UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                            FORM 10-K
[  X  ]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
            SECURITIES EXCHANGE ACT OF 1934:
            For the fiscal year ended December 31, 1998
[     ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934:
            For the transition period from        to

                 Commission file number 0-23170
                                
                HEADWAY CORPORATE RESOURCES, INC.
        (Exact name of registrant 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)

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

Securities  registered  pursuant to Section  12(b)  of  the  Act:
NoneSecurities  registered  pursuant  to  section  12(g)  of  the
Act:Common Stock, Par Value $0.0001

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

Indicate  by  check  mark  if  disclosure  of  delinquent  filers
pursuant  to Item 405 of Regulation S-K (229.405 of this chapter)
is  not contained herein, and will not be contained, to the  best
of  registrant's  knowledge, in definitive proxy  or  information
statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K.  [ X ]

State  the  aggregate market value of the voting  and  non-voting
common  equity  held  by non-affiliates of the  registrant.   The
aggregate  market  value computed on the basis of of the last sale
price on March 11, 1999, is $31,350,354.

Indicate  the  number  of  shares  outstanding  of  each  of  the
registrant's   classes  of  common  stock,  as  of   the   latest
practicable date.  10,362,020

<PAGE>

               DOCUMENTS INCORPORATED BY REFERENCE

Incorporated  by  reference in Part III of  this  report  is  the
definitive  proxy statement of the Company for  the  1999  annual
meeting of stockholders, which the Company proposes to file  with
the  Securities  and Exchange Commission on or before  April  30,
1999.

                        TABLE OF CONTENTS

ITEM NUMBER AND CAPTION                                     Page

Part I                                                           
1.   Business                                                   3

2.   Properties                                                12

3.   Legal Proceedings                                         13

4.   Submission of Matters to a Vote of Security Holders       13
                                                                 
Part II                                                          
5.   Market  for  Registrant's Common Equity  and  Related     13
       Stockholder Matters

6.   Selected Financial Data                                   15

7.    Management's  Discussion and Analysis  of  Financial     16
       Condition and Results of Operations

7A.  Quantitative and Qualitative Disclosures About Market     23
       Risk

8.   Financial Statements and Supplementary Data               23

9.   Changes in and Disagreements with Accountants             23
       on Accounting and Financial Disclosure

Part III                                                         
10.  Directors and Executive Officers of the Registrant         *

11.  Executive Compensation                                     *

12.  Security Ownership of Certain Beneficial Owners  and       *
       Management

13.  Certain Relationships and Related Transactions             *

Part IV                                                          
14.  Exhibits, Financial Statement Schedules, and Reports     24
       on Form 8-K

*      These  items  are  incorporated  by  reference  from   the
definitive  proxy statement of the Company for  the  1999  annual
meeting  of  stockholders  to be filed with  the  Securities  and
Exchange Commission on or before April 30, 1999.

                               2
<PAGE>

                             PART I
                                
                        Item 1.  Business

General

     Headway Corporate Resources, Inc. ("Headway" or the
"Company") is a leading provider of human resource and staffing
services to the financial services industry.  The financial
services industry consists 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.  Headway established its staffing
service business in the financial service industry through 16
acquisitions of staffing and professional services companies
since 1996.  The Company's acquisitions and internal business
development over the past two years have resulted in substantial
growth.  Total revenues in 1998 were $291.3 million, as compared
to $142.8 million in 1997.

     The human resource management services offered by the
Company consist of

     -    temporary staffing and value added services,
     
     -    information technology ("IT") and professional staff
            services,

     -    executive search and permanent placement services, and

     -    contract staff administration services.
     
     In temporary staffing and value added services, the Company
provides employees to clients for periods ranging from one day to
several months.  These employees satisfy a specific job skill
need arising from absenteeism, special projects, fluctuations in
the client's volume of business inherent in the business cycle,
technology and business system changes, and other causes.  The
thrust of Headway's marketing approach 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.  The job skills required by clients and offered
by the Company consist of "office/clerical" personnel, including
secretaries, office workers, and, administrative staff.  Value
added services include payroll services and more involved
arrangements where the Company assumes some or all of the
administrative functions of employment on-site at the client's
business, which is commonly referred to as "vendor-on-premises".
     
     Headway offers IT/professional staff services in which
accountants, computer programmers and technicians, desktop
publishing operators, network administrators, and computer
graphic specialists are placed on a temporary, contract, or
permanent basis.
     
     Executive search services focuses on placing middle to upper
level management positions in the financial services industry and
permanent placement involves placement of office/clerical and
IT/professional personnel.

                                   3
<PAGE>
     
     Headway offers contract staff administration services where
it assumes the position of employer for independent contractors
used frequently by clients and manages the scheduling of the
independent contractors to make them available to service
clients' needs.

     The Company's goal is to build a national staffing business
focused on providing these services primarily to the financial
services industry.  Headway's strategy for achieving this goal is
to make acquisitions and conduct operations through a
decentralized "Hub-Spoke" management model.  The Company will
seek strategic acquisitions in major United States metropolitan
markets, which will serve as Hubs for business operations and
development, and rely on a combination of additional acquisitions
within existing and future Hub locations and internal growth to
expand its business.

Industry Overview

     The temporary employment service industry has experienced
significant growth in response to the changing work environment
in the United States.  Fundamental changes in the employer-
employee relationship continue to occur, with employers
developing increasingly stringent criteria for permanent
employees, while moving toward project-oriented temporary and
contract hiring.  These changes are a result of increasing
automation that has resulted in shorter technological cycles, and
global competitive pressures.  Many employers responded to these
challenges by turning to temporary and contract personnel to keep
personnel costs variable, achieve maximum flexibility, outsource
highly specialized skills, and avoid the negative effects of
layoffs.

     Changes in employment practices are especially evident in
the financial services industry.  Due to the robust economy over
the past several years, the financial services industry
experienced substantial growth and developed new products and
services for investors and other participants in the capital and
asset-based markets.  Changes in the regulation of banking
institutions, securities firms, and insurance companies allow
them to go beyond their traditional activities into new lines of
business.  These changes in the industry, together with peaks and
valleys in business activity within the financial services
industry, result in a substantial demand for more flexible and
efficient workforce resources, management expertise, and
improvements in IT resources.

     Rapidly changing regulations concerning employee benefits,
health insurance, retirement plans, and the highly competitive
business climate have also prompted many employers to take
advantage of the flexibility offered through temporary and
contract staffing.  Additionally, Internal Revenue Service and
Department of Labor regulations concerning the classification of
employees and independent contractors have significantly
increased demand by prompting many independent contractors to
affiliate with employers like Headway.

     The temporary staffing industry grew rapidly in recent years
as companies used temporary employees to manage personnel costs,
while meeting specialized or fluctuating staffing requirements.
According to the Staffing Industry Report, the United States
temporary staffing industry grew from approximately $24.6 billion
in revenue in 1992 to approximately $54.5 billion in revenue in
1997, a compound annual growth rate of approximately 17.2%.  One
of the fastest growing sectors for the Company, as well as the
industry, is information technology services.  Revenue for this
sector grew at an estimated compound annual rate of 23.8% from
approximately $5.1 billion in 1992 to approximately $14.8 billion
in 1997.  Professional and technical staffing within the
temporary staffing industry requires longer-term, more highly-
skilled personnel services.  The Company believes professional
and technical staffing offers the opportunity for higher
profitability than clerical staffing, because of the value-added
nature of professional and technical staffing personnel.  The
Company believes the staffing services industry is highly
fragmented with over 6,000 staffing companies and 2,500
information technology and

                                   4
<PAGE>

professional staffing companies.  The National Association of
Temporary and Staffing Services has estimated that more than 90%
of all U.S. businesses utilize temporary staffing services.

Growth Strategy

     The Company's strategy for growth in existing and new
markets is to

     -    pursue strategic acquisitions,
     
     -    increase the Company's focus on IT/professional staffing
            services, and

     -    enhance and expand offices.

     Pursue Strategic Acquisitions.  The Company intends to
continue to acquire independent staffing services companies
located in attractive geographic locations with strong
management, profitable operating results, and recognized local
and regional presence in the financial services industry.  Since
May 1996, the Company has acquired 16 companies in 9 states.  The
Company intends to pursue strategic acquisitions of staffing
services companies in major metropolitan areas where the Company
already has an established presence to serve as Hubs, and tuck-in
additional acquisitions, or spokes, in the same area as
established Hubs that increase penetration of existing markets.
In the coming year, the Company expects to focus its acquisition
activity primarily on spokes or tuck-in acquisitions that are in
the same area as established Hubs, rather than on new Hub
acquisitions.  The Company has established a team of corporate
officers responsible for identifying prospective acquisitions,
performing due diligence, negotiating contracts, and subsequently
integrating the acquired companies.  The Company typically
retains management of acquired companies and includes in the
consideration for the acquisitions long-term earnout arrangements
based on performance as incentive for improving operating
results.  The Company intends to use available cash, debt, long-
term earnout arrangements, equity, and a combination of these as
consideration in future acquisitions.

     Increase Focus on Professional and Technical Staffing
Services.  The Company's strategy is to increase the percentage
of total revenues and gross profits contributed by
IT/professional staffing services by expanding its service
offerings in the fields of information technology staffing and
consulting and accounting and finance staffing.  The Company also
intends to grow its pool of skilled professionals, hire
additional sales consultants, target mid-size and large
companies, and leverage client relationships.  The Company
believes that providing professional and technical staffing
services to its clients offers attractive opportunities for
growth in sales and profits. Based on client demand for
IT/professional staffing services on a national basis, the
Company intends to increase the pace of acquisitions of
IT/professional staffing services companies in major metropolitan
markets.

     Enhance and Expand Offices.  The Company plans to develop
its current and future Hubs by expanding the services offered,
adding temporary staffing and permanent placement consultants,
pursuing new clients, expanding current client relationships,
cross-marketing services, and assisting Hubs in developing
successful marketing and internal business growth techniques.  To
facilitate the offering of new services in Hub markets, the
Company plans to acquire companies offering services which
complement and expand the Hub's existing services, and transfer
or recruit experienced personnel for positions in its Hub
locations that will expand the services offered.  Increased
service offerings enables the Company to expand existing client
relationships through cross-selling, and to approach new clients
with a variety of staffing needs.  The Company relies on its
regional managers, in consultation with corporate staff, to drive
this internal growth and to determine which service, marketing,
and business techniques are most appropriate for their local
markets.

                                   5
<PAGE>

Operating Strategy

     The key elements of the Company's operating strategy include

     -    emphasis on the financial services industry
     
     -    integrate acquired companies quickly

     -    foster an entrepreneurial environment with Hub-Spoke
            management model

     -    provide corporate level support, and

     -    deliver high, value-added quality service.

     Emphasis on the Financial Services Industry.  The Company
has a strong presence in the financial services industry.
Headway will continue to focus on this industry, because the
Company believes there is a substantial untapped market for its
services in this industry and because its core strengths of
industry experience and human resources expertise enable it to
develop unique, value-added staffing solutions for the financial
services industry.  The Company will work to maintain its
relationships with existing clients in the industry, expand
service offerings in existing and future Hub locations, cross-
sell services to existing clients, and seek acquisitions with an
existing client base in the financial services industry.
Although the Company expects to focus on this industry, it
expects that it will continue to have a diversified client base,
with no more than 60% of its annual revenues being derived from
financial services clients.

     Integrate Acquired Companies Quickly.  As soon as
practicable after an acquisition is completed, management begins
integrating newly acquired companies into the Hub-Spoke
management model.  The Company has a dedicated team of
professionals who implement a formal process of budgeting and
quarterly performance reviews as well as its disciplined
financial management system at all newly acquired companies.  The
integration process involves installing back-office management
information systems and standardizing each acquired company's
accounting and financial procedures with those of the Company.
Marketing, sales, field operations, and personnel programs of the
acquired companies are reviewed and, where appropriate, corporate
management provides guidance and assistance on improving these
functions.

     Foster Entrepreneurial Environment With Hub-Spoke Management
Model.  The Company employs a decentralized, Hub-Spoke management
model.  Local regional managers manage the Company's operations
in each market, including any satellite offices in that market.
The Company believes it has a strong market in each of its major
markets largely due to the commitment, ability, and creativity of
its regional managers who drive each local business.  The Company
fosters this entrepreneurial environment by giving its regional
managers the authority to respond quickly and creatively to
client needs.  Regional managers are responsible for achieving
operational and financial objectives, including revenues and
earnings growth, and have authority over hiring, recruiting,
compensation, pricing, and sales management.  The Company
believes that accountability and authority, combined with the
support of the Company's corporate level support services,
enables its regional managers to compete successfully in the
local marketplace.  The Company also believes this
entrepreneurial environment allows the Company to attract
talented managers and successfully serve its clients' needs.

