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 three months ended March 31, 1999

                                       OR

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

                         Commission file number 1-12835


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

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

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


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


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


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

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


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


         As of April 30, 1999 there were 7,933,833 shares of registrant's common
stock outstanding.

         Transitional Small Business Disclosure Format (Check One):
                        Yes         No   X  
                              ---       ---





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REGISTRANT'S DISCLAIMER  STATEMENT RE:  PRIVATE SECURITIES LITIGATION REFORM ACT
--------------------------------------------------------------------------------
AND OTHER MATTERS
-----------------

         The  statements  in this  Report on Form 10-QSB and Form 10-QSB for the
three months ended March 31, 1999,  in the Company's  Report on Form 10-KSB,  or
press  releases  issued  by  the  Company  that  are  not  based  on  historical
information  are  considered  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended,  including statements regarding the
Company's projections,  hopes, expectations,  intentions,  beliefs or strategies
regarding the future.  Forward-looking  statements include, but expectations are
not limited to,  plans in  Description  of Business  regarding  (i) its plans to
market  products in Europe,  North  America,  South  America and Asia,  (ii) its
belief that  offering free  Internet  access will capture  customers for CallNet
PLC,  (iii) its belief that it may acquire other  companies  engaged in Internet
and  telecommunications  related  businesses,  (iv)  its  expectation  that  the
acquisition  by the Company of the  remaining 85% of CallNet Plc can be acquired
by the end of fiscal year 1999,  (v) its belief that the  majority of its future
revenues will be derived from its ownership of CallNet PLC,  which earns a share
of telephone  toll revenues from  companies  that provide  telephone  service to
their  customers,  (vi) its  belief  that  CallNet  Plc will meet the  quarterly
telephone  toll minute  targets set forth in its agreement with Cable & Wireless
Communications,  Plc ("Cable & Wireless Communications"),  (vii) its belief that
its  products  and  services  will appeal to the many  segments of the  Internet
market, and (vii) statements in Management's  Discussion and Analysis or Plan of
Operation regarding (a) the projection that its working capital will be adequate
until mid 1999, (b) the  projection  that  additional  capital from bridge notes
and/or sale of equity  securities will be necessary,  (c) the  expectation  that
product  manufacturing  and  distribution  costs will be borne by joint  venture
partners,  (d) the estimate of research / development and plant expenditures for
the next twelve months, (e) the expectation that telephone toll revenues derived
from ownership of CallNet PLC will be the primary  source of internal  liquidity
and product sales will be a secondary source of internal liquidity,  and (f) the
belief that Year 2000 issues will not have a material impact on the Company.

         It is possible that the  Company's  projections,  hopes,  expectations,
intentions, beliefs, plans or strategies regarding the future and hopes outlined
above may not be achieved due to factors and circumstances  discussed  elsewhere
in this Form 10-QSB. See Part 1, Item 2,  "Management's  Discussion and Analysis
or Plan of Operation."

         World CallNet, Inc. is not affiliated with, sponsored by or endorsed by
any of the  following  companies  who have similar  trade names,  trademarks  or
service marks: Worldcall  Communications  International,  Inc.; Computer Calling
Technologies,   Inc.;  AT&T  Corp.;  Worldnet   Communications,   Inc.;  Luckman
Interactive,   Inc.;   Allnet   Communications   Services,   Inc.;   West  Coast
Telecommunications, Inc.; and Worldnet Communications, Inc.





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<PAGE>



PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

         Financial  information required by Item 301(b) of Regulation S-B can be
found on the page following Item 2 below.  The financial  information  contained
herein for the three months and six months ended March 31, 1999 is unaudited but
includes  all  adjustments  that  the  Company  considers  necessary  for a fair
presentation of the results for such periods.  The financial  information should
be read in  conjunction  with  the  financial  statements  for  the  year  ended
September  30, 1998  included in the  Company's  Annual  Report on Form  10-KSB.
Operating  results for the three months ended March 31, 1999 are not necessarily
indicative  of the  results  that may be  expected  for the  entire  year  ended
September 30, 1999.

Item 2. Management's Discussion and Analysis or Plan of Operation.

LIQUIDITY AND CAPITAL RESOURCES

         During  1998,  the  Company  sold all of its  interests  in oil and gas
royalty  properties for cash and, after repayment of debt and accounts  payable,
became a publicly  traded  shell.  In October  1998,  the Company  completed the
acquisition  of  World  Wide   Communication   (Holdings)  Ltd.  ("WWCH")  in  a
transaction  accounted for as a reverse  acquisition.  As a result,  the Company
became the successor to the business and financial operations of WWCH, including
its fiscal  yearend of September 30. WWCH was  incorporated  in January 1998 and
during the period from  incorporation  through  March 31, 1999 had been involved
primarily in capital formation  activities,  refinement of its business strategy
and development of relationships  with industry  partners.  In January 1999, the
Company changed its name to World CallNet, Inc.

         Since  its  inception  the  Company  has  not  generated  any  internal
liquidity from any source.  The Company's  principal  external source of capital
for  developing its products and services has been the placement of bridge notes
payable.  In November  and  December  1998,  the Company  completed  the private
placement  of  $1,150,000  in bridge  notes that are due on  December 1, 1999 or
earlier  under certain  circumstances,  including the raising of $3.5 million or
more of additional  capital.  In April 1999,  the Company  completed the private
placement of $550,000 of bridge notes that are due on October 9, 1999 or earlier
under  circumstances  similar  to  the  aforementioned   placement.   Additional
placements of bridge notes or the sale of equity  securities  to fund  operating
expenses will be necessary until the Company's  revenues from operations provide
sufficient cash flow.

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

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


                                        3

<PAGE>




         The Company has estimated that MailTV  research and  development  costs
will be approximately  $250,000 during the next twelve months.  Expenditures for
plant and/or significant  capital equipment are estimated at $500,000 during the
next twelve months.

