UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES AND
        EXCHANGE ACT OF 1934.

               For the quarterly period ended September 30, 1996.

                                       OR

[_]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
        EXCHANGE ACT OF 1934.

        For the transition period from ________,19__ to _________, 19__.


                         Commission File Number: 0-25482

                             EQUALNET HOLDING CORP.
             (Exact Name of Registrant as Specified in its Charter)

              TEXAS                                     76-0457803
(State of Other Jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                     Identification Number)


                           1250 WOOD BRANCH PARK DRIVE
                              HOUSTON, TEXAS 77079
           Address of Principal Executive Offices, Including Zip Code

                                 (281) 529-4600
              (Registrant's Telephone Number, Including Area Code)


              (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

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

                                    Yes [X]   No  [ ]

There were 6,002,000 shares of the Registrant's $.01 par value common stock
outstanding as of November 11, 1996.
<PAGE>
Part I Financial Information
Item I Financial Statements


                             EQUALNET HOLDING CORP.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                                JUNE 30,               SEPTEMBER 30,
                                                                                                  1996                     1996
                                                                                               ------------            ------------
                                                                                                                        (UNAUDITED)
<S>                                                                                            <C>                     <C>         
ASSETS
Current assets
   Cash and equivalents ............................................................           $    381,849            $    304,685
   Accounts receivable, net of allowance for doubtful
       accounts of $3,284,886 at June 30, 1996 and $3,869,231 at 
       September 30, 1996 ..........................................................             14,372,858              12,248,915
   Receivable from officers ........................................................                 28,367                  28,367
   Due from agents, net of allowances of  $1,000,000 at June 30,
       1996 and September 30, 1996 .................................................              1,640,808               2,307,982
   Prepaid expenses and other ......................................................                582,052                 554,853
   Recoverable federal income taxes ................................................              1,302,595                 459,212
   Deferred tax assets .............................................................                696,868                 696,868
                                                                                               ------------            ------------
       Total current assets ........................................................             19,005,397              16,600,882

Property and equipment
   Computer equipment ..............................................................              3,172,950               3,187,758
   Office furniture and fixtures ...................................................              1,204,880               1,204,880
   Leasehold improvements ..........................................................              1,174,510               1,174,777
                                                                                               ------------            ------------
                                                                                                  5,552,340               5,567,415


   Accumulated depreciation and amortization .......................................             (1,864,068)             (2,335,944)
                                                                                               ------------            ------------
                                                                                                  3,688,272               3,231,471

Customer acquisition costs, net of accumulated amortization of $5,379,338 at 
June 30, 1996 and $6,376,493 at September 30, 1996 .................................              9,019,774               8,037,680
Deferred tax assets ................................................................              1,531,209               2,334,054
Other assets .......................................................................              1,351,180               1,204,656
                                                                                               ------------            ------------
       Total assets ................................................................           $ 34,595,832            $ 31,408,743
                                                                                               ============            ============
</TABLE>
See accompanying notes.

                                       2
<PAGE>
                             EQUALNET HOLDING CORP.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                             JUNE 30,      SEPTEMBER 30,
                                                               1996            1996
                                                           ------------    ------------
                                                                            (UNAUDITED)
<S>                                                        <C>             <C>         
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
    Accounts payable ...................................   $  2,057,092    $  2,185,717
    Accrued expenses ...................................      1,080,627       1,223,002
    Accrued sales taxes ................................        912,123         840,024
    Brokerage commissions payable ......................        177,891         278,809
    Payable to providers of long-distance services .....      7,194,856       8,009,281
    Current maturities of capital lease obligations ....         90,000          90,000

    Revolving line of credit ...........................     10,654,245       7,909,885
                                                           ------------    ------------
Total current liabilities ..............................     22,166,834      20,536,718

