<PAGE>   1
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
       SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended September 30, 1998

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
       SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from                               to
                        Commission file number 000-23953

                              OMEGA WORLDWIDE, INC.
             (Exact name of Registrant as specified in its charter)

                Maryland                                38-3382537
     (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)

       900 Victors Way, Suite 345                          48108
           Ann Arbor, Michigan                          (Zip Code)
(Address of Principal Executive Offices)

        Registrant's telephone number, including area code: 734-887-0300

          Securities Registered Pursuant to Section 12 (b) of the Act:

                                                                          
Common Stock, $.10 Par Value                                              
                                                                          

         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 and 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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.   [ ]

         The aggregate market value of the voting stock of the registrant held
by non-affiliates was $43,388,132 based on the $4.125 closing price per share
for such stock on the NASDAQ National Market on December 16, 1998.

         As of December 16, 1998, there were 12,258,000 shares outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Proxy Statement for its Annual Meeting of
Shareholders which will be filed with the Commission on or about January 28,
1999, are incorporated herein by reference as indicated herein. 


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<PAGE>   2
                                     PART I


ITEM 1 - BUSINESS OF THE COMPANY

The business of the Company is to provide asset management services and
management advisory services to firms providing financing to providers of
healthcare services, particularly healthcare services to the elderly. The
Company has established financing activities in the United Kingdom and the
Commonwealth of Australia.

The Company often provides seed equity and debt capital to enable the
establishment of operating or financing firms, in the latter instance
identifying high quality management personnel and providing financial support to
such companies. The intent of the Company is to invest in less than majority
equity positions in such firms, to provide continuing support while such firms
are not public, and to secure local capital as the major source of the growth
capital for expansion and development of such firms. The result is to enable
such firms to access capital markets in the locales in which services are
provided.

It is the intent of the Company to develop a significant international presence
in healthcare services to the elderly, both in finance and operations, and to
undertake within the United States operation or real estate activities
of a sort not possible for a healthcare REIT. The Company was established by and
shares certain management personnel with, Omega Healthcare Investors, Inc.
("Omega"), a publicly traded REIT, which owns and finances healthcare operating
facilities in the United States.

The Company was established in November 1997 and began initial operation as a
separate entity on April 2, 1998, when Omega distributed shares of the Company's
common stock to Omega's existing shareholders. At the same time, the Company
undertook a primary offering and Omega undertook a secondary offering of shares
of the Company's common stock. Omega distributed 5.2 million shares, sold 2.8
million shares (of which 500,000 shares were sold for the account of the
Company) and retained approximately 9.9% of the common shares, together with
260,000 preferred shares, in exchange for the contribution to the Company of the
following assets:

(a)      33.375% of the ordinary shares in Principal Healthcare Finance Limited,
         ("Principal"), a Jersey corporation which is engaged in investing in
         long-term care facilities in the United Kingdom;

(b)      Warrants to purchase 10,256,000 shares of Principal;

(c)      A subordinated debt note of Principal in the amount of (pound)15 
         million; and

(d)      Miscellaneous other net assets stated at a net carrying amount of
         $150,000.


<PAGE>   3


Principal is, as of the date of this report, the owner of 176 long-term care
facilities, primarily purpose-built nursing homes, subject to long-term,
triple-net leases to 11 operating companies in the UK. Principal's revenues for
the year ending August 31, 1998, totaled $51,042,000 and its net earnings
totaled $2,122,000. Principal has employed fixed-rate financing in which it
attempts to match the term of assets and liabilities. Its rental agreements
provide annual increases in rentals in 30-year terms, generally in accordance
with the British consumer price index. Principal has financed its activities
through the issuance of long-term, fixed-rate securitized debt. Its initial
securitization was issued in December 1997 in the amount of (pound)150 million,
repayable in the years 2027 and 2029, consistent with the term of the leases
with respect to the facilities financed.

In June 1998, the Company acquired 100% of the units of Assisted Living Unit
Trust from FAI Insurances Limited, a life and health insurer in Australia, and
its subsidiary, Premier Care Australia (Holdings) Pty Limited, and changed the
name of the Trust to Principal Healthcare Finance Trust ("the Trust"). The Trust
is an Australian Unit Trust which owned, as of the date of acquisition by the
Company, ten long-term nursing homes and 480 assisted living units in New South
Wales. The A$50 million (approximately $30 million)purchase price payable by the
Company is due June 30, 1999. The Company deposited a Banker's Bill (Letter of
Credit) in support of the Trust's obligation to deliver funds on June 30, 1999.
The Trust also deposited A$10 million as security for the performance of the
Trust's obligations and the Trust granted to a bank, mortgage liens with respect
to all of the assets owned by the Trust.

The Trust net leased its assets to an affiliate of Moran Health Care Group Pty
Limited ("Moran"), the largest operator of long-term care and assisted living
facilities in Australia, for an initial term of 30 years.

On November 12, 1998, the Trust completed the first phase of a three-part
purchase and leaseback transaction, also with Moran, which encompasses 30
long-term care facilities in Victoria, New South Wales and Western Australia. In
phase one of the transaction, an affiliate of Moran sold 25 homes to the Trust
for A$80 million and immediately leased them back for an initial 30-year term.
Simultaneously, phase two of the agreement calls for the Trust to acquire, upon
completion and rent-up to stabilized occupancy, five additional Victoria
facilities from an affiliate of Moran for an aggregate purchase price of A$20
million. Phase three involves the advance by the Trust of an additional A$25
million to enable refurbishing and renovation of such of the initial facilities
as is necessary over a five-year period. The advance of funds in excess of A$90
million is subject to the tenant achieving special performance standards and
operating profitability (rent coverage) over the period of the commitment, which
expires in October 2003. The Trust has financed its purchase and leaseback
through credit facilities with a local bank.

The Trust's credit facilities with a local bank have an initial term of one
year, provide exclusive rights for the bank to provide certain additional
long-term finance and contemplate the establishment of a typical revolving
credit facility to make temporary acquisition of investments in Australia,
pending refinance through securitization or otherwise.


<PAGE>   4



The Company acquired, in connection with its initial establishment, an interest
in Essex Healthcare Corporation ("Essex") and an affiliate, Atrium Living
Centers, Inc. In August 1998, the Company invested an additional $500,000,
increasing its equity interest in Essex to 47%. Essex is an operator of 13
long-term care facilities containing 1,400 beds in Ohio, which are leased from
independent third parties.

In August 1998, the Company acquired from a subsidiary of Principal for
(pound)640,000 a 19.9% interest in Moran Healthcare (UK) Limited ("Moran UK"),
the sole shareholder of Baneberry Healthcare, ("Baneberry"), a UK operating
company engaged in the business of providing healthcare services in Northern
Ireland and England. Baneberry was previously financed by Principal. Moran (UK)
is an affiliate of Moran, the operator of the long-term care facilities in
Australia that are owned by the Trust.

Employees

At December 15, the Company employed nine persons in its operating office in
London, England, one person in its operating office in Sydney, Australia and
thirty persons as shared employees with Omega at the Company's executive
offices in Ann Arbor, Michigan.

The Opportunity Agreement

The Company and Omega have entered into the Opportunity Agreement to provide
each other with rights to participate in certain transactions and make certain
investments. The Opportunity Agreement provides, subject to certain terms, that,
regardless of whether the following kinds of investments (each a "Worldwide
Opportunity") first come to the attention of the Company or Omega, the Company
will have the right to: (a) provide advisory services and/or management services
to any healthcare investors, wherever located; (b) acquire or make debt and/or
equity investments (through a joint venture or otherwise) in any healthcare
investor or in healthcare real estate-related assets outside the United States;
(c) make investments in any entity conducting healthcare operations; and (d)
make any other real estate, finance or other investments not customarily
undertaken by a qualified REIT. However, Omega will have the right, regardless
of whether the following kinds of investments (each a "REIT Opportunity") first
come to the attention of the Company or Omega, to: make any investment within
the United States (a) in real estate, real estate mortgages, real estate
derivatives or entities that invest exclusively in or have a substantial portion
of their assets in any of the foregoing, so long as Omega's REIT status would
not be jeopardized by the investment; and (b) that, if made by a REIT, would not
result in the termination of the REIT's status as a REIT under Sections 856
through 860 of the Internal Revenue Code ("Code"). If the Company declines to
pursue a Worldwide Opportunity, it must offer that opportunity to Omega, and if
Omega declines to pursue a REIT Opportunity, it must offer that opportunity to
the Company. Each of the Company and Omega may participate, in its discretion,
in any REIT Opportunity or Worldwide Opportunity that the other requests be
pursued jointly. The terms upon which each of the Company and Omega may elect to
participate in such an opportunity will be negotiated in good faith and must be
mutually acceptable to the respective boards of directors of the Company and
Omega, with the affirmative votes of the independent directors of the respective
boards of directors of the Company and Omega. Each of the Company and Omega, in


<PAGE>   5
its sole discretion, will make all decisions as to whether to pursue
transactions or investments. The determination by each of the Company and Omega
as to whether to pursue an investment or transaction individually shall be made
by the affirmative votes of the independent director(s) of the board of
directors of the Company or Omega. Each of Omega and the Company has agreed to
notify the other of, and make available to the other, investment opportunities
developed by such party or of which such party becomes aware but is unable or
unwilling to pursue. The Opportunity Agreement has a term of ten years and
automatically renews for successive five-year terms unless terminated.  In that
connection, the Company has offered to Omega the opportunity to acquire up to
9.9% of the common shares of the Trust.  

