for approximately $3,598,000 in cash and assumed
liabilities. This transaction was accounted for using the purchase method. The
fair value of the net tangible assets acquired, consisting primarily of
computer, network and communications equipment, approximated $498,000. The
remaining purchase price was allocated to the acquired network, peering
arrangements, customer base and goodwill, which are each being amortized over
five years. No patents, non-competition agreements or other operating know-how
was acquired. No value was ascribed to the employee base.


                                      F-10
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

    The results of operations for Internet Northeast are included in the
Company's statements of operations from November 12, 1997, the effective
acquisition dates. The results of operations of the Network Services Division of
Comstor Corporation are included in the Company's statements of operations from
January 11, 1999, the date of acquisition.

    The following unaudited pro forma combined historical results present
HarvardNET and Internet Northeast as if the acquisition had occurred at the
beginning of 1997, and HarvardNET and the Network Services Division of Comstor
Corporation as if the acquisition had occurred at the beginning of 1998. The pro
forma results include amortization of intangibles and net deferred tax assets
resulting from the acquisitions, and assumed taxes. The unaudited pro forma
combined historical results are not necessarily indicative of the results of
operations that would actually have occurred if the transactions had been
consummated as of January 1, and is not intended to indicate the expected
results for any future period.

<TABLE>
<CAPTION>
                                                                                        YEAR ENDED DECEMBER 31,
                                                                                      ----------------------------
                                                                                          1997           1998
                                                                                      -------------  -------------
<S>                                                                                   <C>            <C>
Revenues............................................................................  $   2,641,026  $   5,293,292
Net loss............................................................................     (1,142,098)    (2,342,432)
Net loss per share-basic and diluted................................................  $       (0.24) $       (0.31)
</TABLE>

5. PROPERTY AND EQUIPMENT:

    Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                               DECEMBER 31,
                                         ------------------------   MARCH 31,    DEPRECIABLE
                                            1997         1998          1999         LIVES
                                         ----------  ------------  ------------  ------------
<S>                                      <C>         <C>           <C>           <C>
                                                                   (UNAUDITED)
Computer and networking equipment......  $  384,527  $  1,400,611  $  1,979,740    3 years
Software...............................       5,003        52,883        96,717    3 years
Furniture and fixtures.................       2,729        16,769        97,655    10 years
Leasehold improvements.................       8,294         8,294        83,309   lease term
                                         ----------  ------------  ------------
                                            400,553     1,478,557     2,257,421

Accumulated depreciation and
  amortization.........................    (172,039)     (421,959)     (553,159)
                                         ----------  ------------  ------------
Property and equipment, net............  $  228,514  $  1,056,598  $  1,704,262
                                         ----------  ------------  ------------
                                         ----------  ------------  ------------
</TABLE>

    Equipment under capital leases included above at:

<TABLE>
<CAPTION>
                                                  DECEMBER 31,
                                              ---------------------   MARCH 31,   DEPRECIABLE
                                                1997        1998        1999         LIVES
                                              ---------  ----------  -----------  -----------
<S>                                           <C>        <C>         <C>          <C>
                                                                     (UNAUDITED)
Computer and networking equipment...........  $  99,626  $  210,832  $   210,832    3 years
Less accumulated amortization...............    (28,019)   (107,764)    (124,599)
                                              ---------  ----------  -----------
                                              $  71,607  $  103,068  $    86,233
                                              ---------  ----------  -----------
                                              ---------  ----------  -----------
</TABLE>

                                      F-11
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

5. PROPERTY AND EQUIPMENT: (CONTINUED)
    Depreciation and amortization expense for the years ended December 31, 1996,
1997 and 1998 was $6,211, $98,475, $249,920, respectively, and for the three
months ended March 31, 1998 and 1999 was $43,628, and $131,200, respectively.

6. INTANGIBLE ASSETS:

    Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                             DECEMBER 31,
                                      --------------------------   MARCH 31,       USEFUL
                                          1997          1998          1999          LIVES
                                      ------------  ------------  ------------  -------------
<S>                                   <C>           <C>           <C>           <C>
                                                                  (UNAUDITED)
Acquired customer base..............  $  2,412,092  $  2,412,092  $  3,187,044  3 to 5 years
Peering arrangements................            --            --       774,952     5 years
Goodwill............................       856,293       856,293     1,631,245  3 to 5 years
Less accumulated amortization.......      (136,183)   (1,225,645)   (1,594,808)
                                      ------------  ------------  ------------
Intangible assets, net..............  $  3,132,202  $  2,042,740  $  3,998,433
                                      ------------  ------------  ------------
                                      ------------  ------------  ------------
</TABLE>

7. ACCRUED EXPENSES:

    Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31        MARCH 31
                                                             ---------------------  ----------
                                                               1997        1998        1999
                                                             ---------  ----------  ----------
<S>                                                          <C>        <C>         <C>
Telecommunication charges..................................  $  28,000  $   20,771  $  180,555
Sales tax..................................................     31,804      50,000      51,797
Wages, salaries, commissions and related taxes.............        737      39,073     111,750
Professional fees..........................................         --     199,066      85,000
Other accrued expenses.....................................         --     131,247      87,500
                                                             ---------  ----------  ----------
                                                             $  60,541  $  440,157  $  516,602
                                                             ---------  ----------  ----------
                                                             ---------  ----------  ----------
</TABLE>

8. NOTES PAYABLE:

    In 1997, the Company assumed a 1995 term loan agreement between Internet
Northeast and a bank for $50,000 at an interest rate of 10.5% to be repaid over
three years. At December 31, 1997, the balance outstanding on the loan was
$18,474. This loan was repaid during 1998.

    In 1997, the Company assumed a term loan between Internet Northeast and a
stockholder of the Company for $100,000 at an interest rate of 10% to be repaid
over four years. The balance outstanding on this loan at December 31, 1997, 1998
and March 31, 1999 was $84,181, $54,820 and $52,821, respectively.

                                      F-12
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

9. COMMITMENTS:

    LEASES

    The Company leases its facilities and certain equipment under operating and
capital leases. The leases expire at various dates through September 30, 2000
and generally require the payment of real estate taxes, insurance, maintenance,
and operating costs. The minimum aggregate future obligations under
noncancelable leases are as follows:

<TABLE>
<CAPTION>
                                                                           OPERATING    CAPITAL
YEAR ENDING DECEMBER 31,                                                    LEASES      LEASES
- ------------------------------------------------------------------------  -----------  ---------
<S>                                                                       <C>          <C>
1999....................................................................   $  46,055   $  77,349
2000....................................................................       6,250      34,955
                                                                          -----------  ---------
Total...................................................................   $  52,305     112,304
                                                                          -----------
                                                                          -----------
Less interest...........................................................                  (9,236)
                                                                                       ---------
Total principal obligation..............................................                 103,068
Less: current portion...................................................                 (69,840)
                                                                                       ---------
Noncurrent portion of principal obligation..............................               $  33,228
                                                                                       ---------
                                                                                       ---------
</TABLE>

10. REDEEMABLE CONVERTIBLE SERIES A PREFERRED STOCK:

    During 1998, the Company issued 7,344,299 shares of redeemable convertible
Series A Preferred Stock ("Series A Preferred Stock") to private investors for
$9,356,463, net of issuance costs of $525,366. On March 23, 1999, the Company
issued 6,405,141 shares of Series A Preferred Stock to private investors for
$8,621,320. At that date, the Company allocated the entire amount of the
proceeds to a non-detachable beneficial conversion feature and, as the shares
were immediately convertible, that amount was recorded as a non-recurring,
non-cash dividend.

    The Series A Preferred stockholders are entitled to votes equaling the
number of shares of common stock into which each share may be converted. The
amended Certificate of Incorporation, which includes a redemption agreement,
provides that the Company shall redeem, at the request of any holder or holders
of issued and outstanding Series A Preferred Stock on or after September 1,
2003, all of the outstanding shares of Series A Preferred Stock held by such
requesting holder or holders.

    The amended Certificate of Incorporation provides that, at any time, a
Series A Preferred stockholder shall be entitled to voluntarily convert all
shares into a number of shares of Common Stock on a 1.3546862-for-one basis,
subject to anti-dilution adjustment. Furthermore, each share of Series A
Preferred Stock shall automatically be converted into common stock immediately
upon the conversion of 60% or more of the outstanding Series A Preferred Stock
or upon an initial public offering of the Company's common stock at a minimum
offering price of $3.97 per share which results in gross proceeds of at least
$20,000,000 on a 1.3546862-for-one basis, subject to anti-dilution adjustment.
In the case of the sale of the Company, the Series A Preferred Stock converts
into a number of shares of common stock on a 1.3546862-for-one basis, subject to
anti-dilution adjustment.

