SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.

Date of report (Date of earliest event reported): February 1, 2000

Commission File No. 0-24833

FUTURELINK CORP.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)

Delaware 95-4763404
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

100, 6 Morgan, Irvine, California 92618
- --------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)

(949) 837-8252
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)

- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS

On February 29, 2000, the Registrant completed its previously announced
acquisition of privately-held MicroLAN Systems, Inc, (doing business as Madison
Technology Group) as well as sister companies Madison Consulting Resources, Inc.
and Madison Consulting Resources NJ, Inc., (collectively the "Madison Group").
Under the terms of this acquisition, the Registrant paid $6,500,000 in cash,
$7,250,000 in short term notes and 1,975,170 shares of the Registrant's common
stock issued at $22.15 per share for total consideration of $57.5 million. The
Agreement and Plan of Reorganization and Merger dated February 1, 2000 (the
"Acquisition Agreement") pursuant to which this acquisition was completed is
attached as an exhibit hereto.

Audited financial statements for each of the three companies comprising
the Madison Group for the years ended December 31, 1999 and 1998 are attached to
this Current Report on Form 8-K. The Registrant intends to file unaudited pro
forma financial statements as at December 31, 1999 for the fiscal year then
ended showing the impact of the acquisition of the Madison Group in a subsequent
Current Report on Form 8-K or 8-K/A on or before April 30, 2000.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED:

Audited financial statements for each of MicroLAN Systems, Inc.,
Madison Consulting Resources Inc. and Madison Consulting Resources NJ,
Inc. for the years (or for date of inception to period) ended December
31, 1998 and 1999 and as at December 31, 1999 are attached to this
Current Report on Form 8-K.

(b) PRO FORMA FINANCIAL STATEMENTS

Unaudited pro forma financial statements showing the impact of the
acquisition of the Madison Group based on results to December 31, 1999
are not yet available. The Registrant intends to file pro forma
financial statements based on the fiscal year ended December 31, 1999
showing the impact of the Madison Group acquisition in a subsequent
Report on Form 8-K or 8-K/A on or before April 30, 2000.

2
3

2.1 The Agreement and Plan of Reorganization and Merger by and
among FutureLink Corp., FutureLink Delaware Acquisition Corp.,
MicroLAN Systems Inc., Madison Consulting Resources Inc.,
Madison Consulting Resources (NJ) Inc., Ira Silverman, Richard
Silverman, Adam Silverman and Adam Fox dated February 1, 2000
(the "Acquisition Agreement"). Schedules not included.

23.1 Consent of Joel E. Sammet & Co. Certified Public Accountants,
auditors of MicroLAN Systems, Inc., Madison Consulting
Resources Inc., and Madison Consulting Resources NJ, Inc.

99.1 News Release of the Registrant dated March 1, 2000.

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.

FUTURELINK CORP.

By: [signed: K. B. Scott] Date: March 15, 2000
-------------------------------------
Kyle B.A. Scott, Corporate Secretary

3
4
EXHIBIT INDEX

Exhibit No. Description
- ---------- -----------

2.1 The Agreement and Plan of Reorganization and Merger by and among
FutureLink Corp., FutureLink Delaware Acquisition Corp., MicroLAN
Systems Inc., Madison Consulting Resources Inc., Madison Consulting
Resources (NJ) Inc., Ira Silverman, Richard Silverman, Adam
Silverman and Adam Fox dated February 1, 2000 (the "Acquisition
Agreement"). Schedules not included.

23.1 Consent of Joel E. Sammet & Co. Certified Public Accountants,
auditors of MicroLAN Systems Inc., Madison Consulting Resources
Inc., and Madison Consulting Resources NJ, Inc.

99.1 News Release of the Registrant dated March 1, 2000.

MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP
DECEMBER 31, 1999 AND 1998

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
MicroLan Systems, Inc.
"DBA" Madison Technology Group
New York, New York

We have audited the accompanying balance sheets of MicroLan Systems, Inc.
"DBA" Madison Technology Group as of December 31, 1999 and 1998 and the related
statements of operations, shareholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We have conducted our audits in accordance with generally accepted audited
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MicroLan Systems Inc. "DBA"
Madison Technology Group as of December 31, 1999 and 1998, and the results of
its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.

