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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K

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

         FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

  / /    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 000-20799

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

                            EARTHLINK NETWORK, INC.

             (Exact name of registrant as specified in its charter)

                  DELAWARE                             58-2389244
          (State of incorporation)           (I.R.S. Employer Identification
                                                         Number)

                3100 NEW YORK DRIVE, PASADENA, CALIFORNIA 91107
         (Address of principal executive offices, including zip code)

                                 (626) 296-2400
                 (Registrant's telephone, including area code)

        Securities registered pursuant to Section 12(b) of the Act: NONE

 Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
                                   par value

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

    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 /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/

    The aggregate market value of the Registrant's outstanding Common Stock held
by non-affiliates of the Registrant on March 9, 1999 was $1.1 billion. There
were 31,813,504 shares of Common Stock outstanding as of March 9, 1999.

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<PAGE>
                            EARTHLINK NETWORK, INC.

                           ANNUAL REPORT ON FORM 10-K

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                     <C>
                                             PART I

Item 1. Business......................................................................          1

Item 2. Properties....................................................................         10

Item 3. Legal Proceedings.............................................................         10

Item 4. Submission of Matters to a vote of Security-Holders...........................         10

                                             PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.........         11

Item 6. Selected Financial Data.......................................................         12

Item 7. Management's Discussion and Analysis of Financial Condition
      and Results of Operations.......................................................         13

Item 8. Financial Statements and Supplementary Data...................................         24

Item 9. Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure........................................................         24

                                            PART III

Item 10. Directors and Executive Officers of the Registrant...........................         25

Item 11. Executive Compensation.......................................................         25

Item 12. Security Ownership of Certain Beneficial Owners and Management...............         25

Item 13. Certain Relationships and Related Transactions...............................         25

                                             PART IV

Item 14. Exhibits, Financial Statements and Reports on Form 8-K.......................         26

SIGNATURES............................................................................         30

INDEX OF FINANCIAL STATEMENTS.........................................................        F-1

EXHIBIT INDEX.........................................................................        E-1
</TABLE>

                                       i
<PAGE>
    THIS REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. ACTUAL EVENTS AND RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS. SEE ITEM 7, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS--SAFE HARBOR STATEMENT".

                                     PART I

ITEM 1. BUSINESS.

OVERVIEW

    EarthLink is a leading Internet service provider, or ISP, providing reliable
nationwide Internet access and related value-added services to our individual
and business members. Our member base grew from approximately 420,000 members on
December 31, 1997 to approximately 1,000,000 paying members on December 31,
1998, making us one of the world's leading ISPs. We believe our growth has
resulted from our efforts to enhance our members' Internet experience through
simple, rapid and reliable access to the Internet, high quality service, and
member education and support. As a result, we believe we have a high member
retention rate for our industry. We receive significant benefits from the size
of our member base, including bargaining power with Internet content providers,
online advertisers and retailers, and network providers.

    We generate our members through a combination of innovative and
cost-conscious marketing programs. We market our services and products through
referrals, online advertising and magazine, radio and television advertisements.
Our affinity marketing and membership referral programs are also valuable
components of our marketing strategy. We have over 500 affinity marketing
partners, including prominent retailers, print publishers, and software and
hardware companies. Leading affinity marketing partners include CompUSA, Novus
Service's Discover Card, MacMillan Digital Publishing USA, SAM's Club, Sony
Entertainment and Warner Bros. In the fourth quarter of 1998 we added Apple and
Packard Bell to our family of distribution partners.

    In June 1998, we entered into a strategic alliance with Sprint, which is
another important driver of our member growth. As a part of this alliance,
Sprint transferred approximately 130,000 members to us and is committed to
generating at least 150,000 new members for us during each of the next 5 years
through their channels. Additionally, we are now co-branded as Sprint's
exclusive consumer Internet access provider, and we have exclusive access to
certain dial-up modem ports in Sprint's network. We also have access to Sprint's
marketing and distribution channels and the right to use Sprint's widely
recognized brand name. As a result of this relationship, we recently added
Sprint PCS and Radio Shack as affinity partners.

    EarthLink provides highly reliable Internet access through a nationwide
telecommunications network of leased, high-speed, dedicated data lines and over
1,700 dial-up access sites, or POPs. We own and operate POPs in Southern
California and lease POPs from UUNET, Sprint, and PSINet nationwide. Over 90% of
the U.S. population can access our Internet service through a local telephone
call. We also provide Internet connections by cable, ADSL, ISDN, frame relay and
other high-speed access technologies.

    Our standard $19.95 per month dial-up Internet service provides our members
with unlimited access to the Internet, email, a Web browser, six megabytes for a
personal web site, a Personal Start Page, BLINK (our member news magazine),
toll-free 24-hour technical support and access to Internet newsgroups. We also
offer premium services to consumers and small businesses, including electronic
commerce solutions, Web hosting and high-speed Internet connections.

    Our address is 3100 New York Drive, Pasadena, California 91107, and our
telephone number is (626) 296-2400.

                                       1
<PAGE>
EARTHLINK'S STRATEGY

    Our objectives are to be the leading nationwide ISP and to provide our
members with a high-quality Internet experience. Key elements of our strategy
include:

    MAXIMIZE MEMBERS' OVERALL EXPERIENCE.  We want to provide our members with a
superior online experience. The following points illustrate our efforts to do
so:

    - Superior Member Service: We believe that an integral part of the EarthLink
      experience is fast, polite, and helpful member service. Accordingly, we
      invest significant resources in supporting our members. We view member
      support as another opportunity to interface directly with our members to
      educate them on how to get the most out of the Internet. We have scaled
      our highly-trained member support staff in line with member growth to
      minimize member hold times and solve each individual problem in the most
      expeditious manner. Our member care center is available seven days a week,
      24 hours a day via a toll free call.

    - Reliable Access: We currently use UUNET, PSINet and Sprint, as well as our
      own facilities, to provide nationwide dial-up access and network
      telecommunications services. Our members can access our service through
      over 1,700 POPs. As a result, our members are able to navigate the
      Internet with few delays, timeouts and disruptions.

    - Easy to Use Solution: Users may encounter numerous difficulties using the
      Internet because of its size and complexity. Therefore, we focus
      significant resources on retaining members by providing them with reliable
      and easy to use Internet access. We designed our TotalAccess software
      (which includes software and documentation for both Windows and Macintosh
      users) to make it easy for members to register and configure their system
      for Internet access. We constantly work to develop new services, content
      and features to enhance that user experience.

    - Personal Start Page: We provide a customizable personal start page user
      interface that allows members to closely match their needs. Members may
      select from a number of browsers, navigation engines and sources of news
      headlines.

    - Member sign-up: From marketing and promotional materials to registration
      and access software, we have carefully crafted the sign-up process to be
      easy-to-use and to engender loyalty.

    - Broad Service Offering: Our members receive six megabytes of space on our
      Web server and special tools to create their own Web page. We recently
      introduced a "Click-N-Build" Web construction tool, an e-commerce solution
      and cable access. Going forward, we will continue to offer our members
      leading Internet and communication products and services.

    RAPIDLY EXPAND OUR MEMBER BASE.  We believe that a key to our success in the
competitive ISP market is to rapidly expand our member base. This will allow us
to amortize our assets over a larger revenue base and enhance our ability to
enter into favorable arrangements with network service providers, affinity
marketing partners, online advertisers and content providers. We have
accelerated efforts and financial commitments to attract new members, while
continuing to provide high-quality service to ensure member retention.
Historically, we have capitalized on our reputation for high-quality service and
have obtained a significant portion of our new members from existing member
referrals. We recently added Apple and Packard Bell to our family of over 500
affinity partners plus numerous other channel partners. We plan to continue to
expand our marketing program, to maintain a presence at national, regional and
local trade shows, and to offer economic incentives to members who refer new
members. Our access to Sprint's high-speed data network and marketing channels
further enhances our ability to add new members.

    CAPITALIZE ON SPRINT ALLIANCE.  We intend to maximize the opportunities
presented by our alliance with Sprint to attract new members nationwide and to
further enhance our position as a leading ISP. We believe that the substantial
increase in members and other financial and operational resources resulting from
the

                                       2
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Sprint alliance will enable us to achieve our strategic objectives on a
cost-effective and accelerated basis. We also believe that new members will be
generated by the Sprint relationship at a lower cost than we would spend to add
these members on our own. Therefore, we intend to take full advantage of
Sprint's recognized brand image, extensive distribution channels (including
Radio Shack and Sprint PCS) and approximately 16 million long-distance and local
telephone customers. To that end, our brand is jointly marketed with Sprint's
widely-recognized brand in connection with consumer Internet services.
Additionally, we expect to further benefit from our exclusive access to certain
dial-up modem ports in Sprint's high-speed data network.

    INCREASE MARKETING AND EXPAND DISTRIBUTION.  We continue to expand our
targeted marketing programs and distribution efforts to increase our member
base, nationwide presence and brand recognition. To achieve these objectives, we
continue to increase our investments in a wide-ranging marketing and
distribution program, including expanded affinity partners, print publications,
radio, television, billboards and direct mail. We closely monitor the results of
these marketing programs as part of our ongoing effort to increase the
cost-effectiveness of our marketing efforts.

    LEVERAGE THIRD PARTY SERVICE PROVIDERS.  We leverage the infrastructure of
others by leasing POP capacity from UUNET, PSINet and Sprint. This allows us to
maintain focus on our members' needs while benefiting from the continuing
decrease in telecommunications services costs. Not only does this approach lower
our required capital expenditures, it also gives us flexibility to rapidly
expand service coverage. Moreover, access to multiple networks provides members
with increased service quality resulting from redundant network access. We will
continue pursuing this strategy so that we can devote our principal resources to
sales and marketing efforts and to improving members' Internet experience.

    DERIVE INCREMENTAL REVENUES.  We leverage our growing member base and user
traffic to increase revenues from sources other than those that are access
related such as advertising and electronic commerce. Our Premiere Partnership
Program is the principal component of this strategy. Through the Premiere
Partnership Program we sell promotional packages that provide advertisers,
retailers and content providers with access to the multiple points of contact we
have with our members. We also sell advertising space on our various online
properties like the Personal Start Page and our news magazine, BLINK. The
EarthLink Mall and branded Personal Start Pages are further sources of
incremental revenues.

    MANAGE INFRASTRUCTURE TO MEET MEMBER GROWTH.  Our membership has grown
rapidly since inception. To continue to effectively add new members and continue
to offer high-quality service, we have made significant capital investments,
including expansion of our network hub, accounting and billing systems and
customer care systems. We believe our current infrastructure is adequate to
manage a significant increase in our member base.

EARTHLINK'S SERVICES

    We provide a wide variety of competitively priced Internet services. Our
TotalAccess software incorporates a telephone dialer and email program with
several leading third-party Internet access tools, including the latest browsers
from Netscape and Microsoft. This software provides a functional, easy-to-use
Internet access solution for Windows 3.1, Windows 95 and Macintosh platforms.
The TotalAccess software automatically installs these and other software
applications on member computers. The simple point-and-click functionality of
TotalAccess, combined with its easy-to-use multimedia registration system,
permits online credit card registration, allowing both our novice and
experienced members to quickly set up access to the Internet.

                                       3
<PAGE>
    Our service offerings include:

STANDARD INTERNET SERVICES

<TABLE>
<S>                                    <C>
EMAIL                                  Publications
WEB BROWSER                            Member and Technical Support
6MB WEB SPACE FOR A PERSONAL WEB SITE  EarthLink Web Site
PERSONAL START PAGE                    Newsgroups
Nationwide POPs                        The EarthLink Online Mall
</TABLE>

PREMIUM SERVICES

<TABLE>
<S>                                    <C>
BUSINESS WEB SITE HOSTING              DOMAIN NAME SERVICE
NATIONAL ISDN                          STAR EMAIL ADDRESSING
NATIONAL LAN ISDN                      INTERNATIONAL ROAMING SERVICE
NATIONAL FRAME RELAY                   800 SERVICE
TOTALACCESS GOLD                       INTERNET ROOMS
ADDITIONAL MAILBOXES                   ELECTRONIC COMMERCE SOLUTION
</TABLE>

EMERGING ACCESS SERVICES

<TABLE>
<S>                                   <C>
CABLE                                 FIBER TO THE CURB
ADSL                                  SATELLITE/WIRELESS ACCESS (IN DEVELOPMENT)
</TABLE>

    EARTHLINK'S STANDARD INTERNET SERVICES.  We provide our members with a core
set of features through our standard Internet service. This standard service
allows unlimited access to the Internet and the World Wide Web as well as other
features and services for a monthly fee of $19.95 and a one-time set up fee
(which is frequently waived). We include the following features in our standard
Internet service:

    EMAIL. Each member receives an electronic mailbox which enables members
    to exchange an unlimited number of multimedia, text, graphics, audio and
    video messages with other online and Internet users.

    WEB BROWSER. We provide members with a free Web browser. Currently, we
    offer Netscape Communicator or Microsoft Internet Explorer. Members may
    also use any other browser of their choice.

    6MB WEB SPACE FOR A PERSONAL WEB SITE. We provide each member with six
    free megabytes of space on our Web server to create a personal Web site.
    We recently introduced our "Click-N-Build" web site creation tool which
    enables members to build their sites without having to learn complex
    programming languages. We also provide tutorials and tools to help
    members develop their sites. This enables members to participate in the
    Internet community by personally adding content to the World Wide Web.

    PERSONAL START PAGE. Each member receives a Personal Start Page, an
    enhanced default start page for members that first appears when they log
    on to the EarthLink Network. Members can customize their start page. For
    example, a member may select from a number of browsers, navigation
    engines and sources of news headline. Members also have the option to
    view stock quotes, and weather reports and are provided with a personal
    reminder system, as well as a place to list their own personal Web links
    and links to EarthLink member and technical support resources. Our
    Premiere Partners on our member's Personal Start Page include
    ABCNews.com, American Greetings, AccuWeather, CNN Interactive, Excite,
    GoTo.com, Infoseek, Lycos, MiningCo.com, Snap, PC Quote, Travelscape.com
    and Wired Digital.

                                       4
<PAGE>
    NATIONWIDE POPS. EarthLink members can access their accounts through a
    nationwide network of over 1,700 POPs.

    PUBLICATIONS. We mail our bi-monthly printed news magazine, BLINK, to
    each member. BLINK provides useful information, such as tips on how to
    search for certain categories of information on the Internet,
    information regarding new EarthLink service offerings, pointers to new
    Internet sites and other items of interest. BLINK is also available
    online on the EarthLink home page. Additionally, we provide new members
    with an orientation booklet called "Getting the Most Out of the
    Internet," written by our founder, Sky Dayton.

    MEMBER AND TECHNICAL SUPPORT. We currently provide the following member
    and technical support services: (i) toll-free, live telephone assistance
    available seven days a week, 24 hours a day; (ii) email-based assistance
    available seven days a week, 24 hours a day; (iii) help sites and
    Internet guide files on the EarthLink Web site; (iv) automated "fax
    back" and "fax on demand" assistance; and (v) printed reference
    material. Additionally, we provide dedicated support for business
    members through dedicated member care support personnel who are
    specially trained for business products and services such as business
    Web sites and local area network ISDN.

    EARTHLINK WEB SITE. We maintain a Web site at www.earthlink.net that
    contains content and links to third-party content and services. Our
    in-house staff actively seeks out interesting content from across the
    World Wide Web and organizes it into areas of interest on our Web site
    under topics such as "Arts & Entertainment," "Sports," "Travel," "News,"
    "Finance," and "Games." Our Web site provides a road map to the abundant
    information and services available on the Internet. The site also
    contains Web pages dedicated to online member assistance including
    technical support, account maintenance and service updates.

    NEWSGROUPS. "Newsgroups," one of the most popular areas of the Internet,
    facilitate ongoing online discussions of specific areas of interest.
    EarthLink aggregates and provides access to thousands of these
    newsgroups, enabling its members to participate in realtime public
    discussions of a myriad of topics.

    THE EARTHLINK ONLINE MALL. Our online electronic shopping mall provides
    users with a one-stop gateway to some of the top retailers on the Web,
    using a familiar mall map interface. Retailers such as The Disney Store,
    BarnesandNoble.com and 1-800-FLOWERS "lease" space in the Mall.

    EARTHLINK'S PREMIUM SERVICES.  In addition to our standard service, we offer
a variety of premium services, including the following:

    BUSINESS WEB SITE HOSTING. We provide a Web hosting service for business
    members. Monthly fees for business Web sites range from $89 to $455,
    plus one-time set up fees of $179 to $479, depending on the size of the
    site and whether the site is a shared or unique address. A wide variety
    of options is available for an extra fee. Additional charges may apply
    for excess site traffic. We also offer an introductory service for small
    businesses, STARTERSITE, which is a ten megabyte, unique-domain Web site
    priced at $19.95 per month, plus a one-time set up fee of $25.

    NATIONAL ISDN. Our nationwide high-speed ISDN access service provides
    significantly higher access speeds than conventional analog modems. The
    monthly charge for ISDN is $34.95 for the first 100 channel hours and
    $0.99 for each additional channel hour, plus a one-time set up fee of
    $50.

    NATIONAL LAN ISDN. Small to medium-sized businesses can connect their
    existing LAN to the Internet at ISDN speed with LAN ISDN. This
    nationwide service costs $99.95 per month for 160 channel hours and four
    email boxes. The set up fee of $149 is waived for current EarthLink
    members, and additional channel hours cost $0.85 per hour.


                                       5


<PAGE>

    NATIONAL FRAME RELAY. Frame relay enables companies to connect their
    LANs to the Internet via a direct, continuous connection at speeds
    ranging from 56 Kbps to 1.5 Mbps. Frame relay connections, available
    nationwide, range from $240 to $1,460 per month depending on access
    speeds, data throughput, etc. One-time set up fees range from $495 to
    $1,995.

    TOTALACCESS GOLD. TotalAccess Gold is a value-added package, which
    includes an additional email box, priority technical support with a
    guaranteed 5-minute maximum wait time, and a quarterly CD-ROM containing
    software tools and plug-ins. The package adds $9.95 to the monthly price
    of a standard dialup or ISDN account.

    ADDITIONAL MAILBOXES. Additional electronic mailboxes are available for
    a per-mailbox fee of $4.95 per month and a $9.95 set up fee.

    DOMAIN NAME SERVICE. We provide unique domain names for those members
    who prefer an individualized address or plan to establish a business Web
    site. These unique domain names allow consumers and businesses to
    customize their email and Web site addresses. EarthLink charges a
    one-time fee of $75 to set up domain name service and assist members in
    establishing their unique domain names. Members then pay an annual
    renewal fee to an Internet domain registration agency.

    STAR EMAIL ADDRESSING. EarthLink members desiring an unlimited choice of
    email addresses (for example "sales@domain.com" or
    "webmaster@domain.com") can purchase star addressing. With star
    addressing, all email goes into a central mailbox, for easy processing
    to individual addresses at the same domain. There is a one-time set up
    fee of $125, but no monthly fee for maintaining the service.

    INTERNATIONAL ROAMING SERVICE. We offer international roaming services
    so that members who travel outside the United States can access their
    EarthLink accounts and the Internet. The fee for international roaming
    is $0.15 per minute plus applicable fees, if any, charged by local and
    long distance carriers.

    800 SERVICE. EarthLink provides 800 number dial-up service for members
    who do not have access to a local POP. EarthLink charges members $24.95
    per month for five hours of 800 number service plus a one-time set up
    fee of $25.00. Additional hours are $4.95 per hour.

    ELECTRONIC COMMERCE SOLUTION. We recently introduced our electronic
    commerce solution for businesses. The software components allow
    businesses to build and operate an online "storefront" and process
    online credit card transactions. In conjunction with our hosting
    services, businesses can conveniently establish their electronic
    commerce presence.

    EARTHLINK'S EMERGING ACCESS SERVICES.  In response to feedback from our
members, we are developing the next generation of Internet access services
targeted at consumers and small businesses. These services offer access speeds
several times faster than ISDN connections utilizing a variety of emerging
connectivity technologies.

    CABLE. We currently offer high-speed cable connections to the Internet
    for consumers and small businesses in selected service areas, through
    partnerships with cable providers such as Charter Communications.

    ADSL. We are testing Asymetric Digital Subscriber Line, or ADSL, service
    that provides a continuous high-speed connection through existing
    telephone lines. This service is in the pilot phase and has not yet been
    priced.

    FIBER TO THE CURB. We are conducting a technology trial utilizing "fiber
    to the curb" technology, an emerging broadband-capable technology
    alternative to both twisted pair copper lines and coaxial cable. This
    service is in the pilot phase and has not yet been priced.

