<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

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

                 For the Quarterly Period Ended March 31, 1997

                                       OR

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

                       For the transition period from _____to_____


                        Commission file number      0-27890
                                               -----------------

                         MINDSPRING ENTERPRISES, INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                  Delaware                       58-2113290
-------------------------------------------------------------------------------
(State or other jurisdiction of                  (I.R.S. Employer
incorporation or organization)                   Identification Number)


1430 West Peachtree St. NW, Suite 400, Atlanta, GA              30309
-------------------------------------------------------------------------------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:         (404) 815-0770
                                                   ----------------------------

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

                                                  Outstanding at May 5, 1997
                                                  --------------------------

Common Stock at $.01 par value                        7,525,625 Shares

<PAGE>   2

Part I - Financial Information

Item 1 - Financial Statements

<TABLE>
<CAPTION>
                                                  MINDSPRING ENTERPRISES, INC.
                                                         BALANCE SHEETS
                                           AS OF MARCH 31, 1997 AND DECEMBER 31, 1996


                                                                                   MARCH 31,1997                DECEMBER 31, 1996
                                                                                  ---------------               -----------------
                                                                                    (unaudited)
<S>                                                                               <C>                              <C>
                                                             ASSETS
CURRENT ASSETS:
     Cash and cash equivalents....................................................$     6,241,388                  $   9,653,234
     Trade receivables............................................................      2,383,575                      1,996,613
     Prepaids and other current assets............................................      1,067,635                        853,122
     Inventory....................................................................         33,840                        116,545
                                                                                  ---------------                  -------------
         Total current assets.....................................................      9,726,438                     12,619,514
                                                                                  ---------------                  -------------

PROPERTY AND EQUIPMENT;
     Computer and telecommunications equipment....................................     13,543,671                     11,509,165
     Assets under capital lease...................................................      1,992,769                      1,472,885
     Other........................................................................        900,013                        565,503
                                                                                  ---------------                  -------------
                                                                                       16,436,453                     13,547,553
     Less:  accumulated depreciation..............................................     (2,757,662)                    (1,964,231)
                                                                                  ---------------                  -------------
         Property and equipment, net..............................................     13,678,791                     11,583,322
                                                                                  ---------------                  -------------
OTHER ASSETS:
     Acquired customer base, net..................................................      9,740,903                     10,727,268
     Other........................................................................        292,142                        302,273
                                                                                  ---------------                  -------------
         Total other assets.......................................................     10,033,045                     11,029,541
                                                                                  ---------------                  -------------

                                                                                  $    33,438,274                  $  35,232,377
                                                                                  ===============                  =============



                                              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Trade accounts payable.......................................................$     2,976,204                  $   4,119,302
     Other accrued expenses.......................................................      2,349,160                      1,284,626
     Current portion of capital lease.............................................      1,086,882                        656,252
     Current portion of notes payable.............................................        943,682                        623,922
     Deferred revenue.............................................................        950,208                        415,881
                                                                                  ---------------                  -------------

         Current liabilities......................................................      8,306,136                      7,099,983
                                                                                  ---------------                  -------------

LONG TERM LIABILITIES:
     Notes payable................................................................      1,646,503                      2,042,742
     Capital lease ...............................................................        561,944                        682,571
                                                                                  ---------------                  -------------
         Total long-term liabilities..............................................      2,208,447                      2,725,313
                                                                                  ---------------                  -------------

         Total liabilities........................................................     10,514,583                      9,825,296
                                                                                  ---------------                  -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
     Common stock, $.01 par value; 15,000,000 shares authorized
       and 7,480,434 and 7,477,084 issued and outstanding at
        March 31, 1997 and December 31, 1996, respectively........................         74,804                         74,771
     Additional paid-in capital...................................................     35,019,855                     34,978,225
     Accumulated deficit..........................................................    (12,170,968)                    (9,645,915)
                                                                                  ---------------                  -------------
       Total stockholders' equity.................................................     22,923,691                     25,407,081
                                                                                  ---------------                  -------------
                                                                                  $    33,438,274                  $  35,232,377
                                                                                  ===============                  =============
</TABLE>

 The accompanying Condensed Notes to Financial Statements are an integral part
                           of these balance sheets.



