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 six months ended March 31, 2000

                                       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 May 10, 2000 there were 18,169,304 shares of registrant's  common
stock outstanding.

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

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<PAGE>


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

         The  statements  in this Report on Form 10-QSB and in other  filings by
World CallNet, Inc. (the "Company") with the Securities and Exchange Commission,
or in 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 are not limited
to, plans  discussed in the Company's  Form 10-K for the period ended  September
30, 1999, in the section entitled  "Description of Business" regarding:  (i) its
plans to market its proprietary MailTV products in Europe, North America,  South
America and Asia Pacific,  (ii) its belief that  offering  free Internet  access
will capture customers for CallNet Plc, (iii) its statement that other companies
engaged in Internet related businesses may be acquired, (iv) its belief that the
majority of its future revenues will be derived from MailTV and its ownership of
CallNet Plc,  which earns a share of telephone toll revenues from companies that
provide  telephone  service  to their  customers,  and (v) the  belief  that its
products and services will appeal to the many  segments of the Internet  market;
its statement in Legal Proceedings that the outcome of any legal proceedings and
claims  against  the  Company  will not have a  material  adverse  effect on the
Company's business,  operating results, and financial condition;  and statements
in Liquidity and Capital Resources regarding (i) the projection that its working
capital  will be  adequate  until  the end of  2000,  (ii) the  projection  that
additional  capital from the sale of debt or equity securities will be necessary
after the end of year 2000, (iii) the expectation  that product  development and
manufacturing costs will be borne by the Company and business partners, (iv) the
estimate of property and/or significant  capital equipment  expenditures for the
next twelve months,  (v) the expectation  that Internet related revenues derived
from its  proprietary  MailTV  products and ownership of CallNet Plc will be the
primary source of internal  liquidity and sales of products that are designed to
facilitate new Internet access will be a secondary source of internal liquidity,
and (vi) the anticipation  that the year 2000 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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PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

         Financial  information required by Item 301(b) of Regulation S-B can be
found on the pages following Item 2 below. The financial  information  contained
herein for the six months  ended March 31, 2000 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, 1999
included in the Company's  Annual Report on Form 10-KSB.  Operating  results for
the six  months  ended  March 31,  2000 are not  necessarily  indicative  of the
results that may be expected for the entire year ended September 30, 2000.

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

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

LIQUIDITY AND CAPITAL RESOURCES

         Since  incorporation  in January  1998,  the Company has been  involved
primarily in capital formation  activities,  refinement of its business strategy
and development of relationships with industry partners. The Company's principal
external  source of capital for  developing  its  products and services has been
proceeds from bridge debt  financing and the private  placement of common stock.
Additional  placements of bridge notes or the sale of equity  securities to fund
operating expenses will be necessary until the Company becomes profitable.

In September 1999, the Company  entered into an agreement with  Australian-based
MailTV  Pty to sell up to  14,500,000  shares of its  common  stock for cash and
equity  ownership in MailTV Pty.  Sales of the Company's  common stock to MailTV
Pty were  completed  on  January  31,  2000.  The  Company  received  a total of
$3,884,920 and 653,125 shares of KeyClub.net,  the parent company of MailTV Pty,
in  consideration  for 4,143,915  shares of the Company's  common stock.  Due to
operational  disputes  with MailTV Pty it is  uncertain  whether any  additional
sales of common stock will be completed pursuant to the agreement.

In January  2000,  the Company  completed a private  placement  of common  stock
totaling  $2,362,500  at $1.75 per share.  The Company  also  completed in April
2000, a private placement of common stock totaling $3,981,112 at $4 per share.

         Approximately $573,000 of the proceeds from the aforementioned sales of
common  stock was used to repay bridge notes  payable and accrued  interest.  On
March 31, 2000,  the  remaining  outstanding  bridge notes payable of $1,137,500
plus accrued  interest of $57,500 were repaid in exchange for 891,787  shares of

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<PAGE>

the Company's  common stock.  The  transaction  included the exercise of 487,500
stock  purchase  warrants  at $1 per  share,  with  the  remaining  $707,500  of
principal and accrued interest exchanged for common stock at $1.75 per share.

         The Company's plan of operation for the next twelve months includes the
ongoing  operation of its Internet  service and the  continued  development  and
marketing of its proprietary  Internet products such as MailTV. The Company will
require  substantial capital to implement its business plan. It is expected that
costs of product  development and manufacturing of its products will be borne by
the Company and business  partners such as Zilog,  OEM television  manufacturers
and other  third  parties  seeking  to  generate  new  technologies  and  MailTV
applications developed by the Company.

