FlashNet Reports Record Revenue; Announces Intent to Merge With Prodigy - FlashNet Communications' 3rd qtr 1999 - Company Financial Information

Cambridge Telcom Report, Nov 15, 1999

FlashNet Communications, Inc. (Nasdaq: FLAS), a leading nationwide Internet access provider, announced record revenues totaling $12.6 million for the third quarter ended September 30, 1999. This reflects a 74 percent increase over revenues of $7.3 million reported in the same period in 1998. On November 8th, 1999, FlashNet entered into a definitive agreement to merge with Prodigy Communications, Corporation (Nasdaq: PRGY).

FlashNet added 24,165 net subscribers for the quarter, a 400 percent increase over the third quarter of 1998. "This significant increase occurred during a time that is traditionally seen as a slow quarter," said Russ Wiseman, chief operating officer of FlashNet. FlashNet closed the quarter with 243,683 total subscribers.

Net loss attributable to common shareholders was $(9.3) million or $(.66) per share compared to a net loss of $(5.5) million, or $(.99) per share during the third quarter of 1998. Weighted average shares outstanding increased to 14,159,000 compared to 5,515,000 one year ago. Total shares outstanding at September 30, 1999 were 14,226,616.

Commenting on the Company's results, Scott Leslie, chief executive officer and co-founder, said: "I am pleased to announce that FlashNet had record revenue in the third quarter. We are excited about the announced merger with Prodigy and the opportunities that this merger offers the combined companies and our shareholders."

FlashNet Communications is one of the largest Internet service providers in the U.S., serving consumer and small business customers nationwide. An early pioneer of unlimited use, flat rate pricing, FlashNet offers a full range of Internet services including access services, Web hosting, electronic commerce and software. FlashNet is a leader in providing a safe Internet service for families, businesses and schools with its exclusive Family pack. Based in Fort Worth, TX, FlashNet can be found at www.flash.net.

FlashNet Communications, Inc. Financial Summary (unaudited and in thousands, except for per share data and subscriber counts)

Three Months Ended

                                Better            Better
                    9/30/99    6/30/99    (Worse)  9/30/98 (Worse)

Revenue              $12,627     $9,532       32%   $7,253     74%

Gross Profit          $6,391     $4,857       32%   $4,115     55%

Expenses
 Sales and Marketing   8,907      5,777      (54%)   2,388   (273%)
 General and Admin.    2,626      2,159      (22%)   1,397    (88%)
 Ops. and Cust. Support3,094      2,253      (37%)   1,681    (84%)
Depreciation and Amort.1,501   1,190      (26%)     774    (94%)
  Total               16,128     11,379      (42%)   6,240   (158%)

Loss From Operations  (9,737)    (6,522)     n/a    (2,125)   n/a

Interest Income (Expense)467        337      n/a      (641)   n/a

Loss Before Accretion
 on Redeemable Preferred
 Stock                (9,270)    (6,185)     n/a    (2,766)   n/a

Net Loss Attributable to
 Common Shareholders  (9,270)    (6,185)     n/a    (5,453)   n/a

Basic and Diluted EPS(A)  ($.66)  ($.45)     n/a     ($.99)   n/a

Total Subscribers    243,683    219,518       11%  165,614     48%

  Balance Sheet Data

                                            Sept 30,     June 30,
                                               1999         1999
Current assets                                $29,698      $41,925
Property and Equipment, Net                    15,947       13,891
Other Assets                                    8,891          365
Total Assets                                  $54,536      $56,181
Current liabilities                            32,188       23,944
Capital Lease Obligations, net of
 current portion                                1,803        2,607
Total liabilities                              33,991       26,551
Total shareholders' equity (deficit)           20,545       29,630
Total Liabilities and Shareholder Equity      $54,536      $56,181

(A) Calculated using 14,159,000, 13,913,000 and 5,515,000 weighted average shares outstanding, respectively.