AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1998

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COLLEGIS, INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 7379 23-2414968
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)

2300 MAITLAND CENTER PARKWAY
SUITE 340
MAITLAND, FLORIDA 32751
(407) 660-1199

(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

ROBERT E. LUND
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
COLLEGIS, INC.
2300 MAITLAND CENTER PARKWAY, SUITE 340
MAITLAND, FLORIDA 32751
(407) 660-1199
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------

COPIES TO:

R. CABELL MORRIS, JR. DOUGLAS NEWKIRK
Winston & Strawn Sachnoff & Weaver, Ltd.
35 West Wacker Drive 30 South Wacker Drive
Chicago, Illinois 60601 Suite 2900
(312) 558-5600 Chicago, Illinois 60611
(312) 207-1000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------

If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

CALCULATION OF REGISTRATION FEE

PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE

Common Stock, par value $0.01 per
share................................ 4,255,000 shares $16.00 $68,080,000 $20,084

(1) Includes 555,000 shares that the Underwriters may purchase to cover
over-allotments, if any.

(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(a) under the Securities Act.
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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SUBJECT TO COMPLETION, DATED JULY 29, 1998

PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

, 1998

3,700,000 SHARES

COLLEGIS, INC.

COMMON STOCK

Of the 3,700,000 shares of Common Stock offered hereby, shares are
being sold by COLLEGIS, Inc. ("COLLEGIS" or the "Company") and shares are
being sold by the Selling Stockholders. See "Principal and Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholders.

Prior to this Offering, there has been no public market for the Common Stock
of the Company. It is currently anticipated that the initial public offering
price will be between $ and $ per share. See "Underwriting" for
information relating to factors to be considered in determining the initial
public offering price.

The Company has made application for quotation of the Common Stock on the
Nasdaq National Market under the symbol "CLGS."
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO THE DISCOUNTS AND TO THE THE SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
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Per Share............... $ $ $ $
Total(3)................ $ $ $ $
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(1) SEE "UNDERWRITING" FOR INDEMNIFICATION ARRANGEMENTS WITH THE UNDERWRITERS.

(2) BEFORE DEDUCTING OFFERING EXPENSES, ESTIMATED AT $ , WHICH WILL BE
PAID BY THE COMPANY.

(3) THE COMPANY HAS GRANTED TO THE UNDERWRITERS A 30-DAY OPTION TO PURCHASE UP
TO 555,000 ADDITIONAL SHARES OF COMMON STOCK AT THE PRICE TO THE PUBLIC,
LESS UNDERWRITING DISCOUNTS AND COMMISSIONS, SOLELY TO COVER OVER-
ALLOTMENTS, IF ANY. IF SUCH OPTION IS EXERCISED IN FULL, THE TOTAL PRICE TO
THE PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO THE
COMPANY WILL BE $ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITING."

The shares of Common Stock are being offered by the several Underwriters
when, as and if delivered to and accepted by the Underwriters and subject to
various prior conditions, including their right to reject orders in whole or in
part. It is expected that delivery of share certificates will be made in New
York, New York, on or about , 1998.

DONALDSON, LUFKIN & JENRETTE BT ALEX. BROWN

[CHART DEPICTING COLLEGIS SERVICE AREAS AND OFFERINGS]

THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE
SUBSTANTIAL RISKS AND UNCERTAINTIES. WHEN USED IN THIS PROSPECTUS, THE WORDS
"ANTICIPATE," "BELIEVE," "ESTIMATE," "EXPECT" AND SIMILAR EXPRESSIONS AS THEY
RELATE TO THE COMPANY OR ITS MANAGEMENT ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS COULD DIFFER MATERIALLY FROM THE RESULTS EXPRESSED IN, OR IMPLIED
BY, THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO
SUCH DIFFERENCES INCLUDE THOSE DISCUSSED IN "RISK FACTORS."
------------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION, INCLUDING
INFORMATION SET FORTH IN "RISK FACTORS" AND THE FINANCIAL STATEMENTS AND RELATED
NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS INDICATED
OTHERWISE, THE INFORMATION CONTAINED IN THIS PROSPECTUS: (i) ASSUMES THAT THE
UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED; AND (ii) GIVES RETROACTIVE
EFFECT TO THE CONVERSION, ON A ONE-FOR-ONE BASIS, OF ALL OUTSTANDING SHARES OF
EACH CLASS OF COMMON STOCK OF THE COMPANY INTO SHARES OF THE COMPANY'S SINGLE
CLASS OF COMMON STOCK, $0.01 PAR VALUE PER SHARE (THE "COMMON STOCK"), WHICH
WILL OCCUR UPON THE CLOSING OF THE OFFERING.

THE COMPANY

COLLEGIS, Inc. ("COLLEGIS" or the "Company") is a leading nationwide
provider of information technology ("IT") enterprise solutions and services to
clients in the higher education marketplace. The Company offers its IT services
through three principal service areas: (i) Operational and Financial IT
Services; (ii) Networking and Internet Services; and (iii) Instructional
Technology Services. COLLEGIS' primary competitive advantage is its in-depth
higher education IT experience, which it applies to assist
colleges and universities to succeed in an environment of increasing competition
for students and rapidly evolving technology. The Company has competed
successfully in this environment, having achieved compound annual revenue growth
of 55% from 1993 to 1997. Moreover, because of the long term nature of most of
the Company's client engagements, COLLEGIS enjoys significant recurring revenues
with the majority of its revenues in 1996 and 1997 having been committed at the
beginning of such years.

The higher education market today is characterized by increased competition
for students, budgetary constraints, outdated IT systems, a rapidly changing
technological environment and student demand for remote access to academic and
administrative services. Colleges and universities are striving to improve the
quality of the educational experience and to lower operating costs by upgrading
their technology infrastructure to provide both academic and administrative
services. In addition, technological advances such as the Internet have made
distance learning and other on-line educational applications feasible and many
schools are recognizing this as an opportunity for revenue enhancement. Outside
IT solution providers are well positioned to address the IT issues facing higher
education because: (i) technological change, especially the advent of client
server computing and Internet/intranet related services, is outpacing internal
resources; (ii) hiring and retaining qualified technical staff is difficult due
to the competitive environment for IT specialists and limited job advancement
opportunities for IT professionals within higher education; (iii) outside
specialists often deliver a greater return on an institution's IT investment
because they enable a college or university to more rapidly and cost-effectively
upgrade its systems; and (iv) external IT specialists can often formulate more
objective advice, free of internal cultural or political forces. The Company
believes that a significant opportunity exists in the higher education market
because most colleges and universities are currently addressing their technology
requirements in-house. The Company estimates that of the approximately 3,500
higher education institutions in the United States, only 55 have engaged a
third-party IT specialist, such as COLLEGIS, under a long-term contract to
operate all or a major portion of their IT function.

COLLEGIS' three service areas are designed to provide a complete range of IT
solutions and services to assist colleges and universities with every aspect of
their technology needs. The Operational and Financial IT Services area provides
strategic planning, project installation and management, training, user support
and IT staffing solutions. The Networking and Internet Services area plans,
designs and implements comprehensive network infrastructures that include
sophisticated Internet/intranet applications, as well as ongoing network
maintenance, training and user support services. The Instructional Technology
Services area uses the Web-based COLLEGIS Learning Network to assist colleges
and universities in designing and developing on-line courses and other on-line
educational, administrative and student service applications.

The Company believes that it possesses several business strengths that
provide it with a competitive advantage, including: (i) vertical market focus
resulting in a thorough understanding of the information technology needs of
U.S. colleges and universities; (ii) broad range of services enabling the
Company to be a single-source provider to the higher education market; (iii)
established industry reputation earned by successfully providing 13 years of IT
solutions to colleges and universities; (iv) proven operating model facilitating
COLLEGIS' goal of becoming an educational institution's IT partner; (v) strong
client relationships fostered through the close working relationships between
the client and COLLEGIS' on-site staff and corporate management; (vi) recruiting
advantage provided by hiring significant numbers of technical staff from
clients; and (vii) the COLLEGIS Learning Network, an on-line service that
assists academic institutions in using Web-based technology to transform the
learning environment.

The Company's goal is to become the nation's leading provider of IT
enterprise solutions and services to the higher education marketplace. Key
elements of COLLEGIS' strategy to achieve this goal are: (i) expand client base
by increasing the size and scope of its sales and marketing organization and
technical staff; (ii) expand long-term relationships with existing clients to
increase length and scope of client engagements; (iii) maintain role as leader
in emerging higher education technologies by allocating sufficient resources to
offer new technologies; (iv) expand the COLLEGIS Learning Network to capture
service opportunities associated with the emerging instructional technology
area; (v) partner with software vendors to broaden customer base, increase
competitiveness and maintain technological sophistication; and (vi) pursue
strategic acquisitions that complement existing service offerings. There can be
no assurance that the Company will be successful in implementing any or all of
its strategies or achieving its goal.

THE OFFERING

Common Stock offered by the Company............. shares

Common Stock offered by the Selling
Stockholders.................................. shares

Common Stock to be outstanding after the
Offering...................................... 9,189,060 shares(1)

Use of proceeds................................. To repay bank indebtedness, pay certain
bonuses arising in connection with the
Offering and for general corporate
purposes.

Proposed Nasdaq National Market Symbol.......... CLGS

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(1) Includes 274,912 shares of Common Stock to be issued upon the exercise of a
warrant by a Selling Stockholder in connection with this Offering and
excludes (i) 2,150,404 shares of Common Stock issuable upon the exercise of
stock options outstanding as of June 30, 1998, of which 1,850,404 are
outstanding under the Company's 1996 Stock Option Plan and 300,000 are held
by an executive officer of the Company, and (ii) 298,360 shares of Common
Stock reserved for grant of future options or direct issuances under the
Company's 1996 Stock Option Plan. See "Management--Employee Benefit
Plans--1996 Stock Option Plan" and "Certain Transactions."

SUMMARY FINANCIAL DATA

SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------------- ------------------------------
PRO PRO
FORMA FORMA
1993 1994 1995 1996 1997 1997(1) 1997 1998 1998(2)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Service revenue............. $ 3,990 $ 7,074 $ 9,708 $ 15,226 $ 22,808 $22,808 $ 10,240 $ 15,858 $15,858
Operating expenses:
Cost of services.......... 2,210 3,996 5,632 8,828 13,072 13,072 5,834 9,027 9,027
Selling, general and
administrative
expenses................ 1,686 2,027 2,317 3,545 6,002 6,002 2,691 4,376 4,376
Depreciation and
amortization............ 14 27 40 104 153 153 68 91 91
Special compensation
expense(3).............. -- -- -- -- -- -- -- 2,474 --
Relocation costs(4)....... -- -- -- 613 488 488 488 -- --
Recapitalization
expenses(5)............. -- -- -- 1,587 -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total operating
expenses.............. 3,910 6,050 7,989 14,677 19,715 19,715 9,081 15,968 13,494
-------- -------- -------- -------- -------- -------- -------- -------- --------
Operating income (loss)..... 80 1,024 1,719 549 3,093 3,093 1,159 (110) 2,364
Interest expense(5)......... (8) (8) -- (787) (1,012) -- (536) (391) --
Interest income............. 25 64 124 131 143 143 79 71 71
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes..................... 97 1,080 1,843 (107) 2,224 3,236 702 (430) 2,435
Income tax (expense)
benefit(6)................ (15) (385) 67 571 (938) (1,365) (324) 170 (963)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary item........ 82 695 1,910 464 1,286 1,871 378 (260) 1,472
Loss on early extinguishment
of debt--net of income tax
benefit of $180........... -- -- -- -- (271) -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)........... $ 82 $ 695 $ 1,910 $ 464 $ 1,015 $ 1,871 $ 378 $ (260) $ 1,472
-------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) per
share--basic.............. $ 0.02 $ 0.14 $ 0.33 $ 0.08 $ 0.16 $ 0.27 $ 0.06 $ (0.04) $ 0.21
Net income (loss) per
share--diluted............ $ 0.02 $ 0.13 $ 0.31 $ 0.07 $ 0.14 $ 0.24 $ 0.05 $ (0.04) $ 0.19
Weighted average shares
outstanding--basic........ 5,007 4,970 5,820 6,050 6,304 7,009 6,299 6,316 6,970
Weighted average shares
outstanding--diluted...... 5,294 5,494 6,104 6,537 7,014 7,720 7,021 6,316 7,940

PRO FORMA NET INCOME DATA(6):
Income (loss) before income
taxes..................... $ 1,843 $ (107)
Pro forma income tax
(expense) benefit......... (765) 44
-------- --------
Pro forma net income
(loss).................... 1,078 (63)
-------- --------
-------- --------
Pro forma net income (loss)
per share--basic.......... $ 0.19 $ (0.01)
Pro forma net income (loss)
per share--diluted........ $ 0.18 $ (0.01)
Pro forma weighted average
shares
outstanding--basic........ 5,820 6,050
Pro forma weighted average
shares
outstanding--diluted...... 6,104 6,050

AS OF JUNE 30, 1998
----------------------------
ACTUAL AS ADJUSTED(7)
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents............................................................... $ 1,293
Working capital......................................................................... 3,760
Total assets............................................................................ 9,702
Long-term debt, including current portion............................................... 8,575
Total stockholders' equity (deficit).................................................... (2,694)

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(1) The pro forma statement of operations data for the year ended December 31,
1997 are presented as if, on January 1, 1997, the Offering had been
consummated and a portion of the net proceeds therefrom had been applied to
repay all outstanding long-term debt, including current portion, resulting
in the elimination of interest expense (and the related income tax benefit).
The 1997 pro forma statement of operations data also reflect the elimination
of the extraordinary loss on early extinguishment of debt. The 1997 pro
forma net income per share data (basic and diluted) include an additional
704.9 shares of Common Stock

assumed to be outstanding, reflecting that portion of the Offering necessary
to repay outstanding debt at January 1, 1997. See "Capitalization," "Use of
Proceeds" and Note 7 of Notes to Financial Statements.

(2) The pro forma statement of operations data for the six months ended June 30,
1998 are presented as if, on January 1, 1998, the Offering had been
consummated and a portion of the net proceeds therefrom had been applied to
repay all outstanding long-term debt, including current portion, resulting
in the elimination of interest expense (and the related income tax benefit).
The 1998 interim period pro forma statement of operations data also reflect
the elimination of special compensation expense (and the related income tax
benefit) recognized as a result of the sale of stock and granting of options
at prices below fair value to certain officers and employees of the Company
in May and June 1998. The 1998 interim period pro forma information does not
include $1,225 in aggregate bonus obligations payable to certain current
officers and a significant stockholder of the Company upon the successful
completion of an initial public offering. The 1998 interim period pro forma
net income per share data-basic include an additional 654.1 shares of Common
Stock assumed to be outstanding reflecting that portion of the Offering
necessary to repay outstanding debt at January 1, 1998 and the 1998 interim
period pro forma net income per share data-diluted includes such 654.1
additional shares plus a further 969.2 shares representing the potential
dilutive impact of outstanding options and warrants that were not considered
in the actual results for the six months ended June 30, 1998 as their impact
would have been anti-dilutive. See "Capitalization," "Use of Proceeds" and
Notes 7 and 11 of Notes to Financial Statements.

(3) Special compensation expense relates to the issuance of stock and options in
connection with the May 1998 hiring of the Company's Chairman and Chief
Executive Officer and certain other employees at prices below the fair value
of the underlying shares. The Chairman's options and shares vested
immediately and are subject to call rights held by the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Management--Executive Compensation," "Certain Transactions"
and Note 11 of Notes to Financial Statements.

(4) During late 1996 and early 1997, the Company incurred costs to relocate its
corporate offices from Pennsylvania to Orlando, Florida. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Note 10 of Notes to Financial Statements.

(5) On April 11, 1996, the Company completed the Recapitalization whereby
combined proceeds of approximately $21,132 from the issuance of common
stock, debt and warrants were used to redeem 5,637 shares of common stock,
to terminate certain options to purchase common stock and to pay
transaction-related expenses including cash bonuses paid to certain key
executives, and certain legal, accounting and other miscellaneous expenses.
Immediately after the Recapitalization, previous shareholders held 20.3% of
the outstanding voting common stock of the Company. Interest expense for
periods after April 11, 1996 reflects the debt incurred as part of the
Recapitalization. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 4 of Notes to Financial
Statements.

(6) For the period January 1, 1995 to April 11, 1996 the Company was treated as
an S Corporation for federal income tax purposes. During such period, the
Company was not subject to federal income taxes, but was subject to certain
state income taxes. Upon the termination of its S Corporation election, the
Company recognized a deferred tax benefit of $271 related to the initial
recording of deferred tax assets and liabilities. The pro forma net income
data show the significant effects on the historical financial information
had the Company not been treated as an S Corporation during this period and
reflect a provision for income taxes at an effective rate of 41.5% and 41.0%
during 1995 and a portion of 1996, respectively. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 1, 2 and 14 of Notes to Financial Statements.

(7) Adjusted to give effect to the sale of shares of Common Stock offered
by the Company hereby (at an assumed initial public offering price of
$ per share) and the application of the estimated net proceeds
therefrom. See "Use of Proceeds" and "Capitalization."

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS, INVESTORS
SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN CONNECTION WITH AN INVESTMENT
IN THE SHARES OF COMMON STOCK OFFERED HEREBY.

RELIANCE ON HIGHER EDUCATION INSTITUTIONS

Substantially all of the Company's clients are colleges and universities.
The Company estimates that there are approximately 3,500 colleges and
universities in the United States. The Company's success will depend, to a large
extent, on its ability to persuade institutions that currently perform
information technology functions through their own in-house departments to
contract with a third-party provider such as the Company to perform those
functions. The Company's ability to increase revenues would also be impaired if
the Company were unsuccessful in persuading clients to use the Company as their
single-source provider of a number of critical information technology services.
Because client referrals are an important component in obtaining new engagements
in the higher education market, a failure or inability to meet a customer's
expectations could seriously damage the Company's reputation and affect its
ability to attract new business. The Company cannot give any assurance of
success in expanding its presence in its target market or otherwise increasing
its revenues from its current clients.

Unfavorable economic conditions adversely impacting the higher education
market could also have a material adverse effect on the Company's business,
financial condition and results of operations. A general economic downturn could
further intensify the competitive pressures facing small private colleges, which
constitute a significant market for the Company's services. In addition, the
Company derives a significant portion of its revenues from public institutions
whose fiscal stability is dependent, in part, on state and local government
funding. As a result, a decrease in government funding in a state or
municipality in which the Company derives a significant portion of its revenue
could have a material adverse effect on the Company's business, financial
condition or results of operations. During the years ended December 31, 1996 and
1997 and the six months ended June 30, 1998, the Company derived 23.2%, 33.1%
and 31.6%, respectively, of its service revenue from New Jersey-based community
colleges.

EXECUTION RISKS OF IT PROJECTS; YEAR 2000 RISKS

The Company's services, especially the outsourcing of a substantial portion
of an institution's IT functions, involve key aspects of computer systems and
are typically critical to a client's operations. Failures in a client's system
could result in a claim for substantial damages against the Company, regardless
of the Company's actual responsibility. Additionally, the Company maintains
general liability insurance coverage, including coverage for errors and
omissions. However, there is no assurance that such coverage will continue to be
available on acceptable terms, or will be available in sufficient amounts to
cover one or more large claims. The successful assertion of one or more large
claims against the Company that exceed available insurance coverage, or changes
in the Company's insurance policies including premium increases or the
imposition of large deductible or co-insurance requirements, could each have a
material adverse effect on the Company's business, financial condition and
results of operations.

The Year 2000 problem is an example of this risk. While the Company is not
aware of any existing or potential claims, the occurrence of Year 2000 related
system failures in the information systems of clients of the Company could
result in a material claim for damages against the Company or the early
termination of the Company from a significant engagement, whether or not the
Company bears any responsibility, legal or otherwise, for the occurrence of
those problems. No assurance can be given that clients will not attempt to
assert that the scope of the Company's engagement, as the administrator of their
IT function, encompasses responsibility for Year 2000 system failures.

DEPENDENCE ON KEY CLIENTS

The Company derives a significant portion of its revenues from a relatively
limited number of clients. COLLEGIS is currently engaged by 28 institutions on
significant long-term projects. The Company's top 10 clients accounted for
approximately 70% of the Company's 1997 revenues, with the top two clients
accounting for approximately 13.5% and 9.0% of such revenues, respectively. For
the six months ended June 30, 1998, the Company's top 10 clients accounted for
approximately 61% of the Company's revenues, with the top two clients accounting
for approximately 10.2% and 9.0% of such revenues, respectively. The loss of any
one of the Company's major clients could have a material adverse effect on the
Company's business, financial condition or results of operations. See
"Business--Clients."

It is the Company's general practice to enter into long-term contracts
having a typical term of five years. Of these long-term client contracts, five
expire prior to December 31, 1999. The Company cannot give any assurance of its
ability to renew contracts or to renew contracts on terms as favorable to the
Company as those contained in the existing contracts.

NEED TO MANAGE GROWTH

The Company is continuing to experience significant growth, which has
placed, and could continue to place, a strain on the Company's financial,
managerial and human resources. From December 31, 1996 through June 30, 1998,
the number of the Company's full-time employees has increased from 195 to 388
and the Company is planning substantial increases in the future. The Company's
future performance and profitability will depend, in large part, on its ability
to manage this growth, particularly with respect to its decentralized workforce
that is located principally at its clients' sites. To manage this growth, the
Company must continue to improve its operational, financial and other internal
systems and the training, motivation, management and retention of its employees.
If the Company is unable to manage growth effectively, it could have an adverse
affect on the Company's business, financial condition or results of operations.

NEED TO ATTRACT AND RETAIN KEY PERSONNEL IN HIGHLY COMPETITIVE MARKETPLACE

The Company's business involves the delivery of professional and technical
services and is labor intensive. The Company's performance depends, to a large
extent, on the continued service of its key technical employees and client
managers and its ability to continue to attract, retain and motivate such
personnel. Competition for such personnel is intense, particularly for highly
skilled and experienced IT professionals who also have backgrounds serving
higher education. Such technical personnel are in great demand and are likely to
remain a limited resource for the foreseeable future. The Company can give no
assurance that it will attract, retain and motivate sufficient numbers of highly
skilled employees in the future. The inability to do so could have a material
adverse effect upon the Company's business, operating results or financial
condition. Competitive forces may require the Company to increase the
compensation of its IT professionals to levels payable by the IT services
industry generally. There is no assurance that the Company would be able to pass
any such increase on to its clients. See "Business--Human Resources."

RISKS ASSOCIATED WITH GROWTH THROUGH ACQUISITIONS

The Company's business strategies include growth through acquisitions of
complementary businesses that meet client and market demands for new services or
enhanced skills. To date, the Company has no experience in making business
acquisitions or integrating acquired businesses. The Company's success in
executing its acquisition strategy will depend, in part, on its ability to
identify potential targets that meet the Company's criteria, which include a
reputation as a leading service provider with strong client relationships and a
complementary culture. The Company can give no assurance that it will have
success in identifying potential acquisitions or that, if identified, it will
complete the acquisitions on acceptable terms or that it will successfully
integrate any acquired assets or business into the Company's operations. The
Company may use Common Stock or preferred stock (which could result in dilution
to the purchasers of

Common Stock in the Offering) or may incur indebtedness or use a combination of
stock and indebtedness for all or a portion of the consideration to be paid in
future acquisitions, all of which could be dilutive to the Company's earnings or
earnings per share.

RISKS INVOLVED IN MANAGING FIXED PRICE PROJECTS

Substantially all of the Company's revenues are generated under long-term,
fixed priced contracts. The Company's failure to accurately estimate the
resources and related expenses required for a fixed fee contract or its failure
to complete its contractual obligations in a manner consistent with the project
plan upon which its fixed fee contract was based, could have a material adverse
impact on the Company's business, financial condition and results of operations.

At the start of a contract for the management of an institution's IT
function, the Company may incur significant start-up expenses prior to receiving
any payments under its contract. Such expenses include the costs of hiring,
training and relocating sufficient personnel.

VARIABILITY OF QUARTERLY OPERATING RESULTS

Variations in the Company's revenues and operating results may occur from
quarter to quarter as a result of a number of factors, including a slowdown in
new client engagements, the failure to renew existing client engagements, the
Company incurring expenditures in connection with an engagement substantially in
excess of the fixed fees paid by the client, the business failure of a
significant client, the length of the Company's sales cycle, the size and scope
of assignments and general economic conditions. Because a significant portion of
the Company's expenses are relatively fixed, a variation in the number of client
assignments or the timing of the initiation or the completion of client
assignments can cause significant variations in operating results from quarter
to quarter. To the extent that increases in the number of professional personnel
are not followed by corresponding increases in revenues, the Company's operating
results could be materially adversely affected. Due to all of the foregoing
factors, it is possible that in some future periods the Company's results of
operations will be below the expectations of public market analysts and
investors. In such event, the price of the Company's Common Stock could be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations-- Unaudited Quarterly Results."

