<PAGE>
 
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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 September 30, 1998

                                       or

   [_]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from _____________ to_______________

                          Commission File No. 000-23711
                          -----------------------------

                                   Acsys, Inc.
                                   -----------
             (Exact name of registrant as specified in its charter)


 Georgia                                                    58-2299173
 -------                                                    ----------
 (State or other jurisdiction of                         (IRS Employer
 incorporation or organization)                 Identification Number)



 75 Fourteenth Street, Suite 2200
 Atlanta, GA                                                     30309
 -----------                                                     -----
 (Address of principal executive offices)                   (ZIP Code)


                                  404-817-9440
                                  ------------
              (Registrant's telephone number, including area code)


         Indicate by check X whether the registrant: (1) has filed all
reports 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
                                 -----    -----

The number of outstanding shares of the registrant's Common Stock on 
November 13, 1998 was 14,431,518.


================================================================================
<PAGE>
 
                                   Acsys, Inc.

                                Table of Contents
                                -----------------

Item No.                                                                   Page
--------                                                                   ----
      PART I - FINANCIAL INFORMATION

  1.  Condensed Consolidated Financial Statements (Unaudited):
        Condensed Consolidated Results of Operations
          For the Three Months Ended September 30, 1998 and 1997 .........   3
      Condensed Consolidated Results of Operations for the Nine Months
          ended September 30, 1998 and 1997 ..............................   4
      Condensed Consolidated Balance Sheets as of
          September 30, 1998 and December 31, 1997 .......................   5
      Condensed Consolidated Statements of Cash Flows
          For the Nine Months Ended September 30, 1998 and 1997 ..........   6
      Notes to Condensed Consolidated Financial Statements ...............   7

  2.  Management's Discussion and Analysis of Results of Operations
          And Financial Condition ........................................  13

  3.  Quantitative and Qualitative Disclosures About Market Risk .........  19
  
      PART II - OTHER INFORMATION

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

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

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

                                       2
<PAGE>
 
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS.

                          Acsys, Inc. and Subsidiaries
                  Condensed Consolidated Results of Operations
                                   (Unaudited)
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                     For the three months ended
                                                                                     --------------------------
                                                                                            September 30,
                                                                                            -------------
                                                                                      1998                 1997
                                                                                    -------              -------
<S>                                                                                 <C>                  <C>    
SERVICE REVENUES:
     Temporary staffing ....................................................        $29,525              $16,198
     Permanent placement ...................................................          8,050                5,355
                                                                                    -------              -------
          Total service revenues ...........................................         37,575               21,553
DIRECT COST OF SERVICES, consisting of payroll, payroll taxes and
      benefit costs for temporary employees ................................         20,714               11,350

                                                                                    -------              -------
          Gross profit .....................................................         16,861               10,203

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ...............................         12,436                7,977
AMORTIZATION AND DEPRECIATION ..............................................            502                  230
                                                                                    -------              -------
          Operating income .................................................          3,923                1,996

INTEREST EXPENSE, NET ......................................................            402                  209
                                                                                    -------              -------

INCOME BEFORE INCOME TAXES .................................................          3,521                1,787

INCOME TAXES (Note 3) ......................................................          1,500                  166
                                                                                    -------              -------

NET  INCOME ................................................................        $ 2,021              $ 1,621
                                                                                    =======              =======

BASIC NET INCOME PER SHARE (Note 9) ........................................        $  0.14              $  0.11
                                                                                    =======              =======

        Shares used in computing basic net income per share ................         14,430               10,661
                                                                                    =======              =======

DILUTED INCOME PER SHARE (Note 9) ..........................................        $  0.14              $  0.11
                                                                                    =======              =======

        Shares used in computing diluted net income per share ..............         14,744               10,749
                                                                                    =======              =======
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.
                                                            

                                       3
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
                  Condensed Consolidated Results of Operations
                                   (Unaudited)
                    (In thousands, except per share amounts)
<TABLE>
<CAPTION>

                                                                                    For the nine months ended
                                                                                    -------------------------
                                                                                           September 30,
                                                                                           -------------
                                                                                    1998                 1997
                                                                                  --------             --------
<S>                                                                               <C>                  <C>     
SERVICE REVENUES:
     Temporary staffing ...................................................       $ 69,564             $ 42,550
     Permanent placement ..................................................         19,807               13,742
                                                                                  --------             --------
          Total service revenues ..........................................         89,371               56,292

DIRECT COST OF SERVICES, consisting of payroll, payroll taxes
      and benefit costs for temporary employees ...........................         48,768               29,863
                                                                                  --------             --------
          Gross profit ....................................................         40,603               26,429

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ..............................         32,969               21,063
COMBINATION EXPENSES  (Note 6) ............................................          1,730                1,722
SEVERANCE AND FRANCHISE TERMINATION COSTS (Note 6) ........................            650                  170
AMORTIZATION AND DEPRECIATION .............................................          1,059                  459
                                                                                  --------             --------
            Operating income ..............................................          4,195                3,015

INTEREST EXPENSE, NET .....................................................            466                  588
                                                                                  --------             --------
INCOME BEFORE INCOME TAXES ................................................          3,729                2,427

INCOME TAXES (Note 3) .....................................................          5,185                  580
                                                                                  --------             --------

NET (LOSS) INCOME .........................................................       $ (1,456)            $  1,847
                                                                                  ========             ========

BASIC (LOSS) INCOME PER SHARE (Note 9) ....................................       $  (0.10)            $   0.09
                                                                                  ========             ========

        Shares used in computing basic net (loss) income per share ........         13,878               10,233
                                                                                  ========             ========

DILUTED (LOSS) INCOME PER SHARE (Note 9) ..................................       $  (0.10)            $   0.09
                                                                                  ========             ========

        Shares used in computing diluted net (loss) income per share ......         13,878               10,321
                                                                                  ========             ========
</TABLE>
            See Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                     ASSETS
                                                                                   September 30,     December 31,
                                                                                   -------------     ------------
                                                                                       1998             1997
                                                                                      -------          -------
<S>                                                                                   <C>              <C>    
CURRENT ASSETS:
        Cash and cash equivalents ..............................................      $ 1,175          $   370
        Accounts receivable, net ...............................................       23,170           12,343
        Prepaid expenses and other .............................................        1,391            1,455
                                                                                      -------          -------
          Total current assets .................................................       25,736           14,168