    The Series A Preferred stockholders have preference upon liquidation over
common and Class B stockholders and are entitled to participate ratably in any
dividends paid to holders of common stock based on the conversion rate in effect
at the time.

                                      F-13
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

11. STOCKHOLDERS' EQUITY:

    STOCK SPLITS

    On November 7, 1997, the Company effected a 100-for-1 stock split through a
stock dividend of common stock. On November 11, 1998, the Company effected a
10-for-1 stock split through a stock dividend of Series A Preferred Stock, Class
B Stock and Common Stock. In July 1999, the Board of Directors of the Company
declared a 1.3546862-for-1 stock split to be effected through a stock dividend
of its Class B Stock and Common Stock. All references to preferred, Class B
Stock and Common Stock share and per share amounts including options and
warrants to purchase common stock have been retroactively restated to reflect
the stock splits.

    COMMON STOCK

    The common stockholders are entitled to one vote per share. At December 31,
1998 and March 31, 1999, the Company had reserved 13,639,412 and 23,095,381,
shares of common stock, respectively, for future issuance upon conversion of
Series A Preferred Stock and Class B Stock and the exercise of warrants and
stock options.

    On December 7, 1998, the Company issued 1,003 shares of common stock to one
entity in connection with the provision of $1,000 of consulting services to the
Company.

    CLASS B STOCK

    During 1998, the Company issued 3,190,664 shares of Class B Stock to two
officers of the Company for $7,402, $5,608 of which was received in the form of
a subscription receivable. During January 1999, the Company issued 785,717
shares of Class B stock to two other officers of the Company for a subscription
receivable of $5,800. All subscription receivables were paid by the officers in
May 1999.

    The holders of Class B Stock are entitled to one vote for each share held.
Dividends, distributions in liquidation or other distributions are payable to
the extent that payments made to common and preferred stockholders exceed
$24,144,164 plus any accumulated but unpaid Series A Preferred stock dividends.
The Class B Stock is convertible at any time at the discretion of the holder
into one share of common stock for an exercise price of $0.99 per share. The
Class B stock automatically converts into common stock upon the consummation of
an initial public offering of the Company's common stock at a minimum offering
price per share of $3.97 which results in gross proceeds of $20,000,000. Upon
automatic conversion, the Class B Stock converts at a rate calculated by
dividing the difference between the offering price and the Class B Stock
conversion price of $0.99 by the offering price. The outstanding Class B stock
is subject to repurchase by the Company on terms set forth in each holder's
employment agreement with the Company.

    WARRANTS

    On September 1, 1998, the Company issued warrants in conjunction with the
preferred stock financing for the purchase of 93,121 shares of its common stock
at a purchase price of $0.99 per share. The warrants were exercisable upon
issuance and expire on September 1, 2003. The Company estimated the value of the
warrants to be $19,447 at the date of issuance.

                                      F-14
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

11. STOCKHOLDERS' EQUITY: (CONTINUED)
    STOCK OPTIONS

    1997 STOCK INCENTIVE PLAN

    In November 1997, the Board of Directors adopted the 1997 Stock Incentive
Plan (the "1997 Plan") for the issuance of incentive and nonqualified stock
options. The number of shares of common stock authorized for issuance under the
1997 Plan is 406,406 shares. Options to purchase common stock are granted at the
discretion of the Board of Directors.

    Under the terms of the 1997 Plan, the exercise price of incentive stock
options granted must not be less than 100% (110% in certain cases) of the fair
market value of the common stock on the date of grant, as determined by the
Board of Directors. The exercise price of nonqualified stock options may be less
than the fair market value of the common stock on the date of grant, as
determined by the Board of Directors but in no case may the exercise price be
less than the statutory minimum. Vesting of options granted is at the discretion
of the Board of Directors.

    1999 STOCK INCENTIVE PLAN

    In January 1999, the Board of Directors adopted the 1999 Stock Incentive
Plan (the "1999 Plan") for the issuance of incentive and nonqualified stock
options. Awards may be made under the 1999 Plan for up to 5,419,000 shares of
common stock. Options to purchase common stock are granted at the discretion of
the Board of Directors. In March 1999, options to purchase an aggregate of
756,646 shares of common stock which vest over a four year period were granted
to employees with an exercise price of $1.00 per share. At the date of grant,
the Company recorded deferred compensation of $8,780,000, which will be charged
ratably to income over the four year vesting period. These options remained
unexercised at March 31, 1999.

    At December 31, 1998 and March 31, 1999, 406,406 and 1,343,104 shares,
respectively, were available for grant under the 1997 and 1999 plans.

    A summary of activity under the Company's 1997 and 1999 plans for the years
ended December 31, 1997 and 1998, and the three months ended March 31, 1999 is
presented below:

<TABLE>
<CAPTION>
                                                                                     WEIGHTED-
                                                                                      AVERAGE
                                                                                     EXERCISE
                                                                          SHARES       PRICE
                                                                        ----------  -----------
<S>                                                                     <C>         <C>
Outstanding at January 1, 1997........................................          --          --
Granted...............................................................     406,406   $    0.62
                                                                        ----------
Outstanding at December 31, 1997......................................     406,406   $    0.62
No activity...........................................................          --          --
                                                                        ----------
Outstanding at December 31, 1998......................................     406,406   $    0.62
Granted...............................................................     756,646   $    1.00
                                                                        ----------
Outstanding at March 31, 1999.........................................   1,163,052   $    0.87
                                                                        ----------
                                                                        ----------
Options exercisable at March 31, 1999.................................     406,406   $    0.62
                                                                        ----------
                                                                        ----------
</TABLE>

                                      F-15
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

11. STOCKHOLDERS' EQUITY: (CONTINUED)
    The following table summarizes information about stock options outstanding
at March 31, 1999:

<TABLE>
<CAPTION>
                              WEIGHTED-
                               AVERAGE
                              REMAINING
  EXERCISE                   CONTRACTUAL      SHARES
    PRICE        SHARES     LIFE (YEARS)    EXERCISABLE
- -------------  ----------  ---------------  -----------
<S>            <C>         <C>              <C>
    $0.62         406,406           8.4        406,406
    $1.00         756,646           9.8             --
               ----------                   -----------
                1,163,052           9.3        406,406
               ----------                   -----------
               ----------                   -----------
</TABLE>

    The fair value of the options granted in 1997 and the three months ended
March 31, 1999 is estimated to be $0.17 and $11.77 per share, respectively. The
fair value of the option grant was estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions: risk free
rate of 5.8% and 4.6%; no expected dividend; an expected life of 4 years; and no
volatility. Had the Company accounted for stock options to employees under the
fair value method prescribed under SFAS No. 123, net losses as reported for the
year ended December 31, 1997 and for the three months ended March 31, 1999 would
have increased $50,250 to $189,210 and $25,000 to 1,415,598, respectively. Pro
forma net loss per share (basic and diluted) reported for the year ended
December 31, 1997 and March 31, 1999 would have increased $0.01 to $0.04 and
remain unchanged at $0.33, respectively.