COMPETITION

The IT services industry is intensely competitive, highly fragmented and
subject to rapid technological and market changes. The Company's primary
competitive challenge is overcoming the initial resistance to the IT outsourcing
model from the internal IT departments of its prospective clients. The Company
also competes for client projects and experienced personnel with a number of IT
service organizations having significantly greater financial, technical and
marketing resources and revenues than the Company. Many of these competitors
also have greater name recognition in the IT services industry. The Company's
competitors include systems consulting and integration services providers,
application software and professional service organizations, major accounting
firms and general management consulting firms. The emerging instructional
technology market is highly fragmented with no single dominant participant. As
this market matures, the Company anticipates facing increasing competition from
larger, better financed participants than the Company.

The Company expects to experience increasing competition from IT service
providers offering established services and new service offerings and
technologies. In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
others, thereby increasing their ability to expand or increase their service
offerings to higher education

institutions. Accordingly, it is possible that new competitors or alliances
among current and new competitors may emerge and rapidly gain significant market
share. Increased competition could result in downward pricing pressures, fewer
client engagements, reduced gross margins and loss of market share for the
Company. See "Business--Competition."

DEPENDENCE ON KEY EXECUTIVES

The success of the Company is highly dependent upon the efforts, abilities,
business generation capabilities and project execution skills of its executive
officers and senior managers. The loss of one or more of the Company's key
executive officers could have a material adverse effect on the Company and its
prospects. See "Management."

DEPENDENCE ON ABILITY TO ANTICIPATE TECHNOLOGICAL ADVANCES

The success of the Company will depend, to a large extent, on its ability to
anticipate and develop solutions that keep pace with changes in information
ttechnology, evolving industry standards and changing client needs and
preferences. The Company cannot give any assurance of success in anticipating
and addressing these developments in a timely manner or that it will be able to
successfully introduce new service offerings. The Company's failure to
anticipate and address these developments could have a material adverse effect
on the Company's business, financial condition or results of operations. In
addition, the Company cannot give any assurance that products or technologies
that third parties develop will not render the information technology services
of the Company noncompetitive or obsolete. See "Business-- Service Areas."

LIMITED PROTECTION OF PROPRIETARY SYSTEMS AND PROCEDURES

The Company's performance is in part dependent upon its internal information
and communication systems, databases, tools, and the methodologies that it has
developed to serve its clients. The Company has no patents; consequently, it
relies on a combination of nondisclosure and other contractual arrangements and
copyright and trade secret laws to protect its proprietary systems, information
and procedures. The Company cannot give any assurance that the steps that it
takes or will take to protect its proprietary rights will be adequate to prevent
misappropriation of such rights or that the Company will detect unauthorized use
and take appropriate steps to enforce its proprietary rights. The Company
believes that its systems and procedures and other proprietary rights do not
infringe upon the rights of third parties. However, the Company cannot give any
assurance in this regard or that any infringement claims will not require the
Company to enter into costly litigation or materially adverse settlements to
litigation, regardless of the merits of such litigation.

SIGNIFICANT UNALLOCATED NET PROCEEDS

The Company has not designated a substantial portion of the anticipated net
proceeds of this Offering. Therefore, the Company's management will have broad
discretion with respect to the use of the net proceeds of this Offering. The
Company could allocate a significant percentage of the net proceeds to uses that
stockholders may not consider desirable, and there can be no assurance that the
net proceeds can or will be invested to yield an acceptable return. See "Use of
Proceeds."

BENEFITS OF OFFERING TO SELLING STOCKHOLDERS

The Selling Stockholders will receive substantial proceeds and certain other
benefits from their participation in this Offering. This Offering will establish
a public market for the Common Stock and provide significantly increased
liquidity to the Selling Stockholders for the shares of Common Stock they will
own after this Offering. After deducting underwriting discounts and commissions,
the aggregate proceeds (before deduction of estimated income taxes) to the
Selling Stockholders from their sale of

shares in this Offering will be approximately $ million. The Company will not
receive any part of the proceeds from the sale of shares by the Selling
Stockholders. See "Use of Proceeds," "Dilution" and "Principal and Selling
Stockholders."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this Offering, the Common Stock has not been publicly traded. The
management of the Company and the representatives of the Underwriters (the
"Representatives") will determine through negotiations the initial public
offering price per share of the Common Stock. See "Underwriting" for factors to
be considered in determining the initial public offering price per share.
Although the Common Stock has been approved for quotation on the Nasdaq National
Market, the Company cannot offer any assurance that an active trading market
will develop or be sustained after this Offering. The market price of the Common
Stock may fluctuate substantially due to a variety of factors, including
quarterly fluctuations in its results of operations, the failure to win a
significant contract on which it has bid, a client's termination of a material
contract, the Company's or a competitor's announcements of technological
innovations or new services, changes in earnings estimates by securities
analysts, changes in accounting principles, sales of Common Stock by existing
holders, negative publicity, loss of key personnel, lack of market acceptance
regarding the Company's announcement of an acquisition and other factors. In
addition, the stock market is subject to extreme price and volume fluctuations.
This volatility has often had a significant effect on the market prices of
securities for reasons unrelated to the operating performance of these
companies. In the past, following periods of volatility in the market price of a
company's securities, certain companies became defendants in securities class
action litigation. Any such litigation initiated against the Company could
result in substantial costs and a diversion of management's attention and
resources, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

INFLUENCE OF PRINCIPAL STOCKHOLDERS

After completion of this Offering, the Company's directors and executive
officers will beneficially own an aggregate of approximately % of the
Company's outstanding shares of Common Stock ( % if the Underwriters'
over-allotment option is exercised in full). As a result, these stockholders
will retain sufficient voting power to exercise significant influence over the
outcome of matters requiring a stockholder vote, including the election of the
members of the Board of Directors, thereby controlling the affairs and
management of the Company. Such control could adversely affect the market price
of the Common Stock or delay or prevent a change in control of the Company. See
"Principal and Selling Stockholders."

DILUTION

The purchasers of the shares of Common Stock in this Offering will
experience an estimated immediate dilution of $ per share. The per share
purchase price of the Common Stock in this Offering will exceed the net tangible
book value per share of the Common Stock immediately following the Offering. See
"Dilution."

ANTI-TAKEOVER MATTERS

The Company's Restated Certificate of Incorporation and By-Laws contain
certain provisions that may delay, defer or prevent a takeover of the Company
that stockholders might consider in their best interests. The Company's Board of
Directors has the authority to issue up to 3,000,000 shares of preferred stock
and to determine the price, rights, preferences and restrictions, including
voting rights, of these shares, without any further vote or action by the
stockholders of the Company. The rights of holders of Common Stock are subject
to, and may be adversely affected by, the rights of holders of any preferred
stock that the Company may issue in the future. The Restated Certificate of
Incorporation also provides

for a classified board of directors, with three classes of directors, each class
being elected for three-year, staggered terms, prohibits the removal of
directors except for "cause" and prohibits stockholder action by written
consent. The Company's By-Laws include provisions establishing advance notice
procedures with respect to stockholder proposals and director nominations and
permits only the Board of Directors, the Chairman or the President to call
special stockholder meetings. In addition, Section 203 of the General
Corporation Law of the State of Delaware, if applicable, may be deemed to have
an anti-takeover effect and may discourage takeover attempts not first approved
by the Board of Directors, which could adversely affect the market price of the
Company's Common Stock. See "Description of Capital Stock and Corporate
Charter."

SHARES ELIGIBLE FOR FUTURE SALE

Immediately after completion of this Offering, the Company will have
9,189,060 shares (excluding 2,150,404 shares issuable upon exercise of currently
issued and outstanding options) of Common Stock outstanding, of which the
3,700,000 shares sold pursuant to this Offering will generally be freely
tradable without restriction or further registration under the Securities Act.
The remaining 5,489,060 shares (excluding shares issuable upon exercise of
currently issued and outstanding options) of Common Stock constitute "restricted
securities" under Rule 144 under the Securities Act ("Rule 144"). Of these
"restricted securities," 5,384,324 shares will be eligible for sale by the
holders thereof subject, however, to the manner of sale, volume, notice
information requirements and other restrictions (other than the holding period)
of Rule 144, as applicable. The remaining 104,736 "restricted securities" will
become eligible for sale under Rule 144 at various times beginning in 1999. The
Company, together with the Selling Stockholders and executive officers and
directors of the Company (holding in the aggregate approximately shares of
Common Stock after completion of this Offering), will enter into agreements,
subject to certain exceptions, not to register the sale of, sell, offer to sell,
contract to sell, grant any option to purchase or otherwise dispose of, directly
or indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, other than the shares offered
hereby, for a period of 180 days after the date of this Prospectus, without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation.
However, Donaldson, Lufkin & Jenrette Securities Corporation may, in its
discretion, waive the foregoing restrictions in whole or in part, with or
without a public announcement of such action. The sale of a substantial number
of shares of Common Stock, or the perception that such sales could occur, could
adversely affect prevailing market prices for the Common Stock. In addition, any
such sale or such perception could make it more difficult for the Company to
sell equity securities or equity-related securities in the future at a time and
price that the Company deems appropriate.

DIVIDEND POLICY; ABSENCE OF DIVIDENDS

The Company has not paid cash dividends on its capital stock since it
converted to a C Corporation for tax purposes and does not anticipate paying
cash dividends in the foreseeable future. The Company currently intends to
retain all earnings for the development of its business. See "Dividend Policy."

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

Included in this Prospectus are various forward-looking statements,
including, among others, the Company's goals and strategies, the expected growth
of the higher education market's demand for IT solutions and services, the pace
of change in that marketplace, the demand for educational outsourcing services,
the Company's goal to expand service offerings and to pursue acquisitions, the
ability to enter into additional contracts with existing clients, and the
ability to obtain new outsourcing contracts.

These statements are forward-looking and reflect the Company's current
expectations. Such statements are subject to a number of risks and uncertainties
including, but not limited to, changes in the

economic and political environments, changes to technology and changes in the
higher education marketplace. In light of the many risks and uncertainties
surrounding the Company and the higher education marketplace, the Company can
give no assurance that the events described in forward-looking statements
contained in this Prospectus will take place.

COMPANY HISTORY

The Company was organized in 1986 under the laws of Pennsylvania. On April
11, 1996, the Company completed a recapitalization transaction (the
"Recapitalization") in which combined proceeds of approximately $21.1 million
from the issuance of Common Stock, debt and warrants were used to (i) redeem
5,637,152 shares of common stock, (ii) terminate certain options to purchase
common stock and (iii) pay transaction-related expenses. Immediately after the
Recapitalization, previous stockholders held 20.3% of the outstanding voting
common stock of the Company. Except for the change in the Company's capital
structure, the operations and nature of the Company's business remained
substantially unchanged. In connection with the Recapitalization, on May 23,
1996 the Company reincorporated in Delaware. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 4 of Notes
to the Financial Statements.

The Company's principal executive offices are located at 2300 Maitland
Center Parkway, Suite 340, Maitland, Florida 32751. The Company's World Wide Web
address is http://www.collegis.com. The Company's Web site is not part of this
Prospectus. The Company's telephone number is (407) 660-1199.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered by the Company (after deducting underwriting discounts and commissions
and estimated offering expenses payable by the Company) are estimated to be
$ , based upon an assumed initial public offering price of $ per
share.

The Company intends to use such net proceeds to (i) repay $8.6 million of
bank indebtedness, (ii) pay $1.2 million in aggregate bonus obligations payable
to certain current officers and a significant stockholder and former director
and executive officer of the Company upon the successful completion of an
initial public offering, and (iii) for general corporate purposes, including
expansion of existing operations, investing in new technologies or future
acquisitions of complimentary businesses. The indebtedness consists of a
revolving credit facility which bears interest at either the applicable Prime or
LIBOR rate, plus a variable spread. Such indebtedness matures on December 31,
2003 and is subject to quarterly amortization payments. The Company currently
has no agreements, understandings or commitments regarding any future
acquisitions.

The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders."

DIVIDEND POLICY

The Company anticipates that it will retain all of its earnings for
expansion of the Company's business, and does not anticipate paying any cash
dividends in the foreseeable future. Future cash dividends, if any, will be at
the discretion of the Company's Board of Directors and will depend upon, among
other things, the Company's future operations and earnings, capital requirements
and surplus, general financial condition, contractual restrictions and such
other factors as the Board of Directors may deem relevant.

CAPITALIZATION

The following table sets forth the current portion of long-term debt and the
capitalization of the Company as of June 30, 1998, and as adjusted to reflect
the sale of shares of Common Stock offered by the Company and the
application of the estimated net proceeds therefrom as described in "Use of
Proceeds." The following table should be read in conjunction with the Financial
Statements and related Notes thereto included elsewhere in this Prospectus.

AS OF JUNE 30, 1998
-----------------------
ACTUAL AS ADJUSTED
(IN THOUSANDS)

Current portion of long-term debt.................................... $ 1,050 $ --
---------- -----------
---------- -----------
Long-term debt, net of unamortized discount.......................... $ 7,525 $ --
---------- -----------
Redeemable Common Stock; $.01 par value; 374,000 shares issued and
outstanding actual, at redemption value; no shares outstanding as
adjusted(1)........................................................ $ 913 --
Stockholders' equity:
Preferred Stock, $.01 par value; 3,000,000 shares authorized as
adjusted; no shares issued and outstanding as adjusted........... --
Common Stock, $.01 par value; 32,500,000 shares authorized;
6,040,148 shares issued and outstanding actual; 9,189,060 shares
issued and outstanding as adjusted(2)............................ 60
Additional paid-in capital......................................... 14,566
Warrants........................................................... 404
Treasury stock-at cost(3).......................................... (18,943)
Retained earnings.................................................. 1,219
Total stockholders' equity (deficit)............................. (2,694)
---------- -----------
Total capitalization........................................... $ 6,794 $
---------- -----------
---------- -----------

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

(1) In connection with the Recapitalization, the Company entered into an
agreement with a former executive officer and director that provided for
certain put rights with respect to 374,000 shares of Common Stock held by
the former officer. The existence of the put rights requires the Company to
separately record these shares as redeemable equity. The agreement granting
the put rights expires upon the completion of this Offering. See "Certain
Transactions" and Note 7 of Notes to Financial Statements.

(2) The issued and outstanding as adjusted shares of Common Stock include
274,912 shares of Common Stock to be issued upon exercise of a warrant by a
Selling Stockholder in connection with this Offering and exclude (i)
2,150,404 shares of Common Stock issuable upon the exercise of stock options
outstanding as of June 30, 1998, of which 1,850,404 are outstanding under
the Company's 1996 Stock Option Plan and 300,000 are held by an executive
officer of the Company, and (ii) 298,360 shares of Common Stock reserved for
grant of future options or direct issuances under the Company's 1996 Stock
Option Plan. See "Management--Employee Benefit Plans--1996 Stock Option
Plan" and "Certain Transactions."

(3) In connection with the Recapitalization, the Company redeemed substantially
all of the Company's then-outstanding common stock. The cost of the
purchased shares was recorded as treasury stock and a portion of the shares
held in treasury will be reissued by the Company in connection with the
Offering. See Note 4 of Notes to Financial Statements.

DILUTION

As of June 30, 1998, the net tangible book value of the Company was $ or
$ per share. Tangible book value per share represents the amount of total
tangible assets of the Company, less total liabilities, divided by the number of
shares of Common Stock outstanding. After giving effect to the sale by the
Company of shares of Common Stock and the application of the
estimated net proceeds therefrom as described under "Use of Proceeds," the net
tangible book value of the Company at June 30, 1998 would have been $ or
$ per share. This amount represents an immediate increase in net tangible
book value of $ per share to existing stockholders of the Company and an
immediate dilution in net tangible book value per share of $ per share to
purchasers of Common Stock in this Offering. The following table illustrates
this per share dilution:

Assumed initial public offering price per share............................ $
Net tangible book value per share at June 30, 1998....................... $
Increase per share attributable to new investors.........................
---------
Net tangible book value per share after this Offering......................
---------
Dilution in net tangible book value per share to new investors............. $
---------
---------

As of June 30, 1998, there were options outstanding to purchase a total of
2,150,404 shares of Common Stock at a weighted average exercise price of $2.13
per share. To the extent outstanding options are exercised, there will be
further dilution to investors.

The following table summarizes, on a pro forma basis as of June 30, 1998,
the differences in the number of shares of capital stock purchased from the
Company, the total consideration paid and the average price paid per share by
existing shareholders and new investors:

TOTAL CONSIDERATION
SHARES PURCHASED -----------------------------------
------------------------ AVERAGE PER
NUMBER PERCENT AMOUNT PERCENT SHARE

Existing stockholders(1)....................................... % $ % $
New investors(1)............................................... $
----------- ----- --------- -----
Total........................................................ 100.0% $ 100.0%
----------- ----- --------- -----
----------- ----- --------- -----

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

(1) Sales by the Selling Stockholders in this Offering will reduce the number of
shares of Common Stock held by existing stockholders of the Company to or
% of the total number of shares outstanding after this Offering ( % if
the Underwriters' over-allotment option is exercised in full), and will
increase the number of shares held by new investors to shares of Common
Stock or % of the total number of shares of Common Stock outstanding
after this Offering ( shares or % if the Underwriters' over-allotment
option is exercised in full). See "Principal and Selling Stockholders."

SELECTED FINANCIAL DATA

The following selected financial data as of and for the years ended December
31, 1996 and 1997 are derived from the Company's Financial Statements and
related Notes thereto included elsewhere in this Prospectus, which have been
audited by Deloitte & Touche, LLP, independent auditors. The selected financial
data for the year ended December 31, 1995 are derived from the Company's
Financial Statements included elsewhere in this Prospectus, which have been
audited by Zweig, Ramick & Associates, independent auditors. The selected
financial data as of December 31, 1993, 1994 and 1995 and for the years ended
December 31, 1993 and 1994 are derived from the Company's audited financial
statements not included in this Prospectus. The selected financial data as of
and for the six months ended June 30, 1997 and 1998 are derived from the
Company's unaudited financial statements, and include, in the opinion of
management, all adjustments necessary for a fair statement of the results for
the interim periods, and all such adjustments are of a normal recurring nature.
The selected financial data for the six months ended June 30, 1998 are not
necessarily indicative of the results to be expected for the full year. The
selected financial data set forth below should be read in conjunction with the
Company's Financial Statements and related Notes thereto and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

PRO FORMA NET INCOME DATA(6):
Income (loss) before income
taxes..................... $ 1,843 $ (107)
Pro forma income tax
(expense) benefit......... (765) 44
-------- --------
Pro forma net income
(loss).................... 1,078 (63)
-------- --------
-------- --------
Pro forma net income (loss)
per share--basic.......... $ 0.19 $ (0.01)
Pro forma net income (loss)
per share--diluted........ $ 0.18 $ (0.01)
Pro forma weighted average
shares outstanding--
basic..................... 5,820 6,050
Pro forma weighted average
shares outstanding--
diluted................... 6,104 6,050

AS OF DECEMBER 31, AS OF JUNE 30,
----------------------------------------------------- ----------------------------
1993 1994 1995 1996 1997 1997(UNAUDITED)1998

BALANCE SHEET DATA:
Cash and cash equivalents................ $ 1,110 $ 1,059 $ 2,726 $ 2,614 $ 3,568 $ 1,950 $ 1,293
Working capital.......................... 1,139 1,794 2,703 2,661 2,793 2,369 3,760
Total assets............................. 1,588 2,856 3,628 6,978 8,257 6,167 9,702
Long-term debt, including current
portion................................ 100 9,088 9,000 8,788 8,575
Redeemable common stock.................. -- -- -- 913 913 913 913
Total stockholders' equity (deficit)..... 1,073 1,892 2,800 (5,963) (5,253) (5,585) (2,694)

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

(6) For the period January 1, 1995 to April 11, 1996 the Company was treated as
an S Corporation for federal income tax purposes. During such period, the
Company was not subject to federal income taxes, but was subject to certain
state income taxes. Upon the termination of its S Corporation election, the
Company recognized a deferred tax benefit of $271 related to the initial
recording of deferred tax assets and liabilities. The pro forma net income
data show the significant effects on the historical financial information
had the Company not been treated as an S Corporation during this period and
reflects a provision for income taxes at an effective rate of 41.5% and
41.0% during 1995 and a portion of 1996, respectively. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Notes 1, 2 and 14 of Notes to Financial Statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

THE FOLLOWING SECTION OF THE PROSPECTUS, MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, SHOULD BE READ IN
CONJUNCTION WITH THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS AND NOTES
THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. THE FOLLOWING DISCUSSION
CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL RISKS AND
UNCERTAINTIES. WHEN USED IN THIS SECTION, THE WORDS "ANTICIPATE," "BELIEVE,"
"ESTIMATE," "EXPECT" AND SIMILAR EXPRESSIONS AS THEY RELATE TO THE COMPANY OR
ITS MANAGEMENT ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD DIFFER MATERIALLY
FROM THE RESULTS EXPRESSED IN, OR IMPLIED BY, THESE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE
DISCUSSED IN "RISK FACTORS."

OVERVIEW

Service revenue is generally recognized as services are provided in
accordance with the percentage of completion method. Changes in project
conditions, performance and profitability may result in revisions to costs and
revenues, which are recognized in the period in which such revisions are
determined. Service revenue excludes reimbursable expenses charged to the
client. Billings are based on payment schedules that may differ from the timing
of revenue recognition.

The fixed-price contracts subject the Company to the risk of cost overruns
and inflation. This risk is partially mitigated by contract clauses that allow
for fee increases in the event of inflation and by the active management of
individual project costs by the Company's on-site, regional and corporate
management teams. To date, the Company has not incurred a loss under a
fixed-price contract.

Because the Company's services are provided under multi-year client
agreements, a substantial portion of the Company's service revenue is committed
at the beginning of the year. Committed revenues as of December 31, 1995 and
December 31, 1996 represented in excess of 75% of the following year's revenue.
The remaining revenues are derived from new client engagements and additional
services sold to existing clients.

The Company's most significant expense is the cost of services provided,
which consists principally of the salaries, benefits and travel expenses of its
IT professionals. Project personnel are typically full-time professionals
employed by the Company. The Company also supplements its project personnel from
time to time with independent contractors. By retaining independent contractors
on a per-engagement basis, the Company is afforded greater flexibility to adjust
professional personnel levels in response to changes in demand for the services
provided.

Selling, general and administrative expenses include the costs of
maintaining the Company's corporate offices and infrastructure, including the
sales and marketing, human resources and recruiting, finance and administration,
and instructional technologies departments. To support its growth, the Company
has made, and anticipates that it will continue to make, a significant
investment in additional sales, marketing and recruiting personnel,
communication systems infrastructure and its instructional technologies area.

Relocation costs represent the costs associated with moving the corporate
headquarters from Pennsylvania to Florida in late 1996 and early 1997.
Relocation costs include certain facility and employee moving expenses, as well
as estimated severance costs for employees who elected not to relocate. See Note
10 of Notes to Financial Statements.

Recapitalization expenses include bonuses paid to certain key executives,
amounts paid to terminate certain stock options and miscellaneous legal,
accounting and other expenses incurred in connection with the recapitalization
of the Company on April 11, 1996. See Note 4 of Notes to Financial Statements.

For the period January 1, 1995 through April 11, 1996, the Company was taxed
as a Subchapter S Corporation for Federal income tax purposes. As a result,
substantially all of the income of the Company was reported for tax purposes by
its stockholders rather than by the Company during this period. Effective with
the Recapitalization on April 11, 1996, the Company's Federal tax status changed
to a C Corporation.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, statements of
operations data as a percentage of revenue:

SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- -----------------------
1995 1996 1997 1997 1998

Service revenue.................................................. 100.0% 100.0% 100.0% 100.0% 100.0 %
Operating expenses:
Cost of services............................................... 58.0 58.0 57.3 57.0 56.9
Selling, general and administrative expenses................... 23.9 23.3 26.3 26.3 27.6
Depreciation and amortization.................................. 0.4 0.7 0.7 0.6 0.6
Special compensation expense................................... -- -- -- -- 15.6
Relocation costs............................................... -- 4.0 2.1 4.8 --
Recapitalization expenses...................................... -- 10.4 -- -- --
--------- --------- --------- --------- -----
Total operating expenses..................................... 82.3 96.4 86.4 88.7 100.7
--------- --------- --------- --------- -----
Operating income (loss).......................................... 17.7 3.6 13.6 11.3 (0.7)
Interest expense................................................. -- (5.2) (4.4) (5.2) (2.5)
Interest income.................................................. 1.3 0.9 0.6 0.8 0.4
--------- --------- --------- --------- -----
Income (loss) before income taxes................................ 19.0 (0.7) 9.8 6.9 (2.7)
Income tax (expense) benefit..................................... 0.7 3.8 (4.1) (3.2) 1.1
Income (loss) before extraordinary item.......................... 19.7 3.0 5.6 3.7 (1.6)
Loss on early extinguishment of debt -
net of income tax benefit...................................... -- -- (1.2) -- --
--------- --------- --------- --------- -----
Net income (loss)................................................ 19.7% 3.0% 4.5% 3.7% (1.6)%
--------- --------- --------- --------- -----
--------- --------- --------- --------- -----

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

SERVICE REVENUE. Service revenue increased 54.9% from $10.2 million for the
six months ended June 30, 1997 to $15.9 million for the six months ended June
30, 1998. The increase in the Company's service revenue reflects the addition of
new clients as well as leveraging the Company's existing client base by
undertaking additional projects for these clients. For the six months ended June
30, 1998, $2.0 million of service revenue was derived from services delivered to
new clients and $13.9 million related to the continuation of existing contracts
and the undertaking of additional projects for the Company's client base of the
previous year. The Company serviced 27 clients under long-term contracts for the
six months ended June 30, 1998 versus 20 clients in the corresponding prior
period.

