<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                    FORM 10-Q


(Mark One)
|X|      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

                                       OR

|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ___________________ to ________________________

Commission File Number: 1-13002


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


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

1719A Route 10, Suite 300, Parsippany, NJ               07054
-----------------------------------------               ----------
(Address of principal executive offices)                (Zip Code)

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

                                 Not Applicable

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

              (Former name, former address and former fiscal year,
                         if changed since last report)


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 |_|

As of April 30, 2001 there were 17,647,030 shares of the Registrant's Common
Stock outstanding.

<PAGE>

                          INDEX TO FINANCIAL STATEMENTS
                AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES


Part I   Financial Information:

Item 1 - Financial Statements
  Consolidated Balance Sheets at March 31, 2001 and December 31, 2000 .......  3
  Consolidated Statements of Operations for the Three Month Periods
    ended March 31, 2001 and 2000............................................  4
  Consolidated Statements of Cash Flows for the Three Month Periods
    ended March 31, 2001 and 2000............................................  5
  Notes to Consolidated Financial Statements.................................  6

Item 2 - Management's Discussion and Analysis of Financial Condition
         and Results of Operations........................................... 12

Item 3 - Quantitative and Qualitative Disclosures About Market Risks......... 19


Part II  Other Information:

Item 1 - Legal Proceedings................................................... 20

Item 2 - Changes in Securities and Use of Proceeds........................... 20

Item 3 - Default Upon Senior Securities...................................... 20

Item 4 - Submission of Matters to a Vote of Security Holders................. 20

Item 5 - Other Information................................................... 20

Item 6 - Exhibits and Reports on Form 8-K.................................... 21

Signatures................................................................... 22


                                        2
<PAGE>


AQUIS COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE INFORMATION)

<TABLE>
<CAPTION>
                                                                                                           March 31,       December
                                                                                                                              31,
                                                                                                             2001            2000
                                                                                                           --------        --------
<S>                                                                                                        <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents ........................................................................       $    452        $    378
  Accounts receivable (net of allowances of $1,958 and $1,929, respectively) .......................          4,068           4,912
  Inventory, net ...................................................................................            285             228
  Prepaid expenses and other current assets ........................................................            784             426
                                                                                                           --------        --------


      Total current assets .........................................................................          5,589           5,944
Property and equipment, net ........................................................................          8,752           9,954
Intangible assets, net .............................................................................          6,347           6,976
Deferred charges and other assets ..................................................................            237             264
                                                                                                           --------        --------


        Total assets ...............................................................................       $ 20,925        $ 23,138
                                                                                                           ========        ========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities of long term debt .............................................................       $ 28,054        $ 27,857
  Notes payable ....................................................................................          2,000           2,000
  Accounts payable .................................................................................          5,450           5,947
  Accrued expenses .................................................................................          1,818           1,081
  Deferred revenue .................................................................................            806             846
  Customer deposits ................................................................................            349             380
                                                                                                           --------        --------


      Total current liabilities ....................................................................         38,477           38,111

Long term debt .....................................................................................             --              --
                                                                                                           --------        --------


Total liabilities ..................................................................................         38,477          38,111
                                                                                                           --------        --------


Commitments and contingencies

7.5% Redeemable Preferred Stock, $0.01 par value, 100,000 shares authorized, 15,000 shares
  issued at March 31, 2001 and December 31, 2000 ...................................................          1,631           1,603
                                                                                                           --------        --------

Stockholders' equity:
  Common stock, $0.01 par value, 75,000,000 shares authorized, 17,647,030 and 17,611,030
  issued and outstanding at March 31, 2001 and December 31, 2000, respectively .....................            176             176
  Additional paid-in capital .......................................................................         18,148          18,211
  Accumulated deficit ..............................................................................        (37,457)        (34,913)
  Note receivable from stockholder .................................................................            (50)            (50)
                                                                                                           --------        --------


  Net stockholders' equity .........................................................................        (19,183)        (16,576)
                                                                                                           --------        --------


        Total liabilities and stockholders' equity .................................................       $ 20,925        $ 23,138
                                                                                                           ========        ========
</TABLE>


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


                                        3


<PAGE>


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

<TABLE>
<CAPTION>

                                                   Three Months Ended March 31,
                                                      2001             2000
                                                  ------------     ------------
<S>                                               <C>              <C>
Revenues:
  Paging services, rent and maintenance ......    $      5,089     $      7,966
  Equipment sales ............................             131              145
                                                  ------------     ------------


       Total revenues ........................           5,220            8,111
                                                  ------------     ------------


Operating expenses:
  Cost of paging services ....................           2,255            3,996
  Cost of equipment sold .....................             167              156
  Selling and marketing ......................             583            1,046
  General and administrative .................           1,352            2,127
  Depreciation and amortization ..............           2,218            2,541
  Provision for doubtful accounts ............             223              296
                                                  ------------     ------------
       Total operating expenses ..............           6,798           10,162
                                                  ------------     ------------
Operating loss ...............................          (1,578)          (2,051)
Interest expense, net ........................            (966)            (810)
Gain on sale of equipment ....................              --               19
                                                  ------------     ------------
Net loss .....................................          (2,544)          (2,842)

Preferred stock dividends ....................             (28)             (19)
                                                  ------------     ------------
Loss attributable to common stockholders .....    $     (2,572)    $     (2,861)
                                                  ============     ============


NET LOSS PER COMMON SHARE:
  Basic and diluted ..........................    $      (0.15)    $      (0.17)
Weighted average common shares outstanding ...      17,629,000       16,791,000
</TABLE>


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


                                        4
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                              Three Months Ended
                                                                                                   March 31,
                                                                                                2001       2000
                                                                                              -------    -------
<S>                                                                                           <C>        <C>
Cash flows from operating activities:
  Net loss ................................................................................   $(2,544)   $(2,842)
  Adjustments to reconcile net loss to net cash provided by/(used by) operating activities:
  Depreciation and amortization ...........................................................     2,218      2,541
  Amortization of deferred financing costs ................................................        --         49
  Stock-based compensation ................................................................         6        693
  Provision for doubtful accounts .........................................................       223        296
   Gain on sale of property and equipment .................................................        --        (19)
   Changes in assets and liabilities, net of business acquisitions:
     Accounts receivable ..................................................................       619     (1,024)
     Inventory ............................................................................      (358)      (371)
     Prepaid expenses and other current assets ............................................      (396)       (20)
     Accounts payable and accrued expenses ................................................       490       (189)
     Deferred revenues and customer deposits ..............................................       (71)        89
                                                                                              -------    -------
  Net cash provided by (used by) operating activities .....................................       187       (797)
                                                                                              -------    -------
Cash flows from investing activities:
  Business acquisitions ...................................................................        --     (2,318)
  Acquisition of property, equipment and licenses .........................................      (160)      (272)
  Deferred business acquisition costs .....................................................        --         (7)
  Acquisition escrow deposits refunded ....................................................        --        200
  Sale of property and equipment ..........................................................       140         95
                                                                                              -------    -------
  Net cash used by investing activities ...................................................       (20)    (2,302)
                                                                                              -------    -------
Cash flows from financing activities:
  Issuance of long term debt ..............................................................        --      2,450
  Proceeds from stock options exercised, net ..............................................        --        377
  Repayment of long term debt .............................................................       (53)        --
  Repayment of capital lease obligation ...................................................        --        (70)
  Deferred financing and stock registration costs .........................................       (40)      (155)
                                                                                              -------    -------
  Net cash (used by) provided by financing activities .....................................       (93)     2,602
                                                                                              -------    -------
Net increase (decrease) in cash and cash equivalents ......................................        74       (497)
Cash and cash equivalents - beginning of period ...........................................       378        973
                                                                                              -------    -------
Cash and cash equivalents - end of period .................................................   $   452    $   476
                                                                                              =======    =======
</TABLE>


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

                                      5
<PAGE>


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


1.  ORGANIZATION AND DESCRIPTION OF THE BUSINESS:

         Aquis Communications Group, Inc. (the "Company") is a holding company,
incorporated in the State of Delaware. Through its operating companies, it
operates three regional paging systems providing one-way wireless alpha and
numeric messaging services in portions of sixteen states principally in the
Northeast and Mid-Atlantic regions of the United States, as well as the District
of Columbia. The Company entered the Midwestern region through a purchase of
targeted paging assets completed on January 31, 2000. Aquis also resells
nationwide and regional services, offers alpha dispatch, news and other
messaging enhancements. Its customers include individuals, businesses,
government agencies, hospitals and resellers.

