<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 Quarterly Period Ended June 30, 1998

                                      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  0-24581
                                        
                                        
                         CAPROCK COMMUNICATIONS CORP.
             (Exact name of registrant as specified in its charter)


                  TEXAS                                  75-2765572
     (State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
     Incorporation or Organization)

           Two Galleria Tower
        13455 Noel Road, Suite 1925
               Dallas, Texas                               75240
 (Address of Principal Executive Offices)                (Zip Code)
 
        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (972) 982-9500

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), and (2) has been subject to such filing
requirements for the past 90 days.
                                                  Yes [ ]  No [X]

COMMON STOCK, $0.01 PAR VALUE                        1,000
    (Title of Each Class)       (Number of Shares Outstanding at August 7, 1998)



<PAGE>

                            CAPROCK COMMUNICATIONS CORP.
                                     FORM 10-Q
                    FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
                                       INDEX

<TABLE>
<CAPTION>
                                                                           PAGE
                                                                          NUMBER
                                                                          ------
<S>                                                                       <C>
PART 1.   FINANCIAL INFORMATION                                               3

Item 1.   Balance Sheet at June 30, 1998                                      3

          Notes to Balance Sheet                                              4

Item 2.   Management's Discussion and Analysis of Financial Condition 
          and Results of Operations                                           6

Item 3.   Quantitative and Qualitative Disclosures About Market Risk          8

PART 2.   OTHER INFORMATION                                                   8

Item 6.   Exhibits and Reports on Form 8-K                                    9

          SIGNATURE PAGE                                                     11

</TABLE>


                                       2
<PAGE>

PART 1.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                         CAPROCK COMMUNICATIONS CORP.
                                BALANCE SHEET
                                JUNE 30, 1998
                                 (Unaudited)

<TABLE>
<CAPTION>
<S>                                                                      <C>
Assets
Investment in affiliates                                                 $2,000
                                                                         ------
                                                                         ------
Stockholder's Equity:
Preferred stock; $.01 par value; 20,000,000 authorized, none issued      $    -
Common stock; $.01 par value; 200,000,000 authorized;
    1,000 issued and outstanding                                             10
Additional paid-in capital                                                1,990
                                                                         ------
    Total stockholder's equity                                           $2,000
                                                                         ------
                                                                         ------
</TABLE>

See accompanying Notes to Balance Sheet

                                       3
<PAGE>

                          CAPROCK COMMUNICATIONS CORP.

                             Notes to Balance Sheet


(1)  BASIS OF PRESENTATION

     The accompanying balance sheet, which should be read in conjunction with
     the balance sheet and footnotes of CapRock Communications Corp. ("CapRock"
     or the "Company") as of March 31, 1998, which were included in the
     Registration Statement (SEC Registration No. 333-57365) filed on Form S-4
     by CapRock in July 1998, are unaudited, but have been prepared in
     accordance with generally accepted accounting principles for interim
     financial information.  Accordingly, they do not include all of the
     information and footnotes required by generally accepted accounting
     principles for complete financial statements.  In the opinion of
     management, all adjustments (consisting only of normal recurring
     adjustments) considered necessary for a fair presentation have been
     included.  Accounting measurements at interim dates inherently involve
     greater reliance on estimates than at year-end.

     CapRock was incorporated as a Texas corporation on February 3, 1998, to
     serve as a holding company for the operations of CapRock Telecommunications
     Corp. ("Telecommunications"), CapRock Fiber Network Ltd. ("Partnership")
     and IWL Communications, Incorporated ("IWL") after completion of their
     business combination (note 2) in conformance with the provisions of their 
     Agreement and Plan of Merger dated February 16, 1998.

     Effective February 3, 1998, IWL purchased 1,000 shares of the common stock
     of the Company for an aggregate purchase price of $2,000, for the purpose
     of completing the organization of the Company.  On June 2, 1998, the
     Company committed to purchase (i) from IWL Acquisition Corp., a Texas
     corporation, 1,000 shares of the common stock, par value $.01 per share of
     IWL Acquisition Corp. for an aggregate purchase price of $1,000 and (ii)
     from CapRock Acquisition Corp., a Delaware corporation, 1,000 shares of the
     common stock, par value $.01 per share of CapRock Acquisition Corp., for an
     aggregate purchase price of $1,000.

