U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-QSB


                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998

Commission file number   333-12979


                                 VOICENET, INC.
                     (Exact name of small business issuer as
                            specified in its charter)

        Delaware                                                  13-3896031
(State or other jurisdiction                                    (IRS Employer
  of incorporation or organization)                          Identification No.)

                           300 Park Avenue, 17th Floor
                               New York, NY 10022
                    (Address of principal executive offices)

                                 (212) 399-6682
                           (Issuer's telephone number)


________________________________________________________________________________
                 (Former name, former address and former fiscal
                       year, if changed since last report)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 ___.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date: 3,261,550.


<PAGE>


                                 VOICENET, INC.

                                      INDEX

Part I - Financial Statements:

         Balance Sheets - March 31, 1998 and December 31, 1997 ...........     3

         Statement of Operations - For the Three Months Ended 
         March 31, 1998 and March 31, 1997 ...............................     4

         Statement of Cash Flows - For the Three                                
         Months Ended March 31, 1998 and March 31, 1997 ..................     5

         Statement of Stockholders' Equity - For the 
         Period April 2, 1996 (Inception) through ........................     6
         March 31, 1998

         Notes to Unaudited Financial Statements .........................     7

         Management's Discussion and Analysis or
         Plan of Operation ...............................................     9



                                       2
<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET

<TABLE>
<CAPTION>
                                                                    March 31,     December 31,
                                                                      1998            1997
                                                                   (unaudited)     (audited)
                                                                   -----------    -----------
<S>                                                                <C>            <C>        
ASSETS

CURRENT ASSETS

   Cash and Cash Equivalents                                       $   375,527    $   909,217
   Prepaid Expenses                                                     11,382         11,382
                                                                   -----------    -----------
      Total Current Assets                                             386,909        920,599

      Organization Costs, Net                                            1,300          1,300
      Intangible Assets                                              4,500,000      4,500,000
      Security Deposits                                                  2,600          2,600
                                                                   -----------    -----------
      Total Assets                                                 $ 4,890,809    $ 5,424,499
                                                                   ===========    ===========
CURRENT LIABILITIES
   Accounts Payable                                                $    92,089    $   138,643
   Due to Parent Company                                                              312,624
   Other                                                                                4,000
                                                                   -----------    -----------

      Total Current Liabilities                                         92,089        455,267
                                                                   -----------    -----------
      Stockholders' Equity
      Preferred Stock, $.01 par value, 1,000,000
      shares authorized, no shares outstanding                             -0-            -0-
      Common Stock, $.01 par value, 10,000,000
      shares authorized, 3,261,550 shares issued and outstanding        32,616         32,616
Additional Paid in Capital                                           5,552,671      5,552,671
Deficit accumulated during developmental stage                        (786,567)      (616,055)
                                                                   -----------    -----------
Total Stockholders' Equity                                           4,798,720      4,969,232
                                                                   -----------    -----------

Total Liabilities and Stockholders' Equity                         $ 4,890,809    $ 5,424,499
                                                                   ===========    ===========
</TABLE>


                      See notes to the financial statements


                                       3
<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                             For the period       
                                                                              April 2, 1996
                                          Three Months    Three Months     (date of inception)    
                                             Ended           Ended              through           
                                           March 31,        March 31,           March 31,         
                                             1998             1997                1998            
                                          (unaudited)      (unaudited)         (unaudited)        
                                          -----------      -----------         -----------        
<S>                                       <C>              <C>                 <C>                
Interest Income                           $     2,544      $        16         $    41,022        
Other Income                                   13,345                               13,345
                                          -----------      -----------         -----------        
Total Income                                   15,889               16              54,367
                                          -----------      -----------         -----------        
                                                                         
   Total General and Administrative                                      
     Expenses                                 186,401            1,972             840,934        
                                          -----------      -----------         -----------        
   Loss from Operations                      (170,512)          (1,956)           (785,567)       
                                          -----------      -----------         -----------        
   Net Loss                               ($  170,512)     ($    1,956)        ($  785,567)       
                                          ===========      ===========         ===========        
    Net Loss per Common Share             $       .05      $       .00        
                                          ===========      ===========              
    Weighted average number of                                           
     shares outstanding during the                                       
     period                                 3,261,550        3,261,550        
                                          ===========      ===========              
</TABLE>                                                 