         The Company has incurred significant net losses since inception,  which
raises  substantial  doubt  about the  Company's  ability to continue as a going
concern. However, with present working capital of approximately $2,900,000,  the
Company estimates it can satisfy its obligations and cash requirements until the
end of  2000.  To  meet  its  working  capital  obligations  plus  research  and
development  cost  requirements  after the end of 2000, the Company will have to
raise additional capital from external sources if cash generated from operations
is not sufficient.

          If the additional  financing is not successfully  completed and if the
Company  is not able to  obtain  additional  financing  arrangements,  it may be
unable to meet its continuing operational obligations, pursue its basic business
strategy,  take  advantage  of new  opportunities,  develop or enhance  existing
products,  or  respond to  competitive  pressures  and  financial  or  marketing
hurdles.  Such inability could have a materially adverse effect on the business,
operating results and financial condition.  Moreover,  the estimated cost of the
proposed  expansion of the  Company's  production  and  marketing  activities is
subject  to  numerous   uncertainties,   including   the   problems,   expenses,
difficulties,  complications and delays,  many of which are beyond  management's
control,  frequently  encountered  in  connection  with  the  establishment  and
development of new business  activities,  and may be affected by the competitive
environment  in which the  Company is  operating.  Accordingly,  there can be no
assurance  that the Company will  complete the proposed  expansion of production
and marketing activities described herein.

         The  Company  has  estimated   that   expenditures   for  plant  and/or
significant  capital equipment will be approximately  $1,500,000 during the next
twelve months.

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

         The Company expects that its primary sources of internal liquidity will
be fees,  toll  charges and rebates  earned under the terms of  agreements  with
telecommunications companies doing business with CallNet Plc Internet and MailTV
customers. In addition the Company will earn revenues from e-commerce activities
from both CallNet ISP and MailTV. The fundamental business strategy is to direct
telephone  usage to the CallNet  telecommunications  network by  increasing  the
CallNet Plc  customer  base and through  sales and usage of MailTV.  The Company
also has  agreements  to earn a percentage of sales from  companies  that market
products and services  through web sites hosted by CallNet Plc. The Company also
offers  products that are designed to facilitate new Internet  access.  Sales of
such products and services are expected to be a secondary source of revenues for
the Company.

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<PAGE>


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

RESULTS OF OPERATIONS

         Revenues  increased  from  $118,477  for the six months ended March 31,
1999,  to $933,540 for the six months ended March 31, 2000,  due to increases in
licensing  fees and  telephone  toll  charges  earned under the terms of CallNet
Plc's agreements with telecommunications companies.

         However,  the production and development costs attributable to revenues
for the six months  ended  March 31,  2000  totaled  $1,875,855.  CallNet  Plc's
agreement with North American  Gateway ("NAG")  required NAG to pay interconnect
charges for telephone usage by CallNet  internet  customers and earn CallNet Plc
rebates and discounts for long distance  calls made through NAG's  network.  NAG
breached its contract  with CallNet Plc by not paying  interconnect  charges for
CallNet Plc's customers  telephone usage and failed to remit any rebates or fees
earned for long distance  calls placed by its customers  through NAG's  network.
This  adversely  affected  revenues  and related  costs for the six months ended
March 31,  2000.  In  February  2000,  dialers  were  provided  to all  Internet
subscribers,  which enables  CallNet Plc to bill its customers for long distance
telephone charges, while providing completely free Internet access.

         General and administrative expenses increased from $918,459 for the six
months ended March 31, 1999,  to  $3,040,719  for the six months ended March 31,
2000. The increase was due to the cost of additional  personnel,  infrastructure
and facilities necessary to meet the growth in the Company's  operations.  Since
the launching of CallNet 0800 free Internet  access in October 1999, the Company
has added additional fulltime employees in response to the significant growth in
new subscribers.

         Interest  expense (before  amortization of discount) for the six months
ended March 31, 2000  decreased  when compared to the six months ended March 31,
1999  due  to  the  repayment  of  bridge  notes  commencing  in  October  1999.
Amortization of the remaining discount related to such debt was $195,049 for the
six months  ended March 31, 2000 and was $43,637 for the six months  ended March
31,  1999.  The discount  related to the value,  as  calculated  using the Black
Scholes options  pricing model, of stock purchase  warrants issued in connection
with the bridge notes.

         Depreciation  and amortization for the six months ended March 31, 2000,
is primarily  composed of  approximately  $500,000 of amortization of the excess
cost over book  value of the assets of CallNet  Plc,  which  became a 100% owned
subsidiary of the Company in September 1999.

