U.S. SECURITIES AND EXCHANGE COMMISSION
                      Washington, DC 20549
                                
                           FORM 10-KSB
                                
[X]   Annual  report  pursuant to section  13  or  15(d)  of  the
Securities  Exchange  Act  of 1934  for  the  fiscal  year  ended
December 31, 1997, 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 No.  0-23170

                HEADWAY CORPORATE RESOURCES, INC.
   (Name of Small Business Issuer as specified in its charter)

           Delaware                         75-2134871
(State or Other Jurisdiction of           (IRS Employer
Incorporation or Organization)         Identification No.)

        850 Third Avenue, 11th Floor, New York, NY  10022
      (Address of Principal Executive Offices and Zip Code)

Issuer's Telephone Number:  (212) 508-3560

Securities registered under Section 12(b) of the Act:  None

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

                 Common Stock, Par Value $0.0001

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

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

The  issuer's  revenues  for  its most  recent  fiscal  year  are
$142,842,000.

The aggregate market value of voting stock held by non-affiliates
computed  on the basis of the last sale price on March  3,  1998,
was $34,341,470.

As of December 31, 1997, the Registrant had outstanding 8,907,110
shares of Common Stock, par value $0.0001.

Documents  incorporated by reference:  Incorporated by  reference
in  Part III of this report is the definitive proxy statement  of
the  Company  for the 1998 annual meeting of stockholders,  which
the  Company  proposes to file with the Commission on  or  before
April 30, 1998.

<PAGE>

                        TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                               Page

Part I                                                           

1.   Description of Business                                            3

2.   Description of Properties                                          8

3.   Legal Proceedings                                                  8

4.   Submission of Matters to a Vote of Security Holders                8
                                                                 
Part II                                                          

5.   Market for Common Equity and Related Stockholder Matters           9

6.   Management's Discussion and Analysis of Financial Condition        9
     and Results of Operations

7.   Financial Statements                                              12

8.   Changes in and Disagreements with Accountants                     12
     on Accounting and Financial Disclosure

Part III                                                         

9.   Directors, Executive Officers, Promoters and Control               *
     Persons; Compliance with Section 16(a) of the Exchange Act

10.  Executive Compensation                                             *

11.  Security Ownership of Certain Beneficial Owners and Management     *

12.  Certain Relationships and Related Transactions                     *

13.  Exhibits and Reports on Form 8-K                                  13

*      These  items  are  incorporated  by  reference  from   the
definitive  proxy statement of the Company for  the  1998  annual
meeting  of  stockholders  to be filed with  the  Securities  and
Exchange Commission on or before April 30, 1998.

<PAGE>

                FORWARD-LOOKING STATEMENT NOTICE

     When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and
similar expressions are intended to identify forward-looking
statements within the meaning of Section 27a of the Securities
Act of 1933 and Section 21e of the Securities Exchange Act of
1934 regarding events, conditions, and financial trends that may
affect the Company's future plans of operations, business
strategy, operating results, and financial position.  Persons
reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may
differ materially from those included within the forward-looking
statements as a result of various factors.  Such factors are
discussed under the headings "Item 1.  Description of Business,"
and "Item 6.  Management's Discussion and Analysis of Financial
Condition and Results of Operations," and also include general
economic factors and conditions that may directly or indirectly
impact the Company's financial condition or results of
operations.
                                
                             PART I
                                
                ITEM 1.  DESCRIPTION OF BUSINESS

General

     Headway Corporate Resources, Inc. ("Headway" or the
"Company"), is a provider of human resource and staffing services
primarily to the financial services industry.  The Company
provides a broad range of human resource management services,
including temporary staffing, information technology staffing,
executive search, permanent placement, contract staffing, project
consulting and management, payroll, and other outsourcing
services related to employment.  The Company has a strong
presence in the financial services industry.  Headway will
continue to focus on this industry in the development and
expansion of its business, because the Company believes there is
a substantial untapped market for its services in this industry
and because its core strengths of experience with the industry
and human resources expertise enable it to develop unique, value-
added staffing solutions for the financial services industry.

     The Company provides these services through its wholly-owned
subsidiaries, Headway Corporate Staffing Services, Inc.
("Staffing Services") and Whitney Partners, L.L.C. ("Whitney").
Staffing Services was formed in 1996 to acquire the first of the
Company's temporary staffing businesses based in New York City.
In 1996 and 1997 Staffing Services made additional acquisitions
of temporary and staffing businesses based in New York, North
Carolina, and Connecticut, and opened an office in Southern
California.  Whitney has provided executive search and human
resource management services in New York City since 1984.  It
provides similar services through its subsidiaries in London,
Hong Kong, and Singapore, and an office in Tokyo.

     The Company's acquisitions and internal business development
over the past two years have resulted in substantial growth for
the Company.  Total revenues in 1997 were $142,842,000, as
compared to $53,389,000 in 1996 and $10,996,000 in 1995.
Staffing Services provides temporary and staffing services
primarily in the Eastern United States and California, and
employs approximately 5,700 temporary workers and consultants per
week.  Staffing Services contributed $125,316,000, or 88% to the
Company's total revenues in 1997.  Whitney services clients in
major world financial centers and has grown its business
internally and through new client and service opportunities
resulting from acquisitions by Staffing Services.  Whitney
contributed $17,526,000, or 12% to the Company's total revenues
in 1997.  The Company will continue to pursue development of its
business through acquisitions and internal growth.

      The  principal  offices of the Company are located  at  850
Third  Avenue,  New  York, New York, 10022, where  its  telephone
number is (212) 508-3560.

Industry, Market and Growth

     The temporary staffing industry, which has grown
substantially over the past five years, continues to benefit from
increased competitive pressures on businesses to reduce costs.
In recent years, businesses have increasingly used temporary
staffing employees as a strategy for converting fixed labor costs
to flexible, manageable costs and for meeting specialized or
fluctuating employment requirements.  According to National
Association of Temporary Staffing Services, in 1996 the average
number of daily temporary staffing employees as a percentage of
the total U.S. workforce reached approximately 1.9%, up from
approximately 1.0% in 1991.  The Company believes this trend will
continue as more businesses recognize the value associated with
flexible workforce management.

     The Company focuses its services on the financial services
industry.  The financial services industry consists primarily of
investment banking firms, banking institutions, insurance
companies, credit card service companies, and other finance
companies, and extends by association to real estate companies,
appraisal firms, law firms, accounting firms, and other service
companies that participate in the financial services industry.
Headway's history of service in the industry, which began in 1984
with executive search services, enables it to understand the
complexity of the products and services offered by the financial
services industry, assist the client in identifying the human
resources required to support those products and services, and
develop industry specific solutions for the human resources needs
of the client.

     The Company has realized substantial growth over the past
two years, primarily due to the Company's acquisitions of
temporary and staffing businesses.  These acquisitions are
indicative of the Company's strategy to expand its operations
through a balance of growth through acquisitions and internal
business development.  The Company will seek to acquire full
service staffing companies in cities throughout the United States
that are regional financial service centers.  These acquisitions
will serve as "hubs" for regional development of the Company's
business.  The Company intends to develop each regional hub by
acquiring and folding in smaller staffing companies.  Headway's
principal hubs are in the New York-New Jersey metropolitan area,
North Carolina, Connecticut, and California.  The Company is in
the process of seeking new acquisitions to enhance its existing
hubs and establish new regional hubs.  A number of potential
acquisition candidates have been identified by Headway and it has
had preliminary discussions with several of these candidates
regarding the possibility of acquisition.  These discussions have
resulted in letters of understanding to acquire four staffing
companies in Florida, California, Virginia, and New England.
Three of the acquisitions are expected to close by the end of
March 1998, and the fourth is expected to close by the end of
June 1998, but all of the acquisitions are subject to the Company
completing its examination of the acquisition candidates,
negotiating and executing final agreements, and obtaining the
financing for the acquisitions.

     The Company's internal growth strategy focuses on promoting
its traditional lines of business, focusing on what management
perceives to be the fastest growing segment of the temporary
staffing industry -- information technology and other highly
skilled temporaries, and, to a lesser extent, cross-selling
services offered by the Company's recent acquisitions.
Traditionally, the temporary staffing industry has focused on
providing clerical services to businesses.  In the last several
years, however, there has been an increase in demand for more
highly skilled temporary employees, such as computer technicians
and programmers, accountants, project managers, and other
managerial positions.  The more highly skilled workers are placed
at higher compensation rates and produce a larger margin of
profit for the Company.  The Company intends to focus on the
recruitment of skilled employees and developing this business in
the coming year.

Workforce Services

     Temporary staffing services offered by the Company consist
of providing employees to clients for periods ranging from one
day to several months to satisfy a specific job skill need
arising from absenteeism, special projects, fluctuations in the
client's volume of business inherent in the business cycle, and
other causes.  The job skills required by clients and offered by
the Company range from entry level clerks and secretaries to
master administrative assistants, accountants, computer
programmers and technicians, desktop publishing operators, and
computer graphic specialists.  The thrust of Headway's marketing
approach for its services is "SmartSizing", which is a human
resource management policy of controlling and minimizing the
fixed cost of employees by expanding and contracting the client's
workforce as needed to meet its specific business needs as they
change.  By using Headway's services, clients can make changes in
workforce quickly without the administrative burden and cost of
hiring and firing.  For many of these clients, the Company
provides on-site services, including administration, management,
recruitment, screening, and training of contingent workforces.
In addition to helping clients control the size and cost of their
workforces, Headway provides additional services, such as
payrolling, which further reduce the employee administrative
burden of clients and enables them to focus more on the pursuit
of their primary business activities.

     Clients also utilize Headway's temporary staffing services
as a means for locating and evaluating new personnel with a view
to permanent employment.  Clients are able to evaluate the
abilities and productivity of workers during the period they are
provided as temporary employees through the Company and make
informed decisions on whether to retain the workers on a
permanent basis, all without the administrative burden associated
with adding the workers to their workforce from the outset.

     Many of the Company's clients use independent contractors on
a regular basis to satisfy recurring needs for highly skilled
workers in the areas of accounting, computer programming,
computer graphics, and other areas requiring a high level of
technical expertise.  The use of independent contractors on a
regular basis can create a number of problems for clients,
including, the possibility that at any time the independent
contractors will accept employment elsewhere that prevents them
from being available to the clients when needed and the potential
that independent contractors will be viewed by federal and state
taxing authorities as employees rather than independent
contractors for income tax withholding and benefits purposes.  To
mitigate these potential problems, Headway offers a service where
it assumes the position of employer for the independent
contractors, manages the scheduling of the independent
contractors to make them available to service the needs of the
clients, and implements income tax withholding and other employee
benefit programs to ensure compliance with the legal requirements
of employment under applicable federal and state laws.

