<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

                                   (MARK ONE)


|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999.

OR

|_|      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 For the transition period from __________ to

Commission file number 1-13002

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

                DELAWARE                                  22-3281446
     (State of other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                   Identification No.)

             1719A ROUTE 10
                SUITE 300
         PARSIPPANY, NEW JERSEY                              07054
(Address of principal executive offices)                  (Zip Code)

              Registrant's telephone number, including area code: (973) 560-8000

Securities registered under Section 12(b) of the Securities Exchange Act of
1934:

                                                      NAME OF EACH EXCHANGE
    TITLE OF EACH CLASS                                ON WHICH REGISTERED

Common Stock, $0.01 par value                        Boston Stock Exchange

Securities registered under Section 12(g) of the Securities Exchange Act of
1934:

                               Title of Each Class
                                      None


<PAGE>


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. |X| Yes |_| No

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-K contained herein, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. |_|

         The aggregate market value of the voting stock held by non-affiliates
of the registrant, as of April 12, 2000, was approximately $28,032,453 based
upon a last sales price on such date of $2.25. The information provided shall in
no way be construed as an admission that any person whose holdings are excluded
from the figure is an affiliate or that any person whose holdings are included
is not an affiliate, and any such admission is hereby disclaimed. The
information provided is solely for record keeping purposes of the Securities and
Exchange Commission.

         As of April 12, 2000, there were 17,156,878 shares of the
registrant's Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the registrant's definitive proxy statement issued or to be
issued in connection with the annual meeting of stockholders (Part III).

         PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT

         When used in this Annual Report on Form 10-K and in other public
statements by the Company and Company officers, the words "expect," "estimate,"
"project," "intend," and similar expressions are intended to identify
forward-looking statements regarding events and financial trends which may
affect the Company's future operating results and financial condition. Such
statements are subject to risks and uncertainties that could cause the Company's
actual results and financial condition to differ materially. Such factors
include, among others, the risk factors described under Item 1 in this Annual
Report. Additional factors are described in the Company's other public reports
filed with the Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date made. The Company undertakes no obligation to publicly release the
result of any revision of these forward-looking statements to reflect events or
circumstances after the date they are made or to reflect the occurrence of
unanticipated events.


<PAGE>


                                     PART I

ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

         Aquis Communications Group, Inc. ("Aquis" or the "Company") was
incorporated under the laws of Delaware on February 17, 1994 as "Paging Partners
Corporation." The Company commenced construction of its paging system in
November 1990 and initiated service in June 1991.

         On March 31, 1999 the Company, through a wholly-owned subsidiary,
merged with Aquis Communications, Inc. ("ACI") in a transaction accounted for as
a reverse acquisition. In connection with the merger, the Company changed its
name to its present name. On December 31, 1998, ACI acquired licenses and other
assets relating to the paging business of the Bell Atlantic Corporation (the "BA
Paging Business"), subject to certain liabilities relating to the BA Paging
Business. The purchase price for the Paging Business was approximately
$29,200,000 which was financed by a blend of senior debt, seller financing and
equity. As of December 31, 1998, the BA Paging Business served approximately
257,000 users. Prior to December 31, 1998, ACI had conducted no business.

         On June 15, 1999, a wholly-owned subsidiary of the Company entered into
a Stock Purchase Agreement (the "SunStar Agreement") with SunStar
Communications, Inc., an Arizona corporation ("SunStar"), and SunStar One, LLC.,
an Arizona limited liability company. SunStar sells secure Internet services
over an intelligent private network, provides dial-up internet access services
to corporate and individual subscribers and can provide enhanced security
standards for user authentication. Pursuant to the Agreement, SunStar became a
wholly-owned subsidiary of the Company and changed its name to "Aquis IP
Communications, Inc." Total consideration paid was $275,000 cash and 1,150,000
shares of the Company's common stock.

                  On January 31, 2000, Aquis, through its wholly-owned
subsidiary, ACI, acquired substantially all of the assets of SourceOne Wireless,
Inc. ("SOWI"), SourceOne Wireless, L.L.C. ("LLC"), and SourceOne Wireless II,
L.L.C. ("LLC II," together with SOWI and LLC, "SourceOne"). SourceOne operated
Commercial Mobile Radio Service one-way paging systems on multiple frequencies
in the midwest and other geographical areas in the United States (the "SourceOne
Paging Systems"). The SourceOne Paging Systems provided service to subscribers
pursuant to licenses issued to LLC II by the Federal Communications Commission
(the "FCC"). On April 29, 1999, SOWI and, on July 2, 1999, LLC (together with
SOWI, "Debtors") filed voluntary petitions for relief in the Bankruptcy Court
for the Northern District of Illinois (Eastern District) (the "Bankruptcy
Court") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code"). ACI and SourceOne entered into an Asset Purchase Agreement dated as of
August 2,1999, as amended by the Amendment to Asset Purchase Agreement dated as
of November 15, 1999 (the "SourceOne Purchase Agreement"). Due to the Debtors'
insufficient resources to continue operations of the SourceOne Paging Systems,
ACI and SourceOne entered into an Agreement Pending Purchase Closing dated as of
August 2, 1999 (the "Management Agreement"), pursuant to which ACI agreed to
manage the SourceOne Paging Systems located in the midwest United States and to
assume certain financial responsibilities pending the closing of the Purchase
Agreement. On November 18, 1999, the Bankruptcy Court entered an order (the
"Order") approving the SourceOne Purchase Agreement, as amended, authorizing the
Debtors to execute and deliver the SourceOne Purchase Agreement, as amended, to
the Company, authorizing and directing the Debtors to implement and satisfy the
procedures necessary to assume and assign certain executory contracts and
unexpired leases to the Company, and authorizing and directing the consummation
by the Debtors of the sale of substantially all of their assets to the Company
under Section 363(b) of the Bankruptcy Code as contemplated by the SourceOne
Purchase Agreement, which closed on January 31, 2000. As consideration for the
purchase of the assets acquired from SourceOne, the Company paid a purchase
price (the "Purchase Price") consisting of: (i) $2.25 million in cash (the "Cash
Payment"); and (ii) $1.5 million of 7 1/2% Redeemable Preferred Stock of the
Company, par value $.01 per share (the "Preferred Stock"). In addition, the
Company assumed or agreed to perform the following obligations and liabilities
of SourceOne:


                                       1
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         -    all liabilities and obligations that accrue or are required to be
              performed after the Closing Date pursuant to any unexpired leases
              or executory contracts that were included in the assets acquired
              by the Company and assumed and assigned under Bankruptcy Code
              Section 365 pursuant to the Order;

         -    all liabilities and obligations that accrue or are required to be
              performed after the Closing Date to the extent related to the
              ownership or operation of the Paging Systems acquired by the
              Company;

         -    all liabilities and obligations of SourceOne for revenues billed
              or received by SourceOne for services not yet rendered as of the
              Closing Date;

         -    all liabilities with respect to the return of or performance
              required as a result of deposits made by subscribers of the Paging
              Systems with SourceOne; and

         -    severance compensation for certain SourceOne employees.

         The Company obtained the funds for the Cash Payment through an
extension of an existing credit facility it had with FINOVA Capital Corporation.

         During 1999 the Company entered into several other acquisition
agreements, including ABC Paging, Inc., COMAV Corporation, Francis
Communications, Inc. and Intelispan, Inc. Although the Company incurred
significant transaction fees and paid deposits on account of these acquisitions,
it determined not to proceed with these transactions. The Company will continue
to pursue opportunistic acquisitions.

GENERAL

         The Company is a leading provider of paging and other wireless
messaging services through its local and regional wireless networks. The Company
offers messaging services through a seven state regional network that provides
coverage into New York, New Jersey, Connecticut, Pennsylvania, Maryland,
Virginia, Delaware and Washington, D.C. as well as through a regional network
providing coverage in six states including Illinois, Indiana, Michigan,
Wisconsin, Minnesota, and Missouri. The Company also provides service to over
1,000 U.S. cities, including the top 100 metropolitan areas through an
interconnect agreement with a nationwide wireless messaging provider. Since
beginning operations in 1994 the Company's subscriber base has increased to
approximately 375,000 units in service as of December 31, 1999. The Company has
achieved this through a combination of internal growth and a program of mergers
and acquisitions. As of December 31, 1999, the Company was the tenth largest
messaging company in the United States based on the number of subscribers. The
Company also markets Internet based products and services through Aquis IP
Communications, Inc., a wholly owned subsidiary ("Aquis IP"). Aquis IP offers
Internet dial up access and various web hosting products and services.

         The Company has traditionally operated technologically advanced paging
systems that provide one-way wireless messaging services. The Company has
recently decided to enter the two-way or advanced wireless messaging space. With
the Company's move into advanced wireless messaging the Company envisions itself
as taking part in the convergence of Internet and wireless data services. To
that end, the Company has executed an interconnect agreement with a nationwide
advanced messaging provider. This agreement allows the Company to pass advanced
wireless messaging traffic from its existing technical and engineering
infrastructure to the nationwide advanced wireless messaging company's
transmission facilities on both a regional and nationwide basis. The Company
feels this agreement is important because it allows for a seamless `switched'
environment in which the Company can market advanced wireless messaging services
to its existing subscriber base as well as take part in the potential high
growth of new applications which will require advanced wireless messaging
capabilities.

         The Company believes that the paging and wireless messaging industry is
likely to undergo additional consolidation and has announced that it intends to
participate in the consolidation process. Potential future consolidations would
be evaluated on several key operating and financial elements including
geographic presence, potential increase in both free and operating cash flow,
potential synergies and availability of financing. Any potential transaction may
result in substantial capital requirements for which additional financing may be
required. No assurance can be given that such additional financing would be
available on terms satisfactory to the Company.


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         The Company derives a majority of its revenues from fixed, periodic
(usually monthly) fees, generally not dependent on usage, charged to subscribers
for paging and wireless messaging services. While a subscriber continues to use
its services, operating results benefit from this recurring revenue with minimal
requirements for incremental selling expenses or fixed costs.

MARKETING

         The Company has grown internally by broadening its distribution network
and expanding its target market to capitalize on the growing appeal of messaging
and other wireless products and services. Over the past several years, the
Company has emphasized a distribution channel that is characterized by lower
average revenue per unit (ARPU), such as resellers, and correspondingly lower
operating costs. To offset declines in ARPU and to capitalize on the growth of
paging and other wireless advanced messaging services, the Company has expanded
its channels of distribution through acquisition, strategic partnerships and
alliances, and internal initiatives. While the Company has expanded its
distribution strategy beyond the reseller model it still views the reseller
distribution channel as an additional revenue opportunity and a lower-cost
avenue for growth.

         The Company markets its wireless messaging products and services
through its Aquis Wireless subsidiary. Aquis Wireless employs a direct sales
force that targets commercial business accounts. It also markets services
through its indirect distribution channel. The indirect distribution channel
consists of both resellers and agents. Resellers purchase airtime and resell
this airtime to its subscriber base. Aquis Wireless provides one invoice to the
reseller and the reseller invoices its subscriber on an individual basis. Agents
offer a branded Aquis Wireless product and receive a commission or margin for
doing so, and Aquis Wireless subsequently bills the subscriber for services sold
by its agent.

         Additional marketing efforts include an inbound call center that
accepts orders for products and services. Calls may be generated by yellow page
advertisements or advertising campaigns. Aquis Wireless maintains field offices
in New York, New Jersey, Maryland, Virginia, and Illinois. These offices are
available for subscribers to walk in and purchase products and services. Aquis
Wireless also maintains an Internet site in which customers may purchase
products and services. The web site also allows Aquis Wireless resellers an
access point to maintain their accounts via web based technology.

         The Company markets Internet based products and services through its
Aquis IP subsidiary. Aquis IP offers Internet dial up access and various web
hosting products and services. Aquis IP maintains offices in Florida and Arizona
and offers these products on a nationwide basis.

SOURCES OF EQUIPMENT

         The Company does not manufacture any of the equipment used in its
operations, all of which is available from a variety of sources. Due to the high
degree of compatibility among different models of transmitters, computers and
other paging and voice mail equipment, the Company has been able to design its
paging networks so as not to be dependent upon any single source for such
equipment. The Company periodically evaluates its purchasing arrangements for
pagers to be sure that the equipment it is offering is current and is available
at appropriate prices.

         The Company currently purchases its transmitters and paging network
equipment from Motorola and Glenayre. The Company's terminal equipment has a
modular design, which will allow significant future expansion by adding or
replacing modules rather than replacing the entire system. The Company believes
that its investment in technologically advanced transmission equipment reduces
its cost of maintenance and system expansion over the long term. The Company
believes that its paging system equipment is among the most technologically
sophisticated in the paging industry.

COMPETITION

         The Company faces intense competition from operators of other wireless
transmission systems. Such competition is based upon price, the quality and
variety of services offered, and the geographic area covered. Competitors of the
Company


                                       3
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include local, regional and national messaging companies. Certain competitors
offer wider coverage than does the Company and certain competitors follow a
low-price discounting strategy to expand market share.

         A number of technologies, including cellular telephone service,
personal communications service ("PCS"), enhanced specialized mobile radio,
low-speed data networks and mobile satellite services are competitive forms of
technology used in, or projected to be used for, wireless one and two-way
communications. The Company believes that paging will remain one of the
lowest-cost forms of wireless messaging due to the low-cost infrastructure
associated with paging systems.

         Future technological developments in the wireless communications
industry and the enhancement of current technologies will likely create new
products and services competitive with the paging services currently offered by
the Company. There can be no assurance that the Company will not be adversely
affected by such technological changes.

REGULATION

         The Company's paging operations are subject to regulation by the
Federal Communications Commission ("FCC") under the Communications Act of 1934,
as amended (the "Communications Act") and the Telecommunications Act of 1996
("1996 Act"). The Company is required to obtain licenses from the FCC to use the
radio frequencies necessary for its paging operations. These authorizations
specify the particular locations and frequencies authorized for use by the
Company and set forth technical parameters such as power, tower height and
antenna specifications under which the Company is permitted to use its
frequencies.

         The Company's current operations are governed under the Commission's
Rules covering commercial mobile radio services ("CMRS"). CMRS licensees must
provide interconnection upon reasonable request, must not engage in any
unreasonably discriminatory practices and are subject to complaints regarding
any unlawful practices. The Company is also subject to provisions that authorize
the FCC to provide remedial relief to an aggrieved party upon finding of a
violation of the Communications Act and related customer protection provisions.

         The Company's FCC licenses are issued for ten years. At the end of the
ten-year term, the Company must file applications for renewal of its
authorizations. The Company can expect renewal if it has met minimum service
requirements. While there can be no assurance that any future renewal
applications filed by the Company will be approved, based upon its experience to
date, the Company knows of no reason to believe that such renewal applications
would not be routinely approved.

         The Communications Act requires prior FCC approval for the transfer of
control of a Company that holds FCC radio licenses as well as prior consent to
the assignment of such licenses to another entity. Although there can be no
assurances that any such future applications filed by the Company will be
approved or acted upon in a timely manner by the FCC, the Company, based on its
past experience, knows of no reason to believe that any future transfer or
assignment applications would not be ultimately approved.

         The Omnibus Budget Reconciliation Act of 1993 (the "Budget Act")
imposed a structure of regulatory fees, which the Company is required to pay
with respect to its licenses. These fees are revised on an annual basis. The
Company believes that these regulatory fees will not have a material adverse
effect on the Company's business.

         The Communications Act also limits foreign ownership in FCC licensed
CMRS entities to no more than twenty percent (20%) direct ownership and, without
Commission consent, no more than twenty-five (25%) indirect ownership. However,
as the result of the World Trade Organization ("WTO") Agreement on Basic
Telecommunications Service entered into February 15, 1997 and effective February
5, 1998, the Commission liberalized foreign participation in the U.S.
telecommunications market by action taken November 25, 1997. This action allows
for an expedited process of approving indirect ownership over the 25% level for
WTO signatories.

         The FCC, under the Communications Act, has authority to revoke or
modify licenses issued by it. Any such revocation can only occur after notice
and opportunity for hearing based upon egregious misconduct by the licensee. No
license of the Company has ever been revoked or modified involuntarily.


                                       4
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         Paging authorizations, such as those held by the Company, have
traditionally been issued on a site-specific basis. However, the FCC, on
February 19, 1997, adopted an Order looking to fundamental changes in its
regulation of the paging industry. Specifically, the FCC will, in the future,
issue most paging licenses on a geographic basis. The FCC has defined these as
Economic Areas ("EAs"). The future licensees will be given operating authority
on particular frequencies within these geographic areas, subject only to
protection of incumbent operators from interference. The FCC proposes to award
these future paging licenses by competitive bidding (auctions). The Company, as
an incumbent licensee, will be entitled to interference protection from such
auction winners for its existing operations. However, the Company's ability to
expand its service territories will be affected by these new policies.

