UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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 September 30, 1999

                                       OR

( )      TRANSACTION  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                         Commission file number 0-28330

                             TALK VISUAL CORPORATION
             (Exact name of registrant as specified in its charter)


         Nevada                                          95-4561156
         ------                                          ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 information or organization)

   3550 Biscayne Blvd, Ste. 704
   Miami, Florida                                       33137
(Address of principal executive offices)              (Zip Code)

   One Canal Park, 3rd Floor
   Cambridge, Massachusettes                            02141
(Former Address of principal executive offices)       (Zip Code)

(Registrant's telephone number, including area code): (305) 572-0575
(Registrant's former telephone number, including area code) (617) 679-0300

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

                                                     Yes   X       No
                                                          ---        ---
There were 28,914,463 shares  outstanding of the registrant's  Common Stock, par
value $.001 per share, as of November 8, 1999.

Transitional Small Business Disclosure Format (check one):
                                                     Yes           No X
                                                         ---         ---




<PAGE>


<TABLE>
<CAPTION>

                             TALK VISUAL CORPORATION

                                      INDEX
                                                                                                      Page No.

                         PART I - FINANCIAL INFORMATION

Item l.  Financial Statements (Unaudited):

<S>                                                                                                       <C>
                Condensed Balance Sheets at September 30, 1999
                and December 31, 1998.                                                                    3

                           Condensed Statements of Operations for the three
                           months ended September 30, 1999 and 1998 and
                           the nine months ended Sept. 30, 1999 and 1998.                                 4

                           Condensed Statements of Cash Flows for the nine
                           months ended September 30, 1999 and 1998.                                      5

                           Notes to Condensed Financial Statements                                        7

Item 2.  Management's Discussion and Analysis or Plan
                           Of Operations                                                                 13

                           PART II - OTHER INFORMATION

Item 1.           Legal Proceedings                                                                      22

Item 2.  Changes in Securities                                                                           23

Item 3.  Defaults Upon Senior Securities                                                                 23

Item 4.  Submission of Matters to a Vote of Security Holders                                             23

Item 5.  Other Information                                                                               23

Item 6.  Exhibits and Reports on Form 8-K                                                                23

Signatures                                                                                               24

Exhibits
              Exhibit 11                                                                                 25
              Exhibit 27                                                                                 26
</TABLE>


                                       2
<PAGE>

<TABLE>
<CAPTION>

                             TALK VISUAL CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                              SEPTEMBER  30        DECEMBER 31
                                                                 1999                 1998
                                                               ---------           ---------
                                                              (unaudited)
                                     ASSETS

CURRENT ASSETS
<S>                                                              <C>                <C>
      Cash and cash equivalents                                  $57,711            $153,608
      Accounts receivable, net of allowances
        for doubtful accounts of $12,500 and $12,500              79,960              31,243
      Inventory                                                   16,989               8,250
      Other receivables                                          263,226              70,000
      Advances - related parties                                 470,134                   -
      Subscriptions receivable                                         -           1,743,000
      Marketable securities                                      229,688              89,210
      Other current assets                                       165,257               6,746
                                                               ---------           ---------
        Total current assets                                   1,282,966           2,102,057
                                                               ---------           ---------
Product development costs, net                                   381,604             381,604
Property and equipment, net                                   11,394,252              18,500
Payment in excess of fair value for acquisition, net           2,370,000                   -
Other assets                                                     484,384               1,400
                                                               ---------           ---------
Total assets                                                 $15,913,206          $2,503,561
                                                             ===========          ==========
           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts payable                                        $1,021,133          $  129,968
      Accrued expenses                                           269,800              16,685
      Other current liabilities                                   67,989                   -
      Notes payable and current portion of long-term debt      1,500,000             281,066
                                                               ---------           ---------
               Total current liabilities                       2,858,922             427,719
                                                               ---------           ---------
LONG-TERM DEBT, net of current portion                         5,332,498              75,000
                                                               ---------           ---------
        Total Liabilities                                      8,191,420             502,719
                                                               ---------           ---------
COMMITMENTS                                                         --                  --

STOCKHOLDERS' EQUITY
   Preferred Stock, par value $.001 per share, 25,000,000
     shares authorized; 975,000 and -0- issued and outstanding       975                --
   Common Stock, par value $.001 per share, 100,000,000
     shares authorized: 28,914,463 and  1,393,417  shares
     issued and outstanding                                       28,914               1,393
   Stock Subscribed                                                 --                   382
   Additional paid in capital                                 21,960,669          10,000,719
   Accumulated deficit                                       (11,273,663)         (7,829,760)
Accumulated other comprehensive loss                            (149,443)            (14,892)
   Stock Subscriptions receivable                             (2,845,666)           (157,000)
                                                               ---------           ---------
         Total stockholders' equity                            7,721,786           2,000,842
                                                               ---------           ---------

  Total Liabilities and Stockholders' Equity                 $15,913,206          $2,503,561
                                                              ==========           =========
</TABLE>




     See accompanying notes to condensed consolidated financial statements.

                                        3
<PAGE>

<TABLE>
<CAPTION>

                             TALK VISUAL CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


                                      THREE MONTHS ENDED SEPT 30,    NINE MONTHS ENDED SEPT 30,
                                      ---------------------------    --------------------------
                                        1999              1998          1999            1998
                                    ------------    ------------    ------------    ------------

REVENUE
<S>                                 <C>             <C>             <C>             <C>
   Royalties                        $       --      $     11,216    $      2,887    $    203,726
   Telecommunication Services
      And Product sales                    1,568            --             1,568            --
   Software sales                           --            22,830            --            38,587
   Equipment sales, net                     --              --            12,373            --
   Corporate services                       --            18,500            --            80,000
   Real estate revenue                   272,500            --           388,748            --
                                    ------------    ------------    ------------    ------------

Total revenue                            274,068          52,546         405,576         322,313
                                    ------------    ------------    ------------    ------------

COSTS AND EXPENSES
   Cost of royalties                        --           604,253           3,204         631,034
   Telecommunication/Retail Costs        144,435         144,435
   Cost of software sales                   --            14,598            --            28,798
   Depreciation and amortization          83,497          20,141         103,069          60,595
   Research & product development         24,903          17,512          33,510          24,731
   Real estate operations                124,317            --           174,499            --
   General & administrative              352,817         216,807         597,545         494,011
   Consulting services                   166,295          20,687       1,701,908          73,318
   Legal and Professional                 42,396          32,701         769,095          89,167
   Marketing                              48,189          31,278          62,437          75,852
                                    ------------    ------------    ------------    ------------

