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, 1999

|_|      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 $43,273,082  based on the $4.125 closing price per share
for such stock on the NASDAQ National Market on December 15, 1999.

         As of December 15, 1999, there were 12,266,000 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 10,
2000, are incorporated herein by reference as indicated herein.


<PAGE>
                                     PART I

Item 1 -- Business of the Company


         The business of the Company is to provide asset management services and
management  advisory  services,  as well as  equity  and  debt  capital,  to the
healthcare  industry,   particularly  residential  healthcare  services  to  the
elderly. The Company has established  financing activities in the United Kingdom
and the  Commonwealth  of  Australia.  Subsequent  to  September  30 the Company
acquired  leasehold  rights and other assets  incidental to 119 nursing homes in
the United Kingdom.


         The Company  often  provides seed equity and debt capital to enable the
establishment  of  operating  or  financing  firms,   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,  operating or real estate  activities
of a sort not possible for a healthcare Real Estate  Investment  Trust ("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
then  outstanding,  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-UK"),  a Jersey corporation which is engaged
               in investing in long-term care facilities in the United Kingdom;


          (b)  Warrants to purchase 10,556,250 shares of Principal-UK;


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

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


         Principal-UK  is,  as of the  date of this  report,  the  owner  of 207
long-term care facilities,  primarily  purpose-built  nursing homes,  subject to
long-term, triple-net leases to 13 operating companies in the UK. Principal-UK's
revenues  for the year ending  August 31, 1999  totaled  $61.8  million,  assets
totaled $570 million and net earnings  totaled $3.9  million.  Principal-UK  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 2025 and 2027.
In March 1999 a second  securitization  was  issued in the amount of  (pound)122
million, repayable in the years 2027 and 2029. Pursuant to the contract expiring
on December 31, 2002, the Company provides  management  services to Principal-UK
for a fee  equal to 0.9% of  assets  managed.  In  November  1999,  Principal-UK
declined to extend the contract for an  additional  year as provided in its self
extending clause. Both  securitizations have maturities that are 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
("Principal-Australia"). Principal-Australia is an Australian Unit Trust which

                                       1
<PAGE>
owned, as of the date of acquisition by the Company, ten long-term nursing homes
and 480 assisted living units in New South Wales. Initial long-term financing of
A$127.9  million was  completed  in October  1999.  The amount is  repayable  in
quarterly installments through 2027.

        Principal-Australia  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, Principal-Australia completed the first phase of a three-part
purchase  and  leaseback  transaction,  also with Moran,  which  encompassed  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
Principal-Australia  for A$80  million and  immediately  leased them back for an
initial  30-year term.  Simultaneously,  phase two of the  agreement  called for
Principal-Australia  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$10.5  million.  Phase two was completed in March
1999. Phase three involves the advance by  Principal-Australia  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 Company  provides  management
services to  Principal-Australia  for a fee equal to 0.9% of assets managed. The
agreement extends through December 31, 2007.

         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,  and manages 33 facilities  (approximately 1,800
beds) in Indiana, Michigan, Illinois and Texas.


         In August 1998, the Company  acquired from a subsidiary of Principal-UK
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-UK.  Moran
(UK) is an affiliate of Moran,  the operator of the long-term care facilities in
Australia that are owned by Principal-Australia.

         Subsequent to year end, in October 1999, the Company,  through a wholly
owned subsidiary,  Idun Healthcare Ltd., acquired the operating  subsidiaries of
Tamaris. The 48  subsidiaries  acquired  operate 119 nursing homes and three
pharmacies in England, Scotland and Northern Ireland.

Employees

         At November 15, 1999, the Company employed ten persons in its operating
office in London,  England,  three  persons in its  operating  office in Sydney,
Australia,  three  persons  at the  Company's  executive  offices  in Ann Arbor,
Michigan  and 31  persons  as  shared  employees  with  Omega  at the  Company's
executive  offices in Ann Arbor,  Michigan.  The Company's Idun  Healthcare Ltd.
employs  approximately 8,700 employees in the operations it purchased in October
1999.


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

                                       2
<PAGE>
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 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.  Pursuant
to the  Opportunity  Agreement,  Omega  acquired  8% of  the  common  shares  of
Principal-Australia.

         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-14 of the
Company's consolidated 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 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.  Operating companies in which the Company invests, as well as
the lessees and  mortgagors  of  Principal-UK,  Principal-Australia  and similar
companies, 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-UK  and
Principal-Australia are attempting to develop and market a method of financing

                                       3
<PAGE>
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-UK,  Principal-Australia  and operating  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-UK,  Principal-Australia  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 operating companies, including
the lessees of Principal-UK,  Principal-Australia 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,  mortgagors and operating  companies
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-UK,  Principal-Australia  and similar
companies in which the Company invests.

         Although   Principal-UK   plans  to  increase  rapidly  the  number  of
healthcare operators it finances, currently over 50% of Principal-UK's rents are
derived from rent payments received from two operators. Principal-Australia 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-UK   and
Principal-Australia  will be dependent upon the ability of these tenants to meet
their    obligations    under   their    agreements   with    Principal-UK   and
Principal-Australia.

         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.

                                       4
<PAGE>
Directors and Executive Officers of Omega Worldwide

         Set forth below is information  regarding (i) current  Directors of the
Company,  who will serve until the term expires at the indicated  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               Positions
         ----                  -------      ---               ---------
<S>      <C>                     <C>        <C>                   <C>


Jacques Aigrain ............    2001         45       Director
Essel W. Bailey, Jr ........    2002         55       Director, President and Chief Executive Officer
James E. Eden ..............    2000         62       Director
James P. Flaherty ..........                 52       Chief Operating Officer
Thomas F. Franke ...........    2001         70       Director
Anil Gupta .................    2000         50       Director
Harold J. Kloosterman ......    2002         57       Director
Bernard J. Korman ..........    2000         68       Director
Susan A. Kovach ............                 39       Vice President, General Counsel and Secretary
Edward Lowenthal ...........    2001         54       Director
Edward C. Noble ............                 45       Vice President and Chief Financial Officer
Robert L. Parker ...........    2002         65       Chairman of the Board of Directors

</TABLE>

         Jacques  Aigrain has been  employed  by J.P.  Morgan and Company for 15
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  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-UK and of Principal-Australia.

         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.

                                      5
<PAGE>
Mr. Franke has been a Director of Omega since its  formation in 1992,  and since
Principal-UK's   formation  in  1995,   Mr.   Franke  has  been  a  Director  of
Principal-UK.

        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. 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),  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  Equity  Residential
Properties  Trust and Great Lakes REIT, Inc. He also has served as a director of
United American Energy  Corporation,  a developer,  owner and operator of energy
facilities, and Corporate Renaissance Group, Inc., a mutual fund.

         Mr. Noble joined  Worldwide in March 1999 as Vice  President  and Chief
Financial  Officer.  From 1995 to 1998, Mr. Noble was Chief Financial Officer of
the international group of Culligan Water Technologies,  Inc., a manufacturer of
water  treatment  products.  From 1991 to 1995, he was  Assistant  Treasurer for
Astrum International, Inc., a holding company in diverse industries.