Long term obligations under capital leases .............         45,000          24,000
Shareholders' equity
    Preferred stock (non-voting), $.01 par value,
        Authorized shares - 1,000,000 at June 30,
        1996 and September 30, 1996 Issued and
        outstanding shares - 0 at June 30, 1996 and
        September 30, 1996 .............................           --              --
    Common stock, $.01 par value, Authorized shares -
        20,000,000 at June 30, 1996, and September 30,
        1996 , Issued and outstanding shares - 6,002,000
        at June 30, 1996, and September 30, 1996 .......         60,237          60,237
    Treasury stock at cost: 21,750 shares at June 30,
        1996 and September 30, 1996 ....................       (104,881)       (104,881)
    Additional paid in capital .........................     19,942,428      19,942,428
    Deferred compensation ..............................       (335,836)       (313,336)

    Accumulated deficit ................................     (7,177,950)     (8,736,423)
                                                           ------------    ------------
Total shareholders' equity .............................     12,383,998      10,848,025
                                                           ------------    ------------
Total liabilities and shareholders' equity .............   $ 34,595,832    $ 31,408,743
                                                           ============    ============
</TABLE>
See accompanying notes.

                                       3
<PAGE>
                             EQUALNET HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                         THREE MONTHS ENDED
                                                            SEPTEMBER 30,
                                                   ----------------------------
                                                       1995            1996
                                                   ------------    ------------
Sales ..........................................   $ 23,920,169    $ 13,314,899

Cost of sales ..................................     18,212,061      10,287,564
                                                   ------------    ------------
                                                      5,708,108       3,027,335

Selling, general and administrative expenses ...      3,111,563       3,177,697

Depreciation and amortization ..................      1,090,620       1,850,148
                                                   ------------    ------------
Operating income (loss) ........................      1,505,925      (2,000,510)

Other income (expense)
   Interest income .............................         44,740              32
   Interest expense ............................       (107,579)       (270,277)
   Miscellaneous ...............................         (4,087)        (90,563)
                                                   ------------    ------------
                                                        (66,926)       (360,808)

Income (loss) before federal income taxes ......      1,438,999      (2,361,318)


Provision (benefit) for federal income taxes ...        558,331        (802,845)
                                                   ------------    ------------
Net income (loss) ..............................   $    880,668    $ (1,558,473)
                                                   ============    ============
Net income (loss) per share ....................   $       0.15    $      (0.26)
                                                   ============    ============
Weighted average number of shares ..............      6,023,749       6,002,000
                                                   ============    ============
See accompanying notes.

                                       4
<PAGE>
                             EQUALNET HOLDING CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED
                                                               SEPTEMBER 30,
                                                          1995            1996
                                                      ------------    ------------

<S>                                                   <C>             <C>          
OPERATING ACTIVITIES
Net income (loss) .................................   $    880,668    $ (1,558,473)
Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activities
   Depreciation and amortization ..................      1,090,620       1,850,148
   Provision for bad debt .........................        242,412         671,344
   Equity in loss on investment ...................           --            75,704
   Benefit for deferred income taxes ..............           --          (802,845)
   Loss on sale of assets .........................           --               341
   Compensation expense recognized
     for common stock issue .......................         35,000          22,500
   Change in operating assets and
     liabilities:
      Accounts receivable .........................        380,392       1,452,599
      Due from agents and commissions .............     (1,757,671)       (814,698)
      Prepaid expenses and other ..................        (37,075)        870,582
      Other assets ................................        268,382        (162,025)
      Accounts payable and accrued liabilities ....       (947,367)      1,114,244
                                                      ------------    ------------
Net cash provided by operating activities .........        155,361       2,719,421

INVESTING ACTIVITIES
Purchase of property and equipment ................     (1,663,813)        (16,964)

Purchase of customer accounts .....................     (2,489,553)        (15,061)

Proceeds from sale of equipment ...................           --               800
                                                      ------------    ------------
Net cash used in investing activities .............     (4,153,366)        (31,225)

FINANCING ACTIVITIES
Proceeds from revolving line of credit ............     20,822,663      13,290,000
Repayments on revolving line of credit ............    (16,297,610)    (16,034,360)
Repayments on capital lease obligations ...........        (27,000)        (21,000)
                                                      ------------    ------------

Net cash provided by (used in) financing activities      4,498,053      (2,765,360)
                                                      ------------    ------------
Net increase (decrease) in cash and equivalents ...        500,048         (77,164)

Cash and equivalents, beginning of period .........      3,526,543         381,849
                                                      ------------    ------------

Cash and equivalents, end of period ...............   $  4,026,591    $    304,685
                                                      ============    ============
</TABLE>
See accompanying notes.

