<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 August 31, 1996

[ ]      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 ENTERTAINMENT, 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
18,451,568 (as of 10/8/96).


<PAGE>   2
                           QUINTEL ENTERTAINMENT, INC.
                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
                          QUARTER ENDED AUGUST 31, 1996

                               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                           8
                                                            
PART II           OTHER INFORMATION                         
                                                            
Item 1.           Legal Proceedings                               N/A
                                                            
Item 2.           Changes in Securities                           N/A
                                                            
Item 3.           Defaults Upon Senior Securities                 N/A
                                                            
Item 4.           Submission of Matters to                  
                      a Vote of Security Holders                   17
                                                            
Item 5.           Other Information                               N/A
                                                            
Item 6.           Exhibits and Reports on Form 8-K                 18
                                                            
                                                        
SIGNATURES


<PAGE>   3
                         PART I. FINANCIAL INFORMATION

                   ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                  QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             AUGUST 31,      NOVEMBER 30,
                                                                                1996            1995
                                                                            ------------     -----------        
                                                                            (UNAUDITED)
<S>                                                                         <C>              <C>    
                                    ASSETS:
Current assets:
        Cash and cash equivalents                                           $ 19,734,802     $ 3,570,468
        Accounts receivable, trade                                             9,192,056      10,097,629
        Deferred tax asset                                                     5,232,412          39,957
        Due from related parties                                                 297,008          67,162
        Prepaid expenses and other current assets                              4,039,885         381,292
                                                                            ------------     -----------  
                        Total current assets                                  38,496,163      14,156,508

Property and equipment, at cost, net of accumulated depreciation                 333,356         142,369
Investment in joint ventures, at equity                                        1,203,067       1,345,304
Other assets                                                                      36,862       1,325,775
                                                                            ------------     -----------    
                                                                            $ 40,069,448     $16,969,956
                                LIABILITIES:                                ============     ===========
Current liabilities:
        Accounts payable                                                    $  2,958,693     $ 1,269,647
        Accrued expenses                                                         911,845       2,351,644
        Reserve for customer chargebacks                                       9,000,208       4,025,130
        Loans payable                                                                          2,643,522
        Due to related parties                                                 3,534,557         354,751
        Income taxes payable                                                   2,862,717         294,187
                                                                            ------------     -----------        
                        Total liabilities                                     19,268,020      10,938,881
                                                                            ------------     -----------        
                             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
 and outstanding 15,246,568 and 12,000,000 shares, respectively                   15,247          12,000
Additional paid-in capital                                                    14,650,085         441,258
Retained earnings                                                              6,136,096       5,597,817
Less, subscriptions receivable                                                                   (20,000)
                                                                            ------------     -----------                            
                        Total stockholders' equity                            20,801,428       6,031,075
                                                                            ------------     -----------        
                                                                            $ 40,069,448     $16,969,956
                                                                            ============     ===========
</TABLE>
See accompanying notes to consolidated financial statements.

                                       3


<PAGE>   4
                  QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED               NINE MONTHS ENDED
                                              ----------------------------    ----------------------------
                                                       AUGUST 31,                     AUGUST 31,
                                                  1996           1995            1996            1995
                                              ------------    ------------    ------------    ------------
<S>                                           <C>             <C>             <C>             <C>         
Net revenue                                   $ 17,493,179    $ 14,314,286    $ 47,277,435    $ 34,603,589
Cost of sales                                   11,755,678      10,348,460      36,560,904      25,587,685
                                              ------------    ------------    ------------    ------------
        Gross profit                             5,737,501       3,965,826      10,716,531       9,015,904
                                                               
Selling, general and
        administrative expenses                  1,797,326       1,092,259       5,059,199       2,384,649
                                              ------------    ------------    ------------    ------------
                                                 3,940,175       2,873,567       5,657,332       6,631,255

Interest expense                                  (207,250)        (77,785)       (438,112)       (221,706)
Other income, net                                   64,029         164,220         501,941         347,420
Equity in earnings of joint ventures             1,121,917       1,230,877       4,271,013       1,877,320
                                              ------------    ------------    ------------    ------------
                                                 4,918,871       4,190,879       9,992,174       8,634,289

Provision for income taxes                       1,807,583          14,643       1,983,245         118,228
                                              ------------    ------------    ------------    ------------    
        Net income                            $  3,111,288    $  4,176,236    $  8,008,929    $  8,516,061
                                              ============    ============    ============    ============
Pro forma data:
        Income before pro forma adjustments                   $  4,190,879                    $  8,634,289
        Pro forma income tax provision                           1,934,302                       3,656,184
                                                              ------------                    ------------
                                                                 2,256,577                       4,978,105
                                                              ------------                    ------------
Net income per share                          $        .20                    $        .52
                                              ============                    ============ 
Pro forma net income per share                                $        .19                    $        .41
                                                              ============                    ============    
Weighted average common shares
        outstanding                             15,408,744      12,000,000      15,408,744      12,000,000
                                              ============    ============    ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4