                                   6
<PAGE>

     Provide Corporate Level Support.  The Company's philosophy
is that the central function of corporate management is to
support the staffing consultants who directly interact with
clients.  The Company provides regional managers corporate level
support to lessen their administrative burden and allow them to
focus on servicing clients and growing the business.  Corporate
management has developed certain financial, risk management, and
administrative control procedures, which are applied to each Hub.
These control procedures include the preparation of annual
business plans and budgets and the submission of detailed monthly
financial reports.  This information is reviewed at the end of
each fiscal quarter by the Company's management together with
regional managers.  Additional support functions include
marketing, management information system support, training, human
resources, accounting, and other back office functions. The
Company believes its Hub-Spoke management model is readily
adaptable and scaleable as the Company continues to grow.

     Deliver High, Value-Added Quality Service.  The Company
emphasizes recruiting, training, and retaining experienced sales
consultants and providing highly qualified temporary employees.
The Company trains its sales consultants to operate as partners
with their clients in evaluating and meeting the client's
staffing requirements.  The Company promotes and monitors quality
of service a number of ways.  It seeks highly qualified temporary
employees through referrals from existing temporary employees and
conducts in-depth interviews by Company personnel experienced in
the temporary employees' field.  The Company performs skill
evaluations and offers programs to its temporary employees to
improve their skills.  The Company contacts clients within hours
of the beginning of a project to receive a preliminary
determination of satisfaction, and obtains client satisfaction
reports upon the completion of projects.  The Company seeks to
understand and proactively assess clients' needs, respond
promptly to clients' requests, and continually monitor job
performance and client satisfaction.  The Company believes that
its commitment to providing quality service has enabled it to
establish and maintain long-term relationships with clients.

Services

     The human resource management services offered by the
Company include

     -    temporary staffing and value added services
     
     -    IT/professional staff services

     -    executive search and permanent placement services, and

     -    contract staff administration services.

     Temporary Staffing and Value Added Services.  The Company
provides 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, technology and
business system changes, 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.

     Under vendor-on-premise programs, the Company assumes
administrative responsibility for coordinating some or all
staffing services at a client's location or organization,
including skills testing and training.  The Company also provides
payroll services to its clients for its permanent employees,
thereby mitigating the administrative burden of employment.  By
using the Company's services, clients can make changes in
workforce quickly without the administrative burden and cost of
hiring and firing.

                                   7
<PAGE>
     
     IT/Professional Staff Services.  Rapid changes in technology
and competitive pressures in the financial services industry
create demand by employers for computer programmers and
technicians, desktop publishing operators, network
administrators, and computer graphic specialists to help
implement the systems required to meet these challenges.  The
Company offers to its clients IT/professional staff services in
which persons with these special skills are placed on a
temporary, contract, or permanent basis.
     
     Executive Search and Permanent Placement.  The Company,
through its subsidiary Whitney Partners, LLC ("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.  Executive search services
are provided in major financial markets, including, New York,
Chicago, London, Tokyo, Hong Kong, and Singapore.

     The Company also provides permanent placement services to
its clients for office/clerical positions and IT/professional
personnel.  Clients also use 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
temporary employment 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.

     Contract Staff Administration Services.  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, finance, business administration, marketing,
computer programming, computer graphics, and other areas
requiring a high level of business or technical expertise.  The
use of independent contractors on a regular basis can create a
number of problems for clients.  The possibility always exists
that the independent contractors will accept employment elsewhere
that prevents him from being available to the client when needed.
Furthermore, there is always a risk 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, the
Company offers a service where it assumes the position of
employer for the independent contractors.  As employer, the
Company 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.

Client Relationships

     The Company has a broad client base.  The Company's largest
client accounted for approximately 14% of the Company's 1998
revenues. The revenues generated by this client represent
primarily payrolling services provided by the Company, which
generates a low gross margin compared to the Company's other
staffing services.

Human Resources

     Employees.  As of December 31, 1998, the Company had
approximately 400 full-time employees.  By the fourth quarter of
1998, the Company employed over 9,000 temporary employees in a
typical week.  None of the Company's employees, including its
temporary employees, is represented by a collective bargaining
agreement.  The Company believes its employee relations to be
strong.  Hourly wages for the Company's temporary employees are
determined according to local market conditions.  The Company
pays mandated costs of employment, including the employer's share
of social security taxes, federal and state unemployment taxes,
unemployment compensation insurance, general payroll expenses and
workers' compensation insurance.  The Company offers access to
various insurance programs and other benefits, such as vacations,
holidays and 401(k) programs to qualified temporary employees and
professionals.

                                    8
<PAGE>

     Recruiting.  The Company's recruiting process is influenced
by its clients' changing demands and recognizes that the
competition for quality is high.  In order to ensure that the
Company attracts high caliber candidates, it maintains ongoing
exposure and communication with recruiting sources.  Recruiting
sources include, newspaper advertisement, internet sourcing,
referrals from our employees and clients, and outreach to various
educational institutions, community groups, job fairs, and other
sources.  Every internal and temporary employee is empowered to
recruit new temporary workers.  Their positive experience with
the Company is a motivating factor, as well as a number of
special bonuses and incentives that are offered.

     Assessment, Training and Quality Control.  The Company's
process begins with the applicant completing an application for
employment followed by an interview with an experienced
recruiter.  The interview seeks to determine the level of
responsibility the applicant is capable of handling in addition
to assessing the motivation, enthusiasm, and energy level of the
candidate.  The Company uses a variety of job skill evaluating
methods.  For example, basic software skills are evaluated by the
applicant's use of the QWIZ product, a comprehensive office skill
evaluation program, helping the Company efficiently screen large
numbers of applicants each week in basic word processing,
spreadsheet, and business graphics functionality.  The QWIZ
system analyzes the range and depth of an individual's skill in
each area tested.  Automated scoring supplies consistent and
standard methods of assessing skill levels.  Computerized
tutorials are generally available for temporary employees who
seek to upgrade their typing, data entry, office automation, or
word processing skills.  Each Hub carefully monitors client
satisfaction with the performance of employees provided by the
Company to assess and control quality of service.

Operations

     Sales and Marketing.  The Company's services are marketed
through its network of Hubs whose managers and placement
coordinators make regular personal sales visits to clients and
prospective clients.  The Company emphasizes long-term personal
relationships with clients which are developed through regular
assessment of client requirements and constant monitoring of
temporary staff performance.  New clients are obtained through
sales calls, consultation meetings with target companies, and
client referrals.  The Company's management and regional managers
participate in national and regional trade associations, local
chambers of commerce, and other civic associations.  The Company
monitors sales, marketing, and recruiting functions to identify
opportunities to deliver high value-added quality services.  The
Company believes that its clients select service providers
principally on the basis of quality of service, range of services
offered, specialized expertise, and ability to service multiple
locations, and the Company is striving to satisfy these criteria
in its marketing efforts.

     Hubs.  The Company's decentralized operating strategy uses a
Hub-Spoke management model in which regional managers manage the
Company's operations in each market.  The Company's current hubs
are located in New York, California, North Carolina and Texas,
with spoke offices in Connecticut, Florida, New Jersey and
Virginia.  Whitney, the Company's executive search division, has
offices in New York, Illinois, the United Kingdom, Japan, Hong
Kong and Singapore.

     Regional managers operate their Hubs with a significant
degree of autonomy and specific areas of accountability to the
Company.  The Company's practice of including long-term earnout
arrangements as part of the acquisition consideration for its
Hubs is designed to motivate the regional managers and former
owners to maximize the growth and profitability of their branches
while securing long-term client

                                    9
<PAGE>

relationships.  Regional managers report directly to corporate
management.  Operating within the guidelines set by the Company,
the regional managers are responsible for pursuing new business
opportunities and focusing on sales and marketing, account
development and retention, and employee recruitment, development,
and retention.

     Management Information Systems.  The Company licenses
StaffCord software from Concord Technologies.  StaffCord is an
integrated front/back office operating platform for temporary
services and permanent employment agencies.  The software runs in
a Novell LAN environment throughout most of the Company's
branches.  The Company has recently entered into a licensing
agreement with Great Plains Software to install Great Plains
Dynamics C/S+, an enterprise-wide client/server based accounting
software product.  In addition, the Company has purchased the
underlying code of the Dynamics product and is producing a
derivative work for the exclusive use of the Company, pursuant to
a special addendum to the licensing agreement.  The new product
will run on a Microsoft SQL server platform with high-speed data
communication being provided through a Frame Relay connection
with MCI.  The Company maintains a state of the art software
development lab in Knoxville, TN staffed with professional
programmers and system analysts who support the applications of
the firm nationally.  The Company believes that its systems are
readily expandable and scaleable to support a rapidly growing
infrastructure.

Competition

     The staffing industry is intensely competitive and
fragmented and has limited barriers to entry.  The Company
competes for employees and clients in national, regional, and
local markets with full-service and specialized temporary
staffing service businesses.  A significant number of the
Company's competitors have greater marketing, financial, and
other resources and more established operations than the Company.
Price competition in the staffing industry is intense and pricing
pressures from competitors and customers are increasing.  Many of
the Company's clients have relationships with more than one
staffing service company.  However, in recent years, an
increasing number of companies have consolidated their staffing
services purchases and entered into exclusive contracts with a
single temporary staffing company or small number of temporary
staffing companies.  If current or potential clients enter into
exclusive contracts with competitors of the Company, it will be
difficult or impossible for the Company to obtain business from
such clients.  The Company expects that the level of competition
will remain high in the future, which could limit the Company's
ability to maintain or increase its market share or maintain or
increase gross margins. However, the Company believes that its
strategy of becoming a dominant provider in each of its markets
will allow it to remain competitive in this environment

     In addition, the Company competes for acquisition candidates
with other staffing services companies, and there can be no
assurance that the Company will be able to successfully identify
suitable acquisition candidates or complete acquisitions.

Regulation

     Generally, the Company's operations are not subject to state
or local licensing requirements or other regulations specifically
governing the provision of commercial and professional staffing
services.  There can be no assurance, however, that states in
which the Company operates or may in the future operate will not
adopt such licensing or other regulations affecting the Company.

     The laws of various states require the Company to maintain
workers' compensation and unemployment insurance coverage for its
temporary employees.  The Company maintains state mandated
workers' compensation and unemployment insurance coverage.  The
extent and type of health insurance benefits that employers are
required to provide employees have been the subject of intense
scrutiny and debate in recent years at both the national and
state levels.  Proposals have been made to mandate that

                                    10
<PAGE>

employers provide health insurance benefits to staffing
employees.  In addition, some states could impose sales taxes, or
raise sales tax rates, on staffing services. Further increases in
such premiums or rates, or the introduction of new regulatory
provisions, could substantially raise the costs associated with
hiring and employing staffing employees.

Intellectual Property

     The Company maintains a number of trademarks, tradenames,
service marks and other intangible rights.  The Company believes
that it has all rights to trademarks and trade names necessary
for the conduct of its business and is not currently aware of any
infringing uses or other conditions that would materially and
adversely affect its use of proprietary rights.

Acquisition History

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

     In 1997, the Company acquired Advanced Staffing Solutions,
Inc., based in Raleigh-Durham, North Carolina; Administrative
Sales Associates Temporaries, Inc., and Administrative Sales
Associates, Inc., both operating in New York City; Quality
OutSourcing, Inc., based in New York; and E.D.R. Associates,
Inc., and Electronic Data Resources, L.L.C., both based in
Windsor, Connecticut.

     In 1998, the Company acquired Cheney Associates and Cheney
Consulting Group of Hamden, Connecticut; Shore Resources,
Incorporated, of Los Angeles, California; substantially all of
the assets of the Southern Virginia offices of Select Staffing
Services, Inc., based in McLean, Virginia; Staffing Solutions,
Inc., and Intelligent Staffing, Inc., of Miami Lakes, Florida;
Phoenix Communication Group, Inc. of N.J., based in Woodbridge,
New Jersey; Carlyle Group Ltd. Of and Staffing Alternatives
International, Inc. and VSG Consulting, Inc. based in Dallas,
Texas.

     The following table sets forth certain information with
respect to companies acquired through the date of this Annual
Report.



                      Table on following page.

                                11             

<PAGE>

                            Date                         Year     
Company                   Acquired    Location          Founded    Services

Irene Cohen Group         May 1996   New York City       1977     Temporary,  
                                                                  IT, Contract,
                                                                  Permanent
                                                    
Vogue Personnel Services  Oct. 1996  New York City       1974    Temporary,
                                                                 IT
                                                    
Advanced Staffing         Mar. 1997  Raleigh-Durham, NC  1965    Temporary,
  Solutions, Inc.                                                IT, Contract
                                                    
Administrative Sales      July 1997  New York City       1976    Temporary,
  Associates Temporaries,                                        IT, 
  Inc., and Administrative                                       Permanent
  Sales Associates, Inc.