CAUTIONARY FACTORS

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

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<PAGE>


NEED FOR ADDITIONAL CAPITAL

         The  Company  needs a  substantial  amount of capital  to  achieve  the
objectives  in 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
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 number of companies  are  developing or have  introduced  devices and
technologies  to  facilitate  access to the Internet via a  television.  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 of 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.


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<PAGE>


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.

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 to provide data  communications  access to its service.  Any damage or
failure that causes  interruptions  in 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,  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.


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<PAGE>


SEASONALITY

         Subscriber  acquisition  is  expected  to be  highest in the second and
third calendar  quarters,  when sales of new computers and computer software are
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.

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


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<PAGE>

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 can be
no  assurance  that the  Company  will  succeed in adapting  its online  service
business to alternate access devices and conduits.

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  revenue  sharing  and  Internet
routing agreements with telecommunications companies 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.

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


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<PAGE>

addition,  there  can  be no  assurance  that  other  parties  will  not  assert
infringement claims against the Company.

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.

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.








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<PAGE>

<TABLE>

<CAPTION>

                               WORLD CALLNET, INC.
                           CONSOLIDATED BALANCE SHEET

                           (Expressed in U.S. Dollars)
                              AS OF MARCH 31, 2000

                                   (Unaudited)

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

CURRENT ASSETS:
   Cash                                                              $  5,009,655
   Trade accounts receivable, no allowance for doubtful accounts          657,446
                                                                     ------------
                                                                        5,667,101
          Total current assets

   Investment in marketable equity securities                             326,563
   Furniture and fixtures, at cost                                        287,843
   Goodwill, net of accumulated amortization of $575,050                4,248,015
   Other intangible assets, net                                           179,186
   Bonds, deposits and other assets                                       422,950
                                                                     ------------
           Total other assets                                           5,464,957

                 Total assets                                        $ 11,131,658
                                                                     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
    Notes payable                                                    $     12,500
   Accounts payable and accrued expenses                                2,689,825
                                                                     ------------
           Total current liabilities                                    2,702,325

STOCKHOLDERS' EQUITY:
    Preferred stock,  $0.001 par value;  10,000,000 shares
    Common stock, $0.001 par value; 100,000,000 shares authorized:
    17,117,595 shares issued and 16,617,595 shares outstanding             17,117
   Common stock subscribed                                              3,405,088
   Additional paid-in capital                                          15,687,396
   Accumulated deficit                                                 (9,770,989)
   Treasury stock, 500,000 shares, at cost                               (507,936)
   Valuation allowance for investment securities                         (401,343)
                                                                     ------------
            Total stockholders' equity                                  8,429,333

            Total liabilities and stockholders' equity               $ 11,131,658
                                                                     ============

</TABLE>





              See accompanying notes to these financial statements.

                                       11
<PAGE>

<TABLE>

<CAPTION>

                               WORLD CALLNET, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS

                           (Expressed in U.S. Dollars)
           FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999

                                   (Unaudited)

                                               Three Months Ended               Six Months Ended
                                                   March 31,                     March 31,
                                             2000              1999           2000           1999
                                             ----              ----           ----           ----
<S>                                      <C>             <C>             <C>             <C>


REVENUES                                 $    554,330    $     83,204    $    933,450    $    118,477

COSTS AND EXPENSES:
                                            3,806,914         526,494       5,733,869         986,665
                                         ------------    ------------    ------------    ------------

NET LOSS                                 $ (3,252,584)   $   (443,290)   $ (4,800,329)   $   (868,188)
                                         ============    ============    ============    ============

NET LOSS PER SHARE (basic and diluted)   $       (.23)   $       (.06)   $       (.35)   $       (.12)
                                         ============    ============    ============    ============

WEIGHTED AVERAGE SHARES                    14,216,165       7,325,377      13,590,629       7,245,043
                                         ============    ============    ============    ============
</TABLE>



















              See accompanying notes to these financial statements.