<PAGE>   5
                  QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           NINE MONTHS ENDED
                                                                                      ----------------------------
                                                                                       AUGUST 31,      AUGUST 31,
                                                                                          1996            1995
                                                                                      ------------    ------------
<S>                                                                                   <C>             <C>    
Cash flows from operating activities:
        Net income                                                                    $  8,008,929    $  8,516,061
        Items not affecting cash:
                Depreciation and amortization                                               36,499          14,915
                Reserve for customer chargebacks                                         4,975,078       2,033,304
                Deferred income taxes                                                   (5,192,455)         44,804
                Equity in net earnings of joint ventures, net of dividends received        160,987        (737,319)
                Stock option exercise compensation expense                                 127,159
        Changes in assets and liabilities:
                Accounts receivable                                                        905,573      (7,837,301)
                Prepaid expenses and other current assets                               (3,658,593)       (621,396)
                Accounts payable                                                         1,649,090         778,779  
                Income tax payable                                                       2,568,530          49,860  
                Due to related parties                                                   2,949,960           7,785 
                Other, principally accrued expenses                                       (155,875)        (72,710)
                                                                                      ------------    ------------
                        Net cash provided by operating activities                       12,374,882       2,176,782
                                                                                      ------------    ------------

Cash flows from investing activities:
        Investment in joint ventures                                                       (18,750)        (25,000)
        Capital expenditures                                                              (222,497)       (119,010)
                                                                                      ------------    ------------ 
                        Net cash used in investing activities                             (241,247)       (144,010)
                                                                                      ------------    ------------ 

Cash flows from financing activities:
        Proceeds from collection of common stock subscription                               20,000
        Proceeds from issuance of common stock, net                                     13,402,075
        Proceeds from exercise of stock options                                            107,840
        Distributions to shareholders                                                   (3,000,000)     (5,271,137)
        Principal payments on notes payable to shareholders                             (3,855,694)
        Loans payable, net                                                              (2,643,522)      4,431,604
                                                                                      ------------    ------------ 
                        Net cash provided by (used in) financing activities              4,030,699        (839,533)
                                                                                      ------------    ------------ 
Net increase in cash and cash equivalents                                               16,164,334       1,193,239
                                                                                                         
Cash and cash equivalents, beginning of period                                           3,570,468         981,073
                                                                                      ------------    ------------ 
Cash and cash equivalents, end of period                                              $ 19,734,802    $  2,174,312
                                                                                      ============    ============
Non-cash financing activities:
        Notes payable to shareholders of undistributed S Corp earnings                $  3,895,650
        Contribution of capital from S corporation                                         575,000
</TABLE>

See accompanying notes to consolidated financial statements.

 
                                     5
<PAGE>   6
                  QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   GENERAL:

     The consolidated financial statements for the three and nine month periods
     ended August 31, 1996 and August 31, 1995 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, 1995, and Quarterly Reports on Form 10-Q for
     the quarters ended February 29, 1996 and May 31, 1996. The results of
     operations for the three and nine months ended August 31, 1996 are not
     necessarily indicative of the results for the entire fiscal year ending
     November 30, 1996.

2.   NEW SUBSIDIARIES:

     During August 1996, the Company incorporated Quintel Hair Products, Inc.,
     for the purpose of marketing a line of hair care products. Development and
     production costs associated with the marketing of such products have been
     expensed to date. Except for these start-up costs, Quintel Hair Products,
     Inc. was inactive during the three and nine month periods ended August 31,
     1996.

     In addition, during August 1996, Quintel Products, Inc. entered into a
     limited liability agreement (the "venture") with LaBuick Entertainment,
     Inc., ("LaBuick") an unrelated party, to form Quintel-LaBuick Products,
     LLC, a limited liability company, for the purpose of developing new
     business opportunities. Quintel Products, Inc. will retain a 65% interest
     in the venture. For financial reporting purposes, the assets, liabilities
     and earnings of the venture will be included in the Company's consolidated
     financial statements. LaBuick's interest in the venture will be recorded as
     a minority interest. Quintel-LaBuick Products, LLC was inactive during the
     three and nine month periods ended August 31, 1996.

3.   EARNINGS PER SHARE:

     Earnings per share are computed by dividing net earnings by the weighted
     average number of common and common equivalent shares during the period.

     Pro forma net earnings per share are computed by dividing pro forma net
     earnings by the weighted average number of common and common
     equivalent shares during the period. Both earnings per share calculations 
     have been computed in accordance with the treasury stock method.