                                       2
<PAGE>   3

Financial Statements - Continued


<TABLE>
<CAPTION>
                                           MINDSPRING ENTERPRISES, INC.
                                             STATEMENTS OF OPERATIONS
                                  FOR THE QUARTERS ENDED MARCH 31, 1997 AND 1996
                                                  (unaudited)


                                                                   1997                  1996
                                                            ---------------       ---------------

<S>                                                         <C>                   <C>
REVENUES
     Access.................................................$     7,356,186       $     1,170,313
     Subscriber start-up fees...............................      1,000,283               339,171
     Business services......................................      1,423,547               302,230
                                                            ---------------       ---------------
       Total revenues.......................................      9,780,016             1,811,714
                                                            ---------------       ---------------

COSTS AND EXPENSES
     Costs of revenues -- recurring.........................      3,168,798               541,634
     Costs of subscriber start-up fees......................        365,074               264,337
     General and administrative.............................      5,012,462               578,924
     Selling      ..........................................      1,910,433             1,159,039
     Depreciation and amortization..........................      1,828,490               233,908
                                                            ---------------       ---------------
       Total costs and expenses.............................     12,285,257             2,777,842
                                                            ---------------       ---------------

OPERATING LOSS    ..........................................     (2,505,241)             (966,128)
INTEREST (EXPENSE) INCOME, NET..............................        (19,812)              (73,132)
                                                            ---------------       ---------------

NET LOSS          .......................................... $   (2,525,053)      $    (1,039,260)
                                                            ---------------       ---------------

NET LOSS PER SHARE..........................................$         (0.34)      $         (0.30)
                                                            ---------------       ---------------

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING  ..........................................      7,478,312             3,507,936
                                                            ---------------       ---------------
</TABLE>


            The accompanying Condensed Notes to Financial Statements
                   are an integral part of these statements.




                                       3
<PAGE>   4



Financial Statements - Continued


<TABLE>
<CAPTION>
                                           MINDSPRING ENTERPRISES, INC.
                                             STATEMENTS OF CASH FLOWS
                                  FOR THE QUARTERS ENDED MARCH 31, 1997 AND 1996
                                                  (unaudited)

                                                                           1997                    1996
                                                                     -----------------      ---------------
<S>                                                                  <C>                <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:                             
     Net loss........................................................$  (2,525,053)     $     (1,039,263)
     Adjustments to reconcile net loss to net cash used              
       in operating activities:                                      
     Depreciation and amortization...................................    1,828,490               233,908
     Changes in operating assets and liabilities:                    
         Trade receivables...........................................     (386,962)             (188,158)
         Other current assets........................................     (131,808)              194,925
         Trade accounts payable......................................   (1,143,098)               40,348
         Other accrued expenses......................................    1,064,534                49,149
         Deferred revenue............................................      534,327               186,129
                                                                     --------------       ---------------
           Total adjustments.........................................    1,765,483               516,301
                                                                     --------------       ---------------
           Net Cash Used in Operating Activities.....................     (759,570)             (522,962)
                                                                     --------------       ---------------
                                                                     
CASH FLOWS USED IN INVESTING ACTIVITIES                              
     Purchases of property and equipment.............................   (2,370,588)           (1,269,660)
     Purchase of customer base.......................................      (35,236)                    -
     Other...........................................................       (1,755)              (24,675)
                                                                     -------------        ---------------
         Net Cash Used For Investing Activities......................   (2,407,579)           (1,294,335)
                                                                     --------------       ---------------
                                                                     
