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

                                   FORM 10-KSB
(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, 1998
                                       or
[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________________
                         Commission file number: 1-11782

                           ESQUIRE COMMUNICATIONS LTD.
        (Exact name of Small Business Issuer as specified in its charter)

         DELAWARE                                       13-3703760
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification No.)

750 B STREET, SAN DIEGO, CALIFORNIA                        92101
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:     (619) 515-0811


Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
Title of each class                                    On Which Registered
Common Stock, $.02 par value                           Boston Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  Common Stock, par
                                                              value $.02

Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that Registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes /X/ No / /

As of March 26, 1999, the aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the closing price, was approximately
$23,110,000.

As of March 25, 1999, the registrant had 5,171,979 shares of Common Stock
outstanding.

Registrant's revenues for the fiscal year ended December 31, 1998 were
$110,586,000.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not 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-KSB or any amendment to
this Form 10-KSB.   /X/

Transitional Small Business Disclosure Format   Yes ___    No X


<PAGE>

                                    BUSINESS

GENERAL

          Esquire Communications Ltd. (the "Company") is the nation's leading
provider of court reporting services to law firms, insurance companies and
corporations through Company-owned offices located in 24 markets in 11 states
and the District of Columbia. In certain markets, the Company also provides
permanent and temporary staffing of legal and financial professionals, legal
video services, records retrieval, process service and document depository
services. The Company also has contractual relationships with approximately 400
independent court reporting, legal video and process service firms through its
DepoNet(R) marketing network, which enables the Company to deliver these
services to its clients in every market within the United States and in certain
international markets. In 1998, the Company provided court reporting and related
services to over 1,000 law firms, insurance companies and corporations.

          Founded in 1988, the Company's predecessor was created to consolidate
the highly fragmented court reporting industry. In October 1996, Golder, Thoma,
Cressey, Rauner Fund IV, L.P. ("GTCR"), a private equity fund with a focus on
investing in and consolidating highly fragmented business services industries,
became a principal stockholder of the Company and has invested approximately $25
million to date and expanded the Company's operations to include other legal
support services. The Company subsequently recruited a senior management team
with significant experience in increasing profitability and managing and
implementing aggressive acquisition programs in consolidating service
industries. The Company's acquisition program has emphasized expanding into new
geographic markets through platform acquisitions, building market share in
existing markets through smaller "tuck-in" acquisitions and focusing on strong,
locally managed companies with a well-recognized market presence. Management has
further developed an integration strategy to (i) streamline operations to
increase the profitability of acquired operations, (ii) increase internal growth
and (iii) expand the range of legal support services available to its clients.

INDUSTRY

          The legal support services industry is comprised of a broad range of
services that assist legal professionals in all aspects of their practice. Based
on available industry data, the Company believes that the market for court
reporting and temporary and permanent legal staffing services is growing and
exceeds $5 billion and is highly fragmented with more than 1,000 independent
court reporting and over 400 legal staffing firms. The Company believes that the
legal support services market is growing due to several trends, including an
increase in: (i) efforts by law firms and corporations, especially insurance
companies, to reduce legal expenses; (ii) the outsourcing of legal support
services to companies that specialize in providing such services; (iii) the use
of lawyers on a temporary basis by law firms and corporations; (iv) the volume
and complexity of litigation; and (v) the national scope of litigation,
particularly in class action and product liability lawsuits.

          Legal support services, such as court reporting, records retrieval and
temporary and permanent legal staffing, traditionally have been marketed to law
firms. Increasingly, insurance companies and corporations, who ultimately pay
the cost of legal support services used by their counsel, are seeking to control
and reduce the costs associated with lawsuits, centralize their purchasing
decisions and ensure consistent service quality. As a result, these companies
are more frequently selecting the providers of legal support services
themselves, rather than delegating that decision to the law firms engaged to
represent them.

          The highly fragmented legal support services industry consists
primarily of local and regional firms that typically provide a single or limited
number of services. Legal support businesses often lack a broad range of
services, regional or national coverage, access to capital or effective
marketing programs and, therefore, are unable to meet the needs of large,
geographically dispersed clients. In addition, as there are limited
opportunities for owners of local legal support service firms to obtain
liquidity or to sell their businesses, the Company believes that many such
owners will be receptive to consolidation.

OPERATING STRATEGY

          The Company seeks to become the nationally recognized leader in
providing a broad range of legal support services. The key elements of the
Company's operating strategy are:

     o    FOCUS ON LEGAL SUPPORT SERVICES. The Company's core business has been
          to provide court reporting and related services to the legal
          profession. Law firms, insurance companies and corporations are
          increasingly seeking to control costs and ensure quality.
          Consequently, the Company believes these firms increasingly seek to do
          business with companies that offer a range of legal support services
          on a regional or national basis. The Company intends to offer a broad
          range of legal support services to its current and prospective
          clients. The Company requires distinct operational knowledge to screen
          and recruit personnel with functional or industry expertise, to match
          resources to client needs and manage, service and expand ongoing
          client relationships. Recent acquisitions have given the Company
          additional capabilities in permanent and temporary placement of legal
          and financial professionals, records retrieval, process service and
          document depository services. The Company continuously evaluates other
          legal support services to offer to its clients.

     o    MAINTAIN STRONG LOCAL PRESENCE AND ENTREPRENEURIAL ENVIRONMENT. The
          Company's management promotes a culture that rewards quality, client
          service and performance. To capitalize on existing client
          relationships of acquired companies and be responsive to local
          business practices and market conditions, the Company intends to
          continue to manage its business on a local basis. General managers are
          given considerable latitude in running their day-to-day operations in
          such areas as hiring, pricing and sales and are accountable for the
          profitability of their operations. The Company believes that allowing
          local management to retain appropriate autonomy and aligning their
          long-term interests with those of the Company provide greater
          opportunity for profitable internal growth and increase the Company's
          attractiveness to prospective sellers. The Company believes its
          operating structure enables it to react more effectively to business
          opportunities in dynamic local markets as well as to utilize managers
          of acquired companies as an important resource for identifying
          additional acquisition candidates and implementing its acquisition
          strategy.

     o    CENTRALIZE FUNCTIONAL MANAGEMENT. The Company's experienced corporate
          management team provides support and strategic direction to assist
          general managers in executing their local business and growth plans.
          The Company's corporate management has developed financial and
          administrative procedures to help integrate and manage the Company's
          local operations. These systems and controls include the preparation
          of annual business plans and budgets and the submission of detailed
          daily, weekly and monthly financial reports, which are reviewed with
          general managers. Corporate management also oversees marketing, human
          resources and information technology to increase operating
          efficiencies, maintain control and ensure consistent management of
          these functional areas. The Company's corporate management also
          conducts weekly operations committee meetings to review performance,
          identify areas for improvement and develop strategies to increase
          profitability.

     o    ATTRACT AND RETAIN HIGH-QUALITY PROFESSIONALS. The Company seeks to
          attract, retain and develop strong local general managers through its
          management development and training programs. In addition, the Company
          places great emphasis on developing relationships with skilled court
          reporters and recruiting permanent and temporary legal and financial
          professionals. Operating employees screen each financial and legal
          staffing candidate to assess qualifications and match the candidate
          with specific client requirements. The Company further participates in
          several legal trade associations and has developed an active
          recruitment program.

     o    EMPHASIZE VALUE-ADDED SERVICES. The Company's marketing and
          operational staff seeks to establish and maintain long-term client
          relationships by developing knowledge of each client's business,
          responding promptly to client needs and measuring individual job
          performance and overall client satisfaction through a structured
          quality assurance program. The Company offers additional value-added
          services including video depositions, video editing, remote electronic
          access to client deposition databases, electronic delivery of
          depositions, client activity and cost savings reports and consolidated
          billing. The Company targets clients who consider quality of service,
          such as timeliness, accuracy and customized solutions, to be as
          important as pricing of services.

INTERNAL GROWTH STRATEGY

          The Company's internal growth strategy will focus on the following key
elements:

     o    OFFER A BROAD RANGE OF SERVICES. The Company believes that national
          and regional clients are increasingly contracting with service
          providers, such as the Company, that are capable of delivering a broad
          range of legal support services. Many of the businesses acquired by
          the Company to date have specialized in providing a narrow range of
          legal support services. The Company seeks to capitalize on the trend
          towards consolidation of service providers and is implementing a plan
          to introduce permanent and temporary placement of legal professionals,
          records retrieval, process service and document depository services
          into each of the Company's existing operations within the next 18
          months. The Company will introduce a range of services in new markets
          in which the Company makes platform acquisitions in an effort to meet
          client demands.

     o    DEVELOP NEW AND LEVERAGE EXISTING CLIENT RELATIONSHIPS. The Company
          intends to establish new client relationships through expansion of its
          sales force. The Company's business development process focuses on
          regular contact with decision makers responsible for procuring legal
          support services. These client contacts work within numerous
          functional areas and at many different levels of the client's
          organization. The Company's sales personnel are trained to develop a
          thorough understanding of each client's total legal support services
          needs and are motivated to identify opportunities to sell additional
          services to existing clients. The Company believes that cross- selling
          opportunities exist as a result of the interrelationships among its
          service offerings, thereby enabling the Company to leverage new and
          existing relationships.

     o    LEVERAGE THE ESQUIRE BRAND TO DEVELOP A NATIONAL ACCOUNTS PROGRAM. The
          Company is engaged in an initiative to transition the brand names of
          the local and regional companies it has acquired to the Esquire brand
          name. The Company believes that it is developing significant brand
          equity through its leadership position in court reporting services and
          intends to further leverage the Esquire brand to develop a national
          accounts program. Large national law firms, insurance providers and
          corporations are increasingly seeking to centralize their purchasing
          decisions to control litigation costs and ensure quality. The Company
          believes that a national accounts program will allow it greater access
          to senior decision-makers, which management believes will enable the
          Company to increase market share and achieve marketing efficiencies
          and greater operating leverage. To date, the Company has established
          several national and regional relationships with corporate law
          departments and large law firms. The Company has also entered into a
          marketing alliance with the American Corporate Counsel Association
          ("ACCA") to serve as ACCA's preferred provider of court reporting
          services for corporate law departments.

     o    OPEN NEW LOCATIONS. The Company continually evaluates potential
          expansion into new geographic markets. To facilitate entry into new
          markets, the Company transfers or recruits experienced personnel to
          manage new locations as they are opened. The Company opened an office
          in 1997 in the San Francisco market and intends to open offices in
          four new markets over the next 18 months.

     o    LEVERAGE DEPONET(R) REFERRAL NETWORK. The Company provides referrals
          for court reporting, process service and legal video services through
          its DepoNet(R) subsidiary, a referral network with contractual
          relationships with approximately 400 independent court reporting,
          legal videography and process service firms. DepoNet(R) targets legal
          professionals who require services outside of their normal work
          locations, but do not have the ability to easily identify and contact
          directly quality out-of-town providers. Using sophisticated
          call-forwarding telecommunications technology, DepoNet(R) is a
          marketing delivery system that enables the Company to provide services
          in every zip code in the United States and in certain international
          markets through either Company-owned operations or through members of
          the DepoNet(R) system (who pay an annual license fee to the Company).
          The Company leverages the DepoNet(R) system, which receives in excess
          of 75,000 calls annually, to service approximately 25% of these
          requests through its Company-owned operations. The Company expects the
          retention rate to increase as it opens or acquires additional
          locations in new markets and also plans to offer other legal support
          services that it may make available through the DepoNet(R) system.

ACQUISITION STRATEGY

          The Company's corporate management has extensive experience in
acquiring and integrating service businesses in consolidating industries. The
Company has an acquisition committee that reviews and evaluates potential
acquisition candidates. Since the formation of the new management team, the
Company has acquired 37 court reporting companies and three providers of
permanent and temporary staffing of legal and financial professionals. The
Company believes its national presence, strategies, reputation and locally
focused, entrepreneurial management structure facilitates its effort to acquire
companies. In targeting acquisitions, the Company will continue to focus on
businesses with a history of profitable operations, a strong management team, a
strong local market position, services that complement the Company's operations
and compatible corporate philosophies and culture. The Company's acquisition
growth strategy consists of the following key elements:

     o    ENTER NEW MARKETS THROUGH PLATFORM ACQUISITIONS. The Company presently
          operates in 24 markets and intends to expand into additional major
          metropolitan markets. The Company will continue to target acquisitions
          in new markets where the Company seeks to establish operations,
          particularly in markets with substantial legal activity.

     o    ACQUIRE SMALLER TUCK-IN BUSINESSES IN EXISTING MARKETS. The Company
          targets businesses in existing markets to increase market share and
          leverage the Company's fixed cost structure in each existing market.
          Tuck-in acquisitions also enable the Company to leverage the existing
          relationships of the acquired businesses in that local market.
          Furthermore, such acquisitions enable the Company to retain
          experienced professionals and avoid the costs and time associated with
          hiring new personnel.

     o    EXPAND SERVICE OFFERINGS. The Company intends to pursue acquisitions
          of firms that will expand its service offerings. In 1998, the Company
          acquired three providers of permanent and temporary staffing of legal
          and financial professionals. These firms establish the Company's
          management and service capabilities and serve as a platform to expand
          these new services throughout the Company-owned operations.

          The following table summarizes the Company's acquisition activity
since the formation of the new management team in February 1997. All
acquisitions were of court reporting firms, except as otherwise indicated.

                                          Date of
  Acquired Company                      Acquisition        Markets Served

Wolfe, Rosenberg & Associates.........  May 1997          Chicago
Krauss, Katz & Ackerman...............  June 1997         Philadelphia
American Network Services
  (DepoNet)...........................  June 1997         Nationwide Referral
                                                          Network
Hyatt Court Reporting.................  August 1997       Denver
Kim Tindall & Associates..............  October 1997      San Antonio
Associates/Certified Reporting........  October 1997      Fort Lauderdale
County Reporting......................  October 1997      Fort Lauderdale
Justice Reporting.....................  October 1997      Fort Lauderdale
Lauderdale Reporting..................  October 1997      Fort Lauderdale
Merit Reporting.......................  October 1997      Fort Lauderdale
Haynes & Harpster Court Reporters.....  October 1997      Southern California
Cynthia Varelli.......................  October 1997      Chicago
Jurist-Begley Reporting Services......  November 1997     Philadelphia
Henry Jacobs & Associates.............  December 1997     New York City
Certified Reporting Company...........  December 1997     New York City
A&A Court Reporters...................  January 1998      Houston
Brody & Geiser........................  January 1998      Northern New Jersey
Kerns & Gradillas.....................  January 1998      Southern California
Jewelinski Court Reporters............  February 1998     Southern California
Friedli, Wolff & Pastore..............  February 1998     District of Columbia
VerbaVolant...........................  March 1998        New York City
McGuire's Reporting Service...........  March 1998        Chicago
Morrissy & Others.....................  March 1998        Chicago
Pollock & Upshaw......................  April 1998        San Antonio
Atlantic Court Reporting..............  April 1998        Fort Lauderdale
Bright & Associates...................  May 1998          Austin
Riggleman, Turk & Nelson..............  May 1998          Baltimore
A-L Associates(1)/A-L Attorneys on
  Assignment(2).......................  May 1998          New York City
Rubin Reporting.......................  May 1998          Chicago
Summit Reporting(3)...................  June 1998         Houston
Hamilton-Legato Deposition Centers....  June 1998         Michigan
Cooksey-Regal Deposition Reporters....  July 1998         Sacramento
Messenger and Associates..............  July 1998         Dallas
Mudrick Witt Professional
  Reporting...........................  July 1998         South Florida
Sandra S. Phillips and Associates.....  August 1998       Sacramento
Gregory & Gregory Associates(1)/
  Gregory & Gregory Staffing(2).......  August 1998       New York City
Lieberman & Chaim.....................  October 1998      Philadelphia
Precise/Verbatim Reporting............  November 1998     Ft. Lauderdale
Mannion Reporting.....................  November 1998     Southwest New Jersey
The Granite Group(2)..................  December 1998     New York City
CAT-LINKS Incorporated(4).............  January 1999      Southern California
----------
(1) Permanent staffing services.

(2) Temporary legal staffing services.

(3) Includes document retrieval business.

(4) Computer software development.

LEGAL SUPPORT SERVICES OFFERED BY THE COMPANY

          The Company provides court reporting, records retrieval, process
service, permanent and temporary placement of legal and financial personnel and
document depository services as described below.

          COURT REPORTING. Court reporting is the verbatim transcription of the
spoken word into the written word, generally from sworn legal testimony. The
industry is divided into two distinct sectors: (i) the recording of proceedings
in court, or "official" court reporting and (ii) all other private sector court
reporting. Official court reporting is performed by civil servant court
reporters employed by local, state or federal courts. All other private sector
court reporting is performed outside the courtroom by free-lance court
reporters, who are self-employed or employees of, or have an independent
contractor relationship with, a court reporting agency. Through the use of
independent contractors, the Company provides court reporting services for legal
proceedings (typically civil proceedings) outside the courtroom and, to a lesser
extent, the recording of other events such as hearings, arbitrations, board
meetings, stockholders' meetings, conferences, conventions and media events. The
Company can provide its clients with a transcript in an electronic format
thereby enabling the client to search, store, index, annotate and manage the
transcribed information. Documents can be searched easily for relevant portions
of testimony and can be integrated into larger databases containing other
information pertaining to a particular proceeding.

          Most states require court reporters to be licensed, which requires
them to attend a certified court reporting school and pass required
examinations. Court reporting requires a skilled professional capable of
transcribing speech, which generally approximates 200 words per minute, using
shorthand symbols. Most of the Company's court reporters use a computer-aided
transcription ("CAT") system for transcribing the spoken word into phonetic
symbols. The shorthand notes, which can be recorded in both paper and electronic
form, are translated and edited to produce a final transcript. CAT systems
enable the computer to interpret the shorthand symbols and translate them into
English.

          The Company believes that the services it provides through the
following technologies offer its clients significant value and its experience
and expertise in the use of such technologies gives it a competitive advantage
over court reporting firms that have not successfully integrated these
technologies into their regular service offerings. The Company's value- added
services include:

     o    LEGAL VIDEO SERVICES. The Company provides a staff of certified legal
          video specialists using broadcast quality equipment to record
          depositions, presentations and other events. The Company provides
          editing, indexing and courtroom playback that enables the client to
          search time-coded transcripts and retrieve key segments of testimony
          with software that synchronizes the video with the text of the
          transcript. Video has gained wider acceptance among legal
          professionals as a strategic tool to impeach adverse witnesses.

     o    REALTIME TRANSCRIPTION. The Company's court reporters provide instant
          transcripts of testimony on lap-top computer monitors, which may be
          located where the testimony is taking place, as well as at remote
          locations. This system also allows attorneys to receive a transcript
          of the testimony on diskette at the conclusion of the proceeding.

     o    INTERACTIVE REALTIME TRANSCRIPTION. Interactive realtime transcription
          enables an attorney to connect a computer to the court reporter's
          system using specialized software which enables the attorney to review
          earlier testimony and make notes during or immediately following the
          deposition.

     o    TEXT SEARCH AND RETRIEVAL PROGRAMS. The Company uses specialized
          software that enables the client to search, store, index and manage
          transcripts and other documents to locate a word or portion of text
          quickly and easily.

          RECORDS RETRIEVAL. Records retrieval services are labor-intensive and
involve the preparation, handling, tracking and delivery of large numbers of
written documents from public or private sources, a significant portion of which
involves medical records acquired on behalf of insurance companies and their
counsel, for litigation or other legal proceedings.

          PROCESS SERVICE. Process service includes the preparation and delivery
of written notices and subpoenas and the monitoring of the recipient's response.