         Because the auctions are new to paging, the Company cannot predict
their impact on its business, although at this time management believes that the
impact of such auctions on the Company will not be material. Initially, auctions
or competitive bidding may increase the Company's cost of obtaining
authorizations from the FCC. The FCC's new wide-area licensing and auction Rules
may also serve as a barrier to new participants to the paging industry. On the
other hand, the more flexible licensing requirements should save on application
costs associated with making changes to facilities within the wide area should
the Company be successful and bid for wide areas or within its incumbent
geographic areas. On the other hand, if the Company is not a winner in the
auctions for broad geographic areas, its ability to expand its service
territories will be affected by these new policies.

         In the future, the Congress may modify or amend the Communications Act
and the FCC may modify its Rules or Policies in ways that could have a material
adverse effect on the Company's business. Such actions may affect the scope and
manner of the Company's operations and delivery of its service. As a result of
the enactment of the 1996 Act, the Company has incurred additional financial
obligations. In November 1996, in response to a directive in the 1996 Act, the
FCC adopted new rules that govern compensation to be paid to pay phone
providers. After these rules were vacated by the U.S. Court of Appeals for the
D.C. Circuit, the FCC released an order mandating that long distance carriers
compensate pay phone providers 28.4 cents for each 800 Number call during a
two-year interim period. The long distance carriers have either passed this cost
through to the paging companies that provide toll-free service to their
subscribers or have blocked payphone calls to toll-free Numbers. This has
increased the cost of providing certain toll-free messaging services and limited
the utility of toll-free Number service. Petitions for review and stay of this
order have been filed with a federal appellate court. Also, in response to
changes made by the 1996 Act, the FCC has adopted new rules regarding payments
by telecommunications firms into a revamped fund that will provide for the
widespread availability of telecommunications services, including to low-income
consumers ("Universal Service"). Prior to the implementation of the 1996 Act,
local telephone companies largely met Universal Service obligations. Under the
new rules, all telecommunications carriers, including paging companies, are
required to contribute to the Universal Service Fund. Payments into the fund
have increased the cost of doing business and could make the Company's service
less competitive with the other services. However, under the 1996 Act, local
exchange carriers are prohibited from charging paging carriers for the
"transport and termination" of local exchange carrier originated traffic. This
has already led to substantial savings for the Company. In addition, paging
carriers may be entitled to compensation from other telecommunications carriers
that terminate a call on a paging network. This could lead to additional revenue
for the Company. Of course, the Company cannot predict the final outcome of any
FCC proceedings, any court challenges to any FCC Rules or Policies or predict
what Congress may, in the future, propose in the way of changes to the
telecommunications laws.

         In connection with state regulations, under the amendments to the
Communications Act included in the Budget Act, the Congress preempted state and
local rate and entry regulation of all CMRS providers. Entry regulation
typically refers to the process whereby an entity's right to provide service in
a particular market is subject to the prior approval by a regulatory body such
as the state public service commission. Rate regulation traditionally concerns
the amount, terms and conditions that an operator may charge for its services.
These items were usually included in tariffs subject to approval by the state
regulatory body. While state and local regulatory bodies have been preempted
from rate and entry regulation, they may still regulate other aspects of the
Company's service offerings. This apparently has not created any burdensome
state or local regulation since the enactment of the 1993 Budget Act. However,
there can be no assurances that state and local governments will not attempt in
the future to expand their regulatory scope.

         The Company is subject to the state and local laws applicable to any
business enterprise. The 1996 Amendments to the Communications Act, however,
have limited the application of state and local zoning regulations requiring
that they not be


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unreasonably discriminatory among providers of functionally equivalent wireless
services and shall not have the effect of prohibiting the provision of wireless
services.

         The foregoing description of certain regulatory considerations does not
purport to be a complete summary of all present federal and state regulatory
requirements nor of all proposed legislation and regulations pertaining to the
Company's present operations.

RISK FACTORS

         The following factors, along with the other matters discussed or
incorporated by reference into this Annual Report on Form 10-K, could have a
material effect on the future operations, financial results and financial
condition of the Company and should be carefully reviewed and considered in
connection with the other matters discussed herein.

BUSINESS AND FINANCIAL RISKS

         THE COMPANY EXPECTS TO REPORT OPERATING LOSSES FOR THE NEXT SEVERAL
         YEARS.

         The Company purchased the BA Paging Business in December 1998. The
purchase price of approximately $29,200,000, including transaction costs, was
substantially above the asset value recorded on the books of the sellers.
Although the BA Paging Business showed an operating profit in its most recent
three years of operation, incremental depreciation and amortization on the
Company's higher asset values are expected to result in operating losses. The
Company also merged with ACI at the end of March, 1999, purchased SunStar in
June, 1999 and purchased Source One Wireless in January, 2000. A significant
effect of the purchase accounting for these transactions will be to record a
substantial amount of intangible assets, which will result in substantial
amortization charges to its consolidated income over the next ten years. As a
result, the Company expects to incur operating losses for the next several
years.

         The Company expects to continue to show earnings before interest,
taxes, depreciation and amortization ("EBITDA"), a financial measure commonly
used in the telecommunications industry in its future operations, just as Bell
Atlantic and Paging Partners did in their 1998 fiscal years. This is important,
as it represents a key financial test for it to preserve its credit with its
major lender, FINOVA Capital Corporation. Still, EBITDA is not derived from
generally accepted accounting principles ("GAAP") and therefore investors should
not consider it as indicative of operating income or cash flows from operating
activities, as determined in accordance with GAAP, or as a measure of liquidity.
Also, its calculation of EBITDA does not take into account its existing
commitments for capital expenditures or debt service requirements and should not
be seen as representative of the amount of funds generally available to it.

         Although the Company anticipates that cost savings achieved through the
Aquis/Paging Partners merger, its recent Sun Star and Source One acquisitions
and continued revenue growth at rates consistent with its historical trends will
improve its EBITDA and narrow its operating losses, the Company cannot assure
investors that its operations will become profitable or that the Company will
continue to generate sufficient EBITDA to cover its debt service and capital
expenditures requirements, provide it with sufficient amounts of operating cash
and enable it to meet its lender's minimum liquidity tests. If the Company can
not achieve operating profitability or adequate EBITDA, its liquidity will be
impaired and its common stock could have little or no value.


                                       6
<PAGE>


         THE COMPANY'S REVENUES AND OPERATING RESULTS MAY FLUCTUATE.

         The Company believes that future fluctuations in its revenues and
operating results may occur due to many factors, including competition,
subscriber turnover, new service developments and technological change. Its
current and planned debt repayment levels are, to a large extent, fixed in the
short term, and are based in part on its expectations as to future revenues and
cash flow growth. The Company may be unable to adjust spending in a timely
manner to compensate for any revenue or cash flow shortfall. It is possible
that, due to future fluctuations, its revenue, cash flow or operating results
may not meet the expectations of securities analysts or investors. This may have
a material adverse effect on the price of its common stock. If shortfalls were
to cause it not to meet the financial covenants contained in its debt
agreements, its lender could declare a default and seek immediate repayment.

         THE RATE OF SUBSCRIBER DISCONNECTIONS COULD INCREASE IN THE FUTURE,
         WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY'S
         OPERATING RESULTS.

         The Company's revenues are derived primarily from fixed periodic
subscription fees for services that are not generally dependent on level of
usage. Consequently, its ability to recoup initial selling and marketing costs,
cover its operating expenses and achieve profitability is dependent on the
average length of each customer's subscription period. Each month, some of its
existing customers have their service terminated for a variety of reasons,
including failure to pay, dissatisfaction with service and switching to a
competing service provider. Loss of those subscribers results in loss of the
recurring stream of revenues generated by payment of fixed fees without
additional selling expenses and adversely affects its operating results.
Company's average monthly disconnection rate for the fiscal year ended December
31, 1999 was 2.7%. Were the Company to experience an increase in its
disconnection rate, its business and future results of operations could be
materially and adversely affected.

         THE TELECOMMUNICATIONS INDUSTRY IS EXTREMELY COMPETITIVE AND IS
         UNDERGOING CONSOLIDATION.

         The paging and telecommunications services industry is extremely
competitive. Some of its competitors, which include local, regional and national
paging companies, possess greater financial, technical and other resources than
the Company does. Moreover, some of its competitors offer broader network
coverage than that provided by its systems and some follow a low-price
discounting strategy to expand their market shares.

         Furthermore, the Company believes that the paging industry has
experienced, and will continue to experience, consolidation due to factors that
favor larger, multi-market paging companies, including:

               -    the ability to obtain additional radio spectrum;
               -    greater access to capital markets and lower costs of
                    capital;
               -    broader geographic coverage of paging systems;
               -    economies of scale in the purchase of capital equipment;
               -    operating efficiencies; and
               -    better access to executive personnel.

This consolidation trend may further intensify competition in its industry. The
Company cannot assure investors that the Company will be able to compete
successfully.


                                       7
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         A HIGH AMOUNT OF DEBT BURDENS THE COMPANY'S OPERATIONS.

         The Company has borrowed a large amount of money from its lender, and
the Company expects to continue to be highly leveraged. The following table
compares its total debt, total assets at or as of December 31, 1999.

<TABLE>
<CAPTION>
                                       Year Ended
                                       Dec. 31, 1997              Dec. 31, 1998      Dec. 31, 1999
                                       (Dollars in Thousands)
                                       -----------------------------------------------------------
<S>                                       <C>                        <C>                <C>
Total Long-Term Debt                      $  --                      $18,535            $25,963
   (net of current maturities)

Total Assets                              $13,547                    $32,335            $39,324

EBITDA                                    $ 3,799                    $ 5,068            $ 2,974
</TABLE>


EBITDA is not a measure defined in GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with GAAP. EBITDA, as determined by the Company, may not necessarily be
comparable to similarly titled data of other paging companies. EBITDA for the
year ended December 31, 1999 was reduced by $1,692 for costs incurred with
abandoned business acquisitions and by $742 for costs related to a settlement
with the Company's former president. Excluding these non-recurring charges,
EBITDA for 1999 would have been $5,408.

         The Company's high degree of debt may have adverse consequences for it.
These include the following:

          -    High amounts of debt may limit or eliminate its ability to obtain
               additional financing necessary for acquisitions, working capital,
               capital expenditures or other purposes on acceptable terms, if at
               all.

          -    A substantial portion of its cash flow will be required to pay
               interest expense; this will reduce the funds which would
               otherwise be available for operations and future business
               opportunities.

          -    Its credit agreement with its lender contains financial and
               restrictive covenants; the failure to comply with these covenants
               may result in an event of default which could have a material
               adverse effect on it if not cured or waived.

          -    The Company may be more highly leveraged than its competitors,
               which may place it at a competitive disadvantage.

          -    Its high degree of debt will make it more vulnerable to a
               downturn in its business or the economy generally.

          -    Its high degree of debt may impair its ability to participate in
               the future consolidation of the paging industry.

         There can be no assurance that the Company will be able to reduce its
level of debt as the Company intends, nor that the Company will achieve an
appropriate balance between growth which the Company considers acceptable and
future reductions in borrowings. If the Company is not able to achieve continued
growth in EBITDA, the Company may be precluded from incurring additional
indebtedness due to cash flow coverage requirements under its existing credit
agreement.

         FUNDING FOR THE COMPANY'S FUTURE CAPITAL NEEDS IS NOT ASSURED.

         The Company's business strategy requires substantial funds to be
available to finance the continued development and future growth and expansion
of its operations, including possible acquisitions. Future amounts of capital
required by it will depend upon a number of factors. These factors include
subscriber growth, the type of paging devices and services demanded by


                                       8
<PAGE>


customers, service revenues, technological developments, marketing and sales
expenses, competitive conditions and acquisition strategies and opportunities.
The Company cannot assure investors that additional equity or debt financing
will be available to it when needed on acceptable terms, if at all. If
sufficient financing is unavailable when needed, the Company may experience
material adverse effects.

         THE COMPANY'S CREDIT AGREEMENT WITH ITS LENDER RESTRICTS THE WAY IT
         OPERATES ITS BUSINESS.

         The Company's agreement with its lender imposes operating and financial
restrictions on it. The Company's credit agreement requires it and its operating
subsidiaries to maintain specified financial ratios, including a maximum
leverage ratio and a minimum fixed charge coverage ratio. In addition, the
credit agreement limits or restricts, among other things, the operating
subsidiaries' ability to:

          -    declare dividends or redeem or repurchase capital stock;

          -    prepay, redeem or purchase debt;

          -    incur liens and engage in sale/leaseback transactions;

          -    make loans and investments;

          -    incur indebtedness and contingent obligations;

          -    amend or otherwise alter debt instruments and other material
               agreements;

          -    engage in mergers, consolidations, acquisitions and asset sales;

          -    engage in transactions with affiliates; and

          -    alter their lines of business or accounting methods.

         The Company's ability to comply with such covenants may be affected by
events beyond its control, including prevailing economic and financial
conditions. A breach of any of these covenants could result in a default under
the credit agreement. Upon the occurrence of an event of default, the lender
could elect to declare all amounts outstanding to be immediately due and
payable, together with accrued and unpaid interest. If the Company were unable
to repay any such amounts, the lender could proceed against the collateral
securing a portion of the indebtedness. If the lender accelerated the payment of
such indebtedness, there can be no assurance that its assets would be sufficient
to repay in full such indebtedness and other indebtedness. In addition, because
the credit agreement limits its ability to engage in certain transactions except
under certain circumstances, the Company may be prohibited from entering into
transactions that could be beneficial to it.

         THE COMPANY'S BUSINESS MAY BE ADVERSELY AFFECTED BY RAPID TECHNOLOGICAL
         CHANGES.

         The paging and telecommunications services industry is characterized by
rapid technological change and advancement which may produce new services or
products that are directly competitive with the paging and data transmission
services the Company provides. A variety of wireless one-way and two-way
communication technologies, including cellular telephone service, personal
communications services, enhanced specialized mobile radio, low-speed data
networks, mobile satellite services and advanced two-way paging services, are
currently in use or under development. Although those technologies are generally
higher-priced than one-way paging service or not yet commercially available,
technological improvements are creating increased capacity and demand for
wireless two-way communication. Increased availability of newer, more
technologically advanced products and services could result in decreased demand
for certain of its products and services. For this reason, a key element of its
growth strategy is to diversify its business and product lines through
acquisitions of companies with businesses that will complement and enhance its
own. However, the Company cannot assure investors that the Company will be able
to successfully diversify its business or incorporate new technologies so as to
keep its product and service offerings competitive.


                                       9
<PAGE>


         IF THE COMPANY DOES NOT MAKE ACQUISITIONS ON ECONOMICALLY ACCEPTABLE
         TERMS AND INTEGRATE ACQUIRED BUSINESSES SUCCESSFULLY, ITS FUTURE GROWTH
         AND FINANCIAL PERFORMANCE WILL BE LIMITED.

         The Company has pursued, and intends to continue to pursue, a growth
strategy which relies in part upon acquisitions of telecommunications and other
data transmission businesses. However, the Company may not be able to identify,
finance and complete suitable acquisitions on acceptable terms, and any future
acquisitions that the Company completes may not be successful. In addition, the
process of integrating acquired businesses may involve unforeseen difficulties
and/or require a disproportionate amount of its time, attention and resources
from time to time. Although its goal will be to achieve operating synergies and
efficiencies and to expand and diversify its business, the Company may not
achieve some of the anticipated benefits of such acquisitions if the existing
operations of such companies are not successfully integrated with its own in a
timely manner. Any difficulties or problems encountered in the integration
process could have a material adverse effect on it. Even if integrated in a
timely manner, there can be no assurance that its operating performance after
acquisitions will be successful or will fulfill management's objectives.

         The integration of businesses the Company acquires will require, among
other things, coordination of administrative, sales and marketing, distribution
and accounting and finance functions and expansion of information and management
systems. The integration process could cause the interruption of the activities
of the two businesses or the diversion of attention and resources from the
businesses' primary operational goals. The difficulties of such integration may
initially be increased by the necessity of coordinating geographically separate
organizations and integrating personnel with disparate business backgrounds and
corporate cultures. The Company may not be able to retain key employees. The
process of integrating newly acquired businesses may require a disproportionate
amount of time and attention of its management and financial and other resources
and may involve other, unforeseen difficulties.

         The success of its growth strategy will also depend on numerous other
contingencies beyond its control, including national and regional economic
conditions, interest rates, competition, changes in regulation or technology and
its ability to attract and retain skilled employees. As a result, the Company
cannot assure investors that its growth and business strategies will prove
effective or that the Company will achieve its goals.

GOVERNMENT REGULATION MAY MAKE ITS OPERATIONS MORE DIFFICULT

         THE COMPANY'S BUSINESS IS DEPENDENT ON FCC LICENSES THAT MAY NOT BE
         RENEWED.