     The Company's original stock issuance consisted of 1,000 shares of $.01 par
     value common stock.  The amount of shares authorized were 100,000,000.  On
     June 18, 1998, the Company amended the Articles of Incorporation to adjust
     the number of authorized shares from 100,000,000 to 200,000,000 shares.  On
     June 3,1998, IWL funded the initial capital contribution of $2,000.

     The accompanying balance sheet presents the financial position of the
     Company as of June 30, 1998.  The Company has not commenced operations and
     does not have any contingent liabilities or commitments, other than its
     commitments to enter into the transactions related to the business 
     combination described above (and in note 2) and the contingent liabilities 
     in connection with the senior note offering (note 3).

(2)  BUSINESS COMBINATION

     On February 16,1998, the Company entered into a definitive agreement
     to combine through mergers and an interest exchange (the "Combination")
     with Telecommunications, IWL and the Partnership.  The Combination is
     subject to, among other matters, approval by the shareholders of the IWL
     and Telecommunications and the partners of the Partnership. The transaction
     is expected to be accounted for as a "pooling of interests" and qualify as 
     a tax-free exchange of shares and partnership interests.

(3)  SUBSEQUENT EVENT

     In July 1998, CapRock, Telecommunications and the Partnership (with 
     IWL as guarantor) issued, through a private placement under Rule 144A 
     under the Securities Act of 1933, as amended, $150 million aggregate 
     principal amount of their 12% Senior Notes due 2008 (the "Notes"), which
     closed on July 16, 1998.  Interest on the Notes will be payable 
     semi-annually in arrears on January 15 and July 15 of each year, 
     commencing on January 15, 1999, at the rate of 12% per annum. The net 
     proceeds from the offering were initially placed in a segregated escrow 
     account and will be released only in accordance with the provisions of 
     an escrow agreement.  Upon consummation of the Combination, (i) the 
     proceeds in such escrow account will be released to CapRock, (ii) 
     Telecommunications and the Partnership will no longer be co-obligors 
     under the Notes, and (iii) IWL will be released from its obligations in 
     connection with the special offer to purchase.  If the Combination is 
     not consummated by August 31, 1998, CapRock, Telecommunications, and the 
     Partnership will be required to offer to purchase the Notes (the "Special

                                       4
<PAGE>

     Offer to Purchase") at a price equal to 101% of the principal amount 
     thereof, plus accrued and unpaid interest, if any, to the date of such 
     repurchase.  To the extent the amounts held in the escrow account are 
     insufficient to repurchase all tendered Notes, each of CapRock, 
     Telecommunications, the Partnership, and IWL (as guarantor) shall be 
     jointly and severally liable to fund any such deficiency (with an 
     estimated contingent liability of not more than approximately $7.0 
     million).  There can be no assurance that CapRock, Telecommunications, 
     the Partnership and IWL will have sufficient funds available at the time 
     of such offer to purchase to repay all Notes tendered.

                                       5
<PAGE>

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

     The following discussion and analysis should be read in conjunction with 
the balance sheet and footnotes of CapRock as of March 31, 1998, which were 
included in the Registration Statement filed on Form S-4 by CapRock in July 
1998.  The Company believes that all necessary adjustments (consisting only 
of normal recurring adjustments) have been included in the amounts stated 
below to present fairly the following quarterly information.  Accounting 
measurements at interim dates inherently involve greater reliance on 
estimates than at year-end. 