                                       5
<PAGE>
                             EQUALNET HOLDING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 -       MANAGEMENT'S REPRESENTATION

               The consolidated financial statements included herein have been
               prepared by the management of EqualNet Holding Corp. (the
               "Company") without audit. Certain information and note
               disclosures normally included in the consolidated financial
               statements prepared in accordance with generally accepted
               accounting principles have been omitted. In the opinion of the
               management of the Company, all adjustments considered necessary
               for fair presentation of the consolidated financial statements
               have been included and were of a normal recurring nature, and the
               accompanying consolidated financial statements present fairly the
               financial position of the Company as of September 30, 1996, and
               the results of operations and cash flows for the three months
               ended September 30, 1995 and 1996.

               It is suggested that these consolidated financial statements be
               read in conjunction with the consolidated financial statements
               and notes for the three years ended June 30, 1996, included in
               the Company's Annual Report on Form 10-K for the year ended June
               30, 1996, as amended, which was filed with the Securities and
               Exchange Commission. The interim results are not necessarily
               indicative of the results for a full year.

NOTE 2 -       INCOME TAXES

               The Company has recorded an income tax benefit at the federal
               statutory rate of 34%. The Company has recorded no tax benefit
               for state and local taxes.

NOTE 3 -       CARRIER COMMITMENTS

               At September 30, 1996 the Company had an agreement with AT&T
               Corp. ("AT&T") which expires in November 1998. The agreement
               covers the pricing of services and establishes minimum
               semi-annual revenue commitments ("MSARCs") which must be met to
               receive the contractual price and to avoid shortfall penalties.
               The Company's commitment to AT&T is segregated into components
               differentiated by the type of traffic. At September 30, 1996, the
               Company was $7.1 million below the cumulative MSARC.

               In the past, management has been able to renegotiate the
               multi-year agreement approximately every six months, and the
               Company believes that it will be able to continue to renegotiate
               the agreement. Historically, the Company has been able to
               negotiate a settlement with the carrier which has resulted in no
               penalty being incurred by the Company, and, therefore, no amount
               has been accrued in the financial statements for any failure to
               meet the MSARCs. No assurances can be made that the Company will
               be able to reach similar favorable settlements with the carrier
               should it continue to fail to meet its commitment.

NOTE 4 -       DEBT

               At September 30, 1996, the Company had a $12.5 million revolving
               line of credit with a bank which will expire December 1, 1997
               with an effective interest rate equal to the bank's prime rate
               plus three percent. The Company had a working capital deficit of
               $3.9 million at September 30, 1996. This reflects the
               consequences of $7.9 million of borrowings under the line of
               credit being reclassified as a current liability as a result of
               covenant violations at September 30, 1996 and anticipated future
               covenant violations. While the Company does not believe it is
               probable that it will be required to repay the outstanding
               borrowings in the next twelve months, generally accepted
               accounting principles require that an obligation in violation of
               covenants which allow the lender to demand immediate payment be
               classified as a current liability at September 30, 1996.

NOTE 5 -       COMMITMENTS AND CONTINGENCIES

               The Company's intrastate long-distance telecommunications
               operations are subject to various state laws and regulations,
               including prior certification, notification or registration
               requirements. The Company must generally obtain and maintain
               certificates of public convenience and necessity from regulatory
               authorities in most states in which it offers service. The
               Company is presently responding to consumer protection inquiries
               from eight states. The inquiries do not state specific damage
               amounts, and the potential liability, if any, is not
               determinable. The Company believes these inquiries will be
               resolved satisfactorily, although settlement offers may be made
               or accepted in instances in which it is determined to be cost
               effective. During the year ended June 30, 1996, the Company
               recorded an accrual of $250,000 for such estimated settlements.
               No assurances can be made however, that the inquiries can be
               settled for amounts within the amount currently accrued, that
               additional states will not begin inquiries or that the current
               accruals will be sufficient to provide for existing or future
               settlements. Failure to resolve inquiries satisfactorily or reach
               a settlement with the regulatory agencies could, in the extreme,
               result in the inability of the Company to provide long-distance
               service in the jurisdiction requiring regulatory certification.
               Any failure to maintain proper certification could have a
               material adverse effect on the Company's business.