Quality OutSourcing, Inc. Sept. 1997 New York City       1989    Temporary,
                                                                 Permanent
                                                    
E.D.R. Associates, Inc.   Sept. 1997 Windsor, CT         1984    IT
  and Electronic Data
  Resources, L.L.C.

Cheney Associates and     Mar. 1998  Hamden, CT          1987    IT
  Cheney Consulting Group

Shore Resources,          Mar. 1998  Los  Angeles, CA    1976    Temporary,
  Incorporated                                                   IT,
                                                                 Permanent

Select Staffing           Mar. 1998  Southern, VA        1960    Temporary,
  Services, Inc.                                                 Payrolling
                                                    
Staffing Solutions, Inc.  June 1998  Southern, FL        1989    Temporary,
  and Itelligent                                                 Permanent 
  Staffing, Inc. 

Phoenix Communication     June 1998  Woodbridge, NJ      1987    IT
  Group, Inc.     

Carlyle Group, Ltd.       July 1998  Chicago, IL         1982    Search
               
Staffing Alternatives     Nov. 1998  Dallas, TX          1995    IT
  International, Inc. and
  VSG Consulting, Inc.

     The Company's acquisitions and internal business development
since May 1996, have resulted in substantial growth. Total
revenues in 1998 were $291.3 million as compared to $142.8
million in 1997, and $53.4 in 1996.

                       Item 2.  Properties

     The Company's corporate headquarters are currently located
at 850 Third Avenue, 11th Floor, New York, NY 10022.  The Company
believes that space at its corporate headquarters will be
adequate for its needs.

                             12

<PAGE>

     The Company leases space for all of its Hub-Centers and does
not own any real property.  The Company believes that its
facilities are adequate for its needs and does not anticipate
inordinate difficulty in replacing such facilities or opening
additional facilities, if needed.

                   Item 3.  Legal Proceedings

     In the ordinary course of its business, the Company is
periodically threatened with or named as a defendant in various
lawsuits, including discrimination, harassment, and other similar
claims.  The Company maintains insurance in such amounts and with
such coverage and deductibles as management believes are
reasonable.  The Company is not a party to any material legal
proceedings.

  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 1998.

                             PART II
                                
   Item 5.  Market for Registrant's Common Equity and Related
                       Stockholder Matters

     Since September 4, 1998, the Company's Common Stock has
traded on the Nasdaq National Market under the symbol "HDWY."
Previously, quotations for the Company's Common Stock were
reported on the Nasdaq SmallCap Market.  The following table sets
forth, (i) the high and low closing sale prices for the Common
Stock as reported on the Nasdaq National Market for the last
calendar quarter of 1998, and (ii) the high and low bid prices
for the Common Stock for all prior periods listed, which are
based on inter-dealer bid prices without markup, markdown,
commissions, or adjustments, and may not represent actual
transactions.

Calendar Quarter Ended                High ($)         Low ($)

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

March 31, 1998                        8.875              4.125
June 30, 1998                         12.750             7.375
September 30, 1998                    11.875             4.313
December 31, 1998                     7.000              4.250

      In  March  1998,  the  Company completed  a  new  financing
consisting  of a $75,000,000 senior credit facility,  $20,000,000
of Series F Convertible Preferred Stock and $10,000,000 of senior
subordinated  debt.   The  Company used  a  portion  of  the  new
financing to pay down existing debt obligations and a portion  to
finance the acquisitions completed in 1998.  The balance  of  the
financing  will be used for future acquisitions and  for  general
working capital.  NationsBank N.A. acted as agent for the  senior
credit facility. NationsBanc Montgomery Securities, LLC, acted as
placement agent for the Series F Convertible Preferred Stock  and
senior   subordinated   notes.   The   Company   incurred   total
transaction  costs of $1,235,000 in connection  with  the  senior
credit facility and $2,134,000 relating to the subordinated  debt
and equity. All of the securities were offered and sold under the
exemption  from  registration set forth in Section  4(2)  of  the
Securities Act of 1933.

                             13

<PAGE>

     In October 1998, the senior credit facility was increased to
$90,000,000 from $75,000,000 on substantially the same  terms  as
the original facility.

     The  Company has authorized and outstanding 1,000 shares  of
Series  F  Convertible Preferred Stock ("Series F  Stock").   The
Series  F Stock is convertible to Common Stock of the Company  on
the basis of the liquidation preference of the Series F Stock  at
a  conversion price of $5.58 per share, subject to adjustment  in
certain  circumstances including a provision to the  effect  that
conversion  within the first two years of the  date  of  issuance
will  be at a conversion price of $6.00 per share.  The Series  F
Stock  is  senior to the Common Stock with respect to payment  of
dividends  and  distributions  in liquidation.   Holders  of  the
Series   F  Stock  are  entitled  to  receive  dividends  payable
quarterly  equal to 5.5% of the liquidation preference  value  of
the  Series  F Stock, which is $20,000 per share or  a  total  of
$20.0  million.  No dividends or distributions may be  made  with
respect to the Common Stock unless all dividend payments  on  the
Series  F  Stock are current.  Holders of the Company's Series  F
Convertible Preferred Stock have the right to elect one member of
the Board of Directors, elect one-third of the Board of Directors
so  long  as  a  default  in  dividend  payments  exists  and  is
continuing,  and  approve  certain  corporate  transactions   and
activities,  including,  acquisitions  in  excess  of   specified
limits, sales of substantial assets or subsidiaries, implementing
additional  debt facilities in excess of specified limits,  sales
of  Company  securities  in certain circumstances,  amending  the
Company's  charter documents, effecting or permitting a  sale  of
the   Company,  issuing  stock  options  and  similar   incentive
arrangements  involving  the  Company's  securities,  and   other
matters.  The existence of these rights could inhibit the ability
of   the   Company  to  effect  or  participate  in  transactions
acceptable  to the Company but not the holders of  the  Series  F
Convertible  Preferred Stock, or the ability of  stockholders  to
participate  in  a  transaction in  which  they  might  otherwise
receive  a premium for their shares over the then-current  market
price.

      Since  its  inception, no dividends have been paid  on  the
Company's  Common  Stock.   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.

      As  of  March  8,  1999, the Company had approximately  250
stockholders   of  record  and  approximately  2,800   beneficial
shareholders.


                        This space left blank.


                                 14

<PAGE>

                Item 6.  Selected Financial Data

     The selected consolidated financial data set forth below as
of and for the years ended December 31, 1998, 1997, 1996, 1995,
and 1994, were derived from audited consolidated financial
statements of the Company.

Statement of Income Data
In Thousands, Except Per Share Data
                                
                                       For Year Ended December 31
                                    1994     1995      1996      1997      1998
                                                     
Revenues                         $12,920  $10,996   $53,389  $142,842  $291,303
Direct expenses                        -        -    29,703   104,396   224,993
                                                          
General and administrative      
  expenses                        10,576    9,364    19,535    29,588    48,638
Depreciation and amortization        116      226       514     1,453     2,952
Total operating expenses          10,692    9,590    20,049    31,041    51,590
                                                          
Operating income from           
  continuing operations            2,228    1,406     3,637     7,405    14,720
                                                          
Other (income) expenses:                                  
  Interest expenses                   32       65     1,088     2,662     4,515
  Interest incom                     (67)     (60)      (91)     (104)     (152)
  (Gain) on sale of investment         -        -         -    (4,272)     (901)
  Other expenses, net                  -        -       (51)     (750)        -
                                     (35)       5       946    (2,464)    3,462
Income from continuing operations                                  
  before income tax expense        2,263    1,401     2,691     9,869    11,258
                                                          
Income tax expense                   999      696       945     4,064     4,639
Income from continuing operations  1,264      705     1,746     5,805     6,619
                                                          
(Loss) from discontinued operations (323)  (1,800)     (564)   (2,999)        -
                                                          
Net (loss) income before      
  extraordinary item                 941   (1,085)    1,182     2,806     6,619
                                                          
Extraordinary (loss)                   -        -         -         -    (1,557)
                                                          
Net income (loss)                    941   (1,085)    1,182     2,806     5,062
                                                          
Deemed dividend on preferred stock     -        -    (1,470)        -         -
Preferred dividend requirements      (98)     (56)     (276)     (137)     (866)
Net income (loss) available for
  common stockholders              $ 843   $(1,141)   $(564)   $2,669    $4,196

Basic earnings (loss) per                                   
 common share:
   Continuing operations           $0.27     $0.14    $   -     $0.79    $ 0.58
   Discontinued operations         (0.07)    (0.39)   (0.11)    (0.42)        -
   Extraordinary item                  -         -        -         -     (0.15)
   Net income (loss)               $0.20    $(0.25)  $(0.11)    $0.37    $ 0.43
                                                          
Diluted earnings (loss)                                  
 per common share:
   Continuing operations           $0.21     $0.10    $   -     $0.58    $ 0.47
   Discontinued operations         (0.05)    (0.35)   (0.11)    (0.30)        -
   Extraordinary item                  -         -        -         -     (0.11)
   Net income (loss)                0.16     (0.25)   (0.11)     0.28    $ 0.36
                                                          
Average shares outstanding
   Basic                    4,315,277  4,597,358 4,995,523  7,223,462  9,853,354
   Diluted                  6,030,151  6,771,032 4,995,523 10,012,198 14,157,012

                                    15

<PAGE>

Balance Sheet Data
In Thousands

                                                 As of December 31
                                     1994    1995     1996    1997    1998
                                                     
Working capital                       245    1,494   1,648     450    32,139
Total assets                       14,522   12,142  34,669  67,336   126,946
Long term debt,  
  excluding current portion           750    1,901   7,250  19,059    60,959
Stockholders' equity                4,030    5,302  13,424  16,452    42,571


   Item 7.  Management's Discussion and Analysis of Financial Condition
                    and Results of Operations

Overview

     Headway Corporate Resources, Inc., is a leading provider of
human resource and staffing services to 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.  Headway has established its staffing service
business in the financial service industry through 16
acquisitions of staffing and professional services companies
since 1996.  The Company's acquisitions and internal business
development over the past two years have resulted in substantial
growth.  Total revenues in 1998 were $291.3 million, as compared
to $142.8 million in 1997 and $53.4 million in 1996.

     The human resource management services offered by the
Company consist primarily of temporary staffing and value-added
services, IT/professional staff services, executive search and
permanent placement services, and contract staff administration
services.  In temporary staffing and value added services, the
Company provides 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,
technology and business system changes, and other causes.  The
thrust of Headway's marketing approach for its temporary staffing
and value added 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.  The job skills required by clients and offered by the
Company consist primarily of "office/clerical" personnel,
including, secretaries, office workers, and, administrative
staff.  Value added services include payroll services and more
involved arrangements where the Company assumes some or all of
the administrative functions of employment on-site at the
client's business, which is commonly referred to as "vendor-on-
premises".  Headway offers IT/professional staff services in
which accountants, computer programmers and technicians, desktop
publishing operators, network administrators, and computer
graphic specialists are placed on a temporary, contract, or
permanent basis.  Executive search services focuses on placing
middle to upper level management positions in the financial
services industry and permanent placement involves placement of
office/clerical and IT/professional personnel.  Headway offers
contract staff administration services where it assumes the
position of employer for independent contractors used frequently
by clients and manages the scheduling of the independent
contractors to make them available to service clients' needs.

                           16
<PAGE>

     The Company's goal is to build a national staffing business
focused on providing these services primarily to the financial
services industry.  Headway's strategy for achieving this goal is
to make acquisitions and conduct operations through a
decentralized "Hub-Spoke" management model.  The Company will
seek strategic acquisitions in major United States metropolitan
markets, which will serve as Hubs for business operations and
development, and rely on a combination of seeking additional
acquisitions within existing and future Hub locations and
internal growth to expand its business.

                                    16
<PAGE>

1998

     In 1998 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 seven acquisitions and expanded
into four new markets during the year.  In 1998, the Company
experienced internal growth of 38% while achieving record
revenues, net income and earnings per share.  The Company is
expecting to continue to grow both internally and through
additional acquisitions. 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 1998, the Company completed a new financing
consisting of a $75,000,000 senior credit facility, $20,000,000
of convertible preferred stock and $10,000,000 of senior
subordinated debt. A portion of the proceeds were used to pay
down existing debt obligations, finance the Company's
acquisitions in 1998 and for general working capital.  In October
1998, the Company expanded its senior credit facility to $90
million.  The unused portion of the senior credit facility is
available to finance future acquisitions and for working capital.
In connection with the financing in March 1998, the Company had
an extraordinary loss after tax of $1.6 million related to the
early retirement of its prior debt.

     In March 1998, the Company acquired substantially all of the
assets of the Southern Virginia offices of Select Staffing
Services Inc., a provider of temporary services.  The offices are
located in Richmond, Virginia Beach and Hampton, Virginia.

     In March 1998, the Company acquired substantially all of the
assets of Cheney Associates and Cheney Consulting Group of New
Haven, Connecticut engaged in the business of offering permanent
and temporary information technology staffing services primarily
in Connecticut.

