SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                               ------------------

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 1998
                         Commission file number 0-27042

                            ALPHANET SOLUTIONS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

          NEW JERSEY                                      22-2554535
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

7 RIDGEDALE AVE., CEDAR KNOLLS, NEW JERSEY                              07927
(Address of Principal Executive Offices)                              (Zip Code)

                                 (973) 267-0088
                         (Registrant's Telephone Number,
                              Including Area Code)

         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 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: ___

         Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of July 31, 1998:

CLASS                                                           NUMBER OF SHARES
-----                                                           ----------------

Common Stock, $.01 par value                                       6,323,480


<PAGE>

                            ALPHANET SOLUTIONS, INC.

                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION.................................................1

         Item 1.  Financial Statements.........................................1

                  Consolidated Balance Sheets
                  as of December 31, 1997
                  and June 30, 1998 (unaudited)................................2

                  Consolidated Statements of Income
                  for the Three Months and Six Months Ended
                  June 30, 1997 (unaudited) and 1998 (unaudited) ..............3

                  Consolidated Statements of Cash Flows
                  for the Six Months Ended
                  June 30, 1997 (unaudited) and 1998 (unaudited) ..............4

                  Notes to Consolidated Financial Statements (unaudited).......5

         Item 2.  Management's Discussion and Analysis of

                  Results of Operations and Financial Condition...............7

                  Results of Operations.......................................11

                  Liquidity and Capital Resources.............................13

PART II.  OTHER INFORMATION...................................................16

         Item 1.  Legal Proceedings...........................................16

         Item 4.  Submission of Matters to a Vote of Security Holders.........17

         Item 5.  Other Information...........................................18

         Item 6.  Exhibits and Reports on Form 8-K............................18

SIGNATURES....................................................................19


                                      -i-
<PAGE>








                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS










<PAGE>


                                             ALPHANET SOLUTIONS, INC.
                                            CONSOLIDATED BALANCE SHEETS
                                         (in thousands, except share data)
 
<TABLE>
<CAPTION>
                                                                               DECEMBER 31,              JUNE 30,
                                                                                  1997                    1998
                                                                               ------------           ------------
                                                                                                       (unaudited)
                                     ASSETS
<S>                                                                            <C>                    <C>         
Current assets:
     Cash and cash equivalents.............................................    $      2,689           $      6,870
     Accounts receivable, net..............................................          50,388                 38,138
     Inventories...........................................................           4,941                  6,589
     Deferred income tax asset.............................................           1,651                  1,651
     Prepaid expenses and other current assets.............................           3,598                  2,351
                                                                               ------------           ------------
       Total current assets................................................          63,267                 55,599
Property and equipment, net................................................           6,386                  7,559
Other assets...............................................................           2,888                  2,458
                                                                               ------------           ------------
       Total assets........................................................    $     72,541           $     65,616
                                                                               ============           ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Current portion of capital lease obligations..........................    $         44           $          6
     Accounts payable......................................................          17,921                 13,797
     Accrued expenses......................................................          12,179                  7,081
                                                                               ------------           ------------
       Total current liabilities ..........................................          30,144                 20,884
Advance from principal shareholder.........................................             675                    675
                                                                               ------------           ------------
       Total liabilities...................................................          30,819                 21,559
                                                                               ------------           ------------
Shareholders' equity:
     Preferred stock -- $0.01 par value; authorized
      3,000,000 shares, none issued........................................              --                     --
     Common stock -- $0.01 par value; authorized 
      15,000,000 shares, 6,257,610 and 6,285,050 shares issued and
       outstanding at December 31, 1997 and June 30, 1998,
       respectively........................................................              63                     63
     Additional paid-in capital............................................          33,172                 33,430
     Retained earnings.....................................................           8,487                 10,564
                                                                               ------------           ------------
       Total shareholders' equity..........................................          41,722                 44,057
                                                                               ------------           ------------
       Total liabilities and shareholders' equity..........................    $     72,541           $     65,616
                                                                               ============           ============
</TABLE>


          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                                      -2-
<PAGE>

                            ALPHANET SOLUTIONS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                           FOR THE THREE MONTHS                   FOR THE SIX MONTHS
                                                              ENDED JUNE 30,                        ENDED JUNE 30,
                                                        ------------------------------         ------------------------------
                                                             1997               1998               1997               1998
                                                             ----               ----               ----               ----
<S>                                                      <C>                <C>                <C>                <C>        
Net sales:
     Product sales................................       $    31,609        $    29,823        $    70,377        $    61,119
     Services and support.........................            10,201             15,099             17,934             29,293
                                                         -----------        -----------        -----------        -----------
                                                              41,810             44,922             88,311             90,412
                                                         -----------        -----------        -----------        -----------
Cost of sales:
     Product sales................................            28,003             26,300             62,496             53,580
     Services and support.........................             6,736             10,424             11,764             19,915
                                                         -----------        -----------        -----------        -----------
                                                              34,739             36,724             74,260             73,495
                                                         -----------        -----------        -----------        -----------

Gross profit......................................             7,071              8,198             14,051             16,917
                                                         -----------        -----------        -----------        -----------

Operating expenses:
     Selling expenses.............................             2,943              3,749              5,861              7,716
     General and administrative expenses..........             2,197              3,287              4,233              5,882
                                                         -----------        -----------        -----------        -----------
                                                               5,140              7,036             10,094             13,598
                                                         -----------        -----------        -----------        -----------

Operating income..................................             1,931              1,162              3,957              3,319
                                                         -----------        -----------        -----------        -----------

Other income (expense):
     Interest and other income....................                18                148                 21                248
     Interest expense.............................               (85)               (19)              (146)               (46)
                                                         -----------        -----------        -----------        -----------
                                                                 (67)               129               (125)               202
                                                         -----------        -----------        -----------        -----------
Income before income taxes........................             1,864              1,291              3,832              3,521  
Provision for income taxes........................               764                529              1,571              1,443
                                                         -----------        -----------        -----------        -----------
Net income........................................       $     1,100        $       762        $     2,261        $     2,078
                                                         ===========        ===========        ===========        ===========