/s/ Joel E. Sammet & Co.
-------------------------------
JOEL E. SAMMET & CO.
Certified Public Accountants

New York, New York
February 14, 2000

MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

1999 1998
---------- ----------

ASSETS
Current Assets
Cash and cash equivalents (Note 3)........................ $ 31,867 $ 53,572
Accounts receivable, less allowance for doubtful accounts
of $33,008 and $40,149 (Note 2)........................ 4,347,545 1,964,688
Inventory (Note 2)........................................ 462,145 278,747
Due from related parties.................................. 0 16,204
Other current assets...................................... 11,014 6,789
Due from shareholders (Note 7)............................ 550,000 0
---------- ----------
Total Current Assets.............................. 5,402,571 2,320,000
---------- ----------

Property and Other Assets
Property and equipment (net of accumulated depreciation of
$265,503 and $177,647)................................. 357,958 238,509
Other assets.............................................. 51,263 30,000
---------- ----------
Total Property, Equipment and Other Assets........ 409,221 268,509
---------- ----------
Total Assets...................................... $5,811,792 $2,588,509
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Cash overdraft............................................ $ 86,749 $ 0
Line of credit (Note 4)................................... 2,000,000 950,000
Loans payable -- due to related parties (Note 5).......... 269,775 150,000
Accounts payable.......................................... 1,780,574 742,755
Accrued purchases and expenses............................ 316,720 390,000
Legal settlement payable (Note 6)......................... 550,000 0
Other current liabilities (Note 2)........................ 209,883 0
---------- ----------
Total Current Liabilities......................... 5,213,701 2,232,755
---------- ----------

Shareholders' Equity
Capital stock, 200 shares authorized 100 shares issued and
outstanding............................................ 20,863 20,863
Additional paid-in capital (Note 7)....................... 550,000 0
Retained earnings......................................... 27,228 334,891
---------- ----------
Total Shareholders' Equity........................ 598,091 355,754
---------- ----------
Total Liabilities and Shareholders' Equity........ $5,811,792 $2,588,509
========== ==========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

1999 1998
----------- ----------

Revenue
Hardware and software..................................... $10,132,508 $3,794,190
Service and delivery...................................... 3,324,869 2,003,934
Cost of sales
Hardware and software..................................... 8,276,675 2,619,991
Service and delivery...................................... 1,657,068 1,290,483
Selling, general and administrative expenses................ 2,955,230 1,779,576
Extraordinary legal settlement.............................. (744,293) 0
----------- ----------
Income (Loss) from operations............................... (175,889) 108,074
Interest income............................................. 1,300 1,947
Interest expense............................................ (132,027) (99,521)
----------- ----------
Income (Loss) before income taxes........................... (306,616) 10,500
Provision for State and City taxes.......................... 1,047 7,581
----------- ----------
Net Income (Loss)........................................... $ (307,663) $ 2,919
=========== ==========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

COMMON STOCK ADDITIONAL
----------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------- ---------- --------- ---------

BALANCES AS OF DECEMBER 31, 1997...... 100 $20,863 $ 0 $ 385,141 $ 406,004
Net income............................ 0 0 0 2,919 2,919
Distribution to shareholders.......... 0 0 0 (53,169) (53,169)
--- ------- -------- --------- ---------
BALANCES AS OF DECEMBER 31, 1998...... 100 20,863 0 334,891 355,754
--- ------- -------- --------- ---------
Net income............................ (307,663) (307,663)
Additional paid-in capital............ 0 0 550,000 0 550,000
--- ------- -------- --------- ---------
BALANCES AS OF DECEMBER 31, 1999...... 100 $20,863 $550,000 $ 27,228 $ 598,091
=== ======= ======== ========= =========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

1999 1998
----------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ (307,663) $ 2,919
Adjustments to reconcile net income to net cash used
provided by operating activities:
Provision for losses on accounts receivable............ 43,865 59,490
Depreciation........................................... 87,855 69,137
(Increase) decrease in operating assets:
Inventory............................................ (183,398) (219,332)
Accounts receivable.................................. (2,426,721) 349,329
Due from related parties............................. 16,204 (12,088)
Other current assets................................. (4,225) (6,302)
Other assets......................................... (21,263) 10,000
Increase (decrease) in operating liabilities:
Accounts payable..................................... 1,037,819 (294,957)
Accrued purchases and expenses....................... (73,280) 205,256
Other current liabilities............................ 209,883 (86,506)
Legal settlement payable............................. 550,000 0
----------- ---------
Net Cash Provided (Used) By Operating
Activities...................................... (1,070,924) 76,946
----------- ---------
CASH FLOWS (USED BY) INVESTING ACTIVITIES:
Purchase of computers, office equipment and leasehold
improvements........................................... (207,305) (65,993)
----------- ---------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Proceeds from line of credit.............................. 1,050,000 200,000
Proceeds (payments) of loans from shareholders and related
party.................................................. 119,775 (90,539)
Distribution to shareholders.............................. 0 (53,169)
----------- ---------
Net Cash Provided By Financing Activities......... 1,169,775 56,292
----------- ---------
Net increase (decrease) in cash............................. (108,454) 67,245
Cash at January 1, 1999 and 1998............................ 53,572 (13,673)
----------- ---------
Cash at December 31, 1999 and 1998.......................... $ (54,882) $ 53,572
=========== =========
Comprised of:
Cash and checking (overdraft)............................. $ (86,749) $ 23,034
Certificate of deposit.................................... 31,867 30,538
----------- ---------
Cash at December 31, 1999 and 1998.......................... $ (54,882) $ 53,572
=========== =========
Supplemental Schedule of Non-Cash Investing and Financing
Activities:
Amounts due from shareholders for legal settlement........ $ 550,000 $ 0
=========== =========

