SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

[Mark One]

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended: December 31, 2000.

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from to
--------- ---------------
2000

Commission file number :000-24447

QUEST NET CORP.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)

1250 E. HALLANDALE BEACH BLVD. SUITE 502
PEMBROKE PARK, FLORIDA 33009
----------------------------------------
(Address of principal executive offices)

(954) 457-0900
-------------------------------
(Registrant's telephone number)

PARPUTT ENTERPRISES, INC.
12835 E. ARAPAHOE ROAD
TOWER I, PENTHOUSE
ENGLEWOOD, COLORADO 80112
(Former name and former address)

Florida [4813] 84-1331134
(State of Incorporation) Primary Standard Industrial IRS Employer
(Classification Code Number I.D. Number)

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

Securities registered under Section 12(g) of
the Exchange Act:
Common Stock, no par value
(Title of class)

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

The number of shares outstanding of each of the issuer's classes of equity
as of January 24, 2001 49,374,309 shares of Common Stock, no par value; and,
30,000 shares of Preferred Convertible Stock, no par value.

QUEST NET CORP.

PART I - FINANCIAL INFORMATION

Page
----

Item 1. Financial Statements

Consolidated Balance Sheet - December 31, 2000 ................................ 3

Consolidated Statements of Operations - Six months ended December 31, 2000
and 1999 and Three months ended December 31, 2000 and 1999 .................. 4

Consolidated Statements of Cash Flows - Six months ended
December 31, 2000 and 1999 .............................................. 5

Notes to Consolidated Financial Statements ... ................................. 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Plan of Operations............................................ 7-14

Part II - Other Information

Item 1. Legal Proceedings.................................................... 15

Item 2. Changes in Securities................................................ 15

Item 3. Defaults Upon Senior Securities...................................... 15

Item 4. Submission of Matters To a Vote of Security Holders ................ 16

Item 5. Other Information.................................................... 16

Item 6. Exhibits and Reports on Form 8-K..................................... 16

Signature ...................................................................... 17

QUEST NET CORP

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2000
UNAUDITED

ASSETS

CURRENT ASSETS
Cash $ 4,076
Accounts receivable net of $10,185 allowance 22,691
Prepaid expenses 1,779
---------------
TOTAL CURRENT ASSETS 28,546

PROPERTY AND EQUIPMENT, net of
accumulated depreciation of $156,379 330,258

OTHER ASSETS 6,663
---------------
$ 365,467
===============

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,177,767
Notes payable-shareholder 3,500,000
Notes payable 126,482
Due to shareholder 657,232
Obligations under capital lease - current 13,559
--------------
TOTAL CURRENT LIABILITIES 5,475,040

MINORITY INTEREST 80,000

OBLIGATIONS UNDER CAPITAL LEASE 33,263

SHAREHOLDERS' DEFICIT
Preferred stock, no par value; 5,000,000 shares authorized;
30,000 shares issued and outstanding -
Common stock, no par value; 50,000,000 shares aurthorized;
49,374,309 shares issued and outstanding 17,670,181
Stock warrants, 47,000 issued and outstanding 7,191
Stock options, 10,000 issued and outstanding 25,800
Additional paid-in capital 353,285
Accumulated deficit (23,279,293)
--------------
TOTAL SHAREHOLDERS' DEFICIT (5,222,836)
--------------
$ 365,467
==============

See accompanying notes to consolidated financial statements

QUEST NET CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

For the six months ended For the three months ended
December 31, December 31,
------------------------------------- -----------------------------------------
2000 1999 2000 1999
---------------- ----------------- ------------------- ------------------

REVENUES
Internet and other related services $ 242,657 $ 108,817 $ 128,567 $ 61,072
---------------- ----------------- ------------------- -----------------

COSTS AND EXPENSES
Cost of internet-related services 188,156 16,477 115,656 10,685
Stock based compensation - 668,203 - 411,203
Bad debt expense 3,052 - - -
Salaries and bonuses 164,157 398,639 92,889 229,387
General and administrative 340,555 694,054 126,481 418,397
Depreciation and amortization 43,781 425,283 23,771 220,891
---------------- ----------------- ------------------- ----------------
TOTAL OPERATING EXPENSES 739,701 2,202,656 358,797 1,290,563
---------------- ----------------- ------------------- ----------------

OPERATING LOSS (497,044) (2,093,839) (230,230) (1,229,491)

NON-OPERATING INCOME (EXPENSE)
Interest expense (65,038) (33,872) (62,396) -
Interest income - 63,927 - 28,559
Realized loss on marketable securities - (17,751) - (11,471)
Proceeds from settlement - 109,454 - 109,454
Gain on settlement of leased space 700,000 - 700,000 -
Loss upon return of leased equipment (376,824) - (376,824) -
Loss from settlement of lawsuits (4,779,460) - (4,779,460) -
---------------- ----------------- ------------------- -----------------
NET LOSS $(5,018,366) $(1,972,081) $ (4,748,910) $ (1,102,949)
================ ================= =================== =================

NET LOSS PER SHARE:
Basic and diluted $ (0.15) $ (0.09) $ (0.11) $ (0.05)
================ ================= =================== =================