PROPERTY AND EQUIPMENT, net ....................................................        4,380            1,928

GOODWILL AND OTHER INTANGIBLE ASSETS, net ......................................       54,567           15,783
DEFERRED INITIAL PUBLIC OFFERING COSTS .........................................           --            1,200
DEFERRED INCOME TAXES ..........................................................           --              103
OTHER ASSETS ...................................................................          230              170
                                                                                      =======          =======
               Total assets ....................................................      $84,913          $33,352
                                                                                      =======          =======

                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
     Bank overdrafts ...........................................................      $    --          $ 1,489
     Current portion of long-term debt .........................................        9,003               47
     Accounts payable ..........................................................        1,391              774
     Accrued liabilities .......................................................       11,507            5,844
     Deferred income taxes .....................................................          402            1,093
     Other current liabilities .................................................          262               --
                                                                                      -------          -------
          Total current liabilities ............................................       22,565            9,247

LONG-TERM DEBT .................................................................       25,642           11,707
DEFERRED INCOME TAXES ..........................................................        2,726               --
OTHER LONG-TERM LIABILITIES ....................................................          284              377
                                                                                      -------          -------
          Total liabilities ....................................................       51,217           21,331
                                                                                      -------          -------
COMMITMENTS AND CONTINGENCIES (Note 7)

REDEEMABLE COMMON STOCK, no par value, 122,012 shares
      Issued and outstanding at December 31, 1997 ..............................           --            1,220

SHAREHOLDERS' EQUITY:
      Preferred stock, no par value, 5,000,000 shares authorized,
         no shares issued or outstanding .......................................           --               --
      Common stock, no par value, 45,000,000 shares authorized,
         14,422,038 and 11,191,564 shares issued and outstanding at September 30,
         1998 and December 31, 1997, respectively ..............................       29,377            7,597
      Retained earnings ........................................................        4,319            3,204
                                                                                      -------          -------
          Total shareholders' equity ...........................................       33,696           10,801
                                                                                      =======          =======
          Total liabilities and shareholders' equity ...........................      $84,913          $33,352
                                                                                      =======          =======
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       5
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                                    For the nine months ended
                                                                                    -------------------------
                                                                                          September 30,
                                                                                          -------------
                                                                                     1998              1997
                                                                                   --------          --------
<S>                                                                                <C>               <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net (loss) income .........................................................   $ (1,456)         $  1,847
     Adjustments to reconcile net (loss) income to net cash
        provided by (used in) operating activities:
           Amortization and depreciation .......................................      1,059               459
           Deferred income taxes ...............................................      1,899               616
           Other ...............................................................         --               153
     Changes in operating assets and liabilities, net of effect of acquisitions:
           Accounts receivable, net ............................................     (7,001)           (3,286)          
           Prepaid expenses and other ..........................................        475              (377)
           Other assets ........................................................         15                15
           Accounts payable ....................................................        (67)              759
           Accrued liabilities and other .......................................      1,718             1,783
           Other long-term liabilities .........................................        (93)               --
                                                                                   --------          --------
               Net cash (used in) provided by operating activities .............     (3,451)            1,969
                                                                                   --------          --------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Net cash paid for acquisitions ............................................    (34,260)           (1,874)
     Capital expenditures ......................................................     (2,341)             (446)
                                                                                   --------          --------
               Net cash used in investing activities ...........................    (36,601)           (2,320)
                                                                                   --------          --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from initial public offering, net of expenses ....................     20,170                --
     Changes in bank overdrafts ................................................     (1,489)             (133)
     Net borrowings (repayments) of long term debt .............................     22,891             1,856
     Proceeds from exercise of employee stock options ..........................         96                --
     Loan origination fees and expenses ........................................       (266)               --
     Distributions to shareholders .............................................       (545)             (845)
     Changes in restricted cash ................................................         --               116
                                                                                   --------          --------
             Net cash provided by financing activities .........................     40,857               994
                                                                                   --------          --------
NET INCREASE IN CASH AND CASH
   EQUIVALENTS .................................................................        805               643
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .................................        370             1,102
                                                                                   ========          ========
CASH AND CASH EQUIVALENTS, END OF PERIOD .......................................   $  1,175          $  1,745
                                                                                   ========          ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                       6
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

1.   Company Background

Acsys, Inc. (or "the Company") is one of the leading specialty professional
staffing firms in the United States.

In May 1997, the Company began combined operations with the acquisition of all
of the issued and outstanding common stock of Infinity Enterprises, Inc., David
C. Cooper & Associates, Inc., DCCA Professional Temporaries, Inc., Cama of
Tampa, Inc. ("Cama") and EKT, Inc. in exchange for shares of the Company's
Common Stock. Since May 1997, the Company has completed numerous acquisitions of
companies which provide temporary and permanent placement staffing services
primarily in the areas of accounting, finance and information technology.

The Company currently operates 40 offices principally throughout the Midwestern
and Eastern portions of the United States.

2.   Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). Although the December 31, 1997
balance sheet was derived from audited financial statements, certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to SEC rules and regulations. The Company believes that the
financial statements include all adjustments of a normal and recurring nature
necessary to present fairly the results of operations, financial position and
cash flows for the periods presented. These financial statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's annual report on Form 10-K. The condensed consolidated financial
statements include the accounts of the Company and its subsidiaries. All
material intercompany balances and transactions have been eliminated. There have
been no material changes in accounting policies from those stated in the
Company's Form 10-K. Interim results of operations are not necessarily
indicative of results to be expected for the entire year.


3.   Initial Public Offering

In February 1998, the Company completed its initial public offering ("IPO") of
2,842,500 shares of common stock at a price of $8.50 per share, generating net
cash proceeds of approximately $20.2 million after deducting underwriters'
discount and offering costs.

In connection with the IPO, the Company terminated its S corporation status and
recorded in the first quarter of 1998 income tax expense and a corresponding net
deferred tax liability of approximately $3,000,000, representing the tax effect
of differences in bases in assets and liabilities for financial reporting and
income tax purposes.

The owner of 122,012 shares of redeemable common stock entered into a
contractual waiver of all redemption rights effective upon the IPO. Accordingly,
subsequent to the IPO, these shares have been reclassified as common stock.

