<PAGE>   1
                  =============================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

(Mark One)

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

For the quarter ended February 29, 2000


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

For the transition period from ___________ to ___________

                         Commission file number 0-27046


                          QUINTEL COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

     Delaware                                        22-3322277
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                  Identification No.)

     One Blue Hill Plaza
     Pearl River, New York                           10965
     (Address of principal executive offices)        (Zip Code)

Registrant's telephone number, including area code:   (914) 620-1212


        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
                                              -----     -----

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

        The number of shares outstanding of the Registrant's common stock is
15,864,164 (as of 4/6/00).


<PAGE>   2



                          QUINTEL COMMUNICATIONS, INC.
                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
               FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
                        QUARTER ENDED FEBRUARY 29, 2000

                               ITEMS IN FORM 10-Q



                                                                        PAGE
                                                                        ----

PART I      FINANCIAL INFORMATION

Item 1.     Financial Statements                                           3

Item 2.     Management's Discussion and Analysis
             of Financial Condition and
             Results of Operations                                        12

Item 3.     Quantitative and Qualitative
             Disclosures About Market Risk                              None


PART II     OTHER INFORMATION

Item 1.     Legal Proceedings                                           None

Item 2.     Changes in Securities
             and Use of Proceeds                                          26

Item 3.     Defaults Upon Senior Securities                             None

Item 4.     Submission of Matters to
             a Vote of Security Holders                                 None

Item 5.     Other Information                                           None

Item 6.     Exhibits and Reports on Form 8-K                              26


SIGNATURES


<PAGE>   3
QUINTEL COMMUNICATIONS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED FEBRUARY 29, 2000 AND
FEBRUARY 28, 1999
<PAGE>   4

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                            FEBRUARY 29,         NOVEMBER 30,
                                                                               2000                 1999
                                                                            (Unaudited)
<S>                                                                        <C>                  <C>
Assets

Current assets:
    Cash and cash equivalents                                              $  6,432,817         $  7,939,567
    Marketable securities                                                    35,214,364           36,511,925
    Accounts receivable, trade                                                4,495,022            5,711,967
    Deferred income taxes                                                     2,134,375            2,778,329
    Due from related parties                                                    275,553              550,112
    Prepaid expenses and other current assets                                   524,523              688,314
                                                                           ------------         ------------

        TOTAL CURRENT ASSETS                                                 49,076,654           54,180,214

Property and equipment, at cost, net of accumulated depreciation                750,957              816,533
Long-term investments, at cost                                                4,119,956            2,097,500
Deferred income taxes                                                           183,032              183,032
                                                                           ------------         ------------

        TOTAL ASSETS                                                       $ 54,130,599         $ 57,277,279
                                                                           ============         ============

LIABILITIES

Current liabilities:
    Accounts payable                                                       $  1,033,560         $  1,793,631
    Accrued expenses                                                          4,407,208            5,548,876
    Reserve for customer chargebacks                                          3,759,027            4,618,108
    Due to related parties                                                      370,185              368,176
    Income tax payable                                                        2,896,469            4,365,104
    Deferred income taxes                                                            --              697,106
                                                                           ------------         ------------

        TOTAL CURRENT LIABILITIES                                            12,466,449           17,391,001
                                                                           ------------         ------------

STOCKHOLDERS' EQUITY
    Preferred stock - $.001 par value; 1,000,000 shares authorized;
      none issued and outstanding
    Common stock - $.001 par value; authorized 50,000,000 shares;
      issued 15,816,483 shares and 15,469,590 shares, respectively               15,816               15,469
    Additional paid-in capital                                               39,340,928           37,482,479
    Retained earnings                                                         4,706,274            3,544,568
    Accumulated other comprehensive (loss) income                              (196,968)           1,045,662
    Common stock held in Treasury, at cost, 942,853 shares                   (2,201,900)          (2,201,900)
                                                                           ------------         ------------

        TOTAL STOCKHOLDERS' EQUITY                                           41,664,150           39,886,278
                                                                           ------------         ------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 54,130,599         $ 57,277,279
                                                                           ============         ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   5

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                          ---------------------------------
                                                           February 29,        February 28,
                                                              2000                 1999
<S>                                                       <C>                  <C>
Net revenue                                               $  2,698,646         $ 19,805,601
Cost of sales                                                  285,875           16,753,371
                                                          ------------         ------------

        GROSS PROFIT                                         2,412,771            3,052,230

Selling, general and administrative expenses                 2,355,991            2,989,356
                                                          ------------         ------------

        INCOME FROM OPERATIONS                                  56,780               62,874

Other income                                                 1,881,061              609,241
                                                          ------------         ------------

                                                             1,937,841              672,115

Provision for income taxes                                     776,135              270,807
                                                          ------------         ------------

        NET INCOME                                           1,161,706              401,308
                                                          ------------         ------------

Other comprehensive (loss) income, net of tax:
    Unrealized (loss) gain from available for sale
      securities net of income taxes of ($749,000)
      and $230,000, respectively                            (1,123,000)             345,000
                                                          ------------         ------------

        COMPREHENSIVE INCOME                              $     38,706         $    746,308
                                                          ============         ============

Basic income per share (Note 2):
      Net income                                          $       0.08         $       0.03
                                                          ------------         ------------

        AVERAGE SHARES OUTSTANDING                          14,913,116           15,783,777
                                                          ============         ============
Diluted income per share (Note 2):
    Net income                                            $       0.07         $       0.03
                                                          ------------         ------------

        AVERAGE SHARES OUTSTANDING                          15,853,965           15,849,080
                                                          ============         ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   6

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                     ---------------------------------
                                                                      February 29,        February 28,
                                                                          2000                1999

<S>                                                                  <C>                  <C>
Cash flows from operating activities:
    Net income                                                       $  1,161,706         $    401,308
    Adjustments to reconcile net income to net cash (used in)
      provided by operating activities:
        Depreciation and amortization                                      73,399               74,011
        Reserve for customer chargebacks                                 (859,081)          (3,952,684)
        Deferred income taxes                                             (53,152)                  --
    Changes in assets and liabilities:
      Accounts receivable                                               1,216,945              794,670
      Prepaid expenses and other current assets                           163,791              294,600
      Accounts payable                                                   (760,071)            (969,512)
      Income tax payable                                               (1,468,635)            (553,310)
      Due from/to related parties, net                                    276,568              215,944
      Other, principally accrued expenses                              (1,141,668)          (2,219,026)
                                                                     ------------         ------------
        NET CASH USED IN OPERATING ACTIVITIES                          (1,390,198)          (5,913,999)
                                                                     ------------         ------------


Cash flows from investing activities:
    Purchases of securities                                           (69,960,949)          (9,657,698)
    Purchase of long-term investment                                     (500,000)                  --
    Proceeds from sales of securities                                  70,109,630           15,603,973
    Other, principally capital expenditures                                (7,823)                  --
                                                                     ------------         ------------
        NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES              (359,142)           5,946,275
                                                                     ------------         ------------