         On March 31, 1999, Paging Partners Corporation merged with Aquis
Communications, Inc. ("ACI", incorporated in late 1997 and first capitalized in
January 1998) in a transaction accounted for as a reverse acquisition with ACI
as the accounting acquirer. At that time, Paging Partners changed its name to
Aquis Communications Group, Inc. (the "Company"). Prior to that merger, on
December 31, 1998, ACI acquired the net assets of Bell Atlantic Paging, Inc.
("BAPCO" or the "Predecessor Company"), prior to which it had no operating
activities.

         The accompanying unaudited consolidated financial statements include
the accounts of the Company and its subsidiaries, and reflect the merger with
Paging Partners Corporation ("Paging Partners") for both periods presented.
These statements also include the acquisition of the net assets of BAPCO on
December 31, 1998, the acquisition of SunStar Communications, Inc. in June 1999,
and the purchase of paging assets of SourceOne Wireless in January 2000 and
Suburban Paging in May 2000. The sale of the Internet assets on August 31, 2000
is also reflected. These acquisitions have been accounted for under the purchase
method of accounting. The accompanying statements reflect all adjustments
considered necessary by management to present fairly the consolidated financial
position as of March 31, 2001 and December 31, 2000, and the consolidated
results of operations and the related consolidated cash flows for the three
months ended March 31, 2001 and 2000. The balance sheet for the end of the
preceding fiscal year has been derived from the Company's audited balance sheet
at December 31, 2000 contained in the Company's Form 10K and is provided for
comparative purposes. All other financial statements are unaudited. In
management's opinion, all adjustments have been made which include only normal
recurring adjustments necessary to fairly present the financial position,
results of operations and changes in cash flows for all periods presented. All
material intercompany accounts and transactions have been eliminated in
consolidation. The results of operations for the interim periods presented are
not necessarily indicative of the results to be expected for the full year.
Certain prior period amounts have been reclassified to conform to the current
period presentation.

         Footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been omitted in
accordance with the published rules and regulations of the Securities and
Exchange Commission. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Form
10K for the most recent fiscal year.

         Aquis' consolidated financial statements as of and for the three months
ended March 31, 2001 and as of December 31, 2000 have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. Aquis incurred losses of about
$2.6 and $2.8 million for the three months ended March 31, 2001 and 2000,
respectively, and $23.7 and $10.9 million during each of the years ended
December 31, 2000 and 1999, respectively. These results have caused it to be in
default of its agreement with its senior lender, and in January 2001 the Company
failed to make a required principal repayment of $514 and another payment of the
same total was not paid as scheduled for April 1, 2001. Further, Aquis has made
none of the monthly interest payments required for any period subsequent to
December 31, 2000. Aquis is required to pay that senior lender $2,886 of loan
principal during the twelve months ended March 31, 2002 and a $2,000 note
payable to AMRO International matures in October 2001, unless it is sooner
converted to common stock, or demand for payment is made as a result of Aquis'
default, at AMRO's election. The Company is further obligated to pay minimum
lease payments under non-cancelable leases during 2001 in the approximate amount
of $7,262, and, on January 31, 2002, is required to redeem its 7.5% Redeemable
Preferred Stock under which the total obligation was $1,631 at March 31, 2001.
The Company's principal source of liquidity at March 31, 2001 included cash and
cash equivalents of about $452. At March 31, 2001, Aquis' reported a working
capital deficit of $32,888, primarily the result of the reclassification of its
term debt to currently payable. These factors raise substantial doubt about the
Company's ability to continue as a going concern, and the auditors' opinion on
Aquis' financial statements as of and for the year ended December 31, 2000 is
qualified as the result of these conditions.

<PAGE>

         In October 2000, NASDAQ notified Aquis that its securities would be
de-listed from the NASDAQ SmallCap Market. Aquis common stock subsequently began
trading on the OTC Bulletin Board under the symbol AQIS.OB. The effect of this
change in trading markets may reduce trading volume and liquidity, may diminish
the Company's ability to restructure its debt or raise additional equity, and
will impair its ability to obtain funding under the Coxton agreement as
currently written.

         Aquis is in default of its loan agreements with FINOVA and AMRO
International, although neither lender has yet demanded payment of the amounts
due to them. Aquis does not expect that its current cash and equivalents and the
cash it expects to generate from operations will be sufficient to meet its
anticipated debt service, working capital and capital expenditure requirements
under its existing capital and operating structure and for the foreseeable
future. The conditions described above indicate that Aquis may not be able to
continue as a going concern. The Company's ability to continue as a going
concern is dependent on the continued forebearance of its lenders from demanding
immediate payment of their outstanding loans, its ability to generate sufficient
cash from operations to meet operating obligations, aside from those under its
debt agreements, in a timely manner, continuing supplies of goods and services
from its key vendors, and an ongoing ability to limit or reduce operating costs
and capital requirements. In the event that demand is made for payment of the
outstanding debt, Aquis does not believe that its resources will be sufficient
to meet such a demand, and the Company would consider appropriate responses
which could include filing a request for protection under the US Bankruptcy
Code.

         The Company has signed a forbearance agreement with AMRO, under which
AMRO has agreed to refrain from making an immediate demand for payment of all
outstanding amounts due for up to 180 days from the date thereof. In connection
with that agreement, Aquis has begun to work with a financial consultant
specializing in the management of distressed businesses. With these arrangements
in place, Aquis its continuing its negotiations with FINOVA for a forbearance
agreement related to its senior loan, and is beginning to finalize business
plans intended to improve its financial performance and its ability to pay its
lenders. These multi-faceted plans include staff and salary reductions through
targeted cutbacks, normal attrition, and compensation adjustments. Also included
are marketing strategies intended to exploit the marketing opportunities in
one-way paging resulting from the refocusing of many of its paging industry
competitors on two-way and other advanced services. Technical operations
improvement plans include financial savings available through strategically
targeted network consolidations involving co-locating some of its low- and
high-band communications equipment, and finalization of reciprocal compensation
agreements currently being negotiated with some of Aquis' communications
facilities providers. With these consolidations, sales of network equipment that
becomes non-essential are also planned, as are closure of targeted non-core
remote sales offices. These initiatives, if successful, are expected to allow
Aquis pay down amounts due to its general creditors, to invest in paging
equipment in sufficient amounts to meet the demands of its target markets, and
to resume debt service payments, on a small scale, to its lenders. However, it
is not likely, without receipt of significant proceeds from the note receivable
due from SunStar, that these initiatives can be executed as currently planned.
Even with collections against that note, management can offer no assurance that
these plans will be successful to the degree that may be required by its
creditors or to the extent necessary to ensure its ability to continue as a
going concern.

2.   MERGERS, ACQUISITIONS AND DISPOSITIONS:

SunStar Communications, Inc.:

         On June 15, 1999, a wholly-owned subsidiary of Aquis entered into a
Stock Purchase Agreement (the "Agreement") with SunStar Communications, Inc.
("SunStar"), an Arizona corporation and SunStar One, LLC, an Arizona limited
liability company. SunStar provides secure Internet services over an intelligent
private network, provides dial-up Internet access services to corporate and
individual subscribers and can provide enhanced security standards for user
authentication. Total consideration paid for all of the outstanding stock of
SunStar was $275 cash and 1,150,000 shares of the Company's common stock valued
at their fair market value based on the average daily closing prices a few days
before and a few days after the terms of the acquisition were agreed upon and
announced. The aggregate purchase price totaled approximately $2,130 including
transaction costs and assumed liabilities and has been allocated to the net
assets acquired based on their estimated fair market values on the closing date
of this transaction, June 30, 1999, based on the purchase method of accounting.
Intangible assets of approximately $2,066 were amortized on a straight-line
basis over three to 10 years until August 31, 2000, at which time Aquis sold
these operations.

