SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[Mark One]

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 for the quarterly period ended: March 31, 2001.

[ ] 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 :000-24447

                                 QUEST NET CORP.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

                Florida [4813]                  84-1331134
        (State of Incorporation)         IRS Employer I.D. Number

                    1250 E. HALLANDALE BEACH BLVD. SUITE 502
                          PEMBROKE PARK, FLORIDA 33009
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (954) 457-0900
                         -------------------------------
                         (Registrant's telephone number)


      Indicate by check mark whether the Registrant:(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
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 [ ]

      The number of shares outstanding of each of the issuer's classes of equity
as of May 30, 2001 49,374,309 shares of Common Stock, no par value; and, 30,000
shares of Preferred Convertible Stock, no par value.

<PAGE>

                                QUEST NET CORP.


PART I - FINANCIAL INFORMATION


                                                                           Page

Item 1.    Financial Statements

Consolidated Balance Sheet - March 31, 2001 ...........................      3

Consolidated Statements of Operations - Nine months ended March 31, 2001
   and 2000 and Three months ended March 31, 2001 and 2000..... ........     4

Consolidated Statements of Cash Flows - Nine months ended
      March 31, 2001 ......................................................  6

Consolidated Statements of Cash Flows - Nine months ended
      March 31, 2000 ............. ........................................  7

Notes to Consolidated Financial Statements ................................8-9

Item 2.    Management's Discussion and Analysis or
           Plan of Operations............................................10-18

Part II - Other Information

Item 1.    Legal Proceedings................................................18

Item 2.    Changes in Securities............................................19

Item 3.    Defaults Upon Senior Securities..................................19

Item 4.    Submission of Matters To a Vote of Security Holders .............19

Item 5.    Other Information................................................19

Item 6.    Exhibits and Reports on Form 8-K.................................19

Signature ..................................................................20





















                                        2
<PAGE>
                                 QUEST NET CORP

                           CONSOLIDATED BALANCE SHEET

                                 MARCH 31, 2001
                                    UNAUDITED

                                     ASSETS

CURRENT ASSETS
   Cash                                                        $          8,902
   Accounts receivable net of $10,185 allowance
    for doubtful accounts                                                28,191
   Prepaid expenses                                                         976
                                                               -----------------
          TOTAL CURRENT ASSETS                                           38,069

PROPERTY AND EQUIPMENT, net of
   accumulated depreciation of $169,007                                 331,165

OTHER ASSETS                                                             11,695
                                                               -----------------
                                                               $        380,929
                                                               =================


                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable and accrued expenses                       $      1,971,254
   Notes payable                                                      3,777,596
   Due to shareholder                                                   901,579
   Obligations under capital lease - current                             16,160
                                                               -----------------
          TOTAL CURRENT LIABILITIES                                   6,666,589

MINORITY INTEREST                                                        80,000

OBLIGATIONS UNDER CAPITAL LEASE                                          30,662

SHAREHOLDERS' DEFICIT
   Preferred stock, no par value; 5,000,000 shares
      authorized; 30,000 shares issued and outstanding                        -
   Common stock, no par value; 50,000,000 shares aurthorized;
      49,374,309 shares issued and outstanding                       17,670,281
   stock warrants, 47,000 issued and outstanding                          7,191
   stock options, 10,000 issued and outstanding                          25,800
   Additional paid-in capital                                           353,285
   Accumulated deficit                                              (24,452,879)
                                                               -----------------
          TOTAL SHAREHOLDERS' DEFICIT                                (6,396,322)
                                                               -----------------
                                                               $        380,929
                                                               =================



           See accompanying notes to consolidated financial statements
                                        3
<PAGE>
                              QUEST NET CORP.

                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                 UNAUDITED


                                                 For the nine months ended
                                                          March 31,
                                           -------------------------------------
                                                 2001                 2000
                                              Unaudited            Unaudited
                                           ----------------     ----------------

REVENUES
   Internet and other related services     $       367,800      $       276,769

COSTS AND EXPENSES
   Cost of internet-related services               286,563              102,045
   Stock based compensation                              -            1,334,431
   Bad debt expense                                  3,052                4,282
   Salaries and bonuses                            194,246              651,314
   General and administrative                    1,330,420            1,424,821
   Depreciation and amortization                   129,401              576,600
   Unauthorized loss on property and
    equipment                                            -              655,000
                                           ----------------     ----------------
TOTAL OPERATING EXPENSES                         1,943,682            4,748,493
                                           ----------------     ----------------

OPERATING LOSS                                  (1,575,882)          (4,471,724)

NON-OPERATING INCOME (EXPENSE)
   Interest expense                               (159,786)             (35,442)
   Interest income                                       -               75,989
   Penalty for unconsummated acquisition                 -             (100,000)
   Unrealized loss on marketable
    securities                                           -              (13,503)
   Proceeds from settlement                              -               19,454
   Gain on settlement of leased space              700,000                    -
   Loss upon return of leased equipment           (376,824)                   -
   Loss from settlement of lawsuits             (4,779,460)                   -
   Other, net                                            -                  884
                                           ----------------     ----------------
NET LOSS                                   $    (6,191,952)     $    (4,524,342)
                                           ================     ================

NET LOSS PER SHARE:
   Basic and diluted                       $         (0.16)     $         (0.20)
                                           ================     ================

SHARES USED FOR COMPUTING NET LOSS PER SHARE:

Basic and diluted                               39,014,309           22,483,859
                                           ================     ================


      See accompanying notes to the consolidated financial statements
                                     4
<PAGE>
                              QUEST NET CORP.