                                       7
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

4.   Debt
<TABLE>
<CAPTION>
                                                                              September 30,     December 31,
                                                                                  1998              1997
                                                                                --------          --------
                                                                                      (In thousands)
<S>                                                                             <C>               <C>     
    Revolving Credit Facility ..........................................        $ 33,959          $ 11,050
      Non-compete agreements with former shareholders of
             Infinity Enterprises, Inc., maturing February 2009 ........           1,042             1,116
    Other ..............................................................              19                10
                                                                                --------          --------
                                                                                  35,020            12,176
    Less--Unamortized discount .........................................            (375)             (422)
                                                                                --------          --------
                                                                                  34,645            11,754
    Less--Current portion ..............................................          (9,003)              (47)
                                                                                ========          ========
                                                                                $ 25,642          $ 11,707
                                                                                ========          ========
</TABLE>

On June 29, 1998, the Company amended its Revolving Credit Facility (the "Credit
Facility"), increasing the amount available to be borrowed from $15.0 million to
$25.0 million and extending its maturity date from May 31, 2000 to June 30,
2002. In August 1998, in connection with the acquisition of Staffing Edge, Inc.
(See Note 5), the Company amended its Credit Facility, increasing the amount
available to be borrowed from $25.0 million to $40.0 million through January 1,
1999, after which availability under the Credit Facility will be reduced to
$25.0 million. As of September 30, 1998, the Company had borrowed approximately
$34.0 million under the credit facility, of which $9.0 million, representing the
amount which must be repaid or refinanced by January 1, 1999, has been
classified as current. In the event that the Company is unable to replace or
refinance the Credit Facility by January 1, 1999, the Company will attempt to
negotiate with the lenders for a modification of the Credit Facility. The
existing Credit Facility bears interest, at the election of the Company, at
either: (A) the greater of (i) the prime rate or (ii) the federal funds rate
plus 0.50%, plus in the case of either a prime rate or federal funds rate a
margin of up to 0.50% based upon the Company's leverage ratio; or (B) at LIBOR
plus a margin which ranges from 1.00% to 2.00% based upon the Company's leverage
ratio. Borrowings and other amounts due under the Credit Facility are
collateralized by all of the assets of the Company and its subsidiaries,
including a pledge of all of the stock of the Company's direct and indirect
subsidiaries. In addition, all borrowings and other amounts under the Credit
Facility are guaranteed by each of the Company's direct and indirect
subsidiaries.

The Credit Facility contains various financial and non-financial covenants. The
financial covenants include requirements relating to the Company's consolidated
leverage ratio, fixed charge coverage ratio, capitalization ratio and current
ratio. Other covenants include, without limitation, restrictions against the
Company and its subsidiaries from incurring debt, creating liens, transferring
or selling assets, making investments, making acquisitions and merging. In
addition, there is a prohibition against the payment of dividends on account of
the Company's capital stock.


                                       8
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

5.   Mergers, Acquisitions, and Pro Forma Financial Information

Pooling of Interests Transactions- The Company effected a business combination
on May 16, 1997 in which it acquired all of the issued and outstanding common
stock of Infinity Enterprises, Inc.; David C. Cooper & Associates, DCCA
Professional Temporaries, Inc.; and EKT Inc. in exchange for 4,240,283 shares of
the Company's common stock. Subsequently in 1997 the Company acquired all of the
issued and outstanding common stock of Cama, Rylan Forbes Consulting Group, Inc.
and ACSYS Resources, Inc. in exchange for 4,252,937 shares of the Company's
Common Stock. On May 22, 1998, the Company acquired all of the equity interests
in Icon Search & Consulting ("ICON"), an Atlanta-based information technology
staffing company, in a stock-for-stock merger. Under the terms of the merger
agreement, ICON shareholders received 2,820,360 shares of Common Stock in
exchange for all of the equity interests in ICON. Each of these transactions
were accounted for as a pooling of interest and, accordingly, the financial
statements include the results of the acquired company for all periods
presented.

Purchase Accounting Transactions- In addition to the pooling of interests
transactions, the Company has completed four acquisitions that have been
accounted for under the purchase method of accounting. The results of operations
for these acquired companies are included from their respective date of
acquisition:

 .    ACSYS Resources, Inc. (prior to its acquisition by the Company) acquired
     C.P.A. Search, Inc. and Career Placement Associates Inc. (together "C.P.A.
     Staffing") on August 12, 1997.
 .    On March 31, 1998, the Company acquired all of the outstanding capital
     stock of TGS Resource Group, Inc. ("Don Richard of Richmond"), a leading
     accounting and finance staffing firm located in Richmond, Virginia.
 .    On July 1, 1998, the Company acquired all of the equity interests of KPD
     Systems, Inc ("KPD"), an information technology staffing firm located on
     Long Island, New York.
 .    On August 4, 1998, the Company acquired all of the equity interests of
     Staffing Edge, Inc., a specialty professional staffing firm with offices
     located throughout the Midwestern United States. The Company acquired the
     equity interest of Staffing Edge in exchange for $22,510,000 in cash,
     81,766 shares of the Company's common stock, assumption of debt of
     $7,004,000 plus a contingent earnout based upon the future performance of
     Staffing Edge which could aggregate up to $7,500,000. The Company financed
     the cash portion of the acquisition with borrowings under its credit
     facility. The Company recorded goodwill of $31,800,000, representing the
     consideration paid in excess of the fair value of the underlying
     identifiable net assets acquired, which will be amortized to future periods
     over a 40 year period.

                                       9
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

The following unaudited pro forma consolidated results of operations assume that
all of the above purchases occurred on January 1, 1997, and that the Company
incurred incremental interest expense on debt presumed to be incurred to fund
the acquisitions. Additionally, these pro forma results reflect (i) an
adjustment to officer and employee compensation based upon employment agreements
entered into upon the closing of certain of the Company's acquisitions.

Prior to February 5, 1998, the Company was an S corporation and not subject to
income taxes. These pro forma results include adjustments to reflect the company
as a taxable entity during all periods presented:
<TABLE>
<CAPTION>

                                                   (In thousands, except per share data)
                                        ----------------------------------------------------------
                                            Three months ended                Nine months ended
                                               September 30,                    September 30,
                                        ----------------------------------------------------------
                                           1998        1997                 1998           1997
                                           ----        ----                 ----           ----
<S>                                       <C>         <C>                <C>             <C>    
Pro forma revenue                         $39,875     $28,691            $107,776        $78,864
Pro forma net income (loss)                  $954     $(1,047)             $1,330        $(2,601)
Diluted earnings (loss) per share           $0.06      $(0.13)              $0.09         $(0.31)
Shares  used in  computing  pro forma
  diluted net income per share             14,775      11,464              14,473         11,463
</TABLE>


6.   Combination, Severance and Franchise Termination Costs

Combination costs-In connection with it's merger with ICON, the Company recorded
a charge for combination expenses of $1,730,000 in the nine months ended
September 30, 1998 which consisted of investment banking, legal and accounting
fees, and other transaction costs associated with the merger.