COST OF SERVICES. Cost of services increased 54.7% from $5.8 million for
the six months ended June 30, 1997 to $9.0 million for the six months ended June
30, 1998. The increase was due primarily to the number of additional
professional staff required to support the Company's growth during the period.
The Company increased the number of its IT professionals from 207 at June 30,
1997 to 337 at June 30, 1998. As a percentage of service revenue, cost of
services remained stable at 56.9% for the six months ended June 30, 1998.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 62.6% from $2.7 million in the six months
ended June 30, 1997 to $4.4 million for the six months ended June 30, 1998. The
increase was primarily attributable to the costs associated with establishing
the instructional technologies services area, increasing sales and recruiting
staff and enhancing support systems, reflecting the Company's continued
investment in its corporate infrastructure to support its growth. As a
percentage of service revenue, selling, general and administrative expenses
increased from 26.3% of revenues in the six months ended June 30, 1997 to 27.6%
in the six months ended June 30, 1998

as increases in sales, recruiting and instructional technologies expenditures as
a percent of service revenue were offset by lower rates of growth in
expenditures in other administrative areas.

SPECIAL COMPENSATION EXPENSE. The Company incurred $2.5 million of special
compensation expense relating to the sale of stock and granting of options in
connection with the hiring of the Company's Chairman and Chief Executive Officer
and certain other employees at prices below the fair value. The Chairman's
options vest immediately and are subject to call rights held by the Company. See
"Management--Executive Compensation" and Note 11 of Notes to Financial
Statements.

RELOCATION COSTS. During late 1996 and early 1997, the Company relocated
its corporate headquarters from Pennsylvania to Orlando, Florida. Since the move
was completed in 1997, no relocation expenses were incurred in 1998.

OPERATING INCOME (LOSS). The Company incurred an operating loss of $0.1
million in the six months ended June 30, 1998 due to the special compensation
expense. Without consideration of this charge, the Company would have had
operating income of $2.4 million (14.9% of service revenue) in the six months
ended June 30, 1998 compared to $1.2 million (11.3% of service revenue) for the
corresponding prior period.

INTEREST EXPENSE. Interest expense declined $0.1 million reflecting lower
loan balances and interest rates for the 1998 period.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

SERVICE REVENUE. Service revenue increased 49.8% from $15.2 million in 1996
to $22.8 million in 1997. The increase in service revenue reflects the addition
of new clients as well as leveraging the Company's existing client base by
undertaking additional projects for these clients. In 1997, $3.0 million of
service revenue was derived from services delivered to new clients and $19.8
million related to the continuation of existing contracts and the undertaking of
additional projects from the Company's client base of the previous year. The
Company serviced 23 clients under long-term contracts in 1997 versus 20 clients
in 1996.

COST OF SERVICES. Cost of services increased 48.1% from $8.8 million in
1996 to $13.1 million in 1997. The increase was primarily due to the number of
additional professional staff required to support the Company's growth during
the period. The Company increased the number of its IT professionals from 179 at
December 31, 1996 to 256 at December 31, 1997. As a percentage of service
revenue, cost of services remained relatively stable.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 69.3% from $3.5 million in 1996 to $6.0
million in 1997. This increase was primarily attributable to the costs
associated with increasing sales, recruiting and other corporate staff and
enhancing support systems, reflecting the Company's continued investment in its
corporate infrastructure to support its growth. As a percentage of service
revenue, selling, general and administrative expenses increased from 23.3% in
1996 to 26.3% in 1997. This increase, as a percentage of revenue, reflects
increases in the costs associated with establishing the instructional
technologies services area and expanding the sales and marketing area, which
were partially offset by lower rates of growth in expenditures in other
administrative areas.

RELOCATION COSTS. Relocation costs were $0.5 million in 1997, down
marginally from the $0.6 million incurred in 1996.

RECAPITALIZATION EXPENSES. Recapitalization expenses include bonuses paid
to certain key executives, amounts paid to terminate certain stock options, and
miscellaneous legal, accounting and other expenses incurred in connection with
the Recapitalization. See Note 4 of Notes to Financial Statements.

OPERATING INCOME. Operating income increased 463.3% from $0.5 million in
1996 to $3.1 million in 1997. Operating income grew more rapidly than revenue
because the 1996 operating income was reduced by Recapitalization expenses.

INTEREST EXPENSE. Interest expense increased from $0.8 million in 1996 to
$1.0 million in 1997. This increase is a result of the existence of the
long-term debt for a full year as compared to nine months in

1996. In September 1997, the Company refinanced approximately $9.5 million of
outstanding term debt and interest with a new lender.

INCOME TAX (EXPENSE) BENEFIT. The year ended December 31, 1997 represented
the first full year the Company was taxed as a C Corporation. For the period
January 1, 1995 through April 11, 1996, the Company was taxed as a Subchapter S
Corporation and income taxes were paid directly by the Company's stockholders.
From April 11, 1996 through December 31, 1996 the Company was taxed as a C
Corporation. During 1996, the Company experienced a taxable loss as a result of
Recapitalization expenses and also received a $0.3 million deferred tax benefit
related to its change in tax status.

LOSS ON THE EARLY EXTINGUISHMENT OF DEBT. In September 1997, the Company
refinanced approximately $9.5 million of outstanding term debt and interest with
a new lender. As part of this transaction, the Company recognized a loss related
to the write-off of the unamortized debt issuance cost and discount related to
the warrants issued as part of the old credit agreement.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

SERVICE REVENUE. Service revenues increased 56.8% from $9.7 million in 1995
to $15.2 million in 1996. The increase in service revenue reflects the addition
of new clients as well as leveraging of the Company's existing client base by
undertaking additional projects for these clients. In 1996, $3.1 million of
service revenue was derived from services delivered to new clients and $12.1
million was related to the continuation of contracts or undertaking additional
projects from the Company's client base in the previous fiscal year. The Company
served 20 clients under long-term contracts in 1996 versus 16 clients in 1995.

COST OF SERVICES. Cost of services increased 56.7% from $5.6 million in
1995 to $8.8 million in 1996. The increase was primarily due to the number of
additional professional staff required to support the Company's growth during
the period. The Company increased the number of its IT professionals from 114 at
December 31, 1995 to 179 at December 31, 1996. As a percentage of service
revenue, cost of services remained stable.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 53.0% from $2.3 million in 1995 to $3.5
million in 1996. This increase was primarily attributable to the costs
associated with increasing sales, recruiting and other corporate staff and
enhancing support systems, reflecting the Company's continued investment in its
corporate infrastructure to support growth. As a percentage of service revenue,
these expenses remained relatively stable.

RELOCATION COSTS. During late 1996, the Company began relocating its
corporate headquarters from Pennsylvania to Orlando, Florida.

OPERATING INCOME. Operating income decreased from $1.7 million in 1995 to
$0.5 million in 1996. This decrease was due primarily to recapitalization and
relocation expenses incurred in 1996.

INTEREST EXPENSE. The Company incurred interest expense as a result of the
debt issued in connection with the Recapitalization. See Note 4 of Notes to
Financial Statements. The $0.8 million of interest expense incurred by the
Company in 1996 represents interest charges from April 11, 1996 through December
31, 1996. The Company had virtually no indebtedness in 1995.

INCOME TAX (EXPENSE) BENEFIT. During 1995 the Company was taxed as a
Subchapter S Corporation. From April 11, 1996 through December 31, 1996, the
Company was taxed as a C Corporation. During this period, the Company
experienced a taxable loss as a result of recapitalization expenses and also
received a $0.3 million deferred tax benefit related to its change in tax
status.

UNAUDITED QUARTERLY RESULTS

The following table sets forth certain unaudited quarterly operating
information for each of the ten quarters ending June 30, 1998. These data have
been prepared on the same basis as the audited financial statements contained
elsewhere in this Prospectus and include all adjustments, consisting only of
normal recurring adjustments, that management considers necessary for a fair
presentation of the information for the periods presented, when read in
conjunction with the Company's Financial Statements and related Notes thereto.
Results for any previous quarter are not necessarily indicative of results for
the full year or for any future quarter.

QUARTERS ENDED
-------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30, SEP. 30, DEC. 31,
1996 1996 1996 1996 1997 1997 1997 1997
(IN THOUSANDS)

Service revenue.................... $ 2,950 $ 3,214 $ 4,178 $ 4,884 $ 5,018 $ 5,222 $ 5,715 $ 6,853

Cost of services................... 1,713 1,864 2,425 2,826 2,874 2,960 3,335 3,903
Selling, general and administrative
expenses......................... 546 845 981 1,173 1,287 1,404 1,462 1,849
Depreciation and amortization...... 10 24 31 39 30 38 44 41
Special compensation expense.......
Relocation costs................... 613 488
Recapitalization expenses.......... 1,587
-------- -------- -------- -------- -------- -------- -------- --------
Operating income (loss)............ 681 (1,106) 741 233 339 820 874 1,060
Net interest (expense) income...... 24 (209) (242) (229) (220) (237) (208) (204)
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes............................ 705 (1,315) 499 4 119 583 666 856
Income tax (expense) benefit....... 778 (205) (2) (56) (268) (267) (347)
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before extraordinary
item............................. 705 (537) 294 2 63 315 399 509
Loss on early extinquishment of
debt-net of income tax benefit... (271)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss).................. $ 705 $ (537) $ 294 $ 2 $ 63 $ 315 $ 128 $ 509
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Earnings per share -- basic
Income (loss) before
Extraordinary item............. $ 0.12 $ (0.10) $ 0.05 $ 0.00 $ 0.01 $ 0.05 $ 0.06 $ 0.08
Extraordinary loss............... (0.04)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)................ $ 0.12 $ (0.10) $ 0.05 $ 0.00 $ 0.01 $ 0.05 $ 0.02 $ 0.08
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Earning per share -- diluted
Income (loss) Before extraordinary
item............................. $ 0.11 $ (0.10) $ 0.04 $ 0.00 $ 0.01 $ 0.05 $ 0.06 $ 0.07
Extraordinary loss................. (0.04)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss).................. $ 0.11 $ (0.10) $ 0.04 $ 0.00 $ 0.01 $ 0.05 $ 0.02 $ 0.07
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Pro forma net income data
(unaudited)
Income (loss) before income taxes,
as reported...................... $ 705 $ (1,315)
Pro forma income tax (Expense)
benefit.......................... (288) 539
-------- --------
Pro forma net income (Loss)........ $ 417 $ (776)
-------- --------
-------- --------
Pro forma net income (loss) per
share (unaudited)
Basic.............................. $ 0.07 $ (0.14)
-------- --------
-------- --------
Diluted............................ $ 0.07 $ (0.14)
-------- --------
-------- --------
Weighted average shares
Basic.............................. 5,997.4 5,605.8 6,297.9 6,297.9 6,297.9 6,299.3 6,309.4 6,311.1
Diluted............................ 6,230.0 5,605.8 6,793.0 6,947.5 7,045.5 6,996.9 7,018.9 6,997.6

MAR. 31, JUNE 30,
1998 1998

Service revenue.................... $ 7,376 $ 8,482
Cost of services................... 4,209 4,818
Selling, general and administrative
expenses......................... 2,032 2,344
Depreciation and amortization...... 45 46
Special compensation expense....... 2,474
Relocation costs...................
Recapitalization expenses..........
-------- --------
Operating income (loss)............ 1,090 (1,200)
Net interest (expense) income...... (155) (165)
-------- --------
Income (loss) before income
taxes............................ 935 (1,365)
Income tax (expense) benefit....... (375) 545
-------- --------
Income (loss) before extraordinary
item............................. 560 (820)
Loss on early extinquishment of
debt-net of income tax benefit...
-------- --------
Net income (loss).................. $ 560 $ (820)
-------- --------
-------- --------
Earnings per share -- basic
Income (loss) before
Extraordinary item............. $ 0.09 $ (0.13)
Extraordinary loss...............
-------- --------
Net income (loss)................ $ 0.09 $ (0.13)
-------- --------
-------- --------
Earning per share -- diluted
Income (loss) Before extraordinary
item............................. $ 0.08 $ (0.13)
Extraordinary loss.................
-------- --------
Net income (loss).................. $ 0.08 $ (0.13)
-------- --------
-------- --------
Pro forma net income data
(unaudited)
Income (loss) before income taxes,
as reported......................
Pro forma income tax (Expense)
benefit..........................

Pro forma net income (Loss)........

Pro forma net income (loss) per
share (unaudited)
Basic..............................

Diluted............................

Weighted average shares
Basic.............................. 6,313.9 6,318.6
Diluted............................ 7,097.9 6,318.6

LIQUIDITY AND CAPITAL RESOURCES

CASH FLOWS FROM OPERATIONS. The Company's primary source of liquidity has
been cash flows from operations. The Company's fixed-price contracts typically
provide for delayed billing arrangements in early contract years to coincide
with clients' budget cycles. Also, the Company typically experiences negative
cash flow from operations in the first six months of a year as the timing of the
receipt of contract payments is more heavily weighted to the July through
December period to coincide with the peak cash inflows experienced by the
Company's higher education clients. The Company anticipates that cash flow from
operations will be positive for the full year 1998. The Company's cash flow in
1996 was negatively impacted by the Recapitalization and the relocation of the
Company's headquarters to Orlando, Florida. Cash flow from operations in 1997
was negatively impacted by the payment of corporate income taxes as a C
Corporation, interest payments made on the long-term debt incurred in connection
with the Recapitalization and relocation costs. Since the Company elected to be
treated as a Subchapter S Corporation for tax purposes in 1995 and part of 1996,
the Company's net cash provided by operations for those periods reflects only
state taxes.

CASH FLOWS USED IN INVESTING ACTIVITIES. Net cash used in investing
activities is largely attributable to capital expenditures for furniture and
personal computers to support the expansion and growth of the organization. The
Company has no major commitments for capital expenditures. However, the Company
will continue to need computer and office equipment as it expands its
operations.

CASH FLOWS FROM FINANCING ACTIVITIES. During 1997, the Company generated
cash by refinancing approximately $9.5 million of outstanding, long-term debt
and interest with a new lender pursuant to a new credit agreement. The new
credit agreement provides for maximum borrowings of up to $9.5 million, which is
reduced through annual scheduled principal payments and additional mandatory
principal payments beginning in 1999 in the event the Company has excess cash
flows (as defined). The new credit agreement expires in December 31, 2003 and
provides for interest at either the prime rate plus a variable spread or LIBOR
plus a variable spread at the option of the Company. Interest is payable
quarterly. At June 30, 1998, the Company had approximately $1.6 million and $7.0
million designated as prime borrowings and LIBOR borrowings, respectively.
Borrowings under the new credit agreement are secured by substantially all the
assets of the Company. The new credit agreement subjects the Company to certain
covenants and requires the Company to maintain certain financial ratios. At
December 31, 1997, the Company was in compliance with all of the covenants and
ratios contained in the new credit agreement. At June 30, 1998, the Company was
in compliance with all covenants and ratios in the new credit agreement after
taking into account the receipt in July 1998 of a waiver relating to covenants
and ratios impacted by the special compensation expense. It is anticipated that
all amounts outstanding under the new credit agreement will be repaid with a
portion of the net proceeds received by the Company in the Offering and the
agreement will terminate at such time. The Company anticipates obtaining a new
bank facility following the Offering, which will be used for working capital
purposes.

In 1996, cash was used to finance the Recapitalization. See Note 4 of Notes
to Financial Statements. Proceeds of $11.5 million from the sale of Common Stock
to new investors, along with net proceeds of approximately $9.6 million from the
issuance of debt and warrants were used to (i) redeem substantially all of the
Company's then-issued and outstanding common stock, (ii) terminate certain
outstanding options to purchase shares of the Company's common stock, and (iii)
pay fees and expenses related to the Recapitalization. Immediately following the
Recapitalization, the prior stockholders of the Company held 20.3% of the voting
Common Stock of the Company.

SUMMARY. The Company believes the net proceeds from the sale of the Common
Stock offered hereby, together with the funds generated by operations, will
provide adequate cash to fund the anticipated cash needs over the next 12
months. Such needs may include investments in new products and services,
expansion of the internal infrastructure for the Company to support future
growth and acquisitions of complementary businesses.

YEAR 2000 ISSUE

The Company has installed Year 2000 compliant software in many of its major
systems. The Company is in the process of either modifying or replacing software
used in the Company's systems. The cost of these efforts is not expected to be
material. The Company presently believes that the Year 2000 issue will not have
a significant impact on the Company's operations. However, Year 2000 issues
could have a significant impact on the Company's operations and its financial
results if modifications cannot be completed on a timely basis, unforeseen needs
or problems arise or the systems operated by its clients, vendors or
subcontractors are not Year 2000 compliant.

BUSINESS

OVERVIEW

COLLEGIS is a leading nationwide provider of IT enterprise solutions and
services to clients in the higher education marketplace. The Company offers its
IT services through three principal service areas: (i) Operational and Financial
IT Services; (ii) Networking and Internet Services; and (iii) Instructional
Technology Services. COLLEGIS' primary competitive advantage is its in-depth
higher education IT experience, which it applies to assist colleges and
universities to succeed in an environment of increasing competition for students
and rapidly evolving technology. The Company has competed successfully in this
environment, having achieved compound annual revenue growth of 55% from 1993 to
1997. Moreover, because of the long term nature of most of the Company's client
engagements, COLLEGIS enjoys significant recurring revenues with the majority of
its revenues in 1996 and 1997 having been committed at the beginning of such
years.

The business of providing higher education is competitive with colleges and
universities constantly seeking new ways to attract students and to stabilize
costs. Information technology is an important tool used to increase enrollment
and contain costs of operations. To fully leverage the advantages of information
technology, higher education institutions must upgrade and maintain their
existing systems and incorporate new technologies to enhance the delivery of
their educational offerings and administrative and student services. Outside IT
solution providers are well positioned to address the IT issues facing higher
education because: (i) technological change, especially the advent of client
server computing and Internet/ intranet related services, is outpacing internal
resources; (ii) hiring and retaining qualified technical staff is difficult due
to the competitive environment for IT specialists and limited job advancement
opportunities for IT professionals within higher education; (iii) outside
specialists often deliver a greater return on an institution's IT investment
because they enable a college or university to more rapidly and cost-effectively
upgrade its systems; and (iv) external IT specialists can often formulate more
objective advice, free of internal cultural or political forces. There are
approximately 3,500 colleges and universities in the United States, which the
Company estimates have aggregate annual IT spending of approximately $9.0
billion.

INDUSTRY OVERVIEW

GENERAL

The education marketplace is one of the largest industries in the United
States, representing nearly 9% of gross domestic product. Of the $670 billion in
annual expenditures in 1996 estimated by the U.S. Department of Education, $280
billion can be attributed to the post-secondary segment of the market, which
includes over 77 million adults. The largest component of the post-secondary
market is traditional colleges and universities with estimated 1996 expenditures
of $211 billion.

A key driver of the growth in the educational marketplace is a combination
of favorable demographic and market trends. According to the National Center for
Education Statistics ("NCES"), between 1985 and 1995, the number of students in
higher education under age 25 increased 13% and those over 25 rose by 22%.
Enrollment of 18-24 year olds is expected to continue to grow 20% from 1996 to
2007, largely as a

result of the "baby boom echo." In addition, growing interest in adult education
is expected to fuel demand for distance learning programs.

INFORMATION TECHNOLOGY

Higher education institutions are increasingly using IT to achieve cost
savings and increase the quality of the educational experience. Furthermore,
potential students now evaluate an institution's ability to provide remote
access to resources such as the Internet, e-mail, library and administrative
services when deciding which school to attend. According to a recent
International Data Corporation survey, over 60% of college students believe that
an institution's technological environment is an important factor in evaluating
a school. Education providers are implementing IT solutions to re-engineer
inefficient processes such as registration, financial aid and payroll. Faculty
members are using the Internet to distribute course materials, link students to
useful Web sites and host on-line discussions. As a result, higher education
represents a significant market for IT service providers. The Company estimates
that U.S. higher education institutions have annual IT spending of approximately
$9.0 billion.

The change in demographics has also led to the implementation of new IT
services, as the number of students pursuing post-secondary education continues
to shift towards students over age 25. With this demographic shift, higher
education institutions are facing an increased demand for distance learning.
This education delivery mechanism allows students, who often lack the time or
schedule flexibility to attend classes in a traditional setting, to participate
in courses and earn credit towards a degree from a variety of geographic
locations including satellite campuses or their own homes. Distance learning,
coupled with on-line access to information and administrative resources, allows
higher education institutions to offer their services to an otherwise
unreachable market. According to NCES, in 1995 33% of higher education
institutions provided distance learning courses and an additional 25% were
expected to provide these services by 1998.

The Company believes that a significant opportunity exists in the higher
education market because most colleges and universities are currently addressing
their technology requirements in-house. The Company estimates that of the
approximately 3,500 higher education institutions in the United States, only 55
have engaged a third-party IT specialist, such as COLLEGIS, under a long-term
contract to operate all or a major portion of their IT function. Competitive
pressures are forcing institutions to rapidly make the transition to client
server-based, Internet/intranet operating environments. The Company believes
that colleges and universities will increasingly realize that independent IT
service providers can more timely and cost-efficiently implement and maintain an
upgraded technology infrastructure than the institution itself.

THE COLLEGIS SOLUTION

The Company applies its experience in higher education information
technology to help colleges and universities manage their IT function through
planning, developing, implementing and managing IT solutions and strategies. The
Company believes that the following business strengths position it to capitalize
on the significant market opportunities presented by the current college and
university environment of increasing competition for students and rapidly
evolving technologies:

VERTICAL MARKET FOCUS. The Company has a singular market focus on the
information technology needs of U.S. colleges and universities. As a result,
COLLEGIS has accumulated a detailed knowledge base and understanding of IT
systems and technology needs of colleges and universities that allows it to
apply proven methodologies, skills and solutions to new projects in a
cost-effective and timely fashion. In addition, the Company believes its
competitive position is enhanced by its understanding of the unique cultural
environment of colleges and universities, where academic considerations
significantly influence IT investment decisions.

BROAD SERVICE OFFERINGS. The Company is a single-source provider of a broad
range of IT services tailored to assist colleges and universities with every
aspect of their technology needs. The Company's services include the development
of strategic IT plans and objectives, the implementation of application systems,
networking and other technology initiatives, and management of existing and
newly-implemented IT plans and systems. Because client engagements often require
creative solutions that must be drawn from diverse areas of IT expertise, the
Company bundles its services as a single, fixed-fee IT solution. The Company
continuously monitors emerging technologies and market developments in order to
expand its service offerings to meet the evolving needs of its clients. A recent
example is the creation of the COLLEGIS Learning Network.

ESTABLISHED INDUSTRY REPUTATION. COLLEGIS has 13 years experience in
successfully providing IT enterprise solutions and services to higher education
institutions and is currently engaged in 28 significant long-term relationships
with colleges and universities. Based upon successful client engagements,
COLLEGIS has earned a reputation for providing high quality IT solutions and
services to colleges and universities supported by industry-knowledgeable
personnel. The Company believes that its reputation and longstanding
relationships with influential members of the higher education community are a
significant source of new business due to the important role industry referrals
play in obtaining new engagements.

PROVEN OPERATING MODEL. The Company believes that its proven operating
model significantly contributes to its success and facilitates COLLEGIS' goal of
becoming an educational institution's IT partner. The Company initially applies
its internally developed client assessment methodology to accurately identify a
client's direct and indirect IT expenditures. The thoroughness and accuracy of
this assessment is critical in managing a client's expectations regarding the
scope and price of COLLEGIS' service offerings. COLLEGIS then works closely with
client personnel to create and implement a strategic plan that meets an
institution's IT needs and objectives. The Company appoints an experienced
on-site client manager to oversee the engagement and become an integral member
of an institution's management. COLLEGIS provides its on-site personnel with
additional technical support both regionally and at the corporate level. As the
IT needs of the Company's clients change and develop, COLLEGIS has a competitive
advantage in its ability to quickly identify and respond to changes and
developments, thereby expanding its presence as a single-source provider.