                   CONSOLIDATED STATEMENTS OF OPERATIONS

                                 UNAUDITED


                                                  For the three months ended
                                                         March 31,
                                           -------------------------------------
                                                 2001                 2000
                                              Unaudited            Unaudited
                                           ----------------     ----------------

REVENUES
   Internet and other related services     $       125,143      $       167,953

COSTS AND EXPENSES
   Cost of internet-related services                98,407               85,568
   Stock based compensation                              -              666,228
   Bad debt expense                                      -                4,282
   Salaries and bonuses                             30,089              252,675
   General and administrative                      989,865              711,313
   Depreciation and amortization                    85,620              161,134
   Unauthorized loss on property and
    equipment                                            -              655,000
                                           ----------------     ----------------
TOTAL OPERATING EXPENSES                         1,203,981            2,536,200
                                           ----------------     ----------------

OPERATING LOSS                                  (1,078,838)          (2,368,247)

NON-OPERATING INCOME (EXPENSE)
   Interest expense                                (94,748)              (1,570)
   Interest income                                       -               12,062
   Penalty for unconsummated acquisition                 -             (100,000)
   Unrealized gain on marketable
    securities                                           -                4,248
   Other, net                                            -              (28,387)
                                           ----------------     ----------------
NET LOSS                                   $    (1,173,586)     $    (2,481,894)
                                           ================     ================

NET LOSS PER SHARE:
   Basic and diluted                       $         (0.02)     $         (0.11)
                                           ================     ================

SHARES USED FOR COMPUTING NET LOSS PER SHARE:

Basic and diluted                               49,374,309           23,091,372
                                           ================     ================


      See accompanying notes to the consolidated financial statements
                                     5

<PAGE>
                          QUEST NET CORP

              CONSOLIDATED STATEMENTS OF CASH FLOWS

             FOR THE NINE MONTHS ENDED MARCH 31, 2001
                           (UNAUDITED)


CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                        $ (6,191,952)

   Adjustments to reconcile net loss to net cash
    used in operating activities:
      Depreciation and amortization                                     129,401
      Stock issued for services and settlements                       1,279,460
      Note issued for settlement                                      3,500,000
      Realized loss from return of equipment                            689,615
      Realized gain on settlement of leased space                      (700,000)
   Changes in current assets and current liabilities:
      Accounts receivable                                                 7,521
      Prepaid expenses                                                   20,457
      Other assets                                                       21,685
      Accounts payable and accrued expenses                             937,566
                                                                   -------------
                                                                      5,885,705
                                                                   -------------
NET CASH USED IN OPERATING ACTIVITIES                                  (306,247)
                                                                   -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures                                                 (167,584)
                                                                   -------------
CASH FLOWS USED IN INVESTING ACTIVITIES                                (167,584)
                                                                   -------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Funds provided by shareholder                                        264,247
   Procceds from notes payable                                          195,611
   Repayments of capital lease                                           (5,816)
                                                                   -------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                             454,042
                                                                   -------------

NET DECREASE IN CASH                                                    (19,789)
   Cash, at beginning of period                                          28,691
                                                                   -------------
   Cash, at end of period                                          $      8,902
                                                                   =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                             $      5,138
                                                                   =============

Cash paid for income taxes                                         $          -
                                                                   =============


           See accompanying notes to consolidated financial statements
                                6

<PAGE>
                                 QUEST NET CORP

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                    FOR THE NINE MONTHS ENDED MARCH 31, 2000
                                   (UNAUDITED)


NET CASH USED IN OPERATING ACTIVITIES                          $     (1,603,633)
                                                               -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Equipment and leasehold purchases                                  (889,806)
    Cash refunded/(paid) for deposits                                  (177,452)
    Advances made to acquisition candidate                             (200,000)
    Purchase of CWTel                                                  (200,000)
                                                               -----------------
CASH FLOWS USED IN INVESTING ACTIVITIES                              (1,467,258)
                                                               -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Redemption of preferred stock                                    (1,000,000)
                                                               -----------------
CASH FLOWS USED IN FINANCING ACTIVITIES                              (1,000,000)
                                                               -----------------

NET DECREASE IN CASH                                                 (4,070,891)
   Cash, at beginning of period                                       4,298,289
                                                               -----------------
   Cash, at end of period                                      $        227,398
                                                               =================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                         $         33,872
                                                               =================

Cash paid for income taxes                                     $              -
                                                               =================

NON-CASH INVESTING AND FINANCING ACTIVITIES
360,000 common shares issued in acquisition of CWTel, Inc.     $        700,000
                                                               =================

           See accompanying notes to consolidated financial statements
                                        7
<PAGE>

                                 QUEST NET CORP.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE A:  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the Company's June 30, 2000 audited
financial statements as filed on Form 10-KSB in November 2000. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included. The results of
operations for the nine months and three months ended March 31, 2001 are not
necessarily indicative of the results that will be realized for the full year.