Earnings per share - Basic........................       $      0.21        $      0.12        $      0.44        $      0.33
                                                         ===========        ===========        ===========        ===========
Weighted average shares outstanding...............             5,257              6,282              5,180              6,271
                                                         ===========        ===========        ===========        ===========

Earnings per share - Diluted......................       $      0.20        $      0.12        $      0.42        $      0.33
                                                         ===========        ===========        ===========        ===========
Weighted average shares
   and share equivalents outstanding..............             5,476              6,383              5,385              6,390
                                                         ===========        ===========        ===========        ===========
</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      -3-
<PAGE>


                            ALPHANET SOLUTIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                   FOR THE SIX MONTHS
                                                                                      ENDED JUNE 30,
                                                                        -----------------------------------
                                                                              1997                1998
                                                                              ----                ----
<S>                                                                     <C>                 <C>           
Cash flows from operating activities:
   Net income......................................................     $       2,261       $        2,078
   Adjustments to reconcile net income to net cash 
    provided by (used in) operating activities:
     Depreciation and amortization.................................               721                1,298
     Increase (decrease) from changes in:
       Accounts receivable, net....................................            (2,731)              12,250
       Inventories.................................................               234               (1,648)
       Prepaid expenses and other current assets...................               696                1,247
       Other assets................................................                51                  430
       Accounts payable and accrued expenses.......................            (1,399)              (9,223)
                                                                        -------------       --------------

     Net cash provided by (used in) operating activities...........              (167)               6,432
                                                                        -------------       --------------
Cash flows from investing activities:
   Property and equipment expenditures.............................            (1,918)              (2,471)
                                                                        -------------       --------------

     Net cash used in investing activities.........................            (1,918)              (2,471)
                                                                        -------------       --------------
Cash flows from financing activities:
   Net proceeds from sales of common stock                                     17,211                   --
   Exercises of stock options......................................                22                  258
   Repayment of capital lease obligations..........................               (37)                 (38)
                                                                        -------------       --------------

     Net cash provided by financing activities.....................            17,196                  220
                                                                        -------------       --------------

Net increase in cash and cash equivalents..........................            15,111                4,181

Cash and cash equivalents, beginning of period.....................             1,610                2,689
                                                                        -------------       --------------

Cash and cash equivalents, end of period...........................     $      16,721       $        6,870
                                                                        =============       ==============
</TABLE>

          SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                      -4-
<PAGE>


                            ALPHANET SOLUTIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                    (in thousands, except per share amounts)

Note 1 -- Basis of Presentation:

         The information presented for June 30, 1997 and 1998 and for the three
month and six month periods then ended is unaudited, but, in the opinion of the
management of AlphaNet Solutions, Inc. (the "Company"), the accompanying
unaudited consolidated financial statements contain all adjustments (consisting
only of normal recurring adjustments) which the Company considers necessary for
the fair presentation of the Company's financial position as of June 30, 1998,
the results of its operations for the three month and six month periods ended
June 30, 1997 and 1998 and its cash flows for the six month periods ended June
30, 1997 and June 30, 1998. The consolidated financial statements included
herein have been prepared in accordance with generally accepted accounting
principles and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These consolidated financial
statements should be read in conjunction with the Company's audited financial
statements for the year ended December 31, 1997, which were included as part of
the Company's Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission.

         Results for the interim period are not necessarily indicative of
results that may be expected for the entire year.

Note 2 -- Net Income Per Share:

         In February 1997, the Financial Accounting Standards Board issued
Statement No. 128 "Earnings per Share" ("SFAS No. 128"), which specifies the
computation, presentation and disclosure requirements for earnings per share
("EPS") of entities with publicly held common stock or potential common stock.
The statement defines two earnings per share calculations, basic and diluted.
The objective of basic EPS is to measure the performance of an entity over the
reporting period by dividing income available to common stock by the weighted
average shares outstanding. The objective of diluted EPS is consistent with that
of basic EPS, that is to measure the performance of an entity over the reporting
period, while giving effect to all dilutive potential common shares that were
outstanding during the period. The calculation of diluted EPS is similar to
basic EPS except both the numerator and denominator are increased for the
conversion of potential common shares. In February 1998, the Securities and
Exchange Commission staff issued Staff Accounting Bulletin No. 98 ("SAB 98")
revising previously issued statements to become consistent with SFAS No. 128 and
No. 130. SAB 98 requires the Company to revise its EPS computations to present
historical EPS including pre initial public offering periods. The computations
for earnings per share contained in this report incorporate SAB 98.


                                      -5-
<PAGE>

                            ALPHANET SOLUTIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                    (in thousands, except per share amounts)

         The following is a reconciliation of the number of shares used in the
basic EPS and diluted EPS computations:

                                         COMPUTATION OF EARNINGS PER SHARE
                                     (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED JUNE 30,
                                    -----------------------------------------------------------------------------------------
                                                        1997                                         1998
                                    -------------------------------------------   -------------------------------------------
                                         NET                        PER SHARE          NET                       PER SHARE
                                       INCOME         SHARES          AMOUNT         INCOME         SHARES        AMOUNT
                                       ------         ------          ------         ------         ------        ------

<S>                                 <C>                 <C>         <C>           <C>                 <C>        <C>     
Basic EPS.................          $     1,100         5,257       $   0.21      $       762         6,282      $   0.12

Effect of  dilutive  stock
options...................                   --           219          (0.01)              --           101            --
                                    -----------         -----       --------      -----------         -----      --------

Diluted EPS...............          $     1,100         5,476       $   0.20      $       762         6,383      $   0.12
                                    ===========         =====       ========      ===========         =====      ========
</TABLE>