          PERMANENT AND TEMPORARY PLACEMENT OF LEGAL AND FINANCIAL
PROFESSIONALS. The Company provides permanent and temporary staffing of legal
and financial professionals as a result of the Company's 1998 acquisitions of
three leading New York-based executive search firms. The Company's permanent
placement activities consist primarily of the recruitment and placement of legal
and financial professionals with financial services firms, law firms and
corporate legal departments. The Company is engaged and paid by the hiring firm
or corporation on either an exclusive or non-exclusive basis pursuant to
arrangements that may include a non-refundable retainer paid to the Company or
that entitle the Company to a fee contingent upon the successful placement of a
candidate with the client. Temporary attorney or paralegal assignments may range
from one day to more than a year and may involve one professional or a team of
professionals.

          DOCUMENT DEPOSITORY SERVICES. The Company offers document depository
services which include document storage, archiving, indexing and retrieval of
documents in a hardcopy or digital format. The Company is able to quickly
retrieve specific documents on demand for use by its clients in various legal
proceedings.

CLIENT RELATIONSHIPS, SALES AND MARKETING

          The Company believes that its clients purchase services based on a
variety of factors, the most important of which are the quality of the local
service provided, the strength of their relationship with the Company and price.
The Company's client base is comprised of more than 1,000 law firms, insurance
companies and corporations. The Company has a broad client base, and no single
client accounted for more than 2.0% of the Company's revenue for 1998. Clients
typically engage the Company for a single job, an entire litigation matter or
pursuant to a contractual relationship to provide ongoing legal support services
on a regional or nationwide basis.

          The Company has developed sales and marketing strategies to expand its
business with local, regional and national accounts. As a cornerstone of this
strategy, the Company is currently implementing a new corporate identification
program through which it is transitioning the brand identity of each owned
operation from its original name at acquisition to the Esquire name. The program
involves the design and implementation of new letterhead and print materials and
is supported by an extensive advertising, public relations and direct marketing
campaign in each local market. The Company intends to continue to create
national awareness of and value in the Esquire brand, under which the Company
believes it will be able to more efficiently market a broad line of legal
support services. The marketing plan also focuses on converting satisfied local
clients to the Esquire name.

          In May 1998, the Company entered into a two-year marketing alliance
with the ACCA, the largest national trade association for in-house corporate
attorneys. Under this agreement, ACCA, which has over 12,000 members, endorses
the Company as a preferred provider for court reporting services in return for
the Company's sponsorship of several association events and initiatives each
year. This alliance offers the Company access to ACCA members who manage
corporate law departments across the nation.

          The Company's general managers and local sales staff target regional
and local accounts, permitting the Company to capitalize on the local expertise
and client relationships of its branch office employees. The Company currently
employs 33 local, four national and eight staffing sales representatives and
plans to add additional sales representatives in 1999. The Company also views
its network of independent court reporters as a source of new business and has
introduced an incentive program designed to motivate court reporters to generate
additional new and repeat business. The Company solicits new business through
personal sales presentations, telemarketing, direct mail, referrals from
existing clients and advertising in a variety of local and national legal trade
publications and journals. The Company also participates in a number of legal
trade shows.

          Sales personnel are compensated with a competitive base salary and can
earn substantial commissions calculated as a function of gross profit from
individual jobs. Court reporters have the opportunity to earn similar
commissions by originating new business.

COMPETITION

          The market for legal support services is highly competitive. The
Company competes with numerous local and regional court reporting and record
retrieval companies, and also competes with permanent and temporary legal
staffing companies, including national temporary staffing firms. There can be no
assurance that these businesses will continue to increase their outsourcing of
legal support and staffing services needs or that such businesses will not bring
in-house services that they currently outsource. Certain of the Company's
competitors in legal staffing have substantially greater resources and operate
in broader geographic areas than the Company. Many larger clients retain
multiple legal support and placement and staffing service providers, which
exposes the Company to continuous competition. The Company competes primarily on
the basis of quality, personal relationships with clients, reputation, breadth
and timeliness of service, geographic coverage and price.

          The Company believes that further consolidation among legal support
services providers will continue during the next few years and that there will
be significant competition for attractive acquisition candidates. This
competition could lead to higher prices being paid for businesses. The Company
believes that it will have certain advantages in completing acquisitions,
including: (i) management's personal relationships with existing legal support
companies; (ii) its decentralized, entrepreneurial management strategy; and
(iii) its greater size and scope of services. However, there can be no assurance
that the Company's acquisition program will be successful or that the Company
will be able to compete effectively for acquisitions.

INDEPENDENT CONTRACTORS

          The Company provides court reporting services through the use of
independent contractors who are not employees of the Company. The Company has
active relationships with in excess of 1,000 independent contractors. The
Company does not pay federal or state employment taxes or withhold income taxes
with respect to these independent contractors or include such persons in the
Company's employee benefit plans. Independent court reporters are responsible
for purchasing and operating their own court reporting equipment. The use of
independent contractors as court reporters is a widespread practice in the court
reporting industry. In the event the Company were required to treat court
reporters as its employees, the Company could become responsible for the taxes
required to be paid or withheld and could incur additional costs associated with
employee benefits and other employee costs on both a current and retroactive
basis, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

EMPLOYEES

          As of March 1, 1999, the Company had approximately 700 full-time
employees. The Company's employees are not represented by a collective
bargaining agreement. Hourly wages for the Company's temporary employees are
determined based on local market conditions. The Company pays mandated costs of
employment, including the employer's share of social security taxes, federal and
state unemployment taxes, unemployment compensation insurance, general payroll
expenses and workers' compensation insurance. The Company offers access to
various insurance programs and benefits to its temporary employees. The Company
believes its employee relations are good.

REGULATION

          Court reporters in many states and attorneys in every state are
subject to licensure requirements and to the continuing oversight by their
respective regulatory bodies, many of whom have broad discretion in interpreting
and enforcing applicable laws and regulations. The conduct of court reporters is
also subject to ethical and other restrictions imposed by state laws and
regulations. While these regulations are not directly applicable to the Company,
they affect the Company's court reporting business. Legislation has been adopted
by several states, where the Company does not currently have Company-owned
operations, and in Georgia, where the Company does have a Company-owned
operation, that prohibit the provision of services by a court reporter under any
agreement other than on a case-by-case basis. Legislation has also been enacted
or proposed in certain other states that prohibit a court reporter from being
employed by, or serving as an independent contractor for, a court reporting firm
unless a majority of the firm is owned by certified shorthand reporters. Any
such laws effectively prohibit the Company from providing court reporting
services in such states. The Company expects that there will continue to be
efforts to sponsor the adoption of similar prohibitions by legislative or
regulatory action or through the ethics codes governing the conduct of court
reporters. In addition, recent federal and state legislative proposals have
included limitations on the number and length of depositions or have proposed
the substitution of video tape recording for stenographic transcription of
certain legal proceedings.

          In addition, attorneys are subject to significant regulation by
committees on legal ethics and professional responsibility of the various state
and national bar associations, who, from time to time, examine and issue
opinions regarding attorney services, including the use of temporary attorneys
through a placement agency. These opinions have suggested that the payment of
fees to agencies that place temporary attorneys may constitute, in certain
circumstances, the improper splitting of legal fees with a non-lawyer. The
applicability of these opinions to the Company's business is uncertain, and
there can be no assurance that a state will not determine that the business as
conducted by the Company violates ethical or professional responsibility
regulations for attorneys. In addition, the practice of placing temporary
lawyers with a number of firms may raise conflict of interest issues under
applicable ethics codes, particularly when attorneys from the same placement
firm are placed with opposing parties, or law firms representing such parties,
in a lawsuit or business transaction.

          Although the Company believes that its existing operations, which
include an integrated offering of legal support services in one state, are in
material compliance with applicable laws, the relationships among various legal
support services are unique, and many aspects of these relationships have not
been subject to judicial or regulatory interpretations. The Company has not
sought judicial or regulatory interpretations with respect to the manner in
which it conducts and plans to conduct its business. Changes in these laws and
regulations, particularly in the states from which the Company derives most of
its revenues, could have a material adverse effect on the Company's business,
financial condition or results of operations.

ITEM 2.   PROPERTIES

          The Company leases office space in all the locations where the Company
operates. The leases generally run for a term of five years and expire at
various dates ranging from October 31, 1999 through August 31, 2008, with annual
rents ranging from $13,900 to $422,600. The leases provide, among other things,
that the Company is responsible for its share of increases in certain utilities,
maintenance and property taxes over a base amount. The Company believes its
facilities are generally adequate for its needs and does not anticipate
difficulty replacing such facilities or locating additional facilities if needed
in the future.

ITEM 3.   LEGAL PROCEEDINGS

          The Company is not a party to any material pending legal proceedings.

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

          On November 17, 1998, the Company held its annual meeting of
stockholders to vote for the election of directors, to amend the Company's 1993
Stock Option Plan, to amend the Company's Certificate of Incorporation to
effectuate a reverse one-for-two stock split of its Common Stock and to approve
the appointment of KPMG LLP as independent public auditors. All directors were
elected and all proposals were approved.

          The votes with respect to election of directors and the proposals were
as follows:

                                     FOR                         WITHHELD

Malcolm L. Elvey                   12,808,961                      25,205
Mortimer R. Feinberg               12,810,961                      23,205
David A. Higson                    12,808,628                      25,538
Gary L. Monroe                     12,810,028                      24,138
Joseph P. Nolan                    12,763,528                      70,638
Bruce V. Rauner                    12,810,028                      24,138
Cary A. Sarnoff                    12,811,261                      22,905
David A. White                     12,810,628                      25,538


Amendment of Stock Option Plan:

For                    Against            Abstain           Broker Non-Votes

10,911,063             579,200            26,850              1,317,053

Amendment of Certificate of Incorporation:

For                    Against            Abstain           Broker Non-Votes

12,731,938             77,363             24,865


Approval of auditors:

For                    Against            Abstain           Broker Non-Votes

12,813,303             17,260             3,603


                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

          All share and per share information set forth herein has been adjusted
to reflect the Company's one-for-two reverse stock split of its Common Stock
which occurred in November 1998. Effective May 18, 1993, the Common Stock of the
Company was listed on the Boston Stock Exchange and Nasdaq Stock Market under
the symbol "ESQS." The following table sets forth for the calendar periods
indicated the high and low bid prices on the Nasdaq Stock Market for the Common
Stock for the period commencing January 1, 1997. The prices set forth below do
not include retail mark-ups, mark-downs or commissions and represent prices
between dealers and are not necessarily actual transactions.

                                HIGH                   Low
   1998
First Quarter                 $14.75                  $9.50
Second Quarter                 13.75                  10.50
Third Quarter                  14.50                   6.50
Fourth Quarter                 7.125                   4.25

1997
First Quarter                  $9.25                  $4.75
Second Quarter                 11.25                   6.50
Third Quarter                  18.75                   9.126
Fourth Quarter                 17.25                   9.25


          There were approximately 120 stockholders of record of Common Stock as
of March 25, 1999. This number does not include beneficial owners holding shares
through nominee or "street" names. The Company believes that it has more than
2,000 beneficial holders of Common Stock.

DIVIDEND POLICY

          The Company has never declared or paid cash or other dividends on its
Common Stock. The declaration or payment of dividends, if any, in the future is
within the discretion of the Board of Directors and will depend upon the
Company's earnings, capital requirements, financial condition, and other
relevant factors. Pursuant to the terms of the Company's Series A and Series C
Preferred Stock and Credit Agreement with its lenders, the Company is prohibited
from paying cash dividends on its Common Stock. The Company has paid cash
dividends on its Series A Preferred Stock. The Company presently intends to
retain all earnings for use in its business and does not anticipate declaring or
paying cash dividends on its Common Stock in the foreseeable future.

ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS


INTRODUCTION

          Revenue from court reporting services are primarily derived from
services provided for recording sworn testimony at depositions and typically are
based on the number of pages transcribed, with a significant portion of revenues
being derived from the production of additional certified copies. Substantially
all of the Company's court reporting services are performed by independent
contractors. Under arrangements with independent court reporters, the Company
retains a portion, averaging 50%, of the total court reporting fee and the
independent court reporter receives the balance. The different types of court
reporting services provided by the Company yield varying profit margins, with
accelerated delivery transcripts, transcript copies and compressed transcripts
providing higher margins. In addition, profit margins vary among the different
geographic markets in which the Company operates. The Company also derives
revenues from its DepoNet(R) network, which consists, in part, of over 400
affiliated firms in locations not directly served by the Company. Under
contractual arrangements with DepoNet(R) members, the Company refers court
reporting and certain other assignments to network participants for which it
receives an annual fee.

          The Company recruits and places legal professionals on a temporary or
contract basis. The Company charges its clients an hourly fee for the number of
hours worked by attorneys and paralegals placed with clients on a temporary or
contract basis. Recruiters are paid commissions based upon revenues from hourly
fee income less the direct cost of the attorneys or paralegals placed. The
Company's permanent placement recruiters are compensated on a commission basis.
Fees for successful placement of professionals typically are based upon a
percentage, approximately 25% to 30% of such professional's total compensation
earned during the year following the placement, of which 40% to 50% is
customarily paid to the individual permanent placement recruiter. This fee is
subject to a partial refund if the new employment arrangement is terminated
prior to the expiration of a negotiated period, usually three months.

          Since 1993, the Company has pursued an aggressive acquisition
strategy, having acquired 45 court reporting companies and three permanent and
temporary staffing companies. Of these acquisitions, three were acquired in 1996
(the "1996 Acquisitions"), 17 were acquired in 1997 (the "1997 Acquisitions")
and 25 were acquired in 1998 (the "1998 Acquisitions"). All but one of these
acquisitions have been accounted for using the purchase method, and a
substantial portion of each acquisition's purchase price is represented by
goodwill. The Company will incur non-cash charges as a result of the
amortization of such assets over their lives. 

RESULTS OF OPERATIONS

COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997

          REVENUE. Revenue increased by approximately $57.4 million, or 108.0%,
to $110.6 million in 1998 from $53.2 million in 1997. Substantially all of the
increase was due to the effect of acquisitions completed after June 30, 1997.

          OPERATING EXPENSES. Operating expenses increased by approximately
$33.2 million, or 109.6%, to $63.5 million in 1998 from $30.3 million in 1997.
This increase was consistent with the increase in revenue. Operating expenses as
a percentage of revenue increased to 57.4% in 1998 from 57.0% in 1997. This
small increase is the result of higher operating expenses, principally salaries,
in the staffing business, which was added in 1998 as compared to the court
reporting business.

          GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by approximately $17.2 million, or 85.6%, to $37.2 million in
1998 from $20.0 million in 1997. General and administrative expenses in 1998
included approximately $839,000 relating to the write-off of costs
associated with its abandoned secondary offering, and general and administrative
expenses in 1997 included approximately $1.3 million relating to an officer's
termination agreement and termination expenses relating to certain marketing
activities, as well as approximately $922,000 in costs incurred in connection
with an acquisition accounted for using the pooling of interests method of
accounting. Excluding the foregoing items, general and administrative expenses
increased by approximately $18.6 million, or 104.1%, to $36.4 million in 1998
from $17.8 million in 1997. The increase was largely due to expenses related to
the acquisitions completed after June 30, 1997, consisting of payroll and
occupancy expenses, as well as increased sales compensation, marketing and
promotional expenses and administrative support expenses due to increased
revenue levels. Excluding the items described above, general and administrative
expenses as a percentage of revenue decreased to 32.9% in 1998 from 33.5% in
1997. This decrease was due to the large number of tuck-in acquisitions
completed in 1998 (which allowed the Company to operate the acquired businesses
through its existing infrastructure), resulting in a lower impact of corporate
overhead as a percentage of revenue.

          DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
by approximately $2.2 million, or 88.5%, to $4.7 million in 1998 from $2.5
million in 1997. This increase was due primarily to additional amortization
resulting from the 1997 and 1998 Acquisitions. A significant component of the
amortization expense relates to goodwill, which is the cost in excess of fair
market value of net tangible assets of acquired businesses.

          INCOME FROM OPERATIONS. Income from operations increased by
approximately $4.8 million to $5.1 million in 1998 from $326,000 in 1997.
Excluding the $839,000 relating to the write-off of costs associated with
its abandoned secondary offering in 1998, and approximately $1.3 million
relating to an officer's termination agreement and termination expenses relating
to certain marketing activities and approximately $922,000 in costs incurred in
connection with an acquisition accounted for using the pooling of interests
method of accounting in 1997, income from operations increased by approximately
$3.5 million, or 135.0%, to $6.0 million in 1998 from $2.5 million in 1997.
Excluding the foregoing items, income from operations as a percentage of
revenues increased to 5.4% in 1998 from 4.8% in 1997.

          OTHER EXPENSE, NET. Other expense, net, consisting primarily of
interest expense, increased by approximately $3.9 million to $6.6 million in
1998 from $2.7 million in 1997 due to the incurrence of additional debt to
finance acquisitions and to fund working capital.

          PROVISION FOR INCOME TAXES (BENEFIT). The Company recorded a tax
benefit of approximately $589,000 in 1998 as a result of a tax refund generated
by the carryback of its tax loss generated in 1997, and recorded a tax expense
of approximately $125,000 in 1997 as a result of offsetting the majority of its
current income tax expense by utilizing its deferred tax asset.

<PAGE>

COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996

          REVENUE. Revenue increased approximately $23.7 million, or 80.3%, to
$53.2 million in 1997 from $29.5 million in 1996. Substantially all of the
increase in revenue was due to the 1997 Acquisitions as well as a full year of
operating results from the 1996 Acquisitions.

          OPERATING EXPENSES. Operating expenses increased by $13.6 million, or
81.8%, to $30.3 million in 1997 from $16.7 million in 1996. Operating expenses
as a percentage of revenue increased to 57.0% in 1997 from 56.5% in 1996. This
increase was due primarily to the increase in revenue of acquired companies
during the year which generally experienced higher operating expenses, offset,
in part, by the benefit of the ongoing standardization and integration of these
acquired companies.

          GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased by approximately $9.4 million to $20.0 million in 1997 from
$10.6 million in 1996. General and administrative expenses in 1997 included
approximately $1.3 million relating to an officer's termination agreement and
termination expenses relating to certain marketing activities, as well as
approximately $922,000 of costs incurred in connection with an acquisition
accounted for under the pooling of interests method of accounting. General and
administrative expenses in 1996 included a $150,000 expense relating to a
sublease loss. Excluding these items, general and administrative expenses
increased by approximately $7.4 million, or 70.8%, to $17.8 million in 1997 from
$10.4 million in 1996. Excluding the foregoing items, general and administrative
expenses, as a percentage of revenue, decreased to 33.5% in 1997 from 35.4% in
1996. This decrease was due to the large number of tuck-in acquisitions
completed in 1996 and 1997, resulting in a lower impact of corporate overhead as
a percentage of revenue.

          DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
by approximately $1.3 million, or 110.5%, to $2.5 million in 1997 from $1.2
million in 1996. This increase was primarily due to additional amortization
expense arising from the 1996 Acquisitions and 1997 Acquisitions. A significant
component of the amortization expense relates to goodwill, which is the cost in
excess of fair market value of the net tangible assets of acquired businesses.

          INCOME FROM OPERATIONS. Income from operations decreased by
approximately $730,000 to $326,000 in 1997 from $1.1 million in 1996. Excluding
the approximately $1.3 million relating to an officer's termination agreement
and termination expenses relating to certain marketing activities and $922,000
of costs incurred in connection with an acquisition accounted for using the
pooling of interests method of accounting in 1997, as well as a $150,000 expense
relating to a sublease loss in 1996, income from operations increased by
approximately $1.3 million, or 111.3%, to $2.5 million in 1997 from $1.2 million
in 1996. Excluding these items, income from operations as a percentage of
revenue increased to 4.8% in 1997 from 4.1% in 1996.

          OTHER EXPENSE, NET. Other expense, net, consisting primarily of
interest expense, increased by approximately $1.5 million to $2.7 million in
1997 from $1.2 million in 1996 due to the incurrence of additional debt to
finance acquisitions and fund working capital.