                      See notes to the financial statements



                                       4
<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                 For the period
                                                                                                                  April 2, 1996
                                                                                                               (date of inception)
                                                                  Three Months Ended                                  through
                                                                    March 31, 1998          Year Ended            March 31, 1998
                                                                     (unaudited)         December 31, 1997          (unaudited)
                                                                  ------------------     ------------------     ------------------
<S>                                                                  <C>                    <C>                   <C>       
Cash Flows from Operating Activities                                                                   
                                                                                                       
   Net Loss                                                          $(170,512)             $  (615,330)          $  (786,567)
                                                                     ---------              -----------           -----------
                                                                                                                  
   Adjustments to reconcile net loss to net cash                                                                  
     provided by operating activities:                                                                            
     Increase (Decrease) in Accounts Payable                                                                      
       and Due to Related Parties                                     (363,178)                  64,614             (226,535)
     Amortization Expense                                                                           400                   700
     Increase in Prepaid Expense                                                                (11,382)              (11,382)
     Increase in Security Deposit                                                                (2,600)               (2,600)
                                                                     ---------              -----------           -----------
                                                                                                                  
     Total Adjustments                                                (363,178)                  51,032             (239,817)
                                                                     ---------              -----------           -----------
     Net cash provided by operating activities                        (533,690)                (564,298)           (1,026,384)
                                                                     ---------              -----------           -----------
   Cash Flows used in Investing Activities                                                                        
                                                                                                                  
     Payments for Organization Costs                                       -0-                      -0-               (2,000)
                                                                     ---------              -----------           -----------
     Net cash used for investing activities                                -0-                      -0-               (2,000)
                                                                     ---------              -----------           -----------
   Cash Flows from Financing Activities                                                                           
                                                                                                                  
     Proceeds from issuance of stock                                                          1,172,921             1,197,941
     Net advances from Parent Company                                                           287,624               312,624
     Advances from Related Party Company                                                          4,000                 4,000
     Payments for deferred offering costs                                                           -0-             (112,654)
                                                                     ---------              -----------           -----------
     Net cash used in financing activities                                 -0-                1,464,545             1,401,911
                                                                     ---------              -----------           -----------
     Net (decrease) increase in cash and cash equivalents             (533,690)                 900,247               375,527
                                                                                                                  
     Cash and cash equivalents, beginning of period                    909,217                    8,970                   -0-
                                                                     ---------              -----------           -----------
     Cash and cash equivalents, end of period                        $ 375,527              $   909,217           $   375,527
                                                                     =========              ===========           ===========
</TABLE>                                                               



                      See notes to the financial statements


                                       5
<PAGE>


                                 VOICENET, INC.
                         (A Development Stage Company)

                       STATEMENTS OF STOCKHOLDERS' EQUITY

        For the Period April 2, 1996 (Inception) Through March 31, 1998

<TABLE>
<CAPTION>
                                                                                                           Deficit
                                                                                                         Accumulated
                                                                                           Additional    during the
                                                                    Common Stock            Paid-in      Development 
                                                              Shares         Amount         Capital         Stage          Total
                                                            -----------    -----------    -----------    -----------    -----------
<S>                                                           <C>          <C>            <C>            <C>            <C>         
Initial issuance of shares                                        1,000    $         1    $    25,019    $       -0-    $    25,020
Stock split                                                   2,499,000         24,999        (24,999)                          -0-
Net loss for the period April 2, 1996 (inception)
  through December 31, 1996                                                                                     (725)          (725)
                                                            -----------    -----------    -----------    -----------    -----------
Balance - December 31, 1996                                   2,500,000         25,000             20           (725)        24,295
Issuance of shares in connection with the initial
  public offering, net of offering costs                        188,250          1,583        971,984                       973,867
Issuance of shares on December 30, 1997                          10,800            108         86,292                        86,400
Conversion of debt to common shares                             562,500          5,625      4,494,375                     4,500,000
Net loss for the year ended December 31, 1997                                                               (615,330)      (615,330)
                                                            -----------    -----------    -----------    -----------    -----------
Balance - December 31, 1997                                   3,261,550    $    32,616    $ 5,552,671    $  (616,055)   $ 4,969,232
                                                            ===========    ===========    ===========    ===========    ===========

Three months ended March 31, 1998                                  --             --             --         (170,512)      (170,512)
                                                            -----------    -----------    -----------    -----------    -----------
  Net loss                                                    3,261,550    $    32,616    $ 5,552,671    $  (786,567)   $ 4,798,720
                                                            ===========    ===========    ===========    ===========    ===========
</TABLE>


                                       6
<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1 - Basis of Presentation

The  financial  statements  included  herein have been  prepared by the Company,
without  audit,  pursuant to the rules and  regulations  of the  Securities  and
Exchange  Commission  and reflect all  adjustments  which are, in the opinion of
management, necessary to present fairly the information required herein. Certain
information  and  footnote   disclosures  normally  included  in  the  financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted  pursuant to such rules and regulations,  although  management
believes that the disclosures are adequate to make the information presented not
misleading.  The  results  of  operations  for the three and nine  months  ended
September 30, 1997 are not  necessarily  indicative of the results of operations
to be expected  for the full year.  For  information  concerning  the  Company's
significant accounting policies,  reference is made to the Company's filing with
the  Securities  and Exchange  Commission  on Form SB-2,  as filed on October 7,
1997.