         The Company's FCC licenses have varying terms of up to 10 years, at the
end of which renewal applications must be approved by the FCC. In the past,
paging license renewal applications generally have been granted by the FCC upon
a showing of compliance with FCC regulations and of adequate service to the
public. Although the Company is unaware of any circumstances which would prevent
the grant of any pending or future renewal applications, the Company cannot
assure investors that any of its renewal applications will be free of challenge.
There may be competition for the radio spectrum associated with its FCC licenses
at the time they expire, which could increase the chances of third party
interventions in the renewal proceedings. The Company cannot assure investors
that its applications for renewal of its FCC licenses will be granted.

         FUTURE CHANGES IN REGULATORY ENVIRONMENT MAY ADVERSELY AFFECT THE
         COMPANY'S BUSINESS.

         The Company and the wireless communications industry are subject to
regulation by the FCC and various state regulatory agencies. From time to time,
legislation and regulations which could potentially adversely affect it are
proposed by federal and state legislators. The Company cannot assure investors
that federal or state legislation or regulations will not be adopted that would
adversely affect its business.


                                       10
<PAGE>


RISKS RELATED TO THE COMPANY'S COMMON STOCK

         THE COMPANY DOES NOT INTEND TO PAY DIVIDENDS FOR THE FORESEEABLE
         FUTURE.

         The Company currently intends to retain all of its earnings to finance
the growth of its business and therefore does not anticipate paying cash
dividends on its common stock at any time in the foreseeable future.
Furthermore, the Delaware General Corporation Law requires that dividends be
paid only out of capital and surplus, or out of certain enumerated "retained
earnings." Any future payments of dividends would be subject to the availability
of sufficient amounts of such funds to cover such payments. The Company cannot
assure investors that such funds will be legally available or that its Board of
Directors will authorize payment of dividends if and when such funds become
available.

         THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS AND THE DELAWARE
         GENERAL CORPORATION LAW CONTAIN PROVISIONS THAT MAY HAVE THE EFFECT OF
         DISCOURAGING ATTEMPTS AT A CHANGE OF CONTROL OF THE COMPANY, WHICH MAY
         ADVERSELY AFFECT THE VALUE OF ITS COMMON STOCK.

         The Company has an authorized class of 1,000,000 shares of "blank
check" preferred stock which may be issued by the Board of Directors on such
terms and with such rights, preferences and designations as the Board may
determine. Issuance of such preferred stock, depending upon the rights,
preferences and designations assigned to it, could delay, deter or prevent a
change in control of the Company. In addition, its restated Certificate of
Incorporation provides for a classified board of directors, which may delay or
deter certain changes in its management.

         Certain "anti-takeover" provisions of the Delaware General Corporation
Law restrict the ability of certain "interested" stockholders to acquire control
of the Company. These "anti-takeover" provisions might discourage prospective
acquirors from attempting to bid for its outstanding shares and therefore may be
considered disadvantageous by certain investors. The Company has no control
over, and therefore cannot predict, what effect these impediments to the ability
of third parties to acquire control of it might have on the market price of its
common stock.

         THE PRICE AT WHICH THE COMPANY'S STOCK TRADES MAY BE VOLATILE.

         The market price of the Company's common stock has been experiencing
significant fluctuation since its merger with ACI in March of 1999. The value of
the Company's common stock will likely be affected by numerous factors. These
include the risk factors set forth in this Report, as well as prevailing
economic and financial trends and conditions in the public securities markets.
Share prices of paging companies such as the Company have exhibited a high
degree of volatility during recent periods. Shortfalls in revenues or EBITDA
from the levels anticipated by the public markets could have an immediate and
significant adverse effect on the trading price of the Company's common stock in
any given period. Shortfalls may result from events that are beyond the
Company's immediate control and can be unpredictable. The trading price of its
shares may also be affected by developments which may not have any direct
relationship with its business or long-term prospects. These include reported
financial results and fluctuations in trading prices of the shares of other
publicly held companies in the paging industry generally.

ITEM 2.  PROPERTIES

         The Company's principal office is located in approximately 21,700
square feet of leased space at 1719A Route 10, Suite 300, Parsippany, New
Jersey. The fixed rent on the lease, which expires April 30, 2001, is currently
approximately $27,400 per month. In addition to fixed rent, the lease requires
the Company to pay its proportionate share of certain maintenance expenses and
any increase in real estate taxes and insurance costs. The Company has an option
to renew the lease for an additional five-year period at a monthly rental of
greater of the current rent or ninety-five percent of the fair market rent for
comparable space in the area.

         As of February 29, 2000, the Company leases approximately 450 locations
for its transmitters on commercial broadcast towers, buildings and other fixed
structures. In addition, the Company leases space in New York, Pennsylvania,
Maryland, and Massachusetts, primarily to house equipment related to its paging
systems. The rental payable for such leases, together with those for the
Company's transmitter locations, aggregated approximately $275,000 per month, as
of February 29, 2000. The Company


                                       11
<PAGE>


also maintains eight sales offices and two operating centers in various U.S.
locations, the aggregate monthly rental payable for such locations being
approximately $33,000.

ITEM 3.  LEGAL PROCEEDINGS

         1. FONE ZONE COMMUNICATION CORP. V. AQUIS COMMUNICATIONS, INC. -
Supreme Court of the State of New York, County of Queens, Index No. 3841/00. The
Company was sued by Fone Zone Communications Corp. in the Supreme Court of the
State of New York, Queens County, on February 18, 2000. The Company removed the
action to the U.S. District Court for the Eastern District of New York on March
23, 2000. The suit seeks $1,000,000 in alleged damages as a result of the
Company's alleged conduct with respect to the Company's termination of services
for plaintiff and the Company's alleged solicitation of plaintiff's customers.
The Company intends to vigorously defend this action.

         2. FRANCIS COMMUNICATIONS TEXAS, INC. ET AL. V. AQUIS COMMUNICATIONS,
INC. ET AL.- U. S. District Court for the Western District of Texas, El Paso
Division, Cause No. EP 99 CA 0388. On November 24, 1999, Francis Communication
Texas, Inc. and Francis Communications I, Ltd. (collectively, the "Francis
Parties") commenced an action arising out of a letter of intent between the
Francis Parties and the Company dated June 10, 1999. The letter of intent called
for the Company to acquire the Francis Parties' assets for a purchase price of
$4,000,000. The Company terminated the letter of intent as a result of the
failure of the Francis Parties to comply with certain conditions contained in
the letter of intent. The Francis Parties allege that the Company breached the
letter of the intent and the Company's duty of good faith and fair dealing in
failing to conclude the transaction described in the letter of intent. The suit
seeks economic and other damages as a result of the Company's alleged conduct.
This matter is at an early procedural stage. The Company strenuously denies the
Francis Parties' allegations and intends to vigorously defend this action.

         3. IN THE MATTER OF ARBITRATION BETWEEN JOHN X. ADILETTA AND AQUIS
COMMUNICATIONS GROUP, INC.- On December 23, 1999, John X. Adiletta, a former
director and chief executive officer of the Company, commenced an arbitration
proceeding under the Rules of the American Arbitration Association by way of a
"Demand for Arbitration and Statement of Claim" (hereinafter the "Demand"). The
Demand set forth three claims for relief. The first claim alleged breach of an
employment agreement between the Company and Mr. Adiletta and sought damages in
"an amount to be proved at trial" but "in no event less than $762,500." The
second claim alleged wrongful discharge and sought damages in "an amount to be
proved at trial" but "in no event less than $1,000,000," plus unspecified
punitive damages. The third claim for relief sought monetary remedies, as well
as an equitable remedy by way of a request for a preliminary and permanent
injunction for the alleged wrongful termination of health and welfare benefits
including incentive stock options. The third claim also sought compensatory and
punitive damages in unspecified amounts. The parties had selected an arbitrator,
and a discovery and hearing schedule was entered. Thereafter, the parties
entered into a settlement agreement, the terms of which provide for a payment of
$25,000, a credit of $75,000 against existing indebtedness owed to the Company
by Mr. Adiletta, stock valued at $400,000, forgiveness of $115,000 of debt under
an existing promissory note secured by common stock owned by Mr. Adiletta, and
the reinstatement of 55,000 stock options with an exercise price of $1.12 each
under a previous Incentive Stock Option Agreement.

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

         Not Applicable.


                                       12
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is traded over the counter on the NASDAQ
SmallCap Market under the symbol "AQIS". Over the counter market quotations
reflect inter-dealer prices without mark-up, mark-down or commissions, and may
not represent actual transactions. The quarterly high and low closing bid prices
for the Company's Common Stock for the past two years as reported by the
National Association of Securities Dealers, Inc., are as follows:

<TABLE>
<CAPTION>
                                1998                                                1999
                            COMMON STOCK                                        COMMON STOCK

          QUARTER      HIGH               LOW              QUARTER         HIGH               LOW
<S>                      <C>             <C>                               <C>               <C>
First Quarter            1.81            0.69           First Quarter      1.63              1.06
Second Quarter           1.75            1.00           Second Quarter     1.56              0.81
Third Quarter            1.50            0.88           Third Quarter      1.88              1.25
Fourth Quarter           3.19            0.69           Fourth Quarter     1.91              0.47
</TABLE>

         On April 12, 2000, the closing price of the Company's Common Stock was
$2.25. As of this date, there were approximately 125 record holders of the
Company's Common Stock. The number of record holders does not reflect the number
of beneficial owners of the Company's Common Stock for whom shares are held by
banks, brokerage firms and others. Based on information requests received from
representatives of such beneficial owners, management believes that there are at
least 1,000 beneficial holders of the Company's Common Stock.

         DIVIDENDS

         The payment of dividends is contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition. The
payment of dividends is currently prohibited by the Company's Credit Agreement
with Finova Capital Corporation. It is the present intention of the Company's
Board of Directors to retain its earnings, if any, for use in the Company's
business.

         RECENT SALES OF UNREGISTERED SECURITIES

         On December 15, 1999, the Company issued to each of Patrick M. Egan,
Michael E. Salerno and John B. Frieling, directors of the Company, 60,000 shares
of the Company's common stock in consideration of those directors' expanded
scope of service to the Company during the interim period following the
departure of John X. Adiletta as Chief Executive Officer in November 1999. The
shares of the Company's stock issued to Messers. Egan, Salerno and Frieling were
issued without registration under the Securities Act of 1933 pursuant to the
exemption therefrom provided by Section 4(2) of the Securities Act on the basis
that such issuances did not involve a public offering.


                                       13
<PAGE>


                                     PART II

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The following table, as it relates to the 1999 and 1998 consolidated
balance sheets and the statement of operations for 1999, has been derived from
the historical financial data of Aquis Communications Group, Inc. The operating
data for 1998 through 1995 has been derived from the annual financial statements
of Bell Atlantic Paging, Inc. ("BAPCO" or the "Predecessor Company"). Similarly,
the balance sheet data for 1997 through1995 has also been derived from BAPCO's
financial statements. The following information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and the notes thereto
included elsewhere herein.

<TABLE>
<CAPTION>
                                                                                PREDECESSOR COMPANY
                                                                   ------------------------------------------------------
                                                                               YEAR ENDED DECEMBER 31,
                                                   1999            1998           1997              1996             1995
                                                   ----            ----           ----              ----             ----
                                                                       (IN THOUSANDS, EXCEPT PER SHARE NUMBERS)
<S>                                             <C>              <C>              <C>              <C>              <C>
STATEMENT OF OPERATIONS DATA:
Total revenues .........................        $ 31,159         $ 26,432         $ 20,689         $ 17,057         $ 15,821
Depreciation and amortization ..........          10,878            4,323            3,378            2,066            1,253
Costs of abandoned business combinations           1,692               --               --               --               --
Operating expenses .....................          26,493           21,364           16,890           13,065           13,380
                                                --------         --------         --------         --------         --------
Operating (loss) income ................          (7,904)             745              421            1,926            1,188
Other expenses, net ....................          (2,975)              --               --               --             (858)
Provision for income taxes .............              --             (296)            (168)            (770)            (543)
Extraordinary item, net of taxes .......              --              682               --               --               --
                                                --------         --------         --------         --------         --------
Net (loss) income ......................         (10,879)           1,131              253            1,156             (213)
                                                --------
Net loss per common share ..............        $  (0.76)
                                                --------
BALANCE SHEET DATA (at year end):
Total assets ...........................        $ 39,324         $ 32,335           13,547         $ 13,015         $  9,345
Long-term debt, less current
    maturities .........................        $ 25,963         $ 18,535         $     --         $      2         $    887
</TABLE>


                                       14
<PAGE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

ORGANIZATION AND BASIS OF PRESENTATION

On March 31, 1999 a wholly-owned subsidiary of Paging Partners Corporation
("Paging Partners") merged with Aquis Communications, Inc. ("ACI") in a
transaction accounted for as a reverse acquisition with ACI as the accounting
acquirer (see Notes to the consolidated financial statements). At such time,
Paging Partners changed its name to Aquis Communications Group, Inc. (the
"Company" or "Aquis"). ACI had no operating activities prior to the acquisition
of the paging assets of Bell Atlantic Paging, Inc. and certain affiliates
("BAPCO" or the "Predecessor Company"), on December 31, 1998. The results of
operations prior to March 31, 1999 are those of Aquis. The financial statements
for the years ended December 31, 1998 and 1997 have been derived from the
financial statements of the Predecessor Company for such period, and include
certain reclassifications to enable uniform accounting presentations for the
periods presented.

The results of operations of the Predecessor Company for the years ended
December 31, 1998 and 1997 include certain revenues and expenses allocated by
Bell Atlantic Corporation and its affiliates ("Bell Atlantic"). The provision
for income taxes was allocated to the Predecessor Company as if it were a
separate taxpayer. Also, certain employee benefit costs were allocated based on
staffing levels. Accordingly, the results of operations and financial position
of the Predecessor Company may not be the same as would have occurred had the
Predecessor Company been an independent entity. This discussion should be read
in conjunction with the consolidated financial statements of the Company and the
notes thereto.

On December 31, 1998, Aquis acquired the Bell Atlantic paging business for
approximately $29,200, including transaction costs. The Bell Atlantic paging
business acquired included BAPCO's (or the Predecessor Company's) sales and
marketing operation and the paging network operation infrastructure owned and
operated by the Bell Atlantic Operating Telephone Companies (the "OTC's"). The
acquisition was accounted for as a purchase in accordance with Accounting
Principles Board Opinion No, 16, "Business Combinations." The acquisition was
financed primarily through a $20,000 loan from FINOVA Capital Corporation
("FINOVA"), a $4,150 note retained by the seller (the "Seller Note"), and cash
proceeds of $5,661 from a sale of preferred stock. The Seller Note was paid in
full on June 30, 1999, net of a negotiated discount.

GENERAL

The Company is a leading provider of paging and other wireless messaging
services and markets one-way paging service and equipment to customers directly
and through resellers. The Company also offers its customers both customer owned
and maintained equipment or lease options for equipment. In addition, with the
acquisition of SunStar Communications, Inc. (see Notes to the consolidated
financial statements), the Company began offering both secure and general
dial-up internet access services effective July 1, 1999. For periods prior to
1999, the Predecessor Company acted as a reseller for the OTC's of Bell Atlantic
and provided one-way paging services and equipment to consumers directly and
through other resellers.

During the year ended December 31, 1999, the Company generated approximately 97%
of its total revenue from fixed periodic fees for paging services that are not
generally dependent on usage. Other sources of revenue include certain
usage-based services provided primarily to resellers and from sales of pagers.
Consequently, the ability to recover initial operating, selling and marketing
costs and to achieve profitability is dependent on the average duration of each
customer's subscription period. For as long as a subscriber continues to utilize
the service, operating results benefit from the recurring fixed fee payments
without the requirement of any incremental selling expenses. Conversely,
customer disconnections adversely affect operating results. Each month a
percentage of existing customers have their service terminated for reasons
including failure to pay, dissatisfaction with service or coverage limitations,
and switching to competing service providers. The average of the monthly
disconnection or churn rates (not weighted and excluding the effects from the
Paging Partners subscriber base) for the years ended December 31, 1999 and 1998,
were 3.1% and 2.9%, respectively. Including the stabilizing effects of the
Paging Partners reseller base added April 1, the churn rate was 2.7% for
calendar year 1999.

RESULTS OF OPERATIONS - 1999 TO 1998


                                       15
<PAGE>


Some of the following financial data is presented on a per subscriber unit
basis. Management believes that such a presentation is useful in understanding
year-to-year comparative results by providing a meaningful basis for comparison,
given the differences in business management and in the number of subscribers of
other paging companies.

UNITS IN SERVICE

Units in service totaled 415,000 and 257,000, a 61.5% increase, on a comparative
basis as of December 31, 1999 and 1998, respectively, before adjustment for
certain units (the "BAM Reseller Units") transferred to Bell Atlantic Mobile
("BAM") effective December 1, 1999. Aquis and BAM entered into a reseller
agreement for these units in connection with the purchase of the assets of
BAPCO. Aquis had the option to cancel the reseller agreement for the BAM
Reseller Units and did so in December, 1999 because these units were not
profitable to the Company. Net of the transfer, units in service totaled 375,000
and 226,000, respectively, and represent a net growth rate of nearly 66%. This
growth was achieved through the merger with Paging Partners Corporation on March
31, 1999, and was partially offset by customer disconnections at a rate of 2.7%
per month.