Cash flows from financing activities:
    Proceeds from exercised stock options                                 242,590                   --
    Purchase of common stock                                                   --             (301,870)
                                                                     ------------         ------------
        NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES               242,590             (301,870)
                                                                     ------------         ------------

Net decrease in cash and cash equivalents                              (1,506,750)            (269,594)

Cash and cash equivalents, beginning of period                          7,939,567            2,123,630
                                                                     ------------         ------------

        CASH AND CASH EQUIVALENTS, END OF PERIOD                     $  6,432,817         $  1,854,036
                                                                     ============         ============
</TABLE>

   The accompanying notes are an integral part of these financial statements.
<PAGE>   7

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.       GENERAL

         The consolidated financial statements for the three month periods ended
         February 29, 2000 and February 28, 1999 are unaudited and reflect all
         adjustments (consisting only of normal recurring adjustments) which
         are, in the opinion of management, necessary for a fair presentation of
         the financial position and operating results for the interim period.
         The consolidated financial statements should be read in conjunction
         with the consolidated financial statements and notes thereto, together
         with management's discussion and analysis of financial condition and
         results of operations, contained in the Company's Annual Report on Form
         10-K for the fiscal year ended November 30, 1999. The results of
         operations for the three months ended February 29, 2000 are not
         necessarily indicative of the results for the entire fiscal year ending
         November 30, 2000.

2.       EARNINGS PER SHARE

         The following table sets forth the reconciliation of the weighted
         average shares used for basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                           -------------------------------
                                                            February 29,      February 28,
                                                                2000              1999
<S>                                                         <C>               <C>
         Denominator:
             Denominator for basic earnings per
               share -- weighted-average shares             14,913,116         15,783,777
             Effect of dilutive securities:
               Stock options                                   940,849             65,303
                                                           -----------         ----------

             Dilutive potential common shares:
               Denominator for diluted earnings
                 per share -- adjusted weighted-average
                 shares and assumed conversions             15,853,965         15,849,080
                                                           ===========         ==========
</TABLE>

         Options and warrants to purchase 140,308 and 872,818 shares of common
         stock were outstanding for the three months ended February 29, 2000 and
         February 28, 1999, respectively, but were not included in the
         computation of diluted earnings per share because their effect would be
         anti-dilutive.

3.       ADVERTISING EXPENSES

         The Company's advertising expenses have historically consisted of
         television broadcast media and related production costs, telemarketing,
         direct-mail, and print media, with all such costs being charged to
         operations at the time the related advertising and marketing occurred.
         Total advertising and marketing expenses for the three months ended
         February 29, 2000 and February 28, 1999 were approximately $118,000
         and $13,043,000, respectively.

4.       ADOPTION OF SFAS 130, "REPORTING COMPREHENSIVE INCOME"

         As of December 1, 1998, the Company adopted Statement of Financial
         Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
         No. 130"). The adoption of SFAS No. 130 had no impact on the Company's
         net income or stockholders' equity. SFAS No. 130 requires
<PAGE>   8

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

         unrealized gains and losses on the Company's marketable securities to
         be reported in comprehensive income and accumulated other comprehensive
         (loss) income. Prior to adoption of this statement, such gains and
         losses were reported separately in stockholders' equity. Prior year
         financial statements have been reclassified to conform to the
         requirements of SFAS No. 130.

5.       ADOPTION OF SFAS 131, "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND
         RELATED INFORMATION"

         The Financial Accounting Standards Board recently issued SFAS No. 131,
         "Disclosures about Segments of an Enterprise and Related Information,"
         which was adopted by the Company as of November 30, 1999. This
         statement establishes standards for reporting of information about
         operating segments in annual and interim financial statements.
         Operating segments are defined as components of an enterprise for which
         separate financial information is available that is evaluated regularly
         by the chief operating decision maker(s) in deciding how to allocate
         resources and in assessing performance. SFAS No. 131 also requires
         disclosures about products and services, geographic areas and major
         customers. The adoption of SFAS No. 131 did not affect the results of
         operations or financial position but did affect the disclosure of
         segment information as presented in Note 7.


6.       INVESTMENTS

         In January 2000, the Company increased its equity position to 15.9% of
         itarget.com, Inc., a privately held on-line permission based e-mail
         marketing and consumer data information company. The Company acquired
         the additional approximate 12.2% equity interest pursuant to a stock
         swap agreement. The agreement required that 229,862 of the Company's
         common shares be issued in exchange for 42,372 newly issued Series B,
         convertible preferred shares of itarget.com, Inc. The total investment
         was valued at $1.6 million based on the Company's share price on the
         date of the closing. On March 29, 2000, itarget.com, Inc. was acquired
         by Cybergold, Inc. (Nasdaq:CGLD).

         As of February 16, 2000, the Company has sold 240,000 shares of its
         investment in SkyMall at an average price of $9.17, yielding total
         proceeds to the Company of approximately $2.2 million, for a profit of
         approximately $941,000, which is included in the Company's Other
         Income for the three months ended February 29, 2000.

7.       SEGMENT INFORMATION

         The Company's activities are classified into three primary operating
         segments: (1) Products and Services billed to consumers by Local
         Exchange Carriers (LEC Billed products and services), (2) Customer
         Acquisition Services billed directly to long distance carriers,
         including post acquisition commissions from long distance usage
         (Customer Acquisition services) and (3) Internet Commerce billed
         directly to consumers and vendors (E-commerce). The balance of the
         Company's operations are immaterial individually and in the aggregate,
         and are included as part of Corporate and other. This business segment
         delineation is consistent with the Company's management and financial
         reporting structure based on products and services. Summarized
         financial information by business segment is as follows:
<PAGE>   9

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

SEGMENT DATA -- NET REVENUES

<TABLE>
<CAPTION>
                                            February 29,       February 28,
                                                2000               1999
<S>                                         <C>                <C>
For the three months ended:
    LEC Billed products and services        $ 1,702,806        $ 4,882,450

    Customer Acquisition services               919,782         14,913,112

    E-commerce                                   49,318                 --

    Corporate and other                          26,740             10,039
                                            -----------        -----------

             CONSOLIDATED TOTALS            $ 2,698,646        $19,805,601
                                            ===========        ===========
</TABLE>


SEGMENT DATA -- GROSS PROFIT

<TABLE>
<CAPTION>
                                             FEBRUARY 29,       FEBRUARY 28,
                                                2000               1999
<S>                                         <C>                 <C>
For the three months ended:
    LEC Billed products and services        $ 1,616,327         $ 3,835,427

    Customer Acquisition services               836,268            (793,236)

    E-commerce                                  (66,564)                 --

    Corporate and other                          26,740              10,039
                                            -----------         -----------

             CONSOLIDATED TOTALS            $ 2,412,771         $ 3,052,230
                                            ===========         ===========
</TABLE>


SEGMENT DATA -- EBITDA

<TABLE>
<CAPTION>
                                            FEBRUARY 29,        FEBRUARY 28,
                                               2000                 1999
<S>                                         <C>                 <C>
For the three months ended:
    LEC Billed products and services        $ 1,519,451         $ 3,197,772