                                       6
<PAGE>
            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                    CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

Sales for the three months ended September 30, 1996 decreased 44.3% to $13.3
million compared with sales of $23.9 million for the same period of the prior
year. Gross margin decreased 47.0% to $3.0 million compared to $5.7 million for
the same period of the prior year. The Company recorded a $2.4 million loss
before taxes compared with net income of $1.4 million for the same period in the
prior year, a decrease of 264.1%.

The following table sets forth for the fiscal periods indicated the percentages
of total sales represented by certain items reflected in the Company's
consolidated statements of income:


                                                            THREE MONTHS ENDED
                                                               SEPTEMBER 30,
                                                            1995         1996
                                                            -----        -----

Total sales ..........................................      100.0%       100.0%
Cost of sales ........................................       76.1%        77.3%
                                                            -----        -----
Gross margin .........................................       23.9%        22.7%

Selling, general and administrative ..................       13.0%        23.8%
Depreciation and amortization ........................        4.6%        13.9%
                                                            -----        -----

Operating income (loss) ..............................        6.3%       (15.0%)

Other income (expense)
Interest income ......................................        0.2%         0.0%
Interest expense .....................................       (0.5%)       (2.0%)
Miscellaneous ........................................       --           (0.7%)
                                                            -----        -----
                                                             (0.3%)       (2.7%)

Income (loss) before federal income taxes ............        6.0%       (17.7%)

Provision (benefit) for federal income taxes .........        2.3%        (6.0%)
                                                            -----        -----

Net income (loss) ....................................        3.7%       (11.7%)
                                                            =====        =====

                                       7
<PAGE>
    SALES

    The Company experienced a decrease in revenues in the three months ended
    September 30, 1996 of 44.3% to $13.3 million compared to $23.9 million for
    the comparable period of the prior year. This decrease was due primarily to
    a decrease in the number of customer accounts and a corresponding decrease
    in billable minutes. Total billable minutes for the quarter ended September
    30, 1996 decreased 45.1% to 42.5 million minutes from 77.4 million minutes
    for the same period of the prior year. The decline in revenues and billable
    minutes was the result of an increased rate of attrition for existing
    customers and a decline in order activity beginning in January 1996.

    COST OF SALES

    The cost of sales for the three months ended September 30, 1996 decreased
    43.5% to $10.3 million compared to $18.2 million for the comparable period
    of the prior year. This decrease was primarily attributable to a decrease in
    sales. Cost of sales as a percentage of sales increased to 77.3% for the
    three months ended September 30, 1996, from 76.1% for the corresponding
    period in the previous year. This increase is primarily the result of an
    increase in billing expense and bad debt expense as a percentage of sales.
    Billing expense as a percentage of sales increased as a result of the
    Company beginning to bill a portion of its customers through Local Exchange
    Carriers ("LECs"). The cost of billing through LECs is generally greater
    than directly billing customers through independent billing companies;
    however, the Company believes that by billing customers directly through the
    LECs, savings will be recognized by decreased bad debt expense and reduced
    customer attrition. In addition, because the majority of customer service is
    performed by the LECs, the Company believes it will be able to reduce
    overhead related to the cost of servicing these customers directly.

    Bad debt expense as a percentage of sales increased for the three months
    ended September 30, 1996 to 5.0% of sales as compared to 1.0% of sales for
    the comparable period in the previous year. The increase is primarily the
    result of the Company's decision to switch from commissioned sales, in which
    the sales agents shared bad debt expense with the Company, to purchased
    accounts, in which the Company had full exposure on uncollectible accounts.
    This increase in bad debt expense was partially offset by a decrease in
    commission expense as a percentage of sales to 3.5% for the first quarter of
    fiscal 1997 from 7.3% for the first quarter of fiscal 1996. In the fourth
    quarter of fiscal 1996, the Company discontinued the purchase order program
    and currently is relying on commissioned sales to provide orders to the
    Company.

