<PAGE>


                       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: December 31, 2000.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 for the transition period from           to
                                               ---------    ---------------
    2000

Commission file number :000-24447

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

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

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


                            PARPUTT ENTERPRISES, INC.
                             12835 E. ARAPAHOE ROAD
                               TOWER I, PENTHOUSE
                            ENGLEWOOD, COLORADO 80112
                        (Former name and former address)


                            Florida [4813] 84-1331134
        (State of Incorporation) Primary Standard Industrial IRS Employer
                    (Classification Code Number I.D. Number)

                  Securities registered under Section 12(b) of
                                the Exchange Act:
                                      None

                  Securities registered under Section 12(g) of
                                the Exchange Act:
                           Common Stock, no par value
                                (Title of class)


      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 January 24, 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

<TABLE>
<CAPTION>

                                                                                 Page
                                                                                 ----
<S>                                                                               <C>
Item 1.    Financial Statements

Consolidated Balance Sheet - December 31, 2000 ................................    3

Consolidated Statements of Operations - Six months ended December 31, 2000
   and 1999 and Three months ended December 31, 2000 and 1999 ..................   4

Consolidated Statements of Cash Flows - Six months ended
      December 31, 2000 and 1999 ..............................................    5

Notes to Consolidated Financial Statements ... .................................   6

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Plan of Operations............................................    7-14

Part II - Other Information

Item 1.    Legal Proceedings....................................................  15

Item 2.    Changes in Securities................................................  15

Item 3.    Defaults Upon Senior Securities......................................  15

Item 4.    Submission of Matters To a Vote of Security Holders ................   16

Item 5.    Other Information....................................................  16

Item 6.    Exhibits and Reports on Form 8-K.....................................  16

Signature ......................................................................  17

</TABLE>






                                        2

<PAGE>
                                 QUEST NET CORP

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2000
                                    UNAUDITED
<TABLE>
<CAPTION>
                                     ASSETS
<S>                                                                          <C>

CURRENT ASSETS
   Cash                                                                      $     4,076
   Accounts receivable net of $10,185 allowance                                   22,691
   Prepaid expenses                                                                1,779
                                                                           ---------------
          TOTAL CURRENT ASSETS                                                    28,546

PROPERTY AND EQUIPMENT, net of
   accumulated depreciation of $156,379                                          330,258

OTHER ASSETS                                                                       6,663
                                                                           ---------------
                                                                             $   365,467
                                                                           ===============


                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable and accrued expenses                                     $ 1,177,767
   Notes payable-shareholder                                                   3,500,000
   Notes payable                                                                 126,482
   Due to shareholder                                                            657,232
   Obligations under capital lease - current                                      13,559
                                                                           --------------
          TOTAL CURRENT LIABILITIES                                            5,475,040

MINORITY INTEREST                                                                 80,000

OBLIGATIONS UNDER CAPITAL LEASE                                                   33,263

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                                17,670,181
   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                                                       (23,279,293)
                                                                           --------------
          TOTAL SHAREHOLDERS' DEFICIT                                         (5,222,836)
                                                                           --------------
                                                                             $   365,467
                                                                           ==============

</TABLE>


           See accompanying notes to consolidated financial statements

                                       3
<PAGE>

                                 QUEST NET CORP.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                    UNAUDITED

<TABLE>
<CAPTION>
                                                       For the six months ended                  For the three months ended
                                                              December 31,                               December 31,
                                                  -------------------------------------    -----------------------------------------
                                                          2000                 1999                  2000                   1999
                                                  ----------------    -----------------    -------------------    ------------------
<S>                                                    <C>                  <C>                    <C>                     <C>
REVENUES
   Internet and other related services               $   242,657            $ 108,817              $ 128,567               $ 61,072
                                                   ----------------    -----------------    -------------------    -----------------

COSTS AND EXPENSES
   Cost of internet-related services                     188,156               16,477                115,656                 10,685
   Stock based compensation                                    -              668,203                      -                411,203
   Bad debt expense                                        3,052                    -                      -                      -
   Salaries and bonuses                                  164,157              398,639                 92,889                229,387
   General and administrative                            340,555              694,054                126,481                418,397
   Depreciation and amortization                          43,781              425,283                 23,771                220,891
                                                    ----------------    -----------------    -------------------    ----------------
TOTAL OPERATING EXPENSES                                 739,701            2,202,656                358,797              1,290,563
                                                    ----------------    -----------------    -------------------    ----------------