          PROVISION FOR INCOME TAXES (BENEFIT). Provision for income taxes for
1997 was $125,000 compared to $216,000 in 1996. For 1997, the Company offset the
majority of its current income tax expense by utilizing its deferred tax asset.

LIQUIDITY AND CAPITAL RESOURCES

          The Company's liquidity and capital resources have been significantly
affected by acquisitions and, given the Company's acquisition strategy, may be
significantly affected for the foreseeable future. The Company's primary source
of cash in the past year has been from bank borrowings and equity investments by
GTCR which has been used primarily for acquisitions, repayment of debt, capital
expenditures and working capital.

OPERATING ACTIVITIES

          Net cash used in operating activities totaled $1,560,000 for the year
ended December 31, 1998 compared to $416,000 in 1997. The increase in usage of
operating cash flow in 1998 was due primarily to an increase in accounts
receivable and prepaid expenses, which was offset by a decrease in net loss and
accounts payable.
 
INVESTING ACTIVITIES

          Net cash used in investing activities totaled $45.9 million and $36.2
million for the years ended December 31, 1998 and 1997, respectively, and
primarily has been used to fund payments for the net assets of acquired
businesses and investments in capital equipment. Net cash used to acquire
businesses was $43.7 million and $34.9 million for the years ended December 31,
1998 and 1997, respectively. Cash used to invest in capital equipment totaled
$3.3 million and $737,000 in 1998 and 1997, respectively. The Company continues
to invest in capital equipment, principally to upgrade facilities, computer
systems and photocopy equipment. At December 31, 1998, the Company had no
commitments to purchase equipment; however, the Company expects to make
additional capital expenditures of between $1.75 million and $2.25 million in
1999, none of which is pursuant to a firm commitment.

FINANCING ACTIVITIES

          Net cash provided by financing activities for 1998 and 1997 was $48.3
million and $36.6 million, respectively, and consisted primarily of proceeds
from Credit Agreement borrowings and the issuance of Series A Convertible
Preferred Stock used to fund payments for acquired businesses and for working
capital. In addition, the Company from time to time issues promissory notes in
connection with acquisitions.

The Company currently has a Credit Agreement with financial institutions which,
as amended, provides for borrowings up to $80.8 million through May 31, 1999 and
$83.5 million thereafter based on operating cash flow as defined therein. The
Credit Agreement expires January 3, 2000. Borrowings under the Credit Agreement
bear interest at the prime rate, plus specified margins. The payment of certain
of the margins is deferred until the maturity of the Credit Agreement. The
Credit Agreement, which is secured by substantially all the assets of the
Company, restricts future indebtedness, investments, distributions, acquisitions
or sale of assets and capital expenditures and also requires maintenance of
certain financial covenants. At December 31, 1998, the effective interest rate
was 8.7% and aggregate borrowings under the Credit Agreement were $79.7 million.
In connection with the Company's acquisition of Gregory & Gregory Associates and
Gregory & Gregory Staffing in August 1998, GTCR has guaranteed the repayment of
a $2.5 million overadvance made to the Company under the Credit Agreement and
received a fee of $125,000 in consideration of such guarantee. In January 1999,
GTCR paid $2,437,500 pursuant to its guaranty and received 2,437.5 shares of
Series C Preferred Stock. At December 31, 1998, the Company had approximately
$13.0 million of indebtedness payable to sellers of various acquired businesses.
In February 1999, GTCR guaranteed $1.5 million of an overadvance made to the
Company under the Credit Agreement and is entitled to receive a fee of $75,000.
GTCR paid $1.5 million pursuant to its guaranty in April 1999. The funds paid by
GTCR on the guaranty are evidenced by a subordinated promissory note with
interest at the rate of 18% per annum, principal and interest to be due and
payable four months after funding.

FUTURE CAPITAL NEEDS

The Company believes that available borrowings under its Credit Agreement, as
amended, and cash from operations, will be sufficient to fund its operations,
planned capital expenditures, payment of certain cash earn-outs and repayment of
indebtedness to certain former owners of acquired businesses through 1999. The
Credit Agreement, as amended, expires on January 3, 2000, and the Company
expects to renegotiate the Credit Agreement, or enter into a new credit
agreement. However, there can be no assurance that the Company will be able to
generate sufficient cash flows from operations or that the terms available for
any future debt or equity financing would be acceptable to the Company.

INFLATION

          Certain of the Company's expenses, such as wages and benefits,
occupancy costs and equipment repair and replacement, are subject to normal
inflationary effects. Supplies, such as paper and related products, can be
subject to significant price fluctuations. Although the Company to date has been
able to substantially offset any such cost increases through increased operating
efficiencies, there can be no assurance that the Company will be able to offset
any future cost increases through similar efficiencies or increased charges for
its products and services.

YEAR 2000 COMPLIANCE

          The Company uses a significant number of computer software programs
and operating systems in its internal operations, including applications used in
financial business systems, sales and marketing, billing and various
administrative functions. The year 2000 issue is the result of computer programs
being written using two digits rather than four to define the applicable year
and impacts both information technology ("IT") and non-IT systems. Any of the
Company's computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could cause the
Company to incur expenses and the risk and potential expense of any disruptions
that may be caused by the software's impaired functioning as the year 2000
approaches and by the modification or replacement of such software, including a
temporary inability to integrate scheduling throughout the Company's offices and
to send correct invoices or engage in similar normal administrative activities.

          The Company has completed its identification of IT systems that are
not year 2000 compliant and is in the process of making appropriate responses to
address certain identified problem areas. The Company has hired an outside firm
to assist in developing a new management information system for scheduling,
billing and paying independent contractors that is designed to be year 2000
compliant and it intends to implement the system by September 1999. The Company
planned to replace its existing information system and did not accelerate the
replacement due to year 2000 issues. Testing of all aspects of the new system
commenced in the first quarter of 1999 and is expected to be completed during
the third quarter of 1999. Costs incurred through December 31, 1998 in
connection with the management information system were $500,000 and the total
cost is estimated to be $1,000,000. The Company is currently in the process of
assessing its non-IT systems for year 2000 compliance.

          The ability of third parties with whom the Company transacts business
to address adequately their year 2000 compliance is beyond the Company's
control. At this time, the Company has begun to make inquiries of its major
third party vendors to determine their ability to be year 2000 compliant. At
this time, the Company is unable to determine the extent to which it will be
dependent on third parties to identify or address year 2000 issues or the impact
of any year 2000 problems of such third parties on the Company's business,
financial condition or results of operations.

          In the event of a delay in the implementation of the new management
information system and the associated year 2000 compliance plan, the Company's
contingency plan is to modify its existing IT system. The Company has been
advised by the outside firm hired to assist in developing and implementing the
new management information system that this would take 90 days and the costs
would not be material (not to exceed $100,000). The Company's contingency plan
also includes some non-computerized backup systems, including manually
scheduling and sending invoices.


          The Company's accounting system presently is Year 2000 compliant. 

          The costs incurred by the Company, including the cost of the
replacement system, to address year 2000 compliance have not had, and are not
anticipated to have, a material adverse effect on the Company's business,
financial condition or results of operations. These costs, and the date on which
the Company plans to complete the year 2000 modification and testing processes,
are based on management's best estimates, which were derived using numerous
assumptions of future events including the continued availability of certain
resources, third party modification plans and other factors. However, there can
be no guarantee that these estimates will be achieved and actual results could
differ from those plans.


NEW ACCOUNTING STANDARDS

          In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"),
was issued and is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. This statement establishes accounting and reporting
standards for derivative instruments and hedging activities.

          The Company anticipates that the adoption of SFAS No. 133 will not
have a material effect on the financial position, results of operations or
liquidity of the Company.

<PAGE>


ITEM 7.   FINANCIAL STATEMENTS

          Reference is made to the Financial Statements, the reports thereon and
notes thereto, commencing on page F-1 to this report.

ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

          None.


                                    PART III

ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The directors and executive officers of the Company are as follows:

                                                                    Director  or
Name                        Age   Position With Company            Officer Since

Malcolm L. Elvey..........  57    Chairman of the Board and Director      1993
David A. White............  46    Chief Executive Officer and             1997
                                  Director
David A. Higson...........  51    Executive Vice President, Chief         1997
                                  Financial Officer, Secretary and
                                  Director
Cary A. Sarnoff...........  51    Senior Vice President--                 1994
                                  Litigation Support and Director
Carole L. Hughes..........  51    Senior Vice President--                 1998
                                  Government and Industry Relations
David L. Harju............  43    Vice President-- Sales                  1998
William J. Forbes.........  48    Vice President-- Human Resources        1998
Steven L. Wolkenstein.....  39    Vice President and Treasurer            1997
Mortimer R. Feinberg(1)(2)  76    Director                                1993
Gary L. Monroe(1)(2)......  44    Director                                1998
Joseph P. Nolan(1)(2).....  34    Director                                1996
Bruce V. Rauner...........  43    Director                                1996


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

(1)  Member of the Compensation Committee

(2)  Member of the Audit Committee

          MALCOLM L. ELVEY has served as Chairman of the Board of Directors of
the Company since its incorporation in 1993 and also served as Chief Executive
Officer of the Company until February 1997. Mr. Elvey is a Chartered Accountant
and has a Master of Business Administration from the University of Cape Town.
Mr. Elvey is also a director of Algol, a public company based in Italy.

          DAVID A. WHITE has been Chief Executive Officer of the Company since
February 1997. He has also been an officer of Harlingwood & Company LLC
("Harlingwood") since January 1997. From 1992 to December 1996, Mr. White was
President of MedTrans ("MedTrans"), a division of Laidlaw, Inc., where he
successfully led the implementation of an acquisition program focused on
consolidating and improving profitability within the ambulance services
industry.

          DAVID A. HIGSON has been Executive Vice President of the Company since
February 1998, Chief Financial Officer and Secretary since May 1997 and a
director since June 1998 and was Senior Vice President from May 1997 to February
1998. From June 1993 to April 1997, he was Senior Vice President-Administration
and Financial Operations of MedTrans where he successfully assisted in
implementing an acquisition program focused on consolidating and improving
profitability within the ambulance services industry.

          CARY A. SARNOFF is Senior Vice President of Litigation Support and is
the former Vice Chairman of the Company. Mr. Sarnoff has been a director and
officer of the Company since November 1994. Prior thereto, Mr. Sarnoff was
President of Sarnoff Deposition Service, Inc. ("SDS"), a court reporting firm
acquired by the Company in 1994. Mr. Sarnoff has more than 25 years experience
in the court reporting industry.

          CAROLE L. HUGHES is Senior Vice president, Government and Industry
Relations. Prior thereto, Ms. Hughes was Senior Vice President of East Coast
Operations for the Company since February 1998. From 1981 to November 1997, Ms.
Hughes was the Vice President and a principal shareholder of Jurist-Begley
Reporting Services (or its predecessor), a court reporting company in
Philadelphia, Pennsylvania, that was acquired by the Company in November 1997.

          DAVID L. HARJU was appointed Vice President, Sales of the Company in
December 1998. From May 1998 to November 1998, Mr. Harju was the Western Region
Sales Director. For the ten years prior thereto, he was in the hospitality
field, including positions of Vice President, Sales for Tarsadia Hotels, Vice
President, Sales for Forte Hotels, Inc. and Regional Director for Holiday Inn
Worldwide.

          WILLIAM J. FORBES was appointed Vice President, Human Resources, of
the Company in May 1998. From July 1993 to April 1998, Mr. Forbes was director
of Human Resources of MedTrans, where he successfully implemented a human
resources program for the acquired companies. Mr. Forbes has more than 20 years
experience in human resources.

          STEVEN L. WOLKENSTEIN was appointed Vice President and Treasurer of
the Company in September 1997. From April 1993 to August 1997, he was tax and
treasury/international finance manager for the Upper Deck Company, and for five
years prior thereto he was with KPMG LLP, with his last position being senior
tax manager.

          MORTIMER R. FEINBERG, PH.D., has served as a director of the Company
since its incorporation. He is the co- founder of BFS Psychological Associates,
Inc., a human resources consulting firm, and has served as Chairman of its Board
of Directors since 1960. Dr. Feinberg is Professor Emeritus, Baruch College,
City University of New York and is a frequent contributor to the WALL STREET
Journal on human resources and other business topics.

          GARY L. MONROE has served as a director of the Company since June
1998. Mr. Monroe has been the Chairman of the Board of Lason, Inc. ("Lason"), an
integrated outsourcing services company, since 1998, Chief Executive Officer
since February 1996, President since April 1997 and a director since he joined
Lason in September 1995. From September 1995 to February 1996, Mr. Monroe served
as Executive Vice President of Lason. From May 1992 to September 1995, Mr.
Monroe served as President of Kodak Imaging Services, Inc., a subsidiary of
Eastman Kodak Co.

          JOSEPH P. NOLAN has served as director of the Company since October
1996. Mr. Nolan is a Principal of GTCR Golder Rauner, LLC and has been a
Principal of Golder, Thoma, Cressey, Rauner, Inc. ("GTCR Inc."), which is a
general partner of GTCR, since July 1996. Mr. Nolan joined GTCR Inc. in February
1994. From May 1990 to January 1994, Mr. Nolan served as Vice President
Corporate Finance at Dean Witter Reynolds Inc. Mr. Nolan is also a director of
Lason and Province Healthcare, Inc.

          BRUCE V. RAUNER has served as director of the Company since October
1996. Mr. Rauner is the Managing Principal of GTCR Golder Rauner, LLC and has
been a Principal of GTCR Inc. for more than the past five years. Mr. Rauner is
also a director of Lason, Polymer Group, Inc., Coinmach Laundry Corporation,
Province Healthcare, Inc. and Answerthink Consulting Group.

DIRECTOR COMPENSATION

          Compensation for directors who are not officers of the Company is
$1,250 per meeting, plus reimbursement for any out-of-pocket expenses incurred
in connection with attending such meetings. In addition, each current outside
director has received, and each outside director upon election to the Board of
Directors will receive, options to purchase 5,000 shares of Common Stock of the
Company.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

          Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of the Company's common stock to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"SEC"). Executive officers, directors and holders of more than ten percent are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such forms
furnished to the Company and written representations from the Company's
executive officers and directors, the Company believes that during the year
ended December 31, 1998, its executive officers, directors and holders of more
than ten percent complied with all applicable Section 16(a) filing requirements.

ITEM 10.  EXECUTIVE COMPENSATION

          The following table sets forth certain information regarding
compensation paid by the Company or accrued for services rendered in all
capacities during the fiscal year ended December 31, 1998, to the Company's
Chief Executive Officer and to each of the other most highly compensated
executive officers of the Company whose aggregate cash compensation exceeded
$100,000:
<TABLE>
<CAPTION>

                                                SUMMARY COMPENSATION TABLE

                                             Annual Compensation                             Long Term Compensation
                                        ----------------------------------------   ------------------------------------------------
                                                                                    Awards                     Payouts
                                                                                   ----------                ------------
                                                                     Other         Restricted
                                                                     Annual          Stock       Options       LTIP      All Other
Name and                                Salary       Bonus        Compensation      Awards(s)      /SARS      Payouts  Compensation
Principal Position          Year         ($)          ($)              ($)             ($)          (#)        ($)         ($)
-----------------------   --------      ---------   --------      ------------    ------------   --------     --------- -----------
<S>                         <C>         <C>          <C>           <C>            <C>             <C>          <C>       <C>
Malcolm L. Elvey            1998        $203,187                                                  20,000
Chairman                    1997         200,043                                                  15,000
                            1996         194,595    $115,000                                      25,000

David A. White              1998(1)      233,675                                                 100,000
Chief Executive Officer     1997(2)      174,791                                                 125,000

Cary A.Sarnoff,             1998         213,967                                                  37,500
Senior Vice President       1997         191,675                                                  37,500
                            1996         190,436                                                  25,000

David A. Higson             1998         170,833                                                  87,500
Executive Vice President    1997(3)       93,750      13,000                                      62,500

Gregory J. Mazares          1998         150,000      50,000
Senior Vice President


(1)  Represents amounts paid to Harlingwood and to Mr. White.
(2)  Amounts were paid to Harlingwood.
(3)  Represents compensation for the partial year from May 15, 1997.
</TABLE>


EMPLOYMENT AND RELATED AGREEMENTS

          Malcolm L. Elvey is employed by the Company under an employment
agreement which expires in May 1999. Mr. Elvey receives an annual salary of
$203,187, which is subject to cost of living increases. Mr. Elvey is also
entitled to an annual bonus ranging from 3% of pre-tax earnings of the Company
in excess of $750,000 to 15% of pre-tax earnings of the Company in excess of
$2,500,000; provided, however, that the bonus will not exceed 100% of Mr.
Elvey's annual salary. In the event the Company consummates any acquisitions,
these pre-tax earnings levels are increased by 70% of the net income before
taxes of the acquired business, excluding any extraordinary items of gain or
loss (which amount is prorated for the portion of any year in which the acquired
business operations are consolidated with the Company's). The employment
agreement terminates upon the death or permanent disability of Mr. Elvey or for
cause. Cause is defined as a material breach of the employment agreement by Mr.
Elvey, his gross negligence or willful misconduct in the performance of his
duties, his dishonesty to the Company, conviction of a felony or excessive
absenteeism unrelated to a disability. In addition, Mr. Elvey has agreed not to
compete with the Company for a period of two years following the termination of
his employment with the Company.

          David A. White is employed under a one-year agreement which expires
June 1999 at an annual salary of $250,000 and is automatically renewed on a
year-by-year basis unless terminated by either party upon at least 60 days
notice prior to the renewal date. If the agreement is not renewed by the
Company, the Company has agreed to pay to Mr. White six months of severance pay.
Mr. White's employment agreement contains termination provisions which are
substantially the same as those of Mr. Elvey's employment agreement. Mr. White
has agreed not to compete with the Company for a period of one year following
the termination of his employment with the Company.

          In connection with the acquisition of SDS, on June 22, 1994, the
Company entered into an employment agreement with Cary A. Sarnoff which expires
in June 1999 and is automatically renewed on a year-by-year basis unless
terminated by either party upon at least 60 days notice prior to the renewal
date. Mr. Sarnoff receives an annual salary at the rate of $213,967, which is
subject to cost of living increases. Mr. Sarnoff's employment agreement contains
termination provisions which are substantially the same as those of Mr. Elvey's
employment agreement. Mr. Sarnoff has agreed not to compete with the Company for
a period of two years following the termination of his employment with the
Company.

          David A. Higson is employed under a one-year agreement which expires
June 1999 at an annual salary of $175,000 and is automatically renewed on a
year-by-year basis unless terminated by either party upon at least 60 days
notice prior to the renewal date. If the agreement is not renewed by the
Company, the Company has agreed to pay to Mr. Higson six months of severance
pay. Mr. Higson's employment agreement contains termination provisions which are
substantially the same as those of Mr. Elvey's employment agreement. Mr. Higson
has agreed not to compete with the Company for a period of one year following
the termination of his employment with the Company.

          Carole L. Hughes is employed under a three-year employment agreement
which expires November 2000 at an annual salary of $135,000. Ms. Hughes is also
entitled to a performance bonus of up to 50% of her annual salary if the Company
achieves financial and operating objectives agreed to by Ms. Hughes and the
Company, with Ms. Hughes to receive a minimum bonus of at least $60,000 for the
first year. Ms. Hughes' employment agreement contains termination provisions
which are substantially the same as those of Mr. Elvey's employment agreement.
Ms. Hughes has agreed not to compete with the Company for a period of two years
following the termination of her employment with the Company.

          Gregory J. Mazares was employed under a two-year agreement which was
to expire August 31, 1999 at an annual salary of $150,000. Mr. Mazares received
an initial bonus of $50,000 and an additional $50,000 bonus on September 1,
1998. If the employment of Mr. Mazares was terminated by the Company, the
Company had agreed to pay to him $200,000 in severance payments, payable in 12
equal monthly installments. Mr. Mazares voluntarily resigned from the Company in
1999.