Forward Looking Information

     Certain information contained herein contains forward-looking statements 
(as defined in the Private Securities Litigation Reform Act of 1995) 
regarding future events or the future financial performance of the Company, 
and are subject to a number of risks and other factors which could cause the 
actual results of the Company to differ materially from those contained in 
and anticipated by the forward-looking statements.  Among such factors are: 
the completion of the Combination, industry concentration and the Company's 
dependence on major customers, competition, risks associated with 
international operations and entry into new markets, government regulation, 
variability in operating results, general business and economic conditions, 
customer acceptance of any demand for the Company's new products, the 
Company's overall ability to design, test, and introduce new products on a 
timely basis, reliance on third parties and other telecommunication carriers, 
the Company's ability to manage change, dependence on key personnel, 
dependence on information systems and changes in technology, and possible 
service interruptions.  The forward-looking statements contained herein are 
necessarily dependent upon assumptions, estimates and data that may be 
incorrect or imprecise.  Accordingly, any forward-looking statements included 
herein do not purport to be predictions of future events or circumstances and 
may not be realized.  Forward-looking statements contained herein include, 
but are not limited to, forecasts, projections and statements relating to 
inflation, future acquisitions and anticipated capital expenditures.  All 
forecasts and projections in this report are based on management's current 
expectations of the Company's near term results, based on current information 
available pertaining to the Company, including the aforementioned risk 
factors.  Actual results could differ materially.

Overview

     CapRock was formed on February 3, 1998 to combine the businesses of 
Telecommunications, the Partnership and IWL.  Telecommunications and the 
Partnership are facilities-based providers of telecommunications services to 
carriers and to small and medium-sized businesses in Texas. IWL is a provider 
of advanced communications solutions, primarily to customers with oil and gas 
exploration operations in the Gulf of Mexico and the North Sea and remote, 
difficult access regions of the world. CapRock believes that the Combination 
will enable it to accelerate the implementation of its business plan and to 
achieve it business objectives by enhancing its revenue opportunities, 
creating greater operational depth, providing the opportunity to cross-sell 
its products, enabling it to capitalize on international opportunities and 
reducing its capital expenditures.

                                       6
<PAGE>

Results of Operations

     The Company has not commenced operations as of June 30, 1998.

Liquidity and Capital Resources

     Upon completion of the Combination, CapRock expects to require 
significant financing for capital expenditure and working capital 
requirements. CapRock currently estimates that its aggregate capital 
requirements will total approximately $50 million in the second half of 1998 
and approximately $140 million in 1999.  CapRock expects to make substantial 
capital expenditures thereafter.  Capital expenditures will be required to: 
(i) fund the construction and operation of its fiber optic network; (ii) fund 
the installation of voice and data switches, and (iii) open sales offices and 
add sales support and customer service personnel in markets throughout Texas 
and the Gulf Coast region.

     In July 1998, CapRock, Telecommunications and the Partnership (with the 
IWL as guarantor) issued through a private placement under Rule 144A under 
the Securities Act of 1933, as amended, $150 million aggregate principal 
amount of their Notes, which closed on July 16, 1998. Interest on the Notes 
will be payable semiannually in arrears on January 15 and July 15 of each 
year, commencing on January 15, 1999, at the rate of 12% per annum. The net 
proceeds from the offering were initially placed in a segregated escrow 
account and will be released only in accordance with the provisions of an 
escrow agreement. Upon consummation of the Combination, (i) the proceeds in 
such escrow account will be released to CapRock, (ii) Telecommunications and 
the Partnership will no longer be co-obligors under the Notes, and (iii) IWL 
will be released from its obligations in connection with the special offer to 
purchase. If the Combination is not consummated by August 31, 1998, CapRock, 
Telecommunications, and the Partnership will be required to offer to purchase 
the Notes at a price equal to 101% of the principal amount thereof, plus 
accrued and unpaid interest, if any, to the date of such repurchase. To the 
extent the amounts held in the escrow account are insufficient to repurchase 
all tendered Notes, each of CapRock, Telecommunications, the Partnership, and 
IWL (as guarantor) shall be jointly and severally liable to fund any such 
deficiency (with an estimated contingent liability of not more than 
approximately $7.0 million). There can be no assurance that CapRock, 
Telecommunications, the Partnership and IWL will have sufficient funds 
available at the time of such offer to purchase to repay all Notes tendered.