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES                   
     Proceeds of loan from preferred stockholder.....................            -             1,000,000
     Payments of loan from preferred stockholder.....................            -            (3,500,000)
     Payments of notes payable.......................................      (76,479)                    -
     Payments of capital lease obligations...........................     (209,881)                    -
     Issuance of common stock........................................       41,663            13,671,549
                                                                     --------------       ---------------
         Net Cash (Used) Provided By Financing Activities............     (244,697)           11,171,549
                                                                     --------------       ---------------
                                                                     
NET (DECREASE) INCREASE IN CASH AND CASH                             
     EQUIVALENTS.....................................................   (3,411,846)            9,354,252
CASH AND CASH EQUIVALENTS, beginning of period.......................    9,653,234               424,834
                                                                     --------------       ---------------
                                                                     
CASH AND CASH EQUIVALENTS, end of period.............................$   6,241,388      $      9,779,086
                                                                     ==============       ===============
                                                                     
SUPPLEMENTAL DISCLOSURE FOR CASH FLOW                                
INFORMATION                                                          
     Interest paid...................................................$     126,693      $        136,127
                                                                     ==============       ===============
     Income taxes....................................................$           -      $              -
                                                                     ==============       ===============
                                                                     
SUPPLEMENTAL NON-CASH DISCLOSURES                                    
     Assets acquired under capital lease.............................$     519,884      $              -
                                                                     ==============       ===============
</TABLE>



            The accompanying Condensed Notes to Financial Statements
                   are an integral part of these statements.



                                       4
<PAGE>   5



Financial Statements - Continued


                          MINDSPRING ENTERPRISES, INC.
                    CONDENSED NOTES TO FINANCIAL STATEMENTS
                            MARCH 31, 1997 AND 1996

1.       Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted pursuant to
         Article 10 of Regulation S-X of the Securities and Exchange
         Commission. The accompanying unaudited condensed financial statements
         reflect, in the opinion of management, all adjustments necessary to
         achieve a fair statement of the Company's financial position and
         results for the interim periods presented. All such adjustments are of
         a normal and recurring nature. It is suggested that these condensed
         financial statements be read in conjunction with the financial
         statements and notes thereto included in the Company's Annual Report
         on Form 10-K for the year ended December 31, 1996 (File No. 0-27890).

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

3.       Net loss per share is computed using the weighted average number of
         shares of common stock and dilutive common stock equivalent shares
         from stock options (using the treasury stock method).

4.       There was no provision for or cash payment of income taxes for the
         three months ended March 31, 1997 and 1996, respectively, as the
         Company had net taxable loss for these periods and anticipates a net
         taxable loss for the year ended December 31, 1997.




                                       5
<PAGE>   6



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

OVERVIEW

                  MindSpring Enterprises, Inc. (the "Company") is a national
provider of Internet access. The Company was incorporated in Georgia on
February 24, 1994 and began marketing its services in June 1994. The Company
reincorporated in Delaware in December 1995. At March 31, 1997, the Company
served a total of approximately 153,000 subscribers.

                  The Company offers nationwide Internet access through a
combination of Company-owned points of presence ("POPs") and third party POPs
to which the Company has access pursuant to network services agreements with
such parties. At March 31, 1997, the Company provided access to subscribers
through 40 Company-owned POPs and over 200 POPs owned by PSINet Inc.
("PSINet"). As of March 31, 1997, the Company and PSINet maintained
approximately 18 POPs in the same service area. In addition, on May 1, 1997,
the Company entered into a three-year services agreement with GridNet
International, L.L.C. ("GridNet"), which enables the Company to provide
Internet access to its subscribers through GridNet's network of over 130 POPs.
Of the 130 GridNet POPs to which the Company now has access, approximately 105
POPs are in the same service area as an existing Company-owned POP or PSINet
POP. Pursuant to the services agreements between the Company and each of PSINet
and GridNet (the "PSINet Services Agreement" and "GridNet Services Agreement,"
respectively), the Company has the flexibility to offer Internet access in such
overlapping POP locations through a MindSpring POP, a PSINet or GridNet POP or
a combination of all three.