12. INCOME TAXES:

    The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                                                                      THREE MONTHS
                                                                                                       ENDED MARCH
                                                                    1996        1997        1998          1999
                                                                  ---------  ----------  -----------  -------------
<S>                                                               <C>        <C>         <C>          <C>
                                                                                                       (UNAUDITED)
Current
  Federal.......................................................  $   6,000  $   15,000           --            --
  State.........................................................      2,709       7,000           --            --
                                                                  ---------  ----------  -----------  -------------
                                                                      8,709      22,000           --            --
Deferred
  Federal.......................................................         --     (62,500) $  (428,500)  $   (80,000)
  State.........................................................         --      (4,000)     (29,000)       (5,000)
                                                                  ---------  ----------  -----------  -------------
                                                                         --     (66,500)    (457,500)      (85,000)
                                                                  ---------  ----------  -----------  -------------
Total provision (benefit).......................................  $   8,709  $  (44,500) $  (457,500)  $   (85,000)
                                                                  ---------  ----------  -----------  -------------
                                                                  ---------  ----------  -----------  -------------
</TABLE>

                                      F-16
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

12. INCOME TAXES: (CONTINUED)

    The Company's effective tax rate varies from the statutory rate as follows:

<TABLE>
<CAPTION>
                                                                                    THREE MONTHS
                                                                                     ENDED MARCH
                                                    1996       1997       1998          1999
                                                  ---------  ---------  ---------  ---------------
<S>                                               <C>        <C>        <C>        <C>
                                                                                     (UNAUDITED)
U.S. Federal income tax rate....................       34.0%     (34.0)%     (34.0)%         (34.0  )%
Benefit of graduated U.S. Federal income tax
  rate..........................................      (19.4)%     (10.2)%       1.5%            --
State income tax rate...........................        4.7%       1.0%      (1.1)%          (1.4  )%
Nondeductible acquisition expenses..............         --       13.0%        --             --
Nondeductible intangible amortization...........         --        6.5%       5.6%           1.4%
Valuation allowance.............................         --         --         --           29.3%
Other...........................................        5.1%      (0.6)%       1.4%          (1.4  )%
                                                  ---------  ---------  ---------          -----
                                                       24.4%     (24.3)%     (26.6)%          (6.1  )%
                                                  ---------  ---------  ---------          -----
                                                  ---------  ---------  ---------          -----
</TABLE>

    The components of the net deferred tax liability are as follows:

<TABLE>
<CAPTION>
                                                                         1997         1998
                                                                      -----------  -----------
<S>                                                                   <C>          <C>
Deferred Tax Assets
  Net operating loss carryforwards..................................           --  $   100,000
  Accounts receivable reserve.......................................  $     9,000       18,000
  Accrued expenses..................................................        6,000       62,000
  Depreciation......................................................       16,000       23,000
                                                                      -----------  -----------
                                                                           31,000      203,000
Deferred Tax Liability
  Intangible assets.................................................     (821,000)    (535,000)
                                                                      -----------  -----------
  Net deferred tax liability........................................  $  (790,000) $  (332,000)
                                                                      -----------  -----------
                                                                      -----------  -----------
</TABLE>

    As of December 31, 1998, the Company had federal net operating loss
carryforwards of approximately $280,000 which begin to expire in 2018.

    Ownership changes resulting from the Company's issuance of capital stock may
limit the amount of net operating loss carryforwards that can be utilized
annually to offset future taxable income. The amount of the annual limitation is
determined based upon the Company's value immediately prior to ownership change.
Subsequent significant changes in ownership could further affect the limitation
in the future.

13. EMPLOYEE BENEFIT PLAN:

    In May 1998, the Company established a savings plan for its employees which
is designed to be qualified under Section 401(k) of the Internal Revenue Code.
Eligible employees are permitted to contribute to the 401(k) plan through
payroll deductions within statutory and plan limits. The Company has not
contributed to the savings plan to date.

                                      F-17
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

14. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

    The following is the supplemental cash flow information for all periods
presented:

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                              --------------------------------
<S>                                                           <C>        <C>        <C>
                                                                1996       1997        1998
                                                              ---------  ---------  ----------
Cash paid during the period for interest....................  $   1,535  $   2,372      24,888
Cash paid during the period for income taxes................  $  18,384         --          --
Noncash financing and investing activities:
  Issuance of Class B stock in exchange for promissory
    notes...................................................         --         --  $    5,608
  Acquisition of equipment through capital lease............  $  75,809  $  23,817  $  111,206
</TABLE>

15. SEGMENT REPORTING:

    In June 1997, the Financial Accounting Standards Board issued SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information", which
requires certain information to be reported about operating segments consistent
with management's internal view of the Company.

    The Company has a single operating segment, Internet access services. The
Company has no organizational structure dictated by product lines, geography or
customer type.

    Sales are derived from one service line, Internet access service, and are
provided to residential and business customers in Maine, New Hampshire and
Massachusetts. The Company evaluates performance based on profit or loss from
operations before interest, income taxes, depreciation and amortization.

16. SUBSEQUENT EVENT:

    On May 28, 1999, the Company entered into a credit facility with Morgan
Stanley Senior Funding, Inc. ("Morgan Stanley"). Newcourt Commercial Financial
Corporation ("Newcourt") is a co-arranger under the credit facility. The credit
facility provides for maximum borrowings of $30.0 million and has a term of five
years. The Company issued warrants to purchase an aggregate of 765,970 shares of
the Company's common stock for $3.62 per share. The warrants are exercisable
immediately and expire on May 28, 2004. The fair value of the warrants on the
date of grant was approximately $7,171,000. The fair value was determined using
the Black Scholes derivative valuation model with the following assumptions:
expected life of 2 years, volatility of 50%, risk free rate of return of 4.91%
and no dividend rate. Deferred debt issuance costs of approximately $4,398,000
were recorded upon issuance and will be charged to interest expense over the
term of the credit facility using the effective interest method.

    On May 28, 1999, Morgan Stanley purchased 356,294 shares of Series A-2
redeemable convertible preferred stock for $1,500,000 from the Company and
purchased 482,666 shares of common stock of the Company from the Chairman of the
Board of Directors and his spouse for $1,500,000. At that date, the Company
allocated the entire amount of the proceeds of $1,500,000 to a non-detachable
beneficial conversion feature and, as the shares were immediately convertible,
that amount was recorded as a non-recurring, non-cash dividend.

    On May 28, 1999, the Company amended its Certificate of Incorporation to
increase the number of shares of authorized preferred stock to an aggregate of
14,105,734 shares of Series A Preferred Stock. The Company's Series A Preferred
Stock was further subdivided into 13,749,440 shares of Series A-1 preferred

                                      F-18
<PAGE>
                                HARVARDNET INC.

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(THE INFORMATION PRESENTED RELATING TO THE THREE MONTHS ENDED MARCH 31, 1998 AND
                               1999 IS UNAUDITED)

16. SUBSEQUENT EVENT: (CONTINUED)
stock and 356,294 shares of Series A-2 preferred stock. All shares of Series A
Preferred Stock then issued were designated as shares of Series A-1 preferred
stock. Series A-2 preferred stock is identical to Series A-1 preferred stock,
except that the dividend rate, the liquidation preference, the redemption price
and the conversion price is different for the Series A-1 preferred stock and the
Series A-2 preferred stock. Both the Series A-1 and A-2 preferred stock converts
into common stock on a 1.3546862-for-one basis, subject to anti-dilution
adjustments.

    For the period from April 1, 1999 through June 10, 1999 (unaudited), the
Company granted options for the purchase of 282,043 shares of common stock to
employees at exercise prices ranging from $1.00 to $2.21 per share. The Company
recorded deferred compensation of approximately $3,037,000 relating to these
grants which will be recognized as compensation charges for issuance of stock
options over the four-year vesting period.

    For the period from April 1, 1999 through June 10, 1999 (unaudited), the
Company canceled options for the purchase of 29,126 shares of common stock
previously issued to employees at exercise prices, in each case, of $1.00 per
share.

    In June 1999 (unaudited), the Board of Directors of the Company adopted the
1999 Employee Stock Purchase Plan. This plan is effective upon the closing of
the anticipated initial public offering and allows eligible employees to
purchase shares of Common Stock at a price equal to the lower of 85% of the
average market price on the beginning or ending of each offering period.

    On July 26, 1999, the stockholders approved an amendment to the Company's
certificate of incorporation increasing the common shares authorized for
issuance to 34,237,000. The Board of Directors authorized a 1.3546862-for-1
stock split, which will be effected through a stock dividend of Class B and
Common Stock (see Note 11). All references to Common Stock and Class B shares,
per share, option and warrant information relating to the Company's stock
including the accompanying financial statements have been retroactively restated
to reflect the stock split.

    On July 26, 1999, the Company decreased the number of shares of Common Stock
under the 1997 Stock Incentive Plan to 406,406. Additionally, on July 26, 1999,
the Company increased the number of shares of Common Stock under the 1999 Stock
Incentive Plan to 5,419,000. The information in these financial statements has
been restated to reflect the increases in Common Stock issuable under the
certificate of incorporation and the changes to the 1997 and 1999 Stock
Incentive Plan.

                                      F-19
<PAGE>
                                HARVARDNET INC.

                        PROFORMA CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS
                                  (UNAUDITED)


    On January 11, 1999, the Company acquired certain assets of the Internet
service provider business of Comstor Corporation ("Network Services Division of
Comstor Corporation") for approximately $3,598,000 in cash and assumed
liabilities. This transaction was accounted for using the purchase method. The
fair value of the net tangible assets acquired, consisting primarily of
computer, network and communications equipment, approximated $498,000. The
remaining purchase price was allocated to the acquired network leases and
peering arrangements, customer base and goodwill, which are each being amortized
over five years. No patents, non-competition agreements or other operating
know-how was acquired. No value was ascribed to the employee base.