    The Company's cost of long distance (which is a component of cost of sales)
    decreased as a percentage of sales to 63.2% from 65.0% for the quarters
    ended September 30, 1996 and 1995, respectively. The decrease is primarily
    the result of the Company reducing its cost of long distance by negotiating
    more favorable rates and amending the AT&T contract effective in June 1996.

                                       8
<PAGE>
    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses increased 2.1% to $3.2 million
    for the three months ended September 30, 1996, from $3.1 million for the
    same period of the prior year. Selling, general and administrative expenses
    increased as a percentage of sales to 23.8% for the three months ended
    September 30, 1996 from 13.0% for the same period of the prior year. The
    increase in selling, general and administrative expenses as a percentage of
    sales relates primarily to an increase in lease expense and professional
    fees, partially offset by a decrease in salary expense and administrative
    costs. Lease expense increased approximately $190,000 in the first quarter
    of fiscal 1997 compared to the same period in fiscal 1996. The increase was
    the result of the addition of two significant leases in January 1996, one of
    which related to the phone system and the other to computer equipment.
    Professional fees increased approximately $95,000 in the first quarter of
    fiscal 1997 compared to the same period in fiscal 1996. The increase in
    professional fees related primarily to legal and consulting fees incurred
    with respect to the ongoing negotiations with the bank and with respect to
    exploring alternatives related to a private placement. The increases in
    lease expense and professional fees were partially offset by a decrease in
    salary and related expenses of $130,000 for the quarter ended September 30,
    1996 as compared to the quarter ended September 30, 1995. Staffing decreased
    from 195 employees at September 30, 1995 to 173 employees at September 30,
    1996. In addition, the Company reduced administrative expenses $106,000 in
    the first quarter of fiscal 1997 compared to the same period in fiscal 1996
    as part of overall cost reduction efforts.

    DEPRECIATION AND AMORTIZATION

    Depreciation and amortization increased 69.6% to $1.9 million for the
    quarter ended September 30, 1996 as compared to $1.1 million for the same
    period in the previous year. Depreciation and amortization as a percentage
    of sales increased to 13.9% for the first quarter of fiscal 1997 from 4.6%
    for the corresponding period of the prior year. The increase is a result of
    the significant purchases of customer accounts throughout fiscal year 1996.

    LIQUIDITY AND CAPITAL RESOURCES

    The Company generated $2.7 million in cash flow from operations for the
    three months ended September 30, 1996, compared to $155,000 for the same
    period of the prior year. Cash flow from operations was negatively affected
    in the first quarter of fiscal 1996 primarily as a result of a change in the
    Company's policy related to the timing of the payment of commissions.
    Beginning in fiscal year 1996, the Company began paying commissions based
    upon revenues billed whereas prior to that time, commissions were paid as
    revenues were collected. In addition, cash flow from operations was aided in
    the first quarter of fiscal 1997 by the decline in accounts receivable and
    the increase in accounts payable and accrued liabilities.

    Cash used in investing activities totaled $31,000 for the three months ended
    September 30, 1996, compared to $4.2 million for the same period of the
    previous year. Cash used in investing activities in the first quarter of
    fiscal 1996 included the acquisition of $2.5 million 

                                        9
<PAGE>
    of customer accounts associated with the purchased order program and the
    costs associated with both the Company's relocation to expanded facilities
    and improvements to the NetBase Customer Management System which totaled
    $1.7 million.

    Cash used in financing activities was $2.8 million for the three months
    ended September 30, 1996, substantially all of which related to net
    repayments on borrowings under the Company's line of credit. Cash provided
    by financing activities totaled $4.5 million for the three months ended
    September 30, 1995, substantially all of which related to net borrowings
    under the Company's line of credit.

    In early 1994, the Company determined that its treatment and disbursement of
    sales taxes was not being properly administered and engaged an outside tax
    compliance firm to assist in the resolution of the matter with various
    states and other regulatory and taxing authorities. The Company has accrued
    liabilities for the resolution of this matter totaling $757,000 at September
    30, 1996. The improper treatment of sales taxes arose from the Company's
    failure to remit the sales tax due to the various taxing authorities on the
    incremental component of revenue in excess of the cost of the underlying
    service (for which taxes were properly paid). While there can be no
    assurance, the Company believes that the amount accrued is adequate for the
    satisfaction of this tax liability, including any interest payable, and that
    the Company can negotiate payment terms which would not significantly impact
    liquidity. The Company anticipates that the tax issues and payment terms
    will be resolved during fiscal year 1997. No assurances can be made,
    however, that the Company will be able to negotiate favorable terms with the
    taxing authorities and a request for immediate payment could have a material
    adverse effect on the Company's financial condition.