Note 2 - Nature of Business

Voicenet,  Inc. (the  "Company"),  a Delaware  corporation,  was incorporated on
April 2, 1996. The Company was established for the marketing and distribution of
continuous speech and voice recognition  systems and of digital audio reporting,
transcription, archiving and retrieval systems in North America, Central America
and South America.  The Company has not commenced operations and is considered a
developmental stage company in accordance with Statement of Financial Accounting
Standards No. 7. The Company is  majority-owned  (63%) by Voicenet  (Aust.) Ltd.
("VNA"), an Australian company.

Note 3 - Net Loss Per Common Share

Net loss per share is computed based on the weighted average number of shares of
common  stock  outstanding  for the periods  presented.  The effect of the stock
options and warrants on the net loss per share was  antidilutive for the periods
presented.

Note 4 - Purchase of Technology

On August 1, 1996 the  Company  entered  into a  Technology  Sales and  Purchase
Agreement (the  "Technology  Agreement")  with VNA to acquire certain  exclusive
rights and ownership with respect to the development,  use, marketing, sales and
distribution  of  a  continuous   computer  based  digital  voice   compression,
recognition  and  recording  technology.  The term of the  agreement  is for the
longer of  twenty-five  (25)  years or the life of any  patents  and  extensions
granted under the patent  applications.  The rights acquired are for territories
including North America,  Central  America and South America.  These rights were
purchased for $4,500,000 in the form of a  noninterest-bearing  promissory note,
further described below.


                                       7
<PAGE>


                                 VOICENET, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)


On August 31, 1996, as amended effective  November 1,1996 and December 31, 1996,
the  Company  executed a  $4,500,000  promissory  note  payable to  Southern  in
conjunction  with  the  above  agreement.  The note was noninterest-bearing  and
payable as follows: (a) $2.5 million upon the earlier of October 31, 1997 or the
successful closing of the Company's public securities  offering,  (b) $1 million
upon the earlier of October 31, 1997 or the first signed  installation  contract
for a COURTSMART  system in the United  States of at least  $30,000,  and (c) $1
million on October 31, 1997. If not earlier paid, the full outstanding principle
shall be due in full on October 31,  1997.  The Company has granted to Southern,
as collateral, a security interest in all assets of the Company. See Note 6.

Note 5 - Due to Parent Company

The Company was advanced monies by VNA for start-up  purposes.  Such amounts are
noninterest  bearing and have no definitive  repayment  terms. The balance as of
December 31, 1997 amounted to $312,624. The amounts due were repaid in the first
quarter of 1998.

Note 6 - Stockholders' Equity

At  inception,  the Company  authorized  3,000  shares of $.001 par value common
stock and issued 1,000 of these shares for $25,000.

On September  15, 1996 the Company  increased  its number of  authorized  Common
Shares to  10,000,000  and  changed  its par  value of these  shares to $.01 per
share. In addition,  the Company authorized 1,000,000 shares to Preferred Stock,
par value $.01 per share.

On  September  15,  1996 the  board  of  directors  of the  Company  declared  a
2,500-for-1 stock split. The financial  statements have been adjusted to reflect
this transaction.

On September 15, 1996,  the Company  adopted a  non-qualified  stock option plan
(the "Plan").  An aggregate of 500,000 shares of Common Stock are authorized for
issuance  under the Plan.  The Plan provides  that all regular  employees of the
Company except for directors who are members of the administrative committee are
eligible to  participate  in the Plan.  No options may be granted  subsequent to
September 15, 2006. There are no options issued and outstanding at September 30,
1997.