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

         The Company  believes that all filings  required to be made pursuant to
Section 16(a) of the Securities Exchange Act of 1934 were timely made.

                                       6
<PAGE>
Item 2 -- Properties

         At September 30, 1998,  the Company's real estate  investments  were 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. At September 30, 1999, the real estate investments described above
continue to be owned by its unconsolidated affiliate, Principal-Australia.

Item 3 -- Legal Proceedings
         There were no legal proceedings pending as of September 30, 1999, or as
of the date of this  report,  to which  the  Company  is a party or to which the
properties are subject.

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.

                                       7
<PAGE>

                                     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  quarters  of the  Company's  fiscal  year  ended
September  30, 1998 does not exist.  The  Company's  shares of common  stock are
traded under the symbol OWWI. The following table sets forth, for the year ended
September  30, 1999 and the period ended  September  30, 1998,  the high and low
prices as reported by the NASDAQ National Market System:


            Quarter                                     High            Low
            -------                                     ----            ---

April 10, 1998 through June 30, 1998 ............    $  10.625       $  6.875
July 1, 1998 through September 30, 1998 .........    $   8.250       $  4.000
October 1, 1998 through December 31, 1998 .......    $   4.750       $  3.500
January 1, 1999 through March 31, 1999 ..........    $   5.250       $  3.438
April 1, 1999 through June 30, 1999 .............    $   6.000       $  3.563
July 1, 1999 through September 30, 1999 .........    $   4.500       $  4.000

         The  closing  price  quoted on the  NASDAQ  National  Market  System on
December  15, 1999 was $4.125 per share.  As of December  15,  1999,  there were
12,266,000  shares  of  common  stock  outstanding  with   approximately   2,000
registered holders and approximately 12,000 beneficial owners.

                                       8
<PAGE>

Item 6 - Selected Financial Data

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


<TABLE>
<CAPTION>

                                                                                                   Period from
                                                                             Year Ended         April 2, 1998 to
                                                                         September 30, 1999    September 30, 1999
                                                                         ------------------    ------------------
<S>                                                                              <C>                   <C>

Operating Data
Revenues ..............................................................     $  14,753               $ 5,095
Operating income ......................................................         6,414                 2,429
Equity in earnings of Principal Healthcare Finance, Limited ...........         1,223                   421
Equity in earnings of Principal Healthcare Finance Trust ..............           484                     -
Equity in earnings (loss) of Essex Healthcare, Inc ....................          (282)                   32
Gain on dilution of interest in Principal Healthcare Finance Trust ....           951                     -
Income tax provision ..................................................        (2,670)                 (927)
Net earnings ..........................................................         6,120                 1,955
Net earnings available to common shareholders .........................         5,912                 1,851

Earnings per common share, basic ......................................          0.48                  0.15
Earnings per common share, dilutive ...................................          0.48                  0.15
Weighted average of shares outstanding, basic .........................        12,261                12,255
Weighted average of shares outstanding, dilutive                               12,262                12,255

                                                                                      September 30,
                                                                                      -------------
                                                                               1999                  1998
                                                                               ----                  ----
Balance Sheet Data
Current assets ........................................................     $  7,042               $ 21,567
Total assets ..........................................................       68,412                 88,992
Current liabilities ...................................................        4,272                 30,341
Long-term debt ........................................................            -                      -
Shareholders' equity ..................................................       64,140                 58,651

</TABLE>

                                       9

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

         "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  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.

         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. The Company began operations on April 2,
1998.  Accordingly,  results  through  September  30, 1998 include six months of
activity,  while results  through  September  30, 1999 include  twelve months of
activity.

Results of Operations

         The Company generates income from three primary sources: (1) Fee income
from providing investment advisory and management services;  (2) Interest income
from providing financing to companies in the healthcare and healthcare financing
industries;  and (3) Equity in  earnings  of  companies  in the  healthcare  and
healthcare  financing  industries.  Prior to April 1,  1999,  the  Company  also
recorded   rental   income   earned  by  its  then  wholly   owned   subsidiary,
Principal-Australia.


Revenues

         Advisory  fees are earned  from  Principal-UK  and  Principal-Australia
based  on  assets  (as  defined)  under   management  by  the  Company  and  its
subsidiaries. Assets subject to fees from Principal-UK increased from (pound)220
million at April 2, 1998 to  (pound)324  million at September  30, 1999;  26% of
this increase  occurred  during the current fiscal year.  Equivalent U.S. dollar
amounts  based on exchange  rates in effect on those dates were $367 million and
$516  million,   respectively.   Prior  to  April  1,  1999,   fee  income  from
Principal-Australia  was eliminated in  consolidation,  but with the dilution of
the  Company's  interest to 47% (see below),  they are now reported  separately.
Principal-Australia's  assets  under  management  at  September  30,  1999  were
approximately A$171 million (US$109 million).

         Interest income from  Principal-UK has increased from prior years based
on increased advances to fund,  temporarily,  acquisitions by Principal-UK.  The
average balance for the current year was approximately  $18.6 million,  compared
to $6.3 million for the six-month period last year.


Expenses

         Direct  costs  of  services  provided  are the  costs  associated  with
generating fee income from  Principal-UK and  Principal-Australia.  The increase
from  the  prior  year  monthly  expense  level is due to the  opening  of Omega
Australia to service  Principal-Australia.  The monthly  increase in general and
administrative  expenses and allocated  expenses from Omega is reflective of the
growth in assets under  management and increased usage of the services  provided
by Omega. Interest expense was largely incurred at  Principal-Australia  when it
was a consolidated  entity for purposes of funding its investments.  In its most
recent  quarter  the  Company  was debt free,  and  interest  expense of $50,000
relates to commitment fees on its line of credit.

                                       10
<PAGE>
Other

         Equity in earnings of Principal-UK increased from $421,000 in the prior
year to $1,223,000 in the current year.  The Company's  ownership  percentage in
Principal-UK has remained constant at 33.375%.  The increase in income is due to
improved  performance of  Principal-UK as its leased assets and their rents have
increased.

         The  equity  in  loss  of  Essex  of   $282,000   was  largely  due  to
non-recurring  costs  associated  with an unfavorable  decision by a third-party
payor. Essex management continues to make progress in structuring  operations to
be profitable under the new Medicare pay structure and in improving  performance
at the several  skilled  nursing  facilities  that were  acquired when they were
unprofitable. Essex has recorded profits in the two most recent quarters.

         The  Company  has  two  other   investments  in  skilled  nursing  home
operators,  both located in the UK. Investments in Baneberry Healthcare Ltd. and
Tamaris  Plc at  September  30,  1999  represent  less  than  20% of the  shares
outstanding of these companies and are held as investments. The Company does not
record  income or loss from these  operators,  except to the extent of dividends
received. The investment cost of Baneberry approximates market value. As Tamaris
was traded on the London  exchange  and market  value  information  was  readily
available,  fluctuations  in market value were reported as  adjustments to total
comprehensive  income.  Subsequent to year end the Company  purchased all of the
operating  subsidiaries of Tamaris, see Note 17 to the Financial  Statements
for further details.