                  The Company derives revenue primarily from monthly
subscriptions and start-up fees from individuals for dial-up access to the
Internet. Monthly subscription fees vary by billing plan. Under the Company's
current pricing plans, customers have a choice of two "flat rate" plans (The
Works and Unlimited Access) and two "usage-sensitive" plans (Standard and
Light). For the quarter ended March 31, 1997, the average monthly recurring
revenue per dial-up subscriber was approximately $20 (monthly recurring revenue
plus usage charges for non-"flat rate" subscribers, divided by total
subscribers), compared to $23 per dial-up subscriber for the quarter ended
March 31, 1996. The decrease in revenue per subscriber is primarily the result
of price plan changes implemented in May 1996. Start-up fees for new
subscribers vary depending upon the promotional method by which the subscriber
is acquired, ranging up to a maximum of $25. Aggregate subscriber fees are
sufficient to cover the aggregate costs of direct materials, mailing expenses,
and licensing fees associated with new subscribers. Most of the Company's
individual subscribers pay their MindSpring fees automatically by preauthorized
monthly charges to the subscriber's credit card.

                  In addition, the Company earns revenue by providing
Web-hosting services, full-time dedicated access connections to the Internet
and domain registration primarily to businesses and some individual
subscribers. The Company's Web-hosting services allow a business or individual
to post information on the World Wide Web so that the information is available
to anyone who has access to the Internet. Through its domain registration
services, the Company provides subscribers the ability to personalize
electronic mail addresses. These services have been classified as business
services in the condensed statements of income and the "Results of Operations"
table set forth below.

                  The Company's costs include (1) costs of revenue that are
primarily related to the number of subscribers, (2) selling, general and
administrative expenses that are associated more generally with operations, and
(3) depreciation and amortization, which are related to the size of the
Company's network and the deferred costs associated with acquired customer
bases.

                                      6

<PAGE>   7
                  Costs of revenue that are primarily related to the number of
subscribers include both recurring costs and subscriber start-up expenses.
Recurring costs of revenue consist primarily of the costs of telecommunications
facilities necessary to provide service to subscribers and certain monthly
licensing fees per subscriber for the right to receive and make available
certain proprietary on-line services. Telecommunications facilities costs
include the costs of providing local telephone lines into each Company-owned
POP, costs related to the use of third party networks pursuant to services
agreements and costs associated with leased lines connecting each Company-owned
POP and third party network to the Company's hub and connecting the Company's
hub to the Internet backbone. Start-up expenses for each subscriber include
one-time license fees paid to third parties for the right to bundle other
capabilities into the Company's software, cost of diskettes and other product
media, manuals, and packaging and delivery costs associated with the materials
provided to new subscribers. The Company does not defer any such subscriber
start-up expenses.

                  Selling, general and administrative costs are incurred in the
areas of sales and marketing, customer support, network operations and
maintenance, engineering, accounting and administration. Selling, general and
administrative costs will increase over time as the Company's scope of
operations increases. However, the Company expects that such costs will be more
than offset by anticipated increases in revenue attributable to overall
subscriber growth. In addition, significant levels of marketing activity may be
necessary in order for the Company to build or increase its subscriber base in
a given market to a size large enough to generate sufficient revenue to offset
such marketing expenses. The Company does not defer any start-up expenses
related to entering new markets. The costs associated with the development and
registration of the Company's trademarks have been expensed as incurred. Such
costs have not been material.