     For temporary staffing, employee administration, and
permanent placement services, the Company is compensated by
charging a service fee based on a percentage of the total payroll
of the employees under administration or percentage of the salary
paid to permanent placements.

Executive Search Services

     Headway, through its subsidiary Whitney, is one of the
leading executive search firms in the financial services
industry.  The Company uses a complete consultative approach with
its clients, including, market analysis, product recommendations,
and staffing new and existing business divisions of its clients.
The Company conducts executive searches in a broad range of
product areas in the financial services industry, including,
investment banking, capital markets, leveraged financing,
research, emerging markets, investment management, financial
administration, and risk management.  For permanent placement
services, the Company is compensated by charging a service fee
based on a percentage of the salary of the employees placed with
clients.

Government Regulation

     The temporary staffing operations of the Company are
affected by numerous federal, state and local laws relating to
labor, tax, insurance, and employment matters.  By entering into
an employment relationship with employees who work at client
company locations, the Company assumes certain obligations and
responsibilities of an employer under these laws, which are
subject to varying interpretations.  The Company believes that
its operations are in compliance in all material respects with
all applicable federal and state statutes and regulations.

     Headway's costs could increase if there are any material
changes in government regulations.  Recent federal and certain
state legislative proposals have included provisions extending
health insurance benefits to employees not presently receiving
such benefits and increasing the level of covered services under
employer health insurance programs.  Legislation enacted at the
national level in 1997 substantially increased the cost of health
insurance benefits, and it may be expected that national and
state proposals currently under consideration would have a
similar impact, if enacted.  Increased health insurance costs
affect the price competitiveness of the Company, as the Company
attempts to attract and retain temporary workers and consultants
with benefits that are competitive with other temporary staffing
companies and at the same time remain competitive with these
companies on fees charged clients for the services of temporary
workers and consultants.  There can be no assurance that Headway
will be able to increase the fees charged to its clients in a
timely manner and sufficient amount to cover increased costs
related to any new benefits that may be extended to temporary
employees.

Competition

     The Company faces competition in its efforts to attract
clients as well as high-quality specialized employment
candidates.  The temporary staffing industry is highly
competitive and fragmented, and there are limited barriers to
entry in the industry.  Headway competes with national, regional,
and local full-service companies and specialized temporary
staffing services, some of which have significantly greater
marketing and financial resources than those of the Company.  In
many areas the local companies are the strongest competitors.
However, there is a developing practice among large national and
regional companies to make centralized purchasing decisions for
temporary staffing services on a national or regional basis,
which will increase competition in certain market segments
including the financial services industry.  The most significant
competitive factors in the temporary and permanent placement
businesses at the local and national levels are price and the
reliability of service, both of which are often a function of the
availability and quality of personnel.  The Company believes that
its niche strategy of being a quality, preeminent provider to a
broad range of financial services and related clients will allow
it to remain competitive.

     A significant element in the Company's growth strategy is to
locate and acquire regional staffing businesses.  The Company
believes that further industry consolidation will continue during
the next several years, and there is likely to be significant
competition which could lead to higher prices being paid for such
businesses.  The Company believes that it will remain competitive
in completing acquisitions as a result of its acquisition
experience, the successful assimilation and integration of
previous acquisitions, and its willingness to pay cash as
consideration.  However, no assurance can be given that the
Company's acquisition program will continue to be successful.

Employees

     The Company presently has 234 full-time employees consisting
of three executive officers, 193 management and supervisory
employees, and 41 office employees.  These numbers do not include
temporary employees and independent contractors employed by the
Company, who currently number approximately 5,700 persons.  None
of the Company's employees is represented by a labor union, and
the Company considers its relations with its employees to be good
and has not experienced any work stoppages or slowdowns.

Acquisitions and Divestitures, and Other Corporate Changes

     1997 Acquisitions

     In September 1997, Staffing Services acquired all of the
capital stock of E.D.R. Associates, Inc., a Connecticut
corporation, and substantially all the assets of Electronic Data
Resources, L.L.C., a Connecticut limited liability company
(collectively referred to as "EDR").  EDR is engaged in the
business of offering information technology staffing and
consulting services, and its principal office is located in
Windsor, Connecticut.

     Also in September 1997, Staffing Services acquired
substantially all the assets of Quality OutSourcing, Inc., a New
Jersey corporation engaged in the business of offering temporary
staffing services, primarily in New York, New Jersey, and North
Carolina.

     In July 1997, Staffing Services acquired substantially all
the assets of Administrative Sales Associates Temporaries, Inc.,
and Administrative Sales Associates, Inc. (collectively "ASA"),
both New York corporations engaged in the business of offering
permanent and temporary staffing services to the financial
services industry.  The principal offices of ASA are located in
New York City.

     In March 1997, Staffing Services acquired substantially all
the assets of Advanced Staffing Solutions, Inc. ("ASSI"), a North
Carolina corporation engaged in the business of offering human
resource management services similar to those offered by the
Company.  The principal offices of ASSI are located in Durham,
North Carolina.

     1996 Acquisitions

     In May 1996, Staffing Services acquired Irene Cohen Temps,
Inc., Corporate Staffing Alternatives, Inc., Certified Technical
Staffing, Inc., and the operating assets of Irene Cohen
Personnel, Inc. (collectively the "IC Group"), all of which are
based in New York City, and offer temporary and staffing
services.  In October 1996, Staffing Services acquired the assets
of Vogue Personnel Services, Inc., of New York City, which were
incorporated into the operations of the IC Group.

     Divestitures

     In January 1995, the Company acquired Furash & Company,
Inc., a Maryland corporation based in Washington, D.C. ("FCI"),
engaged in the business of providing strategic planning and
consulting services to the banking and financial service
industries.  On December 31, 1997, the Company sold FCI to
InterBank/ Furash, Inc., a privately held corporation ("IBF"), in
exchange for 1,500 shares of Series A Preferred Stock of IBF.  In
connection with the transaction, the Company also received a
warrant to acquire up to 18% of the capital stock of FCI, on a
fully diluted basis, which expires in January 2008.  The sale of
FCI represents a determination by the Company to focus on its
core business of staffing solutions and human resource management
and divest itself of non-core business activities.

     As of December 31, 1995, the Company sold certain assets
pertaining to its former public relations, advertising, and
financial notice business to Citigate Communications Group
Limited, a limited company based in England ("Citigate") for an
18.3% interest in Citigate valued at $2,368,000 and the
assumption by Citigate of $9,191,000 in liabilities.  In March
1997, Citigate was acquired by Incepta Group plc, a publicly held
company in the United Kingdom ("Incepta").  The Company received
in exchange for its stock in Citigate 13,805,406 shares of
Incepta plus an earnout based on the earnings of Incepta for the
year ended September 30, 1997, payable in additional Incepta
shares.  The Company subsequently sold the 13,805,406 Incepta
shares and recognized a gain of approximately $1,719,000.  The
Company is entitled to receive under the earnout 7,072,307
additional Incepta shares, which resulted in the Company
recognizing an additional gain of $2,553,000 in 1997.

     Other Corporate Changes

     From 1993 through 1996, the Company issued shares of its
preferred stock in connection with various financing and
acquisition transactions.  In 1997 all shares of Series A
Convertible Preferred Stock were converted to 1,332,412 shares of
common stock of the Company.  In 1997 all but 572 shares of the
Company's Series B Convertible Preferred Stock were converted to
common stock, and the Company received at the beginning of 1998
notice of conversion with respect to the remaining 572 shares,
which is expected to be completed before the end of March 1998.
A total of 684,485 common shares have, or will be, issued on
conversion of the Series B Convertible Preferred Stock.  All
remaining shares of Series C Convertible Preferred Stock were
converted to common stock in 1997, which resulted in the issuance
of 39,489 common shares.  As of January 1998, the last of the
Series D Convertible Preferred Stock was converted to common
stock, so that in 1997 and 1998, 623,928 common shares were
issued on conversion of this series.  Holders of the Series D
Convertible Preferred Stock also received warrants to acquire
328,150 shares of the Company's common stock at an exercise price
of $4.25 per share, which expire at the end of April 1999.

               ITEM 2.  DESCRIPTION OF PROPERTIES

     The Company leases its offices from unrelated parties.  The
following table is a description of the locations, lease rates,
and expiration dates of the Company's office leases.

Location                 Monthly Rental      Lease Term Expires

850 Third Avenue            $74,700             October 2009
New York, New York

317 Madison Avenue          $34,200             January 2007
New York, New York

317 Madison Avenue          $11,900             December 2007
New York, New York

2003 Highway 54              $4,500               May 2002
Durham, North Carolina

7901 Strickland Road         $4,700              March 2002
Raleigh, North Carolina

Ten Univac Lane              $1,500             October 2001
Windsor, Connecticut

6865 Washington Blvd.        $2,500             January 2000
Montebello, California

17 Buckingham Gate          $12,200             February 2003
London, England

3-20 Toranomon 5-Chome       $9,300             October 1998
Minato-ku, Tokyo, Japan

Two Exchange Square         $11,400             October 2000
8 Connaught Place
Central, Hong Kong

Ocean Tower, Room 1004       $7,500              April 1999
Raffles Place, Singapore

     The Company receives monthly rental income based on a sub-
lease agreement with Citigate for the office space at 850 Third
Avenue.  The monthly sublease rental income is approximately
$45,000, expiring December 2000.

                   ITEM 3.  LEGAL PROCEEDINGS

     The Company is party to certain legal proceedings arising
from the normal course of its business.  In the opinion of
management, such proceedings involve matters and amounts that, if
resolved adversely to the Company and not covered by insurance,
would not have a material adverse effect on the Company or its
financial position.

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

     No matter was submitted to a vote of security holders in the
fourth quarter of 1997.

                            PART III

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Quotations for the Company's Common Stock are reported on
the Nasdaq SmallCap Market System under the symbol "HDWY."  The
following table sets forth, for the respective periods indicated,
the prices of the Company's Common Stock in the over-the-counter
market, as reported and summarized by the Nasdaq SmallCap Market
System.  Such prices are based on inter-dealer bid prices,
without markup, markdown, commissions, or adjustments and may not
represent actual transactions.