Effective on August 31, 2000 Aquis sold its Internet operations to a private
group headed by the CEO and a Director of Aquis, along with the President of
that operating subsidiary. At that time, the net assets totaled $1,400 net of
$650 of current liabilities and included licenses, other intangibles and
customer receivables. Including those assumed current liabilities, the purchase
price was $2,966. Cash of $987 was received along with a 10% note maturing on
December 31, 2000 in the face amount of $1,329 in consideration of the non-cash
portion of the purchase price. The maturity date of this note was extended by
the parties to March 31, 2001. The independent members of Aquis' Board of
Directors are in discussions with the buyers concerning an additional short-term

<PAGE>

extension of the note. The buyers have been requested to provide additional
information about the financial performance of the Internet business since the
date they acquired it and the expected source of funding for the payment of that
note. This information is intended to satisfy the board that payment can be made
within the extension period before further extension is granted. A payment of
$25 was received on May 8, 2001 in connection with this outstanding balance.
Revenues and expenses realized from Internet operations totaled $134 and $381,
respectively, during the three months ended March 31, 2000, and those losses
contributed to the decision to sell this operation.

SourceOne Wireless:

         On January 31, 2000, the Company completed the acquisition of certain
assets of SouceOne Wireless, a facilities-based provider of one-way paging
services to subscribers in several Midwestern states. Previously, on August 2,
1999, the Company entered into an Asset Purchase Agreement (the "Purchase
Agreement") and Agreement Pending Purchase Closing (the "Agreement") with
SourceOne Wireless, Inc. and two of its affiliates ("SOWI"). SOWI and its
affiliates filed voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Court in the Northern District of Illinois between April 29
and July 2, 1999. Pursuant to the Agreement, the Company managed the day-to-day
operations of certain SOWI businesses pending the closing of the associated
Purchase Agreement. This closing was subject to various approvals, including
that of the Bankruptcy Court and the FCC. During the management period, a
reduction of the purchase price to $3,750 was negotiated, and resulted in a
reduced price of $2,250 in cash and 15,000 shares of the Company's 7.5%
cumulative preferred stock valued at $1,500 as agreed among the parties.
Acquisition costs totaling about $502 were deferred at December 31, 1999, and is
treated as a cost of the assets acquired on January 31, 2000. The aggregate
purchase price, including transaction costs, totaled approximately $4,500, and
this purchase was accounted for under the purchase method of accounting. Costs
to acquire the assets of SourceOne Wireless were capitalized at December 31,
1999, including an escrow deposit of $200, since this transaction was closed on
January 31, 2000. The revenues and expenses realized from the operations of
these net assets are included in the Company's results of operations from the
date of acquisition.

         If the acquisition of SourceOne assets had occurred on January 1, 2000,
the proforma results for the three months ended March 31, 2000 would have
included total revenue approximating $8,529, a net loss attributable to common
shareholders of $2,945 and a net loss per common share of $0.18. These proforma
results are based on various assumptions and are not necessarily indicative of
what would have occurred had these transactions been consummated on January 1,
2000.


3. INTANGIBLE ASSETS

         Aquis reviews its assets for impairment when events or changes in
circumstances indicate that such costs may not be recoverable in the normal
course of business. Accordingly, as a result of the Company's ongoing losses,
its forecast for continuing losses, and its default under its loan agreements as
described in more detail elsewhere herein, Aquis recognized a charge for
impairment of the carrying value of its FCC licenses and State certificates in
the amount of $9,500,000 at December 31, 2000. The amount of the loss was based
on the amount of the estimated annual cash flows through December 31, 2008
discounted to net present value using a discount rate of 20%. The resulting
adjusted carrying value is believed by management to approximate the realizable
value of these assets. Amortization expenses for the three months ended March
31, 2001, as a result of this write down, have declined accordingly.

4.  DEFERRED CHARGES:

         Deferred financing costs of $1,648 were written off during the year
ended December 31, 2000 as the result of the Company's default under its loan
agreements and its lenders' rights to make demand for payment of outstanding
balances due to them.

5.  LONG-TERM DEBT:

         On October 23, 1998, ACI entered into a five-year term loan agreement
(the "Senior Loan Agreement") with FINOVA Capital Corporation ("FINOVA")
structured to provide a $30,000 credit facility. That agreement specified a term
of five years, and required graduated increasing quarterly principal repayments
ranging from .5% to 3.5% of outstanding principal beginning on July 1, 2000,
with the balance due on December 31, 2003. Loan interest was set at a rate based
on Citibank, N.A.'s corporate base rate plus 175 basis points. The Company may
also elect to have interest on a part of the FINOVA loan based on a London
Inter-Bank Official Overnight Rate plus 450 basis points. This term loan is
collateralized by all of the Company's assets, presently owned and acquired
subsequently, and all issued and outstanding equity interests in the Company's
operating subsidiaries. The loan agreement also contains various covenants,
including restrictions on capital expenditures and compliance with certain

<PAGE>

financial ratios. At December 31, 2000 and 1999, the Company was not in
compliance with certain ratios under this loan agreement.

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

         On January 26, 2000, the FINOVA loan was amended in connection with the
SourceOne Wireless acquisition. The Company borrowed an additional $2,450 from
FINOVA on January 31, 2000 to consummate the acquisition (the "SourceOne
Portion"). The effect of the amendment was to limit the facility to the amount
outstanding after the SourceOne transaction, or a total of $27,765, to modify
certain financial ratios and to set the interest rate on the SourceOne Portion
to Citibank, N.A.'s corporate base rate plus 400 basis points. Aquis and FINOVA
further amended this agreement on April 12, 2000 in order to waive the Company's
covenant non-compliance at December 31, 1999, to reduce the financial ratio
requirements through the third quarter of 2001, and to encourage Aquis to make a
Special Prepayment of principal. That "Special Prepayment" in the amount of
$1,250 was defined and directed to be specifically applied to the SourceOne
Portion. In order to avoid an interest rate increase that was to take effect if
the Special Prepayment was not made, Aquis made this prepayment in April 2000,
using some of the proceeds of the convertible debenture acquired by AMRO
International.

         On April 10, 2000, Aquis entered into an agreement to obtain a $2
million bridge loan with AMRO International as interim funding pending
completion of additional prospective financing. The debt is subordinate to the
Company's senior debt and is unsecured. This agreement provides for an interest
rate of 11%, a scheduled maturity date on October 12, 2001 and also provides for
quarterly interest accruals and payments until the earlier of its maturity date
or conversion. At the lender's election not earlier than 120 days from the date
of funding, this loan is convertible into the Company's common stock at 90% of
the then-current market value. The cost of this beneficial conversion feature or
discount to market price, estimated at $222, was charged against results of
operations for the year ended December 31, 2000. At the Company's election,
after the initial 118 days subsequent to funding, the loan is redeemable at 115%
of face value.

         Proceeds from this loan were used during April 2000 to make the Special
Prepayment of $1,250 to FINOVA. The balance was used to pay certain fees
incurred in connection with the FINOVA loan modifications arranged during 2000,
to pay certain costs incurred in connection with this bridge loan, and for
general corporate purposes.

         As of December 31, 2000, Aquis was in default of its agreements with
FINOVA and AMRO. Neither lender has demanded repayment of the balances due,
however, neither lender has waived their right to do so. Aquis is discussing
various alternatives with these lenders, including restructuring its debt and
equity structure. We have executed a forbearance agreement with AMRO under which
it has agreed not to demand immediate payment of all outstanding amounts due or
to convert its debenture into shares of Aquis common stock. The term of that
forbearance is for a maximum period of 180 days from the April 18, 2001 date of
that agreement. However, under certain circumstances specified in that
agreement, such as the enforcement of any other party's rights against Aquis in
the event of default under another material contract, and certain other
circumstances, the termination date of that forbearance agreement may be
accelerated. In connection with that agreement, Aquis has begun to work with a
financial consultant specializing in the management of distressed businesses. On
April 2, 2001, AMRO provided written notice that it waived the provisions
contained in the debenture that limited its right to acquire a number of Aquis
shares that might cause its beneficial ownership of Aquis common stock to exceed
9.9%. This waiver, unless revoked by AMRO, is to become effective 75 days
subsequent to the date of that notification and could result in a change in
control of Aquis.