         As more fully described in the Form 8-K dated April 1, 1999, on April 1
Principal-Australia sold 7,500,000 newly issued shares to Omega and AMP, as well
as 875,000 additional shares to the Company, diluting the Company's ownership to
47%.  The  transaction  created  the  one-time  gain on  dilution of interest in
Principal-Australia of $951,000, resulting in after tax earnings of $628,000, or
$0.05 per share.

         The Company's effective tax rate varies from the federal statutory rate
of 34% due to the benefit of available foreign tax credits.


Liquidity and Capital Resources

         As of year end, the Company had cash and short-term investments of $5.7
million and  availability  of $25 million  under the  Company's  bank  revolving
credit facility.  These funds are in excess of short-term operating requirements
of the Company and are  available  for further  investments  or expansion of the
Company's  operations into other geographical areas.  Subsequent to year end the
acquisition of Tamaris' operating entities by Idun and temporary working capital
requirements  of Idun were  financed by this cash and a portion of the revolving
credit facility.

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 short-term  borrowing and 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 currency contracts
principally to hedge currency  fluctuations  in its  investments  denominated in
foreign  currencies,  thereby  limiting the Company's risk that would  otherwise
result from changes in exchange  rates.  At September 30, 1999,  the Company had
outstanding a ten-year  British pound sterling forward currency swap to exchange
BPS  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$11.0 million  Australian
dollars for $6,749,000 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.

                                       11
<PAGE>

Year 2000 Implications

         The Year 2000  compliance  issue  concerns  the  inability  of  certain
systems and devices to properly store dates beyond December 31, 1999. This could
result in system failures,  malfunctions or miscalculations  that disrupt normal
operations. This issue affects most companies and organizations, at least to the
extent that potential exposures must be evaluated.

         The  Company  has  reviewed  risks with regard to the impact of outside
vendors'  ability to operate,  including  Omega's  services  under the  Services
Agreement, and the impact of tenants' ability to operate. Based upon information
available from technology vendors to date, Omega does not believe that there are
issues  which could have a material  effect upon its  internal  operations,  its
technology  infrastructure,  information systems and software  applications.  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
have not and will not be material.

         With respect to the Company's other material outside  vendors,  such as
its  banks,  the  Company's   assessment   covered  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.  Based upon its assessment of outside vendors,  the Company does not
believe that there are issues which could have a material effect,  but there can
be no assurances that such issues won't have a material effect on the Company.

                                       12
<PAGE>

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.


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

None.

                                       13
<PAGE>

                                    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 April 19, 2000, which will be filed on or about January 10, 2000 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 April 19, 2000, which will be filed on or about January 10, 2000 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 April 19,  2000,  which will be filed on or about  January 10, 2000 with
the Securities and Exchange Commission pursuant to Regulation 14A.

                                       14
<PAGE>

                                     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 Sheets as of September 30, 1999 and September 30, 1998 ...........        F-2
Consolidated Statements of Operations for the year ended September 30, 1999
     and for the period from April 2, 1998 to September 30, 1998 ......................        F-3
Consolidated Statements of Shareholders' Equity for the year ended
     September 30, 1999 and for the period from April 2, 1998 to
     September 30, 1998 ...............................................................        F-4
Consolidated Statements of Cash Flows the year ended September 30, 1999  and
         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.  All  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
                 18 of this report.
         (b)     Reports on Form 8-K - none filed in the quarter ended September
                 30, 1999.
         (c)     Exhibits -- See Index to Exhibits  beginning on Page 18 of this
                 report.

         (d) Financial Statement Schedules -- The following consolidated
                 financial statement schedule is included herein: None

                                       15
<PAGE>


                         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,  1999 and 1998,  and the  related
consolidated  statements of operations,  shareholders' equity and cash flows for
the  year  ended   September  30,  1999  and  the  period  from  April  2,  1998
(commencement  of  operations)  through  September  30,  1998.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  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 audits provide 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,  1999 and 1998,  and the
consolidated results of their operations and their cash flows for the year ended
September 30, 1999 and the period from April 2, 1998 through  September 30, 1998
in conformity with generally accepted accounting principles.




                                                 /s/  Ernst & Young LLP

November 11, 1999
Detroit, Michigan

                                      F-1
<PAGE>

                              OMEGA WORLDWIDE, INC.

                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except par values)


<TABLE>
<CAPTION>



                                     ASSETS
                                                                                   September 30,
                                                                                1999          1998
<S>                                                                              <C>           <C>
                                                                                ----          ----
Current Assets:
  Cash and short-term investments ....................................      $    5,738     $   10,281
  Restricted cash ....................................................             389          9,330
  Other ..............................................................             915          1,956
                                                                             ---------      ---------
    Total Current Assets .............................................           7,042         21,567

Land and buildings subject to triple-net lease,
  net of $157 accumulated depreciation ...............................               -         27,300
Investments in and temporary advances to Principal
Healthcare Finance Limited ...........................................          48,842         37,902
Investment in Principal Healthcare Finance Trust .....................           6,619              -
Other assets .........................................................           5,909          2,223
                                                                             ---------      ---------
                                                                                61,370         67,425
                                                                             ---------      ---------
    Total Assets .....................................................      $   68,412     $   88,992
                                                                             =========      =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
  Accounts payable and accrued expenses ..............................      $    1,177     $    1,901
  Accrued income taxes ...............................................           1,880            433
  Deferred revenue ...................................................           1,215              -
  Non-interest bearing deferred purchase obligation ..................               -         28,007
                                                                             ---------      ---------
    Total Current Liabilities ........................................           4,272         30,341


Shareholders' Equity:
  Preferred stock $1.00 par value
    Authorized 10,000 shares
    Outstanding 260 Class B shares at liquidation value ..............           2,600          2,600
  Common stock $.10 par value
    Authorized 50,000 shares
    Outstanding shares 12,266 and 12,258 shares,
    at September 30, 1999 and 1998, respectively .....................           1,227          1,226
  Additional paid-in capital .........................................          52,893         52,861
  Retained earnings ..................................................           8,075          1,955
  Accumulated other comprehensive income (loss) ......................            (655)             9
                                                                             ---------      ---------
    Total Shareholders' Equity .......................................          64,140         58,651
                                                                             ---------      ---------
    Total Liabilities and Shareholders' Equity .......................      $   68,412     $   88,992
                                                                             =========      =========

</TABLE>

                See notes to consolidated financial statements.


