<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

     /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For The Quarterly Period Ended December 31, 1999

                                       or

          / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For the transition period from     to

                        Commission file number: 000-20865

                                   e-Net, Inc.
             (Exact name of registrant as specified in its charter)

           Delaware                                     52-1929282
(State or other jurisdiction of                      (I.R.S. Employer
 incorporation or organization)                     Identification No.)

          12800 Middlebrook Road, Suite 400, Germantown, MD    20874
              (Address of principal executive offices)       (Zip Code)

                                 (301) 601-8700
              (Registrant's telephone number, including area code)

                                 Not applicable
         (Former name, former address and former fiscal year, if changed
                               since last report.)

               Check whether the issuer (1) has filed all reports
 required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
   1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
                    filing requirements for the past 90 days.

                               YES  X    NO
                                   ---      ---

   The number of shares of the Registrant's common stock, $.01 par value per
            share, outstanding as of February 4, 2000 was 10,452,640.

           Transitional small business disclosure format (check one):
                                 Yes     No  X
                                     ---     ---

           The exhibit index appears in sequentially numbered page: 17

                                      -1-

<PAGE>





                                TABLE OF CONTENTS

                          PART I. FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                                   Page
                                                                                                                   ----
<S>     <C>                                                                                                       <C>
Item 1.  Consolidated Financial Statements (Unaudited)

         Accountants' Review Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3

         Consolidated Balance Sheets as of December 31 and March 31, 1999 . . . . . . . . . . . . . . . . . . . .     4

         Consolidated Statements of Operations for the three months ended December 31, 1999 and 1998. . . . . . .     5

         Consolidated Statements of Operations for the nine months ended December 31, 1999 and 1998 . . . . . . .     6

         Consolidated Statements of Cash Flows for the nine months ended December 31, 1999 and 1998 . . . . . . .     7

         Consolidated Statements of Stockholders' Equity as of December 31, 1999. . . . . . . . . . . . . . . . .     8

         Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     9

Item 2.  Management's Discussion and Analysis Or Plan of Operations . . . . . . . . . . . . . . . . . . . . . . .    11


                           PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    15

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    16

Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    17
</TABLE>

                                      -2-

<PAGE>


Board of Directors
e-Net, Inc.

We have reviewed the accompanying consolidated balance sheet of e-Net, Inc. (a
Delaware Corporation) as of December 31, 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for the nine-month
periods ended December 31, 1999 and 1998, and the statements of operations for
the three month periods ended December 31, 1999 and 1998. These financial
statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of March 31, 1999, and the related statements of
operations, stockholders' equity and cash flows for the year then ended (not
presented herein), and in our report dated June 10, 1999, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of March
31, 1999 is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.

                                         Grant Thornton LLP

Vienna, Virginia
February 2, 2000

                                      -3-

<PAGE>


                                   e-NET, INC.
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                    DECEMBER 31, 1999        MARCH 31, 1999
                                                                                    -----------------        --------------
                                                                                       (UNAUDITED)              (AUDITED)

<S>                                                                              <C>                      <C>
CURRENT ASSETS
    Cash and cash equivalents                                                       $        6,055,632     $       1,760,627
    Short-term investments                                                                   6,606,522             4,618,587
    Accounts receivable                                                                         60,445               749,903
    Inventory                                                                                      -                 583,634
    Prepaid expenses                                                                           255,389               120,873
                                                                                    ------------------     -----------------

TOTAL CURRENT ASSETS                                                                        12,977,988             7,833,624

DEPOSITS AND OTHER ASSETS                                                                       37,947                44,322

PROPERTY AND EQUIPMENT, NET                                                                    565,066               500,627

SOFTWARE DEVELOPMENT COSTS, NET                                                                     -                488,570
                                                                                    ------------------     -----------------

                                                                                    $       13,581,001     $       8,867,143
                                                                                    ==================     =================