                                       6
<PAGE>
    SATELLITE/WIRELESS ACCESS. EarthLink is currently evaluating
    opportunities to offer Internet access service delivery through both
    satellite and ground-based wireless technologies.

MEMBER AND TECHNICAL SUPPORT

    We believe that reliable member and technical support is critical to
retaining existing members and attracting new members. We currently provide the
following member and technical support services: (i) toll-free, live telephone
assistance available seven days a week, 24 hours a day; (ii) email-based
assistance available seven days a week, 24 hours a day; (iii) help sites and
Internet guide files on the EarthLink Web site; (iv) automated "fax back" and
"fax on demand" assistance; and (v) printed reference material. Additionally, we
provide dedicated support for business members.

    Our call center currently handles an average of over 130,000 member and
technical support calls a week. We also contract with a vendor of call center
services whose EarthLink-trained employees provide additional technical support
assistance. We believe the center's technology and systems are scaleable to
accommodate call volume growth. We actively evaluate our call center facilities
in order to deliver more effective and efficient services to our members.

SALES AND MARKETING

    Our sales and marketing efforts consist of the following programs:

ORIGINAL EQUIPMENT MANUFACTURER CHANNELS. EarthLink has marketing arrangements
with a number of leading hardware and software manufacturers to include our
TotalAccess software pre-installed on or included with their products. Our OEM
partners include, among numerous others, Apple, Packard Bell and Gateway.

AFFINITY MARKETING PROGRAM. Affinity marketing partners typically bundle our
TotalAccess software with their own goods or services to create a package that
promotes EarthLink to potential members. Our affinity marketing partners
include, among numerous others:

    COMPUSA. CompUSA includes TotalAccess software pre-loaded on each of its
    private-label computer systems, as well as offering TotalAccess software
    to its customers through in-store displays.

    DISCOVER CARD. EarthLink and NOVUS Services' Discover Card division
    offer the Discover Connection, an Internet access package, with
    exclusive features and awards for Discover Cardmembers.

    MACMILLAN DIGITAL PUBLISHING USA. EarthLink is the exclusive national
    Internet access provider included in the Internet Starter Kit CD-Rom
    which MacMillan publishes.

    SAM'S CLUB. SAM's Club co-brands and co-offers TotalAccess software
    through direct mail and catalog promotions to SAM's Club members.

    SONY ENTERTAINMENT. Sony bundles TotalAccess software on its enhanced
    music CDs.

SPRINT ALLIANCE. Our alliance with Sprint includes a marketing agreement and
distribution arrangement that provides us access to Sprint's branded marketing
and distribution channels in the United States, the right to use Sprint's brand
for a minimum of ten years and a five-year commitment from Sprint to deliver a
minimum of 150,000 new members annually through Sprint's channels. Additionally,
Sprint promotes EarthLink as Sprint's exclusive consumer Internet access
provider.

MEMBER REFERRAL PROGRAM. We believe that our existing members are among our most
important marketing tools. We currently waive one month of standard access
service fees for each member who refers a new member to our service. These
referrals generate a significant percentage of our new membership.

                                       7
<PAGE>
ADVERTISING. We advertise our services in print, electronic and broadcast media.
We also maintain a presence at national trade shows such as Internet World and
MacWorld, as well as numerous local and regional trade shows. Additionally, we
market through computer, Internet and related publications and bundle our
TotalAccess software with certain of these publications.

PREMIERE PARTNERSHIPS. As part of our strategy to generate incremental revenue
through third party electronic commerce, advertising and content, we leverage
our current properties (such as our Web site and Personal Start Page) through
our Premiere Partnership Program. The Premiere Partnership Program focuses on
third parties having a natural affinity to and benefit for our member base. The
program generates revenues through (1) sales of banner and other online ads; (2)
fees generated through revenue sharing arrangements with online retailers who
are accessed through our properties; and, (3) payments for placing links from
our properties to third-party content

TECHNICAL DEVELOPMENT AND SERVICE ENHANCEMENT

    We place significant emphasis on expanding and refining our services to
enhance member Internet experience. Our technical staff is engaged in a variety
of technical development and service enhancement activities and continuously
reviews new third-party software products and technology for potential
incorporation into our systems and services. The redesigned and enhanced version
of TotalAccess, version 2.3, is a recent product of these efforts. The new
version places a premium on ease of use, and incorporates a variety of powerful
features that reduce the number and types of challenges faced by new members
using the Internet for the first time. We also regularly update and expand the
online services provided through the EarthLink Web site, organize Web content
and develop online guides, help screens and other user services and resources.

POPS AND NETWORK INFRASTRUCTURE

    We provide our members with Internet access primarily through third-party
network POPs. Our use of third parties to provide Internet connectivity enables
us to increase port capacity without the significant capital requirements
necessary to build and maintain a network. It also gives us the flexibility
necessary to adapt to changing technology such as cables. Over 90% of the U.S.
population can access our Internet service through a local telephone call.

    Members located in a geographic area not currently serviced by a local POP
can access the Internet through an 800 service. Our POP sites are connected to
the Internet primarily through our Pasadena network hub. That hub is in turn
connected directly to the Internet by redundant high-speed fiber optic data
lines obtained from various vendors. We have invested in measures to minimize
the effects of damage from fire, earthquake, power loss, telecommunications
failure, computer viruses, security breaches and similar events or backup
Internet services or backbone facilities or other redundant computing or
telecommunications facilities. We do not currently maintain redundant network
hub facilities.

COMPETITION

    We operate in the Internet services market, which is extremely competitive.
Our current and prospective competitors include many large companies that have
substantially greater market presence, financial, technical, marketing and other
resources than we have. We compete directly or indirectly with the following
categories of companies:

    - established online services, such as America Online, the Microsoft Network
      and Prodigy;

    - local, regional and national ISPs, such as MindSpring, Rocky Mountain
      Internet and Internet America Inc.;

    - national telecommunications companies, such as AT&T and GTE;

                                       8
<PAGE>
    - regional Bell operating companies, such as BellSouth and SBC
      Communications Corp; and

    - online cable services, such as At Home and Roadrunner.

    Our competition is likely to increase. We believe this will probably happen
as large diversified telecommunications and media companies acquire ISPs and as
ISPs consolidate into larger, more competitive companies. Diversified
competitors may bundle other services and products with Internet connectivity
services, potentially placing us at a significant competitive disadvantage. In
addition, competitors may charge less than we do for Internet services, causing
us to reduce (or preventing us from raising) our fees. As a result, our business
may suffer.

    We believe that ease of use, fast and qualified technical support and
reliability of the Internet connection are key factors in the very
competitive ISP market. Accordingly, we believe it is critical to EarthLink's
success in the competitive ISP market to establish EarthLink as a brand known
for providing easy to use, reliable nationwide Internet access and related
value-added services to our individual and business members. We strive to
establish these competitive strengths for EarthLink, which are summarized in
our focus on our members' Internet experience by providing them with the best
technical support, most reliable connections and innovative Internet
personalization and navigation tools. Other important factors in the ISP
market include the introductions of new Internet/Web products and services,
the timing of such introductions, as well as industry and general economic
trends. We believe it is important to most Internet users to have current Web
browser and related software, which we provide in every EarthLink software
package.

    A large member base allows us to enhance and expand our products and
services, keeps our service costs low and enhances our ability to enter into
favorable arrangements with network service providers, affinity marketing
partners, online advertisers and content providers. Also, a large member base
will allow us to spread our costs over a larger revenue base, enhance our
ability to keep member costs low and attract such favorable arrangements.
Accordingly, we constantly strive to rapidly expand our member base through
various methods. We believe these factors add to our competitive strengths in
the ISP market.


PROPRIETARY RIGHTS

    GENERAL.  We rely on a combination of copyright, trademark, patent and trade
secret laws and contractual restrictions to establish and protect our technology
and proprietary rights and information. We require employees and consultants
and, when possible, suppliers and distributors, to sign confidentiality
agreements. However, we cannot assure you that our steps will be sufficient to
prevent misappropriation of our technology and proprietary rights and
information or that our competitors will not independently develop technologies
that are substantially equivalent or superior to ours.

    From time to time, third parties have alleged that certain of our trademarks
infringe their trademarks. None of these claims has had an adverse effect on our
ability to market and sell its services. However, we cannot assure you that
those claims will not have an adverse effect in the future or that others will
not assert infringement claims against us in the future.

    LICENSES.  We have licenses to distribute third-party software incorporated
in our TotalAccess software. Applications which we license for distribution
include Netscape Communicator (this license automatically renews each December
for additional one-year terms unless either party terminates the license on 120
days notice), Microsoft Internet Explorer (this license expires in August 1999
and thereafter automatically renews for additional one-year terms, although
either party may terminate the license at any time on 30 days notice), and
MacTCP software from Apple (this license renews each December for additional
one-year terms unless either party terminates the license on twelve-month
notice). The only software in the TotalAccess package that we developed is the
front-end and installation/registration program. We intend to maintain or
negotiate renewals of existing software licenses and authorizations. We may also
want or need to license other applications in the future. Our inability to renew
existing software licenses or to license additional applications could have a
material adverse effect on us.

EMPLOYEES

    As of December 31, 1998, we employed 1,343 people, including 217 sales and
marketing personnel, 998 operations and member and technical support
representatives and 128 administrative personnel. None of our employees are
represented by a labor union, and we have no collective bargaining agreement.

                                       9



<PAGE>

ITEM 2. PROPERTIES.

    Our corporate headquarters and call center are located in a 93,000
square-foot facility in Pasadena, California. Base rent is currently $73,000 per
month. We have an option to extend this lease for an additional five years at
the then-prevailing market rate following its expiration in September 2007. Our
data center and primary data hub are housed in a 110,000 square foot facility
adjacent to our headquarters with rent of $92,000 per month, subject to yearly
increases. The lease for this space expires February 2007, with an option to
extend for an additional ten year term.

ITEM 3. LEGAL PROCEEDINGS.

    We are not currently involved in any legal proceedings that we believe could
have, either individually or in the aggregate, a materiel adverse effect on our
business or financial condition. There are proceedings pending before the FCC
that could adversely affect the ISP industry and the means by which ISPs conduct
business and the cost structure for ISP services. The Company is not a party to
these proceedings.

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

    None.

                                       10
<PAGE>
                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

PRICE RANGE OF COMMON STOCK

    Our common stock has been traded on the Nasdaq National Market under the
symbol "ELNK" since our initial public offering on January 22, 1997. The
following table shows the high and low closing sales price as reported by the
Nasdaq National Market for each quarter since we have been public (as adjusted
for our 2-for-1 stock split effected on July 21, 1998).

<TABLE>
<CAPTION>
                                                                                 SALES PRICE
                                                                             --------------------
                                                                               HIGH        LOW
                                                                             ---------  ---------
<S>                                                                          <C>        <C>
1997
First Quarter (from the date of the Company's initial public offering,
  January 22, 1997)........................................................  $   10.13  $    5.06
Second Quarter.............................................................       6.75       4.31
Third Quarter..............................................................       9.75       5.13
Fourth Quarter.............................................................      12.88       8.00
1998
First Quarter..............................................................  $   28.22  $   12.25
Second Quarter.............................................................      38.38      25.00
Third Quarter..............................................................      44.13      26.50
Fourth Quarter.............................................................      71.88      33.88
</TABLE>

    The last reported sale price of the Company's common stock on The Nasdaq
National Market on March 9, 1999 was $57.00 per share. There were approximately
310 holders of the Company's Common Stock.

DIVIDENDS

    We have never paid or declared any cash dividends. We currently expect to
retain future earnings, if any, to finance the growth and development of our
business, including potential acquisitions. Therefore, we do not anticipate
paying cash dividends in the foreseeable future, except as required pursuant to
the terms of our convertible preferred stock owned by Sprint.

RECENT SALES OF UNREGISTERED SECURITIES

    In connection with the consummation of our strategic relationship with
Sprint, we sold to Sprint 4.1 million shares of our newly created Series A
convertible preferred stock, convertible into 8.2 million shares of common stock
(assuming the acceleration of certain rights).

                                       11
<PAGE>

    ITEM 6. SELECTED FINANCIAL DATA.

    The following consolidated selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and Notes
thereto included elsewhere in this Report.

<TABLE>
<CAPTION>
                                                                      INCEPTION
                                                                   (MAY 26, 1994)
                                                                       THROUGH               YEAR ENDED DECEMBER 31,
                                                                    DECEMBER 31,    ------------------------------------------
                                                                        1994          1995       1996       1997       1998
                                                                   ---------------  ---------  ---------  ---------  ---------
                                                                            (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                                <C>              <C>        <C>        <C>        <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA
Revenues:
  Recurring revenues.............................................     $      53     $   2,422  $  27,606  $  74,657  $ 164,723
  Other revenues.................................................            58           606      5,624      6,231      6,547
  Incremental revenues...........................................            --            --         --         --      4,671
                                                                         ------     ---------  ---------  ---------  ---------
    Total revenues...............................................           111         3,028     33,230     80,888    175,941
                                                                         ------     ---------  ---------  ---------  ---------
Operating costs and expenses:
  Cost of recurring revenues.....................................             4         1,024     17,717     36,716     76,643
  Cost of other revenues.........................................            12           328      2,066      1,349        685
  Sales and marketing............................................            37         3,763     17,363     25,971     42,732
  General and administrative.....................................           168         2,062     10,534     14,406     21,042
  Operations and member support..................................            38         1,869     15,808     30,900     54,443
  Amortization and transaction costs (1).........................            --            --         --         --     42,635
                                                                         ------     ---------  ---------  ---------  ---------
    Total operating costs and expenses...........................           259         9,046     63,488    109,342    238,180
                                                                         ------     ---------  ---------  ---------  ---------
  Loss from operations...........................................          (148)       (6,018)   (30,258)   (28,454)   (62,239)
  Interest income................................................            --            34        150        637      4,424
  Interest expense...............................................            --          (136)    (1,041)    (2,099)    (1,967)
                                                                         ------     ---------  ---------  ---------  ---------
    Net loss.....................................................          (148)       (6,120)   (31,149)   (29,916)   (59,782)
Deductions for accretion dividends (2)...........................            --            --         --         --     (7,601)
                                                                         ------     ---------  ---------  ---------  ---------
Net loss attributable to common stockholders.....................     $    (148)    $  (6,120) $ (31,149) $ (29,916) $ (67,383)
                                                                         ------     ---------  ---------  ---------  ---------
                                                                         ------     ---------  ---------  ---------  ---------
Basic and diluted net loss per share (3).........................     $   (0.05)    $   (0.80) $   (2.57) $   (1.50) $   (2.58)
                                                                         ------     ---------  ---------  ---------  ---------
                                                                         ------     ---------  ---------  ---------  ---------
Weighted average shares (3)......................................         3,100         7,674     12,138     20,002     26,157
                                                                         ------     ---------  ---------  ---------  ---------
                                                                         ------     ---------  ---------  ---------  ---------
Other operating data:
  EBITDA (4).....................................................     $    (141)    $  (5,713) $ (26,105) $ (19,077) $  (7,513)
  Cash flows from
    Operating activities.........................................          (146)       (3,643)   (16,222)   (21,290)    26,597
    Investing activities.........................................           (97)       (4,266)   (18,361)   (16,095)    (9,239)
    Financing activities.........................................           243         8,199     38,286     49,842    107,056
</TABLE>

<TABLE>
<CAPTION>
                                                                                          DECEMBER 31,
                                                                   -----------------------------------------------------------
                                                                        1994          1995       1996       1997       1998
                                                                   ---------------  ---------  ---------  ---------  ---------
<S>                                                                <C>              <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................     $      --     $     290  $   3,993  $  16,450  $ 140,864
Total assets.....................................................           186         4,874     27,119     46,887    266,341
Long-term debt...................................................            --           355      6,088      8,218      7,701
Total liabilities................................................            89         4,584     34,367     40,812     68,997
Accumulated deficit..............................................          (148)       (5,007)   (36,156)   (66,072)  (133,454)
Stockholders' equity (deficit)...................................            97           290    (21,261)     6,075    197,344
</TABLE>

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

(1) Amortization and transaction costs represent $41,238,000 in amortization of
    intangible assets acquired and a one time transaction cost, in June 1998, of
    $1,397,000 resulting from our strategic alliance with Sprint.

(2) Reflects the accretion of liquidation dividends on Series A convertible
    preferred stock at 3% compounded quarterly and the accretion of a dividend
    related to the beneficial conversion feature in accordance with EITF D-60.

                                       12
<PAGE>

(3) See Note 1 of Notes to Consolidated Financial Statements for an explanation
    of the determination of the number of weighted average shares outstanding in
    the net loss per share computation.

(4) Represents earnings (loss) before depreciation and amortization, interest
    income and expense and income tax expense. EBITDA is not determined in
    accordance with generally accepted accounting principles, is not indicative
    of cash used by operating activities and should not be considered in
    isolation from, as an alternative to, or more meaningful than measures of
    performance determined in accordance with generally accepted accounting
    principles.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.

    THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.

OVERVIEW

    EarthLink is a leading Internet service provider, or ISP, providing
reliable nationwide Internet access and related value-added services to our
individual and business members.  Our member base grew from approximately
420,000 members on December 31, 1997 to approximately 1,000,000 paying
members on December 31, 1998, making us one of the world's leading ISPs.
We have focused first and foremost on how our members experience the
Internet, by providing them with the best technical support, most reliable
connections and innovative Internet personalization and navigation tools.  As
a result, of this focus we have been able to limit average monthly
cancellations of our service to industry low rates of 6.1% in 1996, 5.0% in
1997 and 3.6% in 1998.  We receive significant benefits from the size of our
member base, including bargaining power with Internet content providers,
online advertisers and retailers, and network providers.

    We provide our members with a core set of features through our standard
Internet service, which provides unlimited Internet access and several related
services for a $19.95 monthly fee. We also offer a variety of premium services
to both our individual and business members. Recurring revenues, which are
generally paid for in advance with credit cards, consist of monthly fees charged
to members for Internet access and other ongoing services including business Web
site hosting, national ISDN, LAN ISDN, and frame relay connections and, in
certain areas, cable access. We derive incremental revenues by leveraging the
value of our member base and user traffic through promotional and content
partnerships, online advertising, and electronic commerce. We recognize access
fees and certain incremental revenues ratably over the period services are
provided. Other revenues generally represent one-time, non-refundable set up
fees and are recorded as earned.

    Cost of recurring revenues principally includes telecommunications costs and
depreciation expense on equipment used in network operations for ongoing member
services. Fees paid to UUNET, PSINet and Sprint for local dial-up access to
their respective nationwide systems of POPs are included in telecommunications
costs. Cost of other revenues principally includes expenses associated with new
member registration and cost of products sold. Cost of incremental revenues is
immaterial.

    Our recurring revenues derive from our monthly dial-up revenues.  Our
prices and mix of products have been stable since our inception.  EarthLink's
standard Internet Service for $19.95 per month still provides approximately
93% of our revenue.  The cost of our recurring revenues has fixed and
variable components.  As EarthLink grows, our per-member fixed costs
decrease as costs are spread over an increasing member base.  Our growth in
number of members has also enhanced our ability to enter into favorable
arrangements with network service providers which has decreased our variable
cost of recurring revenues.  The "other revenues" category of revenues
generally represents fees charged to set up accounts.  These dial-up set up
revenues continually decrease due to EarthLink's willingness to waive set up
fees for dial-up members acquired through certain marketing programs.  Prior
to July 1997, EarthLink paid a one-time royalty (up to $8.00 per member) to
Internet browser software companies.  In July 1997, due to competition in the
Internet browser market, we obtained the right to use browser software for
free.  This change caused a significant decrease in our cost of other
revenues.  As such, other revenues in relation to costs of other revenues
have been stable.  Our incremental revenue is generated from marketing
activities targeted to EarthLink's active member base.  Costs associated with
incremental revenues are immaterial.

    EarthLink has not experienced and does not expect a decline in revenues
from its standard dial-up Internet service.  Historically, approximately 93%
of our revenues are derived from our standard dial-up service.  New or
premium products, including activities that generate incremental revenue,
provide approximately 7% of our revenues.  The price for our standard dial-up
service has been stable at $19.95 per month since the inception of EarthLink.
We expect our dial-up business to expand as more people come online using
basic telephone service.

    We have experienced net losses since we began operations. As of December 31,
1998, we had an accumulated deficit of $133.5 million (inclusive of $7.6 million
accretion representing dividends on Series A convertible preferred stock). We
expect we will continue to incur net losses as we continue to expend substantial
resources on sales and marketing to rapidly increase our member base.

