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

                                   FORM 10-KSB

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the eleven months ended September 30, 1998

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from______to_______

                         Commission file number 1-12835


                               WORLD CALLNET, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                               75-2468002
 (State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                              Identification No.)

           Brecon House, Meridian Gate, 207 Marsh Wall, London E14 9YT
               (Address of principal executive offices) (Zip Code)


       (Registrants' telephone number, including area code) 0171 335 8300


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


         Securities registered under Section 12 (g) of the Exchange Act:

                          Common Stock, Par Value $.001
      --------------------------------------------------------------------
                                (Title of Class)


         Check whether the registrant (1) filed all reports required to be filed
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days.
Yes  X    No  




<PAGE>

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained, to the best of registrant's knowledge, in definitive proxy statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. ____

         The  registrant  had no revenues for the eleven months ended  September
30, 1998.

         The aggregate  market value of the voting stock held by  non-affiliates
of the registrant,  computed by using the closing price of  registrant's  common
stock, at January 29, 1999, was $35,242,998.

         As of January 29, 1999, there were 7,916,833 shares of the Registrant's
Common Stock, par value $.001 per share, outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

         Transitional Small Business Disclosure Format:

Yes   No  X




                                       2

<PAGE>

<TABLE>

                          T A B L E  O F  C O N T E N T S
                          -------------------------------
<S>                                                                             <C>


PART I                                                                          Page
------                                                                          ----

Item     1.       Description of Business                                         4

Item     2.       Description of Properties                                       8

Item     3.       Legal Proceedings                                               9

Item     4.       Submission of Matters to a Vote of  Security Holders            9


PART II
-------

Item     5.       Market for Common Equity and Related Stockholder Matters        9

Item     6.       Management's Discussion and Analysis of Plan of Operations     10

Item     7.       Financial Statements                                           12

Item     8.       Changes in and Disagreements with Accountants on Accounting
                           and Financial Disclosure                              22


PART III
--------

Item     9.       Directors, Executive Officers, Promoters and Control Persons;
                           Compliance with Section 16 (a) of the Exchange Act    22

Item       10.    Executive Compensation                                         24

Item       11.    Security Ownership of Certain Beneficial Owners and
                  Management                                                     25

Item       12.    Certain Relationships and Related Transactions                 27

Item       13.    Exhibits and Reports on Form 8-K                               27

Signature Page                                                                   28


</TABLE>

                                        3

<PAGE>


         The  statements  in this  Report on Form  10-KSB  that are not based on
historical  information  are considered  forward-looking  statements  within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities Exchange Act of 1934,  including  statements  regarding the Company's
hopes, intentions,  beliefs or strategies regarding the future.  Forward-looking
statements  include,  but are not limited to,  Description of Business regarding
(i) its plans to market  products in Europe,  North  America,  South America and
Asia, (ii) its belief that offering free Internet access will capture  customers
for CallNet ISP,  (iii) its statement that other  companies  engaged in Internet
related businesses may be acquired, (iv) its expectation that the acquisition of
20% of CallNet ISP will be closed in mid February and the  remaining  80% can be
acquired by the end of fiscal year 1999, (v) its belief that the majority of its
future revenues will be derived from its ownership of CallNet ISP, which earns a
share of telephone toll revenues from companies that provide  telephone  service
to their  customers,  and (v) the belief that its  products  and  services  will
appeal to the many segments of the Internet market;  statements in Liquidity and
Capital Resources  regarding (i) the projection that its working capital will be
adequate until mid 1999, (ii) the projection that additional capital from bridge
note and/or sale of equity  securities will be necessary,  (iii) the expectation
that product  development and manufacturing costs will be borne by joint venture
partners, (iv) the estimate of research / development and plant expenditures for
the next twelve months, (v) the expectation that telephone toll revenues derived
from ownership of CallNet ISP will be the primary  source of internal  liquidity
and product sales will be a secondary source of internal liquidity,  and (v) the
anticipation  that the year 2000 will not have a material impact on the Company;
and the belief  stated in Security  Ownership of Certain  Beneficial  Owners and
Management  that the  shareholders  listed have sole investment and voting power
over the shares included in the table and that all beneficial owners of at least
five percent are included.


DESCRIPTION OF BUSINESS

GENERAL
-------

         World  CallNet,   Inc.  (the  "Company")  is  a  Delaware   corporation
incorporated  on December  28, 1992 as Hermes  Capital  Management,  Inc. It was
inactive  until  October  1995,  when it changed  its name to  General  American
Royalty, Inc. and became active in the oil and gas royalty business in Texas and
New Mexico.  In 1998, the Company sold all of its oil and gas royalty  interests
and on October 9, 1998,  acquired  World  Wide  Communications  (Holdings)  Ltd.
("WWCH"),  a privately held United Kingdom development stage  telecommunications
company  based  in  London,  England.  As a  result  of  the  acquisition,  WWCH
shareholders  were issued 75% of the  Company's  presently  outstanding  capital
stock and hold three of the four board of directors positions.


         For financial reporting purposes the transaction was accounted for as a
reverse  acquisition.  WWCH was treated as the  acquirer and will be the ongoing
reporting entity. This report includes only the WWCH financial  statements since
its inception on January 23, 1998.  Since the transaction  was completed  before
the  Company's  October 31 fiscal  yearend,  this  annual  report and all future
reports shall adopt WWCH's September 30 fiscal yearend.  The Company changed its
name to World CallNet, Inc. in January 1999.

                                       4

<PAGE>


BUSINESS OF ISSUER
------------------

         The Company  offers  products and  services  that  facilitate  low cost
consumer  access to the Internet.  It is engaged in the  development of Internet
access solutions through  affordable  products that utilize mediums not normally
associated with Internet access. This includes cellular  telephones,  television
sets and  specially  engineered  input  devices such as keyboards  that function
without a  personal  computer.  The  Company  has  concentrated  its  efforts on
expanding  Internet  access to  customers  in  Europe,  but plans to market  its
products in the United States and other regions of the world.