                                      F-2
<PAGE>

                              OMEGA WORLDWIDE, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)


<TABLE>
<CAPTION>

                                                                                               Period from
                                                                                              April 2, 1998
                                                                                            (Commencement of
                                                                          Year Ended         Operations) to
                                                                      September 30, 1999   September 30, 1998
                                                                      ------------------   ------------------
<S>                                                                             <C>                <C>

Revenues:
  Fee income - Principal Healthcare Finance Limited ....................    $    4,918         $   1,920
  Fee income - Principal Healthcare Finance Trust ......................           405                 -
  Interest:
    Principal Healthcare Finance Limited ...............................         4,761             1,784
    Short-term investments .............................................           663               347
  Rent income ..........................................................         3,908             1,014
  Other income .........................................................            98                30
                                                                             ---------         ---------
                                                                                14,753             5,095

Expenses:
  Direct costs of asset management services ............................         2,494             1,113
  General and administrative ...........................................         1,718               485
  Allocated expenses from Omega Healthcare Investors, Inc ..............           768               303
  Imputed and other interest expense ...................................         2,685               573
  Provision for depreciation ...........................................           674               192
                                                                             ---------         ---------
                                                                                 8,339             2,666
                                                                             ---------         ---------
Earnings before equity earnings and income taxes .......................         6,414             2,429
Equity in earnings of Principal Healthcare Finance Limited .............         1,223               421
Equity in earnings of Principal Healthcare Finance Trust ...............           484                 -
Equity in earnings (loss) of Essex Healthcare, Inc .....................          (282)               32
Gain on dilution of interest in Principal Healthcare Finance Trust .....           951                 -
                                                                             ---------         ----------
Earnings before income taxes ...........................................         8,790             2,882
Provision for income taxes .............................................        (2,670)             (927)
                                                                             ----------        ----------
Earnings before preferred stock dividends ..............................         6,120             1,955
Preferred stock dividends ..............................................          (208)             (104)
                                                                            ----------         ---------
Net earnings available to common shareholders ..........................    $    5,912        $    1,851
                                                                            ==========        ==========
Earnings per common share, Basic .......................................    $     0.48        $     0.15
                                                                            ==========        ==========
Earnings per common share, Diluted .....................................    $     0.48        $     0.15
                                                                            ==========        ==========
Average shares outstanding, Basic ......................................        12,261            12,255
                                                                            ==========        ==========
Average shares outstanding, Diluted ....................................        12,262            12,255
                                                                            ==========        ==========
Total comprehensive income, net of taxes ...............................    $    5,456        $    1,964
                                                                            ==========        ==========
</TABLE>

                See notes to consolidated financial statements.



                                      F-3

<PAGE>


                             OMEGA WORLDWIDE, INC.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                     (In thousands, except per share amount)


<TABLE>
<CAPTION>

                                                                                                                       Accumulated
                                                                         Additional                                         Other
                                                           Common         Paid-in         Preferred      Retained      Comprehensive
                                                           Stock          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, 1998 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 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
Issuance of stock:
  Grants of restricted stock (8 shares
    at an average of $4.09 per share) ................           1               32             -             -               -
Net earnings for 1999 ................................           -                -             -         6,120               -
Unrealized loss on Tamaris stock, net of tax
  effect of  $281 ....................................           -                -             -             -            (657)
Foreign currency translation adjustments .............           -                -             -             -              (7)
                                                            ------          -------        -------       ------          --------
Balance at September 30, 1999 ........................    $  1,227         $ 52,893        $ 2,600      $ 8,075         $  (655)
                                                           =======          =======         ======       ======           ======

</TABLE>

                See notes to consolidated financial statements.


                                      F-4
<PAGE>

                             OMEGA WORLDWIDE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                 (In thousands)



<TABLE>
<CAPTION>


                                                                                                       Period from
                                                                                                      April 2, 1998
                                                                                                    (Commencement of
                                                                                   Year Ended         Operations) to
                                                                               September 30, 1999   September 30, 1998
                                                                               ------------------   ------------------
<S>                                                                                    <C>                   <C>

Operating activities:
  Net earnings ..............................................................    $    6,120           $    1,955
  Adjustments to reconcile net earnings to cash provided
    by operating activities:
    Equity earnings in Principal Healthcare Finance Limited .................        (1,223)                (421)
    Equity earnings in Principal Healthcare Finance Trust ...................          (484)                   -
    Equity (earnings) loss in Essex Healthcare, Inc. ........................           282                  (32)
    Gain on dilution of interest in Principal Healthcare
      Finance Trust .........................................................          (951)                   -
    Imputed interest ........................................................         1,146                  573
    Depreciation and amortization ...........................................           903                  192
    Write-off of investment in AVC Holdings .................................           281                    -
    Other non-cash charges ..................................................           402                   92
  Net change in operating assets and liabilities ............................           354                 (106)
  Foreign currency translation ..............................................             7                  (22)
                                                                                  ---------            ---------
Net cash provided by operating activities ...................................         6,837                2,231

Cash flows provided by financing activities:
  Proceeds from revolving warehouse facility drawn by Principal
    Healthcare Finance Trust ................................................        34,502                    -
  Proceeds from issuance of common stock ....................................             -               27,375
  Cash contributed by Omega in exchange for liabilities assumed .............             -                  837
                                                                                  ---------            ---------
Net cash provided by financing activities ...................................        34,502               28,212

Cash flows from investing activities:
  Acquisition of real estate by Principal Healthcare Finance Trust ..........       (49,288)                   -
  Decrease (increase) in restricted cash ....................................         5,831               (9,330)
  Temporary advances with Principal Healthcare Finance Limited ..............        (9,989)              (8,379)
  Temporary advances with Principal Healthcare Finance Trust ................        13,631                    -
  Dividends from Principal Healthcare Finance Limited .......................           272                    -
  Investment in Principal Healthcare Finance Trust ..........................        (1,108)                   -
  Investment in Baneberry Healthcare Ltd ....................................        (1,622)                   -
  Investment in Tamaris stock ...........................................        (2,842)                   -
  Proceeds from repayment of secured loan ...................................           102                    -
  Secured loan to individual ................................................             -                 (812)
  Loan to Baneberry Healthcare Ltd ..........................................          (228)                   -
  Loan to an enterprise .....................................................          (465)                   -
  Other .....................................................................          (176)              (1,635)
                                                                                  ---------            ---------
Net cash used in investing activities .......................................       (45,882)             (20,162)
                                                                                  ---------            ---------
Increase (decrease) in cash and short-term investments ......................    $   (4,543)          $   10,281
                                                                                  =========            =========

</TABLE>

                See notes to consolidated financial statements.

                                      F-5
<PAGE>

                              OMEGA WORLDWIDE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           September 30, 1999 and 1998

Note 1 - Organization and Significant Accounting Policies

Organization

         Omega Worldwide,  Inc. (the "Company") was formed to provide investment
advisory  and  management  services  as well as equity  and debt  capital to the
healthcare industry,  primarily in Europe and the Pacific Rim. On April 2, 1998,
the Company's registration statement became effective,  and it offered 3,750,000
shares of common  stock to the public at $7.50 per share.  The Company  received
$27,375,000,  net of issuance costs of $750,000. Shares offered included 500,000
shares  in a  primary  offering  and  3,250,000  shares  in a  rights  offering.
Operations  commenced upon the  effectiveness  of the initial  public  offering.
Except for $1,000 invested by Omega Healthcare Investors,  Inc. ("Omega") at the
date of formation  (November  1997),  there were no cash flow  activities of the
Company from the date of formation to the date operations commenced.