PRINCIPLES OF CONSOLIDATION

The  Company's  consolidated  financial  statements  include the accounts of the
Company's and its 80% owned  subsidiary  Globalbot Corp. The Company  formed
six other wholly owned  subsidiaries,  IPQuest  Corp.,  Quest  Wireless  Corp.,
Globalbot Corp., QuesTel Corp., Quest Fiber Corp, and CWTel, Inc. as of March
1,  2000.  All  material   intercompany  accounts  and  transactions  have  been
eliminated in consolidation.



SIGNIFICANT EVENTS

On October 16,  2000,  Quest Net Corp.  ("Quest" or "Qnet")  issued to James LLC
25,900,000  shares of its  common  stock.  The  shares  were  issued as  partial
settlement  of a  lawsuit  that was  filed  against  Quest on May 5, 2000 in the
United States District Court,  Southern District of New York, by James LLC (Case
No. 00 Civ. 3467). On the date of issuance of the shares of common stock,  their
fair market value was  $1,279,460.  The lawsuit  stemmed from the sale of common
stock to James LLC for $5,000,000. The lawsuit alleged that the Company breached
its  contract of sale to James LLC by, among other  things,  failing to register
the  common   stock,   and   failing   to  pay   liquidated   damages   for  the
non-effectiveness of the registration  statement.  James LLC demanded damages in
excess of $5,000,000.  Quest also issued a Promissory  Note in the principal sum
of $3,500,000,  maturing  December 31, 2001, and bearing interest at the rate of
eight  percent  per annum.  As a result of the above  matters,  the  Company has
recorded a loss from settlement from this lawsuit in the amount of $4,779,460.

In October 2000, the Company returned $391,818 of communication equipment not in
service to the vendor from whom it was purchased and the vendor has provided
additional communication equipment valued at $75,000 in full settlement of the
amount owed the vendor.

In December 2000, the Company returned  $159,573 of communication  equipment not
in service to another  vendor from whom it was  purchased in March 1998.  At the
time of  purchase,  the Company had made an initial  payment of $126,824 and the
balance subject to monthly  payments of $13,400.  In September 2000, the Company
defaulted  on its monthly  payments and the vendor has asserted its right to the
balance of the  monthly  payments  approximating  $250,0000.  The outcome of the
vendor's  assertion  is  unknown  as of March 31,  2001,  however,  the  Company
estimates that, in the event the vendor's assertion is upheld by a court of law,
the loss that may be sustained by the Company would approximate $377,000 and the
Company recorded a loss for such amount.

In March 2000, the Company entered into a five year lease for 9,681 square feet
of space at 3001 West Hallandale Beach Boulevard, Pembroke Park, Florida as a
result of its recent growth and to consolidate operations to one location. The
aggregate

                                        8
<PAGE>
annual minimum rent, as defined, over the life of the lease totaled $778,000. In
June 2000, as a result of a significant deterioration of the Company's financial
condition, the Company decided to abandon this space and to operate from the
leased premises of its CWTel, Inc. subsidiary. The lease provided that in the
event of default of payment of the rent due under the terms of the lease, the
lessor had the immediate right to all remaining rents due for the balance of the
term of the lease. At the time of the Company's decision, the Company recorded a
liability of $700,000 representing the remaining rents due for the balance of
the term of the lease. In December 2000, the Company and landlord settled this
matter in exchange for mutual releases granted to each party from further action
or litigation. As a result of the above matters, the Company has recorded a gain
on settlement of leased space in the amount of $700,000.

On  March  15,  2001,  the  Board  of  Directors  of the  Company  approved  the
acquisition  of all of the  outstanding  capital  stock of  Vidikron of America,
Inc., a Delaware corporation ("Vidikron").  The acquisition was also approved by
both  Vidikron's  Board of  Directors  and by  Markland,  LLC,  Vidikron's  sole
stockholder.  The acquisition was effected pursuant to an Exchange Agreement and
Plan of  Reorganization  by and among the Company,  Markland  LLC, and Vidikron,
dated as of March 16, 2001; Vidikron's stockholders received 10 shares of Series
B Convertible  Preferred Stock (the "Series B Stock") which, after conversion to
Qnet common stock, will equal  approximately 85% of the outstanding common stock
of Qnet,  on a  non-diluted  basis.  Upon closing of the  transaction,  which is
expected  ot occur  before  the end of the third  quarter of this  fiscal  year,
Vidikron will become a wholly-owned subsidiary of Qnet.

Vidikron representatives will constitute a majority of the Board of Directors of
Qnet.  To  complete  the  transaction,  both  Qnet's  Board  and a  majority  of
stockholders  have approved by written  consent  articles of amendment to Qnet's
Articles of Incorporation,  with the result that (a) Qnet will effect a 40-for-1
reverse  stock  split in the  outstanding  common  stock of Qnet  (the  "Reverse
Split"), (b) the company will change its name to "Markland  Technologies,  Inc."
and (c) Qnet will establish a new series of preferred stock, namely the Series B
Stock.  Qnet  anticipates  that the amendments will take effect on or about June
11,  2001,  following  the  filing  of a  definitive  information  statement  in
connection with the Exchange Agreement.