                                       8
<PAGE>


Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

General

     The  Company was formed in April 1996.  The Company was  organized  for the
purpose of acquiring and marketing speech  recognition  technologies and systems
(the  "Speech  Technologies")  developed  by  Voicenet  (Aust.)  Ltd.  (formerly
Southern Group Limited) ("VNA"), an Australian publicly traded company listed on
the Australian Stock Exchange, which is the Company's majority shareholder.  The
Company is in the  development  stage and its  operations are subject to all the
problems,  expenses,  delays and other risks inherent in the  establishment of a
new business  enterprise,  as well as the problems  inherent in  developing  and
marketing  a new  product/service  and  in  establishing  a  name  and  business
reputation. The likelihood of the success of the Company must also be considered
in  connection  with the rapidly and  continually  changing  technology  and the
competitive  environment  in which the  Company  will  operate.  There can be no
assurance that the Company's operations will result in its becoming or remaining
economically  viable.  Potential  investors  should  be aware  of the  problems,
delays, expenses and difficulties  encountered by any company in a developmental
stage, many of which may be beyond the Company's control. These include, but are
not limited to, organization and hiring of sales,  administrative and management
personnel,  lack of customer  acceptance  of the Company's  products,  sales and
marketing problems, intense competition, product quality control, and inadequate
financial  resources.  The Company has had no revenues  from  operations to date
and,  because it is just beginning to enter the commercial  stage, it may likely
sustain operating losses for an indeterminate  time period.  Since its inception
in April 1996,  the Company  has  devoted  substantially  all of its efforts and
resources to raising  capital  through an initial public  offering of its common
stock.  As of March 31,  1998,  the Company had a total  accumulated  deficit of
$786,567.

     Statements  included  in this  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations" Section, and in other sections of
this Report and in prior and future  filings by the Company with the  Securities
and Exchange Commission, in the Company's prior


                                       9
<PAGE>


and future press  releases and in oral  statements  made with the approval of an
authorized   executive   which  are  not   historical   or  current   facts  are
"forward-looking  statements" made pursuant to the safe harbor provisions of the
Private  Securities  Litigation  Reform  Act of 1995 and are  subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from those  presently  anticipated  or projected.  The Company wishes to caution
readers not to place  undue  reliance  on any such  forward-looking  statements,
which speak only as of the date made.  There are important  risk factors that in
some cases have  affected and in the future could  affect the  Company's  actual
results and could cause the Company's actual financial and operating performance
to differ materially from that expressed in any expressed in any forward-looking
statement.  The following  discussion and analysis should be read in conjunction
with the  Financial  Statements  and notes thereto  appearing  elsewhere in this
report.

     The Company had no revenues from  continuing  operations in the year ending
December 31, 1997 or the quarter ending March 31, 1998. The Company has incurred
net losses since its inception in 1996.  The  Company's  losses  incurred  since
inception have resulted principally from legal, accounting, priniting, marketing
and travel expenditures incurred in pursuing its capital raising activities, and
to a lesser extent early stage product marketing  expenses.  The Company expects
to incur  operating  costs and possible  losses  therefrom over the next several
years due  primarily to expanded  sales and  marketing  efforts,  including  the
establishment  of  product  sales  office,  the  staffing  of such  office  with
marketing,  administrative  and  management  personnel,  and travel and  related
business  entertainment  expenses  incurred by the sales  personnel as they seek
potential  customers  for the Company's  products.  There can be no assurance of
when and whether the Company will  generate  revenues or become  profitable on a
sustained basis, if at all.  Although the Company  anticipates sales to commence
during 1998,  the Company's  results of operations may vary  significantly  from
quarter to quarter due to timing of payments  and other  factors.  The timing of
the Company's  revenues,  if any, may not match the timing of associated product
development of other expenses.

     The  Company's  ability to achieve sales and increase its levels of revenue
will  depend  upon its  ability  to  secure  capital  financing  and to sell the
Company's  products.  The Company's ability to generate  significant revenue and
become  profitable  is  dependent  in  large  part  on its  commercializing  the
Company's lead product,  the CourtScript system for digital recording of courts.
There can be no  assurance  that the  operations  of the Company  will  generate
significant revenue or will ever be profitable.


                                       10
<PAGE>


RESULTS OF  OPERATIONS  FOR THREE MONTHS  ENDING MARCH 31, l998;  COMPARED  WITH
MARCH 31, l997.

     Net losses increased from $1,956 for the three months ending March 31, l997
to $170,512  for the three  months  ending  March 31,  l998.  The Company had no
revenue or operating  income for the quarters ended March 31, l997 and March 31,
l998 from continuing  operations.  The Company had interest income of $2,544 for
the three months ended March 31, l998 and $16 in the  comparable  prior  period.
Total general,  administrative  and  development  expenses were $186,401 for the
three months  ending March 31, 1998 in  comparison  to $1,972 in the  comparable
prior period.  The increase in these costs from l997 to l998 was in most expense
categories.