          The Company has entered into change in control agreements with its key
executive officers, including Messrs. Elvey, Higson, Sarnoff and White, which
provide that if an executive's employment is terminated within six months after
a change in control of the Company, or the executive terminates employment
within such six month period of time, then the executive shall be entitled to a
lump sum severance payment and all of the executive's options, if any, which are
not then vested shall immediately vest. The lump sum severance payment for
Messrs. Higson and White is 150% of base salary and bonus at the time of
termination and for the other executives is 100% of base salary and bonus at the
time of termination. At December 31, 1998 and based on salary levels currently
in effect, in the event of a change in control, Messrs. Elvey, Higson, Sarnoff
and White would have been entitled to receive a lump sum of $203,187, $262,500,
$213,967 and $375,000, respectively. The agreements have a one year term, but
will be automatically renewed for successive one year terms unless terminated at
least 60 days prior to June 30th of any year and prior to a "change in control."
If the payments to be received under the agreements would not be deductible for
tax purposes by the Company as the result of such payment constituting an excess
parachute payment, the payment would be reduced to an amount which would make
the entire payment deductible for tax purposes. As used in the agreements,
change in control means a person or a group of persons becomes the beneficial
owner of more than 30% of the Company's Common Stock, stockholders approve a
merger of the Company into another entity or a sale of substantially all the
Company's assets or a change in the composition of a majority of the members of
the Board of Directors.

STOCK OPTION PLAN

          In February 1993, the Board of Directors of the Company adopted the
1993 Stock Option Plan (the "Plan"), which was approved by stockholders of the
Company. The Plan was amended to increase the number of options which may be
granted thereunder to 1,750,000 shares of Common Stock. Incentive stock options,
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified stock options may be granted under the Plan.

          The Plan is administered by the compensation committee of the Board of
Directors, which may grant options to key employees, directors, consultants and
independent contractors to the Company. The term of each option may not exceed
ten years from the date of grant. The exercise price of an option may not be
less than 100% of the fair market value of a share of Common Stock. The options
vest over a three-year period, commencing one year following their issuance.

          The table below sets forth information regarding the grant of stock
options made to the executive officers named in the Summary Compensation Table
during the fiscal year ended December 31, 1998.

<PAGE>
<TABLE>
<CAPTION>


                                           OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                                   (Individual Grants)

==================================================================================================================================
                                                                      Percent of
                                                Number of             Total
                                                Securities            Options/SARs
                                                Underlying            Granted to           Exercise or
                                                Options/SARs          Employees in         Base Price          Expiration
Name                                            Granted (#)           Fiscal Year          ($/Sh)              Date
----------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                     <C>                <C>                <C>
Malcom L. Elvey                                  20,000                   6.26%              $12.00             4/2008
----------------------------------------------------------------------------------------------------------------------------------
David A. White (a)                              100,000                  31.30%              $12.00             4/2008
----------------------------------------------------------------------------------------------------------------------------------
Gregory Mazares                                 0                         -                    -                  -
----------------------------------------------------------------------------------------------------------------------------------
Cary Sarnoff                                     37,500                  11.74%              $12.00             4/2008
---------------------------------------------------------------------------------------------------------------------------------
David A. Higson                                  87,500                  27.39%              $12.00             4/2008
==================================================================================================================================

         The table below sets forth information for the executive officers named
in the Summary Compensation Table concerning option exercises during 1998 and
outstanding options at December 31, 1998.

                              AGGREGATED OPTION/SAR EXERCISES IN 1998 AND DECEMBER 31, 1998
                                                    OPTION/SAR VALUES

====================================================================================================================================
                                                                     Number of Securities
                                                                          Underlying                         Value of Unexercised
                                                                          Unexercised                          in-the-Money
                             Shares                                     Options/SARs at                       Options/SARs at
                             Acquired                                  December 31, 1998                     December 31, 1998
                             On                 Value
Name                         Exercise           Realized     Exercisable         Unexercisable       Exercisable     Unexercisable
-----------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>              <C>            <C>                 <C>                <C>                 <C>
Malcolm L. Elvey               0                  -            95,833              61,667             0                   0
-----------------------------------------------------------------------------------------------------------------------------------
David A. White (a)             0                  -           135,937              39,063             0                   0
-----------------------------------------------------------------------------------------------------------------------------------
Gregory Mazares                0                  -            25,000              25,000             0                   0
-----------------------------------------------------------------------------------------------------------------------------------
Cary Sarnoff                   0                  -            29,167              70,833             0                   0
-----------------------------------------------------------------------------------------------------------------------------------
David A. Higson                0                  -            20,833             129,167             0                   0
====================================================================================================================================

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

(a)  These options were granted to Harlingwood.
</TABLE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The following table sets forth, as of March 15, 1999, certain
information with respect to the beneficial ownership of the Common Stock by: (i)
each of the Company's Directors, (ii) each officer named in the Summary
Compensation Table, (iii) all directors and executive officers of the Company as
a group, and (iii) each other person (including any "group," as that term is
used in Section 13(d)(3) of the Exchange Act) who is known by the Company to own
beneficially 5% or more of the Common Stock. The Company believes that the
beneficial owners of the Common Stock listed below, based on information
furnished by such owners, have sole voting and investment power with respect to
such shares, except as noted below. The address of each person listed below is
750 "B" Street, Suite 2350, San Diego, California 92101, unless otherwise
indicated.

                                                                      Percent
Name and Address of Beneficial Owner          Number of Shares        of Class


Malcolm L. Elvey (1)                              439,500                8.2%
  216 East 45th Street
  New York, NY 10017
The Sarnoff Trust (2)                             375,000                7.3%
  2100 Broadway
  Santa Ana, CA 92706
Allied Investment Corporation (3)                 312,500                5.7%
  Allied Investment Corporation II
  Allied Capital Corporation II
  1666 K Street
  Washington, DC 20006
Mortimer R. Feinberg(4)                             5,000                  *
David J. Feldman (5)                              312,950                6.0%
  100A Store Hill Road
  Old Westbury, NY 11568
Gary L. Monroe (4)                                  5,000                  *
Golder, Thoma, Cressey, Rauner Fund IV,         4,275,000               47.1%
L.P. (6)
Joseph P. Nolan (6)                                    __                __
Bruce V. Rauner (6)                                    __                __
Cary A. Sarnoff (7)                               478,890                9.1%
Harlingwood & Company LLC (8)                     350,000                6.5%
David A. White (8)                                350,000                6.5%
David A. Higson (9)                               150,000                2.8%
Carole L. Hughes (10)                             184,263                3.5%
All directors and executive officers as a       1,657,653               28.2%
group (11) (12 persons)


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

*   Less than 1%

(1)     Includes options to purchase 157,500 shares of the Company's Common
        Stock granted to Mr. Elvey under the Plan.

(2)     The Sarnoff Trust is a revocable trust of which Cary A. Sarnoff and his
        wife, Michelle A. Sarnoff, are settlors, trustees and beneficiaries.

(3)     These entities in the aggregate own warrants to purchase an aggregate of
        312,500 shares of Common Stock at an exercise price of $5.80 per share,
        subject to adjustment.

(4)     Consists of options to purchase 5,000 shares of Common Stock.

(5)     Includes options to purchase 62,500 shares of the Company's Common Stock
        granted to Mr. Feldman under the Plan.

(6)     GTCR is the direct owner of 19,012.5 shares of Series A Convertible
        Preferred Stock which are convertible into 3,656,250 shares of Common
        Stock and 2,437.50 shares of Series C Convertible Preferred Stock which
        are convertible into 243,750 shares of Common Stock. GTCR IV, L.P., a
        limited partnership , is the general partner of GTCR and Golder, Thoma,
        Cressey, Rauner, Inc. ("GTCR Inc.") is the general partner of GTCR IV,
        L.P. As such, they may be deemed to be the indirect beneficial owners of
        such securities. Messrs. Nolan and Rauner are principals of GTCR Inc.

(7)     Includes shares owned by The Sarnoff Trust and options to purchase
        100,000 shares of the Company's Common Stock granted to Mr. Sarnoff
        under the Plan. See Note (2).

(8)     Mr. White is an officer of Harlingwood. Includes 175,000 shares owned by
        Harlingwood and options to purchase 175,000 shares of Common Stock owned
        by Harlingwood.

(9)     Consists of options to purchase 150,000 shares of the Company's Common
        Stock granted to Mr. Higson under the Plan.

(10)    Includes options to purchase 57,500 shares of Common Stock of the
        Company.

(11)    Includes options to purchase 712,500 shares of Common Stock.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          For as long as The Sarnoff Trust owns 20% or more of the Common Stock
issued in connection with the acquisition of Sarnoff Deposition Services
("SDS"), the Company has agreed to nominate, recommend and use its best efforts
to have Mr. Sarnoff elected as a director of the Company.

          SDS was a party to an agreement with Edward Sarnoff, the father of
Cary Sarnoff, pursuant to which SDS agreed to pay to Edward Sarnoff, in the
event of the sale of SDS, the amount of $1.0 million payable in equal monthly
installments over a period of five years. In connection with the Company's
acquisition of SDS, the Company assumed the obligations of SDS under this
agreement.

On October 23, 1996, the Company entered into a Purchase Agreement, as amended
(the "Purchase Agreement"), pursuant to which the Company sold to GTCR and
Antares Leveraged Capital Corp. (collectively, the "Investors") 21,937.5 and
562.5 shares of Series A Convertible Preferred Stock, respectively, for an
aggregate purchase price of $22.5 million. In addition, in January 1998, the
Investors were given the further right on or prior to December 2, 1999 to
acquire up to 5,000 shares of Series B Convertible Preferred Stock at a price of
$1,000 per share. In June 1998, GTCR acquired an option to acquire up to an
additional 2,500 shares of Series B Convertible Preferred Stock at a price of
$1,000 per share, which stock is convertible into an aggregate of 208,333 shares
of Common Stock at a conversion price of $12.00 per share. In August 1998, GTCR
converted its options to acquire 7,500 shares of Series B Convertible Preferred
Stock into 375,000 shares of Common Stock. In connection with the Company's
acquisition of Gregory & Gregory Associates and Gregory & Gregory Staffing in
August 1998, GTCR guaranteed the repayment of a $2.5 million overadvance made to
the Company under the Credit Agreement and received a fee of $125,000 in
consideration of such guarantee. In January 1999, GTCR paid $2,437,500 under the
guarantee and received a new series of convertible preferred stock (Series C
Convertible Preferred Stock) of the Company which is identical to the Series A
Convertible Preferred Stock except that it has a conversion price of $10.00 per
share. The liquidation value of this new series is $2.5 million. In February
1999, GTCR guaranteed the repayment of 50% of a $3 million overadvance made to
the Company under the Credit Agreement and is entitled to receive a fee of
$75,000. In April 1999, GTCR paid $1.5 million pursuant to its guaranty. GTCR
received a subordinated promissory note in the amount of such payment, which
note is due and payable four months after funding, together with interest at the
rate of 18% per annum.

          The Series A Convertible Preferred Stock is convertible into Common
Stock of the Company at a conversion price of $6.00 per share (subject to
anti-dilution adjustments) and bears cumulative annual dividends at the rate of
6% ($60.00) per annum. The holders of Series A Convertible Preferred Stock have
a liquidation preference of $1,000 per share, plus accrued dividends. Holders of
Series A Convertible Preferred Stock have the right to vote together with the
holders of Common Stock and are entitled to one vote for each whole share of
Common Stock into which the Series A Convertible Preferred Stock is convertible
(presently 166 2/3 votes per share). GTCR was granted various rights to ask for
registration under the Securities Act of any shares of Common Stock acquired by
it upon conversion of the Series A Convertible Preferred Stock. Without the
consent of the holders of a majority of the Series A Convertible Preferred
Stock, the Company may not take various actions, including paying dividends on
capital stock if there are any accrued but unpaid dividends on the Series A
Convertible Preferred Stock, issuing any equity securities which are senior to
or on a parity with the Series A Convertible Preferred Stock, merging with
another entity, selling or otherwise disposing of all or substantially all its
assets, or acquiring other entities. In addition, the Company may not issue in a
private offering any equity securities without first offering the holders of
Series A Convertible Preferred Stock the right to acquire their pro rata share.
In connection with the Purchase Agreement, the Investors and Malcolm L. Elvey,
Chairman of the Board of the Company, Cary A. Sarnoff, an officer and director
of the Company, David J. Feldman, former President of the Company, CMNY Capital
L.P. and Allied entered into a Stockholder's Agreement dated as of October 23,
1996, as amended (the "Stockholder's Agreement"), pursuant to which (a) the
parties agreed to vote their shares to elect as directors four representatives
designated by management, two representatives designated by GTCR and four
representatives jointly designated by GTCR and management; provided, however,
that if they are unable to agree on such joint designees within 90 days, then
GTCR may elect the joint designees; (b) management granted to the other
stockholders rights of first refusal to acquire their shares if they desire to
sell the same, subject to exceptions for public sales and for transfers to
family members; and (c) if the Company's Board of Directors approves a sale of
the Company's assets or capital stock (whether by merger or otherwise), each
stockholder other than Allied and CMNY Capital L.P. agreed to consent to such
transaction.

          The Series C Convertible Preferred Stock is identical to the Series A
Convertible Preferred Stock except that it is junior to the Series A Convertible
Preferred Stock, has a conversion price of $10.00 per share and has 100 votes
per share.

          In February 1997, the Company entered into a management agreement with
Harlingwood, pursuant to which Harlingwood provided management services to the
Company. This agreement terminated effective in June 1998 upon the Company
entering into an employment agreement with Mr. White. Mr. White fulfilled
Harlingwood's obligations under the management agreement. In connection with the
management agreement, the Company granted options to Harlingwood to purchase
75,000 shares of Common Stock at an exercise price of $18.00 per share and sold
to Harlingwood 125,000 shares of Common Stock at a price of $6.25 per share,
which purchase price was paid by Harlingwood issuing to the Company a promissory
note in the principal amount of $781,250, bearing interest at the rate of 7% per
annum. The note is secured by a pledge of the shares and is payable in full on
April 15, 2001. The shares and options vest 25% on February 13, 1998 and ratably
over a three year period of time subsequent thereto. On December 15, 1997,
Harlingwood exercised options to purchase 50,000 shares of Common Stock at an
exercise price of $7.50 per share and delivered to the Company in payment of the
exercise price a promissory note in the principal amount of $375,000, bearing
interest at the rate of 7% per annum. The note is secured by a pledge of the
shares and is payable in full on December 15, 2001. As the result of the
foregoing, at December 31, 1998, Harlingwood was indebted to the Company in the
principal amount of $1,156,250. In May 1998, the Company granted to Harlingwood
options to purchase 100,000 shares of Common Stock at an exercise price of
$12.00 per share. The Company has agreed to loan to Harlingwood any funds needed
to pay the exercise price in connection with the exercise of the options.

          The Company has engaged Harlingwood Partners, L.P., a partnership of
which Mr. White is a principal ("Harlingwood Partners"), to provide acquisition
services for acquisitions other than in the court reporting area. Harlingwood
Partners will be entitled to a fee of 1% of value of each completed transaction.
In connection with the acquisitions of A-L Associates and A-L Attorneys on
Assignment in May 1998 and Gregory & Gregory Associates and Gregory & Gregory
Staffing in August 1998, Harlingwood Partners received total fees of $162,500.

          In January 1999, the Company acquired all the stock of a corporation
owned by Cary Sarnoff for a purchase price consisting of 50,000 shares of Common
Stock of the Company.


PART IV

ITEM 13.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


          (a)(1). Financial Statements. The following consolidated financial
statements of Esquire Communications Ltd. and Subsidiaries, required by Part II,
Item 7, are included in Part IV of this report:

          Independent Auditors' Report

          Consolidated Balance Sheets as of December 31, 1998 and December 31,
1997.

          Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996.

          Consolidated Statement of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996.

          Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996.

          Notes to the Consolidated Financial Statements


Exhibits

          (a)(3). Exhibits:

EXHIBIT NO.

     3.1       Certificate of Incorporation of the Company, as amended.

     3.2       By-Laws of the Company. Incorporated by reference to Exhibit 3.2
               to the Current Report on Form 8-K reporting on an event which
               occurred October 28, 1996 ("October 1996 8-K").

     10.1      Employment Agreement dated as of March 1, 1993, between the
               Company and Malcolm L. Elvey. Incorporated by reference to
               Exhibit 10.1 to Registration Statement on Form SB-2 (File No.
               33-58814 ("SB")).

     10.2      Employment Agreement dated as of June 30, 1998, between the
               Company and David A. White.

     10.3      Employment Agreement dated November 7, 1997, between the Company
               and Carole L. Hughes. Incorporated by reference to Exhibit 10.3
               to the Company's Annual Report on Form 10-KSB for the year ended
               December 31, 1997 ("1997 10-K").

     10.4      Agreement dated as of May 1, 1997 by and between the Company and
               David Feldman. Incorporated by reference to Exhibit 10.4 to 1997
               10-K.

     10.5      Employment Agreement dated June 22, 1994 by and between the
               Company and Cary A. Sarnoff. Incorporated by reference to Exhibit
               4 to Current Report on Form 8-K reporting on an event which
               occurred on June 22, 1994.

     10.6      Purchase Agreement dated October 23, 1996 by and between the
               Company, Golder, Thoma, Cressey, Rauner Fund IV, L.P. ("GTCR")
               and Antares Leveraged Capital Corp. (collectively with GTCR, the
               "Investors"). Incorporated by reference to Exhibit 10.4 to
               October 1996 8-K.

     10.7      Stockholders Agreement dated October 23, 1996 by and between the
               Investors, Malcolm L. Elvey, Cary A. Sarnoff, David J. Feldman,
               CMNY Capital L.P. and Allied Investment Corporation, Allied
               Investment Corporation II and Allied Capital Corporation II.
               Incorporated by reference to Exhibit 10.5 to October 1996 8-K.

     10.8      Registration Agreement dated October 23, 1996 among the Company
               and the Investors. Incorporated by reference to Exhibit 10.6 to
               October 1996 8-K.

     10.9      Agreement dated October 23, 1996 among the Company, GTCR, David
               J. Feldman, The Sarnoff Trust, Allied Investment Corporation I,
               Allied Investment Corporation II and Allied Capital Corporation
               II relating to registration rights. Incorporated by reference to
               Exhibit 10.7 to October 1996 8-K.

     10.10     Amended and Restated Credit Agreement dated as of August 10, 1998
               by and among Esquire Communications Ltd., as Borrower, Antares
               Leveraged Capital Corp., as Agent and the Other Financial
               Institutions Party Hereto, as Lenders.

     10.11     Asset Purchase Agreement dated as of May 28, 1997 among the
               Company, Wolfe Rosenberg & Associates, Inc., M&M Computrans,
               Seymour L. Wolfe and Fred R. Rosenberg. Incorporated by reference
               to Exhibit 10.1 to Current Report on Form 8-K reporting on an
               event which occurred on May 28, 1997.

     10.12     Asset Purchase Agreement dated as of June 13, 1997, among the
               Company, Krauss, Katz & Ackerman, Inc., Harvey Krauss, Leonard
               Katz and Robert Ackerman. Incorporated by reference to Exhibit
               10.1 to Current Report on Form 8-K reporting on an event which
               occurred June 13, 1997 ("June 1997 8-K").

     10.13     Asset Purchase Agreement dated as of June 18,1997, among the
               Company, American Network Services, Inc., John C. Durham, David
               Rainwater, William Bird and Jeff Johnson. Incorporated by
               reference to Exhibit 10.2 to June 1997 8-K.

     10.14     Amendment No. 2 dated as of January 8, 1998 to Purchase Agreement
               dated October 23, 1996, among the Company, Golder, Thoma,
               Cressey, Rauner Fund IV, L.P. and Antares Leveraged Capital Corp.
               Incorporated by reference to Exhibit 10.16 to 1997 10-K.