                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable--trade                                                         $          172,849     $         279,266
    Notes Payable, current                                                                      16,118                    -
    Accrued liabilities                                                                        972,199               669,652
                                                                                    ------------------     -----------------

TOTAL CURRENT LIABILITIES                                                                    1,161,166               948,918

LONG TERM DEBT                                                                                  66,945                   -

TOTAL LIABILITIES                                                                            1,228,111               948,918

STOCKHOLDERS' EQUITY
    Common stock, $.01 par value, 50,000,000 shares
      Authorized, 10,442,171 and 8,291,955 shares outstanding
      at December 31 and March 31, 1999, respectively                                          104,421                82,919
    Treasury Stock                                                                             (10,500)                   -
    Stock subscriptions and notes receivable                                                        -                    (23)
    Additional paid-in capital                                                              40,757,037            28,479,060
    Retained deficit                                                                       (28,498,068)          (20,643,731)
                                                                                    ------------------     -----------------

TOTAL STOCKHOLDERS' EQUITY                                                                  12,352,890             7,918,225
                                                                                    ------------------     -----------------

                                                                                    $       13,581,001     $       8,867,143
                                                                                    ==================     =================
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      -4-

<PAGE>


                                   e-NET, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                               THREE MONTHS ENDED

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31, 1999      DECEMBER 31, 1998
                                                                                   -----------------      -----------------
<S>                                                                               <C>                   <C>
SALES
    Products                                                                       $            2,051    $          242,946
    Services                                                                                  100,000               124,394
                                                                                    -----------------     -----------------
Total sales                                                                                   102,051               367,340

COST OF PRODUCT SOLD AND SERVICE PROVIDED
    Products                                                                                    2,786               182,828
    Services                                                                                   59,480                43,531
                                                                                     ----------------     -----------------
Total cost of product sold and service provided                                                62,266               226,359

GROSS PROFIT                                                                                   39,785               140,981

OPERATING EXPENSES
    Selling, general and administrative                                                     1,739,873             1,632,680
    Research and development                                                                  187,155               833,229
                                                                                    -----------------     -----------------

LOSS FROM OPERATIONS                                                                       (1,887,243)           (2,324,928)

OTHER INCOME (EXPENSE)
    Legal settlement                                                                         (405,938)                   -
    Other expenses                                                                            (82,561)              (52,936)
    Interest income                                                                            45,122               109,138
                                                                                    -----------------     -----------------

LOSS BEFORE INCOME TAXES                                                                   (2,330,620)           (2,268,726)

INCOME TAX PROVISION                                                                               -                     -
                                                                                    -----------------     -----------------

NET LOSS                                                                             $     (2,330,620)     $     (2,268,726)
                                                                                    =================     =================

LOSS PER SHARE                                                                       $           (.27)     $           (.27)
                                                                                    =================     =================

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED                                     8,699,905             8,256,828
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      -5-

<PAGE>


                                   e-NET, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                                NINE MONTHS ENDED

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31, 1999     DECEMBER 31, 1998
                                                                                   -----------------     -----------------
<S>                                                                               <C>                   <C>
SALES
    Products                                                                       $            5,310    $          678,739
    Services                                                                                  372,905               439,082
                                                                                   ------------------    ------------------
Total sales                                                                                   378,215             1,117,821

COST OF PRODUCT SOLD AND SERVICE PROVIDED
    Products                                                                                    3,370               456,477
    Services                                                                                  259,360               133,268
                                                                                   ------------------    ------------------
Total cost of product sold and service provided                                               262,730               589,745

GROSS PROFIT                                                                                  115,485               528,076

OPERATING EXPENSES
    Selling, general and administrative                                                     4,734,092             4,774,615
    Restructuring Costs                                                                     1,710,000                   -
    Research and development                                                                1,081,539             2,106,880
                                                                                   ------------------    ------------------

LOSS FROM OPERATIONS                                                                       (7,410,146)           (6,353,419)