                                       6


<PAGE>   7
4.   ADVERTISING EXPENSES:

     The Company expenses all advertising costs during the year in which they
     are incurred, except for certain media costs. For interim purposes, media
     costs are expensed as the advertising occurs. Included in prepaid expenses
     and other current assets is approximately $612,000 relating to prepaid
     advertising at August 31, 1996. All costs will be expensed prior to year
     end. Total advertising expense incurred for the three months ended August
     31, 1996 and August 31, 1995 were $6,386,005 and $3,740,102, respectively,
     and for the nine months ended August 31, 1996 and August 31, 1995 were
     $18,884,830 and $9,192,043, respectively.

5.   NEW LAUDERDALE:

     On September 10, 1996, the Company completed the acquisition of the
     remaining 50% interest of New Lauderdale, L.C. from PRN. This transaction
     will be accounted for by the purchase method of accounting.

     The following is condensed financial data for New Lauderdale:

<TABLE>
<CAPTION>
                        THREE MONTHS ENDED         NINE MONTHS ENDED
                    ------------------------   -------------------------
                             MAY 31,                    MAY 31,
                        1996         1995         1996           1995
                    -----------   ----------   -----------   -----------
                            (UNAUDITED)                (UNAUDITED)
<S>                 <C>           <C>          <C>           <C>        
Net revenues        $18,052,989   $4,060,149   $59,957,137   $15,060,445
Gross profit          2,154,588    1,428,447    10,833,163     4,644,019
Net income            2,239,564      977,309     8,537,756     3,754,639
</TABLE>

6.   SUBSEQUENT EVENT:

     During September 1996, the Company approved its new stock option plan (the
     "1996 stock option plan"). The 1996 stock option plan amends the existing
     plan primarily by increasing the options available for grant under the plan
     by 500,000 options to 1,250,000 options and by increasing the automatic
     annual non-employee director grants to 25,000 options.


                                       7
<PAGE>   8
Item 2.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

RESULTS OF OPERATIONS

THREE MONTHS ENDED AUGUST 31, 1996 AND AUGUST 31, 1995

                  Net revenue for the three months ended August 31, 1996 was
$17,493,179, an increase of $3,178,893 or 22% as compared to $14,314,286 for the
three months ended August 31, 1995. The increase in net revenue was attributable
to increased call volume to the Company's "900" number entertainment services.
For the three months ended August 31, 1996, net revenues from the Company's
enhanced voice mail network services product ("VM product"), approximated 20% of
net revenues and net revenues from "900" number entertainment services
approximated 80% of net revenues. For the three months ended August 31, 1995,
net revenues from the VM product (marketed as membership clubs ("Club product")
in such three months) approximated 47% of net revenues and net revenues from
"900" number entertainment services approximated 53% of net revenues. The
Provision for Chargebacks for the three months ended August 31, 1996 was
$9,552,539, an increase of $2,572,944, or 37%, as compared to $6,979,595 for the
three months ended August 31, 1995. The increase in gross revenues has been
partially offset by the rate of consumer chargebacks. A discussion of
chargebacks appears later in this section under the caption "Increased
Chargebacks, Regional Telephone Carrier and Regulatory Matters."

                  Cost of sales for the three months ended August 31, 1996 was
$11,755,678, an increase of $1,407,218, or 14%, as compared to $10,348,460 for
the three months ended August 31, 1995. The increase was primarily attributable
to a higher overall level of advertising. Cost of sales as a percentage of net
revenue decreased to approximately 67% from approximately 72% for these periods.
This reduction is primarily attributable to reduced psychic fees and reduced
advertising expenses incurred for the VM product during the current quarter. A
psychic fee reduction was realized in the current quarter due to
amendments to the contract for psychic services with PRN. As a result, the 
psychic  fees incurred by the Company during the current quarter were $1,635,431
less  than the Company would have incurred had there been no such amendments.  
The amendments specify a two tier fee reduction during the five year term of the
amendments, which became effective in March, 1996. The larger fee reduction 
specified for the first tier changes to a lesser fee reduction in the second
tier  upon the realization by the Company of specified levels of business
volume. It is  anticipated that these levels will be reached in the last
quarter of fiscal 1996.  Depending on actual usage of psychics, the total
amount of fee reductions realized in future quarters as a result of these
amendments will in all likelihood be less than the reductions realized in the
current quarter. VM Product advertising was reduced during the current quarter
as revisions to the product are being tested.




                                      8
<PAGE>   9

                  Selling, general and administrative expenses for the three
months ended August 31, 1996 were $1,797,326, an increase of $705,067, or 65%,
as compared to $1,092,259 for the three months ended August 31, 1995. This
increase was primarily attributable to increases in the Company's personnel and
the Company's relocation to larger office space to accommodate the growth of its
operations.