REVENUES

Paging service revenues for the years ended December 31, 1999 and 1998,
respectively, were $30,368 and $23,309, an increase of approximately $7,059 or
more than 30%. The increase in service revenues was attributable to the increase
in the number of subscribers resulting primarily from the March 31, 1999 Paging
Partners merger, and, to a smaller extent, to an increase in demand for such
value-added services as alpha dispatch, sports, news and business data
messaging. Average revenue per unit, or "ARPU", was $6.84 during 1999, compared
to $7.18 during 1998. This change in ARPU was primarily the result of the
Company's addition of reseller units through the Paging Partners merger and to a
lesser extent was the result of pricing pressures in a highly competitive
marketplace. Resellers purchase the Company's services in bulk and are therefore
provided rates lower than those made available to the Company's direct
subscribers. The relative weight of reseller revenues to total service revenues
has increased from about 11% of service revenues during the first quarter of
1999, to about 28% for subsequent quarters as the result of the merger.

Revenues from sales of paging equipment declined from $3,123 in 1998 to $791 in
1999. This was the result of two factors. First, sales to Bell Atlantic Mobile
and the OTC's, entities that were significant resellers of paging equipment and
services in years prior to 1999, were substantially eliminated as a result of
Aquis' purchase of the business at December 31, 1998. Second, in response to
consumer demand for less costly equipment, Aquis began marketing lower-cost
units at reduced sales prices in 1999, representing a departure from the
Predecessor Company's high-end, high-cost strategy.

COST OF PAGING SERVICES

Cost of service consists principally of fees paid to third party carriers, and,
to a lesser extent, to message dispatch companies. Third party carriers are
utilized when a customer requires service outside of the Company's service area,
and are most commonly used to provide nationwide coverage. The costs of such
services increased from $4,968 in 1998 to $7,753 in 1999. The increases are
attributable primarily to growth of the subscriber base, and to an increase in
customer demand for services such as wide-area, nationwide, alpha dispatch, and
other message dispatch services.

COST OF EQUIPMENT SALES

The cost of equipment sold during fiscal year 1999 was $947, a decline of $1,762
from the prior year level of $2,709. The previously-described reduction of sales
to Bell Atlantic Mobile and the OTC's contributed to the decrease, as did the
Company's move toward lower-cost pagers and an increase in demand for rental
units. Declines in average pager costs also contributed to the reduction.

TECHNICAL OPERATIONS

Technical operating expenses include transmission site rentals, telephone
interconnect services and the costs of network maintenance and engineering.
These expenses totaled $5,317 and $3,482 during the years ended December 31,
1999 and 1998, respectively. Additional costs were incurred to operate and
maintain the Company's expanded network resulting from the merger with Paging
Partners on March 31, 1999. In addition, the elimination of certain expenses
allocated by BAPCO was offset by greater external unsubsidized third party costs
for transmitter and terminal site rents, telephone company access charges, and
personnel costs in the current year.


                                       16
<PAGE>


SALES AND MARKETING

Selling and marketing expenses include the cost to acquire and retain
subscribers, operating costs associated with the sales and marketing
organization, and other advertising and marketing expenses. These costs
increased from $3,394 in 1998 to $3,881 in 1999, or approximately 14.3% from
1998 to 1999, resulting from the opening of additional sales offices and a
corresponding increase in sales and support staff and related administrative
operations and selling costs. These increases were partially offset by a
reduction of sales commissions resulting from a revised commission plan
implemented in 1999 and a decrease in print advertising expenses.

GENERAL AND ADMINISTRATIVE

General and administrative expenses include costs associated with customer
service, field administration and corporate headquarters. As a percentage of
service revenue, these costs increased as a percentage of service revenues from
about 24.3% in 1998 to 25.3% in 1999. The increase was largely attributable to a
settlement of certain employment claims made by the Company's former President,
settled in the approximate amount of $742 and charged against 1999 results of
operations. The increase was also attributable to higher office occupancy and
customer service and call center support costs that were partially offset by
reductions in billing and data processing expenses. Also contributing to the
increase were costs associated with the transition to a public reporting entity.
However, Predecessor Company amounts were lower due its existence as a
subsidiary of Bell Atlantic rather than operating as an independent entity.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased to $10,878 in 1999 from $4,323 during
the prior year. Bell Atlantic, the Predecessor Company, recorded the cost of the
use of the network and communications operating assets through intercompany
charges from the affiliated operating telephone companies that owned the assets
during 1998. In substance, the Predecessor Company leased these assets while the
Company, as owner and operator, allocates such costs to operations. The
increases in depreciation and amortization are also attributable to the
allocation of the purchase price of tangible and intangible assets, which
exceeded their historical costs, acquired from the Bell Atlantic companies and
through the merger with Paging Partners.

ABANDONED BUSINESS COMBINATIONS

On November 8, 1999, the Company announced the termination of discussions
concerning the June 21, 1999 Memorandum of Understanding to merge with
Intelispan, Inc. In addition, the Company also terminated its efforts to acquire
Francis Communications and certain additional telecommunications services
providers and resellers. Earnings for 1999 have been charged $1,692 for the
write off of related capitalized costs.

INTEREST EXPENSE

Net interest expense was $3,004 for the year ended December 31, 1999 and none
for 1998. The 1999 expenses include interest costs related to the senior debt
and the five year term loan due to FINOVA, and additional fees and
first-quarter charges of $299 related to letters of credit used in connection
with the Company's mergers and acquisitions. In years prior to 1999, BAPCO
carried no external debt.

PROVISION FOR INCOME TAXES

The provision for income taxes decreased in the current periods as a result of
the Company's operating loss for book and tax purposes. During the prior period,
the income and expenses of the Predecessor Company were included in the
consolidated Federal and certain combined state income tax returns of its parent
and the prior year provisions for income taxes have been calculated on a
separate return basis herein.

RESULTS OF OPERATIONS - 1998 TO 1997


                                       17
<PAGE>


UNITS IN SERVICE

Units in service totaled 257,000 and 218,000 as of December 31, 1998 and 1997.
This increase represents an annual net growth rate of 18%. Unit growth resulted
primarily from the overall industry growth in numeric and alphanumeric wireless
messaging and was partially offset by monthly customer disconnection rates of
2.9% in 1998 and 2.4% in 1997.

REVENUES

Paging service revenues for the years ended December 31, 1998 and 1997,
respectively, were $23,309 and $17,894, an increase of approximately $5,415 or
more than 30%. The increase in service revenues was attributable to the increase
in the number of subscribers and, to a smaller extent, to an increase in demand
for such value-added services as alpha dispatch, sports, news and business data
messaging, which in turn produced an increase in ARPU from year to year. Average
revenue per unit was $7.18 during 1998, compared to $6.84 in 1997.

Revenues from sales of paging equipment increased from $2,795 in 1997 to $3,123
in 1998. This was the result of several factors, including new product
introductions by the Company's major supplier, increased productivity from its
telemarketing channel, and higher sales to the Company's affiliates.

COST OF PAGING SERVICES

The costs of paging services were $4,968 and $4,401 in 1998 and 1997,
respectively. The increase is attributable primarily to growth of the subscriber
base, and to an increase in customer demand for services such as, nationwide,
alpha dispatch, and other message dispatch services.

COST OF EQUIPMENT SALES

The cost of equipment sold during fiscal years 1998 and 1997 was $2,709 and
$2,873, respectively, representing a decline of $164. Declines in supply costs
available from vendors were partially offset by an increase in the number of
units sold. In addition, the cost of sales for 1997 included higher charges for
obsolescence than required for 1998.

TECHNICAL OPERATIONS

These expenses totaled $3,482 and $2,023 during the years ended December 31,
1998 and 1997, respectively. Additional trunking, labor and other costs were
incurred to operate and maintain the Company's growing network.

SALES AND MARKETING

Costs incurred were $3,394 in 1998 and $2,844 in 1997. The increase resulted
from an increase in the size of the sales team and the change in the commission
structure to encourage revenue growth and sales of value-added, higher-margined
services. The previous commission plan was unit-volume oriented. Print
advertising remained consistent for both years.

GENERAL AND ADMINISTRATIVE

These costs totaled $5,657 and $4,211 in 1998 and 1997, respectively. As a
percentage of revenue, these costs were about 24% of service revenues for both
1998 and 1997. Approximately $1,000 of the increase was attributed to the
expansion of the Company's customer service call centers, information systems
and administrative capabilities to support the growing subscriber base.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization in 1998 and 1997 was $4,323 and $3,378,
respectively. The increase was primarily due to the growth of the Company's
rental pager pool.

PROVISION FOR INCOME TAXES

The provision for income taxes was $296 and $168 in 1998 and 1997, respectively.
Excluding the interest and certain other minor administrative expenses incurred
by Aquis during its start-up activities in 1998, the effective tax rates for
1998 and 1997 approximated 41%. During these two years, the income and expenses
of the Predecessor Company were included in the consolidated Federal and certain
combined state income tax returns of its parent and the provisions for income
taxes have been calculated on a separate return basis herein. See the footnotes
to the consolidated financial statements.


                                       18
<PAGE>


RECENT ACCOUNTING PRONOUNCEMENTS

In December, 1999 the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), REVENUE RECOGNITION IN FINANCIAL STATEMENTS,
amended in March, 2000, which provides guidance on the application of generally
accepted accounting principles to revenue recognition in financial statements.
The Company will adopt SAB 101 in the second quarter of 2000 and believes that
adoption will not have a significant effect on its consolidated results of
operations or its financial position.

LIQUIDITY AND CAPITAL RESOURCES

The Company requires substantial funds to finance the growth of its existing
operations and customer base, expansion into new markets and strategic
acquisitions. Additional cash is required for debt service, working capital and
general corporate purposes.

The Company's net cash provided from operating activities was $4,643 and $2,456
as of December 31, 1999 and 1998, respectively. The increase in operating cash
flows is primarily due to the Company's ability to defer payments to vendors and
suppliers during 1999. The Company does not anticipate that this trend will
continue as such deferment was required due to working capital deficiencies
experienced in 1999. However, the Company does not believe that such trends will
reverse in the 2000. There are several other factors that have impacted the
operations of the Company and the industry during 1999:

-    The paging industry experienced substantial and continued consolidation
     during 1999. As a result, there has been concern about profitability and
     liquidity with respect to many companies in the industry. In response to
     investor concerns, the management of several major paging companies
     announced their intention to shift from a price competitive strategy
     designed to increase subscriber count, to a strategy intended to focus on
     operating margins. This strategic shift is expected to slow the decline in
     ARPU experienced by the industry. Increased penetration of higher priced
     alphanumeric service, as well as value-added services, are also expected to
     strengthen ARPU.

     In response to these trends, management has developed and implemented
     several strategic initiatives. Management's original plan of growth through
     strategic acquisitions has been refined to focus on service providers in
     the telecommunications and internet related industries. Acquisitions
     meeting the Company's growth and value objectives will be targeted as third
     party financing becomes available or in circumstances that will permit such
     business combinations to be completed using equity. The Company has also
     renewed its focus on growth of its core business and improvement in
     utilization of its paging system capacity. The Company has developed
     alternative sales initiatives and additional strategic alliances; these
     combine paging, email and the internet, include advertising programs in
     which cost is based primarily on completed sales, and call for the use of
     its paging network to broadcast information for content providers on a
     metered basis.

     Capital expenditures for the core business are not expected to increase in
     2000. However, the Company plans to expand its two-way messaging business
     and to focus on the development of its internet subsidiary, Aquis IP.
     Current plans estimate that $3,000 would be required for the year 2000 to
     fund the expected growth in these areas, primarily for internet licensing
     and working capital requirements and such funds are anticipated to be
     provided by third party financing. In the event that such financing is not
     obtained the Company is prepared to sell Aquis IP.

-    During 1999 revenues significantly exceeded those of 1998 primarily due
     to the Paging Partners acquisition. The Company experienced continued
     pricing pressure from competition in its markets, resulting in
     decreasing ARPU, increased subscriber churn rates and lower operating
     margins. The units in service increased primarily due to the Paging
     Partners merger. The Company plans on improving its customer retention
     efforts and to continue its marketing efforts to expand its units in
     service and will consider strategic acquisitions to increase the
     customer base.

-    Certain integration issues connected with the Paging Partners merger
     contributed to a decline in total reseller units during 1999. The Company
     did not support the reseller operations to the level of service previously
     provided by Paging Partners. The Company has started a significant
     marketing effort to regain some of the lost resellers.


                                       19
<PAGE>


-    During the fourth quarter, as a result of a lack of working capital to
     purchase a sufficient number of new units, the Company was unable to meet
     sales demand and to service the needs of the existing subscriber base.

The Company's plan to offset these trends include ( i ) negotiating more
favorable terms from paging equipment manufacturers and vendors, ( ii )
obtaining third party financing and ( iii ) the possible sale of non-core assets
and businesses. The Company believes that cash from operations combined with
current cash and cash equivalents will be adequate to finance the existing
business but will require additional sources of funding to expand the business.

During 1999, the Company used cash of $23,300 in connection with business
acquisitions and for the purchase of property plant and equipment. This
represents an increase of $19,319 over the 1998 net cash used in investing
activities. The increase is primarily related to the $21,200 of cash used
related to various business combinations offset by a decrease in capital
expenditures in 1999 as compared to 1998.

For the years ended December 31, 1999 and 1998 net cash provided from
financing activities was $19,630 and $1,564, respectively. The increase is
related to borrowings under the Company's senior credit facility and an
installment loan. The Company received $26,615 in connection with such
borrowings and used such amounts to finance the acquisitions noted above and
to pay off existing notes and obligations. The Company borrowed an additional
$2,450 in January 2000 for an acquisition and concurrently agreed with its
lender to forego any further borrowings under this facility. On April 12,
2000, the Company made a payment of $1,250 towards such amount and the
balance is payable over the same term as the existing senior facility. The
Company was not in compliance with a certain debt covenant at December 31,
1999 with respect to their senior facility and the lender issued a waiver of
the covenant in default and amended the agreement for future periods.
Including the additional funds borrowed in January 2000, quarterly principal
payments to the lender will begin on July 1, 2000, with a total of $520 due
in 2000.

On April 10, 2000, Aquis entered into an agreement to obtain a $2 million
bridge loan as interim funding pending completion of additional prospective
financing. The debt is subordinate to the Company's senior debt and is
unsecured. This agreement provides for an interest rate of 11%, a scheduled
maturity date in September, 2001 and also provides for interest to accrue
until the earlier of its maturity date or conversion. At the lender's
election not earlier than 120 days from the date of funding, this loan is
convertible into the Company's common stock at 90% of the then-current market
value. At the Company's election, the loan is redeemable at 105% of face
value if such election is made within the initial 90 days subsequent to
funding, or at 110% of face value if redemption is elected within 91 to 118
days, or, if elected thereafter, at 115% of face value. Proceeds from this
loan were used to make the $1,250 payment in connection with the January 2000
borrowings. The proceeds were used to pay certain fees incurred in connection
with the lender loan modifications arranged during 2000, to pay certain costs
incurred in connection with this bridge loan, and the balance will provide
about $400 to be used for general corporate purposes.

At December 31, 1999 the Company had a working capital deficit of about $3,900.
The Company's working capital was impacted by the use of cash to finance
acquisitions and by costs incurred in connection with the abandoned acquisitions
and the costs accrued to settle certain employment-related claims made by the
Company's former President. The Company anticipates that its working capital
position will improve in 2000. The Company believes that it will generate
sufficient cash flows from operations to fund estimated working capital
requirements and will have the ability to obtain third party financing if such
working capital requirements exceed management's estimates. In January 2000, the
Company settled liabilities of about $850 through the issuance of debt and
stock.

The Company's principal source of liquidity at December 31, 1999 included cash
and cash equivalents of about $1,000 and its ability to generate cash from
operations, which totaled $4,643 during 1999. The Company believes that its
current cash and equivalents and the cash it expects to generate from operations
will be sufficient to meet its anticipated working capital and capital
expenditure requirements through at least the end of 2000. However, if cash from
operations is not sufficient to fund the planned growth of the core business and
the internet business or if the Company experiences further subscriber and ARPU
deterioration or if certain contingencies are resolved unfavorably, the Company
is prepared to implement an alternative business plan (the "Alternative Plan").
The Alternative Plan calls for the sale of the internet subsidiary and other
assets and for a reduction of planned marketing expenditures and capital
expenditures. Cash requirements of the paging business may vary materially from
those now planned as a result of unforeseen changes that could consume a
significant portion of available resources or as a result of an increased rate
of attrition of the customer base.