Omega and the Company have entered into a Services Agreement pursuant to which
Omega provides shared management and other employees, office space and
administrative services to the Company. The Company reimburses Omega quarterly
for a portion of Omega's overhead expenses such as rent, compensation and
utilities, based on a formula determined by dividing the value of the assets
managed by the Company at the end of each fiscal quarter by the sum of the value
of the assets of Omega and assets managed by the Company at the end of each
fiscal quarter.

Investment Objectives

The investment objectives of the Company are:

1.   To extend its franchise value by providing and financing long-term care
     services to the elderly.

2.   To expand its asset management business by establishing new financing 
     entities and establishing relationships with strong operating companies to 
     extend and expand assets under management.

3.   To expand the Company's ability to provide financial capital to develop, 
     expand and consolidate nursing home operating companies, primarily outside 
     the United States.

4.   To grow the capital value of the Company through prudent use of leverage, 
     extension of its franchise value and the application of the intellectual 
     capital of the Company to investment opportunities in Europe, Australia, 
     Asia and the United States.

There is no expectation or intent in the near-term to pay a dividend on common
stock.

Financial information about foreign and domestic operations.

The information required by this item is incorporated herein by reference to the
"Business Segment Information" footnote on page F-13 of the Company's financial
statements.

Regulation of the Healthcare Industry

The Company will invest in entities which own healthcare facilities
principally outside of the United States. Accordingly, the Company does not
intend to diversify its investments to reduce the risks associated with
investment in the healthcare industry. Future investments by the Company may be
on terms or conditions less favorable than the terms applicable to the

<PAGE>   6


Company's initial investments. The operation of healthcare facilities is subject
to substantial regulation. In addition to other laws and regulations with which
the Company will be required to comply, the Company will be subject to laws that
govern financial arrangements between healthcare providers. Any failure to
comply with these laws or regulations could have an adverse effect on the
operations of the Company.

Healthcare is an area of extensive governmental regulation and frequent
regulatory change. The lessees and mortgagors of Principal, the Trust or similar
companies in which the Company invests are and will continue to be subject to
extensive regulation. Changes in laws or regulations or new interpretations of
existing laws or regulations can have a dramatic effect on the healthcare
industry with respect to methods of doing business, costs of doing business and
revenues. Principal and the Trust are attempting to develop and market a method
of financing for healthcare properties which is not, at present, widely accepted
in the United Kingdom, Australia or elsewhere, and the business of the Company
may not develop and grow as the Company anticipates.

The operating results of the healthcare facilities underlying the investments of
Principal, the Trust and similar companies in which the Company invests will
depend on various factors over which the Company will have no control and which
may affect the present or future cash flows of the Company. Those factors
include, without limitation, general economic conditions, changes in supply of,
or demand for, competing long-term healthcare facilities, changes in occupancy
levels, the ability of the lessees and mortgagors of Principal, the Trust and
similar companies in which the Company invests through rate increases or
otherwise to absorb increases in operating expenses, changes in governmental
regulations and changes in planning (zoning) regulations.

A significant portion of the revenues of the lessees of Principal, the Trust and
similar companies in which the Company invests will be dependent upon payments
from third party payors, including private insurers and local and national
governments. The levels of revenues and profitability of such lessees and
mortgagors may be affected by the continuing efforts of third party payors to
contain or reduce the cost of healthcare. Medical advances and changes in the
method of providing long-term healthcare services may significantly change the
healthcare needs of the elderly and thereby reduce the demand for long-term
healthcare facilities. Likewise, such advances and changes may make obsolete the
healthcare properties owned or financed by Principal, the Trust and similar
companies in which the Company invests.

Although Principal plans to increase rapidly the number of healthcare operators
it finances, currently over 50% of Principal's rents are derived from rent
payments received from Tamaris PLC and Ashbourne Healthcare PLC. The Trust also
plans to increase the number of healthcare operators it finances, but presently
all of its assets are operated by and leased to affiliates of Moran. Thus, the
results of operations and financial condition of Principal and the Trust will be
dependent upon the ability of these tenants to meet their obligations under
their agreements with Principal and the Trust.


<PAGE>   7



Healthcare services, particularly those for the elderly outside the United
States, often have been provided by government or by not-for-profit
organizations, and the ability of the Company to extend its financing and
investment activities is premised upon additional changes in the way in which
healthcare services for the elderly will be provided in such countries as the
Company may invest. While the United Kingdom and the Commonwealth of Australia
have been advanced in permitting and encouraging the private for-profit sector
to develop healthcare services, there is no assurance that such encouragement
and permission will be available in other countries in which the Company may
desire to invest.

No assurance can be given that a lessee will exercise any option to renew its
lease upon the expiration of its term. In such an instance, the Company may not
be able to locate a qualified purchaser or qualified replacement tenant for the
healthcare properties in question, and as a result it would lose a source of
revenue while remaining responsible for payment of its obligations incurred in
financing such properties.

Directors and Executive Officers of Omega Worldwide

Set forth below is information regarding (i) current directors of the Company,
who will serve until the next annual meeting of shareholders or until their
successors are elected, and (ii) the current executive officers of the Company,
who are elected to serve at the discretion of the Board of Directors.

<TABLE>
<CAPTION>
                                                      TERM            
                  NAME                               EXPIRES    AGE   POSITION
                  ----                               -------    ---   --------
                 <S>                                <C>        <C>    <C>             
                  Jacques Aigrain............         2001      44    Director
                  Essel W. Bailey, Jr........         1999      54    Director, President and Chief Executive Officer
                  James E. Eden..............         2000      61    Director
                  James P. Flaherty..........                   51    Chief Operating Officer
                  Thomas F. Franke...........         2001      69    Director
                  Anil Gupta.................         2000      49    Director
                  F. Scott Kellman...........                   42    Vice President
                  Harold J. Kloosterman......         1999      56    Director
                  Bernard J. Korman..........         2000      67    Director
                  Susan A. Kovach............                   38    Vice President, General Counsel and Secretary
                  Edward Lowenthal...........         2001      54    Director
                  Robert L. Parker...........         1999      64    Chairman of the Board of Directors
                  David A. Stover............                   53    Vice President and Chief Financial Officer

</TABLE>

Jacques Aigrain, has been employed by J.P. Morgan and Company for 14 years. Mr.
Aigrain is a managing director of J.P. Morgan and Company, and joined the firm's
Investment Banking Committee in July 1998 and was also made co-head of Global
Mergers and Acquisitions, working from New York and London. For the previous two
years, Mr. Aigrain headed Morgan's Paris office, and from 1991 through 1996
served in the London office, where he was responsible for transactions in the
healthcare and chemical industries.  Mr. Aigrain became a director of the
Company on July 7, 1998 and holds a Ph.D. in Economics from the Sorbonne in
Paris.  

Mr. Bailey has been Chief Executive Officer of the Company since April 1998, as 
well as a Director, since its formation in November 1997. Mr. Bailey also has 
served as President and Chief Executive Officer of Omega, as well as a  Director
of Omega, since its formation in 1992, and he has served as Chairman of the 
Board of Directors of Omega since 1995.  Prior to forming

<PAGE>   8
Omega, he was a Managing Director of Omega Capital, a healthcare investment
partnership, from 1986 to 1992. Mr. Bailey was formerly a Director of Evergreen
Healthcare, Inc., which was a NYSE listed company engaged in the operation of
long-term healthcare facilities, and of Vitalink Pharmacy Services, Inc., a NYSE
listed company, and the operator of institutional pharmacies serving the
long-term care industry in the United States. Mr. Bailey currently serves as
Managing Director of Principal and of Principal Trust.

Mr. Eden has been a Director of the Company since April 1998. He is President
and principal owner of Eden & Associates, Inc., which provides consulting
services to the senior living and long-term care industries. He is also
President and principal owner of Senior Living Properties, LLC, and serves as
Chairman and Chief Executive Officer of Oakwood Living Centers, Inc., which owns
and operates 7 nursing homes in Massachusetts and Virginia. From 1976 to 1992,
he held various positions in healthcare at Marriott Corporation ultimately as
Executive Vice President and General Manager of its Senior Living Services
Division. Mr. Eden is also a director of Omega, the Alliance for Aging Research
and United Vanguard Homes.

Mr. Flaherty joined Omega in 1996 and was appointed Vice President-International
of Omega and Chief Executive of Omega (UK) Limited in January 1997. Mr. Flaherty
was appointed Chief Operating Officer of the Company in April 1998. Before he
joined Omega, Mr. Flaherty was Chairman of Black Rock Capital Corporation, a
leasing and merchant banking firm he founded in 1994. From April 1991 until
December 1993, Mr. Flaherty was Managing Partner of Pareto Partners, a London
based investment management firm. Prior to 1991, he was employed by American
Express Bank Ltd. in London and Geneva in a number of senior management
capacities and by State National Bank of Connecticut and its successor, The
Connecticut Bank & Trust Co.