OTHER INCOME (EXPENSE)
    Legal settlement                                                                         (405,938)                  -
    Other expenses                                                                           (187,391)             (165,048)
    Interest income                                                                           149,138               336,410
                                                                                   ------------------    ------------------

LOSS BEFORE INCOME TAXES                                                                   (7,854,337)           (6,182,057)

INCOME TAX PROVISION                                                                               -                     -
                                                                                   ------------------    ------------------

NET LOSS                                                                           $       (7,854,337)   $       (6,182,057)
                                                                                   ==================    ==================

LOSS PER SHARE                                                                     $             (.93)   $             (.79)
                                                                                   ==================    ==================

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED                                     8,450,735             7,777,597
</TABLE>



        The accompanying notes are an integral part of these statements.

                                      -6-

<PAGE>


                                   e-NET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                NINE MONTHS ENDED

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31, 1999       DECEMBER 31, 1998
                                                                                  -----------------       -----------------
<S>                                                                              <C>                     <C>
 INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS

CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                                      $      (7,854,337)      $      (6,182,057)
    Adjustments to reconcile net loss to net cash from
      operating activities
      Depreciation and amortization                                                         326,281                 393,165
      Loss on retirement of fixed assets                                                     12,790                     -
      Stock-based compensation                                                               39,062                     -
      Non-Cash Restructuring Costs                                                        1,710,000                     -
      Non-Cash Settlement Costs                                                             405,938                     -
        Decrease (Increase) in accounts receivable                                          369,337                (348,223)
        Decrease (Increase) in inventory                                                      8,556                (958,025)
        Increase in prepaid expenses, deposits and other assets                            (128,141)                (42,943)
        Increase in accounts payable and accrued liabilities                               (217,693)               (176,034)
                                                                                  -----------------       -----------------

NET CASH USED IN OPERATING ACTIVITIES                                                    (5,328,207)             (7,314,117)
                                                                                  -----------------       -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Capital expenditures                                                                   (222,967)               (393,377)
    Capitalized software development costs                                                      -                   (30,000)
    Investment in short term securities                                                  (1,987,935)             (4,556,573)
                                                                                  -----------------       -----------------

NET CASH USED IN INVESTING ACTIVITIES                                                    (2,210,902)             (4,979,950)
                                                                                  -----------------       -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net proceeds from issuance of common stock                                           11,854,479              14,336,261
    Purchase of treasury stock                                                              (10,500)                    -
    Principal payments on long term note                                                     (9,888)                    -
    Payments of common stock subscriptions receivable                                            23                      23
                                                                                  -----------------       -----------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                                11,834,114              14,336,284
                                                                                  -----------------       -----------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 4,295,005               2,042,217

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          1,760,627                 855,743
                                                                                  -----------------       -----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                        $       6,055,632       $       2,897,960
                                                                                  =================       =================

SUPPLEMENTAL DISCLOSURES:
    Income Taxes Paid                                                             $              -        $             -
                                                                                  =================       =================

    Interest Paid                                                                 $           7,614       $             -
                                                                                  =================       =================
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      -7-

<PAGE>


                                   e-NET, INC.
                CONSOLIDATED STATEM ENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                      Common Shares          Stock
                                  --------------------    Subscriptions      Additional                                   Total
                                   No. of                   And Notes         Paid in        Treasury     Retained     Stockholders
                                   Shares      Amount       Receivable        Capital          Stock       Deficit        Equity
                                  ---------   --------    --------------    -----------      --------   ------------   ------------
<S>                              <C>         <C>          <C>              <C>              <C>        <C>            <C>
BALANCE, APRIL 1, 1999            8,291,955   $ 82,919     $     (23)       $28,479,060      $     -    $(20,643,731)  $ 7,918,225

Issuance of common stock
   Associated with:
   Stock Option exercises           261,563      2,615             -          1,026,657            -              -      1,029,272

   Broadwing, Inc.                1,888,653     18,887                       10,807,886                                 10,826,773