<TABLE>
<CAPTION>
                                                                    SIX MONTHS ENDED JUNE 30,
                                    -----------------------------------------------------------------------------------------
                                                        1997                                         1998
                                    -------------------------------------------   -------------------------------------------
                                         NET                        PER SHARE          NET                       PER SHARE
                                       INCOME         SHARES          AMOUNT         INCOME         SHARES        AMOUNT
                                       ------         ------          ------         ------         ------        ------

<S>                                 <C>                 <C>         <C>           <C>                 <C>        <C>     
Basic EPS.................          $     2,261         5,180       $     0.44    $     2,078         6,271      $   0.33

Effect of  dilutive  stock
options...................                   --           205            (0.02)            --           119            --
                                    -----------         -----       ----------    -----------         -----      --------

Diluted EPS...............          $     2,261         5,385       $     0.42    $     2,078         6,390      $   0.33
                                    ===========         =====       ==========    ===========         =====      ========
</TABLE>




                                      -6-
<PAGE>



ITEM     2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION.

GENERAL

         The Company is a single-source provider of information technology
("IT") products, services and support to Fortune 1000 and other large and
mid-sized companies located primarily in the New York-to-Philadelphia corridor.
The Company was formed in 1984 as an authorized reseller of computer hardware
and software products, and since 1990, has been developing and offering related
IT services. Although most of the Company's net sales to date have been derived
from IT product sales, the Company intends to continue expanding its service and
support offerings. There can be no assurances that the risks relating to
expansion of such offerings of its business will not have a material adverse
effect on the Company's financial position, results of operations, or cash
flows. For the first six months of 1998, net product sales were approximately
67.6% and services and support revenues were approximately 32.4% of the
Company's net sales.

         The Company has entered into distribution agreements with Ingram Micro,
Inc. ("Ingram") and MicroAge Computer Centers, Inc. ("MicroAge"), two of the
nation's largest aggregators, to acquire most of its IT products for resale. The
Company's relationship with MicroAge commenced in 1984 and, as customer demand
for IT products grew, the Company initiated its relationship with Ingram in
1994. The distribution agreements with MicroAge and Ingram give the Company
access to such aggregators' extensive inventories and provide the Company with
electronic ordering capability, product configuration and testing, warehousing
and delivery. In general, the Company orders IT products, including
workstations, servers, enterprise computing products, networking and
communications equipment, and applications software from such aggregators on an
as-needed basis, thereby reducing the Company's need to carry large inventories.
During the first six months ended June 30, 1998, the Company acquired
approximately 49.5% and 32.9% of its products for resale from Ingram and
MicroAge, respectively.

         In December 1997 the Company entered into a $20.4 million contract
("MTA contract") with the MTA-New York City Transit Authority ("MTA") to furnish
and install local and wide area computer network components throughout the MTA's
over 200 locations, including subway stations, electrical power substations and
a diverse group of train car maintenance facilities. The contract allows for
completion over a four-year period although the project schedule currently
anticipates a 24-month schedule. The aggregate revenues generated from the MTA
contract in the six months ended June 30, 1998 were approximately $1.0 million
consisting primarily of cabling materials and related services. Realization of
certain product sales and service and support revenues under the MTA contract
were delayed. For further discussion on the MTA contract and its effect on the
Company's results of operations, see "RESULTS OF OPERATIONS".

         Except for the MTA contract, in general, there are no ongoing written
commitments by customers to purchase products from the Company and all product
sales are made on a purchase order basis. Furthermore, as the market for IT
products has matured, price competition has intensified and is likely to
continue to intensify. The Company's gross profits, margins and results of
operations could be adversely affected by such continued product pricing
pressure, a 


                                      -7-
<PAGE>

significant reduction in product purchase orders from the Company's customers,
or a disruption in the Company's sources of product supply.

         The Company offers network consulting, workstation support, application
development, communications installation, education, Help Desk, IT staffing
services, Internet and remote network management. Services and support revenue
is recognized as such services are performed. The Company's network consulting,
workstation support, application development, and communications installation
services are billed on a time and materials basis. The Company's education and
IT staffing services are fee-based on a per-course and per-placement basis,
respectively. The Company's Help Desk, Internet and remote network management
services are fee based and are dependent upon the scope of services. Generally,
the Company's service arrangements with its customers may be terminated by such
customers with limited advance notice and without significant penalty. The most
significant cost relating to the services component of the Company's business is
personnel expenses which consist of salaries, benefits and payroll-related
expenses. Thus, the financial performance of the Company's service business is
based primarily upon billing margins (billable hourly rates less the costs to
the Company of such service personnel on an hourly basis) and utilization rates
(billable hours divided by paid hours). The future success of the services
component of the Company's business will depend in large part upon its ability
to maintain high utilization rates at profitable billing margins. The Company's
utilization rates for service personnel likely will be adversely affected during
periods of rapid and concentrated hiring. In addition, the competition for
quality technical personnel has continued to intensify resulting in increased
personnel costs for the Company and many other IT service providers, which has
adversely affected the Company's billing margins.

         The Company may receive manufacturer rebates resulting from equipment
sales. In addition, the Company receives volume discounts and other incentives
from certain of its suppliers. Recently, the Company has learned that price
protection and return policies provided by certain product manufacturers are
being revised and may be modified, restricted or eliminated. Except for products
in transit or products awaiting configuration at a Company facility, the Company
generally does not maintain large inventory balances. Despite this inventory
policy, changes in the price protection and return policies of the Company's
manufacturers may have an adverse affect on the Company's results of operations.
At the present time, the Company is unable to determine the impact, if any, of
the potential changes in such policies on its business or, if there is an
impact, whether such impact will be material. Other than such price protection
and return policies, the Company is unaware that any of its suppliers or
manufacturers have changed or intend to further change these programs. There can
be no assurances that any such rebates, discounts or incentives will continue at
historical levels, if at all. A significant adverse modification, restriction or
reduction in such programs could have a material adverse effect on the Company's
financial position, results of operations, or cash flows.