OPERATING LOSS                                          (497,044)          (2,093,839)              (230,230)            (1,229,491)

NON-OPERATING INCOME (EXPENSE)
   Interest expense                                      (65,038)             (33,872)               (62,396)                     -
   Interest income                                             -               63,927                      -                 28,559
   Realized loss on marketable securities                      -              (17,751)                     -                (11,471)
   Proceeds from settlement                                    -              109,454                      -                109,454
   Gain on settlement of leased space                    700,000                    -                700,000                      -
   Loss upon return of leased equipment                 (376,824)                   -               (376,824)                     -
   Loss from settlement of lawsuits                   (4,779,460)                   -             (4,779,460)                     -
                                                   ----------------    -----------------    -------------------    -----------------
NET LOSS                                             $(5,018,366)         $(1,972,081)          $ (4,748,910)          $ (1,102,949)
                                                   ================    =================    ===================    =================

NET LOSS PER SHARE:
   Basic and diluted                                     $ (0.15)             $ (0.09)               $ (0.11)               $ (0.05)
                                                   ================    =================    ===================    =================

SHARES USED FOR COMPUTING NET LOSS PER SHARE:

Basic and diluted                                     34,254,309           22,180,102             44,918,395             22,207,126
                                                   ================    =================    ===================    =================
</TABLE>


         See accompanying notes to the consolidated financial statements

                                       4
<PAGE>

                                 QUEST NET CORP
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                   For the Six Months Ended
                                                                                                          December 31,
                                                                                                  2000                 1999
                                                                                               Unaudited            Unaudited
                                                                                            -----------------   -------------------
<S>                                                                                               <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                                                                      $ (5,018,366)        $ (2,042,447)
                                                                                            -----------------   -------------------
   Adjustments to reconcile net loss to net cash provided by (used in) operating
      activities:
      Depreciation and amortization                                                                   43,779               423,832
      Stock based compensation                                                                             -               662,603
      Stock issued for services and settlements                                                    1,279,460                 6,000
      Realized loss from marketable securities                                                             -                17,751
      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                                                                             13,021               (11,227)
      Other receivable                                                                                     -               (30,336)
      Increase in prepaid expenses                                                                    19,654               (40,106)
      Other assets                                                                                    26,717                22,674
      Accounts payable and accrued expenses                                                          143,979               327,191
                                                                                            -----------------   -------------------
                                                                                                   5,016,225             1,378,382
                                                                                            -----------------   -------------------
NET CASH PROVIDED BY USED IN OPERATING ACTIVITIES                                                     (2,141)             (664,065)
                                                                                            -----------------   -------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                                                              (81,055)             (862,639)
   Purchase of marketable securities                                                                       -              (100,032)
   Advances made to acquisition candidate                                                                                 (100,000)
                                                                                            -----------------   -------------------
CASH FLOWS USED IN INVESTING ACTIVITIES                                                              (81,055)           (1,062,642)
                                                                                            -----------------   -------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Redemption of preferred stock                                                                           -            (1,000,000)
   Funds provided by shareholder                                                                      19,900                     -
   Procceds from notes payable                                                                        44,497                     -
   Repayments of capital lease                                                                        (5,816)                    -
                                                                                            -----------------   -------------------
CASH FLOWS USED IN (PROVIDED BY) FINANCING ACTIVITIES                                                 58,581            (1,000,000)
                                                                                            -----------------   -------------------

NET DECREASE IN CASH                                                                                 (24,615)           (2,726,707)
   Cash, at beginning of period                                                                       28,691             4,298,289
                                                                                            -----------------   -------------------
   Cash, at end of period                                                                            $ 4,076           $ 1,571,582
                                                                                            =================   ===================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                                                               $ 5,138           $    33,872
                                                                                            =================   ===================

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

NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for services previously accrued                                                  $     -           $ 1,037,015
                                                                                            =================   ===================

Equipment placed in service                                                                          $     -           $    89,144
                                                                                            =================   ===================
</TABLE>


           See accompanying notes to consolidated financial statements

                                       5
<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 six months and three months ended  December 31, 2000 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
four other wholly owned  subsidiaries,  IPQuest  Corp.,  Quest  Wireless  Corp.,
Globalbot Corp., QuesTel Corp. and 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.  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 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 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 the another  vendor from whom it was  purchased in March 1998.  At
the time of  purchase,  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  $250,000.   The outcome of the
vendor's  assertion  is unknown as of December 31,  2000,  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 CW Tel,  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.

