<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

     (X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                     FOR THE QUARTER ENDED MARCH 31, 1999

                                      OR

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

          FOR THE TRANSITION PERIOD FROM ____________ TO ____________

                       COMMISSION FILE NUMBER 000-25477

                         FLASHNET COMMUNICATIONS, INC.
            (Exact name of registrant as specified in its charter)

                  TEXAS                                         75-2614852
     (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                       Identification Number)

1812 N. FOREST PARK BLVD., FORT WORTH, TX                         76102
(Address of principal executive offices)                        (Zip Code)

                                (817) 820-0068
             (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports),

                                Yes (X)  No ( )

and (2) has been subject to such filing requirements for the past 90 days.

                                Yes ( )  No (X)

     Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of the latest practicable date.

                   Class                           Outstanding at April 30, 1999
         Common Stock, No Par Value                          13,877,005

<PAGE>

                         FLASHNET COMMUNICATIONS, INC.
                                     INDEX

<TABLE>
<CAPTION>

                                                                                             Page
<S>                                                                                          <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.

CONSOLIDATED BALANCE SHEETS -
     March 31, 1999 and December 31, 1998.......................................................3

CONSOLIDATED STATEMENTS OF OPERATIONS -
     Three months ended March 31, 1999 and 1998.................................................4

CONSOLIDATED STATEMENTS OF CASH FLOWS -
     Three months ended March 31, 1999 and 1998.................................................5

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................................6


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
     CONDITION AND RESULTS OF OPERATIONS........................................................8

PART II.   OTHER INFORMATION

ITEM 1.    Legal Proceedings..................................................................N/A

ITEM 2.    Changes in Securities and Use of Proceeds...........................................14

ITEM 3.    Defaults upon Senior Securities....................................................N/A

ITEM 4.    Submission of Matters to a Vote of Security Holders.................................14

ITEM 5.    Other Information..................................................................N/A

ITEM 6.    Exhibits and Reports on Form 8-K
           (a).  Exhibits......................................................................15
           (b).  Reports on Form 8-K..........................................................N/A

SIGNATURES.....................................................................................16

</TABLE>


                                       2

<PAGE>

                         FLASHNET COMMUNICATIONS, INC.
                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS

<TABLE>
<CAPTION>

                                                                                  March 31,            December 31,
                                                                                    1999                   1998
                                                                                ------------           ------------
                                                                                 (UNAUDITED)
<S>                                                                             <C>                    <C>
CURRENT ASSETS:
   Cash and cash equivalents                                                    $ 45,802,000           $  1,038,000
   Accounts receivable, net                                                          173,000                391,000
   Prepaid expenses and other current assets                                       1,074,000              1,291,000
                                                                                ------------           ------------
      Total current assets                                                        47,049,000              2,720,000

PROPERTY AND EQUIPMENT, net                                                       11,304,000              6,821,000
SOFTWARE LICENSES, net                                                                 2,000                  6,000
OTHER ASSETS                                                                         241,000                186,000
                                                                                ------------           ------------
TOTAL                                                                           $ 58,596,000              9,733,000
                                                                                ------------           ------------
                                                                                ------------           ------------

                LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
   Current portion of capital lease obligations                                 $  2,517,000           $  1,824,000
   Current portion of convertible notes payable                                      154,000                186,000
   Note payable                                                                       -                   4,834,000
   Trade accounts payable                                                          5,574,000              5,335,000
   Accrued payroll and related expenses                                              948,000                535,000
   Other accrued expenses                                                            547,000                438,000
   Deferred revenue                                                               12,564,000             12,325,000
                                                                                ------------           ------------
      Total current liabilities                                                   22,304,000             25,477,000

CAPITAL LEASE OBLIGATIONS, net of current portion                                    669,000                 52,000
                                                                                ------------           ------------
      Total liabilities                                                           22,973,000             25,529,000

REDEEMABLE SERIES A PREFERRED STOCK, $1.00 par
   value; 1,375,000 sharesauthorized, none and 1,364,085
   issued and outstanding, respectively                                               -                   7,911,000

SHAREHOLDERS' EQUITY (DEFICIT):
   Common stock, no par value, 50,000,000 shares authorized,
     13,844,389 and 5,528,868 issued and outstanding, respectively                67,818,000              3,444,000
   Warrants to purchase common stock                                               3,666,000              3,704,000
   Additional paid-in capital, stock options                                       1,909,000                 -
   Deferred compensation costs                                                    (1,713,000)                -
   Accumulated deficit                                                           (36,057,000)           (30,855,000)
                                                                                ------------           ------------
      Total shareholders' equity (deficit)                                        35,623,000            (23,707,000)
                                                                                ------------           ------------
TOTAL                                                                           $ 58,596,000           $  9,733,000
                                                                                ------------           ------------
                                                                                ------------           ------------