Total costs and expenses                 986,849         957,977       3,589,702       1,477,506
                                    ------------    ------------    ------------    ------------

LOSS FROM OPERATIONS                    (712,781)       (905,431)     (3,184,126)     (1,155,193)

INTEREST EXPENSE                        (165,850)           (495)       (206,189)        (43,591)

INTEREST INCOME                                3            --               443            --

OTHER INCOME                                --           147,935            --           147,935
                                    ------------    ------------    ------------    ------------
LOSS BEFORE EXTRAORDINARY ITEM      $   (878,628)   $   (757,001)   $ (3,389,872)   $ (1,050,849)

EXTRAORDINARY ITEM                          --           300,000            --           300,000
                                    ------------    ------------    ------------    ------------

NET LOSS                            $   (878,628)   $   (457,001)   $ (3,389,872)   $   (750,849)
                                    ============    ============    ============    ============

NET LOSS PER COMMON SHARE
      BASIC AND DILUTED
        BEFORE EXTRAORDINARY ITEM   $      (0.03)   $      (0.63)   $      (0.26)   $      (1.06)
        EXTRAORDINARY ITEM                  --               .25            --               .30
        AFTER EXTRAORDINARY ITEM    $      (0.03)   $      (0.38)   $      (0.26)   $      (0.76)

WEIGHTED AVERAGE COMMON STOCK
   SHARES OUTSTANDING
      BASIC AND DILUTED               28,305,767       1,206,403      13,205,625         993,310
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                             TALK VISUAL CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                           NINE MONTHS ENDED SEPTEMBER 30,
                                                           -------------------------------

                                                                  1999           1998
                                                              -----------    -----------

Cash flows from operating activities:
<S>                                                           <C>            <C>
   Net loss                                                   $(3,389,871)   $  (750,849)

   Adjustments to reconcile net loss to net
          cash used in operating activities:
        Amortization of product development costs                    --          636,712
        Depreciation and amortization                             103,069         60,596
        Due former co-development partner                            --         (300,000)
        (Gain) loss on stock exchanged for debt                     1,563           --
        (Gain) on sale of assets and debt assumption                 --         (147,935)
        Common stock issues for services                        2,251,387           --

Increase (decrease) in cash from changes in:
   Accounts receivable, net                                        28,446        109,225
   Other receivables                                              (25,973)        21,016
   Prepaid expenses                                                59,459           --
   Inventories                                                     (8,739)         5,723
   Other assets                                                    11,978         (1,354)
   Accounts payable                                               440,661         86,276
   Accrued expenses                                                95,097           --
   Deferred revenues                                                 --          (40,284)
   Other current liabilities                                       12,478           --
                                                              -----------    -----------
        Net cash from operating activities                       (420,445)      (320,874)
                                                              -----------    -----------
Cash flows from investing activities:
   Purchase of property and equipment                            (254,397)        (4,617)
   Proceeds from disposition of equipment                           1,364
   Disposal of marketable securities                               89,210
   Additions to organization costs                                   (868)          --
   Advances-related parties                                    (1,698,336)          --
   Investment in production joint ventures                        (78,647)
                                                              -----------    -----------
        Net cash used in investing activities                  (1,864,391)       (81,900)
                                                              -----------    -----------
Cash flows from financing activities:
   Product development advances                                      --           44,317
   Payments on notes payable and long term debt                   (50,565)       (42,501)
   Payment of cash dividends                                      (23,156)          --
   Collection of stock subscriptions receivable                 1,842,545           --
   Proceeds from private placement for Common Stock                  --        2,305,000
   Obligation for equipment sold                                   70,115           --
   Net borrowing on term debt                                     350,000
   Exercise of Common Stock Warrants                                 --           75,000
   Due to former co-development partner                              --           20,000
                                                              -----------    -----------
        Net cash provided by financing activities               2,188,939      2,381,816
                                                              -----------    -----------
Increase (decrease) in cash and cash equivalents                  (95,897)     1,979,042
Cash and cash equivalents, at beginning of period                 153,608         14,464
Cash and cash equivalents, at end of period                   $    57,711    $ 1,993,506
                                                              -----------    -----------
Supplemental disclosure of cash flow information

     a. Cash paid during the period for:
           Interest                                           $   157,684    $    43,591
                                                              -----------    -----------
           Income Taxes                                       $       800           --
                                                              -----------    -----------
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>

                             TALK VISUAL CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                   (continued)

                                                                                  NINE MONTHS ENDED SEPTEMBER 30,
                                                                                  -------------------------------

                                                                                         1999             1998
                                                                                     ----------       ------------
<S>                                                                                  <C>              <C>
    b. Non-cash transactions

       Purchase  of  Toronto  real  estate in  exchange  for  975,000  shares of
       Convertible Preferred Stock with a value of $975,000, assumption
        of  a mortgage and other debts  in the amount of $966,743                    $1,941,743                --

     600,000 shares issued under agreement in connection with the
        acquisition of Videocall International as a commission                       $2,250,000                --

     20,000 shares issued in cancellation of a note payable in the
     amount of $75,000                                                               $   77,500                --


     7,500 shares issued in cancellation of an advance payable in
     the amount of $30,000                                                           $   29,063                --

                         19,841,400  shares  issued  pursuant  to the  merger of
                         Videocall  International  Corporation  with Talk Visual
                         Corporation as
                         approved by the shareholders                                $5,462,458                --


                        Sale of  assets  of  $59,800  and  issue  of a note  for
                        $108,099, less Assumption of $315,834 of debt by a third
                        party
                                                                                       --             $    147,935

                        Reduction of debt by former co-development partner             --             $   300,000
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       6
<PAGE>



                             TALK VISUAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1)      Basis of presentation

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial information
and the instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring accruals)  considered  necessary for a fair
presentation  of the Company's  financial  position at September  30, 1999,  the
results of operations for the three and nine months ended September 30, 1999 and
September 30, 1998,  and the cash flows for the nine months ended  September 30,
1999 and September 30, 1998 are  included.  Operating  results for the three and
nine month period ended September 30, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999.

The information contained in this Form 10-QSB should be read in conjunction with
audited  financial  statements  as of  December  31,  1998  filed as part of the
Company's Annual Report on Form 10-KSB.