Severance costs-During the nine months ended September 30, 1998 the Company made
the decision to centralize its corporate and administrative offices in Atlanta,
Georgia. The Company recorded a charge of $650,000 during the nine months ended
September 30, 1998 consisting principally of severance obligations as a result
of this decision.

Franchise termination costs-The Company recorded a charge of $170,000 during the
nine months ended September 30, 1997 in connection with a termination payment
pursuant to the terms of a franchise agreement.

7.   Commitments and Contingencies

On November 13, 1997, a lawsuit was filed against the Company, Cama and the
former owner of Cama, Stephen S. Tutwiler by L. Robert Frank, Jr. and L. Robert
Frank & Associates, Inc. in the Circuit court of the Thirteenth Judicial
Circuit, Hillsborough County, Florida. The lawsuit alleges that the plaintiffs
and Mr. Tutwiler agreed to form a corporation to provide certain staffing
services; that such services were instead provided through a division of Cama;
and that the plaintiffs were entitled to a portion of the stock of Cama and thus
to a portion of the shares of Common Stock issued to Mr. Tutwiler when it
acquired Cama. The plaintiffs assert numerous claims, including breach of
contract, fraud, civil conspiracy and alleged misstatements and omissions
regarding the Company's ownership of Cama in a prospectus filed by the Company.
The plaintiffs seek to recover $27,000 allegedly due to the plaintiffs, their
alleged portion of Mr.

                                       10
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
--------------------------------------------------------------------------------

Tutwiler's shares of Common Stock, and compensatory and other damages. The
plaintiffs also seek an accounting and employment by the Company. The court has
ordered the plaintiffs and Mr. Tutwiler to arbitrate the allegations in the
lawsuit, which relate to their dispute, and has stayed the litigation of
plaintiffs' claims against Cama and the Company, pending resolution of the
arbitration between Mr. Tutwiler and plaintiffs. The plaintiffs have filed an
appeal of the order requiring them to arbitrate the claims against Mr. Tutwiler.
In the event the claims against the Company and Cama proceed, the Company
intends to vigorously defend against those claims. Due to the uncertainties of
litigation, the Company cannot predict the outcome of this matter. An adverse
result could have a material effect on the Company and result in a charge to the
statement of operations in the period in which the litigation is resolved. There
is no other pending litigation which the Company considers material.


8.   Supplemental Cash Flow Information

During the nine months ended September 30, 1998 and 1997, the Company paid
interest expense of $370,000 and $602,000, respectively.

During the nine months ended September 30, 1998 and 1997, the Company paid
income taxes of $1,181,000 and $0, respectively.


9.   Net (Loss) Income Per Share

The Company calculates net (loss) income per share under the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 specifies the computation, presentation and disclosure required
for earnings per share including a dual presentation of "basic" and "diluted"
EPS. Basic EPS is computed by dividing net income by the weighted average number
of shares of common stock outstanding for the period. When dilutive, options are
included as share equivalents using the treasury stock method and are included
in the calculation of diluted per share data. For the three and nine months
ended September 30, 1997, the average number of shares outstanding excludes the
redeemable common shares, as the accretion on the redeemable common stock of
$454,000 and $932,000 is deducted in arriving at historical and pro forma net
(loss) income per share available to common shareholders.


10.  Concentrations of Risk

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of accounts receivable. The Company does not
require collateral or other securities to support customer accounts receivable.
No client accounted for more than 10% of the Company's revenues during the three
or nine months ended September 30, 1998 or of accounts receivable as of
September 30, 1998.


11.  Recent Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). This statement
requires that items that are components of comprehensive income, defined as the
total net income and all other non-owner changes in equity, be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

                                       11
<PAGE>
 
                          Acsys, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)
--------------------------------------------------------------------------------

SFAS No. 130 became effective for fiscal years beginning after December 31, 1997
and is now currently being applied by the Company. SFAS No. 130 requires
comparative financial statements provided for earlier periods to be reclassified
to reflect application of the provisions of this new standard. The Company has
determined that for the quarter ended September 30, 1998 and for the year ended
December 31, 1997, no items, other than net income, meeting the definition of
comprehensive income as specified in SFAS No. 130 existed in the financial
statements. As a result, no disclosure is necessary to comply with the standard.
In June 1997, the FASB issued Statement No. 131, "Disclosure About Segments of
an Enterprise and Related Information" ("SFAS No. 131"). This statement
establishes additional standards for segment reporting in the financial
statements and is effective for fiscal years beginning after December 15, 1997.
Management believes that SFAS No. 131 will not have a material effect on the
Company's financial statements.

                                       12
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.

     This Management's Discussion and Analysis of Results of Operations and
Financial Condition contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements relate to future economic performance, plans and objectives of
management for future operations and projections of revenues and other financial
items that are based on the beliefs of the Company's management, as well as
assumptions made by, and information currently available to, the Company's
management. Actual results could differ materially from those currently
anticipated as a result of a number of factors, including those listed in (a)
the "Risk Factors" section of the prospectus included in the Company's
Registration Statements on Form S-1 (Registration number 333-38465) as declared
effective by the SEC on February 5, 1998 and any such forms subsequently filed
thereafter, (b) Item 7, "Management's Discussion and Analysis of Results of
Operations and Financial Condition - Disclosure Regarding Forward Looking
Statements" in the Company's annual report on Form 10-K for 1997 and (c) any of
the Company's subsequent filings with the Commission. These factors include, but
are not limited to, the Company's brief combined operating history and its
ability to identify and acquire suitable acquisition candidates, to integrate
acquired companies into its operations, to implement internal control and
management, financial and operational reporting systems, and to manage risks
associated with opening new offices and offering new services.

1998 Acquisitions
-----------------

On May 22, 1998, the Company acquired all of the equity interests in Icon Search
& Consulting ("ICON"), an Atlanta-based information technology staffing company,
in a stock-for-stock merger which has been accounted for under the pooling of
interests method of accounting. The company's financial statements have been
restated to include the accounts of ICON for all periods presented.