         The Company's cost of sales includes primarily, in the case of product
sales, the cost to the Company of products acquired for resale, and in the case
of services and support revenue, salaries and related expenses for billable
technical personnel. The Company's selling expenses consist primarily of
personnel costs, including sales commissions earned by employees involved in the
sales of IT products, services and support. These employees include direct
sales, sales support and marketing personnel. Sales commissions are recorded as
revenue is recognized. General and administrative expenses consist of all other
operating expenses, including primarily salaries and occupancy costs for
administrative, executive and finance personnel.


                                      -8-
<PAGE>

         The Company believes that its ability to provide a broad range of
technical services, coupled with its traditional strength in satisfying its
clients' IT product requirements and its long-term relationships with large
clients, positions the Company to continue to grow the services component of its
business, while further strengthening its product sales. As such, the Company
anticipates that an increasing percentage of its gross profits in the future
will be derived from the services and support component of its business.
However, in the near term, the Company believes that product sales will continue
to generate a significant percentage of the Company's gross profit. The Company
believes that its ability to be a single-source provider of IT products,
services and support enables it to earn margins higher than it would earn if it
sold products only.

YEAR 2000 DISCLOSURE

         Historically, certain computer programs have been written using two
digits rather than four to define the applicable year, which could result in a
computer recognizing a date using "00" as the year 1900 rather than the year
2000. This, in turn, could result in major system failures or miscalculations,
and is generally referred to as the "Year 2000 Problem". The Company is
currently implementing a new third party developed enterprise wide data and
information system ("System"), as the foundation for the Company's new
management information system (MIS). The Company's current integrated accounting
system is not Year 2000 compliant. Although the System has not been fully
implemented, based upon representations of the provider of the System, the
Company believes upon its implementation, the Company's internal business
systems, including its computer systems, will be Year 2000 compliant. There can
be no assurance, however, that the Year 2000 Problem relating to the Company's
systems will not adversely affect its business, financial position, results of
operations or cash flows. For further discussion on the implementation of the
System see "LIQUIDITY AND CAPITAL RESOURCES".

         The Company resells IT products of leading hardware manufacturers and
software developers. As a result, the Company has no control over the
development of computer systems, software products or other business systems
developed by such third parties. Consequently, there can be no assurance that
the computer systems, software products or other business systems sold by the
Company will accept input of, store, manipulate and/or output dates in the year
2000 or thereafter without error or interruption. As a result, the Company, as a
reseller, may be liable for such failures. Given the Company's role in the
distribution of such products, the Company is not able to accurately determine
the extent, if any, of such potential liability.

         In addition, the purchasing patterns of the Company's customers and
potential customers may be affected by issues associated with the Year 2000
Problem. As companies devote significant resources to become Year 2000
compliant, these expenditures may result in reduced funds available to purchase
products or obtain services such as those offered by the Company. There can be
no assurance that the Year 2000 Problem will not adversely affect the Company's
business, financial position, results of operations or cash flows.

FORWARD LOOKING STATEMENTS

         Certain statements included in this Form 10-Q, including, without
limitation, statements regarding the anticipated growth in the IT products and
services markets, the continuation of the 


                                      -9-
<PAGE>

trends favoring outsourcing of management information systems ("MIS") functions
by large and mid-sized companies, the anticipated growth in the services and
support component of the Company's business, the timing of the development and
implementation of the Company's new service offerings and the utilization of
such services by the Company's customers, the Company's objective to grow
through strategic acquisitions, and trends in future operating performance, are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements include risks
and uncertainties, including, but not limited to: (i) the substantial
variability of the Company's quarterly operating results caused by a variety of
factors, some of which are not within the Company's control, including (a) the
short-term nature of the Company's customers' commitments, (b) patterns of
capital spending by customers, (c) the timing, size and mix of product and
service orders and deliveries, (d) the timing and size of new projects, (e)
pricing changes in response to various competitive factors, (f) market factors
affecting the availability of qualified technical personnel, (g) the timing and
customer acceptance of new product and service offerings, (h) changes in trends
affecting outsourcing of IT services, (i) disruption in sources of supply, (j)
changes in terms and conditions of purchases from sources of supply, (k) changes
in product, personnel and other operating costs, and (l) industry and general
economic conditions; (ii) changes in technical personnel billing and utilization
rates which are likely to be adversely affected during periods of rapid and
concentrated hiring; (iii) the intense competition in the markets for the
Company's products and services; (iv) the Company's ability to manage its growth
effectively which will require the Company to continue developing and improving
its operational, financial and other internal systems, including a major upgrade
of the Company's internal MIS infrastructure; (v) the Company's ability to
complete implementation of its MIS, the implementation can be accomplished
without future delays in monthly closings, or the costs in rectifying delays
would not be material; (vi) the Company's ability to develop, market, provide,
and achieve market acceptance of new service offerings to new and existing
customers; (vii) the Company's ability to attract, hire, train, and retain
qualified technical personnel in an increasingly competitive market; (viii) the
Company's substantial reliance on a concentrated number of key customers; (ix)
the MTA's right to terminate its contract with the Company, the Company's
continued compliance with its obligations under the MTA contract, or the
Company's ability to complete the project without incurring a loss; (x)
uncertainties relating to potential acquisitions, if any, made by the Company,
such as its ability to integrate acquired operations and to retain key customers
and personnel of the acquired business; (xi) the Company's dependence on vendor
authorizations to resell certain computer products and to provide related
services; (xii) the Company's dependence on certain aggregators for a
substantial portion of its products acquired for resale; (xiii) the Company's
reliance on the continued services of key executive officers and salespersons;
(xiv) the possibility that the currently installed computer systems, software
products or other business systems of the Company or its distributors,
manufacturers or customers, working either alone or in conjunction with other
software or systems, will not accept input of, store, manipulate and/or output
dates in the year 2000 or thereafter without error or interruption; (xv) the
ability to obtain a new credit facility upon terms and conditions satisfactory
to the Company; and (xvi) the Company's ability to implement required policies
and procedures regarding internal accounting controls. Such risks and
uncertainties may cause the Company's actual results to differ materially from
the results discussed in the forward-looking statements contained herein.