SHARES USED FOR COMPUTING NET LOSS PER SHARE:

Basic and diluted 34,254,309 22,180,102 44,918,395 22,207,126
================ ================= =================== =================

See accompanying notes to the consolidated financial statements

QUEST NET CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended
December 31,
2000 1999
Unaudited Unaudited
----------------- -------------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (5,018,366) $ (2,042,447)
----------------- -------------------
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization 43,779 423,832
Stock based compensation - 662,603
Stock issued for services and settlements 1,279,460 6,000
Realized loss from marketable securities - 17,751
Note issued for settlement 3,500,000 -
Realized loss from return of equipment 689,615 -
Realized gain on settlement of leased space (700,000) -
Changes in current assets and current liabilities:
Accounts receivable 13,021 (11,227)
Other receivable - (30,336)
Increase in prepaid expenses 19,654 (40,106)
Other assets 26,717 22,674
Accounts payable and accrued expenses 143,979 327,191
----------------- -------------------
5,016,225 1,378,382
----------------- -------------------
NET CASH PROVIDED BY USED IN OPERATING ACTIVITIES (2,141) (664,065)
----------------- -------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (81,055) (862,639)
Purchase of marketable securities - (100,032)
Advances made to acquisition candidate (100,000)
----------------- -------------------
CASH FLOWS USED IN INVESTING ACTIVITIES (81,055) (1,062,642)
----------------- -------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of preferred stock - (1,000,000)
Funds provided by shareholder 19,900 -
Procceds from notes payable 44,497 -
Repayments of capital lease (5,816) -
----------------- -------------------
CASH FLOWS USED IN (PROVIDED BY) FINANCING ACTIVITIES 58,581 (1,000,000)
----------------- -------------------

NET DECREASE IN CASH (24,615) (2,726,707)
Cash, at beginning of period 28,691 4,298,289
----------------- -------------------
Cash, at end of period $ 4,076 $ 1,571,582
================= ===================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 5,138 $ 33,872
================= ===================

Cash paid for income taxes $ - $ -
================= ===================

NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for services previously accrued $ - $ 1,037,015
================= ===================

Equipment placed in service $ - $ 89,144
================= ===================

See accompanying notes to consolidated financial statements

QUEST NET CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A: BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB and Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the Company's June 30, 2000 audited
financial statements as filed on Form 10-KSB in November 2000. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included. The results of
operations for the six months and three months ended December 31, 2000 are not
necessarily indicative of the results that will be realized for the full year.

PRINCIPLES OF CONSOLIDATION

The Company's consolidated financial statements include the accounts of the
Company's and its 80% owned subsidiary Globalbot Corp. The Company formed
four other wholly owned subsidiaries, IPQuest Corp., Quest Wireless Corp.,
Globalbot Corp., QuesTel Corp. and Quest Fiber Corp, and CWTel, Inc. as of March
1, 2000. All material intercompany accounts and transactions have been
eliminated in consolidation.

SIGNIFICANT EVENTS

On October 16, 2000, Quest Net Corp. issued to James LLC 25,900,000 shares of
its common stock. The shares were issued as partial settlement of a lawsuit that
was filed against Quest on May 5, 2000 in the United States District Court,
Southern District of New York, by James LLC (Case No. 00 Civ. 3467). On the date
of issuance of the shares of common stock, their fair market value was
$1,279,460. The lawsuit stemmed from the sale of common stock to James LLC for
$5,000,000. The lawsuit alleged that the Company breached its contract of sale
to James LLC by, among other things, failing to register the common stock, and
failing to pay liquidated damages for the non-effectiveness of the registration
statement. James LLC demanded damages in excess of $5,000,000. Quest also issued
a Promissory Note in the principal sum of $3,500,000, maturing December 31,
2001, and bearing interest at the rate eight percent per annum. As result of the
above matters, the Company has recorded a loss from settlement from this lawsuit
in the amount of $4,779,460.

In October 2000, the Company returned $391,818 of communication equipment not in
service to the vendor from whom it was purchased and the vendor has provided
additional communication equipment valued at $75,000 in full settlement of the
amount owed the vendor.

In December 2000, the Company returned $159,573 of communication equipment not
in service to the another vendor from whom it was purchased in March 1998. At
the time of purchase, Company had made an initial payment of $126,824 and the
balance subject to monthly payments of $13,400. In September 2000, the Company
defaulted on its monthly payments and the vendor has asserted its right to the
balance of the monthly payments approximating $250,000. The outcome of the
vendor's assertion is unknown as of December 31, 2000, however, the Company
estimates that, in the event the vendor's assertion is upheld by a court of law,
the loss that may be sustained by the Company would approximate $377,000 and has
recorded a loss for such amount.