    Customer Acquisition services               452,091          (2,312,485)

    E-commerce                               (1,002,765)                 --

    Corporate and other                        (838,298)           (748,099)
                                            -----------         -----------

             CONSOLIDATED TOTALS            $   130,479         $   137,188
                                            ===========         ===========
</TABLE>
<PAGE>   10

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

SEGMENT DATA -- DEPRECIATION AND AMORTIZATION

<TABLE>
<CAPTION>

                                           FEBRUARY 29,   FEBRUARY 28,
                                              2000           1999
<S>                                        <C>            <C>
For the three months ended:
    LEC Billed products and services        $    --        $    --

    Customer Acquisition services                --             --

    E-commerce                               27,513             --

    Corporate and other                      45,886         74,011
                                            -------        -------

             CONSOLIDATED TOTALS            $73,399        $74,011
                                            =======        =======
</TABLE>

8.       LITIGATION

         On or about May 4, 1998, a complaint entitled "Joseph Chalverus, on
         behalf of himself and all others similarly situated v. Quintel
         Entertainment, Inc., Jeffrey L. Schwartz and Daniel Harvey" was filed
         in the United States District Court for the Southern District of New
         York; subsequently, a complaint entitled "Richard M. Woodward, on
         behalf of himself and all others similarly situated v. Quintel
         Entertainment, Inc., Jeffrey L. Schwartz and Daniel Harvey" was filed
         in that same court, as was a complaint entitled "Dr. Michael Title, on
         behalf of himself and all others similarly situated v. Jeffrey L.
         Schwartz, Jay Greenwald, Claudia Newman Hirsch, Andrew Stollman, Mark
         Gutterman, Steven L. Feder, Michael G. Miller, Daniel Harvey and
         Quintel Entertainment, Inc." (collectively, the "Complaints"). In
         addition to the Company, the defendants named in the Complaints are
         present and former officers and directors (the "Individual
         Defendants"). The plaintiffs seek to bring the actions on behalf of a
         purported class of all persons or entities who purchased shares of the
         Company's Common Stock from July 15, 1997 through October 15, 1997 and
         who were damaged thereby, with certain exclusions. The Complaints
         allege violations of Sections 10(b) and 20 of the Securities Exchange
         Act of 1934, and allege that the defendants made misrepresentations and
         omissions concerning the Company's financial results, operations and
         future prospects, in particular, relating to the Company's reserves for
         customer chargebacks and its business relationship with AT&T. The
         Complaints allege that the alleged misrepresentations and omissions
         caused the Company's Common Stock to trade at inflated prices, thereby
         damaging plaintiffs and the members of the purported class. The amount
         of damages sought by plaintiffs and the purported class has not been
         specified.

         On September 18, 1998, the District Court ordered that the three
         actions be consolidated, appointed a group of lead plaintiffs in the
         consolidated actions, approved the lead plaintiffs selection of counsel
         for the purported class in the consolidated actions, and directed the
         lead plaintiffs to file a consolidated complaint. The consolidated and
         amended class action complaint ("Consolidated Complaint") which has
         been filed asserts the same legal claims based on essentially the same
         factual allegations as did the Complaints. On February 19, 1999, the
         Company and the Individual Defendants filed a motion to dismiss the
         Consolidated Complaint. The District Court has denied the motion to
         dismiss. The Company and the Individual Defendants
<PAGE>   11

QUINTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

         have answered the Consolidated Complaint, denying all liability and
         raising various affirmative defenses. Discovery has commenced. The
         Company believes that the allegations in the Complaints are without
         merit, and intends to vigorously defend the consolidated actions. The
         Company maintains Directors and Officers liability insurance, which the
         Company believes adequately covers damages, if any, that may arise
         under the action. No assurance can be given, however, that the outcome
         of the consolidated actions will not have a materially adverse impact
         upon the results of operations and financial condition of the Company.
<PAGE>   12
3/16/00 7:17:38 AM

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

The matters discussed in the following Management's Discussion and Analysis of
Financial Condition and Results of Operations may contain forward-looking
statements and information relating to the Company that are based on the current
beliefs and expectations of Management, as well as assumptions made by and
information currently available to the Company. When used in this Management's
Discussion and Analysis, and elsewhere in this Form 10-Q, the words
"anticipate", "believe", "estimate", and "expect" and similar expressions, as
they relate to the Company are intended to identify forward-looking statements.
Such statements reflect the current views of the Company's management, with
respect to future events and are subject to certain risks, uncertainties and
assumptions, which could cause the actual results to differ materially from
those reflected in the forward-looking statements.


OVERVIEW

         The operations of Quintel Communications, Inc. and its consolidated
subsidiaries (collectively, the "Company") are devoted to developing,
operating, and entering into strategic marketing investments with
Internet-based direct marketing companies. It is these Internet-based marketing
companies and related strategic marketing investments that the Company believes
will form the core of its future period net revenues. Previously, the Company
had relied on conventional marketing channels, specifically television broadcast
media, telemarketing, direct-mail, and print advertising to facilitate the
marketing of its consumer based products and services. The Company will continue
to recognize revenues through the offering of consumer products and services,
but will now be conducting its marketing via the Internet. This significant
change in the Company's marketing emphasis to the Internet, and the unproven
reliability and profitability of the e-commerce marketplace, should both be
considered when using the Company's historical results in evaluating the
possibilities of the Company's future operations, cash flows, and financial
position.

         In the execution of the Company's shift to the Internet, it commenced
the formation of the "Quintel Network" in the second half of the fiscal year
ended November 30, 1999. The Quintel Network is the Company's portfolio of
strategic marketing investments and marketing partnerships with Internet-based
marketing companies, e-commerce retailers and service providers. Together, the
companies that comprise the Quintel Network market a wide variety of products
and services aimed at the consumer audience. See " -- Quintel Network."





<PAGE>   13
BASIS OF PRESENTATION

Certain amounts for the prior period that are presented in the accompanying
consolidated financial statements, and referred to in the discussions below,
have been reclassified with the current period presentation.

SEGMENT INFORMATION

The Company adopted SFAS No.131, Disclosures about Segments of an Enterprise and
Related Information, as of November 30, 1999. The adoption of SFAS No. 131 did
not affect the results of operations or financial position of the Company, but
did require the Company to disclose its "management" approach determined
segments and present comparatively prepared data for the first quarter of fiscal
1999. The Company's segments operate exclusively in the United States with an
immaterial portion of revenue earned in Canada during the three months ended
February 28, 1999. See "Adoption of Segmental Reporting".

RESULTS OF OPERATIONS

The following is a discussion of the financial condition and results of
operations of the Company for the three months ended February 29, 2000 and
February 28, 1999, respectively. It should be read in conjunction with the
Company's Form 10-K as filed for the year ended November 30, 1999, the Notes
thereto and other financial information included elsewhere in this report.