                                      -10-
<PAGE>

         RESULTS OF OPERATIONS

         THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE
30, 1998

         NET SALES. Net sales increased by 7.4%, or $3.1 million, from $41.8
million in 1997 to $44.9 million in 1998. Product sales decreased by 5.7%, or
$1.8 million, from $31.6 million in 1997 to $29.8 million in 1998. This decrease
in product sales was primarily attributed to lower average selling prices in
1998 due to continued pricing pressures on hardware manufacturers and reduced
unit volume. Service and support revenue increased by 48.0%, or $4.9 million,
from $10.2 million in 1997 to $15.1 million in 1998. This increase was
attributable primarily to increased demand for the Company's service and support
offerings, particularly its network consulting services, due to an increase in
the number and size of client projects and the addition of several long-term
staffing contracts. Revenues from the Company's Remote Network Management
service offering have not met the Company's expectations. The Company is in the
process of implementing its marketing efforts with respect to such offering,
including the marketing agreement with Pinacor, a division of MicroAge.

         Additionally, realization of product sales and service and support
revenues for the MTA project was delayed due to revisions to the project plan
and certain of the equipment to be purchased. Product sales planned for April
1998 were delayed at the request of the MTA pending new manufacturer product
releases anticipated to occur in July 1998, but are currently scheduled for
August 1998. In addition, changes in pilot sites required increased labor to
complete. Such changes and their impact on the project have not yet been
addressed by the MTA. The Company believes such changes are beyond the original
scope of work and an equitable adjustment in the contract amount or terms will
be requested. However, there can be no assurance the MTA will approve, either in
whole or in part, any equitable adjustment in the contract amount or terms
requested by the Company. Accordingly, there can be no assurance that the
Company can complete the project within the contract amount or without incurring
a loss.

         During the three months ended June 30, 1998, sales to KPMG Peat
Marwick, LLP and Polo Ralph Lauren, accounted for approximately 16.8% and 12.5%
of the Company's net sales, respectively. There can be no assurance that such
customers will continue to place orders with the Company or engage the Company
to perform services and support at existing levels.

         GROSS PROFIT. The Company's gross profit increased by 15.9%, or $1.1
million, from $7.1 million in 1997 to $8.2 million in 1998. Total gross profit
margin increased from 16.9% of net sales in 1997 to 18.2% in 1998 due to the
increase in higher margin service and support revenues as a percentage of net
sales. Gross profit margin attributable to product sales increased from 11.4% in
1997 to 11.8% in 1998 primarily due to the sales mix of higher margin products.
However, the Company expects that downward pricing pressure on products will
continue and there can be no assurance that the Company will be able to sustain
its margins on product sales in the future. Gross profit margin attributable to
services and support revenue decreased from 34.0% in 1997 to 31.0% in 1998. The
decrease in such gross profit margin was attributable primarily to lower
utilization of technical personnel and securing several long-term staffing
contracts during 1997, which typically yield lower gross margins than individual
projects. The 


                                      -11-
<PAGE>

Company decreased its staff of billable technical personnel from 545 at December
31, 1997 to 527 at June 30, 1998. For a discussion on the Company's reduction in
work force, see "PART II, ITEM 5., OTHER INFORMATION".

         SELLING EXPENSES. Selling expenses increased by 27.4%, or $806,000,
from $2.9 million in 1997 to $3.7 million in 1998, increasing from 7.0% to 8.3%
of net sales, respectively. Such increases were primarily attributed to
increased salesperson commissions and other support costs, and the increase in
sales and marketing efforts associated with the Company's service and support
offerings.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by 49.6 %, or $1.1 million from $ 2.2 million in 1997 to $
3.3 million in 1998, increasing from 5.3% to 7.3 % of net sales, respectively.
Such increases were primarily due to increases in personnel expenses, MIS
implementation costs, depreciation charges, additional leased facilities and
their related costs, corporate insurance premiums, training costs, and
professional fees.

         SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30,
1998

         NET SALES. Net sales increased by 2.4%, or $2.1 million, from $88.3
million in the first six months of 1997 to $90.4 million in the first six months
of 1998. Product sales decreased by 13.2%, or $9.3 million, from $70.4 million
in the first six months of 1997 to $61.1 million in the first six months of
1998. This decrease in product sales was primarily attributed to lower average
selling prices in 1998 due to continued pricing pressures on hardware
manufacturers and reduced unit volume, and, to a lesser extent, higher customer
product demand during the first quarter 1997. Service and support revenue
increased by 63.3%, or $11.4 million, from $17.9 million in the first six months
of 1997 to $29.3 million in the first six months of 1998. This increase was
attributable primarily to increased demand for the Company's service and support
offerings, particularly its network consulting services, due to an increase in
the number and size of client projects and the addition of several long-term
staffing contracts. Revenues from the Company's Remote Network Management
service offering have not met the Company's expectations. The Company is in the
process of implementing its marketing efforts with respect to such offering,
including the marketing agreement with Pinacor, a division of MicroAge.