The Balance  Sheet at December  31, 1998,  does not reflect the rental  property
assets  acquired  February 24, 1999, nor the assets and liabilities of Videocall
International  Corporation and Subsidiaries merged effective June 18, 1999. When
viewing the respective comparative financial information,  the reader is advised
to take into  consideration  the  inclusion or exclusion of the rental and other
assets acquired.


(2) Acquisition of Videocall International Corporation

Pursuant to an Agreement  and Plan of Merger  ("Merger"),  dated  September  14,
1998,  a merger was  consummated  between  Videocall  International  Corporation
("Videocall") and a newly formed, wholly owned subsidiary of the Company on June
18, 1999. The  stock-for-stock  transaction was approved by the  stockholders of
both  companies,  after which the subsidiary into which Videocall was merged was
merged with and into the  Company,  with Talk Visual  being the  survivor.  Each
share of Videocall's  common stock was converted  into either 3 shares,  1 share
and/or options  exercisable at $1.00 per share,  depending on the  shareholder's
purchase date of the holdings. In effecting the Merger, the Company is obligated
to issue 19,841,400  shares of common stock to the Videocall  shareholders,  and
has granted  13,688,475  three year  options for one share of stock each,  at an
exercise  price of $1.00 per  share.  The  transaction  was valued at $0.275 per
share  for a total  purchase  price of  $5,462,458.  The  Videocall  merger  was
accounted  for using the  purchase  method of  accounting  and  accordingly  the
purchase  price has been  allocated  to the  assets  purchased  and  liabilities
assumed  based on the fair  market  values  at the  date of the  acquisition  as
follows:


                                       7
<PAGE>

                             TALK VISUAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


(2)      Acquisition of Videocall International Corporation (continued)

                  Current assets                                     $888,655
                  Land, buildings and other fixed assets            9,328,383
                  Other assets                                      2,391,621
                  Liabilities                                      (7,146,201)
                                                                    ---------
                           Total purchase price                    $5,462,458
                                                                    ==========

Videocall,  at the time of the merger, was a development stage company formed to
provide videocalling services to businesses and consumers.


(3)  Financial Condition and Liquidity

The  Company  has ceased its' CD-ROM  software  development  activities,  and is
currently focusing entirely on Videocall operations.

As of September 30, 1999, the Company had never achieved operating profits.  The
Company is dependent on revenues from the real estate operations, investor stock
subscriptions, short term and long term borrowings and retail videocalling sales
for working capital needs, until the videocalling operations generate sufficient
cash flow to fund the Company.

As part of the Videocall  International  Merger,  the Company acquired a 119,119
square  foot,  two story,  strip  center  retail and office  complex  located in
Sacramento California. The property has been appraised at $11,000,000.  Prior to
the  financing   described  below,   the  property  had  encumbrances   totaling
$5,241,000.   The  Company  has  been  in  discussion  with  several   financial
institutions to borrow an additional $2,500,000 on the property. The proceeds of
any  borrowings  on the property  would be used to recoup the equity  investment
represented by the property and would be employed to fund working  capital needs
and expansion of the videocalling operations.

On August 24,  1999,  the Company  executed a  promissory  note,  secured by the
Sacramento property, in the amount of $1,000,000. The Company has drawn $350,000
of the total note as of September 30, 1999. The note matures  September 1, 2000,
and bears an interest rate of 9% per annum. The Company is obligated to issue up
to 20% of the face amount of the note in Convertible  Preferred shares, based on
a price of the lower of the  average  closing  bid  price for a five day  period
prior to the loan  closing  date or the two  lowest  closing  bid  prices in the
twenty trading day period prior to the loan closing date.

Management  anticipates  that  the  promissory  note,  in  conjunction  with the
refinancing of the Sacramento  property,  should provide  sufficient  capital to
meet the needs of the Company for the next twelve months.

                                       8
<PAGE>


                             TALK VISUAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

On February  24, 1999,  the Company  acquired a 22,622  square foot  property in
Toronto, Canada in exchange for 975,000 shares of Class A Preferred stock, $.001
par value,  paying dividends of $.095 per share per annum,  payable on a monthly
basis.  The Company has not made any  payment of  dividends  since the April 24,
1999 monthly  installment.  This building was acquired as an investment  and for
future consideration for the needs of the videocalling operations.


On April 7, 1999,  the Company was  notified by The Nasdaq  Stock  Market,  Inc.
("Nasdaq")  that the Company was not in  compliance  with the  requirements  for
continued listing on The Nasdaq SmallCap Market(SM),  as set forth in the Nasdaq
Listing Qualifications Panel decision dated January 20, 1999.  Accordingly,  the
Company's securities were delisted from The Nasdaq SmallCap  Market(SM)effective
April 7,  1999 and are  currently  listed  under  the  symbol  "TVCP" on the OTC
Bulletin Board.


(4) Equity Transactions

On January  19,1999,  the Company  issued  175,000  shares of common stock to an
entity for services related to obtaining financing sources. This transaction was
priced at $3.625 per share for a total expense of $634,375.

On January 25, 1999,  the Company issued 600,000 shares of common stock pursuant
to the agreement with the parties  responsible for the introduction of Videocall
to the Company.  This transaction was priced at $3.75 per share for a total cost
of  $2,250,000.  The Company is also  obligated  under the  agreement,  to issue
options, exercisable at $0.25 per share, to the same parties. See the discussion
under the June 18,1999 equity transaction noted below.

On January  25,  1999,  the  Company  issued  190,000  shares  common  stock for
consulting services at $3.75 per share for a total expense of $712,500.

On February 1, 1999,  the Company  issued  5,000  shares  common stock for legal
services at $3.25 per share for a total expense of $16,250.

On  February  2,  1999,  the  Company  issued  40,000  shares  common  stock for
consulting services at $3.25 per share for a total expense of $130,000.

On February 24, 1999, the Company  acquired a 22,622 square foot office facility
in  Ontario,  Canada with the  issuance  of 975,000  shares of Class A Preferred
Stock, Series 1999-A, $.001 par value, and the assumption of a first mortgage in
the amount of $935,450 along with various minor  obligations  totaling  $31,293.
The  Preferred  shares have a stated  value of $975,000  ($1.00 per share),  are
non-voting,  and pay a  cumulative  dividend  of  $0.095  per  share.  The total
acquisition price of the property was $1,941,743.  The property was appraised at
$1,854,000. Included in other assets is $87,743 representing the excess purchase
price paid over the fair value of the acquisition.

                                       9
<PAGE>

                             TALK VISUAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


(4) Equity Transactions (continued)

On March 5, 1999,  the Company issued 27,500 shares common stock in exchange for
$105,000 of notes payable and accrued  interest at $3.875 per share.  The market
value of the shares  issued on the date of  exchange  exceeded  the  obligations
recorded on the books of the Company by $1,562.