Mr. Franke has been a Director of the Company since April 1998. He is Chairman
and principal owner of Cambridge Partners, Inc., an owner, developer and manager
of multifamily housing in Grand Rapids and Ann Arbor, Michigan. He is also the
principal owner of private healthcare firms operating in the United States and
the United Kingdom and a private hotel firm in the United Kingdom. Mr. Franke
has been a Director of Omega since its formation in 1992 and, since Principal's
formation in 1995, Mr. Franke has been a Director of Principal.

Dr. Anil K. Gupta has been a Director of the Company since July 7, 1998.  He is
Professor of Strategy, Organization  and  International Business at the Robert
H. Smith School of Business, The University of Maryland.  He holds a Doctor of
Business Administration from Harvard Business School.  Dr. Gupta served as a
director of Vitalink Pharmacy Services, Inc. from 1992 to 1998.  Recipient of
numerous scholarly awards, he also provides consulting and executive training to
a number of multinational companies.

Mr. Kellman was appointed Vice President of the Company in April 1998. He joined
Omega as Senior Vice President-Acquisitions in August 1993, and was appointed
Executive Vice President in August 1994 and Chief Operating Officer of Omega in
March 1998. From 1986 to 1989, he was Vice President of Meritor Savings Bank,
the last years as director of the healthcare lending unit. From 1989 to 1991, he
served as Vice President of Van Kampen Merritt, Inc., an

<PAGE>   9


investment banking subsidiary of Xerox. From September 1991 to December 1992, he
was employed by Philadelphia First Group, and from January 1993 through August
of 1993 he was an officer of Medical REIT.

Mr. Kloosterman has been a director of the Company since April 1998. He also
has been a director of Omega since its formation in 1992 and was a managing
director of Omega Capital from 1986 to 1992. Mr. Kloosterman has been involved
in the acquisition, development and management of commercial and multi-family
properties since 1978. He has been a senior officer of LaSalle Partners, Inc.,  
and in 1985 he formed Cambridge Partners, Inc., where he serves as President.
At Cambridge, he has been involved in the development and management of
commercial, apartment and condominium projects in Grand Rapids and Ann Arbor,
Michigan and in the Chicago area.

Mr. Korman has been a director of the Company since April 1998. He is Chairman
of the Board of Trustees of Philadelphia Healthcare Trust, a not-for-profit
health care system, and of NutraMax Products, Inc., a public consumer health
care products company. He formerly was President, Chief Executive Officer and
Director of MEDIQ Incorporated (health care services) from 1977 to 1995. Mr.
Korman has been a Director of Omega since 1993 and also is a Director of the
following public companies: The New America High Income Fund (financial
services), The Pep Boys, Inc. (auto supplies), Today's Man, Inc. (retail men's
clothing sales), and Kranzco Realty Trust (real estate investment trust).

Ms. Kovach joined Omega in December 1997 as Vice President, General Counsel and
Secretary, and was appointed Vice President, General Counsel and Secretary of
the Company in April 1998. Prior to that she was a lawyer with Dykema Gossett
PLLC in Detroit, Michigan for 12 years, the last three years as a senior member
of the firm.

Mr. Lowenthal has served as a director of the Company since April 1998. He is
President and Chief Executive Officer of Wellsford Real Properties, Inc. (AMEX:
WRP), a real estate merchant bank, and was President of the predecessor of
Wellsford Real Properties, Inc. since 1986. Mr. Lowenthal has been a Director of
Omega since 1995 and also serves as a Director of United American Energy
Corporation, a developer, owner and operator of energy facilities; Corporate
Renaissance Group, Inc., a mutual fund; Equity Residential Properties Trust; and
Great Lakes REIT, Inc. 

Mr. Parker has served as Chairman of the Company's Board of Directors since
April 1998. He is a consultant to, and formerly was Chairman of Omega from 1992
to 1995 and Managing Director of Omega Capital from 1986 to 1992. From 1972
through 1983, Mr. Parker was a senior officer of Beverly Enterprises, the
largest operator of long-term care facilities in the United States. At the time
of his retirement in 1983, Mr. Parker was Executive Vice President of Beverly
Enterprises. Mr. Parker is a registered architect and is licensed in California 
and Oklahoma. Mr. Parker also served as a Director of GranCare, Inc., a public
company engaged in the operation of long-term care facilities from 1995 to
1997,

<PAGE>   10


and of Vitalink Pharmacy Services Inc., a publicly-traded institutional pharmacy
during 1997. He has served as a director of Principal since 1995, and of First
National Bank of Bethany, Oklahoma.

Mr. Stover has been Vice President and Chief Financial Officer of Omega since
September 1994 and of the Company since April 1998. Mr. Stover is a Certified
Public Accountant and has 23 years' experience with the international accounting
firm of Ernst & Young LLP and its predecessor firms. From 1981 through 1990, he
was an audit, tax and consulting partner, spending the last of those years as
area partner-in-charge of services for the firm's healthcare clients in Western
Michigan. From 1992 to 1994, Mr. Stover was principal of his own consulting firm
and, from 1990 to 1992, he was Chief Financial Officer of International Research
and Development Corporation.

The following individuals were delinquent in complying with Section 16(a) of the
Securities Exchange Act of 1934 during fiscal year 1998:

The Forms 3 for Messrs. Bailey, Kellman, Flaherty and Stover and for
Ms. Kovach were required to be filed with the Securities and Exchange 
Commission by April 12, 1998 and were filed on April 14, 1998. In addition, 
the Form 4 for Mr. Flaherty for the month of May, 1998 was required to be 
filed  by June 10, 1998 and was filed on November 13, 1998.

Todd P. Robinson, who was appointed Vice President of the Company on April 2,
1998 and resigned from the Company on April 20, 1998, was required to file his
Form 3 by April 12, 1998 and his Form 4 for the month of April, 1998 by May 10,
1998. He filed his Form 3 on April 14, 1998 and his Form 4 on November 13, 1998.

The Form 3 for Mr. Aigrain was required to be filed by July 17, 1998 and was
filed on July 20, 1998. The Form 4 for Mr. Franke for the month of April, 1998
was required to be filed by May 10, 1998 and was filed on June 10, 1998. The
Form 4 for Mr. Kloosterman for the month of May, 1998 was required to be
filed on June 10, 1998 and was filed on October 9, 1998.

ITEM 2 - PROPERTIES

At September 30, 1998, the Company's real estate investments are in purchased
long-term care facilities located in New South Wales, Australia and leased and
operated by Moran. There are ten nursing homes with a total of 733 licensed
beds, (weighted average occupancy 99.1%) and the yield on this investment is
10.0%. Eight of the properties also have a total of 480 assisted living units. 

ITEM 3 - LEGAL PROCEEDINGS

There were no legal proceedings pending as of September 30, 1998 or as of the
date of this report, to which the Company is a party to or to which the
properties are subject.


<PAGE>   11



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

No matters were submitted to shareholders during the last quarter of the year
covered by this report.



<PAGE>   12
                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Company completed its IPO on April 2, 1998, and its common stock began
trading on the NASDAQ National Market System on April 10, 1998. Therefore,
data for the first and second quarter of the Company's fiscal year do not exist.
The Company's shares of common stock are traded under the symbol OWWI.
The following table sets forth, for the period ended September 30, 1998, the
high and low prices as reported by the NASDAQ National Market System:

<TABLE>
<CAPTION>

                      QUARTER                 HIGH        LOW
                      -------                -------     ------
<S>                                          <C>         <C>   
        April 10 through June 30             $10.625     $6.875
        July 1 through September 30          $ 8.250     $4.000
</TABLE>

The closing price quoted on the NASDAQ National Market System on December 16,
1998 was $4.125 per share. As of December 16, 1998, there were 12,258,000 shares
of common stock outstanding with approximately 2,000 registered holders and
approximately 28,000 beneficial owners.


<PAGE>   13



ITEM 6 - SELECTED FINANCIAL DATA

The following unaudited selective financial data should be used in conjunction
with the Company's consolidated financial statements applying elsewhere herein
(in thousands, except per share data):


<TABLE>
<CAPTION>

OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1998:
<S>                                                                <C>   
  Revenues                                                         $5,127
  Operating income                                                  2,461
  Equity in earnings of Principal Healthcare
     Finance, Limited                                                 421
  Income tax provision                                               (927)
  Net earnings                                                      1,955
  Net earnings available to common shareholders                     1,851
PER SHARE AMOUNTS                                    
  Earnings per common share, basic                                   0.15
  Earnings per common share, dilutive                                0.15
Weighted average of shares outstanding, basic                      12,255
Weighted average of shares outstanding, dilutive                   12,255


FINANCIAL POSITION AT SEPTEMBER 30, 1998:
  Current assets                                                  $21,567
  Total assets                                                     88,992
  Current liabilities                                              30,341
  Long-term debt                                                      ---
  Shareholders' equity                                             58,651
</TABLE>



<PAGE>   14
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS


"Safe Harbor" Statement 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 subsidiaries or 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 reimbursement by other third party payors;
occupancy levels at the facilities; the availability and cost of capital of the
Company and its investees; the strength and financial resources of competitors
of the Company and investees; the ability of investees to make additional real
estate investments at attractive yields; and the ability of investees to obtain
debt and equity capital at reasonable costs.