THREE MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999


The Company's net revenues, on a segmental basis, and with disclosure of the
individual segment components, for each of the three months ended February 29,
2000 and February 28, 1999, are detailed in the following tables:

<TABLE>
<CAPTION>
NET REVENUES - BY SEGMENT
                                                                                                CHANGE-INC         CHANGE-INC
                                                                     FEBRUARY                      (DEC)             (DEC)
FOR THE THREE MONTHS ENDED                                 29, 2000           28, 1999              $$$               %%%
------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>                <C>                <C>
LEC Billed products and services                          $1,702,806        $ 4,882,450        $ (3,179,644)          -65%


Customer Acquisition services                                919,782         14,913,112         (13,993,330)          -94%


E-commerce                                                    49,318                  -              49,318           100%


Corporate and other                                           26,740             10,039              16,701           166%
------------------------------------------------------------------------------------------------------------------------------

TOTAL                                                     $2,698,646        $19,805,601        $(17,106,955)          -86%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   14
NET REVENUES:

<TABLE>
<CAPTION>
                                                                                                CHANGE-INC       CHANGE-INC
                                                                     FEBRUARY                     (DEC)            (DEC)
FOR THE THREE MONTHS ENDED                                29, 2000           28, 1999              $$$              %%%
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>                <C>                <C>
LEC BILLED PRODUCTS AND SERVICE COMPONENTS
"900" Entertainment Service termination royalties        $  760,101        $        --        $    760,101          100%
Club 900 Products                                           151,319          1,776,542          (1,625,223)         -91%
Enhanced Services, principally voice mail                   791,386          3,105,908          (2,314,522)         -75%
                                                         --------------------------------------------------------------------
TOTAL LEC BILLED PRODUCTS AND SERVICES                   $1,702,806        $ 4,882,450        $ (3,179,644)         -65%
                                                         ====================================================================
CUSTOMER ACQUISITION SERVICE COMPONENTS

Qwest Long distance customer acquisitions                $   42,446        $12,891,234        $(12,848,788)         -100%
Qwest Long distance usage commissions                       877,336          2,021,878          (1,144,542)          -57%
                                                         --------------------------------------------------------------------
TOTAL CUSTOMER ACQUISITION SERVICES                      $  919,782        $14,913,112        $(13,993,330)          -94%
                                                         --------------------------------------------------------------------
TOTAL E-COMMERCE                                         $   49,318        $        --        $     49,318           100%
                                                         --------------------------------------------------------------------
CORPORATE AND OTHER COMPONENTS
Miscellaneous products, list revenue and other           $   26,740        $    10,039        $     16,701           166%
                                                         --------------------------------------------------------------------
</TABLE>

         Net Revenue for the three months ended February 29, 2000 decreased
$17,106,955, or 86%, when compared to the three months ended February 28, 1999.
The most significant portion of the decrease in net revenues, or approximately
$14 million (94%), was attributable to the Company's Customer Acquisition
services segment. See "Transactions with Major Customer and Termination of
Economic Dependence" following the "Liquidity and Capital Resources" section for
a detailed discussion of this decrease.

         The decrease in net revenues was also attributable to decreases in net
revenues from the Company's LEC Billed products and services segment of
approximately $3.2 million. These decreases consisted of reductions in the
Company's enhanced service revenues of approximately $2.3 million, or 75%, when
compared with the prior comparable period, as well as decreases in the
Company's Club 900 product net revenues of approximately $1.6 million, or 91%,
when compared with the prior comparable period. These reductions were partially
offset by royalty income of approximately $760,000, earned in consideration for
the termination of the Company's active role in the "900" pay per call business.

         For a detailed description of the decrease in net revenues attributable
to LEC Billed products and services, see "Service Bureaus and Local Exchange
Carriers" following the "Liquidity and Capital Resources" section. The
significant cause of the reductions in Club 900 net revenues relates to an
agreement entered into between the Company and Access Resources Services, Inc.
("ARS"), which eliminated the Company's active participation in the "900" pay
per call business (the "ARS Agreement"). Such agreement is more fully described
in "Prior Year Transactions Impacting Current and Future Fiscal Periods".
Additionally, the Company's intentional migration away from


<PAGE>   15
the "900" entertainment service business (which was the exclusive avenue for
Club 900 product marketing and member procurement) materially contributed to the
decrease in such net revenues during the three months ended February 29, 2000.
The royalty agreement referenced above became effective June 1, 1999, and
therefore, there was no comparative prior period royalty revenue.

The Company recorded approximately $49,000 in revenues from its E-commerce
segment in the three months ended February 29, 2000. The majority of these
revenues were the result of fees earned from advertising impressions on its
websites. The Company commenced its Internet initiative in the third quarter of
the fiscal year ended November 30, 1999, and, therefore, the quarter ended
February 28, 1999 did not include revenue from E-commerce activities.


The Company's reported net revenues have historically been a product of the
gross revenues generated within each reporting period less the provision for
chargebacks for the related reporting period, which is recorded as a direct
reduction from such gross revenues, except for revenues generated from royalties
and long distance acquisition commissions, which are not subject to provision
for consumer chargebacks. Revenues from the Company's E-commerce activities are
recorded net of an allowance for doubtful accounts, which provides for
collection adjustments to gross billings for duplicate data, bad data and other
collection reduction amounts.


The Company's gross revenues, on a segmental basis, for the three months ended
February 29, 2000 and February 28, 1999, are presented below:

GROSS REVENUES - BY SEGMENT

<TABLE>
<CAPTION>
                                                                                 CHANGE-INC        CHANGE-INC
                                                      FEBRUARY                      (DEC)            (DEC)
FOR THE THREE MONTHS ENDED                    29, 2000         28, 1999              $$$              %%%
-----------------------------------------------------------------------------------------------------------------
<S>                                          <C>              <C>                <C>               <C>
LEC Billed products and services             $1,686,165       $ 9,515,031        $ (7,828,866)        -82%

Customer Acquisition services                   919,782        14,913,112         (13,993,330)        -94%

E-commerce                                       49,318                 -              49,318         100%

Corporate and other                              26,740            10,117              16,623         164%
-----------------------------------------------------------------------------------------------------------------

TOTAL                                        $2,682,005       $24,438,260        $(21,756,255)        -89%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The factors listed in the net revenue section describing the reasons for the
changes in net revenues for the three months ended February 29, 2000, as
compared to the three months ended February 28, 1999, are directly applicable to
gross revenues, as well.

<PAGE>   16
         The provisions for chargebacks for the Company's four segments, where
applicable, are presented below for the three months ended February 29, 2000 and
February 28, 1999:

CHARGEBACKS - BY SEGMENT

<TABLE>
<CAPTION>
                                                                                               CHANGE-INC        CHANGE-INC
                                                                    FEBRUARY                      (DEC)             (DEC)
FOR THE THREE MONTHS ENDED                                29, 2000           28, 1999              $$$               %%%
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>               <C>                <C>               <C>
LEC Billed products and services                          $(16,641)         $4,632,581         $(4,649,222)         -100%

Customer Acquisition services                                    -                   -                   -             0%

E-commerce                                                       -                   -                   -             0%

Corporate and other                                              -                  78                 (78)         -100%
-----------------------------------------------------------------------------------------------------------------------------

TOTAL                                                     $(16,641)         $4,632,659         $(4,649,300)         -100%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The decrease in the provision for chargebacks is directly related to
the decrease in the Company's gross revenues, specifically the LEC Billed
products and services segment revenues from enhanced services and the Club 900
product. These products and services were subject to chargeback allowances, and
with the Company's transition away from these revenue streams, the corresponding
effect was a decrease in chargeback allowances in absolute dollars. Actual
chargebacks incurred for services and programs that are no longer being marketed
are charged against the previously established reserves, with any adjustment
being reflected currently.