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

         The Company  expects that its primary  source of internal  liquidity in
the future will be revenues  from net  telephone  toll charges  earned under the
terms of agreements that CallNet Plc, an affiliated  entity,  has with Cable and
Wireless  Communications ("CWC"). The agreement with CWC entitles CallNet Plc, a
provider  of Internet  access,  to receive 35% of the  telephone  toll  revenues
(after  deducting  certain  payments  made by CallNet Plc to  telecommunications
providers (such as British Telecom) who provide the "last mile") CWC charges its
customers  for calls to CallNet Plc. The Company owns fifteen  percent  (15%) of
the capital stock of CallNet Plc and plans to acquire the remaining  eighty-five
percent (85%) of the capital stock of CallNet Plc.

         The agreement with CWC provides that this revenue  sharing  arrangement
is based on CallNet Plc meeting  quarterly  targets  commencing  with the period
beginning March 1, 1999. The initial quarterly target is 10 million minutes with
the quarterly  targets for the next three-month  period increasing to 30 million
minutes.  If a quarterly target is not met, Callnet Plc will be required to make
certain repayments to CWC based on the difference between the target minutes and
the actual minutes.  The repayment  requirement ranges from 10% of the quarterly
payment made to CallNet Plc for achieving  90% and above of the target  revenues
to 100% of the quarterly payment made to CallNet Plc for achieving less than 50%
of the target revenues. CallNet Plc has thus far exceeded the target minutes for
the initial quarter.

         The fundamental  business  strategy is to direct telephone usage to the
CallNet Plc telecommunications network from new Internet and existing customers.
The Company's  products are designed to facilitate new Internet access.  Sale of
these products is expected to be a secondary source of revenues for the Company.

         The Year 2000  presents  concerns for business and consumer  computing.
Aside from the well-known  problems with the use of certain 2-digit date formats
as the year  changes  from 1999 to 2000,  the Year  2000 is a special  case leap
year,  and dates such as 9/9/99 were used by certain  organizations  for special
functions.  This could  result in system  failures  or  miscalculations  causing
disruption  of  operations,  including  among others,  a temporary  inability to
process  transactions,  send  invoices  or engage  in  similar  normal  business
activities.  The  problem  exists  for many  kinds  of  software  and  hardware,
including mainframes, mini-computers, PC's and embedded systems.

         The Company is  continuing to test its products and classify its tested
products into the following  categories of compliance:  "compliant,"  "compliant
with  minor  issues,"  and "not  compliant."  All of the  Company's  significant
products  tested are either  "compliant"  or "compliant  with minor  issues," as
defined.  The Company has purchased all of its  information  systems  during the
later part of 1998 with a full awareness of Year 2000 issues.  While the Company



                                        4

<PAGE>



received no written assurance from such vendors that such systems were year 2000
compliant,  computer system hardware and software were carefully reviewed by the
Company-employed  computer  technicians  and  software  engineers  before  being
purchased and placed in service.

         Software  developed  by the Company for Internet  access  relies on the
systems  employed by CallNet Plc, an affiliated  entity that  provides  Internet
service to the Company on an exclusive  basis.  CallNet Plc was  incorporated in
1998 and  under the  direction  and  supervision  of the  Company's  information
systems  technicians  has  followed  the  same  procedures  and  timetables  for
purchasing and placing its information systems in service.

         The  Company  believes  that  purchasing  information  technology  from
vendors such as Intel and Microsoft  basically  eliminates  remediation costs on
systems not fully Year 2000 compliant.  World CallNet's policy is to make future
and current versions of its core products Year 2000 "compliant."

         The Year 2000  issue  also  affects  the  Company's  internal  systems,
including  information  technology  (IT) and non-IT  systems.  World  CallNet is
assessing  the  readiness  of its systems for  handling  the Year 2000,  and has
started the remediation and certification  process.  Contingency plans are being
developed in parallel with the testing and remediation efforts.

         As noted above,  World  CallNet has  addressed the Year 2000 issue with
its  largest  suppliers  of  services,   CallNet  Plc,  and  is  evaluating  its
third-party  distribution  and  supply  chain to  understand  their  ability  to
continue providing services and products throughout the change to the year 2000.
World CallNet is monitoring key vendors,  product  manufacturers,  distributors,
and direct  resellers to avoid any business  interruptions in the year 2000. For
critical third parties with known issues,  contingency  plans will be developed.
The Company is also  reviewing its facilities  and  infrastructure.  Remediation
efforts are under way and certain  contingency  plans are in  development.  In a
worst case scenario,  these unknown third party  variables could have a material
and adverse effect on the Company's ability to conduct its business.

         The Company believes that the Internet as a whole is subject to overall
systems  failure  arising from Year 2000 matters due to the open and interactive
nature of the  Internet.  The Internet is a loose and open network that may have
many non-compliant participants who could corrupt the entire system. The Company
believes that this risk does not apply to the Company to any greater extent that
any other Internet Company.

         While Year 2000  issues  present a  potential  risk to World  CallNet's
internal systems,  distribution and supply chain, and facilities, the Company is
minimizing  risk  with a  worldwide  effort.  World  CallNet  is  performing  an
extensive  assessment and is in the process of testing and  remediating  mission
critical  components.  The  current  plan  is to  have  the  majority  of  these
components  resolved by June 1999,  with the  remaining  components  resolved by
September 1999.  Management currently believes that all critical systems will be
ready by the Year 2000. The level of expenditures for information systems,  both
historically  and budgeted for the next year,  are basically  unaffected by Year
2000 issues.  Therefore,  the Company believes that the cost to address the Year
2000 issues is not material. The impact of the Year 2000 on future World CallNet
revenue is difficult  to discern but is a risk to be  considered  in  evaluating
future growth of the Company.



                                        5

<PAGE>




RESULTS OF OPERATIONS

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

         Revenues of  approximately  $118,000 for the six months ended March 31,
1999 were derived from license  fees related to the  Company's  MailTV  software
chip.

         For the three and six months ended March 31, 1998 the Company  incurred
salaries and other  administrative  expenses  related to capital  formation  and
development of its business plan.  These expenses are reflected on the statement
of operations as charges to general and administrative expense.

