<PAGE>   1
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                           -------------------------
 
                                   FORM 10-Q
(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, 1998
                                       OR
[ ]            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 000-23953
 
                             OMEGA WORLDWIDE, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                                    MARYLAND
                            (State of Incorporation)
                                   38-3382537
                      (I.R.S. Employer Identification No.)
 
                900 VICTORS WAY, SUITE 345, ANN ARBOR, MI 48108
                    (Address of principal executive offices)
 
                                 (734) 887-0300
                    (Telephone number, including area code)
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
 
Yes  X        No
   ----         ----
 
     Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of December 31, 1998
 
                          COMMON STOCK, $.10 PAR VALUE
                                    (Class)
                                   12,258,000
                               (Number of shares)
 
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<PAGE>   2
 
                             OMEGA WORLDWIDE, INC.
 
                                   FORM 10-Q
 
                               DECEMBER 31, 1998
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                               PAGE NO.
                                                                               --------
<S>            <C>                                                             <C>
PART I         FINANCIAL INFORMATION
Item 1.        Financial Statements:
               Condensed Consolidated Balance Sheets (unaudited)
                 December 31, 1998 and September 30, 1998..................        2
               Condensed Consolidated Statement of Operations (unaudited)
                 --
                 Three months ended December 31, 1998......................        3
               Condensed Consolidated Statement of Cash Flows (unaudited)
                 --
                 Three months ended December 31, 1998......................        4
               Condensed Consolidated Statement of Shareholders' Equity
                 (unaudited) --
                 December 31, 1998.........................................        5
               Notes to Condensed Consolidated Financial Statements
                 December 31, 1998 (unaudited).............................        6
Item 2.        Management's Discussion and Analysis of Financial Condition
                 and Results of Operations.................................        9
PART II        OTHER INFORMATION
Item 5.        Other Information...........................................       12
Item 6.        Exhibits and Reports on Form 8-K............................       12
</TABLE>
<PAGE>   3
 
                        PART 1 -- FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
                             OMEGA WORLDWIDE, INC.
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                   UNAUDITED
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,   SEPTEMBER 30,
                                                                  1998           1998
                                                              ------------   -------------
                                                                              (SEE NOTE)
<S>                                                           <C>            <C>
ASSETS
Current Assets:
  Cash and short-term investments...........................    $    610        $10,281
  Restricted cash...........................................       9,330          9,330
  Temporary advances to Principal Healthcare Finance
     Limited................................................      17,341
  Other current assets......................................       3,023          1,956
                                                                --------        -------
          Total current assets..............................      30,304         21,567
Land and buildings subject to triple-net lease, net of
  accumulated depreciation of $355 and $157, respectively...      79,472         27,300
Investments in and advances to Principal Healthcare Finance
  Limited...................................................      38,124         37,902
Other assets................................................       5,022          2,223
                                                                --------        -------
                                                                 122,618         67,425
                                                                --------        -------
          Total Assets......................................    $152,922        $88,992
                                                                ========        =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable and accrued expenses.....................    $  3,277        $ 1,901
  Accrued income taxes......................................         745            433
  Bank revolving credit facility............................      23,500
  Non-interest bearing deferred purchase obligation.........      30,405         28,007
                                                                --------        -------
          Total current liabilities.........................      57,927         30,341
Revolving warehouse facility................................      35,364
                                                                --------        -------
          Total Liabilities.................................      93,291         30,341
Shareholders' Equity:
  Preferred Stock $1.00 par value:
     Authorized 10,000 shares
       Outstanding 260 Class B shares at liquidation
      value.................................................       2,600          2,600
  Common stock $.10 par value
     Authorized 50,000 shares
       Outstanding 12,258 shares............................       1,226          1,226
  Additional paid-in capital................................      52,861         52,861
  Retained earnings.........................................       3,246          1,955
  Unrealized loss on Tamaris stock..........................        (311)
  Cumulative translation adjustments........................           9              9
                                                                --------        -------
          Total shareholders' equity........................      59,631         58,651
                                                                --------        -------
          Total Liabilities and Shareholders' Equity........    $152,922        $88,992
                                                                ========        =======
</TABLE>
 
Note -- The balance sheet at September 30, 1998, has been derived from audited
        consolidated financial statements at that date but does not include all
        of the information and footnotes required by generally accepted
        accounting principles for complete financial statements.
 