<PAGE>   15



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 audited consolidated financial
statements and notes thereto.

Results of Operations

Revenues from rents and interest for the period from April 2, 1998 (the date the
Company began operating as an independent public company) through September 30,
1998 (representing approximately a six-month period) were $5,127,000. The
Company's revenue is generated from investment and advisory services stemming
primarily from investments outside the United States. The Company also is an
owner of and provides management services to Principal, an Isle of Jersey
company that owns and leases 166 nursing home facilities to operators in the
United Kingdom. In June 1998, the Company acquired the Trust, a unit trust that
owns and leases 10 nursing home facilities and 480 assisted living units in
Australia. The Trust is a wholly owned subsidiary of the Company whose financial
position and results of operations are consolidated with that of the Company's
after elimination of all material intercompany accounts and transactions. The
Company intends to reduce its equity investment in the Trust to less than a
majority through the sale of units by the Trust to Australian institutional
investors. The Company will then account for its investment in the Trust at its
equity in the underlying net assets of the Trust and will recognize in its
statement of operations its pro rata share of the Trust's results of operations.


Equity in earnings of Principal of $421,000 ($0.03 per share) for the period
through September 30, 1998, represents the Company's 33.375% equity ownership in
Principal, which the Company acquired as a result of the spin-off from Omega on
April 2, 1998. Included in the Company's share of earnings is $172,000 ($0.01
per share) related to the non-recurring operating items realized by Principal
during the six-month period ended August 31, 1998.

On June 19, 1998, the Trust made an investment of approximately $30 million in
certain aged care facilities subject to long-term triple-net lease in Australia,
which is to be paid in June 1999. The deferred purchase obligation, which is due
June 19, 1999, was recorded net of imputed interest.  Interest expense of
$573,000, for the period through September 30, 1998, represents non-cash
interest calculated on the $30 million deferred purchase obligation of the Trust
implied at an 8% interest rate. 

Direct cost of service provided of $1,113,000, for the period ended September
30, 1998, represents cost incurred by Omega (UK) Limited. Omega (UK) Limited is
the primary service provider for activities related to Principal. The reported
amount represents direct cost incurred in the delivery of the services for which
rent and fee income has been recognized.

Allocated expenses from Omega of $303,000, for the period ended September 30,
1998, represents allocated share of compensation and occupancy costs of Omega
pursuant to provisions of the Services Agreement between Omega and the Company.
(See Note 11 to the consolidated financial statements)
<PAGE>   16


General and administrative expenses of $485,000, for the period ended September
30, 1998, represent direct administrative costs incurred by the Company on its
own behalf for corporate expenses, including state taxes, investor
relations, directors' expenses, legal, accounting and similar costs.
 
Liquidity and Capital Resources 
On April 2, 1998, the Company issued 12,250,000 shares of common stock and
260,000 shares of Class B preferred stock in connection with its initial public
offering (3,750,000 shares sold in the public offering) and the contribution of
assets by Omega in exchange for 8,500,000 shares of the Company's common stock
and 260,000 shares of the Class B preferred stock. Proceeds from the IPO and
rights offering totaled $27,375,000 (net of issuance costs totaling $750,000).

On June 19, 1998, the Company acquired 100% of the units of the Trust as
described in Note 3 to the consolidated financial statements. The Trust's
investment in facilities approximates $30 million, which is to be paid in June
1999.  The Company has deposited $9,330,000 in a cash collateral account to
secure a $30 million bankers' bill (letter of credit) obtained by the Trust to
guarantee funding for the deferred purchase obligation.

Cash provided by operating activities, for the period ended September 30, 1998,
totaled $2,231,000. Subsequent to September 30, the Company has obtained a
$25,000,000 two-year line-of-credit facility which expires on September 30,
2000. In November 1998, the Trust obtained an A$75 million (approximately $45
million) revolving credit facility from a bank in Australia. This revolving
credit facility and an interim bridge loan of $14.4 million from Omega were used
to fund the purchase by the Trust of 25 long-term care facilities from an
affiliate of Moran for A$80 (approximately $48 million). The facilities were
immediately leased back to an affiliate of Moran for an initial 30-year term.
Funds borrowed from Omega will be repaid in full by December 31, 1998.

The Company intends to continually seek new investment in providers of finance
to long-term care operators outside the United States. 


<PAGE>   17



Market Risk 
The Company is exposed to various market risks. 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 exchange 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. During 1998, the Company obtained a hedge for its A$15,000,000
investment in and temporary loans to the Trust. At September 30, 1998, the
Company had outstanding a ten-year British pound forward currency swap to
exchange (pound)20,000,000 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.  See
Notes 1 and 6 to the consolidated financial statements for a discussion of the
accounting policies for Financial Instruments and information on Financial
Instruments, respectively.

Year 2000 Implications
The Year 2000 compliance issue concerns the inability of certain systems and
devices to properly use or 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 



<PAGE>   18

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 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 upon current information, the Company does not believe any such
problems would have a material effect on its operations. For example, Year 2000
related

<PAGE>   19


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 upon 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.

ITEM 7a - QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

These disclosures are included in Management's Discussion and Analysis of 
Financial Condition and Results of Operations

<PAGE>   20
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and report of independent auditors are
filed as part of this report on pages F-1 through F-15.


ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
           FINANCIAL DISCLOSURE

Not applicable.
<PAGE>   21
                                    PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Located in Part I as permitted by Instruction 3 to Item 401(b) of Regulation
S-K.

ITEM 11 - EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the
Company's definitive proxy statement for the Annual Meeting of Shareholders to
be held on March 23, 1999, which will be filed on or about January 28, 1999 with
the Securities and Exchange Commission pursuant to Regulation 14A.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated by reference to the
Company's definitive proxy statement for the Annual Meeting of Shareholders to
be held on March 23, 1999, which will be filed on or about January 28, 1999 with
the Securities and Exchange Commission pursuant to Regulation 14A.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated by reference to the
Company's definitive proxy statement for the Annual Meeting of Shareholders to
be held on March 23, 1999, which will be filed on or about January 28, 1999 with
the Securities and Exchange Commission pursuant to Regulation 14A.


<PAGE>   22


                                     PART IV

ITEM 14 -- EXHIBITS, FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.

    (a)(1) Listing of Consolidated Financial Statements

<TABLE>
<CAPTION>

                  Title of Document                                       Page Number
                  -----------------                                       -----------
<S>                                                                         <C>
         Report of independent auditors                                     F-1

         Consolidated Balance Sheet
             as of September 30, 1998                                       F-2

         Consolidated Statement of Operations
             for the period from April 2, 1998 
             to September 30, 1998                                          F-3

         Consolidated Statement of Shareholders'
             Equity for the period from April 2, 1998 
             to September 30, 1998                                          F-4

         Consolidated Statement of Cash Flows for the
             period from April 2, 1998 to September 30, 1998                F-5

         Notes to Consolidated Financial Statements                         F-6
</TABLE>

    (a)(2) Listing of Financial Statement Schedules. The following consolidated
financial statement schedule is included herein:

<TABLE>
<S>                                                                        <C>   
         Schedule III--Real Estate and Accumulated Depreciation            
</TABLE>

All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.

    (a)(3) Listing of Exhibits -- See Index to Exhibits beginning on Page 40 of
    this report.

    (b) Reports on Form 8-K - Form 8-K dated July 2, 1998: Report with the
    following exhibits, each of which is dated as of June 19, 1998:

         Mortgage of Deposit; Bill Facility Agreement; Deed of Guarantee and
         Indemnity; Redemption and Subscription Agreement; Relationship
         Agreement; Deed of Mortgage; Annexure B to Mortgage; Capital
         Contribution Agreement; NSW Lease; Lease Guarantee; Indemnity Deed;
         Procurement Agreement; Mortgage of Shares; and Mortgage of Units

    (c) Exhibits - See Index to Exhibits beginning on Page of this report.

    (d) Financial Statement Schedules - The following consolidated financial
    statement schedule is included herein:  Schedule III -- Real Estate and 
    Accumulated Depreciation.


<PAGE>   23


                         Report of Independent Auditors

Board of Directors
Omega Worldwide, Inc.

We have audited the accompanying consolidated balance sheets of Omega Worldwide,
Inc. and subsidiaries as of September 30, 1998, and the related consolidated
statements of operations, shareholders' equity and cash flows for the period
from April 2, 1998 (commencement of operations) through September 30, 1998. Our
audit also included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Omega
Worldwide, Inc. and subsidiaries at September 30, 1998, and the consolidated
results of their operations and their cash flows for the period from April 2,
1998 through September 30, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects, the information set forth therein.


                                                          /s/  Ernst & Young LLP

December 21, 1998
Detroit, Michigan



                                      F-1
<PAGE>   24
                                  OMEGA WORLDWIDE, INC.