     10.15     Employment Agreement dated September 1, 1997 between the Company
               and Gregory J. Mazares. Incorporated by reference to Exhibit
               10.17 to 1997 10-K.

     10.16     Amendment No. 1 dated as of June 17, 1997 to Purchase Agreement
               dated October 23, 1996, among Esquire, Golder, Thoma, Cressey,
               Rauner Fund IV, L.P. and Antares Leveraged Capital Corp.
               Incorporated by reference to Exhibit 10.3 to June 1997 8-K.

     10.17     Amendments No. 1 and No. 2 to Stockholder's Agreement dated
               October 23, 1996, among Esquire and various stockholders of
               Esquire. Incorporated by reference to Exhibit 10.4 to June 1997
               8-K.

     10.18     Agreement dated February 9, 1998 between the Company and
               Harlingwood Partners, L.P.

     10.19     Employment Agreement dated June 30, 1998 between the Company and
               David A. Higson.

     10.20     Form of Change in Control Agreement between the Company and each
               of its key executive officers.

     21        Subsidiaries of the Registrant.

     23        Consent of independent accountants.

     (b)   Reports on Form 8-K.

           None

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Esquire Communications Ltd.:

We have audited the accompanying consolidated balance sheets of Esquire
Communications Ltd. and subsidiaries as of December 31, 1998 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Esquire
Communications Ltd. and subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting principles.

                                   KPMG LLP

San Diego, California
March 26, 1999, except as to the second, third and fifth paragraphs of Note 
5(A), which are as of April 14, 1999
<PAGE>

                  ESQUIRE COMMUNICATIONS LTD. AND SUBSIDIARIES

                          Consolidated Balance Sheets

                           December 31, 1998 and 1997
                       (In Thousands, Except Share Data)

<TABLE>
<CAPTION>
                              Assets (Pledged)                                   1998            1997
                                                                                ----------    -----------
                                                                                                (Note 2)

Current assets:
<S>                                                                             <C>                 <C>
        Cash                                                                   $    933             116
        Accounts receivable, less allowance for doubtful accounts of
          $2,098 in 1998 and $1,334 in 1997                                      27,574          14,621
        Prepaid expenses and other current assets                                 2,944             639
                                                                               ------------    ----------
                Total current assets                                             31,451          15,376

Property and equipment, net                                                       5,937           3,056
Cost in excess of fair value of net identifiable assets of acquired
   businesses, less accumulated amortization of $6,039 in 1998
   and $2,878 in 1997                                                           112,840          62,763
Other assets, less accumulated amortization of $769 in 1998
   and $714 in 1997                                                               1,028           1,656
                                                                               -------------    -----------
                                                                               $151,256          82,851
                                                                               =============    ===========
                   Liabilities and Stockholders' Equity

Current liabilities:
        Bank overdraft                                                         $    727              -
        Accounts payable                                                          8,826           3,616
        Accrued expenses                                                          6,798           5,622
        Unearned revenue                                                           --               105
        Current portion of long-term debt, including related parties              3,779           4,361
                                                                               -------------    ------------
                                        Total current liabilities                20,130          13,704

Long-term debt, including related parties                                        90,329          45,442
Other liabilities                                                                   331             165
                                                                               -------------    ------------
                                        Total liabilities                       110,790          59,311

Stockholders' equity:
        Preferred stock, $.01 par value, 1,000,000 shares authorized in series:
          Series A convertible preferred stock 22,500 shares authorized;
            22,500 and 15,000 shares issued and outstanding in 1998
            and 1997, respectively; $22,500 and $15,000 aggregate
            liquidation preference in 1998 and 1997, respectively                     --             --
        Common stock, $.02 par value, 100,000,000 shares authorized;
          5,213,729 and 3,524,949 shares issued in 1998 and 1997,
          respectively; 5,121,979 and 3,433,199 shares outstanding
          in 1998 and 1997, respectively                                            104              71
        Additional paid-in capital                                               48,041          29,055
        Treasury stock, at cost - 91,750 shares in 1998 and 1997                   (550)           (550)
        Notes receivable - stockholder                                           (1,156)         (1,156)
        Accumulated deficit                                                      (5,973)         (3,880)
                                                                               --------------   ------------
                                        Total stockholders' equity               40,466          23,540
                                                                               --------------   ------------
Commitments and contingencies
                                                                               $151,256          82,851
                                                                               ==============   ============

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>

                  ESQUIRE COMMUNICATIONS LTD. AND SUBSIDIARIES

                     Consolidated Statements of Operations

                  Years ended December 31, 1998, 1997 and 1996
                (In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>

                                                                1998            1997            1996
                                                             -------------    -----------     -----------
                                                                               (Note 2)        (Note 2)
<S>                                                          <C>                 <C>            <C>
Revenue                                                      $  110,586          53,178         29,501
                                                            ---------------    ----------     -----------
Costs and expenses:
    Operating expenses                                           63,470          30,284         16,662
    General and administrative expenses                          37,214          20,046         10,585
    Depreciation and amortization                                 4,753           2,522          1,198
                                                            ---------------    ----------    ------------
                                                                105,437          52,852         28,445
                                                            ---------------    ----------    ------------
            Income from operations                                5,149             326          1,056
                                                            ---------------    ----------    ------------
Other income (expense):
    Interest expense                                             (6,669)         (2,697)        (1,225)
    Interest income                                                  87              41              6
    Other                                                            --              --              3
                                                            ---------------    ----------    ------------
                                                                 (6,582)         (2,656)        (1,216)
                                                            ---------------    ----------    ------------
            Loss before provision for income taxes
              and extraordinary item                             (1,433)         (2,330)          (160)

Provision (benefit) for income taxes                               (589)            125            216
                                                            ---------------    ----------    ------------
            Loss before extraordinary item                         (844)         (2,455)          (376)

Extraordinary item - loss on early extinguishment of
   debt, net of tax benefit of $104                                 --              --             157
                                                            ---------------    ----------    ------------
            Net loss                                               (844)         (2,455)          (533)

Dividends on preferred stock                                     (1,249)           (702)           (75)
                                                            ---------------    ----------    ------------
            Net loss applicable to common stockholders      $    (2,093)         (3,157)          (608)
                                                            ===============    ==========    ============
Net loss per common share:
    Basic and diluted:
    Net loss before extraordinary item                      $     (0.48)          (1.12)         (0.19)
    Extraordinary item                                             --               --           (0.06)
                                                            ---------------    -----------    ------------
            Net loss                                        $     (0.48)          (1.12)         (0.25)
                                                            ===============   ============   =============
Weighted-average shares outstanding                           4,352,055       2,815,142      2,479,576


See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
                  ESQUIRE COMMUNICATIONS LTD. AND SUBSIDIARIES

                Consolidated Statements of Stockholders' Equity

                  Years ended December 31, 1998, 1997 and 1996
                        (In Thousands Except Share Data)
<TABLE>
<CAPTION>

                                         Series A                                                     Stock-                 Total
                                  convertible preferred stock    Common stock   Additional            holder                 stock-
                                  ---------------------------   --------------- paid-in     Treasury  Notes     Accumulated holders'
                                   Shares        Amount        Shares   Amount  capital     stock    receivable deficit      equity
                                    --------     ------        ------   ------  --------    -------- ---------- -------     --------
<S>                                 <C>         <C>          <C>          <C>    <C>          <C>      <C>      <C>           <C>
Balance, December 31, 1995              --      $  --        2,490,625   $  49   7,695          --       --     (115)         7,629

Issuance of common stock in
  connection with acquisitions
  of businesses                         --         --          102,003       2     508          --       --       --            510
Purchase of treasury stock              --         --         (216,750)      --     --       (1,300)     --       --         (1,300)
Dividends on preferred stock            --         --              --        --     --          --       --      (75)           (75)
Issuance of 7,500 shares of Series
  A convertible preferred
  stock, net of issuance costs        7,500        --              --        --  6,700          --       --       --          6,700
Net loss                                --         --              --        --     --          --       --     (533)          (533)
                                     -------    -------      ---------     ---- -------    ---------  -------  --------     --------
Balance, December 31, 1996            7,500        --        2,375,878       51 14,903       (1,300)     --     (723)        12,931

Issuance of common stock in
  connection with acquisitions
  of businesses                         --         --          678,000       14  5,680          --       --       --          5,694
Issuance of common stock in connection
  with warrant exchange offering, net
  of issuance costs                     --         --           92,448        2   (177)         --       --       --           (175)
Exercise of nonemployee warrants        --         --           76,540        2    224          --       --       --            226
Exercise of employee stock options      --         --           35,333        1    278          --       --       --            279
Reissuance of treasury stock in
  connection with exercise of employee
  stock options for note receivable     --         --          125,000       --     31          750     (781)     --            --
Issuance of stock options to
  non-employees                         --         --              --        --    632          --       --       --            632
Dividends on preferred stock            --         --              --        --     --          --       --     (702)          (702)
Exercise of employee stock options
  for note receivable                   --         --           50,000        1    374          --      (375)     --            --
Issuance of 7,500 shares of Series A
  convertible preferred stock, net of
  issuance costs                      7,500        --             --         --  7,110          --       --       --          7,110
Net loss                                --         --             --         --     --          --       --   (2,455)        (2,455)
                                     -------     -------     ---------     ----- ------     --------   ------ ----------    --------
Balance, December 31, 1997           15,000        --        3,433,199       71 29,055         (550)  (1,156) (3,880)        23,540

Issuance of common stock in
  connection with acquisitions
  of businesses                         --         --          739,290       15  7,066          --       --       --          7,081
Issuance of stock options in
  connection with business
  acquisitions                          --         --             --         --    514          --       --       --            514
Exercise of nonemployee warrants        --         --          570,615       11  3,894          --       --       --          3,905
Exercise of employee stock options      --         --            3,875       --     31          --       --       --             31
Exchange of options to purchase
  Series B convertible preferred stock
  for common stock                      --         --          375,000        7     (7)         --       --       --            --
Dividends on preferred stock            --         --             --         --     --          --       --   (1,249)        (1,249)
Issuance of 7,500 shares of Series A
  convertible preferred stock,
  net of issuance costs               7,500        --            --          --  7,488          --       --       --          7,488
Net loss                                --         --            --          --     --          --       --     (844)          (844)
                                     -------     -------     ----------   ----- ------       -------  ------- ---------    --------
Balance, December 31, 1998           22,500      $ --        5,121,979     $104 48,041         (550)  (1,156) (5,973)        40,466
                                     =======     =======     ==========   ===== =======      ======== ======= =========    =========

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>

                  ESQUIRE COMMUNICATIONS LTD. AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows

                     Years Ended December 31, 1998, 1997 and 1996
                                 (In Thousands)
<TABLE>
<CAPTION>

                                                                            1998          1997            1996
                                                                         ---------      --------       ---------
<S>                                                                   <C>                <C>             <C>
Cash flows from operating activities:
   Net loss                                                           $    (844)         (2,455)         (533)
   Adjustments to reconcile net loss to net cash
     used in operating activities, excluding effect
     of business acquisitions:
       Depreciation and amortization                                      4,753           2,522         1,198
       Commission expense related to grant of
         stock options                                                      --              329           --
       Provision for deferred income taxes                                  --              140          (168)
       Extraordinary item                                                   --              --            157
      (Increase) decrease in assets:
         Accounts receivable                                             (1,100)         (2,815)       (1,284)
         Prepaid expenses and other current assets                       (1,498)            205          (427)
      Increase (decrease) in liabilities:
         Accounts payable, accrued expenses and
           unearned revenue                                              (3,037)          1,753           845
         Other liabilities                                                  166             (95)           37
                                                                      -----------       ------------   ----------
              Net cash used in operating activities                      (1,560)          (416)         (175)
                                                                      -----------       ------------   ----------
Cash flows from investing activities:
   Acquisitions of businesses                                           (43,683)        (34,866)       (3,958)
   Increase in other assets                                               1,081            (620)         (314)
   Purchases of property and equipment                                   (3,324)           (737)         (952)
                                                                      -----------      -------------  -----------
              Net cash used in investing activities                     (45,926)        (36,223)       (5,224)
                                                                      -----------      -------------  -----------
Cash flows from financing activities:
   Change in bank overdraft                                                 727             --            --
   Proceeds from long-term debt                                          39,650          31,846         8,218
   Payment of preferred stock dividends                                    --              (627)          --
   Principal payments on long-term debt                                  (3,110)         (1,552)       (6,317)
   Repayment under bank line of credit, net                                --               --         (1,600)
   Payment of deferred financing costs                                     (388)           (538)         (287)
   Proceeds from exercise of employee stock
      options                                                                31             279           --
   Purchase of treasury stock                                                --             --         (1,300)
   Warrant exchange offering issuance costs                                  --            (175)          --
   Proceeds from issuance of Series A convertible
      preferred stock, net                                                7,488           7,110         6,700
   Proceeds from exercise of warrants, net                                3,905             226           --
                                                                      -----------      ------------  ---------
              Net cash provided by financing activities                  48,303           36,569        5,414
                                                                      -----------      ------------  ----------
Net increase (decrease) in cash                                             817             (70)           15
Cash at beginning of year                                                   116             186           171
                                                                      -----------      ------------  ----------
Cash at end of year                                                   $     933             116           186
                                                                      ===========      ============  ==========


See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
                  ESQUIRE COMMUNICAITONS LTD. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997 and 1996
                (In Thousands, Except Share and Per Share Data)


(1)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

       (a)    PRINCIPLES OF CONSOLIDATION AND DESCRIPTION OF BUSINESS

              The accompanying consolidated financial statements include
              the financial statements of Esquire Communications Ltd. and
              its subsidiaries, all of which are wholly-owned
              (collectively, the Company).  All significant intercompany
              accounts and transactions have been eliminated.

              The Company is the nation's leading provider of court
              reporting services to law firms, insurance companies and
              major corporations through Company-owned offices located in
              24 markets in 11 states and the District of Columbia.  In
              addition, the Company recently acquired several companies
              which provide permanent and temporary staffing of financial
              and legal professionals, legal video services, records
              retrieval, process service and document depository services.

       (b)    REVENUE RECOGNITION

              Revenue and the related direct costs of court reporters and
              transcribers are recognized when services rendered are billable,
              which generally occurs at the time the final documents are
              transcribed and completed. 

              Permanent staffing income is recognized when a candidate is 
              accepted for employment. Provisions are made for estimated losses
              in realization (principally due to failure of applicants to 
              complete stipulated employment periods). Temporary staffing 
              income is recognized when the temporary personnel provide the 
              services.

       (c)    PROPERTY AND EQUIPMENT

              Property and equipment are recorded at cost. Depreciation is
              computed using both accelerated and straight-line methods over the
              estimated useful life of the assets. Property and equipment held
              under capital leases and leasehold improvements are amortized
              straight-line over the shorter of the estimated useful lives of
              the assets or the lease terms. Maintenance and repairs are charged
              to expense as incurred while improvements are capitalized.

       (d)    GOODWILL AND OTHER INTANGIBLE ASSETS

              The cost in excess of the fair values of net identifiable tangible
              and intangible assets of acquired businesses (goodwill) is
              amortized using the straight-line method over periods ranging from
              25 to 40 years. The Company assesses the recoverability of this
              intangible asset by determining whether the amortization of the
              goodwill balance over its remaining life can be recovered through
              undiscounted future operating cash flows of the acquired
              operation. The amount of goodwill impairment, if any, is measured
              based on projected discounted future operating cash flows using a
              discount rate reflecting the Company's average cost of funds. The
              assessment of the recoverability of goodwill will be impacted if
              estimated future operating cash flows are not achieved. 

              Other intangible assets consisting primarily of customer lists,
              covenants not to compete and deferred financing costs are
              amortized using the straight-line method over the assets'
              respective estimated lives or terms, typically no more than ten
              years. Amortization expense for fiscal years 1998, 1997 and 1996
              related to intangible assets was $3,217, $1,824 and $824,
              respectively.

       (e)    INCOME TAXES

              The Company utilizes the asset and liability method of accounting
              for income taxes. Under this method, deferred tax assets and
              liabilities are recognized for the future tax consequences
              attributable to differences between the financial statement
              carrying amounts of existing assets and liabilities and their
              respective tax bases and operating loss and tax credit
              carryforwards. Deferred tax assets and liabilities are measured
              using enacted tax rates expected to apply to taxable income in the
              years in which those temporary differences are expected to be
              recovered or settled. The effect on deferred tax assets and
              liabilities of a change in tax rates is recognized in income in
              the period that includes the enactment date.

       (f)    LOSS PER COMMON SHARE

              In 1997, the Company adopted the provisions of Statement of
              Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE.
              SFAS No. 128 supersedes Accounting Principles Board (APB) Opinion
              No. 15 and replaces primary and fully diluted earnings per share
              (EPS) under APB Opinion No. 15 with basic and diluted EPS. Basic
              EPS excludes dilution and is calculated using the weighted-average
              number of common shares outstanding for the period. Diluted EPS
              reflects the potential dilution of securities that could share in
              the earnings of the Company's net earnings per common share.
              Options, warrants, convertible preferred stock and debt and
              contingently issuable shares of common stock totaling
              approximately 4,280,818, 2,717,216 and 9,935 shares were excluded
              from the computations of net loss per common share for the years
              ended December 31, 1998, 1997 and 1996, respectively, as their
              effect is antidilutive.

<PAGE>

                  ESQUIRE COMMUNICATIONS LTD. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997 and 1996
                (In Thousands, Except Share and Per Share Data)


The following table sets forth the computation of basic and diluted net loss per
share based on the requirements of SFAS No. 128:
<TABLE>
<CAPTION>

                                                                           Years ended December 31,
                                                            ------------------------------------------------------
                                                                   1998                 1997                  1996
                                                            ------------------   ------------------    ----------------
                                                                                                          (Note 2)
<S>                                                           <C>                    <C>                     <C>
Numerator:
   Net loss                                                   $   (844)              (2,455)                 (533)
   Less dividends on preferred stock                            (1,249)                (702)                 (75)
                                                            ------------------   ------------------    ------------------

   Numerator for basic and diluted net loss per share -
       loss available to common stockholders                    (2,093)              (3,157)                (608)

Denominator for basic and diluted net loss per
   share -  weighted-average shares outstanding              4,352,055            2,815,142            2,479,576
                                                            ==================   ==================   ==================

   Basic and diluted net loss per share                    $    (0.48)               (1.12)               (0.25)
                                                           ===================   ==================    ==================

</TABLE>

       (g)    ACCOUNTING FOR STOCK-BASED COMPENSATION

               The Company accounts for its stock option plan in accordance with
               the provisions of APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED
               TO EMPLOYEES, and the Company provides pro forma net income
               disclosures for employee stock option grants made as if the
               Company had adopted the fair value method under SFAS No. 123,
               ACCOUNTING FOR STOCK-BASED COMPENSATION.

       (h)    IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE
              DISPOSED OF

               Long-lived assets and certain identifiable intangibles are
               reviewed for impairment whenever events or change in 
               circumstances indicate that the carrying amount of an asset may 
               not be recoverable. Recoverability of assets to be held and used 
               is measured by a comparison of the carrying amount of an asset to
               future cash flows (undiscounted and without interest charges) 
               expected to be generated by the asset. If such assets are 
               considered to be impaired, the impairment to be recognized is 
               measured by the amount by which the carrying amount of the assets
               exceeds the fair value of the assets. Assets to be disposed of 
               are reported at the lower of the carrying amount or fair value 
               less selling costs.

       (i)    FAIR VALUE OF FINANCIAL INSTRUMENTS

               The carrying value of cash, accounts receivable, current
               maturities of long-term debt, accounts payable and accrued
               expenses approximates their fair value because of the short-term
               maturity of these instruments. The carrying value of long-term
               debt approximates its fair value as such amounts bear rates of
               interest which approximate the Company's current borrowing rate
               for instruments with similar terms.