In March 2000, the Company entered into a five year lease for 9,681 square feet
of space at 3001 West Hallandale Beach Boulevard, Pembroke Park, Florida as a
result of its recent growth and to consolidate operations to one location. The
aggregate annual minimum rent, as defined, over the life of the lease totaled
$778,000. In June 2000, as a result of a significant deterioration of the
Company's financial condition, the Company decided to abandon this space and to
operate from the leased premises of its CW Tel, Inc. subsidiary. The lease
provided that in the event of default of payment of the rent due under the terms
of the lease, the lessor had the immediate right to all remaining rents due for
the balance of the term of the lease. At the time of the Company's decision, the
Company recorded a liability of $700,000 representing the remaining rents due
for the balance of the term of the lease. In December 2000, the Company and
landlord settled this matter in exchange for mutual releases granted to each
party from further action or litigation. As a result of the above matters, the
Company has recorded a gain on settlement of leased space in the amount of
$700,000.

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

GENERAL

Quest Net Corp., since inception, has been primarily engaged in providing
Internet connectivity and the development of Internet tools for individuals and
companies.

The Company has incurred net losses applicable to common shareholders
since inception through December 31, 2000, of approximately $23,988,000 after
discounts and dividends on preferred stock. The Company anticipates that losses
from operations will continue due to the lack of working capital and the capital
necessary to fund its operations.

The Company's costs and expenses historically have primarily fallen into
the following categories:

o Telecommunications and operations;
o Employee stock compensation plans;
o Employees' salaries
o General and administrative;
o Amortization and depreciation.

Telecommunications and operating expenses consist of
telecommunications, including the cost of local telephone lines and costs of
leased lines connecting the Internet and operations centers.

Operating expenses also include employee salaries and benefits,
equipment costs, office rent and utilities and customer service and technical
support costs.

Employee stock compensation plans consist of restricted common stock
awards and options. The Company has utilized its restricted stock as an
incentive to attract and keep qualified experienced key personnel.

General and administrative expenses consist primarily of administrative
staff and related benefits.

Amortization expense primarily relates to the amortization of goodwill
and a non-compete agreement acquired in a purchase of an e-commerce provider and
certain equipment and licenses related to proposed plans to offer Internet
kiosks. Amortization expense is based on the Company's best estimate of the
useful lives of the intangible assets.

Depreciation expense primarily relates to equipment and is based on the
estimated useful lives of the assets ranging from three to five years using the
straight-line method for the equipment.

RESULTS OF OPERATIONS

SIX MONTHS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999

REVENUE

Revenue for the six months ended December 31, 2000 was $242,657 as
compared to $108,817 for the same period in 1999. The increase was primarily a
result of the inclusion of the telephone operations and associated revenues of
CW Tel, Inc., which was acquired in March 2000, in the amount of $188,764.

COSTS AND EXPENSES

Cost of revenue, was substantially comprised of leased telephone lines for
the six months ended December 31, 2000 was $188,156 as compared to $16,477 for
the same period in 1999. The increase was a result of leased lines expense of
$42,471 associated with the telephone operations of CW Tel, Inc. and the cost
of leased telephone lines, under long term leases, of Quest Net Corp. totaling
$136,177 for which operations have been curtailed.

Stock based compensation decreased by $668,203 during the six months ended
December 31, 2000 as compared to the six months ended December 31, 1999 due to
the scaled down operations of the Company, the corresponding decline in manpower
and the non-issuance of shares of common stock of the Company during the six
months ended December 31, 2000.

Salaries and bonuses decreased by $234,482 during the six months ended
December 31, 2000 to $164,157, as compared to $398,639 during the six months
ended December 31, 1999, due to a reduction in manpower as a result of scaled
down operations.

General and administrative costs decreased to $340,555 for the six months
ended December 31, 2000 as compared to $694,054 for the same period in 1999. The
decrease was attributable to cost cutting efforts during the six months ended
December 31, 2000.

Depreciation and amortization decreased by $381,502 during the six months
ended December 31,2000 as compared to the six months ended December 31, 1999.
The decrease was due a review conducted by the Company at June 30, 2000 of the
net book value of its fixed assets, covenant not to compete associated with its
acquisition of Wings Online, Inc. and goodwill associated with acquisitions of
CWTel, Inc. and AVX Communications. The review indicated that based on the
Company's level of operations, the Company's estimate of the recoverability of
such net book values was significantly impaired. Accordingly, the Company
recognized a loss on impairment of $2,467,749 comprised of $714,851 attributable
to fixed assets, $179,633 attributable to the covenant not to compete and
$1,573,265 attributable to goodwill.

Interest expense increased by $31,166 during the six months ended
December 31, 2000 as compared to the six months ended December 31, 1999. As part
of the Company's settlement of a lawsuit with a shareholder in October 2000,
the Company issued a $3,500,000 note to the shareholder bearing interest at 8%
per annum due in December 2001 resulting in interest expense of $60,000 in the
2000 period. During the quarter ended September 30, 1999, as a result of Company
not redeeming its preferred stock outstanding on a timely basis due to a lack
funds at the time, the Company incurred $33,872 of interest expense.

Interest income decreased by $63,927 during the six months ended December
31, 2000 as compared to the six months ended December 31, 1999 due to a decrease
in money market investment interest earned on the proceeds of a $5,000,000
private placement which were totally expended to fund the Company's operating
and investing activities during 1999.