    The Company is currently negotiating with its lenders to maintain
    availability under its revolving credit facility, to amend certain financial
    covenants and waive past financial covenant default. The significant special
    charges incurred in fiscal year 1996 resulted in decreased earnings, equity
    and tangible net worth so that in March 1996 the Company was in default with
    respect to certain loan covenants of its credit agreement. The credit
    agreement was amended in June 1996 with certain of the amended covenants
    having increasing ratios over time. The Company was not in compliance with
    the financial covenants at September 30, 1996, and will need to obtain from
    its lender waivers or the lender could accelerate all amounts due under the

                                       10
<PAGE>
    loan agreement, and amendments to its loan agreement in order to cure
    default. If the situation is not resolved, the Company's ability to continue
    as a going concern will be in doubt. There can be no assurance that the
    Company will be successful in securing such amendments. In addition, the
    Company is negotiating with its carriers for extension of payment terms;
    however, there can be no assurance that the Company will be successful in
    that regard. In the event the Company is unsuccessful in achieving any one
    or a combination of these objectives sufficient to meet the Company's
    liquidity needs, it will seek an alliance with a strategic partner, or in
    the event no such strategic alliance is accomplished, the Company may be
    required to seek protection under United States bankruptcy laws.

                                       11
<PAGE>
                           PART II - OTHER INFORMATION


    Item 1.       Legal Proceedings

                  From time to time the Company is involved in what it believes
                  to be routine litigation or other legal proceedings that may
                  be considered as part of the ordinary course of its business.
                  Currently the Company is involved in litigation filed in
                  August, 1995 under Cause No. 95-CH-0142 in the Circuit Court
                  of the Seventh Judicial Circuit of Sangamon County, Illinois
                  brought by the Illinois Attorney General under that state's
                  Consumer Fraud and Deceptive Business Practices Act, seeking
                  injunctive relief, attorneys fees and civil penalties in the
                  amount of $50,000 for each violation of that Act. The Company
                  is also involved in litigation filed in February, 1996 under
                  Cause No. IJ96-1153 in the Chancery Court of Pulansky County,
                  Arkansas, 1st Division, brought by the Arkansas Attorney
                  General under that state's Deceptive Trade Practices Act
                  seeking injunctive relief, attorneys fees, restitution to
                  consumers and civil penalties in the amount of $10,000 for
                  each violation of the Act. The Company is also involved in
                  litigation filed in February, 1996 in the Fourth Judicial
                  District of the State of Idaho in and for the County of Ada
                  under Cause No. CV-DC-9600809D brought by the Idaho Attorney
                  General under that state's Consumer Protection Act, Telephone
                  Solicitation Act and Rules of Telephone Solicitations seeking
                  injunctive relief, restitution to consumers, attorneys fees
                  and civil penalties in the amount of $5,000 for each violation
                  of either the Consumer Protection or Telephone Solicitation
                  Acts. The Company has also received and responded to a civil
                  investigative demand from the Kansas Attorney General, and has
                  reached a settlement agreement with the Safety & Enforcement
                  Division of the California Public Utility Commission, which
                  agreement is awaiting formal approval of the Public Utility
                  Commission. Each of these matters allege that the Company has
                  received an excessive number of customer complaints that
                  long-distance service was switched to EqualNet without the
                  customer's knowledge or informed consent, with remedies being
                  sought under the deceptive trade practices-consumer protection
                  statutes of these states. While the Company acknowledges that
                  some customers may not fully understand the technical
                  distinction between being a customer of one of the Company's
                  underlying carriers and being a customer of EqualNet with all
                  network processes being handled by those same underlying
                  carriers, the Company vigorously denies that it has engaged in
                  any program or pattern of wrongfully switching customers'
                  long-distance service in violation of state or federal laws.
                  Although it is not possible at this time to predict with any
                  degree of certainty the ultimate exposure of the Company in
                  these matters, the Company does not believe that the outcome
                  of any of these proceedings will have a material adverse
                  effect on either the Company's results of operations or
                  financial condition. See Note 5 to the financial statements in
                  Item 1 hereof.