                                       20
<PAGE>


YEAR 2000

The Company's Year 2000 initiatives have been successful to date. Aquis'
approach to this issue was to subdivide its Year 2000 remediation program into
four distinct segments: 1) create a prioritized inventory of items to be
assessed, 2) assess their readiness through testing, 3) plan and implement
corrective actions, and 4) develop contingency plans. The Company has
transitioned all of its significant systems to the new millennium without
experiencing significant problems in any areas.

The Company's contingency planning has provided for plans to respond to any
known Year 2000 concerns that may affect its day-to-day operations or its
infrastructure. Aquis is not currently aware of any significant Year 2000 or
similar problems that have arisen for its customers or suppliers. Therefore,
management believes it has minimized its risk related to future exposure
concerning year 2000 issues. The Company intends to continue to monitor Year
2000 issues and does not believe such future costs will be material to the
Company's results of operations, financial position or liquidity.

SEASONALITY

Pager usage is slightly higher during the spring and summer months, which is
reflected in higher incremental usage fees. Retail sales were subject to
seasonal fluctuations that affect retail sales generally. Otherwise, the results
were generally not significantly affected by seasonal factors.

FORWARD-LOOKING STATEMENTS

Future revenues, costs, product mix and new product acceptance are all
influenced by a number of factors that are inherently uncertain and difficult to
predict. Therefore, no assurance can be given that financing for such
investments will be available. In addition, no assurance can be given that the
Company's operations will generate positive cash flows. This Management's
Discussion and Analysis of Financial Condition and Results of Operations contain
forward-looking statements made by the Company's management that are based on
current expectations, estimates and projections about the industries in which
the Company operates and management's beliefs and assumptions. In addition,
other written or oral statements, which constitute forward-looking statements,
may be made by or on behalf of the Company. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," or various
of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. The Company undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         As of December 31, 1999, the Company had approximately $26,460 of
floating-rate debt outstanding. The Company's management believes the
interest rate risk represented by this debt is not material. The Company has
not, and does not plan to, enter into any derivative financial instruments
for trading or speculative purposes. As of December 31, 1999, the Company had
no other significant material exposure to market risk.

ITEM  8.     FINANCIAL STATEMENTS

             See Index to Financial Statements, Page F-1.

ITEM  9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL DISCLOSURE


                                       21
<PAGE>


             Not Applicable.


                                       22
<PAGE>


                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information with respect to Item 9 is set forth in the Company's Proxy
Statement for its 2000 Annual Meeting of Stockholders (the "2000 Proxy
Statement") and is incorporated herein by reference

ITEM 11.         EXECUTIVE COMPENSATION

         Information with respect to Item 10 is set forth in the 2000 Proxy
Statement and is incorporated herein by reference.

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information with respect to Item 11 is set forth in the 2000 Proxy
Statement and is incorporated herein by reference.

ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information with respect to Item 12 is set forth in the 2000 Proxy
Statement and is incorporated herein by reference.

ITEM 14.         EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         A.      FINANCIAL STATEMENTS

         See page F-1.

         B.      FINANCIAL STATEMENT SCHEDULES

         All schedules have been omitted since they are either not applicable
or not required, or because the information required is included in the
financial statements and notes thereto.

         C.      EXHIBITS

         The following documents are filed as part of this report:

<TABLE>
<CAPTION>
EXHIBIT NO.                                            DESCRIPTION OF EXHIBIT
-----------                                            ----------------------

<S>               <C>
2.1               Agreement and Plan of Merger with BAP Acquisition Corp. (1)

2.2               Asset Purchase Agreement dated as of August 2, 1999 by and
                  among Aquis Communications, Inc., SourceOne Wireless, Inc.,
                  SourceOne Wireless, L.L.C. and SourceOne Wireless II, L.L.C.
                  (2)

2.2               Amendment to Asset Purchase Agreement dated as of November 15,
                  1999. (2)

2.3               Agreement Pending Purchase Closing dated as of August 2, 1999
                  by and among Aquis Communications, Inc., SourceOne Wireless,
                  Inc., SourceOne Wireless, L.L.C. and SourceOne Wireless II,
                  L.L.C. (2)

2.4               Order of the United States Bankruptcy Court of the Northern
                  District of Illinois (Eastern District) (A) Authorizing and
                  Approving the Sale of Certain of the Debtors' Assets Pursuant
                  to the Asset Purchase Agreement with Aquis Communications,
                  Inc., (B) Authorizing and Approving Procedures for Assumption
                  and Assignment or Rejection of Unexpired Leases and Executory
                  Contracts and (C) Granting Related Relief dated as of November
                  18, 1999. (2)

2.5               Stock Purchase Agreement dated June 15, 1999, by and among
                  Aquis Communications, Inc., SunStar Communications, Inc.,
                  SunStar Communications, Inc. and SunStar One, LLC. (3)

2.6               Asset Purchase Agreement, dated as of July 2, 1998, by and
                  among Bell Atlantic - Delaware, Inc., Bell Atlantic-Maryland,
                  Inc., Bell Atlantic - New Jersey, Inc., Bell Atlantic -
                  Pennsylvania, Inc., Bell Atlantic-Virginia, Inc., Bell
                  Atlantic - Washington, D.C., Inc., Bell Atlantic - West
                  Virginia, Inc., Bell Atlantic Paging, Inc. and BAP Acquisition
                  Corp. (4)
</TABLE>


                                       23
<PAGE>


<TABLE>

<S>               <C>
2.7               Consent and Amendment No. 1 to Asset Purchase Agreement, dated
                  as of November 3, 1998 by and among Bell Atlantic - Delaware,
                  Inc., Bell Atlantic - Maryland, Inc., Bell Atlantic New
                  Jersey, Inc., Bell Atlantic - Pennsylvania, Inc., Bell
                  Atlantic - Virginia, Inc., Bell Atlantic - Washington, D.C.,
                  Inc., Bell Atlantic - West Virginia. (4)

3.1               Certificate of Amendment to Restated Certificate of
                  Incorporation of the Registrant (5)

3.2               Bylaws of the Registrant. (6)

4.1               Form of Common Stock Certificate. (6)

4.2               Form of Warrant Certificate. (6)

4.3               Certificate of Designation, Preferences and Rights of 7 1/2%
                  Redeemable Preferred Stock of Aquis Communications Group, Inc.
                  (2)

10.9              Amended and Restated 1994 Incentive Stock Option Plan, as
                  amended. (9)

10.10             Settlement Agreement, dated as of June 9, 1999 by and among
                  Bell Atlantic-Delaware, Inc., Bell Atlantic-Maryland, Inc.,
                  Bell Atlantic-New Jersey, Inc., Bell Atlantic-Pennsylvania,
                  Inc., Bell Atlantic-Virginia, Inc., Bell Atlantic-Washington,
                  D.C., Inc., Bell Atlantic-West Virginia, Inc., Bell Atlantic
                  Paging, Inc. and Aquis Communications, Inc. (3)

10.11             Indemnity Escrow Agreement dated June 30, 1999 by and among
                  SunStar One, LLC, Aquis Communications, Inc. and Phillips
                  Nizer Benjamin Krim and Ballon, LLC. (3)

10.12             Registration Rights Agreement dated June 15, 1999 by and
                  between Aquis Communications, Inc. and SunStar One, LLC. (3)

10.13             Asset Purchase Agreement dated June 10, 1999 by and among
                  Aquis Communications Group, Inc., Aquis Communications, Inc.,
                  Francis Communications Texas, Inc. and Francis Communications
                  I, LTD. (3)

10.14             Pre-Closing Escrow Agreement dated June 10, 1999 by and
                  between Francis Communications I, LTD, Aquis Communications,
                  Inc. and Chase Bank of Texas, NA. (3)

10.15             Asset Purchase Agreement dated September 28, 1999 by and among
                  Aquis Wireless Communications, Inc., Aquis Communications
                  Group, Inc., ABC Cellular Corporation and ABC Paging, Inc. (7)

10.16             Loan Agreement, dated as of December 31, 1998, by and between
                  Aquis Communications, Inc. and FINOVA Capital Corporation as
                  Agent. (8)

10.17             Note, dated December 31, 1998, of Aquis Communications, Inc.
                  in the original principal amount of $30,000,000. (8)

10.18             First Amendment to Loan Instruments, dated as of March 31,
                  1999, by and between Aquis Communications, Inc. and FINOVA
                  Capital Corporation. (8)

10.19             Guaranty (Equipment Lease), dated as of March 31, 1999, of
                  Aquis Communications Group, Inc. (8)

10.20             Guaranty, dated as of March 31, 1999, of Aquis Communications
                  Group, Inc. (8)

10.21             Security Agreement, dated as of March 31, 1999, executed by
                  Aquis Communications Group, Inc. (8)

10.22             Pledge Agreement, dated as of March 31, 1999, executed by
                  Aquis Communications Group, Inc. (8)
</TABLE>


                                       24
<PAGE>


<TABLE>
<S>               <C>
10.23             Equipment Lease, dated as of March 31, 1999, between Aquis
                  Communications, Inc. and FINOVA Capital Corporation. (8)

10.24             Employment Agreement dated as of July 7, 1998 between BAP
                  Acquisition Corp and John X. Adiletta. (9)

10.25             Letter Agreement amending Employment Agreement dated July
                  7, 1998 between BAP Acquisition Corp and John X. Adiletta.
                  (9)

10.26             Employment Agreement between D. Brian Plunkett and BAP
                  Acquisition Corp. (9)

10.27             Letter Agreement amending Employment Agreement dated July
                  7, 1998, as amended, between John X. Adiletta and BAP
                  Acquisition Corp. and Employment Agreement between D. Brian
                  Plunkett and BAP Acquisition Corp. (9)

10.28             Employment Agreement dated as of January 4, 2000 between the
                  Company and Nick T. Catania (9)

10.29             Amendment dated April 7, 2000 to Employment Agreement dated
                  January 4, 2000 between the Company and Nick T. Catania (9)

10.30             Option Agreement dated as of January 4, 2000 between the
                  Company and Nick T. Catania (9)

10.31             Amended and Restated Loan Agreement dated as of January 31,
                  2000 between the Company and Finova Capital Corporation. (9)

10.32             First Amendment to Loan Instruments dated as of April 10, 2000
                  between the Company and Finova, Capital Corporation. (9)

10.33             Loan Agreement dated as of March 31, 2000 between the Company
                  and AMRO International, S.A. (9)

10.34             Common Stock Purchase Agreement dated as of April 9, 2000
                  between the Company and Coxton, Limited. (9)

10.35             Settlement Agreement and Release and Waiver of Claims between
                  the Company and John X. Adiletta. (9)

23                Consent of Independent Accountants (9)

27                Financial Data Schedule (9)
</TABLE>

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

(1)      Incorporated by reference to the Company's Current Report on Form 8-K
         dated November 6, 1998

(2)      Incorporated by reference to the Company's Current Report on Form 8-K
         dated February 15, 2000

(3)      Incorporated by reference to the Company's Current Report on Form 10-Q
         for the quarter ended June 30, 1999

(4)      Incorporated by reference to the Company's Quarterly Report Form 10-Q
         for the quarter ended March 31, 1999.

(5)      Incorporated by reference to the Company's Proxy Statement, dated March
         11, 1999, filed with the Commission.

(6)      Incorporated by reference to the Company's Registration Statement on
         Form SB-2 (Registration No. 33-76744).

(7)      Incorporated by reference to the Company's Quarterly Report on Form
         10-Q for the quarter ended September 30, 1999.

(8)      Incorporated by reference to the Company's Current Report on Form 8-K
         dated April 15, 1999.


                                       25
<PAGE>


(9)      Filed herewith.

         C.      REPORTS ON FORM  8-K

         None.


                                       26
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 and 15(d) 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.

Dated: April 14, 2000

                                              AQUIS COMMUNICATIONS GROUP, INC.

                                              (Registrant)

                                              By:   /s/ Nick T. Catania
                                                   --------------------------
                                                   Nick T. Catania, President

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
        SIGNATURE                                             TITLE                                  DATE
        ---------                                             -----                                  ----
<S>                                    <C>                                                   <C>
/s/Patrick M. Egan                     Chairman of the Board of Directors                    April 14, 2000
------------------------------
Patrick Egan

/s/Nick T. Catania                     President and Chief                                   April 14, 2000
------------------------------         Executive Officer
Nick T. Catania

/s/D. Brian Plunkett                   Vice President, Treasurer, Secretary, and             April 14, 2000
------------------------------         Principal Financial and Accounting Officer
D. Brian Plunkett

/s/Robert Davidoff                     Director                                              April 14, 2000
------------------------------
Robert Davidoff

/s/John B. Frieling                    Director                                              April 14, 2000
------------------------------
John Frieling

/s/Michael Salerno                     Director                                              April 14, 2000
------------------------------
Michael Salerno
</TABLE>


                                       27
<PAGE>


                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                                      INDEX
<TABLE>
<S>                                                                        <C>
Reports of Independent Certified Public Accountants.................       F-2
Consolidated Balance Sheets.........................................       F-4
Consolidated Statements of Operations...............................       F-5
Consolidated Statements of Changes in Stockholders' Equity..........       F-6
Consolidated Statements of Cash Flows...............................       F-7
Notes to Consolidated Financial Statements..........................       F-9
</TABLE>


                                       F-1
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Aquis Communications Group, Inc:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, stockholders' equity, and cash flows
of Aquis Communications Group, Inc. and Subsidiaries ("Company") present
fairly, in all material respects, the financial position of the Company at
December 31, 1999 and December 31, 1998, and the results of its operations
and cash flows for the year ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States. These
financial statements are the responsibility of management; our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits of these financial statements in accordance with
auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

New York, New York
March 28, 2000, except for
Note 22 for which the date is
April 12, 2000


<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Aquis Communications Group, Inc:

In our opinion, the accompanying statements of operations and cash flows of Bell
Atlantic Paging, Inc. (the "Predecessor Company") present fairly, in all
material respects, the results of its operations and cash flows for the two
years in the period ended December 31, 1998 in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.


/s/ PricewaterhouseCoopers LLP

New York, New York
February 12, 1999


<PAGE>


                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                  (IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                               ------------
                                                                                       1999                 1998
                                                                                       ----                 ----

<S>                                                                                   <C>              <C>
ASSETS
   Current assets:
      Cash and cash equivalents ..............................................        $    973         $     --
      Accounts receivable (net of allowances of
        $939 and $490, respectively) .........................................           4,933            2,061
      Inventory, net .........................................................             228            2,076
      Acquisition escrow deposits ............................................             200               --
      Prepaid expenses and other current assets ..............................           1,072            1,012
                                                                                      --------         --------
        Total current assets .................................................           7,406            5,149
   Property and equipment, net ...............................................          10,461           10,107
   Intangible assets, net ....................................................          20,092           16,749
   Deferred charges and other assets .........................................           1,365              330
                                                                                      --------         --------
   Total Assets ..............................................................        $ 39,324         $ 32,335
                                                                                      ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:

      Current maturities of long term debt ...................................        $    508         $     --
      Accounts payable .......................................................           6,750            1,769
      Accrued expenses .......................................................           2,535              236
      Deferred revenue .......................................................             930            1,033
      Customer deposits ......................................................             577              577
      Notes payable to stockholders ..........................................              --              520
                                                                                      --------         --------
         Total current liabilities ...........................................          11,300            4,135

   Long term debt ............................................................          25,963               --
   Note payable ..............................................................              --            4,150
   Payable to Bell Atlantic Corp. and affiliates .............................              --           18,535
                                                                                      --------         --------
   Total liabilities .........................................................          37,263           26,820
                                                                                      --------         --------
   Commitments and contingencies

   Stockholders' equity:
   Preferred stock, $0.01 par value, 1,000,000 and 80,000 shares authorized in
      1999 and 1998, respectively; none issued 1999,
      78,000 issued and outstanding at December 31, 1998 .....................              --            5,830
   Common stock, $0.01 par value, 75,000,000
      shares authorized, 16,551,000 and 22,000 issued and
      outstanding at December 31, 1999 and 1998, respectively ................             166               --
   Additional paid-in capital ................................................          13,195              221
   Accumulated deficit .......................................................         (11,175)            (296)
   Note receivable from stockholder ..........................................            (125)            (240)
                                                                                      --------         --------
   Total stockholders' equity ................................................           2,061            5,515
                                                                                      --------         --------
   Total liabilities and stockholders' equity ................................        $ 39,324         $ 32,335
                                                                                      ========         ========
</TABLE>

The accompanying notes are an integral part of these financial statements.