STRONG CLIENT RELATIONSHIPS. A substantial portion of the Company's
personnel work at a client's site and become intimately involved in an
institution's IT systems on a day-to-day basis. Through this close working
relationship, COLLEGIS' on-site staff becomes an integral part of the client's
IT function and effectively serves as the institution's IT partner. COLLEGIS
fosters and maintains its role as an institution's IT partner by emphasizing
continued high-level relations between its corporate officers and a college or
university's senior administrators.

TECHNICAL STAFF RECRUITING ADVANTAGE. The existing IT personnel of a new
client are a significant source of technical employees for the Company. Because
the Company's engagements generally encompass all or a major portion of a
client's IT function, COLLEGIS frequently hires a significant number of a
client's existing IT personnel as part of a typical contract. As a result,
COLLEGIS does not face the same level of IT recruiting pressure faced by many IT
service providers.

COLLEGIS LEARNING NETWORK. The recently launched COLLEGIS Learning Network
is a key feature in a package of services and tools intended to help colleges
and universities utilize Web-based technology to provide educational course and
related academic, administrative and student services. The COLLEGIS Learning
Network was developed by nationally recognized academic leaders in the area of
instructional technology. Their expertise allows the Company to maintain a
leading edge in emerging instructional technologies.

STRATEGY

The Company's goal is to become the nation's leading provider of IT
enterprise solutions and services to the higher education marketplace. Key
elements of the Company's strategy to achieve this goal include the following:

EXPAND CLIENT BASE. The Company intends to expand its client base by
increasing the size and scope of its sales and marketing organization and
continuing to recruit highly skilled professionals. Because client referrals
play a significant role in obtaining new business in the higher education
marketplace, the Company also intends to target new clients by highlighting its
superior performance record with its existing clients.

EXPAND LONG-TERM RELATIONSHIPS WITH EXISTING CLIENTS. As part of its
business model the Company serves as an educational institution's IT partner,
focused not only on delivering on time, on-budget services, but also on
identifying and defining additional value-added client services. The Company's
strong client relationships, which are fostered by its on-site presence and
broad range of service offerings, allows it to increase the length and scope of
its client engagements and to grow with its clients' needs.

MAINTAIN ROLE AS LEADER IN EMERGING HIGHER EDUCATION TECHNOLOGIES. The
Company's continued status as a leader in emerging higher education IT
technologies is a key to its growth. The Company plans to allocate sufficient
financial and personnel resources to identify and offer new technologies to the
higher education market. For example, The COLLEGIS Research Institute has a
significant role on a major project to establish a universal set of compliance
standards to permit distributed Internet-based learning environments to work
together.

EXPAND THE COLLEGIS LEARNING NETWORK. The Company is aggressively marketing
the COLLEGIS Learning Network as a key feature in a package of services,
expertise and tools intended to help colleges and universities utilize Web-based
technology to transform the learning environment. The Company believes that the
service opportunities associated with the emerging learning technology area are
significant.

PARTNER WITH SOFTWARE VENDORS. The Company believes that establishing
relationships with leading software vendors that offer applications tailored to
higher education will enable it to broaden its customer base, increase its
competitiveness and maintain its technological sophistication. However, the
Company does not intend to develop or exclusively represent any proprietary
hardware or software products. The Company believes that this product
independence allows it to objectively provide IT services and solutions designed
to meet a particular client's unique requirements.

PURSUE STRATEGIC ACQUISITIONS. The Company plans to selectively pursue
strategic acquisitions that will complement its existing service offerings.
Acquisitions can provide the Company with a rapid, cost-effective method to grow
its number of IT specialists, broaden its client base, establish new or expand
existing service offerings and obtain additional skill sets.

SERVICE AREAS

The Company offers and delivers IT enterprise solutions and services through
three principal service areas: (i) Operational and Financial IT Services; (ii)
Networking and Internet Services, and

(iii) Instructional Technology Services. Within these areas the Company provides
a complete range of IT planning, management and implementation solutions and
services that assist colleges and universities with every aspect of their short
and long-term technology initiatives. By bundling together a wide variety of IT
services and solutions, the Company is able to position itself as a fully
integrated, single-source provider.

OPERATIONAL AND FINANCIAL IT SERVICES

The Company provides operational and financial IT services in connection
with a variety of IT processes used by institutions of higher education. The
Company's services address a variety of problems related to its clients' IT
processes including the ineffectiveness of existing IT systems and the
difficulty in implementation of sophisticated distributed and Year 2000
compliant systems. In response to such problems, the Company will initially
conduct an overall assessment of the client's existing situation and identify
potential IT risks, opportunities and alternatives. The Company has planned,
implemented, modified and managed a wide range of applications systems including
student, human resource and finance systems; fundraising and alumni development;
library and executive information systems; as well as ancillary systems such as
bookstore inventory, central purchasing, physical security, smart cards and
information kiosks.

The Company's personnel work at a client's site and become an integral part
of the client's operational and financial IT operations, working with
administrators and faculty at all levels. Company personnel support and manage
most aspects of a client's IT systems and operations, including short- and
long-term planning, applications support, user training and help-desk support,
technical support services, data center management and operations, office
automation, personal computer maintenance and disaster recovery. The Company's
staff is involved in all phases of services delivery, from the installation and
conversion of new applications systems to the servicing and monitoring of such
systems during the lifetime of the client contract. These on-site services are
supported by an additional two tiers of management support at the regional and
corporate level. See "--Service Delivery Model."

NETWORKING AND INTERNET SERVICES

The Company provides networking and Internet services and solutions to
establish a flexible network infrastructure for institutions of higher
education. Networking and Internet services address a variety of problems
including the ineffectiveness of outdated, incompatible and incomplete networks
and the difficulty in implementation and integration of voice, data and video
technologies and Internet/intranet applications. In response to such problems,
the Company will develop and implement a comprehensive network plan. The Company
also assumes responsibility for the management, monitoring and maintenance of
the network infrastructure. Company personnel provide networking and Internet
training services to a client's employees and tiered networking and Internet
user support services at the client, regional and corporate levels. See "Service
Delivery Model."

The Company utilizes sophisticated diagnostic and utility tools to remotely
monitor client networks from its corporate headquarters. Remote network
management allows the Company to detect and prevent network problems and to
better serve its client's demands for a timely and reliable resolution. The
Company also assists its clients in negotiating with hardware and software
vendors and guiding its clients through a request-for-proposal process to ensure
they are getting the maximum value out of their IT budget.

INSTRUCTIONAL TECHNOLOGY SERVICES

THE COLLEGIS LEARNING NETWORK. Internet-based distance learning is a newly
emerging IT application that is generating significant interest in the academic
community. The proliferation of the Internet and other network-based
applications has increased the competitive pressures on academic institutions to
provide Internet-based tools and services to their students and faculty members.
In response to these

demands, the Company has created the COLLEGIS Learning Network (the "Learning
Network") to provide student-centered, flexible solutions. Although the Learning
Network is a relatively new component of the IT services offered by the Company,
the Company believes that this initiative for new instructional technologies
will be an integral part of its future growth.

Through the Learning Network, the Company provides clients with a variety of
Internet-based tools and services including (i) the on-line delivery of
instruction, (ii) the on-line delivery of student service programs such as
orientation and career counseling, (iii) development and implementation of home
pages and on-line discussion forums and (iv) formation of on-line communities by
faculty members as a basis for professional developmental partnerships with
other members of the academic community. Through its own Web server, the Company
allows clients to fill in simple templates to generate easy to manage databases
that provide a variety of customized Web-based collaboration services and
information resources. In connection with the Learning Network and related web
servers, the Company provides for all systems administration and maintenance.

THE COLLEGIS RESEARCH INSTITUTE. In connection with the development of the
Learning Network, the Company created The COLLEGIS Research Institute, a
not-for-profit research and development center (the "Research Institute"), which
conducts academic research in instructional technology and on-line learning
communities. The Research Institute provides technology expertise to
institutions of higher education in an effort to maximize the impact of
technology on their academic and instructional programs. The Company's
relationship with the Research Institute provides many operational, academic and
competitive benefits to the Company by providing dedicated resources to apprise
clients of the latest technological developments and their application to
academic and instructional challenges. The Company believes that the Research
Institute's research in this area has generated increased awareness among higher
education institutions of the opportunities presented by academic technologies
which the Company is uniquely positioned to capitalize on.

The Research Institute is headed by Dr. William H. Graves, who founded the
Institute for Academic Technology at the University of North Carolina ("UNC")
and served for over 30 years in various senior faculty and administrative
positions at UNC. Dr. Graves has been joined at the Research Institute by
several former colleagues at UNC who are nationally recognized leaders in the
area of instructional technology. Members of the Research Institute are active
in numerous nonprofit organizations dedicated to advancing Internet-based
learning technology, including EDUCAUSE, a consortium of 600 colleges and
universities dedicated to the transformation of higher education through
information technology, and the Internet2 steering committee.

The Company provides personnel, facilities, and overhead support to the
Research Institute pursuant to a services agreement on a cost-basis, and serves
as liaison on behalf of the Research Institute with outside advisors. In
addition, the Company has the right to appoint three members to the Research
Institute's seven-member Board of Directors. The Research Institute attempts to
cover its operating costs through grants and contracts that support the research
projects it undertakes. In the event the Research Institute is unable to obtain
necessary grants or funding or to otherwise cover its operating costs, the
Company is obligated to cover such operating costs as requested by the Research
Institute. In exchange for the Company's financial and corporate support, the
Company has a non-exclusive, royalty-free right to use any intellectual property
developed by the Research Institute. See "Certain Transactions."

SERVICE DELIVERY MODEL

In delivering its IT services and solutions, the Company employs a tiered
management structure consisting of managerial oversight at the on-site, regional
and corporate levels. This tiered delivery model provides clients with immediate
access to professionals who possess highly specialized technical expertise and
tools, including corporate personnel who provide Company-wide technical support
to client sites. The Company's communication and control systems further support
its service delivery by providing immediate access to an on-line forum in which
COLLEGIS employees can collaborate by means of individual and group
communications thereby drawing on Company-wide expertise.

On-site managers and staff are responsible for establishing and implementing
the Company's services on a campus-wide basis. Regional managers oversee and
provide support to the on-site managers located within their respective regions.
In addition, they serve as a conduit for communication between the on-site and
corporate tiers and build working relationships with a client's middle
management. The Company believes that these regional managers ensure consistency
in the quality of IT services delivered in their respective region. At the
corporate tier, managers are primarily responsible for highly specialized
technical skills, new business development and maintenance of existing client
relationships. Managers are integral to the implementation of the Company's
overall business plan and the development and maintenance of new and existing
client relationships.

REPRESENTATIVE SERVICES

The chart below sets forth, by Company service area, the services that the
Company provides to its higher education clients, along with the functional
areas affected by such services.

------------------------------------------------------------------------------------------
----------------------------------------------------------------------
INSTRUCTIONAL
OPERATIONAL AND NETWORK AND TECHNOLOGY
FINANCIAL IT SERVICES INTERNET SERVICES SERVICES
- -----------------------------------------------------------------------------------------------

- Conduct analysis of - Plan, implement and - Conduct analysis of
existing IT manage network existing
operations infrastructure instructional
technologies system
Description of
Services:
- Develop strategic - Establish access to - Develop long-range
plans including IT Internet and IT strategic plan which
spending and resources for identifies new
investment objectives student population technology learning
initiatives
- Consolidate and - Monitor and maintain - Introduce emerging
integrate existing IT on-line network learning
operations technologies into
classrooms
- Develop migration - Develop intranet - Create and design
plan to client Internet/intranet
server-based forums for use by
technology faculty and student
body
- Provide IT - Provide Internet and - Provide access to a
management and Web-site support library of software
technical personnel and courseware
- Install, convert and - Provide user - Establish help desk
manage IT support/ help desk and user support
implementations services system for faculty
and student body
- Create and manage - Create and design
classroom computer courses and provide
labs faculty services
- Create a Year 2000
migration and
implementation plan
Functional Area - Strategic planning - Voice/Data - Distance learning
Affected: communications
- Student systems - Local and wide area - On-line
networks collaboration
- Financial systems - Internet/intranet - Faculty development
- Payroll systems - Academic computer - Curriculum
labs development
- Human resource
systems
- Library systems
- Fundraising/Alumni
development

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

CLIENTS

The Company currently provides IT enterprise services and solutions to 37
separate colleges and universities located throughout the United States. Of
these institutions, 28 are parties to significant long-term engagements and the
remainder represent instructional technology projects independent of long-term
engagements. Clients include private, four-year institutions, community colleges
and public, four-year institutions. The Company generally targets institutions
that have IT personnel budgets in excess of $1 million. Brookdale Community
College, a New Jersey community college ("Brookdale"), accounted for
approximately 13.5% and 10.2% of the Company's revenues in 1997 and the six
months ended June 30, 1998, respectively. The typical term of the Company's
existing client engagements is five years, ranging from a minimum of one year to
a maximum of ten years. In addition, the average annualized revenue under the
Company's long-term contracts has increased from $905,000 per client at December
31, 1996 to $1,360,000 per client at June 30, 1998.

REPRESENTATIVE ENGAGEMENTS

Set forth below is a summary of services currently being performed by the
Company for representative clients:

GOLDEN GATE UNIVERSITY. In 1994, COLLEGIS entered into a four-year service
contract with Golden Gate University ("GGU"), an independent four-year
university with an enrollment of more than 6,500 students. GGU was seeking to
update its administrative systems network and infrastructure. COLLEGIS has
provided on-site staff to assist GGU in developing a strategic plan which has
included the research and selection of Internet-based learning tools, a
comprehensive faculty development program and the provision of instructional
designers, web and multi-media developers. In 1997, the existing service
contract was extended to 2001. Pursuant to such extended contract, GGU engaged
COLLEGIS to assist it in implementing a comprehensive distance learning program
utilizing the Internet for "any time, any place" learning.

EAST TENNESSEE STATE UNIVERSITY. In April 1998, COLLEGIS entered into a
five-year contract with East Tennessee State University ("ETSU"), a four-year
institution with an enrollment of more than 12,000 students. ETSU chose COLLEGIS
to help it achieve its goal of being a leading provider of higher education in
the region, which required significant improvement of its IT environment.
COLLEGIS has initiated work on a strategic and tactical IT plan to ensure Year
2000 compliance and a comprehensive faculty development program to introduce
distance learning applications and integrate learning technology tools into the
curriculum. Additionally, COLLEGIS' on-site staff is upgrading the network and
communications infrastructure and is implementing a telecommunications system.
COLLEGIS is also heading an effort to consolidate three disparate computing
offices into an integrated service delivery organization.

BROOKDALE COMMUNITY COLLEGE. In January 1997, COLLEGIS entered into a
five-year service contract with Brookdale, which has an enrollment of more than
12,000 students. At the time, Brookdale maintained a decentralized IT
organization that was supported by outdated hardware and software. After an
extensive nine-month analysis of Brookdale's existing IT operations, COLLEGIS'
on-site management and support team reengineered and consolidated Brookdale's IT
organization. COLLEGIS has assumed day-to-day planning, implementation and
management of all facets of Brookdale's IT operations including management of
Brookdale's data center, its network systems and technology-related initiatives
such as distance learning, administration systems and information sharing. In
addition, the COLLEGIS solution has included the planning and implementation of
Brookdale's new administrative and network systems.

SALES AND MARKETING

The Company sells and markets its services directly through its sales and
marketing staff and senior management. Due to the unique culture of higher
education, the Company attempts to capitalize on the

experience of its personnel in such field and believes such experience is a
significant factor in its success. As of June 30, 1998, the Company's sales and
marketing staff consisted of 15 employees.

The Company employs a variety of business development and marketing
techniques to communicate directly with senior officers of current and
prospective clients, including focused lead generation initiatives using
customer and industry references, industry seminars and conferences featuring
presentations by the Company's executives and on-site presentations by the
Company's sales representatives to faculty and senior officers of prospective
clients.

The Company has organized its sales and marketing personnel into separate
teams, each of which is given quarterly and annual financial objectives for
their respective geographic regions. The Company's typical sales cycle is six to
nine months, calculated from the time of identification of a prospective client
to execution of the definitive service contract. The Company's typical sales
cycle includes the following components:

- LEAD GENERATION--The Company's sales staff identify potential clients
though directed telesales marketing, client and industry referrals and
industry conferences. During the initial lead generation stage of the
sales cycle, the sales staff qualifies viable prospects through data
collection and interviews of the potential client's personnel regarding
their IT needs.

- QUALIFYING PROCESS--Upon identification of a potential client, the Company
conducts an on-site due diligence review of the potential client's IT
operations, structure and needs and makes a preliminary presentation to a
potential client summarizing the IT services and solutions currently
offered by the Company. Throughout this stage, the Company meets with the
potential client's senior executives, establishes relationships,
identifies a senior executive advocate within the potential client and
evaluates the potential for a long-term relationship. Following this
on-site meeting, the Company's management makes an internal determination
as to whether such potential client is a qualified candidate for the
Company's IT services based, in part, on an assessment of the client's
size, systems and financial resources, existing IT operations and
long-term IT objectives.

- ASSESSMENT--Following the determination that a potential client's IT
organization is a qualified candidate for the Company's services, the
Company initiates either a client-paid, in-depth on-site due diligence
assessment of the prospective client's current IT environment or an
abbreviated evaluation of the prospect's IT delivery capabilities.
Following this data collection, the Company analyzes the results of its
on-site due diligence and formulates its proposal and recommendations, and
reviews the proposed service offerings with its advocate and the other
members of the client's executive team. Included in such proposal is a
detailed budget and schedule for the contemplated engagement.

- INTERIM SERVICES--When an institution requires immediate IT services prior
to the finalization of contractual terms and conditions, the Company
typically provides an interim chief information officer and staff to the
client on a fee-basis, to provide consultation on and management of
day-to-day operations. This enables the Company to initiate the
integration of its personnel with the client and begin the implementation
of the IT solutions and services.

An important portion of new business arises from existing client
engagements. The Company expects to provide further IT services to its clients
as their IT needs develop. Also, the Company's on-site presence affords it the
opportunity to identify and define additional value-added services. The strong
client relationships arising out of long-term engagements often facilitate the
Company's ability to offer additional capabilities to its clients in the future.

The Company's senior management team actively meets with faculty members and
administrators of colleges and universities which have not yet engaged the
Company to make them aware of the Company's capabilities. In addition, as part
of its sales and marketing strategy, the Company leverages its relationship with
the Research Institute to further enhance its credibility within the academic
community and further its

reputation as a leading provider of on-line instructional technologies. The
recent introduction of the Instructional Technology Services area furthers
COLLEGIS' ability to market itself as a full service, integrated provider of IT
solutions and services to the academic community.

The Company is exploring relationships with leading software vendors and
other services providers who tailor their offerings to the higher education
marketplace. The Company believes that these relationships may result in
increased access to potential clients, referrals, expanded service offerings and
enhanced recognition within the academic community. The Company also believes
these relationships will enable it to increase its competitiveness and maintain
its technological sophistication through access to the most current information
and training on leading software and information systems.

HUMAN RESOURCES

The Company's success depends in large part on attracting, retaining and
motivating talented, creative and experienced professionals at all levels.
Qualified technical employees are in great demand and are likely to remain a
limited resource for the foreseeable future. Because the Company's typical
engagement encompasses all or a major portion of a client's IT function, the IT
personnel of its clients are a significant source of employees for the Company.
The Company frequently will hire a large portion of a client's existing IT
personnel as part of a typical contract. As a result, the Company does not face
the same level of IT recruiting pressure typically faced by many IT service
providers.

The Company dedicates significant resources to recruiting employees with IT
and higher education experience. In connection with its hiring efforts, the
Company has its own internal recruiting and human resources department that
includes a Vice President of Recruiting and Human Resources and internal
recruiters. Recruiting is managed in a fashion similar to an independent
recruiting organization. The Company's recruiters have hiring targets and are
compensated on an incentive basis. Their primary recruitment activity is direct
recruiting of targeted candidates. The Internet and World Wide Web are used
extensively as a source for applicants in addition to advertising and employee
referrals. Human resource personnel utilize a comprehensive recruiting
information system that tracks recruitment activities and maintains a database
of candidate information. Recruiting activities are continually monitored and
adjusted to meet the Company's hiring needs. In addition, the Company has
relationships with several recruiting firms to supplement recruiting efforts as
needed.

The Company has historically experienced turnover rates that it believes are
below industry averages for IT professional services companies principally due
to its continuous and extensive professional development opportunities and
diverse and challenging work projects within the higher education marketplace.
However, there is no assurance that these favorable rates will continue. The
Company believes its management structure, corporate culture, human resources
organization, comprehensive and specialized training programs and extensive
benefits package maximize its ability to retain and recruit IT staff. None of
the Company's employees are represented by labor unions and the Company
considers its relationship with its employees to be good.

As of June 30, 1998, the Company had 388 full-time employees. The Company
also supplements its employees on certain engagements with independent
contractors, many of whom are former employees of the Company. The Company
believes that this practice provides it with greater flexibility in adjusting
professional personnel levels in response to changes in demand for its services.

COMPETITION

Although the Company believes its exclusive focus on the higher education
institutions is unique, the IT services industry is intensely competitive,
highly fragmented and subject to rapid technological and market changes. The
Company's primary competitive challenge is helping prospective clients
understand the potential benefits of the IT outsourcing model relative to their
internal IT departments. In addition, the Company competes for client projects
and experienced personnel with a number of companies having

significantly greater financial, technical and marketing resources and revenues
than the Company. Many of these competitors also have greater name recognition
in the IT services industry. The Company's competitors include systems
consulting and integration services providers, application software and
professional service organizations, major accounting firms and general
management consulting firms. The emerging instructional technology market is
highly fragmented with no single dominant participant. As this market matures,
the Company anticipates facing increasing competition from larger, better
financed participants than the Company.

The Company expects to experience increasing competition from IT service
providers offering established services and new service offerings and
technologies, including instructional technology and distance learning. In
addition, current and potential competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with others, thereby
increasing their ability to expand or increase their service offerings to higher
education institutions. Accordingly, it is possible that new competitors or
alliances among current and new competitors may emerge and rapidly gain
significant market share. Increased competition could result in downward pricing
pressures, fewer client engagements, reduced gross margins, and loss of market
share for the Company.

The Company believes the principal competitive factors in its market are
knowledge of the higher education marketplace, responsiveness to client needs,
product and vendor independence, quality of service, project management
capability, technical expertise and price. The Company believes it competes
favorably in most of these areas and excels in the depth of knowledge and
experience it brings to its clients. The ability of the Company to compete also
depends in part on factors outside of its control, including the ability of its
competitors to attract, motivate and retain management, technical and industry
expertise.

FACILITIES

The Company's headquarters and administrative, sales and marketing
operations are located in Maitland, Florida, where the Company leases
approximately 12,000 square feet of office space. This lease expires on January
31, 2002. In addition to its headquarters, the Company leases 8,700 square feet
of office space on behalf of the Learning Network in a building located near
Research Triangle Park, North Carolina. This lease expires on February 28, 2003.
The Company believes that additional space will be required as its business
expands geographically and that it will be able to obtain suitable space as
needed.

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The table below sets forth certain information with respect to the executive
officers and directors of the Company:

NAME AGE POSITION

Robert E. Lund............................ 54 Chairman, Chief Executive Officer and
Director
Robert Foley, Jr.......................... 49 President and Director
Robert C. Bowers.......................... 52 Chief Financial Officer, Executive Vice
President and Director
Dr. William H. Graves..................... 58 Senior Vice President and Director
Dr. Robert H. Atwell...................... 67 Director
James E. Cowie............................ 43 Director
Bernard Goldstein......................... 67 Director
Robert E. King............................ 62 Director
Dr. Thurston E. Manning................... 72 Director
Kenneth G. Pigott......................... 54 Director
Dr. Marvin Wachman........................ 81 Director

ROBERT E. LUND has served as Chairman, Chief Executive Officer and a
Director of the Company since May 1998. Mr. Lund also serves as Chairman of the
Executive Committee of the Board of Directors. Prior to joining the Company, Mr.
Lund served from December 1996 to April 1998 as President and Chief Executive
Officer of Intrepid Technologies, LLC, from November 1995 to May 1996 as interim
President and Chief Executive Officer of Peoples Telephone Company, from
November 1994 to November 1995 as President and Chief Executive Officer of S2
Software, Inc., and from February 1993 to November 1994 as Chief Operating
Officer of Newtrend, L.P., a software and computer services company focused on
the financial services sector ("Newtrend"). Mr. Lund's positions at COLLEGIS,
Intrepid Technologies, LLC and Newtrend resulted from his association with
financial investors common to such companies. Mr. Lund additionally was Chairman
and Chief Executive Officer of International Telecharge, Inc. from 1990 to 1992
and President of the Payment Services Division of Electronic Data Systems from
1988 to 1990. Mr. Lund has also been a director of Peoples Telephone Company
since 1994.