The Company has completed three acquisitions that have been accounted for under
the purchase method of accounting, (collectively, the "1998 Acquisitions") The
results of operations of these acquired companies are included in the Company's
results from their respective dates of acquisition:

 .    On March 31, 1998, the Company acquired all of the outstanding capital
     stock of TGS Resource Group, Inc. ("Don Richard of Richmond"), an
     accounting and finance staffing firm located in Richmond, Virginia.
 .    On July 1, 1998, the Company acquired all of the equity interests of KPD
     Systems, Inc ("KPD"), an information technology staffing firm located on
     Long Island, New York.
 .    On August 4, 1998, acquired all of the equity interests in Staffing Edge,
     Inc. ("Staffing Edge"), a specialty professional staffing firm with offices
     located throughout the Midwestern United States.

                                       13
<PAGE>
 
Results of Operations
(in thousands)

<TABLE>
<CAPTION>
                                                    Three Months Ended                   Nine Months Ended
                                                    ------------------                   -----------------
                                                Sept. 30,         Sept. 30,        Sept. 30,          Sept. 30,
                                                  1998              1997             1998               1997
--------------------------------------------------------------------------------------------------------------
<S>                                            <C>               <C>               <C>                <C>   
Service revenues:
  Temporary staffing                           $ 29,525          $ 16,198          $ 69,564           $ 42,550
  Permanent placement                             8,050             5,355            19,807             13,742
                                               ---------------------------------------------------------------
    Total service revenues                       37,575            21,553            89,371             56,292

Direct cost of services                          20,714            11,350            48,768             29,863
                                               ---------------------------------------------------------------
    Gross Profit                                 16,861            10,203            40,603             26,429

Selling, general & administrative expenses       12,436             7,977            32,969             21,063
Combination expenses                                 --                --             1,730              1,722
Severance and franchise termination costs            --                --               650                170
Amortization and depreciation                       502               230             1,059                459
                                               ---------------------------------------------------------------
  Operating income                                3,923             1,996             4,195              3,015
  Interest expense, net                             402               209               466                588
                                               ---------------------------------------------------------------
Income loss  before income taxes                  3,521             1,787             3,729              2,427
Income Taxes                                      1,500               166             5,185                580
                                               ---------------------------------------------------------------
     Net Income (loss)                         $  2,021          $  1,621          $ (1,456)          $  1,847
                                               ===============================================================
</TABLE>

Historical Results for the Three Months Ended September 30, 1998 Compared to
Historical Results for the Three Months Ended September 30, 1997

     Service Revenues. Total service revenues increased $16.0 million, or 74.3%,
to $37.6 million for the three months ended September 30, 1998 from $21.6
million for the corresponding period in 1997. Temporary staffing service
revenues increased $13.3 million, or 82.3%, to $29.5 million for the three
months ended September 30, 1998 as compared to $16.2 million for 1997. The
increase in temporary staffing service revenues is primarily attributable to the
effect of the 1998 Acquisitions, the growth of IT contract staffing, the
increase in billing rates and the impact of acquisitions. Also contributing to
the increase were higher bill rates and increased revenues from offices opened
in the fourth quarter of 1997. Permanent placement service revenues increased
$2.7 million, or 50.3%, to $8.1 million for the three months ended September 30,
1998 from $5.4 million for the corresponding period in 1997. Permanent placement
service revenues increased primarily due to an increase in the number of
permanent placements, an increase in placement fees and the 1998 Acquisitions.

     Gross Profit. Gross profit increased $6.7 million, or 65.3%, to $16.9
million for the three months ended September 30, 1998 from $10.2 million for
1997. Gross profit as a percentage of service revenues decreased to 44.9% for
the third quarter of 1998 compared to 47.3% for the third quarter of 1997. The
gross profit percentage decline resulted from the decrease in 1998 of the higher
margin permanent placement revenues as a percentage of the total revenues and as
a result of the growth in 1998 of the information technology business which has
higher bill rates but lower gross margins than the rest of the Company's
business.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $4.4 million, or 55.9%, to $12.4 million for
the three months ended September 30, 1998 from $8.0 million 

                                       14
<PAGE>
 
for the three months ended September 30, 1997. As a percentage of revenues,
selling, general and administrative expenses were 33.1% for the three months
ended September 30, 1998 compared with 37.0% for the corresponding period in
1997. This decrease as a percentage of revenues is primarily attributable to the
fact that the three months ended September 30, 1997 had significant amounts of
owner's compensation and the corresponding period in 1998 had increased
efficiencies and the spreading of overhead costs over a substantially larger
revenue base.

     Amortization and Depreciation. Amortization and depreciation for the three
months ended September 30, 1998 increased $272,000 from the corresponding period
of 1997. Amortization for the three months ended September 30, 1998 included
goodwill amortization expense as a result of the C.P.A. Staffing acquisition in
August 1997 and goodwill arising from the 1998 Acquisitions. Depreciation
expense in 1998 also increased as a result of capital expenditures in 1997 and
1998.

     Interest Expense, net. For the three months ended September 30, 1998, the
Company recorded net interest expense of $402,000 consisting principally of
interest expense on the Company's Revolving Credit Facility and certain
noncompete and severance arrangements. For the three months ended September 30,
1997, the Company recorded net interest expense of $209,000 consisting
principally of interest expense on the Company's Revolving Credit Facility.

     Income Tax Expense. For the three months ended September 30, 1998, the
Company recognized income tax expense of $1.5 million on pre-tax income of $3.5
million resulting in an effective tax rate of approximately 42.6%. Prior to
February 5, 1998, the Company was an S corporation and not subject to income
taxes. In 1997, the income tax provision relates exclusively to ICON, which for
federal income tax purposes was a C corporation subject to corporate income
taxes.

     Net Income. On an historical basis, the Company recognized net income and a
net income per share of $2.0 million and $0.14, respectively for the three
months ended September 30, 1998 compared to net income and a net income per
share of $1.6 million and $0.11 for the corresponding period of 1997.

Historical Results for the Nine Months Ended September 30, 1998 Compared to
Historical Results for the Nine Months Ended September 30, 1997


     Service Revenues. Total service revenues increased $33.1 million, or 58.8%,
to $89.4 million for the nine months ended September 30, 1998 from $56.3 million
for the corresponding period in 1997. Temporary staffing service revenues
increased $27.0 million, or 63.5%, to $69.6 million for the nine months ended
September 30, 1998 as compared to $42.6 million for 1997. The increase in
temporary staffing service revenues is primarily attributable to the growth of
IT contract staffing, the increase in billing rates and the impact of
acquisitions. Permanent placement service revenues increased $6.1 million, or
44.1%, to $19.8 million for the nine months ended September 30, 1998 from $13.7
million for 1997. Permanent placement service revenues increased primarily due
to increases in the number of permanent placements, the increase in placement
fees and the 1998 Acquisitions.