           See notes to condensed consolidated financial statements.
 
                                        2
<PAGE>   4
 
                             OMEGA WORLDWIDE, INC.
 
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
 
                                   UNAUDITED
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                              DECEMBER 31, 1998
                                                              ------------------
                                                                    NOTE A
<S>                                                           <C>
Revenues:
  Fee income -- Principal Healthcare Finance Limited........       $ 1,143
  Interest:
     Principal Healthcare Finance Limited...................         1,089
     Short-term investments.................................           226
  Rent income...............................................         1,315
  Other income..............................................            85
                                                                   -------
                                                                     3,858
Expenses:
  Direct costs of services provided.........................           657
  Allocated expenses from Omega Healthcare Investors,
     Inc. ..................................................           188
  Imputed and other interest................................           853
  Provision for depreciation................................           194
  General and administrative................................           365
                                                                   -------
                                                                     2,257
                                                                   -------
Earnings before equity earnings and taxes...................         1,601
Equity in earnings of Principal Healthcare Finance
  Limited...................................................           223
                                                                   -------
Net earnings................................................         1,824
Provision for Federal and foreign income taxes..............          (533)
                                                                   -------
Earnings before preferred stock dividends...................         1,291
Preferred stock dividends...................................           (52)
                                                                   -------
Net Earnings Available to Common Shareholders...............       $ 1,239
                                                                   =======
Earnings per common share, Basic............................          $0.10
                                                                   =======
Earnings per common share, Diluted..........................         $0.10
                                                                   =======
Average shares outstanding, Basic...........................        12,258
                                                                   =======
Average shares outstanding, Diluted.........................        12,258
                                                                   =======
Total comprehensive income, net of taxes....................       $   980
                                                                   =======
</TABLE>
 
           See notes to condensed consolidated financial statements.
 
                                        3
<PAGE>   5
 
                             OMEGA WORLDWIDE, INC.
 
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 
                                   UNAUDITED
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                              DECEMBER 31, 1998
                                                              ------------------
                                                                    NOTE A
<S>                                                           <C>
Operating activities:
  Net earnings..............................................       $  1,291
  Adjustments to reconcile net earnings to cash provided by
     operating activities:
     Equity earnings in Principal Healthcare Finance
      Limited...............................................           (223)
     Imputed interest.......................................            571
     Depreciation and amortization..........................            222
     Other non-cash charges.................................            116
  Net change in operating assets and liabilities............         (1,191)
  Foreign currency translation..............................             20
                                                                   --------
Net cash provided by operating activities...................            806
Cash flows from financing activities:
  Proceeds from bank revolving credit facility..............         23,500
  Proceeds from revolving warehouse facility................         34,502
  Borrowings from Omega.....................................         14,786
  Repayment of borrowings from Omega........................        (14,786)
  Other.....................................................             (9)
                                                                   --------
Net cash provided by financing activities...................         57,993
Cash flow from investing activities:
  Acquisition of real estate by subsidiary..................        (49,288)
  Temporary advances to Principal Healthcare Finance
     Limited................................................        (17,341)
  Investment in Tamaris Plc stock...........................         (2,884)
  Other.....................................................          1,043
                                                                   --------
Net cash used in investing activities.......................        (68,470)
                                                                   --------
Decrease in unrestricted cash and short-term investments....         (9,671)
Cash and short-term investments at October 1, 1998..........         10,281
                                                                   --------
Cash and short-term investments at December 31, 1998........       $    610
                                                                   ========
</TABLE>
 
           See notes to condensed consolidated financial statements.
 
                                        4
<PAGE>   6
 
                             OMEGA WORLDWIDE, INC.
 
            CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
 
                                   UNAUDITED
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                                  ACCUMULATED
                                                          ADDITIONAL                                 OTHER
                                          COMMON STOCK     PAID-IN      PREFERRED    RETAINED    COMPREHENSIVE
                                           PAR VALUE       CAPITAL        STOCK      EARNINGS       INCOME
                                          ------------    ----------    ---------    --------    -------------
<S>                                       <C>             <C>           <C>          <C>         <C>
Balance at October 1, 1998 (12,258
  shares)...............................     $1,226        $52,861       $2,600       $1,955         $   9
Net earnings for the three months ended
  December 31, 1998.....................                                               1,291
Unrealized loss on Tamaris Plc stock....                                                              (311)
                                             ------        -------       ------       ------         -----
Balance at December 31, 1998............     $1,226        $52,861       $2,600       $3,246         $(302)
                                             ======        =======       ======       ======         =====
</TABLE>
 
           See notes to condensed consolidated financial statements.
 
                                        5
<PAGE>   7
 
                             OMEGA WORLDWIDE, INC.
 
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                   UNAUDITED
 
                               DECEMBER 31, 1998
 
NOTE A -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 
ORGANIZATION
 
     On April 2, 1998, the registration statement of Omega Worldwide, Inc. (the
"Company") became effective and the Company offered 3,750,000 shares of common
stock to the public at $7.50 per share. The Company received $27,375,000, net of
issuance costs of $750,000. Shares offered included 500,000 shares in a primary
offering and 3,250,000 shares in a rights offering. Operations commenced upon
the effectiveness of the initial public offering. Additionally, except for
$1,000 invested by Omega at the date of formation (November 1997), there were no
cash flow activities of the Company from the date of formation to the date
operations commenced.
 
     Immediately prior to the offering of shares by the Company, Omega
Healthcare Investors, Inc. ("Omega") contributed substantially all of its
investment in Principal Healthcare Finance Limited ("Principal") to the Company.
Assets contributed by Omega, which were recorded by the Company at Omega's
accounting basis, included a $23,805,000 subordinated loan to Principal, 33.375%
of the common stock of Principal with a carrying value of $5,297,000, warrants
for 10,552,250 shares and other net assets totaling $150,000. Omega also
assigned its interest in a management agreement with Principal in which the
Company receives an annual fee of .9% of Principal's assets (as defined) for
providing certain advisory services. In exchange, Omega received 8,500,000
shares of common stock and 260,000 shares of Class B preferred stock. Of the
common stock received by Omega, approximately 5,200,000 shares were distributed
pro rata to Omega's shareholders, and approximately 2,300,000 were sold pursuant
to the Company's registration statement. Omega retained approximately 9.5% of
the Company's common stock.
 
BASIS OF PRESENTATION
 
     The accompanying unaudited condensed consolidated financial statements for
the Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month
period ended December 31, 1998, are not necessarily indicative of the results
that may be expected for the year ending September 30, 1999. For further
information, refer to the financial statements and footnotes thereto in the
Company's annual report on Form 10-K for the period ended September 30, 1998.
 
CONSOLIDATION
 
     The condensed consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries after elimination of all material
intercompany accounts and transactions. The Company's wholly owned subsidiary,
Principal Healthcare Finance Trust (the "Trust"), is consolidated on a one-month
lag basis as the Trust has an August 31 year end and a November 30, 1998 quarter
end. There were no material changes to the Trust's net assets during the month
of December.
 
NOTE B -- REAL ESTATE ACQUISITIONS BY PRINCIPAL HEALTHCARE FINANCE TRUST
 
     In November 1998, the Trust agreed to acquire and leased back 30 nursing
homes in the Australian states of New South Wales, Queensland, Western Australia
and Victoria for a total committed transaction value of
 
                                        6
<PAGE>   8
 
$75 million. The transaction is in three phases with the first phase closing in
November and consisting of the purchase of 25 facilities for approximately $49
million. The purchase of five newly built victoria homes will occur in the
second phase when construction is completed and stabilized occupancy of the
homes has been achieved; the 5 homes will be purchased for an aggregate price of
approximately $11 million. The final phase involving an additional $15 million
encompasses the renovation and refurbishing of the initial 25 facilities during
a five-year period ending October 2003 to enable these homes to comply with
physical plant regulations being implemented. All disbursements subsequent to
the first phase are conditioned upon various levels of operating profitability
and performance.
 