    We believe that a key to our success in the competitive ISP market is to
rapidly expand our member base. This will allow us to amortize our assets over a
larger revenue base and enhance our ability to enter into favorable arrangements
with network service providers, affinity marketing partners, online advertisers
and content providers. While we have experienced a trend of continuing
improvement in our net loss and earnings before interest, taxes, depreciation
and amortization ("EBITDA") we anticipate investing heavily in obtaining new
members and expect to have negative EBITDA for the foreseeable future.

    EBITDA is not determined in accordance with generally accepted accounting
principles and is not indicative of cash used by operating activities. You
should not consider EBITDA in isolation from, as an alternative to, or more
meaningful than measures of performance determined in accordance with generally
accepted accounting principles.

                                       13
<PAGE>

SPRINT TRANSACTION

    On June 5, 1998, we entered into a very important strategic alliance with
Sprint in the area of consumer Internet access and related services. In
connection with the formation of that relationship, Sprint tendered for and
purchased 2.5 million shares of our common stock for $22.50 per share. At the
close of the tender offer, we issued Sprint approximately 4.1 million shares of
our newly created Series A convertible preferred stock, convertible into
approximately 8.2 million shares of our common stock (assuming the acceleration
of certain rights). In return, Sprint:

    (1) transferred approximately 130,000 members to us;

    (2) paid us approximately $24 million in cash; and

    (3) granted us the exclusive right to use certain dial-up modem ports in
       their high-speed data network for four years.

    Additionally, we entered into a five-year marketing and distribution
agreement with Sprint. The following are highlights from that agreement:

    (a) Sprint must deliver a minimum of 150,000 new members per year for five
       years through its own marketing channels;

    (b) we are Sprint's exclusive provider of consumer Internet access services
       for at least ten years; and,

    (c) we can use Sprint's brand and distribution network for at least ten
       years.

    Sprint also provided us with a $25 million line of credit (increasing to
$100 million over three years) in the form of convertible senior debt.

    We also entered into a governance agreement with Sprint. This agreement
establishes certain terms and conditions concerning our corporate governance,
the acquisition and disposition of our equity securities by Sprint (including
certain preemptive rights in favor of Sprint), the rights of Sprint to make
offers to purchase all outstanding shares of our common stock and rights of our
Board of Directors to receive and entertain offers to effect certain business
combinations. EarthLink, and certain of our stockholders, have also entered into
an agreement with Sprint which obligates such stockholders, under certain terms
and conditions, to take action in support of our obligations to Sprint under the
governance agreement.

    Sprint can appoint (1) one person to our Board of Directors so long as
Sprint owns at least 10% of our capital stock on a fully diluted basis, and (2)
an additional person to our Board of Directors so long as Sprint owns at least
20% of our capital stock on a fully diluted basis.

    As a result of these transactions, Sprint now owns approximately 27% of our
capital stock on a fully diluted basis (this assumes the conversion of Sprint's
convertible preferred stock into common stock and assumes acceleration of
certain dividend rights and the exercise by Sprint of certain preemptive
rights), of which approximately 10% is voting stock. Sprint has the right to
maintain (but not exceed) these ownership levels by purchasing from us
additional common stock equivalent shares, with up to 75% of these common stock
equivalents being in the form of convertible preferred stock.

    The Series A convertible preferred stock owned by Sprint accrues dividends
for the first five years by increasing its liquidation value at a rate of 3%
annually. Thereafter the convertible preferred stock will pay a cash dividend of
3% of the liquidation value during years six through 20. The cash dividend will
increase to 8% in year 21 and increase to 12% by year 23.

                                       14
<PAGE>
RESULTS OF OPERATIONS

    The following table sets forth the percentage of total revenues represented
by certain items in our statements of operations for the periods indicated:

<TABLE>
<CAPTION>
                                                                                               YEAR ENDED DECEMBER 31,
                                                                                        -------------------------------------
                                                                                           1996         1997         1998
                                                                                        -----------  -----------  -----------
<S>                                                                                     <C>          <C>          <C>
Revenues:
  Recurring revenues...................................................................          83%          92%          93%
  Other revenues......................................................................          17            8            4
  Incremental revenues................................................................          --           --            3
                                                                                               ---          ---          ---
    Total revenues....................................................................         100%         100%         100%
                                                                                               ---          ---          ---
Operating costs and expenses:
  Cost of recurring revenues..........................................................          53           46           44
  Cost of other revenues..............................................................           6            2            1
  Sales and marketing.................................................................          52           32           23
  General and administrative..........................................................          32           18           13
  Operations and member support.......................................................          48           38           31
  Amortization and transaction costs (1)..............................................          --           --           23
                                                                                               ---          ---          ---
    Total operating costs and expenses................................................         191          136          135
  Loss from operations................................................................         (91)         (36)         (35)
  Interest income.....................................................................          --            1            2
                                                                                               ---          ---          ---
  Interest expense....................................................................          (3)          (3)          (1)
                                                                                               ---          ---          ---
    Net loss..........................................................................         (94%)        (38%)        (34%)
                                                                                               ---          ---          ---
                                                                                               ---          ---          ---
</TABLE>

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

(1) Amortization and transaction costs represent $41,238,000 in amortization of
    intangible assets acquired and a one time transaction cost, in June 1998, of
    $1,397,000 resulting from the strategic alliance with Sprint.

1998 COMPARED TO 1997

RECURRING REVENUES

         We experienced substantial growth in revenues during 1998. The increase
in recurring revenues of 120% from $74.7 million in 1997 to $164.7 million in
1998 was primarily due to an increase in our member base from approximately
420,000 at December 31, 1997 to approximately 1 million at December 31, 1998. In
June 1998 we gained access to Sprint's marketing and distribution channels as
part of our strategic relationship with Sprint. In addition to these channels,
we aggressively expanded into the OEM arena by securing relationships with
Apple, Packard Bell NEC and CompUSA. Also contributing to our growth was the
addition of several key Affinity marketing partners, Sam's Club, Discover Card
and AAA of Southern California.

OTHER REVENUES

<TABLE>
<CAPTION>

                                                                    YEAR ENDED DECEMBER 31,
                                                            ---------------------------------------
                                                                                          INCREASE
                                                             1997            1998        (DECREASE)
                                                            ------          ------       ----------
                                                                         (IN THOUSANDS)
     <S>                                                    <C>             <C>             <C>
     Dial-up set up fees .........................          $3,478          $2,853          $ (625)
     Non dial-up set up fees .....................           2,753           3,694             941
                                                            ---------------------------------------
     Total other revenues ........................          $6,231          $6,547          $  316
                                                            =======================================
</TABLE>

         The decrease in dial-up set up fees is primarily due to our increased
willingness to waive set up fees for dial-up members acquired through certain
marketing programs in response to competitive pressures. We expect this trend to
continue for dial-up set up fees. THE INCREASE IN NON DIAL-UP SET UP FEES IS DUE
TO OUR EFFORT TO expand our sales of premium services such as business Web site
hosting, national ISDN, LAN ISDN, frame relay connections and cable connections.
Set up fees for these services are generally not waived, and, as such, one-time
fees for the set up of non-dial-up accounts has increased.

INCREMENTAL REVENUES

         In the first quarter of 1998 EarthLink began reporting incremental
revenues derived from advertising, content and electronic commerce fees that
leverage the value of our growing member base and user traffic. The principal
component of our strategy is our Premiere Partnership Program, through which we
offer and sell promotional packages that provide advertisers with access to the
multiple points of contact we have with our members. SALES OF PREMIERE
PARTNERSHIPS WAS $2.1 MILLION FOR 1998. We also sell advertising and content
space on our various online properties, such as the Personal Start Page and the
Mall, and through our news magazine, BLINK. SALES OF CONTENT SPACE AND BANNER
ADVERTISING AND BLINK ADVERTISING WERE $1.2 MILLION, $444,000, AND $156,000
RESPECTIVELY DURING 1998. We generally charge transaction fees on electronic
commerce activities we facilitate. Total incremental revenues were $4.7 million
in 1998.

COST OF RECURRING REVENUES

<TABLE>
<CAPTION>

                                                                      YEAR ENDED DECEMBER 31,
                                                         ---------------------------------------------
                                                                      PERCENT                PERCENT
                                                                         OF                     OF
                                                                      RECURRING              RECURRING
                                                            1997      REVENUES     1998      REVENUES
                                                         ---------    ---------  ---------   ---------
                                                                (IN THOUSANDS, EXCEPT PERCENTAGES)
<S>                                                      <C>          <C>        <C>         <C>
   Recurring revenues................................    $  74,657      100%     $ 164,723     100%
   Cost of recurring revenues........................       36,716       49         76,643      47
</TABLE>

         Cost of recurring revenues increased 109% during 1998 as compared 1997,
primarily due to the increase in our member base. The decrease in the cost of
recurring revenues as a percentage of recurring revenues is attributable to: (a)
more effective management of our network, (b) the addition of Sprint to our
family of POP providers, and (c) our increasing ability to negotiate more
favorable commercial arrangements with our telecommunications service providers
as we leverage our growing member base.

<TABLE>
<CAPTION>

                                      (a)      Cost of other revenues


                                                                      YEAR ENDED DECEMBER 31,
                                                            ----------------------------------------
                                                                       PERCENT              PERCENT
                                                                       OF OTHER             OF OTHER
                                                             1997      REVENUES     1998    REVENUES
                                                            ------     --------    ------   --------
                                                                (IN THOUSANDS, EXCEPT PERCENTAGES)
     <S>                                                    <C>        <C>         <C>      <C>
     Royalties ...................................          $  930        15%      $  158       2%
     Other .......................................             419         7          527       8
                                                            ------     --------    ------   --------
     Total cost of other revenues ................          $1,349        22%      $  685      10%
                                                            ======     ========    ======   ========
</TABLE>

         Cost of other revenues decreased 49% in 1998 as compared to 1997. THE
DECREASE WAS PRIMARILY DUE TO A REDUCTION IN ROYALTY EXPENSE. PRIOR TO JULY 1997
THE COMPANY PAID A ONE-TIME ROYALTY OF AS MUCH AS $8.00 FOR USE OF INTERNET
BROWSER SOFTWARE. IN JULY 1997, DUE TO COMPETITION IN THE INTERNET BROWSER
MARKET, THE COMPANY OBTAINED THE RIGHT TO USE INTERNET BROWSER SOFTWARE FOR
FREE. THIS CAUSED A SIGNIFICANT DECREASE IN ROYALTY EXPENSE IN 1998 AND COMPARED
TO 1997. The increase in the remaining components of cost of other revenues is
primarily due to the increase in the rate of member growth during 1998.

SALES AND MARKETING

         Sales and marketing expenses consist primarily of third-party,
advertising, sales commissions, salaries, referral credits, direct communication
costs associated with trial accounts and the cost of promotional material. Sales
and marketing expenses increased from $26.0 million in 1997 to $42.7 million in
1998. THE INCREASE WAS PRIMARILY DUE AN INCREASE IN THIRD-PARTY BOUNTY PAYMENTS
OF $4 MILLION, INCREASED SALES COMMISSIONS OF $1 MILLION, INCREASED MARKETING
PERSONNEL HEADCOUNT LEADING TO AN INCREASE IN EMPLOYEE COSTS OF $3.4 MILLION AND
INCREASED EMPHASIS ON MARKETING, INCLUDING EXPANDED SALES AND MARKETING EFFORTS
ON A NATIONWIDE BASIS LEADING TO AN INCREASE IN ADVERTISING EXPENSE OF $3.2
MILLION. We do not defer sales, marketing or other direct costs associated with
the acquisition of members. We expense these costs as incurred.

GENERAL AND ADMINISTRATIVE

         General and administrative expenses consist primarily of costs
associated with the accounting and human resources departments, professional
expenses, rent, bad debt and compensation. General and administrative expenses
increased 46% from $14.4 million in 1997 to $21.0 million in 1998. THE INCREASE
WAS PRIMARILY DUE TO AN INCREASE IN PAYROLL EXPENSES OF $3.3 MILLION, AN
INCREASE IN CREDIT CARD PROCESSING FEES OF $2 MILLION AND AN INCREASE IN
PROFESSIONAL FEES OF $1.2 MILLION. The increase in credit card processing fees
was due to the increase in our member base. As a percentage of total revenues,
general and administrative expenses decreased from 18% in 1997 to 13% in 1998.

OPERATIONS AND MEMBER SUPPORT

         Operations and member support expenses consist primarily of costs
associated with technical support and member service, as well as customer
information systems. Operations and member support expenses increased 76%
from $30.9 million in 1997 to $54.4 million in 1998. However, as a percentage
of total revenues Operations and member support expenses decreased from 38%
in 1997 to 31% in 1998. We focus on retaining existing members by providing
superior services and devoting significant resources to expanding technical
support staff and network operations capabilities. We had 565 employees
engaged in operations and member support activities on December 31, 1997 and
1998 on December 31, 1998. THE INCREASE IN HEADCOUNT CAUSED EMPLOYEE LEAD TO
AN INCREASE BY $11.8 MILLION. We continue to improve member service functions
by investing in training programs, hardware and software. EXPENSES RELATED TO
INCOMING CALLS INCREASED $2.1 MILLION. DEPRECIATION EXPENSE ON ASSETS RELATED
TO MEMBER SERVICE AND TECHNICAL SUPPORT INCREASED $1.5 MILLION. RENT AND
UTILITIES INCREASED $459,000 AND $486,000 RESPECTIVELY.

INTEREST EXPENSE

         Interest expense decreased from $2.1 million in 1997 to $2.0 million
during 1998 due to repayment of approximately $4 million in notes payable, the
conversion of $5 million in debt to equity and a reduction in interest rates
paid to lessors. The above was offset by the effect of the increase in
capitalized lease obligations.

INTEREST INCOME

         Interest income increased from $637,000 in 1997 to $4.4 million 1998.
The increase was primarily due to an increase in average cash balances available
for investment as a result of our public follow on common stock offering
completed in June 1998.


1997 COMPARED TO 1996

RECURRING REVENUES

         Recurring revenues increased $47.1 million or 171% from $27.6 million
in 1996 to $74.7 million in 1997 due to the significant increase in our member
base during 1997.

<PAGE>

OTHER REVENUES

<TABLE>
<CAPTION>

                                                                     YEAR ENDED DECEMBER 31,
                                                            -----------------------------------------
                                                                                            INCREASE
                                                              1996             1997        (DECREASE)
                                                            -------          -------       ----------
                                                                          (IN THOUSANDS)
     <S>                                                    <C>              <C>           <C>
     Dial-up set up fees .........................          $ 4,563          $ 3,478        $(1,085)
     Non dial-up set up fees .....................            1,061            2,753          1,692
                                                            -------          -------       ----------
     Total other revenues ........................          $ 5,624          $ 6,231        $   607
                                                            =======          =======       ==========
</TABLE>

         Other revenues increased $607,000 or 11% from 1996 to 1997. Due to
competitive pricing and other pressures, we waived set up fees for dial-up
members acquired through certain marketing partnerships. This caused a decrease
in dial-up set up fees earned during 1997. We expect this trend to continue for
dial-up set up fees. During 1997, we began to aggressively promote Web hosting
and nationwide high speed access services. The decline in dial-up set up fees
was offset by increases in the other set up fees and revenues attributable to
our Web hosting, high speed access services and cost of products sold.

<PAGE>

COST OF RECURRING REVENUES

         Cost of recurring revenues increased from $17.7 million in 1996 to
$36.7 million in 1997 because our member base increased, but decreased from 64%
of recurring revenues in 1996 to 49% of recurring revenues in 1997. The decrease
from 1996 to 1997 was primarily due to our ability to effectively manage
communications costs and economies of scale to reduce per member costs as the
total member base expanded. Until October 1996, we paid UUNET a fixed monthly
fee per member plus a variable amount based on member usage in excess of a
threshold number of hours per month. Our network services agreement with UUNET
was amended as of October 1996 to change the cost basis from per member to peak
port hours. In June 1997, UUNET agreed to waive monthly revenue minimums, excess
hours fees and peak service user targets for the remaining six months of 1997.
In return, EarthLink agreed not to invoke its early termination right prior to
September 1998. If usage becomes more concentrated during peak times, the fees
we pay to UUNET will increase, thereby adversely affecting our operating
margins. Under our agreement with PSINet, we pay PSINet a fixed monthly fee for
each member accessing our services through a PSINet POP.

COST OF OTHER REVENUES

<TABLE>
<CAPTION>

                                                                     YEAR ENDED DECEMBER 31,
                                                            -----------------------------------------
                                                                                            INCREASE
                                                              1996             1997        (DECREASE)
                                                            -------          -------       ----------
                                                                          (IN THOUSANDS)
     <S>                                                    <C>              <C>           <C>
     Royalties ...................................          $1,907           $  930          $ (977)
     Other .......................................             159              419             260
                                                            -------          -------       ----------
     Total cost of other revenues ................          $2,066           $1,349          $ (717)
                                                            -------          -------       ----------
</TABLE>

         Cost of other revenues decreased $717,000 or 38% from $2.1 million in
1996 to $1.3 million in 1997. THE DECREASE WAS PRIMARILY DUE TO A REDUCTION IN
ROYALTY EXPENSE. PRIOR TO JULY QUARTER OF 1997 THE COMPANY PAID ROYALTIES OF AS
MUCH AS $8.00 FOR USE OF INTERNET BROWSER SOFTWARE AT THE SET UP OF EACH MEMBER.
DURING THE THIRD QUARTER OF 1997, DUE TO COMPETITION IN THE INTERNET BROWSER
MARKET, THE COMPANY WAS ABLE TO OBTAIN THE USE OF INTERNET BROWSER SOFTWARE FOR
FREE. THIS CAUSED A SIGNIFICANT DECREASE IN ROYALTY EXPENSE IN 1998 AND COMPARED
TO 1997.

SALES AND MARKETING

         Sales and marketing expenses increased $8.6 million or 49% from $17.4
million in 1996 to $26.0 million 1997. The increase was primarily due to our
emphasis on marketing services, expanding sales and marketing efforts
nationwide, increased sales commissions, marketing personnel headcount,
third-party bounties and referral credits. THE COMPANY INCURRED INCREASED SALES
AND MARKETING EXPENSES OF $1.4 MILLION IN PAYROLL, $1.1 MILLION IN COMMISSIONS,
$1.3 MILLION IN BOUNTIES, $1.4 MILLION IN REFERRAL CREDITS AND $1.7 MILLION IN
ADVERTISING. We do not defer sales, marketing or other direct costs associated
with the acquisition of members; rather, we expense these costs as they are
incurred.

GENERAL AND ADMINISTRATIVE

         General and administrative expenses increased $3.9 million or 37% from
$10.5 million in 1996 to $14.4 million in 1997 due to increases in bad debt,
payroll, rent, depreciation expenses and credit card fees. Bad debt expense was
$2.5 million or 7.5% of total revenues in 1996 due to difficulties in billing
and in disconnecting late-paying members on a timely basis. Bad debt expense was
$3.5 million or 4.3% of total revenues in 1997. Bad debt decreases were due to
our review and elimination of accounts with questionable payment history and the
compression of our collection cycle. The rise in payroll costs was primarily due
to growth in headcount. Personnel engaged in general and administrative
activities increased from 92 to 110 during 1997 and the corresponding payroll
increased $1.6 MILLION. Depreciation expense rose because of the acquisition of
office equipment and the build-out of leasehold improvements. Credit card
processing fees increased $1.1 MILLION primarily because our member base
increased.

OPERATIONS AND MEMBER SUPPORT

         Operations and member support expenses increased $15.1 million or 96%
from $15.8 million in 1996 to $30.9 million in 1997 reflecting our efforts to
retain existing members by devoting significant resources to expanding technical
support and network operations capabilities. Employees engaged in operations and
member support activities increased from 401 to 565 during 1997 AND THE
CORRESPONDING PAYROLL COSTS INCREASED $9.7 MILLION. DURING 1997, WE CREATED A
NEW CALL CENTER AND INVESTED IN TRAINING PROGRAMS AND HARDWARE AND SOFTWARE TO
SOLVE MEMBER PROBLEMS. EXPENSES RELATED TO INCOMING CALLS INCREASED $1.3
MILLION. DEPRECIATION EXPENSE ON ASSETS RELATED TO MEMBER SERVICE AND TECHNICAL
SUPPORT INCREASED $1.7 MILLION. RENT AND UTILITIES INCREASED $744,000 AND
$780,000 RESPECTIVELY.

<PAGE>

INTEREST INCOME

    Interest income increased from $637,000 in 1997 to $4.4 million 1998. The
increase was primarily due to an increase in average cash balances available for
investment as a result of our public follow on common stock offering completed
in June 1998.