Stock-based compensation                 -          -              -             39,062            -              -         39,062

Payment of stock subscriptions           -          -             23                 -             -              -             23

Purchase of treasury stock               -          -              -                 -        (10,500)            -        (10,500)

Warrant rescission                       -          -              -             (1,566)           -              -         (1,566)

Legal settlement                         -          -              -            405,938            -              -        405,938

Net loss                                 -          -              -                 -             -      (7,854,337)   (7,854,337)
                                 ----------   --------     ----------       -----------      --------   ------------   -----------

BALANCE, DECEMBER 31, 1999       10,442,171   $104,421     $       -        $40,757,037      $(10,500)  $(28,498,068)  $12,352,890
                                 ==========   ========     ==========       ===========      ========   ============   ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                      -8-

<PAGE>


                                   e-NET, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements include
the accounts of e-Net, Inc. and its wholly owned subsidiary, ZeroPlus.com,
Incorporated (collectively, the "Company"), which was incorporated in June 1999.
Such statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and pursuant to the
regulations of the Securities and Exchange Commission; accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation
(consisting of normal recurring accruals) have been included. The consolidated
results of operations for the quarter and nine months ended December 31, 1999
are not necessarily indicative of the results for the fiscal year ending March
31, 2000. The accompanying unaudited financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended March 31, 1999.

NOTE B--RESTRUCTURING COSTS

         During the quarter ended June 30, 1999 the Company recorded a charge of
approximately $1.7 million related primarily to a restructuring program that was
substantially implemented by December 31, 1999. The charge includes a provision
for reductions in the carrying value of various Company assets and the accrual
of expenses related to the Company's network gateway equipment activities. The
other accrued expenses related to restructuring costs at December 31, 1999 were
approximately $156,000 and were associated with estimated equipment and support
costs. The restructuring effort, a refinement of the Company's previously
announced "niche" strategy, refocuses the Company's operating model based on a
comprehensive strategy of making voice and telephony functions easily available
at common entry points to digital data networks. The Company intends to use its
core technology competency in advancement of its voice-over-digital data
networks business by exploiting markets that it believes pose fewer competitive
risks.

NOTE C--INVENTORY

         Inventory is stated at the lower of cost or market value. As indicated
in Note B above, the carrying value of inventory has been eliminated as a part
of the restructuring program. The Company continues to maintain the physical
inventory of equipment and integrated circuit boards. Any proceeds received
resulting from inventory disposal will be recorded in the period received.

NOTE D--SOFTWARE DEVELOPMENT COSTS

         The Company had capitalized certain software development costs incurred
after establishing technological feasibility. Software costs were amortized over
the estimated useful life of the software once the product was available for
general release to customers. As indicated in Note B above, the capitalized
software carrying value has been eliminated as a part of the restructuring
program.

NOTE E--DEBT FACILITY

         In December 1999, the Company signed a promissory note in the amount of
$ 92,951 with an interest rate of 10% and payable monthly over 5 years. This
debt is associated with leasehold improvements at our facility in Germantown,
Maryland. At December 31, 1999, the balance due on this note was $83,064. On
June 25, 1999, the Company signed a one (1) year promissory note for a
$1,000,000 line of credit facility that is secured by investments, receivables
and fixed assets of the Company.

NOTE F--NON-QUALIFIED STOCK OPTION PLAN

         At December 31, 1999, the Company had three stock-based compensation
plans. As permitted under generally accepted accounting principles, grants under
those plans are accounted for following APB Opinion No. 25 (APB 25) and related
interpretations. Accordingly, only the compensation cost associated with grants
to non-employees or non-directors of the Company have been recognized in the
amount of $39,062 for the nine months ended December 31, 1999. All options
granted to employees are non-compensatory for financial statement purposes,
under the provisions of APB 25.