         Interest  expense of $74,819 is related to  $1,150,000 of notes payable
dated December 31 and November 30, 1998 that bear interest at 10% per annum. The
Company is obligated to make monthly interest payments to holders of these notes
and to holders of an additional $550,000 notes placed in April 1999.

CAUTIONARY FACTORS

         The  success  of the  Company's  plan  of  operation  may be  adversely
affected by several principal factors.

NEED FOR ADDITIONAL CAPITAL
---------------------------

         The  Company  needs a  substantial  amount of capital  to  achieve  its
business plan.  Conditions in financial markets influence  investors'  attitudes
and  willingness to invest in a particular  industry issuer or type of security.
If the Company is unable to obtain additional  capital through private or public
placement of its debt or equity  securities,  asset-based or bank financing,  or
through  ventures  with industry  partners,  its ability to achieve its business
objectives could be substantially impaired.

COMPETITION
-----------

         The online services and Internet  markets are highly  competitive.  The
Company  believes  that  existing  competitors,  which  include,  among  others,
commercial  online  services  such as  America  OnLine  and  Dixon's  FreeServe,
Internet-based  services,  including,  among others, the Microsoft Network,  and
Internet service  providers,  including  various national and local  independent
Internet  service  providers as well as long  distance  and  regional  telephone
companies,  including,  among  others,  British  Telecommunications  and Cable &
Wireless   Communications  and  various  other  regional   telephone   operating
companies,  are likely to enhance  their  service  offerings.  In addition,  new
competitors,  including  Internet  directory  services  and  various  media  and
telecommunications  companies,  have  entered  or  announced  plans to enter the
online services and Internet markets,  resulting in greater  competition for the
Company. Many of the direct competitors and possible future competitors referred
to  above  have  significantly  greater  financial,   technical,  marketing  and



                                        6

<PAGE>



personnel resources than the Company.  These factors may have a material adverse
effect on the Company's  financial condition and operating results. In addition,
in  response  to  increased  competition,   the  Company  may  adopt  additional
strategies  designed to continue the growth in its subscriber  base, such as new
marketing  programs and  promotional  offers and  implementation  of new pricing
programs.  Such strategies may result in an increase in costs as a percentage of
revenue.

         The business of providing  Internet access  services is new,  extremely
competitive,  rapidly evolving and subject to rapid technological  change. World
CallNet expects that such competition  will intensify  significantly in the near
future.  A large number of companies are developing or have  introduced  devices
and  technologies  to facilitate  access to the Internet via a television.  Such
competitors include suppliers of low-cost Internet  technologies.  Set top boxes
and devices are  proposed or under  development,  as well as video game  devices
that provide Internet access. In addition, manufacturers of television sets have
announced plans to introduce Internet access and Web browsing  capabilities into
their products through set-top boxes.

         Personal computer manufacturers are introducing Personal Communications
Systems  that offer  full-fledged  television  viewing  combined  with  Internet
access. Operators of cable television systems also plan to offer Internet access
in  conjunction  with cable  service.  World CallNet also competes with Internet
service providers and commercial online services. There can be no assurance that
World  CallNet's  competitors  will not develop  Internet  access  products  and
services  that are  superior  to, and priced  competitively  with those or World
CallNet,  thereby achieving greater market acceptance than MailTV. Many of World
CallNet's competitors,  as well as potential competitors,  have longer operating
histories,  greater  name  recognition,  larger  installed  customer  bases  and
significantly  greater financial,  technical and marketing  resources than World
CallNet.

SUBSCRIBER ATTRITION RATES
--------------------------

         World CallNet will devote considerable financial and human resources to
attract  subscribers to its service;  however,  due to circumstances that may or
may not be beyond the control of the Company,  these subscribers may discontinue
their  affiliation with the Company.  As a result of subscriber  attrition,  the
revenues  generated  from Internet  usage may decline  considerably,  as may the
rates that the Company can charge from advertising on its service as well as the
revenues that the Company anticipates from e-commerce.

REPAYMENT OF OBLIGATION UNDER CABLE & WIRELESS AGREEMENT
--------------------------------------------------------

            The Company  expects that its primary  source of internal  liquidity
will be revenues  from  telephone  toll  charges  earned  under the terms of the
agreement  that CallNet  Plc, an  affiliated  entity,  has with Cable & Wireless
Communications.  The  agreement  with Cable & Wireless  Communications  entitles
CallNet Plc, a provider of Internet access,  to receive 35% of the net telephone
toll  revenues  (after  deducting  certain  costs) Cable & Wireless  charges its
customers for calls to CallNet Plc. The agreement requires CallNet Plc to refund
certain payments if such telephone toll minutes do not meet certain targets. See
Part 1, Item 2,  "Management's  Discussion  and  Analysis or Plan of Operation -
Liquidity and Capital Resources".



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NETWORK CAPACITY AND OPERATIONS
-------------------------------

         Rapid  growth in  subscriber  demand may cause the Company and its data
communications  access  providers to  experience  difficulty at certain times in
providing  adequate server and network  capacity.  As a result,  subscribers may
from time to time  encounter  difficulty  in  accessing  and  using the  CallNet
service.  There  can be no  assurance  that the  Company  will be able to expand
server  and  network  capacity  at  a  rate  sufficient  to  satisfy  increasing
subscriber  demands,  and the  failure to do so could  have a  material  adverse
effect on the  Company's  business.  The  Company  currently  relies on  several
companies,  particularly  Cable  &  Wireless  Communications,  to  provide  data
communications  access  to its  service.  Any  damage  or  failure  that  causes
interruptions  in Cable & Wireless  operations  could  have a  material  adverse
effect on the Company's business.