<PAGE>


                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)
<TABLE>
<CAPTION>

                                                                         YEARS ENDED DECEMBER 31,
                                                                         ------------------------
                                                             1999                 1998               1997
                                                             ----                 ----               ----
                                                                              PREDECESSOR          PREDECESSOR
<S>                                                     <C>                  <C>                  <C>
Revenues:
   Paging services .............................        $     30,368         $     23,309         $     17,894
   Equipment sales .............................                 791                3,123                2,795
                                                        ------------         ------------         ------------
         Total revenues ........................              31,159               26,432               20,689
                                                        ------------         ------------         ------------

Operating expenses:
   Paging services .............................               7,753                4,968                4,401
   Technical ...................................               5,317                3,482                2,023
   Cost of equipment sold ......................                 947                2,709                2,873
   Selling and marketing .......................               3,881                3,394                2,844
   General and administrative ..................               7,676                5,657                4,211
   Depreciation and amortization ...............              10,878                4,323                3,378
   Provision for doubtful accounts .............                 919                1,154                  538
   Costs of abandoned acquisitions .............               1,692                   --                   --
                                                        ------------         ------------         ------------
         Total operating expenses ..............              39,063               25,687               20,268
                                                        ------------         ------------         ------------

Operating (loss) income ........................              (7,904)                 745                  421

Interest expense, net ..........................              (3,004)                  --                   --
Gain on sale of equipment ......................                  29                   --                   --
                                                        ------------         ------------         ------------

(Loss) Income before income taxes and
   extraordinary item ..........................             (10,879)                 745                  421

Provision for income taxes .....................                  --                 (296)                (168)
                                                        ------------         ------------         ------------

Income before extraordinary item ...............             (10,879)                 449                  253

Extraordinary item, net of income taxes of $454                   --                  682                   --
                                                        ------------         ------------         ------------

NET (LOSS) INCOME ..............................        $    (10,879)        $      1,131         $        253
                                                        ============         ============         ============

NET LOSS PER COMMON SHARE:
      Basic and diluted ........................        $      ($.76)
                                                        ============

      Weighted average common shares outstanding          14,233,000
                                                        ============
</TABLE>


The accompanying notes are an integral part of these financial statements.


<PAGE>


                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
                  (IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)

<TABLE>
<CAPTION>
                                        Common Stock            Preferred Stock

                                                                                    ADDITIONAL
                                                                                     PAID-IN     ACCUMULATED
                                    SHARES        AMOUNTS      SHARES    AMOUNTS     CAPITAL       DEFICIT
                                    ------        -------      ------    -------    ----------   ----------

<S>                               <C>            <C>           <C>       <C>        <C>          <C>
Balance as of January 1, 1998         99             $ --        --        $ --         $--         $ --
(date capitalized)

Issuance of shares to the
Founders of Aquis in
connection with  their              7,991              --        --          --          --           --
individual stock
subscriptions in January 1998

Value ascribed to the issuance
of shares to the Founders of
Aquis  In July 1998                 2,910              --        --          --           39          --

Value ascribed to the issuance
of shares in connection with
the   issuance of promissory        7,500              --        --          --          108          --
notes in July 1998

Value ascribed to the issuance
 of shares to one of the            2,000              --        --          (54)         54          --
 purchasers of preferred stock
 in November 1998

Value ascribed to the issuance
of shares to one of the note
holders in July 1998                1,500             --         --          --           20          --

Issuance of preferred stock           --              --      78,000       5,884         --           --

Net loss                              --              --         --          --          --          (296)

Notes received from
 stockholder in connection            --              --         --          --          --           --
 with the purchase of
 preferred stock
                                 ------------- -------------- --------- -----------  ----------  -------------
Balance as of December 31, 1998   22,0000             --      78,000       5,830         221         (296)

Recapitalization completed in
connection with the merger
with Paging Partners March 31,    15,199,000         152     (78,000)     (5,830)     11,313          --
1999

Shares issued in SunStar           1,150,000          12         --          --        1,550          --
acquisition

Reduction of note due from
stockholder in connection with
settlement of claim

Shares issued to Directors on
December 15, 1999                    180,000           2         --          --          111          --

Net loss                              --             --          --          --          --       (10,879)
                                 ------------- -------------- --------- -----------  ----------  -------------
Balance as of December 31, 1999   16,551,000        166          --         --        13,195      (11,175)
                                 ============= ============== ========= ===========  ==========  =============
</TABLE>

<TABLE>
<CAPTION>
                                       NOTES         TOTAL
                                     RECEIVABLE-  STOCKHOLDERS
                                    STOCKHOLDER      EQUITY
                                    ------------  ------------

<S>                                     <C>         <C>
Balance as of January 1, 1998           $ --          $ --
(date capitalized)

Issuance of shares to the
Founders of Aquis in
connection with  their                    --            --
individual stock
subscriptions in January 1998

Value ascribed to the issuance
of shares to the Founders of
Aquis  In July 1998                       --             39

Value ascribed to the issuance
of shares in connection with
the   issuance of promissory              --            108
notes in July 1998

Value ascribed to the issuance
 of shares to one of the                  --             --
 purchasers of preferred stock
 in November 1998

Value ascribed to the issuance
of shares to one of the note
holders in July 1998                      --              20

Issuance of preferred stock               --           5,884

Net loss                                  --            (296)

Notes received from
 stockholder in connection              (240)           (240)
 with the purchase of
 preferred stock
                                      ------------ -------------
Balance as of December 31, 1998         (240)          5,515

Recapitalization completed in
connection with the merger
with Paging Partners March 31,            --           5,635
1999

Shares issued in SunStar                  --           1,562
acquisition

Reduction of note due from
stockholder in connection with                           115
settlement of claim                      115

Shares issued to Directors on
December 15, 1999                         --             113

Net loss                                  --         (10,879)
                                      ------------   ---------
Balance as of December 31, 1999         (125)          2,061
                                      ============   =========
</TABLE>

The accompanying notes are an integral part of these financial statements.


<PAGE>


                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                     YEARS ENDED DECEMBER 31,
                                                                                     ------------------------
                                                                             1999             1998               1997
                                                                             ----             ----               ----
                                                                                           PREDECESSOR       PREDECESSOR
<S>                                                                         <C>             <C>             <C>
Cash flows from operating activities:

 Net (loss) income ....................................................     $(10,879)       $  1,131        $    253
 Adjustments to reconcile net loss to net
   cash provided by operating activities:
   Gain on sale of business ...........................................           --          (1,136)             --
   Depreciation and amortization ......................................       10,878           4,323           3,378
   Costs of abandoned business combinations ...........................        1,692              --              --
   Amortization of deferred financing costs ...........................          141              --              --
   Stock-based compensation ...........................................          113              --              --
   Reduction of note due from stockholder .............................          115              --              --
   Deferred income taxes ..............................................           --            (590)           (552)
   Provision for doubtful accounts ....................................          919           1,154             538
   Provision for inventory obsolescence ...............................           --            (136)            316
   (Gain) loss on sale of property and equipment ......................          (29)            232              49
 Changes in operating assets and liabilities, before effects of
   business acquisitions:
   Accounts receivable ................................................       (3,479)         (1,238)           (699)
   Due from affiliates for trade ......................................           --          (1,821)           (793)
   Inventory ..........................................................         (135)           (394)          1,416
   Prepaid expenses and other current assets ..........................           15            (543)             (5)
   Other assets .......................................................           --              --               7
   Accounts payable and accrued expenses ..............................        5,579           1,160             (11)
   Income taxes payable ...............................................           --             848             247
   Intercompany payable ...............................................           --            (569)           (581)
   Deferred revenues and customer deposits ............................         (287)             35            (186)
                                                                            --------        --------        --------
   Net cash provided by operating activities ..........................        4,643           2,456           3,377
                                                                            --------        --------        --------
</TABLE>

The accompanying notes are an integral part of these financial statements.


<PAGE>


                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS, CONTINUED)

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                                          ------------------------
                                                               1999                1998              1997
                                                               ----                ----              ----
                                                                                PREDECESSOR       PREDECESSOR

<S>                                                         <C>                 <C>                 <C>
Cash flows from investing activities:
   Business acquisitions ...........................         (18,940)                 --                  --
   Acquisition of property, equipment and licenses .          (2,275)             (4,217)             (4,930)
   Deferred business acquisition costs .............          (2,230)                 --                  --
   Acquisition escrow deposits .....................            (200)                 --                  --
   Sale of property and equipment ..................             345                 236                 200
                                                            --------            --------            --------
      Net cash used by investing activities ........         (23,300)             (3,981)             (4,730)
                                                            --------            --------            --------

Cash flows from financing activities:
   Issuance of long term debt ......................          26,615                  --                  --
   Repayment of notes payable to stockholders ......            (520)                 --                  --
   Repayment of notes payable ......................          (4,150)                 --                  --
   Repayment of long term debt .....................            (144)                 --                  --
   Repayment of capital lease obligation ...........          (1,506)                 --                  --
   Deferred financing costs ........................            (665)                 --                  --
   Due to affiliates ...............................              --               1,564               1,339
                                                            --------            --------            --------
      Net cash provided by financing activities ....          19,630               1,564               1,339
                                                            --------            --------            --------

Net increase (decrease) in cash and cash equivalents             973                  39                 (14)

Cash and cash equivalents - beginning of year ......              --                  31                  45
                                                            --------            --------            --------

Cash and cash equivalents - end of year ............        $    973            $     70            $     31
                                                            ========            ========            ========
</TABLE>

The accompanying notes are an integral part of these financial statements.


<PAGE>


                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1999, 1998 AND 1997
           (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE INFORMATION)

1.       ORGANIZATION AND DESCRIPTION OF THE BUSINESS:

Aquis Communications Group, Inc. (the "Company") is a holding company,
incorporated in the State of Delaware. Through its operating companies, it
operates two regional paging systems providing one-way wireless alpha and
numeric messaging services in portions of thirteen states principally in the
Northeast and Mid-Atlantic regions of the United States, as well as the District
of Columbia. The Company has recently entered the Midwestern region through a
purchase of certain assets completed on January 31, 2000, the Company has
expanded its geographical reach to six additional states in the mid-west. The
Company, resells nationwide and regional services, offers alpha dispatch, news
and other messaging enhancements, and sells internet access services through a
wholly-owned subsidiary. Its customers include individuals, businesses,
government agencies, hospitals and resellers.

On March 31, 1999, a wholly owned subsidiary of Paging Partners Corporation
("Paging Partners"), merged with Aquis Communications, Inc. ("ACI") in a
transaction accounted for as a reverse acquisition with ACI as the accounting
acquirer. At that time, Paging Partners changed its name to Aquis Communications
Group, Inc. (the "Company"). The historical financial statements prior to March
31, 1999, are those of ACI. ACI had no operating activities prior to the
acquisition of BAPCO on December 31, 1998. The statements of operations and of
cash flows for the years ended December 31, 1998 and 1997 represent the
financial statements of the Predecessor Company for such periods. The
Predecessor Company financial statements include allocations of certain Bell
Atlantic Corporation ("Bell Atlantic") revenues and expenses. Management
believes that these allocations are reasonable. However, the revenues and
expenses allocated are not necessarily indicative of the revenues and expenses
that would have been earned or incurred if the Predecessor Company had performed
or procured these functions as a separate entity.

On June 15, 1999, a wholly-owned subsidiary of the Company entered into a stock
purchase agreement with SunStar Communications, Inc. in a transaction that was
accounted for as a purchase.

The accompanying consolidated financial statements include the accounts of the
Company and its subsidiaries, and reflect the merger with Paging Partners, as
well as the acquisition of SunStar Communications, Inc., and the acquisition of
the net assets of Bell Atlantic Paging, Inc. ("BAPCO" or the "Predecessor
Company") on December 31, 1998. All material intercompany accounts and
transactions have been eliminated in consolidation.

The Company's principal source of liquidity at December 31, 1999 included
cash and cash equivalents of about $1,000 and its ability to generate cash
from operations, which totaled $4,643 during 1999. The Company believes that
its current cash and equivalents and the cash it expects to generate from
operations will be sufficient to meet its anticipated working capital and
capital expenditure requirements through at least the end of 2000. However,
if cash from operations is not sufficient to fund the planned growth of the
core business and the internet business or if the Company experiences further
deterioration of its average revenue per unit ("ARPU") or if certain
contingencies are resolved unfavorably, the Company is prepared to implement
an alternative business plan (the "Alternative Plan"). The Alternative Plan
calls for the sale of the internet subsidiary and other assets and for a
reduction of planned marketing expenditures and capital expenditures. Cash
requirements of the paging business may vary materially from those now
planned as a result of unforeseen changes that could consume a significant
portion of available resources or as a result of an increased rate of
attrition of the customer base.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

   REVENUE RECOGNITION:


<PAGE>


Paging service revenues include airtime for paging services, rental fees for
leased paging equipment, and various other fees for such enhanced features as
alpha dispatch services, loss protection and maintenance, and voice mail. These
revenues are recognized as the services are performed or ratably over time in
the case of rental fees. Revenues related to pre-billed services are deferred
until earned. Equipment revenue is recognized when the equipment is delivered to
the customer.

     USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities. These estimates and
assumptions also affect the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Estimates are used for such reported
amounts as the allowance for doubtful accounts, allowances for asset
obsolescence or impairment, the tax benefit valuation allowance, and useful
lives of fixed assets or amortization periods for intangible assets. Actual
results could differ from those estimates.

     CASH AND CASH EQUIVALENTS

All highly liquid investments with an original maturity of 90 days or less are
considered to be cash equivalents.

     INVENTORY

Inventory consists primarily of new pagers held for sale or lease. Inventories
are stated at the lower of cost or market, with cost determined on a first-in,
first-out basis.

     PROPERTY AND EQUIPMENT

Property and equipment is stated at cost, net of depreciation and amortization.
The property and equipment acquired through merger or business combination is
recorded at estimated fair value. Included are the Company's rental pagers,
paging network assets, data processing equipment, office furniture and
equipment, and leasehold improvements. These assets are depreciated over their
estimated useful lives using the straight-line method. Leasehold improvements
are amortized over the shorter of their estimated useful lives or the term of
the related lease. Costs to repair or maintain assets without adding to their
lives or improving their value are expensed as incurred. Upon the sale or other
disposal of property or equipment, the cost and related accumulated depreciation
or amortization is eliminated from the accounts and any related gain or loss is
reflected in the Company's results of operations.

     DEFERRED CHARGES

Certain costs directly related to pending business acquisitions are deferred
until the acquisition is completed or abandoned. If completed, such costs are
considered part of the cost to acquire the business. Costs associated with
abandoned acquisition efforts are written off. Costs and fees related to
financing activities are amortized over the term of the related loan.

     CAPITALIZED SOFTWARE

The cost to acquire computer software used in the Company's operations is
capitalized and amortized over three years. Accumulated amortization totaled $45
at December 31, 1999.

     INCOME TAXES

Income taxes are provided based on the liability method of accounting pursuant
to Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes". Accordingly, the balance sheet will reflect anticipated tax
impacts of future taxable income or deductions implicit in the balance sheet in
the form of


<PAGE>


temporary differences. These temporary differences will reflect the difference
between the basis in assets and liabilities as measured in the financial
statements and as measured by tax laws using enacted tax rates.

     FAIR VALUE OF FINANCIAL INSTRUMENTS

Aquis' financial instruments include cash and cash equivalents, accounts and
notes receivable. The fair value of these instruments approximate their
carrying values due to their short-term nature. Because the Company has
floating rate debt, the carrying amount of long-term borrowings also
approximates fair value.

     CONCENTRATION OF RISK

The Company utilizes one provider of nationwide paging services to fulfill the
majority of its requirements for this service. Although there are a limited
number of other nationwide carriers, Management believes that other carriers
could provide similar services under comparable terms. However, a change in
vendor or carrier could cause a delay in service provisioning or a possible loss
of revenue, which could adversely effect operating results. The Company
maintains its cash and cash equivalents in one commercial bank and one money
market fund which invests primarily in high quality money market instruments,
including securities issued by the US government. No single customer is large
enough to present a significant financial risk to Aquis.

     ADVERTISING COSTS

Costs associated with advertising in Yellow Pages or similar directories are
amortized ratably over the periods during which the directories are in current
circulation. Other costs for such items as direct mail ads or promotional items
are expensed as incurred. Total advertising expenses totaled $118, $71, and $82
in 1999, 1998 and 1997, respectively.

     LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the
estimated fair value and the carrying value of the asset.

     STOCK-BASED COMPENSATION

The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related Interpretations in accounting for its
stock plans. Accordingly, no compensation expense has been recognized for its
stock-based compensation plans other than for performance-based awards issued to
non-employees. Compensation costs charged against earnings totaled $127 in 1999.
Further, Aquis has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation."

     RECENT ACCOUNTING PRONOUNCEMENT

In December, 1999 the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "REVENUE RECOGNITION IN FINANCIAL STATEMENTS",
amended in March, 2000, which provides guidance on the application of generally
accepted accounting principles to revenue recognition in financial statements.
The Company will adopt SAB 101 in the second quarter of 2000 and believes that
adoption will not have a significant effect on its consolidated results of
operations or its financial position.

     RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform to the current year
presentation.


<PAGE>


3. MERGER AND RECAPITALIZATION:

On November 6, 1998, ACI entered into a merger agreement with Paging Partners
and its wholly-owned subsidiary whereby each share of ACI common stock was
exchanged for 88.92076 shares of Paging Partners' common stock (the "Merger").
The Merger was consummated on March 31, 1999, and has been accounted for as a
recapitalization of Paging Partners with ACI as the acquirer (reverse
acquisition) under the purchase method of accounting in accordance with
Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations."

The aggregate purchase price of $6,124, which includes transaction costs, has
been allocated to the net assets acquired based upon their estimated fair market
values. The purchase price was determined by using the average quoted stock
price of Paging Partners a few days before and after the date of the Merger. The
assets and liabilities recorded in connection with the purchase price allocation
are based on estimated fair value. Intangible assets of approximately $5,038
(principally customer lists and FCC licenses are being amortized over three to
ten years on a straight-line basis.

  The following unaudited pro forma information presents a summary of the
results of operations as if the Paging Partners merger occurred on January 1,
1998.

<TABLE>
<CAPTION>


PREDECESSOR                         COMPANY        COMPANY
-----------                       ------------    ----------
                                    FOR THE YEARS ENDED
                                        DECEMBER 31,
                                     1999            1998
                                  ------------    ----------

<S>                                <C>             <C>
Revenue                            $ 33,433        $ 36,334
Net loss                           $(11,309)       $ (7,427)

Net loss per common share          $  (0.72)
</TABLE>

The pro forma results are based on various assumptions and are not necessarily
indicative of what would have occurred had these transactions been consummated
on January 1, 1998.

4. PREDECESSOR COMPANY ACQUISITION:

On December 31, 1998, ACI acquired the net assets of BAPCO and the paging
frequencies and the paging network infrastructure owned by various Bell Atlantic
operating telephone companies for approximately $29,200, including transaction
costs. The acquisition was accounted for as a purchase in accordance with APB
Opinion No. 16. The aggregate purchase price was allocated to the net assets
acquired based on their estimated fair market values.

Subsequent to the acquisition and during the quarter ended June 30, 1999, Bell
Atlantic and ACI completed negotiations and settled certain post-closing
disputes. These negotiations pertained to the reimbursement to BAPCO and
assumption by ACI of certain liabilities in excess of amounts originally
acknowledged by ACI, and resulted in ACI's assumption of certain additional
current liabilities. On June 30, 1999, the Company paid the settlement amount in
full and, in addition, exercised its negotiated right to prepay the outstanding
balance of the purchase price at a significantly discounted amount. Funding for
retirement of this debt was provided through the credit facility described in
note 11. This settlement did not have a material effect on the Company's
financial position or the results of its operations or cash flows.

5. MERGERS AND ACQUISITIONS:


<PAGE>


   SUNSTAR COMMUNICATIONS, INC.:

On June 15, 1999, a wholly-owned subsidiary of the Company, entered into a Stock
Purchase Agreement (the "Agreement") with SunStar Communications, Inc.
("SunStar"), an Arizona corporation and SunStar One, LLC., an Arizona limited
liability company. SunStar sells secure internet services over an intelligent
private network, provides dial-up internet access services to corporate and
individual subscribers and can provide enhanced security standards for user
authentication. Total consideration paid for all of the outstanding stock of
SunStar was $275 cash and 1,150,000 shares of the Company's common stock. The
aggregate purchase price, including transaction costs, has been allocated to the
net assets acquired based on their estimated fair market values. Intangible
assets of approximately $2,066 are being amortized on a straight-line basis over
three to 10 years.

6. BUSINESS DEVELOPMENTS:

   SOURCEONE WIRELESS:

On January 31, 2000, the Company completed the acquisition of certain assets of
SouceOne Wireless, a facilities-based provider of one-way paging services to
subscribers in certain Midwestern states. Previously, on August 2, 1999, the
Company entered into an Asset Purchase Agreement (the "Purchase Agreement") and
Agreement Pending Purchase Closing (the "Agreement") with SourceOne Wireless,
Inc. and two of its affiliates ("SOWI"). SOWI and its affiliates filed voluntary
petitions for relief under Chapter 11 with the United States Bankruptcy Court in
the Northern District of Illinois between April 29 and July 2, 1999. Pursuant to
the Agreement, the Company managed the day-to-day operations of certain SOWI
businesses pending the closing of the associated Purchase Agreement. This
closing was subject to various approvals, including that of the Bankruptcy Court
and the FCC. During the management period, a reduction of the purchase price was
negotiated, and resulted in a reduced price of $2,250 in cash and 15,000 shares
of the Company's 7.5% cumulative preferred stock valued at $1,500. Acquisition
costs totaling about $502 were deferred at December 31, 1999, and will be
treated as a cost of the assets acquired on January 31, 2000. Costs to acquire
the assets of SourceOne Wireless were capitalized at December 31, 1999,
including an escrow deposit of $200, since this transaction was closed on
January 31, 2000.

The Company had entered into various negotiations and agreements related to
potential value-driven acquisitions or mergers in 1999 with candidates including
ABC Paging, Inc, Francis Communications Texas, Inc. Intelispan, Inc., COMAV
Corporation, SourceOne Wireless, Inc. and related entities holding economic
interests in these entities. Several of these negotiations were terminated as
the business development requirements or the underlying businesses of the
potential acquiree and the Company changed during the course of the discussions.
Acquisition costs and deposits totaling $1,692 related to uncompleted
transactions were charged against earnings in 1999.

7. PROPERTY AND EQUIPMENT:

As of December 31, 1999 and 1998, property and equipment consists of the
following:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                                ------------
                                                            1999            1998
                                                            ----            ----

<S>                                                         <C>              <C>
Rental pagers (3 years) ..........................          $ 7,605          $ 4,847
Paging network equipment (7 years) ...............            8,082            4,441
Data processing equipment (2-5 years) ............            1,096              508
Furniture, fixtures and office equipment (5 years)              326               --
Leasehold improvements (various) .................              435              311
Other ............................................               17               --
                                                            -------          -------
                                                             17,561           10,107
         Less accumulated depreciation ...........            7,100               --
                                                            -------          -------
                                                            $10,461         $ 10,107
                                                            =======         ========
</TABLE>


<PAGE>


8.       INTANGIBLE ASSETS:

Intangible assets consist of the following as of December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                          ------------
                                                      1999           1998
                                                      ----           ----

<S>                                                   <C>            <C>
FCC licenses and State certificates (10 years)        $15,854        $12,238
Customer lists (3 years) .....................          5,681          4,511
Goodwill (10 years) ..........................          1,996             --
                                                      -------        -------
                                                       23,531         16,749
         Less accumulated amortization .......          3,439             --
                                                      -------        -------
                                                      $20,092        $16,749
                                                      =======        =======
</TABLE>


9.       DEFERRED CHARGES:

At December 31, 1999 and 1998, deferred charges consisted of the following:

<TABLE>
<CAPTION>
                                               DECEMBER 31,
                                               ------------
                                            1999         1998
                                            ----         ----

<S>                                         <C>           <C>
Deferred financing costs ...........        $  633        $  110
Deferred acquisition costs .........           502           220
Unamortized software and other costs           230            --
                                            ------        ------
                                            $1,365        $  330
                                            ======        ======
</TABLE>


10.      COMMITMENTS AND CONTINGENCIES:

The Company leases facilities and equipment used in its operations. Many lease
agreements include renewal options with Consumer Price Index related rent
escalations. At December 31, 1999, the aggregate future minimum rental
commitments under non-cancelable operating leases were as follows:

<TABLE>
<CAPTION>
         YEARS
         -----
         <S>                                     <C>
         2000................................    $        2,013
         2001................................             1,137
         2002................................               780
         2003................................               352
         2004................................               152
         Thereafter..........................                97
                                                 --------------

                                                        $ 4,531
                                                 ==============
</TABLE>

Rent expense was $2,874, $551 and $515 for 1999, 1998, and 1997, respectively.

Pursuant to a certain obligation assumed through the Paging Partners merger, the
Company is committed to a significant supplier of telephony services for a
minimum annual usage and services volume valued at $240. Thereunder, and subject
to attainment of the minimum volume, the Company receives certain significant
discount pricing from this provider. The Company has historically exceeded, and
is currently exceeding, that minimum commitment level. Commitments under this
contract expire during the third quarter of 2000.


<PAGE>


The Company has also provisioned some of its communications circuits and other
facilities from another provider. Under terms of this agreement, the Company has
obtained certain volume pricing discounts in exchange for an agreement to
utilize these facilities for a minimum period of three years beginning on
December 31, 1998. Monthly fees incurred under this agreement totaled about $48
as of December 31, 1999.

Various legal proceedings, claims and investigations related to services,
contracts and other matters are pending against the Company. The most
significant of these are discussed below:

     FRANCIS COMMUNICATIONS

The Company has retained local counsel in Texas to represent it in a suit
brought by Francis Communications Texas, Inc. and related interests ("Francis")
in the U.S. District Court for the Western District of Texas. Francis alleges a
breach of agreement to purchase its radio paging business and is seeking the
original purchase price of $4,000 and additional monetary relief. Aquis
terminated this agreement due to the failure of Francis to comply with certain
conditions precedent to closing. Discovery is proceeding at this time. The
Company believes that its termination of this agreement was within the terms of
the purchase agreement and that the allegations made by Francis are without
merit. Management does not expect the outcome of this lawsuit to have a material
effect on its results of operations, cash flows or financial position.

     FONE ZONE COMMUNICATION CORP

On February 18, 2000, Fone Zone Communication Corp. ("Fone") filed a lawsuit in
the Supreme Court of the State of New York in Queens County. Aquis, on March 23,
2000, had the venue of this action moved to the U.S. District Court for the
Eastern District of New York. Fone, a former reseller of Aquis paging services
and of the service of Paging Partners before its merger with Aquis, is seeking
$1,000 in alleged damages as a result of the termination of its service and
solicitation of its customers by Aquis. The Company discontinued service to Fone
as the result of Fone's severe delinquency and ultimate failure to pay for such
services. Management believes it will be able to recover the fully-reserved
unpaid charges from Fone through its counterclaim and that the claims initiated
by Fone are without sufficient grounds to support its claims. Management does
not expect the outcome of this lawsuit to have a material effect on its results
of operations, cash flows or financial position.

     ARBITRATION OF EMPLOYMENT AND OTHER CLAIMS

On December 23, 1999, the Company's former President, who was also a Director
and a Founder of the Company, filed for arbitration under the Rules of the
American Arbitration Association. This former officer's claims were related to
an alleged breach of an employment agreement, to wrongful discharge and to
wrongful termination of health and welfare benefits including incentive stock
options. A claim was filed for an amount to be proven at trial but in no event
less than $1,762 plus compensatory and punitive damages. On April 4, 2000, the
parties settled these claims before this matter proceeded to arbitration.
Accordingly, Aquis has agreed provide this individual a payment of $25, a credit
of $75 against his existing indebtedness to the Company, shares of the Company's
common stock valued at $400, forgiveness of $115 of a note receivable from him,
and agreed to replace 55,000 of the 485,000 options previously held by him,
valued at $127. The Company continues to hold the balance of the note receivable
in the reduced amount of $125, which is expected to be paid in full , net of
applicable credits, during 2000. Accordingly, $742 has been charges against
earning in the accompanying financial statements the period ended December 31,
1999.

11. LONG-TERM DEBT:

On October 23, 1998, ACI entered into a five-year term loan agreement (the
"Senior Loan Agreement") with FINOVA Capital Corporation ("FINOVA") which
provides a $30,000 credit facility. The FINOVA loan has a term of five years,
and requires graduated increasing quarterly principal repayments ranging from
 .5% to 3.5% of outstanding principal beginning on July 1, 2000, with the balance
due on December 31, 2003. The loan bears interest at a rate based on Citibank,
N.A.'s corporate base rate plus 175 basis points. The Company may also elect to
have interest on a part of the FINOVA loan based on a London Inter-Bank Official
Overnight Rate plus 450 basis points. This term loan is collateralized by all of
the Company's assets, presently owned and acquired subsequently, and all


<PAGE>


issued and outstanding equity interests in the Company's operating subsidiaries.
The loan agreement also contains various covenants, including restrictions on
capital expenditures and compliance with certain financial ratios. At December
31, 1999, the Company was not in compliance with certain ratios under this loan
agreement.

In November 1999, in connection with the termination of negotiations related
to various potential mergers, costs that were previously capitalized have
been written off in 1999. During the third quarter of 1999, FINOVA modified
certain financial covenants contained in the loan agreement to exclude the
costs written off in connection with these abandoned business acquisitions
and other specified charges when computing "Net Income" as defined in the
amended loan agreement.

On January 26, 2000, the FINOVA loan was amended in connection with the
SourceOne Wireless acquisition. The Company borrowed an additional $2,450 from
FINOVA on January 31, 2000 to consummate the acquisition (the "SourceOne
Portion"). The effect of the amendment was to limit the facility to the amount
outstanding after the SourceOne transaction, or a total of $27,765, to modify
certain financial ratios and to set the interest rate on the SourceOne Portion
to Citibank, N.A.'s corporate base rate plus 400 basis points. Additionally, a
prepayment of principal of $1,250 (the "Special Prepayment") was defined that is
to be applied to the SourceOne Portion. If the Special Prepayment is not made by
June 8, 2000, the interest rate on the balance of the loan, excluding the
SourceOne Portion, increases to Citibank, N.A.'s corporate base rate plus 225
basis points. Similar increases are scheduled for July 8 and August 8, with a
final increase to 375 basis points over that base rate if the payment is not
made by September 8, 2000.

During the second quarter of 1999, the Company refinanced the capital lease
obligations that were assumed as a result of the merger with Paging Partners.
Terms of the new obligation (the "Installment Loan") include a principal amount
of $1,300, a 60-month repayment schedule, an interest rate indexed to the yield
for five year Treasury Notes, and is collateralized by the underlying equipment.

The balance outstanding at December 31, 1999 under borrowings of the Senior Debt
Agreement was $25,315. The remaining balance of long term debt outstanding
consisted principally of borrowings made pursuant to the Installment Loan.
Principal maturities of the senior debt and the Installment Loan are as follows:

<TABLE>

         <S>                                       <C>
         2000..................................    $          508
         2001..................................             2,215
         2002..................................             3,447
         2003..................................            20,236
         2004..................................                65
                                                   --------------

                                                         $ 26,471
                                                   ==============
</TABLE>

The Seller Note in the amount of $4,150 due as a result of the acquisition of
the paging assets from BAPCO was settled and paid in full on June 30, 1999.

12. RELATED PARTY TRANSACTIONS:

The Company was provided with various investment banking services by a firm with
which a certain member of the Board of Directors was affiliated. During 1999,
fees incurred under this arrangement totaled approximately $411, of which $45
was payable at December 31, 1999.

The Company was also provided with legal services by a firm in which a member of
the Board of Directors was a partner. During 1999, fees incurred under this
arrangement totaled approximately $1,935, of which $1,052 was payable at
December 31, 1999. In January, 2000, this outstanding amount was settled through
cash payments totaling $205, the issuance of a note payable in the face amount
of $350 payable in 20 equal monthly installments bearing interest at the rate of
8.5%, and the issuance of 275,000 shares of the Company's common stock valued at
$380.


<PAGE>


During 1999, Aquis received $500 from a limited liability company in which a
minority member is a partnership whose managing partner is also a member of the
Company's Board of Directors. These funds represent earnest money for a
potential sale of one of the Company's subsidiaries. This advance has been
included as a current liability in the accompanying balance sheet at December
31, 1999.

Three stockholders and members of the Board of Directors were each granted
60,000 shares of the Company's common stock on December 15, 1999 as compensation
for interim management services rendered during the Company's search for a
President and CEO in the later part of 1999. Based on the fair value of the
Company's common stock on the date of grant, current year earnings were charged
$112,500 for these services.

In 1998 and 1997, BAPCO was allocated certain costs from its parent organization
for certain administrative, management and other services. These allocated costs
were based on relative staff size or on relative revenues, and totaled $215 and
$161, respectively. The management of BAPCO believes that these allocated costs
were reasonable. However, the costs for the services provided are not
necessarily indicative of the costs that would have been incurred if the
services had been provided by unaffiliated entities.