On March 1, 2001, the Company issued a promissory note for $201,910.63 to James
LLC. Such note bears interest at 8% per annum and is due on December 31, 2001.
This note is convertible into shares of the Company's common stock at the
average market price 5 trading days prior to the conversion date.

On April 12, 2001, the Company issued a promissory note for $35,000 to James
LLC. Such note bears interest at 8% per annum and is due on December 31, 2001.
This note is convertible into shares of the Company's common stock at the
average market price 5 trading days prior to the conversion date.

                                        9
<PAGE>
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

GENERAL

      Quest Net Corp., since inception, has been primarily engaged in  providing
Internet connectivity and the development of Internet tools for individuals  and
companies.

      The Company has incurred net losses applicable to common shareholders
since inception through March 31, 2001, of approximately $24,740,000 after
discounts and dividends on preferred stock. The Company anticipates that losses
from operations will continue due to the lack of working capital and the capital
necessary to fund its operations.

      The Company's costs and expenses historically have primarily fallen into
the following categories:

            o     Telecommunications and operations;
            o     Employee stock compensation plans;
            o     Employees' salaries
            o     General and administrative;
            o     Amortization and depreciation.

         Telecommunications and operating expenses consist of
telecommunications, including the cost of local telephone lines and costs of
leased lines connecting the Internet and operations centers.

         Operating expenses also include employee salaries and benefits,
equipment costs, office rent and utilities and customer service and technical
support costs.

         Employee stock compensation plans consist of restricted common stock
awards and options. The Company has utilized its restricted stock as an
incentive to attract and keep qualified experienced key personnel.

         General and administrative expenses consist primarily of administrative
staff and related benefits.

         Amortization expense primarily relates to the amortization of goodwill
and a non-compete agreement acquired in a purchase of an e-commerce provider and
certain equipment and licenses related to proposed plans to offer Internet
kiosks. Amortization expense is based on the Company's best estimate of the
useful lives of the intangible assets.

         Depreciation expense primarily relates to equipment and is based on the
estimated useful lives of the assets ranging from three to five years using the
straight-line method for the equipment.


RESULTS OF OPERATIONS

NINE MONTHS ENDED MARCH 31, 2001 AND MARCH 31, 2000

REVENUE

      Revenue for the nine ended March 31, 2001 was $367,800 as compared to
$276,769 for the same period in 2000. The increase was primarily a result of the
inclusion of the telephone operations and associated revenues of CWTel, Inc.,
which was acquired in March 2000, in the amount of $188,764.

                                       10
<PAGE>
COSTS AND EXPENSES

      Cost of revenue,  substantially comprised of leased  telephone lines for
the nine months  ended March 31, 2001 was  $286,563 as compared to $102,045  for
the same period in 2000.  The  increase was a result of a the increase of leased
lines expense  associated with the telephone  operations of CWTel,  Inc. and the
cost of leased telephone lines,  under long term leases,  of Quest Net Corp. for
which operations have been curtailed.

   Stock based compensation decreased by $1,334,431 during the nine months ended
March 31, 2001 as compared to the nine months ended March 31, 2000 due to the
scaled down operations of the Company, the corresponding decline in manpower and
the non-issuance of shares of common stock of the Company during the nine months
ended March 31, 2001.


      Salaries and bonuses decreased by $457,068 during the nine months ended
March 31, 2001 to $194,246, as compared to $651,314 during the nine months ended
March 31, 2000, due to a reduction in manpower as a result of scaled down
operations.

      General and administrative costs decreased to $1,330,420 for the nine
months ended March 31, 2001 as compared to $1,424,821 for the same period in
2000. The decrease was attributable to cost cutting efforts during the nine
months ended March 31, 2001.

      Depreciation and amortization decreased by $447,199 during the nine months
ended March  31,2001 as compared to the nine months  ended March 31,  2000.  The
decrease  was due to a review  conducted  by the Company at June 30, 2000 of the
net book value of its fixed assets,  covenant not to compete associated with its
acquisition of Wings Online,  Inc. and goodwill  associated with acquisitions of
CWTel,  Inc.  and AVX  Communications.  The review  indicated  that based on the
Company's level of operations,  the Company's  estimate of the recoverability of
such net book  values  was  significantly  impaired.  Accordingly,  the  Company
recognized a loss on impairment of $2,467,749 comprised of $714,851 attributable
to fixed  assets,  $179,633  attributable  to the  covenant  not to compete  and
$1,573,265 attributable to goodwill.

      Interest  expense  increased by $124,344 during the nine months ended
March 31, 2001 as compared to the nine months ended March 31,  2000.  As part of
the Company's  settlement of a lawsuit with a shareholder  in October 2000,  the
Company issued a $3,500,0000 note to the shareholder  bearing interest at 8% per
annum due in December 2001 resulting in interest  expense of $60,000 in the 2000
period.

      Interest income decreased by $75,989 during the nine months ended March
31, 2001 as compared to the nine months ended March 31, 2000 due to a decrease
in money market investment interest earned on the proceeds of a $5,000,000
private placement which were totally expended to fund the Company's operating
and investing activities during 1999.