         Immediately  prior to the  offering  of  shares by the  Company,  Omega
contributed  substantially all of its investment in Principal Healthcare Finance
Limited ("Principal-UK") 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-UK,  33.375% of the common stock of Principal-UK
with a carrying  value of $5,297,000,  10,556,250  warrants and other net assets
totaling  $150,000.  Omega also assigned its interest in a management  agreement
with  Principal-UK  in which  the  Company  receives  an  annual  fee of 0.9% of
Principal-UK's  assets (as defined) for providing certain advisory services.  In
exchange,  Omega received 8,500,000 shares of common stock and 260,000 shares of
Class B preferred  stock.  Of the common stock received by Omega,  approximately
5,200,000  shares  were  distributed  pro  rata  to  Omega's  shareholders,  and
approximately  2,300,000  were  sold  pursuant  to  the  Company's  registration
statement.  Omega retained approximately 9.9% of the Company's common stock then
outstanding.

Consolidation

         The  consolidated  financial  statements  include  the  accounts of the
Company and its wholly  owned  subsidiaries  after  elimination  of all material
inter-company  accounts and  transactions.  Prior to April 1, 1999,  the Company
owned 100% of Principal  Healthcare  Finance Trust  ("Principal-Australia").  As
more fully  explained  in Note 3 and the report on Form 8-K dated  April 1, 1999
newly issued shares of Principal-Australia  were issued to independent investors
resulting in the dilution of the Company's ownership to 47%.

         Principal-Australia's  financial  results  prior to  April 1,  1999 are
included   in  the   Company's   results   on  a   consolidated   basis,   while
Principal-Australia's  results after April 1, 1999 are included in the Company's
results using the equity method of accounting.

         The Company reports the results of those subsidiaries, for which it has
over 20% ownership, but in which it does not hold a majority interest, using the
equity method of  accounting,  using a one-month  lag.  Investments in companies
over which the Company  does not  exercise  control are  recorded at fair market
value.  Temporary  changes in fair market value are charged to accumulated other
comprehensive  income,  while  permanent  reductions  in fair  market  value are
charged to operations.

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>
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.  Fee income is
recognized as earned and is based on assets under management.

Depreciation

         Depreciable  assets  are  recorded  at cost.  Depreciation  expense  is
calculated using the straight-line method over the estimated useful lives of the
depreciable asset.  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 1999 or 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 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 the  revenues  and expenses  during the
period. Actual results could differ from those estimates.

Prior Period Classification

         Certain prior year amounts have been  reclassified  to correspond  with
the current year's presentation.

Comprehensive Income

         Comprehensive   income  consists  of  the  Company's   earnings  before
preferred stock dividends  adjusted for the unrealized loss on investments,  net
of tax and foreign currency translation adjustments.

                                      F-7
<PAGE>
 Note 2 - Investment in Principal Healthcare Finance Limited (Principal-UK)

          As described in Note 1, the Company acquired 33.375% of Principal-UK's
voting ordinary shares in connection with the Omega  distribution/exchange.  The
Company  accounts  for its  interest in  Principal-UK  using the equity  method.
Principal-UK  has a fiscal  year end of  August  31;  therefore,  the  equity in
earnings of Principal-UK is recognized on a one-month lag. Principal-UK has $414
million and $377 million of real estate investments in long-term care facilities
as of August 31, 1999 and August 31, 1998,  respectively.  These  facilities are
operated  by  independent  operators  and are  located  in the  United  Kingdom.
Substantially  all of  Principal-UK's  real estate is pledged as collateral  for
Principal-UK's debt agreements.

         The following summarizes selected financial information of Principal-UK
in accordance with United States generally  accepted  accounting  principles (in
thousands): <TABLE> <CAPTION>

                                                           Year Ended              Year Ended
                                                        August 31, 1999          August 31, 1998
                                                        ---------------          ---------------
     <S>                                                     <C>                       <C>  >
    Selected Operating Results:
    Revenues:
      Rent income ...................................      $  55,693               $  47,542
      Interest income ...............................          6,107                   2,991
      Other income ..................................              -                     509
                                                             -------                 -------
        Total revenues ..............................         61,800                  51,042

    Expenses:
      Interest expense ..............................        (39,149)                (34,572)
      Depreciation and amortization .................         (9,839)                 (7,202)
      General and administrative ....................         (5,880)                 (4,284)
                                                             -------                 -------
        Total expenses ..............................        (54,868)                (46,058)
                                                             -------                 -------

    Net income from operations ......................          6,932                   4,984
    Non-operating income ............................             -                    1,406
                                                             -------                   -----
    Net income before income taxes and
      extraordinary charge for prepayment
       of debt ......................................          6,932                   6,390
    Provision for income taxes ......................         (3,053)                 (2,283)
    Extraordinary charge for prepayment of debt .....             -                   (1,985)
                                                             -------                  ------
    Net Income ......................................      $   3,879                $  2,122
                                                            ========                 =======


    Selected Balance Sheet Information as of:            August 31, 1999         August 31, 1998
                                                         ---------------         ---------------
    Investments in real estate subject to
      triple-net leases; net of depreciation ........      $ 395,533               $ 365,941
    Total assets ....................................        569,666                 479,541
    Non-recourse debt borrowings ....................        478,233                 396,282
    Total liabilities ...............................        552,544                 464,717
    Total stockholders' equity ......................         17,122                  14,824

</TABLE>
         The  effective tax rates are 44% and 36% for the years ended August 31,
1999 and 1998,  respectively.  These rates differ from the UK tax rate primarily
because the provisions for  depreciation and amortization are not deductible for
tax  purposes  in the  United  Kingdom.  The  Company's  proportionate  share of
Principal-UK's  earnings for the years ended  August 31, 1999 and the  six-month
period  ended  August  31,  1998  are  approximately  $1,296,000  and  $474,000,
respectively.  Included in the Company's share of  Principal-UK  earnings during
the  six-month  period  ended  August 31,  1998,  is $172,000  ($0.01 per share)
related to the  non-recurring  operating  items  realized by  Principal-UK.  The
Company has recorded a charge against earnings of approximately  $73,000 for the
year ended  August 31, 1999 and  approximately  $53,000 for the six month period
ended August 31, 1998,  representing  amortization over a ten-year period of the
excess of the Company's  investment in Principal-UK of  approximately $ $771,000
over its proportionate share of Principal-UK's  underlying equity at the date of
acquisition.  In January 1999,  the Company  received  $272,000,  representing a
5-pence annual dividend declared by Principal-UK's Board of Directors.

                                      F-8
<PAGE>
          The  Company  also  acquired  a  British  pound  sterling  denominated
subordinated  loan due  December 31,  2000.  The carrying  amount of the loan is
$23.8  million  and it bears  interest  at rates  ranging  from 12.55% to 12.93%
during the remaining  term.  The estimated  fair value of the loan  approximates
$24.7  million 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-UK  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  $1.60) 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, 1999  approximates
$8,758,000.  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
the date of grant.