                                        6

<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 December 31, 2000, of approximately  $23,988,000  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.

                                        7

<PAGE>

         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

SIX MONTHS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999

REVENUE

      Revenue  for  the  six  months  ended  December 31, 2000  was  $242,657 as
compared to $108,817 for the same period in 1999. The increase was  primarily  a
result of the inclusion of the telephone  operations and associated  revenues of
CW Tel, Inc., which was acquired in March 2000, in the amount of $188,764.

COSTS AND EXPENSES

      Cost of revenue, was substantially comprised of leased telephone lines for
the six months  ended  December 31, 2000 was $188,156 as compared to $16,477 for
the same period in 1999.  The  increase was a result  of leased lines expense of
$42,471  associated with the telephone operations of CW Tel, Inc. and  the  cost
of leased telephone lines,  under long term leases, of Quest Net Corp.  totaling
$136,177 for which operations have been curtailed.

   Stock based  compensation  decreased by $668,203  during the six months ended
December 31, 2000 as compared to the six months  ended  December 31, 1999 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 six
months ended December 31, 2000.

      Salaries  and bonuses  decreased  by $234,482  during the six months ended
December  31, 2000 to  $164,157,  as compared to $398,639  during the six months
ended  December 31,  1999,  due to a reduction in manpower as a result of scaled
down operations.

      General and administrative  costs decreased to $340,555 for the six months
ended December 31, 2000 as compared to $694,054 for the same period in 1999. The
decrease was  attributable  to cost cutting  efforts during the six months ended
December 31, 2000.

      Depreciation and amortization  decreased by $381,502 during the six months
ended  December  31,2000 as compared to the six months ended  December 31, 1999.
The decrease  was due 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  $31,166  during  the  six months   ended
December 31, 2000 as compared to the six months ended December 31, 1999. As part
of the Company's  settlement of a lawsuit  with a  shareholder in October  2000,
the Company issued a $3,500,000  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. During the quarter ended September 30, 1999, as a result of Company
not  redeeming  its preferred stock  outstanding on a timely basis due to a lack
funds at the time, the Company incurred $33,872 of interest expense.

                                       7A
<PAGE>


      Interest income  decreased by $63,927 during the six months ended December
31, 2000 as compared to the six months ended December 31, 1999 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
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
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 another  vendor from whom it was  purchased  in
March 1998.  At the time of  purchase,  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 December 31, 2000,  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 CW Tel,  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.

                                       8
<PAGE>
THREE  MONTHS  ENDED  DECEMBER  31,  2000 AND DECEMBER 31, 1999

REVENUE

      Revenue for the three  months  ended  December  31,  2000 was  $128,567 as
compared to $61,072 for the same period in 1999.  The increase  was  primarily a
result of the inclusion of the telephone  operations and associated  revenues of
CW Tel, Inc., which was acquired in March 2000, in the amount of $106,241.

COSTS AND EXPENSES

      Cost of revenue, was substantially comprised of leased and telephone lines
for the quarter ended  December 31, 2000 was $115,656 as compared to $10,685 for
the same period in 1999.  The  increase was a result of a the increase of leased
lines expense associated with the telephone operations of CW Tel, Inc..

   Stock  based  compensation  decreased  by $411,203  during the quarter  ended
December 31, 2000 as compared to the quarter ended  December 31, 1999 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 quarter
ended December 31, 2000.


      Salaries  and  bonuses  decreased  by $136,498  during the  quarter  ended
December 31, 2000 to $92,889,  as compared to $229,387  during the quarter ended
December  31,  1999,  due to a reduction  in manpower as a result of scaled down
operations.

      General and administrative  costs  decreased to $126,481 the quarter ended
December  31,  2000 as compared  to  $418,397  for the same period in 1999.  The
decrease was  attributable  to cost  cutting  efforts  during the quarter  ended
December 31, 2000.