      On October 16, 2000, Quest Net Corp. issued to James LLC, a shareholder of
the Company, 25,900,000 shares of its common stock. The shares were issued as
partial settlement of a lawsuit that was filed against Quest on May 5, 2000 in
the United States District Court, Southern District of New York, by James LLC
(Case No. 00 Civ. 3467). On the date of issuance of the shares of common stock,
their fair market value was $1,279,460. The lawsuit stemmed from the sale of
common stock to James LLC for $5,000,000. The lawsuit alleged that the Company
breached its contract of sale to James LLC by, among other things, failing to
register the common stock, and failing to pay liquidated damages for the
non-effectiveness of the registration statement. James LLC demanded damages in

                                       11
<PAGE>
excess of $5,000,000. Quest also issued a Promissory Note in the principal sum
of $3,500,000, maturing December 31, 2001, and bearing interest at the rate of
eight percent per annum. As result of the above matters, the Company has
recorded a loss from settlement from this lawsuit in the amount of $4,779,460.

      In December 2000, the Company returned $159,573 of communication equipment
not in service to the vendor from whom it was  purchased  in March 1998.  At the
time of purchase,  the Company had made an initial  payment of $126,824 with the
balance subject to monthly  payments of $13,400.  In September 2000, the Company
defaulted  on its monthly  payments and the vendor has asserted its right to the
balance of the  monthly  payments  approximating  $250,0000.  The outcome of the
vendor's  assertion  is  unknown  as of March 31,  2001,  however,  the  Company
estimates that, in the event the vendor's assertion is upheld by a court of law,
the loss that may be sustained by the Company would approximate $377,000 and has
recorded a loss for such amount.

In March 2000, the Company entered into a five year lease for 9,681 square feet
of space at 3001 West Hallandale Beach Boulevard, Pembroke Park, Florida as a
result of its recent growth and to consolidate operations to one location. The
aggregate annual minimum rent, as defined, over the life of the lease totaled
$778,000. In June 2000, as a result of a significant deterioration of the
Company's financial condition, the Company decided to abandon this space and to
operate from the leased premises of its CWTel, Inc. subsidiary. The lease
provided that in the event of default of payment of the rent due under the terms
of the lease, the lessor had the immediate right to all remaining rents due for
the balance of the term of the lease. At the time of the Company's decision, the
Company recorded a liability of $700,000 representing the remaining rents due
for the balance of the term of the lease. In December 2000, the Company and
landlord settled this matter in exchange for mutual releases granted to each
party from further action or litigation. As a result of the above matters, the
Company has recorded a gain on settlement of leased space in the amount of
$700,000.

LIQUIDITY AND CAPITAL RESOURCES

      From inception, the Company's revenues have been insufficient to support
its operations and as a result its continued existence is dependent upon its
ability to resolve its liquidity problems, principally by obtaining additional
debt and/or equity financing. The Company currently has a working capital
deficiency of $6,628,520 as compared to working capital of $604,810 at December
31, 1999 and a Shareholders' deficit of $6,396,322 including an accumulated
deficit of $24,452,879 at December 31, 2000. Additionally, the cash used in
operations for the nine months ended March 31, 2001 totaled $306,247. These and
other factors raise a substantial doubt as to the ability of the Company to
continue as a going concern. In order to continue its current operations and
effectuate its operational plan the Company will need to obtain additional debt
or equity financing. In the event that the Company is unable to obtain debt or
equity financing or is unable to obtain such financing on terms and conditions
that are acceptable, the Company may have to cease or severely curtail
operations.

      The Company has financed its operations through several Regulation D
private placement transactions.

      The Company anticipates that the balance of its capital needs for the
fiscal year ending June 30, 2001 will be approximately $ 250,000.

      In June 1999, the Company finalized a Private Placement ( REG D 506) with
James LLC in the  amount of  $5,000,000,  of which the  company  received  a net
amount of $4,650,000. On May 5, 2000, a lawsuit was filed against Quest by James
LLC. The lawsuit was settled On October 5, 2000. As part of the settlement,  the
Company issued James LLC, 25,900,000 shares of its common stock,  thereby giving
James LLC a majority  interest in the shares of the Company's  common stock then
outstanding  and a note in the principal sum of $3,500,000  maturing on December
31, 2001 with interest at eight percent per annum.

                                       12
<PAGE>
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

      Statements in this Quarterly Report on Form 10-QSB under the caption
"Management's Discussion and Analysis or Plan of Operations," as well as in the
Company's press releases or oral statements that may be made by the Company or
by officers, directors or employees of the Company acting on the Company's
behalf, that are not historical fact constitute "forward-looking statements".
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors that could cause the actual results of the Company to be
materially different from the historical results or from any results expressed
or implied by such forward-looking statements. Factors that might cause such a
difference include, without limitation, the information set forth below. In
addition to statements which explicitly describe such risks and uncertainties,
statements labeled with the terms "believes", "belief" "expects", "plans" or
"anticipates" should be considered uncertain and forward-looking. All cautionary
statements made in this Report should be read as being applicable to all related
forward-looking statements wherever they appear.