                  Interest income of $144,658 for the three months ended August
31, 1996 is primarily a result of investing, in short term securities, a portion
of the proceeds of the initial public offering of the Company's common stock and
similar investment of cash generated by operations.

                  For the three months ended August 31, 1996, the Company
recognized equity in earnings of the New Lauderdale joint venture of $1,121,917.
The Company received distributions of $1,400,000 from New Lauderdale during the
current quarter. This compares to $1,230,877 equity in earnings and $500,000
distributed for the comparable prior period. Such decrease reflects New
Lauderdale's increased chargebacks. New Lauderdale experienced increased 
chargebacks similar to those experienced by
the Company and the discussion under the caption "Increased Chargebacks,
Regional Telephone Carrier and Regulatory Matters" later in this section also
applies to New Lauderdale. The recognized equity in earnings reflects the
Company's 50% interest in New Lauderdale's income for such period. On September
10, 1996, the Company acquired the remaining 50% interest in New Lauderdale.
After such date, the Company will no longer account for New Lauderdale's
operations under the equity method of accounting, but instead will treat New
Lauderdale as a subsidiary and include its results of operations on a
consolidated basis in the Company's consolidated financial statements.

                  The Net Tax Provision of $1,807,583 for the three months ended
August 31, 1996 was calculated using C corporation statutory rates, as adjusted
for temporary differences in recognizing chargeback reserves.

                  Net income increased to $3,111,288 for the three months ended
August 31, 1996 from $2,256,577, the pro forma net income for the prior
comparable period, an increase of $854,711, or 38%. This increase was primarily
due to increases in net revenues and the decreases in cost of sales as a
percentage of net revenues, partially offset by increases in SG&A.


                                      9
<PAGE>   10
NINE MONTHS ENDED AUGUST 31, 1996 AND AUGUST 31, 1995

                  Net revenue for the nine months ended August 31, 1996 was
$47,277,435, an increase of $12,673,846 or 37% as compared to $34,603,589 for
the nine months ended August 31, 1995. The increase in net revenue was
attributable to increased enrollments during the first quarter of fiscal 1996
(the three months ended February 29, 1996) in the Company's VM product, which
were originally marketed as the Club product, and increased calls to the
Company's "900" number entertainment services during all of the nine months
ended August 31, 1996. For the nine months ended August 31, 1996, VM product net
revenues approximated 26% of net revenues and "900" number entertainment
services approximated 74% of net revenues. For the nine months ended August 31,
1995, VM product (marketed as Club product in such nine months) net revenues
approximated 45% of net revenues and "900" number entertainment services
approximated 55% of net revenues. The Provision for Chargebacks for the nine
months ended August 31, 1996 was $29,522,790, an increase of $15,959,745, or
118%, as compared to $13,563,045, for the nine months ended August 31, 1995. The
increase in gross revenues has been partially offset by the rate of consumer
chargebacks. A discussion of chargebacks appears later in this section under the
caption "Increased Chargebacks, Regional Telephone Carrier and Regulatory
Matters."

                  Cost of sales for the nine months ended August 31, 1996 was
$36,560,904, an increase of $10,973,219, or 43%, as compared to $25,587,685 for
the nine months ended August 31, 1995. The increase was primarily attributable
to a higher overall level of advertising. Cost of sales as a percentage of net
revenue increased to approximately 77% from approximately 74% for these periods.
As customers receive entertainment services, the Company recognizes revenues and
incurs the costs of fulfillment, including transmission, billing and collection,
psychic and other costs. However, as chargebacks are recognized, the related
revenues are refunded while the cost burden remains. Therefore the effect of
increased chargebacks in the first and second quarters of fiscal 1996 was a
contributing factor to the increase in cost of sales as a percentage of net
revenue. This increase was partially offset by reduced psychic fees. A psychic
fee reduction was realized in the nine months ended August 31,
1996 due to amendments to the contract for psychic services with PRN. As a 
result, the psychic fees incurred by the Company during the nine months ended 
August 31, 1996 were $3,005,753 less than the Company would have incurred  
had there been no such amendments. The amendments specify a two tier fee 
reduction during the five year term of the amendments, which became 
effective in March, 1996. The larger fee reduction specified for the first tier 
changes to a lesser fee reduction in the second tier upon the realization 
by the Company of specified levels of business volume. It is anticipated 
that these levels will be reached in the last quarter of fiscal 1996. 
Depending on actual usage of psychics, the total amount of fee 
reductions realized in future quarters as a result of these amendments 
will in all likelihood be less than the reductions realized in the 
current fiscal year to date.


                                      10
<PAGE>   11
                  Selling, general and administrative expenses for the nine
months ended August 31, 1996 were $5,059,199, an increase of $2,674,550, or
112%, as compared to $2,384,649 for the nine months ended August 31, 1995. This
increase was primarily attributable to increases in the Company's personnel and
the Company's relocation to larger office space to accommodate the growth of its
operations.