    The results of operations of the Network Services Division of Comstor
Corporation are included in the Company's statement of operations from January
11, 1999, the date of acquisition. A pro forma statement of operations for the
three months ended March 31, 1999 has not been presented as it would not be
materially different from unaudited statement of operations of HarvardNET Inc.
for the three months ended March 31, 1999.

    The following unaudited pro forma condensed statement of operations for the
year ended December 31, 1998 present HarvardNET Inc. and the Network Services
Division of Comstor Corporation assuming that the acquisition had occurred at
the beginning of 1998. The unaudited pro forma condensed statement of operations
is not necessarily indicative of the results of operations that would actually
have occurred if the transactions had been consummated as of January 1, and is
not intended to indicate the expected results for any future period. This
statement should be read in conjunction with the historical financial statements
and related notes of the Company and certain acquired businesses, included
herewith.

                                      F-20
<PAGE>
                                HARVARDNET INC.

      PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

                        FOR THE YEAR ENDED DECEMBER 31,

<TABLE>
<CAPTION>
                                                                          1998
                                    --------------------------------------------------------------------------------
<S>                                 <C>              <C>                      <C>          <C>         <C>
                                                        NETWORK SERVICES
                                                            DIVISION
                                    HARVARDNET INC.  OF COMSTOR CORPORATION   ADJUSTMENTS    TOTAL     PRO FORMA(D)
                                    ---------------  -----------------------  -----------  ----------  -------------
Revenue...........................    $ 4,282,063          $ 1,390,229         $(379,000)(B) $5,293,292  $ 5,293,292
Operating expenses:
  Costs of services (exclusive of
  depreciation and amortization
  shown separately below).........      1,877,827            1,491,229          (367,000)(B)  3,002,056    3,002,056
  Selling, general and
  administrative..................      2,814,860              300,482                      3,115,342     3,115,342
  Depreciation and amortization...      1,339,382               30,383           465,000(A)  1,834,765    1,834,765
                                    ---------------        -----------        -----------  ----------  -------------
    Total operating expenses......      6,032,069            1,822,094            98,000    7,952,163     7,952,163
                                    ---------------        -----------        -----------  ----------  -------------
Operating income (loss)...........     (1,750,006)            (431,865)         (477,000)  (2,658,871)   (2,658,871)
Interest income (expense), net....         32,187              (16,612)               --       15,575        15,575
Benefit from income taxes.........        457,500                   --           179,390(C)    636,890      636,890
                                    ---------------        -----------        -----------  ----------  -------------
Net income (loss).................     (1,260,319)            (448,477)         (297,610)  (2,006,406)   (2,006,406)
Preferred stock dividends.........       (336,026)                  --                --     (336,026)           --
                                    ---------------        -----------        -----------  ----------  -------------
Net income (loss) applicable to
  common stockholders.............    $(1,596,345)         $  (448,477)        $(297,610)  $(2,342,432)  $(2,006,406)
                                    ---------------        -----------        -----------  ----------  -------------
                                    ---------------        -----------        -----------  ----------  -------------
Basic and diluted earnings per
  share...........................                                                         $    (0.31)  $     (0.10)
                                                                                           ----------  -------------
                                                                                           ----------  -------------
Weighted average number of shares
  outstanding:
Basic and diluted.................                                                          7,526,019    20,439,463
                                                                                           ----------  -------------
                                                                                           ----------  -------------
</TABLE>

Notes:

A. Acquired customer base, network leases, peering arrangements and goodwill
    were a result of the acquisition in 1999, which are amortized over a five
    year period. Additional amortization expense of approximately $465,000 for
    1998, would have been recorded if this acquisition had occurred at the
    beginning of such period. Total amounts that would have been recorded as
    acquired customer base, network leases, peering arrangements and goodwill
    was $2,325,000 at January 1, 1998.

B.  Intercompany transactions between HarvardNET and the Network Services
    Division of Comstor Corporation are eliminated for this pro forma financial
    statement.

C.  Adjustment for Federal and state income taxes assuming an effective income
    tax rate of 40%.

D. The pro forma presentation has been prepared assuming the conversion of
    HarvardNET's redeemable convertible preferred stock and Class B stock into
    common stock as of January 1, 1998. Accordingly, the pro forma presentation
    excludes the effect of the accrual of preferred stock dividends.

                                      F-21
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and the Stockholders of
HarvardNET Inc.:

    In our opinion, the accompanying balance sheets and the related statements
of operations, stockholders' equity and cash flows, present fairly, in all
material respects, the financial position of Internet Northeast at December 31,
1996 and October 31, 1997, and the results of its operations and its cash flows
for the year ended December 31, 1996 and for the ten months ended October 31,
1997, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts

June 10, 1999

                                      F-22
<PAGE>
                               INTERNET NORTHEAST

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                    OCTOBER 31,
                                                                               DECEMBER 31, 1996       1997
                                                                               -----------------  ---------------
<S>                                                                            <C>                <C>
                                   ASSETS
CURRENT ASSETS:
  Accounts receivable........................................................     $    12,560       $        --
  Prepaid expenses                                                                         --            13,000
                                                                                     --------     ---------------

    Total current assets.....................................................          12,560            13,000

Property and equipment, net..................................................         188,829           175,161
Other assets.................................................................           2,228             2,745
                                                                                     --------     ---------------

    Total assets.............................................................     $   203,617       $   190,906
                                                                                     --------     ---------------
                                                                                     --------     ---------------

                    LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable...........................................................          49,381                --
  Accrued expenses...........................................................             686            20,312
  Cash overdraft.............................................................          37,572            21,461
  Current portion of note payable............................................          12,808            22,305
  Current portion of stockholder note payable................................              --            26,629
                                                                                     --------     ---------------

    Total current liabilities................................................         100,447            90,707

Commitments and contingencies (Note 3)

Note payable.................................................................          22,305                --
Stockholder note payable.....................................................              --            61,165
                                                                                     --------     ---------------
    Total liabilities........................................................         122,752           151,872

Stockholders' equity:
Common stock, no par; 3,000 shares authorized; 3,000 shares issued and
  outstanding................................................................          16,831            16,831
Retained earnings............................................................          64,034            22,203
                                                                                     --------     ---------------
    Total stockholders' equity...............................................          80,865            39,034
                                                                                     --------     ---------------
    Total liabilities and stockholders' equity...............................     $   203,617       $   190,906
                                                                                     --------     ---------------
                                                                                     --------     ---------------
</TABLE>

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

                                      F-23
<PAGE>
                               INTERNET NORTHEAST

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED      TEN MONTHS ENDED
                                                                              DECEMBER 31, 1996  OCTOBER 31, 1997
                                                                              -----------------  -----------------
<S>                                                                           <C>                <C>
Revenues....................................................................     $   737,366       $   1,259,827
Operating expenses:
  Costs of revenues (exclusive of depreciation and amortization shown
    separately below).......................................................         215,557             370,688
  Selling, general and administrative.......................................         358,844             818,835
  Depreciation and amortization.............................................          52,414             105,303
                                                                                    --------     -----------------
      Total operating expenses..............................................         626,815           1,294,826
                                                                                    --------     -----------------
Operating income (loss).....................................................         110,551             (34,999)
Interest expense............................................................          (5,125)             (5,836)
                                                                                    --------     -----------------
Net income (loss)...........................................................     $   105,426       $     (40,835)
                                                                                    --------     -----------------
                                                                                    --------     -----------------
</TABLE>

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

                                      F-24
<PAGE>
                               INTERNET NORTHEAST

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                             COMMON STOCK
                                                                        ----------------------   RETAINED
                                                                          SHARES       VALUE     EARNINGS     TOTAL
                                                                        -----------  ---------  ----------  ----------
<S>                                                                     <C>          <C>        <C>         <C>

Balance at January 1, 1996............................................       3,000   $  16,831  $   17,505  $   34,336

  Stockholder distributions...........................................                             (58,897)    (58,897)

  Net income..........................................................                             105,426     105,426
                                                                             -----   ---------  ----------  ----------

Balance at December 31, 1996..........................................       3,000      16,831      64,034      80,865

  Stockholder distributions...........................................                                (996)       (996)

  Net loss............................................................                             (40,835)    (40,835)
                                                                             -----   ---------  ----------  ----------