         The  Company's  operations  are dependent on its ability to protect its
computer equipment and the information stored in its data centers against damage
by fire, power loss,  telecommunications  failures,  unauthorized intrusions and
other events.  The Company  believes it has taken prudent measures to reduce the
risk of interruption in its operations.  However, there can be no assurance that
these measures are sufficient.  Any damage or failure that causes  interruptions
in  the  Company's  operations  could  have a  material  adverse  effect  on its
business. While the Company carries property and business interruption insurance
to cover its computer operations, the coverage may not be adequate to compensate
for losses that may occur.

PRESSURES ON OPERATING MARGINS
------------------------------

         One of the  Company's  goals is to  increase  market  share by  rapidly
growing its subscriber  base. To achieve this goal, the Company has aggressively
promoted its service  offerings and may implement other  strategies  designed to
facilitate  subscriber growth. The costs associated with the rapid growth in its
subscriber  base and  investments  in customer  support  have  placed,  and will
continue to place, pressures on the Company's operating margins.

         The Company may adopt  additional  strategies  designed to continue the
growth in its subscriber  base,  such as new marketing  programs and promotional
offers.  Such  strategies  may result in an increase in costs as a percentage of
revenues.  In addition,  an acceleration  in the growth of its subscriber  base,
changes in usage patterns among members or continuing investments in content may
also increase costs as a percentage of revenues.  As a result,  the Company does
not believe its  operating  margins have  stabilized.  There can be no assurance
that the  Company's  operating  margins  will not be  adversely  affected in the
future by such strategies or other conditions.

SEASONALITY
-----------

         Subscriber  acquisition  is  expected  to be  highest in the second and
third fiscal  quarters,  when sales of new computers  and computer  software arc
highest due to the holiday season. Customer usage is expected to be lower in the
summer  months due largely to extended  day light  hours and  competing  outdoor
leisure activities.



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<PAGE>




MANAGING A RAPIDLY GROWING AND CHANGING BUSINESS
------------------------------------------------

         The Company  continues to experience  major  changes in its  operations
resulting  from rapid  expansion of its business  and other  factors  which have
placed  significant  demands on its  administrative,  operational  and financial
resources.  The Company's future  performance will depend in part on its ability
to manage its growth and to adapt its administrative,  operational and financial
control systems to the needs of the expanded  entity.  The failure of management
to anticipate,  respond to and manage changing business  conditions could have a
material adverse effect on the Company's business and results of operations.

ACCESS TO CONTENT PROVIDERS
---------------------------

         As competition in the online services market intensifies, it may become
more  difficult  or  expensive  to secure  and  retain  content  and/ or content
providers.  The Company  generally pays royalties to its content providers under
short-term renewable agreements,  and there can be no assurance that the loss of
a number of content  providers  or  significantly  increased  costs to  maintain
certain  content  providers  would  not have a  material  adverse  effect on the
Company's business.

NEW BUSINESSES AND INTERNATIONAL VENTURES
-----------------------------------------

         The Company  pursues new products and services to diversify its sources
of revenue and leverage its technological and other  competencies.  There can be
no assurance that the Company will be able to successfully  develop,  or achieve
commercial acceptance for, these new products and services.  The Company intends
to offer online services  internationally through either wholly owned operations
or  through  joint  ventures  with  existing   Internet  service   providers  of
telecommunications  companies. There can be no assurance that the Company or its
partners will be able to successfully  market,  sell and deliver its services in
these  markets.  In addition,  there are certain  significant  risks inherent in
doing business on an international  level,  such as laws governing  content that
differ  greatly  from  country to  country,  unexpected  changes  in  regulatory
requirements,  political risks, export restrictions, export controls relating to
encryption  technology,  tariffs  and  other  trade  barriers,  fluctuations  in
currency exchange rates, issues regarding  intellectual property and potentially
adverse  tax  consequences,  any or all of  which  could  impact  the  Company's
international operations.

CHANGING TECHNOLOGIES
---------------------

         As online  services  evolve,  the  Company  will be  required  to offer
technological  advances such as improved data  compression and delivery of voice
and full-motion  video.  Currently,  online  services are accessed  primarily by
personal   computers  via  modem.  As  online  services  become   accessible  by
screen-based  telephones,  television or other consumer electronic devices,  and
become  commercially  deliverable  over other wired conduits such as coaxial and
fiber optic cable,  the Company may have to develop new technology or modify its
existing  technology  to keep pace with  these  developments.  Pursuit  of these
technological advances will require substantial expenditures,  and there call be
no  assurance  that the  Company  will  succeed in adapting  its online  service
business to alternate access devices and conduits.



                                        9

<PAGE>




GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
---------------------------------------------

         Changes   in   the    regulatory    environment    relating    to   the
telecommunications  and  media  industry  could  have an  adverse  effect on the
Company's  business.  The Company cannot  predict the  likelihood  that any such
legislation will pass, or the financial impact, if any, the resulting regulation
may have.  Moreover,  the  applicability  to online service and Internet  access
providers  of  existing  laws  governing  issues such as  intellectual  property
ownership,  libel and  personal  privacy is  uncertain.  The law relating to the
liability  of  online  service  companies  and  Internet  access  providers  for
information  carried on or  disseminated  through  their  systems  is  currently
unsettled  and has been the  subject  of several  recent  private  lawsuits.  If
similar  actions were to be initiated  against the Company,  costs incurred as a
result of such actions  could have a material  adverse  effect on the  Company's
business.

RELIANCE ON KEY PERSONNEL
-------------------------

         The  Company's  success  depends  in part upon the  performance  of its
executive  officers and other key employees.  The loss of the services of one or
more of its key personnel  could have a material  adverse effect on the Company.
The  Company  depends on its  continued  ability to  attract  and retain  highly
skilled and qualified personnel.  Competition for such personnel is intense, and
there can be no assurance  that the Company will be successful in attracting and
retaining such personnel.