         Most companies that offer Internet access are currently  focused on the
subscription or monthly fee based personal computer market. The Company believes
that a  significant  opportunity  exists  to  capture  business  from  providing
Internet connectivity without charging users any registration or monthly fees or
requiring a computer. This approach is based on the concept that virtually every
household or business in the world is a potential customer if Internet access is
free.  The Company  offers  products with  integrated  telephone  circuitry that
provides Internet access using existing local telephone service.

         Calls made by users to  connect  to the  Internet  are  directed  to an
Internet Service Provider ("ISP") designated by the Company with no registration
or monthly  fees.  The Company has entered  into an  agreement  with CallNet Plc
("CallNet ISP"), an affiliate of the Company,  in which the Company will license
its ISP business  through  CallNet ISP.  Under the terms of the  agreement,  the
Company  agreed to purchase 20% of CallNet ISP in exchange for 500,000 shares of
common stock.  The Company  expects to complete the purchase by mid February and
may acquire the remaining 80% of CallNet ISP before the end of fiscal year 1999.

         The  ownership of CallNet ISP is the key  ingredient  in the  Company's
plan  of  operation.  CallNet  ISP  has  entered  into a  revenue  participation
agreement with carrier Cable and Wireless  Communications  ("CWC"), which offers
users  computer/modem and no computer  connections to the Internet at local toll
rates.  The agreement  entitles  CallNet ISP to receive a percentage of the toll
charges earned by CWC from calls connecting to the Internet through CallNet ISP.
Through its ownership of CallNet ISP, the Company's  expects to earn its primary
source of revenues from these toll charges.


PRINCIPAL PRODUCTS AND MARKETS
------------------------------

         The European  telephone  system offers  callers access to its services,
including local calls, only through metered  telephone tolls.  Telephone service
providers have  structured  their  telecommunications  networks to derive income
from system usage rather than from fixed access  charges.  The Company  believes
that  this  makes  monthly  fee based  Internet  service  unaffordable  for most

                                       5

<PAGE>

European  businesses or households.  It has developed  affordable  products that
offer Internet access through existing telecommunications networks using CallNet
ISP for user connection.  The  participation in metered  telephone toll revenues
through the proposed ownership of CallNet ISP is the Company's  principal profit
center and the basis of design for all of its products and services.

         In the United States,  local telephone service is offered for a monthly
fee with either  unlimited  local calls allowed or for a small surcharge after a
certain number of free minutes each month.  In Europe  however,  and the rest of
the world,  local telephone calls are metered and are charged a per minute rate.
In the UK, these  charges vary  depending on the time of day, and the day of the
week, from about $0.06 to slightly more than $0.15 per minute. This includes all
local calls used for Internet connectivity.  Because Europeans are accustomed to
paying for local  calls in this  manner,  companies  offering  Internet  service
without  registration  or monthly  fees  appear to be  providing  free  Internet
access. The Company's goal is to capture a high volume of traffic from customers
that connect to the Internet through CallNet ISP.

         Through its licensing arrangements with CallNet ISP, the Company offers
Internet connectivity as its main product. It is a distribution product, brought
to market via companies and organizations such as banks, supermarkets, retailers
and other ISP organizations.  These entities become virtual ISP's by re-branding
CallNet  ISP with  their own names  such as BankNet  or  StoreNet.  The  Company
provides the technology and infrastructure for these companies, enabling them to
develop and market their own Internet based products and services.  Metered toll
revenues are earned from calls  routed  through the CallNet ISP network by these
companies.

         The Company creates  opportunities to generate  telephone toll revenues
with  products  that  include a  proprietary  keyboard  that is a  sophisticated
telephone  instrument  designed for dial-up  connections  to the  Internet.  The
keyboard is an affordable  alternative  to purchasing a computer and is marketed
using the concept of free Internet  access with no registration or monthly fees.
A connection  to local  telephone  service is the only  requirement.  All of the
Company's Internet access products utilize the special keyboard, which sells for
about fifty dollars.

         Set-Top-Boxes provide Internet access through a standard television set
and sell at a price  significantly  lower than rival "Web TV" units. These units
are  pre-configured  to connect to CallNet ISP and feature full web browsing and
email.  Users pay only for the time while  online at the same rates  charged for
local telephone calls.

         A new product  being  marketed  and  developed is a silicon chip called
MailTV that facilitates Internet access using television sets connected to local
telephone service. The chip is being installed in new television sets and can be
retro-fitted  to  existing  sets  at a  fraction  of the  cost of  purchasing  a
computer.  The Company  has  entered  into a joint  marketing  and  distribution
agreement  with Zilog,  a major  silicon chip  manufacturer  based in the United
States.

                                       6

<PAGE>

         Zilog has been  promoting the MailTV chip to  television  manufacturers
throughout  the world.  The most recent  agreement  was with  Vestel,  an OEM TV
manufacturer. Under the agreement Zilog will supply Vestel with 5 million MaiITV
enabled chips to be  incorporated  into the entire  production of Vestel's TV's.
Most of these TV's will be  distributed  in the United  Kingdom  and  throughout
Europe in 1999 under various brand names. In addition,  Zilog has requested that
World CallNet design for them, a Set-Top-Box that contains the MailTV chip. This
will be a low cost product and is aimed at the retrofit market.

         The Company  plans to expand into  mainland  Europe  through  operating
subsidiaries  and venture  partners.  If  opportunities  become  available,  the
Company  may  acquire  other  businesses  or entities  that are  competitors  in
Internet related businesses.  The customers that are acquired become part of the
CallNet system and facilitate the process of establishing the Company's products
and services.  Future plans call for expansion to North America,  South America,
and ultimately Asia.


COMPETITIVE BUSINESS CONDITIONS
-------------------------------

         The market for Internet products and services is highly competitive and
the Company expects that  competition  will continue to intensify.  There are no
substantial  barriers to entry in these markets and technology is advancing at a
very rapid pace.  Although the Company  believes its products and services  will
appeal to the many segments of the Internet market, it is possible that a single
supplier of products and  services  similar to those of the Company may dominate
one or more market segments.

         The Company  competes with many other  providers of Internet access and
online  navigation  such as America Online,  Compuserve,  Prodigy and Microsoft.
Many of these  competitors  are larger than the  Company and have  substantially
greater access to capital and technical resources than does the Company and may,
therefore,  have a  significant  competitive  advantage.  Many of the  Company's
competitors  are  capable of making  larger  expenditures  to develop and market
their products and services.