     In the event the Combination is consummated by August 31, 1998, 
Telecommunications and the Partnership will be released from their 
obligations under the Notes (and IWL will be released from it obligations 
under such offer to purchase), and CapRock will be the sole obligor 
thereunder.

     Upon completion of the Combination, CapRock may require additional 
capital in the future, or sooner than currently anticipated, for new business 
activities related to its current and planned businesses, or in the event it 
decides to make additional acquisitions or enter into joint venture and 
strategic alliances.  Sources of additional capital may include cash flow 
from operations and public and private equity and debt financings.  There can 
be no assurance, however, that CapRock will be successful in producing 
sufficient cash flow or raising sufficient debt or equity capital to meet its 
strategic business objectives or that such funds, if available, will be 
available on a timely basis and on terms that are acceptable to CapRock and 
within limitations contained in CapRock's financing arrangements. Failure to 
generate or raise sufficient funds may require CapRock to delay or abandon 
some or all of its future expansion plans or expenditures, which could have a 
material adverse effect on CapRock's financial condition, results of 
operations and cash flow.

                                       7
<PAGE>

Credit Facility

     CapRock is currently negotiating with a lender to obtain a senior credit 
facility in the amount of $25 million and which CapRock expects will become 
available upon consummation of the Combination with IWL.  The credit facility 
will replace existing credit agreements and facilities with 
Telecommunications, the Partnership and IWL.  The final terms and conditions 
of the credit facility will depend on negotiation of definitive documentation 
for the credit facility. There can be no assurance, however, as to when or if 
CapRock will enter into the credit facility or as to the amount or terms of 
the credit facility.

New Accounting Pronouncements

     In June 1997, the FASB issued SFAS No. 131, Disclosure About Segments of 
an Enterprise and Related Information ("SFAS 131").  SFAS 131 establishes 
standards for the manner in which business enterprises are to report 
information about operating statements in its annual statements and requires 
those enterprises to report selected information regarding operating segments 
in interim financial reports issued to shareholders.  It also establishes 
standards for related disclosures about products and services, geographic 
areas and major customers. SFAS 131 is effective for fiscal years beginning 
after December 15, 1997. Financial statement disclosures for prior periods 
are required to be restated. The Company is in the process of evaluating the 
disclosure requirements.  The adoption of SFAS 131 will not have an impact on 
the Company's results of operation, financial position or cash flows and any 
effect will be limited to the presentation of its disclosures.

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative 
Instruments and Hedging Activity" ("SFAS 133") which requires that all 
derivatives be recognized in the statement of financial position as either 
assets or liabilities and measured at fair value.  In addition, all hedging 
relationships must be designated, reassessed and documented pursuant to the 
provisions of SFAS No. 133.  SFAS 133 is effective for fiscal years beginning 
after June 15, 1999.  The adoption of SFAS 133 will not have an impact on the 
Company's results of operations, financial position or cash flow.

Contingencies

     The Company is not currently a party to any litigation.

Year 2000

     As the year 2000 approaches, the Company recognizes the need to ensure 
its operations will not be adversely impacted by Year 2000 computer software 
failures.  The Company is addressing this issue to ensure the availability 
and integrity of its financial systems and the reliability of its operational 
systems.  The Company has established processes for evaluating and managing 
the risks and costs associated with this problem.  The Company has and will 
continue to make certain investments in its software systems and applications 
to ensure the Company is year 2000 compliant.  The financial impact to the 
Company has not yet been fully determined, however such impact is not 
anticipated to have a material adverse effect on the financial condition, 
results of operations or cash flow of the Company.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Not applicable.