     In March 1998, the Company acquired all of the outstanding
capital stock of Shore Resources, Incorporated of Los Angeles,
California.  With offices in Newport Beach and Lake Forest, Shore
is engaged in the business of offering temporary and permanent
staffing, primarily in Southern California.

     In June 1998, the Company acquired substantially all of the
assets of Staffing Solutions, Inc. and Intelligent Staffing,
Inc., both Florida corporations (collectively "SSI") in a single
transaction.  SSI is engaged in the business of providing
clerical temporary and permanent staffing principally in Southern
Florida.

     In June 1998, the Company acquired substantially all of the
assets of Phoenix Communication Group, Inc. of N.J.  Phoenix is
engaged in the business of offering information technology
temporary and permanent staffing services.  The principal offices
of Phoenix are located in Woodbridge, New Jersey.

     In July 1998, the Company acquired all of the outstanding
capital stock of Carlyle Group, Ltd. ("Carlyle").  With principal
offices in Chicago, Illinois, Carlyle is an executive search firm
specializing in real estate and management consulting search
assignments.

                             17
<PAGE>

     In November 1998, the Company acquired substantially all of
the assets of Staffing Alternatives International, Inc. and VSG
Consulting, Inc. in a single transaction.  The two companies
provide information technology staffing services in the Dallas,
Texas area.

     During 1998, the Company realized an after tax gain of
$595,000 on the sale of its remaining investment in Incepta.

     During 1998, the Company's common stock began trading on the
Nasdaq National Market System under the symbol HDWY.

     In March 1999, the Company made a decision to buy-out the
employment agreement of Ronald Wendlinger, vice chairman and
executive vice president of Headway Corporate Staffing Services,
a wholly owned subsidiary.  In connection with this termination,
the Company will incur a non-recurring charge of approximately
$1.5 million after tax in the first quarter of 1999.  The Company
expects to realize cost savings for the balance of 1999 and in
future years as a result of this transaction.

     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
of the performance of the financial services industry.

1997

     In 1997 the Company completed four acquisitions and expanded
into three new markets during the year.  In 1997, the Company
experienced internal growth of 20% while achieving record
revenues, net income, and earnings per share.

     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,
"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 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
"EDR").  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 ("ING"), the
lender for the Company's acquisitions in 1996.  In connection
with these acquisitions, ING increased the Company's credit
facility from $15,000,000 to $50,000,000.

     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

                             18

<PAGE>

and 1996 are included in discontinued operations.  This divestiture
marked the completion of the Company's 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 an after-tax gain of
approximately $2,772,000 on its investment in Incepta.

Results of Operations

Years Ended December 31, 1998 and 1997

     Revenue increased $148,461,000 to $291,303,000 for the year
ended December 31, 1998, from $142,842,000 for the year ended
December 31, 1997.  The increase in revenue for 1998 is
attributable to a full year of results from the acquisitions
completed during 1997 as well as the seven acquisitions completed
during 1998.  In addition, the Company experienced internal
growth in 1998 of 38%, as a result of the continued dependence by
the Company's customers on the use of contingent workers.

     The executive search subsidiary, Whitney Partners, L.L.C.
("Whitney") contributed $19,785,000 to consolidated revenues in
1998, an increase of $2,259,000 from $17,526,000 in 1997.  This
increase is due to the continued strong performance in the
financial services industry and the related increase in the
hiring activities of Whitney's clients, and the contribution that
Carlyle made since its acquisition in July 1998.  During the
fourth quarter however, the financial markets experienced a short-
term crisis.  This resulted in lower fourth quarter revenues than
was expected.  The downturn turned out to be short-lived as
revenue picked up the end of the quarter and this trend continues
in the first quarter of 1999.

     Total operating expenses increased $141,146,000 to
$276,583,000 for 1998 from $135,437,000 for 1997.  Of the
increase, $120,597,000 relates to the increase in direct costs
that are the wages, taxes and benefits of work-site employees of
the staffing companies.  Direct costs increased as a percentage
of revenues to 77.2% in 1998 from 73.1% in 1997.  The increase
primarily reflects the Company's changing mix of business.
Specifically, the executive search business that has no direct
costs is becoming a smaller percentage of the Company's revenues.
The balance of the increase in operating expenses relates to the
acquisitions of the staffing companies in late 1997 and 1998.
General and administrative expenses decreased as a percentage of
revenues from 20.7% in 1997 to 16.7% in 1998.  This trend is
expected to continue as the Company grows and gains critical mass

     Whitney's operating expenses increased $744,000 to
$15,313,000 for the year ended December 31, 1998 as compared to
$14,569,000 for the same period last year.  The increase relates
primarily to the operating expenses of Carlyle.

     Net income from continuing operations before extraordinary
item increased $814,000 to $6,619,000 for the year ended December
31, 1998 compared to net income from continuing operations of
$5,805,000 for the year ended December 31, 1997.  Included in the
results for 1998 and 1997 is an after tax gain of $595,000 and
$2,772,000 respectively on the sale of the Company's investment
in Incepta.  In addition, the 1997 results include a reversal of
a loan reserve of $405,000 after tax. Net income was $5,062,000
for the year ended December 31, 1998 after an extraordinary loss
after tax of $1,557,000 on early retirement of debt.  This
compares to net income of $2,806,000 for 1997 which includes
losses after tax from discontinued operations of $2,999,000.

     The Company's operations were not significantly impacted by
inflation during the years ended December 31, 1998 and 1997, 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.

                             19
<PAGE>

Discontinued Operations

     In December 1997, the Company sold its wholly-owned
subsidiary Furash & Company, Inc. ("Furash").  The sale of Furash
has been accounted for as a discontinued operation.  The
financial statements reflect the discontinuation of the advisory
services segment.

Years Ended December 31, 1997 and 1996

     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 Company's customers on the use of
contingent workers.  The Company believes that this trend will
continue in 1998.

     The executive search subsidiary, Whitney, contributed
$17,526,000 to 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 Whitney's 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.  General and administrative expenses
decreased as a percentage of revenues to 20.7% in 1997 from 36.6%
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 Whitney's new Hong
Kong and Singapore offices.

     Net income from continuing operations increased $4,059,000
to $5,805,000 for the year ended December 31, 1997, compared to
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, an
after-tax gain of approximately $2,772,000 on the Company's
investment in Incepta, and a reversal of a loan reserve of
$405,000, net of tax. Net income was $2,806,000 for the year
ended December 31, 1997, compared to net income of $1,182,000 for
the year ended December 31, 1996.  Included in 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.

                             20
<PAGE>

     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

     Net cash generated from operating activities was $124,000 in
1998.  This is a result primarily due to net income of $5,062,000
and depreciation and amortization expenses of $3,354,000, and an
increase in accrued payroll, offset by an increase in accounts
receivable of $13,426,000 attributable to the high level of
internal growth and from the acquisitions of the staffing
companies.  This is a trend that is likely to continue as the
Company continues to grow and acquire additional staffing
companies.  In 1997 cash used for operating activities of
$5,808,000 primarily related to the increase of accounts
receivable as a result of acquisitions.

     Total cash used in investing activities of $42,693,000 in
1998 and $12,714,000 in 1997 was primarily the result of the
acquisitions completed during 1998 and 1997, offset by the
proceeds of the sale of the Company's investment in Incepta Group
plc and purchases of property and equipment.

     Total cash generated from financing activities was
$44,285,000 for 1998, compared to $20,025,000 generated from
financing activities in fiscal 1997.  Cash from financing
activities in 1998 was primarily related to the net proceeds from
the financing completed in March 1998.  Cash from financing
activities in 1997 was primarily related to the net proceeds from
the ING financing arrangement.

     In September 1998, the Company announced that its Board of
Directors had authorized a stock repurchase program of up to 1.0
million shares.  Since the announcement, the Company has used a
total of $290,000 to repurchase approximately 57,000 shares.  All
purchases were made between October 1, 1998 and December 2, 1998.
The program is still in place, however the Company anticipates
that future purchases under the program will not be material.
     
     In March 1998, the Company completed a financing for
$105,000,000 a portion of which was used to refinance existing
debt, for acquisitions completed during 1998 and for general
working capital.  This was subsequently increased to $120
million.  At December 31, 1998, the Company had approximately $37
million available under its senior credit facility.

     At December 31, 1998 the Company had working capital of
$32,139,000 compared to working capital of $450,000 at December
31, 1997.  This increase is primarily the result of the
refinancing completed in March 1998.  Estimated cash earnout
payments to be made in 1999 are $10,489,000 of which $1,987,000
are included in current liabilities at December 31, 1998.
Management anticipates that working capital will continue to
improve in 1999 if the Company's performance continues at present
levels.  Management estimates that cash flow from operations in
1999 as well as the availability under the existing credit
facility with NationsBank will be sufficient for meeting payment
obligations and working capital needs as they arise.

                             21
<PAGE>

Recently Issued Accounting Pronouncements

     In June 1998, the FASB issued Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities, which is
required to be adopted in years beginning after June 15, 1999.
The Statement permits early adoption as of the beginning of any
fiscal quarter after its issuance.  The Company expects to adopt
the new Statement effective January 1, 2000.  The Statement will
require the Company to recognize all derivatives on the balance
sheet at fair value.  Derivatives that are not hedges must be
adjusted to fair value through income.  If a derivative is a
hedge, depending on the nature of the hedge, changes in the fair
value of the derivative will either be offset against the change
in fair value of the hedged asset, liability, or firm commitment
through earnings, or recognized in other comprehensive income
until the hedged item is recognized in earnings.  The ineffective
portion of a derivative's change in fair value will be
immediately recognized in earnings.  The Company does not
anticipate that the adoptions of this Statement will have a
significant effect on its results of operations or financial
position.

Year 2000 Compliance

     The Company's internal computer information system is Year
2000 compliant, since its database does not store dates as plain
text.  The dates are converted into an internal date format that
does not rely on the year to determine the century.  Any new
software purchases will conform to the same type of internal date
storage specifications, which should eliminate any internal Year
2000 issues.

     The Company's Year 2000 issues and any potential business
interruptions, costs, damages or losses related thereto are
primarily dependent upon the Year 2000 compliance of third
parties.  The Company's suppliers that provide mission-critical
services are primarily large companies, such as local and long
distance telephone service providers, banks, and utility
companies.  The Company has no reason to believe that these
suppliers will not be Year 2000 compliant.  However, the Company
is in the process of reviewing its third party relationships in
order to assess and address Year 2000 issues with respect to
these third parties.

     The costs associated with Year 2000 compliance have been
nominal and the Company believes that the remaining costs will be
minimal and will not have a material adverse effect on its
financial condition or results of operations.

     The Company intends to develop a contingency plan to be able
to react to any Year 2000 problems should they arise.

Forward-Looking Statements

     The Private Securities Litigation Reform Act of 1985
provides a safe harbor for forward-looking statements made by the
Company.  All statements, other than statements of historical
fact, which address activities, actions, goals, prospects, or new
developments that the Company expects or anticipates will or may
occur in the future, including such things as expansion and
growth of the Company's operations and other such matters are
forward-looking statements.  Any one or a combination of factors
could materially affect the Company's operations and financial
condition.  These factors include competitive pressures, the
availability of new acquisitions on terms acceptable to the
Company, changes in the performance of the financial services
industry or the economy, legal and regulatory initiates affecting
temporary employment, and conditions in the capital markets.
Forward-looking statements made by the Company are based on
knowledge of its business and the environment in which it
operates as of the date of this report.  Because of the factors
listed above, as well as other factors beyond its control, actual
results may differ from those in the forward-looking statements.

                             22
<PAGE>

 Item 7A.  Quantitative and Qualitative Disclosures About Market
                              Risk

     The Company is exposed to changes in interest rates
primarily from its long-term debt arrangements.  Under its
current policies, the Company uses interest rate derivative
instruments to manage exposure to interest rate changes.  As of
December 31, 1998, the Company had two interest rate exchange
agreements converting $40,000,000 of variable rate borrowings
under the senior credit agreement to a fixed rate of 5.42% per
annum plus the applicable margin, expiring in 2000.  Subsequent
to year-end, the terms of the swap were changed, lowering the
fixed rate to 5.2% per annum plus the applicable margin, and
extending the term of the swap by one-year, at the counterparty's
option.

     The Company is exposed to credit loss in the event of
nonperformance by the counterparty, a large financial
institution.  However, the Company does not anticipate
nonperformance by the counterparty.

      Item 8.  Financial Statements and Supplementary Data

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

    Item 9.  Changes In and Disagreements With Accountants on
               Accounting and Financial Disclosure

     There were no changes in or disagreements with the Company's
independent auditors during the preceding two calendar years.