         The Company's cost of revenues during the three months ended February
29, 2000 and February 28, 1999, were comprised of (1) marketing costs directly
associated with the procurement and retention of customers, including direct
response advertising costs, promotional costs and premium fulfillment costs, and
(2) the related billing, collection and customer service costs. During the three
months ended February 28, 1999, the Company's cost of revenues was offset by net
revenue generated from certain premium offerings in conjunction with the
Company's marketing of other products and services. All residual revenues from
such premium offerings have been reflected in the Company's other income section
for the three months ended February 29, 2000 pursuant to the termination of long
distance customer acquisition marketing at November 30, 1999.

          The Company's cost of revenues for the three months ended February 29,
2000 and February 28, 1999 are presented below:


<PAGE>   17
<TABLE>
<CAPTION>
SEGMENT DATA - COST OF SALES                                                             CHANGE-          CHANGE-
                                                         FEBRUARY                        INC(DEC)         INC(DEC)
FOR THE THREE MONTHS ENDED                       29, 2000       28, 1999                   $$$              %%%
-------------------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>                    <C>                 <C>
LEC Billed products and services                $  86,479      $ 1,047,023            $   (960,544)         -92%

Customer Acquisition services                      83,514       15,706,348             (15,622,834)         -99%

E-commerce                                        115,882                -                 115,882          100%

Corporate and other                                     -                -                       -            0%
-------------------------------------------------------------------------------------------------------------------
TOTAL                                           $ 285,875      $16,753,371            $(16,467,496)         -98%
-------------------------------------------------------------------------------------------------------------------
</TABLE>


CONSOLIDATED COST OF SALES, BY COMPONENT

<TABLE>
<CAPTION>
                                                                               CHANGE-         CHANGE-
                                                      FEBRUARY                 INC(DEC)       INC(DEC)
FOR THE THREE MONTHS ENDED                     29, 2000      28, 1999           $$$             %%%
---------------------------------------------------------------------------------------------------------
<S>                                            <C>         <C>              <C>               <C>
Advertising, promotion and
     fulfillment costs                         $118,285    $ 17,409,490     $(17,291,205)       -99%
Service Bureau fees, including
     customer service and psychic
     operators                                  167,590       3,710,438       (3,542,848)       -95%
"900" Pay-per-call Premium
     net revenues                                     -      (4,366,557)       4,366,557       -100%
---------------------------------------------------------------------------------------------------------

TOTAL                                          $285,875    $ 16,753,371     $(16,467,496)       -98%
---------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   18
         The decrease in cost of revenues is directly attributable to the
Company's significantly reduced marketing efforts and related expenditures
during the three months ended February 29, 2000, when compared to the three
months ended February 28, 1999. The primary factor contributing to the reduction
in these costs resulted from the Company's termination of the marketing of its
residential long distance customer acquisition activities, effective November
30, 1999 - See "-- Transactions with Major Customers and Termination of Economic
Dependence". Decreases in the cost of revenues were also attributable to the
cessation of the Company's active marketing of its "900" pay per call services,
as a premium to potential and acquired long distance customers and the cessation
of the marketing of the Club 900 product, both in accordance with the ARS
Agreement. The advertising, promotion and fulfillment costs decreased by
approximately $17.3 million, or 99%, when compared with the prior year's three
month period. Service bureau fees decreased by approximately $3.5 million, or
95%, when compared to the three months ended February 28, 1999. The reductions
in service bureau fees were directly attributable to the cessation of the
Company's billing of the Club 900 product and the significantly reduced billing
and collection costs associated with its declining residual enhanced service
member base. These reductions were partially offset by the costs of revenues
incurred in the Company's E-commerce segment, which commenced operations in the
third quarter of fiscal 1999.

The Company's selling, general and administrative expenses ("SG&A") are
comprised of (i) compensation costs and related expenses for executive, sales,
finance, information systems and general administration personnel, (ii)
professional fees, (iii) insurance costs, (iv) occupancy and other equipment
rental costs, (v) site development and modification costs related to the
Company's E-commerce segment, and (vi) all other general and miscellaneous
corporate expense items.

     The Company's SG&A expenses for the three months ended February 29, 2000
and February 28, 1999 are presented on a segmental basis, below:

CONSOLIDATED -- SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
<TABLE>
<CAPTION>
                                                                                    CHANGE-         CHANGE-
                                                              FEBRUARY              INC(DEC)        INC(DEC)
FOR THE THREE MONTHS ENDED                           29, 2000          28, 1999        $$$            %%%
------------------------------------------------------------------------------------------------------------
<S>                                                 <C>               <C>          <C>              <C>
LEC Billed products and services                    $   96,876        $  637,655   $  (540,779)        -85%

Customer Acquisition services                          384,177         1,519,249    (1,135,072)        -75%

E-commerce                                             963,714                 -       963,714         100%

Corporate and other                                    911,224           832,452        78,772           9%
------------------------------------------------------------------------------------------------------------

CONSOLIDATED TOTALS                                 $2,355,991        $2,989,356   $  (633,365)        -21%
------------------------------------------------------------------------------------------------------------
</TABLE>

The decrease in SG&A expense in the three months ended February 29, 2000,
compared to the three months ended February 28, 1999, is primarily attributable
to the Company's reduction in personnel (and all associated costs of insurance,
payroll taxes and overhead utilization). The Company commenced such personnel
reductions in the fourth quarter of fiscal year ended November 30, 1998 and
continued the reductions into the third quarter of the fiscal year ended
November 30, 1999. Additional reductions in SG&A are attributable to the terms
of the 900 Agreement, which was executed in the third quarter of the fiscal year
ended November 30, 1999,


<PAGE>   19
pursuant to which the Company (i) eliminated its media buying operation, which
included a staff of approximately twenty-one employees,(ii) was released from
continuing rent expense obligations under an assignment of a lease for the
office space occupied by such media department, and (iii) disposed of all the
media operation's property and equipment. The costs associated with these items
were a component of total SG&A expenses for the three months ended February 28,
1999, and amounted to approximately $609,000. Total decreases in consolidated
SG&A expense were offset by the commencement of operations of the Company's
E-commerce segment in the latter part of the fiscal year ended November 30,
1999, which generated approximately $964,000 of expense. These expenses were
comprised of site development and modification costs (approximately $630,000),
marketing, sales and engineering salaries and related costs (approximately
$226,000), and other items of general and administrative costs (approximately
$108,000).