</TABLE>

           See Condensed Notes to Consolidated Financial Statements


                                       3

<PAGE>

                         FLASHNET COMMUNICATIONS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                 Three Months Ended March 31,
                                                                                              ----------------------------------
                                                                                                  1999                   1998
                                                                                              -----------            -----------
<S>                                                                                           <C>                    <C>
REVENUES:
   Consumer access services                                                                   $ 7,150,000            $ 4,615,000
   Business services                                                                              466,000                351,000
   Set-up fees and other                                                                          473,000                919,000
                                                                                              -----------            -----------
      Total                                                                                     8,089,000              5,885,000
                                                                                              -----------            -----------
OPERATING COSTS AND EXPENSES:
   Cost of recurring revenues                                                                   3,417,000              2,724,000
   Cost of other revenues                                                                         119,000                 98,000
   Sales and marketing                                                                          2,553,000                998,000
   General and administrative                                                                   1,961,000                908,000
   Operations and customer support                                                              1,981,000              1,035,000
   Depreciation and amortization                                                                  889,000                748,000
                                                                                              -----------            -----------
      Total                                                                                    10,920,000              6,511,000
                                                                                              -----------            -----------

LOSS FROM OPERATIONS                                                                           (2,831,000)              (626,000)
INTEREST EXPENSE                                                                                 (712,000)              (652,000)
INTEREST AND OTHER INCOME                                                                          44,000                  9,000
                                                                                              -----------            -----------
LOSS BEFORE EXTRAORDINARY ITEMS                                                                (3,499,000)            (1,269,000)

EXTRAORDINARY ITEMS - LOSSES ON
  EARLY EXTINGUISHMENT OF DEBT                                                                 (1,656,000)                 -
                                                                                              -----------            -----------
NET LOSS                                                                                       (5,155,000)            (1,269,000)
ACCRETION ON REDEEMABLE PREFERRED STOCK                                                           (48,000)                 -
                                                                                              -----------            -----------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS                                                  $(5,203,000)           $(1,269,000)
                                                                                              -----------            -----------
                                                                                              -----------            -----------
NET LOSS PER SHARE, BASIC AND DILUTED:
   Loss before extraordinary items                                                            $     (0.50)           $     (0.23)
   Extraordinary items                                                                              (0.24)                 -
   Accretion on redeemable preferred stock                                                          (0.01)                 -
                                                                                              -----------            -----------
                                                                                              $     (0.75)           $     (0.23)
                                                                                              -----------            -----------
                                                                                              -----------            -----------

WEIGHTED AVERAGE SHARES, BASIC AND DILUTED                                                      7,018,000              5,500,000
                                                                                              -----------            -----------
                                                                                              -----------            -----------

</TABLE>

           See Condensed Notes to Consolidated Financial Statements


                                       4

<PAGE>

                         FLASHNET COMMUNICATIONS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                       Three Months Ended March 31,
                                                                                   -----------------------------------
                                                                                       1999                    1998
                                                                                   ------------            -----------
<S>                                                                                <C>                     <C>
OPERATING ACTIVITIES:
   Net loss                                                                        $ (5,155,000)           $(1,269,000)
   Adjustments to reconcile net loss to net cash provided (used) in
     operating activities:
     Extraordinary losses                                                             1,656,000                  -
     Depreciation                                                                       878,000                738,000
     Amortization of debt discount                                                      329,000                486,000
     Amortization of software licenses                                                    5,000                  8,000
     Amortization of organizational costs                                                 6,000                  2,000
     Deferred compensation expense                                                       95,000                  -
     Provision for allowance for uncollectible accounts                                 (44,000)                 4,000
     Changes in assets and liabilities:
       Decrease in accounts receivable                                                  262,000                 92,000
       (Increase) decrease in prepaid expenses and other current assets                 135,000               (146,000)
       Increase (decrease) in accounts payable and accrued liabilities                  660,000             (1,128,000)
       Increase in deferred revenue                                                     239,000                176,000
                                                                                   ------------            -----------
         Net cash provided (used) by operating activities                              (934,000)            (1,037,000)

INVESTING ACTIVITIES:
   Purchases of property and equipment, net                                          (3,158,000)              (132,000)
   Purchases of software                                                                (84,000)                 -
                                                                                   ------------            -----------
         Net cash used in investing activities                                       (3,242,000)              (132,000)
                                                                                   ------------            -----------
FINANCING ACTIVITIES:
   Proceeds from initial public offering, net                                        56,337,000                  -
   Proceeds from issuance of note payable                                             5,000,000                  -
   Principal payments under notes payable                                           (11,500,000)                 -
   Principal payments under capital lease obligations                                  (897,000)              (361,000)
                                                                                   ------------            -----------
         Net cash provided (used) by financing activities                            48,940,000               (361,000)
                                                                                   ------------            -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 44,764,000             (1,530,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                        1,038,000              1,570,000
                                                                                   ------------            -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                           $ 45,802,000            $    40,000
                                                                                   ------------            -----------
                                                                                   ------------            -----------
SUPPLEMENTAL INFORMATION:
   Cash paid for interest                                                          $    384,000            $    49,000
   Equipment acquired under capital leases                                            2,197,000                  -
   Additional common stock issued upon conversion of debt                                40,000                  -

</TABLE>

           See Condensed Notes to Consolidated Financial Statements


                                       5

<PAGE>

                         FLASHNET COMMUNICATIONS, INC.
             CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