                                       12
<PAGE>
    Item 2.       Changes in Securities

                  None.

    Item 3.       Defaults upon Senior Securities

                  At September 30, 1996, the Company was not in compliance with
                  certain of the financial convenants of the loan agreement with
                  its principal lender, including (i) Tangible Debt to Net Worth
                  ratio of not more than 8.0 to 1.0 and (ii) Debt to EBITDA
                  ratio of not more than 12.25 to 1.0. To have been in
                  compliance with all financial covenants at September 30, 1996,
                  a reduction of $2.0 million in the net loss for the twelve
                  months ended September 30, 1996 would have been required.

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

                  None.

    Item 5.       Other Information

                  CAUTIONARY STATEMENTS:

                  The Company's expectations with respect to operating results
                  and other matters described in this Quarterly Report on Form
                  10-Q, and otherwise embodied in oral and written forward
                  looking statements are subject to the following risks and
                  uncertainties that must be considered when evaluating the
                  likelihood of the Company's realization of such expectations:

                  ATTRITION RATES - In the event that the Company experiences
                  excessive attrition rates either as a result of increased
                  provisioning times by its underlying carrier, the purchase of
                  poor performing traffic, or the inability to properly manage
                  the existing customer base due to unforeseen difficulties with
                  the NetBase system, additional charges that affect earnings
                  may be incurred.

                  DEPENDENCE ON INDEPENDENT MARKETING AGENTS - The Company has a
                  small internal sales force and obtains a significant majority
                  of its new customers from the Company's network of independent
                  marketing agents ("Agents"). The Company's near-term ability
                  to expand its business depends upon whether it can continue to
                  maintain favorable relationships with existing Agents and
                  recruit and establish new relationships with additional
                  Agents. No assurances can be made as to the willingness of the
                  existing Agents to continue to provide new orders to the
                  Company or as to the Company's ability to attract and
                  establish relationships with new Agents.

                  INABILITY TO COLLECT ACCOUNTS RECEIVABLE - Although the
                  Company's bad debt rate has improved somewhat in recent
                  months, if it were not to continue to improve or revert to the
                  fiscal 1996 rate, either as a result of the purchase of poor
                  performing traffic or the inability of the Company to properly
                  manage existing customer receivables, additional charges may
                  be incurred that would affect earnings. In addition, the
                  inability to collect past due receivables could have a
                  material adverse impact upon the Company's liquidity and cash
                  flow.

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<PAGE>
                  DEPENDENCE ON AT&T AND OTHER FACILITIES-BASED CARRIERS - The
                  Company does not own transmission facilities and currently
                  depends primarily upon AT&T and, to a lesser extent, upon
                  Sprint to provide it with the telecommunications services that
                  it resells to its customers and the detailed information upon
                  which it bases its customer billings. The Company's near-term
                  ability to expand its business depends upon whether it can
                  continue to maintain favorable relationships with AT&T and
                  Sprint. Although the Company believes that its relations with
                  AT&T and Sprint are good and should remain so with continued
                  contract compliance, the termination of the Company's current
                  contracts with either AT&T or Sprint or the loss of the
                  telecommunications services that the Company receives from
                  AT&T or Sprint could have a material adverse effect on the
                  Company's results of operations and financial condition.

                  This dependence on the Company's primary carrier further
                  manifested itself during the quarter ended March 31, 1996, as
                  continued delays in provisioning (activating new customers) by
                  the carrier continued to result in a backlog of customers who
                  would otherwise have been activated on the Company's
                  long-distance service and billing. Although the carrier has
                  taken certain steps to decrease the provisioning time which
                  has resulted in an elimination of the provisioning backlog,
                  there can be no assurance that similar delays will not occur
                  in the future.