On March 16, 1999,  the Company  issued  1,128 shares  common stock for services
rendered at $4.00 per share for a total expense of $4,512.

On April 9, 1999,  the Company  issued  30,000  shares of common stock for legal
services at $3.375 per share for a total expense of $101,250. On that same date,
the  Company  set  aside  200,000  shares  in escrow  for the  former  owners of
Sacramento  Results,  Inc., the subsidiary of Videocall which holds the Town and
Country Plaza real estate.  This stock was set aside as collateral  for the note
payable from Videocall to the former owners of Sacramento Results,  Inc. as part
of the original purchase agreement.

On June 8,  1999,  the  Company  issued  50,000  shares of  common  stock to the
President of the Company as a bonus.  The Company also issued  220,000 shares in
payment for legal services and set aside 20,000 for a consultant, to be released
at a later date. The shares were issued at a price of $2.25, for a total expense
of $652,500.

On June 18, 1999, as a result of the Videocall  merger,  each share of Videocall
common was converted into the right to receive  either one share,  three shares,
and/or options of Talk Visual Common Stock or,  19,841,400 shares and 15,608,477
options in the  aggregate.  The options are  exercisable  at $1.00 per share and
expire three years from their issue date. The  transaction  was valued at $0.275
per share for a total  purchase  price of  $5,462,458.  In  connection  with the
merger, the Company also issued 1,800,000 options, in addition to the options to
the shareholders previously noted, at an exercise price of $0.25 per share for a
three year period, to third parties who were responsible for the introduction of
the Company and Videocall.

On July 16, 1999,  the Company issued  4,000,000  shares of common stock under a
private placement  subscription  dated July 7, 1999. The shares were issued at a
subscribed price of $0.25 per share, based on the trading price for the day at a
twenty percent discount.



(5)      Segment Information

Effective  with  the  June 18,  1999  Merger,  the  Company  has two  reportable
segments,   videocalling/telecommunication   services  and  real  estate  rental
activities.  Software  development and sales have been  discontinued,  excluding


                                       10
<PAGE>


                             TALK VISUAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


(5)      Segment Information (continued)

minor  incidental  sales.  The Rental activity results from the ownership of the
Toronto property acquired in the first quarter of the year, and the ownership of
Town and Country  Plaza West,  acquired in the Videocall  merger.  The Company's
reportable segments are separate business units with their individual  reporting
systems.  Rental  activity  is  delineated  on the  Consolidated  Statements  of
Operations under rental revenue and cost of operations - real estate operations.
Videocalling  and  telecommunication  product sales and expenses are  delineated
under the heading Telecommunication.


(6)      Contingencies

     The Company is involved in certain  claims  arising in the normal course of
business.  An estimate of the possible loss  resulting from these matters cannot
be made;  however,  the Company  believes that the ultimate  resolution of these
matters will not have a material  adverse  effect on its  financial  position or
results of operations.


(7)      Subsequent Events

     On October 27, 1999 and November 2, 1999, the Company  reached an agreement
with two vendors to satisfy outstanding  invoices in the amount of $158,000 with
shares of common stock,  at an average  price of $0.076 per share,  based on the
ten day period average trading price. This will result in the Company issuing an
additional 2,063,741 shares of common stock.
Both  vendors  are  existing  shareholders  and are  related to  officers of the
Company.


(8)   Earnings Per Share

     The Company adopted SFAS No. 128,  "Earnings Per Share",  during 1997. SFAS
No. 128 requires  presentation  of basic and diluted  earnings per share.  Basic
earnings  per  share  is  computed  by  dividing  income   available  to  common
stockholders by the weighted average number of common shares outstanding for the
reporting  period.  Diluted  earnings per share reflects the potential  dilution
that could occur if securities or other  contracts,  such as stock  options,  to
issue common stock were exercised or converted  into common stock.  For the nine
months ended September 30, 1999, all  outstanding  options and warrants were not
included in diluted earnings per share since they were antidilutive.

                                       11
<PAGE>



                             TALK VISUAL CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


(9)  Year 2000 Compliance (continued)


         The Company has reviewed  its computer  systems in order to evaluate if
any  modifications  are necessary for the year 2000. The Company  currently does
not anticipate that any material  modifications or expenditures will be required
in  its  computer  systems  to  bring  the  systems  into  compliance  with  the
computational needs for the year 2000. The Company has been advised by its major
external vendors that their systems are in compliance with year 2000 issues.

                                       12
<PAGE>


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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     Except for historical  information contained herein, the statements in this
report (including  without  limitation,  statements  indicating that the Company
"expects,"  "estimates,"  anticipates,"  or "believes" and all other  statements
concerning future financial results, product offerings, proposed acquisitions or
combinations  or other events that have not yet  occurred)  are  forward-looking
statements  that are made pursuant to the safe harbor  provisions of the Private
Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange
Act of 1934,  as  amended,  and Section 27A of the  Securities  Act of 1933,  as
amended. Forward-looking statements involve known and unknown factors, risks and
uncertainties  which may cause the Company's actual results in future periods to
differ materially from forecasted results.

PROPOSED ACQUISITIONS

    On March 22,  1999,  the Company  signed a letter of intent with  Proximity,
Inc.,  subject to Board  approval,  to acquire  all of it's  outstanding  stock.
Proximity,  Inc. is an international full spectrum provider of videoconferencing
services with public access to over 2,000  videoconferencing  sites. In addition
to videoconferencing  access,  Proximity provides High Impact  Videoconferencing
Productions, multipoint bridge coordination, satellite uplink/downlink services,
corporate videoconferencing outsourcing and consulting services.

     The letter of intent calls for a purchase price of  $4,250,000,  to be paid
$250,000 in cash and the balance with the Company's common stock. In recognition
of the  price  fluctuation  of the  Company's  stock  following  the  merger  of
Videocall International Corporation,  both the Company and Proximity have agreed
to withdraw the letter of intent pending stabilization of the stock price.

MERGER OF VIDEOCALL

      On September 8, 1998,  the Company and  Videocall  announced  that the two
companies  had entered  into a Letter of Intent for the Company to purchase  the
common  shares of Videocall in exchange for the  Company's  common and preferred
stock. On September 14, 1998 the two companies  signed the Merger Plan detailing
the terms of the  transaction  whereby  Videocall will merge with a newly formed
wholly owned subsidiary of the Company. The Company held a special shareholders'
meeting June 15, 1999,  whereupon the stockholders  approved the Merger plan. On
June 18, 1999 the Merger was effected.