         On September 27, 2000, the Company and FINOVA agreed to modify the
terms of its Senior Loan Agreement, as amended. These modifications enabled
Aquis to retain all proceeds from the sale of its Internet operations and gave
Aquis an option to reduce the scheduled principal payment due on July 1, 2001
from $514 to $200 in exchange for payment of a fee of $75. Financial ratio
covenants related to the amount of senior and total debt outstanding and to its
debt service coverage were also relaxed from original levels through September
30, 2001. The maximum permitted leverage ratios were increased by amounts
ranging from 33% to 75% of original limits. Minimum required coverage ratios
were relaxed by 34% to 54% of original requirements. In exchange, Aquis has
agreed to pay quarterly fees of $75 if original financial ratios are not
maintained. Further, additional contingent fees of up to $250 per quarter will
be added to the principal balance due at final maturity if Aquis is unable to
meet the financial ratios as amended in April, 2000. The Company paid a fee of
$100 in order to secure these modifications. Finally, a principal payment of
$2,000 was required on or before December 31, 2000 in order to avoid the
assessment of a $500 fee and an interest rate increase of 2%. The Company did
not make that specified principal repayment of $2,000 and the related fee of
$500 was added to the principal balance otherwise payable at the maturity date
of this loan. In addition, Aquis has not made the scheduled quarterly principal
payment due on January 2, 2001 of $514, nor the payment due in April, 2001 of
the same

<PAGE>


amount. The Company and its senior lender are discussing alternatives for the
Company's failure to make the scheduled principal payments and the Company's
projected ongoing non-compliance with amended financial covenants. As the result
of the defaults under the FINOVA and AMRO agreements, all debt has been
classified as current at March 31, 2001.

         At March 31, 2001 the balance of the Senior Loan outstanding was
$26,999 and is subject to floating interest rates. Of that total, $1,200, the
SourceOne portion, carried an interest rate of 12.5% at that time. The balance
was subject to a rate of 12.25%. These rates include, as applicable an
additional 2% due to the non-payment of the specified $2,000 principal payment
due on December 31, 2000. The remaining balance of debt outstanding consisted
principally of borrowings made pursuant to the bridge loan of April 2000 and to
the Installment Loan, discussed below. If Aquis was not in default of its loan
agreements at March 31, 2001, principal maturities of outstanding debt would
have been as follows:


<TABLE>
<S>                                                                      <C>
2001 .................................................                   $ 5,341
2002 .................................................                     3,703
2004 .................................................                    21,010
                                                                         -------
                                                                         $30,054
                                                                         =======
</TABLE>


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


6. COMMON STOCK ISSUED

         During the quarter ended March 31, 2001, Aquis issued 36,000 shares of
its common stock, valued at about $.016 per share in connection with consulting
services related to its business planning efforts that were provided by an
independent business consultant.

7. NET LOSS PER COMMON SHARE:

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

8. SUPPLEMENTAL CASH FLOW DATA:

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

<TABLE>
<CAPTION>
                                                                                           March 31,
                                                                                     2001             2000
                                                                                ---------------   --------------
<S>                                                                             <C>               <C>
Cash paid for interest.......................................................            $ 295            $ 771
Cash paid for taxes..........................................................               $-               $-
Note receivable accepted as partial consideration............................               $-               $-
</TABLE>


Business Acquisitions

         During the three months ended March 31, 2001, Aquis completed no
additional business combinations. During the three months ended March 31, 2000,
Aquis purchased targeted paging assets of SourceOne Wireless and expended cash
as depicted below:

<PAGE>

<TABLE>
<CAPTION>
                                                                          March 31, 2000
                                                                         ------------------
<S>                                                                      <C>
Fair value of assets acquired.....................................                 $6,366
Liabilities assumed...............................................                 (1,807)
Exchange of common stock..........................................                    --
Exchange of preferred stock.......................................                 (1,500)
Transaction costs paid or accrued.................................                   (501)
Less: cash acquired ..............................................                   (240)
                                                                         -----------------

Net cash paid ....................................................                 $2,318
                                                                         =================
</TABLE>


9.       SUBSEQUENT EVENTS:

         The Company is in default on its senior debt covenants, did not make
the scheduled principal repayments to FINOVA of $514 due in each of January and
April 2001, and has made none of the monthly interest payments required for any
period subsequent to December 31, 2000. The Company is also in default under
terms of its agreement with AMRO International. Aquis is currently renegotiating
the terms of its senior and junior debt agreements and is seeking additional
funds to finance business operations, but a successful conclusion to these
efforts cannot be assured. See also Note 1 to these financial statements.


<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations

Forward-Looking Statements

         Future revenues, costs, product mix and new product acceptance are all
influenced by a number of factors that are inherently uncertain and difficult to
predict. Therefore, no assurance can be given that financing for such
investments will be available. In addition, no assurance can be given that the
Company's operations will generate positive cash flows.

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

Organization and Basis of Presentation

         Aquis Communications Group, Inc. is a holding company, incorporated in
the State of Delaware. Through our operating companies, we operate three
regional paging systems providing one-way wireless alpha and numeric messaging
services in portions of sixteen states principally in the Northeast, the Midwest
and the Mid-Atlantic regions of the United States, as well as the District of
Columbia. We entered the Midwestern region through a purchase of certain assets
from SourceOne Wireless, Inc. completed on January 31, 2000. We also resell
nationwide and regional services, offer alpha dispatch, news and other messaging
enhancements. Our customers include individuals, businesses, government
agencies, hospitals and resellers.

         On December 31, 1998, we began business operations with the purchase of
the paging assets of Bell Atlantic Paging, our predecessor company. On March 31,
1999, Paging Partners Corporation (incorporated in 1994), merged with our
operating company, Aquis Communications, Inc. ("ACI", incorporated in late 1997
and first capitalized in January 1998) in a transaction accounted for as a
reverse acquisition with ACI as the accounting acquirer. At that time, Paging
Partners changed its name to Aquis Communications Group, Inc. On June 30, 1999,
a wholly owned subsidiary of Aquis acquired SunStar Communications, Inc. On
January 31, 2000, we completed the acquisition of selected paging assets of
SourceOne, a Chicago-based radio common carrier. In May 2000 we acquired certain
paging assets of Suburban Paging, a regional paging services reseller
headquartered in Pennsylvania. Finally, on August 31, 2000, we sold the net
assets of our Internet services operations in order to focus our resources on
our paging operations. These matters are more fully discussed in our
consolidated financial statements and the notes thereto.

         As noted above, the Bell Atlantic paging business was acquired on
December 31, 1998, for approximately $29,200,000, including transaction costs.
The business acquired in this transaction included Bell Atlantic Paging's sales
and marketing operation and the paging network operation infrastructure owned
and operated by the Bell Atlantic Operating Telephone Companies. The acquisition
was accounted for as a purchase in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations." This transaction was financed primarily
through a $20,000,000 loan from FINOVA Capital Corporation, a $4,150,000 note
retained by the seller, and cash proceeds of $5,661,000 from a sale of preferred
stock. Aquis satisfied all its obligations under the note received by the seller
on June 30, 1999.