NOTE G--INCOME TAXES

         The Company has generated net operating losses since its inception. At
December 31, 1999, the Company recorded a valuation allowance in an amount equal
to the deferred tax asset due to the uncertainty of generating future taxable
income.

                                       9


<PAGE>

NOTE H--CONCENTRATION

         Approximately 97% of the Company's accounts receivable balance at
December 31, 1999 were from one customer, and approximately 97% of the Company's
sales for the nine months ended December 31, 1999, were from two customers.

NOTE I--ADVERTISING COMMITMENTS

         The Company has entered into agreements with various Internet-related
firms, whereby the Company pays a fixed scheduled payment over time in return
for online advertising. Expense is recognized for these programs in the period
in which the advertising is performed. At December 31, approximate future
advertising commitments are as follows:

<TABLE>
<CAPTION>
Year ending March 31,

<S>                                                                                      <C>
2000 (3 months) ...............................................................          $  277,000
2001...........................................................................          $  883,000
2002...........................................................................          $        0
Thereafter ....................................................................          $        0
</TABLE>

Payments made for the nine month period ended December 31, 1999 totalled $
134,000.

                                       10

<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

         This information should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
consolidated financial statements and notes contained in the our Annual Report
on Form 10-KSB for the fiscal year ended March 31, 1999.

RESULTS OF OPERATIONS

THIRD QUARTER ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

NET SALES

         Sales for the third quarter ended December 31, 1999 were approximately
$102,100, a decrease of 72% over the approximately $367,300 recorded for the
corresponding quarter of 1998. The revenue decrease was due to a shift in focus
from sales of our Telecom 2000 customer premises-based gateway - medium systems
products to our restructuring efforts described below. The services sales for
the quarter ended December 31, 1999, were primarily from one customer. Through
the end of the third quarter ended December 31, 1999, we have recorded no sales
from our wholly-owned subsidiary, ZeroPlus.com, Incorporated.

GROSS PROFIT

         Gross profits for the third quarter ended December 31, 1999 were
approximately $39,785 or 39% of sales, compared to the approximately $140,981 or
38% of sales for the corresponding quarter of 1998. In total dollars, gross
profit decreased by 72% due to reduced product sales resulting from a shift in
focus from sales of our Telecom 2000 customer premises-based gateway - medium
systems products to our restructuring efforts described below.

OPERATING EXPENSES

         Selling, general & administrative expenses for the third quarter ended
December 31, 1999, were approximately $1,739,900, an increase of 7% over the
approximately $1,632,700 recorded for the corresponding quarter of 1998. The
dollar increase in these expenses over the prior year reflected increased
spending for advertising-related programs in support of our wholly-owned
subsidiary, ZeroPlus.com, Incorporated

         Research & development expenses for the third quarter ended December
31, 1999, were approximately $187,200, a 78% decrease over the approximately
$833,200 recorded for the corresponding quarter of 1998. The decreased
expenditures for research and development are due to the decrease in number of
employees and other expenditures devoted to the general development of the
Company's technology products.

OTHER INCOME (EXPENSE)

         Other income (expense) includes a non-cash charge of $405,900
associated with the settlement of a lawsuit brought by the holders of warrants
issued in connection with the underwriting of our initial public offering. Under
the terms of the settlement, the Company agreed to lower the exercise price of
certain warrants held by the plaintiffs. In the third quarter ended December 31,
1999, the Company's other income and expenses also included interest income,
which decreased over 1998 due to the use of investments to fund working capital
requirements.