      Videocall  was a  development  stage  company  in the  area  of  providing
videocalling  services to businesses and  consumers.  At the time of the Merger,
Videocall  was in the  process of  developing  international  locations  through
strategic partnerships and through vendor relationships.  The Company has ceased
its' CD-ROM software development activities,  and is currently focusing entirely
on  Videocall  operations.  Since  the  date  of the  Merger,  the  videocalling
operations have matured from the  development  stage to  implementation  and are
currently being offered  through the Company's  retail centers and joint venture
partners.

                                       13
<PAGE>

      The Company has issued  600,000  shares of stock and 1,800,000  options to
parties  responsible  for the  introduction  of the  Company to  Videocall.  The
options are  exercisable  at twenty five cents per share and expire  three years
from  the  issue  date.  Additionally,  Videocall  issued  1,200,000  shares  in
connection with the Merger Plan to those same parties.

On June 18, 1999, as a result of the Videocall  merger,  each share of Videocall
common was converted into the right to receive  either one share,  three shares,
and/or  options of Talk Visual Common Stock or 19,841,400  shares and 15,608,477
options in the  aggregate.  The options are  exercisable  at $1.00 per share and
expire three years from their issue date. The  transaction  was valued at $0.275
per share for a total  purchase price of  $5,462,458.  The Videocall  merger was
accounted  for using the  purchase  method of  accounting  and  accordingly  the
purchase  price has been  allocated  to the  assets  purchased  and  liabilities
assumed  based on the fair  market  values  at the  date of the  acquisition  as
follows:

      Current assets                                      $888,655
      Land, buildings and other fixed assets             9,328,383
      Other assets                                       2,391,621
      Liabilities                                       (7,146,201)
                                                         ---------
                           Total purchase price         $5,462,458
                                                        ==========

      The  amounts  paid by the  Company  in  stock,  to the third  parties,  as
compensation for the introduction of Videocall,  has been capitalized as amounts
paid in excess of fair value. This amount,  totaling $2,370,000 for the combined
entities, is considered an intangible asset to be amortized over forty years.



RISK FACTORS

     As of September 30, 1999, the Company had never achieved operating profits.
The Company has ceased its  software  development  and sales  activities  and is
wholly dependent on the  videoconferencing and real estate rental activities for
its future  revenues.  Because  Videocalling is a new business  activity for the
Company,  there can be no assurance that the Company will achieve  profitability
and, even if achieved, that such profitability will be consistent on a quarterly
or annual basis. The Company's  ability to integrate and organize new businesses
and   successfully   manage  growth  requires   significant   expansion  in  its
operational,  financial and management  systems.  There is no assurance that the
Company will be able to address these requirements in a satisfactory manner, and
the  failure  to do so could  have a material  adverse  effect on the  Company's
results of operations, financial condition and business.

     Management  of Growth;  Uncertainties  Relating to  Acquisitions,  Business
Combinations and New Businesses.  The Company has pursued, is currently pursuing
and, in the future may pursue,  new technologies  and businesses  internally and
through  acquisitions and combinations which involve significant risks. Any such
acquisition  or  combination  may involve,  among other things,  the issuance of
equity securities, the payment of cash, the incurrence of contingent liabilities
and the  amortization  of  expenses  related to  goodwill  and other  intangible
assets, and transaction costs, which have adversely  affected,  or may adversely

                                       14
<PAGE>

affect, the Company's business,  results of operations and financial  condition.
The  Company's  ability to  integrate  and organize  any new  businesses  and/or
products,   whether   internally   developed  or  obtained  by   acquisition  or
combination,   will  likely  require  significant  expansion  of  the  Company's
operations.  There is no  assurance  that the  Company  will  have or be able to
obtain the necessary resources to satisfactorily effect such expansion,  and the
failure to do so could have a material adverse effect on the Company's business,
financial condition and results of operations.  In addition, future acquisitions
and or  combinations  by the  Company  involve  risks of,  among  other  things,
entering  markets or  segments  in which the  Company  has no or  limited  prior
experience,  the potential loss of key employees of the acquired  company and/or
difficulty,  delay or failure in the integration of the operations,  management,
personnel and business of any such new business with the Company's  business and
operating and financial  difficulties  of any new or newly combined  operations,
any of which could have a materially  adverse effect on the Company's  business,
financial  condition  and  results  of  operations.  Moreover,  there  can be no
assurance that the  anticipated  benefits of any specific  acquisition or of any
internally  developed  new  business  segment or  business  combination  will be
realized.


RESULTS OF OPERATIONS

         For the three months  ended  September  30, 1999  compared to the three
         -----------------------------------------------------------------------
months ended September 30, 1998.
--------------------------------

For the three months ended September 30, 1999,  revenues  increased from $52,546
for the three months ended  September  30, 1998 to $274,068 for the three months
ended  September  30, 1999.  This  $221,522  increase was due to the change from
software  sales  and  support  to  real  estate   activities  and  the  sale  of
videocalling services, cell phones and pagers in the retail outlets owned by the
company.

Costs  associated  with royalty income for the three months ended  September 30,
1998 in the amount of  $604,253,  includes a charge of  $600,000  to the product
development costs associated with the DA Pursuit of Justice title based on lower
forecasted  sales of the title,  at that time.  Costs of royalties for the three
months  ended  September  30, 1999 are not  significant  and  therefore  are not
reflected  in the cost and expense  schedule.  As a result of the  cessation  of
gaming software development and sales activities, the Company has not recognized
any cost of software sales nor has the Company incurred any product  development
costs.  Research and product development expense of $24,903 for the three months
ended September 30, 1999 represent  amounts  incurred for  videocalling  systems
after the June 18, 1999 merger with Videocall  International Corp. The amount of
$17,512  for the three  months  ended  September  30, 1998  represents  software
development  costs incurred by the Company for development of its former product
line.

Telecommunication/Retail  costs of $144,435  for the three month  period  ending
September 30, 1999 are those costs  associated  with operations in the Company's
six wholly owned videocalling outlets.

Depreciation and amortization increased $63,356, from 20,141 for the three month
period ended  September  30, 1998,  compared to $83,497,  the three month period
ended September 30, 1999,  primarily as a result of the real estate held and the
investment in equipment and facilities for retail videocalling centers.