Calendar Quarter Ended              Low Bid ($)     High Bid ($)

March 31, 1996                         2.00            4.375
June 30, 1996                          3.25            6.00
September 30, 1996                     3.00            4.9375
December 31, 1996                      3.375           5.125

March 31, 1997                         3.625           4.750
June 30, 1997                          3.00            4.625
September 30, 1997                     3.688           5.344
December 31, 1997                      4.125           5.938

     Since its inception, no dividends have been paid on the
Company's Common Stock.  Cumulative dividends accrued on the
Series A Convertible Preferred Stock, Series C Convertible
Preferred Stock, and Series D Convertible Preferred Stock of the
Company at a rate of eight percent per annum on their respective
liquidation values during 1997, but all outstanding shares of
such preferred stock have been converted to Common Stock so the
Company has no further dividend obligation with respect thereto.
The Company intends to retain any earnings for use in its
business activities, so it is not expected that any dividends on
the Common Stock will be declared and paid in the foreseeable
future.

     At December 31, 1997, there were approximately 227 holders
of record of the Company's Common Stock.

   ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                            CONDITION
                    AND RESULTS OF OPERATIONS

Results of Operations

Overview

     In 1997 the Company continued to execute its strategy of
becoming a full service provider of human resource management and
staffing services primarily serving the financial services
industry.  The Company completed four acquisitions and expanded
into three new markets during the year.  In addition, the Company
entered into letters of understanding with four additional
staffing companies and is in negotiation with several others.  To
finance these and future acquisitions, the Company announced its
plans for $110,000,000 of new financing.

     The Company is expecting to continue to grow both internally
and through additional acquisitions.  In 1997, the Company
experienced internal growth of 20% while achieving record
revenues, net income, and earnings per share.  While there are a
number of competitive companies in the staffing industry, the
Company believes that its strategy of focusing on the financial
services industry is unique, as is its ability to provide a broad
range of human resource services.

     In March 1997, the Company acquired substantially all of the
assets of Advanced Staffing Solutions, Inc., ("ASSI") a North
Carolina-based provider of temporary staffing and human resource
management services.  The principal offices of ASSI are located
in Durham, North Carolina.

     In July 1997, the Company acquired substantially all of the
assets of Administrative Sales Associates, Inc., and
Administrative Sales Associates Temporaries, Inc. (collectively,
OASAO), both New York corporations engaged in the business of
offering permanent and temporary staffing services to the
financial services industry.  The principal offices of ASA are
located in New York City.

     In September 1997, the Company acquired substantially all of
the assets of Quality OutSourcing, Inc., a New Jersey corporation
engaged in the business of offering temporary staffing and
outsourcing services, primarily in New Jersey, New York, and
North Carolina.

     Also in September 1997, the Company acquired all of the
capital stock of E.D.R. Associates, Inc., and substantially all
the assets of Electronic Data Resources, L.L.C. (collectively
OEDRO).  EDR is engaged in the business of offering information
technology staffing and consulting services.  The principal
office of EDR is located in Windsor, Connecticut.

     Funding for these acquisitions was provided by debt
financing obtained from ING Capital Corporation (OINGO), the
lender for the CompanyOs acquisitions in 1996.  In connection
with these acquisitions, ING increased the CompanyOs credit
facility from $15,000,000 to $50,000,000.

     In January 1998, the Company signed commitment letters for
$110,000,000 of proposed new financing consisting of a
$75,000,000 Senior Credit Facility and $35,000,000 of junior
financing.  The new financing will be used to refinance existing
debt, make additional acquisitions and for general working
capital purposes.

     In February and March 1998, the Company announced that it
has signed letters of understanding with four staffing companies:
three temporary staffing companies located in Southern
California, Florida, and Virginia, and an information technology
staffing company located in Connecticut.  Three of these
transactions are expected to close by the end of the first
quarter of 1998, and the fourth is expected to close by the end
of the second quarter of 1998.

     In December 1997, the Company completed the sale of Furash &
Company, Inc. ("FCI"), in exchange for 1,500 shares of preferred
stock in a privately held corporation.  The Company recorded a
loss on the sale of approximately $2,700,000 net of tax.
Accordingly, FCI's results of operations for 1997 and 1996 are
included in discontinued operations.  This divestiture marked the
completion of the CompanyOs plan to divest all non-core business
segments, allowing it to focus on its core business of human
resource management and staffing services.

     During 1997, the Company realized a gain of approximately
$4,272,000 on its investment in Incepta.

     The services of the Company are targeted to the financial
services industry, and it is expected that this focus will
continue in the current year.  Accordingly, the performance of
the Company has been, and will continue to be heavily dependent
on the performance of the financial services industry.

Consolidated

     Consolidated revenues increased $89,453,000 to $142,842,000
for the year ended December 31, 1997, from $53,389,000 for the
year ended December 31, 1996.  The increase in revenues for 1997
is attributable to a full year of the IC Group and Vogue
acquisitions, which were completed in May and October 1996,
respectively, as well as the other acquisitions of temporary
staffing companies completed during 1997.  All acquisitions were
effected through the Company's subsidiary, Headway Corporate
Staffing Services, Inc. ("Staffing Services").  In addition, the
Company experienced internal growth in 1997 of 20% as a result of
the continued dependence by the CompanyOs customers on the use of
contingent workers.  The Company believes that this trend will
continue in 1998.

     The executive search subsidiary, Whitney Partners, L.L.C.
("Whitney") contributed $17,526,000 to consolidated revenues in
1997, an increase of $1,218,000 from $16,308,000 in 1996.  This
increase is due to the continued strong performance in the
financial services industry and the related increase in the
hiring activities of WhitneyOs clients.

     Total operating expenses increased $85,685,000 to
$135,437,000 for the year ended December 31, 1997, from
$49,752,000 for the year ended December 31, 1996.  Of the
increase, $74,693,000 relates to the increase in direct costs
which are the wages, taxes, and benefits of worksite employees of
Staffing Services.  Furthermore, direct costs as a percentage of
revenues increased in 1997 as compared to 1996 as a result of the
increase in the percentage of the Company's total revenues
attributable to the workforce business of Staffing Services.  The
balance of the increase relates to the operating expenses
associated with the acquisitions of the staffing companies in
late 1996 and 1997.  The total of general and administrative and
depreciation and amortization expenses decreased as a percentage
of consolidated revenues to 21.7% in 1997 from 37.6% in 1996.
This percentage is expected to continue to decrease as the
Company grows.

     Whitney's operating expenses increased $1,273,000 to
$14,569,000 for the year ended December 31, 1997 as compared to
$13,296,000 for the same period last year.  The increase relates
to additional compensation expense directly attributable to the
increase in revenue and start-up costs for WhitneyOs new Hong
Kong and Singapore offices.

     Consolidated net income from continuing operations increased
$4,059,000 to $5,805,000 for the year ended December 31, 1997,
compared to consolidated net income from continuing operations of
$1,746,000 for the year ended December 31, 1996.  The increase in
1997 relates to the acquisitions of the staffing companies in
late 1996 and 1997, a gain of approximately $4,272,000 on the
CompanyOs investment in Incepta, and a reversal of a loan reserve
of $750,000.  Consolidated net income was $2,806,000 for the year
ended December 31, 1997, compared to consolidated net income of
$1,182,000 for the year ended December 31, 1996.  Included in
consolidated net income are losses after tax from discontinued
operations of $2,999,000 in 1997 and $564,000 in 1996.

     The Company's operations were not significantly impacted by
inflation during the years ended December 31, 1997 and 1996, and
it is not anticipated that inflation will have any significant
impact on the Company's results of operations for at least the
next year.

     The software in use at the Company is not susceptible to
year 2000 problems because the database does not store dates as
plain text.  Dates are converted into an internal date format
that does not rely on the year to determine the century.  New
software will conform to the same type of internal date storage
specifications and, therefore, escape problems in the next
century.

Discontinued Operations

     In December 1997, the Company sold its wholly-owned
subsidiary FCI.  The sale of FCI has been accounted for as a
discontinued operations and the prior years financial statements
have been restated to reflect the discontinuation of the advisory
services segment.

     FCI had a loss after tax for the year ended December 31,
1997, of $301,000 compared to a loss after tax of $564,000 for
the same period in 1996.  In addition, the Company recorded a
loss on the disposal of the segment of approximately $2,700,000.

Liquidity and Capital Resources

     Cash used in operating activities was $5,808,000 in 1997 as
a result of an increase in accounts receivable primarily from the
revenue growth of Staffing Services.  In 1996, cash generated
from operating activities was $319,000.  This is a trend that is
likely to continue as the Company continues to grow the staffing
business.  In January 1998, the Company signed commitment letters
for $110,000,000 of proposed new financing which will be used to
refinance existing debt, for future acquisitions, and for general
working capital.  Management is of the opinion, however, that
cash on hand, amounts available under current credit facilities,
and cash from its operations will be sufficient to meet its
operating needs in 1998.

     At December 31, 1997, the Company had working capital of
$450,000 compared to working capital at December 31, 1996, of
$2,138,000.  This decrease is the result of current earnout
obligations affecting non-current assets, which will be paid with
the CompanyOs revolving credit facility with ING.  Estimated cash
earnout payments to be made in 1998 are $3,667,000, of which
$2,200,000 are included in current liabilities at December 31,
1997.  Management anticipates that working capital will improve
in 1998 if the Company's performance continues at present levels.
Management estimates that cash flow from operations in 1998, as
well as the availability under the existing credit facility with
ING, will be sufficient for meeting payment obligations and
working capital needs as they arise.

     Total cash generated from financing activities was
$20,025,000 for the year ended December 31, 1997, compared to
$12,542,000 in fiscal 1996.  Cash from financing activities in
1997 was primarily related to the net proceeds from the ING
financing arrangement.  In 1996, cash generated from financing
activities included the net proceeds from ING of $12,850,000 and
the sale of the CompanyOs preferred stock of $6,267,000, offset
by the repayment of loans outstanding prior to the ING financing
of $5,675,000.

                  ITEM 7.  FINANCIAL STATEMENTS

     The consolidated financial statements of the Company appear
at the end of this report beginning with the Index to
Consolidated Financial Statements on page F-1.

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

     In September 1996, the accounting firm of Ernst & Young LLP
was approved by the Board of Directors of the Company, upon
recommendation by the Audit Committee, to serve as independent
auditors of the Company for 1996, which was ratified by the
stockholders of the Company in November 1996.  This change in
independent auditors was previously reported in a report on Form
8-K dated September 16, 1996, filed with the Securities and
Exchange Commission.