Cash paid for income taxes for the years ended December 31, 1999 and 1998 was
$1,895 and $14,325, respectively. Cash paid for interest for the years ended
December 31, 1999 and 1998 was $171,274 and $96,978, respectively.

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

NOTE 1 NATURE OF BUSINESS

MicroLan Systems, Inc. doing business as Madison Technology Group (the
"Company") installs, services and provides consultant, design and integration
services for computer hardware systems, software systems and networks. The
Company is an authorized dealer for Novell, Microsoft, Citrix, Cisco and various
other major companies.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

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

REVENUE RECOGNITION

Revenue is recognized when products are shipped and training revenue is
recognized when performed. Income from service contracts is recognized over the
life of the contract on a pro rata basis. Losses on returns and contract costs
are recorded when they occur.

INVENTORY

Inventory consists primarily of hardware and software products and other
related parts. It is valued at the lower of cost or market on a first-in,
first-out basis. Market is current selling price.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. The Company provides for
depreciation by charges to operations based upon estimated useful lives of the
assets using the straight-line method. Maintenance and repair costs are charged
to expense when incurred.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company reflects accounts receivable at net realizable value. There is
an allowance for doubtful accounts of $33,008 and $40,149 at December 31, 1999
and 1998, respectively.

INCOME TAXES

The Company has elected under the Internal Revenue Service Code to be taxed
as an S corporation which is also effective for state tax purposes. In lieu of
corporate income taxes, the shareholders of an S corporation are taxed on their
proportionate share of the company's taxable income. Therefore, no provision or
liability for federal income tax has been included in the financial statements.
However, state

See the Accompanying Independent Auditor's Report.
12
MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
and city taxes calculated at the greater of minimum, regular or alternative tax
methods have been provided for in the financial statements.

DEFERRED SERVICE CONTRACT INCOME

The Company sells service contracts which may cover a period of time of one
year or more. At December 31, 1999 several service contracts were prepaid.
Management determines deferred service contract income based upon the contract
period. The amount of deferred service contract income is shown as other current
liabilities.

NOTE 3 CASH AND CASH EQUIVALENTS

Cash and cash equivalents include a certificate of deposit which represents
an investment in a three month certificate of deposit, which is being held as
collateral pursuant to the Company's line of credit arrangement (Note 4). The
investment is shown at cost. At December 31, 1999 and 1998, the Company held a
certificate of deposit of $31,867 and $30,538, respectively.

NOTE 4 LINE OF CREDIT

The Company has a line of credit with a bank, which is in the form of a
time secured loan maturing March 14, 2000. The loan is secured by eligible
accounts receivable and a certificate of deposit held with the bank (see Note
3). The Company can borrow up to 70% of eligible accounts receivable
(outstanding 90 days or less) up to $2,000,000 and $1,000,000 at December 31,
1999 and 1998, respectively. Interest is payable monthly at 1.50% over the
bank's prime rate which amounted to 10.00% at December 31, 1999 and 1998. As of
December 31, 1999 and 1998, outstanding borrowings under the line of credit are
$2,000,000 and $950,000, respectively. Loans payable to shareholders are
subordinated to this time secured loan.

NOTE 5 LOANS PAYABLE -- RELATED PARTIES

Loans payable to shareholders and related parties consists of borrowings
for working capital purposes and are summarized as follows:

DECEMBER 31,
--------------------
1999 1998
-------- --------

Shareholders........................................... $150,000 $150,000
Related Parties --
Madison Resources Consulting, Inc.................... 100,940 0
Madison Resources Consulting NJ, Inc................. 18,835 0
-------- --------
$269,775 $150,000
======== ========

Loans payable to shareholders are unsecured, bear interest at a rate of
8.5%, and are subordinated to the bank line of credit. Loans from related
parties are unsecured and do not bear interest.