Balance at October 31, 1997...........................................       3,000   $  16,831  $   22,203  $   39,034
                                                                             -----   ---------  ----------  ----------
                                                                             -----   ---------  ----------  ----------
</TABLE>

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

                                      F-25
<PAGE>
                               INTERNET NORTHEAST

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED      TEN MONTHS ENDED
                                                                              DECEMBER 31, 1996  OCTOBER 31, 1997
                                                                              -----------------  -----------------
<S>                                                                           <C>                <C>
Cash flows from operating activities:
  Net income (loss).........................................................     $   105,426       $     (40,835)
  Adjustments to reconcile net income (loss) to net cash provided by
      operating activities:
    Depreciation and amortization...........................................          52,414             105,303
    Loss on disposal of property and equipment..............................          17,337             130,963
    Changes in assets and liabilities
      Prepaid expenses......................................................              --             (13,000)
      Accounts receivable...................................................         (11,510)             12,560
      Accounts payable......................................................          48,906             (49,381)
      Accrued expenses......................................................             686              19,626
      Other assets..........................................................              --                (517)
                                                                              -----------------  -----------------

Net cash provided by operating activities...................................         213,259             164,719
                                                                              -----------------  -----------------

Cash flows from investing activities:
  Purchase of property and equipment........................................        (190,184)           (222,598)
                                                                              -----------------  -----------------

Cash flows from financing activities:
  Proceeds from stockholder note payable....................................              --             100,000
  Payments on note payable..................................................         (30,148)            (12,808)
  Payments on stockholder note payable......................................              --             (12,206)
  Cash overdraft............................................................          37,572             (16,111)
  Stockholder distributions.................................................         (58,897)               (996)
                                                                              -----------------  -----------------

Net cash provided by (used in) financing activities.........................         (51,473)             57,879
                                                                              -----------------  -----------------

Net decrease in cash equivalents............................................         (28,398)                 --

Cash at beginning of period.................................................          28,398                  --
                                                                              -----------------  -----------------

Cash and cash equivalents at end of period..................................     $        --       $          --
                                                                              -----------------  -----------------
                                                                              -----------------  -----------------

Supplemental disclosure of cash flow information:
  Interest paid.............................................................     $     4,621       $       8,102
</TABLE>

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

                                      F-26
<PAGE>
                               INTERNET NORTHEAST

                         NOTES TO FINANCIAL STATEMENTS

1. DESCRIPTION OF THE BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:

    Internet Northeast (the "Company"), a Maine corporation, was incorporated on
August 1, 1995 to provide Internet access, Web hosting and other related data
services to customers in Maine and New Hampshire.

    On November 12, 1997, the Company merged with HarvardNET Inc. through an
exchange of all shares of the Company's common stock for 2,938,890 shares of
common stock of HarvardNET Inc. The transaction was accounted for using the
purchase method.

    REVENUE RECOGNITION

    Revenues are recognized when Internet access services are provided.

    PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost and depreciated over their
estimated useful lives using the straight-line method. Leasehold improvements
are depreciated over the lesser of related lease terms or the estimated
productive useful lives. Property and equipment acquired under capital leases is
depreciated over the useful life of the asset.

    Betterments and major renewals are capitalized and included in property and
equipment accounts, while expenditures for maintenance and repairs and minor
renewals are charged to expense. When assets are retired or otherwise disposed
of, the assets and related accumulated depreciation and amortization are
eliminated from the accounts and any resulting gain or loss is reflected in
income.

    ADVERTISING COSTS

    Advertising costs are expensed as incurred. Advertising expense of
approximately $23,068 and $26,738 was charged to operations in 1996 and 1997,
respectively.

    USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

    INCOME TAXES

    The Company is taxed as an S-Corporation. Accordingly, the stockholders of
the Company are subject to federal income taxes rather than the Company.

                                      F-27
<PAGE>
                               INTERNET NORTHEAST

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. PROPERTY AND EQUIPMENT:

    Cost of property and equipment and depreciable lives are summarized as
follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,  OCTOBER 31,       DEPRECIABLE
                                                                    1996         1997            LIFE YEARS
                                                                ------------  -----------  ----------------------
<S>                                                             <C>           <C>          <C>
Equipment.....................................................   $  232,622    $ 320,603             3
Furniture and fixtures........................................          433        2,731             10
Leasehold improvements........................................        7,802        9,158             3
                                                                ------------  -----------
                                                                    240,857      332,492
Less: accumulated depreciation................................      (52,028)    (157,331)
                                                                ------------  -----------
Property and equipment, net...................................   $  188,829    $ 175,161
                                                                ------------  -----------
                                                                ------------  -----------
</TABLE>

3. COMMITMENTS:

    The Company leases its facilities and vehicles under operating leases. The
leases expire at various dates.

    Rent expense under all operating leases of approximately $11,384 and $26,230
was charged to operations in 1996 and 1997, respectively.

4. NOTE PAYABLE:

    In 1995, the Company entered a $50,000 term loan agreement with a bank
bearing an interest rate of 10.5% to be repaid over three years. At December 31,
1996 and October 31, 1997, the balance outstanding on the loan was $35,113 and
$22,305, respectively.

5. STOCKHOLDER NOTE PAYABLE:

    In 1997, the Company entered into a note payable with a stockholder of the
Company for $100,000 bearing an interest rate of 10% to be repaid over four
years. At October 31, 1997, the balance outstanding on the loan was $87,794.

                                      F-28
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and the Stockholders of
HarvardNET Inc.:

    In our opinion, the accompanying balance sheet and the related statements of
operations, parent company investment and cash flows, present fairly, in all
material respects, the financial position of the Network Services Division of
Comstor Corporation at December 31, 1998 and the results of its operations and
its cash flows for the year ended December 31, 1998, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

    As discussed in Note 1, the accompanying financial statements of the Network
Services Division of Comstor Corporation were derived from the historical books
and records of Comstor Corporation and may not be indicative of the financial
position and results of operations and cash flows had the Network Services
Division of Comstor Corporation operated as a nonaffiliated, autonomous entity.

PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts
May 14, 1999

                                      F-29
<PAGE>
                NETWORK SERVICES DIVISION OF COMSTOR CORPORATION

                                 BALANCE SHEET

                            AS OF DECEMBER 31, 1998

<TABLE>
<S>                                                                                 <C>
                                           ASSETS
Current assets:
  Accounts receivable.............................................................  $ 351,690
  Prepaid expenses................................................................     12,631
                                                                                    ---------
    Total current assets..........................................................    364,321

  Property and equipment, net.....................................................    211,981
  Deposits........................................................................     11,600
                                                                                    ---------
    Total assets..................................................................  $ 587,902
                                                                                    ---------
                                                                                    ---------

                                   LIABILITIES AND EQUITY
Current liabilities:
  Accounts payable................................................................     68,450
  Accrued expenses................................................................      5,000
                                                                                    ---------
    Total current liabilities.....................................................     73,450

  Parent company investment.......................................................    514,452
                                                                                    ---------
                                                                                    $ 587,902
                                                                                    ---------
                                                                                    ---------
</TABLE>

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

                                      F-30
<PAGE>
                NETWORK SERVICES DIVISION OF COMSTOR CORPORATION

                          STATEMENT OF OPERATIONS AND
                           PARENT COMPANY INVESTMENT

                      FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<S>                                                                               <C>
Revenues:
  Internet access service.......................................................  $ 833,091
  Equipment.....................................................................    557,138
                                                                                  ---------
      Total revenues............................................................  1,390,229
  Operating expenses:
    Costs of Internet access service revenues (exclusive of depreciation and
      amortization shown separately below)......................................    961,948
    Costs of equipment revenues (exclusive of depreciation and amortization
      shown separately below)...................................................    529,281
    Selling, general and administrative.........................................    300,482
    Depreciation and amortization...............................................     30,383
                                                                                  ---------
      Total operating expenses..................................................  1,822,094
                                                                                  ---------
Operating loss..................................................................   (431,865)
Interest expense................................................................    (16,612)
                                                                                  ---------
Net loss........................................................................  $(448,477)
                                                                                  ---------
                                                                                  ---------

Parent company investment, as of December 31, 1997..............................  $  10,969
                                                                                  ---------
Net loss........................................................................   (448,477)
Net transfers from parent.......................................................    951,960
                                                                                  ---------
Parent company investment, as of December 31, 1998..............................  $ 514,452
                                                                                  ---------
                                                                                  ---------
</TABLE>