                               CONSOLIDATED BALANCE SHEET

                                     (In Thousands)
<TABLE>
<CAPTION>
                                                                                          SEPTEMBER 30,
                                                                                              1998
                                                                                         -------------

                                         ASSETS
<S>                                                                                      <C>    
Current Assets:
  Cash and short-term investments .....................................................  $      10,281
  Restricted cash .....................................................................          9,330
  Other ...............................................................................          1,956
                                                                                         -------------
     Total Current Assets .............................................................         21,567

Land and Buildings subject to triple-net lease, net of $157 of accumulated depreciation         27,300
Investments in and temporary advances to Principal Healthcare Finance Limited .........         37,902
Other assets ..........................................................................          2,223
                                                                                         -------------
                                                                                                67,425
                                                                                         -------------
Total Assets ..........................................................................  $      88,992
                                                                                         =============

                          LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable and accrued expenses ...............................................  $       1,901
  Accrued income taxes ................................................................            433
  Non-interest bearing deferred purchase obligation ...................................         28,007
                                                                                         -------------
     Total Current Liabilities ........................................................         30,341


Shareholders' Equity:
   Preferred Stock $1.00 par value:
       Authorized 10,000 shares
       Outstanding 260 Class B shares at liquidation value ............................          2,600
   Common stock $.10 par value
       Authorized 50,000 shares
       Outstanding 12,258 shares ......................................................          1,226
    Additional paid-in capital ........................................................         52,861
    Retained earnings .................................................................          1,955
    Accumulated Other Comprehensive Income ............................................              9
                                                                                         -------------
     Total Shareholders' Equity .......................................................         58,651
                                                                                         -------------
Total Liabilities and Shareholders' Equity ............................................  $      88,992
                                                                                         =============

</TABLE>

                 See notes to consolidated financial statements.






                                      F-2
<PAGE>   25
                                   OMEGA WORLDWIDE, INC.

                           CONSOLIDATED STATEMENT OF OPERATIONS


                         (In Thousands, Except Per Share Amounts)


<TABLE>
<CAPTION>

                                                              Period from 
                                                             April 2, 1998 
                                                           (Commencement of 
                                                             Operations) to
                                                          September 30, 1998
                                                          ------------------
<S>                                                             <C>     
Revenues:
  Rent income ............................................      $  1,014
  Fee income - Principal Healthcare Finance Limited ......         1,920
   Interest:
     Principal Healthcare Finance Limited ................         1,784
     Short-term investments ..............................           347
  Other income ...........................................            62
                                                                --------
                                                                   5,127
Expenses:
  Direct costs of asset management services ..............         1,113
  Allocated expenses from Omega Healthcare 
    Investors, Inc........................................           303
  Imputed interest expense ...............................           573
  Provision for depreciation .............................           192
  General and administrative .............................           485
                                                                --------
                                                                   2,666
                                                                --------

Earnings before equity earnings and income taxes .........         2,461

Equity in earnings of Principal Healthcare Finance Limited           421
                                                                --------

Earnings before Federal and foreign income taxes .........         2,882
Provision for Federal and foreign income taxes ...........          (927)
                                                                --------

Net earnings before preferred stock dividends ............         1,955
Preferred stock dividends ................................          (104)
                                                                --------

Net Earnings Available to Common Shareholders ............      $  1,851
                                                                ========

Earnings per common share, Basic .........................      $   0.15
                                                                ========
Earnings per common share, Diluted .......................      $   0.15
                                                                ========
Average Shares Outstanding, Basic ........................        12,255
                                                                ========
Average Shares Outstanding, Diluted ......................        12,255
                                                                ========
Total comprehensive income, net of taxes .................      $  1,964
                                                                ========

</TABLE>

                 See notes to consolidated financial statements.



                                      F-3
<PAGE>   26
                              OMEGA WORLDWIDE, INC.

                 CONSOLIDATED STATEMENT OF SHAREHOLDER' EQUITY
                                 (In Thousands)

                     Period from April 2, 1998 (Commencement
                      of Operations) to September 30, 1998


<TABLE>
<CAPTION>
                                                                                                    Accumulated
                                                               Additional                              Other
                                                 Common Stock   Paid-in     Preferred   Retained   Comprehensive
                                                   Par Value    Capital      Stock      Earnings       Income
                                                   ---------    -------      -----      --------       ------
<S>                                               <C>           <C>         <C>         <C>        <C>


Issuance of stock:
   Issuance of 8,500 common shares and
     260 preferred shares to Omega Healthcare
       Investors, Inc. ......................      $   850      $25,802      $ 2,600
  Proceeds from April 2 equity offering of
     3,750 shares at $7.50 per share, net of
        issuance costs of $750 ..............          375       27,000
  Grants of restricted stock (8,000 shares at
     $7.50 per share) .......................            1           59

Net earnings for 1998 .......................                                             $ 1,955

Foreign currency translation adjustments ....                                                          $     9

                                                   -------      -------      -------      -------      -------
Balance at September 30, 1998 ...............      $ 1,226      $52,861      $ 2,600      $ 1,955      $     9
                                                   =======      =======      =======      =======      =======

</TABLE>



                 See notes to consolidated financial statements.



                                      F-4
<PAGE>   27
                           OMEGA WORLDWIDE, INC.

                   CONSOLIDATED STATEMENT OF CASH FLOWS

                              (In Thousands)


<TABLE>
<CAPTION>
                                                                                Period from 
                                                                               April 2, 1998
                                                                             (Commencement of
                                                                               Operation) to   
                                                                            September 30, 1998
                                                                            ------------------
<S>                                                                         <C>  
Operating activities:
  Net earnings............................................................  $            1,955 
  Adjustment to reconcile net earnings to cash provided by operating
  activities:
     Equity earnings in Principal Healthcare Finance, Limited ............                (421)
     Imputed Interest.....................................................                 573
     Other non-cash charges ..............................................                 252
  Net change in operating assets and liabilities .........................                (106)
  Foreign currency translation............................................                 (22)
                                                                            ------------------
Net cash provided by operating activities ................................               2,231

Cash flows from financing activities:
  Proceeds from issuance of common stock .................................              27,375
  Cash contributed by Omega in exchange of liabilities assumed ...........                 837
                                                                            ------------------
Net cash provided by financing activities ................................              28,212

Cash flow from investing activities:
  Restricted cash ........................................................              (9,330)
  Advances to Principal Healthcare Finance Limited .......................              (8,379)
  Secured loan to individual .............................................                (817)
  Other ..................................................................              (1,636)
                                                                            ------------------
Net cash used in investing activities ....................................             (20,162)
                                                                            ------------------
Increase in unrestricted cash and short-term investments .................  $           10,281
                                                                            ==================
</TABLE>



              See notes to consolidated financial statements.






                                     F-5
<PAGE>   28
                              OMEGA WORLDWIDE, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1998



NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION 
         Omega Worldwide, Inc. (the "Company") was formed to provide asset
management advisory services and hold equity and debt interest in companies
engaged in providing sale/leaseback and other capital financing to providers of
healthcare services throughout the world, particularly healthcare service for
the elderly. On April 2, 1998, 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, other net asset of $150,000 and 10,556,250
warrants as described in Note 2. The interest rate on the subordinated loan was
12.18% at September 30, 1998. Omega also assigned to the Company 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 for the assets contributed, Omega received
8,500,000 shares of common stock and 260,000 shares of Class B preferred stock.

         On April 2, 1998, the Company's registration statement became
effective, and it offered 3,750,000 shares 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. There are no differences in the Company's results of operations
between the six-month period ended September 30 1998 and the period from the
date of incorporation to September 30, 1998. Additionally, except for $1,000
invested by Omega at the date of formation, there was no difference between cash
flows from the six-month period ended September 30, 1998 and the period from the
date of incorporation.

CONSOLIDATION
         The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries after elimination of all material
intercompany accounts and transactions. As disclosed in Note 3, the Company
acquired Principal Healthcare Finance Trust (the "Trust") on June 19, 1998.
Information for the Trust is consolidated on a one-month lag basis as the Trust
has an August 31, 1998 year end. There were no material changes to the Trust's 
net assets during the month of September.

CASH AND SHORT-TERM INVESTMENTS
         Short-term investments consist of highly liquid investments with a
maturity date of three months or less when purchased. These investments are
stated at cost, which approximates fair value.


                                      F-6
<PAGE>   29



REVENUE RECOGNITION
         Rental income is recognized on a straight-line basis over the initial
terms of the related master lease. Such income includes periodic increases based
upon predetermined formulas as defined in the master lease.

DEPRECIATION
         Depreciable assets are recorded at cost. Depreciation expense is
calculated using the straight-line method over the estimated useful lives of the
depreciable assets. Estimated useful lives of depreciable assets range from 3 to
7 years for furniture, fixtures and equipment, and 40 years for buildings.

TRANSLATION
         Translation of currencies for foreign subsidiary financial information
is computed pursuant to the provisions of Financial Accounting Standards Board
Statement No. 52, which provides that balance sheet amounts are translated at
the year end exchange rate and income statement amounts are translated at the
average annual rate. There are no material amounts of exchange gains or losses
included in the results of operations for 1998.