On October 16, 2000, Quest Net Corp. issued to James LLC, a shareholder of
the Company, 25,900,000 shares of its common stock. The shares were issued as
partial settlement of a lawsuit that was filed against Quest on May 5, 2000 in
the United States District Court, Southern District of New York, by James LLC
(Case No. 00 Civ. 3467). On the date of issuance of the shares of common stock,
their fair market value was $1,279,460. The lawsuit stemmed from the sale of
common stock to James LLC for $5,000,000. The lawsuit alleged that the Company
breached its contract of sale to James LLC by, among other things, failing to
register the common stock, and failing to pay liquidated damages for the
non-effectiveness of the registration statement. James LLC demanded damages in
excess of $5,000,000. Quest also issued a Promissory Note in the principal sum
of $3,500,000, maturing December 31, 2001, and bearing interest at the rate
eight percent per annum. As result of the above matters, the Company has
recorded a loss from settlement from this lawsuit in the amount of $4,779,460.

In December 2000, the Company returned $159,573 of communication
equipment not in service to the another vendor from whom it was purchased in
March 1998. At the time of purchase, Company had made an initial payment of
$126,824 and the balance subject to monthly payments of $13,400. In September
2000, the Company defaulted on its monthly payments and the vendor has asserted
its right to the balance of the monthly payments approximating $250,0000. The
outcome of the vendor's assertion is unknown as of December 31, 2000, however,
the Company estimates that, in the event the vendor's assertion is upheld by a
court of law, the loss that may be sustained by the Company would approximate
$377,000 and has recorded a loss for such amount.

In March 2000, the Company entered into a five year lease for 9,681 square
feet of space at 3001 West Hallandale Beach Boulevard, Pembroke Park, Florida as
a result of its recent growth and to consolidate operations to one location. The
aggregate annual minimum rent, as defined, over the life of the lease totaled
$778,000. In June 2000, as a result of a significant deterioration of the
Company's financial condition, the Company decided to abandon this space and to
operate from the leased premises of its CW Tel, Inc. subsidiary. The lease
provided that in the event of default of payment of the rent due under the terms
of the lease, the lessor had the immediate right to all remaining rents due for
the balance of the term of the lease. At the time of the Company's decision, the
Company recorded a liability of $700,000 representing the remaining rents due
for the balance of the term of the lease. In December 2000, the Company and
landlord settled this matter in exchange for mutual releases granted to each
party from further action or litigation. As a result of the above matters, the
Company has recorded a gain on settlement of leased space in the amount of
$700,000.

THREE MONTHS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999

REVENUE

Revenue for the three months ended December 31, 2000 was $128,567 as
compared to $61,072 for the same period in 1999. The increase was primarily a
result of the inclusion of the telephone operations and associated revenues of
CW Tel, Inc., which was acquired in March 2000, in the amount of $106,241.

COSTS AND EXPENSES

Cost of revenue, was substantially comprised of leased and telephone lines
for the quarter ended December 31, 2000 was $115,656 as compared to $10,685 for
the same period in 1999. The increase was a result of a the increase of leased
lines expense associated with the telephone operations of CW Tel, Inc..

Stock based compensation decreased by $411,203 during the quarter ended
December 31, 2000 as compared to the quarter ended December 31, 1999 due to the
scaled down operations of the Company, the corresponding decline in manpower and
the non-issuance of shares of common stock of the Company during the quarter
ended December 31, 2000.

Salaries and bonuses decreased by $136,498 during the quarter ended
December 31, 2000 to $92,889, as compared to $229,387 during the quarter ended
December 31, 1999, due to a reduction in manpower as a result of scaled down
operations.

General and administrative costs decreased to $126,481 the quarter ended
December 31, 2000 as compared to $418,397 for the same period in 1999. The
decrease was attributable to cost cutting efforts during the quarter ended
December 31, 2000.

Depreciation and amortization decreased by $197,120 during the quarter
ended December 31, 2000 as compared to the quarter ended December 31, 1999. The
decrease was due a review conducted by the Company at June 30, 2000 of the net
book value of its fixed assets, covenant not to compete associated with its
acquisition of Wings Online, Inc. and goodwill associated with acquisitions of
CWTel, Inc. and AVX Communications. The review indicated that based on the
Company's level of operations, the Company's estimate of the recoverability of
such net book values was significantly impaired. Accordingly, the Company
recognized a loss on impairment of $2,467,749 comprised of $714,851 attributable
to fixed assets, $179,633 attributable to the covenant not to compete and
$1,573,265 attributable to goodwill.

Interest expense increased by $62,396 during the quarter ended December
31, 2000 as compared to the quarter ended December 31, 1999. As part of the
Company's settlement of a lawsuit with a shareholder in October 2000, the
Company issued a $3,500,000 note to the shareholder bearing interest at 8% per
annum due in December 2001 resulting in interest expense of $60,000 in the 2000
period.

Interest income decreased by $28,559 during the quarter ended December 31,
2000 as compared to the quarter ended December 31, 1999 due to a decrease in
money market investment interest earned on the proceeds of a $5,000,000 private
placement which were totally expended to fund the Company's operating and
investing activities during 1999.