NINE MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998

NET SALES

         Net sales for the nine months ended December 31, 1999 were
approximately $378,200, a decrease of 66% over the approximately $1,117,800
recorded for the corresponding period of 1998. The revenue decrease was due to a
shift in focus from sales of our Telecom 2000 customer premises-based gateway -
medium systems products to our restructuring efforts described below. Product
sales were only approximately $5,300 in the nine months ended December 31, 1999
compared to $678,700 recorded for the corresponding period of 1998. The services
sales for the nine months ended December 31, 1999 were primarily from two
customers. Through the end of the third quarter ended December 31, 1999, we have
recorded no sales from our wholly-owned subsidiary, ZeroPlus.com, Incorporated

                                       11


<PAGE>

GROSS PROFIT

         Gross profits for the nine months ended December 31, 1999 were
approximately $115,500 or 31% of sales, compared to approximately $528,100 or
47% of sales for the corresponding period of 1998. The amount of gross profit
decrease was due to reduced product sales resulting from a shift in focus from
sales of our Telecom 2000 customer premises-based gateway - medium systems
products to our restructuring efforts described below.

OPERATING EXPENSES

         Selling, general & administrative expenses for the nine months ended
December 31, 1999 were approximately $4,734,100, a decrease of 1% over the
approximately $4,774,600 recorded for the corresponding period of 1998. These
expenses reflected decreased spending for personnel in connection with promotion
of our Telecom 2000 technology products. During the nine months ended December
31, 1998 selling, general & administrative expenses included significant costs
associated with advertising and tradeshows that we did not incur in the
corresponding period in 1999. However, we incurred additional expenses for
personnel, travel, and other management efforts in connection with our shift in
focus from sales of our Telecom 2000 customer premises-based gateway - medium
systems products to our restructuring efforts described below.

         Restructuring costs in the nine months ended December 31, 1999 were
approximately $1,710,000. The costs were related primarily to a refinement of
our previously announced "niche" strategy. The charge includes a provision for
reductions in the carrying value of various assets and the accrual of expenses
related to our network gateway equipment activities. We have further refined our
operating model, in the direction contemplated by our previously announced
"niche" strategy, toward a comprehensive strategy of making voice and telephony
functions available at common entry points to digital data networks. We intend
to use our core technology competency in voice-over-digital data networks by
exploiting markets that we believe pose fewer competitive risks.

         The formation of a wholly owned subsidiary, ZeroPlus.com, Incorporated,
in June 1999, to offer a free software-only voice-over-internet product, is the
first example of our effort. Market access points upon which we intend to
refocus include Telecom 2000 desktop - small systems and selected versions of
our customer-premises-based gateway - medium systems. Through these access
points, we believe that we can provide our customers with quick and easy access
to the advantages of voice-over-digital data network technology, building on our
strengths, specifically, the ability to provide voice-over-digital data network
telephony that operates similarly to the traditional telephone network. We
believe that this initiative will position us to take advantage of partnerships
with Internet service providers, Internet portals, and data network carriers to
leverage off their larger customer distribution capabilities. As we are now
operating under this refined model, we have indefinitely delayed our Telecom
2000 carrier class gateway - large systems project, and we have shifted our
focus in Telecom 2000 customer premises-based gateways - medium systems to
market niches consistent with our refined strategy.

         Research & development expenses for the nine months ended December 31,
1999 were approximately $1,081,500, an decrease of 49% over the approximately
$2,106,900 recorded for the corresponding period of 1998. The decrease in the
research and development expenditures for the 1999 period reflected lower
overall workforce costs and reduced third party supplier costs for new
integrated printed circuit boards and the related software. The importance of
ZeroPlus.com, Incorporated to our overall business strategy is demonstrated by
our planned name change from e-Net, Inc. to ZeroPlus.com, Inc., in connection
with a merger of ZeroPlus.com, Incorporated into e-Net, Inc. We expect this
event to occur effective February 15, 2000.

OTHER INCOME (EXPENSE)

         Other income (expense) includes a non-cash charge of $405,900
associated with the settlement of a lawsuit brought by the holders of warrants
issued in connection with the underwriting of our initial public offering. Under
the terms of the settlement, the Company agreed to lower the exercise price of
certain warrants held by the plaintiffs. Excluding the legal settlement expense,
the decrease in other income (expense) in 1999 is due primarily to the interest
income decrease over 1998 due to the use of investments to fund working capital
requirements.