FINANCIAL INSTRUMENTS
         The Company has foreign exchange rate contracts which mitigate the risk
of currency movements. Any gain or loss on the contract offsets any losses or
gains, respectively, on its investments denominated in pounds sterling and
Australian dollars.

STOCK BASED COMPENSATION
         The Company grants stock options to employees and directors with an
exercise price equal to the fair value of the shares at the date of the grant.
In accordance with the provisions of APB Opinion No. 25, Accounting for Stock
Issued to Employees, compensation expense is not recognized for these stock
option grants.

ACCOUNTING ESTIMATES
         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.


NOTE 2 - INVESTMENT IN PRINCIPAL HEALTHCARE FINANCE LIMITED

         As described in Note 1, the Company acquired 33.375% of Principal's
voting ordinary shares in connection with the Omega distribution/exchange. The
Company accounts for its interest in Principal using the equity method.
Principal has $377 million of real estate investments in long-term care
facilities.  These facilities are operated by independent operators and are
located in the United Kingdom.  Substantially all of Principal's real estate is
pledged as collateral for Principal's debt agreements. Principal has a fiscal
year end of August 31, 1998; therefore, the equity in earnings of Principal is
recognized on a one-month lag basis. Included in consolidated earnings is
$421,000 of undistributed earnings of Principal, representing the Company's
share of Principal's earnings for the period of six months ended August 31,
1998. Included in the Company's

                                      F-7
<PAGE>   30


share of earnings is $172,000 ($0.01 per share) related to the non-recurring
operating items realized by Principal during the six-month period ended August
31. The following is summarized financial information of Principal as of and for
the year ended August 31, 1998 (in thousands):

<TABLE>
<S>                                                           <C> 
                  Current assets                              $  41,132
                  Noncurrent assets                             438,409
                  Current liabilities                           128,463
                  Noncurrent liabilities                        336,254
                  Revenue                                        51,042
                  Expenses                                       48,341
                  Non operating income                            1,406
                  Net earnings before extraordinary item          4,107
</TABLE>

         The carrying value of the investment in Common Stock of Principal
exceeds the Company's proportionate share of Principal's equity by approximately
$901,000 and is amortized over a period of 10 years.

         The Company also acquired a British pound sterling denominated 
subordinated loan due December 31, 2000. The carrying amount of the loan is
$23,805,000, and it bears interest at rates ranging from 12.18% to 12.93% during
the remaining term. The estimated fair value of the loan approximates
$27,348,000 based on estimates of management and on coupon rates currently
prevailing for comparable loans.

         The Company also received warrants to purchase 10,000,000 ordinary
shares of Principal expiring June 30, 2001 at an exercise price of (pound)1.50
(approximately $2.55) per share and 556,250 ordinary shares of Principal
expiring December 31, 2000 at an exercise price of (pound)1.00 (approximately
$1.70) per share. As to the warrants that expire in December 2000, no value was
assigned at the date of issuance because the underlying securities were issued
at their fair value at that date. As to the warrants that expire in June 2001,
the coupon rate for the subordinated debt was the prevailing market rate on the
date of the loan, and, therefore, the face amount of the subordinated loans
approximated its fair value on the date of issuance. In addition, at the grant
date the exercise price on these warrants significantly exceeded the fair value
of the stock on the date of issuance since the warrants enabled the purchase of
shares at (pound)1.50, while the current value of the shares at that time was
approximately (pound)1.00. Based on these factors at the date of the loan, no
value was ascribed to the warrants. However, the estimated fair value of these
warrants at September 30, 1998 approximates $6,700,000. In determining the
estimated fair value, the Company used a Black Scholes pricing model with the
following assumptions: risk free interest rate of 6%; a volatility factor of
40%; and an average life of five years from date of grant.


NOTE 3 - ACQUISITION OF PRINCIPAL HEALTHCARE FINANCE TRUST

         On June 19, 1998 the Company acquired Assisted Living Unit Trust, an
Australian property trust that owns nursing homes, for a cash investment of $3
million plus a loan of $6.2 million and a guarantee of the Trust's deferred
purchase obligation of $30 million. Concurrent with the acquisition, the
Assisted Living Unit Trust's name was changed to Principal Healthcare Finance
Trust. The Company currently has a 100% interest in the Trust but intends to 
hold a minority interest position. 


                                      F-8
<PAGE>   31



         The Trust's investment in facilities approximates $30 million, which is
to be paid in June 1999. The investment in facilities and the deferred
obligation are recorded net of imputed interest at 8%. Imputed interest expense
for the period was $574,000. The Trust has provided $9,330,000 in cash
collateral to secure a $30 million letter of credit obtained by the Trust to
provide funding for the deferred payment. The cash collateral is classified as
restricted cash.


NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

         The real estate properties owned by the Trust are represented by 10
long-term care facilities and 480 assisted living units and are leased under the
provisions of a 30-year master lease. The lease provides for minimum payments of
$3,110,000 commencing in June 1999. Such payments are subject to annual
increases based on the greater of changes in price indexes or 2%, with a maximum
annual increase of 6%. Under the terms of the lease, the lessee is responsible
for all maintenance, repairs, taxes and insurance on the leased premises.

         A summary of the Company's land and buildings subject to triple net
lease and related accumulated depreciation is as follows (in thousands):

<TABLE>
<S>                                                         <C>
         Land and buildings subject to triple-                $ 27,457
                net lease
         Less accumulated depreciation                            (157)
                                                              -------- 
                                                              $ 27,300
                                                              ========
</TABLE>

Depreciation expense for the period ended September 30, 1998 which includes 
approximately $35,000 to related the Company's office equipment was 
approximately $192,000.


NOTE 5 - SECURED LOAN TO INDIVIDUAL

On May 28, 1998, the Company loaned $817,500 to an individual secured by the
individual's interest in a United Kingdom aged care operating company. The
operating company is a tenant of Principal. The loan bears interest at 10.5%
and principal payments are due through the year 2000. The estimated fair value
of the secured loan at September 30, 1998 is $856,000. Fair value is based on
the estimates of management and on rates currently prevailing for comparable
loans.

                                      F-9

<PAGE>   32

NOTE 6- FINANCIAL INSTRUMENTS

         At September 30, 1998, the carrying amounts and fair values of the
Company's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                          Carrying                 Fair
                                                           Amount                  Value
                                                          ------------------------------
                                                                   (In Thousands)
<S>                                                       <C>                    <C>    
Assets:
   Cash and short-term investments                        $10,281                $10,281
   Restricted Cash                                          9,330                  9,330
   Subordinated loan to Principal                          23,805                 27,348
   Temporary advances to Principal                          8,379                  8,379
   Warrants for 10,556,250 Principal shares                     0                  6,700
   Secured loan                                               817                    856
                                                          -------                -------
                                                          $52,612                $62,894

Off Balance Sheet Financial Instruments:
       Foreign currency contracts                               -                 (1,789)
</TABLE>

         Fair value estimates are subjective in nature and are dependent on a
number of important assumptions, including estimates of future cash flows,
risks, discount rates and relevant comparable market information associated with
each financial instrument. The use of different market assumptions and
estimation methodologies may have a material effect on the reported estimated
fair value amounts. Accordingly, the estimates presented above are not
necessarily indicative of the amounts the Company would realize in a current
market exchange.

         The Company has forward contracts to hedge currency risks associated
with investments in Principal and the Trust. Pursuant to a ten-year British
pound sterling currency swap agreement, the Company will have the right to
exchange (Pound)20,000,000 for $31,740,000 on October 15, 2007. Also, a
five-year forward contract to sell A$15,000,000 at the rate of US$.6220 was
entered into on June 30, 1998. The carrying amount of the investment in
Principal and the subordinated loans/advances to Principal, as well as
restricted cash related to the Trust, are based on the rates established in the
forward exchange contracts.


NOTE 7 - INCOME TAXES

         Income tax expense differs from the amounts computed by applying the
U.S. Federal income tax rate of 34% to earnings before taxes as follows (in
thousands):

         Computed expected tax expense                 $979
         Tax effect of equity earnings                 (143)
         Foreign tax rate differential and other         91
                                                       ----
             Total                                     $927
                                                       ====

         The provisions for deferred taxes related to foreign investments has 
been partially offset by available related foreign tax credits.




                                      F-10

<PAGE>   33


NOTE 8 - STOCK OPTIONS

         Under the terms of the 1998 Stock Option and Restricted Plan (the
"Plan"), the Company reserved 750,000 shares of common stock for grants to be
issued during a period of up to 10 years. Directors, officers, and key employees
are eligible to participate in the Plan. Options for 648,000 have been granted
during 1998. Additionally, 8,000 shares of restricted stock have been granted
under the provisions of the Plan. The vesting period on the restricted stock
lapsed on September 30, 1998, and expenses for 1998 include $60,000 related to
restricted stock grants for 1998.

         The following is a summary of activity under the plan.