In December 2000, the Company returned $159,573 of communication
equipment not in service to the another vendor from whom it was purchased in
March 1998. At the time of purchase, Company had made an initial payment of
$126,824 and the balance subject to monthly payments of $13,400. In September
2000, the Company defaulted on its monthly payments and the vendor has asserted
its right to the balance of the monthly payments approximating $250,0000. The
outcome of the vendor's assertion is unknown as of December 31, 2000, however,
the Company estimates that, in the event the vendor's assertion is upheld by a
court of law, the loss that may be sustained by the Company would approximate
$377,000 and has recorded a loss for such amount.

In March 2000, the Company entered into a five year lease for 9,681 square
feet of space at 3001 West Hallandale Beach Boulevard, Pembroke Park, Florida as
a result of its recent growth and to consolidate operations to one location. The
aggregate annual minimum rent, as defined, over the life of the lease totaled
$778,000. In June 2000, as a result of a significant deterioration of the
Company's financial condition, the Company decided to abandon this space and to
operate from the leased premises of its CW Tel, Inc. subsidiary. The lease
provided that in the event of default of payment of the rent due under the terms
of the lease, the lessor had the immediate right to all remaining rents due for
the balance of the term of the lease. At the time of the Company's decision, the
Company recorded a liability of $700,000 representing the remaining rents due
for the balance of the term of the lease. In December 2000, the Company and
landlord settled this matter in exchange for mutual releases granted to each
party from further action or litigation. As a result of the above matters, the
Company has recorded a gain on settlement of leased space in the amount of
$700,000.

LIQUIDITY AND CAPITAL RESOURCES

From inception, the Company's revenues have been insufficient to support
its operations and as a result its continued existence is dependent upon its
ability to resolve its liquidity problems, principally by obtaining additional
debt and/or equity financing. The Company currently has a working capital
deficiency of $5,446,494 as compared to working capital of $604,810 at December
31, 1999 and a Shareholders' deficit of $5,222,836 including an accumulated
deficit of $23,279,293 at December 31, 2000. Additionally, the cash used in
operations for the quarter ended December 31, 2000 totaled $2,141. These and
other factors raise a substantial doubt as to the ability of the Company to
continue as a going concern. In order to continue its current operations and
effectuate its operational plan the Company will need to obtain additional debt
or equity financing. In the event that the Company is unable to obtain debt or
equity financing or are unable to obtain such financing on terms and conditions
that are acceptable, the Company may have to cease or severely curtail
operations.

The Company has financed its operations through several Regulation D
private placement transactions.

The Company anticipates that the balance of its capital needs for the
fiscal year ending June 30, 2001 will be approximately $ 250,000.

In June 1999, the Company finalized a Private Placement ( REG D 506) with
James LLC in the amount of $5,000,000, of which the company received a net
amount of $4,650.000. On May 5, 2000, a lawsuit was filed against Quest by James
LLC. The lawsuit was settled On October 5, 2000, the lawsuit was settled. As
part of the settlement, the Company issued James LLC, 25,900,000 shares of its
common stock, thereby giving James LLC a majority interest in the shares of the
Company's common stock then outstanding and a note in the principal sum of
$3,500,000 maturing on December 31, 2001 with interest at eight percent per
annum.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

Statements in this Quarterly Report on Form 10-QSB under the caption
"Management's Discussion and Analysis or Plan of Operations," as well as in the
Company's press releases or oral statements that may be made by the Company or
by officers, directors or employees of the Company acting on the Company's
behalf, that are not historical fact constitute "forward-looking statements".
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors that could cause the actual results of the Company to be
materially different from the historical results or from any results expressed
or implied by such forward-looking statements. Factors that might cause such a
difference include, without limitation, the information set forth below. In
addition to statements which explicitly describe such risks and uncertainties,
statements labeled with the terms "believes", "belief" "expects", "plans" or
"anticipates" should be considered uncertain and forward-looking. All cautionary
statements made in this Report should be read as being applicable to all related
forward-looking statements wherever they appear.

Limited Operating History; Continuing Operating Losses
- ------------------------------------------------------

From inception to December 31, 2000, we generated revenues of
approximately $1,589,100 and incurred operating expenses of approximately
$17,987,000. At December 31, 2000, we had a net loss of approximately
$5,018,000.

The Company is Unable to Meet Capital Needs
- -------------------------------------------

At present, we are not generating enough cash flow to meet our
operating needs. We have downsized our employees to three full-time and one
part-time employee, including our sole officer, Charles Wainer. The Company has
cut back on all but the necessary expenses, however we still cannot fund our
operations.

We have been seeking additional capital to fund our operations, and we
are seeking to obtain additional capital through debt or equity financing or
conventional loans. However, we have been unsuccessful to date due to our credit
rating and low stock price. If we cannot obtain additional funds or a candidate
that wishes to take over the Company and infuse additional capital within the
next few months, the Company will be forced to cease operations or seek
protection by filing for Bankruptcy.

Our lack of working capital has necessitated the sale of 20% of our
subsidiary GlobalBot. In addition, our Board of Directors has approved the
spin-off of GlobalBot in order to give GlobalBot the financial and operational
flexibility to take advantage of significant growth opportunities in the
E-commerce business. We believe that separating the two companies will give
GlobalBot a better access to capital, and allow the investment community to
measure GlobalBot's performance as a stand alone company.