         Additionally, realization of product sales and service and support
revenues for the MTA project was delayed due to revisions to the project plan
and certain of the equipment to be purchased. Product sales planned for April
1998 were delayed at the request of the MTA pending new manufacturer product
releases anticipated to occur in July 1998, but are currently scheduled for
August 1998. In addition, changes in pilot sites required increased labor to
complete. Such changes and their impact on the project have not yet been
addressed by the MTA. The Company believes such changes are beyond the original
scope of work and an equitable adjustment in the contract amount or terms will
be requested. However, there can be no assurance the MTA will approve, either in
whole or in part, any equitable adjustment in the contract amount or terms
requested by the Company. Accordingly, there can be no assurance that the
Company can complete the project within the contract amount or without incurring
a loss.


                                      -12-
<PAGE>

         In the first six months of 1998, sales to KPMG Peat Marwick, LLP and
Polo Ralph Lauren accounted for approximately 17.5% and 10.2 % of the Company's
net sales, respectively. There can be no assurance that such customers will
continue to place orders with the Company or engage the Company to perform
services and support at existing levels.

         GROSS PROFIT. The Company's gross profit increased by 20.4%, or $2.8
million, from $14.1 million in the first six months of 1997 to $16.9 million in
the first six months of 1998. Total gross profit margin increased from 15.9% of
net sales in the first six months of 1997 to 18.7% in the first six months of
1998 due to the increase in higher margin service and support revenues as a
percentage of net sales. Gross profit margin attributable to product sales
increased from 11.2% in the first six months of 1997 to 12.3% in the first six
months of 1998 primarily due to the sales mix of higher margin products.
However, the Company expects that downward pricing pressure on products will
continue and there can be no assurance that the Company will be able to sustain
its margins on product sales in the future. Gross profit margin attributable to
services and support revenue decreased from 34.4% of services and support
revenue in the first six months of 1997 to 32.0% in the first six months of
1998. The decrease in such gross profit margin was attributable primarily to
lower utilization of technical personnel and securing several long-term staffing
contracts during 1997, which typically yield lower gross margins than individual
projects. The Company decreased its staff of billable technical personnel from
545 at December 31, 1997 to 527 at June 30, 1998. For a discussion on the
Company's reduction in work force, see "PART II, ITEM 5., OTHER INFORMATION".

         SELLING EXPENSES. Selling expenses increased by 31.6%, or $1.8 million,
from $5.9 million in the first six months of 1997 to $7.7 million in the first
six months of 1998, and increased from 6.6% to 8.5% of net sales, respectively.
The increases in selling expenses were primarily attributed to increased
salesperson commissions and other support costs, and the increase in sales and
marketing efforts associated with the Company's service and support offerings.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by 39.0%, or $1.7 million, from $4.2 million in the first six
months of 1997 to $5.9 million in the first six months of 1998, and increased
from 4.8% to 6.5% of net sales, respectively. The increases were primarily due
to increases in personnel expenses, MIS implementation costs, depreciation
charges, additional leased facilities and their related costs, corporate
insurance premiums, training costs, and professional fees.

LIQUIDITY AND CAPITAL RESOURCES

         Since its inception, the Company has funded its operations primarily
from cash generated by operations, as well as with funds from borrowings under
the Company's credit facilities and the net proceeds from the Company's public
offerings of its common stock. The Company's cash provided by operations was
approximately $6.4 million for the first six months of 1998 and consisted
primarily of a decrease in accounts receivable of $12.3 million. The decrease in
accounts receivable is primarily attributable to the decrease in net sales and
the timing of collection of accounts receivable. As measured in days sales
outstanding, the Company's accounts receivable decreased from 80 days at
December 31, 1997 to 74 days at June 30, 1998. The Company's cash flow from
operations has been and continues to be affected primarily by the 


                                      -13-
<PAGE>

timing of collection of accounts receivable, which typically fluctuate in a
manner consistent with net sales.

         The Company's working capital was $34.7 million at June 30, 1998
compared to $33.1 million at December 31, 1997.

         The Company invested $2.5 million in property and equipment in the
first six months of 1998, primarily related to purchases and upgrades of
computer equipment and software utilized in-house and consultant fees relating
to implementation of the Company's MIS. Although there are no other material
commitments for capital expenditures currently outstanding, the Company
anticipates additional capital expenditures to continue the expansion of the
services component of its business and for the enhancement of its MIS
infrastructure.

         Since December 1996, the Company has expended approximately $450,000
for software, $1.5 million for consultant fees, and $380,000 for Company
personnel in implementing the System. The complexity of the project, the lack of
trained and knowledgeable Company technical personnel in the implementation of
the System, and the lack of availability of current Company personnel dedicated
to the project has resulted in significant project delays and increased costs.
In addition, the Company has experienced delays in financial reporting,
processing of vendor invoices and continues to rely on its existing integrated
accounting system. At the present time, the Company is uncertain: (i) whether
and to what extent the System can or will be implemented; (ii) whether an
alternate system adequate for the Company's requirements can or should be
procured; or (iii) of the costs for full implementation of the System or
acquisition and implementation of a new system. There can be no assurance that
the costs to complete such implementation or the costs for an alternate system
will not be material.

         Further, the Company's current integrated accounting system is
inadequate for current operations and is not Year 2000 compliant. Although the
Company continues to incur costs and dedicate personnel to implement the System
and other aspects of its MIS, there can be no assurances that the Company will
complete implementation of its MIS, that implementation can be accomplished
without future delays in monthly closings, or that the costs in rectifying such
delays would not be material. 

         The Company and its independent auditors have identified significant
deficiencies in the design and operation of its internal control structure. The
Company's independent auditors have determined such deficiencies are "reportable
conditions". The Company has implemented and is in the process of implementing
additional policies, procedures and controls to correct these deficiencies. The
Company does not believe that such deficiencies have had a material affect on
the Company's reported financial results. However, there can be no assurance
that such deficiencies will not have a material adverse effect on the Company's
ability to record, process, summarize and/or report its financial information.