                  Prior to entering into the PSINet Services Agreement and the
GridNet Services Agreement, as the demand for the Company's services in a 
particular POP had grown, the Company had been required to invest in additional
telecommunications equipment and provide additional local telephone lines for
that POP. The PSINet Services Agreement and the GridNet Services Agreement
provide the Company the option to evaluate on a POP-by-POP basis whether to
continue to develop MindSpring POPs using the Company's capital resources or to
conserve capital through utilization of third party POPs for a specified fee.
As the Company expands into new markets, both costs of revenue and selling,
general and administrative expenses will increase. To the extent the Company
opens MindSpring POPs in new markets, such expenses may also increase as a
percentage of revenue in the short term after a new MindSpring POP is opened
because many of the fixed costs of providing service in a new market are
incurred before significant revenue can be expected from that market. However,
to the extent that the Company expands into new markets by using third party
POPs instead of opening its own POPs, the Company's incremental monthly
recurring costs will consist primarily of the fees to be paid to third parties
based on revenue per subscriber served, as provided in the PSINet Services
Agreement and the GridNet Services Agreement. The margins on such subscribers
will initially be higher than if the Company had developed its own POP in new
markets. Once a new market matures, costs of revenue as a percentage of revenue
will tend to be higher in markets served through utilization of purchased
network services rather than Company-owned POPs since the full costs of
utilizing such network services is included in costs of revenue and a portion
of the costs of utilizing Company-owned POPs is included in depreciation and
amortization. The Company does not currently plan to open a significant number
of new MindSpring POPs during 1997. Management will, however, evaluate on a
POP-by-POP basis the closing or expansion of existing MindSpring POPs or the
opening of new MindSpring POPs based on subscriber demand and strategic
considerations.

                  The Company has experienced operating losses since its
inception as a result of efforts to build its network infrastructure and
internal staffing, develop its systems, and expand into new markets. The
Company expects to continue to focus on increasing its subscriber base which
will result in higher expenses, but believes that the development of its
operations will provide certain economies of scale which will decrease its cost
of start-up fees, selling expenses, and general and administrative expenses as
a percentage of revenue in the future.



                                       7
<PAGE>   8





RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 1997 COMPARED TO QUARTER ENDED MARCH 31, 1996

                  The following table sets forth certain unaudited financial 
data for the quarters ended March 31, 1997 and 1996. Operating results for any
period are not necessarily indicative of results for any future period. Dollar
amounts (except per share data) are shown in thousands.

<TABLE>
<CAPTION>
                                               RESULTS OF OPERATIONS


                                                          QUARTER ENDED                 QUARTER ENDED
                                                          MARCH 31, 1997               MARCH 31, 1996
                                                      (000'S)       % OF           (000'S)       % OF
                                                                    REVENUES                      REVENUES
<S>                                                 <C>            <C>           <C>            <C>
STATEMENTS OF OPERATIONS DATA:
Revenues
   Dial-up access to Internet                          $  7,356            75      $   1,170             64
   Start-up fees                                          1,000                          339             19
                                                                           10
   Business services                                      1,424            15            303             17
                                                     -----------    ----------    -----------    -----------
          Total revenues                                  9,780           100          1,812            100
Costs and expenses:
   Selling, general and administrative                    6,923            71          1,738             96
   Costs of revenues- recurring                           3,169            32            542             30
   Costs of revenues- start-up fees                         365             4            264             14
   Depreciation and amortization                          1,828            19            234             13
                                                     -----------    ----------    -----------    -----------
         Total costs and expenses                        12,285           126          2,778            153
                                                     -----------    ----------    -----------    -----------
Operating loss                                          (2,505)          (26)          (966)           (53)
Interest expense, net                                      (20)           (0)           (73)            (4)
                                                     -----------    ----------    -----------    -----------
Net loss                                                (2,525)          (26)        (1,039)           (57)
                                                     ===========                  ===========

PER SHARE DATA:
Net loss per share                                  $    (0.34)                  $    (0.30)
Weighted average common shares outstanding           7,478,312                    3,507,936

OPERATING DATA:
Approximate number of subscribers at end of period     152,922                       21,540
Number of Company employees at end of period               365                          137
</TABLE>