                                       15
<PAGE>

Expenses of  $124,317  were  incurred  for the  Toronto  real  estate  operation
acquired  February 24, 1999 and the Sacramento  real estate  acquired as part of
the Videocall merger June 18,1999.  Rental income, as noted above, was $272,500,
yielding net rental earnings of $148,183 before  interest and  depreciation  for
the three months ending September 30, 1999.

General and  administrative  expenses  increased  $136,010 from $216,807 for the
three months ended  September  30, 1998 to $352,817,  for the three months ended
September 30, 1999. This resulted from the Company's support of the videocalling
activities.  Of the $352,817,  administrative  and officer salaries  constituted
$105,361,  and costs  associated with public filings and the annual  shareholder
meeting totaled $57,982.

Consulting services, not related to software development or sales, for the three
months ended September 30, 1999 were $166,295, compared to $20,687 for the three
months ended  September 30, 1998.  Of this amount,  the  contracting  vendor for
$110,000 has agreed to be paid in shares of the Company's common stock, as noted
earlier,  and $56,295 was paid in cash. The majority of the consulting  services
were for assistance in financing,  investor  relations,  management services and
public relation services.

Legal and professional expense increased from $32,701 for the three months ended
September  30, 1998 to $42,396 for the three  months ended  September  30, 1999.
Legal and  professional  expenses for both periods  relate  primarily to general
corporate  matters,  costs  related  to  public  companies  and  funds  spent on
potential acquisitions.

The Company's  marketing expenses for the three months ended September 30, 1999,
amounted to $48,189,  compared to $31,278 of expenses for the three months ended
September  30,  1998.  Marketing  expenses  in the  three  month  period  ending
September 30, 1999 related to videocall activities, verses marketing expenses in
the prior year for the same period related to educational software products.

Interest  expense  increased  $165,355  from  $495 for the  three  months  ended
September  30, 1998 to $165,850 for the three months ended  September  30, 1999.
Interest  expense in the current  reporting  period  resulted from the mortgages
held on the  rental  properties  and debt on  videocalling  activity  financing,
whereas  interest  expense in the  comparative  prior year period  resulted from
financing corporate software production and sales activities.

Other income of $147,935 for the three months ended September 30, 1999, resulted
from the sale of certain  assets and the  assumption  of certain  debt by Legacy
Interactive,  Inc., a company formed by the former President of the Company,  as
part of the Agreement and Plan of Merger dated  September 14, 1998,  between the
Company and Videocall International Corporation.

The extraordinary income for the three months ended September 30, 1998 is due to
the  cancellation of debt of $300,000 as a result of the Company and IBM signing
a Payment  Agreement  relating  to the  licensing  and  distribution  agreements
between the two companies.

                                       16
<PAGE>


         For the nine  months  ended  September  30,  1999  compared to the nine
         -----------------------------------------------------------------------
months ended September 30, 1998.
--------------------------------

For the nine months ended September 30, 1999,  revenues  increased from $322,313
for the nine months  ended  September  30, 1998 to $405,576  for the nine months
ended June 30, 1999.  This $83,263  increase was due to the change from software
sales and support to real estate activities,  the sale of videocalling equipment
to  foreign  joint  venture  partners  and cell  phones and pagers in the retail
outlets  owned by the  company.  The Company  invoices a fee for the sale of the
equipment separate from the equipment cost. Accordingly,  revenue from equipment
sales represents only the fee portion of the sale.

As  a  result  of  the  cessation  of  gaming  software  development  and  sales
activities,  the Company has recognized  minimal costs of software sales and has
not incurred any product development costs. Costs associated with royalty income
for the six months ended September 30, 1998 in the amount of $631,034,  includes
a charge of $600,000 to the product  development  costs  associated  with the DA
Pursuit of Justice title based on lower  forecasted  sales of the title, at that
time.  Research and product  development  expense of $33,510 for the nine months
ended September 30, 1999 represent  amounts  incurred for  videocalling  systems
development  after the June 18, 1999 merger with Videocall  International  Corp.
The  amount of  $24,731  for the nine  months  ended  June 30,  1998  represents
software development costs incurred by the Company for development of its former
product line.

Expenses of  $174,499  were  incurred  for the  Toronto  real  estate  operation
acquired  February 24, 1999 and the Sacramento  real estate  acquired as part of
the Videocall  merger June 18,1999.  Rental income,  was $388,748,  yielding net
rental earnings of $214,249 before interest and depreciation.

General and  administrative  expenses  increased  $103,534 from $494,011 for the
nine months  ended  September  30, 1998 to  $597,545,  for the nine months ended
September 30, 1999.  For the nine months ended  September 30, 1998,  the Company
incurred general and  administrative  expenses to support the administration and
marketing  of the  educational  software  products.  For the nine  months  ended
September  30, 1999,  all general and  administrative  expenses were incurred in
support of the videocalling business activities.

Consulting services,  not related to software development or sales, for the nine
months ended  September  30, 1999 were  $1,701,908,  compared to $73,318 for the
nine months ended September 30, 1998. This amount represents  $1,526,387 paid in
shares of the Company's  common stock and $175,521 paid in cash. The majority of
the consulting services were for assistance in financing, investor relations and
public  relation  services.  The amount  charged to expense is a function of the
market share price at the time the stock is issued to the  consultant  under the
terms of the consulting agreement.

Legal and professional  expense increased from $89,167 for the nine months ended
September 30, 1998 to $769,095 for the nine months ended September 30, 1999. The
increase  of  $679,928  resulted  primarily  from legal  costs  incurred  in the
preparation of the proxy related to the Merger; legal costs incurred in security
matters,  legal work  performed  in  relation  to the filings as a result of the
merger and legal costs incurred to defend assets of the company, for the Toronto


                                       17
<PAGE>


subsidiary  acquisition  and the issuance of preferred  stock.  The expense is a
function of the market price of the stock at the time of issue.  Of the $769,095
expense, $612,500 was paid for with common stock of the Company.

The Company's  marketing  expenses for the nine months ended September 30, 1999,
amounted to $62,437,  compared to $75,852 of expenses  for the nine months ended
September 30, 1998. Marketing expenses in the nine month period ending September
30, 1999 related to videocall activities, verses marketing expenses in the prior
year for the same period related to educational software products.

Interest  expense  decreased  $3,801  from  $44,140  for the nine  months  ended
September  30, 1998 to $40,339 for the nine months  ended  September  30,  1999.
Interest  expense in the current  reporting  period  resulted from the mortgages
held on the rental properties, whereas interest expense in the comparative prior
year period  resulted from  financing  corporate  software  production and sales
activities.