                                       15
<PAGE>
 
     Gross Profit. Gross profit increased $14.2 million, or 53.6%, to $40.6
million for the nine months ended September 30, 1998 from $26.4 million for
1997. Gross profit as a percentage of service revenues for the nine months ended
September 30, 1998 decreased to 45.4% of revenues compared to 46.9% of revenues
for 1997. The gross profit percentage decline resulted from the decrease in 1998
of the higher margin permanent placement revenues as a percentage of the total
revenues and as a result of the growth in 1998 of the information technology
business which has higher bill rates but lower margins than the rest of the
Company's business.

     Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $11.9 million, or 56.5%, to $33.0 million for
the nine months ended September 30, 1998 from $21.1 million for the nine months
ended September 30, 1997. As a percentage of revenues, selling, general and
administrative expenses were 36.9% for the nine months ended September 30, 1998
compared with 37.4% for the corresponding period in 1997. This decrease as a
percentage of revenues is primarily attributable to the fact that the nine
months ended September 30, 1997 had significant amounts of owners' compensation
costs. Also contributing to the lower percentage was increased efficiencies and
the spreading of overhead costs over a substantially larger revenue base.

     Combination Expenses. Combination expenses for the nine months ended
September 30, 1998 and 1997 were $1.7 million. These expenses included
transaction costs for the Company's mergers which have been accounted for under
the pooling of interests method and include investment banking, legal, 
accounting and other fees.

     Severance and Franchise Termination Costs. The Company recorded a charge of
$650,000 during the nine months ended September 30, 1998 consisting principally
of severance obligations resulting from the decision to consolidate its
corporate offices in Atlanta. For the corresponding period in 1997, the Company
recorded a charge of $170,000 related to the termination of a franchise
agreement.

     Amortization and Depreciation. Amortization and depreciation for the nine
months ended September 30, 1998 increased $600,000 from the corresponding period
of 1997. Amortization and depreciation for the nine months ended September 30,
1998 includes goodwill amortization expense as a result of the C.P.A. Staffing
acquisition in August 1997 and the 1998 Acquisitions. Depreciation expense also
increased as a result of capital expenditures in 1997 and 1998.

     Interest Expense, net. For the nine months ended September 30, 1998, the
Company recorded net interest expense of $466,000, consisting principally of
interest on borrowings under the Company's Credit Facility with NationsBank, NA,
and interest on noncompete and severance arrangements. For the nine months ended
September 30, 1997, the Company recorded net interest expense of $588,000
consisting principally of interest expense on the Company's Credit Facility and
other long term debt. In February 1998, the Company repaid the amount
outstanding under this Credit Facility with part of the proceeds of the IPO. The
Company subsequently renewed borrowings on its Credit Facility, primarily to
fund its August 1998 acquisition of Staffing Edge. See Liquidity and Capital
Resources Below.

     Income Tax Expense. Prior to February 5, 1998, the Company was an S
corporation and not subject to income taxes. In connection with the IPO and the
termination of the Company's S corporation status, the Company recorded a tax
liability of approximately $3.0 million in the nine months ended September 30,
1998 to recognize income tax expense created by the Company's change to a C
corporation, which primarily relates to a change from the cash to accrual method
of accounting for income tax purposes. The Company is paying this deferred tax
liability over a four-year period. For 1997, the income tax provision relates
exclusively to ICON, which for federal income tax purposes was a C corporation
subject to corporate income taxes.

                                       16
<PAGE>
 
     Net Income. On an historical basis, the Company recognized a net loss and a
net loss per share $1.5 million and $0.10, respectively, for the nine months
ended September 30, 1998 compared to net income and net income per share of $1.8
million and $0.09, respectively, for the corresponding period of 1997. The
calculation of the net loss per share for the nine months ended September 30,
1997 reflects a reduction of $932,000 to net income available to common
shareholders for the accretion of the redeemable shares. 

Liquidity and Capital Resources
-------------------------------

     Net cash used for operating activities was $3.5 million in the nine months
ended September 30, 1998. The use of cash is due to increased accounts
receivable and increases in other working capital requirements. For the
corresponding period of 1997, cash provided by operations was $2.0 million,
principally due to increases in accrued expenses and other liabilities.

     Net cash used in investing activities during the nine months ended
September 30, 1998 was $36.6 million. Included in cash used for investing
activities was $34.3 million (net of cash acquired) paid in connection with the
1998 Acquisitions and $2.3 million used for capital expenditures for furniture,
fixtures and equipment. The Company will continue to make capital expenditures
throughout 1998 on information technology systems and equipment.

     Net cash provided by financing activities was $40.9 million in the nine
months ended September 30, 1998. Upon completion of its IPO, the Company raised
$20.2 million net of expenses paid. The Company used approximately $11.1 million
to immediately repay its then current borrowings under its Credit Facility. The
Company subsequently borrowed approximately $31.0 million which was used to
consummate certain acquisitions (including the acquisition of Staffing Edge in
August 1998) and for working capital requirements. Additionally, during the nine
months ended September 30, 1998, the Company used $545,000 for shareholder
distributions related to certain pre-IPO S corporation tax liabilities.

     The existing Credit Facility bears interest, at the election of the
Company, at either: (A) the greater of (i) the prime rate or (ii) the federal
funds rate plus 0.50%, plus in the case of either a prime rate or federal funds
rate a margin of up to 0.50% based upon the Company's leverage ratio; or (B) at
LIBOR plus a margin which ranges from 1.00% to 2.00% based upon the Company's
leverage ratio. Borrowings and other amounts due under the Credit Facility are
collateralized by all of the assets of the Company and its subsidiaries,
including a pledge of all of the stock of the Company's direct and indirect
subsidiaries. In addition, all borrowings and other amounts under the Credit
Facility are guaranteed by each of the Company's direct and indirect
subsidiaries.