                  Revenue. Revenue for the quarter ended March 31, 1997 totaled
approximately $9,780,000, as compared to approximately $1,812,000 for the
quarter ended March 31, 1996. The 440% increase in period revenue resulted
primarily from a 610% increase in subscribers offset by a decrease in revenue
per subscriber resulting from price changes implemented in May 1996. Access
revenue for the quarter ended March 31, 1997 represented 75% of revenue, as
compared to 64% of revenue for the same quarter in the prior year. Subscriber
start-up fees accounted for 10% of revenue for the quarter ended March 31,
1997, as compared to 19% for the quarter ended March 31, 1996. The Company
anticipates that as its customer base continues to expand, subscriber start-up



                                       8
<PAGE>   9



fees will progressively represent a smaller percentage of revenue. Business
services revenue remained relatively constant as a percentage of total revenue.

                  Costs of revenue-recurring. For the quarter ended March 31,
1997, recurring costs of revenue increased to approximately 32% of total
revenue as compared to approximately 30% of total revenue for the quarter ended
March 31, 1996. However, the cost decreased as a percentage of dial-up access
revenue from 46% in the first quarter of 1996 to 43% in the first quarter of
1997. Exclusive of $450,000 in discounts received in the first quarter of 1997
pursuant to the PSINet Services Agreement, recurring costs of revenue would
have been 49% of total dial-up revenue for the period compared to 46% for the
quarter ended March 31, 1996. This increase as a percentage of revenue resulted
primarily from the addition of capacity through increased utilization of
purchased network services as opposed to increasing capacity by opening
additional Company-owned POPs.

                  Costs of revenue-start-up expenses. For the quarter ended
March 31, 1997, subscriber start-up expenses decreased to approximately 4% of
total revenue as compared to approximately 14% of total revenue for the quarter
ended March 31, 1996, and decreased to 37% of start-up fee revenue for the
quarter ended March 31, 1997 compared to 78% of start-up fee revenue for the
quarter ended March 31, 1996. The decrease in start-up expenses as a percentage
of total revenue is a result of the number of new subscribers decreasing as a
percentage of the entire subscriber base as the subscriber base expands and
lower expenditures per new subscriber for one time license fees and starter kit
materials. The decrease in start-up expenses as a percentage of start-up fees
results from reduced expenditures per new subscriber for licenses and kit
materials. The Company anticipates that start-up expenses will continue to
decrease as a percentage of total revenue to the extent that the number of new
subscribers decreases as a percentage of the entire subscriber base.

                  Selling, general and administrative expenses. Selling,
general and administrative expenses were approximately 71% of revenue for the
quarter ended March 31, 1997, compared to approximately 96% of revenue for the
first quarter ended March 31, 1996. The decrease in selling, general and
administrative expenses as a percentage of revenue resulted from the Company
benefiting from economies of scale with respect to such costs as salaries and
wages that do not increase in direction proportion to increases in revenue and
to cost control efforts implemented by management.

                  Depreciation and amortization. Depreciation and amortization
expenses increased to approximately 19% of revenue for the quarter ended March
31, 1997, compared to approximately 13% of revenue for the same period in the
prior year. The increase is primarily attributable to the amortization of the
acquired customer bases. The Company is amortizing the costs of acquired
customer bases over a three-year period. Amortization expense related to the
acquired customer bases for the quarter ended March 31, 1997 was approximately
$1,022,000, or 10% of revenue. Depreciation expense was 9% of total revenue for
the quarter ended March 31, 1997, compared with 13% for the comparable period
in the prior year. The decrease in depreciation expense as a percentage of
total revenue resulted from the addition of capacity through increased
utilization of purchased network services as opposed to increasing capacity
through the construction of additional Company-owned POPs and from efficiencies
within the Company's owned POPs resulting from reductions in cost of new
equipment and improved utilization within the Company's network.