See the Accompanying Independent Auditor's Report.
13
MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 6 LEGAL SETTLEMENT PAYABLE

The Company agreed to pay a settlement in the amount of $550,000 relating
to a lawsuit in which the plaintiff alledged that the Company took key employees
away from the plaintiff by offering them positions. The payment of this
settlement is personally guaranteed by the shareholders of the corporation.
Additional capital has been contributed to the corporation to fund this
liability. $250,000 was paid in early 2000.

NOTE 7 ADDITIONAL PAID IN CAPITAL

The shareholders contributed additional capital of $550,000 for the purpose
of funding the payment due on the legal settlement (Note 6). This contribution
was still due to the corporation on December 31, 1999. $250,000 was contributed
in early 2000.

NOTE 8 RELATED PARTY TRANSACTIONS

During 1999 and 1998, the Company had transactions with affiliated
companies, Madison Consulting Resources, Inc., a Company which is owned by the
father of the shareholders of the Company and Madison Consulting Resources NJ,
Inc. During 1999 and 1998, the Company shared office space with these affiliated
companies, and charged overhead, primarily for rent and shared administrative
salaries.

Following is a summary of transactions and balances with these affiliated
companies for 1999 and 1998:

1999 1998
-------- --------

Sales....................................................... $ 46,794 $435,558
======== ========
Outsourced labor expenses................................... $285,352 $ 0
======== ========
Accounts receivable (included in the accompanying balance
sheets)................................................... $ 1,108 $ 72,102
======== ========
Due from affiliated company (included in the accompanying
balance sheets)........................................... $ 0 $ 16,204
======== ========
Account payable (included in the accompanying balance
sheets)................................................... $107,616 $ 0
======== ========
Due to affiliated company (included in the accompanying
balance sheets)........................................... $119,775 $ 0
======== ========
Overhead charged (included as a reduction to general and
administrative expenses)
Madison Consulting Resources, Inc......................... $ 19,152 $202,912
Madison Consulting Resources NJ, Inc...................... 22,848 15,291
-------- --------
$ 42,000 $218,203
======== ========

NOTE 9 LEASES

The Company leases office space under an operating lease expiring in 2007.
Total rental expense recorded in the financial statements under this office
lease was $179,811 and $130,953 for 1999 and 1998, respectively.

See the Accompanying Independent Auditor's Report.
14
MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9 LEASES (CONTINUED)
Future minimum rental payments at December 31, 1999, under this operating
lease is as follows:

Year ended December 31,
2000...................................................... $ 273,726
2001...................................................... 273,726
2002...................................................... 273,726
2003...................................................... 273,726
2004...................................................... 212,296
Thereafter................................................ 349,267
----------
$1,656,467
==========

There is an informal agreement with an affiliated company, Madison
Consulting Resources NJ, Inc. to share rent related to shared office space. In
1999, $51,614 of Madison Technology's lease payments were paid by this
affiliate.

NOTE 10 INCOME TAXES

Income tax expense for the years ended December 31, 1999 and 1998 is
comprised of the following:

1999 1998
------ ------

New York State franchise tax............................... $ 425 $ 325
New York City corporation tax.............................. 622 7,256
------ ------
$1,047 $7,581
====== ======

NOTE 11 PENSION PLAN

The Company has adopted a qualified pension plan (the "Plan") under
provisions of Section 401(k) of the Internal Revenue Code. Under the provisions
of the Plan, each participant is able to defer a percentage of his compensation
up to statutory maximums. The plan is administered by a professional retirement
plan consulting firm and assets are held in trust in mutual funds run by a major
insurance company. The Company has not made any contributions to the Plan for
the years ending December 31, 1999 and 1998, respectively.

NOTE 12 CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of cash and cash equivalents
and trade receivables. The Company places its cash with federally insured
financial institutions and as of December 31, 1999 and 1998, the Company's
balances do not exceed federally insured limits. Fair value of these financial
instruments approximates their carrying values.

Trade receivables are primarily short-term receivables which arise in the
normal course of business. The Company generally does not require collateral,
and all of its trade receivables are unsecured. At December 31, 1999, the
Company had one customer which had an accounts receivable balance of
approximately 15% of the total accounts receivable balance. There were no other
customers that

See the Accompanying Independent Auditor's Report.
15
MICROLAN SYSTEMS, INC.
"DBA" MADISON TECHNOLOGY GROUP

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 12 CONCENTRATION OF CREDIT RISK (CONTINUED)
individually had accounts receivable balances exceeding 10% of the total
accounts receivable balance for the years ended December 31, 1999 and 1998,
respectively.