         Aquis' consolidated financial statements as of and for the three months
ended March 31, 2001 and for the year ended December 31, 2000 have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. We incurred losses
of about $2,572,000 and $2,861,000 for the three month periods ended March 31,
2001 and 2000, respectively, and $23,841,000 and $10,879,000 million during the
years ended December 31, 2000 and 1999, respectively. These results have caused
us to be in default of our agreements with our senior lender, and in January
2001 and April 2001 we were unable to make two required principal repayments,
each in the amount of $514,000, under that loan. Further, we have not made any
required interest payments on this debt since January 11, 2001. Aquis is
required to pay FINOVA $2,886,000 of loan principal during the 12 months ended
March 31, 2002 and a $2,000,000 note payable to AMRO International matures in
October 2001, unless it is sooner converted to common stock, or demand is made
for payment due to Aquis' default, at AMRO's election. Aquis is further
obligated to pay minimum lease payments under non-cancelable leases during 2001
in the approximate amount of $7,262,000. Our principal source of liquidity at
March 31, 2001 included cash and cash equivalents of about $452,000. At March
31, 2001, our working capital deficit totaled $32,888,000, primarily resulting
from the classification of its loan from FINOVA as a current liability due to
Aquis' default thereunder.

<PAGE>

         In October 2000, NASDAQ notified us that our securities would be
de-listed from the NASDAQ SmallCap Market. Aquis common stock subsequently began
trading on the OTC Bulletin Board under the symbol AQIS.OB. The effect of this
change in trading markets may reduce trading volume and liquidity, may diminish
our ability to restructure our debt or raise additional equity, and will impair
our ability to obtain funding under the Coxton agreement.

         We are in default of our loan agreements with FINOVA, our senior
secured lender, and AMRO International, an unsecured creditor, although neither
lender has yet demanded payment of all amounts due to them. These defaults also
cause violations of the terms of some of our operating agreements for services
provided by others to our customers. Further, Aquis does not expect that its
current cash and equivalents and the cash it expects to generate from operations
will be sufficient to meet our anticipated debt service, working capital and
capital expenditure requirements under our existing capital and operating
structure for the foreseeable future. The conditions described above indicate
that Aquis may not be able to continue as a going concern. Our ability to
continue as a going concern is dependent on the continued forbearance of FINOVA
and AMRO from demanding immediate payment of their outstanding loans, our
ability to generate sufficient cash to meet operating requirements, continuing
supplies of goods and services from our key vendors, and an ongoing ability to
limit or reduce operating costs and capital requirements. In the event that
demand is made for payment of the outstanding debt, we do not believe that our
resources will be sufficient to meet such a demand. We would consider
appropriate responses, including the filing of a request for protection under
the US Bankruptcy Code.

         We have executed a forbearance agreement with AMRO under which it has
agreed not to demand immediate payment of all outstanding amounts due or to
convert its debenture into shares of Aquis common stock. The term of that
forbearance is for a maximum period of 180 days from the April 18, 2001 date of
that agreement. However, under certain circumstances specified in that
agreement, such as the enforcement of any other party's rights against Aquis in
the event of default under another material contract, and certain other
circumstances, the termination date of that forbearance agreement may be
accelerated. In connection with that agreement, Aquis has begun to work with a
financial consultant specializing in the management of distressed businesses. On
April 2, 2001, AMRO provided written notice that it waived the provisions
contained in the debenture that limited its right to acquire a number of Aquis
shares that might cause its beneficial ownership of Aquis common stock to exceed
9.9%. This waiver, unless revoked by AMRO, is to become effective 75 days
subsequent to the date of that notification and could result in a change in
control of Aquis. With these arrangements in place, we are continuing
negotiations with FINOVA for a forbearance agreement related to its senior loan,
and we are beginning to finalize business plans intended to improve our
financial performance and our ability to pay our lenders. These multi-faceted
plans include staff and salary reductions through targeted cutbacks, normal
attrition, and compensation adjustments. Also included are marketing strategies
intended to exploit the marketing opportunities in one-way paging resulting from
the refocusing of many of our paging industry competitors on two-way and other
advanced services. Technical operations improvement plans include financial
savings available through strategically targeted network consolidations
involving co-locating some of its low- and high-band communications equipment,
and finalization of reciprocal compensation agreements currently being
negotiated with some of Aquis' communications facilities providers. With these
consolidations, sales of network equipment that becomes non-essential are also
planned, as are closure of targeted non-core remote sales offices. These
initiatives, if successful, are expected to allow us to pay down amounts due to
our general creditors, to invest in paging equipment in sufficient amounts to
meet the demands of our target markets, and to resume debt service payments, on
a small scale, to our lenders. However, it is not likely, without receipt of
significant proceeds from the note receivable due from SunStar, that these
initiatives can be executed as currently planned. Even with collections against
that note, management can offer no assurance that these plans will be successful
to the degree that may be required by our creditors or to the extent necessary
to ensure our ability to continue as a going concern.

General

         Aquis is a leading provider of paging and other wireless messaging
services and markets one-way paging service and equipment to customers directly
and through resellers. We offer our customers both customer owned and maintained
equipment or lease options for equipment.

         We generate a substantial majority of our revenue from fixed periodic
fees for paging services that are not generally dependent on usage. Usage
sensitive charges consist primarily of charges for messages exceeding the number
included in a customer's fixed monthly rate plan, fees charged to resellers for
messages sent to the resellers' subscribers over Aquis' communication network on
a per-character basis under a Telocator Networking Paging Protocol ("TNPP"), and
fees charged to a party sending a message to an Aquis-enabled pager, primarily
on a flat fee-per-message basis (referred to as "Calling Party Pays" or ("CPP").


<PAGE>


         The ability to recover initial operating, selling and marketing costs
and to achieve profitability is dependent on the average duration of each
customer's subscription period. For as long as a subscriber continues to utilize
the service, operating results benefit from the recurring fixed fee payments
without the requirement of any incremental selling expenses. Conversely,
customer disconnections adversely affect operating results. Each month a
percentage of existing customers have their service terminated for reasons
including failure to pay, dissatisfaction with service or coverage limitations,
or switching to competing service providers.

         This discussion should be read in conjunction with Aquis' consolidated
financial statements and the notes thereto.


RESULTS OF OPERATIONS-THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000

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

Units in Service

         Units in service totaled 345,000 at March 31, 2001 and 426,000 at March
31, 2000. A significant contributor to the decline was the return of about
30,000 units in April 2000 to Bell Atlantic Mobile that were not profitable to
the Company. An additional 40,000 units had been previously returned for the
same reason in December 1999. Aquis and Bell Atlantic Mobile entered into a
cancelable reseller agreement for these units in connection with the purchase of
the assets of Bell Atlantic Paging in 1998. Aquis exercised its right to cancel
that service and reduce related support activities. Including approximately
70,000 units added through the acquisitions of SourceOne and Suburban Paging, we
added a total of about 120,000 units during the 12 months ended March 31, 2001.
Our churn rates during the three months ended March 31, 2001 and 2000, were 3.5%
and 2.4%, respectively. These rates are influenced by industry trends in a
nationwide contracting paging market and our own limited ability to procure
paging units to replace those for our customers who have lost or damaged their
paging units.


Revenues

         Service revenues for the three months ended March 31, 2001 and 2000,
were $5,089,000 and $7,966,000, respectively, a decrease of approximately
$2,877,000 or about 36.1%. The decrease in service revenues was attributable to
three factors: the churn described above, continuing industry-wide pricing
pressures, and a change in the mix of direct subscriber and reseller units.
Average monthly revenue per unit during the three month periods ended March 31
was about $4.99 in 2001 and $6.56 in 2000. During the current period, the
portion of our subscriber base represented by reseller units increased from
about 59% to 63%. Resellers purchase Aquis' services in bulk and are therefore
provided rates lower than those made available to Aquis' direct subscribers. The
revenue decline was also effected by the 30,000 units returned to Bell Atlantic
Mobile in April 2000.

         Revenues from Internet operations were $134,000 during the 3 months
ended March 31, 2000. Due to the sale of those operations, no such revenues were
booked during the current period. We sold this business in August 2000 due to
sustained losses from operations that reached about $665,000 for the eight
months then ended.