     The investment was initially funded by drawing $34.5 million on the Trust's
$45 million revolving credit facility and an interim bridge loan advance of
$14.8 million provided by Omega. The Omega loan was repaid prior to December 31,
1998 by the Company.
 
NOTE C -- ASSET CONCENTRATIONS
 
     As of December 31, 1998, 100% of the Trust's real estate investments are
related to long-term care facilities located in Australia. All the properties
are leased to Moran Health Care Group (Australia) Pty Limited, currently the
largest operator of aged care homes in Australia.
 
NOTE D -- PRINCIPAL HEALTHCARE FINANCE LIMITED
 
     Principal has a year end of August 31, and the Company recognizes its share
of Principal's earnings on a one-month lag basis. The following summarizes
unaudited operating results of Principal for the three months ended November 30,
1998 (in thousands):
 
<TABLE>
<S>                                                           <C>        <C>
Revenues:
  Rent income.............................................    $13,450
  Interest income.........................................      1,526
  Other income............................................         39
                                                              -------
     Total revenues.......................................               $ 15,015
Expenses:
  Interest expense........................................     (9,814)
  Depreciation and amortization...........................     (2,340)
  General and administrative..............................     (1,286)
                                                              -------
     Total expenses.......................................                (13,440)
                                                                         --------
Income from operations before income taxes................                  1,575
Provision for income taxes................................                   (863)
                                                                         --------
Net income from operations................................               $    712
                                                                         ========
</TABLE>
 
     The effective tax rate differs from the U.S. tax rate primarily because the
provision for depreciation and amortization is not deductible for tax purposes
in the United Kingdom. The Company's proportionate share of Principal's earnings
for the three months ended November 30, 1998 is approximately $238,000.
Additionally, the Company has recorded a charge against earnings of
approximately $20,000, representing amortization over a ten-year period of the
excess of the Company's investment in Principal over its proportionate share of
Principal's underlying equity. In January, the Company received $267,000
representing a 5 pence dividend declared by Principal's Board of Directors.
 
                                        7
<PAGE>   9
 
NOTE E -- INCOME TAXES
 
     Income tax expense differs from the amount computed by applying the U.S.
Federal income tax rate of 34% to earnings before taxes as follows (in
thousands):
 
<TABLE>
<S>                                                             <C>
Computed expected tax expense...............................    $620
Tax effect on equity earnings...............................     (76)
Foreign tax rate differential, credits and other............     (11)
                                                                ----
  Total.....................................................    $533
                                                                ====
</TABLE>
 
     The provision for deferred taxes related to foreign investments has been
partially offset by available related foreign tax credits.
 
NOTE F -- NET EARNINGS PER SHARE
 
     Net earnings per share is computed based on the weighted average number of
common shares outstanding during the period. Diluted earnings per share amounts
reflect the dilutive effect of stock options (438 shares at December 31, 1998).
The assumed conversion of shares of preferred stock currently is anti-dilutive.
 
NOTE G -- CREDIT FACILITIES
 
     In November 1998, the Company entered into a revolving credit agreement
with two banks for borrowings up to $25 million. Omega provided a guarantee to
the banks in consideration of a fee of 1%, plus an annual 25 basis point
facility fee. The agreement is scheduled to expire on September 30, 2000. The
Company will also pay to the banks an unused facility fee, presently at .30%.
Borrowings under the facility bear interest at LIBOR plus 1.1875% or, at the
Company's option, at the prime rate. At December 31, 1998, the interest rate on
the Company's $23.5 million borrowings is at 6.77%.
 