                            PART III

     The information required by each of the Items listed below
is incorporated herein by reference to the definitive proxy
statement of the Company for the 1998 annual meeting of
stockholders, which the Company proposes to file with the
Securities and Exchange Commission on or before April 30, 1998:

     Information required by "Item 9.  Directors, Executive
Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act," is incorporated by reference to the
proposed caption "Directors and Executive Officers" in the proxy
statement;

     Information required by "Item 10.  Executive Compensation,"
is incorporated by reference to the proposed caption "Executive
Compensation" in the proxy statement;

     Information required by "Item 11.  Security Ownership of
Certain Beneficial Owners and Management," is incorporated by
reference to the proposed caption "Security Ownership of
Management and Principal Stockholders" in the proxy statement;
and

     Information required by "Item 12.  Certain Relationships and
Related Transactions," is incorporated by reference to the
proposed caption "Certain Relationships and Related Transactions"
in the proxy statement.

                            ITEM 13.
                EXHIBITS AND REPORTS ON FORM 8-K

      Copies  of the following documents are included as exhibits
to this report pursuant to Item 601 of Regulation S-B.

Exhibits.

Exhibit     SEC Ref.     Title of Document                      Location
No.         No.                                           
1           (3)(i)       Certificate ofIncorporation (1)        1996 Fm10-K
                                                                Ex. No. 1
                                                          
2           (3)(ii)      By-Laws (1)                            1996 Fm10-K
                                                                Ex. No. 2
                                                          
3           (4)          Certificate of Designation             1996 Fm10-K
                           of Preferred Stock (1)               Ex. No. 3
                                                          
5           (2)          Asset Purchase Agreement dated         Mar/Fm8-K
                           March 31, 1997 (2)                   Ex. No. 1
                                                          
6           (2)          Asset Purchase Agreement dated         Jul/Fm8-K
                           July 28, 1997 (3)                    Ex. No. 1
                                                          
7           (2)          Asset Purchase Agreement dated         Sep/Fm8-K
                           September 29, 1997 (4)               Ex. No. 1
                                                          
8           (4)          Fourth Amended and Restated Credit     This Filing
                           Agreement dated September 15, 1997   Page E-1
                         
9           (4)          Security Agreement dated               Fm8-K
                           May 31, 1996 (5)                     Ex. No. 9
                                                          
10          (4)          Warrant Agreement dated                Fm8-K
                           May 31, 1996 (5)                     Ex. No. 10
                                                          
11          (4)          Registration Rights Agreement          Fm8-K
                           dated May 31, 1996 (5)               Ex. No. 11
                                                          
12          (21)         Subsidiaries of the Company            This Filing
                                                                Page E-104
                                                          
13          (23)         Consent of Ernst & Young LLP           This Filing
                                                                Page E-105
                                                          
14          (27)         Financial Data Schedule                This Filing
                                                                Page E-106
                                                          
(1)  Each of these exhibits are included in the Company's annual
report on Form 10-KSB, for the fiscal year ended December 31,
1996, and filed with the Securities and Exchange Commission on
March 27, 1997, and are incorporated herein by this reference.
The reference under the column "Location" is to the exhibit
number in the report on Form 10-KSB.

(2)  This exhibit is included in the Company's current report on
Form 8-K, dated March 31, 1997, and filed with the Commission on
April 14, 1997, and is incorporated herein by this reference.
The reference under the column "Location" is to the exhibit
number in the report on Form 8-K.

(3)  This exhibit is included in the Company's current report on
Form 8-K, dated July 28, 1997, and filed with the Commission on
August 6, 1997, and is incorporated herein by this reference.
The reference under the column "Location" is to the exhibit
number in the report on Form 8-K.

(4)  This exhibit is included in the Company's current report on
Form 8-K, dated September 29, 1997, and filed with the Commission
on October 14, 1997, and is incorporated herein by this
reference.  The reference under the column "Location" is to the
exhibit number in the report on Form 8-K.

(5)  Each of these exhibits are included in the Company's current
report on Form 8-K, dated May 31, 1996, and filed with the
Commission on June 14, 1996, and are incorporated herein by this
reference.  The reference under the column "Location" is to the
exhibit number in the report on Form 8-K.

FORM 8-K FILINGS

     On October 14, 1997, the Company filed a report on Form 8-K
dated September 29, 1997 reporting under Item 2 the acquisition
of Quality Outsourcing, Inc. (OQOSO), and included with this
report, under Item 7, are the historical audited financial
statements of QOS for the calendar years ended December 31, 1996
and 1995 (audited), and for the periods ended July 4, 1997, and
July 5, 1996 (unaudited), consisting of the following:

     Report of Independent Auditors
     Balance Sheets
     Statements of Income and Retained Earnings
     Statements of Cash Flows
     Notes to Financial Statements

In addition, the Company reported under Item 2, the acquisition
of E.D.R. Associates, Inc. and Electronic Data Resources, L.L.C.
(collectively referred to as OEDRO).  Based on significance
tests, historical financial statements of EDR were not required.

     On November 14, 1997, the Company filed a report on Form 8-
K/A dated September 29, 1997, reporting under Item 7, the
acquisition of QOS, and included in this report are the pro forma
condensed combined balance sheet as of June 30, 1997, giving
effect to the acquisition of QOS, and the pro forma condensed
combined statements of operations of the Company for the year
ended December 31, 1996, and the six months ended June 30, 1997,
giving effect to the acquisition of QOS.

                           SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act,
the  registrant caused this report to be signed on its behalf  by
the undersigned thereunto duly authorized.

                                    HEADWAY CORPORATE RESOURCES, INC.

Date:   March 4, 1998               By:  Barry S. Roseman, President
                                         (Signature)

      In  accordance with the Exchange Act, this report has  been
signed  by the following persons on behalf of the registrant  and
in the capacities and on the dates indicated.

Dated:  March 4, 1998            Gary S. Goldstein (Signature)
                                 Principal Executive Officer, Director
                                 
Dated:  March 4, 1998            Barry S. Roseman (Signature)
                                 Principal Financial and Accounting
                                 Officer, Director
                                 
Dated:  March 5, 1998            G. Chris Andersen (Signature)
                                 Director
                                 
Dated:  March 4, 1998            Edward E. Furash (Signature)
                                 Director
                                 
Dated:  March 4, 1998            Ehud D. Laska (Signature)
                                 Director
                                 
Dated:  March 4, 1998            Richard B. Salomon (Signature)
                                 Director
                                 
Dated:  March __, 1998           Bruce R. Ellig (No Signature)
                                 Director
                                 
Dated:  March 4, 1998            Glen R. Sergeon(Signature)
                                 Director

<PAGE>                                 

       Headway Corporate Resources, Inc. and Subsidiaries
                                
           Index to Consolidated Financial Statements
                                
                                




                            Contents

Report of Independent Auditors                                        F- 2
Consolidated Balance Sheet as of December 31, 1997                    F- 3
Consolidated Statements of Operations for the years ended
 December 31, 1997 and 1996                                           F- 5
Consolidated Statements of Stockholders' Equity for the years ended
 December 31, 1997 and 1996                                           F- 6
Consolidated Statements of Cash Flows for the years ended
 December 31, 1997 and 1996                                           F-10
Notes to Consolidated Financial Statements                            F-12

<PAGE>

                 Report of Independent Auditors

The Board of Directors and Stockholders
Headway Corporate Resources, Inc.

We  have  audited  the  consolidated  balance  sheet  of  Headway
Corporate Resources, Inc. as of December 31, 1997 and the related
consolidated statements of operations, stockholders'  equity  and
cash  flows  for each of the two years in the period then  ended.
These   financial  statements  are  the  responsibility  of   the
Company's management. Our responsibility is to express an opinion
on these 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  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  Headway  Corporate  Resources,  Inc.  at
December   31,  1997  and  the  consolidated  results  of   their
operations and their cash flows for each of the two years in  the
period   then   ended  in  conformity  with  generally   accepted
accounting principles.


                                                ERNST & YOUNG LLP


New York, New York
February 17, 1998,
except for Note 4, as to which
the date is March 3, 1998

<PAGE>

       Headway Corporate Resources, Inc. and Subsidiaries
                                
                   Consolidated Balance Sheet
                                
                        December 31, 1997
                     (Dollars in Thousands)
                                
                                
Assets                                              
Current assets:                                     
Cash and cash equivalents                                          $   2,472
Accounts receivable, trade, net of allowance for     
doubtful accounts of $371                                             27,332
Prepaid expenses and other current assets                                368
 Due from related party                                                  638
 Total current assets                                                 30,810
                                                    
Property and equipment, net                                            2,181
                                                    
Intangibles, net of accumulated amortization of $1,437                28,079
Deferred financing costs                                               2,821
Deferred income taxes                                                    426
Other assets                                                           3,019
Total assets                                                        $ 67,336
                                
<PAGE>                                
                                
       Headway Corporate Resources, Inc. and Subsidiaries
                                
             Consolidated Balance Sheet (continued)
                                
                        December 31, 1997
                     (Dollars in Thousands)
                                
                                
Liabilities and stockholders' equity                
Current liabilities:                                
 Accounts payable and accrued expenses                              $  3,987
 Line of credit                                                       13,404
 Capital lease obligations, current portion                              199
 Long-term debt, current portion                                       1,855
 Accrued payroll                                                       8,097
 Income taxes payable                                                    618
 Other liabilities                                                     2,200
Total current liabilities                                             30,360
                                                    
Capital lease obligations, less current portion                          318
Long-term debt, less current portion                                  19,059
Deferred rent                                                          1,147
                                                    
Commitments and contingencies                       
                                                    
Stockholders' equity:                               
 Preferred stock-$.0001 par value, 5,000,000 shares authorized:
  Series B, convertible preferred stock-$.0001         
   par value, 6,858 shares authorized, 572 issued      
   and outstanding (aggregate liquidation value $200)                    200
  Series D, convertible preferred stock-$.0001 par     
   value, 44 shares authorized, 4 issued and           
   outstanding (aggregate liquidation value $200)                        200
  Series E, convertible preferred stock-$.0001         
   par value, 575,000 shares authorized, none
   issued and outstanding
 Common stock-$.0001 par value, 20,000,000 shares authorized     
  8,907,110 shares issued and outstanding                                  1
 Additional paid-in capital                                           13,247
 Cumulative translation adjustments                                       41
 Notes receivable                                                       (285)
 Retained earnings                                                     3,048
Total stockholders' equity                                            16,452
Total liabilities and stockholders' equity                          $ 67,336
                         
See accompanying notes.