ROBERT FOLEY, JR. has served as President and a Director of the Company
since December 1993. Mr. Foley served from April 1988 to October 1993 as
President of Sysorex Information Systems and is a former executive of Science
Application International Corporation, GE Information Systems, Inc. and
Electronic Data Systems.

ROBERT C. BOWERS has served as a Director of the Company since April 1996,
as Executive Vice President and Chief Financial Officer of the Company since May
1996 and as Assistant Secretary of the Company since July 1997. Prior to joining
the Company, Mr. Bowers served as Senior Vice President and Chief Financial
Officer of Newtrend from June 1985 to December 1994 and then as Vice President
and Chief Financial Officer of HTE Inc. from June 1995 to May 1996. Mr. Bowers
has also been a director of U.S. Servis, Inc. since 1995.

DR. WILLIAM H. GRAVES has served as Senior Vice President of Instructional
Technologies and as a Director of the Company since November 1997. Dr. Graves
has also served as President of the COLLEGIS Research Institute since November
1997. Dr. Graves is the founder and a former director of the Institute for
Academic Technology and for over twenty years prior to joining COLLEGIS was a
Professor at the University of North Carolina at Chapel Hill. Dr. Graves also
serves on several national academic information technology boards, including
NLII, IMC, Internet2, CNI and EDUCAUSE.

DR. ROBERT H. ATWELL has served as a Director of the Company since November,
1996. Dr. Atwell has served as Senior Consultant to A.T. Kearney since 1986 and
is a director of Education Management Company. Dr. Atwell was President of the
American Council on Education from 1984 to 1996 and formerly served as President
of Pitzer College and as Vice Chancellor of the University of Wisconsin.

JAMES E. COWIE has served as a Director of the Company since April, 1996.
Since 1989, Mr. Cowie has been a General Partner of Frontenac Company. Mr. Cowie
also serves on the Boards of Directors of 3COM Corporation, PLATINUM TECHNOLOGY,
INC. and US Servis, Inc., and is a Trustee of the Illinois Institute of
Technology.

BERNARD GOLDSTEIN has served as a Director of the Company since April 1996.
He also serves as a director of Broadview Associates, LLC, SPSS, Inc., Sungard
Data Systems Inc. and Franklin Electronic Publishers Inc. Mr. Goldstein is a
former Chairman of National CSS, Inc.

ROBERT E. KING has served as a Director of the Company since April 1996. Mr.
King served from May 1996 to May 1998 as Chairman of the Executive Committee of
the Board of Directors. Since 1994, Mr. King has served as Chairman of Salt
Creek Ventures, a private investment firm. From 1983 to 1994, Mr. King was
Chairman and Chief Executive Officer of Newtrend. He also serves as a director
of American Floral Services, DeVry, Inc., and US Servis, Inc. Mr. King also
founded and served as Chief Executive Officer of DELTAK, Inc.

DR. THURSTON E. MANNING has served as a Director of the Company since
November 1996. Since 1991, he has served as a self-employed consultant in higher
education administration and accreditation. In addition, Dr. Manning served from
1992 to 1997 as Senior Consultant to International University and from 1987 to
1991 as President of the Council on Post-secondary Accreditation. Dr. Manning
was formerly President of the University of Bridgeport and Vice President for
Academic Affairs of the University of Colorado. Dr. Manning is a director of
DeVry, Inc.

KENNETH G. PIGOTT has served as a Director of the Company since April 1996.
He also serves as Managing Partner of Pigott & Company and as Chairman of
Compass Asset Management, LLC. Mr. Pigott is a former Chairman of Specialty
Packaging Products, Inc. and of Intertech Resources, Inc. and is a former
partner of Winston & Strawn.

DR. MARVIN WACHMAN has served as a Director of the Company since 1993 and is
currently Vice Chairman of the Board of Directors. Dr. Wachman served as
Chairman of the Board of Directors from 1993 to May 1998. Dr. Wachman has been
Chancellor of Temple University since 1982 and was President of Temple
University from 1973 to 1982. Dr. Wachman is a former President of Lincoln
University and a past President of the Pennsylvania Association of Colleges &
Universities.

The Company's executive officers are appointed annually by, and serve at the
discretion of, the Board of Directors. Each executive officer is a full-time
employee of the Company. The Board of Directors currently consists of 11
members. The Board of Directors is divided into three classes, each of whose
members serve for a staggered three-year term. The Board is comprised of three
Class I Directors (Messrs. Lund, Cowie and Atwell), four Class II Directors
(Messrs. Foley, Graves, King and Manning) and four Class III Directors (Messrs.
Bowers, Pigott, Goldstein and Wachman). At each annual meeting of stockholders
the appropriate number of directors will be elected for a three-year term to
succeed the directors of the same class whose terms are then expiring. The terms
of the Class I Directors, Class II Directors and Class III Directors will expire
upon the election and qualification of successor directors at the annual
meetings of stockholders held in calendar years 1999, 2000 and 2001,
respectively. There are no family relationships between any director or
executive officer of the Company.

BOARD COMMITTEES

The Executive Committee is responsible for the development and review of
corporate strategies. The Executive Committee meets monthly and makes strategic
recommendations to the Board of Directors. The

members of the Executive Committee currently consist of Messrs. Lund, Foley,
Bowers, Graves, Cowie, King, Pigott and Wachman.

The Audit Committee is responsible for reviewing with management the
financial controls, accounting, audit and reporting activities of the Company.
The Audit Committee reviews the qualifications of the Company's independent
auditors, makes recommendations to the Board of Directors regarding the
selection of independent auditors and reviews the scope, fees and results of the
Company's annual audit and other matters related to internal control systems.
The members of the Audit Committee currently consist of Messrs. Cowie, Manning
and Pigott.

The Compensation Committee performs certain duties in connection with the
administration of salary and incentive compensation plans for officers and key
employees of the Company, including bonuses. The members of the Compensation
Committee currently consist of Messrs. King, Foley and Goldstein.

The Board of Directors also maintains a Nominating Committee currently
consisting of Messrs. Lund, Atwell and Wachman. The Nominating Committee
identifies and recommends nominees for appointment to the Board of Directors.

DIRECTOR COMPENSATION

Directors of the Company who are not employees of the Company or significant
stockholders, currently consisting of Messrs. Atwell, Wachman and Manning,
receive (i) an annual retainer fee of $10,000 in connection with their service
as a director of the Company, (ii) a daily fee of $1,000 for Board of Directors
meetings attended and (iii) a consulting fee of $150 per hour, up to a maximum
of $1,200 per day, for time spent consulting with the Company on business
matters independent of their board duties. In 1997, the fees paid to such
outside directors ranged from approximately $20,000 to $47,000. Directors are
reimbursed for reasonable out-of-pocket expenses incurred in connection with
attending Board of Directors meetings. Directors are also eligible for
participation in the Company's 1996 Stock Option Plan. See "Employee Benefit
Plans--1996 Stock Option Plan."

EXECUTIVE COMPENSATION

The following table sets forth the cash compensation that was paid to the
Company's Chief Executive Officer and each other executive officer of the
Company in 1997 (the "Named Executive Officers") and the number of shares of
Common Stock underlying options issued pursuant to the 1996 Stock Option Plan
that were granted for services rendered to the Company.

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS(1) COMPENSATION(2) OPTIONS(#) COMPENSATION(3)

Robert E. Lund(4).................. $ -- $ -- $ -- -- $ --
Chairman and Chief
Executive Officer

Robert Foley, Jr................... 187,500 63,190 -- -- --
President

Robert C. Bowers................... 140,000 47,181 -- -- 2,257
Chief Financial Officer and
Executive Vice President

Dr. William H. Graves(5)........... 33,334 -- -- 100,000 --
Senior Vice President

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

(1) Represents bonus earned in respect of the year ended December 31, 1997, all
of which was paid in 1998.

(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or 10% of the total amount of annual salary and bonus for the
executive officer for 1997.

(3) Represents amounts paid by the Company as matching contributions under the
Company's 401(k) Plan.

(4) Mr. Lund became Chairman and Chief Executive Officer of the Company on May
1, 1998 and is currently paid an annual base salary of $220,000. Mr. Lund
also participates in incentive packages generally available to other
officers of the Company. See "Employment Related Agreements" and "Employee
Benefit Plans."

(5) Dr. Graves became Senior Vice President of the Company on November 1, 1997
and is currently paid an annual base salary of $200,000. Dr. Graves also
participates in incentive packages generally available to other officers of
the Company. See "Employment Related Agreements" and "Employee Benefit
Plans."

The table below sets forth information as to options granted during 1997 to
the Named Executive Officers.

OPTIONS GRANTS IN 1997

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTION/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE/ EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR SHARE DATE 5% 10%

Robert E. Lund...................... -- -- -- -- -- --
Robert Foley, Jr.................... -- -- -- -- -- --
Robert C. Bowers.................... -- -- -- -- -- --
Dr. William H. Graves(2)............ 100,000 15.58% $ 2.75 11/01/04 $ 111,953 $ 260,897

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

(1) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration of
their term, assuming that the stock price on the date of grant appreciates
at the specified annual rates of appreciation, compounded annually over the
term of the options. These numbers are calculated based on rules promulgated
by the Securities and Exchange Commission. Actual gains, if any, on stock
option exercises and Common Stock holdings are dependent on the time of such
exercise and the future performance of the Company's Common Stock.

(2) The options were granted on November 1, 1997 pursuant to the Company's 1996
Stock Option Plan (at the fair market value as determined by the Board of
Directors at the time of the grant). Dr. Graves' options vest in equal
installments on the first four anniversaries of the grant date.

The following table provides information regarding unexercised stock options
held as of December 31, 1997 by each of the Named Executive Officers. No stock
options were exercised by any of the Named Executive Officers during fiscal year
1997.

AGGREGATED 1997 YEAR-END OPTION VALUES

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
YEAR-END(#) YEAR-END($)(1)
-------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE

Robert E. Lund(2)...................................... -- -- -- --
Robert Foley, Jr....................................... 383,500 250,500 $ 1,204,858 $ 662,572
Robert C. Bowers....................................... -- -- -- --
Dr. William H. Graves.................................. -- 100,000 -- 102,000

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

(1) There was no public trading market for the Common Stock as of December 31,
1997. Accordingly, these values have been calculated by determining the
difference between the estimated fair market value of the securities
underlying the option as of December 31, 1997 and the exercise price of the
applicable Named Executive Officer's options.

(2) Mr. Lund became Chairman and Chief Executive Officer of the Company on May
1, 1998 and on such date received options to purchase 360,000 shares of
Common Stock at an exercise price of $4.00 per share. See "Employment
Related Agreements" and "Employee Benefit Plans".

EMPLOYEE BENEFIT PLANS

1996 STOCK OPTION PLAN

In 1996, the Board of Directors adopted the 1996 Stock Option Plan (the
"1996 Stock Option Plan"). The 1996 Stock Option Plan is designed to enhance the
long-term profitability and stockholder value of the Company by aligning the
interests of selected directors, officers, employees and consultants with the
Company's performance targets.

The 1996 Stock Option Plan is administered by the Board of Directors, which
has exclusive authority to grant awards under the 1996 Stock Option Plan and to
make all interpretations and determinations affecting the 1996 Stock Option
Plan. The Board of Directors has the sole discretion, for example, to determine
the individuals to be granted options, the number of shares of Common Stock to
be subject to each option granted, the exercise price of each option, the
conditions with respect to vesting and exercisability of options and all other
conditions of any grant of options under the 1996 Stock Option Plan. The Board
of Directors may delegate all or any portion of the authority granted to it
under the 1996 Stock Option Plan to a committee appointed by the Board of
Directors. Following the Offering, the 1996 Stock Option Plan provides that the
1996 Stock Option Plan will be administered by a committee consisting of at
least two "disinterested persons" within the meaning of Rule 16b-3 under the
Exchange Act.

Participation in the 1996 Stock Option Plan is limited to directors,
officers, employees and consultants of the Company who are selected from time to
time by the Board of Directors or by a committee appointed by the Board of
Directors. Awards under the 1996 Stock Option Plan may be in the form of
incentive stock options meeting the requirements of Section 422 of the Internal
Revenue Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Internal Revenue Code.

The Company has reserved an aggregate of 2,200,000 shares of Common Stock
for issuance under the 1996 Stock Option Plan. As of June 30, 1998, options to
purchase 1,850,404 shares of Common Stock were outstanding and 298,360 shares
are reserved for issuance under the 1996 Stock Option Plan.

PERFORMANCE INCENTIVE PLAN

In each of 1996, 1997 and 1998, the Company established an annual
performance incentive plan pursuant to which all employees of the Company were
made eligible to be paid a bonus based on individual performance and the
Company's results of operations for such fiscal year. The Company currently
anticipates establishing a performance incentive plan in 1999. The Compensation
Committee approves levels of allocations of the bonus pool among employee groups
and cash bonuses, if any, are paid following the Company's annual audit. In
1997, the Company contributed $485,000 for payment under the 1997 performance
incentive plan.

EMPLOYMENT RELATED AGREEMENTS

The Company entered into an employment agreement with Robert E. Lund in May
1998 that provides for an annual base salary of $220,000, as subsequently
increased by the Board of Directors, and for participation in incentive plan and
benefit packages generally available to other officers of the Company. In
connection with his employment, Mr. Lund purchased 65,000 shares of Common Stock
at a purchase price of $4.00 per share, and was granted 360,000 fully-vested
options under the 1996 Stock Option Plan at an exercise price of $4.00 per
share. The options are subject to certain call rights held by the Company. See
Note 11 of Notes to the Financial Statements. Under the agreement, in the event
that an acquiring company terminates Mr. Lund's employment with the Company
after the second anniversary of Mr. Lund's employment with the Company or within
six months following a "fundamental change" or a "stock sale" (each as defined
in the agreement), Mr. Lund is entitled to a severance payment in the amount of
one-half his then-annual base salary.

The Company entered into an employment agreement with Dr. William H. Graves
in November 1997 that provides for an annual base salary of $200,000 and for
participation in certain incentive plan and benefit packages generally available
to other officers of the Company. Dr. Graves was also granted the right to
receive incentive compensation not in excess of $50,000 per year payable
annually in arrears based on the Company's achievement of certain performance
goals and objectives and options under the 1996 Stock Option Plan to purchase an
aggregate of 100,000 shares at an exercise price of $2.75 per share. The
agreement further provides for the payment of a one-time bonus in the amount of
$250,000 upon the consummation of an initial underwritten public offering of
common stock of the Company. Dr. Graves is also entitled to receive a lump sum
cash payment equal to seventy-five percent of his then-annual salary if the
Company terminates his employment without cause.

CERTAIN TRANSACTIONS

AGREEMENT WITH EXECUTIVE OFFICER AND DIRECTOR

In connection with the Recapitalization, the Company entered into an
agreement with Robert Foley, Jr. in April, 1996, pursuant to which the Company
has agreed to pay Mr. Foley a bonus of $500,000 upon the occurrence of the
Company's first underwritten public offering of its capital stock, so long as
Mr. Foley has been continuously employed with the Company through the date of
such Offering. In addition, Mr. Foley agreed to certain restrictive covenants
including certain non-compete and confidentiality covenants to be effective
during the two-year period following the termination of his employment with the
Company. The Company also granted Mr. Foley certain put rights with respect to
his options to purchase 300,000 shares of Common Stock. The put rights expire
upon the completion of the Offering. See Note 7 of Notes to Financial
Statements.

AGREEMENT WITH FORMER DIRECTOR

The Company entered into an agreement with Claire Reid in May 1997 pursuant
to which Ms. Reid terminated her employment as Vice Chairman and resigned as a
Director of the Company. The agreement, which provides that Ms. Reid shall be
entitled to a bonus in the amount of $475,000 upon the closing of an initial
public offering by the Company, modified the terms of an earlier agreement
between Ms. Reid and the Company entered into in connection with the
Recapitalization. In addition, upon the request of Ms. Reid, the Company will
use its "reasonable best efforts" to cause Ms. Reid's shares to be registered in
any such Offering in accordance with the terms of the Registration Agreement.
Ms. Reid has also agreed to be available to perform certain consulting services
for the Company through December 31, 1998. Ms. Reid has agreed to certain
non-compete covenants effective through December 31, 1998 and has been granted
certain put rights by the Company with respect to 374,000 shares of Common Stock
owned by Ms. Reid. The put rights expire upon the completion of the Offering.
See Note 7 of Notes to Financial Statements.

RESEARCH INSTITUTE SERVICES AGREEMENT

Pursuant to a Services Agreement dated February 15, 1998 by and between the
Company and the Research Institute, the Company has agreed to provide to the
Research Institute outsourcing, management and administrative services and to
serve as liaison on behalf of the Research Institute with outside advisors, to
the extent such services are specifically authorized by the President of the
Research Institute. The Research Institute has agreed to reimburse the Company
for its costs in providing such services to the Research Institute. The Research
Institute has agreed to grant to the Company a perpetual, royalty-free,
non-exclusive right to and license in all intellectual property developed by the
Research Institute and a right to use the name of the Research Institute in its
marketing efforts. The Research Institute has further agreed that, unless
otherwise specifically authorized in writing by the Company, it will not license
its intellectual property to any third party for use in a for-profit enterprise.
The Services Agreement exempts the Company from liability to the Research
Institute for damages arising in connection with the Company's failure to
provide, or the misperformance of, any required services under the agreement. In
addition, the Research Institute has agreed to indemnify the Company for any
damages arising in connection with the Company's obligations under the Services
Agreement, except to the extent arising out of the willful and intentional
misconduct of the Company. The Services Agreement extends through February 15,
2008 and is thereafter automatically extended for one-year periods unless either
party provides written notice of its desire to terminate. During the six months
ended June 30, 1998, the Company provided approximately $225,000 in reimbursable
services and costs to the Research Institute.

REGISTRATION AGREEMENT

The Company and certain of its stockholders are parties to a Registration
Agreement providing for the registration of certain shares of Common Stock in
future periods. See "Shares Eligible for Future Sale--Registration Rights."

MANAGEMENT FEES

Pursuant to the authorization of the Board of Directors, an entity
controlled by two of the Company's directors, Messrs. King and Pigott, is paid
an aggregate management fee of $25,000 per quarter for periods commencing April
1996. Such fees totalled $75,000, $100,000 and $50,000 in 1996, 1997 and the six
months ended June 30, 1998.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Prior to the consummation of the Offering, the Company expects to enter into
agreements to provide indemnification for its directors and executive officers
in addition to the indemnification provided for in the Company's Restated
Certificate of Incorporation and By-Laws.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of June 30, 1998, and as adjusted to reflect the
sale of the Common Stock offered hereby, by (i) all persons known by the Company
to own beneficially more than 5% of the outstanding shares of Common Stock, (ii)
each director of the Company, (iii) each of the Named Executive Officers, (iv)
each Selling Stockholder and (v) all directors and executive officers as a
group. Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares of Common Stock beneficially owned
by them.

SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE NUMBER OF OWNED AFTER THE
OFFERING(1) SHARES OFFERING(1)
----------------------- BEING -----------------------
NAME AND ADDRESS OF BENEFICIAL OWNERS NUMBER PERCENT OFFERED NUMBER PERCENT

DIRECTORS AND NAMED EXECUTIVE OFFICERS
Robert E. Lund(2)...................................... 433,995 6.4%
Robert Foley, Jr.(3)................................... 467,000 6.8
Robert C. Bowers....................................... 362,707 5.7
Dr. William H. Graves.................................. -- *
Dr. Marvin Wachman(4).................................. 14,440 *
Dr. Robert H. Atwell(3)................................ 5,220 *
James E. Cowie(5)...................................... 2,519,169 39.3
Bernard Goldstein...................................... 44,974 *
Robert E. King(6)...................................... 1,105,274 17.2
Dr. Thurston E. Manning(3)............................. 5,220 *
Kenneth G. Pigott(7)................................... 1,112,470 17.3
All Directors and Executive Officers as a group
(consisting of 11 persons)........................... 6,070,469 83.6
5% STOCKHOLDERS
Frontenac VI Limited Partnership....................... 2,519,169 39.25 375,000 2,144,169 23.32%
Claire Reid(8)......................................... 436,500 6.73 436,500 -- *
OTHER SELLING STOCKHOLDERS
Chase Bank............................................. 274,912 4.11 274,912 -- *

- ------------------------
* Represents less than one percent.

(1) Applicable percentage of ownership prior to the Offering is based upon
6,414,148 shares of Common Stock issued and outstanding. Applicable
percentage of ownership after the Offering is based upon 9,189,060 shares
issued and outstanding. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission and includes voting
and investment power with respect to the shares shown as beneficially owned.
Number of shares of Common Stock deemed beneficially owned by any person
includes any shares of Common Stock issuable upon exercise of options held
by such person exercisable within 60 days.

(2) Includes 360,000 shares issuable upon the exercise of options pursuant to
the 1996 Stock Option Plan.

(3) Represents shares issuable upon the exercise of stock options.

(4) Includes 10,440 options issuable upon the exercise of options pursuant to
the 1996 Stock Option Plan.

(5) Represents 2,519,169 shares held by Frontenac VI Limited Partnership. Mr.
Cowie is a General Partner of Frontenac Company, which is the sole general
partner of Frontenac VI Limited Partnership. As a result, Mr. Cowie may be
deemed to have beneficial ownership of the shares held by Frontenac VI
Limited Partnership.

(6) Includes 35,979 shares held by Flagg Creek Foundation, of which Mr. King is
a director. Also includes certain shares held in trust for Mr. King's spouse
and minor children, of which trusts Mr. King is a trustee. Mr. King
disclaims beneficial ownership of all such attributed shares.

(7) Includes 21,587 shares owned by Mr. Pigott's spouse, 10,794 shares owned by
a trust for the benefit of a minor child of Mr. Pigott and 10,794 shares
owned by The Dearborn Foundation, of which Mr. Pigott is a director. Mr.
Pigott disclaims beneficial ownership of all such attributed shares.

(8) Includes 62,500 shares issuable upon the exercise of options pursuant to the
1996 Stock Option Plan.

DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon the completion of the Offering, the authorized capital stock of the
Company will consist of 32,500,000 shares of Common Stock, par value $.01 per
share, and 3,000,000 shares of Preferred Stock, par value $.01 per share (the
"Preferred Stock") and the Company will have outstanding 9,189,060 shares of
Common Stock and no shares of Preferred Stock.

As of June 30, 1998, and without giving effect to the Offering, there were
1,899,688 shares of Class A Voting Common Stock, 4,398,224 shares of Class A
Voting Common Stock, 116,236 shares of Class B Common Stock and no shares of
Class C Common Stock held by five, one, six and no stockholders of record,
respectively. Upon the completion of the Offering, all outstanding shares of
stock will be converted into Class C Common Stock, which shall thereafter be
redesignated as a single class of Common Stock.

The following discussion describes the Company's capital stock, the Restated
Certificate of Incorporation and By-Laws as in effect upon completion of the
Offering. The following summary of certain provisions of the Company's capital
stock describes all material provisions of, but does not purport to be complete
and is subject to, and qualified in its entirety by, the Restated Certificate of
Incorporation and the By-Laws, which are included as exhibits to the
Registration Statement of which this Prospectus forms a part and by the
provisions of applicable law.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share for the election
of directors and all other matters submitted for stockholder vote, except
matters submitted to the vote of another class or series of shares. Holders of
Common Stock are not entitled to cumulative voting rights. Therefore, the
holders of a majority of the shares voting for the election of directors can
elect all of the directors if they choose to do so. The holders of Common Stock
are entitled to dividends in such amounts and at such times, if any, as may be
declared by the Board of Directors or by a committee duly appointed by the Board
of Directors out of funds legally available therefor. The Company has not paid
any dividends on its Common Stock and does not anticipate paying any cash
dividends on such stock in the foreseeable future. See "Dividend Policy." Upon
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all net assets available for distribution
to stockholders after payments to creditors. The Common Stock is not redeemable
and has no preemptive or conversion rights.

The rights of the holders of Common Stock are subject to the rights of the
holders of any Preferred Stock which may, in the future, be issued. All
outstanding shares of Common Stock are, and the shares of Common Stock to be
sold by the Company in this Offering when issued will be, duly authorized,
validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors has the authority to issue the Preferred Stock in one
or more series and to fix the price, rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation
of such series, without further vote or action by the stockholders. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the stockholders and
may adversely affect the voting and other fights of the holders of Common Stock.
The issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock, including the loss of
voting control to others.