Other income of $147,935 for the nine months ended September 30, 1999,  resulted
from the sale of certain  assets and the  assumption  of certain  debt by Legacy
Interactive,  Inc., a company formed by the former President of the Company,  as
part of the Agreement and Plan of Merger dated  September 14, 1998,  between the
Company and Videocall International Corporation.

The extraordinary  income for the nine months ended September 30, 1998 is due to
the  cancellation of debt of $300,000 as a result of the Company and IBM signing
a Payment  Agreement  relating  to the  licensing  and  distribution  agreements
between the two companies.


Liquidity and Capital Resources

         The Company had $420,445 in cash outflows from operating activities for
the nine months ended  September  30, 1999 compared to cash outflows of $320,874
for the nine months ended  September  30, 1998.  The increase in net outflows of
$99,571 between 1999 and 1998 operating cash flow,  primarily  resulted from the
following:  a  increase  of  $980,311  in the net  loss  from  operations  after
adjustments for non-cash items; a decrease in the change of deferred  revenue of
$40,284; a decrease in the change in accounts receivable of $80,779; an increase
in the change in other  receivables  of  $42,473;  a  increase  in the change in
inventory of $14,462; an increase in the change in accounts payable of $354,385;
an  increase  in the change in accrued  expenses  of $95,097  and an increase in
other assets of $13,332;  an increase in the change in other current liabilities
of $12,478.  This  increase in net  outflows is primarily  due to the  Company's
assumption  of  videocalling  activities  following  the merger  with  Videocall
International Corporation.

         Investing  activities in the first nine months ended September 30, 1999
consisted of the purchase of the Toronto property,  which required cash payments
of $37,390;  purchase of computer equipment,  leasehold improvement and software
for $254,397  compared to the  purchase of computer  equipment in the six months
ended June 30, 1998, for $4,617; conversion of the marketable securities to cash
for $89,210;  additional  expenditures for  organization  costs of $868; and net
advances  to related  parties of  $1,698,336  compared  to  investment  in joint
ventures for the nine months ended September 30, 1999 of $78,647.

                                       18
<PAGE>

The acquisition of the Toronto,  Ontario Canada property was  accomplished  with
the issuance of 975,000 shares of Class A Preferred Stock, Series 1999-A,  $.001
par value,  and the  assumption  of a first  mortgage  in the amount of $935,450
along with various minor obligations totaling $31,293. The Preferred shares have
a stated  value  of  $975,000  ($1.00  per  share),  are  non-voting,  and pay a
cumulative  dividend  of $0.095 per share.  The total  acquisition  price of the
property was $1,941,743.  The property was appraised at $1,854,000.  Included in
other assets is $87,743  representing  the excess  purchase  price paid over the
fair value of the  acquisition.  The  property  is held by a  subsidiary  of the
Company, The Ontario International Property Corporation.

         The Company has cash inflows of $2,188,939  from  financing  activities
for the first nine months of 1999 compared to cash inflows of $2,381,816 for the
first nine months of 1998.  Financing  activities for the nine months ended June
30, 1999 included collection of stockholder's and stock subscriptions receivable
of $1,842,545;  payment on notes payable of $50,565, recording of obligation for
equipment  sold but not owned by the Company of $70,115,  net borrowing on short
term debt of $350,000,  and payment of cash dividends on the preferred  stock of
$23,156.  This compares to the nine months ended  September  30, 1998  financing
activities  which  included  advances  received  on product  development  costs;
proceeds on private placements of $2,305,000;  exercise of common stock warrants
for $75,000;  payment due to former co-developer of $20,000,  offset by payments
of $42,501 on notes payable.

On August  24,  1999,  the  Company  executed a  promissory  note with a private
lender,  secured by the Sacramento  property,  in the amount of $1,000,000.  The
Company has drawn  $350,000 of the total note as of September 30, 1999,  leaving
$650,000 available to the Company. The note matures September 1, 2000, and bears
an interest rate of 9% per annum. The Company is obligated to issue up to 20% of
the face amount of the note in Convertible Preferred shares, based on a price of
the lower of the average  closing  bid price for a five day period  prior to the
loan closing date or the two lowest closing bid prices in the twenty trading day
period prior to the loan closing  date.  Management  intends to retire this debt
upon the refinancing of the property as described below.

The Company has been in discussion with several financial institutions to borrow
up to  $2,500,000  in addition to the existing debt (which would be retired with
this refinancing) on the Sacramento property. The property has been appraised at
$11,000,000  and as of September 30, 1999,  there is $5,241,000 of existing debt
against the property.  The proceeds of any  borrowings on the property  would be
used to recoup the equity  investment  represented  by the property and would be
employed  to fund  working  capital  needs  and  expansion  of the  videocalling
operations.

         On July 13,  1999,  the  Company  announced  that a  private  placement
funding of $1,000,000 was subscribed to by a group of existing shareholders. The
Company  has  received  a  portion  of the funds  under  this  subscription  and
anticipates receiving the balance by the end of the fourth quarter.

         On October  27,  1999 and  November  2, 1999,  the  Company  reached an
agreement  with two  vendors to satisfy  outstanding  invoices  in the amount of

                                       19
<PAGE>


$158,000 with shares of common  stock,  at an average price of $0.076 per share,
based on the ten day  period  average  trading  price.  This will  result in the
Company issuing an additional 2,063,741 shares of common stock. Both vendors are
existing shareholders and are related to officers of the Company. The Company is
pursuing  additional  agreements  with  other  vendors  to  convert  obligations
existing prior to the merger to equity  investments based on the current trading
price of the common stock on the date of the  conversion  agreement.  Management
anticipates  that common stock issued  under any  agreements  will be subject to
lock up periods as  appropriate to mitigate any influence of these shares on the
trading price of the stock.

         Effective  September 1, 1999, the Company occupied its new headquarters
located in Miami Florida,  relocating from Cambridge Massachusetts.  The Company
has  reduced  its  annual  office  rental  costs by  $43,152 as a result of this
relocation.

         Commencing  August  24,  1999,  the  Company  has  rolled  out  several
promotional  programs for the  videoconferencing  services.  These programs have
started to generate  cash flow from the retail  operations  of the Company.  The
Company has also perfected high quality  videocalls over the internet  protocol.
The Company will begin  deploying this  technology to its retail  facilities and
joint  venture  partners.  It is  anticipated  this  technology  will  result in
substantial  cost  savings for the  transport of the  communication  signals and
permit the Company to offer extremely competitive rates for videocalls.