         Competitive conditions in the telecommunications  industry could have a
significant  influence on the success of CallNet ISP's ability to earn telephone
toll revenues.  Arrangements that earn CallNet ISP a percentage of metered tolls
are  dependent  upon the  telephone  carrier's  ability to maintain its network.
Market  conditions and other factors that affect  telephone  carriers are beyond
the  scope or  control  of the  Company.  If  satisfactory  agreements  to share
revenues  with  telephone  carriers  cannot be  maintained  by CallNet  ISP, the
Company would have to purchase its own telecommunications facilities.




                                       7
<PAGE>


MAJOR CUSTOMERS
---------------

         The Company's  products are generally  sold to the public and no single
customer is significant enough to adversely impact income if lost. However,  the
Company's  primary  source of revenue is  expected  to be derived by CallNet ISP
from toll charges billed by local telephone  companies to its customers  through
carrier CWC. CWC is the second largest  telephone company in the United Kingdom,
providing  carrier  network  services  on a  worldwide  basis.  The  CallNet ISP
communications  equipment is located at the CWC  Facilities  Management  in West
London.

         In October 1998, an interconnect agreement was signed with CWC, whereby
CallNet ISP is entitled to receive  payment for thirty five percent of toll call
revenues generated from CallNet ISP traffic.  Based on the proposed  acquisition
of CallNet ISP, the CWC  agreement is expected to become the  Company's  primary
source of future  revenues.  The loss of this  agreement  could  have a material
adverse impact on the Company's business.


REGULATORY MATTERS
------------------

         Deregulation  of the  telecommunications  industry  has  just  begun in
Europe. As a result of deregulation, European telephone companies are engaged in
intense  competition  for local  call  traffic  and to gain  market  share.  The
Company's  business  plan is designed to take  advantage of these factors in the
European  telephone  industry by  participation  in the toll  charges  earned by
telephone carriers from telephone connections to the Internet.  CallNet ISP must
negotiate with telephone companies that own the telecommunication  networks that
handle  customer  traffic and connection to the Internet.  It is not possible to
predict  the impact  that  deregulation  will have on the  Company's  ability to
maintain satisfactory margins on contracts with network carriers.


EMPLOYEES
---------

         The Company has eleven  full-time  employees in the United  Kingdom and
has  retained  the  services  of a  full-time  consultant  to  oversee  business
activities in the United  States.  The management  believes it has  satisfactory
relations with its employees.


DESCRIPTION OF PROPERTIES

         The  Company's  administrative  offices  are  located at Brecon  House,
Meridian Gate, 207 Marsh Wall, in London. In addition, the Company has an office
in the United  States  located at 731  Meadows  Building,  5646  Milton  Street,
Dallas,  Texas.  Both of these offices are leased.  The Company owns the patents
and  intellectual  property  rights  for all of its core  products  and plans to
license  these   technologies   to   semiconductor   and  consumer   electronics
manufacturers.



                                       8

<PAGE>

         The Company regards its trade secrets and intellectual  property rights
as  critical to its success and will rely upon  applicable  laws,  trade  secret
protection and  confidentiality  and/or license  agreements  with its employees,
customers,  partners and others to protects its proprietary rights. There can be
no  assurance  that  the  steps  taken  by the  Company  to  protect  any of its
proprietary  rights will be adequate or that third  parties will not infringe or
misappropriate the Company's proprietary rights.  Additionally,  there can be no
assurance  that other parties will not assert  infringement  claims  against the
Company.


LEGAL PROCEEDINGS

         There were no legal  proceedings  involving  the  Company or any of its
subsidiaries as of the date of this report.


SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year covered by this report.


MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

         The Company's  common stock is listed on the OTC Bulletin Board (symbol
WOWW).  The first  trading  in the stock  occurred  on  February  4,  1997.  The
following  table sets forth the high and low bid prices of the Company's  common
stock,  as reported by NASDAQ System  Statistics  furnished by NASD,  during the
periods indicated.  The quotations reflect inter-dealer  prices,  without retail
mark-up, mark-down or commission and may not represent actual transactions:

                  Quarter Ended                   HIGH              LOW
                  --------------                  ----              ----
                  March 31, 1997                  $6.25             $4.75
                  June 30, 1997                    4.50              3.50
                  September 30, 1997               5.75              4.25
                  December 31, 1997                4.25              2.63
                  March 31, 1998                   3.00              1.13
                  June 30, 1998                    1.63               .38
                  September 30, 1998               1.28               .39


         As of December  31,  1998,  the Company  had  approximately  110 common
shareholders  of record and estimates  that an additional 300  shareholders  own
common shares in street name.


                                       9

<PAGE>

         During the last two years no cash  dividends  have been declared on the
Company's  common  stock.  There are no  restrictions  that limit the  Company's
ability to pay  dividends on common  equity stock or that are likely to do so in
the future.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         During  1998  the  Company  sold  all of its  interests  in oil and gas
royalty  properties for cash and, after repayment of debt and accounts  payable,
became a publicly  traded  shell.  In October  1998,  the Company  completed the
acquisition  of  World  Wide  Communication   (Holdings)  Ltd.  ("WWCH"),  in  a
transaction  accounted for as a reverse  acquisition.  As a result,  the Company
became the successor to the business and financial operations of WWCH, including
its fiscal  yearend of September  30. WWCH began  operations in January 1998 and
this report  includes  historical  data since that date.  In January  1999,  the
Company changed its name to World CallNet, Inc.

         Since  incorporation  in January  1998,  the Company has been  involved
primarily in capital formation  activities,  refinement of its business strategy
and development of relationships with industry partners. The Company's principal
external source of capital for developing its products and services has been the
placement of bridge notes payable.  In December 1998, the Company  completed the
private  placement of $1,150,000 in bridge notes that are due one year from date
of  issuance.  Additional  placements  of  bridge  notes or the  sale of  equity
securities  to fund  operating  expenses  will be  necessary  until the  Company
becomes profitable.