WARRANTS

In connection with the Recapitalization, the Company issued warrants to
purchase 274,912 shares of Common Stock to Chase Bank at an exercise price of
$0.4675 per share. Chase Bank has elected to

participate as a Selling Stockholder in the Offering and will sell 274,912
shares of Common Stock representing all shares issuable upon the exercise of its
warrant.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE RESTATED CERTIFICATE OF
INCORPORATION,
BY-LAWS AND DELAWARE LAW

Certain provisions of the Company's Restated Certificate of Incorporation
and By-Laws could discourage potential acquisition proposals and could delay,
defer or prevent a change in control of the Company. These provisions are
intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and in the policies formulated by the
Board of Directors and to discourage certain types of transactions that may
involve an actual or threatened change of control of the Company. These
provisions are designed to reduce the vulnerability of the Company to an
unsolicited acquisition proposal. The provisions also are intended to discourage
certain tactics that may be used in proxy fights. However, such provisions could
have the effect of discouraging others from making tender offers for the
Company's shares and, as a consequence, they also may inhibit fluctuations in
the market price of the Company's shares that could result from actual or
rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of the Company. See "Risk Factors-- Certain
Anti-Takeover Matters."

CLASSIFIED BOARD OF DIRECTORS. The Company's Restated Certificate of
Incorporation provides for the Board of Directors to be divided into three
classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Board of Directors will be elected each year.
Classification of the Board of Directors expands the time required to change the
composition of a majority of directors and may tend to discourage a proxy
contest or other takeover bid for the Company. Moreover, under the Delaware
General Corporation Law, in the case of a corporation having a classified board
of directors, the stockholders may remove a director only for cause. These
provisions, when coupled with provisions of the Company's Restated Certificate
of Incorporation authorizing only the Board of Directors to fill vacant
directorships, will preclude stockholders of the Company from removing incumbent
directors without cause and simultaneously gaining control of the Board of
Directors by filling the vacancies with their own nominees.

SPECIAL MEETINGS OF STOCKHOLDERS. The Company's By-Laws provide that
special meetings of stockholders may be called by the Chairman of the Board or
the President and shall be called by the President or the Secretary at the
request in writing of a majority of the Board of Directors of the Company.

ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The Company's By-Laws provide that stockholders seeking to bring
business before a meeting of stockholders, or to nominate candidates for
election as directors at a meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice must be delivered to,
or mailed and received at, the principal executive office of the Company, not
less than 60 days nor more than 90 days prior to the scheduled meeting (or, if a
special meeting, not later than the close of business on the tenth day following
the earlier of (i) the day on which such notice of the date of the meeting was
mailed, or (ii) the day on which public disclosure of the date of the special
meeting was made). The By-Laws also specify certain requirements pertaining to
the form and substance of a stockholder's notice. These provisions may preclude
some stockholders from making nominations for directors at an annual or special
meeting or from bringing other matters before the stockholders at a meeting.

NO ACTION BY WRITTEN CONSENT OF THE STOCKHOLDERS. The Company's Restated
Certificate of Incorporation does not allow the stockholders of the Company to
take action by written consent.

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW. The Company is subject to Section
203 of the Delaware General Corporation Law ("Section 203"), which, subject to
certain exceptions, prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three years
following the date that such stockholder became an interested stockholder,
unless: (i) prior to such date, the board of directors of the corporation
approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder; (ii) upon consummation of the
transaction that resulted in the stockholder becoming an interested stockholder,
the interested

stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (a) by persons
who are directors and also officers and (b) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to such plans will be tendered in a tender or exchange
offer; or (iii) on or subsequent to such date. the business combination is
approved by the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the affirmative vote
of at least 66 2/3% of the outstanding voting stock that is not owned by the
interested stockholder.

Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

LIMITATION OF LIABILITY. As permitted by the Delaware General Corporation
Law, the Company's Restated Certificate of Incorporation provides that directors
of the Company shall not be personally liable for monetary damages to the
Company for certain breaches of their fiduciary duty as directors, unless they
violated their duty of loyalty to the Company or its stockholders, acted in bad
faith, knowingly or intentionally violated the law, authorized illegal dividends
or redemptions, or derived an improper personal benefit from their action as
directors. This provision would have no effect on the availability of equitable
remedies or nonmonetary relief, such as an injunction or rescission for breach
of the duty of care. In addition, the provision applies only to claims against a
director arising out of his or her role as a director and not in any other
capacity (such as an officer or employee of the Company). Further, liability of
a director for violations of the federal securities laws will not be limited by
this provision. Directors will, however, no longer be liable for monetary
damages arising from decisions involving violations of the duty of care which
could be deemed grossly negligent.

INDEMNIFICATION. The Restated Certificate of Incorporation provides that
directors and officers of the Company shall be indemnified by the Company to the
fullest extent authorized by Delaware law, as it now exists or may in the future
be amended, against all expenses and liabilities reasonably incurred in
connection with service for or on behalf of the Company. The Restated
Certificate of Incorporation also authorizes the Company to enter into one or
more agreements with any person that provide for indemnification greater or
different from that provided in the Restated Certificate of Incorporation. The
Company has entered into indemnification agreements with all current members of
the Board of Directors and executive officers. The Company believes that these
provisions and agreements are desirable to attract and retain qualified
directors and officers. Insofar as indemnification for liabilities arising the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is .

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this Offering, there has been no market for the Common Stock. Sales
of substantial amounts of Common Stock in the public market, or the perception
that such sales could occur, could adversely affect market prices prevailing
from time to time. Furthermore, since certain contractual and legal restrictions
on resale described below restrict the ability of the Company and current
shareholders of the Company from selling Common Stock, sales of substantial
amounts of Common Stock in the public market after the restrictions lapse could
adversely affect the prevailing market price and the ability of the Company to
raise equity capital in the future.

Upon completion of this Offering, the Company will have outstanding an
aggregate of 9,189,060 shares of Common Stock. Of these shares of Common Stock
outstanding, the 3,700,000 shares of Common Stock sold in this Offering will be
freely tradable without restriction or further registration under the Securities
Act, unless purchased by "affiliates" of the Company as that term is defined in
Rule 144 under the Securities Act. The remaining 5,489,060 shares of Common
Stock held by existing shareholders are "restricted securities" as that term is
defined in Rule 144 under the Securities Act ("Restricted Shares"). Restricted
Shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rules 144 or 701 promulgated under the
Securities Act, which are summarized below. Sales of the Restricted Shares in
the public market, or the availability of such shares for sale, could adversely
affect the market price of the Common Stock.

Each of the Company, its executive officers and directors, and certain
stockholders of the Company (including the Selling Stockholders) has agreed that
during the 180-day period after the date of this Prospectus, they will not,
without prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation, sell, offer to sell, contract to sell, grant any option to purchase
or otherwise dispose of any Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, other than the Common Stock
offered hereby, except that the Company may issue shares upon the exercise of
stock options granted prior to the date of the Offering, and may grant
additional options under stock option and other employee compensation plans,
provided that, without the prior written consent of Donaldson, Lufkin & Jenrette
Securities Corporation, such options shall not be exercisable during such
period.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or person whose shares are aggregated)
who has beneficially owned Restricted Shares for at least one year (including
the holding period of any prior owner other than an affiliate of the Company)
would be entitled to sell within any three-month period a number of shares that
does not exceed the greater of: (i) one percent of the number of shares of
Common Stock then outstanding (which will equal approximately 91,800 shares
immediately after this Offering); or (ii) the average weekly trading volume of
the Common Stock during the four calendar weeks preceding the filing of a Form
144 with respect to such sale. Sales under Rule 144 are also subject to certain
manner of sales provisions and notice requirements and to the availability of
current public information about the Company. Under Rule 144(k), a person who is
not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale, and who has beneficially owned the shares proposed to be
sold for at least two years (including the holding period of any prior owner
other than an affiliate), is entitled to sell such shares without complying with
the manner of sale, public information, volume limitation or notice provisions
of Rule 144.

Any employee, officer or director of or consultant to the Company who
purchased his or her shares pursuant to a written compensatory plan or contract
may be entitled to rely on the resale provisions of Rule 701. Rule 701 permits
affiliates to sell their Rule 701 shares under Rule 144 without complying with
the holding period requirements of Rule 144. Rule 701 further provides that
non-affiliates may sell such shares in reliance on Rule 144 without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. In both cases, a holder of rule 701 shares is required to wait until
90 days after the date of this Prospectus before selling such shares.

REGISTRATION RIGHTS

Pursuant to a Registration Rights Agreement dated April 11, 1996 (the
"Registration Rights Agreement") by and among the Company, TSI Investment
Company I, L.L.C., TSI Investment Company II, L.L.C., Chase Bank, Robert Foley,
Jr. and Claire Reid (collectively, the "Investors"), the Company has granted
certain "piggyback" registration rights (collectively, the "Registration
Rights") with respect to the shares of Common Stock held by the Investors.
Subject to certain conditions and limitations, the Registration Rights permit
the Investors to include their shares of Common Stock in conjunction with a
primary offering pursuant to a registration statement filed with the Commission
or whenever the securities of the Company then issued and outstanding are to be
registered under the Securities Act upon compliance with certain notice
provisions set forth in the Registration Rights Agreement. The Company has
retained the right to postpone or withdraw any piggyback registration without
obligation or liability to any Investor. In general, the Company will bear
expenses arising from exercise of the Registration Rights. In addition, the
Company has further agreed to indemnify, to the fullest extent permitted by law,
each Investor and certain of their affiliates against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged untrue
statement of a material fact contained in any registration statement, any
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading.

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement, dated
, 1998 (the "Underwriting Agreement"), the Underwriters named below,
who are represented by Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") and BT Alex. Brown (collectively, the "Representatives"), have severally
agreed to purchase from the Company and the Selling Stockholders, the respective
number of shares of Common Stock set forth opposite their names below:

UNDERWRITERS NUMBER OF SHARES

Donaldson, Lufkin & Jenrette Securities Corporation........................
BT Alex. Brown.............................................................

-----------------
Total.................................................................. 3,700,000
-----------------
-----------------

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval by their counsel of certain legal matters
and to certain other conditions. The Underwriters are obligated to purchase and
accept delivery of all the shares of Common Stock offered hereby (other than
those shares covered by the over-allotment option described below) if any are
purchased.

The Underwriters initially propose to offer the shares of Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain dealers (including the
Underwriters) at such price less a concession not in excess of $ per share.
The Underwriters may allow, and such dealers may re-allow, to certain other
dealers a concession not in excess of $ per share. After the initial
offering of the Common Stock, the public offering price and other selling terms
may be changed by the Representatives at any time without notice. The
Underwriters do not intend to confirm sales to any accounts over which they
exercise discretionary authority.

The Company has granted to the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase, from time to time, in whole
or in part, up to an aggregate of 555,000 additional shares of Common Stock at
the initial public offering price less underwriting discounts and commissions.
The Underwriters may exercise such option solely to cover over-allotments, if
any, made in connection with the Offering. To the extent that the Underwriters
exercise such option, each Underwriter will become obligated, subject to certain
conditions, to purchase its pro rata portion of such additional shares based on
such Underwriter's percentage underwriting commitment as indicated in the
preceding table.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.

Each of the Company, its executive officers and directors and certain
stockholders of the Company (including the Selling Stockholders) has agreed,
subject to certain conditions, not to (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash or otherwise) for a period of 180 days after the date of this Prospectus
without the prior written

consent of DLJ. In addition, during such period, the Company has also agreed not
to file any registration statement with respect to, and each of its executive
officers, directors and certain stockholders of the Company (including the
Selling Stockholders) has agreed not to make any demand for, or exercise any
right with respect to, the registration of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
without DLJ's prior written consent.

Prior to the Offering, there has been no established trading market for the
Common Stock. The initial public offering price for the shares of Common Stock
offered hereby will be determined by negotiation among the Company and the
Representatives. The factors to be considered in determining the initial public
offering price include the history of and the prospects for the industry in
which the Company competes, the past and present operations of the Company, the
historical results of operations of the Company, the prospects for future
earnings of the Company, the recent market prices of securities of generally
comparable companies and the general condition of the securities markets at the
time of the Offering.

Application has been made to list the Common Stock on the Nasdaq National
Market ("Nasdaq"). In order to meet the requirements for listing the Common
Stock on Nasdaq, the Underwriters have undertaken to sell lots of 100 or more
shares to a minimum of 2,000 beneficial owners.

Other than in the United States, no action has been taken by the Company,
the Selling Stockholders or the Underwriters that would permit a public offering
of the shares of Common Stock offered hereby in any jurisdiction where action
for that purpose is required. The shares of Common Stock offered hereby may not
be offered or sold, directly or indirectly, nor may this Prospectus or any other
offering material or advertisements in connection with the offer and sale of any
such shares of Common Stock be distributed or published in any jurisdiction,
except under circumstances that will result in compliance with the applicable
rules and regulations of such jurisdiction. Persons into whose possession this
Prospectus comes are advised to inform themselves about and to observe any
restrictions relating to the offering of the Common Stock and the distribution
of this Prospectus. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any shares of Common Stock offered hereby in any
jurisdiction in which such an offer or a solicitation is unlawful.

In connection with the Offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Underwriters may overallot the Offering, creating a syndicate
short position. The Underwriters may bid for and purchase shares of Common Stock
in the open market to cover such syndicate short position or to stabilize the
price of the Common Stock. In addition, the underwriting syndicate may reclaim
selling concessions from syndicate members, if DLJ repurchases previously
distributed Common Stock in syndicate covering transactions, in stabilization
transactions or otherwise or if DLJ receives a report that indicates that the
clients of such syndicate members have "flipped" the Common Stock. These
activities may stabilize or maintain the market price of the Common Stock above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.

LEGAL MATTERS

Certain legal matters in connection with the Common Stock offered hereby are
being passed upon for the Company by Winston & Strawn, Chicago, Illinois.
Certain legal matters will be passed upon for the Underwriters by Sachnoff &
Weaver, Ltd., Chicago, Illinois.

EXPERTS

The balance sheets of the Company as of December 31, 1997 and 1996, and the
related statements of operations, stockholders' equity (deficit), and cash flows
of the Company for each of the two years in the period ended December 31, 1997,
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein and are
included in reliance upon the report of such firm given on their authority as
experts in accounting and auditing.

The statements of operations, stockholders' equity (deficit), and cash flows
of the Company for the year ended December 31, 1995, included in this Prospectus
have been audited by Zweig, Ramick &
Associates, independent auditors, as stated in their report appearing herein and
are included in reliance upon the report of such firm given on their authority
as experts in accounting and auditing.

At a meeting of the Board of Directors of the Company held on May 20, 1996,
the Board of Directors determined to engage Deloitte & Touche LLP as independent
accountants. Deloitte & Touche LLP was formally engaged on February 3, 1997.

Zweig, Ramick and Associates had been engaged to audit the Company's
financial statements for the twelve months ended December 31, 1994 and 1995.
Zweig, Ramick and Associates' reports on the Company's financial statements for
those years do not contain an adverse opinion or a disclaimer of opinion, and
such reports are not qualified or modified as to uncertainty, audit scope or
accounting principles. During those two years, there were no disagreements with
Zweig, Ramick and Associates on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of Zweig, Ramick and Associates,
would have caused it to make reference thereto in such reports nor were there
any reportable events during those two years required to be disclosed. In
accordance with the rules of the Securities and Exchange Commission (the
"Commission"), Zweig, Ramick and Associates has reviewed and concurred with the
above discussion. A copy of Zweig, Ramick and Associates' letter is filed as an
exhibit to the registration statement of which the Prospectus is a part.

Prior to being engaged as its principal accountant, Deloitte & Touche LLP
did not consult with the Company as to either the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements.
In addition, Deloitte & Touche LLP did not consult with the Company as to any
matter that was either the subject of a disagreement or a reportable event as
defined in the Commission's rules.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, is required to file reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the Public Reference Section of the
Commission at Room 1024, 540 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of the reports, proxy statements and other
information can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549, upon payment of prescribed rates and, in certain cases,
by accessing the Commission's World Wide Web site at http://www.sec.gov.

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act (together with all amendments, exhibits, schedules
and supplements thereto, the "Registration Statement"), of which this Prospectus
forms a part, with respect to the shares of Common Stock offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement. Certain items
are omitted in accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement and the exhibits
thereto. Statements contained in this Prospectus regarding the contents of any
contract or any other document to which reference is made are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. A copy of the
Registration Statement may be inspected without charge at the public reference
facilities maintained by the Commission in Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048, and copies of all or any part of the Registration Statement may be
obtained from such offices upon the payment of the fees prescribed by the
Commission. The Registration Statement can also be inspected by accessing the
Commission's World Wide Web site at http://www.sec.gov.

INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Reports......................................................... F-2

Balance Sheets as of December 31, 1996 and 1997 and June 30, 1998 (unaudited)......... F-4

Statements of Operations for the years ended December 31, 1995, 1996 and 1997 and for
the six months ended June 30, 1997 and 1998 (unaudited)............................. F-5

Statements of Stockholders' Equity for the years ended December 31, 1995, 1996 and
1997 and for the six months ended June 30, 1998 (unaudited)......................... F-6

Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997 and for
the six months ended June 30, 1997 and 1998 (unaudited)............................. F-7

Notes to Financial Statements......................................................... F-8

F-1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
COLLEGIS, Inc.:

We have audited the accompanying balance sheets of COLLEGIS, Inc. as of December
31, 1996 and 1997, and the related statements of operations, stockholders'
equity (deficit), and cash flows for each of the two years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of COLLEGIS, Inc. as of December 31, 1996 and
1997, and the results of its operations and its cash flows for each of the two
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP
Chicago, Illinois
February 20, 1998

F-2

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
COLLEGIS, Inc.:

We have audited the accompanying statements of operations, stockholders' equity,
and cash flows of COLLEGIS, Inc. (formerly Technology Specialists, Inc.) for the
year ended December 31, 1995. 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 conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statements of operations, stockholders' equity, and
cash flows are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statements of
operations, stockholders' equity, and cash flows. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the statements of
operations, stockholders' equity, and cash flows. We believe that our audit of
the statements of operations, stockholders' equity, and cash flows provides a
reasonable basis for our opinion.

In our opinion, the statements of operations, stockholders' equity, and cash
flows referred to above present fairly, in all material respects, the results of
the operations, stockholders' equity, and the cash flows of COLLEGIS, Inc.
(formerly Technology Specialists, Inc.) for the year ended December 31, 1995 in
conformity with generally accepted accounting principles.

Zweig, Ramick & Associates
Philadelphia, Pennsylvania
January 23, 1996

F-3

COLLEGIS, INC.

BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

DECEMBER 31, JUNE 30,
---------------------- -----------
1996 1997 1998

(UNAUDITED)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents.................................................. $ 2,614 $ 3,568 $ 1,293
Cash collateral deposit.................................................... 1,500
Accounts receivable........................................................ 1,447 2,337 3,086
Unbilled receivables on contracts.......................................... 179 749 2,704
Prepaid expenses and other current assets.................................. 231 400 582
Deferred income taxes--current............................................. 392 186 53
---------- ---------- -----------
Total current assets................................................... 6,363 7,240 7,718
PROPERTY AND EQUIPMENT--Net.................................................. 122 649 806
OTHER ASSETS................................................................. 290 168 220
DEFERRED INCOME TAXES........................................................ 203 200 958
---------- ---------- -----------
TOTAL ASSETS........................................................... $ 6,978 $ 8,257 $ 9,702
---------- ---------- -----------
---------- ---------- -----------

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Current portion of long-term debt.......................................... $ 762 $ 850 $ 1,050
Accounts payable........................................................... 45 113 25
Deferred revenue........................................................... 1,798 1,746 1,322
Other current liabilities.................................................. 1,061 1,738 1,561
Income taxes currently payable............................................. 36
---------- ---------- -----------
Total current liabilities.............................................. 3,702 4,447 3,958
LONG-TERM DEBT--Net of unamortized discount of $611 at December 31, 1996 and
$0 at December 31, 1997 and June 30, 1998.................................. 8,326 8,150 7,525
COMMITMENTS AND CONTINGENCIES (Note 13)
REDEEMABLE COMMON STOCK--$.01 par value; 374,000 shares issued and
outstanding, at redemption value........................................... 913 913 913

STOCKHOLDERS' DEFICIT:
Common stock; par value $.01; authorized, 32,000,000 shares at December 31,
1996 and 1997, 32,500,000 shares at June 30, 1998; issued and outstanding,
5,923,912 shares at December 31, 1996, 5,939,412 shares at December 31,
1997, 6,040,148 shares at June 30, 1998.................................... 59 59 60
Additional paid-in capital................................................... 11,722 11,748 14,566
Warrants..................................................................... 735 404 404
Treasury stock-at cost....................................................... (18,943) (18,943) (18,943)
Retained earnings............................................................ 464 1,479 1,219
---------- ---------- -----------
Total stockholders' deficit............................................ (5,963) (5,253) (2,694)
---------- ---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT............................ $ 6,978 $ 8,257 $ 9,702
---------- ---------- -----------
---------- ---------- -----------

See Notes to Financial Statements

F-4

COLLEGIS, INC.

STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- ----------------------------
1995 1996 1997 1997 1998

(UNAUDITED)
SERVICE REVENUE.................................. $ 9,708 $ 15,226 $ 22,808 $ 10,240 $ 15,858
OPERATING EXPENSES:
Cost of services............................... 5,632 8,828 13,072 5,834 9,027
Selling, general and administrative expenses... 2,317 3,545 6,002 2,691 4,376
Depreciation and amortization.................. 40 104 153 68 91
Special compensation expense................... 2,474
Relocation costs............................... 613 488 488
Recapitalization expense....................... 1,587
--------- --------- --------- ------------- -------------
Total operating expenses................... 7,989 14,677 19,715 9,081 15,968
--------- --------- --------- ------------- -------------
OPERATING INCOME (LOSS).......................... 1,719 549 3,093 1,159 (110)
INTEREST EXPENSE................................. (787) (1,012) (536) (391)
INTEREST INCOME.................................. 124 131 143 79 71
--------- --------- --------- ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES................ 1,843 (107) 2,224 702 (430)
INCOME TAX (EXPENSE) BENEFIT..................... 67 571 (938) (324) 170
--------- --------- --------- ------------- -------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM.......... 1,910 464 1,286 378 (260)
LOSS ON EARLY EXTINGUISHMENT OF DEBT-- NET OF
INCOME TAX BENEFIT OF $180..................... (271)
--------- --------- --------- ------------- -------------
NET INCOME (LOSS)................................ $ 1,910 $ 464 $ 1,015 $ 378 $ (260)
--------- --------- --------- ------------- -------------
--------- --------- --------- ------------- -------------
EARNINGS PER SHARE--BASIC
Income (Loss) Before Extraordinary Item........ $ 0.33 $ 0.08 $ 0.20 $ 0.06 $ (0.04)
Extraordinary Loss............................. (0.04)
--------- --------- --------- ------------- -------------
Net Income (Loss).............................. $ 0.33 $ 0.08 $ 0.16 $ 0.06 $ (0.04)
--------- --------- --------- ------------- -------------
--------- --------- --------- ------------- -------------
EARNINGS PER SHARE--DILUTED
Income (Loss) Before Extraordinary Item........ $ 0.31 $ 0.07 $ 0.18 $ 0.05 $ (0.04)
Extraordinary Loss............................. (0.04)
--------- --------- --------- ------------- -------------
Net Income (Loss).............................. $ 0.31 $ 0.07 $ 0.14 $ 0.05 $ (0.04)
--------- --------- --------- ------------- -------------
--------- --------- --------- ------------- -------------
PRO FORMA NET INCOME DATA (UNAUDITED)
Income (Loss) Before Income Taxes, as
reported..................................... $ 1,843 $ (107)
Pro Forma Income Tax (Expense) Benefit......... (765) 44
--------- ---------
Pro Forma Net Income (Loss).................... $ 1,078 $ (63)
--------- ---------
--------- ---------
PRO FORMA EARNINGS PER SHARE (UNAUDITED)
Basic.......................................... $ 0.19 $ (0.01)
--------- ---------
--------- ---------
Diluted........................................ $ 0.18 $ (0.01)
--------- ---------
--------- ---------
WEIGHTED AVERAGE SHARES
Basic.......................................... 5,819.5 6,049.8 6,304.4 6,298.6 6,316.3
Diluted........................................ 6,104.1 6,537.0 7,014.7 7,021.2 6,316.3
PRO FORMA WEIGHTED AVERAGE SHARES
Basic.......................................... 5,819.5 6,049.8
Diluted........................................ 6,104.1 6,049.8

See Notes to Financial Statements.