Note 3 - Principal Healthcare Finance Trust (Principal-Australia)

         In June 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  entity'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  (Principal-Australia).  The  investment  in facilities  approximated  $30
million,  which was 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  year  ended  September  30,  1999 was  $1,146,000  and for the
six-month  period ended  September  30, 1998 was  $573,000.  Principal-Australia
provided  $9,330,000 in cash collateral to secure a $30 million letter of credit
obtained by the Principal-Australia to provide funding for the deferred payment.
The cash collateral was classified as restricted cash.

         In November 1998  Principal-Australia  agreed to acquire and lease back
30  nursing  homes in the  Australian  states  of New South  Wales,  Queensland,
Westerns  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  approximately  $49 million.  The purchase of five Victoria
homes occurred in the second phase in March 1999 upon completion of construction
and the  stabilized  occupancy of the homes for an aggregate  purchase  price of
approximately  $7 million.  The final phase  involves an additional  $15 million
investment  encompassing the renovation and refurbishing of facilities  during a
five-year period ending October 2003. This phase will assist the homes to comply
with  physical  plant  regulations  being  implemented  by the  Commonwealth  of
Australia.  All disbursements subsequent to the first phase are conditioned upon
various levels of operating profitability and performance.

         In April 1999,  Principal-Australia  sold 7,500,000 newly issued shares
to Omega  and AMP Life  Limited,  as well as  875,000  additional  shares to the
Company.  Prior to the  issuance  of these  shares,  the  Company  owned 100% of
Principal-Australia.  Issuance of the new shares reduced the Company's ownership
to 47% of  shares  outstanding.  The  transaction  created  a  one-time  gain on
dilution of interest in Principal-Australia of $951,000,  resulting in after tax
earnings available to common shareholders of $628,000, or $0.05 per share.

         As described in Note 1, the  financial  results of  Principal-Australia
prior to April 1, 1999 are included in the Company's  results on a  consolidated
basis, while  Principal-Australia's  results after April 1, 1999 are included in
the Company's results using the equity method of accounting. Principal-Australia
has a fiscal  year end of  August  31;  therefore,  the  equity in  earnings  of
Principal-Australia  is recognized on a one-month lag.  Included in consolidated
earnings  is  $484,000  of   undistributed   earnings  of   Principal-Australia,
representing the Company's share of Principal-Australia  earnings for the period
from April 1, 1999 through August 31, 1999.

                                      F-9
<PAGE>
         The   following   summarizes   selected   financial    information   of
Principal-Australia   in  accordance  with  United  States  generally   accepted
accounting principles (in thousands):

                                   Year Ended
  Selected Operating Results:                               August 31, 1999
                                                            ---------------
  Revenues:
    Rent Income .....................................           $ 9,592
    Interest and other income .......................               322
                                                                 ------
      Total Revenues ................................             9,914

  Expenses:
  Interest expense ..................................            (5,203)
  Depreciation and amortization .....................            (1,856)
  General and Administrative ........................              (932)
                                                                 ------
      Total expenses ................................            (7,991)
                                                                 ------
  Income from operations ............................           $ 1,923
                                                                 ======


  Selected Balance Sheet Information as of:                August 31, 1999
                                                           ---------------
  Investments in real estate subject to triple-net
    leases, net of depreciation ....................            $85,652
  Total assets .....................................             96,986
  Non-recourse debt borrowings .....................             75,815
  Total liabilities ................................             82,215
  Total unit  holders' equity ......................             14,771


Note 4 - Essex Healthcare Corporation

         On April 2, 1998, Omega  contributed to the Company its holdings in the
preferred stock of Essex  Healthcare  Corporation  ("Essex"),  an  Atlanta-based
private operator of skilled nursing  facilities.  The preferred stock was valued
at  approximately  $39,000.  Essex's  primary  activities are in Ohio,  where it
operates 13 long-term care and assisted living facilities  (approximately  1,400
beds).  It also  manages 33  facilities  (approximately  1,800 beds) in Indiana,
Michigan,  Illinois,  and Texas.  On July 30, 1998, the Company  acquired 55,000
shares of Essex's  common stock for $500,000 and converted  its preferred  stock
into 1,940 shares of common stock.  The Company holds  approximately  47% of the
outstanding  common shares of Essex.  The Company  accounts for this  investment
using the equity method.

         The  Company's  proportionate  share of Essex's loss for the year ended
August 31, 1999 is $282,000  and  earnings of $32,000 for the  six-month  period
ended August 31, 1998.


Note 5 - Land and Buildings

          The real estate properties owned by  Principal-Australia  at September
30, 1998 were 10 long-term care facilities and 475 assisted living units and are
leased under the provisions of a 30-year master lease.

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


                                                                 1998
                                                                 ----
  Land and buildings subject to triple-net lease .......      $ 27,457
  Less accumulated depreciation ........................          (157)
                                                                ------
                                                              $ 27,300
                                                                ======

                                      F-10
<PAGE>

         As   a   result   of   the   Company's    dilution   of   interest   in
Principal-Australia  to 47%  at  September  30,  1999,  the  Company  no  longer
consolidates Principal-Australia.

Note 6 - Secured Loans

         On May 28, 1998, the Company loaned $818,000 to an individual. The loan
is secured by the individuals'  interest in Tamaris., an aged care operating
company in the United  Kingdom.  The loan bears  interest at 10.5% and principal
payments  are due  through  the year  2000.  The  carrying  value of the loan at
September   30,  1999  and   September   30,  1998  is  $716,000  and  $818,000,
respectively.

         On August 18, 1999, the Company loaned  $465,000 to an enterprise.  The
loan is secured by the  enterprise's  interest  in Tamaris  plc.  The loan bears
interest at 7.15% and  principal  and  interest is due on demand.  The  carrying
value of the loan at September 30, 1999 is $465,000.

Note 7 - Financial Instruments

         The  carrying  amounts  and  fair  values  of the  Company's  financial
instruments are as follows:

<TABLE>
<CAPTION>
                                                                       September 30,
                                                                 1999                    1998
                                                                 ----                    ----
                                                       Carrying      Fair      Carrying      Fair
                                                        Amount       Value      Amount       Value
                                                                      (In thousands)
<S>                                                        <C>         <C>         <C>         <C>

Assets:
  Cash and short-term investments ..................     $  5,738    $  5,738    $ 10,281    $ 10,281
  Restricted cash ..................................          389         389       9,330       9,330
  Subordinated loan to Principal-UK ................       23,805      24,699      23,805      27,348
  Temporary advances to Principal-UK ...............       18,368      18,368       8,379       8,379
  Warrants for 10,556,250 Principal-UK shares ......            -       8,758           -       6,700
  Secured loans ....................................        1,181       1,181         818         856
                                                          -------     -------      ------      ------
                                                         $ 49,481    $ 59,133    $ 52,613    $ 62,894
                                                          =======     =======     =======     =======

Off Balance Sheet Financial Instruments:
  Foreign currency contracts .......................     $ (1,629)   $ (1,629)   $  1,789    $ (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-UK and Principal-Australia. Pursuant to a ten-year
British  pound  sterling  currency swap  agreement,  the Company is obligated to
exchange (pound)20,000,000 for $31,740,000 on October 15, 2007. At September 30,
1999,  the Company is obligated to exchange  A$11,000,000  at an average rate of
US$  0.6135.  The  carrying  amount  of  the  investment  in  Principal-UK,  the
subordinated   loans/advances   to   Principal-UK,   and   the   investment   in
Principal-Australia,  are based on the rates established in the forward exchange
contracts.