<PAGE>
                                
       Headway Corporate Resources, Inc. and Subsidiaries
                                
              Consolidated Statements of Operations
                     (Dollars in Thousands)
                                
                                
                                                     Year ended December 31
                                                      1997            1996
                                                    
Revenues                                           $ 142,842        $ 53,389
                                                    
Operating expenses:                                 
 Direct costs                                        104,396          29,703
 General and administrative                           29,588          19,535
 Depreciation and amortization                         1,453             514
                                                     135,437          49,752
                                                    
Operating income from continuing operations            7,405           3,637
                                                    
Other (income) expenses:                            
 Interest expense                                      2,662           1,088
 Interest income                                        (104)            (91)
 Gain on sale of investment                           (4,272)              -
 Other (income) expense, net                            (750)            (51)
                                                      (2,464)            946
Income from continuing operations before             
 income tax expense                                    9,869           2,691
                                                    
Income tax expense (benefit):                       
 Current                                               3,589           1,775
 Deferred                                                475            (830)
                                                       4,064             945
                                                    
Income from continuing operations                      5,805           1,746
                                                    
Discontinued operations:                             
 Loss from operations of discontinued segment     
  (net of income tax benefit of $95 and $245)           (301)           (564)
 Loss on disposal of segment (net of                  
  income tax benefit of $117)                         (2,698)              -
 (Loss) from discontinued operations                  (2,999)           (564)
Net income                                             2,806           1,182
                                                    
Deemed dividend on preferred stock                         -          (1,470)
Preferred dividend requirements                         (137)           (276)
Net income (loss) available for common stockholers $   2,669      $     (564)
                                                    
Basic earnings (loss) per common share:             
 Continuing operations                             $     .79      $        -
 Discontinued operations                                (.42)           (.11)
 Net income (loss)                                 $     .37      $     (.11)
                                                    
Diluted earnings (loss) per common share:            
 Continuing operations                             $     .58      $        -
 Discontinued operations                                (.30)           (.11)
 Net income (loss)                                 $     .28      $     (.11)
                                
                                
See accompanying notes.

<PAGE>

       Headway Corporate Resources, Inc. and Subsidiaries
                                
         Consolidated Statements of Stockholders' Equity
                     (Dollars in Thousands)
                                
                                
                                 Series A Convertible    Series B Convertible
                                   Preferred Stock         Preferred Stock
                                   Shares    Amount       Shares     Amount
                                                     
Balance-December 31, 1995          2,800     $ 700        6,858     $ 2,400
 Issuance of preferred stock           -         -            -           -
 Notes receivable                      -         -            -           -
 Conversion of preferred stock         -         -            -           -
 Change in par value                   -         -            -           -
 Retirement of treasury stock          -         -            -           -
 Repayment of notes receivable         -         -            -           -
 Warrants issued in connection                         
  with financing transactions          -         -            -           -
 Fair value of warrants issued         -         -            -           -
 Preferred stock dividends             -         -            -           -
 Translation adjustment                -         -            -           -
 Net income                            -         -            -           -
Balance-December 31, 1996          2,800       700        6,858       2,400
 Conversion of preferred stock    (2,800)     (700)      (6,286)     (2,200)
 Retirement of treasury stock          -         -            -           -
 Repayment of notes receivable         -         -            -           -
 Issuance of stock for acquisition     -         -            -           -
 Exercise of options and warrants      -         -            -           -
 Fair value of warrants issued         -         -            -           -
 Preferred stock dividends             -         -            -           -
 Translation adjustment                -         -            -           -
 Net income                            -         -            -           -
Balance-December 31, 1997              -     $   -          572     $   200

<PAGE>

       Headway Corporate Resources, Inc. and Subsidiaries
                                
   Consolidated Statements of Stockholders' Equity (continued)
                     (Dollars in Thousands)
                                
                                
                                 Series C Convertible    Series D Convertible
                                   Preferred Stock         Preferred Stock
                                   Shares    Amount       Shares     Amount
                                                       
Balance-December 31, 1995             -     $     -          -      $     -
 Issuance of preferred stock        150       3,000         80        4,000
 Notes receivable                     -           -          -            -
 Conversion of preferred stock     (145)     (2,900)       (43)      (2,150)
 Change in par value                  -           -          -            -
 Retirement of treasury stock         -           -          -            -
 Repayment of notes receivable        -           -          -            -
 Warrants issued in connection                         
   with financing transactions        -           -          -            -
 Fair value of warrants issued        -           -          -            -
 Preferred stock dividends            -           -          -            -
 Translation adjustment               -           -          -            -
 Net income                           -           -          -            -
Balance-December 31, 1996             5         100         37        1,850
 Conversion of preferred stock       (5)       (100)       (33)      (1,650)
 Retirement of treasury stock         -           -          -            -
 Repayment of notes receivable        -           -          -            -
 Issuance of stock for acquisition    -           -          -            -
 Exercise of options and warrants     -           -          -            -
 Fair value of warrants issued        -           -          -            -
 Preferred stock dividends            -           -          -            -
 Translation adjustment               -           -          -            -
 Net income                           -           -          -            -
Balance-December 31, 1997             -     $     -          4      $   200
                                
<PAGE>
                                
       Headway Corporate Resources, Inc. and Subsidiaries
                                
   Consolidated Statements of Stockholders' Equity (continued)
                     (Dollars in Thousands)

                                
                                      Notes                       Additional
                                    Receivable     Common Stock     Paid-in
                                      Amount     Shares    Amount   Capital
                                                     
Balance-December 31, 1995            $      -   4,597,358  $   46  $  2,592
 Issuance of preferred stock                -           -       -         -
 Notes receivable                        (507)          -       -         -
 Conversion of preferred stock              -   1,818,050       -     5,178
 Change in par value                        -           -     (45)       45
 Retirement of treasury                     -    (113,960)      -      (577)
 Repayment of notes receivable             50           -       -         -
 Warrants issued in connection
  with financing transactions               -           -       -     1,867
 Fair value of warrants issued              -           -       -      (734)
 Preferred stock dividend                   -           -       -         -
 Translation adjustment                     -           -       -         -
 Net income                                 -           -       -         -
Balance-December 31, 1996                (457)  6,301,448       1     8,371
 Conversion of preferred stock              -   2,565,775       -     4,799
 Retirement of treasury stock               -     (83,462)      -      (438)
 Repayments of notes receivable           172           -       -         -
 Issuance of stock for acquisition          -     121,066       -       500
 Exercise of options and warrants           -       2,283       -         5
 Fair value of warrants issued              -           -       -        10
 Preferred stock dividend                   -           -       -         -
 Translation adjustment                     -           -       -         -
 Net income                                 -           -       -         -
Balance-December 31, 1997            $   (285)  8,907,110  $    1  $ 13,247

<PAGE>

       Headway Corporate Resources, Inc. and Subsidiaries
                                
   Consolidated Statements of Stockholders' Equity (continued)
                     (Dollars in Thousands)
                                
                              
                                                      
                                                      
                                   Cumulative       Retained        Total
                                   Translation      Earnings    Stockholders'
                                   Adjustment       (Deficit)       Equity
                                                  
Balance-December 31, 1995           $   90         $    (527)    $   5,301
 Issuance of preferred stock             -                 -         7,000
 Notes receivable                        -                 -          (507)
 Conversion of preferred stock           -                 -           128
 Change in par value                     -                 -             -
 Retirement of treasury stock            -                 -          (577)
 Repayment of notes receivable           -                 -            50
 Warrants issued in connection                                  
  with financing transactions            -                 -         1,867
 Fair value of warrants issued           -                 -          (734)
 Preferred stock dividends               -              (276)         (276)
 Translation adjustment                (10)                -           (10)
 Net income                              -             1,182         1,182
Balance-December 31, 1996               80               379        13,424
 Conversion of preferred stock           -                 -           149
 Retirement of treasury stock            -                 -          (438)
 Repayment of notes receivable           -                 -           172
 Issuance of stock for acquisition       -                 -           500
 Exercise of options and warrants        -                 -             5
 Fair value of warrants issued           -                 -            10
 Preferred stock dividends                              (137)         (137)
 Translation adjustment                (39)                -           (39)
 Net income                              -             2,806         2,806 
Balance-December 31, 1997           $   41         $   3,048     $  16,452

See accompanying notes.

<PAGE>

       Headway Corporate Resources, Inc. and Subsidiaries
                                
              Consolidated Statements of Cash Flows
                     (Dollars in Thousands)
                                
                                
                                                     Year ended December 31
                                                      1997            1996
                                                  
Net income                                          $  2,806        $  1,182
Adjustments to reconcile net income to net cash
 provided by (used in) operating activities:
  Gain on sale of investment                          (4,272)              -
  Loss on disposal of segment                          2,698               -
  Depreciation and amortization                        2,253           1,099
  Deferred income taxes                                  475            (830)
  Changes in assets and liabilities:                
   Accounts receivable                               (14,471)         (4,163)
   Prepaid expenses and other current assets              54             622
   Other assets                                          264            (329)
   Accounts payable and accrued expenses               1,211             347
   Accrued payroll                                     4,222           2,092
   Income taxes payable                                 (568)            260
   Deferred rent                                           -              39
   Changes in working capital related to              
    discontinued operations                             (480)              -

Net cash provided by (used in) operating activities   (5,808)            319
                                                  
Investing activities                              
Expenditures for property and equipment                 (695)           (286)
Repayment from notes receivable                          172              50
Advances to employees                                      -            (257)
Due from related parties                                   -            (167)
Proceeds from sale of investment                       4,363               -
Cash paid for acquisitions                           (16,512)        (12,139)
Other assets                                             (42)           (107)
Net cash used in investing activities                (12,714)        (12,906)
                                                  
Financing activities                              
Cash pledged                                               -              85
Net change in revolving credit line                    9,554               -
Proceeds from long-term debt                          14,352          12,850
Repayment of long-term debt                           (2,641)         (5,675)
Payment of capital lease obligations                    (136)            (72)
Payments of loan acquisition fees                     (1,051)           (857)
Sale of preferred stock                                    -           6,267
Cash dividends paid                                      (53)            (56)
Net cash provided by financing activities             20,025          12,542

<PAGE>

       Headway Corporate Resources, Inc. and Subsidiaries
                                
        Consolidated Statements of Cash Flows (continued)
                                
                     (Dollars in Thousands)
                                
                                
                                                     Year ended December 31
                                                      1997            1996
Effect of exchange rate changes on               
  cash and cash equivalents                        $    (39)       $    (10)
                                                
Increase (decrease) in cash and cash equivalents      1,464              (55)
Cash and cash equivalents at beginning of year        1,008            1,063
Cash and cash equivalents at end of year           $  2,472        $   1,008
                                               
Supplemental disclosures of cash flow information
Cash paid during the year for:                  
 Interest                                          $  2,016        $     736
 Income taxes                                      $  2,870        $   1,043
                                
Supplemental schedule of noncash investing and financing activities
                                
In  December  1997, an officer and in December 1996, the  officer
and  a  former employee sold 83,462 and 113,960 shares of  common
stock  valued  at  $438,000 and $577,000,  respectively,  to  the
Company which was used to reduce amounts due to the Company  from
these individuals.