     The Company's other income classification for the three months ended
February 29, 2000, consists of interest and dividend income earned on the
Company's marketable securities (approximately $528,000), capital gains on the
disposition of 240,000 shares of the common stock of Skymall, Inc., one of the
companies that comprise the Quintel Network (approximately $941,000), and
approximately $503,000 of other income related to payments received by the
Company from residual premium offering based revenues previously associated with
the Company's customer acquisition services. Total other income for the three
months ended February 29, 2000 amounted to $1,881,061, compared with $609,241
for the three months ended February 28, 1999, for an increase of $1,271,820.
Other income for the fiscal year ended November 30, 1999 was comprised entirely
of interest income.

The Company's effective income tax rate is a result of the combination of
federal income taxes at statutory rates, and state taxes. The combined effective
rate was approximately 40% for the three month periods ended February 29, 2000
and February 28, 1999.

LIQUIDITY AND CAPITAL RESOURCES

At February 29, 2000, the Company had cash and cash equivalents of approximately
$6.4 million, reflecting a decrease of approximately $1.5 million, when compared
to the $7.9 million in cash and cash equivalents held at November 30, 1999.

     During the three months ended February 29, 2000, net cash used in operating
activities was approximately $1.4 million. The significant components resulting
in this decrease, were (A)(i) payments of corporate income taxes of
approximately $1.5 million, (ii) payments on trade payables of approximately
$760,000, and (iii) payments on accrued expenses of approximately $1.1 million,
offset by (B)(i) collection of accounts receivable of approximately $1.2 million
and (ii) net income of approximately $1.2 million for the three months ended
February 29, 2000.

     The approximate $359,000 in net cash used in investing activities during
the three months ended February 29, 2000 was primarily attributable to the
Company's strategic investment in LCS Golf, Inc. ($500,000), one of the
companies that comprises the Quintel Network, offset by proceeds from marketable
security sales exceeding marketable security purchases.


     Cash provided by financing investing activities during the three months
ended February 29, 2000 amounted to $242,590, all of which was provided by the
exercise of the Company's employee and director held stock options.

Historically, the Company's primary cash requirements have been to fund the cost
of advertising and promotion. Additional funds have been used in the purchasing
of equipment and services in connection with the commencement of new business
lines and further development of businesses being test marketed. During the
fiscal year ended November 30, 1999, the Company began the process or redefining
itself as an on-line direct marketing provider of consumer products and
services, within the Internet industry. The Company's future plans and business
strategy call for its Internet based E-commerce segment to be its sole operating
focus, and the significant source of all future revenues. This
<PAGE>   20
Internet initiative may have a significant impact on the Company's capital and
liquidity resources relating to the E-commerce segment's possible expenditures
for (i) marketing and advertising campaigns, (ii) the cost of additional
personnel required to occupy executive, operational and administrative
positions, (iii) product development costs, (iv) technology based costs, and (v)
other miscellaneous costs. Our Internet initiative, and its underlying business
plan and strategy, has caused the Company to terminate the marketing of its
legacy products and services. Accordingly, these services will no longer
contribute significantly to the Company's cash flows in subsequent fiscal
periods. This Company wide redefinition should be considered when using the
Company's historical results in evaluating future operations, cash flows and
financial position.

     Under currently proposed operating plans and assumptions (including the
substantial costs potentially attributable to the Company's Internet
initiative), management believes that projected cash flows from operations and
available cash resources will be sufficient to satisfy the Company's anticipated
cash requirements for at least the next twelve months. Currently, the Company
does not have any long-term obligations and does not intend to incur any
long-term obligations in the near future. As the Company seeks to extend its
reach into the E-commerce arena, as well as identify new and other consumer and
non-consumer product and services, the Company may use existing cash reserves,
long-term financing or other means to finance such diversification. See "Forward
Looking Information May Prove Inaccurate".

ADOPTION OF SEGMENTAL REPORTING

The Company adopted SFAS No.131, Disclosures about Segments of an Enterprise and
Related Information, effective November 30, 1999. The adoption of SFAS No. 131
did not affect the results of operations or financial position of the Company,
but did require the Company to disclose its "management" approach determined
segments. The Company's segments operate exclusively in the United States with
an immaterial portion of revenue earned in Canada during the three months ended
February 28, 1999.

The Company's reportable operating segments are aligned into three fundamental
areas: (1) Products and Services billed to consumers by Local Exchange Carriers
(LEC Billed products and services), (2) Customer Acquisition Services billed
directly to long distance carriers and wireless carriers (Customer Acquisition
services) and (3) Internet Commerce billed directly to consumers and vendors
(E-commerce). The balance of the Company's operations are immaterial
individually and in the aggregate, and are included as part of Corporate and
other. This business segment delineation is consistent with the Company's
management and financial reporting structure based on products and services.

     The Company's LEC Billed product and service segment, which historically
included revenues from voice mail services and telephone entertainment services
(principally comprised of psychic related 900 pay-per-call and club products and
services), are billed and collected through the use of service bureaus, which
act as conduits for the Local and Long Distance Exchange Carriers. The Company's
Customer Acquisition services segment, which has historically included revenues
from residential long distance customer acquisitions and related usage
royalties, as well as prepaid and conventional cellular phone customer
acquisition services, were billed to and collected directly from the parties to
the agreements, and did not require service bureau intervention. Historically,
the services offered by the Company have evolved based on changing consumer
tastes, as well as the impact of telephone company billing practices,
governmental regulation, and most recently, the Internet.

<PAGE>   21
Revenue from the Company's LEC Billed product and service segment's voice mail
and club product components have historically been recognized, net of an
estimated provision for customer chargebacks (which include refunds and
credits), as customers automatically renewed their monthly subscriptions. In
regard to the Company's LEC Billed product and service segment's telephone
entertainment services component, which consisted principally of the 900
pay-per-call activities, up to and including May 31, 1998, the Company
recognized revenues from the telephone entertainment services at the time the
customer initiated a billable transaction, net of an estimated provision for
customer chargebacks. Subsequent to May 31, 1998 through November 30, 1999
these 900 pay-per-call revenues were offered as a premium to the Company's
acquired long distance customers. For periods after November 30, 1999, such
revenues are included in other income and will be immaterial in amount.

In the case of its legacy revenues earned within its LEC Billed product and
service segment, the Company historically estimated the reserve for customer
chargebacks monthly, based on updated chargeback history, with any resulting
adjustments being charged against current revenue. The Company estimated
chargebacks and other provisions for new products and services without a
previous operating history, on currently available experience with similar
products and services, and adjusted such estimates as further information became
available. Since reserves were established prior to the periods in which
chargebacks were actually expended, the Company's revenues may be adjusted in
later periods in the event that the Company's incurred chargebacks vary from the
estimated amounts.

Revenue from the Company's Customer Acquisition services segment were recorded
upon the achievement of certain events particular to the corresponding program's
fulfillment liability. Subsequent to the delivery of the initial sales record to
the respective long distance carrier, the Company may have been required to
provide to the customer certain products and services (fulfillment liability),
such as prepaid cellular telephones and/or complimentary airline ticket
redemption vouchers. These costs were estimated and accrued, as a component of
marketing expense, at the time the associated revenues were recorded. This
estimation is adjusted to actual amounts in subsequent periods. There were no
chargebacks from the Company's long distance acquisition programs.