<TABLE>
<CAPTION>
                                                                Stock Options                                        
                                           -----------------------------------------------------
                                           Number of               Exercise          Weighted
                                           Shares                    Price         Average Price
                                           -----------------------------------------------------
<S>                                        <C>                  <C>                  <C>
Outstanding at April 2, 1998                    0
Grants during 1998                          648,000             $5.688-$7.500            $7.479
Forfeited                                   (42,000)             7.500                    7.500
                                           ----------------------------------------------------
Outstanding at September 30, 1998           606,000             $5.688-$7.500            $7.477
                                           ----------------------------------------------------
</TABLE>


         In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." This new standard prescribes a fair value based
method of accounting for employee stock options or similar equity instruments
and requires certain pro forma disclosures. For purposes of the pro forma
disclosures required under Statement 123, the estimated fair value of the
options is amortized to expense over the option's vesting period. Based on the
Company's option activity, net earnings and net earnings per share on a pro
forma basis does not differ significantly from that determined under APB 25. The
estimated weighted average fair value of options granted in 1998 approximates $2
million. In determining the estimated fair value of the Company's stock options
as of the date of grant, a Black-Scholes option pricing model was used with the
following weighted-average assumptions: risk-free interest rates of 6.0%;
volatility factors of the expected market price of the Company's common stock at
30%; and a weighted-average expected life of the options of 7 years.

         The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

         Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. For purposes of pro forma disclosures, the estimated fair value of
the options is amortized to expense over the options' vesting period. For the
period ended September 30, 1998, the Company's pro forma net earnings would be
$1,784,000, and pro forma earnings per common share, basic and diluted, would be
$0.14.

                                      F-11
<PAGE>   34



NOTE 9 - PREFERRED STOCK

         Effective April 2, 1998, the Company issued 260,000 shares of 8% Series
B Cumulative Preferred Stock ("Preferred Stock") at $1 par value per share to
Omega in connection with the terms of the agreement. Each share of Series B
Preferred converts to one share of Omega Worldwide Common Stock immediately
after Omega makes a distribution of the Series B Preferred to its shareholders
or otherwise transfers the shares to any unaffiliated third party. Dividends on
the Preferred Stock are payable annually based on a liquidation value of $10 per
share.


NOTE 10 - NET EARNINGS PER SHARE

         Net earnings per share are 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 (518 shares at
September 30, 1998). The assumed conversion of shares of preferred stock is
currently anti-dilutive.


NOTE 11 - RELATED PARTY TRANSACTIONS

         Pursuant to the provisions of a Services 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 period ended September 30, 1998 were approximately $303,000.
Such allocations are based on estimates and formulas that management believes to
be reasonable.

         Temporary advances to Principal in the amount of $8,379,000 are
outstanding at September 30, 1998. Interest at 9.25% is paid on a monthly basis.
Included in interest income for the six-month period ended September 30, 1998 is
$292,000 related to advances to Principal.

         Interest on the subordinated loan to Principal and fees from services
are $1,492,000 and $1,920,000, respectively, for the six-month period ended
September 30, 1998.


                                      F-12
<PAGE>   35



NOTE 12 - BUSINESS SEGMENT INFORMATION

         Omega Worldwide, Inc. was formed to provide asset management advisory
services and hold equity and debt interest in companies engaged in providing
sale/leaseback and other capital financing to providers of healthcare services
throughout the world, particularly healthcare service for the elderly. The
Company seeks to leverage its management expertise in financing healthcare
providers globally by providing seed equity, debt capital and investment
advisory services to newly-formed or existing finance companies, principally in
countries other than the United States. As of September 30, 1998, the Company
has made equity and debt investments in the United Kingdom and Commonwealth of
Australia. Accordingly, the Company presently operates in three geographic
regions, the United States, United Kingdom and Australia. The following is a
summary of operations by geographic region for the period of six months ended
September 30, 1998 (in thousands):

<TABLE>
<S>                                                               <C>     
     Revenue:
         United States                                            $  2,097
         United Kingdom                                              1,920
         Australia                                                   1,110
                                                                  --------
         Total                                                    $  5,127
                                                                  ========

     Operating income (expense):
         United States                                            $  2,643
         United Kingdom                                                477
         Australia                                                     247
         Corporate expenses                                           (485)
                                                                  --------
         Total                                                    $  2,882
                                                                  ========

     Identifiable assets:
         United States                                            $ 57,108
         United Kingdom                                                131
         Australia                                                  31,753
                                                                  --------
         Total                                                    $ 88,992
                                                                  ========
</TABLE>

         Identifiable assets attributable to the United States include
approximately $45 million represented by cash, loans and investments denominated
in currencies other than the U.S. dollar.

                                      F-13
<PAGE>   36



NOTE 13 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

         Following are details of changes in operating assets, liabilities and
other Non-cash transactions for the period ended September 30, 1998 (in
thousands):

<TABLE>
<S>                                                           <C>          
Increase (decrease) in cash from changes 
  in operating assets and liabilities:
                  Operating assets                            $  (880)
                  Other liabilities                               341
                  Accrued taxes                                   433
                                                              -------
                                                              $  (106)
                                                              =======

         Noncash investing and financing transactions:
               Contribution by Omega Healthcare Investors,
                 Inc., excluding cash
                  Investments                                 $ 5,297
                  Loans                                        23,805
                  Other                                           150
                Equity                                        (29,252)
               Acquisition of land and buildings subject
                        to triple-net lease                   (27,457)
               Non-interest bearing deferred obligation        27,457
 
Income taxes paid during the period                               600
</TABLE>

NOTE 14 - QUARTERLY DATA (UNAUDITED)

         The following is an unaudited summary of quarterly results of
operations for the periods ended June 30, and September 30, 1998.

<TABLE>
<CAPTION>
                                                          June 30      September 30
                                                     (In thousands, except per share)

<S>                                                        <C>            <C>   
Revenues                                                   $1,778         $3,349
Net earnings                                                  744          1,211
Net earnings available to common                              692          1,159
Per Share Amounts:
Net earnings available to common, basic                       .06            .09
Net earnings available to common, diluted                     .06            .09
</TABLE>


                                      F-14

<PAGE>   37



NOTE 15 - SUBSEQUENT EVENTS

         In November 1998, the Company entered into a revolving credit agreement
with two banks for loans up to $25,000,000. 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 bank an unused facility fee presently at .300%. Borrowings
under the facility bear interest at LIBOR plus 1.1875% or at the Company's
option price.

         In November 1998, the Trust acquired and leased back 30 nursing
homes in the Australian states of New South Wales, Queensland, Western
Australia, and Victoria for $60 million. The transaction is in three phases with
the first phase closing in November and consisting of the purchase of 25
facilities for $48 million. The purchase of five Victoria homes will occur in
the second phase upon completion of construction and the stabilized occupancy of
the homes for an aggregate purchase price of $12 million. The final phase
involving an additional $15 million encompasses the renovation and refurbishing
of facilities during a five-year period ending October 2003 to enable 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 transaction was funded by drawing $30 million on the Trust's $45
million revolving credit facility, and by an interim bridge loan advance of
$14.4 million provided by Omega. The terms of the bank's financing involved
borrowings at an initial six months interest rate at 6.10% and interest rates
thereafter at the base rate (as defined) plus 1.50%, or approximately 6.45%. The
Omega loan bears interest at 10% and is due December 31, 1998, or sooner upon
completion of local equity financing currently anticipated to be closed in the
Company's first quarter.



                                      F-15
<PAGE>   38






              SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
                              OMEGA WORLDWIDE, INC.
                               SEPTEMBER 30, 1998


<TABLE>
<CAPTION>


            COLUMN A              COLUMN B       COLUMN C                COLUMN D             
-----------------------------  -------------  -------------   -----------------------------   
                                                                                              
                                                                                              
<CAPTION>

                                                                                              
                                               INITIAL COST
                                                TO COMPANY           COST CAPITALIZED
                                              -------------           SUBSEQUENT TO          
                                                                        ACQUISITION           
                                                 BUILDINGS    -----------------------------                               
                                                 AND LAND                       CARRYING      
         DESCRIPTION(1)         ENCUMBRANCES   IMPROVEMENTS    IMPROVEMENTS       COSTS       
-----------------------------  -------------  --------------  -------------- --------------   
<S>                                            <C>                     <C>          <C>
Moran Healthcare Group pty.:                                                                  
   New South Wales, Australia..                  27,457,565              0           0        
                                                                                              


<CAPTION>



    COLUMN E(3)       COLUMN F        COLUMN G        COLUMN H           COLUMN I      
 ----------------  --------------  --------------  ---------------    ------------      
  GROSS AMOUNT AT                                                                      
 WHICH CARRIED AT                                                                      
  CLOSE OF PERIOD                                                                      
 ----------------                                                                                       
                                                                                       
<CAPTION>
                                                                       LIFE ON WHICH   
     BUILDINGS                                                         DEPRECIATION    
     AND LAND                                                            IN LATEST     
   IMPROVEMENTS      ACCUMULATED       DATE OF          DATE         INCOME STATEMENTS 
       TOTAL       DEPRECIATION(4)   RENOVATION       ACQUIRED          IS COMPUTED    
 ----------------  ---------------  --------------  -------------    -----------------    
                                                                                       
<S>                     <C>                        <C>                  <C>          
   27,457,565           157,542                     June 19, 1998        40 years     
                                                                                                                                 
                                                                                       
</TABLE>

(1)  All the real estate included in this schedule are being used for the 
     operation of long-term care facilities (LTC) in New South Wales, Australia.