         Revenues from sales of paging equipment declined slightly to $131,000
in 2001 from $145,000 in 2000. In response to consumer demand for less costly
equipment, Aquis continued marketing lower-cost units at reduced sales prices in
2001, a strategy that was implemented in 1999.

Cost of Equipment Sales

         The cost of equipment sold during the three months ended March 31, 2001
and 2000, respectively, was $167,000 and $156,000. The previously-described move
toward lower-cost pagers was offset by higher sales volumes.

Cost of Paging Services

         Cost of service consists principally of fees paid to third party
carriers, and, to a lesser extent, to message dispatch companies. Also included
are technical operating expenses. Total services costs decreased to $2,255,000
in 2001 from $3,996,000 in 2000. Declines in costs of third party paging
carriers and costs totaling $118,000 that were incurred to provide Internet
services during the earlier three month period before the sale of our Internet
assets contributed to the decline. We also


<PAGE>


lowered these costs by eliminating and consolidating some paging communications
facilities that were considered to be outside our more profitable core paging
areas, particularly those related to our Midwest operations.

         Third party carriers are utilized when a customer requires service
outside of Aquis' service area, and are most commonly used to provide nationwide
coverage. During the three months ended March 31, the costs of such paging
services decreased from $1,773,000 in 2000 to $742,000 in 2001. The decreases
are primarily attributable to the decline of the subscriber base and a
refocusing of our sales efforts on higher utilization of our own paging
infrastructure.

         Technical operating expenses include transmission site rentals,
telephone interconnect services and the costs of network maintenance and
engineering. These expenses totaled $2,105,000 and $1,513,000 during the three
month periods ended March 31, 2000 and 2001, respectively. The aforementioned
elimination and consolidation of communications facilities, including trunking
and other communications facilities provided by third party suppliers, was the
primary contributor to cost reductions in this facet of our business. Also
contributing were lower salary costs and elimination of targeted non-core leased
communications tower sites.

Sales and Marketing

         Selling and marketing expenses include the cost to acquire and retain
subscribers, operating costs associated with the sales and marketing
organization, and other advertising and marketing expenses. These costs
decreased from $1,046,000 in 2000 to $583,000 in 2001, or approximately 44%.
Cost reductions resulted from a reduction of the sales organization, and from
elimination of yellow page and other non-essential advertising media. Reduced
commissions resulting from a revised commission plan implemented late in 1999
and from fewer new units placed in service through sales channels during 2001
also lowered overall selling expenses.

 General and Administrative

         General and administrative expenses include costs associated with
customer service, field administration and corporate headquarters. These costs
decreased slightly as a percentage of service revenues to approximately 25.9% in
2001 from about 26.2% in 2000. Total costs for the three months ended March 31,
2000 included $693,000 resulting from the issuance of options pursuant an
employment agreement with a former President of Aquis. No similar costs were
incurred in 2001. Other small cost reductions were realized through elimination
of outside customer call center activities, which was enabled upon completion of
the integration of the SourceOne and Suburban customer bases, and through
reduced billing and data processing costs and costs of reduced office
facilities.

Depreciation and Amortization

         Depreciation and amortization decreased to $2,218,000 in 2001 from
$2,541,000 in the prior year three month period. Amortization of intangible
assets decreased significantly as a result of the asset impairment write down
recorded at December 31, 2000. This write down was made as the result of our
ongoing losses, our forecast for continuing losses, and our defaults under our
loan agreements. Accordingly, we recognized a provision for impairment of the
carrying value of our FCC licenses and State certificates in the amount of
$9,500,000 at December 31, 2000.

Interest Expense

         Net interest expense was $966,000 for the three months ended March 31,
2001, compared to $810,000 for the corresponding period in 2000. Gross interest
expenses increased as the result of the costs of funds borrowed to complete the
SourceOne purchase on January 31, 2000 and due to slightly higher interest rates
on our floating rate loans. Also, $250,000 was accrued as the result of the
inability to meet specified debt leverage and coverage ratios acquired in our
agreements with Finova. That debt was outstanding for the full three month
period ended March 31, 2001, as compared to two months in the year-earlier
period. Those increased costs were partially offset by additional financial
income derived from the imposition during mid-2000 of late fees and interest
assessments on non-current billings due from our subscribers.

Income Taxes

         No provision for income taxes is reflected in either period as a result
of the Company's net losses in both periods.


<PAGE>


Liquidity and Capital Resources

         We are not in compliance with debt covenants and principal repayment
requirements related to our senior debt at March 31, 2001. All of our term debt
totaling $27,743,000, including the $26,750,000 due to FINOVA under our senior
loan agreement, is classified as currently payable as a result of the defaults
under our loan agreements. That reclassification includes the $17.6 million
balloon payment due to FINOVA, originally scheduled for payment on December 31,
2003, and the other principal installments due quarterly until that date. Under
our existing agreements, we are required to pay FINOVA $2,886,000 of loan
principal during the 12 months ended March 31, 2002. We are also obligated to
pay aggregate future minimum rental commitments under non-cancelable leases in
an amount of about $7 million through 2005 and a $2,000,000 note payable to AMRO
International matures in October 2001, unless it is sooner converted to common
stock or demand is made for payment as the result of Aquis' default at AMRO's
election. We are also required to redeem all of the outstanding 7.5% Redeemable
Preferred Stock on January 31, 2002 at 100% of its stated value plus accrued
cumulative unpaid dividends; those totaled $1,631,000 at March 31, 2001.
Excluding amounts due to FINOVA and AMRO, our working capital deficit at March
31, 2001 totaled $2,895,000, and our principal source of liquidity was our cash
balances totaling about $452,000.

         Our auditors opinion on our financial statements as of and for the year
ended December 31, 2000 is qualified and states that there is substantial doubt
about our ability to continue as a going concern. We are in default of the terms
of our loan agreements with FINOVA, our senior lender, and with AMRO
International. The FINOVA debt is secured by substantially all of Aquis' assets.
These defaults result in violations of the terms of several of our other
operating agreements. If either of our lenders elected to demand repayment of
amounts due to them, we would be unable to meet those requirements with the
financial resources currently available to us. Consequently, in such an event,
we would then consider appropriate responses, including the filing of a
voluntary petition for protection under the U.S. Bankruptcy Code.

         Aquis is currently discussing debt restructuring alternatives with its
lenders, but no assurance can be given that these efforts will be successful to
the extent required in order to obtain a waiver of its defaults under any
existing, or future revised, debt agreements. We have executed a forbearance
agreement with AMRO under which it has agreed not to demand immediate payment of
all outstanding amounts due or to convert its debenture into shares of Aquis
common stock. The term of that forbearance is for a maximum period of 180 days
from the April 18, 2001 date of that agreement. However, under certain
circumstances specified in that agreement, such as the enforcement of any other
party's rights against Aquis in the event of default under another material
contract, and certain other circumstances, the termination date of that
forbearance agreement may be accelerated. In connection with that agreement,
Aquis has begun to work with a financial consultant specializing in the
management of distressed businesses. With these arrangements in place, Aquis is
continuing its negotiations with FINOVA for a forbearance agreement related to
its senior loan, and is beginning to finalize business plans intended to improve
its financial performance and its ability to pay its lenders. These
multi-faceted plans include staff and salary reductions through targeted
cutbacks, normal attrition, and compensation adjustments. Also included are
marketing strategies intended to exploit the marketing opportunities in one-way
paging resulting from the refocusing of many of its paging industry competitors
on two-way and other advanced services. Technical operations improvement plans
include financial savings available through strategically targeted network
consolidations involving co-locating some of its low- and high-band
communications equipment, and finalization of reciprocal compensation agreements
currently being negotiated with some of Aquis' communications facilities
providers. With these consolidations, sales of network equipment that becomes
non-essential are also planned, as are closure of targeted non-core remote sales
offices. Finally, collection of the proceeds of the note due to Aquis for the
sale of its internet assets may also be a key element of the plan. The March 31,
2001 due date for payment of this note has passed after having been extended
from December 31, 2000, and discussion of further extensions of time to pay is
continuing. Although Aquis has earmarked a significant portion of these proceeds
for payments to its creditors, there can be no assurance that the proceeds due
will be collected within timeframes acceptable to Aquis' creditors. These
initiatives, if successful, are expected to allow Aquis to pay down amounts due
to its general creditors, to invest in paging equipment in sufficient amounts to
meet the demands of its target markets, and to resume debt service payments, on
a small scale, to its lenders. However, it is not likely, without receipt of
significant proceeds from the note receivable due from SunStar, that these
initiatives can be executed as currently planned. Even with collections against
that note, management can offer no assurance that these plans will be successful
to the degree that may be required by its creditors or to the extent necessary
to ensure its ability to continue as a going concern. We believe that our
business plan as a niche one-way paging carrier in an industry that is moving
toward other communications services is sound, yet our ability to execute this
plan is heavily dependent on the factors noted above which are largely beyond
our unilateral control.