In November 2000, we were forced to sell our dial-up customers to an
unaffiliated third party because be could no longer afford to maintain our dial
up lines.

If we are unable to continue our operations, your entire investment in
us will be lost. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" for a
discussion of our working capital and capital expenditures.

We Have Had History Of A Limited Customer Base And This May Continue To Be The
Case.
At present, our customer base is limited. Our ability to operate
profitably depends on increasing our customer base and achieving sufficient
gross profit margins. We cannot assure you that we will be able to increase our
customer base or to operate profitably.

We Are Subject To All Of The Substantial Risks Inherent In An Internet Business,
Which May Harm Our Ability To Operate Successfully.

We are subject to all of the substantial risks inherent in an Internet
related business, any one of which may harm our ability to operate successfully.
These include, but are not limited to:

Our inability to develop, maintain and/or increase levels of traffic on our
Internet sites.
Our inability to attract or retain customers.
Our inability to generate significant Web-based revenue from our customers.
Our failure to anticipate and adapt to a developing market and the level of
use of the Internet and online services for the purchase of consumer
products and in general.
Our inability to upgrade and develop competitive systems and infrastructures.
The failure of our servers and networking systems to efficiently handle our
Web traffic.
Technical difficulties and system downtime or Internet brownouts.

If We Raise Addition Capital Through The Issuance Of Equity Or Convertible Debt,
Your Proportionate Interest Will Be Diluted.

We will need more working capital to continue our operations. If we
raise additional capital by issuing equity or convertible debt securities, the
percentage ownership of our then-current stockholders will be reduced, and such
securities may have senior rights, preferences, or privileges.

Our Data Centers And The Networks On Which We Rely Are Sensitive To Harm From
Human Factions And Natural Disasters. Any Resulting Disruption Could
Significantly Damage Our Business And Reputation.

Our reputation for providing reliable service largely depends on the
performance and security of our data centers equipment and the network
infrastructure on which we rely. Our customers often maintain confidential
information on our servers.

Our data centers, equipment and networks, and our customers'
information are subject to damage and unauthorized access from:

Human error and tampering.
Breaches of security.
Natural disasters.
Power loss.
Capacity limitations.
Software defects.
Telecommunications failures.
Intentional acts of vandalism, including computer viruses.

All of which, will cause interruptions in service or reduced capacity
for our customers. These events could potentially jeopardize the security of our
customers' confidential information such as credit card and bank account
numbers.

Despite precautions we have taken and plan to take, the occurrence of
any one of the events listed above or other unanticipated problems could
seriously damage our business and reputation and cause us to lose customers.

The time and expense required to eliminate computer viruses and
alleviate other security problems could be significant and could impair our
service quality.

We Could Not Provide Adequate Service To Our Customers If We Were Unable To
Secure Or Maintain Sufficient Network Capacity To Meet Our Future Needs On
Reasonable Terms Or At All.

Our failure to achieve or maintain high capacity data transmission
could negatively impact service levels to our existing customers and limit our
ability to attract new customers, which would harm our business.

We Are Dependent On Internet Network Access Services We Receive From Others, Any
Disruption Of These Services Could Harm Our Business

We rely on third-party networks, local telephone companies, and other
companies to provide data communications capacity. Any disruption of these
services could cause our customers to find other providers and prohibit us from
obtaining new customers.

Our Business Depends In Part On Our Network Service Provider's Numerous Peering
Relationships. Their Inability To Maintain Their Peering Relationships Could Be
Costly And Harmful To Our Business.

The Internet is composed of many Internet service providers that
operate their own networks and interconnect with other Internet Service
Providers at various peering points.

If our network service provider's network or infrastructure fails to
continue to meet industry requirements for peering or it loses its peering
relationships for any reason, our transmission rates could be reduced, resulting
in a decrease in the quality of service we provide to our customers.

Potential Lack Of Liquidity Of Our Common Stock

Our common stock trades on the OTC Electronic Bulletin Board. Stocks
trading on the OTC Electronic Bulletin Board generally attract a smaller number
of market makers and a less active public market.

Moreover, since our common stock is traded on the OTC Electronic
Bulletin Board, investors may find it difficult to dispose of or obtain accurate
quotations as to the value of our common stock.

We Are Subject To Penny Stock Regulations And Restrictions

Our stock is designated as a Penny Stock. Such a designation requires
any broker or dealer selling such securities to disclose certain information
concerning the transaction, obtain a written agreement from the purchaser, and
determine that the purchaser is reasonably suitable to purchase such securities.
These rules will restrict the ability of Broker / Dealers to sell our common
stock and may affect the ability of Investors to sell their shares.

You May Not Be Able To Resell Shares Of Our Stock At Or For More Than The Price
You Paid.

The price of our common stock and Internet and telecommunication stock
in general, have recently experienced extreme volatility that often has been
unrelated to the operating performance of any specific public companies. During
the period from July 10, 1998 to January 24, 2001 the bid and ask price of our
common stock has ranged from a high of $30.71 to a low of $.02. If continued,
these broad market and industry fluctuations may adversely affect the trading
price of our common stock, regardless of our actual operating performance. This
volatility may negatively impact the liquidity and value of your shares.