     In November 1998, the Trust entered into a revolving warehouse facility
with an Australian bank for loans up to approximately $45 million. The revolving
warehouse facility provides that borrowings for the initial six-month period
will be at the base rate plus 1.10% or 6.10%, and interest thereafter at the
base rate (as defined) plus 1.50%. Also included in the terms are a non-use fee
equal to .25% for the undrawn balance of the revolving warehouse facility and
the establishment fee paid to the bank.
 
NOTE H -- RELATED PARTY TRANSACTIONS
 
     Pursuant to the provisions of a Service Agreement between Omega and the
Company, indirect costs incurred by Omega, including compensation of shared
executive officers and relations support personnel, and costs incurred by Omega
for rent, insurance, telephone, utilities, supplies, maintenance and travel, are
allocated to the Company based upon the relationship of assets under the
Company's management to the combined total of those assets and Omega's assets.
Assets and costs in the formula are on a one-quarter lag basis. Allocated
expenses during the three-month period ended December 31, 1998 were
approximately $188,000. Such allocations are based on estimates and formulas
that management believes to be reasonable.
 
     Temporary advances and advances to Principal in the amount of $25,720,000
are outstanding at December 31, 1998. Interest at 9.25% is paid on a monthly
basis. Included in interest income for the three-month period ended December 31,
1998 is $328,000 related to advances to Principal.
 
     Interest on the subordinated loan to Principal and fees from services are
$761,000 and $1,143,000, respectively, for the three month period ended December
31, 1998. The subordinated loan currently bears interest at 12.18%.
 
     During the three months ended December 31, 1998, Omega provided an interim
bridge loan of $14.8 million for the Trust. This loan was repaid by the Company
on December 31, 1998. Interest on the bridge loan from Omega totaled $103,000
for the three month period ended December 31, 1998.
 
                                        8
<PAGE>   10
 
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
 
     "Safe Harbor" Statements Under the United States Private Securities
Litigation Reform Act of 1995. Statements that are not historical facts
contained in Management's Discussion and Analysis are forward-looking statements
that involve risks and uncertainties that could cause actual results to differ
from projected results. Some of the factors that could cause actual results to
differ materially include: the financial strength of the operators of the
facilities owned by the Company's subsidiary and investees, as it affects their
continuing ability to meet their obligations under the terms of the lease
agreements; changes in operators or ownership of operators; government policy
relating to the healthcare industry, including changes in the reimbursement
levels; operators' continued eligibility to participate in the government
sponsored payment programs; changes in the reimbursement by other third party
payors; occupancy levels at the facilities; the ability and cost of capital of
the Company and its investees; the strength and financial resources of
competitors of the Company and investees to make additional real estate
investments at attractive yields; and the ability to obtain debt and equity at
reasonable costs.
 
     Following is a discussion and analysis of the Company's consolidated
results of operations, financial condition and liquidity and capital resources.
The discussion should be read in conjunction with the unaudited consolidated
financial statements and accompanying notes.
 
RESULTS OF OPERATIONS
 
     Revenues from rents and interest for the quarter ended December 31, 1998
were $3,858,000. The Company's revenue is generated from investment and advisory
services from Principal Healthcare Finance Limited ("Principal"), from
investments made by its wholly-owned subsidiary, Principal Healthcare Finance
Trust (the "Trust"), and from investing in short-term investments.
 
     Interest expense of $853,000 for the three months ended December 31, 1998
is comprised of imputed interest of $571,000 and interest and fees incurred of
$282,000 related to borrowings of the Trust related to acquisition.
 
     Direct cost of services provided of $657,000 for the three months ended
December 31, 1998 represents costs incurred by Omega (UK) Limited and Omega
(Australia) Pty Limited. Omega (UK) Limited and Omega (Australia) Pty Limited
are the primary service providers for the activities related to Principal and
the Trust, respectively. The reported amount represents direct costs incurred in
the delivery of the services for which rent and fee income has been recognized.
 
     Allocated expenses of $188,000 for the three months ended December 31, 1998
represents the Company's allocated share of compensation, occupancy costs and
other shared expenses of Omega Healthcare Investors, Inc. pursuant to provisions
of the Service Agreement between Omega and the Company. General and
administrative expenses of $365,000 for the three months ended December 31, 1998
represents direct administrative costs incurred by the Company for corporate
expenses.
 