                            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 1999 annual meeting of
stockholders, which the Company proposes to file with the
Securities and Exchange Commission on or before April 30, 1999:

     Information required by "Item 10.  Directors and Executive
Officers of the Registrant," is incorporated by reference to the
proposed caption "Directors and Executive Officers" in the proxy
statement;

     Information required by "Item 11.  Executive Compensation,"
is incorporated by reference to the proposed caption "Executive
Compensation" in the proxy statement;

     Information required by "Item 12.  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 13.  Certain Relationships and
Related Transactions," is incorporated by reference to the
proposed caption "Certain Relationships and Related Transactions"
in the proxy statement.

                             23
<PAGE>

                             Part IV
                                
Item 14.  Exhibits, Financial Statement Schedules, and Reports on
                            Form 8-K

Financial Statements and Financial Statement Schedules

     The information required by this subsection of this item is
presented in the index to the financial statements on page F-1.

Reports on Form 8-K

     No reports on Form 8-K were filed by the Company during the
last calendar quarter of 1998.

Exhibits

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

Exhibit     SEC Ref.     Title of Document                Location
No.         No.                                           
1           (2)          Stock Purchase Agreement dated   Jan/Fm8-K
                          December 24, 1997, pertaining   Ex. No. 1
                          to the sale of Furash & Company Page E-1
                          Inc. (1)
                         
2           (2)          Asset  Purchase Agreement dated  Apr/Fm8-K
                          March 23, 1998 for Cheney       Ex. No. 1
                          Associates, L.L.C. (2)          Page E-1
                         
3           (2)          Asset  Purchase Agreement dated  Apr/Fm8-K
                          March 23, 1998, Select Staffing Ex. No. 2
                          Services, Inc. (2)              Page E-31
                         
4           (2)          Stock  Purchase Agreement dated  Apr/Fm8-K
                          March 23, 1998 for Shore        Ex. No. 3
                          Resources, Incorporated (2)     Page E-58
                         
5           (2)          Asset Purchase Agreement dated   Jun/Fm8-K
                          June 22, 1998, pertaining to    Ex. No. 2
                          the purchase of assets of       Page E-36
                          Staffing Solution, Inc., and 
                          Intelligent Staffing, Inc (3)
                         
6           (2)          Asset Purchase Agreement dated   Jun/Fm8-K
                          June 29, 1998, pertaining to    Ex. No. 1
                          the purchase of assets of       Page E-1
                          Phoenix Communication Group, 
                          Inc. (3)
                         
7           (3)(I)       Certificate of Incorporation (4) 1996 Fm10-K
                                                          Ex. No. 1
                                                          Page E-1

                             24
<PAGE>
                                                          
8           (3)(ii)      By-Laws (4)                      1996 Fm10-K
                                                          Ex. No. 2
                                                          Page E-5
                                                          
9           (3)(ii)      By-Law Amendments (2)            Apr/Fm8-K
                                                          Ex. No. 5
                                                          Page E-113
                                                          
10          (4)          Certificate of Designation       1996 Fm10-K
                          of Preferred Stock (4)          Ex. No. 3
                                                          Page E-16
                                                          
11          (4)          Series F Preferred Stock         Apr/Fm8-K
                          Designation (2)                 Ex. No. 4
                                                          Page E-85
                                                          
12          (4)          Securities Purchase Agreement    Apr/Fm8-K
                          dated March 19, 1998 (2)        Ex. No. 6
                                                          Page E-116
                                                          
13          (4)          Registration Rights Agreement    Apr/Fm8-K
                          dated March 19, 1998 (2)        Ex. No. 7
                                                          Page E-164
                                                          
14          (4)          Indenture dated March 19, 1998   Apr/Fm8-K
                          (2)                             Ex. No. 8
                                                          Page E-183
                                                          
15          (4)          Form of Senior Subordinated      Apr/Fm8-K
                          Note (2)                        Ex. No. 9
                                                          Page E-271
                                                          
16          (4)          Guaranty Agreement dated March   Apr/Fm8-K
                          19, 1998 (2)                    Ex. No.10
                                                          Page E-282
                                                          
17          (4)          Credit  Agreement  dated  March  Apr/Fm8-K
                          19, 1998 including Exhibit A    Ex. No. 11
                          Commitment Percentage, and      Page E-291
                          Exhibit F - Form of                           
                          Revolving Note (2)
                         
18          (4)          Guaranty Agreement dated March   Apr/Fm8-K
                          19, 1998 (2)                    Ex. No. 12
                                                          Page E-393
                                                          
19          (4)          Security Agreement dated March   Apr/Fm8-K
                          19, 1998 (2)                    Ex. No. 13
                                                          Page E-402

                             25
<PAGE>
                                                          
20          (4)          Pledge Agreement dated March     Apr/Fm8-K
                          19, 1998 (2)                    Ex. No. 14
                                                          Page E-423
                                                          
21          (4)          LC Account Agreement dated       Apr/Fm8-K
                          March 19, 1998 (2)              Ex. No. 15
                                                          Page E-435
                                                          
22          (4)          Intellectual Property  Security  Apr/Fm8-K
                          Agreement dated March 19, 1998  Ex. No. 16
                          (2)                             Page E-445
                      
23          (21)         Subsidiaries of the Company      This Filing
                                                          Page E-1
                                                          
24          (23)         Consent of Ernst & Young LLP     This Filing
                                                          Page E-2
                                                          
25          (27)         Financial Data Schedule (5)      Not
                                                          Applicable
                                                          

(1)  This exhibit is included in the Company's current report on
Form 8-K, dated December 31, 1997, and filed with the Commission
on January 15, 1998, and is incorporated herein by this
reference.  The reference under the column "Location" is to the
exhibit number and page in the report on Form 8-K.

(2)  These exhibit are included in the Company's current report
on Form 8-K, dated March 19, 1998, and filed with the Commission
on April 3, 1998, and is incorporated herein by this reference.
The reference under the column "Location" is to the exhibit
number and page in the report on Form 8-K.

(3)  These exhibit is included in the Company's current report on
Form 8-K, dated June 29, 1998, and filed with the Commission on
July 13, 1998, and is incorporated herein by this reference.  The
reference under the column "Location" is to the exhibit number
and page in the report on Form 8-K.

(4)  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
and page in the report on Form 10-KSB.

(5)  The Financial Data Schedule for the year ended December 31,
1998, is presented only in the electronic filing with the
Securities and Exchange Commission.

                                    26
<PAGE>

                           Signatures

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

                                   Headway Corporate Resources,
Inc.

Date:  March 8, 1999                         By: /s/ Barry S.
Roseman, President

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

                         
Dated: March 8, 1999     /s/ Gary S. Goldstein, Principal
                         Executive Officer and Director
                         
                         
Dated: March 8, 1999     /s/ Barry S. Roseman Principal
                         Financial and Accounting Officer and
                         Director
                         
                         
Dated: March 4, 1999     /s/ G. Chris Andersen, Director
                         
                         
Dated: March 8, 1999     /s/ E. Garrett Bewkes, III, Director
                         
                         
Dated March 8, 1999      /s/ Bruce R. Ellig, Director
                         
                         
Dated: March 8, 1999     /s/ Ehud D. Laska, Director
                         
                         
Dated: March 8, 1999     /s/ Richard B. Salomon, Director
                         

                                   27
<PAGE>
                         

              Form 10-K Item 14 (a) (1) and (2)
                              
     Headway Corporate Resources, Inc. and Subsidiaries
                              



    List of Financial Statements and Financial Statement
                          Schedules

The  following consolidated financial statements of  Headway
Corporate  Resources, Inc. and Subsidiaries are included  in
Item 8:

Report of Independent Auditors                                 F-2

Consolidated Balance Sheets as of December 31, 1998 and 1997   F-3
Consolidated Statements of Income for the years ended
 December 31, 1998, 1997 and 1996                              F-4
Consolidated Statements of Stockholders' Equity
 for the years ended December 31, 1998, 1997 and 1996          F-5
Consolidated Statements of Cash Flows for the years ended
 December 1998, 1997 and 1996                                  F-9
Notes to Consolidated Financial Statements                     F-10


The following consolidated financial statement schedule of
 Headway Corporate Resources, Inc. and Subsidiaries is
 included in Item 14 (a) (2):

Schedule II - Valuation and Qualifying Accounts                F-34

All other schedules for which provision is made in the
applicable regulation of the securities and exchange
commission are not required under the related instruction or
are inapplicable and, therefore, have been omitted.

                                    F-1
<PAGE>


               Report of Independent Auditors

To the Board of Directors and Stockholders
Headway Corporate Resources, Inc.

We have audited the accompanying consolidated balance sheets
of  Headway Corporate Resources, Inc. and Subsidiaries as of
December  31,  1998  and 1997 and the  related  consolidated
statements  of income, stockholders' equity and  cash  flows
for each of the three years in the period ended December 31,
1998.  Our  audits  also  included the  financial  statement
schedule listed in the Index at item 14 (a). These financial
statements  and  schedule  are  the  responsibility  of  the
Company's  management. Our responsibility is to  express  an
opinion on these financial statements and schedule 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. and Subsidiaries at December 31,  1998  and
1997  and  the consolidated results of their operations  and
their  cash flows for each of the three years in the  period
ended   December  31,  1998  in  conformity  with  generally
accepted  accounting principles. Also, in our  opinion,  the
related  financial  statement schedule, when  considered  in
relation to the basic financial statements taken as a whole,
present fairly in all material respects the information  set
forth therein.



                                           ERNST & YOUNG LLP


New York, New York
February 18, 1999

                                   F-2
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                 Consolidated Balance Sheets
                   (Dollars in Thousands)
                              
                                                              December 31
                                                            1998        1997
Assets                            
Current assets:                                       
Cash and cash equivalents                                 $4,157    $  2,472
Accounts receivable, trade, net of allowance          
 for doubtful accounts of $593 (1998) and $371 (1997)     47,017      27,332
Prepaid expenses and other current assets                    954         368
Prepaid income taxes                                       1,217           -
Due from related party                                         -         638
Total current assets                                      53,345      30,810
                                                       
Property and equipment, net                                4,566       2,181
Intangibles, net of accumulated amortization  
 $3,628 (1998) and $1,437 (1997)                          66,388      28,079
Deferred financing costs                                   1,757       2,821
Deferred income taxes                                          -         426
Other assets                                                 890       3,019
Total assets                                            $126,946     $67,336
                                                       
Liabilities and stockholders' equity             
Current liabilities:                                  
  Accounts payable                                       $ 2,190     $ 2,211
  Accrued expenses                                         2,969       1,776
  Accrued payroll                                         13,492       8,097
  Line of credit                                               -      13,404
  Capital lease obligations, current portion                 416         199
  Long-term debt, current portion                            150       1,855
  Income taxes payable                                         -         618
  Other liabilities                                        1,989       2,200
Total current liabilities                                 21,206      30,360
                                                      
Capital lease obligations, less current portion              755         318
Long-term debt, less current portion                      60,959      19,059
Deferred rent                                              1,251       1,147
Deferred income taxes                                        204           -
                                                       
Commitments and contingencies                         
                                                       
Stockholder's equity:                                 
Preferred stock-$.0001 par value, 5,000,000           
   shares authorized: 
 Series B, convertible preferred stock-$.0001 par 
  value, 6,858 shares authorized, none and 572 shares 
  issued and outstanding at December 31, 1998 and 
  1997, respectively                                           -         200
 Series D, convertible preferred stock-$.0001 par value, 
  44 shares authorized, none and 4 shares issued and    
  outstanding at December 31, 1998 and 1997, respectively      -         200
 Series F, convertible preferred stock-$.0001, 1,000 
  shares authorized, 1,000 shares and none issued and 
  outstanding at December 31, 1998 and 1997, respectively, 
  (aggregate liquidation value $20,000)                   20,000           -
 Common stock-$.0001 par value, 20,000,000 shares 
  authorized, 10,419,220 shares and 10,362,020 shares 
  issued and outstanding, respectively, at December 
  31, 1998; 8,907,110 shares issued and outstanding at
  December 31, 1997                                             1          1
 Additional paid in capital                                15,779     13,247
 Treasury stock, at cost                                     (290)         -
 Note receivable                                             (172)      (285)
 Retained earnings                                          7,244      3,048
 Other comprehensive income                                     9         41
Total stockholders' equity                                 42,571     16,452
Total liabilities and stockholders' equity               $126,946    $67,336
See accompanying notes.