Regardless of our lenders' election regarding demand for payment of outstanding
amounts due to them on an accelerated basis, we require substantial cash to meet
scheduled principal repayments and minimum lease payments as noted above.
Further, not later than January 31, 2002, we are required to redeem the
preferred stock outstanding in the face amount of $1,500,000 plus any cumulative
unpaid dividends, which totaled $131,000 at March 31, 2001. Interest costs
associated with our senior debt and our bridge loan alone reached almost
$3,200,000 during the year ended December 31, 2000 and such costs are expected
to equal or exceed that total in 2001. Cash provided by operations during 2001
are not expected to be sufficient to satisfy these requirements as we are
currently structured. Finally, funding would also be required to finance the
growth of existing operations and customer base, to expand into new markets and
to make strategic acquisitions in the event that we pursue opportunities that
might become available in the future. Availability of funding for these purposes
can not be assured and may not be economically viable if available given our
existing debt requirements.

         Aquis' operations used about $797,000 of net cash during the three
months ended March 31, 2000, while operating activities provided net cash of
$248,000 for the same period of 2001. Cash generated by operations during the
current period was used to fund pager purchases of $358,000 and to reduce
payables to key vendors. During 2000 the primary use of operating cash was to
fund the growth of paging subscriber receivables, purchase paging and other
operating equipment and to complete our purchase of assets from SourceOne
Wireless. The need to reduce certain outstanding accounts payables to vendors
was influenced by the declining telecommunications markets, and the failures of
PageNet, and then TSR Wireless late in the year ended December 31, 2000.

               During the three months ended March 31, 2000, we used net cash of
$2,318,000 in connection with the acquisition of assets from SourceOne. An
additional $272,000 of expenditures were made for the purchase of network and
data processing equipment. No business combinations were effected in 2001 and
capital equipment expenditures were limited to $160,000.

         During the three months ended March 31, 2001, cash totaling $154,000
was used for financing activities, primarily to pay down certain installment
debt and notes. During the year-earlier period, net cash was provided by
financing activities totaling $2,602,000. We borrowed $2,450,000 to complete the
SourceOne transaction and to pay down the FINVOA installment debt. We also
realized net cash from the exercise of stock options totaling $377,000.
Expenditures were also made during this period of 2000 for debt and equity
financing related costs.

         On September 27, 2000, Aquis agreed with FINOVA to modify certain terms
of its existing Senior Loan Agreement. These modifications permit Aquis to
retain all proceeds from the sale of its Internet operations and gives Aquis an
option to reduce the scheduled principal payment due on July 1, 2001 from
$514,000 to $200,000 in exchange for payment of a fee of $75,000. Financial
ratio covenants related to the amount of senior and total debt outstanding and
to its debt service coverage were also relaxed from original levels through
September 30, 2001. The maximum permitted leverage ratios were increased by
amounts ranging from 33% to 75% of original limits. Minimum required coverage
ratios were relaxed by 34% to 54% of original requirements. In exchange, Aquis
has agreed to pay quarterly fees of $75,000 if original financial ratios are not
maintained. Further, additional contingent fees of up to $250,000 per quarter
will be added to the principal balance due at final maturity if Aquis is unable
to meet the financial ratios as amended in April, 2000.

         Finally, a principal payment of $2,000,000 was required on or before
December 31, 2000 in order to avoid the assessment of a $500,000 fee and an
interest rate increase of 2% which, at existing debt levels, will increase debt
service costs by $44,000 per month. Aquis has not made this $2,000,000 principal
payment and has not made either of the $514,000 principal payments scheduled for
January 2, or April 1, 2001. In addition, the Company was also not in compliance
with a debt service coverage requirement at December 31, 2000. Aquis and FINOVA
are currently discussing alternative remedies for failure to make the January 2,
2001 payment and Aquis' projected non-compliance with amended financial
covenants established for December 31, 2001. As a result of the non-payment of
the principal installment of $514,000 on January 2, 2001 and the debt service
coverage ratio violation at December 31, 2000, FINOVA has the right to demand
payment in full of the outstanding debt, although it is not obligated to do so.
In addition, Aquis has not paid interest costs related to this Senior Debt
incurred after December 31, 2000. FINOVA has not exercised its right to demand
immediate payment of the entire amount of the outstanding Senior Loan and Aquis
and FINOVA are currently discussing alternatives and remedies. Should FINOVA
elect to demand immediate payment of amounts due, Aquis' existing resources will
be insufficient to satisfy the repayment obligation.

         In October 2000, NASDAQ notified Aquis that its securities would be
de-listed from the NASDAQ SmallCap Market. Aquis common stock subsequently began
trading on the OTC Bulletin Board under the symbol AQIS.OB. The effect of this
change in trading markets may reduce trading volume and liquidity, may diminish
the Company's ability to restructure its debt or raise additional equity, and
will impair its ability to obtain funding under the Coxton agreement.

         The Company does not expect that its current cash and equivalents and
the cash it expects to generate from operations will be sufficient to meet its
anticipated debt service, working capital and capital expenditure requirements
under its existing capital and operating structure and for the foreseeable
future. The conditions described above indicate that Aquis may not be able to
continue as a going concern. The Company's ability to continue as a going
concern is dependent on the continued forbearance of its lenders from demanding
immediate payment of their outstanding loans, its continuing ability to generate
sufficient cash from operations to meet obligations, aside from those under its
debt agreements, in a timely manner, continuing supplies of goods and services
from its key vendors, and an ongoing ability to limit or reduce operating costs
and capital requirements. In the event that demand is made for payment of the
outstanding debt, Aquis does not believe that its resources will be sufficient
to meet such a


<PAGE>


demand, and the Company would consider appropriate responses, including the
filing a request for protection under the U.S. Bankruptcy Code.

Seasonality

         Retail sales were subject to seasonal fluctuations that affect retail
sales generally. Otherwise, the results were generally not significantly
affected by seasonal factors.


<PAGE>


Item 3 - Quantitative and Qualitative Disclosures about Market Risk

         As of March 31, 2001, substantially all of our debt carried floating
interest rates. At March 31, 2001, we had approximately $27,608,000 of
floating-rate debt outstanding. As of December 31, 2000, total floating-rate
debt was $27,668,000. An interest rate increase or decrease of 2% on this
floating rate debt would result in a change in annual interest expenses of about
$555,000, or about $0.03 per share. Aquis has not, and does not plan to, enter
into any derivative financial instruments for trading or speculative purposes.
As of March 31, 2001, Aquis had no other significant material exposure to market
risk.


<PAGE>


Part II Other Information


Item 1   Legal Proceedings.


The Company is a party to legal proceedings that have been reported in its
Annual Report on Form 10-K for the year ended December 31, 2000. There were no
other significant developments related to legal proceedings involving the
Company at May 14, 2001.


Item 2   Changes in Securities and Use of Proceeds.


On February 2, 2001, Aquis issued 36,000 shares of its common stock to Michael
Branson in exchange for consulting services rendered to Aquis in connection with
development of its business plans and ongoing business development strategies.
The forgoing issuance was made without registration under the Securities Act of
1933 under the exemption provided by Section 4(2) of the Securities Act on the
basis that this issuance involved no public offering.