NOTE 13 SUBSEQUENT EVENTS

On February 1, 2000, MicroLan Systems, Inc., doing business as Madison
Technology Group, as well as sister companies Madison Consulting Resources Inc.
and Madison Consulting Resources of New Jersey (collectively "Madison"), entered
into an agreement to sell all of their existing and outstanding shares to
Futurelink Corp. ("Futurelink") Under the terms of the agreement, Futurelink
will pay total consideration of $57.5 million consisting of $6.5 million in
cash, $7.25 million in short term notes and 1.975 million common shares of
Futurelink for 100% of Madison. The transaction is expected to close by February
29, 2000.

See the Accompanying Independent Auditor's Report.
16

MADISON CONSULTING RESOURCES, INC.
DECEMBER 31, 1999 AND 1998

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Madison Consulting Resources, Inc.
New York, New York

We have audited the accompanying balance sheets of Madison Consulting
Resources, Inc. as of December 31, 1999 and 1998, and the related statements of
income, shareholders equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We have conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. Our audits include examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our audits
also include assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Madison Consulting
Resources, Inc. as of December 31, 1999 and 1998, and the results of its
operations and cash flows for the years then ended in conformity with generally
accepted accounting principles.

/s/ Joel E. Sammet & Co.
-------------------------------
JOEL E. SAMMET & CO.
Certified Public Accountants

New York, New York
February 15, 2000

MADISON CONSULTING RESOURCES, INC.

BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

1999 1998
---------- ----------

ASSETS
Current Assets
Cash...................................................... $ 4,448 $ 51,186
Accounts receivable (less allowance for doubtful accounts
of $10,000 at December 31, 1999) (Note 2).............. 695,473 620,914
Due from affiliate (Note 6)............................... 100,940 0
Due from related party (Note 4)........................... 738,225 672,238
Prepaid expenses.......................................... 11,512 0
Other current assets...................................... 1,713 0
---------- ----------
Total Current Assets.............................. 1,552,311 1,344,338
Other assets.............................................. 1,185 7,000
---------- ----------
Total Assets...................................... $1,553,496 $1,351,338
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses..................... $ 130,039 $ 154,556
Due to affiliate (Note 6)................................. 0 16,204
Line of credit (Note 3)................................... 900,000 785,000
Income taxes payable...................................... 12,801 1,028
---------- ----------
Total Current Liabilities......................... 1,042,840 956,788
Long-Term Liabilities
Loan payable -- shareholder (Note 5)...................... 437,400 437,400
---------- ----------
Total Liabilities................................. 1,480,240 1,394,188
---------- ----------
Shareholders' Equity
Capital stock -- 50 shares issued and outstanding......... 20,000 20,000
Retained earnings (deficit)............................... 53,256 (62,850)
---------- ----------
Total Shareholders' Equity........................ 73,256 (42,850)
---------- ----------
Total Liabilities and Shareholders' Equity........ $1,553,496 $1,351,338
========== ==========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES, INC.

STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

1999 1998
---------- ----------

Service revenues............................................ $3,725,665 $2,577,819
Cost of service revenues.................................... 2,534,937 1,980,654
Selling, general and administrative expenses................ 1,061,821 568,357
---------- ----------
Operating income before income taxes...................... 128,907 28,808
Provision for state and city taxes.......................... 12,801 1,028
---------- ----------
Net income.................................................. $ 116,106 $ 27,780
========== ==========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES, INC.

STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

COMMON STOCK RETAINED
----------------- EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
------ ------- --------- --------

BALANCES AS OF DECEMBER 31, 1997.................... 50 $20,000 $(90,630) $(70,630)
Net income.......................................... 0 0 27,780 27,780
-- ------- -------- --------
BALANCES AS OF DECEMBER 31, 1998.................... 50 20,000 (62,850) (42,850)
Net income.......................................... 0 0 116,106 116,106
-- ------- -------- --------
BALANCES AS OF DECEMBER 31, 1999.................... 50 $20,000 $ 53,256 $ 73,256
== ======= ======== ========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES, INC.

STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

1999 1998
--------- ---------

CASH FLOW FROM OPERATING ACTIVITIES:
Net income................................................ $ 116,106 $ 27,780
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Provision for losses on accounts receivable............ 84,998 0
(Increase) decrease in operating assets:
Accounts receivable.................................. (159,557) (370,062)
Due from affiliate................................... (100,940) 0
Prepaid expenses..................................... (11,512) 0
Other current assets................................. (1,713) 0
Other assets......................................... 5,815 (7,000)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses................ (24,517) 35,089
Due to affiliate..................................... (16,204) 12,088
Income taxes payable................................. 11,773 1,028
--------- ---------
Net Cash Provided (Used) By Operating
Activities...................................... (95,751) (301,077)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from line of credit.......................... 115,000 785,000
Amounts received on loans from shareholder................ 0 187,400
Payments on loans due from related party.................. (65,987) (672,238)
--------- ---------
Net Cash Provided By Financing Activities......... 49,013 300,162
--------- ---------
Net increase (decrease) in cash............................. (46,738) (915)
Cash at January 1, 1999 and 1998............................ 51,186 52,101
--------- ---------
Cash at December 31, 1999 and 1998.......................... $ 4,448 $ 51,186
========= =========

Cash paid for income taxes for the years ended December 31, 1999 and 1998 was
$1,028 and $625, respectively. Cash paid for interest for the years ended
December 31, 1999 and 1998 was $79,106 and $17,865, respectively.