                  Interest expenses. Interest expense for the quarter ended
March 31, 1997 consisted of approximately $127,000 related to capital leases of
equipment and imputed interest under a non-interest bearing note given to
PSINet (the "PSINet Note") in connction with the PSINet Transaction (as defined
herein), netted with approximately $107,000 of interest income. For the quarter
ended March 31, 1996, the Company had interest expense of approximately 
$73,000 which primarily related to a credit facility that was repaid in 
March 1996. No such credit facilities existed during the first quarter of 1997.



                                       9 
<PAGE>   10




LIQUIDITY AND CAPITAL RESOURCES

                  The Company has not generated net cash from operations for
any period presented. The Company has primarily financed its operations to date
through public and private sales of equity securities, loans from third parties
and capital leases of equipment. The Company completed an initial public
offering of its Common Stock in March 1996 (the "Initial Offering") and a
second public offering in October 1996 (the "October Offering"), issuing
2,025,000 shares at a price of $8.00 per share and 2,250,000 shares at a price
of $9.125 per share, respectively. The proceeds from the public offerings were
approximately $32,500,000, net of underwriting discounts and expenses. Upon
completion of the Initial Offering, the Company repaid all outstanding
principal amounts loaned to the Company by ITC Holding Company, Inc., totaling
$3,500,000 of principal balance and approximately $97,000 in interest. The
Company used approximately $9,175,000 or 50% of the net proceeds from the
October Offering to pay PSINet in conjunction with a transaction between the
Company and PSINet in which the Company purchased certain individual subscriber
accounts of PSINet and related assets (the "PSINet Transaction"). Total cash
used in financing activities for the quarter ended March 31, 1997 was
approximately $245,000, consisting primarily of cash paid for capital lease
obligations and to PSINet in connection with the PSINet Transaction. Total cash
provided from financing activities for the quarter ended March 31, 1996 was
approximately $11,172,000, consisting primarily of the net proceeds from the
Initial Offering.

                  The Company used approximately $2,408,000 in cash for
investing activities during the quarter ended March 31, 1997 and approximately
$1,294,000 during the quarter ended March 31, 1996. This investing activity
primarily related to the purchases of telecommunications equipment necessary
for the provision of service to subscribers. In addition to the purchased
equipment, the Company acquired approximately $520,000 of equipment under
capital lease agreements in the first quarter ended March 31, 1997. There were
no capital lease agreements in the first quarter of 1996.

                  On October 14, 1996, the Company and Monorail Inc.
("Monorail"), an Internet-ready computer manufacturer, entered into an
agreement (the "Monorail Agreement") pursuant to which the Company's software
is to be included on the personal computers manufactured by Monorail. On
November 5, 1996, pursuant to the Monorail Agreement, the Company paid $560,000
in cash to Monorail, which included a prepayment of $500,000 for the first
12,500 subscribers acquired by the Company pursuant to this agreement ($40 per
subscriber) and $60,000 for estimated expenses incurred by Monorail to include
the Company's software on its PCs. The software preparation cost was expensed
in 1996. To the extent that more than 12,500 subscribers are acquired by the
Company pursuant to the Monorail Agreement, the Company will be required to pay
Monorail $40 per additional subscriber. To the extent that fewer than 12,500
subscribers are acquired by the Company as of May 31, 1997, Monorail will be
required to reimburse the Company at the rate of $40 per subscriber by July 30,
1997 for the difference between 12,500 and the actual number of subscribers
acquired. If Monorail adds additional Internet access providers to its personal
computers, the Company, at its option, may require Monorail to reimburse the
Company upon seven days notice for the difference between 12,500 and the number
of subscribers acquired by the Company. As of March 31, 1997, approximately
1,100 subscribers had signed up for service under the Monorail Agreement.