Revenues from the Company's E-commerce segment for the three months ended
February 29, 2000 amounted to $49,318. Revenues from such segment are expected
to comprise the majority of future fiscal period revenues. Such subsequent
period E-commerce revenues will be recognized upon the completion of the
performance of all of the Company's obligations to a customer or vendor relative
to the particular activity, including delivery of products or services, delivery
of advertising impressions, recording of all product costs, discounts and
fulfillment obligations, and the recording of all other variable direct costs
associated with completing the Company's obligation to the customer or vendor.
Such revenue recognition will be subject to provisions for chargebacks based on
the probability of collection of the particular underlying revenue stream.

<PAGE>   22
TRANSACTION WITH MAJOR CUSTOMER AND TERMINATION OF ECONOMIC DEPENDENCE

During the three months ended February 29, 2000 and February 28, 1999, revenues
from the Company's Customer Acquisition service segment were earned entirely
from the "Residential Distributor Program Agreement" with Qwest. Such revenues
accounted for approximately $920,000, or 35% of the Company's total revenues
during the three months ended February 29, 2000, and $14.9 million, or 75% of
the Company's total revenue during the three months ended February 28, 1999.
During November 1999, Qwest informed the Company that the customers being
acquired for it by the Company were not remaining Qwest customers long enough to
justify the acquisition costs Qwest was required to pay the Company, and,
accordingly, the Company should no longer solicit customers on Qwest's behalf.
Therefore, the Company terminated its marketing efforts regarding the Qwest
customer acquisition program in November 1999. This termination of the Qwest
program marketing is the primary factor for the decrease in the Company's
Customer Acquisition services segment revenue for the three months ended
February 29, 2000. Such segment's revenue decrease totaled $13,973,258, with the
customer acquisition commission revenue decrease amounting to $12,848,234 and
the continuing customer usage revenue decrease amounting to $1,144,542.



PRIOR YEAR TRANSACTIONS IMPACTING CURRENT AND FUTURE FISCAL PERIODS

     In June 1999, the Company entered into a series of agreements
(collectively, the "Transaction Agreements") pursuant to which the Company
ceased offering its telephone entertainment services. Included in the
Transaction Agreements is the Agreement Regarding 900 Pay-Per-Call Psychic
Services (the "900 Agreement"), dated as of May 26, 1999, by and between the
Company and Access Resource Services, Inc. ("ARS"), pursuant to which the
Company agreed to refrain until January 17, 2001 from conducting, marketing,
advertising or promoting certain "stand alone" 900 Pay-Per-Call Psychic Services
described in the 900 Agreement (the "900 Psychic Services") directly or
indirectly through any affiliate. In addition, the Company agreed to cease the
conduct of the media buying operation which it conducted under the name "Quintel
Media" and ARS agreed to assume responsibility for the "Quintel Media" employees
and for the lease of the premises used by "Quintel Media" in Fort Lauderdale,
Florida, and to acquire the computer equipment and other furniture, fixtures and
leasehold improvements used by "Quintel Media" at such premises.

     In consideration for the Company's acceptance of the terms of the 900
Agreement, ARS and any of its affiliates offering 900 Pay-Per-Call Psychic
Services and/or membership club services, agreed to pay to the Company certain
royalty fees relative to such service offerings. ARS is required to pay such
royalty fees from and after the consummation of the transactions contemplated by
the Transaction Agreements, and until January 17, 2001. For the three months
ended February 29, 2000, these royalties amounted to approximately $760,000, or
28% of the Company's net revenues.


<PAGE>   23
SERVICE BUREAUS AND LOCAL EXCHANGE CARRIERS

         In November 1998, three of the LECs (Local Exchange Carriers),
Ameritech Corp., Bell Atlantic Corp. and SBC Communications, Inc., refused to
bill customers for enhanced services provided by the Company. This was a result
of what the LECs claimed was excessive complaints by customers for "cramming"
(unauthorized charges billed to a customer's phone bill) against the Company and
its affiliates. As a result of such LEC imposed billing cessation, in November
1998, the primary billing service provider for the Company's enhanced services,
Billing Information Concepts Corporation ("BIC"), terminated its arrangement
with the Company for providing billing for the Company's enhanced services. BIC
continued to service all data relating to post-billing adjustments to records
billed prior to BIC's self-imposed billing cessation. In December 1998, the
Company entered into an agreement with Federal Transtel, Inc. ("Transtel")
whereby Transtel provided the billing services previously provided by BIC. The
remaining LECs did not alter their billing practices for the Company's services
and the Company continued to offer its enhanced services in those areas through
Transtel from December 28, 1998 to present. During the three months ended
February 28, 1999, the Company billed approximately $5.8 million in gross
enhanced services as compared to approximately $926,000 in the three months
ended February 29, 2000. The enhanced services that continue to be billed are
from the residual customers that remain from marketing efforts undertaken prior
to the November 1998 LEC billing cessation.





QUINTEL NETWORK

         In November 1999, the Company began the implementation of its strategy
to create the Quintel Network, a portfolio of marketing partnerships and
strategic investments with Internet marketing companies, e-commerce retailers
and service providers, to allow for the marketing of different products and
services to a detailed database of profiled consumers.

         Database Growth and Expansion

         The first step in creating the Company's Quintel Network was to grow
the Company's already extensive profiled consumer database. Towards this end,
the Company has made strategic investments in several companies. In tandem with
each of these investments, the Company entered into marketing agreements,
entitling the Company access to these entities' proprietary e-mail databases and
other marketing data. The entities in which the Company made these strategic
investments (and to whose databases the Company gained access) include the
following:

-        SkyMall, Inc., a publicly-traded company (Nasdaq-SKYM) with access to
         e-mail addresses and other marketing information for over 3 million
         consumers, that utilizes
<PAGE>   24
         its website, SkyMall.com, and exclusive agreements with several airline
         carriers and travel partners to offer a wide array of products from a
         variety of vendors.

-        itarget.com, Inc. is a permission based direct e-mail marketing company
         with over 1 million members that have given their consent to be
         marketed for various products and services.

-        The Innovation Factory, Inc., a development stage company, intends to
         provide business development support, state of the art infrastructure
         and necessary capital to promising new companies.

-        GenerationA.com, Inc. provides internet and other computer related
         products and services to the over-50 generation.

-        AtYourBusiness.com, Inc. provides a full-range of support services for
         small businesses, including assistance with human resources, payroll,
         office management and growth management.

-        Montvale Management, LLC provides a full range of on-line mortgage
         products and services to homeowners.

The Company is also acquiring additional marketing information from traffic
attracted to GroupLotto.com and MultiBuyer.com, two websites created by a
subsidiary of the Company.