       (j)    SEGMENT INFORMATION

               The Company adopted SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
               AN ENTERPRISE AND RELATED INFORMATION, in 1998. This statement
               establishes standards for the reporting of information about
               operating segments in annual and interim financial statements and
               requires restatement of prior year information. Operating
               segments are defined as components of an enterprise for which
               separate financial information is available that is evaluated
               regularly by the chief operating decision maker(s) in deciding
               how to allocate resources and in assessing performance. SFAS No.
               131 also requires disclosures about products and services,
               geographic areas and major customers. The adoption of SFAS No.
               131 did not affect results of operations or financial position
               but did affect the disclosure of segment information, as
               presented in Note 10.

       (k)    USE OF ESTIMATES

               The preparation of financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect the reported amounts
               of assets and liabilities, the disclosure of contingent assets
               and liabilities at the date of the financial statements and the
               reported amounts of revenue and expenses during the reporting
               period. Actual results could differ from those estimates.

       (l)     RECLASSIFICATIONS

               Certain reclassifications have been made to the 1997 and 1996
               balances in order to conform with the presentation in 1998.

(2)    REVERSE STOCK SPLIT

       On November 17, 1998, the Company's stockholders voted to amend the
       Company's Certificate of Incorporation and effect a 1-for-2 reverse stock
       split of all outstanding common stock and increase the par value of the
       Company's common stock from $.01 to $.02 effective November 30, 1998. All
       share and per share amounts have been restated to give effect to the
       reverse stock split.

(3)    BUSINESS COMBINATIONS

       (a)     PURCHASE BUSINESS COMBINATIONS

               1996 ACQUISITIONS

               On July 26, 1996, the Company acquired the assets and liabilities
               of Kitlas, Dickman & Associates (KDA), a court reporting agency
               based in San Diego, California. The acquisition, accounted for
               under the purchase method of accounting, has resulted in the
               inclusion of the results of operations of KDA from the date of
               acquisition, which had an immaterial effect on the operating
               results of the Company. The total purchase price inclusive of
               transaction costs, consisted of $305 in cash, $367 estimated earn
               out and assumption of net liabilities of $221. During 1998 and
               1997, the Company paid $125 and $180, respectively, in
               connection with the acquisition's earn out provision. The total 
               cost in excess of fair value of net identifiable assets acquired,
               including the estimated earn out, was approximately $893.

               On October 28, 1996, the Company acquired the assets and
               liabilities of M&M Reporting Referral Services, Inc. (M&M), a
               Southern California-based court reporting company. The purchase
               price, inclusive of transaction costs, consisted of approximately
               $3,243 of cash, subordinated promissory notes in the aggregate
               amount of $2,625 and 66,129 unregistered shares of the Company's
               common stock valued at $309. The principal amount of one of the
               notes and the cash portion of the purchase price were subject to
               revision based on the revenue derived from M&M's business for 12
               months commencing November 1, 1996, which resulted in a decrease
               in 1998 in one of the notes of $88. The Company accounted for
               this revision as an adjustment to goodwill. The subordinated
               promissory notes are payable in equal quarterly installments over
               a period of five years together with interest at the rate of 9%
               per annum. The total cost in excess of fair value of net 
               identifiable assets acquired was approximately $5,581.

               On November 15, 1996, the Company acquired the assets and
               liabilities of Sherry Roe & Associates, Inc. (SRA), a Washington,
               D.C.-based court reporting company. The purchase price, inclusive
               of transaction costs, consisted of approximately $684 of cash,
               subordinated promissory notes in the aggregate amount of $530 and
               35,874 unregistered shares of the Company's common stock valued
               at $200. The principal amount of one of the notes and cash
               portion of the purchase price were subject to revision based on
               the revenue derived from SRA's business for 24 months commencing
               December 1, 1996. In 1998, the purchase price was increased by
               $60 based on the revenue derived from SRA's business. This
               increase was accounted for as an increase to goodwill. The
               subordinated promissory notes are payable in equal quarterly
               installments over a period of six years together with interest
               at the rate of 8% per annum. The total cost in excess of fair 
               value of net identifiable assets acquired was approximately 
               $1,223.

               1997 ACQUISITIONS

               On January 3, 1997, the Company acquired the assets and
               liabilities of Nevill & Swinehart and Pelletier & Jones, both
               Southern California-based court reporting companies, and entered
               into consulting and noncompetition agreements for an aggregate
               consideration of $4,520 consisting of cash in the amount of
               $2,065, subordinated promissory notes and installment payments in
               the aggregate amount of $735 payable in equal quarterly
               installments over a period of six years, and 50,000 unregistered
               shares of the Company's common stock valued at $220. The purchase
               price for these companies was amended on July 1, 1997, with the
               issuance of additional subordinated promissory notes in the
               aggregate amount of $1,500, payable in equal quarterly
               installments over a period of five years. The cost in excess of
               fair value of net identifiable assets acquired was approximately
               $3,858, and other intangible assets of approximately $375 were
               recognized.

               On May 28, 1997, the Company acquired the assets and liabilities
               of Wolfe, Rosenberg & Associates, Inc. (WRA), a court reporting
               agency based in Chicago, Illinois. The purchase price, inclusive
               of transaction costs, consisted of approximately $6,397 paid in
               cash and liabilities discharged of $123. The purchase price is
               subject to revision based upon the revenue derived from WRA's
               business for 24 months commencing June 1997. The Company will
               account for any such revision as an adjustment to goodwill, when
               such contingencies are resolved. During 1998, the purchase price
               was increased by $239 based upon revenues derived from WRA's
               business during the first 12 months and was accounted for as an
               adjustment to goodwill. The total cost in excess of fair value of
               net identifiable assets acquired was approximately $6,951.

               On June 13, 1997, the Company acquired the assets and liabilities
               of Krauss, Katz & Ackerman, Inc. (KKA), a court reporting agency
               based in Philadelphia, Pennsylvania. The purchase price,
               inclusive of transaction costs, consisted of approximately $9,374
               paid in cash and liabilities discharged of $150. The purchase
               price was subject to an increase based upon the revenue derived
               from KKA's business for the three years ending December 31, 1999.
               The increase was payable in unregistered shares of the Company's
               common stock, up to a maximum of 150,000 shares. In November
               1997, the agreement with KKA was amended to delete any increase
               to the purchase price, and the Company issued 150,000
               unregistered shares of the Company's common stock valued at
               $1,560. The Company accounted for the amendment as an adjustment
               to goodwill. The cost in excess of fair value of net identifiable
               assets acquired was approximately $10,589.

               On June 18, 1997, the Company acquired the assets and liabilities
               of American Network Services, Inc., a court reporting referral
               network based in Atlanta, Georgia. The purchase price, inclusive
               of transaction costs, consisted of approximately $6,692 in cash
               and 375,000 unregistered shares of the Company's common stock
               valued at $2,700. The cost in excess of fair value of net
               identifiable assets acquired was approximately $9,731.

               On August 29, 1997, the Company acquired substantially all the
               assets and liabilities of Hyatt Court Reporting & Video, Inc., a
               Denver, Colorado-based court reporting firm. The purchase price,
               inclusive of transaction costs, consisted of $665 in cash and a
               promissory note in the principal amount of $100. The promissory
               note is payable in equal quarterly installments over a period of
               two years, without interest. The cost in excess of fair value of
               net identifiable assets acquired was approximately $450, and
               other intangible assets of approximately $300 were recognized.

               On October 1, 1997, the Company acquired substantially all the
               assets and liabilities of Kim Tindall & Associates, a San
               Antonio, Texas-based court reporting firm. The purchase price,
               inclusive of transaction costs, consisted of $2,236 in cash and
               60,000 unregistered shares of the Company's common stock valued
               at $660. The cost in excess of fair value of net identifiable
               assets acquired was approximately $2,191.

               On October 7, 1997 and effective October 15, 1997, the Company
               acquired substantially all the assets and liabilities of five
               court reporting firms in Fort Lauderdale, Florida, consisting of
               Associates/Certified Reporting, County Reporting, Justice
               Reporting, Lauderdale Reporting and Merit Reporting. The
               aggregate purchase price for the five companies, inclusive of
               transaction costs, consisted of $3,252 in cash, 43,000
               unregistered shares of the Company's common stock valued at $554
               and a $50 promissory note payable in 16 equal quarterly
               installments with interest at the rate of 8% per annum. The cost
               in excess of fair value of net identifiable assets acquired was
               approximately $4,026.

               On October 9, 1997, the Company acquired substantially all the
               assets and liabilities of Haynes & Harpster Court Reporters, a
               Southern California-based court reporting firm. The purchase
               price paid by the Company consisted of $409 in cash and a
               promissory note in the principal amount of $175, payable in eight
               equal quarterly installments without interest. The total cost in 
               excess of fair value of net identifiable assets acquired was
               approximately $488.

               On October 9, 1997, the Company acquired substantially all the
               assets and liabilities of Cynthia Varelli, a Chicago,
               Illinois-based court reporting firm. The purchase price paid,
               inclusive of transaction costs, consisted of $345 in cash, $300
               payable in twelve equal installments and two promissory notes in
               the aggregate principal amount of $397, $297 of which was paid
               during 1998, with the balance payable in eight equal quarterly
               installments without interest. The cost in excess of fair value
               of net identifiable assets acquired was approximately $1,066.

               In December 1997, the Company acquired substantially all the
               assets and liabilities of Henry Jacobs & Associates and
               Affiliated Reporters (doing business as Certified Reporting
               Company), two court reporting agencies based in New York City.
               The aggregate purchase price, inclusive of transaction costs,
               consisted of $3,784 in cash, a promissory note in the principal
               amount of $450 payable in 20 equal quarterly installments
               together with interest at the rate of 8% per annum, and a
               convertible promissory note in the principal amount of $500
               payable in three years, without interest. The cost in excess of
               fair value of net identifiable assets acquired was approximately
               $4,642.

               1998 ACQUISITIONS

               On January 5, 1998, the Company acquired substantially all the
               assets and liabilities of A & A Court Reporters, a court
               reporting agency based in Houston, Texas. The purchase price
               paid, inclusive of transaction costs, consisted of approximately
               $2,785 paid in cash and 70,500 unregistered shares of the
               Company's common stock valued at $606. The terms of the
               acquisition agreement provide for additional compensation to be
               paid by the Company if within three years from the acquisition
               date the Company acquires additional court reporting or video
               companies in the Houston, Texas and South Texas areas. Such
               additional consideration will be recorded when earned as
               additional purchase price. The cost in excess of fair value of
               net identifiable assets acquired was approximately $3,131.

               On January 7, 1998, the Company acquired substantially all the
               assets and liabilities of Brody & Geiser, a court reporting
               agency based in northern New Jersey. The purchase price paid,
               inclusive of transaction costs, consisted of approximately $1,975
               paid in cash and 113,793 unregistered shares of the Company's
               common stock valued at $979. The cost in excess of fair value of
               net identifiable assets acquired was approximately $2,757.

               On January 16, 1998, the Company acquired substantially all the
               assets and liabilities of Kerns & Gradillas, a court reporting
               agency based in Southern California. The purchase price paid,
               inclusive of transaction costs, consisted of approximately $6,602
               paid in cash, liabilities discharged of $79, a convertible
               promissory note in the principal amount of $1,300 payable in
               three years with interest payable quarterly at the rate of 7% per
               annum (convertible into common stock at a conversion price of
               $16.00 per share) and 85,715 unregistered shares of the
               Company's common stock valued at $840. The cost in excess of fair
               value of net identifiable assets acquired was approximately
               $7,846.

               On February 12, 1998, the Company acquired substantially all the
               assets and liabilities of Jewelinski Court Reporters
               (Jewelinski), a court reporting agency based in Southern
               California. The purchase price paid, inclusive of transaction
               costs, consisted of approximately $124 paid in cash and a
               promissory note in the principal amount of $390 payable in 24
               equal monthly installments without interest. The former owners of
               Jewelinski were also given the opportunity to receive 37,500
               unregistered shares of the Company's common stock based upon
               Jewelinski's revenue levels in each of the three years following
               the acquisition. Approximately 10,000 to 12,500 shares of common
               stock will be issued during 1999 relating to 1998 revenue levels.
               Goodwill will be increased by the value of the common stock
               issued. The cost in excess of fair value of net identifiable
               assets acquired was approximately $548.

               On February 20, 1998, the Company acquired substantially all the
               assets and liabilities of Friedli, Wolff & Pastore, a court
               reporting agency based in Washington, D.C. The purchase price
               paid, inclusive of transaction costs, consisted of approximately
               $548 paid in cash and 10,000 unregistered shares of the Company's
               common stock valued at $88. The cost in excess of fair value of
               net identifiable assets acquired was approximately $656.

               On March 16, 1998, the Company acquired substantially all the
               assets and liabilities of VerbaVolant, Inc., a court reporting
               agency based in New York City. The purchase price paid, inclusive
               of transaction costs, consisted of approximately $399 paid in
               cash and options to purchase 15,000 shares of the Company's
               common stock valued at $97. The cost in excess of fair value of
               net identifiable assets acquired was approximately $362.

               On March 16, 1998, the Company acquired substantially all the
               assets and liabilities of McGuire's Reporting Service and
               Morrissy & Others Ltd., two court reporting agencies based in
               Chicago, Illinois. The aggregate purchase price, inclusive of
               transaction costs, consisted of approximately $1,089 paid in
               cash, promissory notes in the aggregate principal amount of $375
               payable in 12 equal quarterly installments, without interest, and
               9,000 unregistered shares of the Company's common stock valued at
               $95. The cost in excess of fair value of the aggregate net
               identifiable assets acquired was approximately $1,402.

               On April 17, 1998, the Company acquired substantially all the
               assets and liabilities of Pollock & Upshaw, a court reporting
               agency based in San Antonio, Texas. The purchase price, inclusive
               of transaction costs, consisted of approximately $267 paid in
               cash and a convertible promissory note in the principal amount of
               $100 payable in three years with interest payable quarterly at
               the rate of 8% per annum (convertible into common stock at a
               conversion price of $20.00 per share). The cost in excess of fair
               value of net identifiable assets acquired was approximately $337.

               On April 30, 1998, the Company acquired substantially all the
               assets and liabilities of Atlantic Court Reporting, a court
               reporting agency based in Fort Lauderdale, Florida. The purchase
               price, inclusive of transaction costs, consisted of approximately
               $558 paid in cash and a promissory note in the principal amount
               of $150 payable in 16 equal quarterly installments with interest
               at the rate of 7% per annum. The purchase price is subject to
               revision based upon the revenue derived from Atlantic's business
               for 12 months commencing May 1998. The Company will account for
               any such revision as an adjustment to goodwill when such
               contingencies are resolved. The cost in excess of fair value of
               net identifiable assets acquired was approximately $648.

               On May 5, 1998, the Company acquired substantially all the assets
               and liabilities of Bright & Associates, a court reporting agency
               based in Austin, Texas. The purchase price, inclusive of
               transaction costs, consisted of approximately $871 paid in cash
               and a promissory note in the principal amount of $340 payable in
               12 equal quarterly installments with interest at the rate of
               6.125% per annum. The cost in excess of fair value of net
               identifiable assets acquired was approximately $1,154.

               On May 7, 1998, the Company acquired substantially all the assets
               and liabilities of Riggleman, Turk & Nelson (RT&N), a court
               reporting agency based in Baltimore, Maryland. The purchase
               price, inclusive of transaction costs, consisted of approximately
               $717 paid in cash and 13,750 unregistered shares of the Company's
               common stock valued at $275, which represents the guaranteed
               value of the shares issued. On the second anniversary of the
               closing date, the former owners of RT&N have the option to
               sell the unregistered shares of common stock received back to the
               Company at a price of $20.00 per share. The value of the
               unregistered shares of common stock issued has been recorded at
               its guaranteed value. The cost in excess of fair value of net
               identifiable assets acquired was approximately $866.

               On May 15, 1998, the Company acquired substantially all the
               assets and liabilities of A-L Associates, Inc. and Attorneys on
               Assignment, a permanent staffing agency and a temporary staffing
               agency, respectively, both of which are based in New York City.
               The aggregate purchase price, inclusive of transaction costs,
               consisted of approximately $7,650 paid in cash, 83,334
               unregistered shares of the Company's common stock valued at $733
               and options to purchase 100,000 shares of the Company's common
               stock valued at $410. The purchase price is subject to revision
               based upon the earnings before interest, taxes and depreciation
               and amortization of A-L's business for the period ended December
               31, 1998 and each of the years in the three-year period ending
               December 31, 2001, payable by the Company in cash and shares of
               the Company's common stock. The Company will account for any such
               revision as an adjustment to goodwill when such contingencies are
               resolved. There was no such revision for the period ended
               December 31, 1998. The cost in excess of fair value of net
               identifiable assets acquired was approximately $7,185.

               On May 27, 1998, the Company acquired substantially all the
               assets and liabilities of Rubin Reporting, a court reporting
               agency based in Chicago, Illinois. The purchase price, inclusive
               of transaction costs, consisted of approximately $1,177 paid in
               cash, a promissory note in the principal amount of $250 payable
               in 12 equal quarterly installments without interest and 9,924
               unregistered shares of the Company's common stock valued at $86.
               The cost in excess of fair value of net identifiable assets
               acquired was approximately $1,412.

               On June 10, 1998, the Company acquired substantially all the
               assets and liabilities of Summit Reporting and Summit Document
               Retrieval Services, a court reporting agency and records
               retrieval agency, respectively, based in Houston, Texas. The
               aggregate purchase price, inclusive of transaction costs,
               consisted of approximately $1,279 paid in cash, a promissory note
               in the principal amount of $200 payable in 12 equal quarterly
               installments with interest at the rate of 7% per annum and 17,500
               unregistered shares of the Company's common stock valued at $350,
               which represents the guaranteed value of the shares issued. The
               purchase price is subject to revision based upon the revenue
               derived from Summit's business for a period of 12 months
               commencing June 1998. The Company will account for any such
               revision as an adjustment to goodwill when such contingencies are
               resolved. The purchase price is also subject to revision based
               upon the market price of the Company's common stock during the
               36-month period following the acquisition. If the market price of
               the Company's stock does not reach at least $20.00 per share for
               a period of at least 15 trading days, the Company could be
               required to deliver up to an additional 10,000 shares of the
               Company's common stock. The Company will account for the issuance
               of the additional shares, if applicable, as a reclassification
               from additional paid-in capital to common stock for the par value
               of the additional shares issued. The cost in excess of fair value
               of net identifiable assets acquired was approximately $1,549.

               On June 15, 1998, the Company acquired substantially all the
               assets and liabilities of Hamilton-Legato Deposition Centers, a
               court reporting agency based in Troy, Michigan. The purchase
               price, inclusive of transaction costs, consisted of approximately
               $5,165 paid in cash and a convertible promissory note in the
               principal amount of $2,800 payable in 20 equal quarterly
               installments with interest at the rate of 7% per annum
               (convertible into common stock at a conversion price of $20.00
               per share). The cost in excess of fair value of net identifiable
               assets acquired was approximately $7,598.

               On July 10, 1998, the Company acquired substantially all the
               assets and liabilities of Cooksey-Regal Deposition Reporters, a
               court reporting agency based in Sacramento, California. The
               purchase price, inclusive of transaction costs, consisted of
               approximately $367 paid in cash, a promissory note in the
               principal amount of $250 payable in 16 equal quarterly
               installments without interest and 5,000 unregistered shares of
               the Company's common stock valued at $52. The cost in excess of
               fair value of net identifiable assets acquired was approximately
               $664.

               On July 17, 1998, the Company acquired substantially all the
               assets and liabilities of Messenger & Associates, a court
               reporting agency based in Dallas, Texas. The purchase price,
               inclusive of transaction costs, consisted of approximately $238
               paid in cash and a promissory note in the principal amount of $88
               payable in 12 equal quarterly installments with interest at the
               rate of 7% per annum. The cost in excess of fair value of net
               identifiable assets acquired was approximately $324.