                  On July 15, 1996, the Company and BellSouth entered into a
two-year agreement (the "BellSouth Agreement"), pursuant to which the Company
agreed to purchase telecommunications services from BellSouth for a minimum of
$2,000,000 in the first year, and, in the second year, a minimum of 90% of the
amount billed to the Company during the first year. The Company may renew the
BellSouth Agreement pursuant to two one-year renewal options. In the event the
Company terminates the BellSouth Agreement prior to its expiration, the Company
is



                                      10
<PAGE>   11




required to pay BellSouth a termination fee, subject to certain exceptions,
equal to 50% of the amounts billed to the Company during the 12 months
preceding such termination.

                  As of March 31, 1997, the Company had cash on hand of
approximately $6,241,000. The Company's significant capital commitments through
1997 include approximately $562,000 in principal under the PSINet Note and
capital expenditures estimated to be approximately $6,100,000. The Company
anticipates that it will generate cash flows from operations in 1997. The
impact of the BellSouth Agreement and certain discounts available to the
Company pursuant to the PSINet Services Agreement are reflected in the expected
operating cash flows.

                  The Company estimates that its cash and financing needs
through 1997 will be met by cash on hand, additional capital leases, and cash
flow from operations. However, any increases in the Company's growth rate,
shortfalls in anticipated revenue, increases in anticipated expenses, or
significant acquisition opportunities could have a material adverse effect on
the Company's liquidity and capital resources and would require the company to
raise additional capital from public or private equity or debt sources in order
to finance operating losses, anticipated growth and contemplated capital
expenditures. If such sources of financing are insufficient or unavailable, the
Company will be required to modify its growth and operating plans in accordance
with the extent of available funding and attempt to attain profitability in its
existing markets (including those accessible pursuant to the third party
network services agreements). The Company may need to raise additional funds in
order to take advantage of unanticipated opportunities, such as acquisitions of
complementary businesses or the development of new products, or otherwise
respond to unanticipated competitive pressures. There can be no assurance that
the Company will be able to raise any such capital on terms acceptable to the
Company or at all.

                  In February 1997, the Financial Accounting Standards Board
issued Statement 128, "Earnings per Share" ("SFAS 128") which redefines how
entities compute earnings per share. Primary earnings per share will be
replaced by basic earnings per share which will be computed exclusively based
on the weighted average number of common shares outstanding. This statement is
effective for periods ending after December 15, 1997 and will require
restatement of all prior period earnings per share data presented. The adoption
of SFAS 128 is not expected to have a material impact on the Company's earnings
per share data.




                                      11
<PAGE>   12



                                   P A R T II

                               OTHER INFORMATION


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          11.  Statement Re:  Computation of loss per common share

          27.  Financial Data Schedule

     (b)  Report on Form 8-K

      On March 3, 1997, the Company filed a Current Report on Form 8-K (the
"Form 8-K"). The Form 8-K reported that the Company had entered into Amendment
No. 3 to the purchase agreement between the Company and PSINet originally
entered into as of June 28, 1996 (the "Purchase Agreement"), effective as of
January 24, 1997 and Amendment No. 2 to the PSINet Services Agreement effective
as of January 1, 1997, pursuant to which the Company amended certain pricing
terms of the Purchase Agreement and certain pricing and termination terms of
the PSINet Services Agreement.







                                      12
<PAGE>   13





SIGNATURES


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





                                    MINDSPRING ENTERPRISES, INC.
                                    (Registrant)





Date:  May 14, 1997                 By:  /s/ Michael S. McQuary
                                         ----------------------
                                    Michael S. McQuary
                                    President and Chief
                                    Operating Officer




Date:  May 14, 1997                 By:  /s/ Michael G. Misikoff
                                         -----------------------
                                    Michael G. Misikoff
                                    Vice President and Chief Financial
                                    Officer





                                      13
<PAGE>   14





                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>

  Exhibit            Exhibit Description                                   Sequentially              
  -------            -------------------                                   ------------
  Number                                                                   Numbered Page
  ------                                                                   -------------
<S>             <C>                                                        <C>
   11.          Statement Re:  Computation of loss per common 
                share

   27.          Financial Data Schedule

</TABLE>






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