1.   BASIS OF PRESENTATION

     In the opinion of management of FlashNet Communications, Inc. 
("FlashNet" or the "Company"), the accompanying consolidated financial 
statements, which have not been audited by independent public accountants, 
contain all adjustments necessary to present fairly the Company's 
consolidated financial position, the results of its operations and its cash 
flows for the periods reported. The consolidated financial statements include 
the accounts of the Company and its subsidiaries. All significant 
intercompany balances and transactions are eliminated. Certain information 
and footnote disclosures normally included in financial statements prepared 
in accordance with generally accepted accounting principles have been condensed 
or omitted pursuant to Article 10 of Regulation S-X of the Securities and 
Exchange Commission. These condensed financial statements should be read in 
conjunction with the financial statements and notes thereto included in the 
Company's Registration Statement on Form S-1 (File No. 333-69277) relating to 
the Company's initial public offering, which was declared effective by the 
Securities and Exchange Commission on March 16, 1999. The results of 
operations for the three months ended March 31, 1999 and 1998 are not 
necessarily indicative of the results to be expected for a full year.

2.   ACCOUNTING ESTIMATES

     The preparation of the 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 
disclosures of contingent assets and liabilities at the date of the financial 
statements and the reported amounts of revenues and expenses during the 
reporting period. Actual results could differ from those amounts.

3.   STOCK OPTION GRANTS

     On January 15, 1999, the Company granted stock options to purchase 150,943 
and 15,890 shares of Common Stock at $5.88 and $8.82 per share, respectively. 
On March 16, 1999, the Company granted stock options to purchase 220,185 
shares of Common Stock at $17.00 per share. The options were granted under 
the Company's 1997 Stock Incentive Plan (the "Plan"). On March 26, 1999, the 
Company granted additional stock options to purchase 10,000 shares of Common 
Stock at $30.00 per share. During February 1999, the Company's Board of 
Directors and shareholders approved a change in the number of authorized 
shares of common stock to 50,000,000, and increased the number of shares 
authorized and reserved under the Plan to 1,327,230 shares.

4.   GOLDMAN SACHS TERM LOAN AGREEMENT

     During January 1999, the Company entered into a $5.0 million term loan 
agreement with Goldman Sachs Credit Partners L. P. ("Goldman Sachs"). The 
term loan's stated maturity was January 15, 2000. It bore interest at 13%, 
was subject to a repayment fee of 1.13% to 4.50% of the repaid principal and 
was secured by a second lien on the Company's assets. As part of this 
financing, a Goldman Sachs affiliate obtained the right to acquire within 
180 days of the consummation of an initial public offering up to $5.0 million 
of the Company's common stock at the initial public offering price. This 
right was assigned a value of $0.1 million and was netted against the loan 
amount. The term loan plus accrued interest of $0.1 million was repaid in 
March 1999 (see "LIQUIDITY AND CAPITAL RESOURCES").

5.   INITIAL PUBLIC OFFERING

     On March 16, 1999 the Company effected its initial public offering 
("IPO"). The IPO consisted of 3,000,000 shares of Common Stock issued at 
$17.00 per share. Concurrently with the IPO, the Company sold an additional 
175,000 shares of Common Stock to SBC Communications Inc. at $17.00 per 
share. Net proceeds to the Company were approximately $49.2 million. Upon 
consummation of the IPO, 1,364,085 shares of the Company's Redeemable Series 
A Preferred Stock were automatically converted to 4,637,889 shares of Common 
Stock. On March 29, 1999 the Underwriter exercised its over-allotment option 
and 


                                       6

<PAGE>

purchased 450,000 shares of the Company's Common Stock at the IPO price of 
$17.00 per share. Net proceeds to the Company from this exercise were 
approximately $7.1 million.

6.   REVENUE RECOGNITION

     Amounts received upon the sale or renewal of prepaid annual and monthly 
subscriptions are recorded as deferred revenue through a 30-day money back 
cancellation period and then amortized over the remaining period in which 
service is provided. Annual subscribers canceling after the initial 30-day 
period are treated as monthly subscribers. Such subscribers are refunded the 
difference between their prepaid amounts and retroactive set-up fees and 
monthly rates for the period of service. Distributor sign-up and renewal fees 
are also recorded as deferred revenue and amortized over the life of the 
related agreements.

7.   NET LOSS PER SHARE

     Share and per share amounts have been adjusted retroactively for the 
3.4-for-1 stock split which was approved in February 1999, and became 
effective March 11, 1999. Basic loss per share is computed using the weighted 
average number of common shares outstanding. Options, warrants and 
convertible securities are not included in the computation of diluted loss 
per share as the effects would be antidilutive.


                                       7

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

     This report contains certain forward-looking statements with respect to 
the Company's operations, industry, financial condition and liquidity. These 
statements reflect management's best current assessment of a number of risks 
and uncertainties. The Company's actual results could differ materially from 
the results anticipated in these forward-looking statements as a result of 
certain factors described in this report and other risks indicated in the 
Company's other filings with the Securities and Exchange Commission.