RELIANCE ON THIRD PARTIES
-------------------------

         The  Company  depends  substantially  upon third  parties  for  several
critical  elements of its  business,  including,  among  others,  CallNet  Plc's
revenue   sharing  and  Internet   routing   agreement  with  Cable  &  Wireless
Communications  and the Company's  agreement with Zilog,  Inc. pursuant to which
Zilog,  Inc. has agreed to  manufacture  and supply  MailTV chips to  television
manufacturers. The Company will outsource the manufacture of its MAILTV retrofit
keyboards from an outside  manufacturer  pursuant to purchase orders placed from
time to time, will not carry significant inventories of these keyboards and will
have no guaranteed  supply  arrangements.  The Company relies on local telephone
companies and other companies to provide data communications  capacity via local
telecommunications  lines and leased  long  distance  lines.  In  addition,  the
Company relies on CallNet PLC as an Internet service provider, which the Company
plans to acquire.

INTELLECTUAL PROPERTY ISSUES
----------------------------

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



                                       10

<PAGE>




VOLATILITY OF SHARE PRICE
-------------------------

         The  market  price of the  Company's  Common  Stock  has a  history  of
volatility.  Factors  such as  quarterly  variations  in  financial  results and
membership  growth  and usage,  new  pricing  strategies,  the  announcement  of
technological innovations, mergers, acquisitions,  strategic partnerships or new
product  offerings  by the  Company  or its  competitors,  the  entrance  of new
competitors into the online services market and changes in content providers may
have a significant impact on the market price of the Common Stock. Moreover, the
Common Stock could experience price  volatility based on market  conditions.  In
particular,  a substantial  short interest exists in the Company's  Common Stock
which may tend to exacerbate volatility.


SALES OF COMMON STOCK
---------------------

         Sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices of the Common Stock. The warrants that
have been  issued by the  Company  since the  reverse  acquisition  of WWCH have
provided  for  demand  and  piggyback  registration  rights.  Exercise  of  such
registration  rights could increase the number of shares of Common Stock sold in
the public markets.







                                       11

<PAGE>


<TABLE>
<CAPTION>

                                                    WORLD CALLNET, INC.
                                  (Formerly Worldwide Communications (Holdings) Limited)
                                               (A Development Stage Company)
                                                       BALANCE SHEET
                                                (Expressed in U.S. Dollars)
                                        AS OF MARCH 31, 1999 AND SEPTEMBER 30, 1998

<S>                                                                             <C>                       <C>

                                                                                (Unaudited)
ASSETS                                                                           March 31,                 September 30,
                                                                                   1999                        1998

CURRENT ASSETS:                                                                 $     88,575              $     1,995
     Cash                                                                            502,107                        -
                                                                                ------------              -----------
     Receivable from affiliated entity                                               590,682                    1,995
                                                                                ------------              -----------

OTHER ASSETS:
     Furniture and fixtures                                                           66,053                        -
     Investments                                                                     500,000                  203,772
     Intangible asset, net of $1,900 and $0
          accumulated amortization                                                    16,673                   19,500
                                                                                 -----------              -----------
             Total other assets                                                      582,726                  223,272

                 Total assets                                                   $  1,173,408              $   225,267
                                                                                ============              ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
     Notes payable, net of unamortized discount
          of $107,922 and $0                                                    $  1,042,078              $        -
     Accounts payable and accrued expenses                                           253,265                  43,041
     Accrued compensation due officers                                               157,170                 165,565
     Deferred Revenue                                                                      -                 193,583
     Due to affiliate                                                                      -                  10,486
                                                                                ------------              ---------- 
                   Total current liabilities                                       1,452,513                 412,675
                                                                                ------------              ----------

COMMITMENT AND CONTINGENCY (Notes 3 and 7)

STOCKHOLDERS' DEFICIT:
     Common stock, $.001 par value; 30,000,000
     shares authorized, 7,989,333 and 5,500,000
     shares issues and outstanding                                                     7,989                   5,500
     Additional paid-in capital                                                      964,662                 190,660
     Accumulated deficit                                                          (1,264,658)               (378,285)
     Foreign currency translation adjustment                                          12,902                  (5,283)
                                                                                ------------              ----------
                    Total stockholders' deficit                                 $   (279,105)             $ (187,408)
                                                                                ------------              ----------
                Total liabilities and stockholders' deficit                     $  1,173,408              $  225,267
                                                                                ============              ==========
</TABLE>
    
              See accompanying notes to these financial statements.



                                       12

<PAGE>


<TABLE>
<CAPTION>

                                                    WORLD CALLNET, INC.
                                  (Formerly Worldwide Communications (Holdings) Limited)
                                               (A Development Stage Company)
                                                  STATEMENT OF OPERATIONS
                                                (Expressed in U.S. Dollars)
                                     FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1999

                                                        (Unaudited)


<S>                                                                                             <C>              <C> 
                                                                                      Three Months             Six Months
                                                                                          Ended                   Ended
                                                                                -------------------------------------------------
                                                                                                March 31, 1999
                                                                                             -------------------
REVENUES                                                                                      $    83,204       $   118,477

COSTS AND EXPENSES:
         General and administrative expenses                                                      457,447           918,459
         Interest expense                                                                          69,153            74,819
         Amortization expense                                                                       1,575             1,900
         Impairment of marketable securities                                                        9,672             9,672
                                                                                              -----------       -----------
                                                                                                  537,847         1,004,850
                                                                                              -----------       -----------

NET LOSS                                                                                         (454,357)         (886,373)

OTHER COMPREHENSIVE INCOME - Foreign currency translation
adjustment                                                                                         11,353            18,185
                                                                                              -----------       -----------

COMPREHENSIVE LOSS                                                                            $  (443,004)      $  (868,188)
                                                                                              ===========       ===========

NET LOSS PER SHARE (basic and diluted                                                         $      (.06)      $      (.12)
                                                                                              ===========       ===========

WEIGHTED AVERAGE SHARES                                                                         7,325,377         7,245,043
                                                                                              ===========       ===========

</TABLE>




              See accompanying notes to these financial statements.