1997 COMPARED TO 1996


1998 COMPARED TO 1997

RECURRING REVENUES

         We experienced substantial growth in revenues during 1998. The increase
in recurring revenues of 120% from $74.7 million in 1997 to $164.7 million in
1998 was primarily due to an increase in our member base from approximately
420,000 at December 31, 1997 to approximately 1 million at December 31, 1998. In
June 1998 we gained access to Sprint's marketing and distribution channels as
part of our strategic relationship with Sprint. In addition to these channels,
we aggressively expanded into the OEM arena by securing relationships with
Apple, Packard Bell NEC and CompUSA. Also contributing to our growth was the
addition of several key Affinity marketing partners, Sam's Club, Discover Card
and AAA of Southern California.

OTHER REVENUES

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                            --------------------------------------
                                                                                         INCREASE
                                                             1997           1998        (DECREASE)
                                                            ------         ------       ----------
                                                                      (IN THOUSANDS)
     <S>                                                    <C>             <C>          <C>
     Dial-up set up fees .........................          $3,478          $2,853       $ (625)
     Non dial-up set up fees .....................           2,753           3,694          941
                                                            ------          ------       -------
     Total other revenues ........................          $6,231          $6,547       $  316
                                                            ------          ------       -------
                                                            ------          ------       -------
</TABLE>


         The decrease in dial-up set up fees is primarily due to our increased
willingness to waive set up fees for dial-up members acquired through certain
marketing programs in response to competitive pressures. We expect this trend to
continue for dial-up set up fees. THE INCREASE IN NON DIAL-UP SET UP FEES IS DUE
TO OUR EFFORT TO expand our sales of premium services such as business Web site
hosting, national ISDN, LAN ISDN, frame relay connections and cable connections.
Set up fees for these services are generally not waived, and, as such, one-time
fees for the set up of non-dial-up accounts has increased.

INCREMENTAL REVENUES

         In the first quarter of 1998 EarthLink began reporting incremental
revenues derived from advertising, content and electronic commerce fees that
leverage the value of our growing member base and user traffic. The principal
component of our strategy is our Premiere Partnership Program, through which we
offer and sell promotional packages that provide advertisers with access to the
multiple points of contact we have with our members. SALES OF PREMIERE
PARTNERSHIPS WAS $2.1 MILLION FOR 1998. We also sell advertising and content
space on our various online properties, such as the Personal Start Page and the
Mall, and through our news magazine, BLINK. SALES OF CONTENT SPACE AND BANNER
ADVERTISING AND BLINK ADVERTISING WERE $1.2 MILLION, $444,000, AND $156,000
RESPECTIVELY DURING 1998. We generally charge transaction fees on electronic
commerce activities we facilitate. Total incremental revenues were $4.7 million
in 1998.

<PAGE>

COST OF RECURRING REVENUES

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                       ---------------------------------------------
                                                                    PERCENT OF             PERCENT OF
                                                                    RECURRING              RECURRING
                                                          1997      REVENUES     1998      REVENUES
                                                       --------    ----------   ------    ----------
                                                             (IN THOUSANDS, EXCEPT PERCENTAGES)
   <S>                                                 <C>          <C>        <C>         <C>
   Recurring revenues................................  $ 74,657       100%     $164,723      100%
   Cost of recurring revenues........................    36,716        49        76,643       47
</TABLE>

         Cost of recurring revenues increased 109% during 1998 as compared 1997,
primarily due to the increase in our member base. The decrease in the cost of
recurring revenues as a percentage of recurring revenues is attributable to: (a)
more effective management of our network, (b) the addition of Sprint to our
family of POP providers, and (c) our increasing ability to negotiate more
favorable commercial arrangements with our telecommunications service providers
as we leverage our growing member base.

(a)      Cost of other revenues

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                            --------------------------------------
                                                                       PERCENT             PERCENT
                                                                       OF OTHER            OF OTHER
                                                              1997     REVENUES    1998    REVENUES
                                                            -------    --------   ------   --------
                                                                 (IN THOUSANDS, EXCEPT PERCENTAGES)
     <S>                                                    <C>         <C>      <C>        <C>
     Royalties ...................................          $  930       15%     $  158       2%
     Other .......................................             419        7         527       8
                                                            ------      ----     ------      ---
     Total cost of other revenues ................          $1,349       22%     $  685      10%
                                                            ------      ----     ------      ---
                                                            ------      ----     ------      ---
</TABLE>




         Cost of other revenues decreased 49% in 1998 as compared to 1997. THE
DECREASE WAS PRIMARILY DUE TO A REDUCTION IN ROYALTY EXPENSE. PRIOR TO JULY 1997
THE COMPANY PAID A ONE-TIME ROYALTY OF AS MUCH AS $8.00 FOR USE OF INTERNET
BROWSER SOFTWARE. IN JULY 1997, DUE TO COMPETITION IN THE INTERNET BROWSER
MARKET, THE COMPANY OBTAINED THE RIGHT TO USE INTERNET BROWSER SOFTWARE FOR
FREE. THIS CAUSED A SIGNIFICANT DECREASE IN ROYALTY EXPENSE IN 1998 AND COMPARED
TO 1997. The increase in the remaining components of cost of other revenues is
primarily due to the increase in the rate of member growth during 1998.

SALES AND MARKETING

         Sales and marketing expenses consist primarily of third-party,
advertising, sales commissions, salaries, referral credits, direct communication
costs associated with trial accounts and the cost of promotional material. Sales
and marketing expenses increased from $26.0 million in 1997 to $42.7 million in
1998. THE INCREASE WAS PRIMARILY DUE AN INCREASE IN THIRD-PARTY BOUNTY PAYMENTS
OF $4 MILLION, INCREASED SALES COMMISSIONS OF $1 MILLION, INCREASED MARKETING
PERSONNEL HEADCOUNT LEADING TO AN INCREASE IN EMPLOYEE COSTS OF $3.4 MILLION AND
INCREASED EMPHASIS ON MARKETING, INCLUDING EXPANDED SALES AND MARKETING EFFORTS
ON A NATIONWIDE BASIS LEADING TO AN INCREASE IN ADVERTISING EXPENSE OF $3.2
MILLION. We do not defer sales, marketing or other direct costs associated with
the acquisition of members. We expense these costs as incurred.

GENERAL AND ADMINISTRATIVE

         General and administrative expenses consist primarily of costs
associated with the accounting and human resources departments, professional
expenses, rent, bad debt and compensation. General and administrative expenses
increased 46% from $14.4 million in 1997 to $21.0 million in 1998. THE INCREASE
WAS PRIMARILY DUE TO AN INCREASE IN PAYROLL EXPENSES OF $3.3 MILLION, AN
INCREASE IN CREDIT CARD PROCESSING FEES OF $2 MILLION AND AN INCREASE IN
PROFESSIONAL FEES OF $1.2 MILLION. The increase in credit card processing fees
was due to the increase in our member base. As a percentage of total revenues,
general and administrative expenses decreased from 18% in 1997 to 13% in 1998.

OPERATIONS AND MEMBER SUPPORT

         Operations and member support expenses consist primarily of costs
associated with technical support and member service, as well as customer
information systems. Operations and member support expenses increased 76% from
$30.9 million in 1997 to $54.4 million in 1998. However, as a percentage of
total revenues Operations and member support expenses decreased from 38% in 1997
to 31% in 1998. We focus on retaining existing members by providing superior
services and devoting significant resources to expanding technical support staff
and network operations capabilities. We had 565 employees engaged in operations
and member support activities on December 31, 1997 and 998 on December 31, 1998.
THE INCREASE IN HEADCOUNT CAUSED EMPLOYEE LEAD TO AN INCREASE BY $11.8 million.
We continue to improve member service functions by investing in training
programs, hardware and software. EXPENSES RELATED TO INCOMING CALLS INCREASED
$2.1 MILLION. DEPRECIATION EXPENSE ON ASSETS RELATED TO MEMBER SERVICE AND
TECHNICAL SUPPORT INCREASED $1.5 MILLION. RENT AND UTILITIES INCREASED $459,000
AND $486,000 RESPECTIVELY

INTEREST EXPENSE

         Interest expense decreased from $2.1 million in 1997 to $2.0 million
during 1998 due to repayment of approximately $4 million in notes payable, the
conversion of $5 million in debt to equity and a reduction in interest rates
paid to lessors. The above was offset by the effect of the increase in
capitalized lease obligations.

INTEREST INCOME

         Interest income increased from $637,000 in 1997 to $4.4 million 1998.
The increase was primarily due to an increase in average cash balances available
for investment as a result of our public follow on common stock offering
completed in June 1998.


1997 COMPARED TO 1996

RECURRING REVENUES

         Recurring revenues increased $47.1 million or 171% from $27.6 million
in 1996 to $74.7 million in 1997 due to the significant increase in our member
base during 1997.

OTHER REVENUES

<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                            -----------------------------------------
                                                                                            INCREASE
                                                               1996           1997         (DECREASE)
                                                            --------       ---------       ----------
                                                                      (IN THOUSANDS)
     <S>                                                    <C>              <C>              <C>
     Dial-up set up fees .........................          $ 4,563          $ 3,478          $(1,085)
     Non dial-up set up fees .....................            1,061            2,753            1,692
                                                            -------          -------          -------
     Total other revenues ........................          $ 5,624          $ 6,231          $   607
                                                            -------          -------          -------
                                                            -------          -------          -------
</TABLE>


         Other revenues increased $607,000 or 11% from 1996 to 1997. Due to
competitive pricing and other pressures, we waived set up fees for dial-up
members acquired through certain marketing partnerships. This caused a decrease
in dial-up set up fees earned during 1997. We expect this trend to continue for
dial-up set up fees. During 1997, we began to aggressively promote Web hosting
and nationwide high speed access services. The decline in dial-up set up fees
was offset by increases in the other set up fees and revenues attributable to
our Web hosting, high speed access services and cost of products sold.



<PAGE>


COST OF RECURRING REVENUES

         Cost of recurring revenues increased from $17.7 million in 1996 to
$36.7 million in 1997 because our member base increased, but decreased from 64%
of recurring revenues in 1996 to 49% of recurring revenues in 1997. The decrease
from 1996 to 1997 was primarily due to our ability to effectively manage
communications costs and economies of scale to reduce per member costs as the
total member base expanded. Until October 1996, we paid UUNET a fixed monthly
fee per member plus a variable amount based on member usage in excess of a
threshold number of hours per month. Our network services agreement with UUNET
was amended as of October 1996 to change the cost basis from per member to peak
port hours. In June 1997, UUNET agreed to waive monthly revenue minimums, excess
hours fees and peak service user targets for the remaining six months of 1997.
In return, EarthLink agreed not to invoke its early termination right prior to
September 1998. If usage becomes more concentrated during peak times, the fees
we pay to UUNET will increase, thereby adversely affecting our operating
margins. Under our agreement with PSINet, we pay PSINet a fixed monthly fee for
each member accessing our services through a PSINet POP.

COST OF OTHER REVENUES

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31,
                                                           ----------------------------------
                                                                                     INCREASE
                                                            1996          1997      (DECREASE)
                                                           ------        ------     ----------
                                                                  (IN THOUSANDS)
     <S>                                                    <C>          <C>          <C>
     Royalties ...................................          $1,907       $  930       $ (977)
     Other .......................................             159          419          260
                                                            ------       ------       -------
     Total cost of other revenues ................          $2,066       $1,349       $ (717)
                                                            ------       ------       -------
                                                            ------       ------       -------
</TABLE>

         Cost of other revenues decreased $717,000 or 38% from $2.1 million in
1996 to $1.3 million in 1997. THE DECREASE WAS PRIMARILY DUE TO A REDUCTION IN
ROYALTY EXPENSE. PRIOR TO JULY QUARTER OF 1997 THE COMPANY PAID ROYALTIES OF AS
MUCH AS $8.00 FOR USE OF INTERNET BROWSER SOFTWARE AT THE SET UP OF EACH MEMBER.
DURING THE THIRD QUARTER OF 1997, DUE TO COMPETITION IN THE INTERNET BROWSER
MARKET, THE COMPANY WAS ABLE TO OBTAIN THE USE OF INTERNET BROWSER SOFTWARE FOR
FREE. THIS CAUSED A SIGNIFICANT DECREASE IN ROYALTY EXPENSE IN 1998 AND COMPARED
TO 1997.

SALES AND MARKETING

         Sales and marketing expenses increased $8.6 million or 49% from $17.4
million in 1996 to $26.0 million 1997. The increase was primarily due to our
emphasis on marketing services, expanding sales and marketing efforts
nationwide, increased sales commissions, marketing personnel headcount,
third-party bounties and referral credits. THE COMPANY INCURRED INCREASED SALES
AND MARKETING EXPENSES OF $1.4 MILLION IN PAYROLL, $1.1 MILLION IN COMMISIONS,
$1.3 MILLION IN BOUNTIES, $1.4 MILLION IN REFERRAL CREDITS AND $1.7 MILLION IN
ADVERTISING. We do not defer sales, marketing or other direct costs associated
with the acquisition of members; rather, we expense these costs as they are
incurred.

GENERAL AND ADMINISTRATIVE

         General and administrative expenses increased $3.9 million or 37% from
$10.5 million in 1996 to $14.4 million in 1997 due to increases in bad debt,
payroll, rent, depreciation expenses and credit card fees. Bad debt expense was
$2.5 million or 7.5% of total revenues in 1996 due to difficulties in billing
and in disconnecting late-paying members on a timely basis. Bad debt expense was
$3.5 million or 4.3% of total revenues in 1997. Bad debt decreases were due to
our review and elimination of accounts with questionable payment history and the
compression of our collection cycle. The rise in payroll costs was primarily due
to growth in headcount. Personnel engaged in general and administrative
activities increased from 92 to 110 during 1997 and the corresponding payroll
increased $1.6 MILLION. Depreciation expense rose because of the acquisition of
office equipment and the build-out of leasehold improvements. Credit card
processing fees increased $1.1 MILLION primarily because our member base
increased.

OPERATIONS AND MEMBER SUPPORT

         Operations and member support expenses increased $15.1 million or 96%
from $15.8 million in 1996 to $30.9 million in 1997 reflecting our efforts to
retain existing members by devoting significant resources to expanding technical
support and network operations capabilities. Employees engaged in operations and
member support activities increased from 401 to 565 during 1997 AND THE
CORRESPONDING PAYROLL COSTS INCREASED $9.7 MILLION. DURING 1997, WE CREATED A
NEW CALL CENTER AND INVESTED IN TRAINING PROGRAMS AND HARDWARE AND SOFTWARE TO
SOLVE MEMBER PROBLEMS. EXPENSES RELATED TO INCOMING CALLS INCREASED $1.3
MILLION. DEPRECIATION EXPENSE ON ASSETS RELATED TO MEMBER SERVICE AND TECHNICAL
SUPPORT INCREASED $1.7 MILLION. RENT AND UTILITIES INCREASED $744,000 AND
$780,000 RESPECTIVELY.

INTEREST EXPENSE

    Interest expense increased from $1.0 million in 1996 to $2.1 million in 1997
primarily due to our increased borrowings and capital lease obligations to
finance our expansion of network infrastructure and capital equipment
acquisitions.

INTEREST INCOME

    Interest income increased from $150,000 in 1996 to $637,000 in 1997
primarily because of the increase in average cash balances available for
investment.

                                       19
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

    Our operating activities used $16.2 million and $21.3 million in cash during
the years ended December 31, 1996 and 1997, respectively. In all three years,
the Company's net loss was the primary component of cash used in operating
activities. In 1998, however, the Company's net loss was offset by significant
non-cash depreciation and amortization expenses relating to the Company's
network and intangible assets. Our operating activities provided $26.6 million
of cash during the year ended December 31, 1998, primarily because of the
increase in accounts payable and accrued liabilities of $31.7 million.

    Our investing activities, used cash of approximately $18.4 million, $16.1
million and $9.2 million in 1996, 1997 and 1998, respectively. Capital equipment
purchases were $18.8 million, $14.5 million and $24.3 million during the three
years then ended. During 1997, we purchased the rights to subscribers and
related assets of Internet in a Mall, Inc., a Tarzana, California based ISP, at
a cost of approximately $1.4 million. Net cash received in the Sprint
transaction of $23.8 million was partially offset by Sprint transaction costs of
$9.9 million for the year ended December 31, 1998.

    Financing activities provided approximately $38.3 million, $49.8 million and
$107.1 million in cash during 1996, 1997 and 1998, respectively. We raised $8.7
million and $15.4 million in private sales of equity securities during 1996 and
1997, respectively. In the first quarter of 1997, we sold 4.6 million shares of
common stock in our initial public offering and generated approximately $26.2
million in net proceeds. We completed a follow on public offering in June 1998
of 3.8 million shares of common stock. Our net proceeds were approximately
$106.3 million. During 1996, 1997 and 1998, we financed the acquisition of data
processing and office equipment amounting to approximately $11.3 million, $10.5
million and $9.3 million, respectively, through equipment leases and sale
leaseback agreements. We record sale leaseback transactions at cost, which
approximates the fair market value of the property, and, therefore, no gains or
losses are recorded. We continue to depreciate the property and record a
financing obligation representing the proceeds based upon payments under the
lease agreement.

    On December 31, 1998, we had approximately $140.9 million in cash and cash
equivalents. We believe our available cash is sufficient to meet our operating
expenses and capital requirements for the next 12 months. We also have a $25
million credit facility from Sprint in the form of convertible senior debt,
increasing to $100 million over a three-year period, at an interest rate of 6%
per annum. Our capital requirements depend on numerous factors, including the
rate of market acceptance of our services, our ability to maintain and expand
our member base, the rate of expansion of our network infrastructure, the size
and types of acquisitions in which we may engage and the level of resources
required to expand our marketing and sales programs. We cannot accurately
predict the timing and amount of capital requirements. We may require additional
financing sooner than anticipated if capital requirements vary materially from
those currently planned. We have no commitments for any additional financing
other than the line of credit from Sprint, and we cannot be sure that we can
obtain additional commitments on favorable terms, if at all. Additional equity
financing may dilute our stockholders, and debt financing, if available, may
restrict our ability to declare and pay dividends and raise future capital. If
we are unable to obtain additional needed financing, we may be required to
reduce the scope of operations or anticipated expansion, which could materially
and adversely affect us.

YEAR 2000 RISKS MAY ADVERSELY AFFECT US

    Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
upcoming change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond the year
2000. We utilize software, computer technology and other services internally
developed and provided by third-party vendors that may fail due to the year 2000
phenomenon. For example, we are dependent on the institutions involved in
processing our members' credit card payments for Internet services. We are also
dependent on telecommunications vendors and leased POP vendors to maintain
network reliability.

                                       20
<PAGE>
    We are continuing to assess the year 2000 readiness of our third-party
supplied software, computer technology and other services. Based upon the
results of this assessment, we will develop and implement, if necessary, a
remediation plan with respect to third-party software, computer technology and
services which may fail to be year 2000 compliant. We have assessed our
proprietary software and internal systems and determined them to be year 2000
compliant. We anticipate that our systems, including components thereof provided
by third-party vendors, will be year 2000 compliant by 2000. The failure of our
software and computing systems and our third-party vendors to be year 2000
compliant could have a material adverse effect on us.

    The most reasonably likely worst-case year 2000 scenario would be for one or
more of our network service providers to fail thereby making it difficult or
impossible for members to dial-up and access the Internet; however, we maintain
agreements with several nationwide network service providers including UUNET,
Sprint and PSINet, and have the ability to switch our members among the networks
of these providers. Therefore, should any of these providers be unable to
provide our members with Internet access as a result of year 2000 problems, we
believe our redundant network arrangements will adequately accommodate our dial
up access needs.

    Total costs incurred in connection with our year 2000 compliance efforts are
expected to be minimal.

                                       21
<PAGE>
QUARTERLY RESULTS

    The following table sets forth certain unaudited quarterly consolidated
financial data for the eight quarters ended December 31, 1998. In the opinion of
the Company's management, this unaudited information has been prepared on the
same basis as the audited consolidated financial statements contained herein and
includes all adjustments (consisting of normal recurring adjustments) necessary
to present fairly the information set forth therein when read in conjunction
with the Consolidated Financial Statements and Notes thereto. The operating
results for any quarter are not necessarily indicative of results for any future
period.