         The Company purchases certain inventory and equipment through financing
arrangements with Finova Capital Corporation and IBM Credit Corporation. At June
30, 1998, there were outstanding balances of $6.7 million and $3.7 million,
respectively, under such 


                                      -14-
<PAGE>

arrangements. Obligations under such financing arrangements are collateralized
by substantially all of the assets of the Company. Under the Loan and Security
Agreement entered into on June 30, 1997 with First Union National Bank (the
"Bank"), the Bank entered into an intercreditor agreement with respect to their
relative interests.

         On June 30, 1997, the Company and the Bank executed a Loan and Security
Agreement whereby the Bank expanded the Company's credit facility to enable the
Company to borrow, based upon eligible accounts receivable, up to $15.0 million
for short-term working capital purposes. Such facility, which matured on June
30, 1998, included a $2.5 million sublimit for letters of credit and a $5.0
million sublimit for acquisition advances. Under the facility the Company may
borrow, subject to certain post-closing conditions and covenants by the Company,
(i) for working capital purposes at the Bank's prime rate less 0.50% or LIBOR
plus 1.25% and (ii) for acquisitions at the Bank's prime rate less 0.25% or
LIBOR plus 1.50%. The Company's obligations under such facility are
collateralized by a first priority lien on the Company's accounts receivable and
inventory, except for inventory for which the Bank has or will have subordinated
its portion to certain other lenders pursuant to intercreditor agreements. On
June 30, 1998, the Bank agreed to extend the facility through September 30, 1998
on the same terms and conditions. The Company anticipates entering into a new
credit facility prior to the expiration date of the extension. There can be no
assurance the Company will obtain a new credit facility on terms satisfactory to
the Company.

         The Company had been notified by the taxing authorities of several
jurisdictions concerning the Company's failure to meet certain reporting and
compliance requirements of such jurisdictions with respect to the Company's
sales tax obligations. The Company commenced a review of its reporting and
compliance procedures relating to its sales tax obligations and determined that
although sales tax liability had been accrued, tax returns and payments had not
been remitted. As a result of such review, the Company has filed sales tax
returns and paid its sales tax obligations to each jurisdiction, including fines
and penalties. Presently, the Company has implemented new control systems and
believes it is in compliance with the applicable sales tax regulations. However,
there can be no assurance that any State will not audit the Company or that if
audited, such audit may identify further non-compliance by the Company resulting
in additional tax payments, fines or penalties. In 1997 the Company had recorded
an amount for payment of unpaid sales taxes and possible fines and penalties.
Although the amount recorded was sufficient to pay such sums, there can be no
assurance that such remaining amount will be sufficient for sums subsequently
assessed by any jurisdiction in the future, if any, as well as any fines or
penalties which may be imposed. In addition, there can be no further assurance
that any such future assessment in excess of the remaining amount recorded will
not be material.

         The Company believes that its available funds, together with existing
and anticipated credit facilities and the cash flow expected to be generated
from operations, will be adequate to satisfy its current and planned operations
for at least the next 24 months.



                                      -15-
<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

                  WAGE AND HOUR. In September 1997, the Company was audited by
the New Jersey Department of Labor, Division of Wage and Hour Compliance (the
"State") regarding the Company's compensatory and overtime payment practices.
Such audit revealed record keeping errors involving daily and weekly totaling of
hours worked on employee time sheets. Subsequent to the audit, a notice of
violation was issued to the Company with a requirement to perform a self-audit
covering the period from September 1995 through September 1997 identifying all
non-exempt employees who were not paid correctly. The Company requested a
pre-hearing conference to clarify the scope of the self-audit. As a result of
the pre-hearing conference, the Company performed a self-audit, identified areas
of non-compliance, and has remitted payment to the State relating to such
identified non-compliance including fines, penalties and administrative fees.
Presently, the Company has implemented new control systems and believes it is in
full compliance with the wage and hour statutes and regulations. However, there
can be no assurance that the State will not audit the Company or that if
audited, such audit will not identify further non-compliance by the Company
resulting in additional wage payments, fines, penalties or administrative fees.
In 1997, the Company recorded an amount for payment of unpaid wages and possible
fines, penalties and administrative fees. Although the amount recorded was
sufficient to pay such sums, there can be no assurance that such remaining
amount will be sufficient for sums subsequently determined to be due, or
assessed by the State in the future, if any. In addition, there can be no
further assurance that any such future assessment in excess of the remaining
amount recorded will not be material.

                  UNEMPLOYMENT REPORTING. In June of 1998, the Company effected
a reduction in its labor force. As a result of applications made for
unemployment compensation by former employees, the Company learned that
electronic media containing employee wage information required to be filed with
the New Jersey Department of Labor, Division of UI/DI Financing (the "Division")
for the period April 1, 1997 through March 31, 1998 had not been filed. Although
the electronic media has now been filed, the Company has been notified that the
Division intends to fine the Company for its failure to timely file such
information in the approximate amount of $32,000. The Company is contesting the
matter, however no assurance can be made that the Company will be successful in
its appeal.

                  ALPHANET SOLUTIONS, INC. V. BRUCE FLITCROFT AND ALLIANT
TECHNOLOGIES. On June 30, 1998, Bruce Flitcroft ("Flitcroft"), the Company's
former Corporate Vice President, Technology Services, filed suit in the Superior
Court of New Jersey, Morris County, against the Company and Stan Gang, the
Company's President and CEO, alleging, among other allegations, breach by the
Company of Flitcroft's employment agreement entered into in October 1995.
Flitcroft seeks its rescission as well as rescission and/or reformation of
certain restrictive covenants contained in said employment agreement and damages
for said breach. Flitcroft also alleges that the Company failed to pay certain
bonus obligations arising from the Company's 1990 acquisition of Datar IDS Corp.
and/or pay, pursuant to an oral promise allegedly made by Stan Gang, a one
million-dollar severance payment in lieu of such bonus.