Limited Operating History; Continuing Operating Losses
------------------------------------------------------

         From inception to March 31, 2001, we generated revenues of
approximately $1,714,100 and incurred operating expenses of approximately
$19,900,000. At March 31, 2001, we had a net loss of approximately $6,192,000.


The Company is Unable to Meet Capital Needs
-------------------------------------------

         At present, we are not generating enough cash flow to meet our
operating needs. We have downsized our employees to three full-time and one
part-time employee, including our sole officer, Charles Wainer. The Company has
cut back on all but the necessary expenses, however we still cannot fund our
operations.

         We have been seeking additional capital to fund our operations, and we
are seeking to obtain additional capital through debt or equity financing or
conventional loans. However, we have been unsuccessful to date due to our credit
rating and low stock price. If we cannot obtain additional funds or a candidate
that wishes to take over the Company and infuse additional capital within the
next few months, the Company will be forced to cease operations or seek
protection by filing for Bankruptcy.

         Our lack of working capital has necessitated the sale of 20% of our
subsidiary GlobalBot. In addition, our Board of Directors has approved the
spin-off of GlobalBot in order to give GlobalBot the financial and operational
flexibility to take advantage of significant growth opportunities in the
E-commerce business. We believe that separating the two companies will give
GlobalBot a better access to capital, and allow the investment community to
measure GlobalBot's performance as a stand alone company.

         In November 2000, we were forced to sell our dial-up customers to an
unaffiliated third party because be could no longer afford to maintain our dial
up lines.

         If we are unable to continue our operations, your entire investment in
us will be lost. See "Management's Discussion and Analysis or Plan of Operations
--Liquidity and Capital Resources" for a discussion of our working capital and
 capital expenditures.

We Have Had History Of A Limited Customer Base And This May Continue To Be The
Case.


                                       13
<PAGE>
         At present, our customer base is limited. Our ability to operate
profitably depends on increasing our customer base and achieving sufficient
gross profit margins. We cannot assure you that we will be able to increase our
customer base or to operate profitably.

We Are Subject To All Of The Substantial Risks Inherent In An Internet Business,
Which May Harm Our Ability To Operate Successfully.

         We are subject to all of the substantial risks inherent in an Internet
related business, any one of which may harm our ability to operate successfully.
These include, but are not limited to:

   Our inability to develop, maintain and/or increase levels of traffic on our
     Internet sites.
   Our inability to attract or retain customers.
   Our inability to generate significant Web-based revenue from our customers.
   Our failure to anticipate and adapt to a developing market and the level of
     use of the Internet and online services for the purchase of consumer
     products and in general.
   Our inability to upgrade and develop competitive systems and infrastructures.
   The failure of our servers and networking  systems to efficiently  handle our
     Web  traffic.
   Technical difficulties and system downtime or Internet brownouts.

If We Raise Addition Capital Through The Issuance Of Equity Or Convertible Debt,
Your Proportionate Interest Will Be Diluted.

         We will need more working capital to continue our operations. If we
raise additional capital by issuing equity or convertible debt securities, the
percentage ownership of our then-current stockholders will be reduced, and such
securities may have senior rights, preferences, or privileges.

Our Data Centers And The Networks On Which We Rely Are Sensitive To Harm From
Human Factions And Natural Disasters. Any Resulting Disruption Could
Significantly Damage Our Business And Reputation.

         Our reputation for providing reliable service largely depends on the
performance and security of our data centers equipment and the network
infrastructure on which we rely. Our customers often maintain confidential
information on our servers.

         Our data centers, equipment and networks, and our customers'
information are subject to damage and unauthorized access from:

               Human error and tampering.
               Breaches of security.
               Natural disasters.
               Power loss.
               Capacity limitations.
               Software defects.
               Telecommunications failures.
               Intentional acts of vandalism, including computer viruses.

         All of which, will cause interruptions in service or reduced capacity
for our customers. These events could potentially jeopardize the security of our
customers' confidential information such as credit card and bank account
numbers.

         Despite precautions we have taken and plan to take, the occurrence of
any one of the events listed above or other unanticipated problems could
seriously damage our business and reputation and cause us to lose customers.

         The time and expense required to eliminate computer viruses and
alleviate other security problems could be significant and could impair our
service quality.

                                       14
<PAGE>
We Could Not Provide Adequate Service To Our Customers If We Were Unable To
Secure Or Maintain Sufficient Network Capacity To Meet Our Future Needs On
Reasonable Terms Or At All.

         Our failure to achieve or maintain high capacity data transmission
could negatively impact service levels to our existing customers and limit our
ability to attract new customers, which would harm our business.


We Are Dependent On Internet Network Access Services We Receive From Others, Any
 Disruption Of These Services Could Harm Our Business

         We rely on third-party networks, local telephone companies, and other
companies to provide data communications capacity. Any disruption of these
services could cause our customers to find other providers and prohibit us from
obtaining new customers.

Our Business Depends In Part On Our Network Service Provider's Numerous Peering
 Relationships. Their Inability To Maintain Their Peering Relationships Could Be
 Costly And Harmful To Our Business.

         The Internet is composed of many Internet service providers that
operate their own networks and interconnect with other Internet Service
Providers at various peering points.