-        GroupLotto.com - This website permits Internet users to play the
         lottery free in exchange for providing their e-mail addresses. Players
         can win a $2,000,000 jackpot by selecting the winning lottery numbers.
         GroupLotto.com accommodates the public's interest in free lotteries by
         offering the opportunity to participate in multiple weekly
         opportunities to play at no cost, while simultaneously serving as a
         valuable marketing information source for the Company's other Internet
         activities. The Company has obtained contingent prize based insurance
         for the first $1 million jackpot payout.

-        MultiBuyer.com - This website is an online retail location where buyers
         consolidate their purchasing power for a variety of offered products
         and services and reap the benefits of reduced sales prices that
         generally correlate to bulk purchases. On-line consumers can select the
         price that they want to pay for a particular product or service. For
         the majority of "MultiBuys," as the number of buyers for that product
         or service increases, the asking price for the product or service
         decreases, until a large enough number of purchasers are accumulated to
         allow the seller to deliver such product at the buyers' asking price.

Based on the foregoing alliances that comprise the Quintel Network, the Company
estimates that it presently has access to in excess of 5 million opt-in e-mail
addresses.


<PAGE>   25
         Marketing of Products and Services

         The second step in creating the Quintel Network is to utilize the
extensive database accumulated by the Quintel Network to generate revenue. The
Company believes this can be achieved by acquiring the right to market a wide
array of products and services to the large potential customer base that
comprises the Company's database. Towards this end, the Company recently entered
into marketing agreements with several different companies for the marketing of
a wide variety of products and services.

         These include:

-        Cellstar, Ltd., d/b/a Echostar, providers of the DISH 500 Satellite TV
         System and service.

-        SunDial Marketplace Corporation, providers of wireless
         telecommunications services from AT&T, Cellular One, AllTel, OmniPoint
         and Airtouch, as well as cellular handsets and accessories from Nokia,
         Motorola, Qualcomm, Ericcson and Sony.

-        NextCard, Inc., which offers instant on-line approval for the
         NextCard(R) Visa(R).

-        GTC Telecom Corp., which offers 5 cent per minute long distance
         services.

-        Mortgage.com, Inc., providers of various on-line mortgages and other
         programs geared toward the homeowner.

-        LCS Golf, Inc. (Nasdaq - LCSGE), a company that offers golf related
         products and services via its website, GolfUniverse.com.


<PAGE>   26



                                     PART II

                                OTHER INFORMATION


ITEM 2.     CHANGES IN SECURITIES AND USE OF PROCEEDS

        In accordance with the Company's strategy of building the Quintel
Network, consisting of strategic partnerships through marketing agreements and
equity investment in its marketing partners, the Company executed a Stock Swap
Agreement with itarget.com, Inc., an on-line, permission-based, e-mail database
marketing and development company ("itarget"), dated as of January 20, 2000.
Pursuant to the terms of such Agreement, the Company exchanged 229,862 shares of
its common stock (the "Quintel Shares"), in exchange for 42,372 shares of
itarget's Series B Preferred Stock. In addition, in November 1999, the Company
had acquired 11,450 shares of itarget's Series B Preferred Stock, giving the
Company ownership of an aggregate of 53,822 shares of itarget's Series B
Preferred Stock (the "itarget Shares").

        In accordance with the terms of the Stock Swap Agreement, on March 10,
2000, Quintel filed a Registration Statement on Form S-3 (File No. 333-32220)
with the Securities and Exchange Commission (the "Commission") including the
Quintel Shares. Such Registration Statement has not yet been declared effective
by the Commission.

        Effective March 30, 2000, itarget was merged into CyberGold, Inc.
(Nasdaq: CGLD), a premier internet incentive company ("Cybergold"). As a result
of this merger, the itarget Shares were converted into 270,886 shares of
CyberGold's common stock. Pursuant to the terms of an indemnification agreement
between Cybergold and the shareholders of itarget, the Company agreed to deposit
27,088 of its Cybergold shares in escrow for a period of one year to secure the
payment of any of itarget's obligations unforeseen at the time of the merger.

        The issuance to itarget of the Quintel Shares was exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
pursuant to the provisions of Section 4(2) of the Act, as not involving any
public offering.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)     EXHIBITS.

EXHIBIT
NUMBER
------

3.1.1   Articles of Incorporation of the Company, as amended (1)

3.1.2   Amendment to the Articles of Incorporation of the Company (2)

3.2     By-Laws of the Company (3)

10.1*   Stock Swap Agreement by and between the Company and itarget.com, Inc.

27.1*   Financial Data Schedule


<PAGE>   27

--------------
*       Filed herewith.

(1)     Filed as an Exhibit to the Company's Registration Statement on Form 8-A,
        dated October 23, 1995, and incorporated herein by reference.

(2)     Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for
        the fiscal quarter ended August 31, 1998, and incorporated herein by
        reference.

(3)     Filed as an Exhibit to the Company's Registration Statement on Form S-1
        (the "S-1 Registration Statement"), dated September 6, 1995 (File No.
        33-96632), and incorporated herein by reference.

(b)     REPORTS ON FORM 8-K.

        The Company did not file any reports on Form 8-K during the first
quarter of the fiscal year ending November 30, 2000.

                          FORWARD LOOKING INFORMATION

        This Quarterly Report on Form 10-Q includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. When used herein, words like "intend,"
"anticipate," "believe," "estimate," "plan" or "expect," as they relate to the
Company, are intended to identify forward-looking statements. The Company
believes that the assumptions and expectations reflected in such forward-looking
statements are reasonable, based on information available to it on the date of
this Quarterly Report, but no assurances can be given that these assumptions and
expectations will prove to have been correct or that the Company will take any
action that it may presently be planning. The Company is not undertaking to
publicly update or revise any forward-looking statement if it obtains new
information or upon the occurrence of future events or otherwise.


<PAGE>   28



                                   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.


                                 QUINTEL COMMUNICATIONS, INC.


                                       By:/s/ Jeffrey L. Schwartz
                                          -------------------------
                                       Jeffrey L. Schwartz
Date:   April 14, 2000                 Chairman and CEO





                                       By:/s/ Daniel Harvey
                                          -------------------------
                                       Daniel Harvey
                                       Chief Financial Officer
Date:   April 14, 2000                 (Principal Financial Officer)


<PAGE>   29



Exhibit Index

EXHIBIT
NUMBER
------

3.1.1   Articles of Incorporation of the Company, as amended (1)

3.1.2   Amendment to the Articles of Incorporation of the Company (2)

3.2     By-Laws of the Company (3)

10.1*   Stock Swap Agreement by and between the Company and itarget.com, Inc.

27.1*   Financial Data Schedule

--------------
*       Filed herewith.

(1)     Filed as an Exhibit to the Company's Registration Statement on Form 8-A,
        dated October 23, 1995, and incorporated herein by reference.

(2)     Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for
        the fiscal quarter ended August 31, 1998, and incorporated herein by
        reference.

(3)     Filed as an Exhibit to the Company's Registration Statement on Form S-1,
        dated September 6, 1995 (File No. 33-96632), and incorporated herein by
        reference.