                                       12

<PAGE>


OTHER

IMPACT OF INFLATION

         The Company does not believe that inflation has had a material adverse
effect on sales or income during the past several years. Increases in supplies
or other operating costs may adversely affect the Company's operations; however,
the Company believes it may increase prices of its products and systems to
offset increases in costs of goods sold or other operating costs.

SEASONALITY

         Based our experience to date, the we believe that our future operating
results may be subject to quarterly variations based on a variety of factors,
but seasonal changes in the weather should have little or no effect.

LIQUIDITY AND CAPITAL RESOURCES

         In the nine months December 31, 1999, we used approximately
$(5,360,300) in cash flows from operating activities, excluding changes in
assets and liabilities, compared to approximately $(5,788,900) for the
corresponding period of 1998. The total net cash used by operating activities
was approximately $(5,328,200) for the nine months ended December 31, 1999,
compared to approximately $(7,314,100) for the corresponding period of 1998.

         Cash used by investing activities totalled approximately $(2,210,900)
for the nine months ended December 31, 1999 as compared to approximately
$(4,979,900) used in investing activities for the corresponding period of 1998.
The main component of that investing activity was the purchase of short-term
securities of approximately $1,988,000, as well as continued expenditures for
equipment of approximately $223,000, the majority of which related to the
refinement of our operating model described above.

         Cash provided by financing activities totalled approximately
$11,834,100 compared to approximately $14,336,300 for the corresponding period
in 1998. In December, 1999, Broadwing, Inc exercised a call right to purchase
18.259% of the Company's common stock for an aggregate price of $10,826,800. We
successfully completed a private placement in April 1998 that yielded net
proceeds of approximately $5,100,000, and exercises of our common stock warrants
prior to their redemption in December 1998 yielded net proceeds of approximately
$9,000,000. In December, 1999, the Company signed a promissory note in the
amount of $ 92,951 payable monthly over 5 years. We have access to a $1,000,000
credit line secured by investments, fixed assets and receivables, but did not
borrow against that line of credit during the nine months ended December 31,
1999.

         We expect to continue to make significant investments in the future to
support our overall growth. We presently have cash and cash equivalents,
investments and a line of credit that we believe will be sufficient to meet
near-term cash requirements. However, we expect that our operational cash
requirements will stay the same or increase as a result of our restructuring
efforts and funding of the business of our subsidiary ZeroPlus.com,
Incorporated. As indicated in the Company's most recent Annual Report on Form
10-KSB, as amended, while operating activities may provide cash in certain
periods, to the extent the Company experiences growth in the future, the Company
anticipates that its operating and product development activities may use cash
and consequently, such growth may require the Company to obtain additional
sources of financing. There can be no assurances that unforeseen events may not
require more working capital than the Company currently has at its disposal.

FUTURE OPERATING RESULTS

         The preceding paragraphs and the following discussion include
forward-looking statements regarding our future financial position and results
of operations. Actual financial position and results of operations may differ
materially from these statements. All such statements are qualified by the
cautionary statements set forth in Part I, Item 1 of our most recent Annual
Report on Form 10-KSB, as amended, under "Forward Looking and Cautionary
Statements," as well as the following statements.

         We have invested significant amounts in the research and development
and the initial product rollout marketing and selling for the Telecom 2000
product line. Even though our restructuring is substantially completed, the
emphasis, attention, and dedication of our limited resources to the Telecom 2000
product line will, in our view, continue to cause losses. However,

                                       13


<PAGE>

we believe that the value and sales potential of our refocused Telecom 2000
product line outweighs the risk of continued operating losses.

         We believe that our revenues will grow as we continue to implement our
revised operating model and deliver new Telecom 2000 products that make voice
and telephony functions easily available at common entry points to digital data
networks, which we will target under our refined strategy. However, our refined
strategy is new. While we believe it offers us the possibility of increased
revenue growth sooner than did our previous equipment-based strategy, we can
make no assurance of this result.