F-5

COLLEGIS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(IN THOUSANDS, EXCEPT SHARE DATA)

COMMON STOCK ADDITIONAL TREASURY STOCK
---------------------- PAID-IN -------------------- RETAINED
SHARES AMOUNT CAPITAL WARRANTS SHARES COST EARNINGS

BALANCE, JANUARY 1, 1995....... 5,743,192 $ 144 $ 1,323 $ 425
Exercise of stock options...... 228,960 5 55
S Corporation dividend declared
and paid on common stock
($.18 per share)............. (1,062)
Net income..................... 1,910
--------- ----- ----------- ----- --------- --------- -----------
BALANCE, DECEMBER 31, 1995..... 5,972,152 149 1,378 1,273
Exercise of stock options...... 51,000 1 11
Cash dividend declared and paid
on common stock ($.27 per
share)....................... (1,603)
Reclassification of
undistributed accumulated
losses to additional paid-in
capital upon termination of S
Corporation election......... (330) 330
Conversion of common stock in
connection with
recapitalization............. (89) 89
Issuance of common stock....... 5,911,912 16 11,483
Repurchase of common stock..... (5,637,152) (14) 5,637,152 $ (18,943)
Issuance of stock warrants..... $ 735
Reclassification of redeemable
common stock................. (374,000) (4) (909)
Net income..................... 464
--------- ----- ----------- ----- --------- --------- -----------
BALANCE, DECEMBER 31, 1996..... 5,923,912 59 11,722 735 5,637,152 (18,943) 464
Exercise of stock options...... 15,500 18
Income tax benefit on exercised
options...................... 8
Adjustment for unissued
warrants forfeited upon early
extinguishment of debt....... (331)
Net income..................... 1,015
--------- ----- ----------- ----- --------- --------- -----------
BALANCE, DECEMBER 31, 1997..... 5,939,412 59 11,748 404 5,637,152 (18,943) 1,479
Exercise of stock options
(unaudited).................. 35,736 52
Issuance of stock
(unaudited).................. 65,000 1 259
Income tax benefit on exercised
options (unaudited).......... 33
Special compensation expense
recognized upon issuance of
stock and options
(unaudited).................. 2,474
Net loss (unaudited)........... (260)
--------- ----- ----------- ----- --------- --------- -----------
BALANCE, JUNE 30, 1998
(UNAUDITED).................. 6,040,148 $ 60 $ 14,566 $ 404 5,637,152 $ (18,943) $ 1,219
--------- ----- ----------- ----- --------- --------- -----------
--------- ----- ----------- ----- --------- --------- -----------

TOTAL
EQUITY
(DEFICIT)

BALANCE, JANUARY 1, 1995....... $ 1,892
Exercise of stock options...... 60
S Corporation dividend declared
and paid on common stock
($.18 per share)............. (1,062)
Net income..................... 1,910
-------
BALANCE, DECEMBER 31, 1995..... 2,800
Exercise of stock options...... 12
Cash dividend declared and paid
on common stock ($.27 per
share)....................... (1,603)
Reclassification of
undistributed accumulated
losses to additional paid-in
capital upon termination of S
Corporation election.........
Conversion of common stock in
connection with
recapitalization.............
Issuance of common stock....... 11,499
Repurchase of common stock..... (18,957)
Issuance of stock warrants..... 735
Reclassification of redeemable
common stock................. (913)
Net income..................... 464
-------
BALANCE, DECEMBER 31, 1996..... (5,963)
Exercise of stock options...... 18
Income tax benefit on exercised
options...................... 8
Adjustment for unissued
warrants forfeited upon early
extinguishment of debt....... (331)
Net income..................... 1,015
-------
BALANCE, DECEMBER 31, 1997..... (5,253)
Exercise of stock options
(unaudited).................. 52
Issuance of stock
(unaudited).................. 260
Income tax benefit on exercised
options (unaudited).......... 33
Special compensation expense
recognized upon issuance of
stock and options
(unaudited).................. 2,474
Net loss (unaudited)........... (260)
-------
BALANCE, JUNE 30, 1998
(UNAUDITED).................. $ (2,694)
-------
-------

See Notes to Financial Statements.

F-6

COLLEGIS, INC.

STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- --------------------
1995 1996 1997 1997 1998
(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)....................................... $ 1,910 $ 464 $ 1,015 $ 378 $ (260)
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation and amortization......................... 41 104 153 68 91
Amortization of discount on long-term debt............ 124 110 87
Extraordinary loss on early extinguishment of debt -
gross............................................... 451
Special compensation expense recognized upon issuance
of stock and options................................ 2,474
Provision for deferred income taxes................... (342) (595) 209 50 (625)
Changes in:
Accounts receivable and unbilled receivables on
contracts......................................... 452 (963) (1,460) (1,107) (2,704)
Prepaid expenses and other assets................... 222 (83) (286) (67) (234)
Accounts payable and accrued expenses............... 84 932 745 197 (265)
Deferred revenue.................................... 300 1,206 (52) (1,214) (424)
Income taxes payable................................ 63 (27) (36) 128
--------- --------- --------- --------- ---------
Net cash flows from operating activities.......... 2,730 1,162 849 (1,480) (1,947)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment..................... (51) (103) (629) (297) (248)
--------- --------- --------- --------- ---------
Net cash flows from investing activities.......... (51) (103) (629) (297) (248)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt (net of
debt issuance costs)................................ 8,897 9,409
Repayments of long-term debt.......................... (300) (10,200) (387) (425)
Cash collateral deposit............................... (1,500) 1,500 1,500
Proceeds from the issuance of stock................... 11,499 260
Repurchase of stock................................... (18,957)
Exercise of stock options (inclusive of income tax
benefit)............................................ 60 13 25 85
Proceeds from issuance of warrants.................... 735
Cash dividends paid................................... (1,062) (1,558)
--------- --------- --------- --------- ---------
Net cash flows from financing activities.......... (1,002) (1,171) 734 1,113 (80)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...... 1,677 (112) 954 (664) (2,275)
CASH AND CASH EQUIVALENTS, JANUARY 1...................... 1,049 2,726 2,614 2,614 3,568
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................. $ 2,726 $ 2,614 $ 3,568 $ 1,950 $ 1,293
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest.................................. $ 664 $ 789 $ 536 $ 551
Cash paid for income taxes.............................. $ 2 52 722 146 342

See Notes to Financial Statements.

F-7

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS--COLLEGIS, Inc. (the "Company") is a nationwide
provider of information technology ("IT") enterprise solutions and services to
clients in the higher education marketplace. The Company provides services in
areas that include operational and financial IT services, networking and
Internet services, and instructional technology services. These services are
normally bundled into a multi-year contract with lengths ranging from three to
ten years.

ORGANIZATION--Formerly, the Company was organized as a corporation under the
laws of the Commonwealth of Pennsylvania. On April 11, 1996, the Company
completed a recapitalization transaction (the "Recapitalization"--see Note 4)
and, on May 23, 1996, the Company reincorporated in the State of Delaware.
Coincident with the reincorporation, the Company effected a stock split (the
"Stock Split") whereby existing shareholders received four shares of common
stock for each share of common stock held at that date. Additionally, all
outstanding options to purchase shares of the Company's common stock were
adjusted at that date for the effect of the Stock Split. All applicable share
amounts and per share prices have been adjusted for the effect of the Stock
Split.

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 reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

REVENUE RECOGNITION--Substantially all of the Company's revenues are
generated under long-term, fixed-priced contracts. Revenues are recognized as
services are provided in accordance with the percentage of completion method.
Changes in project conditions, performance and profitability may result in
revisions to costs and revenues and are recognized in the period in which such
revisions are determined. Service revenue excludes reimbursable expenses charged
to the client. Billings are based on payment schedules that may differ from the
timing of revenue recognition. These differences are reflected in the balance
sheets as either unbilled receivables on contracts or deferred revenue.

CASH AND CASH EQUIVALENTS--Cash and cash equivalents consist primarily of
amounts held in demand deposit accounts and amounts in highly liquid time
deposit instruments having an original maturity of three months or less, and are
recorded at cost which approximates fair value.

PROPERTY AND EQUIPMENT--Property and equipment are recorded at cost and
depreciated over the estimated useful lives of the related assets under the
straight-line method. The estimated useful lives range from three to seven
years.

INCOME TAXES--The provision for income taxes is calculated under the
liability method pursuant to Statement of Financial Accounting Standards No.
109, ACCOUNTING FOR INCOME TAXES. Deferred tax assets and liabilities are
recorded based on the difference, if any, between the financial statement and
tax bases of assets and liabilities at the enacted tax rates.

Effective April 11, 1996, as a result of the Recapitalization (see Note 4),
the Company's federal tax status changed to a C Corporation. Prior to that date,
beginning January 1, 1995, the Company's federal

F-8

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
tax status was an S Corporation. As an S Corporation, the Company did not incur
or pay federal and certain state corporation income taxes on its taxable income.
Instead, shareholders were liable for individual federal and certain state
income taxes, as applicable, on their proportionate share of the Company's
taxable income. Upon termination of the S Corporation election on April 11, 1996
undistributed accumulated losses of $330 were reclassified to additional paid-in
capital. (See Note 3).

EARNINGS PER SHARE--Basic earnings per share is computed based on the
weighted average number of common shares outstanding. Diluted earnings per share
is computed based on the weighted average number of dilutive potential common
shares outstanding. The following summarizes the effects of dilutive securities
for the periods in arriving at diluted earnings per share (in thousands):

SIX MONTHS ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
------------------------------- ------------------------
1995 1996 1997 1997 1998
(UNAUDITED)

Weighted average common shares--basic................. 5,819.5 6,049.8 6,304.4 6,298.6 6,316.3
Impact of dilutive securities:
Options............................................. 284.6 224.1 455.1 452.3 603.5
Written put options................................. 97.7
Warrants and contingent warrants.................... 165.4 255.2 270.3 185.6
--------- --------- --------- ----------- -----------
Weighted average common shares--diluted............... 6,104.1 6,537.0 7,014.7 7,021.2 7,105.4
--------- --------- --------- ----------- -----------
--------- --------- --------- ----------- -----------

The effects of potentially dilutive securities on earnings per share for the
years ended December 31, 1996 (pro forma) and six months ended June 30, 1998
have been ignored as their impact would have been antidilutive.

RECLASSIFICATIONS--Certain 1996 and 1997 amounts have been reclassified to
conform with the 1998 presentation.

2. INTERIM AND PRO FORMA INFORMATION

INTERIM FINANCIAL DATA--The financial statements and related notes thereto
as of June 30, 1998 and for the six months ended June 30, 1997 and 1998 are
unaudited. In the opinion of management, such information reflects all
adjustments, consisting only of normal recurring adjustments, that management
considers necessary for a fair presentation of the financial position at such
date and the results of operations and cash flows for the periods indicated.
Results of operations for the six months ended June 30, 1998 are not necessarily
indicative of the results to be expected for the full fiscal year.

PRO FORMA ADJUSTMENTS--As discussed in Note 1, for the period January 1,
1995 to April 11, 1996 the Company was treated as an S Corporation for federal
income tax purposes. The Company was not subject to federal income taxes during
1995 and for a portion of 1996. Upon the termination of its S Corporation
election in April of 1996, the Company recognized a deferred tax benefit of
approximately $271 related to the initial recording of deferred tax assets and
liabilities. The objective of the pro forma financial information is to show
what the significant effects on the historical financial information might have
been

F-9

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

2. INTERIM AND PRO FORMA INFORMATION (CONTINUED)
had the Company not been treated as an S Corporation during 1995 and the portion
of 1996. The pro forma adjustments reflect a provision for income taxes at an
effective rate of 41.5% in 1995 and 41.0% in 1996.

3. STOCKHOLDERS' EQUITY

On April 10, 1996 and May 21, 1998, stockholders authorized amendments to
the Company's Articles of Incorporation that provided for changes to its capital
structure and the creation of four classes of common stock. The following
summarizes the number of common shares authorized for each class at:

DECEMBER 31,
-------------------------- JUNE 30,
1996 1997 1998

(UNAUDITED)
Series A Voting Common Stock (par value, $.01).......................... 10,000,000 10,000,000 10,000,000
Series A Non-Voting Common Stock (par value, $.01)...................... 10,000,000 10,000,000 10,000,000
Series B Common Stock (par value, $.01)................................. 2,000,000 2,000,000 2,500,000
Series C Common Stock (par value, $.01)................................. 10,000,000 10,000,000 10,000,000
------------ ------------ ------------
Total shares authorized................................................. 32,000,000 32,000,000 32,500,000
------------ ------------ ------------
------------ ------------ ------------

The following summarizes the number of shares issued and outstanding for
each class, including the 374,000 shares of Series A Voting Common Stock
classified as Redeemable Common Stock in the balance sheets, at:

DECEMBER 31,
-------------------------- JUNE 30,
1996 1997 1998

(UNAUDITED)
Series A Voting Common Stock (par value, $.01).......................... 1,899,688 1,899,688 1,899,688
Series A Non-Voting Common Stock (par value, $.01)...................... 4,398,224 4,398,224 4,398,224
Series B Common Stock (par value, $.01)................................. 15,500 116,236
Series C Common Stock (par value, $.01).................................
------------ ------------ ------------
Total shares issued and outstanding..................................... 6,297,912 6,313,412 6,414,148
------------ ------------ ------------
------------ ------------ ------------

SERIES A VOTING AND NON-VOTING COMMON STOCK--Each share of the Series A
Voting Common Stock ("Series A Voting") entitles the holder to one vote on each
matter submitted to a vote of stockholders. Holders of Series A Voting and
Series C Common Stock ("Series C") will vote together and not as separate
classes. Series A Voting and Series A Non-Voting Common Stock (collectively,
"Series A") are senior to the Series B Common Stock ("Series B") and Series C
with respect to dividend and liquidation preferences. In the event of a
liquidation of the Company, out of the assets of the Company available for
distribution to stockholders, holders of Series A are entitled to receive $1.94
per share plus any declared or unpaid dividends. If upon liquidation the assets
to be distributed to holders of Series A is insufficient to fulfill payment of
the preferential amount, available assets of the Company will be distributed
ratably

F-10

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

3. STOCKHOLDERS' EQUITY (CONTINUED)
among holders of Series A. The total liquidation preference to holders of Series
A shares was $12,218 at December 31, 1996 and 1997 and June 30, 1998.

SERIES B COMMON STOCK--Holders of Series B are not entitled to voting
rights. In the event of a liquidation of the Company, holders of Series B Common
Stock shall be entitled to receive $1.125 per share of any assets available
after preferential distribution to holders of Series A. If the amount of assets
available after preferential distribution to holders of Series A is insufficient
to fulfill payment of the preferential amount, the available assets will be
distributed ratably among holders of Series B. The total liquidation preference
to holders of Series B shares were $17 and $131 at December 31, 1997 and June
30, 1998, respectively.

SERIES C COMMON STOCK--Each share of the Series C Common Stock ("Series C")
entitles the holder to one vote on each matter submitted to a vote of
stockholders. In the event of a liquidation of the Company, any remaining assets
available for distribution to stockholders after preferential payments to
holders of Series A and Series B will be distributed ratably to holders of
Series A, Series B and Series C. Upon the closing of an initial public offering
of Series C, each share of the Series A and Series B will be automatically
converted into one share of Series C, which shall thereafter be redesignated a
single class of Common Stock.

4. RECAPITALIZATION

As part of the Recapitalization, each outstanding common share of the
Company was converted into one share of Series A Voting and all outstanding
options became exercisable for shares of Series A Voting. This conversion
resulted in a reclassification from common stock par to additional paid-in
capital of $89.

On April 11, 1996, the Company completed the Recapitalization whereby
1,513,688 shares of Series A Voting and 4,398,224 shares of Series A Non-Voting
were issued to investors previously unrelated to the Company. Proceeds of
approximately $11,500 from the stock issuance, along with the net proceeds of
approximately $9,632 from the issuance of debt and warrants (see Notes 5 and 6),
were used to redeem 93.5% of the Company's common stock held by existing
shareholders at that date, to terminate certain outstanding options to purchase
shares of the Company's common stock and to pay transaction-related expenses
("Recapitalization Expenses"). Immediately after the Recapitalization, previous
shareholders held 20.3% of the outstanding voting common stock of the Company.
The shares purchased from previous shareholders are classified as treasury stock
in the balance sheet at cost.

Recapitalization Expenses of $1,587 include approximately $600 of cash
bonuses paid to certain key executives and approximately $766 used to terminate
certain outstanding options to purchase shares of the Company's common stock
(see Note 11). The balance of Recapitalization Expenses includes certain legal,
accounting and other miscellaneous expenses.

5. LONG-TERM DEBT

In September 1997, the Company refinanced approximately $9,500 of
outstanding term debt and interest (the "Refinancing") with a new lender (the
"New Lender") pursuant to a new revolving credit

F-11

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

5. LONG-TERM DEBT (CONTINUED)
agreement (the "New Credit Agreement"). The New Credit Agreement provides for
maximum borrowings of up to $9,500, reduced quarterly through scheduled
principal and commitment reductions, as defined; calls for additional mandatory
principal reductions beginning in 1999 in the event the Company has excess cash
flows, as defined; and expires December 31, 2003. Borrowings under the New
Credit Agreement bear interest at either the prime rate plus a variable spread
(as defined in the New Credit Agreement, 9.0% at December 31, 1997 and 9.0% at
June 30, 1998 (unaudited)) or LIBOR plus a variable spread (as defined in the
New Credit Agreement, 8.4% at December 31, 1997 and 8.2% at June 30, 1998
(unaudited)) at the option of the Company. Interest is payable quarterly. At
December 31, 1997 and June 30, 1998, the Company had $2,000 and $1,575
(unaudited) designated as prime borrowings and $7,000 and $7,000 (unaudited)
designated as LIBOR borrowings, respectively. Borrowings under the New Credit
Agreement are secured by substantially all of the assets of the Company.
Finally, the New Credit Agreement restricts dividends without the prior written
consent of the New Lender, makes the Company subject to certain covenants and
requires the Company to maintain certain financial ratios. At December 31, 1997,
the Company was in compliance with all covenants and ratios contained in the New
Credit Agreement. At June 30, 1998, the company was in compliance with all
covenants and ratios contained in the New Credit Agreement, after taking into
account the receipt in July 1998 of a waiver relating to covenants and ratios
impacted by the special compensation expense.

Debt issuance costs of approximately $91 incurred in connection with the New
Credit Agreement have been capitalized and are reflected in the balance sheet at
December 31, 1997 and June 30, 1998 as Prepaid Expenses and Other Assets and are
net of accumulated amortization of approximately $6 and $13 (unaudited),
respectively.

At December 31, 1996, long-term debt consisted of a term note (the "Term
Note") issued pursuant to a credit agreement entered into by the Company with a
lender (the "Old Lender") in connection with the Recapitalization (the "Old
Credit Agreement"). The Term Note was paid in full and the Old Credit Agreement
was terminated in connection with the Refinancing in September 1997. The Term
Note was issued with a face amount of $10,000 and bore interest at prime plus 1%
(9.25% at December 31, 1996). Principal and interest were payable in quarterly
installments through April 11, 2002, with mandatory accelerated principal
payments to commence during 1998 in the event the Company had excess cash flows,
as defined.

The Old Credit Agreement also provided for a Revolving Credit Facility (the
"Revolving Facility") for maximum borrowings of up to $1,000. The Revolving
Facility was to expire on April 11, 2002 and bore interest at prime plus 1%
(9.25% at December 31, 1996). The Company paid a quarterly commitment fee at the
rate of 1/2 of 1% per annum on the average daily unused amount of the Revolving
Facility. No borrowings under the Revolving Facility were made during 1996 or
1997.

The Old Credit Agreement also required that the Company maintain cash
balances of $1,500 as collateral until certain leverage and interest coverage
ratios were met. This amount is classified as cash collateral deposit in the
balance sheet at December 31, 1996.

Debt issuance costs of approximately $368 incurred in connection with the
Old Credit Agreement were capitalized and are reflected in the balance sheet at
December 31, 1996 as Prepaid Expenses and

F-12

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

5. LONG-TERM DEBT (CONTINUED)
Other Assets and are net of accumulated amortization of approximately $41. The
Refinancing resulted in an extraordinary loss for the early extinguishment of
debt, due principally to the write-off of approximately $280 of unamortized debt
issuance costs related to the Old Credit Agreement and the write-off of
unamortized discount related to warrants (see Note 6).

The following summarizes the annual maturities of long-term debt for years
subsequent to 1997:

Year ending December 31:

1998.............................................................. $ 850
1999.............................................................. 1,250
2000.............................................................. 1,600
2001.............................................................. 1,750
2002.............................................................. 1,750
Thereafter........................................................ 1,800
---------
Total............................................................... $ 9,000
---------
---------

6. WARRANTS

Concurrent with entering into the Old Credit Agreement, the Company issued
warrants to the Old Lender to purchase 274,912 shares of the Series A Non-Voting
Common Stock at a price of $0.47 per share. On January 1, 1998, 1999 and 2000,
additional warrants to purchase 72,358, 73,684 and 75,472 shares, respectively,
were to be issued to the Old Lender with an exercise price of $0.47 per share.
Approximately $735 of the debt proceeds were allocated to the warrants (both
issued and unissued) based on the relative fair values of the warrants and the
debt at the date of issuance. This amount was recorded as contributed capital
with a corresponding discount recorded on the Term Note. The discount was being
amortized to interest expense over the remaining term of the Term Note based on
the effective interest method.

The fair value of the warrants was estimated using the Black-Scholes
option-pricing model assuming a risk-free interest rate of 6.3%, an expected
life of five years and an expected annual dividend yield of 0.0%. As the
Company's stock is not publicly traded, the effects of volatility have been
ignored, given the uncertainty of future prices.

As a result of the Refinancing, the Old Lender's rights to receive
additional warrants were canceled. At the date of the Refinancing, approximately
$171 of the unamortized discount related to the issued warrants was written off
and is classified with the extraordinary item, net of the related income tax
benefit, in the 1997 statement of operations. The remaining approximate $331 of
unamortized discount related to those warrants which would no longer be issued
was charged to contributed capital.

F-13

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

7. REDEEMABLE COMMON STOCK

In connection with the Recapitalization (see Note 4), an officer and a
former officer of the Company entered into separate Incentive, Put and
Noncompetition Agreements (the "Put Agreements") with the Company.

In the event of an initial public offering ("IPO") or other qualifying sale,
as defined, the former officer may require the Company to purchase her 374,000
shares of Series A Voting at $1.17 per share (in the event of an IPO) or $2.44
per share (in the event of another qualifying sale). The Put Agreement expires
upon the completion of an IPO or other qualifying sale. The redeemable common
stock is recorded at the maximum redemption price of $2.44 per share. Management
believes it to be impracticable to estimate the fair market value of the
redeemable common stock given the contingent nature of the put options and the
lack of a specified term. At December 31, 1996 and 1997 and at June 30, 1998,
the estimated fair market value of the underlying common stock was in excess of
the maximum redemption price.

In the event of an IPO or other qualifying sale, as defined, the officer may
require the Company to purchase his shares issued upon the exercise of options
to purchase 300,000 shares of Series A Voting (exercisable at $0.49 per share),
at $0.58 per share (in the event of an IPO), or $2.24 (in the event of another
qualifying sale). The Put Agreement expires upon the completion of an IPO or
other qualifying sale.

8. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at:

DECEMBER 31,
------------------------ JUNE 30,
1996 1997 1998
(UNAUDITED)

Furniture and equipment............................... $ 257 $ 788 $ 963
Leasehold improvements................................ 47 50
Computer software..................................... 22 53 117
----------- ----------- ------------
279 888 1,130
Accumulated depreciation and amortization............. (157) (239) (324)
----------- ----------- ------------
Property and equipment--net........................... $ 122 $ 649 $ 806
----------- ----------- ------------
----------- ----------- ------------

Depreciation and amortization expense related to property and equipment was
approximately $41, $63 and $103 in 1995, 1996 and 1997, respectively.
Depreciation and amortization expense related to property and equipment was
approximately $68 (unaudited) and $83 (unaudited) for the six months ended June
30, 1997 and 1998, respectively.

F-14

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

9. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following at:

DECEMBER 31,
--------------------
1996 1997 JUNE 30,
1998
(UNAUDITED)

Accrued payroll and bonuses.................................. $ 378 $ 645 $ 652
Accrued interest............................................. 223 63
Accrued relocation costs..................................... 318 170 83
Other accrued expenses....................................... 365 700 763
--------- --------- -----------
Total other current liabilities.............................. $ 1,061 $ 1,738 $ 1,561
--------- --------- -----------
--------- --------- -----------

F-15

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

10. RELOCATION COSTS

During 1996 and 1997, the Company relocated its corporate headquarters from
Pennsylvania to Orlando, Florida. Relocation costs include certain facility and
employee moving expenses, as well as estimated severance costs for selected
employees who elected not to relocate. Cash paid for relocation costs was
approximately $296 and $636 for the years ended December 31, 1996 and 1997,
respectively, and $258 and $87 for the six months ended June 30, 1997 and 1998
(unaudited), respectively. The remaining accrued relocation costs are
anticipated to be paid by the end of 1998.