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

                                      F-31
<PAGE>
                NETWORK SERVICES DIVISION OF COMSTOR CORPORATION

                            STATEMENT OF CASH FLOWS

                      FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<S>                                                                                <C>
Cash flow from operating activities:
  Net loss.......................................................................  $(448,477)
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation and amortization................................................     30,383
  Changes in assets and liabilities:
    Accounts receivable..........................................................   (234,497)
    Prepaid expenses.............................................................    (12,631)
    Accounts payable and accrued expenses........................................    (58,685)
                                                                                   ---------
      Net cash used in operating activities......................................   (723,907)
                                                                                   ---------
Cash flow from investing activities:
  Purchase of property and equipment.............................................   (228,053)
                                                                                   ---------
Cash flow from financing activities:
  Net transfers from parent......................................................  $ 951,960
                                                                                   ---------
Net increase (decrease) in cash and cash equivalents.............................         --
Cash and cash equivalents, beginning of year.....................................         --
                                                                                   ---------
Cash and cash equivalents, end of year...........................................         --
                                                                                   ---------
                                                                                   ---------
</TABLE>

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

                                      F-32
<PAGE>
                NETWORK SERVICES DIVISION OF COMSTOR CORPORATION

                         NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

    ORGANIZATION AND BASIS OF PRESENTATION

    The accompanying financial statements present the financial position and
results of operations as of and for the year ended December 31, 1998, of the
Network Services Division of Comstor Corporation, which during that period was a
division of Comstor Corporation. Comstor Corporation, a wholly owned subsidiary
of General Electric Company had acquired the Internet service provider business
from Management Analysis, Inc. in August 1997.

    On January 11, 1999, Comstor Corporation entered into a purchase and sale
agreement for the sale of assets to HarvardNET Inc. The Network Services
Division of Comstor Corporation provides full service access to the Internet for
corporate and individual users primarily in the greater Washington, D.C. area.

    These financial statements present the Network Services Division of Comstor
Corporation's results of operations and its financial condition as derived from
the historical books and records of Comstor Corporation, including certain
adjustments necessary for a fair presentation of the business. Certain selling,
general and administrative expenditures incurred by Comstor Corporation on
behalf of the Network Services Division of Comstor Corporation were allocated to
the Network Services Division of Comstor Corporation based upon relative office
space utilization and percentage of revenues. Interest expense was allocated to
the Network Services Division of Comstor Corporation based upon average working
capital levels at an approximated market rate. Management believes that the
methods used for these allocations are reasonable. The statements presented may
not be indicative of the result of operations had the Network Services Division
of Comstor Corporation operated as a nonaffiliated, autonomous entity.

    For purposes of this presentation, Comstor Corporation is referred to as the
parent company of the Network Services Division of Comstor Corporation.

    USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates include the allocation of certain costs
incurred by Comstor Corporation to the Network Services Division of Comstor
Corporation. Actual results could differ from those estimates.

    CASH

    The Network Services Division of Comstor Corporation maintains no cash
balance. Disbursements are made by Comstor Corporation on behalf of the Network
Services Division of Comstor Corporation. Comstor Corporation is reimbursed
monthly by the Network Services Division of Comstor Corporation for cash
disbursements.

    PROPERTY AND EQUIPMENT

    Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. Costs of repairs and
maintenance are charged to expense as incurred.

                                      F-33
<PAGE>
                NETWORK SERVICES DIVISION OF COMSTOR CORPORATION

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
    REVENUE RECOGNITION

    The Network Services Division of Comstor Corporation recognizes revenue when
internet access services are provided or when equipment is shipped. Advance
collections relating to future access services are recorded as deferred revenue
and recognized as revenue when earned. Equipment revenue is comprised of routers
and related equipment resold to the Network Services Division of Comstor
Corporation's Internet access customers.

    INCOME TAXES

    The Network Services Division of Comstor Corporation is not a taxable
entity. Had the Network Services Division of Comstor Corporation been a taxable
entity, the accompanying financial statements would not have been affected, as
the results of operations reflect a loss for the year ended December 31, 1998,
and a tax benefit, if any, would have been reduced by a full valuation
allowance.

2. PROPERTY AND EQUIPMENT:

    Cost of property and equipment and depreciable lives are summarized as
follows:

<TABLE>
<CAPTION>
                                                                                     DEPRECIABLE
                                                                         1998       LIFE IN YEARS
                                                                      ----------  -----------------
<S>                                                                   <C>         <C>
Computer and networking equipment...................................  $  231,371              3
Leasehold improvements..............................................      10,993              3
Less accumulated depreciation and amortization......................     (30,383)
                                                                      ----------
Property and equipment, net.........................................  $  211,981
                                                                      ----------
                                                                      ----------
</TABLE>

3. OPERATING LEASES:

    The Company leases office space under lease terms of less than one year.

    Rent expense under all operating leases of approximately $32,000 was charged
to operations in 1998.

4. RELATED PARTY TRANSACTIONS:

    The financial statements include approximately $95,000 of accounts
receivable, $379,000 of revenues, and $367,000 of costs of revenues related to
business transactions with HarvardNET Inc., as well as approximately $41,000 of
revenues and $39,000 of costs of revenues related to business transactions with
General Electric Company.

                                      F-34
<PAGE>


Remote Connect Telecommuter Network

[Graphical depiction of HarvardNet's Remote Connect Telecommuter Network. At
the center of the page is an image labeled "HarvardNet Managed Fiber Optic
Network and Internet" with lines radiating to images labeled "Mobil Employee,"
"Telecommuter," "Branch Office," and "Corporate."]


<PAGE>
                                     [LOGO]
<PAGE>
THE INFORMATION IN THIS 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 PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
                  ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
PROSPECTUS (SUBJECT TO COMPLETION)
AUGUST   , 1999

                                8,900,000 SHARES

                                     [LOGO]

                                  COMMON STOCK

HARVARDNET INC. IS OFFERING SHARES OF ITS COMMON STOCK. THIS IS OUR INITIAL
PUBLIC OFFERING AND NO PUBLIC MARKET CURRENTLY EXISTS FOR OUR SHARES. WE
ANTICIPATE THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN $13 AND $15
PER SHARE.

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

THE COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET
UNDER THE SYMBOL "HVNT."
                              -------------------

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 5.
                               -----------------

                              PRICE $      A SHARE

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

<TABLE>
<CAPTION>
                                                                            UNDERWRITING
                                                          PRICE TO         DISCOUNTS AND        PROCEEDS TO
                                                           PUBLIC           COMMISSIONS          HARVARDNET
                                                     ------------------  ------------------  ------------------
<S>                                                  <C>                 <C>                 <C>
PER SHARE..........................................          $                   $                   $
TOTAL..............................................          $                   $                   $
</TABLE>

HARVARDNET INC. HAS GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP TO AN
ADDITIONAL 1,335,000 SHARES TO COVER OVER-ALLOTMENTS.

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

MORGAN STANLEY & CO. INCORPORATED EXPECTS TO DELIVER THE SHARES TO PURCHASERS ON
      , 1999.

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

MORGAN STANLEY DEAN WITTER
 MERRILL LYNCH INTERNATIONAL
   SALOMON SMITH BARNEY INTERNATIONAL

           , 1999
<PAGE>
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

    The following table sets forth the costs and expenses, other than the
underwriting discount, payable by the Registrant in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fees and the Nasdaq National Market listing
fee.

<TABLE>
<S>                                                                               <C>
SEC registration fee............................................................  $  42,680
NASD filing fee.................................................................     15,853
Nasdaq National Market listing fee..............................................     95,000
Printing and engraving expenses.................................................    200,000
Legal fees and expenses.........................................................    400,000
Accounting fees and expenses....................................................    550,000
Blue Sky fees and expenses (including legal fees)...............................     15,000
Transfer agent and registrar fees and expenses..................................     17,000
Miscellaneous...................................................................     14,467
                                                                                  ---------
    Total.......................................................................  $1,350,000
                                                                                  ---------
                                                                                  ---------
</TABLE>

    HarvardNET will bear all expenses shown above.

Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

    The Registrant's Restated Certificate of Incorporation (the "Restated
Certificate") provides that, except to the extent prohibited by the Delaware
General Corporation Law (the "DGCL"), the Registrant's directors shall not be
personally liable to the Registrant or its stockholders for monetary damages for
any breach of fiduciary duty as directors of the Registrant. Under the DGCL, the
directors have a fiduciary duty to the Registrant which is not eliminated by
this provision of the Restated Certificate and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of nonmonetary relief will
remain available. In addition, each director will continue to be subject to
liability under the DGCL for breach of the director's duty of loyalty to the
Registrant, for acts or omissions which are found by a court of competent
jurisdiction to be not in good faith or involving intentional misconduct, for
knowing violations of law, for actions leading to improper personal benefit to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are prohibited by the DGCL. This provision also does not affect
the directors' responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws. The Registrant has
obtained liability insurance for its officers and directors.