     At December  31,  1997,  the Company had assets of  $5,424,499  compared to
total  assets of  $4,890,809  at March 31,  1998,  a decrease  of  $533,690.  At
December 31, 1997,  the Company had total  liabilities  of $455,267  compared to
total  liabilities  of $92,089 at March 31,  l998,  a decrease of  $363,178.  At
December 31, 1997,  the Company had a total  stockholders'  equity of $4,969,232
compared to total stockholders' equity at March 31, l998 of $4,798,720.

                         LIQUIDITY AND CAPITAL RESOURCES

     The  Company had  working  capital as of  December  31, 1997 of $465,332 in
comparison $294,820 as of March 31, l998. The Company had an accumulated deficit
of $616,055 as of December 31, 1997 in comparison to an  accumulated  deficit of
$786,567  as of March 31,  l998.  The  increase  in the  accumulated  deficit is
primarily  related to continuing  operating costs without any operating  income.
For the three months ended March 31, l998 the Company's cash  requirements  were
satisfied from the cash reserves in its operating and investment accounts.

     On November 5, 1997, the Company  successfully  completed an initial public
offering of its common stock. In the public  offering,  562,500 shares of common
stock were issued to VNA at a conversion price of $8.00 per share in payment and
satisfaction  of a $4.5 million  promissory  note which the Company had executed
and  delivered  to  VNA in  August  1996  pusuant  to the  purchase  of  digital
technology from VNA under a Technology  Purchase Agreement dated August 1, 1996,
and 188,250 shares of common stock were sold to new shareholders at the price of
$8.00 per share.  After the underwriters  selling  commission and discount,  the
Company had net proceeds of  approximately  $973,867.  In addition,  the Company
incurred  approximately  $532,133 in  transaction  costs in connection  with the
offering,  including filing fees,  attorneys fees,  accountants  fees,  printing
costs, tranfser agent's fees, travel expenses and other costs and expenses.


                                       11
<PAGE>


The Company does not  currently  possess a bank source of financing  and has not
had any  revenues.  The Company  cannot be certain that its existing  sources of
cash will be adequate to meet its liquidity requirements. Therefore, the Company
is considering the following options to meet its liquidity requirements:

     (a)  attempting  to raise  additional  funds  through  the  sale of  equity
securities  to persons or entities  who are not  presently  stockholders  of the
Company;

     (b) attempting to obtain a bank line of credit; and

     (c) should  insufficient  funds be available  from the  foregoing  sources,
reducing the  Company's  present  rate of  expenditures  which might  materially
adversely affect the ability of the Company to produce competitive  products and
services and to market them effectively.

     The Company believes that its existing cash and cash  equivalents  together
with the  approximately  $1 million of net proceeds after offering  expenses and
costs resulting from the closing of its initial public  offering,  excluding any
potential  cash flow from  operating  revenues,  will be  sufficient to meet its
operating expenses and capital expenditures requirements for at least the next 6
months.  The Company's  future  capital  requirements,  however,  will depend on
numerous factors,  including (i) the effectiveness of product  commercialization
activities and marketing activities,  including the creation and progress of its
sales and marketing operations,  (ii) the effect of competing  technological and
market  developments,  from  competitors  that have greater  resources  than the
Company. However, if operating expenses are higher than expected or if cash flow
from  operations is lower than  anticipated,  there can be no assurance that the
Company will have sufficient capital resources to be able to continue as a going
concern.

     Unless  the  Company  is able to  generate  revenues  or obtain  additional
financing in the future,  the continuing  losses  incurred by the Company in its
development  phase  raise  substantial  doubt  about the  Company's  ability  to
continue as a going  concern.  Therefore,  the Company's  ability to continue in
business  as a going  concern  depends  upon its  ability to sell  products,  to
generate  fees from the sale of its services,  to conserve  liquidity by setting
marketing  and other  priorities  and  reducing  expenditures,  to  obtain  bank
financing and to obtain additional funds through offering of its securities. The
Company's  ability to obtain funds through an offering of its debt securities is
limited by its lack of revenue.  In any event,  there is no  assurance  that any
expenditure  reductions,  financings  or other  measures that the Company may be
able to effect will enable it to meet its working capital requirements.


                                       12
<PAGE>


                                   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.

Dated: May 20, 1998

                                    VOICENET, INC.


                                    By:  /s/ Howard Messer
                                         --------------------------------------
                                         Howard Messer
                                         Principal Accounting Officer