11. STOCK OPTION PLANS

The COLLEGIS, Inc. 1996 Stock Option Plan (the "1996 Plan") was adopted on
June 19, 1996. Under the provisions of the 1996 Plan, options to purchase shares
of Series B may be granted to selected directors, officers, employees, and
consultants of the Company at the discretion of the Board of Directors. Option
terms, including the number of shares subject to the options, the exercise price
and the conditions with respect to the vesting or exercisability of such
options, are determined at the sole discretion of the Board of Directors. The
maximum number of shares authorized to be issued under the 1996 Plan was
1,692,336 at December 31, 1997 and 2,200,000 at June 30, 1998. During 1996 and
1997, options were granted with exercise prices greater than or equal to the
fair value of the Series B at the date of grant. These options generally vest
over four to six years and expire seven years from the date of grant.

During May and June of 1998, the Company issued and sold 65,000 shares of
Series B at a purchase price of $4.00 per share to an officer. In the same
period, the Company granted to that officer and other employees an aggregate of
431,000 options to purchase Series B at an exercise price of $4.00 per share. In
each instance, the $4.00 price was less than the estimated fair market value,
resulting in compensation expense of approximately $2,474. Of the total options
granted, the 360,000 granted to the officer vested immediately and are subject
to call rights held by the Company. Under the terms of the call rights, the
Company has the right to purchase any stock issued upon the exercise of such
options at $4.00 per share, not to exceed the number of shares listed below for
the applicable time periods:

PERIOD SHARES

May 1, 1998 to April 30, 1999...................................................... 270,000
May 1, 1999 to April 30, 2000...................................................... 202,500
May 1, 2000 to April 30, 2001...................................................... 135,000
May 1, 2001 to April 30, 2002...................................................... 67,500

Prior to the Recapitalization, options to purchase shares of common stock of
the Company had been granted under various plans (the "Pre-Recapitalization
Plans") at prices equal to the fair market value of the stock on the dates the
options were granted. These options were generally exercisable in not more than
six annual installments, as defined in the individual option agreements, and
expired ten years from the date of grant. As discussed in Note 4, at the date of
the Recapitalization, all outstanding options under the Pre-Recapitalization
Plans were redeemed, excluding options to purchase 300,000 shares of Series A
Voting with an exercise price of $0.49. Compensation expense recognized in
connection with the redemption of these options was approximately $750 and is
included in recapitalization expense in the 1996 Statement of Operations.

F-15

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

11. STOCK OPTION PLANS (CONTINUED)
The following summarizes changes in stock options for the years ended
December 31, 1995, 1996 and 1997 and for the six months ended June 30, 1998:

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------------------------------------------------------------- ------------------------
1995 1996 1997 1998
------------------------ ------------------------ ------------------------ ------------------------
WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
(UNAUDITED)

Outstanding, beginning
of year............... 850,960 $ 0.38 625,760 $ 0.50 1,418,240 $ 0.99 1,702,140 $ 1.58
Granted................. 134,000 0.83 1,166,240 1.13 642,000 2.75 498,500 4.00
Exercised............... (228,960) 0.26 (51,000) 0.25 (15,500) 1.13 (35,736) 1.34
Cancelled, forfeited or
repurchased........... (130,240) 0.49 (322,760) 0.63 (342,600) 1.39 (14,500) 2.94
--------- ----- --------- ----- --------- ----- --------- -----
Outstanding, end of
period................ 625,760 0.50 1,418,240 0.99 1,702,140 1.58 2,150,404 2.13
Exercisable, end of
period................ 339,600 0.40 255,000 0.49 550,863 0.81 1,073,097 1.97

Weighted-average fair
value of options
granted:
Exercise price greater
than market price of
stock............... 0.42
Exercise price equals
market price of
stock............... 0.83 0.30 0.68 0.68
Exercise price is less
than market price of
stock............... 6.42

The following summarizes information on the exercise prices for options
outstanding as of December 31, 1997 and June 30, 1998:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------ ------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OUTSTANDING REMAINING OUTSTANDING REMAINING EXERCISABLE REMAINING EXERCISABLE REMAINING
EXERCISE PRICE AT 12/31/97 USEFUL LIFE AT 6/30/98 USEFUL LIFE AT 12/31/97 LIFE AT 6/30/98 LIFE
(UNAUDITED) (UNAUDITED)

$ 0.49 300,000 5.4 300,000 4.9 300,000 5.4 300,000 4.9
1.13 815,640 5.4 784,140 4.9 239,160 5.4 374,380 4.9
2.75 586,500 6.6 568,764 6.1 11,703 6.2 38,717 5.8
4.00 N/A N/A 497,500 6.8 N/A N/A 360,000 6.8

F-16

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

11. STOCK OPTION PLANS (CONTINUED)
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model using the following weighted-average
assumptions for options granted in the years ended December 31, 1995, 1996, 1997
and the six months ended June 30, 1998:

SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------------- --------------
1995 1996 1997 JUNE 30,
1998
(UNAUDITED)

Expected future dividend yield...................... 0.0% 0.0% 0.0% 0.0%
Risk-free interest rate............................. 6.0% 6.2% 6.3% 5.6%
Expected life (years)............................... 5.0 5.0 5.0 3.6

As the Company's stock is not publicly traded, the effects of volatility
have been ignored, given the uncertainty of future stock prices.

In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation"
("SFAS No. 123"), was issued and is effective for financial statements for
fiscal years beginning after December 15, 1995. As permitted by the statement,
the Company will continue to measure compensation cost for stock option plans in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees." Had compensation cost for the Company's stock option
plans been determined consistent with the fair value method prescribed by SFAS
No. 123, the impact on the Company's net income (loss) and earnings per share
would have been as follows:

SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------------- ------------
1995 1996 1997 JUNE 30,
1998
(UNAUDITED)

Net income (loss):
As reported............................... $ 1,910 $ 464 $ 1,015 $ (260)
Pro forma................................. 1,908 796 963 (209)
Earnings per share-basic:
As reported............................... $ 0.33 $ 0.08 $ 0.16 $ (0.04)
Pro forma................................. 0.33 0.13 0.15 (0.03)
Earnings per share-diluted:
As reported............................... 0.31 0.07 0.14 (0.04)
Pro forma................................. 0.31 0.12 0.14 (0.03)

12. EMPLOYEE BENEFIT PLAN

Most employees are eligible to participate in the Company's 401(k) defined
contribution profit-sharing plan. Through December 31, 1997, the Company made
matching contributions of 25% (increased to 50% in January 1, 1998) of employee
contributions up to 1.5% of the employees' compensation and may

F-17

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

12. EMPLOYEE BENEFIT PLAN (CONTINUED)
contribute additional amounts at the discretion of the Board of Directors. The
Company made matching contributions of approximately $43, $55 and $113 in 1995,
1996 and 1997, respectively.

13. COMMITMENTS AND CONTINGENCIES

The Company leases certain office facilities under agreements classified as
operating leases. The following represents future minimum lease commitments
under noncancellable operating leases at December 31, 1997:

1998............................................................... $ 223
1999............................................................... 225
2000............................................................... 228
2001............................................................... 231
2002............................................................... 19
-----
Total $ 926
-----
-----

Rental expense was approximately $55, $81 and $194 in 1995, 1996 and 1997,
respectively. Rental expense was approximately $62 (unaudited) and $198
(unaudited) for the six months ended June 30, 1997 and 1998, respectively. In
March 1998, the Company entered into a lease agreement for additional space
through February 2003. Annual rent under this lease agreement is approximately
$160.

EXECUTIVE IPO BONUSES

Pursuant to terms of certain executive employment agreements and incentive
provisions included in the Put Agreements (see Note 7), certain current and
former executives are entitled to cash bonuses totaling $1,225 upon the
successful completion of an IPO of the Company's Common Stock.

LONG-TERM SERVICE CONTRACTS

The Company is contractually obligated to provide services under the terms
and conditions of various long-term, fixed-price contracts.

F-18

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

14. INCOME TAXES

The components of the income tax benefit (expense) were as follows:

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------- ------------------------
1995 1996 1997 1997 1998
(UNAUDITED)

Current:
Federal........................................ $ (408) $ (196) $ (351)
State.......................................... $ (44) $ (24) (140) (78) (103)
Deferred:
Federal........................................ 106 463 (166) (42) 482
State.......................................... 5 132 (44) (8) 142
---------- ---------- ----------- ----------- -----------
Total income tax benefit (expense)............... 67 571 (758) (324) 170
Income tax benefit allocated to extraordinary
item........................................... (180)
---------- ---------- ----------- ----------- -----------
Income tax benefit (expense)..................... $ 67 $ 571 $ (938) $ (324) $ 170
---------- ---------- ----------- ----------- -----------
---------- ---------- ----------- ----------- -----------

As discussed in Notes 1 and 2, effective April 11, 1996, the Company's
federal tax status changed from an S Corporation to a C Corporation as a result
of the Recapitalization. The income tax benefit for 1995 includes federal S
Corporation "built-in gains" tax of approximately $256 related to the federal S
Corporation election made in 1995. Included in the income tax benefit for 1996
was approximately $271 of deferred tax benefit related to the recognition of
deferred tax assets and liabilities at the date of the change in tax status.

F-19

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

14. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as follows:

DECEMBER 31, JUNE 30,
---------------------- 1998
1996 1997 (UNAUDITED)

Deferred tax assets:
Accrued liabilities...................................................... $ 224 $ 130 $ 36
Relocation expenses...................................................... 191 56 36
Amortization of bond discount............................................ 53 174 174
Change from cash to accrual basis of tax accounting...................... 219 146 109
Special compensation expense recognized upon issuance of stock and
options................................................................ 905
Other.................................................................... 15 44
---------- ---------- -------------
Total gross deferred tax assets........................................ 702 550 1,260
---------- ---------- -------------
Deferred tax liabilities:
Prepaid expenses......................................................... 51 87 128
Property and equipment................................................... 11 47 44
Deferred state taxes..................................................... 45 30 77
---------- ---------- -------------
Total gross deferred tax liabilities................................... 107 164 249
---------- ---------- -------------
Net deferred tax asset..................................................... $ 595 $ 386 $ 1,011
---------- ---------- -------------
---------- ---------- -------------

A reconciliation of the provision for income taxes follows:

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------- ------------------------
1996 1997 1997 1998
(UNAUDITED)

Tax at federal statutory rate............................................ 34.0% 34.0% 34.0% 34.0%
State taxes.............................................................. 66.1 6.9 7.8 5.9
Recapitalization......................................................... 440.0
Permanent differences.................................................... (9.0) 0.5 0.5
Other.................................................................... 1.4 3.2
--------- ----- --- ---
Effective rate........................................................... 531.1% 42.8% 45.5% 39.9%
--------- ----- --- ---
--------- ----- --- ---

15. RELATED PARTY TRANSACTIONS

The Company paid approximately $75 and $120 to selected directors for
certain management fees and consulting services during the years ended December
31, 1996 and 1997, respectively. For the six months ended June 30, 1998, the
Company paid approximately $50 (unaudited) for such management fees and
consulting services.

F-20

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

15. RELATED PARTY TRANSACTIONS (CONTINUED)
In October 1997, The COLLEGIS Research Institute (the "Research Institute"),
a not-for-profit research organization related to the Company through common
directors, was formed to engage in research and development activities in
connection with the innovation, use and application of information technologies
in teaching and learning. Pursuant to a Services Agreement dated February 15,
1998, by and between the Company and the Research Institute, the Company has
agreed to provide to the Research Institute outsourcing, management and
administrative services and to serve as liaison on behalf of the Research
Institute with outside advisors, to the extent such services are specifically
authorized by the President of the Research Institute. The Research Institute
has agreed to reimburse the Company for its costs in providing such services to
the Research Institute. The Research Institute has agreed to grant the Company a
perpetual, royalty-free, non-exclusive right to and license in all intellectual
property developed by the Research Institute and a right to use the name of the
Research Institute in its marketing efforts. The Research Institute has further
agreed that, unless otherwise specifically authorized in writing by the Company,
it will not license its intellectual property to any third party for use in a
for-profit enterprise. The Company has agreed to make annual contributions to
the Research Institute in the amount of the Research Institute's annual net
loss, if any, which may be offset against amounts owed to the Company under the
Services Agreement. The Services Agreement extends through February 15, 2008 and
is thereafter automatically extended for one-year periods unless either party
provides written notice of its desire to terminate.

Amounts received from the Research Institute as reimbursement of the cost of
services provided are accounted for as a reduction of the related expense
amounts in the statement of operations. During the six months ended June 30,
1998, the Company provided approximately $225 in reimbursable services and costs
to the Research Institute.

16. FINANCIAL INSTRUMENTS

Financial instruments that potentially subject the Company to concentrations
of credit risk consisted principally of accounts receivable. The Company
believes that concentrations of credit risk are limited due to the credit
quality of the Company's customers.

The carrying amounts reflected in the balance sheets for cash and cash
equivalents, accounts receivable and long-term debt approximate their respective
fair values given their terms are at or near market. See Note 7 for fair value
disclosure associated with Redeemable Common Stock.

17. SEGMENT INFORMATION

The Company operates primarily in one industry segment. The Company has
derived and expects to continue to derive a significant portion of its revenue
from a relatively limited number of customers.

F-21

COLLEGIS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998 (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

17. SEGMENT INFORMATION (CONTINUED)
The following summarizes revenues from significant customers (defined as
representing 10%, or more, of total revenues):

SIX MONTHS ENDED JUNE
YEARS ENDED DECEMBER 31, 30,
------------------------------- ------------------------
1995 1996 1997 1997 1998
(UNAUDITED)

Customer A......... 13.5% 14.3% 10.2%
Customer B......... 19.3% 14.1% 10.9%
Customer C......... 16.0%
Customer D......... 12.5%

The loss of any one of the Company's major customers could have a material
adverse effect on the Company's business, financial condition or results of
operations.

Additionally, the Company derives a significant portion of its revenues from
public institutions whose fiscal stability is dependent, in part, on state and
local government funding. As the Company currently operates in a limited number
of states, a decrease in government funding in a state or local municipality in
which the Company derives a significant portion of its revenue could have a
material adverse effect on the Company's business, financial condition or
results of operations. During the years ended December 31, 1996 and 1997 and the
six months ended June 30, 1998 the Company derived 23.2%, 33.1%, and 31.6%
(unaudited), respectively, of its service revenue from New Jersey-based
community colleges.

F-22

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
--------------

TABLE OF CONTENTS

PAGE

Prospectus Summary............................. 3
The Company.................................... 3
Risk Factors................................... 7
Company History................................ 13
Use of Proceeds................................ 13
Dividend Policy................................ 13
Capitalization................................. 14
Dilution....................................... 15
Selected Financial Data........................ 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 17
Business....................................... 25
Management..................................... 37
Certain Transactions........................... 44
Principal and Selling Stockholders............. 46
Description of Capital Stock................... 47
Shares Eligible for Future Sale................ 50
Underwriting................................... 52
Legal Matters.................................. 54
Experts........................................ 54
Additional Information......................... 54
Index to Financial Statements.................. F-1

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

UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

3,700,000 SHARES

COLLEGIS, INC.

COMMON STOCK

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

PROSPECTUS

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

DONALDSON, LUFKIN & JENRETTE
BT ALEX. BROWN

, 1998

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

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth fees payable by the Company incurred in
connection with the issuance and distribution of the Common Stock. All such fees
and expenses, except the Securities and Exchange Commission registration fee,
are estimated:

Securities and Exchange Commission Registration Fee............... $ 20,084
NASD Fee.......................................................... 7,308
Nasdaq Stock Market Listing Fee................................... *
Transfer Agent Fees and Expenses.................................. *
Printing Engraving Fees and Expenses.............................. *
Legal Fees and Expenses........................................... *
Accounting Fees and Expenses...................................... *
Miscellaneous..................................................... *
---------
Total......................................................... $ *
---------
---------

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

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding whether civil, criminal or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be a made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor, against expenses (including
attorneys' fees) actually and reasonably incurred in connection with the defense
or settlement of such action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or such other court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.

The Company's Restated Certificate of Incorporation and By-Laws provide that
indemnification shall be to the fullest extent permitted by the DGCL for all
current or former directors or officers of the Company.

As permitted by the DGCL, the Restated Certificate of Incorporation provides
that directors of the Company shall have no personal liability to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except (i) for any breach of a director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional

misconduct or knowing violations of law, (iii) under Section 174 of the DGCL or
(iv) for any transaction in which a director derives an improper personal
benefit.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since January 1, 1995, the Company has issued the following securities which
were not registered under the Securities Act:

(i) Prior Option Plan. In 1995, the Company granted 134,000 options to purchase
shares of common stock at a weighted average exercise price of $0.83 per
share and issued 228,960 shares of common stock pursuant to option exercises
at a weighted average exercise price of $0.26.

(ii) On April 11, 1996, in connection with the Recapitalization, the Company
issued 1,513,680 shares of Series A Voting Stock to TSI Management Company
I, L.L.C. ("TICI"), in exchange for a purchase price of $1.95 per share, and
4,398,224 shares of Class A Non-Voting Stock to TSI Management Company II,
L.L.C. ("TICII") in exchange for a purchase price of $1.95 per share.

(iii) On April 11, 1996, in connection with the certain loans advanced as part
of the Recapitalization, the Company issued a warrant exercisable into
274,912 shares to Chase Bank at an exercise price of $0.47 per share.

(iv) 1996 Stock Option Plan Issuances. The following option grants at the
indicated dates and exercise prices were made by the Company pursuant to the
1996 Stock Option Plan:

NUMBER OF EXERCISE
DATE SHARES PRICE
- ------------------------------------------------------------------- ---------- -------------

06/19/96........................................................... 1,040,480 $ 1.125
11/19/96........................................................... 125,760 1.125
02/13/97........................................................... 56,500 2.750
03/27/97........................................................... 185,000 2.750
05/22/97........................................................... 99,000 2.750
10/01/97........................................................... 85,500 2.750
11/01/97........................................................... 216,000 2.750
02/20/98........................................................... 67,500 4.000
05/01/98........................................................... 360,000 4.000
06/01/98........................................................... 71,000 4.000

(v) 1996 Stock Option Plan Exercises. The Company issued the following shares on
the dates indicated to employees who exercised options under the 1996 Stock
Option Plan:

NUMBER OF
DATE SHARES
- ---------------------------------------------------------------------------------- -----------

06/19/97.......................................................................... 11,500
11/22/97.......................................................................... 3,000
11/25/97.......................................................................... 1,000
02/13/98.......................................................................... 1,000
06/19/98.......................................................................... 34,736
07/01/98.......................................................................... 4,000

(vi) On May 1, 1998, Mr. Lund purchased 65,000 shares at a purchase price of
$4.00 per share.

In each of the above instances, exemption from registration was claimed on
the grounds that the issuance of such securities did not involve any public
offering within the meaning of Section 4(2) of the Securities Act.

II-2

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

The following exhibits are filed as part of this Registration Statement:

1.1 Form of Underwriting Agreement.**

3.1 Restated Certificate of Incorporation of the Company dated May 23, 1996,
as amended.*

3.3 By-Laws of the Company.*

4.1 Specimen Common Stock Certificate.**

4.2 Registration Agreement by and among the Company, TSI Investment Company I,
L.L.C., TSI Investment Company II, L.L.C., Chase Bank, Robert Foley,
Jr., and Claire Reid.*

5.1 Opinion of Winston & Strawn as to the legality of the securities to be
registered.*

10.1 Loan and Security Agreement dated September 23, 1997 between the Company
and LaSalle National Bank.**

10.2 Warrant Agreement dated April 11, 1996 between the Company and Chase
Bank.*

10.3 Letter Agreement between Robert E. Lund and the Company dated May 1, 1998
relating to his employment by the Company.*

10.4 Employment Agreement dated November 1, 1997 between the Company and Dr.
William H. Graves.*

10.5 Incentive, Put and Non-Competition Agreement dated April 11, 1996 between
the Company and Robert Foley.*

10.6 Services Agreement dated February 15, 1998 between the Company and The
COLLEGIS Research Institute.*

10.7 Settlement Agreement dated May 28, 1997 between the Company and Claire
Reid.*

10.8 1996 Stock Option Plan.*

16.1 Letter re change in Certifying Accountant.*

23.1 Consent of Deloitte & Touche LLP.*

23.2 Consent of Zweig, Ramick & Associates.*

23.3 Consent of Winston & Strawn (contained in the opinion filed as Exhibit
5.1).*

27.1 Financial Data Schedule.*

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

* Filed herewith

** To be filed by amendment

(b) Financial Statement Schedules

None required.

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of

II-3

the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

(b) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(c) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required
by the underwriters to permit prompt delivery to each purchaser.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Maitland, in the State of
Florida, on the 29th day of July, 1998.

COLLEGIS, INC.

By: /s/ ROBERT E. LUND
-----------------------------------------
Name: Robert E. Lund
Title: CHAIRMAN AND CHIEF EXECUTIVE
OFFICER

POWER OF ATTORNEY

The undersigned directors and officers of COLLEGIS, Inc. do hereby
constitute and appoint Robert E. Lund and Robert C. Bowers, and each of them,
with full power of substitution, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our name and behalf in our
capacities as directors and officers, and to execute any and all instruments for
us and in our names in the capacities indicated below which such person may deem
necessary or advisable to enable COLLEGIS, Inc. to comply with the Securities
Act of 1933, as amended (the "Securities Act"), and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but not limited to, power and
authority to sign for us, or any of us, in the capacities indicated below and
any and all amendments (including pre-effective and post-effective amendments or
any other registration statement filed pursuant to the provisions of Rule 462(b)
under the Securities Act) hereto; and we do hereby ratify and confirm all that
such person or persons shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Act, this Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated:

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

/s/ ROBERT E. LUND
- ------------------------------ Chairman, Chief Executive July 29, 1998
Robert E. Lund Officer and Director

/s/ ROBERT FOLEY, JR.
- ------------------------------ President and Director July 29, 1998
Robert Foley, Jr.

Chief Financial Officer,
/s/ ROBERT C. BOWERS Executive Vice President
- ------------------------------ and Director (Principal July 29, 1998
Robert C. Bowers Financial and Accounting
Officer)

/s/ DR. WILLIAM H. GRAVES
- ------------------------------ Senior Vice President and July 29, 1998
Dr. William H. Graves Director

II-5

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------

/s/ DR. ROBERT H. ATWELL
- ------------------------------ Director July 29, 1998
Dr. Robert H. Atwell

/s/ JAMES E. COWIE
- ------------------------------ Director July 29, 1998
James E. Cowie

/s/ BERNARD GOLDSTEIN
- ------------------------------ Director July 29, 1998
Bernard Goldstein

/s/ ROBERT E. KING
- ------------------------------ Director July 29, 1998
Robert E. King

/s/ DR. THURSTON E. MANNING
- ------------------------------ Director July 29, 1998
Dr. Thurston E. Manning

/s/ KENNETH G. PIGOTT
- ------------------------------ Director July 29, 1998
Kenneth G. Pigott

/s/ DR. MARVIN WACHMAN
- ------------------------------ Director July 29, 1998
Dr. Marvin Wachman

II-6

EXHIBITS

1.1 Form of Underwriting Agreement.**

3.1 Restated Certificate of Incorporation of the Company dated May 23, 1996, as
amended.*

3.3 By-Laws of the Company.*

4.1 Specimen Common Stock Certificate.**

4.2 Registration Agreement by and among the Company, TSI Investment Company I, L.L.C.,
TSI Investment Company II, L.L.C., Chase Bank, Robert Foley, Jr., and Claire
Reid.*

5.1 Opinion of Winston & Strawn as to the legality of the securities to be registered.*

10.1 Loan and Security Agreement dated September 23, 1997 between the Company and LaSalle
National Bank.**

10.2 Warrant Agreement dated April 11, 1996 between the Company and Chase Bank.*

10.3 Letter Agreement between Robert E. Lund and the Company dated May 1, 1998 relating
to his employment by the Company.*

10.4 Employment Agreement dated November 1, 1997 between the Company and Dr. William H.
Graves.*

10.5 Incentive, Put and Non-Competition Agreement dated April 11, 1996 between the
Company and Robert Foley.*

10.6 Services Agreement dated February 15, 1998 between the Company and The COLLEGIS
Research Institute.*

10.7 Settlement Agreement dated May 28, 1997 between the Company and Claire Reid.*

10.8 1996 Stock Option Plan.*

16.1 Letter re Change in Certifying Accountant.

23.1 Consent of Deloitte & Touche LLP.*

23.2 Consent of Zweig, Ramick & Associates.*

23.3 Consent of Winston & Strawn (contained in the opinion filed as Exhibit 5.1).*

27.1 Financial Data Schedule.

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

* Filed herewith

** To be filed by amendment