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

NOTE 1 NATURE OF BUSINESS

Madison Consulting Resources, Inc. (the "Company") was formed in 1997 and
is a provider of information technology through placement of computer
consultants on a temporary and permanent basis to Fortune 1000 companies.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

REVENUE RECOGNITION

Revenue is recognized from the temporary placement of computer consultants
as services are performed. Permanent placement revenues are recognized when
computer consultants are placed. Losses on allowances and permanent placement
revenues are recorded when they occur.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company reflects accounts receivable at net realizable value. There is
an allowance for doubtful accounts at December 31, 1999 of $10,000. There is no
allowance for doubtful accounts at December 31, 1998.

INCOME TAXES

The Company has elected under the Internal Revenue Service Code to be taxed
as an S corporation, which is also effective for state tax purposes. In lieu of
corporate income taxes, the shareholders of an S corporation are taxed on their
proportionate share of the company's taxable income. Therefore, no provision or
liability for federal income tax has been included in the financial statements.
However, state and city taxes calculated at the greater of minimum, regular or
alternative tax methods have been provided for in the financial statements.

NOTE 3 LINE OF CREDIT

The Company has a line of credit with a bank, which is in the form of a
time secured loan maturing March 14, 2000. The loan is secured by eligible
accounts receivable. The Company can borrow up to 80% of eligible accounts
receivable (outstanding 90 days or less) up to $2,000,000 and $1,000,000 at
December 31, 1999 and 1998, respectively. Interest is payable monthly at 1.50%
over the bank's prime rate which amounted to 10.00% at December 31, 1999 and
1998. As of December 31, 1999 and 1998, outstanding borrowings under the line of
credit was $900,000 and $785,000, respectively. Loan payable to shareholder is
subordinated to this time secured loan.

See the Accompanying Independent Auditor's Report.
23
MADISON CONSULTING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4 DUE FROM RELATED PARTY

During 1999 and 1998, the Company had transactions with an affiliated
company, Madison Consulting Resources NJ, Inc. ("MCR NJ") a company which is
majority owned by the sole shareholder of the Company. During 1999 and 1998, the
Company shared office expenses with MCR NJ, and charged it for common office and
administrative expenses paid for or incurred by the Company primarily based on
an allocation of monthly sales or outstanding accounts receivable balances. In
addition, the Company charged MCR NJ $120,000 for management services for the
year ended December 31, 1998.

The Company also loaned MCR NJ amounts for working capital purposes. At
December 31, 1999 and 1998, the Company had balances due from MCR NJ in the
amount of $738,225 and $672,238, respectively.

NOTE 5 LOAN PAYABLE -- SHAREHOLDER

Loan payable to shareholder consists of borrowings for working capital
purposes and amounted to $437,400 at December 31, 1999 and 1998.

Loan payable to shareholder is unsecured and is subordinated to the bank
line of credit.

NOTE 6 RELATED PARTY TRANSACTIONS

During 1999 and 1998, the Company had transactions with an affiliated
company, MicroLan Systems, Inc. DBA Madison Technology Group, a company which is
owned by the sons of the sole shareholder of the Company. During 1999 and 1998,
the Company shared office space with this affiliated company, and was charged
for overhead, primarily for rent and shared administrative salaries.

Following is a summary of transactions and balances with this affiliated
company for 1999 and 1998:

1999 1998
-------- --------

Sales....................................................... $285,352 $ 0
======== ========
Purchase of computer consultants labor (included in cost of
sales).................................................... $ 46,784 $435,558
======== ========
Accounts receivable (included in the accompanying balance
sheets)................................................... $107,616 $ 0
======== ========
Due from affiliated company (included in the accompanying
balance sheets)........................................... $100,940 $ 0
======== ========
Accounts payable (included in the accompanying balance
sheets)................................................... $ 1,108 $ 72,102
======== ========
Due to affiliated company (included in the accompanying
balance sheets)........................................... $ 0 $ 16,204
======== ========
Overhead charged, reduced by $22,848 and $15,291 in 1999 and
1998, respectively, for amounts allocated to MCR NJ
(included in general and administrative expenses)......... $ 19,152 $202,912
======== ========