(2)  Cost for federal tax purposes.

Column E                                                1998
                                                        ----       
(3)  Balance at beginning of period                    0
       Additions during period:
       Acquisitions                                    27,457,565
                                                    -------------   
    Balance at Close of period                         27,457,565
                                                    =============   

Column F                                               1998
                                                       ----
(4)  Balance at Beginning of period                    0
       Additions during period:                       
       Provisions for depreciation                        157,542
                                                    -------------   
     Balance at Close of period                           157,542
                                                    =============   
<PAGE>   39


                                   SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) 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.

                                                   By: /s/ ESSEL W. BAILEY, JR.
                                                      -------------------------
                                                         Essel W. Bailey, Jr.
                                                       Chief Executive Officer
Dated:  December 28, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities on the date indicated.

<TABLE>
<CAPTION>
                                      SIGNATURES                           TITLE                 DATE
                                      ----------                           -----                 ----
                        <S>                                   <C>                         <C>
                         PRINCIPAL EXECUTIVE OFFICER

                         /s/ ESSEL W. BAILEY, JR.              President,                   December 28,1998
                         --------------------------------      Chief Executive 
                         Essel W. Bailey, Jr.                  Officer, 
                                                               and Director

                         PRINCIPAL FINANCIAL OFFICER and
                         PRINCIPAL ACCOUNTING OFFICER

                         /s/ DAVID A. STOVER                   Vice President, Chief        December 28,1998
                         --------------------------------      Financial Officer 
                         David A. Stover                       and Chief Accounting
                                                               Officer                        

                         DIRECTORS

                         /s/ JAMES A. EDEN                     Director                     December 28,1998
                         --------------------------------
                         James A. Eden

                         /s/ THOMAS F. FRANKE                  Director                     December 28,1998
                         --------------------------------
                         Thomas F. Franke

                         /s/ HAROLD J. KLOOSTERMAN             Director                     December 28,1998
                         -------------------------------- 
                         Harold J. Kloosterman

                         /s/ BERNARD J. KORMAN                 Director                     December 28,1998
                         --------------------------------
                         Bernard J. Korman

                         /s/ EDWARD LOWENTHAL                  Director                     December 28,1998
                         --------------------------------
                         Edward Lowenthal

                         /s/ ROBERT L. PARKER                  Chairman of the Board        December 28,1998
                         --------------------------------
                         Robert L. Parker

                         /s/  JACQUES AIGRAIN                  Director                     December 28,1998
                         --------------------------------
                         Jacques Aigrain

                         /s/ ANIL K GUPTA                      Director                     December 28,1998
                         --------------------------------
                         Anil K. Gupta

</TABLE>




<PAGE>   40
                                INDEX TO EXHIBITS


Exhibit 3.1       Articles of Amendment and Restatement Incorporated by 
                  reference to Exhibit 3.1 to Form S-1 Registration Statement

Exhibit 3.2       Amended and Restated Bylaws Incorporated by reference to
                  Exhibit 3.2 to Form S-1 Registration Statement

Exhibit 3.3       Articles Supplementary for Series B Preferred Stock
                  Incorporated by reference to Exhibit 3.3 to Form S-1 
                  Registration Statement

Exhibit 3.4       Articles Supplementary for Series A Preferred Stock
                  Incorporated by reference to Exhibit 3.4 to Form S-1
                  Registration Statement

Exhibit 10.1      Omega Worldwide, Inc. 1997 Stock Option and Restricted Stock 
                  Plan Incorporated by reference to Exhibit 10.1 to Form S-1 
                  Registration Statement

Exhibit 10.2      Opportunity Agreement between the Company and Omega dated 
                  April 1, 1998 Incorporated by reference to Exhibit 10.2 to
                  Form S-1 Registration Statement

Exhibit 10.3      Services Agreement between the Company and Omega dated April 
                  1, 1998 Incorporated by reference to Exhibit 10.3 to Form
                  S-1 Registration Statement

Exhibit 10.4      Amended and Restated Advisory Agreement dated as of July 21,
                  1995 between the Company (as successor by assignment from
                  Omega) and Principal Incorporated by reference to Exhibit 10.5
                  to Form S-1 Registration Statement

Exhibit 10.5      Indemnification Agreements between the Company and its
                  Directors and Executive Officers Incorporated by reference
                  to Exhibit 10.7 to form S-1 Registration Statement

Exhibit 10.6      Advisory Agreement between Omega (Australia) Pty Limited and
                  Principal Healthcare Finance Trust Filed herewith

Exhibit 10.7      Form of Loan Agreement dated as of November 20, 1998 among the
                  Company, Fleet Bank, N.A., as Agent, and other financial
                  institutions named therein, Filed herewith



<PAGE>   41

Exhibit 10.8      Promissory Note executed by the Trust to Omega and Guaranty
                  executed by the Company in favor of Omega Incorporated by 
                  reference to Exhibit 10.3 to the Company's report on Form 8-K 
                  filed on November 27, 1998

Exhibit 10.9      Transaction documents dated June 19, 1998 -- Incorporated by
                  reference to Exhibit 10.1 to the Company's report on Form 8-K
                  filed on July 2, 1998:

                  (a)      Mortgage of Deposit between the Company and ABN AMRO 
                           Facilities Australia Limited ("ABN Facilities")

                  (b)      Bill Facility Agreement between Principal Pty and ABN
                           AMRO Australia Limited ("ABN Australia")

                  (c)      Deed of Guarantee and Indemnity between the Company 
                           and ABN Facilities

                  (d)      Redemption and Subscription Agreement among Premier 
                           Care Australia (Holdings) Pty Limited, FAI Insurances
                           Limited ("FAI"), PHF No. 1 Pty Limited ("PHF No. 1"),
                           Tanoa Pty Limited ("Tanoa"), and Premier Care 
                           Australia Pty Limited (now known as Principal
                           Healthcare Finance Pty Limited ("Principal Pty")

                  (e)      Relationship Agreement among the Company, PHF No. 1
                           Pty Limited, PHF No. 2 Pty Limited, Tanoa, Mindra
                           Pty Limited, Beheer-en Beleggingsmaatschappij Dilava
                           BV, Beheer-en Beleggingsmaatschappij Rocla BV, Moran
                           Health Care ("Australia") Pty Limited ("Moran
                           Australia") and Moran Health Care Group Pty Limited
                           ("Moran")

                  (f)      Deed of Mortgage and Annexure B to Mortgage between
                           Principal Pty and ABN Facilities

                  (g)      Capital Contribution Agreement among Moran Australia,
                           Moran and Principal Pty

                  (h)      NSW Lease between Principal Pty, as lessor, and Moran
                           Australia, as lessee

                  (i)      Lease Guarantee between Moran and Principal Pty

                  (j)      Indemnity Deed

                  (k)      Procurement Agreement among Moran Australia, FAI, 
                           Moran, Douglas John Moran, Greta Richmond Moran, 
                           Peter Godfrey Moran and Shane Moran

                  (l)      Mortgage of Shares between Moran and Principal Pty



<PAGE>   42


Exhibit 12        Statement re Computation of Ratio of Earnings to Combined 
                  Fixed Charges and Preferred Stock Dividends - Filed herewith

Exhibit 21        Subsidiaries of Registrant - Filed herewith

Exhibit 27        Financial Data Schedule - Filed herewith

Exhibit 99(a)     Financial Statements of Principal Healthcare Finance Limited--
                  (filed herewith):
                           -Report of Auditors
                           -Consolidated Statement of operations for the years 
                           ended August 31, 1998, 1997, and 1996
                           -Consolidated Balance Sheets as of August 31, 1998 
                           and 1997
                           -Consolidated Statements of Shareholders' Equity for 
                           the years ended August 31, 1998, 1997, and 1996
                           -Consolidated Statements of Cash Flows for the years
                           ended August 31, 1998, 1997, and 1996
                           -Notes to Consolidated Financial Statements

Exhibit 99(b)     Financial Statements of Tamaris Plc--(filed herewith):
                           -Report of Auditors
                           -Consolidated Profit and Loss Account for the years
                           ended March 31, 1998 and 1997 
                           -Consolidated Balance Sheets as of March 31, 1998 and
                           1997 
                           -Company Balance Sheets as of March 31, 1998 and 1997
                           -Consolidated Cash Flow Statement for the years ended
                           March 31, 1998 and 1997 
                           -Notes to the Financial Statements

Exhibit 99(c)     Financial Statements of Moran Health Care Pty Limited--(filed
                  herewith):
                           -Independent Audit Report
                           -Consolidated Profit and Loss Account for the years
                           ended June 30, 1998 and 1997 
                           -Consolidated Balance Sheet as of June 30, 1998 
                           and 1997 
                           -Consolidated Statement of Cash Flows for the years 
                           ended June 30, 1998 and 1997 
                           -Notes to and forming part of the financial 
                           statements