    Section 145 of the DGCL empowers a corporation to indemnify its directors
and officers and to purchase insurance with respect to liability arising out of
their capacity or status as directors and officers, provided that this provision
shall not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) arising under Section 174 of the DGCL including
for an unlawful payment of dividend or unlawful stock purchase or redemption, or
(iv) for any transaction from which the director derived an improper personal
benefit. The DGCL provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under the corporation's by-laws, any agreement, a vote
of stockholders or otherwise. The Restated Certificate eliminates the personal
liability of directors to the fullest extent permitted by the DGCL and, together
with the Registrant's Amended and Restated By-Laws (the "Restated By-Laws"),
provides that the Registrant shall fully indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (whether civil, criminal, administrative or
investigative) by reason of the fact that such person is or was a director or
officer of the Registrant, or is or was serving at the request of the Registrant
as a

                                      II-1
<PAGE>
director or officer of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding. Reference is made to the Registrant's Form of Amended and Restated
Certificate of Incorporation and Form of Amended and Restated By-Laws filed as
Exhibits 3.3 and 3.4 hereto, respectively.

    The Underwriting Agreement provides that the underwriters are obligated,
under specified circumstances, to indemnify directors, officers and controlling
persons of HarvardNET against specified liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"). Reference is made
to the form of Underwriting Agreement to be filed as Exhibit 1.1 hereto.

    At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the Restated Certificate. The Registrant is not
aware of any threatened litigation or proceeding that may result in a claim for
such indemnification.

Item 15. RECENT SALES OF UNREGISTERED SECURITIES.

    In the three years preceding the filing of this registration statement, we
have issued the following securities that were not registered under the
Securities Act as summarized below. The share information provided below
reflects a 100-for-1 split of the common stock effected on November 12, 1997 and
a 10-for-1 split of the Series A convertible preferred stock, Class B stock and
common stock effected on November 16, 1998 and a 1.3546862-for-one split of the
common stock and Class B stock to be effective immediately prior to the closing
of this offering:

    (a) Issuances of Capital Stock, Notes and Warrants. Since January 1, 1996,
the Registrant has issued the following securities that were not registered
under the Securities Act as summarized below. The share information provided
below reflects a 100-for-1 split of the common stock effected on November 12,
1997 and a 10-for-1 split of the Series A convertible preferred stock, Class B
stock and common stock effected on November 16, 1998:

        1. On August 15, 1997, the Registrant issued and sold a total of 609,608
    shares of its common stock to five individuals, each of whom was an
    accredited investor, for an aggregate purchase price of $375,300. These
    issuances were conducted pursuant to Section 4(2) of the Securities Act.

        2. On November 12, 1997, the Registrant issued an aggregate of 3,981,273
    shares of common stock to six individuals in connection with the merger of
    another corporation with and into the Registrant on such date. This issuance
    was conducted pursuant to Section 4(2) of the Securities Act.

        3. On September 1, 1998, December 7, 1998 and March 23, 1999, the
    Registrant issued and sold a total of 13,749,440 shares of its Series A
    convertible preferred stock to two individuals and eight entities, each of
    whom or which was an accredited investor, for an aggregate purchase price of
    $18,500,000. In connection with the sale of these shares of Series A
    convertible preferred stock, the Registrant issued a common stock purchase
    warrant to one placement agent for 93,121 shares of common stock at an
    purchase price of $0.99 per share. These issuances were conducted pursuant
    to Section 4(2) of the Securities Act. The Registrant paid $832,500 in
    commissions to the placement agent in connection with the sale of these
    shares of Series A convertible preferred stock.

        4. On September 29, 1998, December 3, 1998, January 4, 1998 and January
    18, 1998, the Registrant issued and sold an aggregate of 3,976,381 shares of
    Class B stock to four executive officers for an aggregate purchase price of
    $13,202. This issuance was conducted pursuant to Section 4(2) of the
    Securities Act.

        5. On December 7, 1998, the Registrant issued 1,003 shares of common
    stock to one entity in connection with the provision of $1,000 of consulting
    services to the Registrant. This issuance was conducted pursuant to Section
    4(2) of the Securities Act.

                                      II-2
<PAGE>
        6. On May 28, 1999, the Registrant issued and sold a total of 482,666
    shares of its Series A convertible preferred stock to one entity, an
    accredited investor, for an aggregate purchase price of $1,500,000. In
    connection with the sale of these shares, the Registrant also issued common
    stock warrants to the purchaser of these shares for 765,970 shares of common
    stock at a purchase price of $3.62 per share. These issuances were conducted
    pursuant to Section 4(2) of the Securities Act and Regulation D promulgated
    thereunder.

    (b) Certain Grants and Exercises of Stock Options. The Registrant's 1997
Stock Incentive Plan was adopted by the Board of Directors on August 15, 1997.
The Registrant's 1999 Stock Incentive Plan was approved by the Board of
Directors on January 26, 1999. As of May 31, 1999, options to purchase 406,406
shares of common stock were outstanding under the 1997 Stock Incentive Plan and
options to purchase 1,009,564 shares of common stock were outstanding under the
1999 Stock Incentive Plan. As of such date, no options had been exercised. The
options issued under the 1997 Stock Incentive Plan and the 1999 Stock Incentive
Plan were offered in reliance upon the exemption from registration under Rule
701 promulgated under the Securities Act.

    No underwriters were involved in the foregoing sales of securities.

Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

    (A) EXHIBITS:


<TABLE>
<CAPTION>
EXHIBIT NO.                                                 DESCRIPTION
- -------------  -----------------------------------------------------------------------------------------------------
<C>            <S>
        1.1+   Form of Underwriting Agreement

        3.1+   Restated and Amended Certificate of Incorporation of the Registrant dated May 28, 1999, as amended

        3.2+   Form of Amended and Restated Certificate of Incorporation of the Registrant to be filed upon the
               closing of this public offering

        3.3+   Second Amended and Restated By-Laws of the Registrant

        3.4+   Form of Amended and Restated By-Laws of the Registrant

        4.1+   Specimen Certificate for shares of Common Stock, $.01 par value, of the Registrant

        5.1+   Opinion of Hale and Dorr LLP with respect to the validity of the securities being offered

       10.1+   Amended and Restated 1997 Stock Incentive Plan of the Registrant

       10.2+   Amended and Restated 1999 Stock Incentive Plan of the Registrant

       10.3+   1999 Employee Stock Purchase Plan of the Registrant

       10.4+   1999 Director Stock Option Plan of the Registrant

       10.5+   Redemption and Non Competition Agreement between William and Barbara Southworth and the Registrant
               dated as of September 1, 1998

       10.6+   Employment Agreement between the Registrant and Mark M. Washburn effective as of September 29, 1998

       10.7+   Employment Agreement between the Registrant and Todd C. DeSisto effective as of December 3, 1998

       10.8+   Lease dated October 30, 1998 by and between Hood Business Park LLC and the Registrant

       10.9+   Amendment A to Lease as of March 15, 1998 by and between Hood Business Park LLC and the Registrant
</TABLE>


                                      II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                                                 DESCRIPTION
- -------------  -----------------------------------------------------------------------------------------------------
<C>            <S>
      10.10+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of February 24, 1999 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--New Hampshire and the Registrant

      10.11+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of February 24, 1999 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--Maine and the Registrant

      10.12+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of February 24, 1999 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--Rhode Island and the Registrant

      10.13+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of January 19, 1998 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--Massachusetts and the Registrant

      10.14+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Virginia, Inc. and the Registrant

      10.15+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Maryland, Inc. and the Registrant

      10.16+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Washington D.C., Inc. and the Registrant

      10.17+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Pennsylvania and the Registrant

      10.18+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--New Jersey, Inc. and the Registrant

      10.19+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1996 by and between New York Telephone Company d/b/a Bell Atlantic--New York and the
               Registrant

      10.20+   Registration Rights Agreement dated September 1, 1998 between the Registrant and the Purchasers and
               Holders identified therein

      10.21+   First Amendment to Registration Rights Agreement dated May 28, 1999 between the Registrant and the
               Purchasers and Holders identified therein

      10.22+   Second Amendment to Registration Rights Agreement dated July 14, 1999 between the Registrant and the
               Purchasers and Holders identified therein.