NOTE 7 CONCENTRATION OF CREDIT RISK

See the Accompanying Independent Auditor's Report.
24
MADISON CONSULTING RESOURCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7 CONCENTRATION OF CREDIT RISK (CONTINUED)
Trade receivables are primarily short-term receivables which arise in the
normal course of business. The Company generally does not require collateral,
and all of its trade receivables are unsecured. At December 31, 1999,
approximately 38% of the Company's trade receivables were represented by two
customers, with one customer representing approximately 22% of the outstanding
trade receivable balance. At December 31, 1998, approximately 38% of the
Company's trade receivables were represented by two customers, with one customer
representing approximately 25% of the outstanding trade receivable balance.
There were no other customers that individually had accounts receivable balances
exceeding 10% of the total accounts receivable balance for the year ended
December 31, 1999 and 1998, respectively.

NOTE 8 SUBSEQUENT EVENTS

See the Accompanying Independent Auditor's Report.
25

MADISON CONSULTING RESOURCES NJ, INC.
DECEMBER 31, 1999 AND 1998

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Madison Consulting Resources NJ, Inc.
New York, New York

We have audited the accompanying balance sheets of Madison Consulting
Resources NJ, Inc. as of December 31, 1999 and 1998, and the related statements
of income, shareholders' equity and cash flows for the year then ended and for
the period from inception January 22, 1998 to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We have conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Madison Consulting Resources
NJ, Inc. as of December 31, 1999 and 1998, and the results of its operations and
cash flows for the year and the initial period then ended in conformity with
generally accepted accounting principles.

/s/ Joel E. Sammet & Co.
-------------------------------
JOEL E. SAMMET & CO.
Certified Public Accountants

New York, New York
February 15, 2000

MADISON CONSULTING RESOURCES NJ, INC.

BALANCE SHEETS
DECEMBER 31, 1999 AND 1998

1999 1998
---------- --------

ASSETS
Current Assets
Cash...................................................... $ 3,442 $ 43,320
Accounts receivable -- trade (less allowance for doubtful
accounts of $10,000 at December 31, 1999).............. 1,159,172 670,738
Loan receivable -- shareholder............................ 25,500 8,000
Due from affiliate (Note 4)............................... 18,835 0
Prepaid expenses.......................................... 22,447 0
Other current assets...................................... 305 0
---------- --------
Total Current Assets.............................. 1,229,701 722,058
---------- --------
Property and Other Assets
Property and equipment (net of accumulated depreciation of
$11,772)............................................... 52,347 0
Other assets.............................................. 442 0
---------- --------
Total Property, Equipment and Other Assets........ 52,789 0
---------- --------
Total Assets...................................... $1,282,490 $722,058
========== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses..................... $ 263,460 $ 7,920
Loan payable -- shareholder............................... 5,000 0
Income taxes payable...................................... 4,796 200
Due to related party (Note 3)............................. 738,225 672,238
---------- --------
Total Current Liabilities......................... 1,011,481 680,358
---------- --------
Shareholders' Equity
Capital stock -- 200 shares issued and outstanding........ 20,000 20,000
Retained earnings......................................... 251,009 21,700
---------- --------
Total Shareholders' Equity........................ 271,009 41,700
---------- --------
Total Liabilities and Shareholders' Equity........ $1,282,490 $722,058
========== ========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES NJ, INC.

STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD
FROM INCEPTION JANUARY 22, 1998 TO DECEMBER 31, 1998

1999 1998
---------- ----------

Service revenues............................................ $6,404,652 $2,512,757
Cost of service revenues.................................... 4,765,283 1,850,451
Selling, general and administrative expenses................ 1,405,064 640,406
---------- ----------
Income before income taxes................................ 234,305 21,900
Provision for state taxes................................... 4,996 200
---------- ----------
Net income.................................................. $ 229,309 $ 21,700
========== ==========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES NJ, INC.

STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD
FROM INCEPTION JANUARY 22, 1998 TO DECEMBER 31, 1998

COMMON STOCK
----------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------- -------- --------

Common stock issued................................. 200 $20,000 $ 0 $ 20,000
Net income.......................................... 0 0 21,700 21,700
--- ------- -------- --------
BALANCES AS OF DECEMBER 31, 1998.................... 200 20,000 21,700 41,700
Net income.......................................... 0 0 229,309 229,309
--- ------- -------- --------
BALANCES AS OF DECEMBER 31, 1999.................... 200 $20,000 $251,009 $271,009
=== ======= ======== ========

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES NJ, INC.