      Depreciation  and  amortization  decreased by $197,120  during the quarter
ended  December 31, 2000 as compared to the quarter ended December 31, 1999. The
decrease  was due 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 $62,396 during the quarter ended December
31, 2000 as compared to the quarter  ended  December  31,  1999.  As part of the
Company's  settlement  of a lawsuit  with a  shareholder  in October  2000,  the
Company issued a $3,500,000  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 $28,559 during the quarter ended December 31,
2000 as  compared to the quarter  ended  December  31, 1999 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
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
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 another  vendor from whom it was  purchased  in
March 1998.  At the time of  purchase,  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 December 31, 2000,  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 CW Tel,  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.


                                       9
<PAGE>


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 $5,446,494 as compared to working  capital of $604,810 at December
31, 1999 and a  Shareholders'  deficit of  $5,222,836  including an  accumulated
deficit of  $23,279,293  at December  31, 2000.  Additionally,  the cash used in
operations  for the quarter ended  December 31, 2000 totaled  $2,141.  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 are 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,  the lawsuit was  settled.  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.


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  December  31,  2000,  we  generated   revenues  of
approximately  $1,589,100  and  incurred  operating  expenses  of  approximately
$17,987,000.  At  December  31,  2000,  we  had  a  net  loss  of  approximately
$5,018,000.

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.

                                       10
<PAGE>


         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  of  Financial
Condition  and Results 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.
         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.

                                       11
<PAGE>


         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.

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.

                                       12
<PAGE>


         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 January 24, 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

         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.

                                       13
<PAGE>


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.

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.

                                      13A
<PAGE>

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.

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.

                                       14
<PAGE>


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.

SUNRISE INTERNATIONAL LEASING CORPORATION, AS ASSIGNEE OF CISCO SYSTEMS  CAPITAL
CORPORATION

       On October 13, 2000 a verified complaint was filed in the Fourth Judicial
District  Court  of  State  of  Minnesota  by  Sunrise   International   Leasing
Corporation as assignee of Cisco Systems Capital Corporation  asserting that the
Company  is in  default  of payment  under  terms of a Master  Lease  Agreement,
covering various  computer/communication  equipment. The Complaint seeks payment
of the entire amounts of the remaining  lease  payments,  including  arrearages,
approximating $250,000, due and immediately payable.  Furthermore, the Plaintiff
seeks the right of replevin and  recovery of all  reasonable  costs  incurred in
conjunction with asserting its complaint.

      In December  2000,  the Company  returned the equipment in question to the
Plaintiff.  The lawsuit is in the discovery  stage.  At present,  the Company is
unable to predict the outcome of this lawsuit.

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.

      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). As a result of this settlement, James LLC  beneficially
owns 54.3% of the outstanding  Common Stock of the Company.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

                                       15

<PAGE>

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.

On February 25, 2000, Quest entered into a Stock Purchase  Agreement,  effective
March 1,  2000 to  purchase  CWTel,  Inc.  from  Charles  Wainer  for the sum of
$1,200,000.  Of the purchase  price  $200,000 was paid at closing,  $700,000 was
paid by the issuance of 360,000 share of the Company's  restricted  common stock
and $300,000 was to be paid in three equal  payments at 90 days,  180 days,  and
270 days from closing.  These payments were  represented by promissory  note and
guaranteed by the issuance,  at closing,  of 300,000 shares of preferred  stock,
with a face value of $10.00 per share.  The Company is  presently in default for
all payments under the purchase  agreement.  CWTel, Inc. provides  communication
services to commercial and residential customers.  The company is a switch-based
carrier  for  local  and  long  distance  voice  calls  utilizing   conventional
transmission  methods and Voice over IP  protocols.  CWTel,  Inc.  also provides
high-speed  Internet service,  dial-up Internet access, and web hosting.  CWTel,
Inc.  offers local dial tone,  long distance  calling,  and high speed  Internet
access to tenants located in commercial buildings.


      During the quarter ended June 30, 2000,  the Company found that there were
severe  technological  problems with the equipment of Wireless,  Inc., which was
returned to the manufacturer in October 2000.

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

Filed November 16, 2000

                                       16

<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: February 26, 2001                    QUEST NET CORP.



                                          By: /s/ Charles Wainer
                                              ----------------------------------
                                              Charles Wainer, President
                                              Acting Chief Financial Officer

                                       17

<PAGE>