                                       13

<PAGE>

<TABLE>
<CAPTION>

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



                                   STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                                            (Expressed in U.S. Dollars)
                                      FOR THE SIX MONTHS ENDED MARCH 31, 1999

                                                    (Unaudited)


                                                                                                             Foreign                
                                                                Common Stock      Additional                 Currency             
                                                              -----------------     Paid-In   Accumulated  Translation           
                                                              Shares     Amount     Capital     Deficit     Adjustment      Total
                                                              ------     ------   ----------  -----------  -----------      -----
<S>                                                          <C>         <C>      <C>         <C>            <C>         <C>
Balance September 30, 1998                                   5,500,000   $5,500   $ 190,660   $  (378,285)   $(5,283)    $ (187,408)

Issuance of shares of common stock on October 9,                                                                                 
1998 in connection with acquisition of 100% of                                                                                
the Company's common stock by General                                                                                           
American Royalty                                             1,829,333    1,829      13,043             -          -         14,872

Issuance of 160,000 shares on November 19,                                                                                         
1998 for cash                                                  160,000      160     167,400             -          -        167,560

Issuance of common stock purchase warrants                                           94,059                                  94,059

Issuance of 500,000 to acquire 15% of CallNet Plc              500,000      500     499,500                                 500,000

Net loss for the period                                              -        -           -      (886,373)         -       (886,373)

Foreign currency translation adjustment                              -        -           -             -     18,185         18,185
                                                             ---------   ------   ---------   -----------    -------     ----------

                                                             7,489,333   $7,989   $ 964,662   $(1,264,658)   $12,902     $ (279,105)
                                                             =========   ======   =========   ===========    =======     ==========
</TABLE>

              See accompanying notes to these financial statements.


                                       14

<PAGE>

<TABLE>
<CAPTION>

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

                                              STATEMENT OF CASH FLOWS
                                             (Expressed in U.S. Dollars)
                                       FOR THE SIX MONTHS ENDED MARCH 31, 1999

                                                    (Unaudited)

<S>                                                                                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                                 $     (868,188)
   Amortization expense                                                                              1,900
   Impairment of marketable securities                                                               9,672
   Accretion of discount on notes payable                                                           43,637
   Increase in accounts payable and accrued expenses, net of
      foreign currency translation adjustments                                                     201,829
Increase in amount due from affiliate                                                             (512,593)
    Other                                                                                           16,314
                                                                                            --------------
               Net cash used by operating activities                                            (1,107,427)
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase furniture and fixtures                                                                (66,053)
                                                                                                   (66,053)
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from short-term indebtedness, net of financing costs                                 1,092,500
   Cash received in common stock issuances                                                         167,560
                                                                                                 1,260,060
NET INCREASE IN CASH                                                                                86,580
CASH, beginning of period                                                                            1,995
CASH, end of period                                                                         $       88,575
                                                                                            ==============
NON CASH TRANSACTIONS:
       Purchase of net assets in reverse acquisition for common stock                       $       14,872  
       Acquisition of CallNet Plc shares for common stock                                          500,000
                                                                                            --------------
        
                                                                                    $      514,872
                                                                                            ============== 
</TABLE>
              See accompanying notes to these financial statements.
                                       15
<PAGE>
                              WORLD CALLNET, INC.
             (Formerly Worldwide Communications (Holdings) Limited)
                         (A Development Stage Company)

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS
                          (Expressed in U.S. Dollars)

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

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

     Investments
     -----------
     The  Company's  investments at  March  31,  1999  consist solely  of shares
     of CallNet Plc, an affiliated company, as described in Note 4.

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

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

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

     Income Taxes
     ------------
     The Company  accounts for income taxes under the  liability  method,  which
     requires  recognition  of  deferred  tax  assets  and  liabilities  for the
     expected  future tax  consequences of events that have been included in the
     financial statements or tax returns. Under this method, deferred tax assets






                                                        16

<PAGE>


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

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS
                          (Expressed in U.S. Dollars)


     and  liabilities  are  determined  based  on  the  difference  between  the
     financial  statements and tax bases of assets and liabilities using enacted
     tax rates in effect for the year in which the  differences  are expected to
     reverse.  The Company has a tax loss  carryforward at September 30, 1998 of
     approximately  $200,000 and a deferred tax asset,  which is fully reserved,
     of approximately  $50,000. The Company has accrued approximately $77,000 in
     payroll taxes due to United Kingdom taxing authorities.

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

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


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

The Company is in the development stage and has had $118,191 in revenues through
March 31, 1999.  In addition,  the Company will require  substantial  capital to
implement its business  plan.  These factors raise  substantial  doubt about the
Company's  ability to continue as a going  concern.  In December  1998 and April
1999, the Company  completed bridge note offerings,  in which it raised proceeds
(net of consulting and finders fees), of approximately  $1,100,000 and $530,000,
respectively.  The Company  has also  negotiated  a  development  and  marketing
agreement with a much larger company that  management  believes will  facilitate
market  penetration.  Management  also  intends to  attempt to raise  additional
capital in the near term.  Management  believes  these  actions  will permit the
Company to achieve its objectives and attain profitable  operations to allow the
Company to continue as a going concern.








                                       17

<PAGE>


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

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS
                          (Expressed in U.S. Dollars)


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

In September 1998, the Company acquired 2,000,000 shares in Cherokee Leisure Plc
("Cherokee"),  a publicly  traded  company in the United  Kingdom,  from another
company in exchange for payment of $10,189 and assumption of the other company's
obligations to Cherokee.  The obligations  are to design,  install and support a
website for Cherokee.  The Company had valued the Cherokee shares based on their
estimated  market value of $203,772 at the time of acquisition.  The Company has
recorded  a  deferred  revenue  liability  of  $193,583,  which  represents  the
estimated  value of the shares less the cash payment.  The cash payment was made
by CallNet Plc, an  affiliate  of the Company with  directors in common with the
Company,  and  is  included  in  "Receivable  from  affiliated  entity"  in  the
accompanying balance sheet.

The  Company  is  entitled  to receive  40% of any  revenue  generated  from the
website.  No revenue was  generated  from the website  through  April 30,  1999.
Management  of the Company  does not believe  that the website  project  will be
completed or generate any significant future revenues.  Accordingly, as of March
31, 1999, the entire investment of $203,772 less the offsetting deferred revenue
of $193,583 have been taken as an impairment loss.