OVERVIEW

     FlashNet is a nationwide provider of consumer Internet access services 
and business services. Founded in September 1995, the Company initially 
served as an Internet access provider for consumers located primarily in the 
Dallas/Fort Worth area. To provide Internet access throughout the 
southwestern United States and selected central and northeastern states, the 
Company expanded its operations during 1996 and 1997 through the installation 
of 182 Company-owned points of presence ("POPs") where subscribers can access 
its services through a local telephone call. These POPs are supported by a 
network operations center in Fort Worth, Texas and 28 additional remote 
facilities where Company-owned equipment has been deployed within third-party 
networking or data centers. During 1998, the Company signed a national 
network access agreement with PSINet that provides access to PSINet's POPs. 
This agreement, combined with the Company's agreement with Level 3 
Communications, has transformed FlashNet into a national Internet service 
provider with 637 total POPs across 476 cities throughout the United States. 
As of March 31, 1999, the Company had accumulated a subscriber base of 
approximately 190,000 users, including approximately 3,000 customers for its 
business services.

     In addition to access services as a national Internet service provider, 
the Company offers a broad range of business services that enable businesses 
to outsource their Internet and electronic commerce activities. The Company 
expects that business services revenues will increase in future periods, 
particularly in view of its strategy to increase the size of its corporate 
sales department and expand its offerings of business services. The Company 
believes that attracting additional business customers will result in a more 
stable, higher quality customer base. The Company further believes that its 
business services enable it to acquire new corporate customers more 
effectively and provide many cross-selling opportunities.

     REVENUES.

     The Company's revenues generally are composed of:

     -  Consumer access services revenues;

     -  Business services revenues; and

     -  Set-up fees and other revenues.

     Consumer access services revenues consist of annual prepaid and, to a 
lesser extent, monthly subscriptions for consumer dial-up access to the 
Internet. The Company offers prepaid and monthly subscribers a full 
money-back guarantee upon cancellation of their service if made within 30 days 
of initiating service. Amounts received upon the sale or renewal of prepaid 
annual and monthly subscriptions are recorded as deferred revenue through the 
30-day money-back cancellation period and then amortized over the remaining 
period in which service is provided. Subscribers may cancel their subscriptions 
at any time following the initial 30-day period, in which case the Company 
charges the subscriber according to its monthly service rates for services 
provided through the end of the month in which the cancellation occurs plus 
an additional set-up fee, and refunds any remaining prepaid amounts after 
such charges. Cash received from subscribers is applied to working capital 
when received, and no cash reserves are maintained for potential refund 
obligations.

     Business services consisting of dedicated access services also are 
offered on a prepaid annual and monthly subscription basis. The revenue 
recognition policies and customer guarantee practices described above for 
consumer access services also apply to dedicated access business services. 
Revenues from the sale of other business services typically involve set-up 
fees, which are included in set-up fees and other 

                                       8
<PAGE>

revenues in the consolidated statement of operations, and a service contract 
that provides for monthly billing. These business services revenues are 
recognized as services are provided.

     Set-up fees and other revenues are derived through a variety of sources, 
including set-up fees for subscribers to the Company's consumer access 
services and business services, consulting services, sign-up and renewal fees 
for independent representatives in the Company's network marketing program 
and advertising revenues. Set-up fees are charged to new customers of monthly 
consumer access and to business services customers, other than prepaid annual 
dedicated access customers. These one-time set-up fees are non-refundable and 
are deferred and amortized over a one-year period. Consulting services have 
been provided from time to time on a limited basis by the Company on both a 
fixed fee and a time-and-materials basis and are recognized as the services 
are performed. Non-refundable fees are paid by representatives in the 
Company's network marketing program at the commencement of participation in 
the program and for renewal of participation on each anniversary of the 
representative's commencement date. Such fees are deferred and amortized over 
a one-year period following the month of initial sign-up or renewal, as the 
case may be. Advertising revenues are recognized as advertising services are 
provided.

     COSTS AND EXPENSES.

     The Company's costs include (i) costs of revenue that are primarily 
related to the number of subscribers; (ii) costs related to merchandise sold 
and cost of material for the Company's network marketing program; 
(iii) selling, customer support and general and administrative expenses that 
are associated more generally with operations; and (iv) depreciation and 
amortization, which are related to the size of the Company's network and 
capital lease obligations.

     Costs of revenue that are primarily related to the number of subscribers 
are recurring costs. Cost of recurring revenues is comprised of the costs 
incurred in providing consumer access services and business services. These 
costs include costs for providing local telephone lines into each Company-owned 
POP, the use of third-party networks and the use of leased lines to connect 
each Company-owned POP and third-party POP to its hub and to connect its hub 
to the Internet backbone.

     Cost of other revenues consists of costs of installation software, 
premium support costs, cost of merchandise sold and the cost of user guides 
and other materials for representatives and distributors involved in the 
Company's network marketing program.