See accompanying notes.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
         Notes to Consolidated Financial Statements
                              
                      December 31, 1997
                              


1. Organization

Headway  Corporate  Resources,  Inc.  and  its  wholly-owned
subsidiaries  (i) Headway Corporate Staffing Services,  Inc.
("HCSSI") and its wholly-owned subsidiaries and (ii) Whitney
Partners  LLC  and its United Kingdom and Asian Subsidiaries
("WPI"), (collectively referred to as the "Company") provide
a  wide  range of human resource management services.  HCSSI
provides  temporary  and  permanent  staffing  and   related
services,  primarily  in  the  New  York,  New  Jersey   and
Connecticut tri-state area and in North Carolina through its
offices in New York City, California, Connecticut and  North
Carolina.  WPI  is  engaged  in  providing  human   resource
management, primarily to the financial services market, with
offices  and  principal markets in New York, London,  Tokyo,
Hong Kong and Singapore.

In   December   1997,  the  Company  sold  its  wholly-owned
subsidiary Furash & Company, Inc. ("FCI"), which was engaged
in  providing  management and consulting advisory  services,
primarily  to the financial services market, throughout  the
United  States  through its office in Washington,  D.C.  The
disposal  of  FCI has been accounted for as  a  discontinued
operation and the prior years financial statements have been
restated  to  reflect the discontinuation  of  the  advisory
services segment.

In  1997  and  1996, HCSSI purchased the  stock  or  certain
assets of several temporary staffing agencies (see Note  6).
The  results  of  operations of the companies  acquired  are
included  in the consolidated statements of operations  from
the various dates of acquisition.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The  consolidated financial statements include the  accounts
of  Headway  Corporate Resources, Inc. and its  subsidiaries
after   elimination   of  all  intercompany   accounts   and
transactions.

Revenue Recognition

Temporary  staffing revenue is recognized when the temporary
personnel  perform  the related services  and  revenue  from
permanent   placement  services  is  recognized   when   the
placement is employed.

WPI's  services  are primarily engaged on a retainer  basis.
Income  from retainer contracts, which provide for  periodic
billings  over  periods of up to one year, is recognized  as
earned based on the terms of the contract.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

2. Summary of Significant Accounting Policies (continued)

Cash Equivalents

Cash  equivalents  are  comprised of certain  highly  liquid
investments  with a maturity of three months  or  less  when
purchased.

Property and Equipment

Property  and equipment are stated at cost. Depreciation  is
computed   utilizing  the  straight-line  method  over   the
estimated useful lives of the assets which range from  three
to   seven   years.  Leasehold  improvements  are  amortized
utilizing  the straight-line method over the lesser  of  the
useful life of the leasehold or the term of the lease.

Deferred Rent

The  Company leases premises under leases which provide  for
periodic   increases  over  the  lease  term.  Pursuant   to
Statement   of  Financial  Accounting  Standards   No.   13,
"Accounting for Leases," the Company records rent expense on
a  straight-line basis. The effect of these  differences  is
recorded as deferred rent.

Deferred Taxes

The   Company  provides  for  deferred  taxes  pursuant   to
Statement  of  Financial  Accounting  Standards   No.   109,
"Accounting   for   Income  Taxes,"   which   requires   the
recognition  of  deferred  taxes  utilizing  the   liability
method.

Cumulative Translation Adjustments

Balance  sheet  accounts of WPI's United Kingdom  and  Asian
subsidiaries  are translated using year end exchange  rates.
Statement  of operations accounts are translated at  monthly
average exchange rates. The resulting translation adjustment
is recorded as a separate component of stockholders' equity.

Goodwill

Goodwill  is  amortized utilizing the  straight-line  method
over  a  period of 20 to 30 years. The Company  periodically
evaluates the carrying value and the periods of amortization
of  goodwill  based on the current and expected future  non-
discounted  income  from operations of the  entities  giving
rise  to  the  goodwill  to  determine  whether  events  and
circumstances warrant revised estimates of carrying value or
useful lives.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              
2. Summary of Significant Accounting Policies (continued)

Deferred Financing Costs

Deferred   financing  costs  are  amortized  utilizing   the
straight-line method over the term of the related debt.

Earnings Per Share

In  1997,  the  Financial Accounting Standards Board  issued
Statement  No.  128,  Earnings  per  Share.  Statement   128
replaced  the  calculation  of  primary  and  fully  diluted
earnings  per  share  with basic and  diluted  earnings  per
share. Unlike primary earnings per share, basic earnings per
share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share  is  very
similar  to  the previously reported fully diluted  earnings
per  share.  All earnings per share amounts for all  periods
have  been  presented,  and where appropriate,  restated  to
conform to the Statement 128 requirements.

Concentration of Credit Risk

Financial  instruments that potentially subject the  Company
to  concentration  of  credit risk  include  cash  and  cash
equivalents and accounts receivable arising from its  normal
business  activities. The Company places its cash  and  cash
equivalents with high credit quality financial institutions.

The Company believes that its credit risk regarding accounts
receivable  is limited due to the large number  of  entities
comprising  the  Company's customer base. In  addition,  the
Company  routinely assesses the financial  strength  of  its
customers  and,  based upon factors surrounding  the  credit
risk   of  its  customers,  establishes  an  allowance   for
uncollectible  accounts,  where  appropriate   and,   as   a
consequence,  believes that its accounts  receivable  credit
risk exposure is limited.

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
amount   of   assets  and  liabilities  and  disclosure   of
contingent  assets  and  liabilities  at  the  date  of  the
financial statements and the reported amount of revenue  and
expenses  during the reporting period. Actual results  could
differ from those estimates.

Reclassifications

Certain  1996 balances have been reclassified to conform  to
the 1997 presentation.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

2. Summary of Significant Accounting Policies (continued)

Stock Based Compensation

The  Company accounts for its stock-based compensation plans
using  the provisions of Accounting Principles Board Opinion
No.  25,  "Accounting for Stock Issued to  Employees"  ("APB
25").

Under   the   provisions  of  "Accounting  for   Stock-Based
Compensation" ("SFAS 123"), companies can elect  to  account
for  stock-based compensation plans using a fair-value based
method or continue measuring compensation expense for  those
plans using the intrinsic value method prescribed in APB 25.
SFAS  123 requires that companies electing to continue using
the intrinsic value method make pro forma disclosures of net
income  and  earnings per share as if the  fair-value  based
method  of  accounting  had been applied.  The  Company  has
elected   to   account  for  stock  based  compensation   in
accordance with the provisions of APB 25 (See Note 8).

3. Property and Equipment

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

 Leasehold improvements                            $    881,000
 Furniture and fixtures                               1,043,000
 Office and computer equipment                        1,405,000
                                                      3,329,000
 Less accumulated depreciation and amortization       1,148,000
                                                   $  2,181,000

4. Due from Related Parties and Related Party Transactions

In December 1997, the Chairman repaid approximately $290,000
of  amounts due from him.  The remaining $638,000  due  from
him  as  of December 31, 1997 was repaid on March  3,  1998.
Accordingly,  a  $750,000  reserve against  such  receivable
previously established in 1992 was reversed, and is included
in  other income in the accompanying statement of operations
for the year ended December 31, 1997.

During  1996, certain other borrowings and accrued interest,
aggregating $197,000, were repaid in their entirety  by  the
Chairman.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

4.  Due  from Related Parties and Related Party Transactions
(continued)

A  director of the Company is an employee of an entity  that
provides  financial  advisory services to  the  Company.  In
1996,  the  Company  paid $582,500 and  issued  warrants  to
purchase  240,000 shares of common stock at $4.25 per  share
to  this entity for such services. The warrants were  valued
at  $270,000. Financial advisory services provided  in  1996
related  to  the  Company's debt and equity financings  and,
accordingly,  these  expenses were allocated  between  share
issuance expenses ($160,000) and deferred financing expenses
($110,000).

During  the  years  ended December 31, 1997  and  1996,  the
Company    paid   approximately   $282,000   and   $246,000,
respectively, to an entity, whose partner is a member of the
Board of Directors, for legal services.

5. Long-Term Debt and Credit Facilities

Under the terms of a credit agreement entered into with  ING
U.S.  Capital Corporation ("ICC") in May 1996,  the  Company
obtained a revolving line of credit of $6,000,000 and a term
loan  of  $9,000,000.  In  connection  with  this  financing
agreement, the Company granted to ICC a Series E Warrant  to
purchase  575,000  shares of Series E Convertible  Preferred
Stock  of the Company at $.02 per share exercisable  at  any
time  through  May  31,  2004. At December  31,  1997,  such
warrants  could  be  converted  into  approximately  572,000
shares  of common stock. The Series E Warrant was valued  by
an   independent  appraiser  at  $1,757,000  and  is   being
amortized over the period of the term loan.

In  1997,  amendments  were made  to  the  credit  agreement
resulting  in  three term loans with principal  balances  of
$7,675,000,  $7,360,000 and $5,425,000 as  of  December  31,
1997.  These  term  loans are payable in  varying  quarterly
installments and bear interest at varying rates which ranged
from  9.16%  to 9.40% per annum at December 31, 1997.  Under
the  amended  agreement,  the Company's  revolving  line  of
credit,  due on demand, was increased to $17,000,000 bearing
interest at varying rates based on LIBOR (8.66% per annum at
December 31, 1997).

Substantially all assets of the Company have been pledged as
collateral  for this credit agreement. The credit  agreement
places  limits on annual capital expenditures  and  requires
the Company to meet certain financial ratios, as defined.