     The Credit Facility contains various financial and non-financial covenants.
The financial covenants include requirements relating to the Company's
consolidated leverage ratio, fixed charge coverage ratio, capitalization ratio
and current ratio. Other covenants include, without limitation, restrictions
against the Company and its subsidiaries from incurring debt, creating liens,
transferring or selling assets, making investments, making acquisitions and
merging. In addition, there is a prohibition against the payment of dividends on
account of the Company's capital stock.

                                       17
<PAGE>
 
     Principally as a result of the August 1998 acquisition of Staffing Edge, at
September 30, 1998 the outstanding balance under the Company's $40.0 million
Credit Facility was approximately $34.0 million. The amount available under the
Credit Facility will be reduced to $25.0 million on January 1, 1999.
Accordingly, at September 30, 1998, $9.0 million of the borrowings have been
classified as a current liability. The Company anticipates, as a result of its
operating results and borrowing capacity, that it will be able to refinance or
replace the existing Credit Facility with a larger borrowing facility. In the
event that the Company is unable to repay the amount necessary to reduce the
obligations under the Credit Facility to $25 million by January 1, 1999, the
Company will attempt to negotiate with the lenders for a modification of the
Credit Facility. Additionally, the Company believes that the funds currently
available on hand, funds to be provided by operations, funds available under the
existing Credit Facility and, after January 1, 1999, funds available under the
replaced, refinanced or renegotiated borrowing facility will be sufficient to
meet the Company's anticipated needs for working capital for the next twelve
months. There can be no assurance, however, that the Company will be able to
replace, refinance or renegotiate its Credit Facility. The Company's plan to
replace, refinance or renegotiate its Credit Facility and its estimate of the
time that funds will be sufficient to meet the Company's working capital needs
is a forward-looking statement that is subject to risks and uncertainties.
Actual results and working capital needs could differ materially from those
estimated due to a number of factors, including the use of funds to fund
acquisitions. In addition, future acquisitions may require additional debt and
equity financing.

Year 2000 Computer Issues
-------------------------

     Introduction. The Year 2000 issue refers to the problems resulting from
many existing computer software programs and operating systems that use only two
digits rather than four to define the applicable year in a date field. These
programs were designed and developed without considering the impact of the
upcoming change in the century. If not corrected, many computer applications
could fail or create erroneous results by or at the Year 2000. 

     The Company's State of Readiness. The Company's key financial,
informational and operational systems are being assessed and detailed plans are
being developed to address system modifications required by March 1999. These
systems include information technology systems ("IT"). The Company has assessed
its major IT vendors and technology providers and is in the process of testing
its systems to determine Year 2000 compliance. In addition, the Company is in
the process of assessing its non-IT systems that utilize embedded technology
such as microcontrollers and reviewing them for Year 2000 compliance.

     To operate it's business, the Company relies upon government agencies,
utility companies, providers of telecommunication services, suppliers, and other
third party service providers ("Primary Service Providers"), over which it can
assert little control. The Company's ability to conduct its core business is
dependent upon the ability of these Primary Service Providers to fix their Year
2000 issues to the extent they affect the Company. If the telecommunications
carriers, public utilities and other Primary Service Providers do not
appropriately rectify their Year 2000 issues, the Company's ability to conduct
its core business may be materially impacted, which could result in a material
adverse effect on the Company's financial condition. In addition, the Company's
customers may experience Year 2000 issues that could have a material adverse
affect on their business and their need for the Company's services, which in
turn could have a material adverse affect on the Company.

     The Company has begun an assessment of all Primary Service Providers to
determine risk and assist in the development of contingency plans. This effort
is to be completed by March 1, 1999. In particular, the Company uses various
software packages in conducting and accounting for its temporary staffing,
permanent 

                                       18
<PAGE>
 
placement and general accounting operations. These packages, among other things,
track and accumulate temporary staff time and client billings, process staff
payroll, and produce financial statements and other financial data. The Company
uses software packages and hardware in certain locations that may not be Year
2000 compliant. The Company has the option either to purchase new Year 2000
compliant software from outside vendors or implement existing in-house Year 2000
compliant software, or to combine both approaches.

     The Company expects that its information systems integration efforts will
enable it to be fully Year 2000 compliant although the Company cannot guarantee
that software represented by vendors to be Year 2000 compliant will in fact be
compliant. Further, certain Hub-Centers use third-party payroll processing
companies. Although the Company expects that such companies will be Year 2000
compliant, no assurances can be given in that regard. In pursuing its
acquisition strategy the Company could acquire an entity that is not Year 2000
compliant. Depending on the size of the entity acquired, noncompliance could
negatively affect the Company's results of operations.

     Costs to Address the Company's Year 2000 Issues. The Company expenses costs
associated with Year 2000 system changes as the costs are incurred except for
system change costs that the Company would otherwise capitalize. To date, the
Company has incurred costs of approximately $500,000 in connection with its Year
2000 compliance plan ("Year 2000 Plan") and estimates it will spend an
additional $500,000 to complete its Year 2000 Plan. The financial impact of
these expenses has not been material, and the Company does not expect future
redemption costs to be material to the Company's consolidated financial position
or results of operations. However, the Company is unable to estimate the costs
that it may incur as a result of Year 2000 problems suffered by the parties with
which it deals, such as Primary Service Providers and customers, and there can
be no assurance that the Company will successfully address the Year 2000
problems present in its own systems.

     Risks Presented by Year 2000 Problems. The Company has recently begun the
system integration testing phase of its Year 2000 Plan. However, until system
integration testing is substantially in process the Company cannot fully assess
the risks of its Year 2000 issue. As a result of system integration testing, the
Company may identify areas of its business that are at risk of Year 2000
disruption. The absence of any such determination at this point represents only
the status currently in the implementation of the Company's Year 2000 Plan, and
should not be construed to mean that there is no area of the Company's business
which is at risk of a Year 2000 related disruption. As noted above, many of the
Company's business critical Primary Service Providers and customers may not
appropriately address their Year 2000 issues, the result of which could have a
material adverse affect on the Company's financial condition and results of
operations.

     The Company's Contingency Plans. The Company's Year 2000 Plan calls for the
development of contingency plans for areas of the business that are susceptible
to a substantive risk of a disruption resulting from a Year 2000 related event.
Because the Company has only recently begun system integration testing, and
accordingly has not fully assessed its risk from potential Year 2000 failures,
the Company has not yet developed detailed contingency plans specific to Year
2000 events for any specific area of business. The Company does, however,
maintain contingency plans, outside of the scope of the Year 2000 issue,
designed to address various other business interruptions. The Company is
prepared for the possibility that system integration testing may hereafter
identify certain areas of business at risk. Consistent with its Year 2000 Plan,
the Company will develop specific Year 2000 contingency plans for such areas of
business as and if such determinations are made.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Not applicable.