                  Interest income of $429,356 for the nine months ended August
31, 1996 is primarily a result of investing, in short term securities, a portion
of the proceeds of the initial public offering of the Company's common stock and
similar investment of cash generated by operations.

                  For the nine months ended August 31, 1996, the Company
recognized equity in earnings of the New Lauderdale joint venture of $4,271,013.
The Company received distributions of $4,432,000 from New Lauderdale during the
nine months ended August 31, 1996. This compares to $1,877,320 equity in
earnings and $1,140,000 distributed for the comparable prior period. Such
increases reflect New Lauderdale's increased earnings which were affected by
increased chargebacks. New Lauderdale experienced increased chargebacks similar
to those experienced by the Company and the discussion under the caption
"Increased Chargebacks, Regional Telephone Carrier and Regulatory Matters" later
in this section also applies to New Lauderdale. The recognized equity in
earnings reflects the Company's 50% interest in New Lauderdale's income for such
period. New Lauderdale commenced operations during the nine months ended August
31, 1995 and the Company recognized equity in earnings of joint venture of
$1,877,320 for such nine months. On September 10, 1996, the Company acquired the
remaining 50% interest in New Lauderdale. After such date, the Company will no
longer account for New Lauderdale's operations under the equity method of
accounting, but instead will treat New Lauderdale as a subsidiary and include
its results of operations on a consolidated basis in the Company's consolidated
financial statements.

                  The Net Tax Provision of $1,983,245 for the nine months ended
August 31, 1996 included a $5,192,455 deferred tax benefit. Approximately
$1,766,000 relates to the benefit received when the Company converted to the
accrual basis of accounting in connection with the termination of its S
corporation status with the balance attributable to the current year's temporary
differences. This benefit was offset by a current tax provision of $7,175,700
calculated using C corporation statutory rates, as adjusted for temporary
differences in recognizing chargeback reserves.


                                      11
<PAGE>   12
                  Net income increased to $8,008,929 for the nine months ended
August 31, 1996 from $4,978,105, the pro forma net income for the prior
comparable period, an increase of $3,030,824, or 61%. This increase was
primarily due to the increase of $2,393,693 in income attributable to the
Company's 50% equity interest in New Lauderdale and increased revenues,
partially offset by the decrease in income from operations, such decrease caused
primarily by increased chargebacks.


LIQUIDITY AND CAPITAL RESOURCES

                  The Company had working capital of $19,228,143 at August 31,
1996. The Company has historically financed its working capital requirements
principally through cash flow from operations and receivables financing. In
December 1995, the Company received net proceeds of approximately $13,402,000
from the initial public offering of its shares of Common Stock. During the nine
months ended August 31, 1996, the Company repaid all loans related to advances
received for accounts receivable financing and also paid the notes due to
shareholders for undistributed S corporation earnings. Such payments amounted to
$2,643,522 and $3,855,694 respectively. While the Company is not currently
financing any accounts receivable, credit lines for this purpose are being
maintained and the Company may incur obligations for such financing in the
future.

                  The Company's primary cash requirements have been to fund the
cost of advertising and promotion. Chargebacks are paid currently from
receivables due from carriers through the Company's service bureaus. Other than
the purchase of equipment in connection with the establishment of in-house
telemarketing operations, the expansion of its customer service operations and
the relocation to larger headquarters offices, the Company currently has no
plans or material commitments for capital expenditures. The Company anticipates,
based on currently proposed plans and assumptions relating to its operations
(including the substantial costs associated with its proposed advertising and
marketing activities), that projected cash flow from operations and available
cash resources, including its financing arrangements with service bureaus, will
be sufficient to satisfy its anticipated cash requirements for at least the next
twelve months. The Company does not currently have any long-term obligations and
does not intend to incur any such obligations in the future.

                  During May, 1996, the Company formed three new wholly owned
subsidiaries, Quintel Products, Inc., Quintelco, Inc. and NL Corp. During
August, 1996, the Company formed Quintel Hair Products, Inc., also as a 

                                      12
<PAGE>   13
wholly owned subsidiary. During the three and nine month periods ended August
31, 1996, only Quintel Products, Inc. was active. Since its inception, Quintel
Products has contributed an immaterial amount to net income and did not impose
any significant cash requirements on the Company. Certain development and
production costs associated with the marketing of hair care products already
incurred by another subsidiary of the Company will subsequently be transferred
to Quintel Hair Products, Inc. The Company does not anticipate any of these new
subsidiaries to materially alter the working capital or cash requirements of the
Company during the next twelve months.