     Selling, general and administrative costs are incurred in the areas of 
sales and marketing, customer support, network operations and maintenance, 
engineering, accounting and administration. Sales and marketing expenses 
consist primarily of media and production costs, commissions and expenses 
related to the Company's network marketing program, sales and marketing 
overhead, and personnel costs. General and administrative expenses consist of 
personnel and related costs associated with the Company's executive and 
administrative functions and other miscellaneous expenses. Operations and 
customer support expenses consist primarily of expenses associated with daily 
support of the Company's subscriber base, including customer service and 
technical support. Selling, general and administrative costs will increase 
over time as the Company's scope of operations increases. However, the 
Company expects that such costs will be more than offset by anticipated 
increases in revenue attributable to overall subscriber growth. In addition, 
significant levels of marketing activity may be necessary in order for the 
Company to build or increase its subscriber base in a given market to a size 
large enough to generate sufficient revenue to offset such marketing 
expenses. The Company may determine to significantly increase the level of 
marketing activity in order to increase the rate of subscription growth. Any 
such increase would have a short-term negative impact on earnings. The 
Company does not defer any start-up expenses related to entering new markets.

     As the Company expands into new markets, both costs of revenue and 
selling, general and administrative expenses will increase. To the extent the 
Company opens FlashNet POPs in new markets, such expenses may also increase 
as a percentage of revenue in the short-term after a new FlashNet POP is 
opened because many of the fixed costs of providing service in a new market 
are incurred before significant revenue can be expected from that market. 
However, to the extent that the Company expands into new markets by using 
third-party POPs instead of opening its own POPs, the Company's incremental 
monthly recurring costs will consist primarily of the fees to be paid to 
third parties pursuant to network service agreements. The margins on 
subscribers serviced by using third party POPs will initially be lower than if 


                                       9

<PAGE>

the Company had developed its own POPs in such new markets. Once a new market 
matures, costs of revenue as a percentage of revenue will tend to be higher 
in markets served through utilization of purchased network services rather 
than Company-owned POPs. Costs of utilizing purchased network services are 
generally higher because all of these costs are included in costs of revenue, 
while a portion of the costs of utilizing Company-owned POPs is included in 
depreciation and amortization. Also, assuming favorable local area 
telecommunications charges, the Company can provide services at a lower cost 
on its own POPs once a sufficient subscriber base relative to such POPs is 
achieved.

     The Company has experienced operating losses since its inception as a 
result of efforts to build its network infrastructure and internal staffing, 
develop its systems and expand into new markets. The Company expects to 
continue to focus on increasing its subscriber base and geographic coverage. 
Accordingly, the Company expects that its cost of revenues, sales and 
marketing expenses, general and administrative expenses, operations expenses 
and capital expenditures will continue to increase, all of which may have a 
negative impact on short-term operating results.

RESULTS OF OPERATIONS

     The following table sets forth certain unaudited financial data for the 
quarters ended March 31, 1999 and 1998. Operating results for any period are 
not necessarily indicative of results for any future period. Dollar amounts 
are shown in thousands.

<TABLE>
<CAPTION>

                                                      Three Months Ended                     Three Months Ended
                                                        March 31, 1999                         March 31, 1998
                                                -----------------------------          -----------------------------
                                                                       % of                                   % of
                                                (000's)              Revenues          (000's)              Revenues
                                                -------              --------          -------              --------
<S>                                             <C>                  <C>               <C>                  <C>
REVENUES:
   Consumer access services                     $ 7,150                 88%            $ 4,615                 78%
   Business services                                466                  6                 351                  6
   Set-up fees and other                            473                  6                 919                 16
                                                -------              --------          -------              --------
      Total                                       8,089                100               5,885                100
                                                -------              --------          -------              --------
OPERATING COSTS AND EXPENSES:
   Cost of recurring revenues                     3,417                 42               2,724                 46
   Cost of other revenues                           119                  1                  98                  2
   Sales and marketing                            2,553                 32                 998                 17
   General and administrative                     1,961                 24                 908                 15
   Operations and customer support                1,981                 25               1,035                 18
   Depreciation and amortization                    889                 11                 748                 13
                                                -------              --------          -------              --------
      Total                                      10,920                135               6,511                111
                                                -------              --------          -------              --------
LOSS FROM OPERATIONS                             (2,831)               (35)               (626)               (11)
INTEREST EXPENSE                                   (712)                (9)               (652)               (11)
INTEREST AND OTHER INCOME                            44                  1                   9                 -
                                                -------              --------          -------              --------
LOSS BEFORE EXTRAORDINARY ITEMS                  (3,499)               (43)             (1,269)               (22)

EXTRAORDINARY ITEMS - LOSSES ON EARLY
  EXTINGUISHMENT OF DEBT                         (1,656)               (20)                -                   -
                                                -------              --------          -------              --------
NET LOSS                                         (5,155)               (63)             (1,269)               (22)
ACCRETION ON REDEEMABLE
  PREFERRED STOCK                                   (48)                (1)                -                   -
                                                -------              --------          -------              --------
NET LOSS ATTRIBUTABLE TO
  COMMON SHAREHOLDERS                           $(5,203)               (64)%           $(1,269)               (22)%
                                                -------              --------          -------              --------
                                                -------              --------          -------              --------

</TABLE>


                                       10

<PAGE>

QUARTER ENDED MARCH 31, 1999 COMPARED TO QUARTER ENDED MARCH 31, 1998

     REVENUES.