<TABLE>
<CAPTION>
                                          MAR. 31  JUN. 30  SEPT. 30   DEC. 31  MAR. 31  JUN. 30   SEPT. 30  DEC. 31
                                           1997     1997      1997      1997     1998      1998      1998     1998
                                          -------  -------  --------   -------  -------  --------  --------  -------
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                       <C>      <C>      <C>        <C>      <C>      <C>       <C>       <C>
CONSOLIDATED STATEMENT OF OPERATIONS
  DATA:
Revenues:
  Recurring revenues....................  $14,540  $17,880  $19,450    $22,787  $27,856  $ 35,224  $ 46,877  $54,766
  Other revenues........................   1,632     1,367    1,559      1,673   1,578      1,620     1,699    1,650
  Incremental revenues (1)..............      --        --       --         --     392      1,146     1,248    1,885
                                          -------  -------  --------   -------  -------  --------  --------  -------
    Total revenues......................  16,172    19,247   21,009     24,460  29,826     37,990    49,824   58,301

Operating costs and expenses:
  Cost of recurring revenues............   7,601     8,876    9,271     10,968  14,087     17,555    20,619   24,382
  Cost of other revenues................     406       429      281        233      36        120       252      277
  Sales and marketing...................   6,261     6,125    6,756      6,829   7,566      8,281    10,644   16,241
  General and administrative............   3,519     3,467    3,529      3,891   4,537      5,018     5,871    5,616
  Operations and member support.........   6,422     7,791    7,970      8,717   9,540     11,630    15,078   18,195
  Amortization and transaction costs
    (2).................................      --        --       --         --      --      7,208    17,754   17,673
                                          -------  -------  --------   -------  -------  --------  --------  -------
    Total operating costs and
      expenses:.........................  24,209    26,688   27,807     30,638  35,766     49,812    70,218   82,384

Loss from operations....................  (8,037 )  (7,441)  (6,798)    (6,178) (5,940 )  (11,822)  (20,394) (24,083)
Interest expense........................    (507 )    (444)    (516)      (632)   (687 )     (621)     (353)    (306)
Interest income.........................     165       135      116        221     223        426     1,919    1,856
                                          -------  -------  --------   -------  -------  --------  --------  -------
  Net loss..............................  (8,379 )  (7,750)  (7,198)    (6,589) (6,404 )  (12,017)  (18,828) (22,533)

Deductions for accretion dividends
  (3)...................................      --        --       --         --      --     (1,054)   (3,276)  (3,271)
                                          -------  -------  --------   -------  -------  --------  --------  -------
Net loss attributable to common
  stockholders..........................  $(8,379) $(7,750) $(7,198)   $(6,589) $(6,404) $(13,071) $(22,104) $(25,804)
                                          -------  -------  --------   -------  -------  --------  --------  -------
                                          -------  -------  --------   -------  -------  --------  --------  -------
Basic and diluted net loss per share
  (4)...................................  $(0.46 ) $ (0.40) $ (0.36)   $ (0.29) $(0.28 ) $  (0.53) $  (0.78) $ (0.89)
                                          -------  -------  --------   -------  -------  --------  --------  -------
                                          -------  -------  --------   -------  -------  --------  --------  -------
Weighted average shares (4).............  18,188    19,476   19,864     22,482  22,746     24,586    28,458   28,838
                                          -------  -------  --------   -------  -------  --------  --------  -------
                                          -------  -------  --------   -------  -------  --------  --------  -------
</TABLE>

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

(1) We began reporting incremental revenues in the first quarter of 1998.

(2) Amortization and transaction costs represent $41,238,000 in amortization of
    intangible assets acquired and a one time transaction cost, in June 1998, of
    $1,397,000 resulting from the strategic alliance with Sprint.

(3) Represents the accretion of liquidation dividends on Series A convertible
    preferred stock at 3% compounded quarterly and the accretion of a dividend
    related to the beneficial conversion feature in accordance with EITF D-60.

(4) SFAS No. 128, Earnings per Share ("EPS"), and Staff Accounting Bulletin No.
    98 require companies, such as EarthLink, that incorporated the SAB 83
    concept of "cheap stock" in determining pre-initial public offering EPS data
    to restate EPS data to conform to SFAS No. 128. Basic EPS now represents the
    weighted average number of shares divided into net income during a

                                       22
<PAGE>
    given period. Potential common stock items, options, warrants or convertible
    instruments are not included in the calculation of EPS due to their
    anti-dilutive effect.

<TABLE>
<CAPTION>
                                          MAR. 31   JUN. 30   SEPT. 30   DEC. 31   MAR. 31   JUN. 30   SEPT. 30   DEC. 31
                                           1997      1997       1997      1997      1998      1998       1998      1998
                                          -------   -------   --------   -------   -------   -------   --------   -------
                                                                (AS A PERCENTAGE OF TOTAL REVENUES)
<S>                                       <C>       <C>       <C>        <C>       <C>       <C>       <C>        <C>
CONSOLIDATED STATEMENT FO OPERATIONS
  DATA
Revenues:
  Recurring revenues....................     90%       93%       93%        93%       94%       93%       94%        94%
  Other revenues........................     10         7         7          7         5         4         3          3
  Incremental revenues (1)..............     --        --        --         --         1         3         3          3
                                          -------   -------     ---      -------   -------   -------     ---      -------
    Total revenues......................    100       100       100        100       100       100       100        100

Operating costs and expenses:
  Cost of recurring revenues............     47        46        44         45        47        46        41         42
  Cost of other revenues................      2         2         1          1        --        --         1         --
  Sales and marketing...................     39        32        32         28        26        22        21         28
  General and administrative............     22        18        17         16        15        13        12         10
  Operations and member support.........     40        41        38         35        32        31        30         31
  Amortization and transaction costs
    (2).................................     --        --        --         --        --        19        36         30
                                          -------   -------     ---      -------   -------   -------     ---      -------
    Total operating costs and
      expenses..........................    150       139       132        125       120       131       141        141

Loss from operations....................    (50)      (39)      (32)       (25)      (20)      (31)      (41)       (41)
  Interest expense......................     (3)       (2)       (2)        (3)       (2)       (2)       (1)        (1)
  Interest income.......................      1         1         1          1         1         1         4          3
                                          -------   -------     ---      -------   -------   -------     ---      -------
    Net loss............................    (52)      (40)      (33)       (27)      (21)      (32)      (38)       (39)

Deductions for accretion dividends(3)...     --        --        --         --        --        (2)       (6)        (5)
                                          -------   -------     ---      -------   -------   -------     ---      -------
Net loss attributable to common
  stockholders..........................    (52)%     (40)%     (33)%      (27)%     (21)%     (34)%     (44)%      (44)%
                                          -------   -------     ---      -------   -------   -------     ---      -------
                                          -------   -------     ---      -------   -------   -------     ---      -------
</TABLE>

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

(1) We began reporting incremental revenues in the first quarter of 1998.

(2) Amortization and transaction costs represent $41,238,000 in amortization of
    intangible assets acquired and a one time transaction cost, in June 1998, of
    $1,397,000 resulting from the strategic alliance with Sprint.

(3) Represents the accretion of liquidation dividends on Series A convertible
    preferred stock at 3% compounded quarterly and the accretion of a dividend
    related to the beneficial conversion feature in accordance with EITF D-60.

SAFE HARBOR STATEMENT

    The following "Safe Harbor Statement" is made pursuant to the Private
Securities Litigation Reform Act of 1995. Certain of the statements contained in
the body of this Report are forward-looking statements (rather than historical
facts) that are subject to risks and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. With respect to such forward-looking statements, the Company seeks
the protections afforded by the Private   Securities Litigation Reform Act of
1995. These risks include, without limitation, (1) that the Company will not
retain or grow its member base, (2) that the Company will fail to be competitive
with existing and new competitors, (3) that the Sprint Transactions will fail to
close, (4) that if the Sprint Transactions close, they will not be as beneficial
to the Company as management anticipates, (5) that the Company will not be able
to sustain its current growth, (6) that the Company will not adequately respond
to technological developments impacting the Internet, and (7) that needed
financing will not be available to the Company if and as needed. This list is
intended to identify certain of the principal factors that could cause actual
results to differ materially from those described in the forward-looking
statements included elsewhere herein. These factors are not intended to
represent a complete list of all risks and uncertainties inherent in the
Company's business, and should be read in conjunction with the more detailed
cautionary statements included elsewhere in recent SEC filings.

                                       23
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

    The information required by this item appears in a subsequent section of
this Report. (See Item 14(a)(1) and (2)).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    None.

                                       24
<PAGE>
                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    Information relating to management's nominees for directors of the Company
will be set forth under the captions "Proposal 1--Election of
Directors--Nominees" and "Proposal 1--Election of Directors-- Information
Regarding Nominees for Director" in the Company's Proxy Statement for its 1999
Annual Meeting of Shareholders or in a subsequent amendment to this Report. Such
information is incorporated herein by reference. Information relating to the
executive officers of the Company will be set forth under the caption "Executive
Officers" in the above-referenced Proxy Statement or amendment. Such information
is incorporated herein by reference. Information regarding compliance by
directors and executive officers of the Company and owners of more than ten
percent of the Company's Common Stock with the reporting requirements of Section
16(a) of the Securities Exchange Act of 1934, as amended, will be set forth
under the caption "Compliance with Section 16(a) of the Securities Exchange Act
of 1934" in the above-referenced Proxy Statement or amendment.

ITEM 11. EXECUTIVE COMPENSATION

    Information relating to management compensation will be set forth under the
captions "Proposal 1-- Election of Directors--Director Compensation" and
"Executive Compensation" in the Company's Proxy Statement referred to in Item 10
above or in a subsequent amendment to this Report. Such information is
incorporated herein by reference, except for the information set forth under the
captions "Executive Compensation--Audit and Compensation Committee Report on
Executive Compensation" and "Stock Performance Graph," which specifically is not
so incorporated by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Information regarding ownership of the Company's $0.01 par value Common
Stock by certain persons is set forth under the captions "Beneficial Ownership
of Common Stock" in the Company's Proxy statement referred to in Item 10 above
or in a subsequent amendment to this Report. Such information is incorporated
herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    Information regarding certain relationships and transactions between the
Company and certain of its affiliates is set forth under the caption
"Compensation Committee Interlocks and Insider Participation" in the Company's
Proxy Statement referred to in Item 10 above or in a subsequent amendment to
this Report. Such information is incorporated herein by reference.

                                       25
<PAGE>
                                    PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(A) DOCUMENTS FILED AS PART OF THIS REPORT.

1.  FINANCIAL STATEMENTS

    Report of Independent Accountants

    Consolidated Balance Sheet as of December 31, 1997 and 1998

    Consolidated Statement of Operations for the three years ended December 31,
1998

    Consolidated Statement of Stockholders' Equity (Deficit) for the three years
ended December 31, 1998

    Consolidated Statement of Cash Flows for the three years ended December 31,
1998

    Notes to Consolidated Financial Statements

2.  FINANCIAL STATEMENT SCHEDULE

    The Financial Statement Schedule(s) described in Regulation S-X are omitted
from this Report because they are either not required or are immaterial.

3.  EXHIBITS

<TABLE>
<CAPTION>
   EXHIBIT                                                  DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>

       2.1   Investment Agreement dated as of February 10, 1998, with Sprint Corporation and Sprint Communications
             Company L.P. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by EarthLink Network, Inc.
             on February 10, 1998).

       3.1   Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration
             Statement on Form S-4--File No. 333-52507).

       3.2   Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form
             S-4--File No. 333-52507).

       3.3   Form of Certificate of Designation, Preferences and Rights of the Company's Series A Convertible
             Preferred Stock (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by EarthLink Network,
             Inc. on February 10, 1998).

       3.4   Certificate of Designation, Preferences and Rights of the Company's Series B Convertible Preferred Stock
             and amendment thereto.

       4.1   See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the Certificate of Incorporation, Bylaws and
             Certificates of Designation, Preference and Rights of Series A and B Convertible Preferred Stock.

       4.2   Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on
             Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

       4.3   Form of Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form
             S-1 of EarthLink Network, Inc.--File No. 333-15781).

       4.4   Agreement and Plan of Merger between Newco, Inc. and EarthLink Network, Inc. dated as of February 10,
             1998 and entered into in connection with the Sprint Transaction (incorporated by reference to Exhibit 4.4
             to the Company's Registration Statement on Form S-4--File No. 333-52507).
</TABLE>

                                       26
<PAGE>
<TABLE>
<CAPTION>
   EXHIBIT                                                  DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
      10.1   1995 Stock Option Plan and forms of Stock Option Agreement and Stock Purchase Agreement (incorporated by
             reference to Exhibit 10.1 to Registration Statement of EarthLink Network, Inc. on form S-1--File No.
             333-15781).

      10.2   Amended and Restated Stock Option Plan for Directors (incorporated by reference to Exhibit 10.2 to the
             Company's Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.3   Lease Line Agreement, dated January 30, 1996, between the Company and Boston Financial & Equity
             Corporation (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-1 of
             EarthLink Network, Inc.--File No. 333-15781).

      10.4   Master Lease Agreement, dated September 1, 1995, between the Company and LINC Capital Management
             (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

      10.5   Netscape Communications Corporation Internet Service Provider Navigator Distribution Agreement dated May
             31, 1996, between the Company and Netscape Communications Corporation (incorporated by reference to
             Exhibit 10.6 to the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

             (a) Amendment No. 1 to Netscape Communications Corporation Internet Service Provider Agreement
                 (incorporated by reference to Exhibit 10.6(a) to the Registration Statement on Form S-1 of EarthLink
                 Network, Inc.--File No. 333-15781).

             (b) Amendment No. 2 to Netscape Communications Corporation Internet Service Provider Agreement
                 incorporated by reference to (Exhibit 10.6(b) to the Registration Statement on Form S-1 of EarthLink
                 Network, Inc.--File No. 333-15781).

      10.6   Network Services Agreement dated May 31, 1996, between the Company and UUNET Technologies, Inc.
             incorporated by reference to (Exhibit 10.7 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

             (a) Addendum No. 1 to Network Services Agreement (incorporated by reference to Exhibit 10.7 (a) to the
                 Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.7   Software Distribution Agreement (MacTCP), dated October 2, 1995, between the Company and Apple Computer,
             Inc. (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

      10.8   Employment Agreement, dated January 15, 1996, between the Company and Charles G. Betty (incorporated by
             reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1--File No. 333-15781).

             (a) Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(a) to the Report on Form
                 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

             (b) First Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9 to the Company's
                 Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

             (c) Second Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(c) to the Report
                 on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)
</TABLE>

                                       27
<PAGE>
<TABLE>
<CAPTION>
   EXHIBIT                                                  DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
             (d) Amended and Restated Employment Agreement (incorporated by reference to Exhibit 10.8(d) to the
                 Company's Registration Statement on Form S-1--File No. 333-53063).

      10.9   Standard Industrial/Commercial Multi-Tenant Lease, dated December 1, 1995, between the Company and Becton
             Dickinson and Company (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form
             S-1 of EarthLink Network, Inc.--File No. 333-15781).

     10.10   Business Loan Agreement, dated June 15, 1995, and Promissory Note in the original principal amount of
             $250,000 between the Company and California United Bank (incorporated by reference to Exhibit 10.13 to
             the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

     10.11   Production and Distribution Agreement, dated May 6, 1996, between the Company and National Media
             Corporation (incorporated by reference to Exhibit 10.16 to the Registration Statement on Form S-1 of
             EarthLink Network, Inc.--File No. 333-15781). (a) Amendment No. 1 to Production and Distribution
             Agreement (incorporated by reference to Exhibit 10.16(a) to the Registration Statement on Form S-1 of
             EarthLink Network, Inc.--File No. 333-15781).

     10.12   Internet Wizard Sign-Up Agreement between the Company and Microsoft Corporation, dated August 16, 1996
             (incorporated by reference to Exhibit 10.19 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

     10.13   Network Access Agreement between the Company and PSINet, Inc., dated July 22, 1996 and Amendment No. 1 to
             Network Access Agreement (incorporated by reference to Exhibit 10.20 to the Registration Statement on
             Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

     10.14   Office Lease by and between The Mutual Life Insurance Company of New York, as Landlord, and the Company,
             as Tenant, dated September 20, 1996 (incorporated by reference to Exhibit 10.21 to the Registration
             Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

     10.15   Standard Office Lease by and between Glen Feliz Properties, as Landlord, and the Company, as Tenant,
             dated July 2, 1996 (incorporated by reference to Exhibit 10.22 to the Registration Statement on Form S-1
             of EarthLink Network, Inc.--File No. 333-15781).

     10.16   Amended and Restated Note Purchase Agreement between the Company and UUNET Technologies, Inc., dated
             October 31, 1996 (incorporated by reference to Exhibit 10.23 to the Company's Registration Statement on
             Form S-1--File No. 333-15781). (a) $5,000,000 Convertible Note (incorporated by reference to Exhibit
             10.23(a) to the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781). (b)
             Addendum to Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit
             10.23(c) to the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

     10.17   Amended and Restated Convertible Securities Vesting Plan (incorporated by reference to Exhibit 10.18 to
             the Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997).

     10.18   Key Employee Compensation Continuation Plan (incorporated by reference to Exhibit 10.19 to the Report on
             Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997). (a) Amendment to Key
             Employee Compensation Continuation Plan (incorporated by reference to Exhibit 10.19(a) to the Report on
             Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997).
</TABLE>


                                      28


<PAGE>
<TABLE>
<CAPTION>
   EXHIBIT                                                  DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
     10.19   Governance Agreement, dated as of February 10, 1998, (incorporated by reference to Exhibit 10.1 to the
             Form 8-K filed by EarthLink Network, Inc. on February 10, 1998).

     10.20   Credit Agreement, dated as of February 10, 1998, with Sprint Corporation as the Lender (incorporated by
             reference to Exhibit 10.3 to the Form 8-K filed by EarthLink Network, Inc. on February 10, 1998).

     10.21   Registration Rights Agreement, dated as of February 10, 1998, with Sprint Corporation, and Sprint
             Communications Company L.P., (incorporated by reference to Exhibit 99.1 to the Form 8-K by EarthLink
             Network, Inc. filed on February 10, 1998).

     10.22   Stockholders Agreement, dated as of February 10, 1998, among EarthLink Network, Inc., Sprint Corporation,
             Sprint Communications Company L.P., and the persons identified on Schedule 1 thereto (incorporated by
             reference to Exhibit 99.2 to the Form 8-K of EarthLink Network, Inc. filed on February 10, 1998).

     10.23   Agreement to Vote Stock, dated as of February 10, 1998, among the Granting Stockholders named on Schedule
             A thereto, Sprint Corporation and Sprint Communications Company L.P. (incorporated by reference to
             Exhibit 99.3 to the Form 8-K filed by EarthLink Network, Inc. on February 10, 1998).

     10.24   Agreement to Vote and Tender Stock, dated as of February 10, 1998, among the Granting Stockholders named
             on Schedule A thereto, Sprint Corporation, and Sprint Communications Company, L.P. (incorporated by
             reference to Exhibit 99.4 to the Form 8-K filed by EarthLink Network, Inc. on February 10, 1998).

     10.25   Marketing and Distribution Agreement, dated as of February 10, 1998, Sprint Corporation, and Sprint
             Communications Company L.P. (incorporated by reference to Exhibit 10.26 of the Company's Registration
             Statement on Form S-4, filed May 13, 1998, File No. 333-52507).

     10.26   Third Amendment to the lease agreement between WHMNY Real Estate Limited Partnership, a Delaware limited
             partnership ("Landlord"), and EarthLink Network, Inc. (incorporated by reference to Exhibit 10.1 to the
             Company's Form 10-Q filed on November 16, 1998.

      22.1   Significant Subsidiaries (incorporated by reference to Exhibit 22.1 to the Company's Registration
             Statement on Form S-1, filed May 19, 1998, File No. 333-53063).

      23.1   Consent of Independent Accountants.

      24.1   Power of Attorney (set forth on the signature page to the Registration Statement).

      27.1   Financial Data Schedule.
</TABLE>

(B) REPORTS ON FORM 8-K.

    On February 10, 1998, the Company filed a Current Report on Form 8-K (the
"Form 8-K"). The Form 8-K reported that, on February 10, 1998 the Company
announced a long-term strategic alliance with Sprint Corporation as more
thoroughly described elsewhere in this report. See "Business--Sprint
Transaction".

    On August 14, 1998 the Company filed a Current Report on Form 8-K describing
the Company's recently completed strategic alliance with Sprint Corporation and
related transactions.

                                       29
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                EARTHLINK NETWORK, INC.