Our Articles of Incorporation Allow Authorization and Discretionary Issuance of
Preferred Stock

Our Articles of Incorporation authorize the issuance of "blank check",
preferred stock. The Board of Directors is empowered, without stockholder
approval, to designate and issue additional series of preferred stock with
dividend, liquidation, conversion, voting, or other rights, including the right
to issue convertible securities with no limitations on conversion. Any such
designations and issuances, could:

Adversely affect the voting power or other rights of the holders of our
common stock.

Substantially dilute the common shareholder's interest. Depress the price
of our common stock.

Our Certificate Of Incorporation Gives The Board Of Directors The Sole
Authority To Issue "Blank Check" Preferred Stock. The Issuance Of "Blank Check"
Preferred Stock Could Have The Effect Of Delaying, Deterring, Or Preventing A
Merger, Take Over Or Change In Control Without Any Action By The Shareholders.

The Board of Directors, by the issuance of preferred stock, could make
it more difficult for a third party to acquire us, even if the acquisition would
be beneficial to you. You may not realize the premium return that stockholders
may realize in conjunction with corporate takeovers.

The issuance of "blank check" Preferred stock could delay, deter, or
prevent a take over, merger or change of control and May Prevent You From
Realizing A Premium Return.

We May Be Unable To Protect Our Intellectual Property Rights Or To Continue
Using Intellectual Property That We License From Others.

We rely and will rely on a combination of copyright, trademark, service
mark, and trade secret laws and contractual restrictions to establish and
protect certain of our proprietary rights. We have no patented technology that
would bar competitors from our market. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or otherwise obtain
and use our data or technology.

The Uncertainty Associated With Unproven Business Models

Since Quest Net's business model is relatively new and unproven, we may
not be able to anticipate and adapt to a developing market, or may be unable to
manage its network infrastructure (including server, hardware, and software, to
handle our Internet traffic, or to effectively manage our rapidly expanding
operations.

We Lack Unique Services Or Market Niche In An Industry Characterized By
Significant Overcapacity For Current Demand

The market for Internet access is highly competitive and fragmented
with over 4,800 Internet service providers, primarily in local markets and
averaging less than 5,000 customers each. Multiple Internet access providers
serve every local market we have entered, or intend to enter. We offer the same
type of services as other Internet service providers. Due to our lack of working
capital in the past, we have not obtained any significant market share.

We Cannot Be Certain That We Will Be Able To Compete With Significant Pricing
Pressure By Our Competitors.

As a result of increased competition in our industry, we expect to
encounter significant pricing pressure. We cannot be certain that we will be
able to offset the effects of any required price reductions through an increase
in the number of our subscribers, higher revenues from our business services,
cost reductions or otherwise, or that we will have the resources to continue to
compete successfully.

We May Not Be Able To Compete In The Internet Service Market

We operate in the Internet services market, which is extremely
competitive. Our current and prospective competitors include many large
companies that have substantially greater market presence, financial, technical,
marketing, and other resources than we have. We compete directly or indirectly
with the following categories of companies:

>> Established online services, such as America Online, the Microsoft
Network, CompuServe, and Prodigy.
>> Local, regional, and national Internet service providers, such as
MindSpring, Earthlink, Network, Inc., Internet America, and PSINet.
>> National telecommunications companies, such as AT&T Corp., MCI
WorldCom, Inc., Sprint, and GTE.
>> Regional Bell operating companies, such as BellSouth and SBC
Communications.

Our competition is likely to increase. We believe this will probably
happen as large diversified telecommunications and media companies acquire
Internet service providers and as Internet service providers consolidate into
larger, more competitive companies.

Diversified competitors may bundle other services and products with
Internet connectivity services, potentially placing us at a significant
competitive disadvantage. As a result, our business may suffer.

We May Not Be Able To Compete In The Long-Distance Telephone Market

Quest, through its wholly owned subsidiary CWTel, is a reseller of long
distance telephone service. We compete with long distance carriers and other
long distance resellers and providers, including large carriers such as AT&T,
MCI WorldCom and Sprint and new entrants to the long distance market. Many of
our competitors are significantly larger and have substantially greater market
presence and financial, technical, operational, marketing and other resources.
We will face stiff price competition and may not be able to compete.

13A

Quest Has Limited Marketing And Sales Capability.

Because of our lack of working capital we have not had the resources to
develop a marketing and sales force.

Dependence On Qualified Personnel.

Due to the specialized nature of our business, we are highly dependent
upon our ability to attract and retain qualified technical and managerial
personnel. Our failure to recruit key technical and managerial personnel in a
timely manner has been detrimental to our plan of operations and has had an
adverse impact upon our business affairs and finances. Due to our lack of
operating capital, we have had to downsize our technical personnel to two, which
includes Charles Wainer, our sole officer.

The "Going Concern" emphasis On The Report Of Our Independent Accountants May
Reduce Our Ability To Raise Additional Financing.