     Equity earnings of Principal of $223,000 (approximately $0.02 per share)
for the quarter ended December 31, 1998 represents the Company's 33.375% equity
ownership in Principal.
 
     The Company had net income available to common shareholders of $1,239,000,
or $0.10 per share for the three months ended December 31, 1998.
 
LIQUIDITY AND CAPITAL RESERVE
 
     In November 1998, the Company obtained a $25 million revolving credit
facility which expires on September 30, 2000. The Company has borrowed $23.5
million of this credit facility, primarily to fund the temporary advances of
Principal and the Trust. In the second quarter, the Company expects to repay all
borrowings on its credit facility upon completion of long-term capital raising
initiatives by Principal and the Trust.
 
     Also in November 1998, the Trust obtained a revolving warehouse facility
from two banks in Australia for borrowings up to approximately $45 million.
Borrowings of approximately $34.5 million from the revolving
                                        9
<PAGE>   11
 
warehouse facility and an interim bridge loan from Omega of $14.8 million were
used to fund the purchase by the Trust of 25 long-term care facilities from an
affiliate of Moran Health Care Group (Australia) Pty ("Moran") for approximately
$49 million. The facilities were immediately leased back to an affiliate of
Moran for an initial 30-year term.
 
     Included in other assets is the Company's investment of stock of Tamaris
PLC, a public operating company in the United Kingdom. During the three months
ended December 31, 1998, the Company purchased approximately 4.2 million shares
of Tamaris stock, representing approximately 10% of its outstanding shares, for
$2,884,000. As of December 31, 1998, the fair value of the Company's investment
in Tamaris stock decreased approximately $471,000.
 
     The Company intends to continually seek new investment in providers of
finance to long-term care operators outside the United States.
 
MARKET RISK
 
     The Company is exposed to various market risk. Market risk is the potential
loss arising from adverse changes in market interest rates and prices, such as
foreign currency exchange rates. The Company does not enter into derivatives or
other financial instruments for trading or speculative purposes.
 
     The Company enters into forward foreign contracts principally to hedge
currency fluctuations in its investments denominated in foreign currencies,
thereby limiting the Company's risk that would otherwise result from changes in
exchange rates. At December 31, 1998, the Company had outstanding a ten-year
British pound sterling forward currency swap to exchange L20,000,000 for
$31,740,000 to mature on October 15, 2007, and a five-year Australian dollar
forward currency swap to exchange A$15,000,000 for $9,330,000 to mature on July
3, 2003. From time to time, the Company may also obtain hedges for its foreign
currency exposure relative to temporary loans to Principal and the Trust.
Because of the Company's foreign exchange contracts, its sensitivity to foreign
exchange currency exposure is considered low.
 
YEAR 2000 IMPLICATIONS
 
     The Year 2000 compliance issue concerns the inability of certain systems
and devices to properly store dates beyond December 31, 1999. This could result
in system failures, malfunctions or miscalculations that disrupt normal
operations. This issue affects most companies and organizations to large and
small degrees, at least to the extent that potential exposures must be
evaluated.
 
     The Company is reviewing risks with regard to the ability of the impact of
outside vendors' ability to operate, including Omega's services under the
Services Agreement, and the impact of tenants' ability to operate. Omega has
certified that its internal operations, its technology infrastructure,
information systems and software applications are likely to be compliant or will
be compliant by mid-1999 based upon certification statements by the applicable
vendors. In those cases where there are compliance issues, these are considered
to be minor in nature and remedies are already identified. Expenditures for such
remedies will not be material.
 
     With respect to the Company's other material outside vendors, such as its
banks, the Company's assessment will cover the compliance efforts of significant
vendors, the effects of potential non-compliance, and remedies that may mitigate
or obviate such effects as to the Company's business and operations. The Company
plans to complete its assessment of compliance by important vendors by mid-1999.
 