     Total revenues increased $2.2 million, or 37%, to $8.1 million in 1999 
from $5.9 million in 1998. Subscriptions and renewals increased $2.7 million, 
as reflected by the increase in consumer access services revenues. These 
increases were partially offset by a decrease of $0.5 million in subscriber 
set-up fees and other revenues. In the fourth quarter of 1997, the Company 
eliminated set-up fees applicable to annual prepaid consumer accounts in 
connection with a price increase for all consumer access and business access 
services. However, as a result of the Company's revenue recognition policy 
noted above, set-up fees related to 1997 were deferred and recognized over 
the twelve-month period following their receipt. The number of subscribers 
who use the Company's services increased from approximately 160,000 at 
March 31, 1998 to 190,000 at March 31, 1999. Consumer access services 
revenues increased 55% in 1999 over 1998, primarily as a result of the 
increase in the Company's subscriber base. Business services revenues 
increased 33% in 1999 from 1998 as the Company expanded its offerings of 
dedicated and broadband access and other business services in response to 
escalating customer demand.

     COST OF RECURRING REVENUES.

     Cost of recurring revenues increased $0.7 million, or 25%, to $3.4 million 
in 1999 from $2.7 million in 1998. Of this increase, $0.5 million was 
attributable to an increase in dial tone costs associated with a higher level 
of subscribers on the Company's network. As a percentage of total revenues, 
cost of recurring revenues decreased to 42% in 1999 from 46% in 1998 
primarily due to the increases in total revenues and also as a result of 
greater network efficiencies.

     SALES AND MARKETING EXPENSES.

     Sales and marketing expenses increased $1.6 million, or 156%, to 
$2.6 million in 1999 from $1.0 million in 1998. As a percentage of total 
revenues, sales and marketing expenses increased to 32% in 1999 from 17% in 
1998. This increase, both in absolute dollars and as a percentage of total 
revenues, was attributable to a $0.7 million increase in media expenses, a 
$0.5 million increase in personnel costs and a $0.4 million increase in 
expenses associated with our network marketing program. The Company suspended 
much of its advertising efforts in 1998 to conserve cash resources.

     GENERAL AND ADMINISTRATIVE EXPENSES.

     General and administrative expenses increased $1.1 million, or 116%, to 
$2.0 million in 1999 from $0.9 million in 1998. General and administrative 
expenses increased primarily due to an increase in the number of staff 
members, an increase in credit card processing fees and increased spending on 
facilities and supplies. In addition, the Company recognized deferred 
compensation expense of $0.1 million during 1999 related to stock options 
granted in January 1999. As a percentage of total revenues, general and 
administrative expenses increased to 24% in 1999 from 15% in 1998.

     OPERATIONS AND CUSTOMER SUPPORT EXPENSES.

     Operations and customer support expenses increased $1.0 million, or 91%, 
to $2.0 million in 1999 from $1.0 million in 1998. As a percentage of total 
revenues, operations and customer support expenses increased to 25% in 1999 
from 18% in 1997. These increases were primarily due to the addition of new 
customer care and technical personnel to support a larger subscriber base.

     DEPRECIATION AND AMORTIZATION.

     Depreciation and amortization expense increased $0.1 million, or 19%, to 
$0.9 million in 1999 from $0.8 million in 1998. This increase primarily 
resulted from additional purchases of capital equipment and software that 
were needed to support the Company's expanding network. As a percentage of 
total revenues, depreciation and amortization expense decreased 11% in 1999 
from 13% in 1998.


                                       11

<PAGE>

     EXTRAORDINARY LOSSES.

     The extraordinary losses on early extinguishment of debt are related to 
the write-off of unamortized debt discount costs of $1.4 million related to 
the repayment of a $6.5 million Secured Promissory Note payable to Ascend 
Communications, Inc. (the "Ascend Note"), and $0.3 million of unamortized 
debt discount and other costs related to the repayment of the Goldman Sachs 
term loan.

LIQUIDITY AND CAPITAL RESOURCES

     The capital needs of the Company have historically been met, in large 
part, by receipts from its prepaid subscriber customer base, which, in turn, 
increased its deferred revenue liability. Commencing in 1996, as the Company 
placed greater emphasis on developing and expanding its network infrastructure, 
it sought additional capital from other sources, including vendor capital 
leases and other vendor financing arrangements and through private placements 
of its securities. The Company's IPO, completed in March 1999, provided the 
Company with additional capital of $56.3 million.

     The Company's operating activities used net cash of approximately 
$0.9 million and $1.0 million during the quarters ended March 31, 1999 and 
1998, respectively. During the quarter ended March 31, 1999, net cash used in 
operations resulted primarily from net losses, adjusted for the extraordinary 
losses, depreciation and amortization expense and increases in trade accounts 
payable. During the quarter ended March 31, 1998, net cash used in operations 
resulted from net losses.

     Cash used by investing activities has consisted primarily of equipment 
purchases for POP and network expansion. For the quarters ended March 31, 
1999 and 1998, capital expenditures amounted to approximately $3.2 million 
and $0.1 million, respectively. In addition, the Company spent approximately 
$2.2 million for equipment acquired under capital leases in 1999.