The report of our independent accountants on our June 30, 2000
Consolidated Financial Statements contains an explanatory paragraph regarding
our ability to continue as a going concern. Our independent accountants cited
our history of operating losses, limited operating history, and negative cash
flow from operations, which raised substantial doubt as to our ability to
continue as a going concern. This "going concern", emphasis will reduce our
ability to raise additional financing.

Control By James LLC/Possible Change Of Control

James LLC beneficially owns 54.3% of the outstanding Common Stock of
the Company. Due to it stock ownership, James LLC is in a position to elect all
of the Company's directors and control policies and operations of the Company.
This could effectuate a change in control of the Company. See, "Principal
Shareholders".

No Payment Of Dividends

Although we declared a three-for-one stock dividend in December 1998,
it is not anticipated that we will pay any cash dividends on our common stock in
the future. The Board of Directors intends to follow a policy of retaining
earnings, if any, for use in our business operations. As a result, the return on
your investment in us will depend upon any appreciation in the market price of
the common stock.

GENERAL

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

SECURE TRANSACTION INTERNATIONAL CORP. ET AL.

In April 1999, Quest filed a lawsuit in the Circuit Court of the 17th
Judicial Circuit in and for Broward County, Florida against Secure Transaction
International Corp., its subsidiaries and principals, the accounting firm of
Margolis, Fink & Wichrowski, Barry A Fink, C.P.A., P.A., Mark V. Wichrowski,
C.P.A. and Barry A. Fink and Mark Wichrowski, individually, alleging violation
of the Florida securities laws, negligent misrepresentations, breach of contract
payment of accounts, and conversion.

The lawsuit stems from several contracts entered into with Secure
Transaction and its subsidiaries for bandwidth, consulting services and
software. As payment for the services, Secure Transaction and its subsidiaries
issued redeemable preferred stock that was convertible into Secure Transaction
common stock.

Quest provided the services as required and the appropriate amount of
convertible stock was not redeemed or converted.The amount due the Company under
these various agreements is approximately $867,842.

Quest has also alleged that the financial statements provided, negligently
misrepresented the financial condition of Secure Transaction and its
subsidiaries. Quest has asked the court for rescission, compensatory damages,
attorneys' fees, costs, and expenses.

The defendants filed a motion to dismiss, which was denied. The defendants
have filed an answer to our complaint. The lawsuit is in the discovery stage. At
present, we are unable to predict the outcome this lawsuit.

SUNRISE INTERNATIONAL LEASING CORPORATION, AS ASSIGNEE OF CISCO SYSTEMS CAPITAL
CORPORATION

On October 13, 2000 a verified complaint was filed in the Fourth Judicial
District Court of State of Minnesota by Sunrise International Leasing
Corporation as assignee of Cisco Systems Capital Corporation asserting that the
Company is in default of payment under terms of a Master Lease Agreement,
covering various computer/communication equipment. The Complaint seeks payment
of the entire amounts of the remaining lease payments, including arrearages,
approximating $250,000, due and immediately payable. Furthermore, the Plaintiff
seeks the right of replevin and recovery of all reasonable costs incurred in
conjunction with asserting its complaint.

In December 2000, the Company returned the equipment in question to the
Plaintiff. The lawsuit is in the discovery stage. At present, the Company is
unable to predict the outcome of this lawsuit.

SECURITIES AND EXCHANGE COMMISSION

Quest has been advised by the Securities and Commission (the "Commission")
that they have issued an order directing a private investigation of possible
violations of Sections 17(a) of the Securities Act and Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated there under by
certain unnamed persons. The Commission has also advised Quest that the
investigation should not be construed as an indication by the Commission or its
staff that any violation of law has occurred, nor as a reflection upon any
person, entity, or security.

ITEM 2. CHANGES IN SECURITIES.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

The Company has not submitted any matters to a vote of Security Holders.

ITEM 5. OTHER INFORMATION.

On February 25, 2000, Quest entered into a Stock Purchase Agreement, effective
March 1, 2000 to purchase CWTel, Inc. from Charles Wainer for the sum of
$1,200,000. Of the purchase price $200,000 was paid at closing, $700,000 was
paid by the issuance of 360,000 share of the Company's restricted common stock
and $300,000 was to be paid in three equal payments at 90 days, 180 days, and
270 days from closing. These payments were represented by promissory note and
guaranteed by the issuance, at closing, of 300,000 shares of preferred stock,
with a face value of $10.00 per share. The Company is presently in default for
all payments under the purchase agreement. CWTel, Inc. provides communication
services to commercial and residential customers. The company is a switch-based
carrier for local and long distance voice calls utilizing conventional
transmission methods and Voice over IP protocols. CWTel, Inc. also provides
high-speed Internet service, dial-up Internet access, and web hosting. CWTel,
Inc. offers local dial tone, long distance calling, and high speed Internet
access to tenants located in commercial buildings.

During the quarter ended June 30, 2000, the Company found that there were
severe technological problems with the equipment of Wireless, Inc., which was
returned to the manufacturer in October 2000.

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

Filed November 16, 2000

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, who is duly
authorized to sign as an officer and as the principal financial officer of the
registrant.

Dated: February 26, 2001 QUEST NET CORP.

By: /s/ Charles Wainer
----------------------------------
Charles Wainer, President
Acting Chief Financial Officer