                  During July, 1996, the Company entered into a limited
liability agreement with Paragon Cellular Services, Inc., an unrelated party, to
form Quintel Cellular, LLC, a limited liability company, to market, lease and 
sell cellular telephones and related services. The Company will retain a 
50% interest in the venture. During August, 1996, Quintel Products, Inc., a 
wholly owned subsidiary of the Company, entered into a limited liability 
agreement with LaBuick Entertainment, Inc., an unrelated party, to form 
Quintel-LaBuick Products, LLC, a limited liability company, for the 
purpose of developing new business opportunities. Quintel Products, Inc. 
will retain a 65% interest in the venture. The agreements require the 
Company to provide loans to the ventures in initial amounts of $250,000 
each, with additional amounts at the Company's discretion. Such loans 
would bear interest at the rate of 7% per annum and be repaid in 
installments as a percentage of the venture's retained earnings or net 
available cash as specified in each agreement. Additionally, the Company 
will also advance $20,000 per month to LaBuick Entertainment, Inc. for 
services rendered to Quintel-LaBuick Products, LLC. Such advances are 
deductible from distributions due LaBuick Entertainment, Inc. under 
the agreement. The Company expects to be able to fund such loans and 
advances from its operating cash flow over the next twelve months and 
that such loans and advances, as extended, would not have an adverse 
effect on the working capital position of the Company.

INCREASED CHARGEBACKS, REGIONAL TELEPHONE CARRIER AND REGULATORY MATTERS

                  During the first quarter of fiscal 1996 (the three month
period ended February 29, 1996), the Company increased marketing activities and
experienced high enrollments of new customers which caused the Company to
experience a high level of acceptance difficulties with its VM product. These
acceptance difficulties occurred at two levels, consumer and regional telephone
carrier.

                  At the consumer level, customers did not always relate the VM


                                      13
<PAGE>   14
product billing description on their telephone bills to the entertainment
service that they purchased. This prompted an increase in customer service
inquiries to both the Company and ESBI, the billing service bureau conduit to
the regional telephone carriers and telephone companies. Accordingly, for the
first nine months of 1996, the Company experienced a higher level of customer
cancellations and chargebacks relating to the $19.95 per month VM product.
Management believes that its VM products can be successfully modified and
repositioned with shifts in emphasis as part of the marketing process. The
Company and ESBI expanded their customer service operations during the first
fiscal quarter of 1996 (three months ended February 29, 1996) to better educate
the consumer about the product. Telemarketing efforts during the second fiscal
quarter of 1996 (three months ended May 31, 1996) were reduced as the marketing
shift was being accomplished. Although there can be no assurance that these
marketing efforts and changes will be successful, management anticipates that
the marketing shift along with the expansions in customer service will reduce
customer cancellations and chargebacks for the VM product to acceptable levels.
Several variations, including different pricing structures, of a substantially
revised VM product continue to be tested with many tests yielding positive
results. Management expects one or more of the successful versions to be
actively marketed during the remainder of the fiscal year with the marketing of
one such version having already started in the current quarter. The pace of
telemarketing and enrollments will proceed gradually, along with increased
customer service support, so as not to repeat the difficulties of the first
quarter. Due to the telephone company billing and collection delays inherent in
this business, the higher cancellation and chargeback level began in the first
quarter of fiscal 1996, continued during the second and third quarters of fiscal
1996 and may continue into the fourth quarter of fiscal 1996.

                  At the regional telephone carrier level, five of the regional
telephone carriers suspended billing of the Company's VM products at different
times during the first nine months of 1996. The suspensions were the result of
the carriers' belief that the Company and ESBI were unable to provide adequate
customer services to VM product customers in the regions serviced by the
carriers. The Company did not anticipate the increase in customer service calls
during the first three months of fiscal 1996 and was not able to adequately
handle the increased customer service call volume. As stated above, both the
Company and ESBI expanded their customer service operations in response to such
needs. Four of the five carriers, in reaching their decisions to suspend
billings, specifically addressed the Company's VM product and the remaining
carrier addressed the billing platform that encompasses the Company's VM
product. The Company has already resumed billing the VM product with the four of
the carriers that specifically addressed 


                                      14
<PAGE>   15
the difficulties associated with the VM product. For the carrier that addressed
the difficulties associated with the billing platform, the Company resumed
billing through an alternate platform with another service bureau. For four of
these carriers, the suspensions each lasted less than sixty (60) days and did
not have a material impact on the Company's cash flows and operations. For the
fifth carrier, the suspension lasted several months and resulted in lost
revenues. During the first nine months of fiscal 1996, VM product net revenues
billed through this carrier approximated 5% of total net revenues. Marketing
shifts between the VM Product and "900" business are expected to partially
offset the impact of this carrier's suspension. Though the full amount of the
impact of the lost revenues is presently not known, the Company did incur
marketing and fulfillment costs in this carrier's regions during the first six
months of fiscal 1996. Therefore, the impact to date has been significant as
costs were incurred without a corresponding revenue stream.