Item 3   Defaults Upon Senior Securities.


Aquis is in default of the provisions of its Amended and Restated Loan Agreement
with FINOVA Capital Corporation dated as of January 31, 2000 as amended by a
First Amendment to Loan Instruments dated as of April 10, 2000 and as further
amended by a Second Amendment to Loan Instruments dated as of September 27,
2000. Two principal payments of approximately $514,000 each were due in January
2001 and April 2001 and were not paid. Aquis has also not met two financial
covenants related to debt service coverage and debt leverage ratios. Aquis is
indebted to FINOVA under its senior loan agreement and an installment obligation
in amounts approximating $26,749,000 and $859,000, respectively. Related unpaid
interest due under these obligations totaled approximately $824,000.


Aquis is also in default of a Loan Agreement dated as of March 31, 2000 with
AMRO International, S.A. as a result of its failure to make interest payments
when due. The balance outstanding under the debt to AMRO at March 31, 2001 was
approximately $2,213,000 including accrued interest of about $213,000. Principal
and accrued but unpaid interest is payable to AMRO in October 2001 unless demand
for payment is accelerated or conversion into Aquis' common stock is sooner
elected by AMRO.


Item 4   Submission of Matters to a Vote of Security Holders.  None


Item 5   Other Information.


Annual Meeting:


Aquis will hold its 2001 Annual Meeting of Stockholders on July 12, 2001. To be
considered for inclusion in Aquis' proxy statement relating to the Annual
Meeting, Aquis stockholder proposals must be received no later than May 25,
2001. To be considered for presentation at the Annual Meeting, although not
included in the proxy statement, proposals must be received no later than June
25, 2001. All stockholder proposals should be marked to the attention of
Secretary, Aquis Communications Group, Inc., 1719A Route 10, Suite 300,
Parsippany, New Jersey 07054.


Additional Risk Factors:


Aquis is in default of the terms of its loan agreements and does not have
sufficient financial resources to cure those defaults.


We did not pay either of the two principal installments of $514,000 due to
FINOVA in January or April, 2001, and interest payments have been suspended
since the interest payment covering the month of December 2000 was paid in
January 2001. Although FINOVA has not made a demand for payment of the full
balance outstanding, its right to do so has not been waived. We are also in
default of the terms of a debenture issued to AMRO International, S.A. and these
defaults result in violations of the terms of many other operating agreements.
As a result, among other available remedies, our lenders could demand payment in
full of all amounts due to them and our existing resources are insufficient to
meet such a demand. In addition, several of our operating agreements could be
terminated by our service providers as a result of the aforementioned defaults
and our ability to service our customers could thereby be impaired.


<PAGE>

AMRO has executed a forbearance agreement under which it has agreed not to
demand immediate payment of all outstanding amounts due or to convert its
debenture into shares of Aquis common stock. The term of that forbearance is for
a maximum period of 180 days from the April 18, 2001 date of that agreement.
However, under certain circumstances specified in that agreement, such as the
enforcement of any other party's rights against Aquis in the event of default
under another material contract, and certain other circumstances, the
termination date of that forbearance agreement may be accelerated. We are also
negotiating with our lenders to restructure our debt and equity structure, but
there is no assurance that these negotiations will be successful. In the event
that we are unsuccessful, we will consider appropriate responses, including a
voluntary petition for protection under the US Bankruptcy Code. Our ability to
continue to operate is dependent on meeting short term financing requirements
and long term profitability.


One of our creditors may effect a change in control of Aquis.


Under the terms of the $2,000,000 11% convertible debenture held by AMRO
International, S.A., AMRO may elect to convert the principal amount and related
accrued interest, or any portion thereof, into Aquis common stock at a
conversion price that is 90% of the market price as defined in that agreement.
On April 2, 2001, AMRO provided written notice that it waived the provisions
contained in the debenture that limited its right to acquire a number of Aquis
shares that might cause its beneficial ownership of Aquis common stock to exceed
9.9%. This waiver, unless revoked by AMRO, is to become effective 75 days
subsequent to the date of that notification. However, AMRO has also executed a
forbearance agreement under which it has agreed not to demand immediate payment
of all outstanding amounts due or to convert its debenture into shares of Aquis
common stock. The term of that forbearance is for a maximum period of 180 days
from the April 18, 2001 date of that agreement. However, under certain
circumstances specified in that agreement, such as the enforcement of any other
party's rights against Aquis in the event of default under another material
contract, and certain other circumstances, the termination date of that
forbearance agreement may be accelerated. To the extent that AMRO exercises its
right to convert its debenture into common stock, a change in control of Aquis
may be effected. However, as referenced in earlier filings, the Communications
Act of 1934, as amended, contains restrictions on foreign ownership in FCC
licensed commercial mobile radio services entities. Those restrictions were
liberalized by the World Trade Organization Agreement on Basic
Telecommunications Service, effective February 5, 1998. As a result of these
liberalized ownership limitations in entities holding FCC licenses, AMRO may not
have sufficient incentives to effect a change in control of Aquis.


Additional shares will be available for sale in the public market which could
cause the market price of our stock to drop.


We currently estimate that approximately 7.6 million shares of our common stock
are currently eligible for resale under applicable securities laws. We expect to
register these shares, and about 360,000 additional shares, for resale. This
could have the effect of increasing the number of shares eligible for trading in
the public markets. In turn, additional shares in the market may have an adverse
effect on our stock price and may make it more difficult for us to sell stock in
the future.


Item 6 Exhibits and Reports on Form 8-K.

         (a) Exhibits

Exhibit No.:

<TABLE>
<S>      <C>
10.46    Stock Option Agreement dated January 15, 2001 between Aquis
         Communications Group, Inc. and Keith J. Powell (1)
10.47    Agreement between Keith J. Powell and Aquis Communications Group, Inc.,
         dated January 14, 2001 (1)
10.49    Forbearance Agreement with AMRO International, S.A. dated as of April
         18, 2001 (2)
10.50    Professional Services Agreement with Pirinate, Inc. dated as of April
         18, 2001 (2)
10.51    Registration Rights Agreement dated as of March 31, 2000 between Aquis
         Communications Group, Inc. and AMRO International, S.A. (2)
10.52    Registration Rights Agreement dated as of April 9, 2000 between Coxton,
         Limited and Aquis Communications Group, Inc. (2)
</TABLE>

(1)  Incorporated by reference to Aquis' Annual Report on Form 10-K for the
     year ended December 31, 2000.
(2)  Filed herewith

         (b) Reports on Form 8-K

         In a report on Form 8-K dated March 5, 2001, Aquis reported the change
in certifying accountants from PricewaterhouseCoopers, LLC to Wiss & Company,
LLC. No other reports on Form 8K were filed during the current year.

<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized:


<TABLE>
<CAPTION>
                  Name                                         Title                                 Date
                  ----                                         -----                                 ----
<S>                                             <C>                                               <C>

/s/ John B. Frieling
-------------------------------------------
             John B. Frieling                   Chief Executive Officer and Director              May 14, 2001


/s/ D. Brian Plunkett
-------------------------------------------
            D. Brian Plunkett                   Chief Financial Officer                           May 14, 2001


</TABLE>


<PAGE>

                                  Exhibit Index


<TABLE>
<CAPTION>

Exhibit Number
--------------
(Referenced to                                                                       Page Number in Rule
 Item 601 of                                                                         0-3(b) Sequential
Regulation S-K)                      Description                                     Numbering System
                                    -------------                                    Where Exhibit can be
                                                                                         Found
<S>      <C>                                                                          <C>
10.49    Forbearance Agreement with AMRO International, S.A. dated as of April
         18, 2001

10.50    Professional Services Agreement with Pirinate, Inc. dated as of April
         18, 2001

10.51    Registration Rights Agreement dated as of March 31, 2000 between Aquis
         Communications Group, Inc. and AMRO International, S.A.

10.52    Registration Rights Agreement dated as of April 9, 2000 between Coxton,
         Limited and Aquis Communications Group, Inc.
</TABLE>