               On July 17, 1998, the Company acquired all of the outstanding
               common stock of Mudrick Witt Professional Reporting, a court
               reporting agency based in West Palm Beach, Florida. The purchase
               price, inclusive of transaction costs, consisted of approximately
               $3,838 paid in cash and 135,000 unregistered shares of the
               Company's common stock valued at $1,404. The cost in excess of
               fair value of net identifiable assets acquired was approximately
               $4,574.

               On August 7, 1998, the Company acquired all of the outstanding
               common stock of Philips & Associates, a court reporting agency
               based in Sacramento, California. The purchase price, inclusive of
               transaction costs, consisted of approximately $41 paid in cash
               and 158,000 unregistered shares of the Company's common stock
               valued at $1,612. The cost in excess of fair value of net
               identifiable assets acquired was approximately $1,164.

               On August 28, 1998, the Company acquired substantially all the
               assets and liabilities of Gregory & Gregory Associates, Inc. and
               Gregory & Gregory Staffing, Inc. (collectively Gregory &
               Gregory), a permanent staffing agency and a temporary staffing
               agency, respectively, both of which are based in New York City.
               The aggregate purchase price, inclusive of transaction costs,
               consisted of approximately $6,257 paid in cash, a promissory note
               in the principal amount of $750 with interest at the rate of 6.5%
               per annum, with $450 payable on November 30, 1998 and the
               remainder payable in three equal quarterly installments beginning
               February 28, 1999, and 27,778 unregistered shares of the
               Company's common stock valued at $238. The purchase price is
               subject to revision based upon the earnings before interest,
               taxes and depreciation and amortization of Gregory & Gregory's
               business for the period ended December 31, 1998. In connection
               with this revision, the Company will pay to the former owners of
               Gregory & Gregory $200, and 150,000 shares of the Company's 
               common stock will be issued during 1999. Goodwill will be 
               increased for the value of the additional consideration received.
               The cost in excess of fair value of net identifiable assets 
               acquired was approximately $6,613.

               On October 13, 1998, the Company acquired substantially all the
               assets and liabilities of Lieberman & Chaim, Inc., a court
               reporting agency based in Philadelphia, Pennsylvania. The
               purchase price, inclusive of transaction costs, consisted of
               approximately $613 paid in cash, a promissory note in the
               principal amount of $150 payable in 8 equal quarterly
               installments without interest and options to purchase 5,000
               shares of the Company's common stock valued at $7. The cost in
               excess of fair value of net identifiable assets acquired was
               approximately $693.

               On November 6, 1998, the Company acquired substantially all the
               assets and liabilities of Mannion Reporting, a court reporting
               agency based in Northern New Jersey. The purchase price,
               inclusive of transaction costs, consisted of approximately $156
               paid in cash and a promissory note in the principal amount of $75
               payable in 12 equal quarterly installments with interest at the
               rate of 7% per annum. The cost in excess of fair value of net
               identifiable assets acquired was approximately $206.

               On November 6, 1998, the Company acquired substantially all the
               assets and liabilities of Precise Reporting & Video, Inc., a
               court reporting agency based in Fort Lauderdale, Florida. The
               purchase price, inclusive of transaction costs, consisted of
               approximately $489 paid in cash and two promissory notes in the
               aggregate amount of $141, payable in 12 equal quarterly
               installments with interest at the rate of 6.75% per annum. The
               cost in excess of fair value of net identifiable assets acquired
               was approximately $616.

               On December 1, 1998, the Company acquired certain assets of The
               Granite Group, Inc., a temporary staffing agency based in New
               York City. The purchase price, inclusive of transaction costs,
               consisted of approximately $25 paid in cash and 10,416
               unregistered shares of the Company's common stock (the shares
               vest in three equal annual installments commencing one year from
               the acquisition date). The Company will account for the stock
               issuance as an adjustment to goodwill, as such stock becomes
               vested. 

               The following unaudited pro forma information assumes the 1998
               Acquisitions occurred on January 1, 1997, the 1997 Acquisitions
               and the sale of preferred stock occurred on January 1, 1996, and
               the 1996 Acquisitions, the private placement of Series A
               convertible preferred stock, the Company's repurchase of its
               common stock and the revolving loan credit agreement and related
               repayment of certain existing debt occurred on January 1, 1996.
               These results are not necessarily indicative of future
               operations, nor of results that would have occurred had the
               acquisitions and other transactions been consummated as of the
               beginning of the periods presented:

                                         1998          1997            1996
                                  -------------   ------------     ----------

               Revenue                 $ 135,979      135,590          53,754
               Net (loss) income
                applicable to common
                stockholders              (1,827)        (489)            571
               Net (loss) income per
                 common share - basic      (0.40)       (0.13)           0.24
               Net (loss) income per
                 common share- diluted     (0.40)       (0.13)           0.24


              1999 ACQUISITION

               On January 1, 1999, the Company acquired all of the outstanding
               common stock of CAT-LINKS, Inc., a court reporting software
               development company from an officer/director of the Company. The
               purchase price paid, inclusive of transaction costs, consisted of
               approximately $60 paid in cash and 50,000 unregistered shares of
               the Company's common stock valued at $170. The cost in excess of
               fair value of net identifiable assets acquired was approximately
               $387.

       (b)    POOLING OF INTERESTS BUSINESS COMBINATION

               On November 7, 1997, the Company acquired all of the common stock
               of Jurist-Begley Reporting Services, Inc., Jurist, Inc. and 
               Aarons & Associates, Inc. (collectively Jurist) in exchange for 
               427,214 shares of the Company's common stock. Jurist is a 
               Philadelphia, Pennsylvania-based court reporting company.

               The merger constituted a tax-free reorganization and has been
               accounted for as a pooling of interests, and accordingly, the
               accompanying consolidated financial statements have been restated
               to include the results of Jurist for all periods presented. The
               fiscal year-end of Jurist was conformed to the Company's.

               Revenue and net loss from continuing operations of the combining
               companies for the periods preceding the acquisition are as
               follows (excluding extraordinary item in 1996):

                                           Period from
                                            January 1,
                                           1997 through             Year ended
                                            November 6,             December 31,
                                               1997                    1996
                                         -------------             -------------

               Revenue:
                  Esquire                       $ 37,010               24,583
                  Jurist                           3,952                4,918
                                          ----------------        -------------
                                                $ 40,962               29,501
                                          ================        =============

               Net loss before extraordinary
                item:
                 Esquire                          (1,475)               (309)
                 Jurist                             (511)                (67)
                                          ----------------        -------------
                                              $   (1,986)               (376)
                                          =================       =============

               The combined financial results presented above include
               adjustments made to conform to the accounting policies of the two
               companies. In connection with the merger, the Company recorded
               charges of $922 in the quarter ended December 31, 1997. These
               charges include legal, accounting and other fees.

   (4)         PROPERTY AND EQUIPMENT

               Property and equipment consists of the following as of December
               31, 1998 and 1997:

                                                                    Depreciable
                                           1998        1997            lives
                                        -----------   ---------     -----------

               Office condominium         $  208         203           31 years
               Equipment                   8,128       4,495       5 to 7 years
               Leasehold improvements      1,782       1,002       5 to 10 years
                                        -----------   ---------    -------------
                                          10,118       5,700

               Less accumulated
                depreciation and
                amortization              (4,181)     (2,644)
                                        -----------  -----------
                                         $ 5,937       3,056
                                        ===========  ===========

               Depreciation and amortization expense for property and equipment
               amounted to $1,537, $698 and $432 for the years ended December 
               31, 1998, 1997 and 1996, respectively.

   (5)         LONG-TERM DEBT

               Long-term debt consists of the following as of December 31, 1998
               and 1997:

                                                       1998              1997
                                                    -------------     ---------

               Revolving loan agreement(A)            $ 79,715          40,065
               Promissory notes(B)                       8,402           8,691
               Contract obligation(C)                      341             422
               Other notes and obligations(D)              815             125
               Convertible notes(E)                      4,560             500
               Common stock repurchase guaranty(F)         275              --
                                                      ------------    ---------
                                                        94,108          49,803
               Less current portion of long-term debt   (3,779)         (4,361)
                                                      ------------    ---------
                                                      $ 90,329          45,442
                                                      ============    =========

           (A) In December 1996, the Company entered into a three-year
               revolving loan agreement, as amended, (Loan Agreement) with a
               financial institution which is a preferred stockholder of the
               company. The Loan Agreement provides for borrowings of up to
               $80,000 based on operating cash flows as defined therein.
               Borrowings under the Loan Agreement bear interest at either prime
               rate or London Inter-Bank Offered Rate (LIBOR), at the Company's
               election, plus applicable margin rate. The applicable margin
               varies on the basis of operating cash flows and overall leverage
               ratio as defined in the Loan Agreement. The effective rate at
               December 31, 1998 and 1997 was 8.7% and 9.3%, respectively. In
               addition, substantially all other lenders to the Company have
               entered into a subordination agreement with this financial
               institution.

               The Loan Agreement, which is secured by substantially all the
               assets of the Company, restricts future indebtedness,
               investments, distributions, acquisitions or sale of assets and
               capital expenditures and also requires the maintenance of certain
               financial ratios and covenants. At December 31, 1998, the Company
               did not comply with certain covenant requirements for which the
               Company received waivers and amendments on February 16, 1999 and
               April 12, 1999. These amendments contain among other things, an
               increase in the total borrowing capacity to $80,800 through May
               31, 1999 and $83,500 thereafter, a provision for the payment of
               fees equal to $400, a provision for the conversion of all LIBOR
               loans to prime rate loans at the end of the Interest Period, as
               defined therein, and an extension of the expiration date of
               the Loan Agreement to January 3, 2000.

               Furthermore, the Loan Agreement, as amended, consists of two
               segments. Segment A consists of revolving loans totaling $77,000.
               The interest rate on the borrowings under this segment is prime
               rate or LIBOR, plus an applicable margin rate of 1.75% and 3.25%,
               respectively, plus a PIK margin of 0.75% and an additional PIK
               Margin of 1.25% on outstanding borrowings in excess of the
               available borrowing capacity based upon operating cash flows, if
               any. Segment B consists of revolving loans totaling $3,800
               through May 31, 1999 and $6,500 thereafter. The interest rate on
               the borrowings under this segment is prime rate, plus an
               applicable margin rate of 1.75% plus a PIK margin of 1.50% from
               January 1, 1999 through June 30, 1999, 2.25% from July 1, 1999
               through September 30, 1999 and 3.75% thereafter. No payments with
               respect to the PIK margin are due until January 3, 2000, subject
               to certain provisions.

               In connection with an acquisition in August 1998, a preferred
               stockholder guaranteed the repayment of a $2,500
               overadvance made to the Company under the Loan Agreement and
               received a fee of $125 in consideration of such guaranty. In
               January 1999, preferred stockholders paid $2,500 pursuant
               to this guaranty and received 2,500 shares of the Company's
               Series C convertible preferred stock.

               In February 1999, a preferred stockholder guaranteed $1,500
               of an overadvance made to the Company under the Loan Agreement,
               and received a fee of $75 in consideration of such guaranty. In
               April 1999, the preferred stockholder paid $1,500 pursuant
               to this guarantee, which is evidenced by a subordinated
               promissory note bearing interest at the rate of 18% per annum,
               with interest and principal due and payable four months after
               funding.

           (B) Promissory notes with former stockholders of acquired
               businesses are generally payable in quarterly installments plus
               interest at rates ranging from no interest to 10% through August
               2006. In December 1998 and January and February 1999, the Company
               amended certain of these promissory notes.  These amendments 
               contain provisions to defer all payments until June 30, 1999
               and provide an interest rate of 9% on all deferred amounts.

           (C) Contract obligation -- an agreement with a former employee of
               an acquired company, who is related to an officer/director of the
               Company, provides for monthly payments of $9 through June 2002.
               The obligation is carried net of imputed interest, at 8%, of $31
               and $10 at December 31, 1998 and 1997, respectively.

           (D) Other notes and obligations -- outstanding amounts relate to
               various equipment capital leases and are payable in aggregate
               monthly installments with interest ranging from 8% to 15% through
               February 2002.

           (E) Convertible promissory notes with former stockholders of
               acquired businesses, with due dates ranging from November 2000
               through June 2003. The notes are convertible at any time at the
               option of the Company into shares of the Company's common stock
               at the conversion prices ranging from $16.00 - $20.00 per share
               only if certain conditions are met.

           (F) Common stock repurchase guaranty -- contractual obligation to
               repurchase 13,750 shares of the Company's common stock at $20.00
               per share from former stockholders of an acquired business in May
               2000. The obligation is at the option of the former stockholders.

           Scheduled annual principal payments of long-term debt are as follows:

                             1999       $   3,779
                             2000          83,698
                             2001           4,229
                             2002           1,482
                             2003             581
                          Thereafter          339
                                      -------------
                                        $  94,108
                                      =============

   (6)         STOCKHOLDERS' EQUITY

           (a) COMMON STOCK

               In May 1993, the Company completed an initial public offering of
               its securities, comprised of 625,000 shares of common stock at a
               price of $8.00 per share and 625,000 warrants to purchase common
               stock at $0.20 per warrant. In addition, the underwriters
               exercised an overallotment and acquired an additional 93,750 of
               warrants at $.18 per warrant, net of discount. These initial
               public offering warrants (the Redeemable Common Stock Purchase
               Warrants) were exercisable until May 18, 1998 at an exercise
               price of $9.00 per share and were redeemable by the Company at a
               price of $.02 per warrant, subject to certain conditions.

               In November 1996, the Company purchased 216,750 shares of its
               outstanding common stock at $6.00 per share.

               On June 12, 1997, the Company completed an offer to exchange
               common stock for any and all outstanding Redeemable Common Stock
               Purchase Warrants (Exchange). The Company offered to exchange one
               share of the Company's common stock for each five warrants
               tendered. As a result of the Exchange, 92,448 shares of common
               stock were issued in exchange for 462,240 warrants during the
               year ended December 31, 1997.

               On September 12, 1997, the Company sent a Notice of Redemption to
               the registered holders of its Redeemable Common Stock Purchase
               Warrants that the Company had exercised its rights, pursuant to
               the Warrant Agreement dated May 25, 1993, to redeem, on November
               12, 1997 (the Redemption Date), all of the warrants issued under
               the Warrant Agreement that were then outstanding. The Redemption
               Date was subsequently extended until February 27, 1998. During
               1998 and 1997, 233,743 and 26,667 warrants, respectively, were
               exercised at the exercise price of $9.00 per share.

               On April 15, 1997, as provided for in the Management Agreement
               dated February 13, 1997 between Esquire Communications Ltd.,
               Harlingwood & Company, LLC (Harlingwood) and David A. White,
               Harlingwood acquired 125,000 shares of common stock at a price of
               $6.25 per share. Payment by Harlingwood was with a promissory
               note, due on April 15, 2001, in the amount of $781. The note
               accrues interest at the rate of 7% per annum, and the interest is
               payable on April 15, 2001. The amount due under the note is
               secured by a pledge of the 125,000 shares of common stock issued.
               The 125,000 common stock shares were issued out of the Company's
               treasury stock.

               On December 15, 1997, Harlingwood exercised 50,000 stock options
               granted under the Company's stock option plan at the exercise
               price of $7.50 per share, resulting in the issuance of 50,000
               shares of common stock. Payment by Harlingwood was with a
               promissory note due on December 15, 2001 in the amount of $375.
               The note accrues interest at the rate of 7% per annum, and the
               interest is payable on December 15, 2001. The amount due under
               the note is secured by a pledge of the 50,000 shares of common
               stock issued.

               In connection with the October 23, 1996 private placement, the
               Company granted the placement agent warrants to acquire 93,750 
               shares of common stock of the Company at an exercise price of 
               $6.00 per share in addition to cash compensation. On December 10,
               1997, the placement agent exercised its right to acquire the 
               shares. Under the terms of the agreement, the placement agent 
               received 50,313 shares of common stock upon the exercise of 
               93,750 stock warrants.

               As part of the Company's initial public offering, the
               underwriters received a purchase option (subject to certain
               antidilutive provisions) to acquire, until May 18, 1998, 132,376
               shares of common stock and warrants at a price of $5.28 and $.12,
               respectively. On May 14 and 21, 1998, the underwriters exercised
               their rights to acquire the shares and warrants. Under the terms
               of the agreement, the underwriters acquired 132,376 shares at the
               exercise price of $5.28 per share for the options, acquired
               warrants to purchase 132,375 shares at $.12 per warrant and
               immediately exercised the warrants acquired for 132,375 shares at
               the exercise price of $9.00.

               In connection with the Preferred Stockholder acquiring an
               additional 7,500 shares of Preferred Stock, the Company granted
               the placement agent warrants to acquire 93,750 shares of common
               stock of the Company at an exercise price of $6.00 per share. On
               March 25, 1998, the placement agent exercised its right to
               acquire shares. Under the terms of the agreement, the placement
               agent received 52,692 shares of common stock upon the exercise of
               93,750 stock warrants issued in June 1997.

               In connection with the Preferred Stockholders acquiring an
               additional 4,500 shares of Series A convertible preferred stock,
               the Company granted the placement agent warrants to acquire
               37,500 shares of common stock of the Company at an exercise price
               of $9.00 per share. On August 26, 1998, the placement agent
               exercised its right to acquire shares. Under the terms of the
               agreement, the placement agent received 19,428 shares of common
               stock upon the exercise of 37,500 warrants issued on January 9,
               1998. 

               In connection with the 1998, 1997 and 1996 Acquisitions,
               the Company issued 739,290, 678,000 and 102,003 shares of common
               stock, respectively, valued at approximately $7,081, $5,694 and
               $510, respectively.

               During 1998 and 1997, stock options granted under the Company's
               stock option plan (the Plan) were exercised at the exercise price
               of $8.00 per share exercise during 1998 and exercise prices
               ranging from $5.75 to $8.00 per share during 1997, resulting in
               the issuance of 3,875 and 85,333 shares of common stock,
               respectively.

           (b) PREFERRED STOCK

               On October 23, 1996, the Company completed a private placement of
               7,500 shares of Series A convertible preferred stock (the
               Preferred Stock) for an aggregate purchase price of $7,500, and
               entered into an agreement (the Agreement) with the Preferred
               Stockholders. Under the Agreement, the Preferred Stockholders
               have the right within 21 months to acquire up to an additional
               7,500 shares of Preferred Stock at a price of $1,000 per share.
               The Preferred Stock is convertible into common stock of the
               Company at a conversion price of $6.00 per share (subject to
               antidilution adjustments) and bears cumulative annual dividends
               at the rate of 6% per annum. The holders of Preferred Stock have
               a liquidation preference of $1,000 per share, plus accrued
               dividends. The Preferred Stockholders have the right to vote with
               the holders of common stock and are entitled to one vote for each
               whole share of common stock into which the Preferred Stock is
               convertible (presently 333-1/3 votes per share). The Agreement
               restricts future dividend payments on common stock, issuance of
               certain equity securities, mergers, acquisitions and sale of
               assets. In connection with the private placement, the Company
               granted the placement agent warrants to acquire 93,750 shares of 
               common stock of the Company at an exercise price of $6.00 per 
               share in addition to cash compensation. The warrants are 
               exercisable at any time prior to October 2001.

               On June 16, 1997, in connection with the Preferred Stockholder
               acquiring an additional 7,500 shares of Preferred Stock, the
               Company granted the Placement Agent warrants to acquire 93,750
               shares of common stock of the Company at an exercise price of
               $6.00 per share. The warrants are exercisable at any time prior
               to October 2001.

               On June 17 and 18, 1997, the Company's Preferred Stockholders
               exercised their right to acquire an additional 7,500 shares of
               Preferred Stock at a price of $1,000 per share. Under the
               Agreement, as amended, the Preferred Stockholders have the right
               to acquire, prior to December 17, 1998, up to an additional 7,500
               shares of Preferred Stock at a price of $1,000 per share.