                                       19
<PAGE>
 
                                     PART II
                                OTHER INFORMATION



ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Sales of Unregistered Securities during the Quarter Ended September 30, 1998

     The Company entered into that certain Agreement and Plan of Merger dated as
of July 1, 1998 by and among the Company, Acsys NY, Inc., KPD Systems, Inc. and
Howard Sapolsky, the sole shareholder of KPD Systems, Inc. Pursuant to such
agreement, a wholly-owned subsidiary of the Company merged with and into KPD,
and the Company issued a total of 77,504 shares of Common Stock to Mr. Sapolsky.

     The Company entered into that certain Agreement and Plan of Merger dated as
of August 3, 1998, by and among the Company, SE Merger Subsidiary, Inc.,
Staffing Edge, Inc. and certain shareholders of Staffing Edge, Inc. Pursuant to
such agreement, Staffing Edge shareholders received an aggregate of $22,510,000
in cash, and 81,766 shares of the Company's common stock plus a contingent
earnout based upon the future performance of Staffing Edge, Inc. which could
aggregate up to $7,500,000. In addition, the Company assumed and subsequently
paid outstanding debt in the amount of $7,040,000 owed by Staffing Edge, Inc. to
certain of its creditors.

     The issuance of securities described above was made in reliance on one or
more of the exemptions from registration under the Securities Act of 1933, as
amended, including those provided for by Section 4(2) and Regulation D
thereunder. The recipients of the securities in the above transactions
represented their intentions to acquire the securities for investment purposes
only and not with a view to or for the sale in connection with any distribution
thereof, and appropriate legends were affixed to the share certificates issued
in such transactions. The recipients of these securities had adequate access,
through their relationship with the Company, to information about the Company.


Use of Proceeds from the Company's Initial Public Offering in February 1998

     On February 5, 1998, the Company's registration statement on Form S-1
(Commission File No. 333-38465) for the Company's initial public offering (the
"IPO") of its Common Stock, no par value, became effective. From February 5,
1998 through September 30, 1998, the Company incurred and paid underwriting
discounts of $1.7 million and other offering expenses of $2.3 million, resulting
in total expenses of $4.0 million.

     The only payments to a director, officer, owner of 10% or more of the
Common Stock, or affiliate arising out of the IPO were to a company that is
wholly-owned by David C. Cooper, the Company's Chairman of the Board, and which
totaled $71,962 and were for the costs associated with the Company's use during
the IPO of an aircraft owned by that company.

     The net proceeds to the Company from the IPO after payment of the above
expenses was $20.2 million. The Company used $11.8 million to reduce debt, $4.5
million for business acquisitions, $1.5 for fixed asset purchases and $2.4
million for working capital and general corporate purposes.


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

     None.

                                       20
<PAGE>
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.


     (a) Exhibits.


Exhibit                                                      
Number                             Description
------                             -----------

 10.1   Registration Rights Joinder Agreement dated July 1, 1998 by and among
        the Company and Howard Sapolsky.
 
 10.2   Registration Rights Joinder Agreement dated August 3, 1998 by and among
        the Company and certain holders of capital stock of the Company.
 
 10.3   Amendment No. 2 to Credit Amendment dated August 3, 1998 by and among
        the Company, NationsBank, National Association as Lender and
        NationsBank, National Association as Agent for the Lenders.

 10.4   Employment Agreement between the Company and Brady W. Mullinax, Jr.,
        dated as of August 21, 1998.

 10.5   Non-qualified Stock Option Agreement between the Company and Brady W.
        Mullinax, Jr., dated as of August 21, 1998.

 10.6   Incentive Stock Option Agreement between the Company and Brady W.
        Mullinax, Jr., dated as of August 21, 1998.
 
 27     Financial Data Schedule.

     (b) Reports on Form 8-K
      
         On July 7, 1998 the Company filed a current report on Form 8-K dated
         July 1, 1998. The Form 8-K reported under Item 5, Other Events, that
         the Company acquired by merger all of the equity interests in KPD
         Systems, Inc.

         On August 5, 1998 the Company filed an amended Form 8-K providing the
         financial statements required as a result of the Company's acquisition
         of ICON in a stock-for-stock transaction which was initially filed
         April 9, 1998 and dated March 31, 1998.
   
         On August 19, 1998, the Company filed a current report on Form 8-K
         dated August 4, 1998. The Form 8-K reported under Item 2, Acquisition
         or Disposition of Assets, that the Company acquired all of the equity
         interests in Staffing Edge, Inc. in accordance with an Agreement and
         Plan of Merger dated August 3, 1998. The Company filed an amended Form
         8-K/A providing the required financial statements on October 19, 1998.

                                       21
<PAGE>
 
                                   Acsys, Inc.


                                   SIGNATURES

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

                                              Acsys, Inc.
                              ------------------------------------------------
                                             (registrant)


 Date: November 16,  1998               /s/ Brady Mullinax, Jr.
       ------------------     ------------------------------------------------
                                          Brady Mullinax, Jr.
                                        Chief Financial Officer
                               (the registrant's principal financial and
                                 chief accounting officer, who is duly
                                    authorized to sign this report)

                                       22
<PAGE>
 
                                  EXHIBIT INDEX

Exhibit                                                      
Number                                   Description
------                                   -----------

 10.1   Registration Rights Joinder Agreement dated July 1, 1998 by and among
        the Company and Howard Sapolsky.
 
 10.2   Registration Rights Joinder Agreement dated August 3, 1998 by and among
        the Company and certain holders of capital stock of the Company.
 
 10.3   Amendment No. 2 to Credit Amendment dated August 3, 1998 by and among
        the Company, NationsBank, National Association as Lender and
        NationsBank, National Association as Agent for the Lenders.

 10.4   Employment Agreement between the Company and Brady W. Mullinax, Jr.,
        dated as of August 21, 1998.

 10.5   Non-qualified Stock Option Agreement between the Company and Brady W.
        Mullinax, Jr., dated as of August 21, 1998.

 10.6   Incentive Stock Option Agreement between the Company and Brady W.
        Mullinax, Jr., dated as of August 21, 1998.

   27   Financial Data Schedule.

                                       23