         The Company's plan of operation for the next twelve months includes the
ongoing  operation of its Internet  service and the  continued  development  and
marketing of its Internet products such as Mail TV and its proprietary keyboard.
The Company will require  substantial  capital to implement  its business  plan,
which is discussed further in Note 2 to the Financial Statements. It is expected
that costs of product development and manufacturing these products will be borne
by joint venture partners such as Zilog, OEM television  manufacturers and other
third  parties  seeking to acquire new  microchip  technology  developed  by the
Company.

         With working capital on hand, the Company  estimates it can satisfy its
obligations and cash  requirements  until mid 1999. To meet debt obligations due
during  the  balance of fiscal  1999 and 2000,  the  Company  will have to raise
additional capital in the next twelve months.

         The Company has estimated that research and  development  costs will be
approximately  $250,000  during the next twelve months.  Expenditures  for plant
and/or  significant  capital equipment are estimated at $750,000 during the next
twelve months.

                                       10

<PAGE>

         If  necessary,  the Company will issue  shares of its capital  stock to
acquire  assets,  customers and other entities that appear to be viable business
opportunities.

         The Company expects that its primary source of internal  liquidity will
be revenues  from  telephone  toll charges  earned by under the terms of its CWC
agreement. The fundamental business strategy is to direct telephone usage to the
CallNet telecommunications network from new CallNet ISP customers. The Company's
products are designed to facilitate new Internet access.  Sale of these products
is expected to be a secondary source of revenues for the Company.

         The Company is in the process of evaluating and  implementing  changes,
as necessary, to its information systems and accordingly does not anticipate any
material  year 2000  issues  from its own  systems,  programs or from any of its
products.  The  impact of such  issues on the  Company's  suppliers,  customers,
vendors and financial service  organizations could have an adverse effect on the
Company.


RESULTS OF OPERATIONS
---------------------

         The results of operations for purposes of this discussion  include only
the financial information related to WWCH, the surviving business operation in a
transaction that was treated as a reverse  acquisition.  The Company's financial
statements  report  only the  business  operations  and  assets of WWCH from its
inception in early 1998. Financial information and related discussions contained
in  reports  previously  filed  by the  Company  are  not  comparable  with  the
disclosures included herein.

         For the period from  January 23, 1998  through  September  30, 1998 the
Company incurred salaries and other  administrative  expenses related to capital
formation and development of its business plan.  These expenses are reflected on
the  statement  of  operations   for  the  period  as  charges  to  general  and
administrative expense.









                                       11
<PAGE>



FINANCIAL STATEMENTS                                                        Page

                  Independent Auditors Report                                 13

                  Balance Sheet as of September 30, 1998                      14

                  Statements of Operations for the Period from
                  January 23 1998 to September 30, 1998                       15

                  Statements of Stockholders' Equity for the Period
                  from January 23 1998 to September 30, 1998                  16

                  Statements of Cash Flows for the Period from
                  January 23 1998 to September 30, 1998                       17

                  Notes To Financial Statements









                                       12


<PAGE>



                          INDEPENDENT AUDITOR'S REPORT



The Board of Directors
World CallNet, Inc.
London, England


We have audited the accompanying balance sheet of World CallNet,  Inc. (formerly
World Wide Communications  (Holdings) Limited) as of September 30, 1998, and the
related  statements of operations,  stockholders  deficit and cash flows for the
period from January 23, 1998 (date of inception)  to 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes  examining on a test basis evidence  supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management as well as evaluating the overall financial  statement  presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of World  CallNet,  Inc. as of
September 30, 1998, and the results of its operations and its cash flows for the
period then ended in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  the Company is in the  development  stage and has had no
revenues  through  September 30, 1998, which raise  substantial  doubt about its
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also  described in Note 2. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.



HEIN + ASSOCIATES LLP


Dallas, Texas
January 25, 1999



                                       13

<PAGE>

<TABLE>

<CAPTION>

                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)



                                  BALANCE SHEET
                           (Expressed in U.S. Dollars)
                               SEPTEMBER 30, 1998

                                     ASSETS
                                     ------
<S>                                                                             <C> <C>


CURRENT ASSET -
   Cash                                                                             $   1,995

OTHER ASSETS:
   Investment in marketable securities                                                203,772
   Intangible asset                                                                    19,500
                                                                                    ---------
       Total other assets                                                             223,272
                                                                                    ---------
                 Total assets                                                       $ 225,267
                                                                                    =========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
   Accounts payable and accrued expenses                                            $  43,041
   Accrued compensation due officers                                                  165,565
   Deferred revenue                                                                   193,583
   Due to affiliate                                                                    10,486
                                                                                    ---------
            Total current liabilities                                                 412,675

COMMITMENT AND CONTINGENCY (Notes 3 and 5)

STOCKHOLDERS' DEFICIT:
   Common stock, $1.66 par value; 1,000 shares authorized, issued and outstanding
   (20,000,000 shares authorized at $0.001 par value and 7,333,333 shares issued
    on a pro forma basis)                                                               1,660
   Additional paid-in capital                                                         194,500
   Accumulated deficit                                                               (378,285)
   Foreign currency translation adjustment                                             (5,283)
                                                                                    ---------
            Total stockholders' deficit                                              (187,408)

            Total liabilities and stockholders' deficit                             $ 225,267
                                                                                    =========

</TABLE>

             See accompanying notes to these financial statements.

                                       14

<PAGE>



                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)


                             STATEMENT OF OPERATIONS
                           (Expressed in U.S. Dollars)
              FOR THE PERIOD JANUARY 23, 1998 TO SEPTEMBER 30, 1998


REVENUES                                                             $    --

GENERAL AND ADMINISTRATIVE EXPENSES                                    378,285

NET LOSS                                                              (378,285)

OTHER COMPREHENSIVE LOSS - Foreign currency translation adjustment      (5,283)
                                                                     ---------

COMPREHENSIVE LOSS                                                   $(383,568)
                                                                     =========

NET LOSS PER SHARE (basic and diluted)                               $ (12,610)
                                                                     =========

WEIGHTED AVERAGE SHARES
                                                                            30
                                                                     =========

             See accompanying notes to these financial statements.