                  The VM product is independent of the Company's "900" number
entertainment services and these difficulties do not impact the "900" number
portion of the Company's business. The carrier billing suspensions of the VM
product are also limited to the geographic regions serviced by the individual
carriers.

                  The Company intends to continue its promotion of VM products
or similar voice-mail entertainment services concepts as previously discussed.
Also, as previously discussed, recent shifts in marketing and other strategies
have increased the Company's "900" business net revenues, both absolutely and in
relation to the VM product. Therefore, the Company expects that revenues from
the VM (or similar) products will account for a decreasing portion of the
Company's net revenues in the future. Since any reduction in VM products'
contributions to total net revenues are expected to be more than offset by
increases in the Company's "900" business net revenues, total net revenues are
expected to increase. However no assurance can be given that these projections
will prove to be accurate.

                  All of the Company's entertainment services and advertisements
are reviewed by the Company's regulatory counsel, and management believes that
the Company is in substantial compliance with all material federal and state
laws and regulations governing its provision of "800" and "900" number
entertainment services, all of its billing and collection practices and the
advertising of its services and has obtained or is in the process of obtaining
all licenses and permits necessary to engage in telemarketing activities.
Although the Company from time to time receives requests for information from,
or is forwarded consumer complaints by, regulatory authorities, the Company has
not been subject to any enforcement actions by any regulatory authority.


                                      15
<PAGE>   16
Nevertheless, civil investigative demands have been received from the Attorneys'
General of the States of Idaho, Missouri, New York, Pennsylvania and Texas, as
well as from the Tennessee Public Service Commission, seeking certain
information relating to the Company. In addition, certain information has been
requested by the Oregon Department of Justice. Lastly, certain information
relating to the Company's programs also has been subpoenaed by the Attorney
General of the State of Texas from West Outbound and from the Attorneys' General
of the States of Texas and Idaho from ESBI. The Company believes that the
information has been sought as part of pending investigations in connection with
certain of the Company's marketing activities. The investigation by the State of
Idaho has been discontinued. The Pennsylvania Attorney General's investigation
has concluded with issuance of a warning letter to the Company. The Company has
responded and is continuing to respond to the subpoenas issued by the New York
Attorney General's Office. While such investigation is still ongoing, management
believes it will be able to amicably resolve any outstanding issues with such
state. In the event the Company is able to resolve such outstanding issues, it
is possible that the Company may be required to modify the manner in which it
advertises its products and services in New York State. No assurance can be
given, however, that management will be able to amicably resolve the issues with
New York State and the failure to do so may have a materially adverse effect on
the Company. Management further believes that while the other remaining
investigations will not result in enforcement actions or claims which would have
a material adverse effect on the Company, there can be no assurance that this
will be the case. Amendments to or interpretations and enforcement of existing
statutes and regulations, adoption of new statutes and regulations and the
Company's expansion into new jurisdictions and "900" number services could
require the Company to continually alter methods of operations, modify the
content or use of its services or the manner in which it markets its services,
which could result in material interruptions in its operations. Failure to
comply with applicable laws and regulations could subject the Company to civil
remedies, including substantial fines, penalties and injunctions, as well as
possible criminal sanctions, which could have a material adverse effect on the
Company.

                                      16
<PAGE>   17
                                     PART II

                                OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

         Information Statement

         An Information Statement was mailed on or about August 20, 1996 to
shareholders of record of the Company as of August 1, 1996 in connection with
the approval of the Acquisition (the "Acquisition") by a subsidiary of the
Registrant (NL Corp.), of Psychic Readers Network Inc.'s ("PRN") 50% interest in
New Lauderdale L.C. ("New Lauderdale"), a Florida limited liability company, of
which the Registrant's subsidiary, Calling Card Co., Inc., owned the remaining
50% interest. The By-Laws of NASDAQ require shareholder approval of the
Acquisition. Delaware law allows such approval to be obtained without a
shareholders' meeting if written consents approving the Acquisition are obtained
from the holders of a requisite number of shares of common stock of the
Corporation. The five executive officers of the Registrant held in excess of
such requisite amount and, on August 1, 1996, provided their written consent to
the Acquisition and the definitive forms of agreements pertaining thereto. On
September 10, 1996 the Acquisition was consummated.

         Proxy Statement

         A Proxy Statement was mailed on or about August 20, 1996 to
shareholders of record of the Company as of August 1, 1996 in connection with
the Company's 1996 Annual Meeting of Shareholders, which was held on September
25, 1996 at the Park Ridge Marriott Hotel, 300 Brae Boulevard, Park Ridge, New
Jersey. At the Meeting, the shareholders voted on three matters and all of such
matters were approved.