                                       12

<PAGE>

<TABLE>

<CAPTION>



                      CONSOLIDATED STATEMENT OF CASH FLOWS

                           (Expressed in U.S. Dollars)
                FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999

                                   (Unaudited)

                                                                        2000           1999
<S>                                                                 <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                         $(4,800,329)   $  (868,188)
   Depreciation and amortization expense                                564,704          1,900
   Amortization of debt issuance costs                                  195,049         43,637
   Issuance of common stock for services                                 90,000
   Increase in receivables                                             (509,889)      (512,593)
   Decrease in prepaid expenses                                          99,159           --
   Increase in bonds, deposits and other assets                        (204,131)          --
   Increase in accounts payable and accrued expenses                  1,196,238        201,829
    Other                                                               (15,115)        25,986

               Net cash used by operating activities                 (3,384,314)    (1,107,427)
                                                                    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase furniture and fixtures                                    (145,951)       (66,053)
                                                                    -----------    -----------


CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from short-term indebtedness, net of financing costs           --        1,092,500
   Repayment of short-term indebtedness                                (550,000)          --
   Cash received in common stock issuances and subscriptions          8,875,677        167,560
                                                                    -----------    -----------
                                                                      8,325,677        512,884

NET INCREASE IN CASH                                                  4,795,412         86,580

CASH, beginning of period                                               214,243          1,995
                                                                    -----------    -----------
CASH, end of period                                                 $ 5,009,655    $    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
   Repayment of notes payable with common stock                       1,137,500
                                                                                   -----------
                                                                    $ 1,137,500    $   514,872
                                                                    ===========    ===========
</TABLE>


              See accompanying notes to these financial statements.

                                       13
<PAGE>


                               WORLD CALLNET, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                            Expressed in U.S. Dollars

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

     Organization and Nature of Operations
     -------------------------------------

     World CallNet,  Inc. (the "Company") is incorporated in the United Kingdom.
     The Company is primarily engaged in developing proprietary Internet devices
     and software  applications,  developing  commercial  Internet  websites and
     operating a pay-as-you-go  Internet service provider.  Primarily all of the
     Company's  operations and customers are located in the United Kingdom as of
     March 31, 2000.

     Unaudited Information
     ---------------------

     The  consolidated  balance  as of  March  31,  2000  and  the  consolidated
     statements  of  operations  for the three and six month periods ended March
     31, 2000 and 1999 were taken from the Company's  books and records  without
     audit. However, in the opinion of management, such information includes all
     adjustments  (consisting  only of  normal  recurring  accruals)  which  are
     necessary to properly  reflect the consolidated  financial  position of the
     Company as of March 31,  2000 and the results of  operations  for the three
     and six months ended March 31, 2000 and 1999.

     The accompanying  financial  statements include the accounts of the Company
     and its two wholly owned  subsidiaries,  CallNet Plc and Overleaf  Systems,
     Limited  ("Overleaf").  Overleaf has been inactive to date. All significant
     balances  and  transactions  have been  eliminated  in  consolidation.  The
     foregoing notes to these financial  statements include only the information
     regarding transactions and events that occurred during the six months ended
     March 31, 2000. These notes should be read in conjunction with the notes to
     the audited September 30, 1999 financial statements.

2.   TRANSACTION WITH MAILTV
     -----------------------

     In September  1999,  the Company  entered into an agreement with MailTV Pty
     Ltd.  ("MailTV"),  an  Australian  company,  in which  MailTV is to acquire
     14,500,000  shares of the Company's  common stock in two phases.  The first
     phase involved the Company exchanging  2,900,000 shares of its common stock
     for $2,718,750 in cash and 453,125 shares of KeyClub.net, a publicly traded
     company  affiliated  with MailTV.  This phase closed on September 30, 1999,
     although  $1,765,530  of the cash was  received in  installments  that were
     completed in January 2000.





                                       14

<PAGE>

                               WORLD CALLNET, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                            Expressed in U.S. Dollars

     The second  phase ended on January 31,  2000,  with the Company  exchanging
     1,243,915  shares of its common  stock for  $1,166,170  in cash and 200,000
     shares  of  KeyClub.net.  As a result of  KeyClub.net  losing  its  trading
     privileges on the OTC Bulletin Board,  the Company has provided a valuation
     allowance  of  $401,343  on  its  investment  in  KeyClub.net  shares.  The
     valuation  allowance  reflects an adjustment  to the carrying  value of the
     KeyClub.net  shares to equal $.50 per share.  Management does not currently
     believe the  reduction  in value is permanent in nature and has recorded it
     as a component of stockholders' equity.

     Due to  operational  disputes  and mutual  defaults  under the terms of the
     agreement with MailTV Pty, the Company is uncertain  whether any additional
     exchanges will be consummated with MailTV Pty.