     Cash from financing activities provided the Company with approximately 
$48.9 million during the quarter ended March 31, 1999, compared to cash used 
by financing activities of $0.4 million during the quarter ended March 31, 
1998. During January 1999, the Company received proceeds of $5.0 million from 
the Goldman Sachs term loan. During March 1999, the Company effected its IPO. 
The offering consisted of 3,175,000 shares of common stock issued at $17 per 
share. Net proceeds to the Company were approximately $49.2 million. On 
March 29, 1999, the Underwriters exercised their over-allotment option and 
purchased 450,000 shares at the IPO price of $17.00. Net proceeds to the 
Company were approximately $7.1 million. Cash used for financing activities 
included $6.5 million and $5.0 million for the repayment of the Ascend Note 
and the Goldman Sachs term loan, respectively, plus $0.9 million for 
principal payments under capital lease obligations.

     As of March 31, 1999, the Company had cash and cash equivalents on hand 
of approximately $45.8 million. The Company estimates that its cash and 
financing needs for the next twelve months, assuming reasonable internal 
growth, can be met by cash on hand and cash flow from operations. The 
Company's future capital requirements depend on several factors, including 
the rate of market acceptance of the Company's services, the Company's 
ability to maintain and expand its subscriber base, the rate of expansion of 
the Company's network infrastructure, the level of resources required to 
expand the Company's marketing and sales efforts, the availability of 
hardware and software provided by third-party vendors and other factors. If 
capital requirements vary materially from those currently planned, the 
Company may require additional financing. The Company has no commitments for 
any additional financing, and there can be no assurance that any such 
commitments can be obtained on favorable terms, if at all. Any additional 
equity financing may be dilutive to the Company's stockholders. Debt 
financing, if available, may involve restrictive covenants with respect to 
dividends, raising future capital and other financial and operational matters 
and may otherwise limit the Company's ability to raise additional capital.

     The Company frequently evaluates potential business acquisitions. 
Depending on the circumstances, the Company may not disclose a material 
acquisition until completion of a definitive agreement. The Company may 
determine to raise additional debt or equity capital to finance potential 
acquisitions and/or to fund accelerated growth. Any significant acquisitions 
or increases in the Company's growth rate could materially affect the 
Company's operating and financial expectations and results, liquidity and 
capital resources.

                                       12
<PAGE>

YEAR 2000

     The Company recognizes the need to ensure that the provisioning of 
access services and business services, as well as its internal systems, will 
not be adversely affected by Year 2000 software failures. The Company 
currently does not believe that the Year 2000 issue will have a material 
effect on its internal network, computer systems or operations. However, the 
Company is continuing to assess the potential impact of the Year 2000 issue. 
In particular, the Company has established procedures for evaluating and 
managing the risks and costs associated with this problem. The Company's plan 
to resolve Year 2000 issues involves four phases: assessment, remediation, 
testing and implementation. The Company has completed its assessment of all 
material information technology systems, and based on this assessment, it 
currently expects that its computer systems will be Year 2000 compliant by 
July 1999. However, notwithstanding its assessment, the Company may 
experience degradation in the performance of its network or other systems, or 
complete system failure if its expectations are not realized or it encounters 
unforeseen difficulties. Any performance degradation or system failure, 
whether of the Company's internal systems or of the systems of its customers, 
likely would have a material adverse effect on its business, financial 
condition and results of operations.

     The Company's customers maintain their Internet operations on 
commercially available operating systems, which may be impacted by Year 2000 
complications. In addition, the Company relies on telecommunications 
providers and third-party vendors for certain equipment and software included 
within its services that may not be Year 2000 compliant. The Company is in 
the final stages of conducting an audit of its telecommunications providers 
and third-party suppliers as to the Year 2000 compliance of their systems, 
and plans to complete this audit in the second quarter of 1999. To date, the 
Company has verbally contacted all of its major telecommunications, 
information systems and software vendors concerning their Year 2000 
compliance and plans to obtain written responses from them prior to July 31, 
1999 indicating that they will be Year 2000 compliant prior to December 1999. 
The Company has not obtained legally binding representations from any of 
these third-party vendors with respect to their Year 2000 compliance. 
Communications to date from such third parties indicate that these third 
parties expect, at this time, to be compliant by the Year 2000 based on their 
progress to date. However, the inability of a substantial number of third 
parties to complete their Year 2000 resolution process on a timely basis and 
in a manner compatible with the Company's systems could materially and 
adversely affect the operation of its internal systems or its ability to 
provide consumer access services and business services.

     The total cost of completing the Company's Year 2000 plan is estimated 
to be less than $1.0 million and is being expensed as incurred and funded 
through operating cash flows. The Company expects that its expenses in 1999 
related to all phases of its Year 2000 project will not be material. The 
Company has not established contingency plans in case of failure of its 
information technology systems since it currently expects that such systems 
will be Year 2000 compliant by mid-1999. In connection with its assessment of 
third-party readiness and operating equipment, in the third quarter of 1999 
the Company plans to evaluate the necessity of contingency plans based on the 
level of uncertainty regarding third-party compliance. In the event its 
telecommunications providers or third-party suppliers do not expect to be 
Year 2000 compliant, the Company's contingency plans may include replacing 
such third parties or performing the particular services provided by such 
parties itself.