Significant transactions with affiliates in 1998 and 1997 are summarized as
follows:

<TABLE>
<CAPTION>
                                                                                            1998                   1997
                                                                                            ----                   ----

         <S>                                                                           <C>                    <C>
         Revenues from affiliates..............................................        $    3,622             $    2,406
         Revenues from BAM as a reseller of BAPCO services.....................             2,724                  2,114
         Network charges.......................................................             3,933                  3,750
         Telecommunications expenses...........................................               194                    247
         Data processing charges...............................................               216                    181
</TABLE>



13. NOTES PAYABLE TO STOCKHOLDERS:

On July 7, 1998, Aquis completed an offering in which it issued $750 face
amount, 15% promissory notes due on December 31, 1998, and 7,500 shares of
common stock at $1 per share to the note holders. Further, one of the note
holders purchased 1,500 shares of common stock at par value ($.001). In addition
to the $7 of cash proceeds received, a value of $121 was ascribed to the
issuance of these shares and was recorded as an original issue discount on the
notes payable, and amortized over the life of the notes. The proceeds from the
offering were used for working capital , acquisitions, and general corporate
purposes. In connection with the acquisition of BAPCO, these notes and related
interest were paid on December 31, 1998 concurrent with the closing of the
acquisition of BAPCO. Pursuant to the note agreements, as amended, a 10% premium
on the promissory notes was also paid upon maturity and was recorded as
additional interest over the life of the notes.

Concurrent with the repayment of these notes, Aquis issued an additional $520 of
notes to stockholders for working capital purposes. Those notes provided
interest at 15%, and were paid at the time of closing of the Paging Partners
merger.

14. INCOME TAXES:

At December 31, 1999, the Company had Federal net operating loss carryforwards
for tax purposes of approximately $13,000 that expire between 2009 and 2014.
Approximately $8,550 of this total consists of pre-acquisition losses that are
subject to restrictions imposed by Section 382 of the Internal Revenue Code that
limit utilization of such carryforwards to about $300 annually. During the prior
period, the income and expenses of the Predecessor Company were included in the
consolidated Federal and certain combined state income tax returns of its parent
and the prior year provisions for income taxes have been calculated on a
separate return basis herein.

The provision for income taxes is summarized as follows:


<PAGE>


<TABLE>
<CAPTION>
                                          1999            1998            1997
                                          ----            ----            ----
<S>                                     <C>             <C>             <C>
Federal:

   Current .....................        $    --         $ 1,235         $   564
   Deferred (benefit), net .....         (3,756)           (647)           (433)
   Valuation allowance .........          3,756              --              --
                                        -------         -------         -------
      Total Federal ............             --             588             131
                                        -------         -------         -------

State:

   Current .....................        $    --         $   337         $   157
   Deferred (benefit), net .....           (898)           (179)           (120)
   Valuation allowance .........            898              --              --
                                        -------         -------         -------
      Total State ..............             --             158              37
                                        -------         -------         -------

Total provision for income taxes        $    --         $   746         $   168
                                        =======         =======         =======
</TABLE>


Significant components of deferred tax assets and liabilities as of December 31,
1999 are as follows:

<TABLE>
<CAPTION>
                                                                1999             1998
                                                                ----             ----
<S>                                                           <C>             <C>
Deferred tax assets:

  Allowance for doubtful accounts ....................        $   396         $    --
  Seller note ........................................             --           1,646
  Depreciation .......................................            815              --
  Net operating loss carryforwards ...................          5,487              --
  Settlement reserve .................................            264              --
  Other - net ........................................             33              --
                                                              -------         -------
       Total deferred tax assets .....................          6,995           1,646
Deferred tax liabilities - amortization of intangibles         (1,029)             --
                                                              -------         -------
  Net deferred tax assets before valuation allowance .          5,966           1,646
  Valuation allowance ................................         (5,966)             --
                                                              -------         -------

Net deferred tax asset ...............................        $    --         $ 1,646
                                                              =======         =======
</TABLE>

A reconciliation from the Federal income tax provision at the statutory rate to
the effective rate is as follows:

<TABLE>
<CAPTION>
                                                     1999            1998           1997
                                                    ------          ------         ------
<S>                                                 <C>              <C>            <C>
Tax (benefit) at Federal statutory rate ......      (34.0)%          34.0%          34.0%
State income taxes, net of Federal tax benefit         --             6.0%           6.0%
Permanent differences ........................        0.4%             --              --
Valuation allowance ..........................       33.6%             --              --
                                                    ------          ------         ------

Effective tax rate ...........................         --            40.0%          40.0%
                                                    ======          ======         ======
</TABLE>

As of December 31, 1999, the Company recorded no deferred tax asset. The future
expected benefit from the realization of the net operating losses was fully
offset by a related valuation allowance. A full valuation allowance was recorded
due to management's uncertainty about the realizability of the related tax
benefits as of December 31, 1999. However, the amount of the deferred tax assets
considered realizable could be adjusted in the future if estimates of taxable
income are revised.

15. STOCK SUBSCRIPTIONS:


<PAGE>


On January 30, 1998, Aquis entered into three stock subscription agreements with
the Founders and issued 7,991 shares of common stock at par value. On July 7,
1998, the Founders purchased 2,910 additional shares at par value. Aquis
recognized a compensation charge of $22 for 1,635 of the shares that were issued
to an officer of Aquis. In addition, a value of $17 was ascribed to the 1,275
shares issued to the other two Founders and was netted against the proceeds from
the issuance of the Series A Convertible Preferred Stock.

16. PREFERRED STOCK:

On October 16, 1998, the Board of Directors authorized up to 80,000 shares of
preferred stock to be designated as Series A Convertible Preferred Stock
("Series A Preferred Stock") at $80 per share ("Original Issue Price"). Each
holder of these shares shall be entitled to the number of votes equal to the
number of whole shares of common stock into which the shares of Series A
Preferred Stock held by each holder are convertible. Each share of Series A
Preferred Stock may be converted at the election of the holder at any time into
a number of shares of common stock determined by dividing the Original Issue
Price by the Applicable Conversion Price ("Applicable Conversion Price"). The
initial Applicable Conversion Price is $80 per share. Adjustments to the
Applicable Conversion Price are based upon a formula noted in the Preferred
Stock Purchase Agreement. A mandatory conversion of the Series A Preferred Stock
into common stock may occur in the event of any one of the following
circumstances: (1) the request of at least two-thirds of the holders of the
outstanding Series A Preferred Stock, (2) the consummation of the Paging
Partners transaction, or (3) the closing of the sale of shares of common stock
in a public offering pursuant to the Securities Act of 1933, at a price in
excess of 200% of the Applicable Conversion Price then in effect and resulting
in at least $20,000 of gross proceeds to Aquis.

In the event of any voluntary or involuntary liquidation of Aquis, the holders
of shares of Series A Preferred Stock shall be entitled to be paid out of the
assets of Aquis available for distribution to its stockholders before any
payment shall be made to the holders of common stock or any other series of
stock. The holders of Series A Preferred Stock are entitled to receive, when and
if declared by the Board of Directors of Aquis, a dividend (the "Accruing
Dividend") at the annual rate of 8% of the Original Issue Price (appropriately
adjusted in the event of any stock dividend, stock split or combination or
similar recapitalization). The Accruing Dividend will accrue, whether or not
earned or declared, on each issued and outstanding share of Series A Preferred
Stock and shall be cumulative.

On November 6, 1998, Aquis approved the sale and issuance of 78,000 shares of
its series A Preferred Stock at a purchase price of $80 per share. An individual
who purchased shares of the Series A Preferred Stock also was issued 2,000
shares of common stock, and a value of $54 was ascribed to these shares and was
netted against the proceeds from the issuance of the Series A Preferred Stock.
As part of a purchase of a portion of the Series A Preferred Stock, an officer
of the Company signed a note for $240 that was to be repaid in four equal annual
installments commencing on May 15, 2000. The note provided interest at a rate of
8%, and all interest was due with the final payment on May 15, 2003. On April 4,
2000, in connection with the settlement of certain claims made by this officer
in relation to the end of his relationship with the Company, an agreement was
reached under which the face amount of this $240 note was reduced to $125.

17. STOCK OPTIONS:

Through the merger with Paging Partners, the Company has a stock option plan
(the "Plan") as amended, pursuant to which options to purchase shares of the
Company's common stock, intended to qualify as "incentive stock options". These
options may be granted to employees, directors of the Company and independent
contractors providing services to the Company. A total of 1,500,000 shares of
common stock had been reserved for issuance under the amended Plan. Options are
exercisable for terms of six months to ten years from the date granted. Details
are as follows (shares and prices are stated at original amounts before effect
of the share conversion effected through the merger):


<PAGE>


<TABLE>
<CAPTION>
                                  NUMBER                      OPTION
                                 OF SHARES                  PRICE RANGE
                                 ---------                  -----------
<S>                             <C>                      <C>
1997

Outstanding, January 1 .           260,600               $ 1.38 - 6.25
Granted ................           128,500               $ 0.88 - 1.38
Exercised ..............           (10,000)              $ 0.88
Cancelled ..............           (37,150)              $ 1.38 - 6.25
                                ------------
Outstanding, December 31           341,950               $ 0.88 - 6.25
                                                         -------------
Exercisable, December 31           254,050               $ 0.88 - 6.25
                                                         -------------

1998

Outstanding, January 1 .           341,950               $ 0.88 - 6.25
Granted ................           216,100               $ 1.38 - 4.38
Exercised ..............           (25,750)              $ 0.88 - 1.00
Cancelled ..............          (180,150)              $ 0.88 - 6.25
                                ------------
Outstanding, December 31           352,150               $ 0.88 - 4.19
                                ------------
Exercisable, December 31           342,150               $ 0.88 - 4.19
                                ------------

1999

Outstanding, January 1 .           352,150               $ 0.88 - 4.19
Granted ................         1,209,946               $ 1.00 - 1.38
Exercised ..............            (2,500)              $ 0.88
Cancelled ..............          (523,683)              $ 0.88 - 1.38
                                ------------
Outstanding, December 31         1,035,913               $ 0.88 - 4.19
                                ------------
Exercisable, December 31           460,150               $ 0.88 - 4.19
                                ------------
</TABLE>

In consideration of the merger, exercisable options as of December 31, 1998
include options that actually become exercisable on February 13, 1999 and
options that become exercisable upon a change in control.

As permitted under SFAS No. 123, "Accounting for Stock-Based Compensation,"
Aquis has elected to apply APB No. 25, "Accounting for Stock Issued to
Employees" and related interpretations in accounting for options granted.
Accordingly, no compensation cost has been recognized for the grant of these
options in the accompanying financial statements.

The weighted average fair value of options granted in 1998 was $0 per share. The
fair value is based on the minimum value method with the following assumptions:
the price of the stock at the time of grant, risk free interest rates ranging
from 4.57% to 5.81%, no dividend yield, and a weighted average expected life of
the options of nine to ten years. Had compensation cost been determined on the
basis of FASB Statement No. 123, net loss and loss per share would have been
reduced as follows:

<TABLE>
<CAPTION>
                                    1999
                                    ----
<S>                            <C>
Net Loss:
As reported ..............     $  (10,879)
Pro forma ................     $  (11,679)
Net Loss per Common Share:
As reported ..............     $    (0.76)
Pro Forma ................     $    (0.82)
</TABLE>


In connection with the employment of its President and CEO, and pursuant to his
employment agreement dated January 4, 2000, the Company issued an option to
purchase 900,000 shares of the Company's common stock. The option vests ratably
on, or around, June 30, 2000, January 2, 2002 and January 2, 2003. The exercise
price of the


<PAGE>


options is $0.75 for the shares initially vested, and is set at the closing
price of the common stock on January 2, 2001 and January 2, 2002 for the two
subsequently vested entitlements. As of December 31, 1999, none of the options
were vested.

18. NET LOSS PER COMMON SHARE:

The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share", which requires a dual presentation of basic and diluted
earnings per share ("EPS"). Basic EPS is based on the weighted average number of
shares outstanding during the periods presented. Diluted EPS reflects the
potential dilution that could occur if options, warrants, convertible securities
or other contracts requiring the issuance of common stock were converted into
common stock during the periods presented. The Company has not presented diluted
EPS because the effect would be anti-dilutive.

19. SUPPLEMENTAL CASH FLOW DATA:

The tables below provides supplemental information to the consolidated
statements of cash flows:

<TABLE>
<CAPTION>
                                          1999        1998             1997
                                         ---------------------------------------

<S>                                      <C>         <C>                <C>
Cash paid for interest                   $ 2,586       $     -            $   -

Cash paid for taxes                                    $   570            $ 492
Note receivable accepted as partial                    $ 4,150
consideration
Receivable from affiliate                              $ 4,835
Receivable from Aquis                                  $ 4,565
</TABLE>


         BUSINESS ACQUISITIONS

In 1999, the Company used cash of $18,940 for business acquisitions in
connection with the final cash payment made for the December 31,1998 BAPCO
assets purchase and for Paging Partners and SunStar transactions:

<TABLE>
<CAPTION>
BAPCO acquisition

<S>                                                     <C>
       Purchase price                                        $  29,200
       Transaction costs                                       (1,149)
       Note issued to Bell Atlantic Mobile                     (4,150)
       Cash paid at closing                                    (5,366)
                                                        ---------------

Net cash paid during  1999                              $       18,535
                                                         =============
</TABLE>


<TABLE>
<CAPTION>
Paging Partners and SunStar Acquisition

<S>                                                     <C>
       Fair value of assets acquired                         $  11,420
       Liabilities assumed                                     (3,262)
       Exchange of common stock                                (7,197)
       Accrued transaction costs                                 (386)
                                                        ---------------

        Cash paid                                                  575
        Less: cash acquired                                        170

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

Net Cash paid during 1999                                $         405
                                                          =============
</TABLE>


<PAGE>


20. QUARTERLY FINANCIAL RESULTS (UNAUDITED):

Quarterly financial information for the years ended December 31, 1999 and 1998
is summarized below:

<TABLE>
<CAPTION>
                                                         FIRST       SECOND          THIRD          FOURTH
                                                        QUARTER      QUARTER        QUARTER         QUARTER
                                                        -------      -------        -------         -------
<S>                                                    <C>          <C>          <C>          <C>
Year ended December 31, 1999:

Total revenues ...................................     $ 6,294      $ 8,056        $ 8,717          $ 8,092
Operating loss ...................................        (413)      (1,145)        (1,970)          (4,376) (a)
Net loss .........................................      (1,342)      (1,790)        (2,702)          (5,045)
Net loss per share (basic and diluted) ...........       (0.15)       (0.12)         (0.17)           (0.31)


Year ended December 31, 1998, Predecessor Company:

Total revenues ...................................     $ 6,143      $ 6,636        $ 6,925          $ 6,728
Operating income (loss) ..........................         207          254            364              (80)
Net income (loss) ................................         125           87            137              782
</TABLE>

(a)  Operating loss for the fourth quarter of 1999 includes a non-recurring
     charge of $1,692 for costs incurred in connection with certain abandoned
     business acquisitions. The loss also includes the costs incurred to settle
     a dispute with a former officer of the Company in the amount of $742.

21. VALUATION AND QUALIFYING ACCOUNTS:

All information for 1999 is that of the Company, as is the balance at the end of
1998. All other information is that of the Predecessor Company.

<TABLE>
<CAPTION>
                                                        ADDITIONS
                                          BALANCE AT   CHARGED TO     DEDUCTIONS      BALANCE AT
                                           BEGINNING    COSTS AND      AND OTHER          END
                                            OF YEAR     EXPENSES      ADJUSTMENTS       OF YEAR
                                          ----------   ----------     -----------     ----------
<S>                                       <C>           <C>            <C>             <C>
Allowance for doubtful accounts:

    1997 ............................     $   386       $   538        $   620         $   304
    1998 ............................         304         1,154            968             490
    1999 ............................         490           919            470             939

Allowance for inventory obsolescence:

    1997 ............................     $     5       $   316        $    --         $   321
    1998 ............................         321          (136)            --             185
    1999 ............................         185            --            185              --
</TABLE>

22. SUBSEQUENT EVENTS:

On April 10, 2000, Aquis entered into an agreement to obtain a $2 million bridge
loan as interim funding pending completion of additional prospective financing.
The debt is subordinate to the Company's senior debt and is unsecured. This
agreement provides for an interest rate of 11%, a scheduled maturity date in
September, 2001 and also provides for interest to accrue until the earlier of
its maturity date or conversion. At the lender's election not earlier than 120
days from the date of funding, this loan is convertible into the Company's
common stock at 90% of the then-current market value. At the Company's election,
the loan is redeemable at 105% of face value if such election is made within the
initial 90 days subsequent to funding, or at 110% of face value if redemption is
elected within 91 to 118 days, or, if elected thereafter, at 115% of face value.
Proceeds from this loan will be used to make the Special Prepayment of $1,250 to


<PAGE>


FINOVA. The proceeds were used to pay certain fees incurred in connection
with the FINOVA loan modifications arranged during 2000, to pay certain costs
incurred in connection with this bridge loan, and the balance will provide
about $400 to be used for general corporate purposes.

At December 31, 1999, the Company was not in compliance with a covenant in
the FINOVA Senior Loan. On April 12, 2000, FINOVA waived the non-compliance
and amended the loan agreement to redefine certain financial ratios specified
in the loan covenants for future periods and to ensure that the Special
Payment of $1.250 was paid before April 15, 2000.