                                      F-11
<PAGE>
Note 8 - 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 for the
year ended September 30, 1999 and the six-month  period ended September 30, 1998
(in thousands):

<TABLE>
<CAPTION>
                                                                   1999        1998
<S>                                                                 <C>          <C>
     Computed expected tax expense .........................     $ 2,989     $   979
     Tax effect of equity in earnings of investments .......        (320)       (143)
     Other .................................................           1          91
                                                                  ------      ------
          Total ............................................     $ 2,670     $   927
                                                                  ======      ======
</TABLE>

         The tax basis of assets  transferred from Omega to the Company exceeded
the book basis by approximately  $36 million,  resulting in a deferred tax asset
of  approximately  $12  million.  Due to the  uncertainties  in  realizing  this
benefit, management has provided a valuation reserve against the full amount.

Note 9 - Credit facilities

         In November 1998, the Company entered into a revolving credit agreement
with a group of banks allowing for borrowings up to $25 million.  Omega provided
a  guarantee  to the banks in  consideration  of a fee of 1%,  plus an annual 25
basis point  facility fee. The agreement is scheduled to expire on September 30,
2000.  The  Company  also  pays to the  banks an  unused  facility  fee of .40%.
Borrowings  under the  facility  bear  interest  at LIBOR plus  1.350% or at the
Company's  option,  at the prime rate. At September 30, 1999, the Company has no
outstanding borrowings under the credit facility.

Note 10 - 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  in the Plan.  Options  for 99,000 and  648,000  shares  have been
granted to eligible  participants  during the year ended  September 30, 1999 and
the six-month period ended September 30, 1998, respectively. Additionally, 8,000
shares of restricted  stock have been granted  under the  provisions of the Plan
during both the year ended  September  30, 1999 and the  six-month  period ended
September 30, 1998. The vesting  period on restricted  stock is six months after
the date of grant and expense related to the restricted stock grants during 1999
and 1998 is $33,000 and $60,000  for the year ended  September  30, 1999 and the
six-month period ended September 30, 1998, respectively.

The following is a summary of activity under the Plan.

<TABLE>
<CAPTION>

                                                 Number of      Exercise         Weighted
                                                  Shares         Price         Average Price
                                                  ------         -----         -------------
<S>                                                 <C>             <C>                <C>

    Outstanding at April 2, 1998                        -     $          -        $     -
      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
      Granted during 1999 ....................     99,000      4.000-4.688          4.521
      Forfeited ..............................    (31,000)     4.688-7.500          7.100
                                                  -------      -----------          -----
    Outstanding at September 30, 1999 ........    674,000     $4.000-7.500        $ 7.116
                                                  =======      ===========         ======

</TABLE>

         In October  1995,  the  Financial  Accounting  Standards  Board  issued
Statement  of Financial  Accounting  Standard  (SFAS) No. 123, " Accounting  for
Stock-Based  Compensations."  This standard prescribes a fair value based method
of accounting  for employee  stock  options or similar  equity  instruments  and
requires certain pro forma disclosures. For purpose 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.  The estimated  weighted
average fair value of options  granted  approximates  $204,000,  and $2,000,000,
during  the year  ended  September  30,  1999  and the  six-month  period  ended
September 30, 1998, respectively. In determining the estimated fair value of the

                                      F-12
<PAGE>

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.  The
Company's pro forma net earnings  would be $5,741,000  and  $1,784,000,  and pro
forma  earnings per common share,  basic and diluted,  would be $0.47 and $0.14,
for the year ended September 30, 1999 and the six-month  period ending September
30, 1998, respectively.

Note 11 - 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 the Company's 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  liquidation  value of $10 per
share.

Note 12 - Net Earnings Per Share

         Net  earnings  per share are  computed  based on the  weighted  average
number  of  common  shares  outstanding   during  the  period.   Average  shares
outstanding  for the basic  earnings  per share were  12,261,000  for 1999,  and
12,255,000  for 1998.  The assumed  conversion  of shares of preferred  stock is
currently antidilutive.

Note 13 - Related Party Transactions

         Pursuant to the provision 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, 1999 and for the six-month period
ended September 30, 1998 were approximately $768,000 and $303,000, respectively.
Such allocations are based on estimates and formulas that management believes to
be reasonable.

         Temporary   unsecured   advances  to  Principal-UK  in  the  amount  of
$18,368,000  and  $8,379,000  are  outstanding  at  September  30, 1999 and 1998
respectively. Interest at 9.25% is paid on a monthly basis. Included in interest
income for the year ended  September  30, 1999 and the  six-month  period  ended
September 30, 1998 is $1,719,000 and $292,000 respectively,  related to advances
to Principal-UK.

         Interest  on the  subordinated  loan  to  Principal-UK  and  fees  from
services  are  $3,042,000  and  $4,918,000,  respectively,  for the year  ending
September  30,  1999,  and  $1,492,000  and  $1,920,000,  respectively,  for the
six-month period ended September 30, 1998.

         Fees from services provided to Principal-Australia for the period April
1, 1999 through September 30, 1999 are $405,000.

         Interest  expense relating to a bridge loan from Omega totaled $226,000
for the year ended  September  30, 1999.  This loan was repaid prior to December
31, 1998.

                                      F-13
<PAGE>

Note 14 - Business Segment Information

         The Company provides  investment advisory and management  services,  as
well as equity and debt capital to the healthcare industry,  primarily in Europe
and the Pacific Rim. The Company emphasizes  investments in firms, which provide
residential  services to the  elderly.  The Company has  established  subsidiary
businesses, Omega (UK) Ltd. in London and Omega (Australia) Pty Ltd., in Sydney,
to manage, finance, and monitor investments in Europe and Australia/New Zealand,
respectively.  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 year ended
September 30, 1999 and the six-months ended September 30, 1998.


                                             1999           1998
     Revenue:
       United States ................     $  5,369       $  2,065
       United Kingdom ...............        4,918          1,920
       Australia ....................        4,466          1,110
                                            ------          -----
         Total ......................     $ 14,753       $  5,095
                                           =======        =======

     Operating income (expense):
       United States ................     $  6,295       $  2,643
       United Kingdom ...............        2,828            477
       Australia ....................        1,385            247
       Corporate expenses ...........       (1,718)          (485)
                                            ------          ------
         Total ......................     $  8,790       $  2,882
                                           =======        =======

     Identifiable assets:
       United States ................     $ 67,921       $ 57,108
       United Kingdom ...............          113            131
       Australia ....................          378         31,753
                                            ------         ------
         Total ......................     $ 68,412       $ 88,992
                                           =======        =======


         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-14
<PAGE>
Note 15 - Supplemental Disclosure of Cash Flow Information

         Following are details of changes in operating  assets,  liabilities and
other  non-cash  transactions  for the year  ending  September  30, 1999 and the
six-month period ended September 30, 1998 (in thousands):

<TABLE>
<CAPTION>

    Increase (decrease) in cash from changes in
        operating assets and liabilities:                                        1999           1998
                                                                                 ----           ----
       <S>                                                                        <C>            <C>

      Operating assets ...................................................    $ (3,310)      $  (880)
      Other liabilities ..................................................       1,936           341
      Accrued taxes ......................................................       1,728           433
                                                                                 -----         -----
                                                                              $    354       $  (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, net of refunds received .........         923            600
    Interest expense paid during the period ..............................       1,627             -
    Principal-Australia cash balance at April 1, 1999 ....................         151             -


</TABLE>

Note 16 - Quarterly Data (Unaudited)

         The  following  is  an  unaudited   summary  of  quarterly  results  of
operations for the years ended September 30, 1999 and the six-month period ended
September 30, 1998.