                                       15


<PAGE>

<TABLE>

<CAPTION>

                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)

                  STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                           (Expressed in U.S. Dollars)
           FOR THE PERIOD FROM JANUARY 23, 1998 TO SEPTEMBER 30, 1998


                                                                                                    
                                                                          
                                                                                                     Foreign     
                                                       Common Stock       Additional                Currency     
                                                  --------------------      Paid-In    Accumulated  Translation  
                                                    Shares     Amount       Capital     Deficit     Adjustment    Total
                                                    ------     ------     ---------    -----------  -----------  --------
<S>                                               <C>        <C>          <C>          <C>          <C>          <C> 
Issuance of shares to founders upon
incorporation on January  23, 1998                       2   $       3    $    --      $    --      $    --      $       3


Issuance of shares on September 24, 1998 for
cash at par value and intangible asset                 100         166       19,501         --           --         19,667
                                                                                                                              

Issuance of shares on September 24, 1998 for
cash at par value and funding of expenses              898       1,491      174,999         --           --        176,490

Net loss for the period                               --          --           --       (378,285)        --       (378,285)
                                                                                                                
Foreign currency translation adjustment               --          --           --           --         (5,283)      (5,283)
                                                 ---------   ---------    ---------    ---------    ---------    ---------    

                                                     1,000   $   1,660    $ 194,500    $(378,285)   $  (5,283)   $(187,408)
                                                 =========   =========    =========    =========    =========    =========    


</TABLE>


             See accompanying notes to these financial statements.

                                       16


<PAGE>


                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)


                             STATEMENT OF CASH FLOWS
                           (Expressed in U.S. Dollars)
              FOR THE PERIOD JANUARY 23, 1998 TO SEPTEMBER 30, 1998


CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                         $(378,285)
   Expenses paid by stockholders                                      175,000
   Increase in accounts payable and accrued expenses, net of
      foreign currency translation adjustments                        203,323
   Cash advances from and expenses paid by affiliate                      297
                                                                    ---------  
               Net cash provided by operating activities                  335

CASH FLOWS FROM FINANCING ACTIVITIES -
   Cash received in common stock issuances                              1,660
                                                                    ---------
NET INCREASE IN CASH                                                    1,995

CASH, beginning of period
                                                                    ---------

CASH, end of period                                                 $   1,995
                                                                    =========

NON CASH TRANSACTIONS:
   Investment in marketable securities obtained for obligation to
       provide services and for cash payment by affiliate           $ 203,772
                                                                    =========
   Acquisition of intangible asset for common stock                 $  19,500
                                                                    =========



              See accompanying notes to these financial statements.

                                       17

<PAGE>


                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)

                          (Expressed in U.S. Dollars)

NOTES TO FINANCIAL STATEMENTS

                                                      
1.   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------

     Organization
     ------------
     World CallNet,  Inc. (the  "Company")  (formerly  Worldwide  Communications
     (Holdings)  Limited) is a  development  stage company  incorporated  in the
     United  Kingdom on January 23,  1998.  The  Company's  business  plan is to
     develop  and sell  certain  consumer  internet  software  and  operate as a
     pay-as-you-go   internet  service  provider.   The  accompanying  financial
     statements  include  the  accounts  of the  Company  and  its  wholly-owned
     subsidiary,  Overleaf  Systems,  Limited  ("Overleaf").  Overleaf  has been
     inactive to date.

     Investment in Marketable Securities
     -----------------------------------
     The Company's  investment in securities at September 30, 1998 is classified
     as available for sale and carried at estimated market value.

     Foreign Currency Translation
     ----------------------------
     The Company  conducts its  operations and maintains its accounts in British
     pounds.  Financial statements prepared in U.S. dollars are translated based
     on the exchange rate at the balance  sheet date for assets and  liabilities
     and  a  weighted  average  rate  for  revenues  and  expenses.  Translation
     adjustments  are  accumulated  in a  separate  component  of  stockholders'
     deficit entitled foreign currency translation adjustment.

     Loss Per Share
     --------------
     Basic loss per share is computed  based on the weighted  average  number of
     shares outstanding  during the period.  Diluted loss per share takes common
     stock  equivalent  shares  (such  as  options,   warrants  and  convertible
     securities) into consideration. However, common stock equivalent shares are
     not considered when their effect would be anti-dilutive.

     Use of Estimates
     ----------------
     The  preparation of the Company's  financial  statements in conformity with
     generally accepted accounting  principles requires the Company's management
     to make estimates and assumptions that affect the amounts reported in these
     financial  statements and accompanying  notes.  Actual results could differ
     from those estimates.

     Income Taxes
     ------------
     The Company  accounts for income taxes under the  liability  method,  which
     requires  recognition  of  deferred  tax  assets  and  liabilities  for the
     expected  future tax  consequences of events that have been included in the
     financial statements or tax returns. Under this method, deferred tax assets
     and  liabilities  are  determined  based  on  the  difference  between  the
     financial  statements and tax bases of assets and liabilities using enacted
     tax rates in effect for the year in which the  differences  are expected to
     reverse.  The Company has a tax loss  carryforward at September 30, 1998 of
     approximately  $200,000 and a deferred tax asset,  which is fully reserved,
     of approximately $50,000.


                                       18

<PAGE>


                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)

                          (Expressed in U.S. Dollars)


     Intangible Asset
     ----------------
     Intangible asset consists of intellectual property, which will be amortized
     by the straight-line method over five years.

     Statement of Cash Flows
     -----------------------
     For purposes of the  statements  of cash flows,  the Company  considers all
     highly liquid debt instruments purchased with an original maturity of three
     months or less to be cash equivalents.

2.   CONTINUED OPERATIONS
     --------------------

     The Company is in the  development  stage and has had no  revenues  through
     September  30,  1998.  In addition,  the Company  will require  substantial
     capital to implement its business  plan.  These  factors raise  substantial
     doubt  about the  Company's  ability to  continue  as a going  concern.  In
     December 1998, the Company completed a one-year note offering,  in which it
     raised net  proceeds  of  approximately  $1,100,000.  The  Company has also
     negotiated a development and marketing agreement with a much larger company
     that management  believes will facilitate  market  penetration.  Management
     also  intends  to  attempt  to raise  additional  capital in the near term.
     Management  believes  these  actions will permit the Company to achieve its
     objectives  and  attain  profitable  operations  to allow  the  Company  to
     continue as a going concern.