PART II.  OTHER INFORMATION

                                       8
<PAGE>

Item 6.    Exhibits and Reports on Form 8-K

(a)  Exhibits

<TABLE>
<S>         <C>
      2.1   First Amendment to Agreement and Plan of Merger and Plan of
            Exchange, dated as of April 30, 1998, by and among the Company,
            CapRock, Telecommunications, the Partnership, IWL Acquisition
            Corp., and CapRock Acquisition Corp. (collectively, the "Parties").
            (Incorporated by reference to Exhibit 2.2 to the Registration
            Statement on Form S-4, as amended, first filed by the Company with
            the SEC on June 22, 1998) (SEC Registration No. 333-57365) (the
            "Form S-4").

      2.2   Second Amendment to Agreement and Plan of Merger and Plan of
            Exchange, dated as of June 20, 1998, by and among the Parties
            (incorporated by reference to Exhibit 2.3 to the Form S-4).

      3.1   Amended and Restated Articles of Incorporation of the Company
            (incorporated by reference to Exhibit 3.1 to the Form S-4).

      3.2   Bylaws of the Company (incorporated by reference to Exhibit 3.2 to 
            the Form S-4).

      4.1   Specimen certificate for the Common Stock of the Company
            (incorporated by reference to Exhibit 4.3 to the Form S-4).

    +27.1   Financial Data Schedule of CapRock.

    +99.1   Form of Form 10-Q of CapRock Telecommunications Corp. filed pursuant
            to that certain Indenture (the "Indenture") dated July 16, 1998 by
            and among the Company, CapRock Telecommunications Corp.
            ("Telecommunications"), CapRock Fiber Network, Ltd. (the
            "Partnership"), IWL Communications, Incorporated and PNC Bank,
            National Association.

    +99.2   Form of Form 10-Q of CapRock Fiber Network, Ltd. filed pursuant to 
            the Indenture.

    +99.3   Articles of Incorporation of Telecommunications, as amended.

    +99.4   Bylaws of Telecommunications, as amended.

    +99.5   Agreement and Limited Partnership of the Partnership, as amended.

     99.6   Second Amendment to Loan Agreement dated April 29, 1998 by and
            between the Partnership and Bank One, Texas, N.A. ("Bank One") 
            (incorporated by reference to Exhibit 10.52 to the Form S-4).

     99.7   License Agreement dated July 16, 1998 by and between
            Telecommunications and RiverRock Systems, Ltd. (incorporated by 
            reference to Exhibit 10.53 to the Form S-4).

     99.8   Eighth Amendment to Loan and Security Agreement dated as of June
            18, 1998 by and between Telecommunications and Bank One 
            (incorporated by reference to Exhibit 10.56 to the Form S-4).

     99.9   Renewal and Extension Promissory Note dated as of June 18, 1998
            executed by Telecommunications payable to the order of Bank One in
            the original principal amount of $7,000,000.00 (incorporated by
            reference to Exhibit 10.57 to the Form S-4.

     99.10  Intercompany Promissory Note dated as of June 18, 1998 originally
            executed by the Partnership payable to the order of
            Telecommunications in the principal amount of $2,500,000.00 and
            endorsed by Telecommunications in favor of Bank One (incorporated
            by reference to Exhibit 10.58 to the Form S-4).

                                       9
<PAGE>

     99.11  Third Amendment to Loan Agreement dated as of June 18, 1998 by and
            between the Partnership and Bank One  (incorporated by reference to
            Exhibit 10.60 to the Form S-4).

    +99.12  Computation of Earnings per share for Telecommications.

    +99.13  Form of Financial Data Schedule of Telecommunications.

    +99.14  Form of Financial Data Schedule of the Partnership.

(b)  Reports on Form 8-K

     None.

</TABLE>

----------------------
+ Filed herewith.







                                       10
<PAGE>

                            CAPROCK COMMUNICATIONS CORP.


     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.



                                   CAPROCK COMMUNICATIONS CORP.


Date: August 13, 1998              By:  /s/ Kevin W. McAleer
                                        ---------------------------------------
                                        Kevin W. McAleer
                                        Chief Financial Officer (Duly Authorized
                                        Officer and Principal Financial and
                                        Accounting Officer)









                                       11