               On January 9, 1998, the Company's Preferred Stockholders
               exercised their rights to acquire an additional 4,500 shares of
               Preferred Stock at a price of $1,000 per share. Under the
               agreement, as amended, the Preferred Stockholders have the right
               to acquire up to 5,000 shares of Series B convertible preferred
               stock at a price of $1,000 per share. The Series B convertible
               preferred stock is identical to the Series A convertible
               preferred stock, except that it is junior to the Series A
               convertible preferred stock, has a conversion price of $12.00 per
               share and has 166-2/3 votes per share.

               On January 9, 1998, in connection with the Preferred Stockholders
               acquiring an additional 4,500 shares of Series A convertible
               preferred stock, the Company granted the placement agent warrants
               to acquire 37,500 shares of common stock of the Company at an
               exercise price of $9.00 per share. The warrants are exercisable
               at any time prior to January 2003.

               On June 15, 1998, the Company's Preferred Stockholders exercised
               their rights to acquire an additional 3,000 shares of Series A
               convertible preferred stock at a price of $1,000 per share. Under
               the agreement, as amended, the Preferred Stockholders have the
               right to acquire up to 7,500 shares of Series B convertible
               preferred stock at a price of $1,000 per share. On December 21,
               1998, this option was converted into 375,000 shares of common
               stock of the Company at the conversion price of $12.00 per share.

               In January 1999, pursuant to a guarantee agreement entered into
               by the Company with a preferred stockholder (Note 5), the Company
               issued 2,500 shares of Series C convertible preferred stock. The
               Series C convertible preferred stock is identical to the Series B
               convertible preferred stock, except that it has a conversion 
               price of $10.00 per share and has 100 votes per share. 

   (7)         STOCK OPTIONS AND WARRANTS

           (a) STOCK OPTION PLAN

               In 1993, the Company adopted a stock option plan (the Plan)
               pursuant to which the Company's Board of Directors may grant
               stock options to officers, employees, directors, consultants and
               independent contractors of the Company. The Plan was amended in
               1998 to increase the number of shares of common stock issued
               under the Plan. The Plan, as amended, authorizes grants of
               options to purchase up to 1,750,000 shares of authorized but
               unissued common stock. Stock options are granted with an exercise
               price equal to the stock's fair market value at the date of
               grant. Stock options have ten-year terms and generally vest and
               become fully exercisable over a three-year period, commencing one
               year from the date of grant.

               The per share weighted-average fair value of stock options
               granted during 1998, 1997 and 1996 was $3.77, $1.19 and $1.03,
               respectively, on the date of grant using the Black-Scholes
               option-pricing model with the following weighted-average
               assumptions: 1998-expected volatility of 51%, expected dividend
               yield of 0%, risk-free interest rate of 4.69%, and an expected
               life of five years; 1997 - expected volatility of 30%, expected
               dividend yield of 0%, risk-free interest rate of 6%, and an
               expected life of five years; 1996 - expected volatility of 25%,
               expected dividend yield of 0%, risk-free interest rate of 6%, and
               an expected life of five years.

               The Company applies APB Opinion No. 25 in accounting for its
               Plan, and accordingly, no compensation cost has been recognized
               for its stock options in the consolidated financial statements.
               Had the Company determined compensation cost based on the fair
               value at the grant date for its stock options under SFAS No. 123,
               the Company's net loss would have been adjusted to the pro forma
               amounts indicated below (excluding extraordinary item in 1996):

                                                    1998        1997       1996
                                                 ---------     --------  ------
               Net loss before extraordinary
                 item applicable to common
                 stockholders:
                    As reported                   $ (2,093)    (3,157)    (451)
                    Pro forma                       (3,279)    (3,511)    (497)


               Basic and diluted net loss
                 before extraordinary item per
                 common share:
                    As reported                   $  (0.48)     (1.12)   (0.19)
                    Pro forma                        (0.75)     (1.25)   (0.20)


               Pro forma net loss reflects only options granted in 1998, 1997
               and 1996. Therefore, the full impact of calculating compensation
               cost for stock options under SFAS No. 123 is not reflected in the
               pro forma net loss amounts presented above because compensation
               cost is reflected over the options' vesting period of three
               years, and compensation cost for options granted prior to January
               1, 1996 is not considered.

               Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>

                                                                         Weighted-average
                                                       Number of         exercise
                                                        shares            price
                                                   -----------------    -----------------
                <S>                                      <C>              <C>
                Balance at December 31, 1995             289,300          $  8.00
                Granted                                   85,000             5.98
                Exercised                                   --                 --
                Forfeited                                (10,050)            8.00
                                                    -----------------    ----------------

                Balance at December 31, 1996             364,250             7.52
                Granted                                  349,000             9.96
                Exercised                                (85,333)            7.68
                Forfeited                                 (7,683)            8.00
                                                    ------------------    ---------------

                Balance at December 31, 1997             620,234             8.84
                Granted                                  319,500            11.44
                Exercised                                 (3,875)            8.00
                Forfeited                                (40,625)            8.25
                                                     ------------------    --------------

                Balance at December 31, 1998             895,234           $ 9.80
                                                     ==================    ==============

               The following table summarizes information about Plan options
               outstanding at December 31, 1998:

                                     Weighted-average             Number of                 Weighted-
                                        remaining                  options                 average exercise
                                        contractual               currently                price of options
               Exercise price            life                   exercisable               currently exercisable
               ------------------    --------------------     --------------------     ----------------------------

               <S>                       <C>                        <C>                   <C>
                 $5.75 - $8.00           7.19 years                 340,067               $   7.49
                $10.63 -$13.50           9.32 years                 103,833                  12.02
                    $18.00               8.08 years                  35,937                  18.00
</TABLE>

               At December 31, 1997 and 1996, the number of options exercisable
               was 251,983 and 197,785, respectively, and the weighted-average
               exercise price of those options was $7.75 and $8.00,
               respectively.

           (b) OPTIONS GRANTED OUTSIDE THE PLAN

               During the year ended December 31, 1997, the Company granted to
               nonemployees options to purchase 120,000 shares of the Company's
               common stock outside the Plan at a price range of $8.00 to $9.00.
               The Company recognized $329 of commission expense relating to
               these options during the year ended December 31, 1997, and
               capitalized as goodwill $303 of commission expense for options
               granted in connection with a business acquisition accounted for
               as a purchase, using the Black-Scholes option-pricing model. The
               Company determined that the per share weighted-average fair value
               of stock options granted outside the Plan during 1997 was $8.83
               on the date of grant. The following weighted-average assumptions
               were included in this method for 1997: expected volatility of 
               30.0%; expected dividend yield of 0%; risk-free interest rate of 
               6.0%; and an expected life of five years.

               During the year ended December 31, 1998, the Company granted to
               nonemployees options to purchase 120,000 shares of the Company's
               common stock outside the Plan at prices ranging from $12.50 to
               $18.00. The Company capitalized as goodwill $514 for these
               options which were granted in connection with certain business
               acquisitions accounted for as a purchase, using the Black-Scholes
               option-pricing model. The Company determined that the per share
               weighted-average fair value of stock options granted outside the
               Plan during 1998 was $12.25 on the date of grant. The following
               weighted-average assumptions were included in this method for
               1998: expected volatility of 51%; expected dividend yield of 0%;
               risk-free interest rate of 4.69%; and an expected life of five
               years.

               The following table summarizes information about options granted
               outside the Plan at December 31, 1998:

<TABLE>
<CAPTION>

                                                                                        Weighted-
                                      Weighted-average            Number of           average exercise
                                         remaining                 options            price of options
                                        contractual               currently            currently
               Exercise price              life                  exercisable            exercisable
               --------------------  --------------------       -------------    ----------------------------
               <S>                        <C>                      <C>                  <C>
                $8.00 - $9.00             8.96 years               175,000              $   8.83
               $12.50 - $18.00            8.95 years               120,000                 17.23
</TABLE>

           (c) WARRANTS

               At December 31, 1998, 1997 and 1996, the Company had outstanding
               354,500, 951,284 and 1,439,751 warrants, respectively, at
               exercise prices ranging from $5.28 to $9.00 per warrant. At
               December 31, 1998, 1997 and 1996, the weighted-average exercise
               price of those warrants was $6.18, $7.14 and $7.77, respectively,
               and the weighted-average remaining contractual life of those
               warrants was 3.59, 2.86 and 3.03 years, respectively. All
               warrants outstanding are exercisable at December 31, 1998.

   (8)         PROFIT SHARING PLAN

               In September 1995, the Company adopted a 401(k) savings plan
               covering all eligible employees. The plan allows employees to
               voluntarily contribute up to l5% of compensation. The Company may
               make discretionary matching contributions prior to the end of
               each plan year. The current matching percentage is 10%. The
               Company may also make discretionary additional contributions to
               the plan. The Company's total contributions to the plan for 1998,
               1997 and 1996 amounted to $34, $15 and $12, respectively.

   (9)         INCOME TAXES

               The income tax provision (benefit) for the years ended December
               31, 1998, 1997 and 1996, excluding the income tax benefit of $104
               attributed to the extraordinary loss in 1996, is as follows:

                                                  1998       1997         1996
                                                 -------    -------      ------
               Current tax expense (benefit):
                 Federal                          $ (604)      --          284
                 State and city                       15       (15)        100
                                                 ---------  --------     ------
                   Total current                    (589)      (15)        384
                                                 ---------  --------     ------

               Deferred tax (benefit) expense:
                 Federal                             --        101        (135)
                 State and city                      --         39         (33)
                                                 ---------   -------     ------
                   Total deferred                    --        140        (168)
                                                 ---------   -------     ------
                   Total income tax provision       (589)      125         216
                                                 =========   =======     ======

               Income tax benefit for the years ended December 31, 1998, 1997
               and 1996 differs from the amount computed by applying the federal
               statutory rate of 34% as follows:
                                                     1998        1997      1996
                                                    ------   ---------  --------
                Computed at federal statutory rate   $(487)    (792)       (54)
                State tax                               15       24         67
                Change in the valuation allowance     (329)     489         --
                Amortization of goodwill               210      157        162
                Nondeductible expenses                   -       38         34
                Preacquisition earnings                  -      174          -
                Other                                    2       35          7
                                                    -------   --------    -----
                                                    $ (589)     125        216
                                                    =======   ========    =====

               Significant components of the Company's net deferred tax assets
               and liabilities as of December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
                                                              1998                  1997
                                                       ---------------     --------------
               <S>                                           <C>                  <C>
               Deferred tax assets:
                 Contract obligation                       $   136                  169
                 Allowances and accrued expenses               202                  266
                 Net operating loss (NOL) carryforwards      1,869                  689
                 Tax credits                                   --                    17
                                                       ----------------     --------------
                  Total gross deferred tax assets             2,207               1,141

                  Less valuation allowance                     (160)               (489)
                                                       ----------------     --------------
                  Net deferred tax assets                     2,047                 652
                                                       ----------------     --------------
               Deferred tax liabilities- depreciation
                    and amortization                         (2,047)               (652)
                                                       ----------------     ---------------
</TABLE>

               At December 31, 1998, the Company has approximately $4,407 in net
               operating loss carryforwards which begin to expire in 2017.

               In accordance with Internal Revenue Code Section 382, the annual
               utilization of net operating loss carryforwards and credits
               existing prior to a change in control may be limited.

               In assessing the realizability of deferred tax assets, management
               considers whether it is more likely than not that some portion or
               all of the deferred tax assets will not be realized. The ultimate
               realization of deferred tax assets is dependent upon the
               generation of future taxable income in the periods in which those
               temporary differences become deductible. Management believes that
               there is a risk that certain of these NOL, tax credit
               carryforwards and other deferred tax assets may expire unused
               and, accordingly, has established a valuation allowance against
               them.

   (10)        REPORTABLE SEGMENT DATA

               The Company believes that all of its material operations are part
               of the legal services industry, and it currently reports as a
               single industry segment. The Company's reportable segments are
               geographically aligned business units and include three regions
               within the United States, the Western region, the Northeast
               region and the Southeast region. The Western region includes the
               Company's corporate operations as well as its operations in
               California, Colorado and Texas, the Northeast region includes the
               Company's operations in Illinois, Michigan, New Jersey, New York,
               Pennsylvania and Washington, D.C. and the Southeast Region
               includes the Company's operations in Florida and Georgia.

               The geographic reportable segments of the Company's revenues,
               operating income and identifiable assets are summarized in the
               following table. The "Other" column includes corporate related
               items and income and expense not allocated to reportable
               segments.
<TABLE>
<CAPTION>

                                          Western         Northeast         Southeast
                                          Region           Region           Region            Other        Consolidated
                                     --------------     -------------     ------------   -------------   ---------------
                <S>                    <C>                  <C>              <C>                               <C>
                1998
                  Revenue              $   36,975           56,661           16,950             --             110,586
                  Operating income          6,413            7,715            1,352           (10,331)           5,149
                  Identifiable assets      16,830           16,835            5,490           112,101          151,256

                1997
                  Revenue                   23,813          26,536            2,829             --              53,178
                  Operating income           3,473           2,380              551            (6,078)             326
                  Identifiable assets        9,547           4,521            2,306            66,477           82,851

                1996
                  Revenue                   12,789          16,712              --                --            29,501
                  Operating income           1,495           1,248              --             (1,687)           1,056
                  Identifiable assets        6,013           3,236              --             22,585           31,834

</TABLE>

               No single customer accounted for as much as 10% of consolidated
               revenue in 1998, 1997 and 1996.

   (11)        SUPPLEMENTAL CASH FLOW INFORMATION

               Cash payments for the years ended December 31, 1998, 1997 and
               1996 have included:

                                   1998             1997                1996
                               ------------     -------------       -----------
               Interest         $  6,636           2,687                1,197
               Income taxes           15              78                1,011

               During 1997, $627 in preferred stock dividends were paid. At
               December 31, 1998, 1997 and 1996, accrued and unpaid preferred
               stock dividends were $1,399, $150 and $75, respectively.

               During 1997, 175,000 shares of the Company's common stock were
               issued for notes receivable of which 125,000 shares were issued
               from the Company's treasury stock.

               During 1998, 1997 and 1996, the Company issued 739,290, 678,000
               and 102,003 shares of common stock, respectively, in connection
               with the acquisitions.

               During 1998 and 1997, the Company issued 72,120 and 50,313 shares
               of common stock, respectively, in connection with cashless
               exercises of warrants.

               During 1997, the Company issued 92,448 shares of common stock in 
               connection with a warrant exchange offering.
<TABLE>
<CAPTION>

                                                             1998                  1997                  1996
                                                       -----------------     -----------------     ------------------
               <S>                                         <C>                   <C>                   <C>
               Supplemental noncash investing and
                 financing activities:
                   Acquisitions:
                      Fair value of assets acquired         14,359                7,144                 1,525
                      Liabilities assumed                   (8,156)              (6,674)                 (988)
                      Cash paid for acquisitions            43,683               34,866                 3,958
                      Stock issued                          (7,081)              (5,694)                 (510)
                      Stock options issued                    (541)                 --                    --
                      Notes issued                          (7,359)              (4,707)               (3,243)
</TABLE>

   (12)        LIQUIDITY

               Management of the Company believes that the Company's existing
               Loan Agreements (as amended) will provide the necessary working
               capital required to fund the Company's operations through 1999.

   (13)        COMMITMENTS

           (a) EMPLOYMENT AGREEMENTS

               The Company has employment agreements and arrangements with its
               executive officers and certain management personnel. The
               agreements generally continue until terminated by the executive
               or the Company, and provide for severance payments under certain
               circumstances. The majority of the agreements include a covenant
               against competition with the Company, which extends for a period
               of time after termination. As of December 31, 1998, if all
               employees under contract were to be terminated by the Company
               without good cause, under these contracts the Company's liability
               would be approximately $9,500 payable over the remaining
               terms of the employment agreements.

               In addition, the Company has entered into change in control
               agreements with its key executive officers which provide that if
               an executive's employment is terminated within six months after
               a change in control of the Company, or the executive terminates
               employment within such six month period of time, then the
               executive is entitled to a lump sum severance payment ranging
               from $105 to $375 based upon salary levels currently in effect, 
               and all of the executive's options shall immediately vest. As of
               December 31, 1998, if a change of control were to occur, the
               Company's liability would be approximately $1,500.

               Effective May 1, 1997, the Company reached an agreement with the
               former stockholder of David Feldman & Associates (USA) Ltd.,
               whereby the Company bought out the remaining term of the
               employment agreement. Total compensation earned under the
               employment agreement prior to termination amounted to $230. The
               Company recognized a $1,000 expense related to the future costs
               associated with the termination agreement.

               On February 13, 1997, the Company entered into a management
               agreement with Harlingwood, whereby Harlingwood would provide the
               services of a Chief Executive Officer. The agreement expired on
               February 13, 1998 and was verbally extended until June 30, 1998,
               and provided for an annual management fee of $175. During 1998
               and 1997, the Company paid $163 and $45, respectively, to
               Harlingwood for services rendered in connection with business
               acquisitions.

           (b) LEASE COMMITMENTS

               The Company is obligated under operating leases for office
               facilities which expire through August 2008. The leases provide,
               among other things, that the Company is responsible for its share
               of increases in certain utilities, maintenance and property taxes
               over a base amount. In addition, the Company is also obligated
               under various equipment and vehicle leases which expire through
               September 1999. Total lease expense for 1998, 1997 and 1996 under
               the above leases amounted to approximately $3,170, $1,641 and
               $720, respectively.

               During 1996, the Company relocated its headquarters and
               recognized a $262 expense related to the net present value of
               future rental payments, net of sublease income, pertaining to the
               vacated premises.

               The anticipated future annual lease payments under operating
               leases at December 31, 1998, inclusive of the base utility,
               maintenance and property tax charges for the office facilities,
               are as follows:

                          1999                            $     4,599
                          2000                                  4,079
                          2001                                  3,361
                          2002                                  3,014
                          2003                                  2,442
                       Thereafter                               6,862
                                                       -------------------
                                                          $    24,357
                                                       ===================

               Future annual rental income under remaining noncancelable
               subleases is as follows: 1999 - $218, 2000 - $150, 2001 - $143,
               2002 - $131 and 2003 - $101.

           (c) LEGAL PROCEEDINGS

               The Company is involved in various claims and legal actions in
               the ordinary course of business. In the opinion of management,
               the ultimate disposition of these matters will not have a
               material adverse effect on the Company's consolidated financial
               statements taken as a whole.                 


<PAGE>


                                   SIGNATURES

          In accordance with Section 13 or 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.


                                  ESQUIRE COMMUNICATIONS LTD.


April 14, 1999                     By: /s/ David A. White
                                       ----------------------------------
                                        David A. White
                                        Chief Executive Officer


          In accordance with 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.

NAME                                      TITLE                        DATE

/s/ Malcolm L. Elvey                   Chairman of the Board     April 8, 1999
--------------------------------
Malcolm L. Elvey

/s/ David A. White                     Chief Executive 
---------------------------------      Officer and Director      April 8, 1999
David A. White                                             

/s/ David A. Higson                    Principal Financial
---------------------------------      Officer, Principal 
David A. Higson                        Accounting Officer        April 8, 1999
                                       and Director

/s/ Cary A. Sarnoff                    Senior Vice President
---------------------------------      and Director              April 8, 1999
Cary A. Sarnoff                                

/s/ Mortimer R. Feinberg               Director                  April 8, 1999
----------------------------------                               
Mortimer R. Feinberg


----------------------------------     Director                  April __, 1999
Gary L. Monroe

/s/ Joseph P. Nolan                    Director                  April 8, 1999
----------------------------------                               
Joseph P. Nolan


----------------------------------     Director                  April __, 1999
Bruce V. Rauner