3.   INVESTMENT AND DEFERRED REVENUE
     -------------------------------

     In  September  1998,  the  Company  acquired  2,000,000  shares in Cherokee
     Leisure Plc ("Cherokee"),  a publicly traded company in the United Kingdom,
     from another  company in exchange for payment of $10,189 and  assumption of
     the other company's obligations to Cherokee. The obligations are to design,
     install  and  support a website  for  Cherokee.  The Company has valued the
     Cherokee  shares based on their  estimated  market value of $203,772 at the
     time of acquisition. The estimated market value was materially unchanged at
     September 30, 1998. The Company has recorded a deferred  revenue  liability
     of $193,583,  which  represents the estimated  value of the shares less the
     cash payment.  The cash payment was made by another  company with directors
     in common with the Company  and is  included in "due to  affiliate"  in the
     accompanying  balance sheet.  The Company is entitled to receive 40% of any
     revenue generated from the website.  If such revenue generated is less than
     approximately  $700,000  through  April 30,  1999,  the Company must return
     500,000 shares of the Cherokee stock. If such revenue exceeds approximately
     $2,800,000  through  April 30,  1999,  the  Company  will be entitled to an
     additional 500,000 shares of the Cherokee stock.


                                       19

<PAGE>


                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)

                          (Expressed in U.S. Dollars)


4.   RELATED PARTY TRANSACTIONS
     --------------------------

     Certain  directors and  stockholders  of the Company are  directors  and/or
     stockholders in other companies with which the Company had the transactions
     set forth below. Also, see Notes 3 and 6.

o        CallNet Plc paid salaries of officers/directors  and employees and paid
         certain other administrative costs of the Company. Such amounts,  which
         totaled $185,486, have been recorded as administrative expense.

o        Certain  intellectual  property rights related to e-mail  functionality
         were  assigned  to the Company by  Telemail  Europe (via the  Company's
         newly formed subsidiary, Overleaf) in exchange for 100 shares of stock.
         The parties  that  received  the stock also paid the Company a total of
         $166 for the shares.

o        The Company  entered  into an  agreement  with CallNet Plc in which the
         Company will  license its system for the  business of internet  service
         provider and CallNet Plc will sub-license such system to other parties.

5.   COMMITMENT
     ----------

     The Company has employment agreements with three  officers/directors  which
     require annual payments through  September 2001 of  approximately  $110,000
     each.

6.   Subsequent Events
     -----------------

     In October 1998, 100% of the Company's common stock was acquired by General
     American  Royalty,  Inc.  ("GAR").  The  Company's   stockholders  obtained
     approximately  75% of the outstanding  common stock of GAR and three of the
     Company's  directors  were  appointed  to the board of GAR.  For  financial
     reporting   purposes,   the  transaction  will  be  treated  as  a  reverse
     acquisition of GAR by the Company.  Following the reverse acquisition,  the
     Company's  stockholders'  deficit  section  will  reflect  the GAR  capital
     structure,  which is presented  parenthetically on a pro forma basis in the
     accompanying  balance  sheet.  As of  September  30,  1998 GAR's  unaudited
     summarized financial position was as follows:

                   Total assets                     $ 20,537
                   Total liabilities                   5,665
                                                    -------- 
                   Stockholder's equity             $ 14,872
                                                    ========

     In October 1998 in  connection  with the merger with GAR referred to above,
     the  Company  agreed to acquire 20% of the stock of CallNet Plc in exchange
     for 500,000 shares of the Company's common stock.

                                       20

<PAGE>


                               WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                          (A Development Stage Company)

                          (Expressed in U.S. Dollars)


     In December  1998,  the  Company  completed  a private  placement  of notes
     payable  totaling  $1,150,000.  The  notes  bear  interest  at 10%  and are
     collateralized by the Company's shares of Cherokee Leisure Plc. Interest is
     due monthly and  principal is due in full on December 1, 1999.  The holders
     of the notes were also issued stock  purchase  warrants  entitling  them to
     purchase an  aggregate  of 575,000  shares of the  Company's  common  stock
     between March 1, 1999 and December 1, 2000 at $1.00 per share.  The Company
     paid a $50,000 commission in connection with the offering.

     In January 1999,  the Company's  stockholders  approved (1) a change in the
     corporate name of GAR and its  subsidiary,  the Company,  to World CallNet,
     Inc.,  (2) an increase in the  authorized  shares to  30,000,000  shares of
     common  stock and  10,000,000  shares of preferred  stock,  and (3) a stock
     option  plan that had been  adopted by the board of  directors  in November
     1998.  Under the stock option plan,  the  Company's  board of directors may
     grant  options  to acquire  up to a total of  1,000,000  shares of stock to
     officers, directors,  employees, advisors or consultants of the Company. In
     November  1998,  the  Company  granted  options  to  each of  three  of its
     directors to acquire  150,000 shares for $1.50 a share.  The options expire
     in November 2001.  Also in November 1998,  the Company  granted  options to
     acquire  100,000  shares to a  director  and 50,000  shares to an  advisory
     director under the same terms.








                                       21



<PAGE>


CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND  FINANCIAL
DISCLOSURE

         On October 30, 1997 the Company  engaged Hein + Associates LLP ("Hein")
as its independent  principal  accountant and auditor,  and dismissed  Coopers &
Lybrand, LLP ("C&L").  C&L had been engaged as principal  accountants and issued
an audit report on the Company's financial  statements for the last fiscal year.
C&L's audit reports  contained no adverse  opinion of disclaimer of opinion and,
were not qualified as to uncertainty,  audit scope or accounting principles. The
Company had no disagreements  with C&L over accounting  principles or practices,
financial  statement  disclosure,  or auditing scope or procedure  which, if not
resolved to C&L's  satisfaction,  would have caused it to make  reference to the
subject matter of the disagreements in its audit report. C&L's letter confirming
these  facts  was  included  as part of the  Company's  filing on Form 8-K dated
October 30, 1997.


DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS;  COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT


         Set forth below are the identities of the directors, executive officers
and  significant  employees of the Company and a brief account of their business
experience.  The  Company's  bylaws  provide  for up to nine  directors  who are
elected for one-year  terms.  Executive  officers are  appointed by the board of
directors  to serve in  their  respective  capacities  for one  year  until  the
directors duly appoint their successors.

DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
                                                                       Served as
                                                             Term       Director
    Name              Age       Position and Offices         Expires      Since 
-----------------     ---       --------------------         -------   ---------

Paul Goodman-         41        President and                 2000        1998
    Simpson (1)                 Director

Aaron Goodman-        37        Vice President and            2000        1998
    Simpson (1)                 Director

Keith Goodyer         31        Vice President and            2000       1998

James F. Smith        62        Director                      1999        1996

Walter B. Wriston     79        Advisory Director             2000        1998

(1) Paul Goodman-Simpson and Aaron Goodman-Simpson are brothers.


                                       22

<PAGE>


BUSINESS EXPERIENCE
-------------------

         Paul Goodman-Simpson.  Mr.  Goodman-Simpson has been a director and the
president  of the Company  since  October  9,1998 and a managing  director and a
co-founder  in 1997 of  WWCH,  which  became a wholly  owned  subsidiary  of the
Company on October 9, 1998.  From 1993 to 1997 he was the  managing  director of
KORE Ltd., a computer software  distribution  company.  From 1992 to 1997 he was
Director of Sales (Far East Asia) of  International  Software  Systems,  Inc., a
software  company.  From 1985 to 1991 he was a salesman  for two other  software
companies.

         Aaron Goodman-Simpson.  Mr. Goodman-Simpson has been a director and the
vice  president for  operations  and sales of the Company since October 9, 1998,
when the Company  acquired all the capital stock of WWCH. He joined WWCH in 1997
as its sales  director and vice  president for  operations.  He serves,  and has
served  since  1994,  as the sales  director of KORE Ltd.,  a computer  software
distribution  company.  From  1992  until  October  1994  he  was  the  business
development  manager for Computer 2000 Datech Ltd.,  Europe's  largest  computer
peripheral  distributor.  From  1986  until  1992  he  was a  director  of A & B
Developments  Ltd.,  a  construction   company  to  which  Mr.   Goodman-Simpson
introduced computer-aided design to its practice.

         Keith  Goodyer.  Mr.  Goodyer is a director  and vice  president of the
Company  since  October 9, 1998 and the  technical  director and a co-founder in
1997 of WWCH,  which became a wholly owned  subsidiary of the Company on October
9, 1998. He manages WWCH's research and development facility in Newport Pagnell,
England.  From 1979  until  co-founding  WWCH,  he was an  independent  Internet
consultant  and developer.  He developed  several new consumer  electronics  and
Internet tools including the Company's  TelEmail and MailTV products.  From 1992
to April  1997  Mr.  Goodyer  was  Internet  Appliance  Product  Manager  of MSU
Corporation,  a public  company  that  designs  internet  appliances,  and led a
development team that produced the first  Set-Top-Box for connecting  television
sets to the Internet.

              James F. Smith.  Mr.  Smith is a director  and  was  president  of
the Company from 1995 until October 9, 1998,  when the Company  acquired all the
capital  stock of WWCH.  Prior to joining  the  Company in 1995,  Mr.  Smith was
active in the oil and gas business and had been a founder and executive  officer
of four public companies that were engaged in the oil and gas business.

              Walter B. Wriston.  Mr.  Wriston has served as an advisory 
director of the Company  since  November  1998. He retired as Chairman and Chief
Executive Officer of Citicorp and its principal subsidiary,  Citibank,  N.A., in
September  1984.  Mr.  Wriston  serves as a director of ICOS  Corporation,  York
International  Corporation,  Cygnus, Inc., Vion  Pharmaceuticals,  Inc. and WMNB
Acquisition  Corp.  He also served as Chairman of  President  Reagan's  Economic
Policy Advisory Board and a member and former Chairman of The Business Council.

                                       23

<PAGE>


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 
-------------------------------------------------------

         The following  persons  during the last fiscal year failed to file on a
timely basis, as disclosed in the following  table,  reports required by Section
16(a) of the Exchange Act:

                             Number of                  Number of
         Name              Late Reports                Transactions

Paul Goodman-Simpson            2                          1
Aaron Goodman-Simpson           2                          1
Keith Goodyer                   2                          1
James F. Smith                  2                          2
Douglas Weedon                  2                          2
George E. Green                 2                          2
Sam E. Nicholson                2                          2


         The Company knows of no existing failures to file a required form.


EXECUTIVE COMPENSATION.

         Set  forth  below is the  aggregate  remuneration  during  the  periods
indicated of the officers and directors who received remuneration,  and officers
and directors as a group:

<TABLE>

                                                                 Remuneration
Name of Individual        Capacities in Which             September 30,  September 30,
Identity of Group         Remuneration was Received           1998           1997
-----------------         -------------------------           ----           ----
<S>                       <C>                               <C>           <C>    

James F. Smith            President and Chief Executive
                          Officer and Director (1)          $  15,000     $  30,000

Paul Goodman-               (2)                                66,388 (4)      -
Simpson

Aaron Goodman-              (3)                                66,388 (4)      -
Simpson

Keith Goodyer               (3)                                66,388 (4)
                                                                               -

Officers and directors
as a group (4 persons)                                      $ 214,164     $  30,000

</TABLE>

                                       24

<PAGE>

(1)      Includes $3,000 of other compensation and does not include any personal
         benefits  provided by the Company as such  benefits  did not exceed ten
         percent of total salary and bonus.  Mr. Smith resigned as President and
         Chief Executive Officer on October 9, 1998.

(2)      Mr.  Goodman-Simpson  became a director and was appointed as President 
         and Chief Executive Officer of the Company on October 9, 1998.

(3)      Messes  Goodman-Simpson and Goodyer became directors and were appointed
         as Vice Presidents of the Company on October 9, 1998.

(4)      Represents salaries and  reimbursement of expenses paid by CallNet Plc,
         a 20% owned subsidiary of the Company.

         The Company has employment agreements with Paul Goodman-Simpson,  Aaron
Goodman-Simpson and Keith Goodyer.  Each is employed for a term to end September
30, 2001 at an annual salary of (pound)65,000  (approximately  $110,000) plus an
automobile allowance of (pound)7,500 (approximately $12,675).