         The Company  anticipates adding voice over internet protocol traffic to
its videocalling facilities.  The deployment of this service,  particularly with
respect to  international  traffic,  is expected to enhance the revenue base and
profitability  of the  videocalling  centers owned and partnered by the Company.
Additionally, the Company has entered into agreements with MCI-Worlcom,  Westcon
Corporation (resellers and suppliers of Picturetel Corporation videoconferencing
equipment) and National Leasing,  Inc. to market a turnkey videocalling packages
to specific  market  segments.  The Company will become a national ISDN reseller
under the program.  This will enhance the Company's revenue from equipment sales
and telecommunication traffic.

         Management feels that based on contributed capital amounts,  conversion
of  obligations  as  previously   described,   cost  saving  operational  moves,
additional  product  offerings and  anticipated  refinancing  of the  Sacramento
property,  the Company will be able to operate for the coming twelve months.  It
is anticipated that videocalling and related  telecommunication  product revenue
will be sufficient  to fund the working  capital needs of the Company after that
period.

EQUITY ISSUES

         The Company has been made aware of private negotiations to purchase and
hold for  investment,  a substantial  number of the shares issued to consultants
and issued as finder's  fees.  The acquiring  group has indicated that they will
purchase  up  to  $1,000,000  from  these  shareholders  and  will  purchase  an
additional amount of stock on the open market. The private group of shareholders
believes  that its actions  will allow the share price to return to a value more
reflective of the Company's assets and business activities.  In addition to this
activity,  a number of the Company's major  shareholders  have agreed to lock-up


                                       20
<PAGE>


their  shareholding  for  periods  between  six and  twelve  months.  Management
anticipates that with the private purchase and the shareholder agreements not to
sell for a six to twelve  month  period,  the market  price of the common  stock
should stabilize and better reflect the value of the business  activities of the
Company.



YEAR 2000 ISSUES

The  Company  has  reviewed  its  computer  systems in order to  evaluate if any
modifications  are necessary for the year 2000.  The Company  currently does not
anticipate that any material  modifications or expenditures  will be required in
its computer systems to bring the systems into compliance with the computational
needs for the year 2000.  The  Company  has been  advised by its major  external
vendors that their systems are in compliance with year 2000 issues.

                                       21
<PAGE>





PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On August 18, 1997, the U.S. Securities and Exchange Commission ("SEC")
issued a subpoenas  deces tecum to the  Custodian  of Records of the Company and
other  parties.  The subpoenas  were issued in connection  with the SEC's formal
investigation  entitled In the Matter of Reynolds Kendrick Stratton,  Inc., File
No. LA-752 (the  "Investigation").  The  Investigation  appears to center around
activities of JB Oxford Holdings, Inc., a broker-dealer,  which is the successor
to Reynolds  Kendrick  Stratton,  Inc., and was the underwriter of the Company's
initial  public  offering.  The SEC has  indicated  that it  expects to take the
testimony  of the  Company and other  parties at some point in the  future.  The
Company has no reason to conclude that it is a target of the Investigation.


     The Company filed a lawsuit in Los Angeles,  California  against the former
Chairperson,  Ariella  Lehrer,  the D&A Lehrer  Children Trust and other related
entities. In that action, the Company alleged that Lehrer breached her fiduciary
duties to the Company through various actions that,  according to the Complaint,
"undertook to burden an already weakened Legacy with  unreasonable,  unnecessary
and unfair  obligations  that primarily  benefited her  personally." The Company
also claims that  Lehrer's  actions were "taken in bad faith and were...  not in
the best  interest of Plaintiff  Legacy or its  shareholders."  The Company also
alleges that Lehrer  fraudulently  backdated documents for her personal benefit,
and  "deliberately  and maliciously  misrepresented  the financial  condition of
plaintiff  Legacy..."  The company  claims that the  misrepresentations  created
substantial and unnecessary  legal exposure for the Company,  particularly  with
the Company's listing on the Nasdaq SmallCap Stock Market.  The Company seeks to
recover  substantial  damages,  for Lehrer's  actions and also seeks  injunctive
relief  requiring  Lehrer to return to the  Company  significant  assets.  Legal
counsel has advised the Company that the matter is currently in arbitration.

     The Company filed a lawsuit in Los Angeles, California, claiming a total of
$30,000,000 in damages  against DCI  Telecommunications,  Inc., its officers and
Directors and several of its  shareholders.  The lawsuit alleged that during the
period February 1998 to April, 1999, the defendants  conspired jointly to libel,
slander and falsely accuse the Chairman of the Company of wrong doing by posting
messages on the  internet.  As a result of an  official  SEC  investigation  and
suspension of trading of DCI  Telecommunications,  Inc.  stock from the NASD OTC
bulletin   board  listing  and  changes  in  the   California  law  relating  to
jurisdictional  issues  involving  actions  relating to internet  postings,  the
Company  decided to formally  withdraw  its  litigation  and claims  against DCI
Telecommunications,  Inc. in the California  courts. The Company has advised the
defendants that it reserves all rights for future actions.

     The Company is not currently involved in any litigation that is expected to
have a material adverse effect on the Company's business or financial  position.



                                       22
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There  can  be no  assurance,  however,  that  third  parties  will  not  assert
infringement or other claims against the Company in the future which, regardless
of the  outcome,  could  have an  adverse  impact on the  Company as a result of
defense costs, diversion of management resources and other factors.



ITEM 2.  CHANGES IN SECURITIES.

                  Not Applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

                  The  Company  has  failed to pay the June  through  September,
1999,  dividend on the Class A Preferred Stock,  Series 1999-A, in the amount of
$30,875.

           The Company has not made the June and  September  payments due to IBM
under the renegotiated agreement dated September 14, 1998, totaling $50,000.

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

                  Not Applicable.

ITEM 5.  OTHER INFORMATION.

                  Not Applicable.


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

(a)      The following exhibits are included herewith:

                 Exhibit 11 -   Weighted Average of Common Stock Shares
                                                Outstanding
                 Exhibit 27 -   Financial Data Schedule

(b) The  Company  did not file any  reports on Form 8-K during the  quarter  for
which this form is filed.


                                       23
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                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  November 12, 1999   TALK VISUAL CORPORATION


                              /s/ C. HAROLD SNYDER
                              ----------------------------------
                              C. Harold Snyder
                              Chief Financial Officer
                              (Duly Authorized Officer and Principal
                              Financial and Accounting Officer)