     The Company's Year 2000 plans are based on management's best estimates, 
which were derived utilizing numerous assumptions of future events, including 
the continued availability of certain resources and other factors. Estimates 
on the status of completion and the expected completion dates are based on 
progress to date compared to the timetable established by the Company's Year 
2000 committee. The Company has not employed the services of independent 
contractors to verify its assessment and estimates related to the Year 2000 
problem. There can be no guarantee that these estimates will be achieved and 
actual results could differ materially from these plans. Specific factors 
that might cause such material differences include, but are not limited to, 
the availability and cost of personnel trained in this area, the ability to 
locate and correct all relevant computer codes and similar uncertainties.


                                       13

<PAGE>

PART II.  OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

     The Company's registration statement on Form S-1 (Registration 
No. 333-69277) under the Securities Act of 1933, as amended, for its initial 
public offering (the "Offering") became effective on March 16, 1999. The 
managing underwriters of the offering were BancBoston Robertson Stephens, 
J.C. Bradford & Co. and EVEREN Securities, Inc. (the "Underwriters"). All 
3,175,000 shares of Common Stock registered under the Registration Statement 
were sold at a price of $17.00 per share. The Underwriters also exercised an 
over-allotment option of 450,000 shares on March 29, 1999. All 450,000 
over-allotment shares were sold at a price of $17.00 per share. The aggregate 
price of the offering amount registered and sold was approximately 
$61.6 million. In connection with the Offering, the Company paid 
approximately $4.1 million in underwriting discounts and commissions to the 
Underwriters. Offering proceeds, net of aggregate expenses to the Company of 
approximately $1.2 million, were approximately $56.3 million. As of March 31, 
1999, the Company has used the net offering proceeds for the purchase of 
temporary investments consisting of cash, cash equivalents, and short-term 
investments. The Company repaid notes payable totaling $11.5 million. The 
Company will also use the proceeds for the expansion of its sales and 
marketing operations, for enhancements to its network infrastructure and to 
develop further its business service offerings. The balance of the proceeds 
will be used for working capital, general corporate purposes and potential 
acquisitions. None of the Company's net proceeds of the Offering were paid 
directly or indirectly to any director, officer of the Company or their 
associates, persons owning 10% or more of any class of equity securities of 
the Company, or an affiliate of the Company.

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

     On February 22, 1999, the Company held its 1999 annual meeting of 
shareholders. The number of shares outstanding on the record date of the 
meeting and the number of shares represented in person or by proxy at the 
meeting, were as follows:

<TABLE>
<CAPTION>
Class of Stock       Number of Shares Outstanding       Number of Shares Present
--------------       ----------------------------       ------------------------
<S>                  <C>                                <C>
  Common                      1,626,838                        1,502,513
  Preferred                   1,364,085                        1,331,136
</TABLE>

     At the meeting, John B. Kleinheinz, Kevin A. Stadtler, James B. 
Francis, Jr., M. Scott Leslie and A. Lee Thurburn were elected as directors 
of the Company. Mr. Kleinheinz and Mr. Stadtler were designated as 
representatives of the holders of shares of the Company's Preferred Stock and 
only holders of the Preferred Stock voted in respect of their election. The 
remaining shareholders voted in respect of the election of the other three 
individuals. All shares represented at the meeting and entitled to vote in 
respect of the election of the directors were voted in favor of their 
election, with the exception of 5,780 shares for which authority to vote was 
withheld.

     The remaining matters acted upon at the annual meeting were:

     -  A proposal to approve a Plan of Recapitalization and Restated Articles
        of Incorporation of the Company to effect a 3.4-for-1 split of the
        outstanding shares of the Company's Common Stock;

     -  A proposal to approve an increase in the number of shares reserved for
        issuance under the Company's 1997 Stock Incentive Plan;

     -  A proposal to approve the Company's Employee Stock Discount Purchase
        Plan; and

     -  Ratification of the appointment by the Board of Directors of
        independent public accountants of the Company for the fiscal year
        ending December 31, 1998.

     All shares represented at the meeting were voted in favor of the proposals 
and ratification. There were no votes against or withheld and there were no 
abstentions.

                                       14
<PAGE>

     By written consent of the shareholders dated March 10, 1999, the Company's 
shareholders approved Articles of Amendment to the Company's Restated Articles 
of Incorporation for the purpose of causing the Company's 3.4-for-1 stock split 
to become effective on March 11, 1999. Holders of in excess of two-thirds of 
the outstanding shares entitled to vote in respect of the Articles of Amendment 
signed the consent. In accordance with the Company's Restated Articles of 
Incorporation and Texas law, prompt notice of the taking of the action by the 
shareholders without a meeting was given to the shareholders who did not sign 
the consent.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a).  Exhibits

         27.1  Financial Data Schedule

   (b).  Reports on Form 8-K

         None.


                                       15

<PAGE>

                                  SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has duly caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.


                                            FLASHNET COMMUNICATIONS, INC.
                                            -----------------------------
                                                     (Registrant)


Date: May 12, 1999                          /s/ ANDREW N. JENT
                                            -----------------------------
                                            Andrew N. Jent
                                            Executive Vice President and
                                            Chief Financial Officer


                                       16