     With respect to the tenants and properties, the Company's subsidiaries and
investees are making assessments covering their tenants' compliance efforts, the
possibility of any interface difficulties or electromechanical problems relating
to compliance by material vendors, the effects of potential non-compliance, and
remedies that may mitigate or obviate such effects. The subsidiaries and
investees plan to process information from tenant surveys beginning in 1999 and
complete its assessment by mid-1999.
 
     Because these early evaluations have been conducted by the Company's own
personnel or by selected inquiries of its vendors and tenants in connection with
their routine servicing operations, the Company believes that its expenditures
for assessing Year 2000 issues, though difficult to quantify, have not been
material. In
 
                                       10
<PAGE>   12
 
addition, the Company is not aware of any issues that will require material
expenditures by the Company in the future.
 
     Based upon current information, the Company believes that the risk posed by
foreseeable Year 2000 related problems with internal systems (including both
information and non-information systems) is minimal. Year 2000 related problems
with software applications and internal operational programs are unlikely to
cause more than minor disruptions in the Company's operations. Year 2000 related
problems at certain of its third-party service providers, such as its banks,
payroll processor, and telecommunications provider is marginally greater,
though, based on current information, the Company does not believe any such
problems would have a material effect on its operations. For example, Year 2000
related problems at such third-party service providers could delay the
processing of financial transactions and could disrupt the Company's internal
and external communications.
 
     The Company believes that the risk posed by Year 2000 related problems at
properties of its subsidiaries and investees or with its tenants is marginally
greater, though, based on current information, the Company does not believe any
such problems would have a material effect on its operations. Year 2000 related
problems at certain governmental agencies and third-party payers could delay the
processing of tenant financial transactions, though, based upon current
information, the Company does not believe any such problems would have a
material long-term effect on its operations. Year 2000 related problems with the
electromechanical systems at its properties are unlikely to cause more than
minor disruptions in the Company's operations.
 
     The Company and Omega intend to complete outstanding assessments, to
implement identified remedies, to continue to monitor Year 2000 issues, and will
develop contingency plans if, and to the extent deemed, necessary. However,
based upon current information and barring developments, the Company does not
anticipate developing any substantive contingency plans with respect to Year
2000 issues. In addition, the Company has no plans to seek independent
verification or review of its assessments.
 
     While the Company and Omega believe that they will be Year 2000 compliant
by December 31, 1999, there can be no assurance that the Company and Omega will
be successful in identifying and assessing all compliance issues, or that the
Company's efforts to remedy all Year 2000 compliance issues will be effective
such that they will not have a material adverse effect on the Company's business
or results of operations.
 
                                       11
<PAGE>   13
 
PART II -- OTHER INFORMATION
 
ITEM 5. OTHER INFORMATION
 
     None
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
  (A) EXHIBITS - THE FOLLOWING EXHIBITS ARE FILED HEREWITH:
 
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<CAPTION>
  EXHIBIT                            DESCRIPTION
  -------                            -----------
  <C>        <S>
</TABLE>
 
  27 FINANCIAL DATA SCHEDULE
 
  (B) REPORTS ON FORM 8-K
 
     The following report on Form 8-K was filed since September 30, 1998:
 
          Current report on Form 8-K dated November 12, 1998 with the following
     exhibits:
 
          Form of Transaction Documents
           Advisory Agreement
           Promissory Note
 
                                       12
<PAGE>   14
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
                             OMEGA WORLDWIDE, INC.
                                   Registrant
 
<TABLE>
<S>                                                         <C>
                                                            By: /s/ESSEL W. BAILEY, JR.
                                                            -----------------------------------------------------
                                                                Essel W. Bailey, Jr.
Date: February 12, 1999                                         President and Chief Executive Officer
 
                                                            By: /s/DAVID A. STOVER
                                                            -----------------------------------------------------
                                                                David A. Stover
Date: February 12, 1999                                         Chief Financial Officer
</TABLE>
 
                                       13
<PAGE>   15
                                Exhibit Index
                                -------------




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<CAPTION>
Exhibit No.                             Description
-----------                             -----------
<S>                                     <C>
     27                                 Financial Data Schedule

</TABLE>