         If our network service provider's network or infrastructure fails to
continue to meet industry requirements for peering or it loses its peering
relationships for any reason, our transmission rates could be reduced, resulting
in a decrease in the quality of service we provide to our customers.

Potential Lack Of Liquidity Of Our Common Stock

         Our common stock trades on the OTC Electronic Bulletin Board. Stocks
trading on the OTC Electronic Bulletin Board generally attract a smaller number
of market makers and a less active public market.

         Moreover, since our common stock is traded on the OTC Electronic
Bulletin Board, investors may find it difficult to dispose of or obtain accurate
quotations as to the value of our common stock.

We Are Subject To Penny Stock Regulations And Restrictions

         Our stock is designated as a Penny Stock. Such a designation requires
any broker or dealer selling such securities to disclose certain information
concerning the transaction, obtain a written agreement from the purchaser, and
determine that the purchaser is reasonably suitable to purchase such securities.
These rules will restrict the ability of Broker / Dealers to sell our common
stock and may affect the ability of Investors to sell their shares.

You May Not Be Able To Resell Shares Of Our Stock At Or For More Than The Price
You Paid.

         The price of our common stock and Internet and telecommunication stock
in general, have recently experienced extreme volatility that often has been
unrelated to the operating performance of any specific public companies. During
the period from July 10, 1998 to February 7, 2001 the bid and ask price of our
common stock has ranged from a high of $30.71 to a low of $.02. If continued,
these broad market and industry fluctuations may adversely affect the trading
price of our common stock, regardless of our actual operating performance. This
volatility may negatively impact the liquidity and value of your shares.

Our Articles of Incorporation Allow Authorization and Discretionary Issuance  of
Preferred Stock


                                       15
<PAGE>
         Our Articles of Incorporation authorize the issuance of "blank check",
preferred stock. The Board of Directors is empowered, without stockholder
approval, to designate and issue additional series of preferred stock with
dividend, liquidation, conversion, voting, or other rights, including the right
to issue convertible securities with no limitations on conversion. Any such
designations and issuances, could:

       Adversely affect the voting power or other rights of the holders of our
         common stock.

       Substantially dilute the common shareholder's interest. Depress the price
       of our common stock.

         Our Certificate Of Incorporation Gives The Board Of Directors The Sole
Authority To Issue "Blank Check" Preferred Stock. The Issuance Of "Blank Check"
Preferred Stock Could Have The Effect Of Delaying, Deterring, Or Preventing A
Merger, Take Over Or Change In Control Without Any Action By The Shareholders.

         The Board of Directors, by the issuance of preferred stock, could make
it more difficult for a third party to acquire us, even if the acquisition would
be beneficial to you. You may not realize the premium return that stockholders
may realize in conjunction with corporate takeovers.

        The issuance of "blank check" Preferred stock could delay, deter, or
prevent a take over, merger or change of control and May Prevent You From
Realizing A Premium Return.

We May Be Unable To Protect Our Intellectual Property Rights Or To Continue
Using Intellectual Property That We License From Others.

         We rely and will rely on a combination of copyright, trademark, service
mark, and trade secret laws and contractual restrictions to establish and
protect certain of our proprietary rights. We have no patented technology that
would bar competitors from our market. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or otherwise obtain
and use our data or technology.


The Uncertainty Associated With Unproven Business Models

         Since Quest Net's business model is relatively new and unproven, we may
not be able to anticipate and adapt to a developing market, or may be unable to
manage its network infrastructure (including server, hardware, and software, to
handle our Internet traffic, or to effectively manage our rapidly expanding
operations.

We  Lack  Unique  Services  Or  Market  Niche  In  An  Industry Characterized By
 Significant Overcapacity For Current Demand

         The market for Internet access is highly competitive and fragmented
with over 4,800 Internet service providers, primarily in local markets and
averaging less than 5,000 customers each. Multiple Internet access providers
serve every local market we have entered, or intend to enter. We offer the same
type of services as other Internet service providers. Due to our lack of working
capital in the past, we have not obtained any significant market share.

We Cannot Be Certain That We Will Be Able To Compete With Significant Pricing
Pressure By Our Competitors.

         As a result of increased competition in our industry, we expect to
encounter significant pricing pressure. We cannot be certain that we will be
able to offset the effects of any required price reductions through an increase
in the number of our subscribers, higher revenues from our business services,
cost reductions or otherwise, or that we will have the resources to continue to
compete successfully.

                                       16
<PAGE>
We May Not Be Able To Compete In The Internet Service Market

         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, CompuServe, and Prodigy.
        >> Local, regional, and national Internet service providers, such as
           MindSpring, Earthlink, Network, Inc., Internet America, and PSINet.
        >> National  telecommunications  companies,  such  as  AT&T  Corp.,  MCI
           WorldCom, Inc., Sprint, and GTE.
        >> Regional Bell operating companies, such as BellSouth and SBC
           Communications.

         Our competition is likely to increase. We believe this will probably
happen as large diversified telecommunications and media companies acquire
Internet service providers and as Internet service providers 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. As a result, our business may suffer.