                                    F-3
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
              Consolidated Statements of Income
                   (Dollars in Thousands)
                              
                              
                                          Year ended December 31
                                     1998       1997        1996
Revenues                           $291,303   $142,842    $53,389
Operating expenses:                                  
 Direct costs                       224,993    104,396     29,703
 General and administrative          48,638     29,588     19,535
 Depreciation and amortization        2,952      1,453        514
                                    276,583    135,437     49,752
Operating income from continuing  
 operations                          14,720      7,405      3,637
                                                     
Other (income) expenses:                             
 Interest expense                     4,515      2,662      1,088
 Interest income                       (152)      (104)       (91)
 Gain on sale of investment            (901)    (4,272)         -
 Other (income) expense, net              -       (750)       (51)
                                      3,462     (2,464)       946
Income from continuing operations  
before income tax expense            11,258      9,869      2,691 
                                                       
Income tax expense                    4,639      4,064        945
Income from continuing operations     6,619      5,805      1,746
                                                       
Discontinued operations:                            
 Loss from operations of 
  discontinued segment (net of 
  income tax benefit of $95 (1997)
  and $245 (1996))                        -       (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 before extraordinary item  6,619      2,806      1,182
Extraordinary loss on early                          
  extinguishment of debt (net income        
  tax benefit of $1,141)             (1,557)         -          -
Net income                            5,062      2,806      1,182
                                                       
Deemed dividend on preferred stock        -          -     (1,470)
Preferred dividend requirements        (866)      (137)      (276)
Net income (loss) available for    
  common stockholders                $4,196     $2,669      $(564)
                                                       
Basic earnings (loss) per common                     
 share:
  Continuing operations              $  .58    $   .79      $   -
  Discontinued operations                 -       (.42)      (.11)
  Extraordinary item                   (.15)         -          -
  Net income (loss)                  $  .43    $   .37      $(.11)
Diluted earnings (loss) per common                   
 share:
  Continuing operations              $  .47    $   .58      $   -
  Discontinued operations                 -       (.30)      (.11)
  Extraordinary item                   (.11)         -          -
  Net income (loss)                  $  .36    $   .28      $(.11)


See accompanying notes.

                                   F-4
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
       Consolidated Statements of Stockholders' Equity
                   (Dollars in Thousands)
                              
                              
                                   Series A       Series B       Series C
                                 Convertible    Convertible     Convertible
                                  Preferred      Preferred       Preferred
                                    Stock          Stock          Stock
                              Shares  Amount   Shares  Amount  Shares Amount
                                                        
Balance at December 31, 1995   2,800   $700     6,858  $2,400     -   $    -
  Issuance of preferred stock      -      -         -       -   150    3,000
  Notes receivable                 -      -         -       -     -        -
  Conversion of preferred stock    -      -         -       -  (145)  (2,900)
  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 adjustments          -      -         -       -     -        -
  Net income                       -      -         -       -     -        -
  Comprehensive income             -      -         -       -     -        -
Balance at December 31, 1996   2,800    700     6,858   2,400     5      100
  Conversion of preferred 
   stock                      (2,800)  (700)   (6,286) (2,200)   (5)    (100)
  Retirement of tresury stock      -      -         -       -     -        -
  Repayment of notes receivable    -      -         -       -     -        -
  Issuance of stock for 
   acquistion                      -      -         -       -     -        -
  Exercise of options and
   warrants                        -      -         -       -     -        -
  Fair value of warrants issued    -      -         -       -     -        -
  Preferred stock dividends        -      -         -       -     -        -
  Translation adjustments          -      -         -       -     -        -
  Net income                       -      -         -       -     -        -
  Comprehensive income             -      -         -       -     -        -
Balance at December 31, 1997       -      -       572     200     -        -
  Issuance of preferred stock      -      -         -       -     -        -
  Conversion of preferred stock    -      -      (572)   (200)    -        -
  Repayment of notes receivable    -      -         -       -     -        -
  Issuance of stock for 
  acquisitions                     -      -         -       -     -        -
  Exercise of options and warrants -      -         -       -     -        -
  Preferred stock dividends        -      -         -       -     -        -
  Treasury stock                   -      -         -       -     -        -
  Translation adjustment           -      -         -       -     -        -
  Net income                       -      -         -       -     -        -
  Comprehensive income             -      -         -       -     -        -
Balance at December 31, 1998       -    $ -         -   $   -     -    $   -

See accompanying notes.

                                    F-5
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
 Consolidated Statements of Stockholders' Equity (continued)
                   (Dollars in Thousands)
                              
                              
                                  Series D        Series F          
                                Convertible      Convertible    Common Stock
                                 Preferred        Preferred
                                   Stock            Stock
                              Shares  Amount  Shares  Amount    Shares   Amount
                                                         
Balance at December 31, 1995       -  $    -       -  $    -  4,597,358   $46
  Issuance of preferred stock     80   4,000       -       -          -     -
  Notes receivable                 -       -       -       -          -     -
  Conversion of preferred stock  (43) (2,150)      -       -  1,818,050     -
  Change in par value              -       -       -       -          -   (45)
  Retirement of treasury stock     -       -       -       -   (113,960)    -
  Repayment of notes receivable    -       -       -       -          -     -
  Warrants issued in connection                                     
   with financing transaction      -       -       -       -          -     -
  Fair value of warrants issued    -       -       -       -          -     -
  Preferred stock dividends        -       -       -       -          -     -
  Translation adjustments          -       -       -       -          -     -
  Net income                       -       -       -       -          -     -
  Comprehensive income             -       -       -       -          -     -
Balance at December 31, 1996      37   1,850       -       -  6,301,448     1
  Conversion of preferred stock  (33) (1,650)      -       -  2,565,775     -
  Retirement of treasury stock     -       -       -       -    (83,462)    -
  Repayment of notes receivable    -       -       -       -          -     -
  Issuance of stock for acquistion -       -       -       -    121,066     -
  Exercise of options and warrants -       -       -       -      2,283     -
  Fair value of warrants issued    -       -       -       -          -     -
  Preferred stock dividends        -       -       -       -          -     -
  Translation adjustments          -       -       -       -          -     -
  Net income                       -       -       -       -          -     -
  Comprehensive income             -       -       -       -          -     -
Balance at December 31, 1997       4     200       -       -  8,907,110     1
  Issuance of preferred stock      -       -   1,000  20,000          -     -
  Conversion of preferred stock   (4)   (200)      -       -    114,540     -
  Repayment of notes receivable    -       -       -       -          -     -
  Issuance of stock for 
   acquisitions                    -       -       -       -    175,488     -
  Exercise of options and warrants -       -       -       -  1,222,082     -
  Preferred stock dividends        -       -       -       -          -     -
  Treasury stock                   -       -       -       -          -     -
  Translation adjustment           -       -       -       -          -     -
  Net income                       -       -       -       -          -     -
  Comprehensive income             -       -       -       -          -     -
Balance at December 31, 1998       -    $  -   1,000 $20,000 10,419,220  $  1

See accompanying notes.

                                   F-6
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
 Consolidated Statements of Stockholders' Equity (continued)
                   (Dollars in Thousands)
                              
                                 
                                  Additional                        
                                   Paid-in       Treasury Stock      Notes
                                   Capital      Shares    Amount   Receivable
                                                    
Balance at December 31, 1995      $  2,592           -      $ -      $    -
  Issuance of preferred stock            -           -        -           -
  Notes receivable                       -           -        -        (507)
  Conversion of preferred stock      5,178           -        -           -
  Change in par value                   45           -        -           -
  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              -           -        -           -
  Translation adjustments                -           -        -           -
  Net income                             -           -        -           -
  Comprehensive income                   -           -        -           -
Balance at December 31, 1996         8,371           -        -        (457)
  Conversion of preferred stock      4,799           -        -           -
  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              -           -        -           -
  Translation adjustments                -           -        -           -
  Net income                             -           -        -           -
  Comprehensive income                   -           -        -           -
Balance at December 31, 1997        13,247           -        -        (285)
  Issuance of preferred stock       (1,367)          -        -           -
  Conversion of preferred stock        400           -        -           -
  Repayment of notes receivable          -           -        -         113
  Issuance of stock for acquisitions 1,233           -        -           -
  Exercise of options and warrants   2,266           -        -           -
  Preferred stock dividends              -           -        -           -
  Treasury stock                         -     (57,200)    (290)          -
  Translation adjustment                 -           -        -           -
  Net income                             -           -        -           -
  Comprehensive income                   -           -        -           -
Balance at December 31, 1998       $15,779     (57,200)   $(290)     $ (172)


See accompanying notes.

                                    F-7
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
 Consolidated Statements of Stockholders' Equity (continued)
                   (Dollars in Thousands)
                              
                                
                                              Other          Total
                                Retained   Comprehensive  Stockholders'
                                Earnings      Income         Equity
                                                   
Balance at December 31, 1995      $(527)        $90        $ 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 transaction         -           -          1,867
  Fair value of warrants issued       -           -           (734)
  Preferred stock dividends        (276)          -           (276)
  Translation adjustments             -         (10)           (10)
  Net income                      1,182           -          1,182
  Comprehensive income                -           -          1,172
Balance at December 31, 1996        379          80         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 adjustments             -         (39)           (39)
  Net income                      2,806           -          2,806
  Comprehensive income                -           -          2,767
Balance at December 31, 1997      3,048          41         16,452
  Issuance of preferred stock         -           -         18,633
  Conversion of preferred stock       -           -              -
  Repayment of notes receivable       -           -            113
  Issuance of stock for acquisitions  -           -          1,233
  Exercise of options and warrants    -           -          2,266
  Preferred stock dividends        (866)          -           (866)
  Treasury stock                      -           -           (290)
  Translation adjustment              -         (32)           (32)
  Net income                      5,062           -          5,062
  Comprehensive income                -           -          5,030
Balance at December 31, 1998     $7,244         $ 9       $ 42,571

See accompanying notes.

                                   F-8
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
            Consolidated Statements of Cash Flows
                   (Dollars in Thousands)
                              
                                                 Year ended December 31
                                                 1998     1997     1996
Net income                                     $5,062   $2,806   $1,182
Adjustments to reconcile net income to                 
 net cash provided by (used in) operating 
 activities:
  Gain on sale of investment                     (901)  (4,272)       -
  Loss on disposal of segment                       -    2,698        - 
  Depreciation and amortization                 3,354    2,253    1,099
  Deferred income taxes                           379      475     (830)
  Loss on early extinguishment of debt          1,557        -        -
Changes in assets and liabilities net                  
 of effects of acquisitions:
  Accounts receivable                         (13,426) (14,471)  (4,163)
  Prepaid expenses and other current assets      (548)      54      622
  Other assets                                   (148)     264     (329)
  Accounts payable and accrued expenses           752    1,211      347
  Accrued payroll                               4,657    4,222    2,092
  Income taxes payable                           (718)    (568)     260
  Deferred rent                                   104        -       39
  Changes in working capital related to   
   discontinued operations                          -     (480)       -  
Net cash provided by (used in)          
  operating activities                            124   (5,808)     319
                                                       
Investing activities                         
Expenditures for property and equipment        (1,759)    (695)    (286)
Repayment from notes receivable                   113      172       50
Repayment / advances to employees                   -        -     (257)
Repayment / advances to related parties           638        -     (167)
Proceeds from sale of investment                3,178    4,363        -
Cash paid for acquisitions                    (44,863) (16,512) (12,139)
Other assets                                        -      (42)    (107)
Net cash used in investing activities         (42,693) (12,714) (12,906)
                                                           
Financing activities                         
Cash pledged                                        -        -       85
Net change in revolving credit line           (13,404)   9,554        -
Proceeds from long-term debt                   60,800   14,352   12,850
Repayment of long-term debt                   (20,605)  (2,641)  (5,675)
Payment of capital lease obligations             (246)    (136)     (72)
Payments of loan acquisition fees              (2,003)  (1,051)    (857)
Sale of preferred stock, net                   18,633        -    6,267
Proceeds from exercise of options and warrants  2,266        -        -
Purchase of treasury stock                       (290)       -        -
Cash dividends paid                              (866)     (53)     (56)
Net cash provided by financing activities      44,285   20,025   12,542
                                                           
Effect of exchange rate changes on cash       
  and cash equivalents                            (31)     (39)     (10)
Increase (decrease) in cash and cash     
  equivalents                                   1,685    1,464      (55)
Cash and cash equivalents at beginning of year  2,472    1,008    1,063
Cash and cash equivalents at end of year       $4,157   $2,472   $1,008
                                                           
Supplemental disclosure of cash flow information
Cash paid during the year for:                         
  Interest                                     $3,736   $2,016   $  736
  Income taxes                                 $5,129   $2,870   $1,043

                                    F-9
<PAGE>

Supplemental  disclosure 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.

In  1998, the Company purchased property and equipment under
capital leases amounting to approximately $900,000.

See accompanying notes.

                                   F-10
<PAGE>

     Headway Corporate Resources, Inc. and Subsidiaries
                              
         Notes to Consolidated Financial Statements
                              
                      December 31, 1998
                              
                              
                              

1. Organization


Headway  Corporate  Resources, Inc.  and  its  wholly  owned
subsidiaries   provide  strategic  staffing  solutions   and
personnel  worldwide.  Its  operations  include  information
technology staffing, temporary staffing, contract  staffing,
permanent  placement and executive search. Headquartered  in
New   York,   the   Company  has  offices   in   California,
Connecticut, Florida, New Jersey, North Carolina,  Virginia,
and   Texas  and  executive  search  offices  in  New  York,
Illinois,   the  United  Kingdom,  Japan,  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.
The  disposal  of  FCI was accounted for as  a  discontinued
operation  in  1997 and the 1996 financial  statements  were
restated  to  reflect the discontinuation  of  the  advisory
services segment.