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998 AND THE PERIOD
FROM INCEPTION JANUARY 22, 1998 TO DECEMBER 31, 1998

1999 1998
--------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 229,309 $ 21,700
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Provision for losses on accounts receivable............ 13,923 0
Depreciation........................................... 11,772 0
(Increase) decrease in operating assets:
Accounts receivable.................................. (502,357) (670,738)
Due from affiliate................................... (18,835) 0
Prepaid expenses..................................... (22,447) 0
Other current assets................................. (305) 0
Other assets......................................... (442) 0
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses................ 255,540 7,920
Income taxes payable................................. 4,596 200
--------- ---------
Net Cash Provided (Used) By Operating
Activities...................................... (29,246) (640,918)
CASH FLOWS (USED BY) INVESTING ACTIVITIES:
Purchase of computers, office equipment and furniture and
fixtures............................................... (64,119) 0
--------- ---------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Payments on loan receivable to shareholder................ (17,500) (8,000)
Amounts received from loan payable to shareholder......... 5,000 0
Amounts received on loan payable to related party......... 65,987 672,238
Proceeds from issuance of capital stock................... 0 20,000
--------- ---------
Net Cash Provided By Financing Activities......... 53,487 684,238
--------- ---------
Net increase (decrease) in cash............................. (39,878) 43,320
Cash at January 1, 1999 and 1998............................ 43,320 0
--------- ---------
Cash at December 31, 1999 and 1998.......................... $ 3,442 $ 43,320
========= =========

Cash paid for income taxes for the years ended December 31, 1999 and 1998 was
$400 and $-0-, respectively. Cash paid for interest for the years ended December
31, 1999 and 1998 was $96,958 and $-0-, respectively.

See the Accompanying Independent Auditor's Report and Notes to Financial
Statements.

MADISON CONSULTING RESOURCES NJ, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

NOTE 1 NATURE OF BUSINESS

Madison Consulting Resources NJ, Inc. (the "Company") was formed in 1998
and is a top provider of information technology through placement of computer
consultants on a temporary and permanent basis to Fortune 1000 companies.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

REVENUE RECOGNITION

ALLOWANCE FOR DOUBTFUL ACCOUNTS

INCOME TAXES

The Company has elected under the Internal Revenue Service Code to be taxed
as an S corporation. In lieu of corporate income taxes, the shareholders of an
S corporation are taxed on their proportionate share of the company's taxable
income. Therefore, no provision or liability for federal income tax has been
included in the financial statements. However, state taxes calculated at the
greater of minimum, regular or alternative tax methods have been provided for in
the financial statements.

NOTE 3 DUE TO RELATED PARTY

During 1999 and 1998, the Company had transactions with an affiliated
company, Madison Consulting Resources, Inc. ("MCR"), a company which is owned by
the majority shareholder of the Company. During 1999 and 1998, the Company
shared office expenses with MCR, and was charged for common office and
administrative expenses paid or incurred by MCR primarily based on an allocation
of monthly sales or outstanding accounts receivable balances. In addition, MCR
charged the Company $120,000 for management services for the year ended December
31, 1998.

The Company also had borrowings from MCR for working capital purposes. At
December 31, 1999 and 1998, the Company had balances due to MCR in the amount of
$738,225 and $672,238, respectively.

See the Accompanying Independent Auditor's Report.
32
MADISON CONSULTING RESOURCES NJ, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4 RELATED PARTY TRANSACTIONS

During 1999 and 1998, the Company was allocated with overhead charges by
MCR from an affiliated company, MicroLan Systems, Inc. DBA Madison Technology
Group, a company which is owned by the sons of the majority shareholder of the
Company. For the year ending December 31, 1999 and 1998, overhead allocated by
MCR from this affiliate amounted to $22,848 and $15,291, respectively, and is
included in general and administrative expenses in the accompanying statements
of income.

At December 31, 1999, the Company had a balance due from this affiliated
company in the amount of $18,835.

NOTE 5 CONCENTRATION OF CREDIT RISK

Trade receivables are primarily short-term receivables which arise in the
normal course of business. The Company generally does not require collateral,
and all of its trade receivables are unsecured. At December 31, 1999,
approximately 70% of the Company's trade receivables were represented by two
customers, with one customer representing approximately 52% of the outstanding
trade receivable balance. At December 31, 1998, approximately 75% of the
Company's trade receivables were represented by three customers, with one
customer representing approximately 40% of the outstanding trade receivable
balance. There were no other customers that individually had accounts receivable
balances exceeding 10% of the total accounts receivable balance for the year
ended December 31, 1999 and 1998, respectively.

NOTE 6 SUBSEQUENT EVENTS

See the Accompanying Independent Auditor's Report.