<TABLE>
<CAPTION>

                                                         December 31    March 31     June 30    September 30
<S>                                                          <C>           <C>         <C>          <C>>
                                                                     (In thousands, except per share)
    1999
    Revenues .......................................       $ 3,858     $ 5,269      $ 2,740       $ 2,886
    Net earnings ...................................         1,291       1,214        2,112         1,503
    Net earnings available to common ...............         1,239       1,162        2,060         1,451
    Per Share Amounts:
    Net earnings available to common, basic ........          0.10        0.10         0.16          0.12
    Net earnings available to common, diluted ......          0.10        0.10         0.16          0.12

    1998
    Revenues .......................................        $   -      $   -        $ 1,778       $ 3,317
    Net earnings ...................................            -          -            744         1,211
    Net earnings available to common ...............            -          -            692         1,159
    Per Share Amounts:
    Net earnings available to common, basic ........            -          -           0.06          0.09
    Net earnings available to common, diluted ......            -          -           0.06          0.09

</TABLE>

Note 17- Subsequent Event

In October  1999,  the  Company,  through  its  wholly  owned  subsidiary,  Idun
Healthcare  Ltd.,  acquired the operating  subsidiaries of Tamaris,  plc. The 48
subsidiaries  acquired,  operate 119 nursing  homes located throughout England,
Scotland  and  Northern  Ireland.  The  purchase  price  consisted  of  cash of
$1.7  million,  4,170,250  shares  of  Tamaris, plc  with  an original  cost at
$2.8 million  and  a  carrying  value as of September  30, 1999 of $1.9 million,
and  the  assumption of liabilities of the operations, estimated at $40 million.
The  companies acquired had  approximately $2 million of  combined  tangible net
assets as of their most recent year end, March 31, 1999, and management believes
the excess of purchase consideration  over net tangible assets acquired will not
be significant.

                                      F-15
<PAGE>

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 27, 1999

         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, Chief Executive                      December 27, 1999
---------------------------                 Officer, and Director
       Essel W. Bailey, Jr.

PRINCIPAL FINANCIAL OFFICER and
PRINCIPAL ACCOUNTING OFFICER

/s/ EDWARD C. NOBLE                         Vice President, Chief Financial Officer         December 27, 1999
---------------------------                 and Chief Accounting Officer
       Edward C. Noble

DIRECTORS
/s/ JACQUES AIGRAIN
---------------------------
       Jacques Aigrain                      Director                                        December 27, 1999


/s/ JAMES A. EDEN
---------------------------
       James A. Eden                        Director                                        December 27, 1999

/s/ THOMAS F. FRANKE
---------------------------
       Thomas F. Franke                     Director                                        December 27, 1999

/s/ ANIL K. GUPTA
---------------------------
       Anil K. Gupta                        Director                                        December 27, 1999


/s/ HAROLD J. KLOOSTERMAN
---------------------------
       Harold J. Kloosterman                Director                                        December 27, 1999


/s/ BERNARD J. KORMAN
---------------------------
       Bernard J. Korman                    Director                                        December 27, 1999


                                       16
<PAGE>

/s/ EDWARD LOWENTHAL
---------------------------
       Edward Lowenthal                     Director                                        December 27, 1999


/s/ ROBERT L. PARKER
---------------------------
         Robert L. Parker                   Chairman of the Board                           December 27, 1999

</TABLE>

                                       17
<PAGE>


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 incorporated
                     by  reference  to Exhibit  10.6 to Form 10-K for the fiscal
                     year ended September 30, 1998.

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.   Incorporated  by
                     reference  to Exhibit 10.7 to Form 10-K for the fiscal year
                     ended September 30, 1998.


Exhibit              10.8  Promissory  Note executed by  Principal-Australia  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



                                       18
<PAGE>

                     (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

Exhibit               10.10 Transaction  documents dated April 16, 1999 with the
                      following  exhibits.  Incorporated by reference to Exhibit
                      to the  Company's  report  on Form 8-K  filed on April 16,
                      1999.

                      (a)  Form of Transaction Documents

                      (b)  Subscription Deed, Principal Healthcare Finance Unit
                          Trust No. 1

                      (c)  Subscription Deed, Principal Healthcare Finance Unit
                          Trust No. 2

                      (d)  Deed  of  Loan,  PHF  No.  1 Pty  Limited,  AMP  Life
                           Limited, Omega Worldwide, Inc.

                      (e)  Principal Healthcare Finance Unit Trust No. 1, Term
                           of 2004 Options

                      (f)  Principal Healthcare Finance Unit Trust No. 2, Term
                           of 2004 Options

                      (g)  Advisory Agreement

Exhibit              10.11 Share  Acquisition  Agreement between Tamaris and
                     the Company - Incorporated  by reference to Exhibit 10.1 to
                     the Company's report on Form 8-K filed on November 1, 1999

Exhibit 10.12        Amendment to Loan  agreement  dated as of November 20, 1998
                     among the Company,  Fleet Bank,  N.A. as agent - Filed
                     herewith

Exhibit 10.13        Asset Administration deed between Principal Healthcare
                     Finance Pty Limited and Omega (Australia) Pty Limited dated
                     as of November 1, 1999 - Filed herewith

Exhibit 11           Statement re Computation of Per-Share Earnings - Filed
                     herewith

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


                                       19
<PAGE>

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, 1999, 1998 and 1997
                         -Consolidated Balance Sheets as of August 31, 1999
                          and 1998
                         -Consolidated Statements of Shareholders' Equity for
                          the years ended August 31, 1999, 1998, and 1997
                         -Consolidated Statements of Cash Flows for the years
                          ended August 31, 1999, 1998, and 1997
                         -Notes to Consolidated Financial Statements

Exhibit 99(b)        Proforma Financial Statements of Idun Health Care Limited
                     (UK) -- (filed herewith):
                         -Report of Independent Accountant
                         -Proforma Combined Profit and Loss Account for the
                          years ended March 31, 1999 and 1998
                         -Proforma Combined  Balance Sheets as of March 31, 1999
                          and 1998
                         -Proforma Combined Cash Flow Statement for the years
                          ended March 31, 1999 and 1998
                         -Notes to the Financial Statements

                                       20