4. ACQUISITIONS
   ------------

In October  1998,  100% of the  Company's  common  stock was acquired by General
American   Royalty,   Inc.   ("GAR").   The  Company's   stockholders   obtained
approximately  75% of the  outstanding  common  stock  of GAR and  three  of the
Company's  directors were appointed to the board of GAR. For financial reporting
purposes, the Company has accounted for the transaction as a reverse acquisition
of GAR. As a result of the  transaction,  the  Company's  stockholders'  deficit
section reflects the GAR capital structure in the accompanying balance sheet. As
of the closing date of the acquisition,  the following  amounts were recorded to
reflect the accounts of GAR :


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








                                       18

<PAGE>


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

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS
                          (Expressed in U.S. Dollars)


In February 1999, the Company completed the acquisition of fifteen percent (15%)
of the stock of CallNet Plc by issuing  500,000  shares of the Company's  common
stock.  The  CallNet Plc shares  were  valued at  $500,000  and are  included in
Investments in the accompanying  balance sheet. The transaction was valued based
on  such  factors  as the  market  price  of the  Company's  common  stock,  the
historical  volitility  of stock  prices,  the  number of shares  held by public
shareholders  that have no trading  restrictions and the relatively large number
of shares issued.

5. NOTES PAYABLE
   -------------

In December  1998,  the Company  completed a private  placement of notes payable
totaling  $1,150,000.  The notes bear interest at 10% and are  collateralized by
the  Company's  shares of  Cherokee  Leisure  Plc.  Interest  is due monthly and
principal  is due  in  full  on  December  1,  1999  or  earlier  under  certain
circumstances,  including  the raising by the Company of $3.5 million or more of
additional  capital.  The holders of the notes were also issued  stock  purchase
warrants  entitling  them to  purchase  an  aggregate  of 575,000  shares of the
Company's  common stock  between March 1, 1999 and December 1, 2000 at $1.00 per
share.  The Company  paid a $57,500  consulting  fee and issued  stock  purchase
warrants,  on the same terms  described  above,  to purchase  182,500  shares of
common stock in connection with the offering. The holders of these warrants have
certain  demand and piggyback  registration  rights.  The Company has valued the
aforementioned stock purchase warrants at $94,059 using a discount factor of 8%.
Both the value of the stock  purchase  warrants  and the referral fee of $57,500
have been  treated as a discount  to notes  payable.  Amortization  of  discount
related to the  discount was $43,637 for the six months ended March 31, 1999 and
is included in interest expense.  Remaining discount is being amortized based on
the maturity date of December 1, 1999.

6. STOCKHOLDERS' EQUITY
   --------------------

In  January  1999,  the  Company's  stockholders  approved  (1) a change  in the
corporate name of GAR and its subsidiary,  the Company, to World CallNet,  Inc.,
(2) an increase in the  authorized  shares to 30,000,000  shares of common stock
and 10,000,000  shares of preferred  stock, and (3) a stock option plan that had
been adopted by the board of directors in November 1998.  Under the stock option
plan,  the  Company's  board of directors  may grant  options to acquire up to a
total of 1,000,000 shares of stock to officers,  directors,  employees, advisors
or consultants of the Company.

Effective  November 1998, the Company granted  options  pursuant to the terms of
the Stock Option Plan to purchase an aggregate of 600,000 shares as follows:








                                       19

<PAGE>


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

                    NOTES TO UNAUDITED FINANCIAL STATEMENTS
                          (Expressed in U.S. Dollars)



                       Grantee                                        Options 
                       -------                                        -------
         Each of three officers who are also directors                150,000
         One outside director                                         100,000
         One advisory director                                         50,000

Each option  entitles the grantee to purchase one share of the Company's  common
stock at an exercise price of $1.50 per share and expires in November 2001.

In March 1999, the Company  granted an option pursuant to the terms of the Stock
Option Plan to an officer of the Company to  purchase  100,000  shares of Common
Stock at an exercise  price of $3.50 per share,  which  option  expires in March
2002.


7. RELATED PARTY TRANSACTIONS
   --------------------------

     Certain  directors and  stockholders  of the Company are  directors  and/or
     stockholders in other companies with which the Company had the transactions
     set forth below:

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

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

o    The Company has made cash advances to CallNet Plc, an 15% owned  affiliated
     entity, that equaled $502,107 at March 31, 1999.






                                       20

<PAGE>


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

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                           (Expressed in U.S. Dollars)





8. COMMITMENTS
   -----------

The  Company  has  employment  agreements  with  three  officers  who  are  also
directors. Each of these employment agreements requires an annual salary through
September  2001  of  approximately  $110,000  each,  and  provides  that if such
agreement is  terminated by either party during the term of the  agreement,  the
full salary and benefits are required to be paid to the executive  officer until
the end of the  term of the  agreement.  Each of  these  offers  have  identical
employment  agreement with Callnet,  Plc. During February and March 1999,  these
executive officers deferred approximately 23% of their salaries from the Company
in the  aggregate.  Commencing  with  the  quarter  ended  June 30,  1999,  each
executive  officer  has agreed to defer  one-half of his salary from the Company
until a substantial amount of additional capital has been raised by the Company,
as determined in the reasonable  discretion of the Board of Directors,  at which
time the  Company  will be  obligated  to pay to these  executive  officers  the
deferred portion of their salary.  The Company's  obligation to pay the deferred
portion of the salary,  without  interest,  is an  unsecured  obligation  of the
Company that is subordinated to the claims of certain other unsecured  creditors
of the Company.

9. SUBSEQUENT EVENTS
   -----------------

In April 1999, the Company completed the private placement of $550,000 of bridge
notes payable due on October 9, 1999,  or earlier  under certain  circumstances,
including  the  raising  by the  Company of $3.5  million or more of  additional
capital.  The notes bear interest of 10% per annum which is payable monthly. The
holders of the notes were also issued stock purchase warrants  entitling them to
purchase an aggregate of 1,100,000  shares of the Company's common stock between
March 1,  1999 and  December  1, 2000 at prices  varying  from  $4.50 to $10 per
share.