                                /s/ CHARLES G. BETTY
                                ---------------------------------------------
                                Charles G. Betty
                                PRESIDENT, CEO
                                Date: March 30, 1999

    Each person whose signature appears below hereby constitutes and appoints
Charles G. Betty and Grayson L. Hoberg the true and lawful attorneys-in-fact and
agents of the undersigned, with full power of substitution and resubstitution,
for and in the name, place and stead of the undersigned, in any and all
capacities, to sign any and all amendments to this Report, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Commission, and hereby grants to such attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the undersigned
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                       SIGNATURE                                                   TITLE
--------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
                                                          /s/ CHARLES G. BETTY
                                                          --------------------------------------------
Date: March 30, 1999                                      Charles G. Betty, President, Chief Executive Officer and
                                                          Director

                                                          /s/ GRAYSON L. HOBERG
                                                          --------------------------------------------
Date: March 30, 1999                                      Grayson L. Hoberg, Sr. Vice President--
                                                          Finance and Administration and Chief
                                                          Financial Officer

                                                          /s/ RICHARD A. QUIROGA
                                                          --------------------------------------------
Date: March 30, 1999                                      Richard A. Quiroga, Vice President--
                                                          Corporate Controller

                                                          /s/ SKY D. DAYTON
Date: March 30, 1999                                      --------------------------------------------
                                                          Sky D. Dayton, Chairman of the Board

                                                          /s/ SIDNEY AZEEZ
Date: March 30, 1999                                      --------------------------------------------
                                                          Sidney Azeez, Director

                                                          /s/ ROBERT M. KAVNER
Date: March 30, 1999                                      --------------------------------------------
                                                          Robert M. Kavner, Director

                                                          /s/ PAUL MCNULTY
Date: March 30, 1999                                      --------------------------------------------
                                                          Paul McNulty, Director
</TABLE>

                                       30
<PAGE>
<TABLE>
<CAPTION>
                       SIGNATURE                                                   TITLE
--------------------------------------------------------  --------------------------------------------------------
<S>                                                       <C>
                                                          /s/ KEVIN M. O'DONNELL
Date: March 30, 1999                                      --------------------------------------------
                                                          Kevin M. O'Donnell, Director

                                                          /s/ REED E. SLATKIN
Date: March 30, 1999                                      --------------------------------------------
                                                          Reed E. Slatkin, Director

                                                          /s/ LINWOOD A. LACY
Date: March 30, 1999                                      --------------------------------------------
                                                          Linwood A. Lacy, Director

                                                          /s/ WILLIAM T. ESREY
Date: March 30, 1999                                      --------------------------------------------
                                                          William T. Esrey, Director
</TABLE>

                                       31
<PAGE>
                            EARTHLINK NETWORK, INC.
                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
Report of Independent Accountants..........................................................................         F-2

Consolidated Balance Sheet as of December 31, 1997 and 1998................................................         F-3

Consolidated Statement of Operations for the three years ended December 31, 1998...........................         F-4

Consolidated Statement of Stockholders' Equity (Deficit) for the three years ended December 31, 1998.......         F-5

Consolidated Statement of Cash Flows for the three years ended December 31, 1998...........................         F-6

Notes to Consolidated Financial Statements.................................................................         F-7
</TABLE>

                                      F-1
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of EarthLink Network, Inc.

    In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity (deficit) and of
cash flows present fairly, in all material respects, the financial position of
EarthLink Network, Inc. and its subsidiary (the "Company") at December 31, 1997
and 1998, and the results of their operations and their 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

Century City, California
February 16, 1999, except as to Note 14, which is as of
February 24, 1999

                                      F-2
<PAGE>
                            EARTHLINK NETWORK, INC.

                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                         --------------------
                                                                           1997       1998
                                                                         ---------  ---------
                                                                            (IN THOUSANDS)
<S>                                                                      <C>        <C>
                                           ASSETS
Current assets:
  Cash and cash equivalents............................................  $  16,450  $ 140,864
  Restricted short-term investment.....................................      1,250         --
  Accounts receivable, net of allowance of $165,000 and $405,000 at
    December 31, 1997 and 1998, respectively...........................      2,520      4,779
  Prepaid expenses.....................................................      1,109      4,147
  Other assets.........................................................        753        775
                                                                         ---------  ---------
    Total current assets...............................................     22,082    150,565
Other long-term assets.................................................        449        564
Property and equipment, net (Notes 1 and 3)............................     23,398     35,206
Intangibles, net (Note 4)..............................................        958     80,006
                                                                         ---------  ---------
                                                                         $  46,887  $ 266,341
                                                                         ---------  ---------
                                                                         ---------  ---------

                            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable...............................................  $   6,472  $  14,818
  Accrued payroll and related expenses.................................      2,316      8,934
  Other accounts payable and accrued liabilities.......................      3,717     20,372
  Current portion of capital lease obligations (Note 11)...............      7,112      8,341
  Notes payable (Note 5)...............................................      9,387         --
  Deferred revenue.....................................................      3,590      8,831
                                                                         ---------  ---------
    Total current liabilities..........................................     32,594     61,296
Long-term debt (Note 11)...............................................      8,218      7,701
                                                                         ---------  ---------
    Total liabilities..................................................     40,812     68,997

Commitments and contingencies (Note 11)

Stockholders' equity:
  Preferred stock, $0.01 par value, 25,000,000 shares authorized, nil
    and 4,102,941 shares issued and oustanding as Series A convertible
    preferred stock at December 31, 1997 and 1998, respectively (Note
    7).................................................................         --         41
  Common stock, $0.01 par value, 50,000,000 shares authorized,
    22,500,744 and 29,069,827 shares issued and outstanding at December
    31, 1997 and 1998, respectively....................................        225        291
  Stock subscriptions receivable.......................................         --     (1,041)
  Additional paid-in capital...........................................     70,829    330,911
  Warrants to purchase common stock (Note 9)...........................      1,093        597
  Accumulated deficit..................................................    (66,072)  (133,455)
                                                                         ---------  ---------
    Total stockholders' equity.........................................      6,075    197,344
                                                                         ---------  ---------
                                                                         $  46,887  $ 266,341
                                                                         ---------  ---------
                                                                         ---------  ---------
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-3
<PAGE>
                            EARTHLINK NETWORK, INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                                -------------------------------
                                                                  1996       1997       1998
                                                                ---------  ---------  ---------
                                                                (IN THOUSANDS, EXCEPT PER SHARE
                                                                             DATA)
<S>                                                             <C>        <C>        <C>
Revenues:
  Recurring revenues..........................................  $  27,606  $  74,657  $ 164,723
  Other revenues..............................................      5,624      6,231      6,547
  Incremental revenues........................................         --         --      4,671
                                                                ---------  ---------  ---------
    Total revenues............................................     33,230     80,888    175,941

Operating costs and expenses:
  Cost of recurring revenues..................................     17,717     36,716     76,643
  Cost of other revenues......................................      2,066      1,349        685
  Sales and marketing.........................................     17,363     25,971     42,732
  General and administrative..................................     10,534     14,406     21,042
  Operations and member support...............................     15,808     30,900     54,443
  Amortization and transaction expenses (Note 4)..............         --         --     42,635
                                                                ---------  ---------  ---------
    Total operating costs and expenses........................     63,488    109,342    238,180
                                                                ---------  ---------  ---------
Loss from operations..........................................    (30,258)   (28,454)   (62,239)
Interest income...............................................        150        637      4,424
Interest expense..............................................     (1,041)    (2,099)    (1,967)
                                                                ---------  ---------  ---------
      Net loss................................................    (31,149)   (29,916)   (59,782)
Deductions for accretion dividends (Note 8)...................         --         --     (7,601)
                                                                ---------  ---------  ---------
Net loss attributable to common stockholders..................  $ (31,149) $ (29,916) $ (67,383)
                                                                ---------  ---------  ---------
                                                                ---------  ---------  ---------
Basic and diluted net loss per share..........................  $   (2.57) $   (1.50) $   (2.58)
                                                                ---------  ---------  ---------
                                                                ---------  ---------  ---------
Weighted average shares.......................................     12,138     20,002     26,157
                                                                ---------  ---------  ---------
                                                                ---------  ---------  ---------
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-4


<PAGE>
                            EARTHLINK NETWORK, INC.
            CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                 PREFERRED
                                   STOCK       COMMON STOCK       STOCK      ADDITIONAL                              TOTAL
                               --------------  -------------  SUBSCRIPTIONS   PAID-IN    WARRANTS  ACCUMULATED   STOCKHOLDERS'
                               SHARES  AMOUNT  SHARES AMOUNT   RECEIVABLE     CAPITAL     ISSUED     DEFICIT    EQUITY (DEFICIT)
                               ------  ------  ------ ------  -------------  ----------  --------  -----------  ----------------
<S>                            <C>     <C>     <C>    <C>     <C>            <C>         <C>       <C>          <C>
                                                                        (IN THOUSANDS)
Balance at December 31,
  1995........................                 10,114  $101                   $  5,072    $ 124     $  (5,007)      $    290
Issuance of common stock......                 1,846     18                      8,642       --            --          8,660
Issuance of common stock for
  services....................                    85      1                        462       --            --            463
Warrants issued in connection
  with equipment leases and
  other financings (Note 9)...                    --     --                         --      475            --            475
Net loss......................                    --     --                         --       --       (31,149)       (31,149)
                               ------  ------  ------ ------  -------------  ----------  --------  -----------      --------
Balance at December 31,
  1996........................                 12,045   120                     14,176      599       (36,156)       (21,261)
Initial public offering, net
  of expenses.................                 4,570     46                     26,180       --            --         26,226
Conversion of redeemable
  preferred stock into common
  stock.......................                 2,727     27                     13,986       --            --         14,013
Conversion of debt to common
  stock.......................                   112      1                        724       --            --            725
Issuance of common stock in
  connection with private
  placement...................                 2,920     30                     15,379       --            --         15,409
Issuance of common stock
  pursuant to exercise of
  stock options...............                   127      1                        384       --            --            385
Warrants issued in exchange
  for services (Note 9).......                    --     --                         --      494            --            494
Net loss......................                    --     --                         --       --       (29,916)       (29,916)
                               ------  ------  ------ ------  -------------  ----------  --------  -----------      --------
Balance at December 31,
  1997........................                 22,501   225                     70,829    1,093       (66,072)         6,075
Issuance of preferred stock... 4,103    $41       --     --                    134,959       --            --        135,000
Accretion of convertible
  preferred stock.............    --     --                                      7,601       --        (7,601)            --
Follow on offering, net of
  expenses (Note 6)...........    --     --    3,763     38                    106,271                               106,309
Conversion of debt to common
  stock.......................    --     --      783      8                      5,035       --            --          5,043
Notes receivable from stock
  sales.......................                    18             $(1,041)        1,041       --            --             --
Issuance of common stock for
  services....................                    20     --                        130       --            --            130
Issuance of common stock
  pursuant to exercise of
  stock options...............    --     --    1,224     12                      3,647       --            --          3,659
Warrants issued in conjunction
  with marketing agreement....                                                               91                           91
Warrants issued in exchange
  for services................    --     --       --     --                         --       60            --             60
Issuance of common stock
  pursuant to exercise of
  warrants....................                   761      8                      1,398     (647)                         759
Net loss......................    --     --       --     --                         --       --       (59,782)       (59,782)
                               ------  ------  ------ ------  -------------  ----------  --------  -----------      --------
Balance at December 31,
  1998........................ 4,103    $41    29,070  $291      $(1,041)     $330,911    $ 597     $(133,455)      $197,344
                               ------  ------  ------ ------  -------------  ----------  --------  -----------      --------
                               ------  ------  ------ ------  -------------  ----------  --------  -----------      --------
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-5
<PAGE>
                            EARTHLINK NETWORK, INC.

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     YEAR ENDED DECEMBER 31,
                                                                 -------------------------------
                                                                   1996       1997       1998
                                                                 ---------  ---------  ---------
                                                                         (IN THOUSANDS)
<S>                                                              <C>        <C>        <C>
Cash flows from operating activities:
  Net loss.....................................................  $ (31,149) $ (29,916) $ (59,782)
  Adjustments to reconcile net loss to net cash provided by
    (used in) operating activities, net of effect from
    acquisition:
    Depreciation and amortization..............................      4,153      9,377     54,726
    Issuance of common stock in exchange for professional
      services.................................................         50         --        130
    Issuance of common stock in exchange for termination of
      consulting agreement.....................................        413         --         --
    Issuance of warrants in exchange for professional
      services.................................................         --        494         60
    Increase in net accounts receivable........................     (1,507)      (180)    (2,260)
    Increase in prepaid expenses and other assets..............     (2,353)      (413)    (3,176)
    Increase (decrease) in accounts payable and accrued
      liabilities..............................................     12,373     (2,232)    31,658
    Increase in deferred revenue...............................      1,798      1,580      5,241
                                                                 ---------  ---------  ---------
Net cash provided by (used in) operating activities............    (16,222)   (21,290)    26,597
                                                                 ---------  ---------  ---------
Cash flows from investing activities:
  Purchases of property and equipment..........................    (18,774)   (14,528)   (24,316)
  Purchases of intangible assets...............................         --     (1,404)        (9)
  Transaction costs............................................         --         --     (9,914)
  Cash acquired from acquisition...............................         --         --     23,750
  Purchase of restricted short-term investment.................     (1,087)      (200)        --
  Liquidation of restricted short-term investment..............      1,500         37      1,250
                                                                 ---------  ---------  ---------
    Net cash used in investing activities......................    (18,361)   (16,095)    (9,239)
                                                                 ---------  ---------  ---------
Cash flows from financing activities:
  Proceeds from issuance of notes payable......................      7,950      4,387        200
  Repayment of notes payable...................................     (1,494)    (2,225)    (4,583)
  Proceeds from capital lease obligations......................     11,348     10,544      9,275
  Principal payments under capital lease obligations...........     (2,191)    (4,884)    (8,563)
  Proceeds from issuance of mandatorily redeemable preferred
    stock (Note 6).............................................     14,013         --         --
  Proceeds from private placements of common stock.............      8,660     15,409         --
  Proceeds from public stock offerings.........................         --     26,226    106,309
  Proceeds from warrants exercised.............................         --                   759
  Proceeds from stock options exercised........................         --        385      3,659
                                                                 ---------  ---------  ---------
    Net cash provided by financing activities..................     38,286     49,842    107,056
                                                                 ---------  ---------  ---------
Net increase in cash and cash equivalents......................      3,703     12,457    124,414
Cash and cash equivalents, beginning of year...................        290      3,993     16,450
                                                                 ---------  ---------  ---------
Cash and cash equivalents, end of year.........................  $   3,993  $  16,450  $ 140,864
                                                                 ---------  ---------  ---------
                                                                 ---------  ---------  ---------
Acquisition, net of cash acquired (Note 2):
  Issuance of convertible preferred stock......................                        $ 135,000
  Transaction costs............................................                            9,914
  Intangible assets............................................                         (121,164)
                                                                                       ---------
  Cash acquired from acquisition...............................                        $  23,750
                                                                                       ---------
                                                                                       ---------
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements

                                      F-6
<PAGE>
                            EARTHLINK NETWORK, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

    EarthLink Network, Inc. ("EarthLink" or the "Company") is an Internet
service provider that was formed to help members derive meaningful benefits from
the extensive resources of the Internet.

    The Company has experienced operating losses since 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 that it will continue
to incur net losses as it continues to expend substantial resources on sales and
marketing as it attempts to rapidly increase its market share. There can be no
assurance that the Company will achieve or sustain profitability or positive
cash flow from its operations.

BASIS OF CONSOLIDATION

    The consolidated financial statements include the accounts of EarthLink
Network, Inc. and its wholly-owned subsidiary EarthLink Operations, Inc. (Note
2). All intercompany transactions and balances have been eliminated in the
consolidated financial statements.

REVENUES

    Recurring revenues consists of monthly fees charged to members for Internet
access and other ongoing services from monthly Internet service and are
recognized over the period services are provided. Other revenues generally
represent one-time non-refundable set up fees. Incremental revenues are derived
from advertising, content and electronic commerce fees that leverage the value
of the Company's member base and user traffic. Such revenues are recorded as
earned.

CASH AND CASH EQUIVALENTS

    All short-term, highly liquid investments with an original maturity of three
months or less at the date of acquisition are classified as cash equivalents.

ACCOUNTS RECEIVABLE AND DEFERRED REVENUES

    The Company bills for Internet service generally one month in advance.
Accordingly, these non-cancelable advanced billings are included in both
accounts receivable and deferred revenue.

CONCENTRATIONS OF CREDIT RISK

    Financial instruments that potentially subject the Company to concentrations
or credit risk consist principally of cash investments and trade receivables.
The Company's cash investment policies limit investments to short-term,
investment grade instruments. Concentrations of credit risk with respect to
trade receivables are limited due to the large number of members comprising the
Company's member base.

PROPERTY AND EQUIPMENT

    Property and equipment is stated at cost and depreciated using the
straight-line method over the estimated useful life of the assets, which is
generally three years for computers and computer related equipment and five
years for other non-computer furniture and equipment. Leasehold improvements are

                                      F-7
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
amortized using the straight-line method over the shorter of their estimated
lives or the term of the lease, ranging from one to ten years.

EQUIPMENT UNDER CAPITAL LEASE

    The Company leases certain of its data communications and other equipment
under capital lease agreements. The assets and liabilities under capital lease
are recorded at the lesser of the present value of aggregate future minimum
lease payments, including estimated bargain purchase options, or the fair value
of the assets under lease. Assets under capital lease are amortized over the
lesser of their estimated useful lives of three to five years or the term of the
lease.

INTANGIBLES

    Intangible assets consist primarily of rights to customer lists, long-term
marketing agreements, goodwill, deferred financing and other items. The costs
assigned to intangible assets are being amortized on a straight-line basis over
the estimated useful lives of the assets, which range from one to ten years. The
Company regularly reviews the recoverability of intangible assets based on
estimated undiscounted future cash flows from operating activities compared with
the carrying values of the intangibles.

ADVERTISING AND CUSTOMER ACQUISITION COSTS

    Advertising and customer acquisition costs are included in sales and
marketing. Such costs are expensed as incurred. Advertising expenses were $3.2
million, $5.1 million and $8.8 million in 1996, 1997 and 1998, respectively.

INCOME TAXES

    Income taxes are accounted for under the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between the financial reporting basis and tax basis of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

NET LOSS PER SHARE

    The Company adopted Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings per Share" (EPS) and Staff Accounting Bulletin (SAB) No. 98. SAB
No. 98 states that companies, such as EarthLink, that completed an initial
public offering ("IPO") within the past 5 years and incorporated the SAB No. 83
concept of "cheap stock" in determining pre-IPO EPS data must restate all EPS
data to conform to SFAS No. 128. Accordingly, all EPS data have been restated to
conform to SFAS No. 128. SFAS No. 128 requires a dual presentation of basic and
diluted EPS. Basic EPS represents the weighted average number of shares divided
into net income during a reported period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. However, the Company did not
include potential common stock in the calculation of EPS since inception as such
inclusion would have an anti-dilutive effect.

                                      F-8
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

    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. Actual results could differ from those estimates.

COMMON STOCK BASED COMPENSATION

    The Company continues to account for its employee stock based compensation
using the intrinsic value method in accordance with the provisions of Accounting
Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees," and provides pro forma disclosures in the notes to the consolidated
financial statements (Note 9), as if the measurement provisions of SFAS No. 123
had been adopted.

RECLASSIFICATION

    Certain amounts in the prior year financial statements have been
reclassified to conform to current year presentation.

STOCK SPLIT

    In July 1998 the Company effected a two-for-one stock split. The
accompanying consolidated financial statements and related notes have been
retroactively adjusted to give effect to the stock split.

2. STRATEGIC ALLIANCE WITH SPRINT CORPORATION

    On February 10, 1998, EarthLink entered into certain agreements to establish
a broad strategic relationship (the "Strategic Alliance") with Sprint
Corporation ("Sprint") in the area of consumer Internet access and related
services. In connection with the Strategic Alliance, on June 5, 1998, Sprint
consummated a tender offer for 2.5 million shares of the Company's common stock
at a price per share of $22.50 in cash to each tendering stockholder (the
"Offer"). Immediately following the closing of the Offer, Sprint received
approximately 4.1 million shares of the Company's Series A convertible preferred
stock which has been valued at $135 million, in exchange for (i) transfer to the
Company of Sprint's approximately 130,000 Sprint Internet Passport subscribers,
(ii) aggregate cash consideration of approximately $24 million and (iii) the
exclusive right to use certain ports within Sprint's high-speed data network for
four years. EarthLink and Sprint also entered into a Marketing and Distribution
Agreement which includes a commitment by Sprint to deliver a minimum of 150,000
new subscribers per year for five years through its own channels, EarthLink's
right to be Sprint's exclusive provider of consumer Internet access services for
at least ten years and the right to use Sprint's brand and distribution network
for at least ten years. Sprint has also provided EarthLink with a credit
facility of up to $25 million (increasing to $100 million over three years) in
the form of convertible senior debt. Collectively, the above is referenced to as
the "Sprint Transaction".