In  connection  with an acquisition made in July  1997  (see
Note 6), the Company entered into a $451,000 note payable to
the  seller.  This  note is payable in six equal  semiannual
installments  commencing in January 1998 and bears  interest
at 6% per annum.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

5. Credit Facilities (continued)

In  connection  with the Company's May 31, 1996  acquisition
(see Note 6), the Company assumed a $500,000 loan. This loan
bore interest at 8.25% per annum and the outstanding balance
was repaid in December 1997.

Annual maturities of long-term debt as of December 31, 1997
are as follows:

             Year ending December 31:
               1998                              $  1,855,000
               1999                                 2,399,000
               2000                                 2,736,000
               2001                                 2,841,000
               2002                                 1,750,000
               Thereafter                           9,333,000
                                                 $ 20,914,000

6. Acquisitions

In  May 1996, the Company acquired all of the capital  stock
and  certain  assets  of  four  related  New  York  staffing
agencies for cash of $9,230,000 plus $500,000, payable based
upon  future  earnings. The purchase price for  the  capital
stock,  including transaction expenses of $491,000, exceeded
the fair value of net assets acquired, resulting in goodwill
of $6,700,000.

In  October 1996, the Company purchased certain assets of  a
temporary  staffing agency for cash of $2,418,000, including
transaction  expenses  of  $18,000  of  which  $280,000  was
allocated  to a covenant not-to-compete. Goodwill  resulting
from  this transaction amounted to $2,118,000. The  covenant
not-to-compete is being amortized over four years.

In  March  1997, the Company purchased certain assets  of  a
North  Carolina corporation that provides temporary staffing
services, for a purchase price of up to $7,000,000, of which
$4,000,000  was paid in March 1997, and up to an  additional
$3,000,000 is payable in July 1998 based on future earnings.
At   December  31,  1997,  $2,200,000  of  such   additional
consideration   has  been  recorded  with  a   corresponding
increase   to   goodwill.  The  purchase  price,   including
transaction expenses of $189,000, exceeded the fair value of
assets acquired resulting in goodwill of $6,289,000.

In  July  1997, the Company acquired substantially  all  the
assets  of two New York corporations engaged in the business
of offering permanent and temporary staffing services to the
financial services industry. The purchase price consisted of
$4,000,000 in cash, promissory notes in the aggregate amount
of  $451,000,  121,066  shares of the  Company's  restricted
common  stock  valued at $500,000 and an  earnout  based  on
future  earnings. The earnout is payable in cash and  common
stock. The purchase price, including transaction expenses of
$201,000,  exceeded  the fair value of the  assets  acquired
resulting in goodwill of $5,152,000.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

6. Acquisitions (continued)

In September 1997, the Company acquired substantially all of
the  assets  of  a  New Jersey corporation  engaged  in  the
business  of  offering  temporary  staffing  services.   The
purchase  price was $795,000 in cash, plus an earnout  based
on  future  earnings. The Company also advanced $140,000  to
the  seller,  which will be offset against the earnout.  The
purchase  price, including transaction expenses of $103,000,
exceeded  the  fair  value of assets acquired  resulting  in
goodwill of $1,038,000.

In   September  1997,  the  Company  acquired  all  of   the
outstanding   stock   of  a  Connecticut   corporation   and
substantially  all  of the assets of a  Connecticut  limited
liability  company  affiliated with the  corporation.  These
entities are engaged in the business of offering information
technology  staffing and consulting services.  The  purchase
price  was $7,000,000 in cash, assumption of liabilities  of
approximately  $893,000  plus an  earnout  based  on  future
earnings. The purchase price, including transaction expenses
of  $84,000,  exceeded  the fair value  of  assets  acquired
resulting in goodwill of $6,123,000.

The  aforementioned acquisitions have been accounted for  as
purchases and have been included in the Company's operations
from  the  dates of the respective purchases. Any additional
purchase  price  based  on future earnings  related  to  the
aforementioned acquisitions will be recorded  as  additional
goodwill upon the determination that the earnouts have  been
met.

The  pro  forma unaudited consolidated results of operations
assuming consummation of the above-mentioned transactions as
of the beginning of the respective periods, are as follows:

                                                   Year ended December 31
                                                    1997           1996
                                              
  Total revenue                                 $164,972,000    $108,197,000
  Net income                                       3,160,000       1,106,000
  Net income (loss) available                  
   for common stockholders                         3,023,000        (640,000)
  Earnings per share:                         
   Basic                                              $.42           $(.13)
   Diluted                                            $.30           $(.13)

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

7. Stockholders' Equity

In  1997, 2,800 shares of Series A 8% cumulative convertible
preferred  stock  that were outstanding as of  December  31,
1996 were converted into 1,332,412 shares of common stock.

In  1995,  6,858  shares  of Series B convertible  preferred
stock  were issued for all of the capital stock of FCI.  The
Series  B preferred stock was convertible into a minimum  of
628,600  shares  and a maximum of 685,744 shares  of  common
stock  and participated fully with the common stock  in  all
dividends. The holders of 6,286 shares of Series B Preferred
Stock  converted their shares into 628,600 shares of  common
stock  in  1997.  The  remaining  572  shares  of  Series  B
convertible  preferred  stock  at  December  31,  1997   are
convertible into a maximum of 57,144 shares of common stock.

In  April 1996, the Company issued 150 shares of Series C 8%
convertible  preferred  stock for  $3,000,000.  Warrants  to
purchase  240,000 shares of common stock at $4.25 per  share
were  issued  to  related parties for services  rendered  in
connection  with  this transaction. The Series  C  preferred
stock was convertible to common stock of the Company at  the
lesser  of $4.558125 or 80% of the market price of Company's
common  stock. In 1997 and 1996, the holders of  5  and  145
shares  of Series C preferred stock, respectively, converted
their shares into common stock.

In  June 1996, the Company completed a private placement  of
80  shares  of Series D 8% convertible preferred  stock  for
$4,000,000.  The Series D preferred stock is convertible  to
common stock of the Company at the lesser of $5.21065 or 80%
of  the  market  price  of the Company's  common  stock.  In
addition, on conversion, the holders of Series D convertible
preferred  stock  are  entitled  to  receive  a  warrant  to
purchase  one share of common stock at an exercise price  of
$4.25  per  share,  for every four shares  of  common  stock
issued   upon   conversion.  The  guaranteed   discount   on
conversion ($1,000,000) and the valuation of warrants to  be
issued upon conversion, which amounted to $470,000 (based on
an  independent appraisal), was deemed to be a dividend  for
purposes  of  calculating  net income  available  to  common
stockholders.  Accordingly, a deemed dividend of  $1,470,000
was  recorded and shown as a reduction to earnings available
to common stockholders for the year ended December 31, 1996.
In  1997 and 1996, the holders of 33 and 43 shares of Series
D preferred stock, respectively, converted their shares into
common stock. In addition, warrants to purchase 130,743  and
184,470  shares of common stock, respectively, at $4.25  per
share were issued upon conversion.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

7. Stockholders' Equity (continued)

In  December  1997 the Chairman and, in December  1996,  the
Chairman  and a former employee of the Company, sold  83,462
and  113,960  shares of common stock, respectively,  at  the
then   current  market  price  of  $438,000  and   $577,000,
respectively, to the Company. Such amount was used to reduce
amounts  due  to  the  Company from these  individuals.  The
shares purchased by the Company were retired.

In  May 1996, the Company loaned a total of $507,000 to  ten
employees  of  the Company at 8% interest per annum  payable
quarterly over a term of five years. The funds were used  by
the  employees  to purchase a total of 2,170 shares  of  the
Company's Series A Convertible Preferred Stock from the then
current  Series  A  Convertible Preferred stockholder.  Such
Series  A  Convertible Preferred Stock  was  converted  into
common   stock   in   1997.   The  loans   outstanding   are
collateralized by common stock and assets with  a  value  in
excess of the principal amount of each loan.

In  April  1996,  the  Company issued warrants  to  purchase
200,000  shares  of  common stock  at  $3.50  per  share  as
consideration  for  services  rendered  in  connection  with
equity  financing obtained by Company and investor relations
services.

In  November  1997, warrants to purchase  50,000  shares  of
common  stock  at $5.25 per share were issued for  financial
advisory  services to be performed over a two  year  period.
Such  warrants were valued at approximately $52,000 and  are
being amortized over the two year period.

At  December  31,  1997, approximately 5,647,000  shares  of
common  stock  have  been reserved  for future  issuance  as
follows:

  Convertible Preferred Stock                                 118,000
  Warrants issued and issuable upon conversion of  
    Series D Preferred Stock                                  328,000
  Series E Warrants                                           572,000
  Stock Incentive Plan                                      3,770,000
  Other Warrants                                              859,000
                                                            5,647,000

At December 31, 1997, all warrants issued by the Company are
fully  vested and have exercise prices ranging from $.02  to
$5.25.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

8. Earnings per Share
The following table sets forth the computation of basic and
diluted earnings per share for the years ended December 31,
1997 and 1996:

                                                       1997          1996
Numerator:                                        
 Income from continuing operations                 $ 5,805,000   $ 1,791,000
 Discontinued operations                            (2,999,000)     (609,000)
 Deemed dividend on preferred stock                          -    (1,470,000)
 Preferred dividend requirements                      (137,000)     (276,000)
 Numerator for basic earnings per share-net income        
  (loss) available for common stockholders           2,669,000      (564,000)
                                                  
 Effect of dilutive securities:                   
  Preferred dividend requirements                      137,000             -
  Numerator for diluted earnings per share-net                 
   income (loss) available for common
   stockholders after assumed conversions          $ 2,806,000   $  (564,000)

Denominator:                                      
 Denominator for basic earnings per                 
  share-weighted average shares                      7,223,462     4,995,523
 Effect of dilutive securities:                     
  Stock options                                        373,984             -
  Warrants                                             746,340             -
 Convertible preferred stock                         1,758,412             -
 Dilutive potential common stock                     2,878,736     4,995,523
 Denominator for diluted earnings per               
  share-adjusted weighted-average                    
  shares and assumed conversions                    10,102,198     4,995,523

Basic earnings (loss) per share                        $.37          $(.11)
Diluted earnings (loss) per share                      $.28          $(.11)

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

9. Income Taxes

Income  tax  expense from continuing operations consists  of
the following:

                                                     December 31
                                                  1997         1996
   Current:                                  
    Domestic                                 $ 3,545,000    $1,737,000
    Foreign                                       44,000        38,000
                                               3,589,000     1,775,000
   Deferred expense (benefit):               
    Domestic                                     475,000      (830,000)
   Total deferred expense (benefit)              475,000      (830,000)
                                             $ 4,064,000    $  945,000

The components of deferred tax assets and liabilities are as
follows:

                                                     December 31,
                                                         1997
   Deferred tax assets:                     
    Deferred rent                                    $   528,000
    Allowances for doubtful accounts                     150,000
                                                         678,000
                                            
   Deferred tax liabilities:                
    Depreciation                                         (29,000)
    Intangibles                                          (51,000)
    Cash to accrual adjustments                         (172,000)
                                                        (252,000)
                                                     $   426,000

The Company recorded a change in the valuation allowance  of
$69,000 for the year ended December 31, 1996.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

9. Income Taxes (continued)

A reconciliation of the statutory Federal income tax rate to
the effective rates is as follows:

                                                                December 31
                                                               1997     1996
                                                       
   Statutory rate                                               34%      34%
   State and local income taxes (net of federal tax benefit)     6       22
   Deferred tax benefit                                          -      (21)
   Other                                                         1        -
   Effective tax rate                                           41%      35%

10. Stock Incentive Plan

Pursuant to the Company's Stock Incentive Plan (the "Plan"),
up  to  3,771,567  options  to purchase  common  stock  were
reserved  for grant. The Plan provides for the  granting  of
stock  options, stock appreciation rights and stock  awards.
Stock options intended to be incentive stock options will be
granted at prices equal to at least market price on the date
of  the grant. A summary of the activity in the Plan  is  as
follows:

                                                Number      Weighted Average
                                               of Shares     Exercise Price
                                              
 Outstanding at December 31, 1995               593,500           $2.86
 Granted                                        719,950            3.28
 Canceled                                       (92,503)           2.85
 Outstanding at December 31, 1996             1,220,947            3.12
 Granted                                        641,962            4.13
 Canceled                                      (161,964)           2.91
 Exercised                                       (1,033)           2.55
 Outstanding at December 31, 1997             1,699,912            3.52
                                              
 Exercisable at December 31, 1996               374,225           $2.74
 Exercisable at December 31, 1997               758,443           $3.32

Options   generally  vest  equally  over  3  years.  Options
outstanding  as  of December 31, 1997 have  exercise  prices
ranging from $2.50 to $5.50 per share.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

11. Stock Based Compensation

Pro  forma information regarding net income and earnings per
share is required by SFAS 123, and has been determined as if
the Company had accounted for its employee stock options and
warrants under the fair value method of SFAS 123.  The  fair
value  for these options and warrants was estimated  at  the
date  of  grant  using a Black-Scholes option pricing  model
with the following weighted-average assumptions for 1997 and
1996:

                   Assumption                     1997          1996
                                                  
      Risk-free rate                              5.65%         6.6%
      Dividend yield                                 0%           0%
      Volatility factor of the expected market
       price of the Company's common stock         .62          .50
      Average life                               3 years       3 years

The  Black-Scholes option valuation model was developed  for
use  in  estimating the fair value of traded  options  which
have no vesting restrictions and are fully transferable.  In
addition,  option  valuation models  require  the  input  of
highly  subjective assumptions including the expected  stock
price  volatility. Because the Company's employee stock  has
characteristics significantly different from those of traded
options,  and  because  changes  in  the  subjective   input
assumptions  can materially affect the fair value  estimate,
in   management's  opinion,  the  existing  models  do   not
necessarily  provide a reliable single measure of  the  fair
value  of  its employee stock options and stock appreciation
rights.

For  purposes  of pro forma disclosures, the estimated  fair
value  of  the options and warrants is amortized to  expense
over  the  vesting period of the options and  warrants.  The
Company's pro forma information is as follows:

                                                   1997          1996
                                           
  Pro forma net income (loss) available
   for common stockholders                     $ 2,112,000   $  (897,000)
  Pro forma earnings per share:            
   Basic                                          $  .29        $(.18)
   Diluted                                        $  .21        $(.18)

The  weighted  average fair value of options granted  during
the  years  ended December 31, 1997 and 1996 was  $1.84  and
$1.32,   respectively.   The  weighted   average   remaining
contractual life of options exercisable at December 31, 1997
is 7.9 years.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

12. Commitments and Contingencies

The Company leases office space under operating leases which
expire through 2009. The leases provide for additional  rent
based on increases in operating costs and real estate taxes.
The  Company  also  leases equipment  under  capital  leases
expiring at various times through 2001.

Future  minimum  lease  payments under  capital  leases  and
noncancelable  operating leases (shown net  of  $538,000  of
sublease income per annum through 2000) with remaining terms
of one year or more are as follows at December 31, 1997:

                                                   Capital       Operating
                                                   Leases         Leases
                                                
 1998                                           $   238,000     $ 1,602,000
 1999                                               195,000       1,468,000
 2000                                               128,000       1,424,000
 2001                                                25,000       1,805,000
 2002                                                     -       1,714,000
 Thereafter                                               -       8,997,000
 Total minimum lease payments                       586,000     $17,010,000
 Less amounts representing interest                  69,000     
 Present value of net minimum lease payments        517,000    
 Less current portion                               199,000    
 Long-term portion                              $   318,000   

Included in property and equipment at December 31, 1997  are
assets recorded under capital leases with a cost of $714,000
and  accumulated depreciation and amortization of  $140,000.
Amortization  of  assets recorded under  capital  leases  is
included with depreciation expense.

Rent  expense, including escalation charges, for  the  years
ended  December  31,  1997 and 1996 was $1,661,000  (net  of
sublease income of $538,000) and $1,524,000 (net of sublease
income of $628,000), respectively.

The Company is party to litigation arising out of the normal
course  of  its business. In the opinion of management,  all
matters  are  adequately covered by  insurance  or,  if  not
covered,  are without merit or are of such kind  or  involve
such  amounts, as would not have a  material adverse  effect
on  the  financial position of the Company  if  disposed  of
unfavorably.

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

13. Retirement Plan

The Company had four 401(k) plans covering substantially all
its  domestic employees.  One plan required the  Company  to
make  matching contributions equal to 25% of the  employees'
contributions.  Company contributions into the  plan,  which
have been charged to operations, totaled $53,000 and $55,000
for   the   years   ended  December  31,  1997   and   1996,
respectively.  Effective  January  1,  1998,   the   Company
replaced  the  existing 401(k) plans covering  substantially
all  employees.  The  new plan does not require  a  matching
contribution by the Company.

14. Major Customer

For the year ended December 31, 1997, one customer accounted
for  10%  of  revenues  from continuing operations.  Another
customer  accounted  for  11% of revenues   from  continuing
operations for the year ended December 31, 1996.

15. Geographic Information

                               
                                          Year ended December 31, 1997
                                      United                          
                                      States    Europe    Asia   Consolidated
                                                   
Revenue                             $ 138,148  $ 3,247   $ 1,447    $ 142,842
Income (loss) from                                 
 continuing operations                  7,364       26        15        7,405
Other expense (income)                 (2,445)     (19)        -       (2,464)
Income from continuing operations
 before income tax expense              9,809       45        15        9,869
Identifiable assets                    65,438    1,390       508       67,336
                               
                                          Year ended December 31, 1996
                                      United                          
                                      States    Europe    Asia   Consolidated
                                                   
Revenue                            $  47,742   $ 4,557   $ 1,090    $  53,389
Income (loss) from                                  
 continuing operations                 3,635        35       (33)       3,637
Other expense (income)                   950        (4)        -          946
Income from continuing operations
 before income tax expense             2,685        39       (33)       2,691
Identifiable assets                   30,627     1,642       143       32,412

<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
   Notes to Consolidated Financial Statements (continued)
                              

16. Discontinued Operations

In   December   1997,  the  Company  sold  its  wholly-owned
subsidiary FCI to InterBank/Furash, Inc. ("IBF") in exchange
for  1,500  shares of Series A Preferred Stock  of  IBF.  In
addition, the Company provided a short-term working  capital
advance  to FCI of $250,000 which was repaid within  a  week
following the sale. In consideration for providing the short-
term  loan,  the  Company received  a  warrant  to  purchase
approximately 18% of the outstanding common stock of FCI  at
an  exercise price of $.10 per share. FCI has had  recurring
losses and, accordingly, no value was assigned to the Series
A  Preferred  Stock or warrant. The sale  of  FCI  has  been
accounted  for  as a discontinued operation  and  the  prior
year's statement of operations have been restated to reflect
the  discontinuation of FCI. The loss on the disposal of the
segment  represents the write-off of (i)unamortized goodwill
related  to  the  purchase  of  FCI  in  1995  amounting  to
approximately  $1,500,000  and  (ii)  advances  to  FCI   of
$1,200,000.

17. Gain on Sale of Investment

In  December  1995, the Company adopted  a  formal  plan  to
discontinue its marketing communications segment and entered
into  an  agreement  to exchange substantially  all  of  the
operating  assets of the segment to Citigate  Communications
Group  Limited ("Citigate")for an 18.3% interest in Citigate
valued  at  $2,368,000  and the assumption  by  Citigate  of
$9,191,000  in  liabilities. In  March  1997,  Citigate  was
acquired  by  Incepta  Group,  plc.  ("Incepta"),  a  United
Kingdom  public  company.  The Company  received  13,805,406
shares  of  Incepta  in  exchange  for  its  investment   in
Citigate. The Company sold these shares in March and October
1997  for  $4,363,000 and recognized a gain of approximately
$1,719,000.  The Company was also entitled to an  additional
7,072,307  shares  of  Incepta  if  Incepta  meets   certain
earnings  targets for the year ended September 30, 1997.  In
October 1997, the Company was advised that such targets  had
been   met   and,   accordingly,  an  additional   gain   of
approximately   $2,553,000  was   recognized.   The   shares
receivable  are included in other assets as of December  31,
1997.

18. Subsequent Event

In  January  1998,  the  Company  entered  into  non-binding
commitment  letters for (i) a revolving credit  facility  of
$75,000,000,    (ii)   subordinated   debt   financing    of
approximately  $11,667,000 and (iii) a  commitment  for  the
purchase  of  $23,333,000 of Series F Convertible  Preferred
Stock  to be issued by the Company. The proceeds from  these
financings   will  be  used  for  future  acquisitions,   to
refinance certain existing indebtedness and working capital.
However,  there  can be no assurances that  such  financings
will occur.