         In  September  1998,  James F. Smith  exercised  an option,  granted on
August 28,  1998,  to purchase  7,000 shares of common stock at $0.01 per share.
Based on the $1.00 market price of the stock,  Mr. Smith realized a $7,368 value
upon exercise of the option.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT.

         As of December 31, 1998,  set forth below are the numbers of shares and
the  percentage  of  outstanding  shares of Common  Stock of the  Company  owned
beneficially  by each director of the Company,  each executive  officer named in
the Executive  Compensation Table, by all officers and directors as a group, and
by each  shareholder  known by the Company to own more than five  percent of the
Company's common stock, including those shares subject to outstanding options or
warrants:

                                                      Beneficial Ownership
                                                      --------------------
         Name and Address                           Number of    Percentage
         of Beneficial Owner                        Shares (1)   of Class(2)  
         -------------------                        ------------------------
         James F. Smith                             234,000 (3)   2.9%
         4925 Greenville Ave. Ste 717
         Dallas, TX  75206

         Paul Goodman-Simpson  (4)                  535,000 (5)   6.6%
         Brecon House, Meridian Gate
         207 Marsh Wall
         London E149YT


                                       25

<PAGE>


         Aaron Goodman-Simpson (4)                  315,000 (5)   3.9%
         Brecon House, Meridian Gate
         207 Marsh Wall
         London E149YT

         Keith Goodyer                              287,500 (5)   3.6%
         Brecon House, Meridian Gate
         207 Marsh Wall
         London E149YT

         Walter B. Wriston                          50,000 (6)    0.6%
         405 Park Ave, 3rd Floor
         New York, NY 10022

         Officers and directors                  1,421,000       16.7%
         as a group (4 persons)


(1)      This table is based upon  information  supplied by officers,  directors
         and principal  shareholders  and  applicable  schedules  filed with the
         Securities and Exchange  Commission.  Unless otherwise indicated in the
         footnotes  to this table and subject to community  property  laws where
         applicable, the Company believes that each of the shareholders named in
         this table has sole  voting and  investment  power with  respect to the
         shares  indicated as beneficially  owned. The number of shares for each
         person is  calculated in accordance  with rules of the  Securities  and
         Exchange  Commission  and includes  shares each person has the right to
         acquire within 60 days from the exercise of stock options.

(2)      Percentages  are  calculated on the basis of the amount of  outstanding
         shares of stock (7,916,833),  plus for each person or group, any shares
         that  person or group has the right to acquire  within 60 days  through
         the exercise of options.

(3)      Includes  105,000 shares held of record by Sammie S. Smith, Mr. Smith's
         spouse.  Mr. Smith  disclaims any beneficial  interest in these 105,000
         shares.  Also includes  100,000 shares subject to being acquired within
         60 days at $1.50 per share  pursuant to a stock  option  granted by the
         Company.

(4)      Paul Goodman-Simpson and Aaron Goodman-Simpson are brothers.

(5)      Includes  150,000 shares  subject to being acquired  within 60 days at 
         $1.50 per share pursuant to a stock option granted by the Company.

(6)      Includes  50,000 shares  subject to being  acquired  within 60 days at 
         $1.50 per share pursuant to a stock option granted by the Company.


                                       26

<PAGE>


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         During the period from inception in January 1998 through  September 30,
1998, CallNet Plc, a 20% owned subsidiary,  paid salaries of  officers/directors
and  employees  and paid  certain  other  administrative  costs  of the  Company
totaling $185,486.

         Certain  intellectual  property rights related to e-mail  functionality
were  assigned to the Company by Telemail  Europe in exchange  for 100 shares of
stock. The parties that received the stock also paid the Company a total of $166
for the shares.  The Company entered into an agreement with CallNet Plc in which
the  Company  will  license  its system for the  business  of  internet  service
provider and CallNet Plc will sub-license such system to other parties.  Both of
the  aforementioned  entities have directors and shareholders in common with the
Company.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits.

      2.1     The Plan of  Acquisition  with  WWCH,  which  is  incorporated
              herein  by  reference  as filed as  exhibit  to Form 8-K dated
              October 23, 1998.

      3.1     Certificate  of  Incorporation  of the Company and  amendments
              thereto,  which is incorporated herein by reference as Exhibit
              3(i) to Form 10 filed on March 26, 1997.

      3.2     Amendment   to   Certificate   of   Incorporation,   which  is
              incorporated by reference  herein as Exhibit 3(i) to Form 8-K,
              dated October 23, 1998.

      3.3     By-laws of the Company,  which are  incorporated by reference 
              herein as Exhibit 3(ii) to Form 10 filed on March 26, 1997.

      10(a)   Agreement between General American Royalty, Inc. and ZiLOG, Inc.
              dated December 2, 1998.

      10(b)   Employment agreement between the Company and Paul Goodman-Simpson,
              Aaron  Goodman-Simpson and Keith Goodyer.

      21      List of all the  Company's  subsidiaries,  the  state or other
              jurisdiction of incorporation,  and the names under which such
              subsidiaries do business.

      27      Financial data schedule.

(b)  Reports on Form 8-K.  No  reports  on Form 8-K were  filed  during the last
quarter of the period covered by this report.


                                       27

<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.


                                          WORLD CALLNET, INC.
                                          -------------------
                                              (Registrant)


                                          /s/ Paul Goodman Simpson
                                          -------------------------
                                          Paul Goodman-Simpson, Director,
                                          President and Chief Executive
                                          Officer

                                          Date   January 29, 1999 
                                                ----------------- 


         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  registrant and in the capacities and
on the dates indicated.



 /s/ Aaron Goodman-Simpson              /s/ Paul Goodman-Simpson
     ---------------------                  --------------------
Aaron Goodman-Simpson, Vice                 Paul Goodman-Simpson, President,
President and Director                      Chief Executive Officer and Director

Date   January 29, 1999                 Date   January 29, 1999
     ------------------                        ----------------



 /s/ Keith Goodyer                      /s/ James Christodolou
     -------------                          ------------------
Keith Goodyer, Vice President and      James Christodolou, Principal
Director                               Accounting Officer

Date   January 29, 1999                Date   January 29, 1999  
     ------------------                       ----------------



 /s/ James F. Smith        
     ---------------
James F. Smith, Director
Date: January 29, 1999



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