    In connection with the Sprint Transaction, a newly-formed subsidiary of the
Company was merged with and into the former EarthLink Network, Inc. (the
"Merger"), pursuant to which (i) the former EarthLink became a wholly-owned
subsidiary of the Company and (ii) each outstanding share of former

                                      F-9


<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. STRATEGIC ALLIANCE WITH SPRINT CORPORATION (CONTINUED)
EarthLink common stock was converted into one share of common stock of the
Company. EarthLink Operations, Inc. ("EarthLink Operations"), the corporation
surviving the Merger, is now a wholly-owned subsidiary of the Company. All
references in these financial statements to EarthLink or the Company related,
collectively, to both EarthLink Network, Inc. and EarthLink Operations, Inc.

    The Company accounted for the acquisition of the Sprint Internet Passport
business ("SIP") as a purchase and, accordingly, the results of operations of
SIP for the period from June 5, 1998 are included in the accompanying
consolidated financial statements. Intangible assets acquired in the Sprint
Transaction are valued as follows:

<TABLE>
<CAPTION>
                                                                                (IN THOUSANDS)
                                                                                --------------
<S>                                                                             <C>
Member base...................................................................   $     65,000
Marketing and distribution agreement..........................................         20,000
Goodwill......................................................................         36,164
                                                                                --------------
                                                                                 $    121,164
                                                                                --------------
                                                                                --------------
</TABLE>

    The assets are being amortized on a straight-line basis over the estimated
useful lives as follows: member base amortized over 18 months, the Marketing and
Distribution Agreement amortized over 5 and 10 years, which are the life of the
portion of the contract related to Sprint's provision of additional customers
and the overall contract life relative to the co-branding feature, respectively,
and the excess of consideration over the fair value of net asserts acquired
(goodwill) over 18 months. As such, the member base and goodwill will be fully
amortized by December 31, 1999.

    The following unaudited pro forma consolidated results of operations for the
two years ended December 31 1998, assume the acquisition occurred on January 1,
1997 and 1998, respectivley. These pro forma results have been prepared for
comparative purposes only and do not purport to be indicative of the results of
operations that actually would have resulted had the acquisition occurred on the
date indicated, or which may result in the future.

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER
                                                                 31,
                                                         --------------------
                                                           1997       1998
                                                         ---------  ---------
                                                            (IN THOUSANDS,
                                                           EXCEPT PER SHARE
                                                                DATA)
<S>                                                      <C>        <C>
STATEMENT OF OPERATIONS DATA:
Total revenues.........................................  $  95,377  $ 187,063
Net loss...............................................   (153,935)   (99,348)
Deductions for accretion dividends (Note 8)............    (13,099)   (13,099)
Net loss attributable to common stockholders...........   (167,034)  (112,447)
Basic and diluted net loss per share...................  $   (8.35) $   (4.30)
</TABLE>

                                      F-10
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY AND EQUIPMENT

    Property and equipment consist of:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                          --------------------
                                                            1997       1998
                                                          ---------  ---------
                                                             (IN THOUSANDS)
<S>                                                       <C>        <C>
Data communications equipment...........................  $  17,056  $  29,274
Office and other equipment..............................     12,196     21,863
Leasehold improvements..................................      5,013      8,771
Construction in progress................................      1,901        541
                                                          ---------  ---------
                                                             36,166     60,449
Less accumulated depreciation and amortization..........    (12,768)   (25,243)
                                                          ---------  ---------
                                                          $  23,398  $  35,206
                                                          ---------  ---------
                                                          ---------  ---------
</TABLE>

    Property under capital lease, primarily data communications equipment
included above, aggregated $22.5 million and $31.7 million at December 31, 1997
and 1998, respectively. Included in accumulated depreciation and amortization
are amounts related to property under capital lease of $8.5 million and $15.7
million at December 31, 1997 and 1998, respectively. Depreciation expense
charged to operations was $3.9 million, $8.5 million and $12.5 million in 1996,
1997, and 1998, respectively, and included $2.8 million, $5.6 million and $7.1
million, respectively, pertaining to property under capital lease.

4. INTANGIBLE ASSETS

    Intangible assets consist of:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                          --------------------
                                                            1997       1998
                                                          ---------  ---------
                                                             (IN THOUSANDS)
<S>                                                       <C>        <C>
Member base.............................................  $      --  $  65,000
Marketing and distribution agreement....................         --     20,000
Goodwill................................................         --     36,164
Rights to client lists..................................      1,414         10
Other...................................................        618        245
                                                          ---------  ---------
                                                              2,032    121,419
Less accumulated amortization...........................     (1,074)   (41,413)
                                                          ---------  ---------
                                                          $     958  $  80,006
                                                          ---------  ---------
                                                          ---------  ---------
</TABLE>

5. NOTES PAYABLE

    In June 1996, the Company issued to 17 investors, 10% Promissory Notes
aggregating $2,950,000. Certain of the investors were directors and stockholders
of the Company. As described in Note 9, the Company issued warrants valued at
$116,000 to the note holders. The fair value of the warrants was recorded as
deferred financing costs and amortized as interest expense over the life of the
notes. Upon consummation of the Company's initial public offering on January 22,
1997, the holders of $725,000 of the 10% Promissory Notes converted their
indebtedness into 111,534 shares of Common Stock. In January 1997, the Company
repaid the $2,225,000 balance remaining on the 10% Promissory Notes.

                                      F-11
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. NOTES PAYABLE (CONTINUED)
    On March 31, 1998, the Company's $5.0 million Convertible Note payable to
UUNET Technologies Inc., and related accrued interest, were converted into
783,030 shares of Common Stock at a conversion price of $6.44 per share. The
Company's note payable to PSINet, $4.4 million at December 31, 1997, was also
paid off during 1998.

6. CAPITAL STOCK AND MANDATORILY REDEEMABLE EQUITY SECURITIES

INITIAL PUBLIC OFFERING

    On January 22, 1997 the Company commenced its initial public offering. The
offering consisted of 4,000,000 shares of common stock issued at $6.50 per
share. Net proceeds to the Company were approximately $22.8 million. Upon
consummation of the offering 2,727,273 shares of the Company's Series A
redeemable convertible preferred stock were converted to 2,727,248 shares of
common stock. In February 1997, the Underwriter exercised its over-allotment
option and purchased 569,500 shares at the initial public offering price of
$6.50. Net proceeds to the Company were approximately $3.4 million.

CONVERSION OF MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

    On September 10, 1996, the Company issued 2,727,273 shares of its Series A
redeemable convertible preferred stock to investors including among others,
certain directors, stockholders and the Underwriter associated with the
Company's initial public offering and certain of its associates for $15 million.
Stock issuance costs of $987,000 have been charged to redeemable convertible
preferred stock. Each two shares of the Series A redeemable convertible
preferred stock was automatically converted into one share of common stock upon
consummation of the initial public offering of the Company's common stock on
January 22, 1997.

COMMON STOCK

    On September 19, 1997, the Company closed a private placement of 2,919,518
shares of its unregistered restricted common stock. Net proceeds from the
offering were approximately $15.4 million.

FOLLOW ON PUBLIC OFFERING

    In June 1998 the Company completed a follow on public offering of 3.8
million shares of its common stock at $30 per share. The offering consisted of
3.0 million shares, including 490,000 shares sold to Sprint in accordance with
its preemptive rights under the Sprint Alliance, and an underwriter's
over-allotment of 720,000 shares. Net proceeds to the Company were approximately
$106.3 million.

COMMON STOCK ISSUANCES FOR OTHER THAN CASH

    In May 1996, the Company issued 10,244 shares of common stock at $4.88 per
share, to a sub-contractor in lieu of cash for services provided to the Company.
In September 1996, the Company issued 75,000 shares of common stock at $5.50 per
share as consideration for the termination of a consulting agreement.

    In January 1998, the Company issued 20,000 shares of its common stock to a
Consultant in lieu of cash for services provided pursuant to a consulting
agreement. The fair value of the shares was recorded as prepaid professional
services and amortized ratably over the term of the contract. Under this
agreement the Company issued 20,000 additional shares of its common stock in
January 1999.

                                      F-12
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. CONVERTIBLE PREFERRED STOCK

    All issued and outstanding shares of Series A convertible preferred stock
are held by Sprint (Note 2).

    The Series A convertible preferred stockholders receive dividends at a rate
per annum of 3% of the Liquidation Value (as defined below), compounded
quarterly. For a period of five years from June 1998, such dividends are payable
"in kind" by way of an increase in the Liquidation Value of the shares.
Beginning in June 2003, holders of Series A convertible preferred stock will
receive cumulative quarterly cash dividends of 3% annually. Beginning in June
2018, holders of the Series A convertible preferred stock are entitled to
cumulative quarterly cash dividends of 8% of the Liquidation Value per share,
increasing annually to a maximum rate of 12%.

    The holders of Series A convertible preferred stock will receive, prior to
any payment or distribution in respect of other shares of the Company's capital
stock, an amount per share equal to the average market value of the common stock
measured over the thirty day period ended June 5, 1998 (the "Average Stock
Price"), plus all accrued and unpaid dividends on such share, whether in cash or
in kind (such amount, the "Liquidation Value").

    Beginning in June 1999, each share of Series A convertible preferred stock
is convertible into such number of shares of common stock as is determined by
dividing the Liquidation Value by the "Conversion Price" in effect at such time.
For the five year period following June 1998, the Conversion Price is equal to
the Average Stock Price multiplied by 116.118%. Thereafter, the Conversion Price
is increased annually by 6%, accruable quarterly. The Conversion Price is also
subject to adjustment based on changes in capitalization of the common stock.
Although conversion of the Series A convertible preferred stock is at the
holder's option, conversion is required in the event the Company consummates
certain business combination transactions.

    Beginning in June 2001, the Company may elect to redeem the outstanding
shares of Series A convertible preferred stock at a redemption price per share
equal to the Liquidation Value of such shares, including the acceleration of
certain dividends, multiplied by a specified percentage. The specified
percentage is initially equal to 103%, and will be reduced by 1% annually in
each of the subsequent three years, and thereafter will be equal to 100%.

    The Series A convertible preferred stockholders do not possess general
voting rights together with holders of common stock. However, the Series A
convertible preferred stockholders are separately entitled to elect two of the
Company's directors. This right terminates as to one of the directors if Sprint
fails to maintain at least a 20% equity interest in EarthLink (on a fully
diluted basis, subject to adjustment) for any three consecutive months, and will
terminate as to both of the directors if Sprint fails to maintain at least a 10%
equity interest over the same period. A separate vote of 66.67% of the
then-outstanding shares of Series A convertible preferred stock is required in
certain limited situations, including liquidation, dissolution or winding up of
the Company, or taking certain actions which would adversely affect the rights
of the holders of the Series A convertible preferred stock as a class.

8. DEDUCTIONS FOR DIVIDENDS ON CONVERTIBLE PREFERRED STOCK

    Dividends on convertible preferred stock are reflected as an increase to net
loss attributable to common stockholders. This adjustment reflects the
liquidation dividend of $4.3 million based on a 3% dividend (Note 7) and the
accretion of a $3.3 million dividend related to the beneficial conversion
feature of the Series A convertible preferred stock in accordance with EITF
Topic No. D-60 based upon the rate at which the preferred stock becomes
convertible.

                                      F-13
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTIONS AND WARRANTS

1995 STOCK OPTION PLAN

    In September 1995, the Company established the EarthLink Network 1995 Stock
Option Plan (the "1995 Plan"). The 1995 Plan provides for the grant of incentive
stock options to purchase shares of common stock to employees of the Company and
non-qualified stock options to employees, officers, directors and consultants of
the Company. During 1998, the Plan was amended to increase the number of
available options from 2,500,000 to 5,700,000. The Plan is administered by a
committee appointed by the Board of Directors which determines the terms of the
options granted, including the exercise price, the number of shares subject to
option, and the option vesting period. The exercise price of all options granted
under the plan must be at least 100% of the fair market value on the date of
grant. Options generally have a maximum term of ten years and vest in equal
quarterly increments over a five year period. As of December 31, 1998, there
were 1,493,176 shares available for issuance under the 1995 Plan.

DIRECTORS STOCK OPTION PLAN

    In September 1995, the Company established the EarthLink Directors Stock
Option Plan (the "Directors Plan"). The Directors Plan, as amended and restated
in December 1996, provides for the grant of options to purchase an aggregate of
125,000 shares of common stock to directors who do not also serve as employees
of the Company and do not beneficially own, nor are employees, directors or
officers of any entity which owns 5% or more of the outstanding shares of the
Company's capital stock. Under the Directors Plan, grants of options to purchase
20,000 and 5,000 shares of common stock are automatically made to each
non-management director at such time as the person first becomes a member of the
Board of Directors and at the beginning of each fiscal year, respectively.
Options generally have a maximum term of ten years and vest in equal quarterly
increments over a five year period. As of December 31, 1998, there were no
outstanding options to purchase shares of common stock under the Directors Plan.

NON-QUALIFIED OPTION GRANTS

    In addition to the options granted under the plans described above, the
Company granted non-qualified stock options to certain employees, officers and
directors. Non-qualified options generally have a maximum term of ten years and
generally vest in equal quarterly increments over a five-year period.

VALUE OF OPTIONS GRANTED TO EMPLOYEES

    For disclosure purposes, the fair value of all stock options granted is
estimated using the Black-Scholes option-pricing model with the following
weighted average assumptions used for stock options granted:

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER
                                                              31,
                                                      --------------------
                                                        1997       1998
                                                      ---------  ---------
<S>                                                   <C>        <C>
Annual dividends....................................       zero       zero
Expected volatility.................................        69%        83%
Risk free interest rate.............................      6.49%      5.28%
Expected life.......................................  6.6 years  6.6 years
</TABLE>

                                      F-14


<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTIONS AND WARRANTS (CONTINUED)
    For 1996, the fair value of each option grant is estimated on the date of
grant using the minimum value method with the following assumptions used for
grants during both periods: dividend yield of 0.0%, risk free interest rate of
5.83% and expected option term of 10 years.

    Had compensation cost been determined on the basis of fair value pursuant to
SFAS No. 123, net loss and net loss per share would have been increased as
follows:

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                             -------------------------------
                                               1996       1997       1998
                                             ---------  ---------  ---------
                                             (IN THOUSANDS, EXCEPT PER SHARE
                                                          DATA)
<S>                                          <C>        <C>        <C>
Net loss attributable to common
  stockholders
  As reported..............................  $  31,149  $  29,916  $  67,383
                                             ---------  ---------  ---------
                                             ---------  ---------  ---------
  Pro forma................................  $  31,477  $  30,737  $ 104,577
                                             ---------  ---------  ---------
                                             ---------  ---------  ---------
Basic and diluted net loss per share
  As reported..............................  $    2.57  $    1.50  $    2.58
                                             ---------  ---------  ---------
                                             ---------  ---------  ---------
  Pro forma................................  $    2.60  $    1.54  $    4.00
                                             ---------  ---------  ---------
                                             ---------  ---------  ---------
</TABLE>

WARRANTS

    The Company has issued to certain Board members, consultants, lessors,
creditors and others warrants to purchase shares of the Company's common stock.

    In January 1996, certain stockholders guaranteed a $1.5 million lease for
networking equipment. The Company issued warrants to purchase 200,000 shares of
common stock at $2.42 per share. The fair value of the warrants has been
included in intangible assets. These warrants expire January 11, 2001.

    In January 1996, the Company issued warrants to purchase 200,000 shares of
common stock at $2.42 to Board members. The warrants vest quarterly over five
years. As these warrants were issued for service on the Board of Directors they
are accounted for under APB No. 25 and as such are included in the summary of
non-qualified options and are not included in the summary of warrant grants.

    In January 1996, LINC Capital Partners, Inc. ("LINC") provided a $1.5
million lease line for equipment. The Company issued warrants to LINC to
purchase 100,000 shares of common stock at $2.42 per share. The fair value of
the warrants has been included in intangible assets. These warrants expire
January 18, 2006.

    In February 1996, Boston Financial & Equity Corporation ("Boston Financial")
provided a $700,000 lease line for equipment. The Company issued warrants to
Boston Financial to purchase 10,000 shares of common stock at $4.88 per share.
The fair value of the warrants has been included in intangible assets. These
warrants expire February 15, 2006.

    In May 1996, the Company issued warrants to purchase 90,954 shares of common
stock at $4.88 per share to various lessors in return for lease lines and other
services to the Company. The fair value of the warrants has been included in
intangible assets. The warrants expire on May 10, 2006.

                                      F-15
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTIONS AND WARRANTS (CONTINUED)
    In May 1996, in connection with the amendment and restatement of the UUNET
Agreement, the Company agreed to issue warrants to purchase 20,000 shares of
common stock at an exercise price of $10.00 per share. The fair value of the
warrants has been included in intangible assets.

    In connection with the issuance of 10% Promissory Notes aggregating
$2,950,000, the Company issued to the lenders warrants to purchase an aggregate
of 196,680 shares of common stock at an exercise price of $5.50 per share, as
adjusted. The fair value of the warrants has been included in intangible assets.

    In connection with the execution of the PSINet, Inc. ("PSINet") agreement in
July 1996 (Note 11), the Company issued warrants to purchase 200,000 shares of
Common Stock at an exercise price of $10.00 per share. The fair value of the
warrants has been included in intangible assets.

    In connection with the private placement of Series A redeemable convertible
preferred stock, described in Note 6, the Company granted to certain purchasers
of the convertible preferred stock warrants to purchase 200,000 shares of common
stock at $5.50 per share.

WARRANTS ISSUED FOR SERVICES

    In May 1996, the Company entered into an agreement with NMC, a producer of
infomercials and commercials, pursuant to which NMC agreed to produce and
broadcast commercials for EarthLink's services in exchange for warrants. Upon
completion of the infomercial in April 1997, the Company issued warrants to NMC
to purchase 100,000 shares of common stock, having an exercise price of $4.88
per share. In September 1997, the parties orally agreed to rescind the
agreement. The rescission agreement included the return of the 100,000 warrants
and the cancellation of any future obligations of either party. However, the
rescission agreement was never executed and thus may be considered
non-operative. The fair value of the warrants, $76,000, has been recorded as
prepaid advertising and will be expensed upon airing of the infomercials.

    In January 1997 and October 1997, the Company issued warrants to purchase
12,000 and 50,000 shares, respectively, of the Company's common stock to certain
consultants. The respective exercise prices of the warrants were $6.50 and
$8.88. The fair value of the warrants is reflected as prepaid consulting fees
and amortized ratably over the life of the consulting agreement. Consulting
expense recorded with respect to warrants issued to consultants was $23,340
during 1997.

    In September 1996, the Company issued warrants to purchase 15,000 shares of
the Company's common stock at $5.50 per share to each of the three members of
the Company's Technology Advisory Council. The warrants vest quarterly over two
years. The fair value of the warrants is reflected as deferred professional
services expense and amortized ratably over the member's two year term of
service in the Technology Advisory Council.

    In March 1997 and October 1997, the Company issued warrants to purchase
15,000 shares of the Company's c common stock to each of two new members of the
Company's Technology Advisory Council. The warrants have an exercise price of
$5.25 per share and $8.88 per share, respectively, and vest quarterly over two
years. The fair value of the warrants is reflected as deferred professional
services expense and amortized ratably over the member's two year term of
service in the Technology Advisory Council.