In  1998, 1997 and 1996, the Company purchased the stock  or
certain  assets of several temporary staffing companies  and
an executive search firm (see Note 6).

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

Information  technology  staffing,  temporary  staffing  and
contract  staffing revenue is recognized when the  personnel
perform  the  related services, and revenue  from  permanent
placement  services  is  recognized when  the  placement  is
employed.

                                    F-10
<PAGE>

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

2. Summary of Significant Accounting Policies (continued)

Executive  search  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.

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.

Foreign Currency Translation

Balance  sheet accounts of the Company'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.

                                    F-11
<PAGE>

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

2. Summary of Significant Accounting Policies (continued)

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.

Deferred Financing Costs

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

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  amounts
reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

                                    F-12
<PAGE>

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

2. Summary of Significant Accounting Policies (continued)

Comprehensive Income

Effective January 1, 1998, the Company adopted Statement  of
Financial   Accounting   Standards   No.   130,   "Reporting
Comprehensive Income". Statement 130 establishes  new  rules
for  the  reporting and display of comprehensive income  and
its  components, however, the adoption of this Statement had
no  impact  on  the  Company's net income  or  stockholders'
equity.  Statement 130 requires foreign currency translation
adjustments,   which   prior  to  adoption   were   reported
separately in shareholders' equity, to be included in  other
comprehensive income.

Segment Information

Effective January 1, 1998, the Company adopted Statement  of
Financial  Accounting Standards No. 131, "Disclosures  about
Segments   of   an  Enterprise  and  Related   Information".
Statement  131 superseded FASB Statement No. 14,  "Financial
Reporting  for Segments of a Business Enterprise". Statement
131  establishes standards for the way that public  business
enterprises  report information about operating segments  in
annual   financial  statements  and  requires   that   those
enterprises  report  selected  information  about  operating
segments  in interim financial reports. Statement  131  also
establishes standards for related disclosures about products
and  services,  geographic areas, and major  customers.  The
adoption  of  Statement  131  did  not  affect  results   of
operations  or  financial  position,  but  did  affect   the
disclosure of segment information (see Note 14).

Stock-Based Compensation

The  Company  grants stock options for  a  fixed  number  of
shares to employees with an exercise price equal to the fair
value  of  the  shares  at the date of  grant.  The  Company
accounts  for  stock  option grants in accordance  with  APB
Opinion  No. 25, "Accounting for Stock Issued to Employees",
("APB  25") and related interpretations because the  Company
believes the alternative fair value accounting provided  for
under  FASB  Statement No. 123, "Accounting for  Stock-Based
Compensation",  requires the use of option valuation  models
that  were  not developed for use in valuing employee  stock
options.  Under APB 25, because the exercise  price  of  the
Company's employee stock options equals the market price  of
the  underlying stock on the date of grant, no  compensation
expense is recognized.

                                    F-13
<PAGE>

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

3. Property and Equipment

Property and equipment consists of the following:

                                           December 31
                                        1998         1997
                                             
Leasehold improvements               $1,248,000     $881,000
Furniture and fixtures                1,537,000    1,043,000
Office and computer equipment         3,730,000    1,405,000
                                      6,515,000    3,329,000
Less accumulated depreciation and  
  amortization                        1,949,000    1,148,000
                                   $  4,566,000  $ 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,  in  1997,  a  $750,000  reserve  against  such
receivable previously established in 1992 was reversed,  and
is included in other income.

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

In  1998 and 1996, financial advisory services were provided
to  the  Company  by  entities in which a  director  of  the
Company  was  a  principal. Amounts paid for  such  services
amounted  to  $147,000  in  1998  and  was  related  to   an
acquisition  made by 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 expense ($110,000).

During the years ended December 31, 1998, 1997 and 1996, the
Company  incurred  fees of approximately $615,000,  $282,000
and $246,000, respectively, for legal services to an entity,
whose partner is a member of the Board of Directors.

                                   F-14
<PAGE>

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

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. The Series E warrant was  valued
by  an independent appraiser at $1,757,000 and was amortized
over  the  period  of the term loan. The Series  E  warrants
issued  in  connection  with the ICC  credit  facility  were
exercised for 575,000 shares of common stock in April  1998.
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 were payable in varying  quarterly
installments, bearing 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.  The  Company
retired  the  balance outstanding under its credit  facility
with  ICC from the proceeds of the new financing (see below)
and  incurred an extraordinary loss on the early  retirement
of this credit facility of $1,557,000.

In  March  1998, the Company completed a financing  totaling
$105,000,000  consisting  of  a  $75,000,000  senior  credit
facility,  $10,000,000  of senior  subordinated  notes,  and
$20,000,000  of  Series F Convertible Preferred  Stock  (see
Note 7).

In  October 1998, the lender increased the amounts available
under  its  senior  credit  facility  to  $90,000,000   from
$75,000,000.  The  amount that can  be  borrowed  under  the
senior  credit facility is reduced to $85,000,000  in  March
2001  and to $75,000,000 in March 2002. This credit facility
expires  within  five  years and bears interest  at  varying
rates  based on LIBOR ranging from 7.08% to 7.69% per  annum
at  December  31,  1998. The Company  incurred  expenses  in
connection  with the issuance of the senior credit  facility
of  $1,235,000  which  have  been  deferred  and  are  being
amortized  over  the  five year term of  the  senior  credit
facility.   As   of  December  31,  1998,  $50,800,000   was
outstanding  under the senior credit facility. The  carrying
amount  of  the borrowings under the senior credit  facility
approximates  fair value. Substantially all  assets  of  the
Company  have  been  pledged as collateral  for  the  senior
credit  facility. In addition, the Company  is  required  to
meet certain financial ratios, as defined.
 
                                   F-15
<PAGE>


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

5. Long-Term Debt and Credit Facilities (continued)

The  senior subordinated notes are payable in March 2006 and
bear  interest at 12% per annum until March 2001, increasing
to  14%  per annum thereafter. The Company incurred expenses
in  connection with the issuance of the senior  subordinated
notes  of  $767,000 which have been deferred and  are  being
amortized   over  the  eight  year  term   of   the   senior
subordinated  notes.  The  carrying  amount  of  the  senior
subordinated notes was approximately $10,273,000 at December
31, 1998 and was estimated using discounted cash flows based
on  the  Company's  incremental borrowing rate  for  similar
types of borrowing arrangements.

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  semi-annual
installments  commencing in January 1998 and bears  interest
at  6%  per  annum.  At  December  31,  1998,  approximately
$309,000 of the note payable is outstanding.

Annual maturities of long-term debt as of December 31,  1998
are as follows:

        Years ending December 31:
        1999                    $150,000
        2000                     159,000
        2001                           -
        2002                           -
        2003                  50,800,000
        Thereafter            10,000,000
                             $61,109,000

As  of December 31, 1998, the Company had two interest  rate
exchange agreements converting $40,000,000 (notional amount)
of   variable  rate  borrowings  under  the  senior   credit
agreement  to  a  fixed rate of 5.42%  per  annum  plus  the
applicable  margin. The notional amount does  not  represent
amounts exchanged by the parties and is not a measure of the
exposure of Company through its use of derivatives. The term
of  the  exchange agreements expire in 2000.  Subsequent  to
December  31, 1998, the terms of the interest rate  exchange
agreements were revised to reduce the fixed interest rate to
5.2% per annum plus the applicable margin, and to provide an
option  to  the  counterparty to  extend  the  term  of  the
exchange  agreements to 2001. The fair value of the interest
rate  exchange  agreements based on  a  notional  amount  of
$40,000,000   and   other  terms  of  the  agreements,   was
calculated  based  on  the buyback value  of  such  exchange
agreements  and,  amounted  to approximately  $(355,000)  at
December 31,

                                   F-16
<PAGE>

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

5. Long-Term Debt and Credit Facilities (continued)

1998. The Company is exposed to credit loss in the event  of
nonperformance  by  the  counterparty,  a  large   financial
institution.   However,  the  Company  does  not  anticipate
nonperformance by the counterparty.

6.   Acquisitions

In  May 1996, the Company acquired all of the capital  stock
and  certain  assets  of  four  related  New  York  staffing
companies and, in October 1996, the Company acquired certain
assets of another staffing company.  The purchase price  for
these   acquisitions   which   amounted   to   approximately
$12,203,000  exceeded  the fair  value  of  the  net  assets
acquired resulting in goodwill of approximately $8,833,000.

In  March and July 1997, the Company acquired certain assets
of   a   North  Carolina  corporation  and  two   New   York
corporations, respectively.  In September 1997, the  Company
acquired (i) substantially all of the assets of a New Jersey
corporation  and  (ii)  all of  the  outstanding  stock  and
substantially all of the assets of a Connecticut corporation
and  related  limited  liability company,  respectively.  In
addition, to the purchase price paid at closing, the sellers
are  entitled  to  earnouts based on  future  earnings.  The
purchase  price  for these acquisitions  which  amounted  to
approximately  $25,198,000, including earnouts  recorded  in
1998  of  $5,640,000, exceeded the fair  value  of  the  net
assets  acquired  resulting  in  goodwill  of  approximately
24,092,000.  In  addition, in 1997  and  1998,  the  Company
issued  121,066  and 80,710 shares of the  Company's  common
stock,  valued  at  $500,000 and $333,000, respectively,  as
consideration for a portion of the purchase price.

In March 1998, the Company acquired substantially all of the
assets  of two related Connecticut entities, three  Southern
Virginia Offices of a Virginia corporation, and the stock of
a  California corporation in three separate transactions; in
June  1998,  the Company acquired substantially all  of  the
assets   of  two  Florida  corporations  and  a  New  Jersey
corporation in two separate transactions;  in July 1998, the
Company acquired all of the outstanding stock of an Illinois
corporation;  and  in  November 1998, the  Company  acquired
substantially  all of the assets of two Texas  corporations.
In  addition,  to  the purchase price paid at  closing,  the
sellers  are entitled to earnouts based on future  earnings.
The purchase price for these acquisitions which amounted  to
approximately  $40,385,000, including earnouts  recorded  in
1998 of

                                    F-17
<PAGE>

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

6. Acquisitions

$640,000, exceeded the fair value of the net assets acquired
resulting  in  goodwill  of  approximately  $35,061,000.   A
portion of the purchase price for two acquisitions consisted
of  94,778  shares of the Company's common stock  valued  at
$900,000.

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  amortization  of goodwill  for  the  years  ended
December   31,   1998,  1997  and  1996  was   approximately
$2,191,000, $854,000 and $582,000, respectively.

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

                                Year ended December 31
                                 1998            1997
                                     (Unaudited)
Total revenue                $320,150,000     $220,769,000
Net income before           
  extraordinary item            7,297,000        4,592,000
Net income                      5,740,000        4,592,000
Net income available for                
  common stockholders        $  4,639,000      $ 3,355,000
                                        
Earnings per share:                     
Basic                        $        .47      $       .45
Diluted                      $        .38      $       .33

                                   F-18
<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 572 and 6,286 shares of  Series  B
Preferred  Stock  converted their  shares  into  55,885  and
628,600   shares   of  common  stock  in  1998   and   1997,
respectively.

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 into 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 was 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  were  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  1998, 1997 and 1996, the holders of 4, 33 and 43  shares
of  Series D preferred stock, respectively, converted  their
shares  into common stock. In addition, warrants to purchase
12,937,   130,743  and  184,470  shares  of  common   stock,
respectively,   at   $4.25  per  share  were   issued   upon
conversion.
                                    F-19
<PAGE>

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

7. Stockholders' Equity (continued)

In  March  1998,  the Company authorized  and  issued  1,000
shares   of   Series  F  Convertible  Preferred  Stock   for
$20,000,000.  The  Series  F  Convertible  Preferred   Stock
accrues  dividends  at the rate of 5.5%  per  annum  and  is
convertible into common stock at an initial conversion price
of $5.58 per share (the market value of the Company's common
stock  at  closing).  The initial conversion  price  may  be
adjusted  up  to  $6 per share if the market  value  of  the
Company's common stock exceeds $8.50 per share. Expenses  in
connection with the issuance of the preferred stock amounted
to  $1,367,000  and  were accounted for  as  share  issuance
expenses.

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
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 Stock  stockholder.
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.
The  warrants were valued at approximately $52,000 and  such
value is being amortized over the two year period.

In September 1998, the Company authorized a stock repurchase
program of up to 1.0 million shares of the Company's  common
stock.   In  1998, the Company repurchased 57,200 shares  of
the Company's common stock for approximately $290,000.