      10.23+   Form of Director Indemnification Agreement

       21.1+   Subsidiaries of the Registrant

       23.1+   Consent of Hale and Dorr LLP (included in Exhibit 5.1)

       23.2    Consent of PricewaterhouseCoopers LLP

       24.1+   Powers of Attorney
</TABLE>



                                      II-4

<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO.                                                 DESCRIPTION
- -------------  -----------------------------------------------------------------------------------------------------
<C>            <S>
       27.1+   Financial Data Schedule
</TABLE>

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

+   Previously filed.

    (b) Financial Statement:

    Schedule II--Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                                                              BALANCE     ADDITIONS
                                                                                AT       CHARGES TO
                                                                             BEGINNING    COSTS AND   BALANCE AT END
DESCRIPTION                                                                  OF PERIOD    EXPENSES      OF PERIOD
- --------------------------------------------------------------------------  -----------  -----------  --------------
<S>                                                                         <C>          <C>          <C>

Allowance for doubtful accounts:

Three Months Ended March 31, 1999 (unaudited).............................   $  50,000    $  33,489     $   83,489

Year Ended December 31, 1998..............................................      24,717       25,283         50,000

Year Ended December 31, 1997..............................................          --       24,717         24,717

Year Ended December 31, 1996..............................................          --           --             --
</TABLE>


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



                                      II-5

<PAGE>
Item 17. UNDERTAKINGS.

    The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

    Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the Delaware General Corporation Law, the Restated
Certificate of the registrant, the Underwriting Agreement, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the registrant will,
unless in the opinion of 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 Act and
will be governed by the final adjudication of such issue.

    The undersigned registrant hereby undertakes that:

    (1) For purpose of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.


    (2) For purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.



                                      II-6

<PAGE>
                                   SIGNATURES


    Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 5 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Boston,
Massachusetts, on this 12th day of August, 1999.


<TABLE>
<S>                             <C>  <C>
                                HARVARDNET INC.

                                By:             /s/ MARK M. WASHBURN
                                     -----------------------------------------
                                                  Mark M. Washburn
                                       PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

                                   SIGNATURES


    Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 5 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.



<TABLE>
<CAPTION>
          SIGNATURE                        TITLE                    DATE
- ------------------------------  ---------------------------  -------------------
<C>                             <S>                          <C>
                                President, Chief Executive
     /s/ MARK M. WASHBURN         Officer and Director
- ------------------------------    (Principal Executive         August 12, 1999
       Mark M. Washburn           Officer)

                                Chief Financial Officer and
              *                   Treasurer (Principal
- ------------------------------    Financial and Accounting     August 12, 1999
         Todd DeSisto             Officer)

              *                 Chairman and Director
- ------------------------------                                 August 12, 1999
    William H. Southworth

              *                 Director
- ------------------------------                                 August 12, 1999
      Peter H.O. Claudy

              *                 Director
- ------------------------------                                 August 12, 1999
       Leo J. Esposito
</TABLE>


                                      II-7
<PAGE>

<TABLE>
<CAPTION>
          SIGNATURE                        TITLE                    DATE
- ------------------------------  ---------------------------  -------------------
<C>                             <S>                          <C>
              *                 Director
- ------------------------------                                 August 12, 1999
     Robert C. Ketterson

              *                 Director
- ------------------------------                                 August 12, 1999
        Jeffrey Osborn

              *                 Director
- ------------------------------                                 August 12, 1999
      Matthew J. Rubins
</TABLE>


<TABLE>
<S>   <C>                        <C>                         <C>
*By:    /s/ MARK M. WASHBURN
      -------------------------
          Mark M. Washburn
          ATTORNEY-IN-FACT
</TABLE>

                                      II-8
<PAGE>
                 REPORT OF INDEPENDENT ACCOUNTS ON SCHEDULE II

To the Board of Directors and Stockholders of
HarvardNET Inc.:

Our report on the financial statements of HarvardNET Inc. is included in this
Registration Statement. In connection with our audits of such financial
statements, we have also audited the related financial statement schedule listed
in Item 16(b) of this Registration Statement.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements as a whole, presents
fairly, in all material respects, the information required to be included
therein.

PRICEWATERHOUSECOOPERS LLP

Boston, Massachusetts
June 10, 1999

                                      II-9
<PAGE>
                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT NO.                                                 DESCRIPTION
- -------------  -----------------------------------------------------------------------------------------------------
<C>            <S>
        1.1+   Form of Underwriting Agreement

        3.1+   Restated and Amended Certificate of Incorporation of the Registrant dated May 28, 1999, as amended

        3.2+   Form of Amended and Restated Certificate of Incorporation of the Registrant to be filed upon the
               closing of this public offering

        3.3+   Second Amended and Restated By-Laws of the Registrant

        3.4+   Form of Amended and Restated By-Laws of the Registrant

        4.1+   Specimen Certificate for shares of Common Stock, $.01 par value, of the Registrant

        5.1+   Opinion of Hale and Dorr LLP with respect to the validity of the securities being offered

       10.1+   Amended and Restated 1997 Stock Incentive Plan of the Registrant

       10.2+   Amended and Restated 1999 Stock Incentive Plan of the Registrant

       10.3+   1999 Employee Stock Purchase Plan of the Registrant

       10.4+   1999 Director Stock Option Plan of the Registrant

       10.5+   Redemption and Non Competition Agreement between William and Barbara Southworth and the Registrant
               dated as of September 1, 1998

       10.6+   Employment Agreement between the Registrant and Mark M. Washburn effective as of September 29, 1998

       10.7+   Employment Agreement between the Registrant and Todd C. DeSisto effective as of December 3, 1998

       10.8+   Lease dated October 30, 1998 by and between Hood Business Park LLC and the Registrant

       10.9+   Amendment A to Lease as of March 15, 1998 by and between Hood Business Park LLC and the Registrant

      10.10+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of February 24, 1999 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--New Hampshire and the Registrant

      10.11+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of February 24, 1999 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--Maine and the Registrant

      10.12+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of February 24, 1999 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--Rhode Island and the Registrant

      10.13+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of January 19, 1998 by and between New England Telephone and Telegraph Company d/b/a Bell
               Atlantic--Massachusetts and the Registrant

      10.14+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Virginia, Inc. and the Registrant

      10.15+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Maryland, Inc. and the Registrant
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.                                                 DESCRIPTION
- -------------  -----------------------------------------------------------------------------------------------------
<C>            <S>
      10.16+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Washington D.C., Inc. and the Registrant

      10.17+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--Pennsylvania and the Registrant

      10.18+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1999 by and between Bell Atlantic--New Jersey, Inc. and the Registrant

      10.19+   Interconnection Agreement under Sections 251 and 252 of the Telecommunications Act of 1996 dated as
               of May 26, 1996 by and between New York Telephone Company d/b/a Bell Atlantic--New York and the
               Registrant

      10.20+   Registration Rights Agreement dated September 1, 1998 between the Registrant and the Purchasers and
               Holders identified therein

      10.21+   First Amendment to Registration Rights Agreement dated May 28, 1999 between the Registrant and the
               Purchasers and Holders identified therein

      10.22+   Second Amendment to Registration Rights Agreement dated July 14, 1999 between the Registrant and the
               Purchasers and Holders identified therein.

      10.23+   Form of Director Indemnification Agreement

       21.1+   Subsidiaries of the Registrant

       23.1+   Consent of Hale and Dorr LLP (included in Exhibit 5.1)

       23.2    Consent of PricewaterhouseCoopers LLP

       24.1+   Powers of Attorney

       27.1+   Financial Data Schedule
</TABLE>


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

+   Previously filed.

<PAGE>
                                                                    EXHIBIT 23.2

                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the use in this Amendment No. 5 to Registration Statement
on Form S-1 (No. 333-80529) of our report dated June 10, 1999, except for the
information in the seventh and eighth paragraphs of Note 16, for which the date
is July 26, 1999, relating to the financial statements of HarvardNET Inc. and of
our reports dated June 10, 1999 relating to the financial statement schedule of
HarvardNET Inc. and the financial statements of Internet Northeast, and of our
report dated May 14, 1999 relating to the financial statements of the Network
Services Division of Comstor Corporation, which appear in such Registration
Statement. We also consent to the references to us under the headings "Experts"
and "Selected Financial Data" in such Registration Statement.


PRICEWATERHOUSECOOPERS LLP


Boston, Massachusetts
August 12, 1999



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