                  CARRIER COMMITMENTS - The Company has significant commitments
                  with its two primary carriers to resell long distance
                  services. The Company's contracts with its carriers contain
                  penalty clauses that could materially and adversely impact the
                  Company should the Company incur a shortfall in meeting its
                  commitments. The Company currently is in a shortfall situation
                  with both of its primary carriers. Although the Company has
                  from time to time failed to meet its commitment levels under a
                  particular contract and in each case has been able to
                  negotiate a settlement with the carrier which resulted in no
                  penalty being incurred by the Company, there can be no
                  assurances that the Company will be able to reach similar
                  favorable settlements with its carriers currently or in the
                  event that the Company should continue to fail to meet its
                  commitments.

                  In recent years, AT&T, MCI Communications Corporation ("MCI")
                  and Sprint have consistently followed one another in pricing
                  their long distance products. If MCI and Sprint were to lower
                  their rates for long distance service and AT&T did not adopt a
                  similar price reduction, adverse customer reaction could
                  affect the Company's ability to meet its commitments under the
                  AT&T contract which could have a material adverse affect the
                  Company's financial position and results of operations.

                  DEVELOPMENTAL PROBLEMS WITH NETBASE - NetBase Plus(R), the
                  Company's second generation customer management system, was
                  not able to meet the operating requirements of the Company. As

                                       14
<PAGE>
                  a result, in the third quarter of fiscal 1996 the Company
                  began reverting to an enhanced version of the original NetBase
                  operating system. Although the Company successfully completed
                  the reversion in the fourth quarter of fiscal 1996 and has
                  made continued improvements to the operating system, to the
                  extent that the Company experiences significant growth, the
                  existing NetBase operating system may reach technical
                  limitations and hinder reporting visibility to management as
                  well as cause a decline in customer service, thereby
                  negatively impacting attrition levels and, therefore, results
                  of operations.

                  RELATIONSHIPS WITH STATE REGULATORY AGENCIES - The Company's
                  intrastate long distance telecommunications operations are
                  subject to various state laws and regulations, including prior
                  certification, notification or registration requirements. The
                  Company must generally obtain and maintain certificates of
                  public convenience and necessity from regulatory authorities
                  in most states in which it offers service. The Company is
                  presently responding to consumer protection inquiries from
                  eight states. Management believes these inquiries will be
                  resolved satisfactorily, although settlement offers may be
                  made or accepted in instances in which it is determined to be
                  cost effective. During the quarter ended March 31, 1996, the
                  Company recorded an accrual of $250,000 for such estimated
                  settlements. No assurances can be made however, that
                  additional states will not begin inquiries or that the current
                  accrual will be sufficient to provide for existing or future
                  settlements. Failure to resolve inquiries satisfactorily or
                  reach a settlement with the regulatory agencies could, in the
                  extreme, result in the inability of the Company to provide
                  long distance service in the jurisdiction requiring regulatory
                  certification. Any failure to maintain proper certification in
                  jurisdictions in which the Company provides a significant
                  amount of intrastate long-distance service could have a
                  material adverse effect on the Company's business.


    Item 6.       Exhibits and Reports on Form 8-K

                  a.      Exhibits

                          27.1 Financial Data Schedule

                  b.      Reports on Form 8-K

                          On September 30, 1996, the Registrant filed a Current
                          Report on Form 8-K with the Securities and Exchange
                          Commission, pursuant to which it disclosed that it had
                          issued a press release the same day announcing (i)
                          expected results for its fourth fiscal quarter and
                          fiscal year ended June 30, 1996, (ii) its liquidity
                          situation and (iii) that it was unable to timely file
                          its Annual Report on Form 10-K within the 90-day
                          period prescribed by the Securities Exchange Act of
                          1934, as amended.

                                       15
<PAGE>
                                   SIGNATURES

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

                                               EQUALNET HOLDING CORP.


    Date November 13, 1996                /S/  ZANE D. RUSSELL
                                               Zane D. Russell
                                               Chairman of the Board and
                                                      Chief Executive Officer


    Date November 13, 1996                /S/  MICHAEL L. HLINAK
                                               Michael L. Hlinak
                                               Senior Vice President and
                                               Chief Financial Officer

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