In connection with this transaction,  the Company paid a $12,500 finders fee and
issued stock purchase warrants to purchase 37,500 shares of Company common stock
at an exercise price of $3.60 per share, on substantially  the same terms as the
1998 bridge  warrants  (described in Note 5). The holders of these warrants have
the right to exercise  these  warrants  in cash or pursuant to a "net  exercise"
provision whereby the holder of a warrant can use shares subject to such warrant






                                       21

<PAGE>


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

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                           (Expressed in U.S. Dollars)




at their  then fair  market  value as  consideration  for the  exercise  of such
warrant.  In  addition,  the exercise  price with respect to these  warrants are
subject to standard anti-dilution  provisions.  In addition, the warrants with a
$4.00 exercise price are subject to "ratchet" anti-dilution  provisions whereby,
subject to certain  exceptions,  the  exercise  price of such  warrants  will be
subsequently reduced if during the term of the warrant the Company issues shares
of Company  common  stock at a price below $3.60 per share or grants  options or
warrants with an exercise price or conversion price,  respectively,  below $3.60
per share.  The exercise  price with respect to such warrants will be reduced to
the lowest issuance price or exercise or conversion  price. The holders of these
warrants have certain demand and piggyback registration rights.












                                       22

<PAGE>





                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

         Not applicable.

Item 2.  Changes in Securities.

         In March 1999, the Company issued warrants  exercisable until March 26,
         2001 to purchase  100,000 shares of Company common stock at an exercise
         price of $5.00 per share in  consideration  of an  agreement to provide
         certain financial public relations and investor relations services. The
         holder of the  warrant has certain  demand and  piggyback  registration
         rights. In March 1999, the Company granted an option  exercisable until
         March 2002 to the Company's chief financial officer to purchase 100,000
         shares of Company common stock at an exercise price of $3.50 per share.
         The  securities  referenced in this item 2 were issued in  transactions
         exempt from registration  under the Securities Act of 1933, as amended,
         pursuant to the private placement exemption set forth in Section 4(2).

Item 3.  Defaults on Senior Securities.

         Not applicable.

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

         On  January  5,  1999,  the  Company  held  a  special  meeting  of its
         stockholders.  All proposals  submitted to the  Company's  stockholders
         were approved as follows:

o    To amend the Certificate of Incorporation of the Company to change the name
     of the Company to "World CallNet, Inc."

o    To amend the  Certificate of  Incorporation  of the Company to increase its
     authorized  capital (i) from 20 million  shares of common  stock (par value
     $0.0001) to 30 million  shares of common stock (par value  $0.001) and (ii)
     from 5 million  shares of  preferred  stock (par value $0.01) to 10 million
     shares of preferred stock (par value $0.001).

o     To approve the Company's 1998 Stock Option Plan.


The results of the vote of the  stockholders  with respect to these matters were
as follows:








                                       23

<PAGE>






<TABLE>
<CAPTION>

                                                                      Abstain/          Broker
                                         For          Against         Withheld          No-Votes
                                         ---          -------         --------          --------
<S>                                    <C>            <C>                    <C>               <C>

   o   Change of Name                  6,442,700           0                 0                 0
   o   Increase of Authorized          6,405,700      37,000                 0                 0
   o   1998 Stock Option Plan          6,415,700      27,000                 0                 0

</TABLE>

Item 5.  Other Information.

         As of May 18, 1999,  James  Christodoulou  ceased to be employed by the
         Company.  Aaron  Goodman-Simpson  will  serve  as the  Chief  Financial
         Officer of the Company.


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

     Exhibits.

     a.       Certificate of Amendment to the  Certificate of  Incorporation  of
              the  Company,  which is  incorporated  by  reference  herein  from
              Exhibit 3.1 to the Company's Form 8-K, dated January 5, 1999.

     b.       Securities  Purchase  Agreement  dated as of April 9,  1999 by and
              among  the  Company  and  the  Purchasers  (as  defined  therein).
              (Schedules and certain Exhibits have been omitted).

     c.       Form of Promissory  Note issued to the Purchasers  pursuant to the
              Securities Purchase Agreement.

     d.       Form of Warrant  with an exercise  price of $4.00 per share issued
              to the Purchasers pursuant to the Securities Purchase Agreement.

     e.       Form of Warrant with an exercise  price of $10.00 per share issued
              to the Purchasers pursuant to the Securities Purchase Agreement.

     f.       Registration  Rights  Agreement by and between the Company and the
              Purchasers pursuant to the Securities Purchase Agreement.

10.6          Warrant issued to Thomas Price, Jr.  to purchase 100,000 shares of
              Company common stock.



                                       24

<PAGE>





10.7          Company's 1998 Stock  Option Plan  (incorporated by reference from
              Exhibit 99 to the Company's Form 8-K, dated January 5, 1999).

27            Financial Data Schedule filed herewith.


Reports on Form 8-K.

     One report on Form 8-K dated  January  5, 1999 was filed  during the period
covered by this report. The registrant reported the approval by the stockholders
to the (i)  change  of name of the  Company  to World  CallNet,  Inc.;  (ii) the
amendment to the Company's  Certificate of  Incorporation to increase the number
of authorized  shares of Company common stock and preferred stock; and (iii) the
Company's 1998 Stock Option Plan.







                                       25

<PAGE>





                                   SIGNATURES

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


                                                WORLD CALLNET, INC.
                                                (Registrant)


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

Date: May  19, 1999  
      -------------

                                                /s/Aaron Goodman-Simpson 
                                                --------------------------------
                                                Aaron Goodman-Simpson, Vice
                                                President and Chief Financial
                                                Officer (Principal Financial and
                                                Accounting Officer)

Date: May   19, 1999  
      --------------



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