                                   F-20
<PAGE>

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

7. Stockholders' Equity (continued)

At  December  31,  1998, approximately 7,880,000  shares  of
common  stock  have  been reserved for  future  issuance  as
follows:

Convertible Preferred Stock               3,584,000
Warrants issued upon conversion of        
  Series D Preferred Stock                  102,000
Other Warrants                              550,000
Stock Incentive Plan (see Note 10)        3,644,000
                                          7,880,000

At December 31, 1998, all warrants issued by the Company are
fully vested and have exercise prices ranging from $3.50  to
$5.25.  During  1998, 1,097,970 warrants, including  575,000
Series E warrants were exercised.

                                   F-21
<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 pursuant to FASB  Statement  No.
128, "Earnings per Share", for the years ended December  31,
1998, 1997, and 1996:

                                              1998        1997         1996
Numerator:                                             
Income from continuing operations          $6,619,000  $5,805,000   $1,746,000
Discontinued operations                             -  (2,999,000)    (564,000)
Extraordinary loss                         (1,557,000)          -            -
Deemed dividend on preferred stock                  -           -   (1,470,000)
Preferred stock dividend requirements        (866,000)   (137,000)    (276,000)
Numerator for basic earnings per share-
  net income (loss) available for      
  common stockholders                       4,196,000   2,669,000     (564,000)
Effective of dilutive securities:
  Preferred dividend requirements             866,000     137,000            -
Numerator for diluted earnings per share-                                  
  net income (loss) available for common 
  stockholders after assumed conversions   $5,062,000  $2,806,000    $(564,000)


Denominator:                                          
Denominator for basic earnings per                 
  share-weighted average shares             9,853,354   7,223,462    4,995,523
Effect of dilutive securities:
  Stock options and warrants                1,615,486   1,120,324            -
  Convertible preferred stock               2,688,172   1,758,412            -
  Dilutive potential common stock           4,303,658   2,878,736    4,995,523
Denominator for diluted earnings per 
  share-adjusted weighted-average 
  shares and assumed conversions           14,157,012  10,102,198    4,995,523
Basic earnings (loss) per share            $      .43  $      .37    $    (.11)
Diluted earnings (loss) per share          $      .36  $      .28    $    (.11)

                                     F-22
<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
                                1998          1997          1996
Current:                                         
  Domestic                  $4,241,000    $3,545,000    $1,737,000
  Foreign                       19,000        44,000        38,000
                             4,260,000     3,589,000     1,775,000
Deferred expense (benefit):
  Domestic                     379,000       475,000      (830,000)
Total deferred expense   
  (benefit)                    379,000       475,000      (830,000)
                            $4,639,000    $4,064,000     $ 945,000

The components of deferred tax assets and liabilities are as follows:
 
                                            December 31,
                                        1998          1997
Deferred tax assets:                       
  Deferred rent                      $515,000      $528,000
  Allowances for doubtful accounts    243,000       150,000
                                      758,000       678,000
Deferred tax liabilities:                  
  Depreciation                       (113,000)      (29,000)
  Intangibles                        (468,000)      (51,000)
  Cash to accrual adjustments        (336,000)     (172,000)
  Other                               (45,000)            -
                                     (962,000)     (252,000)
                                    $(204,000)     $426,000

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

                                    F-23
<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
                              1998        1997        1996
                                                 
Statutory rate                 34%         34%         34%
State and local income taxes   
 (net of federal tax benefit)   7           6          22  
Deferred tax benefit            -           -         (21)
Other                           -           1           -
Effective tax rate             41%         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    593,000        $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                           (131,964)        2.91
Exercised                            (1,033)        2.55
Outstanding at December 31, 1997  1,729,912         3.52
Granted                             403,000         6.53
Canceled                            (40,671)        2.79
Exercised                          (124,112)        3.10
Outstanding at December 31, 1998  1,968,129         4.16
Exercisable at December 31, 1996    374,225         2.74
Exercisable at December 31, 1997    758,443         3.52
Exercisable at December 31, 1998  1,061,680         3.57

                                    F-24
<PAGE>

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

10. Stock Incentive Plan (continued)

Options   generally  vest  equally  over  3  years.  Options
outstanding  as  of December 31, 1998 have  exercise  prices
ranging from $2.50 to $9.88 per share.

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
under the fair value method of SFAS 123. The fair value  for
these  options  was estimated at the date of grant  using  a
Black-Scholes  option  pricing  model  with  the   following
weighted-average assumptions for 1998, 1997 and 1996:

                            1998        1997        1996
Assumptions                                      
Risk-free rate             5.30%          5.65%     6.6%
Dividend yield                0%             0%       0%
Volatility factor of                             
 the expected market                             
 price of the Company's      .76           .62      .50
 common stock
Average life             5 years       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
options  have  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.

                                    F-25
<PAGE>

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

11. Stock-Based Compensation (continued)

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

                                    Year ended December 31
                               1998          1997          1996
Pro forma net income                             
 (loss) available for                            
 common stockholders     $3,694,000    $2,112,000     $(897,000)
Pro forma earnings                               
 (loss) per share:
   Basic                 $      .37    $      .29     $    (.18)
Diluted                  $      .32    $      .21     $    (.18)

The  weighted  average fair value of options granted  during
the  years ended December 31, 1998, 1997 and 1996 was $4.26,
$1.84   and   $1.32,  respectively.  The  weighted   average
remaining   contractual  life  of  options  exercisable   at
December 31, 1998 is 7.2 years.

12. Commitments and Contingencies

The Company leases office space under operating leases which
expire through 2012. 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 2003.

Future  minimum lease payments at December 31,  1998,  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:

                                   F-26
<PAGE>

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

12. Commitments and Contingencies (continued)

                                     Capital     Operating
                                      Leases       Leases
                                           
1999                              $  491,000     $2,178,000
2000                                 422,000      2,186,000
2001                                 266,000      2,279,000
2002                                 102,000      2,044,000
2003                                  52,000      1,702,000
Thereafter                                 -      7,829,000
Total minimum lease payments       1,333,000    $18,218,000
Less amounts representing interest   162,000      
Present value of net minimum               
  lease payments                   1,171,000
Less current portion                 416,000      
Long-term portion                 $  755,000  

Included in property and equipment at December 31, 1998  and
1997 are assets recorded under capital leases with a cost of
$1,656,000   and  $756,000,  respectively,  and  accumulated
depreciation  and  amortization of  $332,000  and  $140,000,
respectively. Amortization of assets recorded under  capital
leases is included with depreciation expense.

Rent  expense, including escalation charges, for  the  years
ended  December 31, 1998, 1997 and 1996 was $1,912,000  (net
of sublease income of $538,000), $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, results of operation or cash  flows
of the Company if disposed of unfavorably.

                                    F-27
<PAGE>

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

13. Retirement Plan

The Company has a 401(k) plan covering substantially all its
domestic  employees. The plan does not  require  a  matching
contribution by the Company.

14.  Segment Information

Major Customers

For the year ended December 31, 1998, one customer accounted
for  14%  of revenues from continuing operations.   For  the
year ended December 31, 1997, another customer accounted for
10%  of  revenues from continuing operations. For  the  year
ended December 31, 1996, another customer accounted for  11%
of revenues from continuing operations.

Geographic Information

For  the  years ended December 31, 1998, 1997 and 1996,  the
Company  derived  substantially all  of  its  revenues  from
businesses  located  in  the United  States,  and  no  other
country  accounted  for  more  than  10%  of  the  Company's
revenues.

Business Segments

The  Company  classifies its business into  two  fundamental
areas,  staffing and executive search. Staffing consists  of
the  placement  and  payrolling of temporary  and  permanent
office,  clerical  and  information technology  professional
personnel.  Executive search focuses on  placing  middle  to
upper level management positions.

The  Company  evaluates performance based on  the  segments'
profit   from   operations  before   unallocated   corporate
overhead. The accounting policies of the reportable segments
are   the  same  as  those  described  in  the  summary   of
significant accounting policies (see Note 2).

                                    F-28
<PAGE>

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

14. Segment Information (continued)

Business Segments (continued)

                                             Executive      
                                 Staffing     Search        
Year ended December 31, 1998     Services    Services       Total
                                              
Revenues                     $271,518,000  $19,785,000  $291,303,000
Depreciation and         
  amortization                  2,694,000      258,000     2,952,000    
Interest expense                4,107,000        6,000     4,113,000
Interest income                   (26,000)     (43,000)      (69,000)
Segment income from                           
  continuing operations before                       
  before income tax expense     8,654,000    4,509,000    13,163,000
Income tax expense              3,609,000    1,880,000     5,489,000
Segment income from                           
  continuing operations and                        
  before extraordinary item     5,045,000    2,629,000     7,674,000
Extraordinary loss             (1,557,000)           -    (1,557,000)
Segment profit                  3,488,000    2,629,000     6,117,000
Segment assets                106,636,000   19,602,000   126,238,000
Expenditures for long      
  lived assets                  1,493,000      266,000     1,759,000

     
                                             Executive
                                 Staffing      Search     
Year ended December 31, 1997     Services     Services        Total
                                              
Revenues                     $125,316,000  $17,526,000  $ 142,842,000
Depreciation and         
  amortization                  1,225,000      228,000      1,453,000
Interest expense                2,004,000       12,000      2,016,000
Interest income                         -      (20,000)       (20,000)
Segment income from                           
  continuing operations                        
  before income tax expense     2,858,000    3,754,000      6,612,000
Income tax expense              1,334,000    1,752,000      3,086,000
Segment profit                  1,524,000    2,002,000      3,526,000
Segment assets                 48,332,000   15,416,000     63,748,000
Expenditures for long     
  lived assets                    541,000      154,000        695,000

                                    F-29
<PAGE>

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

14. Segment Information (continued)

Business Segments (continued)

                                              Executive      
                                 Staffing       Search        
Year ended December 31, 1996     Services      Services         Total
                                              
Revenues                       $37,082,000   $16,307,000     $ 53,389,000
Depreciation and amortization      344,000       170,000          514,000
Interest expense                   669,000       189,000          858,000
Interest income                          -       (13,000)         (13,000)
Segment income from continuing                          
  operations before income tax
  expense                          447,000     2,822,000        3,269,000
Income tax expense                 264,000       986,000        1,250,000
Segment profit                     183,000     1,836,000        2,019,000
Segment assets                  17,632,000    10,629,000       28,261,000
Expenditures for long    
  lived assets                      58,000       109,000          167,000
 
                                       
                                       
                                               Year ended December 31
Reconciliation to net income               1998         1997          1996
                                              
Total profit for reportable segments  $ 6,117,000   $3,526,000     $2,019,000
Unallocated amounts:                          
  Gain on sale of investment              901,000    4,272,000              -
  Interest expense                       (402,000)    (646,000)      (230,000)
  Interest income                          83,000       84,000         78,000
  Corporate overhead                   (2,487,000)    (453,000)      (426,000)
  Loss from operations of                      
   discontinued segment                         -   (2,999,000)      (564,000)
  Income tax (expense) benefit            850,000     (978,000)       305,000
Net income                             $5,062,000   $2,806,000     $1,182,000

                                   F-30
<PAGE>

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

14. Segment Information (continued)

Business Segments (continued)

                                       
                                       
                                                 December 31
Reconciliation to total assets        1998          1997          1996
                                                   
Total assets for reportable
  segments                     $126,238,000    $63,748,000    $28,261,000
Other assets                        708,000      3,588,000      6,408,000
Total assets                   $126,946,000    $67,336,000    $34,669,000


15. 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 was accounted
for  as  a discontinued operation and the 1996 statement  of
operations  were 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.

                                   F-31
<PAGE>

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

16. 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 met 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 in 1997. The  shares  receivable
were included in other assets as of
December  31,  1997.   In May 1998,  the  Company  sold  its
remaining  investment in Incepta and recognized  a  gain  of
approximately $901,000.

                                    F-32
<PAGE>

       SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                              
     Headway Corporate Resources, Inc. and Subsidiaries
                              
                      December 31, 1998
                              
                              
                              
                                                                    
                                                                    
   COL. A           COL. B            COL. C          COL. D       COL. E
                                       Additions                      
                                                        
                   Balance at    Charged to  Charged               Balance at
                   Beginning     Costs and   to Other              End of
  Description      of Period     Expense     Accounts  Deductions  Period 
                                                                    
                                                                    
Year Ended December                                               
31, 1998:
 Deducted from asset                                              
 account 
  Allowance for
  doubtful accounts  $371,000      427,000        -     205,000    $593,000
                                                                     
                                                                     
Year Ended December                                               
31, 1997:
  Deducted from  asset                                               
  account
   Allowance for             
   doubtful accounts  $122,000     249,000        -          -     $371,000
                                                                     
                                                                     
Year Ended December                                               
31, 1996:
  Deducted from  asset                                               
  account
   Allowance for      
   doubtful accounts   $     -     122,000        -           -    $122,000
                                                                    
                                  F-33
<PAGE>