         The first matter was the re-election of the members of the Board of
Directors. The nine directors elected and the tabulation of the votes (both in
person and by proxy) was as follows:

<TABLE>
<CAPTION>

Nominees for Directors                                For               Withheld
----------------------                                ---               --------
<S>                                                <C>                    <C>   
Jeffrey Schwartz                                   14,973,751             24,617
Jay Greenwald                                      14,973,751             24,617
Claudia Newman Hirsch                              14,973,751             24,617
Andrew Stollman                                    14,973,751             24,617
Michael Miller                                     14,973,751             24,617
Murray Skala                                       14,973,751             24,617
Mark Gutterman                                     14,973,276             25,092
Edwin Levy                                         14,973,051             24,617
Vincent Tese                                       14,973,276             25,072
</TABLE>
                                      17
<PAGE>   18
         There were zero (0) broker held non-voted shares represented at the
Meeting with respect to this matter.

         The second matter upon which the shareholders voted was the proposal to
ratify the appointment by the Board of Directors of Coopers & Lybrand LLP as
independent certified public accountants for the Company for 1996. The
tabulation of the votes (both in person and by proxy) was as follows:

<TABLE>
<CAPTION>
      For                     Against          Abstentions            Nonvoted
      ---                     -------          -----------            --------
<S>                             <C>               <C>                   <C>     
   13,496,295                 75,360              32,844              1,393,295
</TABLE>

         There were 1,393,295 broker held non-voted shares represented at the
Meeting with respect to this matter.

         The third matter upon which the shareholders voted was the proposal to
adopt the Company's 1996 Stock Option Plan. The tabulation of the votes (both in
person and by proxy) was as follows:

<TABLE>
<CAPTION>

            For                     Against          Abstentions                Nonvoted
            ---                     -------          -----------                --------

<S>                                  <C>                <C>                      <C>   
         14,936,793                  2,700              30,050                   28,825
</TABLE>

         There were 28,825 broker held non-voted shares represented at the
Meeting with respect to this matter.

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

                  (a)      EXHIBITS.

EXHIBIT
NUMBER
------
                                                                   
2.1+              Definitive Form of Acquisition Agreement by and between
                  the Registrant, Calling Card Co., Inc. and Psychic
                  Readers Network (1)

3.1               Articles of Incorporation of the Registrant, as
                  amended (2)

3.2               By-Laws of the Registrant (3)

4.1               Form of certificate evidencing shares of
                  Common Stock (4)

23.1              Definitive Information Statement filed by the
                  Registrant with the Securities and Exchange Commission

                                      18
<PAGE>   19
                  on August 20, 1996 in connection with the approval of
                  the Acquisition. (5)

27.1     Financial Data Schedule.
--------------
+        Confidential treatment requested as to portions of this
         Exhibit.

(1)      Filed as an exhibit to the Definitive Information Statement, dated
         August 20, 1996, and incorporated herein by reference (see Footnote 5).

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

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

(4)      Filed as an Exhibit to Amendment No. 1 to the Registrant's
         Registration Statement on Form S-1, dated November 14, 1995,
         and incorporated herein by reference.

(5)      Incorporated herein by reference.

                  (b)      REPORTS ON FORM 8-K.

         No reports on Form 8-K were filed during the third quarter of 1996.

                                      19
<PAGE>   20
                                   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 ENTERTAINMENT, INC.

                                                By:/s/ Jeffrey L. Schwartz
                                                   -----------------------    
                                                     Jeffrey L. Schwartz
Date:             October 15, 1996                     Chairman and CEO

 .


                                                By:/s/ Raymond J. Richter
                                                   ----------------------    
                                                     Raymond J. Richter
Date:             October 15, 1996                 Chief Financial Officer
                                      20
<PAGE>   21
                                EXHIBIT INDEX
                                -------------

EXHIBIT
NUMBER                                DESCRIPTION
------                                -----------
                                                                   
2.1+              Definitive Form of Acquisition Agreement by and between
                  the Registrant, Calling Card Co., Inc. and Psychic
                  Readers Network (1)

3.1               Articles of Incorporation of the Registrant, as
                  amended (2)

3.2               By-Laws of the Registrant (3)

4.1               Form of certificate evidencing shares of
                  Common Stock (4)

23.1              Definitive Information Statement filed by the
                  Registrant with the Securities and Exchange Commission

                  on August 20, 1996 in connection with the approval of
                  the Acquisition. (5)

27.1              Financial Data Schedule
--------------
+        Confidential treatment requested as to portions of this
         Exhibit.

(1)      Filed as an exhibit to the Definitive Information Statement, dated
         August 20, 1996, and incorporated herein by reference (see Footnote 5).

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

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

(4)      Filed as an Exhibit to Amendment No. 1 to the Registrant's
         Registration Statement on Form S-1, dated November 14, 1995,
         and incorporated herein by reference.

(5)      Incorporated herein by reference.

                                      21