We May Not Be Able To Compete In The Long-Distance Telephone Market

         Quest, through its wholly owned subsidiary CWTel, is a reseller of long
distance telephone service. We compete with long distance carriers and other
long distance resellers and providers, including large carriers such as AT&T,
MCI WorldCom and Sprint and new entrants to the long distance market. Many of
our competitors are significantly larger and have substantially greater market
presence and financial, technical, operational, marketing and other resources.
We will face stiff price competition and may not be able to compete.

Quest Has Limited Marketing And Sales Capability.

         Because of our lack of working capital we have not had the resources to
develop a marketing and sales force.

Dependence On Qualified Personnel.

         Due to the specialized nature of our business, we are highly dependent
upon our ability to attract and retain qualified technical and managerial
personnel. Our failure to recruit key technical and managerial personnel in a
timely manner has been detrimental to our plan of operations and has had an
adverse impact upon our business affairs and finances. Due to our lack of
operating capital, we have had to downsize our technical personnel to two, which
includes Charles Wainer, our sole officer.

The "Going Concern" emphasis On The Report Of Our Independent Accountants May
Reduce Our Ability To Raise Additional Financing.

         The report of our independent accountants on our June 30, 2000
Consolidated Financial Statements contains an explanatory paragraph regarding
our ability to continue as a going concern. Our independent accountants cited
our history of operating losses, limited operating history, and negative cash
flow from operations, which raised substantial doubt as to our ability to
continue as a going concern. This "going concern", emphasis will reduce our
ability to raise additional financing.


                                       17
<PAGE>
Control By James LLC/Possible Change Of Control

         James LLC beneficially owns 54.3% of the outstanding Common Stock of
the Company. Due to it stock ownership, James LLC is in a position to elect all
of the Company's directors and control policies and operations of the Company.
This could effectuate a change in control of the Company. See, "Principal
Shareholders".

No Payment Of Dividends

         Although we declared a three-for-one stock dividend in December 1998,
it is not anticipated that we will pay any cash dividends on our common stock in
the future. The Board of Directors intends to follow a policy of retaining
earnings, if any, for use in our business operations. As a result, the return on
your investment in us will depend upon any appreciation in the market price of
the common stock.


GENERAL

PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

SECURE TRANSACTION INTERNATIONAL CORP. ET AL.

      In April 1999, Quest filed a lawsuit in the Circuit Court of the 17th
Judicial Circuit in and for Broward County, Florida against Secure Transaction
International Corp., its subsidiaries and principals, the accounting firm of
Margolis, Fink & Wichrowski, Barry A Fink, C.P.A., P.A., Mark V. Wichrowski,
C.P.A. and Barry A. Fink and Mark Wichrowski, individually, alleging violation
of the Florida securities laws, negligent misrepresentations, breach of contract
payment of accounts, and conversion.

      The lawsuit stems from several contracts entered into with Secure
Transaction and its subsidiaries for bandwidth, consulting services and
software. As payment for the services, Secure Transaction and its subsidiaries
issued redeemable preferred stock that was convertible into Secure Transaction
common stock.

      Quest provided the services as required and the appropriate amount of
convertible stock was not redeemed or converted.The amount due the Company under
these various agreements is approximately $867,842.

      Quest has also alleged that the Financial Statements provided, negligently
misrepresented the financial condition of Secure Transaction and its
subsidiaries. Quest has asked the court for rescission, compensatory damages,
attorneys' fees, costs, and expenses.

      The defendants filed a motion to dismiss, which was denied. The defendants
have filed an answer to our complaint. The lawsuit is in the discovery stage. At
present, we are unable to predict the outcome this lawsuit.

QWEST COMMUNICATIONS CORP. TRADEMARK INFRINGEMENT

         Qwest Communication Corp. has filed suit against the Company for
trademark infringement. The Company is currently negotiating a settlement of
this suit and believes that this suit will be resolved by the end of the third
quarter of fiscal year ended 2001.




                                       18
<PAGE>
TELLIGENT V. QUESTNET CORP.

         Telligent, Inc. has filed suit against the Company in the State of
Florida, for $50,000. Telligent alleges that it is due these monies for services
rendered to the Company. The Company has filed a motion to dismiss this suit and
intends to vigorously defend this action.

GREAT AMERICA LEASING

         Great America Leasing Corp. filed suit in the State of Iowa, in
connection  with a default  on leases in the name of the  Company.  The suit was
uncontested  and a default  judgment in the amount of $28,000 was levied against
the Company.

SECURITIES AND EXCHANGE COMMISSION

      Quest has been advised by the Securities and Commission (the "Commission")
that they have issued an order directing a private investigation of possible
violations of Sections 17(a) of the Securities Act and Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated there under by
certain unnamed persons. The Commission has also advised Quest that the
investigation should not be construed as an indication by the Commission or its
staff that any violation of law has occurred, nor as a reflection upon any
person, entity, or security.


ITEM 2. CHANGES IN SECURITIES.

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

The Company has not submitted any matters to a vote of Security Holders.

ITEM 5.    OTHER INFORMATION.

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

Filed April 10, 2001




                                       19
<PAGE>

                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, who is duly
authorized to sign as an officer and as the principal financial officer of the
registrant.

  Dated: May 31, 2001                    QUEST NET CORP.



                                          By: /s/Adam Wasserman
                                              ----------------------------------
                                              Adam Wasserman
                                              Acting Chief Financial Officer




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