                                      -16-
<PAGE>

                  On July 16, 1998, without knowledge of the suit filed by
Flitcroft, the Company filed suit against Flitcroft and Alliant Technologies,
Inc. ("Alliant") a company believed to be owned and/or operated by Flitcroft,
alleging among other allegations, breach of Flitcroft's October 1995 employment
agreement, tortious interference with prospective economic advantage and
contractual relations, and conspiracy to usurp corporate assets and
opportunities. The Company seeks to enforce its employment agreement with
Flitcroft including enjoining (i) Flitcroft's employment with Alliant; (ii)
Flitcroft's solicitation of Company employees; (iii) Flitcroft from disclosing
the Company's confidential information; and (iv) Flitcroft from soliciting the
Company's customers. The Company and Stan Gang believe Flitcroft's claims are
without merit and intend to fully and vigorously defend themselves while
pursuing all available remedies they may have. Although the Company has notified
its insurance carriers of the Flitcroft complaint, no response has been received
regarding coverage or defense of all or any portion of the matter at this time.
The Company's Board of Directors authorized the Company to defend Stan Gang and
approved his indemnification by the Company. There can be no assurance that an
outcome favorable to the Company may be achieved or that the Company will be
successful in its efforts to enforce Flitcroft's restrictive covenants contained
in the employment agreement. Accordingly, given the preliminary nature of this
matter, the Company cannot determine at this time whether its resolution or the
expenses to be incurred in this matter will have a material adverse impact on
the Company's financial position, results of operations, or cash flows.

         The Company is also involved in various other pending legal proceedings
arising out of the ordinary course of the Company's business. None of these
legal proceedings is expected to have a material adverse effect on the financial
condition of the Company. With respect to these proceedings and the litigation
and claims described in the preceding paragraphs, management of the Company
believes that it expects to prevail, has adequate insurance coverage or has
established appropriate reserves to cover potential liabilities. There can be no
assurance, however, as to the ultimate outcome of any of these matters, and if
all or substantially all of these legal proceedings were to be determined
adversely to the Company, there could be a material adverse effect on the
financial condition of the Company.

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

         The Annual Meeting of Shareholders of the Company (the "Meeting") was
held on May 29, 1998.

         There were present at the Meeting in person or by proxy shareholders
holding an aggregate of 5,403,436 shares of Common Stock of a total number of
6,269,230 shares issued, outstanding and entitled to vote at the Meeting. The
results of the vote taken at the Meeting with respect to each nominee for
director were as follows:

               NOMINEES                     FOR                   WITHHELD
               --------                     ---                   --------
Stan Gang                                5,381,481                 21,955
Michael Gang                             5,380,481                 22,955
Michael R. Bruce                         5,381,481                 21,955


                                      -17-
<PAGE>

Richard S. Miller                        5,380,481                 22,955
Susan H. Wolford                         5,380,481                 22,955

         In addition, a vote of the shareholders was taken at the Meeting on the
proposal to ratify the appointment of Price Waterhouse LLP, now known as
PricewaterhouseCoopers LLP, as the independent auditors of the Company for the
fiscal year ending December 31, 1998. Of the shares present at the Meeting in
person or by proxy 5,383,166 shares of Common Stock were voted in favor of such
proposal, 13,370 shares of Common Stock were voted against such proposal, 6,900
shares of Common Stock abstained from voting and there were no broker nonvotes.

         In addition, a vote of the shareholders was taken at the Meeting on the
proposal to adopt the Employee Stock Purchase Plan of the Company. Of the shares
present at the Meeting in person or by proxy 3,254,288 shares of Common Stock
were voted in favor of such proposal, 64,620 shares of Common Stock were voted
against such proposal, 23,850 shares of Common Stock abstained from voting and
there were 2,060,678 broker nonvotes.

ITEM 5.           OTHER INFORMATION.

                  REDUCTION IN FORCE. In June 1998 the Company underwent a
reduction in force among its technical and administrative personnel.
Approximately 40 personnel were affected resulting in an expected annualized
cost reduction of approximately $2.0 million beginning July 1, 1998.

                  LEASED FACILITY. The Company and American International
Recovery, Inc. ("AIR"), a subsidiary of American International Group, entered
into a sublease dated May 27, 1998 for approximately 16,038 square feet of
office space at 7 Ridgedale Avenue, Cedar Knolls, NJ (the Company's
headquarters). The lease term extends through September 29, 2000 at a base
rental rate of $15.00 per square foot and upon terms similar to the Company's
existing lease for its headquarters. The Company believes that its current
facilities will be adequate for its needs for the forseeable future, but
continues to evaluate its property needs. The sublease is attached hereto as
exhibit 10.1.

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

         (a)      Exhibit.

                  10.1     Sublease, American International Recovery, Inc. to
                           AlphaNet Solutions, Inc.
                  27       Financial Data Schedule

        (b)       Reports on Form 8-K.

                  No reports on Form 8-K were filed during the quarter for which
                  this report on Form 10-Q is filed.


                                      -18-
<PAGE>


                                   SIGNATURES

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

                                                   AlphaNet Solutions, Inc.

DATE: August 14, 1998                             By:/S/ STAN GANG
                                                     ---------------------------
                                                       Stan Gang,
                                                       President and Chief
                                                       Executive Officer
                                                       (Principal Executive
                                                       Officer)



DATE:  August 14, 1998                            By:/S/ ROBERT G. PETOIA
                                                     ---------------------------
                                                       Robert G. Petoia
                                                       Vice President and
                                                       Chief Financial Officer
                                                       (Principal Financial and
                                                       Accounting Officer)



                                      -19-
<PAGE>

                                 EXHIBIT INDEX



EXHIBIT                              DESCRIPTION
-------                              -----------


  10.1                Sublease, American International Recovery, Inc. to
                      AlphaNet Solutions, Inc.

  27                  Financial Data Schedule