         We do not expect revenue growth to occur ratably in the near term.
Revenue growth, if any, in fiscal 2001 will depend to a large extent on the
timing and success of the finalization and rollout of our refined strategy.

         Because of these and other uncertainties affecting our future operating
results, past performance should not be considered to be a reliable indicator of
future performance. The use of historical trends to anticipate results or trends
in future periods may be inappropriate. In addition, our participation in a
highly dynamic industry may result in significant volatility in the price of our
common stock.

                                       14

<PAGE>


PART II - OTHER INFORMATION

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

         On December 10, 1999, at the Company's 1998 Annual Meeting of
Shareholders, the shareholders of the Company voted on the following matters:

Concerning the election of directors:

<TABLE>
<CAPTION>
NOMINEES FOR DIRECTOR                                   VOTES CAST FOR                      VOTES WITHHELD
---------------------                                   --------------                      --------------
<S>                                                     <C>                                 <C>
Gen. Alonzo E. Short, Jr.                               7,765,666                           46,353
Robert A. Veschi                                        7,765,666                           46,353
William W. Rogers, Jr.                                  7,765,616                           46,403
William L. Hooton                                       7,765,666                           46,353
Clive G. Whittenbury, Ph.D.                             7,765,666                           46,353
Michael A. Viren                                        7,765,616                           46,403
Donald J. Shoff                                         7,765,666                           46,353
</TABLE>


Concerning approval of the 1999 Stock Compensation Plan:

<TABLE>
<S>                                                     <C>
Votes Cast For:                                         2,426,839
Votes Cast Against:                                       316,321
Abstentions:                                               30,171
Broker Non-Votes                                        5,038,688
</TABLE>


Concerning ratification of Grant Thornton LLP as the Company's independent
auditors for fiscal year 2000:

<TABLE>
<S>                                                     <C>
Votes Cast For:                                         7,770,771
Votes Cast Against:                                        19,585
Abstentions:                                               21,663
Broker Non-Votes                                        not applicable
</TABLE>

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

<TABLE>
<CAPTION>
(a)      Exhibit           Description
<S>      <C>          <C>
         10.1         Amendment Dated December 7, 1999 to Revenue Sharing, Service Development, and Joint
                      Marketing Alliance Agreement dated September 15, 1999 by and between IXC Communication
                      Services, Inc. and e-Net, Inc

         10.2         Letter Agreement Dated December 20, 1999 from Broadwing, Inc. to e-Net, Inc

         10.3         1999 Stock Compensation Plan
</TABLE>

(b)      Since the end of its most recent fiscal year on March 31, 1999, e-Net,
         Inc. has filed the following reports on Form 8-K:

<TABLE>
<CAPTION>
         Date of Report             Item Reported

        <S>                        <C>
         February 8, 2000           Item 5 - Other Events
         December 22, 1999          Press Release
         December 14, 1999          Press Release
         September 15, 1999         Press Release
</TABLE>

                                       15

<PAGE>


SIGNATURES

         Pursuant to the requirements of the Exchange Act, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                              e-Net, Inc.
                              (Registrant)


DATE:  February 14 2000               /s/  Donald J. Shoff
                                      ------------------------------------------
                                      Donald J. Shoff
                                      Vice President and Chief Financial Officer
                                      (Duly Authorized Officer and Principal
                                      Financial Officer)

                                       16

<PAGE>



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
PAGE       DOCUMENT
----       --------
<S>       <C>
17         10.1 Amendment Dated December 7, 1999 to Revenue Sharing, Service
           Development, and Joint Marketing Alliance Agreement dated September
           15, 1999 by and between IXC Communication Services, Inc. and e-Net, Inc

           10.2  Letter Agreement Dated December 20, 1999 from Broadwing, Inc. to e-Net, Inc

           10.3  1999 Stock Compensation Plan
</TABLE>

                                       17