3.   NOTES PAYABLE
     -------------

     In October and December  1999, the Company repaid in cash $550,000 of notes
     payable,  plus accrued  interest to three note holders.  On March 31, 2000,
     $1,137,500 of the remaining $1,150,000 notes payable, plus accrued interest
     of $57,500 was repaid through the issuance of the Company's common stock to
     the note holders.  Stock purchase  warrants  covering 487,500 shares of the
     Company's  common  stock were  exercised  at $1.00 per share and  remaining
     principal  and accrued  interest was repaid  through the issuance of common
     stock at $1.75 per share. A total of 891,787 shares of the Company's common
     stock  were  issued  in the  exchange  and  warrant  exercises  by the note
     holders.  At March 31, 2000, $12,500 of notes payable remained  outstanding
     and were repaid in cash during April 2000. As of March 31, 2000,  1,187,500
     stock purchase warrants remained outstanding.

4.   STOCKHOLDERS' EQUITY
     --------------------

     In January  2000,  the Company  completed a private  placement of 1,350,000
     shares of its common stock for total proceeds of $ 2,362,500. In connection
     with the  placement,  the  Company  paid a cash  commission  of $37,100 and
     issued 150,000 shares of its common stock.

     On February 24, 2000,  the  Company's  stockholders  approved the following
     proposals:

         o        An  amendment to the  Company's  Stock Option Plan to increase
                  the  number  of  shares  to be  issued  under  such  plan from
                  1,000,000 to 3,000,000.

         o        An  amendment  to the  Company's  Second  Amended and Restated
                  Certificate of Incorporation to increase the authorized number
                  of shares of common stock from 30,000,000 to 100,000,000.

                                       15

<PAGE>


5.   SUBSEQUENT EVENT
     ----------------

     On  April  19,  2000,  the  Company  completed  the  private  placement  of
     $3,981,112 of its common stock at $4.00 per share.  In connection  with the
     offering,  the Company paid a cash commission of $112,500 and issued 28,125
     shares of its common  stock.  At March 31,  2000,  the Company had received
     $3,405,088  in cash stock  subscriptions  and has  included  such amount as
     common stock  subscribed  in the  accompanying  balance  sheet at March 31,
     2000.














                                       16

<PAGE>



                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

Not applicable.

Item 2.  Changes in Securities.

Not Applicable

Item 3.  Defaults on Senior Securities.

Not applicable.

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

On February 24, 2000, the Company held its annual meeting of  stockholders.  The
Company's stockholders were submitted and approved the following proposals:

1)            To elect three directors to the Company's Board of Directors, each
              to hold office  until his  successor  is elected and  qualified or
              until his earlier resignation or removal.

2)            To approve an  amendment  to the  Company's  Stock  Option Plan to
              increase  the  number of shares to be issued  under such plan from
              1,000,000 to 3,000,000.

3)            To  approve an  amendment  to the  Company's  Second  Amended  and
              Restated  Certificate of  Incorporation to increase its authorized
              number  of  shares  of  common  stock  from  30,000,000  shares to
              100,000,000 shares.

4)            To ratify the  appointment  of Hein + Associates,  L.L.P.  as the
              Company's  independent  auditors  for the fiscal  year  ending
              September 30, 2000.

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

                                                           Abstain/   Broker
                                For         Against       Withheld    No-Votes

Election of Directors:

Paul Goodman-Simpson        11,590,159        1,000         5,433         -

Aaron Goodman-Simpson       11,590,159        1,000         5,433         -

Keith Goodyer               11,590,159        1,000         5,433         -


                                       17

<PAGE>

                                                           Abstain/   Broker
                                For         Against       Withheld    No-Votes


To amend the Company's
Stock Option Plan for an
increase of number of
shares from 1,000,000
to 3,000,000                10,158,000       17,820        52,746     1,438,592

To amend the Company's
Second Amended and
Restated Certificate of
Incorporation to increase
the authorized number of
common stock from
30,000,000 to 100,000,000   11,596,592       21,233       45,646          -

To ratify the appointment
Of Hein + Associates, LLP
as independent auditors for
the fiscal year ending on
September 30, 2000          11,596,592        5,300        2,265          -



Item 5.  Other Information.

Not applicable.

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

(a)      Exhibits.

3.1      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.

3.2      Amendment to Second Amended and Restated  Certificate of Incorporation,
         dated February __, 2000.

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

10.1     Amended 1998 Stock Option Plan.

27.1     Financial Data Schedule.


                                       18

<PAGE>


(b)      Reports on Form 8-K.

         A  Current  Report  on Form 8-K was filed  with the  Commission  by the
         Company on February 15, 2000,  to report the amendment of the agreement
         with  MailTV  Pty to  provide  an  extension  of time for MailTV Pty to
         complete its funding  obligations  until February 29, 2000. The Company
         also reported that outstanding promissory notes in the principal amount
         of $1,150,000 were past due.

                                   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 22, 2000


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

                                               Date: May 22, 2000