                                      F-16
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. STOCK OPTIONS AND WARRANTS (CONTINUED)
    Following is a summary of stock option and warrant activity during the three
years ended December 31, 1998:

<TABLE>
<CAPTION>
                                              NUMBER OF SHARES OF COMMON STOCK
                                            -------------------------------------   WEIGHTED
                                            INCENTIVE   NON-QUALIFIED                AVERAGE
                                              STOCK         STOCK                   EXERCISE
                                             OPTIONS       OPTIONS      WARRANTS      PRICE
                                            ----------  -------------  ----------  -----------
<S>                                         <C>         <C>            <C>         <C>
Balance at December 31, 1995..............     465,000       729,582      520,660   $    1.50
Granted...................................   1,612,500       350,000    1,182,634   $    4.58
Forfeited.................................     (21,000)           --           --   $    4.88
                                            ----------  -------------  ----------  -----------
Balance at December 31, 1996..............   2,056,500     1,079,582    1,703,294   $    3.45
Granted...................................     691,250       100,000       92,000   $    6.92
Exercised.................................     (97,914)      (29,582)          --   $    2.82
Forfeited.................................    (422,614)           --           --   $    4.51
                                            ----------  -------------  ----------  -----------
Balance at December 31, 1997..............   2,227,222     1,150,000    1,795,294   $    4.01
Granted...................................   1,817,400            --        7,306   $   26.35
Exercised.................................    (774,720)     (494,034)    (712,392)  $    2.82
Forfeited.................................     (85,712)           --           --   $   14.79
Surrendered in cashless exercise..........          --        (7,966)    (148,776)  $    8.77
                                            ----------  -------------  ----------  -----------
Balance at December 31, 1998..............   3,184,190       648,000      941,432   $   12.14
                                            ----------  -------------  ----------  -----------
                                            ----------  -------------  ----------  -----------
Exercisable at December 31, 1996..........     168,312       194,584    1,538,294
                                            ----------  -------------  ----------
                                            ----------  -------------  ----------
Exercisable at December 31, 1997..........     598,710       417,500    1,673,840
                                            ----------  -------------  ----------
                                            ----------  -------------  ----------
Exercisable at December 31, 1998..........     583,497       145,500      874,257
                                            ----------  -------------  ----------
                                            ----------  -------------  ----------
</TABLE>

    The weighted average fair values of the options granted during the three
years ended December 31, 1998, were $1.01, $4.98 and $20.47, respectively. The
weighted average fair values of warrants granted during the three years ended
December 31, 1998 were $0.86, $6.46 and $22.56, respectively.

    Following is a summary of stock options and warrants outstanding as of
December 31, 1998:

<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                      ---------------------------------------  ----------------------
                                     WEIGHTED
                                      AVERAGE      WEIGHTED                WEIGHTED
                                     REMAINING      AVERAGE                 AVERAGE
      RANGE OF          NUMBER      CONTRACTUAL    EXERCISE     NUMBER     EXERCISE
  EXERCISE PRICES     OUTSTANDING      LIFE          PRICE     EXERCISABLE    PRICE
--------------------  -----------  -------------  -----------  ---------  -----------
<S>        <C>        <C>          <C>            <C>          <C>        <C>
$    0.91  $    0.91     615,000          6.23     $    0.91     435,000   $    0.91
$    2.42  $    2.42     964,910          6.97     $    2.42     454,410   $    2.42
$    4.88  $    5.75   1,004,128          7.67     $    5.24     373,865   $    5.23
$    6.50  $   16.06   1,080,734          8.85     $   12.29     135,699   $   11.99
$   22.38  $   39.19   1,108,850          9.56     $   32.94     204,280   $   23.84
                      -----------                              ---------
$    0.91  $   39.19   4,773,622          8.05     $   12.14   1,603,254   $    6.21
                      -----------                              ---------
                      -----------                              ---------
</TABLE>

                                      F-17
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. INCOME TAXES

    At December 31, 1997 and 1998, the Company had net operating loss
carryforwards for federal income tax purposes totaling approximately $61.0
million, and $106.8 million, respectively, which begin to expire in 2010. At
December 31, 1997 and 1998, the Company had net operating loss carryforwards for
California income tax purposes totaling approximately $48.0 million and $70.0
million, respectively, which begin to expire in 2001. The Internal Revenue Code
of 1986, as amended, includes provisions which may limit the net operating loss
carryforwards available for use in any given year if certain events occur,
including significant changes in ownership. Due to the Company's initial public
offering and other issuances of common stock and common stock equivalents,
utilization of the Company's net operating loss carryforwards to offset future
income may be limited. The net operating loss includes $24.0 million related to
the exercise of employee stock options. Any benefit resulting from the
utilization of this portion of the net operating loss will be credited directly
to equity.

    Deferred tax assets and liabilities include the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                          --------------------
                                                            1997       1998
                                                          ---------  ---------
                                                             (IN THOUSANDS)
<S>                                                       <C>        <C>
Gross deferred tax liabilities:
  Member base...........................................  $      --  $ (17,414)
  Other.................................................         --       (819)
                                                          ---------  ---------
                                                                 --    (18,233)
                                                          ---------  ---------
Gross deferred tax assets:
  Net operating loss carryforwards......................     24,584     42,625
  Other.................................................        642        948
                                                          ---------  ---------
                                                             25,226     43,573
                                                          ---------  ---------
Valuation allowance.....................................    (25,226)   (25,340)
                                                          ---------  ---------
                                                          $      --  $      --
                                                          ---------  ---------
                                                          ---------  ---------
</TABLE>

    Because management believes sufficient uncertainty exists regarding
realizability, a full valuation allowance has been established.

    The following table summarizes the significant differences between the U.S.
Federal statutory tax rate and the Company's effective tax rate for financial
statement purposes:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                          --------------------
                                                            1997       1998
                                                          ---------  ---------
                                                             (IN THOUSANDS)
<S>                                                       <C>        <C>
Federal income tax (benefit) at statutory rate..........  $ (10,171) $ (20,923)
Nondeductible goodwill..................................         --      4,922
Nondeductible expenses..................................         --         54
Net valuation allowance.................................     10,171     15,947
                                                          ---------  ---------
                                                          $      --  $      --
                                                          ---------  ---------
                                                          ---------  ---------
</TABLE>

                                      F-18
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES

LEASES

    The Company leases its facilities and certain equipment under non-cancelable
operating leases expiring in various years through 2008. Total rent expense in
1996, 1997 and 1998 for all operating leases amounted to $914,000, $1.9 million
and $2.4 million, respectively. The Company also leases equipment, primarily
data communications equipment, under non-cancelable capital leases. Most of the
Company's capital leases include purchase options at the end of the lease term.

    During the three years ended December 31, 1998, the Company financed the
acquisition of data processing and office equipment amounting to approximately
$11.3 million, $10.5 million and $9.3 million, respectively, by entering into a
number of leases and agreements for the sale and leaseback of equipment. The
sale leaseback transactions are recorded at cost, which approximates the fair
market value of the property and, therefore, no gains or losses have been
recorded. The property remains on the books and continues to be depreciated. A
financing obligation representing the proceeds is recorded and reduced based
upon payments under the lease agreement.

    The Company's corporate headquarters and call center are located in a 93,000
square-foot facility in Pasadena, California. Base rent is currently $73,000 per
month. The Company has an option to extend this lease for an additional five
years at the then-prevailing market rate following its expiration in September
2007. The data center and primary data hub are housed in a 110,000 square foot
facility adjacent to the headquarters with rent of $92,000 per month, subject to
yearly increases. The lease for this space expires February 2007, with an option
to extend for an additional ten year term.

    Minimum lease commitments under non-cancelable leases at December 31, 1998
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING                                                                CAPITAL    OPERATING
DECEMBER 31,                                                               LEASES      LEASES
------------------------------------------------------------------------  ---------  -----------
<S>                                                                       <C>        <C>
                                                                              (IN THOUSANDS)
1999....................................................................  $  10,048   $   2,606
2000....................................................................      7,109       2,967
2001....................................................................      2,287       2,740
2002....................................................................        183       2,865
2003....................................................................         38       2,881
Thereafter..............................................................          8      10,312
                                                                          ---------  -----------
Total minimum lease payments............................................     19,673   $  24,371
                                                                                     -----------
                                                                                     -----------
Less amount representing interest.......................................     (3,631)
                                                                          ---------
Present value of future lease payments..................................     16,042
Less current portion....................................................     (8,341)
                                                                          ---------
                                                                          $   7,701
                                                                          ---------
                                                                          ---------
</TABLE>

SIGNIFICANT AGREEMENTS

    Access to the Internet for members outside of the Company's California
regional base is provided through points of presence ("POP") capacity leased
from UUNET and PSINet. EarthLink is, in effect, buying this capacity in bulk at
a discount, and providing access to EarthLink's member base at EarthLink's
normal rates. At December 31, 1998, $4.0 million and $4.1 million in amounts due
to UUNET were

                                      F-19


<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
recorded in accounts payable and other accrued liabilities, respectively, and
$4.7 million in amounts due PSINet were recorded in other accrued liabilities.

    Minimum commitments under non-cancelable network service agreements from
UUNET and PSINet are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,                                                                        IN MILLIONS
----------------------------------------------------------------------------------  -----------
<S>                                                                                 <C>
1999..............................................................................   $    36.0
2000..............................................................................        40.8
2001..............................................................................        43.0
2002..............................................................................        47.0
                                                                                    -----------
Total.............................................................................   $   166.8
                                                                                    -----------
                                                                                    -----------
</TABLE>

    EarthLink licensed Netscape Communicator software ("Netscape Communicator")
from Netscape Communications Corporation, and Microsoft Internet Explorer
software ("Internet Explorer") from Microsoft Corporation. These licenses permit
the Company to distribute Netscape Communicator and Internet Explorer in the
EarthLink Network TotalAccess software package. Management believes that
contract renewal for this browser software under conditions acceptable to
EarthLink, is probable.

12. PROFIT SHARING PLAN

    Effective January 1997, the Company implemented a profit sharing plan (the
Plan) pursuant to Section 401(k) of the Internal Revenue code, whereby
participants may contribute a percentage of compensation, but not in excess of
the maximum allowed under the Code. The Company makes a discretionary matching
contribution of 25% up to a maximum of 6% of the participant's total eligible
compensation. The Company's matching contributions vest over four years from the
participant's date of hire. Total contributions for 1997 and 1998 were $84,000
and $285,000, respectively.

13. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                      -------------------------------
                                                        1996       1997       1998
                                                      ---------  ---------  ---------
                                                              (IN THOUSANDS)
<S>                                                   <C>        <C>        <C>
Cash paid during the year for interest..............  $   1,041  $   1,965  $   2,101
Cash paid during the year for income taxes..........          1          1          1
Non cash transactions related to the conversion of
  notes payable to equity...........................         --        725      5,043
Common stock subscription...........................         --         --      1,041
Non cash adjustments related to accretion dividends
  of Series A convertible preferred stock...........         --         --      7,601
</TABLE>

14. SUBSEQUENT EVENTS

    In January 1999 the Company completed a follow on public offering of 2.4
million shares of its common stock at $73.63 per share. The offering consisted
of 2.3 million shares and an underwriter's

                                      F-20
<PAGE>
                            EARTHLINK NETWORK, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. SUBSEQUENT EVENTS (CONTINUED)
over-allotment of 99,000 shares exercised in February 1999. Net proceeds to the
Company were approximately $170 million. In conjunction with the offering,
Sprint exercised its preemptive rights to maintain its existing ownership level
in the Company. Accordingly, Sprint purchased 770,000 shares of which 192,000
were common stock and 578,000 were Series B convertible preferred stock. Series
B convertible preferred stock has the same rights and privileges as Series A
convertible preferred stock, as described in Note 7, except that each Series B
share is convertible into only one share of the Company's common stock. Proceeds
from the sale of shares to Sprint were $54.1 million.

    In February 1999, Sprint exercised its preemptive rights to maintain its
ownership in the Company after the exercise of the underwriter's over-allotment
granted in connection with the aforementioned follow on public offering.
Accordingly, Sprint purchased 38,000 shares of which 9,000 were common stock and
29,000 were Series B convertible preferred stock. Proceeds from the sale of
stock to Sprint were $2.7 million.

                                      F-21
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 EXHIBIT                                                    DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>

       2.1   Investment Agreement dated as of February 10, 1998, with Sprint Corporation and Sprint Communications
             Company L.P. (incorporated by reference to Exhibit 2.1 to the Form 8-K filed by EarthLink Network, Inc.
             on February 10, 1998).

       3.1   Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Registration
             Statement on Form S-4--File No. 333-52507).

       3.2   Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form
             S-4--File No. 333-52507).

       3.3   Form of Certificate of Designation, Preferences and Rights of the Company's Series A Convertible
             Preferred Stock. (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by EarthLink Network,
             Inc. on February 10, 1998).

       3.4   Certificate of Designation, Preferences and Rights of the Company's Series B Convertible Preferred Stock
             and amendment thereto.

       4.1   See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of the Certificate of Incorporation, Bylaws and
             Certificates of Designation, Preference and Rights of Series A and B Convertible Preferred Stock.

       4.2   Specimen Stock Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on
             Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

       4.3   Form of Warrant Agreement (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form
             S-1 of EarthLink Network, Inc.--File No. 333-15781).

       4.4   Agreement and Plan of Merger between Newco, Inc. and EarthLink Network, Inc. dated as of February 10,
             1998 and entered into in connection with the Sprint Transaction (incorporated by reference to Exhibit 4.4
             to the Company's Registration Statement on Form S-4--File No. 333-52507).

      10.1   1995 Stock Option Plan and forms of Stock Option Agreement and Stock Purchase Agreement (incorporated by
             reference to Exhibit 10.1 to Registration Statement of EarthLink Network, Inc. on form S-1--File No.
             333-15781).

      10.2   Amended and Restated Stock Option Plan for Directors (incorporated by reference to Exhibit 10.2 to the
             Company's Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.3   Lease Line Agreement, dated January 30, 1996, between the Company and Boston Financial & Equity
             Corporation (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-1 of
             EarthLink Network, Inc.--File No. 333-15781).

      10.4   Master Lease Agreement, dated September 1, 1995, between the Company and LINC Capital Management
             (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

      10.5   Netscape Communications Corporation Internet Service Provider Navigator Distribution Agreement dated May
             31, 1996, between the Company and Netscape Communications Corporation (incorporated by reference to
             Exhibit 10.6 to the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).
</TABLE>

                                      E-1
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT                                                    DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
             (c) Amendment No. 1 to Netscape Communications Corporation Internet Service Provider Agreement
                 (incorporated by reference to Exhibit 10.6(a) to the Registration Statement on Form S-1 of EarthLink
                 Network, Inc.--File No. 333-15781).

             (d) Amendment No. 2 to Netscape Communications Corporation Internet Service Provider Agreement
                 incorporated by reference to (Exhibit 10.6(b) to the Registration Statement on Form S-1 of EarthLink
                 Network, Inc.--File No. 333-15781).

      10.6   Network Services Agreement dated May 31, 1996, between the Company and UUNET Technologies, Inc.
             incorporated by reference to (Exhibit 10.7 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

             (a)  Addendum No. 1 to Network Services Agreement (incorporated by reference to Exhibit 10.7 (a) to the
                  Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.7   Software Distribution Agreement (MacTCP), dated October 2, 1995, between the Company and Apple Computer,
             Inc. (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

      10.8   Employment Agreement, dated January 15, 1996, between the Company and Charles G. Betty (incorporated by
             reference to Exhibit 10.9 to the Company's Registration Statement on Form S-1--File No. 333-15781).

             (e) Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(a) to the Report on Form
                 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

             (f) First Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9 to the Company's
                 Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

             (g) Second Amendment to Employment Agreement (incorporated by reference to Exhibit 10.9(c) to the Report
                 on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997)

             (h) Amended and Restated Employment Agreement (incorporated by reference to Exhibit 10.8(d) to the
                 Company's Registration Statement on Form S-1--File No. 333-53063).

      10.9   Standard Industrial/Commercial Multi-Tenant Lease, dated December 1, 1995, between the Company and Becton
             Dickinson and Company (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form
             S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.10  Business Loan Agreement, dated June 15, 1995, and Promissory Note in the original principal amount of
             $250,000 between the Company and California United Bank (incorporated by reference to Exhibit 10.13 to
             the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.11  Production and Distribution Agreement, dated May 6, 1996, between the Company and National Media
             Corporation (incorporated by reference to Exhibit 10.16 to the Registration Statement on Form S-1 of
             EarthLink Network, Inc.--File No. 333-15781). (a) Amendment No. 1 to Production and Distribution
             Agreement (incorporated by reference to Exhibit 10.16(a) to the Registration Statement on Form S-1 of
             EarthLink Network, Inc.--File No. 333-15781).
</TABLE>

                                      E-2
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT                                                    DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
      10.12  Internet Wizard Sign-Up Agreement between the Company and Microsoft Corporation, dated August 16, 1996
             (incorporated by reference to Exhibit 10.19 to the Registration Statement on Form S-1 of EarthLink
             Network, Inc.--File No. 333-15781).

      10.13  Network Access Agreement between the Company and PSINet, Inc., dated July 22, 1996 and Amendment No. 1 to
             Network Access Agreement (incorporated by reference to Exhibit 10.20 to the Registration Statement on
             Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.14  Office Lease by and between The Mutual Life Insurance Company of New York, as Landlord, and the Company,
             as Tenant, dated September 20, 1996 (incorporated by reference to Exhibit 10.21 to the Registration
             Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.15  Standard Office Lease by and between Glen Feliz Properties, as Landlord, and the Company, as Tenant,
             dated July 2, 1996 (incorporated by reference to Exhibit 10.22 to the Registration Statement on Form S-1
             of EarthLink Network, Inc.--File No. 333-15781).

      10.16  Amended and Restated Note Purchase Agreement between the Company and UUNET Technologies, Inc., dated
             October 31, 1996 (incorporated by reference to Exhibit 10.23 to the Company's Registration Statement on
             Form S-1--File No. 333-15781). (a) $5,000,000 Convertible Note (incorporated by reference to Exhibit
             10.23(a) to the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781). (b)
             Addendum to Amended and Restated Registration Rights Agreement (incorporated by reference to Exhibit
             10.23(c) to the Registration Statement on Form S-1 of EarthLink Network, Inc.--File No. 333-15781).

      10.17  Amended and Restated Convertible Securities Vesting Plan (incorporated by reference to Exhibit 10.18 to
             the Report on Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997).

      10.18  Key Employee Compensation Continuation Plan (incorporated by reference to Exhibit 10.19 to the Report on
             Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997). (a) Amendment to Key
             Employee Compensation Continuation Plan (incorporated by reference to Exhibit 10.19(a) to the Report on
             Form 10-K of EarthLink Network, Inc. for the fiscal year ended December 31, 1997).

      10.19  Governance Agreement, dated as of February 10, 1998, (incorporated by reference to Exhibit 10.1 to the
             Form 8-K filed by EarthLink Network, Inc. on February 10, 1998).

      10.20  Credit Agreement, dated as of February 10, 1998, with Sprint Corporation, a Kansas corporation, as Lender
             (incorporated by reference to Exhibit 10.3 to the Form 8-K filed by EarthLink Network, Inc. on February
             10, 1998).

      10.21  Registration Rights Agreement, dated as of February 10, 1998, with Sprint Corporation, and Sprint
             Communications Company L.P., (incorporated by reference to Exhibit 99.1 to the Form 8-K by EarthLink
             Network, Inc. filed on February 10, 1998).

      10.22  Stockholders Agreement, dated as of February 10, 1998, among EarthLink Network, Inc., Sprint Corporation,
             Sprint Communications Company L.P., and the persons identified on Schedule 1 thereto (incorporated by
             reference to Exhibit 99.2 to the Form 8-K of EarthLink Network, Inc. filed on February 10, 1998).

      10.23  Agreement to Vote Stock, dated as of February 10, 1998, among the Granting Stockholders named on Schedule
             A thereto, Sprint Corporation, a Kansas corporation and Sprint Communications Company L.P., a Delaware
             limited partnership (incorporated by reference to Exhibit 99.3 to the Form 8-K filed by EarthLink
             Network, Inc. on February 10, 1998).
</TABLE>

                                      E-3
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT                                                    DESCRIPTION
-----------  ---------------------------------------------------------------------------------------------------------
<C>          <S>
      10.24  Agreement to Vote and Tender Stock, dated as of February 10, 1998, among the Granting Stockholders named
             on Schedule A thereto, Sprint Corporation, and Sprint Communications Company, L.P., (incorporated by
             reference to Exhibit 99.4 to the Form 8-K filed by EarthLink Network, Inc. on February 10, 1998).

      10.25  Marketing and Distribution Agreement, dated as of February 10, 1998, Sprint Corporation, and Sprint
             Communications Company L.P., (incorporated by reference to Exhibit 10.26 of the Company's Registration
             Statement on Form S-4, filed May 13, 1998, File No. 333-52507).

      10.26  Third Amendment to the lease agreement between WHMNY Real Estate Limited Partnership, a Delaware limited
             partnership ("Landlord"), and EarthLink Network, Inc. (incorporated by reference to Exhibit 10.1 to the
             Company's Form 10-Q filed on November 16, 1998.

      22.1   Significant Subsidiaries (incorporated by reference to Exhibit 22.1 to the Company's Registration
             Statement on Form S-1, filed May 19, 1998, File No. 333-53063).

      23.1   Consent of Independent Accountants.

      24.1   Power of Attorney (set forth on the signature page to the Registration Statement).

      27.1   Financial Data Schedule.
</TABLE>

                                      E-4